Sustainability is becoming an essential strategy for today’s manufacturers. A vortex of customer demand, increased regulation and rising energy and raw material costs is driving sustainability deep into the consciousness of manufacturers and their suppliers. Not since the advent of lean manufacturing have we seen a business strategy so far-reaching and transformational.
A new report on an innovative pilot program to promote sustainable manufacturing in Wisconsin validates the premise that “green is the new gold” for state manufacturers, and reveals the stellar financial and environmental benefits that can be achieved with sustainable practices.
The Wisconsin Profitable Sustainability Initiative (PSI) was launched in April 2010 by the Wisconsin Department of Commerce and the Wisconsin Manufacturing Extension Partnership (WMEP). The goal was to help small and midsize manufacturers reduce costs, gain competitive advantage and minimize environmental impacts. Forty-five manufacturers participated in the program, the only one of its kind in the U.S.
The PSI First Report states that the program is projected to generate a five-year $54 million economic impact, including: $26.9 million in savings, $23.5 million in increased/retained sales and $3.6 million in investment.
Key environmental benefits outlined in the report include significant reductions in electricity, carbon dioxide equivalents, solid waste and air emissions.
The financial and environmental benefits exceeded our expectations, and underscore the cogent business case for sustainability. The program is projected to deliver a 31-to-1 return on the state’s investment of $1.75 million and average paybacks of about ten months for manufacturers. Replicating these gains over a larger portion of the state’s 9,000 small and midsize manufacturers could have an enormous impact on economic growth, environmental impact reduction and job creation.
Moreover, the success of this initiative positions Wisconsin as a national leader in sustainable manufacturing – a designation that will attract new businesses, talent and investment, fueling the expansion of a vibrant 21st century manufacturing economy. This is a game changer.
PSI is unique in its multidisciplinary approach to sustainability. Under the program, a team of energy, environmental, logistics, lean and finance experts were dispatched to take a 360-degree view of the 45 manufacturers’ businesses to identify areas for improvements. The process prioritized projects based on both performance improvement and environmental impact reduction. This laser focus on results is a key attribute of the program’s success.
A total of 87 PSI projects tackled a wide range of improvements, including reducing raw materials, solid waste and freight miles, optimizing processes, installing new equipment and launching new products. The initial results show that the projects with the largest impact do not come from the traditional sustainability areas such as energy or recycling. Instead, outcomes from the initial projects suggest that transportation and operational improvements are places where manufacturers can look to find big savings, quick paybacks and significant environmental benefits.
The Wisconsin Profitable Sustainability Initiative offers compelling evidence of the power of sustainability to drive savings and business growth while reducing environmental impacts. Sustainability poses challenges for manufacturers, especially smaller firms, who may not have the in-house expertise or resources to know where to get started. PSI makes world-class advice and assistance available to small and midsize manufacturers: operations that could not afford these alternatives on their own.
Like lean, sustainability is a journey, not a destination. It requires strong leadership, a solid commitment and vision from management and highly engaged employees. Manufacturers who get it right will enhance the reputation of their brands, attract new customers, increase profits and achieve new heights of success. The time to get started is now.
Buckley Brinkman is the executive director and chief executive officer of the Wisconsin Manufacturing Extension Partnership (WMEP). For more information, visit http://bit.ly/ip2RCo.