FROM THE ARCHIVES: On the road to sustainability, you’re going to need a map
Businesses look to implement, embrace sustainability as a critical success factor for long-term value for their customers, our common planet. Sustainability is also strongly linked to making the most of the organization’s energy.
By Greg Bodenhamer, Schneider Electric
The growing energy dilemma and increased awareness around environmental impact are challenging business leaders around the globe to find a balance between growth and sustainability. As the environment becomes a driver for regulation and impacts economic factors, businesses look to implement and embrace sustainability as a critical success factor for long-term value for their customers and our common planet.
Sustainability is defined as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” The first step towards developing and executing a successful sustainability initiative is to define sustainability in terms that will resonate with your organization.
Some key attributes of sustainability include leaving the planet no worse off, or even better than you found it, while in the context of a business, sustainability is also strongly linked to making the most of the organization’s energy – from human to electrical, water, air and gas.
Plan, implement sustainability
Once an organization has defined sustainability as it pertains to their business, they can begin to establish a focus, as well as identify activities to support their goals and achieve the desired outcomes. As described below, an effective plan that will deliver desired results should be based on simple, executable activities in select, focused areas of the business.
Also, experience shows succinct metrics should be defined and dedicated resources should be deployed. Effective metrics involve milestones (time/duration/dates and financial) for activities that are required to enable the sustainability outcomes, for example, a specific capital project to add power metering to a plant operation, facility and so on.
Sustainability results or outcomes will be measured and may include ramp up targets over time and final “How you know you’re there” results once efforts are mature. As with any key initiative, the plan must include how to motivate, reward and recognize individuals, departments, functional groups and the company as a whole.
Many companies that have been able to create and implement sustainability strategies that produce desired results have tended to focus on three or fewer key elements. Additionally, most successful companies put in place specific organizational roles to develop, execute and monitor their plans, such as a sustainability director.
A recent customer approach that yielded success focused on:
- Operational Efficiency
- Infrastructure Improvements
- Process Development
One of the keys that this customer indicated was in taking a long term approach to results objectives versus a large, quick hit metric set. For example, this organization targets a 3% per year improvement in aggregate areas of their plan for the next 20 years, versus attacking a 50% improvement in a single area or year.
As part of this approach the customer, one of the world's largest manufacturers, implemented metering, which allowed them to accurately benchmark usage, provided the granularity that identified high energy usage, and identified waste in the system (especially weekends when production levels were lower).
Ultimately this visibility allowed them to decrease their energy usage per ton by 50% over a 7-year period. That savings continues today as the data from the system is continually monitored in an attempt to further improve efficiency. But perhaps the most important aspect of this system beyond the energy savings was that it provided proof positive to management that the savings were real.
Once the management team was comfortable with proposed project savings, energy projects were embraced and capital dollars were provided for improvements. Most companies are skeptical of energy savings since the reductions may or may not show on the energy bills.
At the 2011 ARC Forum in Orlando, Wal-Mart presented the three key focuses of their global sustainability initiative. Well-known for its focus on sustainability, Wal-Mart’s environmental goals are to: (1) be supplied 100% by renewable energy, (2) create zero waste, (3) sell products that sustain people and the environment. These areas of focus for Wal-Mart actually convey or imply the measurement. While they do not detail the timeline to achieve their goals, the desired results or outcomes are clear and it is easy to understand the types of activities that will be required to garner success.
Measuring, rewarding success
It may sound obvious, but specific attention has to be given to what the organization wants to measure in order to determine how they are progressing along their sustainability journey as well as the results being generated. Outcome metrics or milestone metrics for key activities should support a “that which gets measured, gets done” approach.
As goals are attained it is important to recognize and reward individuals, functions and the entire organization, as appropriate. Recognition and praise will keep the goals and focus on the sustainability plan and implementation on the forefront of everyone’s mind.
According to a recent poll, released in February 2011 by Harris Interactive and commissioned by Schneider Electric, 88% of Fortune 1000 senior executives feel business has a moral responsibility to make their companies more energy efficient. At the same time, 61% of respondents say that potential cost savings are their biggest motivator to save energy at the enterprise-level, outranking environmental concerns at 13% or government regulations (2%).
Part of the motivation equation will likely involve incentives and other monetary awards for appropriate level resources involved in the effort. Recent research indicates financial rewards will help, but what really motivates people are rewards that combine financial incentives with achieving a specific purpose that resonates with the individuals. A key “purpose” that will likely resonate with most individuals is how the company’s sustainability efforts are helping preserve and protect the environment for future generations, including children and grandchildren.
Combining this purpose with a reward for financial results, such as reduction in energy consumption, leads to a lower electric bill for the company and will likely be very effective in driving engagement and successful outcomes from the sustainability plan implementation.
In addition to the combination of communicating the key purpose and incentives, involving local resources in designing and executing actions and activities linked to the overall plan will also provide motivation as the plan is rolled out to the various and appropriate parts of the organization – the empowerment principle. Additionally, the opportunity for local resources to attain a level of mastery regarding sustainability will provide an additional motivational lever – learning and expertise.
Active energy efficiency
Regardless of how an organization chooses to approach sustainability, they should consider taking a more active role in energy efficiency to improve operations and maximize existing solutions. Through measurement, organizations can assess the efficiency of their building infrastructure and industrial processes, as well as fix basic issues such as inefficient products, power reliability and power quality.
Automating certain systems such as building management, lighting controls, and installing variable speed drives are ways to optimize systems organizations already have in place. Investing in new solutions can be costly in terms equipment and potential downtime.
Upgrading existing machines with enhanced features and functions of modern automation technology, such as PLCs, HMIs, and variable frequency drives can improve productivity, reduce maintenance costs, and increase efficiency. Finally, in order to continue to gain efficiencies the organization needs to monitor progress, maintain the systems and improve – it is an ongoing cycle to achieve energy efficiency.
Sustainability is an investment requiring planning, achievable metrics, action and then continuous improvement to ensure short-term and long-term goals are met. Beyond the moral obligation, regulatory requirements and financial benefits – sustainability will likely spur additional benefits such as improved flexibility and increased productivity within the organization.
A company can explore and implement sustainability efforts from simply raising employee awareness to a comprehensive investment initiative. Deciding what fits the need of the organization is important to establishing a sustainability strategy, while securing and maintaining commitment from the plant floor to the C-suite.
Greg Bodenhamer is Business Director, Industry End User Marketing, Solutions and Services Execution, Industry Business for Schneider Electric.
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2012 Salary Survey
In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.
Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.