IDC Manufacturing Insights Community > Sustainability Blog

Wins with Diebold and Hasbro for Hara's Environmental and Energy Management

Mon, 28 Jun 2010 16:26:55 +0000

Entry

In June, Hara Software announced two manufacturing wins for Hara Environmental and Energy Management (EEM) - Diebold and Hasbro. Earlier in May, Hara announced its Spring 2010 Release including enhancements to its functionality in forecasting and modeling, simplified reporting for Carbon Disclosure Project, EPA Climate Leaders and other programs and protocols, and automated integration to utility systems. Other manufacturing customers of Hara's include Apple (a relatively new addition) and Coca-Cola.

Diebold: Expanding Progress in Sustainability

Diebold formalized its sustainability program in 2009 and expects to use Hara to continue its progress in minimizing its environmental impact and reducing natural resource consumption. To date, Diebold has instituted several energy-saving projects, which reduced consumption at its U.S.-based manufacturing and headquarters facilities by more than 7 percent, also lowering energy consumption costs at the same time. With more than 16,000 employees in almost 90 countries, the company manufactures, sells, and services self-service systems such as ATMs, electronic voting machines, and other security systems. We expect Diebold to use Hara to extend that success to many more of its facilities. Diebold also pointed to the Hara deployment to support its global reporting needs.

Hasbro: Creating an Environmental System of Record

Toy manufacturer Hasbro is also implementing Hara, in order to establish an environmental system of record and monitor, manage, and optimize its natural resource and energy usage and environmental impact across its global operations. Hasbro's purchase of Hara's EEM is an interesting one, considering the fact that Hasbro has been working on sustainability initiatives for some time. Some highlights of those programs and results include:

Membership in the U.S. Environmental Protection Agency (EPA) Climate Leaders and U.S. EPA WasteWise programs
Implementation of an ISO 14001 Environmental Management System (EMS);
Reductions to its U.S. operations' greenhouse gas emissions by 43.4%. over the last seven years
Recycling worldwide of 88% of currently generated waste over the same time period
Formal recognition in 2008 of Hasbro’s East Longmeadow facility by Northeast Energy Efficiency Partnerships for its energy efficiency and conservation measures for a "demonstrated 15.4 percent reduction in energy use”

By all accounts, Hasbro is already making good progress on reducing its environmental footprint before its investment in Hara. What's the turning point that prompted the investment? We believe Hasbro and other manufacturers are reaching the point where they invest in carbon accounting or environmental management software because of what we'd summarize as:

Simplifying the process of tracking environmental performance and making sustainability improvements on an ongoing basis, or in other words, institutionalizing sustainability across a global company with the ability to measure, monitor and manage.

Increasing investment in Environmental Management Technology Ahead

We can see a good starting point for Hasbro in its organization with Hasbro's EHS Committee, which has operated within Hasbro for many years, includes senior Hasbro officials as active participants, and is designed specifically to address issues of sustainability. But with Hara, Hasbro gives the committee a means of moving the company's progress forward starting with an up to date snapshot of its environmental state - with an environmental system of record to satisfy an increasing number (and frequency) of internal and external reporting obligations. From there, the committee members can ensure the company is engaging all of the relevant stakeholders and making the right decisions and taking advantage of pockets of best practices.

As manufacturers increasingly recognize the pace of sustainability needs to be maintained or even increased, we expect to see more investments in carbon and environmental management applications to reduce the complexity underneath sustainability.

Let me know if your company is planning an investment in this area - you can leave a note on this blog or email me directly at kknickle@idc.com.

Keywords

environment, sustainability, carbon, system of record, ISO 14001

SAP Sapphire: A Sustainability Perspective

Wed, 26 May 2010 14:18:16 +0000

Entry by Kimberly Knickle

Entry

Sustainability was a well discussed (and promoted) topic at Sapphire, sprinkled throughout the keynotes from guest speakers - Sir Richard Branson, the Honorable Al Gore, and General Colin Powell, in the co-CEO Jim Hagemann Snabe and Bill McDermott press conferences, in Chief Sustainability Officer Peter Graf's sustainability roundtable, myriad presentations by SAP and its ecosystem of partners across the exhibit floor, and even the announcement of the SAP Pinnacle award to CSC in sustainability.

