Sustainable competitive advantage through green manufacturing

Green_Manufacturing

Dr.Joydeep-Chatterjee,Joydeep Chatterjee

The Indian manufacturing sector has witnessed an unprecedented change in terms of complexity, increased uncertainty and turbulence in the business environment in the last two decades. There has been an increased inter-linkage and a shift in the marketplace across the globe, which is skewed towards Asia with global businesses considering India and China as the fulcrum of the change. With global corporations having recognized the potential of India and China’s manufacturing capabilities, Indian corporates have been venturing out to garner an increased share of global manufacturing. While China has had an upper edge over India so far, largely on the back of abundant cost-effective labour, things are now changing with rising Chinese wages and demanding global customers. One important aspect that global corporations consider before selecting manufacturers in Asia / elsewhere is the vendor’s approach to manufacturing.
The paradigm shift towards environment-friendly approach in manufacturing by Indian corporate sector kicked off more as compliance with the changing regulations related to environment, as also the need to comply with the changing legislative requirements for exports. As a concept, Green Manufacturing has its roots in Germany, which in the early-nineties started requiring its vendors to own the responsibility of disposal of packaging solid waste generated in their countries of manufacturing. This subsequently got extended and further established as a de facto global manufacturing standard instilling that, “any company wishing to compete globally must start making products that will comply with the green dictates of the huge global market.”
There are different viewpoints about the Green Manufacturing approach. One of the most-widely accepted interpretations of Green Manufacturing is manufacturing of “green” products, by using renewable energy systems and clean technologies. The Green Manufacturing aims at reducing pollution and waste by minimizing use of natural resource, recycling and reusing waste and reducing emissions.

greenEnhanced value through “Green” approach:
The demand is growing for environment-friendly products – the products manufactured with low energy consumption, organic raw material, lead-free paints, recyclable packaging – indicating that the global consumers are getting more concerned about the environment. This gives the corporates an opportunity to promote environment-friendly or “green” products, which will give them the competitive advantage for doing business globally, and an enhanced brand perception. While it is an imperative for export-oriented companies to have a Green Manufacturing (GM) strategy, we feel that it needs to be an integral part of the organisational strategy. The GM strategy needs to be enacted with defined goals for the short, medium and long term.

More and more Indian companies have now begun adopting green approach in some or the other way, as it is being realized that Green Manufacturing can be implemented across the value chain – right from the Design stage to the Waste Management stage, and post the usage by consumers (Refer to Figure 2). Going Green ideally starts in a company’s own manufacturing facility, where they have complete control on the processes. The aspect–impact analysis gives an indication of the possible environmental outcomes of the manufacturing processes. At the operational level, it requires to implement the (new) manufacturing processes that minimize the use of natural resources, promote the use of alternative energy sources such as solar or wind power, minimize the impact of packaging wastes through developing environment-friendly biodegradable material, adopt technology-shifts to minimize emissions and refining practices in the industries, all of which ultimately contribute in lowering the organisation’s overall carbon footprint. The focus on design aims at minimizing the overall environmental impact throughout the entire lifecycle of the product or process, and the product stewardship till it reaches the end of life. Designing a product not only focuses on minimizing the usage of toxic substance to ensure customer safety and lowering the usage of fresh raw materials, but it also focuses on recyclability of wastes and its safe disposal.

To drive the Green Manaufacturing strategy, the organisation must implement effective Green Manufacturing systems that will help in identifying the key success factors for its real-time implementation. In real-time industrial context in India, the systems model is still focused on three dimensions – Green Design, Green Manufacturing processes and Green Packaging (Refer to Table 1). To ensure effective implementation of the GM strategy, it needs to be dropped down to specifics. For the successful implementation of Green Manufacturing, the senior leadership must be committed towards the greener future on a broader and long-term perspective. The scope enhances to the other areas of value chain once the process matures in the identified areas.

