Debt Ceiling – Profit Floor

As the United States leaders “discuss” ways to raise the debt ceiling and make cuts – including possible demolition of the Environmental Protection Agency, we’re going to draw your attention away from the ceiling and have you think about the floor.  Floor – as in “floor it”.  As in “accelerate” .  Floor – as in a solid foundation based on a sustainable business platform.

Case in point: a national chain of convenience stores started tracking green analytics data to optimize transportation routes to and from its distribution centers. By analyzing information such as orders, shipments, routes, and truck capacity they crafted a model that helped re-route delivery trucks, which reduced annual mileage by 300,000 at a single distribution center. With 25 centers across the US, this project has the potential to reduce the company’s overall mileage by millions, translating into huge dollar savings and emissions reductions. When new routes or distribution centers are added, the company now applies this model to maximize fuel efficiency.

Case in point:  a large US-based specialty retail chain wanted to determine the chief drivers of store energy efficiency in order to reduce usage and greenhouse emissions. They built a green analytics model examining factors such as weather, HVAC (Heating Ventilation and Air Conditioning), store size, and layout to determine why energy consumption differed among stores. The resulting data not only enabled the retailer to reduce overall energy consumption by 8-10%, but was also applied to optimize energy consumption in new-store construction and to set usage targets for future planning cycles. For example, the retailer was able to migrate to automatic HVAC systems for better insulation and adjust store timings to optimize energy usage.

These two cases come from an excellent and recent article from the Harvard Business Review,  “Making the Business Case for  Sustainability”

Here’s what to notice about these examples (from our project management perspective):

  • these sustainability efforts were, in and of themselves, projects
  • these projects were green projects which involved a total of zero wind farms, solar panels, and species-saving efforts – in other words, they help point out the difference between stereotypical ‘green’ projects and projects based on sustainability thinking
  • these projects help illustrate the way in which project managers connect sustainability-oriented mission/vision/values and strategies to operations
  • these projects created project management jobs and – more importantly – helped cement (there’s that floor reference again) the company’s long term health for future projects – and thus future project management jobs (sounds a lot like sustainability!)

But that’s just our view.  Let’s defer to the nice people at the Harvard Business Review (once again, from the HBR blog post we referenced above)  for their points on how to make a business case for sustainability:

Take a close look at your supply chain. Collect baseline measurements on energy, material and natural resource usage. Measuring is the first step: If you can’t measure it, you can’t manage it.

Establish some short-term goals. With this supply-chain information in hand, select an initial project that the use of green analytics might impact rather quickly. For example, determine heating oil consumption in one store, and identify the drivers of wastage. Once this is done, take a deep dive — establish a team or task force to determine innovative ways to control wastage.

Expand the initiative. If your small-scale goal succeeds, expand by rolling it out to additional markets. That’s the approach that the convenience chain above took — they began the initiative with one distribution center, and then leveraged the results in centers across the country.

Communicate your vision. Broadly share the results and impact of these initial projects within your organization. Not only will this gain buy-in and support for future sustainability efforts, but the work will have much greater impact if your vendors, suppliers, and customers have bought into the ideas both philosophically and practically.

Engage the entire supply chain. Once your organization is serious about green’s impact on the ROI, further expand your efforts by applying the green initiative across your supply chain. For example, reduce inefficiencies and remove duplicates across your supply chain. Begin with choosing the right vendors, then incorporate green compliance checks and choose vendors not just on price but also based on quality and environmental factors.