SAP has many good reasons to invest in sustainability - it's a conversation starter with customers and prospects, and it's an opportunity for SAP to play an important role in the not-so-easy work that needs to be done to support a sustainability strategy and sustainability initiatives.

Sustainability is fundamentally a data and process challenge that is changing how businesses make decisions. How and when companies acknowledge the importance of sustainability varies from company to company and industry to industry.

In my research with manufacturers, sustainability investments can be about cost savings, efficiency improvements, protecting the brand, responding to or getting ahead of regulations, satisfying stakeholders, developing a corporate culture and attracting new employees, revenue opportunities, first mover advantage, and even "do the right thing".

Peter Graf commented that the turning point for SAP was a customer's statement that they would no longer be able to purchase from SAP unless SAP had a sustainability strategy. I'm sure the statement oversimplifies SAP's decision to elevate sustainability across the company, in its products and how it markets those products, but I am positive that the customer asking for SAP's sustainability strategy brought a much-needed financial connection - No sustainability strategy, no deal.

At this point, SAP is doing the best job of the large software vendors in raising the issue of sustainability and making it an integral component of its business. On one of the Sapphire panels, a manufacturer commented that sustainability (and compliance) needs to be delegated and distributed, and that's where we're headed with SAP's strategy as well - sustainability will be distributed across the company and its products, whether those are on-demand, on-premise, or on-device. Some of SAP's sustainability facts and comments I'd like to note:

"It takes a lifetime to build a brand and one unfortunate incident to tear it down" was a comment made during the co-CEO press conference. This kind of thinking is not unusual among brand-oriented manufacturers and opens the door for conversations related to environmental health and safety (EH&S), product compliance, data management and analytics from a general sense, and carbon (and other resource) tracking.
SAP has more than 1,000 employees working on sustainability, after the TechniData acquisition.
"Sustainability is an opportunity for business process innovation". This is a Peter Graf quote that is right on target and also speaks to why we think sustainability needs to be supported by a wide range of IT applications, not just carbon or energy management. Innovation may be in the form of a new supply network or new manufacturing processes. Graf also commented that he had more than 200 appointments with companies that wanted to talk with him about sustainability at the show (and I assume those numbers don't include analysts or members of the press).
The Sybase acquisition could potentially help SAP bring sustainability more sophistication in the analytics (via in-memory database) and out to the employees via mobile devices.
SAP Carbon Impact 5.0 will be available on demand in July with several functional enhancements related to building energy management, employee engagement, regulatory GHG reporting, and product lifecycle assessments. More details will be coming soon.
SAP updated its sustainability map to be more stakeholder focused, SAP's new interactive sustainability report (was released the week before Sapphire, and SAP used data from Carbon Impact as an input. Not surprisingly, SAP is in the process of developing the capability to help its customers create similar sustainability reports. Similarly, SAP uses its Sustainability Performance Management product to run its internal management meetings tracking sustainability metrics and KPIs, and in turn uses its first hand knowledge for customer-facing activities.

To finish up my thoughts about SAP's focus on sustainability, I'm going to refer back to a blog I wrote in November 2009 after attending an SAP event in October where my favorite comment from Larry Bossidy was "Be prepared to change your mind in the face of data." I think that's good advice when it comes to sustainability. All manufacturers can benefit from seeing their sustainability data clearly, to make the kinds of decisions that will benefit their business and environmental sustainability performance, with IT as the enabler and the enforcer for the data and the processes those sustainability decisions require.