Dimension Definition Benefits
Green Design Product Design philosophy treats environmental attributes as design objectives as an opportunity, and not as constraints. (not clear) It aims at incorporating the attributes without compromising on the fitness-for-use and the useful lifecycle of the product. 1.Differentiated product offering to the customer
2.Brand image through organisational commitment towards green
3.Improved product lifecycle
4.Enhanced Customer Value Proposition
Green Manufacturing Green Manufacturing is a method of manufacturing that minimizes the waste and pollution. In the process, it slows the depletion of natural resources while lowering the extensive amounts of bio-non-degradable waste that enter the landfills. Its emphasis is on reducing parts, rationalizing materials and reusing components to help make products more efficient to build.
1.Reduced waste and harmful emission
2.Reduced costs through lifecycle assessment approaches and total cost of ownership
3.Non-renewable Resource conservation
4.Cradle-to-cradle design, promoting reuse, recycle and re-conditioning
5.Protecting environment
6.Systemic approach through management systems such as EMS 14001, EnMS 50001 etc.
7.Advancement in manufacturing technologies and processes
Green Packaging / Sustainable Packaging Green Packaging is the use of packaging material (for goods sold) that has low impact on the environment and energy consumption. 1.Using recyclable and biodegradable materials
2.Reusability of packaging material
3.Cost reduction through down-gauging
4.Reduced negative impact on environment through reduced landfills
5.Responsible solid waste management
6.Reduced emissions during packaging waste disposal

Challenges encountered in going Green
Green Manufacturing can directly benefit the environment, and corporates get many benefits of getting engaged in the journey. However, there are challenges that need to be addressed through well laid-out strategy right from the organizational level to the operational level. The major challenges in implementing the Green Manufacturing are briefly discussed below.
a)Leadership commitment: It is extremely important to have a high level of leadership commitment right at the board-level. Although it has been established that Green Manufacturing has several long-term benefits in terms of enhanced value, it calls for investments, and hence, negative returns in the short term. There is always a debate whether Green Manufacturing is good business or a bad investment. Hence, it is important how an organisation balances the long-term benefits of its Green strategy and the interest of the shareholders and protects their profits. Fortunately, the financial community has started realizing the long-term benefits of Green Manufacturing and established pricing strategies for the Green approach, Social and Environmental externalities.
b)Strategic outlook: Often in organisations, the Green Manufacturing strategies are one of the operational-level strategies, which are aimed towards cost reduction, resource conservation or compliance to management systems requirements such as Environment Management Systems. It is important to integrate the concepts of sustainability and Green Manufacturing within the core strategy of the organisational value chain and the process design. This will enable the organisation to have a holistic approach towards the initiative. This will also enable them to establish metrics which will be monitored and reviewed to check for the effectiveness of implementation. Few leading business conglomerates in India have adopted such integrated framework such as Sustainable Operational Excellence or Green Cards which are enabling them to get the best of the advantages.
c)Market communication: Organizations that have embarked on this journey often miss out in getting the best of the benefits from the Green Manufacturing drive. It is equally important to communicate to the customers and all interested parties about the Green commitment as a differentiator. This enables the organisation to bring forth the differentiated and enhanced value proposition to the customers as well as improve its brand perception.
d)Implementing across the value chain: Although it might be relatively easy for organizations to implement the Green Manufacturing initiatives within their own manufacturing facilities, it is lot more difficult to implement the same at the suppliers’ end. Unless the suppliers have a clear line of sight, it might not be possible for them to implement the same at their end. This becomes all the more challenging as most manufacturing organizations have a highly fragmented pool of suppliers.
e)In-house training and awareness: In order to effectively drive the Green Manufacturing initiatives, it is important to ensure that the employees are engaged, because it calls for total employee involvement. It is therefore extremely important to enhance the awareness level of the employees through appropriate training.

Conclusion
Although Green Manufacturing has picked up in a number of large business houses in India, there needs to be a national level drive for creating awareness at the larger level. This will help eliminate the confusion and misunderstanding regarding its implementation, costs and benefits. A marked shift is being observed in the urban consumers’ perceptions, who are now demanding products which are not only low-cost and high-quality, but that are also safe and produced with materials and processes that are environmentally responsible. This market pull will force organisations to shift towards a differentiated approach with an enhanced value proposition for the wider customer base. In order to ensure that the Green Manufacturing strategy is successfully implemented, the leadership team must be committed and foster the culture through communicating clearly their vision of going Green. It needs to be an integrated part of the organization’s core strategy. This will help achieve the global vision to “Go Green”.

, General Manager – Corporate Quality Assurance, Kirloskar Brothers Limited

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