Published Monday 22nd November 2021
As the global climate change discussion takes centre stage, businesses across all sectors must make sustainability a priority.
Sustainable approaches include striving to reduce carbon emissions and waste, creating robust energy strategies, and increasing efficiency, to name just a few elements.
Sustainability and organisational performance are closely linked, as high-level efficiency is derived from getting the most value out of the fewest resources. The use of fewer resources is, of course, essential for the development of more sustainable business practices.
The Link Between Sustainability & Efficiency
In a recent article, McKinsey reflected on their 2016 report, Unlocking Industrial Resource Productivity, to take a look at how recent years have shaped sustainability and resource productivity. This article outlines five principles concerning how resource productivity can be enhanced to help achieve sustainability goals.
As businesses continue to struggle with the pressures of the pandemic, Brexit, and the climate crisis, seeking sustainable approaches through increased productivity and efficiency could be instrumental in the future of business operations.
Since the initial report, many companies have adopted McKinsey’s five approaches to create production and operations systems that are driven by sustainability, and in turn, generate more productive and efficient methods.
Finding Success With an All-Encompassing Approach
Before considering these approaches, organisations must also consider the importance of combining boardroom decisions with changes to practical operations.
A holistic perspective means that carbon reductions can be made through zero-cost alternations to procedures along with the strategic investment in new technologies and equipment.
McKinsey’s five approaches are also recommended in tandem, as each aspect supports the other. The key areas are described as follows:
- Think lean
- Think limits
- Think profit per hour
- Think holistic
- Think circular
Using Lean Principles to Boost Sustainability Success
At its core, the lean perspective is all about optimising a businesses’ processes and workforce to provide better value for customers while continuing to improve efficiency and increase productivity.
This principle is characterised by making lots of small efficiency-focused changes that make an incremental difference when reducing carbon emissions, energy consumption or whatever metric is being measured.
Identifying simple changes like this can offer organisations an easy win when it comes to becoming more sustainable by creating streamlined processes.
Creative Thinking & Setting Ambitious Goals
While small-scale changes aligned with lean principles are integral, it is also essential that businesses expand upon this to facilitate creative thinking and set more ambitious goals that might require more resources.
This opens the door to bigger jumps in performance through innovation, the implementation of new technologies, and analytics-driven decisions.
This point also considers the importance of thinking about the theoretical limits to efficiency when compared to the current maximum levels. Understanding the gap between reality and the theoretical helps businesses identify where losses reside and savings can be made.
Highlighting the Value of Time
McKinsey also highlights the importance of the non-renewable resource that every business must use – time.
Profit per hour is singled out as a metric that oversees the impact of numerous variables on process performance. Performance can be directly linked to efficiency as results rely on how effectively time is used to generate value.
Optimising profit per hour is another vital step in the journey towards sustainable productivity – tools like real-time analytics and AI implementation mean employees can respond faster when it matters, making better decisions with efficiency in mind.
The importance of an all-encompassing approach to productivity and, in turn, sustainability has already been highlighted.
However, this idea also includes the upskilling of the workforce, especially as digitisation takes further hold of manufacturing and other industries. This ensures that all players are motivated and in a better position to understand where losses are happening and what can be done to solve inefficiencies.
By combining improvements to production systems and changes to management systems, organisations also give themselves the insight they need to reprioritise across the company.
Circular Business Models
A circular business model links directly to sustainability, as more businesses are beginning to adopt the model that products are resources with untapped future value.
Rather than assuming that the end of initial production leads to the final stage of a product’s life, businesses should consider how that product can have multiple life cycles, providing maximum value and increasing the efficiency of the resources used throughout the first life cycle.
Circular models have become more widespread in the mainstream, with the sale of refurbished goods in the electronics industry and the rise of second-hand clothing platforms and rental fashion stores being particularly good examples.
Using recycled materials, optimising processes, and simplifying production methods help to make an organisation’s carbon footprint smaller and circle tighter.
The Path to Sustainability
After considering these approaches, it is clear that using resource-productive operations to improve sustainability metrics is something that could be instrumental in helping businesses achieve their goals.
A change of perspective and re-ordering of priorities are great ways for companies to reduce waste, carbon emissions and energy consumption without heavy investment in new technologies.
Ensuring productivity is optimised at every turn will lead to the practical achievement of sustainability goals.
If you would like to improve the internal processes of your businesses to support the development of more sustainable, productive and efficient practices, get in touch with the ERA team today.