The importance of making production processes more sustainable
For manufacturers, reducing waste and emissions has never been more important. A Deloitte survey shows that a third of consumers have stopped buying certain brands because of ethical or sustainability concerns. How a company handles its waste has a huge impact, not only on the environment but also on the company’s bottom line. Michel Doppert of The Lean Six Sigma Company provides insights into the importance of making the production process more sustainable.
No full understanding
However, according to research by media company “Edie”, 74% of industry executives admitted that they do not fully understand their company's absolute carbon footprint and the changes that need to be made to reduce emissions.
Michel Doppert is the managing director of “22Improve Coaching” and the lead instructor for the “Lean Six Sigma Company”. He says it is essential that production leaders get a grip on reducing waste and emissions. "The market is no longer just competitive from a financial point of view, but also from a social or environmental point of view," he explains. "Manufacturing companies will not be able to avoid the increasing pressure from a society looking for a more environmentally friendly production process."
Not just losing customers
And companies are not only in danger of losing customers if they do not reduce their waste. PwC research found that 65% of people in China, Germany, India, the UK and the US want to work for an organisation with a strong social conscience.
Of course, there are also financial reasons why waste reduction is a good idea. A leaner company should be more profitable. "By reducing waste, you don't create anything that has no value," says Doppert. "If you use your resources only to create value, it also positively affects your employee satisfaction. People stop working harder and instead work smarter."
Seeing the challenge
While the importance of reducing waste is clear, identifying waste areas can be more difficult. Doppert recommends to create clear lines of communication that extend from the top to the bottom of a company and to engage with customers to discover their concerns.
"The ivory tower approach, where leadership only looks at strategic and long-term issues, while your work floor looks at short-term issues, does not work."
Leadership needs to be more aware of what is happening in society. “You should look around, talk to people, and understand customers. Many manufacturing companies fail to do so and instead continue to use technology that harms the environment. It is only a matter of time before they face public scrutiny and backlash."
Push and pull KPIs
Once manufacturers have identified waste areas, establishing relevant key performance indicators (KPIs) is an essential first step in reducing waste. Doppert warns that KPIs are too often set according to the 'push' principle, in the sense that automated dashboards tell colleagues what to do. Instead, he recommends exploring 'pull' KPIs, where colleagues are asked questions that help them identify and respond to areas of waste in real-time.
"Often KPIs are high-level and strategic but have no value to people on the work floor who may be producing the waste," he explains. "You want KPIs to be measured differently at each specific level based on the needs of that level. That leads to a cascade upwards."
And while this allows flexibility in KPIs, they still need to be linked to the same organisational goals. For instance, as a CEO, you will not have to deal with the same pull KPI as an employee on the work floor. But there should be a coherent set of KPIs, starting from bottom to top, that everyone can use for their work.
An opportunity to transition
Manufacturers must shift towards a more responsive mindset. In today's world, where processes require close monitoring for quality control, colleagues may take time to generate creative solutions. According to Doppert, the Covid-19 pandemic provided an excellent opportunity to shift to a new way of thinking.
"Thinking that everything will return to normal is not the right mindset," he says. "You need a control plan and a response plan. In manufacturing, people are usually expected to work certain hours. But is it smart to have so many people coming in simultaneously? Is that the way we want to work? Or do we want to use more technology and improve workers' skills on the shop floor so that they can use robotic process automation to do the work?"
Leading the way
"Although 'pull' KPIs will differ for every organisation, setting up a culture change will always have to start in the same place", says Doppert. "It's easy said but hard done – it starts with leadership," he explains. Becoming lean and reducing waste has everything to do with a mindset. The mindset is not about cutting costs but maximising capacity. The key to bringing that mindset to people in an organisation is to change the mindset in the leadership team to a more strategic point of view where you make full use of the workforce.
"Don't see them as hands and feet, but as brains. Executives need to look at apprenticeship systems, increase staff skills and change how they work," he concludes.
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