How to think like 
a green machine

By Rick Pendrous

- Last updated on GMT

Related tags Supply chain Sustainability

The way food companies do business with their retail customers is changing, as sustainability issues muscle in on boardroom decision making. While the present tough economic climate may be causing some companies to delay making environmental investments, in the longer term a firm's green credentials look set to become a condition of doing business.

And if the enlightened self-interest and business case of saving money through the introduction of energy-, water- and waste-saving measures isn't enough, then the threat of powerful supermarket customers delisting those that fail to come up to their corporate social responsibility (CSR) expectations should be an added incentive.

The perfect storm of rising global demand for food and energy combined with water shortages predicted by chief scientist Sir John Beddington by 2030 "affects heavily what we do as a business",​ said Richard Gillies, Marks & Spencer (M&S) director of Plan A: the retailer's flagship policy to transform itself into a fully sustainable business.

"There is huge tension on the business model as it exists today,"​ confessed Gillies at a 'Lean & Green' conference organised by consultancy S A Partners in London last month. "The way we are operating today is not tenable."

His comments are a sign of the revolution now permeating blue-chip retail and food manufacturing businesses as they strive to reconcile the profit motive of the business world with the new paradigm now expected by their customers, non-governmental organisations and governments. This puts pressure on businesses to embrace socially responsible policies at the core of everything they do.

The argument in favour of adopting greener policies was eloquently summed up by sustainability guru Hunter Lovins: "Cutting waste is your investment to sustainability." ​However, she also highlighted the need for some form of regulation in what is essentially a capitalist world: "Markets make a good servant; they are a terrible master."

But it isn't only the big players that have recognised the environmental winds of change. The sustainable business model was also espoused by Dr Andy Wood, chief executive Adnams Brewery, based in Southwold, in Suffolk.

In 2006 Adnams, which has a turnover of around of £50M, invested in a new distribution centre. In 2007 it renewed its brewery, based on energy efficient facilities and fabric. At the same time, it embarked on a journey with Tesco to help fill the multiple's "green basket"​ of goods. The Adnams brewery now uses just 3.1 pints of water to produce each pint of water, compared with an industry average of 68pints, said Wood, who added that he hoped to get this figure even lower.

"For us it was quite a transformation in the relationship with Tesco," ​said Wood. "We have become much more of an added-value supplier and are seen as an innovator."

The project involved extensive work designed to reduce the environmental impact of all steps along the beer supply chain: from local farms supplying barley and malsters that processed it, to the glass used to bottle the beer sold on supermarket shelves. "What we are trying to do is build a sustainable business model,"​ said Wood. "One could argue that capitalism is broken in its present form."

The world is about to embark on the sustainability revolution, following agricultural, industrial and latterly the information revolution of previous centuries, opined Gillies.

He remarked that of the 100 commitments made by M&S in its Plan A slaunched in 2006, only a few remain unmet and a number have been toughened following success in working towards them to date. "The scope of what we are talking about here is large," he said.

To mention just a few targets: by 2012 M&S expects to be sending zero waste to landfill, be carbon neutral and source 100% of its fish sustainably. "We have only a few of the 100 that we are at risk of not achieving,"​ he said.

Gillies said the measures introduced were worth around £50M to M&S's bottom line over the past year alone. Which is not insignificant for a business reporting profits of £702.7M before taxation on a turnover of £9.5bn.

Changing lifestyles

Tara Garnett, who heads up Surrey University's Food Climate Research Network, put the scope of the challenge facing Britain's food and drink industry into perspective by reminding delegates that the UK's food supply chain contributed 30% of the total greenhouse gas (GHG) emissions generated by the nation, when land use change was also taken into account. Garnett added that the meat and dairy sectors together contributed 8.5% of all UK emissions.

She argued that addressing the impending global environmental crisis and, more specifically, meeting the UK government's 80% carbon dioxide reduction target by 2050 would require much more than piecemeal change. It would require, said Garnett, a wholesale change in societal behaviour: changes such as not overeating; eating less meat and dairy; and wasting less food. Garnett suggested that, for such sustainable diets to become the norm, retailers would probably need to "choice edit"​ the less environmentally damaging products.

