Sustainability in Manufacturing - Part 3

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This episode is the third and final part of our series around sustainability in manufacturing (here you can listen to episodes one and two.) Once again we welcomed Tom Permatteo (CEO) and Bill Zujewski (CMO and COO) from the Green Business Bureau, which helps organizations demonstrate their commitment to sustainability.

In this episode, Tom Permatteo and Bill Zujewski from the Green Business Bureau join me to discuss how manufacturers can measure and monitor their sustainability targets and how long they can expect to wait to see an ROI for their efforts. Hope you enjoy it!

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Transcript

Niall Sullivan, Senseye: I just want it to move on to talking about the measure measuring and monitoring of sustainability performance. Now we know that there's steps required to get started on the journey to sustainable manufacturing, but how do you know whether the changes you've made have had an impact whether positively or negatively on your business?

And I guess that relates a lot to how you guys work with manufacturers, but it's just interesting to know how would they see that change and how quickly, I guess, as well would they expect to see an impact, whether it's on the bottom line or something else?

Tom Permatteo, GBB: So that's a great question. Again, the answer varies somewhat. It depends on what you're looking for. Where are you starting in your journey? But generally speaking, we've seen return on investments as early as three or four months on certain initiatives.

And we can go to a small company that did three initiatives in three months and we're able to look and say, this is the cost we're saving on energy because they updated particular units or made them more efficient. When do you want to measure? How long are you measuring things against potentially sometimes, right? But you could see things as quickly as a couple of months on every single initiative.

So if I'm doing something where I hate to use the light bulb thing but I replace light bulbs and my energy costs in month one or prior to was this. In month two, my energy costs is now this. So it can be as simple as that or if I put water reduction in, I can see within a month or two, we were spending this much on this and now we're spending this much on this.

There are some things that are really readily available easily to get impact from and you can measure. The measurement on sales sometimes can take a bit longer unless it's specifically where we get a lot of people who are saying, "Hey, I'm going to be doing these three contract grids and I know I'm going to need to do this. So I got to get started now." And if they win those contract bids, they're partially attributing those contract bid wins to the work that they've been around sustainability.

So it can be relatively quick or it might be something that you're measuring like most other things that there's a 12 month ROI because I'm looking at the specific initiatives. So each initiative in and of itself could have a shorter or long-term ROI.

Bill Zujewski, GBB: Yeah, and we don't have to reinvent the wheel on measurement and sustainability. A lot of the business metrics that companies already use are very good indicators of how sustainable they are.

So how much they're spending on their energy bills directly correlates to how much fossil fuel they're probably burning, right? So you bring that cost down and you're bringing your carbon footprint down. How much you're spending on machine parts and service is something you're probably already monitoring.

And then you bring those costs down, they're probably good indicators that there's less service visits and there's less purchasing of spare parts which is avoiding those resources wasting. So I think there's an easy way to hold people accountable with business metrics people already have.

Tom Permatteo, GBB: Yeah. And Bill you keep following that thing. If there's less service visits and less part replacement, there also could be less vehicle service, less vehicle replacement because they become... This vehicle was only driven by a little old lady who'd go into church on Sundays because they're not going out as much as they used to go out. It has a ripple effect, I guess, is what I'm saying.

Bill Zujewski, GBB: No, you're right. We're going to extend the life of the vehicles of your service organization or your own company because you'll be using them less. So extending the life cycle of products it's an easy way to reduce the world's footprint because we're using less resources.

Niall Sullivan, Senseye: Yeah. Just thinking back. We talked about how long should they expect to wait until they see some sort of return on investment, but before manufacturing can get started, what do they need to know in order to measure their sustainability performance? So they've right at the beginning of their journey.

Bill Zujewski, GBB: There's two schools of thought there. There's the carbon footprint calculator school of thought. We're not big fans of that because it doesn't point directly to what you're doing wrong or doing right.

Our eco score is based on assessing what processes and policies you have in place that you should have in place to be more eco-friendly in an environmentally friendly way. So for us, it's more of a report card of these 200 things you can be doing as a manufacturer. How many of them are you doing? If it's very little, you're going to have a low score. If it's most of them, you're going to have a high eco score.

So that's the approach we advocate because it also points to where your scores are low whether it's in your manufacturing, your facilities, your power, that approach at assessing your score against those initiatives will engage employers directly and tell them what actions to take to improve their score.

Niall Sullivan, Senseye: You talk about improvement there, that's actually another question I've got that on here. Obviously, they'll get a score and a lot of the time, presumably, there'll be some sort of room for improvement.

