Manufacturers Seeing More Bang for Buck with Green Operations

The corporate mindset around environmental initiatives is changing, and the need to invest in innovative products and new technologies is growing, a new report has revealed.

Of more than 300 North American manufacturing, operations and supply chain executives recently surveyed by EFT Research, most (77 percent) agreed that energy prices will rise significantly in 2009 and that the focus of operations budgets is "turning sharply" toward how to cut the dependence on oil.

With this in mind, EFT asked respondents to pinpoint what real projects they are investing in, what the challenges and barriers have been, and where they are seeing a return on investment (ROI).

Not only do the vast majority of respondents (95 percent) agree that green manufacturing will continue to expand, EFT Research's Green Manufacturing: Adoption & Implementation Report revealed?but 66 percent also believe there to be a market for more expensive and greener products in their industry.

The finding further showed that it isn't simply the increased profits that are driving green initiatives. Forty-three percent of respondents report that environmental imperatives have resulted in improved efficiency and product quality for their operation.

To achieve results from green efforts, 65 percent of EFT Research's respondents are investing in recycling and reuse programs. Other initiatives these companies are pursuing to make manufacturing leaner, greener and more profitable include the following:
-Water-reduction programs (58 percent);
-Continuous improvement (54 percent);
-Energy management (50 percent);
-Environmental management (46 percent);
-Materials management (36 percent);
-Establishing a corporate green team (33 percent); and
-Supplier management (32 percent).

Where there was once reluctance to invest in green initiatives, manufacturers now see some real payback.

The survey found that 64 percent of executives expect green initiatives to further their overall corporate sustainability strategy and vision, 62 percent see green initiatives as a good response to customer interest in environmentally friendly products and services, and 51 percent feel they are improving their public reputation.

On the operations side, 52 percent noted cost reduction as a key benefit, and 47 percent saw improved efficiency.

"When asked how they view green manufacturing initiatives, 84 percent told us that they see them as part of an overall optimization strategy. This marks a major sea change, and implies that environmental programs are becoming part of the standard arsenal of strategies employed to boost innovation and optimize operations," Katharine O'Reilly, EFT's Senior Vice President of Environmental Research, said in a statement last week.

A statement made in April by Darin Yug, who leads Diamond Management & Technology Consultants, Inc.'s Supply Chain practice, echoes EFT Research's findings.

"The idea of a green supply chain isn't exclusively about green issues," Yug said upon the release of a report titled The Case for a Green Supply Chain: Turning Mandate into Opportunity (free registration required). "It's also about generating efficiencies and cost containment."

Indeed, 96 percent of executives agree that environmental initiatives and traditional business objectives were far from mutually exclusive, and can and should be combined to move businesses forward, EFT concluded.