"I think it's a case of the food industry [players] moving together in the same direction; providing alternatives, so broadening the range of non-meat alternatives that are available,"​ she said.

Garnett cautioned: "You can do a lot to clean up the manufacturing, but it's what's in those foods that really counts."​ She cited examples such as much UK chocolate, in which it was the high milk content that is the main source of GHG emissions; and the GHG emissions from meat being the problem in ready meals, say, rather than the contribution from transporting lamb sourced from New Zealand.

She was also highly critical of GHG emissions generated by Britain's use of refrigeration in the chilled and frozen supply chains, which she said contributed 3.5% of UK GHG emissions. "There is a lot you can do, especially in refrigeration, packaging, transport and storage," ​she noted. "The question is: Will it get us to the level of reductions we need?"

Garnett added: "70% reduction for food is possible I think it will be very difficult to get to a 80% cut."

What is lean and green?

So what does lean and green manufacture mean? What it isn't about is "sweating assets"​, said Dr Keivan Zokaei, a consultant with SA Partners. And, while it may generally be seen as eliminating different types of waste, if this is viewed solely in terms of becoming more efficient, it can sometimes have adverse environmental consequences: for example, where the frequency of deliveries is increased, said Zokaei.

The lean and green approach has to consider a broader range of parameters, including whole lifecycle costs of products, including the costs to society as well as the end user, added Zokaei. "What is real lean?"​ he asked. "Doing the right thing, as opposed to doing the wrong thing righter. Efficiency logic tells us do the wrong thing righter; lean tells us how to enhance value."

It's basically about "whole system thinking"​, he added, which takes in sustainable considerations such as: "reduce rather than recycle".

"Lean and green are essentially one and the same thing,"​ said Zokaei. "I don't know why these two ​[lean and green] communities are not talking to each other. In most of the companies I go to there is a CSR department and then there is the lean or continuous improvement department and nothing is happening between the two. Completely wrong." ​The main difference between the two is that CSR uses a top-down approach while lean uses a bottom up one, he remarked.

Zokaei cited two examples of companies that had adopted lean and green thinking, with significant tangible benefits. The first, was a multi-national food manufacturer operating outside the UK, which adopted lean tools in a factory to radically improve its environmental bottom line using seven tools of environmental value stream mapping developed by S A Partners. As a result, the firm accrued huge financial savings (1020% of utility costs) with very little investment by just drilling down into the problem areas, claimed Zokaei.

The second example was with one of the UK's major retailers, which had some ambitious green targets. The retailer worked with SA Partners on a project involving a ready meal product. It looked at issues affecting waste along the product's supply chain, from its meat ingredient to the product on the supermarket shelf. During the process, some 11.5% of waste was identified, including 4.24% of giveaway; 4.34% waste from out-of-life product in-store; and 1.12% of line and changeover waste costs. "Nearly 5% of that [waste] is in the last 100 yards within retail stores,"​ said Zokaei.

"A lot is down to misalignment of specifications​ [eg, a misunderstanding between post-marinated weight and pre-marinated weight].

As a result of the work, some £140,000/year of immediate savings were obtained. Following on from this work, further activities have been devoted to reducing the number of handling "touches" ​in the supply chain, improving visibility in the chain and reducing order delivery lead times from four to less than two days. "Let's reduce the last 100 yards of waste down to 2%," said ​Zokaei.

One area requiring urgent attention, according to Zokaei, was in 'demand amplification', where orders were erroneously inflated up the supply chain, contributing to significant amounts of waste. The level of demand inflation might be 20% at the retail store, but this regularly increased to 45% at the meal manufacturing stage, and a staggering 545% at the packaging supplier. "This was a great source of environmental waste and economic waste,"​ said Zokaei.

Helen Sisson, technical director for chilled food manufacturer Greencore another proponent of lean manufacturing highlighted examples of where lean and green had been used to great effect.

Often simple solutions provide big savings, she said, citing the use of sensors on quiche lines to avoid wasted fillings when casings were absent and complete extraction of sauces from bins at Greencore Sauces & Soups to avoid unnecessary waste and effluent generation during washing. Manufacturers may not ultimately save the planet by adopting lean and green methodologies. But they will at least be playing their part and in doing so they might just save themselves.

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