But I guess my question was going to be, how do you define the performance improvement sort of targets? How are those defined?

Bill Zujewski, GBB: Well, we've established some baselines around levels like gold and platinum and how to reach those levels. So your goal to improvement would be actually looking for how you can raise your eco score. And the way you do that in our world, you go into the Green Business Bureau our eco planner tool, navigate our libraries.

You can filter by impact, by costs, level of effort, by function, transportation, caf, bathrooms, transport vehicles and then have a list of initiatives that will have the highest impact and start plucking those off to make the biggest impact, prioritize the ones that will make the biggest impact.

Niall Sullivan, Senseye: Yeah. And if we look specifically at performance issues, what I want us to know is, which key environmental performance issues relate more closely to operations specifically?

Bill Zujewski, GBB: For manufacturing it's probably energy, materials and maintenance. Those are the three big things that companies if you're a manufacturer need to look at.

Tom Permatteo, GBB: I would agree with that, yeah. From a measuring and cost perspective, yeah, I would agree with that.

Niall Sullivan, Senseye: I should've asked this before this question, but why is it important to assess operations in sustainable manufacturing?

Bill Zujewski, GBB: Well, there is now actually material risk to your company both from a profitability standpoint but also from a competitive standpoint. Your competitors are going to end up being probably sustainable and more cost efficient and have more customers and better employees. So all the costs of not being sustainable are becoming very, very materialistic to the bottom line for companies.

Niall Sullivan, Senseye: Do you have a lot manufacturers or otherwise come to you and that's a reason why they want to look more into sustainability because our competitor X or Y they're really on the ball with this. We need to pull our socks up. Do you experience that?

Tom Permatteo, GBB: Well, we do in the sense that if someone's bidding on something and they realize that, I've got to catch up, but I think that there's more passionate about this generally speaking from a business perspective.

There's less about catching up for some other than just being forward-thinking that this is the way we need to go, that the world is pushing us in this direction. And if we want to be the company that we want to be, if I'm a private company, I want to go public, I can't go public without this sort of information now or I can but I'm going to get hurt my results.

So I don't know that people come to us and tell us that that's the reason why they're coming here. They generally approach us on a more optimistic that we want to do better. We're committed to this. We see it's important. We think it's a competitive advantage oftentimes more than a competitive catch-up. So our experience would be that when people are coming here, again, we'll go back to some things that they think they've already done good things and from a competitive standpoint, they want to talk about all the great things that they've done.

Some are saying that we just want to be a better run corporation and for us to be a competitive corporation, not even... Maybe they look at someone else and say, maybe Ford and Chevy are producing electric cars now because of Tesla and there's no doubt about that. So there's always that angle of people looking over their shoulder about what other people are doing, but they may not be as forthcoming with us as that's the reason why they're here.

Bill Zujewski, GBB: Yeah, but we definitely have cases where people come to us and say, we lost a bid. We found out after the fact that we weren't selected, because we didn't even mention sustainability or they come to us and say we couldn't even compete and respond to this bid because it required some kind of certification around sustainability to even bid.

We also have cases where people said they've lost market share. I'll give you a little anecdote about a dry cleaner in California whose competitor rebranded and repositioned their company as eco cleaners and they said in the next six months they lost 30% of their business.

Obviously, California people care passionately about the environment. But he had to respond to his competitor whose actually greenwashing wasn't even that green. So they came to us, became more sustainable, truly sustainable, got the seal and marketed themselves as well as an eco-friendly cleaner and was able to recover that market share he had lost to that greenwasher in that county too. So it was a consumer issue as well as a B2B issue.

Tom Permatteo, GBB: Yeah. And the other thing we'll get sometimes is that, again, it's not saying right away, I'm doing this from a competitive perspective, but they're saying in my supply chain, I'm now being forced to do this. And if I don't do this, so the implication then obviously. If I don't do this, they're going to find another supplier. So yes, from that perspective, you're absolutely right.

Niall Sullivan, Senseye: Yeah, it's interesting greenwashing story there, but I just wonder whether some people or sort of people, companies, so manufacturers approach you and they just think, oh yeah, green. That's something. That's a buzzword. That's something that'd be really great and that they think that you could almost help them to greenwash their company.

I don't know. They come in with that attitude that, oh, I'll just come in and grab my certification and off I go kind of thing. Do you find that or have you spoken to companies in the past with that sort of attitude that it's just an easy, let's go in and get my certificate and off we go and that's it? And just full on marketing.

