Remote process mapping
Remote process mapping workshop during Level 4 Lockdown
September 17, 2021
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Remote process mapping
Remote process mapping workshop during Level 4 Lockdown
September 17, 2021
west gate
End of an Era at the West Gate
October 14, 2021
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Why Productivity Improvement is Saving Our Planet – Not Destroying it

two hands holding a radiant globe of the earth

saving our planet

While the pandemic is an immediate and significant global threat, it will be easier to address than the existential threat that is man-made climate change. We can’t vaccinate and isolate ourselves out of the stresses on our ecosystems. Temperature rises, water shortages, significant weather events such as cyclones and droughts, increased fire threats, habitat and soil degradation, and disease and pest incursions will all increase. There needs to be a fundamental change.

This is hardly new territory. The Club of Rome’s computer simulations already suggested in 1972 that economic growth could not continue indefinitely because of resource depletion. We must find the ‘Goldilocks Zone’ from Doughnut Economics, Kate Raworth’s book describing the extent to which the needs of people are met (the social boundary) without overshooting the planetary boundaries.

Yes, we need a fundamental change, and the current clarion calls for climate revolution and climate strikes are necessary, albeit uncomfortable. Fortunately, there are many mainstream sustainability improvements that businesses can pursue – they’re proven, they’re ‘easy’ and best of all: they will improve your bottom-line. I’m making the case that environmental sustainability outcomes and productivity improvement outcomes are one and the same: through the reduction of wasteful or ineffective and inefficient use of resources. This does not require a revolution; they are simple steps we can and should take now.

Productivity improvement is sometimes seen as synonymous with endless growth and therefore as the cause of the degradation of Mother Earth, especially if defined as GDP per FTE. But if you define Productivity meaning outputs over inputs, you’ll quickly see that a reduction of inputs, or better said, a reduction of the inefficient inputs, can benefit Planet, People and Profit equally. In short, productivity improvement is saving our planet.

The relentless pursuit of the elimination of the (inefficient) use of our planetary resources is part of the productivity equation. What is central to productivity improvement is waste elimination – and with ‘waste’ I don’t mean rubbish clogging up landfills, but the inefficient use of resources: the seven ‘Lean’ wastes as first described by Toyota engineer Taiichi Ohno. In my 30+year career I have pursued environmental sustainability outcomes by ensuring the business cases stacked up – often through profit improvement. Let me share three practical areas of where productivity improvement is saving our planet by reducing waste and improves environmental sustainability:

Materials are often wasted, from designed-in by-products to inadvertent losses, which could lead to the dumping of these resources or otherwise release into the environment. The solution is capturing, separating, and repurposing waste streams.

  • For example, capturing stack losses can recover materials: it is amazing how much milk powder is lost from drier stacks. You’re better off selling the powder particle in a bag, then reporting it for your resource consent! Reducing dust losses also has a significant positive impact on the people and assets of an enterprise.
  • By separating waste streams, you can provide an unadulterated source of materials for further processing. For example, separating saw dust from wood chips in a sawmill will make either stream a saleable by-product, but when mixed it is of nil value and ends up being dumped.
  • By repurposing waste streams, you can reduce the load on energy-hungry waste processing and generate a saleable by-product. For example, offal and solids from an abattoir, solids from the processing of vegetables, and rubber waste have all been repurposed into petfood, food ingredients and roading materials, respectively.

Start measuring your waste streams by completing a process mass balance: where do the components of your raw materials go – in the product the customer is paying for, or in waste? Then problem-solve and innovate to make this value-to-waste ratio better.

Energy is often wasted too. In Fonterra, our national milk processor, a focused effort on reducing energy usage saved enough Joules annually to power the city of Hamilton for a year. There are examples abound how to be energy efficient:

  • Unproductive running or idling of equipment: running an industrial oven up to the desired temperature might take 22 minutes. Loading the dough later than that is an energy loss.
  • Overdesigned equipment: using a 30 HP engine when a 10 HP is more than enough.
  • Constant running equipment: where processes naturally fluctuate and not pull the same constant energy, the use of variable speed drives not only saves energy but also extends the life of the asset.
  • Inefficient equipment: old or poorly designed equipment where rotational slippage or friction occurs, where there are pressure leaks, or where energy lost in the generation of heat, not movement.

As with material wastage, you can measure and improve your energy consumption. Governments have given high priority on reducing our carbon footprint and there is a lot of excellent and free help. In New Zealand, EECA is your first stop.

End-product quality, durability, or expiration is a significant contributor to the inefficient use of our planetary resources. When product is faulty or develops defects early in the life, or where the product is expired before it is used, the waste is immense. Most producers end up picking up the cost through warranty claims or returns, so the impact on the bottom-line is significant too. But the reputational impact on the brand and company means you will have lost customers and your top line will suffer too. Here are examples of productivity improvement practices that eliminate or reduce this waste:

  • Quality defects, identified before and after the product reaches the customer, can be prevented by implementing a Quality Management System (QMS). You can assure quality by defining and controlling how a product is produced and how processes are performed, with quality controls (inspections) included checking the effectiveness of the QMS.
  • Product expiration is almost always due to over-supply and therefore the result of a lack of integrated planning. Having a good Sales and Operations Planning process (or S&OP) allows an organisation to have an accurate view of demand (from historical sales to marketing plans to events and promotions) matched with a well-defined supply plan in terms of material procurement, inventory plans and production capacity plans. The result is an agile company that can respond fast to changing demand with the right inventory: to keep this as low as possible without the risk of stocking out. Furthermore, being good at product changeovers, as in the Formula 1 pitstops, allows organisations to do short runs to further reduce perishable inventory without adding to running costs.

The wasting of end-product is the worst impact of all, as all resources required for the sourcing, making and delivery of the product are wasted. Understanding your end-to-end value stream and placing the productivity improvement lens over it will not only reduce your negative impact on our planet but will bolster your P&L and Balance Sheet too.

I hope I have made my case for you to act. Productivity improvement is saving our planet – not destroying it. Again, it’s hardly new. No placard-waving required, no strikes. They are simple steps we can and should take now. The pursuit to eliminate the inefficient use of our planet’s resources is true productivity, and it will save our planet, not destroy it.

 

About the author: Geerten Lengkeek is the Managing Director of Productivity People