Posted By ML Admin, May 14, 2012 at 12:04 PM, in Category: Sustainability
Between rising oil prices and carbon footprint regulations, manufacturing executives have made energy management a priority in their organizations. But is it a strategy?
According to Deloitte Consulting, energy prices will continue to rise as global demand increases. Ultimately, that is going to force companies to think of energy as a manageable asset that stretches across every aspect of their business -- much like the IT infrastructure or even the human resources department. To that end, Deloitte is advising companies to adopt a holistic, enterprise-wide strategy. By increasing the energy efficiency of its facilities and operations, an organization can create additional economic value with limited new risk.
Good idea. But how do you suddenly work a widespread sustainability strategy into your global operations? First, start with a clear objective.
In 2008, Danone, a global provider of dairy, water, baby food, and medical nutrition products, decided it would reduce its carbon footprint by 30% by 2012. A lofty goal. “You need to change the way you are doing things in order to do that,” said Jean-Marc Lagoutte, Danone’s CIO, in an interview.
Danone has about 150 affiliate companies around the world, each with its own general manager. The company gave these managers an incentive by offering a bonus based on their ability to lower their carbon footprint. That provided the momentum to get the affiliates moving. Then, the company needed to provide individuals with a way to measure their progress, so Danone designed a spreadsheet model to audit, trace, and calculate the company’s carbon footprint using specific KPIs. Those KPIs were then integrated with the SAP ERP system.
About 70% of the company uses SAP, and, according to Lagoutte, about 80% of the data needed for the calculation model was already in the ERP system.
By measuring every process across its product lines, Danone ultimately modified some production procedures -- for example, by reducing the weight and the density of the plastic put into a bottle.
Ultimately, Danone’s sustainability strategy has transformed the organization. “It changed the way we do things and changed the way we look at things,” Lagoutte said.
More importantly, it worked. By the end of 2011, Danone had already reduced its carbon footprint by 20%. This year, the company has surpassed its goal. “We are beyond the 30% reduction in 2012,” Lagoutte said. “But what is really interesting is the benefit we got out of doing that. We were able to simplify processes and reduce costs.”
Yes, companies need to figure out how they will combat rising energy costs. But, as in the Danone example, when done right, implementing a sustainability strategy can become a corporation’s real competitive advantage.
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