RubinBrown recently attended the first Lean and Green Summit in Boulder, Colorado. Discussions at the Summit were focused on implementing green practices into manufacturing and distribution businesses. The primary message of the Summit was to improve environmental sustainability while growing the bottom line. The Summit included real-life examples of green implementation from top executives of world class companies, including Nike and Harley-Davidson, as well as mid-size organizations, like Interface and Burgerville. Based on the feedback from conference attendees, they have found that most successful green implementations come when companies have already implemented lean practices into their business processes. Lean’s focus on eliminating waste, while delivering quality products on time at the least cost, is a natural lead to green practices.
Conference presenters emphasized that green principles should not be implemented without regard to the financial impact. In fact, many green initiatives can, and should, have a positive impact on the business’ bottom line. However, there needs to be a shift from concentrating only on the financial bottom line to a “triple bottom line” including: Profit, People and Plant.
Profit is self explanatory – we would not want to engage in a green initiative that will bankrupt the company! People represent social characteristics including how your employees and customers perceive your green initiatives. One of the items most difficult to measure is the positive impact of marketing your company as a “green” business. The ability to manufacture or distribute your products in a “green” friendly manner can give you a competitive advantage both in terms of obtaining new customers and talented employees. Plant represents the environmental implications and results of a proposed change. Conference presenters emphasized the importance of all three of these concepts if your green strategies are to be financially viable!
If you are considering a “green initiative” some areas for improvement to consider are:
- Excess air space when transporting product
- Re-use of packaging materials
- Scrap in the production process
- Cost of disposal of waste products
- Electricity and gas usage
- Recycling practices
Using lean tools and methodologies to find waste in these areas is a natural extension of your current lean initiatives.
Remember to consider the possibilities for savings opportunities in the form of tax credits for energy efficiency investments and vendor credits, including current and proposed programs in Illinois and Missouri. These opportunities provide an immediate savings in addition to the long-term savings that may result from energy efficiency.
As you begin to consider your green journey a great Web site provided by the U.S. EPA, including toolkits to help with both lean and green initiatives, is http://www.epa.gov/lean.
Under U.S. Treasury Department guidelines, we hereby inform you that any tax advice contained in this communication is not intended or written to be used, and cannot be used by you for the purpose of avoiding penalties that may be imposed on you by the Internal Revenue Service, or for the purpose of promoting, marketing or recommending to another party any transaction or matter addressed within this tax advice. Further, RubinBrown LLP imposes no limitation on any recipient of this tax advice on the disclosure of the tax treatment or tax strategies or tax structuring described herein.
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