November 30, 2016 / best practices, continuous improvement, Cost Management, industry news, LIT, operator training, preventative maintenance, ROI, strategic planning
In today’s challenging market, any edge you can carve out against the competition is beneficial. While traditional improvement strategies such as lean manufacturing, ongoing training, and preventative maintenance can help improve your operational success, top performers are looking beyond long-established methods to differentiate themselves from their competitors.
According to the brief, “Resource Allocation Strategies for Leading Industrial Metal-Cutting Organizations,” industry leaders understand the importance of thinking outside the box. “In the spirit of continuous improvement, best-in-class managers need to explore all of the ways they can save their operation time and money,” the brief states.
Enter sustainability—the latest initiative manufacturers are using to reduce costs and gain a competitive advantage. Whether implementing strategic energy plans or adopting more environmentally friendly processes, today’s industrial manufacturers are finding that “going green” can provide bottom-line savings.
For example, according to The U.S. Green Building Council report, LEED in Motion: Industrial Facilities, more than 1,755 industrial facilities have received a voluntary green building certification system called LEED – Leadership in Energy and Environmental Design. As stated here in a blog from Frost & Sullivan, experts believe that the operational efficiencies gained by following LEED building principles are real and measurable.
Take Fiat Chrysler’s Trenton South Engine plant as an example. The Michigan-based facility was the world’s first engine plant to achieve a Gold LEED rating, which has helped cut the plant’s annual CO2 emissions by 12,000 metric tons, reduced energy consumption by 39%, and saved about $1.6 million a year.
Ball and roller bearing manufacturers are following suit. For the last 17 years, industry leader SKF has been listed as one of the most sustainable companies by the Dow Jones Sustainability World Index (DJSI). “Our long-running inclusion in the DJSI is something that we are all very proud of within SKF,” stated Rob Jenkinson, director of corporate sustainability at SKF. “Sustainability issues for businesses have evolved during this period, with an ever increasing focus on reducing negative environmental impacts and doing more for society as a whole. We maintain our focus on understanding these issues and the role we can play to help address them—now, and in the future.”
New Hampshire Ball Bearings, Inc. (NHBB) is also focused on sustainability as a strategy and has a formal Energy Management Plan in place. “Energy management is at the core of our strategy to achieve sustainability because it is so vital to our long term health,” the company says on its website. “Rapid economic growth, especially in the developing world, is expected to increase global energy consumption 40% by 2035. The expected increase in energy costs and the potential for supply disruptions compels us to identify and implement aggressive energy efficiency improvements.”
Instead of embracing sustainability as something that’s just “good to do,” more and more manufacturers are realizing that there are practical short-term and long-term financial benefits to implementing environmentally conscious improvements, according to a blog from the Manufacturing Extension Partnership (MEP). The industry group lists five key business advantages to adopting sustainable practices. The following are the top three: (You can read the full list here.)
- Reduce Energy-Related Costs. Energy and water costs are a prime concern for manufacturers. Focusing on improvements can reduce these expenses, typically on an annual basis. In addition, switching to energy-efficient lighting and adjusting lighting levels in accordance with your production schedule will reduce your long-term electrical costs. Regular equipment inspections can also prove beneficial.
- Attract New Customers and Increase Sales. Green and sustainable practices can make your company more marketable. Consumers are more conscious of the environment, and making improvements will strengthen your reputation. Whether you’re an OEM or a supplier, highlighting your initiatives to the public will help you attract a whole new base of customers, resulting in increased sales.
- Tax Incentives. There are a variety of tax credits and rebates on both the federal and state level for manufacturers who proactively implement more sustainable improvements. There may be incentives available to your business. Check out the U.S. Department of Energy’s website and the Database of State Incentives for Renewables & Efficiency.
Of course, the bigger picture benefit of sustainability is its positive impact on the environment. However, as Fiat, SKF, NHBB, and many other industrial manufacturers are discovering, developing and integrating a detailed sustainability vision into your long-term strategic plan can have real, measurable business advantages that contribute to the bottom line.