Business Functions and Sustainability
Each department within a company presents an opportunity for economic, social and environmental improvements. Many of the ideas to reduce environmental impacts directly coincide with cost savings and improved levels of efficiency. Advancements that occur in one department can often be felt throughout the entire organization and each department is equally important in the life cycle of a product.
The most important step in making improvements to the manufacturing and engineering of a product is mapping out how the product or products are produced, from the idea conception to the end-product. Successfully mapping the product allows analysis of each aspect of the process enabling the proper identification of environmental impact reduction, waste reduction, time improvements and opportunities for cost savings.
The creation of the product should allow the product to be remanufactured, repaired for continued usage, reuse and 100% recyclable. This includes the cardboard, office paper and wood pallets, as well as materials that are specific to the manufacturing process. The manufacturing process should be tracked for each product within the plant to look for immediate energy, input and water reductions. Creation of the product should occur in a sustainable fashion, requiring less water, energy and resources. Resources should be non-toxic, renewable and acquired in a sustainable fashion.
o Replace toxic materials with nontoxic
Mapping out the processes toward production realization present the organization with an opportunity to replace materials that have been found toxic. Once any toxic materials have been identified, research can begin to find suitable, non-toxic alternatives that are priced comparatively. There are many options available today that are equal in performance to products that have traditionally been used that also lower waste, energy use, chemicals and material use.
Recent recalls have made consumers aware of the possible negative effects that the products they purchase could have on the health of their families and themselves. This growing attention by consumers has not been lost on the government, which could impose stricter guidelines on products produced both on an international and national level to ensure the safety of the public and the employees that create the products.
o Lean Manufacturing
Lean manufacturing is “the systematic elimination of waste from all aspects of an organization's operations, where waste is viewed as any use or loss of resources that does not lead directly to creating the product or service a customer wants when they want it” (Lean). Even without overtly targeting environmental outcomes, lean initiatives can generate considerable environmental benefits.
Lean manufacturing can result in less material use and waste or scrap, reduced water and energy use and decreased number and amount of chemicals used. Lean can be leveraged to produce even more environmental improvement. “Lean provides an excellent platform for broadening companies' definition of waste to address environmental risk and product life-cycle considerations as some lean practitioners have demonstrated” (Lean).
A growing network of organizations are promoting lean manufacturing that share a goal with organizations promoting environmental improvement and pollution prevention. Both strive to eliminate waste from business
o Water recycling
The amount of clean water available is continuing to shrink, so the question becomes what can an organization do to reduce its impact? “Energy efficiency will be preferred in water-related products and system designs and may potentially be mandated by regulation in the future” (waterbrief). There are many options that are available that can be taken advantage of so that not only will the organization improve its water usage, but it can also be known as an industry leader to the consumers and competition.
Wastewater recycling and reuse has been adopted by many companies in the form closed loop treatment systems. This means that “gray water” or water that is not suitable for consumption after its initial use is utilized for landscape use or the water is continually cycled through the manufacturing processes in lieu of using fresh water during production.
It is estimated that up to 60% of water in urban distribution systems are lost or contaminated through leaks in sewers. This fact, while disturbing, can be seen as an opportunity for improvement within an organization. Maintaining and repairing the infrastructure will not only help to reduce water waste but it will also lower the cost of overall water use throughout the organization.
o Replace data systems with paperless information system
The utilization of an Enterprise Resource Planning or ERP system can provide many benefits to a company on an economic and environmental basis. Supply Chain Management or SCM replaces paper filing systems with electronic system. It provides organizations with accurate and prompt information on raw materials, production plans, expected shipments, delivery lead times and existing inventory levels. This allows raw materials and packaging ordered as needed, and inventory levels are kept low, resulting in cost savings and minimization of environmental impact.
o Environmentally preferred purchasing
Environmentally preferable goods and services have reduced effects on “human health and the environment when specifically compared with other goods and services that serve the same purpose” (EPP). There are some questions to ask before purchasing a product that include: “Is the product less hazardous? Is it reusable or more durable? Is it made from recycled materials? Do we really need to buy a virgin product when the recycled version is just as good? What happens to the product at the end of its life? Can it be recycled? Will the manufacturer take the product back? Will it need special disposal? Does it conserve energy or water? Is it made from plant-based raw materials?” (EPP).
The purchase and use of environmentally preferable products can have a profound impact; and not just on the environment. Wise purchasing has a number of additional tangible benefits ranging from worker safety to budget savings: “Buying less-hazardous products can reduce regulatory liability, improve worker safety, and lower disposal costs” (EPP). Using energy-efficient and water-conserving products can save money.
o ISO 14000 implementation
ISO 14001:2004 is a management tool that enables an organization to: “identify and control the environmental impact of its activities, products or services, and to improve its environmental performance continually, and to implement a systematic approach to setting environmental objectives and targets, to achieving these and to demonstrating that they have been achieved” (ISO). It does not specify levels of environmental performance due to the enormous complexity of providing a specific standard to each business activity and a specific Environmental Management Standard or EMS for each business.
“Because ISO 14001:2004 does not lay down levels of environmental performance, the standard can to be implemented by a wide variety of organizations, whatever their current level of environmental maturity” (ISO). There is, however, a commitment to compliance with any environmental legislation or regulations that is applicable to the individual organization, along with the commitment to continually improve. Internal and external audits of the organization ensure that the an organization has properly stated what they do and that they do what they say.