Keywords

sustainability, compliance,

News Roundup: Closer Look at P&G, EPA, and the American Power Act

Mon, 17 May 2010 02:02:05 +0000

Entry by Kimberly Knickle

Entry

The week of May 10th was a banner week for sustainability news and discussions, including the two days I spent in Chicago at ASA's Sustainable Manufacturing conference, Procter & Gamble's new sustainability supplier scorecard, the introduction of Kerry-Lieberman's American Power Act, SAP's new interactive sustainability report, an EPA ruling on GHG emissions, and my colleague Simon Ellis' experience on a sustainability panel at Transplace's Shipper Symposium. I'll follow up in another piece with more information on the Sustainable Manufacturing conference and my earlier attendance at a March MIT Green Supply Chain event, Simon will provide some highlights of his panel in his May Theory & Practice newsletter article, and SAP's report is worth a look but is fairly self-explanatory. For now, I'll concentrate on Procter & Gamble, the EPA, and the American Power Act.

On May 12th, Procter & Gamble (P&G) announced its Supplier Environmental Sustainability Scorecard for its key suppliers, as partof an ongoing effort to acknowledge sustainability extends from end-to-end in the supply chain. The new scorecard will measure energy use, water use, waste disposal, and greenhouse gas (GHG) emissions on a year-to-year basis, with the annual scorecard deadline approaching in July 2010 for participating suppliers. P&G attributes the scorecard to 18 months of work and close collaboration with the organization's Supplier Sustainability Board, which includes more than 20 leading supplier representatives from P&G's global supply chain; the scorecard also includes protocols from the World Resources Institute (WRI), the World Business Council for Sustainable Development (WBCSD), and the Carbon Disclosure Project (CDP) to minimize redundant efforts and build on existing best practices. P&G describes the uses of this scorecard related to not only sustainability metrics but also spend decisions and product design:

Annual Supplier Sustainability Performance Ratings (corporate)
Supplier Business Award Decisions (related to spend)
Improvement Tracking (against goals set by a P&G spend category or P&G corporate)
Material Production Impact Studies for Product Design
Total Supply Chain Impact Modeling

One of the statements I appreciated most in the press release was the fact that P&G promoted the scorecard as "open code", in other words as a starting point for the discussions necessary to create a common supply chain evaluation process across all industries. Although the last phrase "across all industries" is a fairly high target, I think it's reasonable to expect that it can be a good starting point for manufacturers. I can think of a number of ongoing efforts that are gathering momentum that will help move companies in the same direction, (including the WRI, WBCSD, CDP, Sustainability Consortium) and not just from a push from supply chain captains (think IBM, HP, and Dell individually and collectively through the EICC code of conduct) or dominant retailers (think Wal-mart). I know many manufacturers and their suppliers would welcome some agreement on sustainability scorecards and metrics.

The Environmental Protection Agency (EPA) finalized its rulings to cut GHG emissions following an earlier proposal to add permitting requirements for new or substantially modified emitting facilities on greenhouse gases (GHG) emissions of 25,000 metric tons or more, though the number in this final ruling has been raised to at least 75,000 metric tons with statements that imply it's unlikely the ruling will be applied to emitters under the 50,000 metric ton threshold. The announcement does add more detail to which stationary sources and modification projects apply and when, with the intention of targeting the largest GHG emission sources first beginning in January 2011. Because the largest stationary sources (over 75,000 metric tons) are at facilities such as power plants and oil refineries, many manufacturers can breathe a sigh of relief, even if it's temporary. My colleague Jill Feblowitz of Energy Insights wrote in her Smart Grid Blog on the IDC Insights Community page that her quick take is "Companies will need to re-examine their engineering and design, document management, and environmental, health and safety (EHS) applications."

Jill also wrote: "Right off the bat, the new rule that further tailors the Clean Air Act will complicate the permitting process. If a company wants to operate a new or expanded facility, it will need to demonstrate that it will be using the best available technology (BART) to curb emissions. Of course, installation of BART emissions control will undoubtedly raise the cost of new coal generation. For all facilities, expect that the permitting process will be lengthened, requiring more documentation back and forth with the permitting authorities. That's where engineering and design and document management applications which also have workflow could come into play in order to reduce the costs of permitting by helping to streamline the process.

