Tuesday, June 03, 2008

Taming Energy Costs While Going Green: An Open Letter to Corporate America

Chances are that your organization is trying to tame energy costs AND break into the market for “green” products and services. Your marketing people are probably pursuing the green opportunities. To what extent are they connected to your energy costs? I’ll challenge you to think of energy cost control and “green” business opportunities as two sides of the same coin. Companies can make the most of these opportunities by managing them jointly.

Let’s first understand the “green” part. We’re all aware of increasing pressure on businesses to contain the social and environmental impacts of their operations. Increasingly, consumers prefer to do business with companies that “do good by doing no bad.” This includes the minimization of material waste and pollution. It’s no longer enough to make a good product—the competitive manufacturer should also make products in a clean process.

Energy use is usually the largest component of corporate green performance. You’ve probably heard about “carbon footprints.” Your company has one, too: various combustion activities produce carbon emissions, as do most of the power generators that supply electricity to production facilities, labs, and offices. If you reduce energy waste, two benefits await you: (1) you immediately convert expenses into operating profit as you stop buying energy you don’t need, and (2) your carbon “footprint” recedes proportionately with your energy consumption.

Energy cost control… Green marketing… Can you be successful at both? The answer is “yes,” but you should be prepared to manage both in a combined effort. Here’s a checklist for making it so:

1. Elevate facility management to a strategic pursuit. Deferred maintenance and “lean” maintenance have become standard operating procedure, with the facilities department getting the remainders of budget and analytical support. If you want to make a substantive claim to green performance, have your facilities take advantage of technology and best practices that boost their efficiency and minimize their waste.

2. Treat energy like the wealth it always has been. This means tracking fuel and power consumption with the same care that is given to cash and currency. Modern information technologies, tied to energy monitoring and control systems, provide this capability.

3. Support cross-departmental collaboration for pursuit of green market opportunities. If you delegate all energy issues to the fellow in the basement, you are not taking advantage of the skills and talents needed to pursue today’s energy opportunities. Want to break into green markets? Your marketing, operations, and facility managers should collaborate to develop criteria for green products and production processes.

4. Harvest more value from your existing process control systems. Companies everywhere are relying on information systems to manage their core production processes. It’s a small effort to amend those same systems to accommodate energy performance monitoring. Energy savings can increase the returns on existing control systems.

Your leadership is important. Collaboration of the kind suggested here is unprecedented in many companies. You will need to establish the vision and set the goals. Be prepared to organize budget dollars and analytical talent differently—break down the silos that come with “the way we’ve always done it.” Be prepared to make some changes. As management guru W. Edwards Deming said, “Change is not compulsory… but then, neither is survival.”



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