For years, it was the conventional wisdom: If you improved quality, costs would also rise. But then companies discovered the opposite was true. By redesigning processes—reducing mistakes, doing things right the first time—companies could provide better products and services and cut their costs.
Now it’s time to learn this lesson all over again, as it applies to going green.
Green Is Economical
- Old Thinking: Companies have long mistakenly thought that adopting environmentally friendly processes adds costs.
- New Thinking: Green practices like recycling, reusing and reducing waste can cut costs because they make a company more efficient.
- Proof in Action: At the Subaru of Indiana plant, workers are constantly devising and revising green initiatives. The factory has dramatically reduced waste per vehicle and puts no garbage in landfills.
Despite what many companies think—that reducing their environmental impact is a nice idea, but impractical because of the cost—businesses can go green and lower costs at the same time. No one disputes that it’s expensive to cap smokestacks and process hazardous waste. But as the earlier lesson suggests, the focus shouldn’t be on cleaning up and its costs—the focus should be on creating less mess to begin with.
The experience of an auto plant in Indiana helps illustrate how re-engineering processes with green principles and greater efficiency in mind can not only improve a company’s standing with nature, but increase its profits and give it competitive advantages as well.
Subaru of Indiana Automotive Inc., a factory of more than 3,000 workers who make roughly 800 automobiles a day, has pursued green initiatives since its launch 20 years ago in Lafayette, Ind., by Japan’s Fuji Heavy Industries Ltd. With employees at every level of the plant looking for ways to save energy, reduce waste and generally make processes more efficient, one measure of its success is a 14% reduction in electricity consumption on a per-car basis since 2000. An even bigger achievement: It has not shipped any waste to a landfill since May 2004.
The authors, skeptical themselves at first, have confirmed the company’s claims with their own detailed research. How did Subaru do it? By redesigning numerous plant processes, thus producing less waste and requiring less material as inputs. Since 2000, the company says, it has reduced the amount of waste it generates per vehicle by about 47%. Of the solid waste that the factory still generates, 99.9% is recycled or used by other companies as manufacturing
Get Premium Already a Premium Subscriber? Sign In
Purchase
Buy this article
Purchase one or more copies as a PDF
Copyright © Massachusetts Institute of Technology, 1977-2011. All rights reserved.
I would be curious to know if Subaru’s initial motivation was cost savings or becoming more environmentally friendly. This is not meant to make light or question the changes that they made, however, my view is that becoming sustainable is only a byproduct of being efficient. Most of the actions cited in the article (with the exception of getting rid of waste) are actions that companies can take to reduce their operational expenses. A nice byproduct of this is that it is also environmentally friendly because it reduces power consumption, reduces transportation and reduces waste.
Andrew Miller
President, ACM Consulting
andrew@acmconsulting.ca