Tom Permatteo, GBB: No. Again, that's a great question. And I would say it's getting rarer and rarer. Has it happened in the past? Of course, but we will randomly audit our members and we have ways for people to feed back information to us both from potentially from employees or from consumer's feedback.

So we will check on things with our members because it is important to be transparent and verify these things. But more importantly why it's become less and less is because I think there's a lot of examples out there of people who have tried to do that and been caught and the damage that it's done to their reputation.

I use Volkswagen as an example. Everybody knows four or five years ago, they get caught fudging their miles per gallon numbers or miles per kilometer numbers depending on where you are in the world and their brand took a big hit. So you think about your brand and you think about the risk that you take from doing something as dumb as that. What was the cost of that?

Smart people, sophisticated people aren't going to take the chance to do that. The other part is that employees are going to know if we're lying to the world and they don't like it. They don't like it. They will leave. And that again creates this image problem for you. So less and less and less I would say that that has happened.

Niall Sullivan, Senseye: And again, that goes back to... It's appeared a lot in the conversation where we talk about manufacturers specifically and obviously maybe even a predictive maintenance focus, you focus on what's happening in the factory, but it does really touch every area of the business.

And the interesting part for me, which I didn't think of personally is actually the internal, as in the HR side of things as well and by not trying to achieve sustainability targets or plus even worse greenwashing can actually have a negative effect on employees who will just sort of say, "Right, I'm going to move to someone who actually cares about the environment and the sustainable future for the world."

Bill Zujewski, GBB: Yeah, let's not forget. We're in a different world with social media now. 20, 30 years ago, it was easy to pull the wool over your customers' eyes and your partner's eyes.

Now every employee has a voice. Our model is that your score, your list of initiatives you've completed, all that is public. When you get certified, you put up your public eco profile that everyone sees. So if you truly are greenwashing you're going to get caught by your employees, by your partners, by your customers somewhere.

They're going to come to us and say, "Hey, these people are saying they're doing this and they're not." And it's super risky to your brand. So we feel that transparency is way to go these days and it's working well for us.

Niall Sullivan, Senseye: Yeah. Right, absolutely. Absolutely. I'm just look at a time now. I've had a really great conversation. I just want it to end with one final question.

I know you mentioned earlier, Tom, I think about having some case studies on your website and I've seen them myself actually and I think we've shared them before in previous conversations, but are there any really good example... Good example, but relevant examples of manufacturers that have implemented sustainable working practices that come to mind just maybe one or two, but just really great examples?

Tom Permatteo, GBB: Off the top of my head, I... I know there's one thing on there and it's additive manufacturing, so a little bit different, but it is a great story.

There's an interview that we have with the CEO of a company called Sintavia, which I think is really interesting about their approach to sustainability. We haven't published yet the story about Martin Ray International, but they have a zero waste initiative that they completed with us that will be coming soon. And just off the top of my head, Bill, I don't know if there's any other stories.

Bill Zujewski, GBB: I think the only other one that's a school specialty. We've told their story. I don't think we've shared the specific metrics on the website yet, but they're saving about I think $250,000 a year across four facilities based on improving their manufacturing operation and waste management. So there are hard dollars to be gained here for sure.

Niall Sullivan, Senseye: No, brilliant. No, there's some really big numbers there. Actually it leads nicely to this one final point is, where can people find out more about the Green Business Bureau?

Tom Permatteo, GBB: So it's greenbusinessbureau.com. If they comes to the website, they will find a lot of information and they'll be able to find those stories. There are many more.

Also Watson Gloves we just signed up as a member. Have done their initial business case story as well. But the greenbusinessbureau.com is the place to go. That's the best way to answer your question.

Bill Zujewski, GBB: Yeah, start there. There's so many ways to engage with us. It can be as little as a starting to subscribe to our monthly newsletter.

We've got tons of guides and articles there, but then when you want to get into a disciplined approach around either managing your sustainability program or getting the certification, we have that online software subscription you would sign up for to get access to our online eco assessment tool and our online eco planner tool.

All that can be done self-service on the website. You can sign up in a few minutes if you're ready to get going.

Niall Sullivan, Senseye: Fantastic. Well, thank you Bill and thank you Tom. It's been really interesting to hear from you. And thanks for being the first guest on our podcast as well. It's been a real pleasure.

Tom Permatteo, GBB: It was an honor and it was great. Thank you for having us.

Niall Sullivan, Senseye: That's all right. Thank you very much.

Bill Zujewski, GBB: Thank you so much Niall. Awesome being here.