In order to maintain the GHG permit, the company will need to report at least twice a year on its GHG emissions from that facility. Power plants for years have used continuous emissions monitoring (CEM) to help comply with Clean Air Act emissions like sulfur and nitrous oxide. Expect CEM now to have capabilities to measure GHG. If the CEM does capture GHG, then the company will need a way to aggregate and produce compliance reports at least, and a way to manage emissions not to exceed thresholds at best. If the facility does not use CEM, it will need to build out its EHS applications to include estimating algorithms that will be acceptable in calculating emissions for the semi-annual reports. But permitting authorities aren't the only places where a company will want to report GHG. Many companies are already reporting on their carbon footprint or emissions to voluntary reporting groups such as the Carbon Disclosure Project."

Also on May 12th, Senators John Kerry and Joe Lieberman introduced new clean energy and climate change legislation - the American Power Act, the follow through of a New York Times opinion piece from Senators Kerry and Lindsey Graham back in October 2009 and the resulting Framework for Climate Action and Energy Independence developed by Senators Kerry, Graham, and Lieberman. (On a side note, the bill would impact much of the EPA's existing Clean Air Act authority.) A statement from the Pew Center on Global Climate Change summed up the general expectations from the bill: "Know that any successful effort in the U.S. Senate will require bi-partisan support". The Pew Center also summarized the major elements of the legislation as:

A market-based solution to achieve pollution reduction targets regulated - in the short term in the range of 17 percent and in the long term 80 percent below 2005 levels.
Investments to develop and deploy new clean energy technologies, including nuclear energy, renewable energy, clean coal, and energy efficiency.
Increased domestic production of oil and natural gas onshore and offshore.
Transitional support for low- and middle-income families to ease costs and for businesses to ensure compliance and avoid carbon leakage.
A mechanism to moderate the price of carbon to prevent market volatility and vigilant carbon market oversight.
Domestic and international offsets.
A strong, international agreement with real, measurable, verifiable and enforceable actions by all nations, long-term financial assistance to developing countries, and enhanced technology cooperation with intellectual property rights protection.

Although I believe any climate change legislation will face significant challenges (and the BP oil spill isn't going to make any of this easier) most leading manufacturers want some clear guidance on how to move forward, and part of that means creating a way to value carbon or some other sustainability measurement.

And that's probably the most important issue common to all of the news above, from Proctor & Gamble, the EPA, and the American Power Act: with some clarity in the definition of sustainability, carbon, and GHG emissions thresholds, manufacturers can make the right business decisions for financial and environmental sustainability.

Keywords

sustainability, regulations, legislation, EPA, climate change

SAP Acquires TechniData - Not Surprising, But Still Interesting for Manufacturers

Mon, 26 Apr 2010 14:13:46 +0000

Entry by Kimberly Knickle

Entry

On April 21st, SAP announced its intent to acquire environmental, health and safety (EH&S) partner TechniData AG, and the acquisition should be completed in the beginning of the third quarter of 2010. In fiscal year 2008, TechniData recorded sales of EUR 64.9 million

One phrase in the press release summarizes the announcement best: this acquisition is the next logical step. There's more marketing spin in the rest of that statement, but this is one of those deals that has appeared obviously inevitable going back almost three years, and as the relationship strengthened, one that became necessary as well for both companies. TechniData is an integral component of SAP's EHS offerings, and TechniData has become so linked with SAP that the relationship has effectively closed opportunities with other vendors. But just because news is expected doesn't mean it's not good news.

Based in Germany with almost 500 employees, TechniData provides systems integration, managed EHS services, regulatory-related content, and software for regulatory compliance. TechniData has been a strategic SAP partner for more than 15 years, and has contributed significantly to SAP’s sustainability offerings in EHS, particularly in REACH compliance. REACH, or Registration, Evaluation and Authorization of Chemicals, is a European regulation that has far-reaching consequences for the use (and sale) of chemicals into and within Europe. Registration impacts all chemical substances produced in or imported into the European Union (EU) above a total quantity of 1 tonne (metric ton) per year. Close to 143,000 substances were pre-registered by 65,000 companies between June and December 2008 in the first phase of REACH. Substances of "high concern" will go through an assessment process, beyond registration. For example in June 2009, the European Chemicals Agency responsible for enforcing REACH recommended that seven chemical substances of very high concern should not be used without specific authorization.