JIT or Just-In-Time systems help eliminate overproduction. “Overproduction affects the environment in three key ways: increases the number of products that must be scrapped or discarded as waste; increases the amount of raw materials used in production; increases the amount of energy, emissions, and wastes (solid and hazardous) that are generated by the processing of the unneeded output” (JIT).
JIT systems reduce the amount of necessary in-process and post-process inventory, reducing the potential for product damage during handling, storage, or through deterioration or perishables spoiling over time. “Such damaged inventory typically ends up being disposed of as solid or hazardous waste” (JIT).
JIT usually requires less floor space for equal levels of production. “Reductions in square footage can reduce energy use for heating, air conditioning, lighting and can also reduce the resource consumption and waste associated with maintaining the unneeded space” (JIT). More importantly, the reduction of space required for production can reduce the need to construct additional production facilities, “as well as the associated environmental impacts resulting from construction material use, land use, and construction wastes” (JIT).
• Human Resources
o Hire employees that share the culture of sustainability
While it is vitally important to have support from the top level of an organization, every level must believe in any changes that are implemented. Therefore, it is extremely important that the Human Resource department participate in the culture that reinforces the vision statement of the organization. The department is in charge of hiring the appropriate individuals, orientations and ongoing training for each employee. The type of training and culture that is expressed from the moment an individual walks through the door as a new employee and throughout their career, is directly linked to human resources.
o Offer alternative employee acknowledgements
Most organizations traditionally give acknowledgements during an employee’s career. Those acknowledgements have typically been items, such as pens, plaques, written acknowledgements or a different sort of gift. In lieu of the small gift, an organization could use this as an opportunity to do something beneficial in the name of the employee. This could include a donation that the employee is allowed to choose that could benefit society and the environment. Interface is a company that has adopted this practice. “Interface Americas employees now have the option of having trees planted to celebrate their years of service with the company, in lieu of traditional service awards like watches, pen sets and plaques” (Interface Sustainability).
o switch to a paperless tracking and information system
Traditional record keeping in human resources has generally used a great deal of paper, resulting in waste and inefficiencies. The use of an information system in the human resource department would greatly reduce the environmental impact of the department by minimizing the paper that is used and would increase productivity, prevent information duplication or the misplacement of important employee files. An additional advantage “of an integrated information system over a paper-based system is that controlling access to data is automated; managers can use the system to determine which users should have access to various data” (Concepts, p.151). This has a strong and positive impact on the social responsibility when dealing with employees. Evaluations, raises and promotions can be considered more efficiently and effectively, improving employee morale and productivity.
o reduce number of sales calls/use alternative methods of contacting current customers
Sales calls will always be a huge part of the marketing process but thanks to technology, organizations can now be just as effective while incurring less costs and environmental impact. Cell phones, email, PDA’s, instant messenger and video teleconferencing provide routes of communication between the receiver and provider of goods and services without the traveling that has traditionally been necessary for communication. The utilization of these new technologies allows an organization’s sales team to maintain or improve their current level of effectiveness while lowering their environmental impact resulting from less greenhouse gas emissions through reductions in necessary travel.
o utilize marketing information system to reduce paper use
Customer Resource Management or CRM is an information system that organizations are able to utilize that provides environmental and cost benefits. The use of CRM can lead to operational and environmental efficiencies by replacing a paper-based filing system with an electronic system, simultaneously reducing the natural resources used and providing easily accessible, accurate information, This will lower costs and allow the better use of sales force time, resulting in cost savings.
Business Warehouse is an information system that provides environmental and cost benefits not only to the marketing department but the results also provide benefits to the manufacturing of the product. This information system is used for ‘reporting and analyzing transactional data” (Concepts, p.65). The analysis of sales transactions uncovers trends and patterns that are used by the sales force to plan effective marketing activities while reducing waste regarding labor and resource use. Analyzing these results supports efficient planning of the supply chain, providing waste reduction through efficient planning of orders for raw materials and production.
• Accounting/Finance & Investments
o switch to an accounting information system to reduce paper use
One of the greatest opportunities to reduce waste throughout accounting departments and accounting firms is to replace the paper-based system with an electronic system. Not only will an information system reduce the amount of paper that is used in the accounting department, resulting in a lower impact to the environment, but the cost savings could also be substantial through improved efficiency.
o Dow Jones Sustainability Index
One of the largest and aggressive long-term goals that an organization can set is to attain a place on the Dow Jones Sustainability Index. This goal results in the cumulative effort of the organization and each of its departments becoming more environmentally focused. It requires that the organization adopt the idea of corporate sustainability. “Corporate Sustainability is a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments” (Dow Jones). These leaders achieve long-term shareholder value by designing both strategies and management in order to utilize the potential for sustainable products and services while reducing, or if possible, eliminating sustainability costs and risks. The Dow Jones Sustainability Index website, www.sustainability-indexes.com provides the information on how to become part of the sustainability index.
o Provide cost benefit analysis
Investments in an organization that will require capital for implementation should be analyzed to provide a cost benefit analysis for shareholders to consider. The accounting department can provide these analyses for consideration and provide quantifiable information on both the upfront costs and the resulting long-term benefits to the organization. The creation of these cost benefit analyses allows the accounting department to uncover the benefits that one change in a single department can make on the entire organization, such as implementing a CRM would not only benefit the marketing and sales department but would also provide important information to the production department, resulting in additional cost and environmental savings.
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Monk, Ellen, and Bret Wagner. 2006. Marketing Information Systems and the Sales Order Process. Concepts in Enterprise Resource Planning, 2nd ed. United States: Thomson Course Technology.
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