Spring 2009 issue of Horizons

INDUSTRy u

Manufacturing and distribution

Making Your Sustainability Initiative Profitable

material, from the harvest or extraction of the material through the lifetime of your product. When possible, choose materials that are plentiful. • Review the use of water and chemicals – Finding ways to reduce, eliminate or recycle the use of water and other chemicals is not only environmentally friendly, but also can significantly reduce current costs. • Review energy costs – While energy costs continue to escalate, it is important to find ways to minimize the consumption of energy. Look not only at what energy is used in the production or storage of your products, but also how the products you produce or sell use energy. • Look at waste in your office processes – We tend to focus on waste in the production or warehouse facility. However, many office processes contain significant waste. • Engage your employees – Let them know that sustainability is not only about maintaining and improving the environment, but also part of your strategy for being profitable. Looking at these areas now can provide manufacturing and distribution companies with a distinct advantage. First, regulatory standards are most certainly going to be more restrictive in the future. Taking steps now to understand the impact of your operation and products on the environment will prepare you to respond to current and future environmental regulation. Second, voluntary compliance with “green” standards can provide you with a marketing advantage as compared to your competition, as consumers prefer environmentally friendly products.

By Mike Lewis, CPA

The Environmental Protection Agency defines “sustainability” as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” Often, corporatemanagement has viewed green initiatives as expensive propositions that ultimately reduce theprofitability of thebusiness. However, many manufacturing and distribution companies that are implementing lean are finding that “sustainability” is a natural extension of the lean philosophy and can yield very profitable results. A lean strategy is the relentless pursuit to eliminate waste in all business processes. Manufacturers have pursued this goal on the plant floor for many years and more recently have begun to implement lean throughout the entire organization, including office processes and even sales! Companies that have implemented lean are finding sustainability initiatives an easy extension of this philosophy. Lean provides the framework and tools necessary to implement green initiatives while always focusing on providing value to the customer. Opportunities to reduce waste in the following areas exist at almost all manufacturing and distribution companies and are a great place to apply lean and begin your sustainability journey: • Use materials efficiently – Many materials that were once cheap and plentiful are now expensive and hard to find due to rapid growth of other industrial nations. Consider the impact to the environment of the use of

Questions? Contact:

Mike Lewis, CPA Partner-in-Charge Manufacturing and Distribution Services Group 314.290.3391 mike.lewis@rubinbrown.com

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