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GETTING SERIOUS ABOUT GREEN MANUFACTURING

By: Satish Lele
Asia Pacific Market Insights
Frost & Sullivans commentary on the Asia Pacific IPC industry, addressing
opportunities, best practices, and major events
2009
Manufacturing plays a very strategic role in an organization, especially to build competitive advantage and improve
performance. With rapid changes in technology, customer needs and globalization, manufacturing itself is constantly
transforming and evolving. The beginning of the century saw the automobile industry introduce the mass production
techniques which revolutionized manufacturing processes. Over the years the need for meeting individualistic customer
demands without compromising productivity or quality, brought about the introduction of flexible and mass customization
techniques.
The focus is now on Green manufacturing. Recent volatility in the price of fossil fuels and global awareness about the finite
nature of our resources is creating the need for a more
sustainable way of how we produce and use. Green manufacturing
itself is not new. The concept has been around for a couple of
decades, but has never received much attention from
manufacturers except for participation in seminars and scoring
well in polls and surveys. However recent trends show that with
the heightened focus on climate change, a transformation of mindset is happening and so positive action is now finally
imminent.
What is Green manufacturing?
There are many interpretations of green manufacturing and all convey similar meaning. According to Melnyk and Smith, it is
a system that integrates product and process design issues with issues of manufacturing, planning and control in such a
manner as to identify, quantify, assess, and manage the flow of environmental waste with the goal of reducing and ultimately
minimizing environmental impact while also trying to maximize resource efficiency.
Green Manufacturing is also known by plethora of different names: Clean manufacturing, environmentally conscious
manufacturing, environmentally benign manufacturing, environmentally responsible manufacturing and Sustainable
manufacturing. Irrespective of the various acronyms, the primary goal remains the same designing and delivering products
that minimize negative effects on the environment through their production, use, and disposal.
The fundamentals of green manufacturing are very simple and relate to minimizing the use of resources and the
environmental impact of a product. This philosophy is extended to all the elements of its life cycle from its design to its
end of life.
There are tremendous opportunities which will arise with Green manufacturing. Each element of this cycle has the potential
to be an industry by itself, given the rapid growth rate and demand it is expected to generate in the mid to long term.
Although it is very difficult to estimate the market size for green manufacturing, industry experts feel this would be very
significant in the coming decade. As government, companies and consumers realize the importance of going green the barriers
for investment in these technologies is expected to fall rapidly.
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Getting serious about Green manufacturing
Market Insight
The drivers for green
There are many drivers which are expanding the boundaries for
green manufacturing. Frost & Sullivan recently conducted a survey
among senior industry leaders to find some of the drivers for going
green. A growing number of executives today feel that going green
will help them to compete more effectively in the marketplace in
the long term. Also organizations tend to conform to implicit
expectations of their communities, which is another driver of
change. In summary the major drivers can be grouped into three
key areas:
1. Competitiveness: The natural desire of manufacturing firms to improve its processes and capabilities for
competitive advantage. This can manifest in terms of technology, new product and process development as well
as opportunities for business.
2. Corporate Social Responsibility: The growing pressure on manufacturing firms to become more responsible to
the social and environmental impact it creates. Companies would like to brand themselves with a green image.
3. Legislation: Manufacturing firms have to constantly strive to meet current and upcoming stricter environmental
regulations.
The challenges
Although the benefits look very obvious, there are many challenges to going green. The most significant is the economic
mindset and rationalities of organizations. And it cannot be denied that going green will be at an initial cost with potential
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Getting serious about Green manufacturing
Market Insight
savings coming much later. In fact according to a 2005 report by the
U.S. Small Business Administration, in 2004 the business sector was
forced to shoulder 65% of the environmental regulatory costs. This
worked out to an average of $4,850 per employee for U.S.
manufacturing companies.
Another key challenge is that most companies have not integrated
the process of continuous environmental management into the
core of their business strategy, either because it conflicts with their
existing priorities or simple because they are ignorant about how
to do it. Moreover companies do not have specific environmental performance indicators or social performance metrics by
which they are measured by their stakeholders. Many firms today are engaged in some level of environmental management,
however such solutions may not in themselves promote effciency gains or improvements in productivity. This would further
reduce incentive for deploying green manufacturing company wide.
The way ahead
The change to green manufacturing will not happen overnight but over time. However we do expect a tipping point after
which adoption will be very rapid, when it moves beyond a continuous improvement approach. Till today, firms have always
operated on the concept of producing quality and technology products at lowest cost to achieve competitiveness.
Manufacturing processes were designed to make products faster and better on purely economic terms.
The leap into green manufacturing will follow with the fundamental change in the way companies design, procure,
manufacture, distribute, dispose and recycle their products. It has now been proved beyond doubt through increasing
experience of companies implementing green manufacturing practices that the payback periods of such investment is
generally 1 to 3 years.
But Industry by itself cannot bring about this change. Government has to play a very important role of creating the right
environment in which adopters of green manufacturing do not lose competitive edge in the short term.
This article was authored by: Satish Lele, Vice President, Asia Pacific Industrial Technologies Frost & Sullivan.
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Market Insight
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Getting serious about Green manufacturing
Market Insight
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