Consumer Goods Technology - July 2008 - (Page 27)

BETWEEN THE LINES GREEN INITIATIVES descending order of importance, has been the guideline for decades now, as reducing use up front is far better than recycling spent materials. Reduction not only avoids raw material consumption but also lessens the carbon footprint in many ways, from no energy spent on production to no energy spent on transportation. Recycling may actually increase the carbon footprint for many materials. A good example is the ongoing trend to concentrate liquid laundry detergent. By making it twice as effective, weight, volume, transportation, etc., are reduced by 50 percent without impairing any of the consumer benefits or experience. The cost of goods sold will also drop, although not as much. Of course, not every product can be shrunk without impairing usability, so look for other ways to reduce your inventory investment. Improving the performance of a manufacturer’s supply chain can be the quickest and most effective starting point for a successful sustainability program. By avoiding production and transportation of unnecessary goods a manufacturer completely eliminates the associated resource and energy consumption. When will green initiatives be viewed as a normal part of doing business rather than a separate category of projects? B Y R N E : This should happen as soon as possible. Virtually all projects have some kind of green impact, from repainting your headquarters to new product design to inventory management, so all projects should be evaluated against both return and environmental and other non-economic impacts. Publicly traded companies answer to shareholders and must justify the expense of all green initiatives because these programs impact corporate profits. Manufacturers must also coordinate green initiatives throughout the entire organization to ensure that new programs actually CONSUMER GOODS TECHNOLOGY | J U LY 2 0 0 8 | have an overall positive impact on the environment. What is the point of reducing your packaging if the benefits are offset by increasing inventory to improve customer service? What you gain in reduced packaging you lose in wasted fuel and increased carbon emissions. Too many green projects are started because the cost is felt to be low enough to justify the investment, but inadequate exploration of alternatives has been done, and many projects that are not primarily “green” offer environmental benefits that exceed green proj- “REDUCTION NOT ONLY AVOIDS RAW MATERIAL CONSUMPTION BUT ALSO LESSENS THE C A R B O N F O O T P R I N T I N M A N Y WAY S .” — R O B E R T B Y R N E , P R E S I D E N T A N D C E O, T E R R A T E C H N O L O G Y ects and also real ROI. For example, AMR Research says that consumer products companies who are better at demand forecasting have 24 percent less raw material inventory; 22 percent less finished goods inventory; 21 percent shorter cash-to-cash cycle times; 32 percent shorter days sales outstanding; 22 percent better plant utilization; and 9 percent lower costs representing approximately 5 percent of revenue. Simply by being better at demand forecasting, these companies decrease different types of inventory by more than 20 percent, improve plant utilization by 22 percent and decrease costs 9 percent. Producing fewer inventories, increasing plant efficiency, decreasing costs and shorter cash-to-cash cycle times all create a positive return on green. CG 27 W W W. C O N S U M E R G O O D S . C O M http://WWW.CONSUMERGOODS.COM

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Consumer Goods Technology - July 2008 Contents Edit Note Insights Special Report Catching Up With... Energy-Minded Efficiency Waste to Wonder Greater Good Natural Business Built to Last Setting Sustainable Goals Sustainability, Part 2 CGT Events Between the Lines

Consumer Goods Technology - July 2008

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