IDC Manufacturing Insights is already seeing impact on US companies in many industries, if not directly from the REACH legislation, then as downstream users and from changing expectations among consumers and supply chain partners. However, beyond the top-tier chemical manufacturers headquartered in the U.S., such as Dow and DuPont, North America has been relatively slow to understand REACH, considering the first REACH deadline was back in December 2008. Yet REACH and the ongoing product safety regulatory debates in the U.S. will definitely influence IT investments in a number of categories, including master data management, product lifecycle management (PLM), and EHS.

While the acquisition locks down TechniData's known assets in development and service resources and expertise, what's most interesting is the broader scope implied in the acquisition, beyond regulatory compliance. We've long talked about regulatory compliance as the foundation for sustainability, especially in manufacturing, and this is where we see SAP headed: using EHS and compliance as a building block for "product, plant, and people safety" (including what SAP often calls Product Safety and Stewardship). We see this as an opportunity for the SAP-TechniData combination to excel as issues such as sustainability and enterprise risk management grow increasingly important to C-level executives.

Keywords

EH&S, regulatory compliance, REACH, sustainability, risk

Sustainability & Risk: IDC Survey & IBM's Latest Approach in the Supply Chain

Mon, 19 Apr 2010 18:49:53 +0000

Entry by Kimberly Knickle

Entry

In our 2010 supply chain survey of 400+ U.S. manufacturers, IDC Manufacturing Insights asked "How important is driving environmental or social sustainability initiatives in the supply chain?" The good news is that 58% think it's important. Because this wasn't a sustainability survey, we don't ask them out right why sustainability in the supply chain is important. But we can see correlations to other issues that have high importance - like risk avoidance and risk management.

We usually find that larger companies are more "sustainability mature"; in other words, sustainability at companies with more than 10,000 employees is usually many steps beyond regulatory compliance. Our data shows that companies that rated sustainability as important are more aligned with our results of large companies (versus all manufacturers) with a few exceptions. Where that alignment really comes through is in two supply chain initiatives, one of them being "Including risk and risk mitigation in service-level agreements with key suppliers".

Recently, Simon Ellis wrote about supply chain risk in Reassessing Supply Network Risk (Manufacturing Insights #MI222770, April 2010), where he reviewed his 2009 and 2010 predictions related to risk. As manufacturers manage increasingly complex, global supply chains with higher levels of outsourcing, it will be important to reassess the inherent risk from the supply network and decide what steps to take to address that risk. Ellis asks us "What will addressing the risk look like?" A recent IBM announcement answers that question, at least in terms of combining sustainability and risk management.

Just last week, IBM announced the beginning of a sustainability push now asking every supplier around the world to do the following:

Define an environmental management system (EMS) that fits their business operations.
Establish voluntary environmental goals and measure performance for, at minimum, energy conservation, greenhouse gas emissions, and waste management/recycling.
Publicly disclose their results on an annual basis, beginning within one year from IBM's request.
Cascade these requirements to any of their suppliers who perform work for them that is material to what is ultimately supplied to IBM.

To put this in perspective, IBM spent $40 billion in its supply chain in 2009, among almost 30,000 suppliers in 90 countries. Sustainability in the supply chain isn’t new for IBM. In 1998, IBM wrote to its suppliers to encourage them to adopt the new ISO 14001 EMS standard. In 2004, IBM published its Supplier Conduct Principles that suppliers were required to follow in order to do business with IBM. I spoke to Wayne Balta, IBM's VP, Corporate Environmental Affairs & Product Safety, for some more details on how this impacts its suppliers, large and small.

One of the comments Balta made really stuck with me - that IBM wants the supplier to have a system that works for them, after the spotlight fades. This more hands-off approach allows the suppliers to let them find the metrics that work best for their business, as well as allowing some flexibility to conform to industry or country practices. IBM isn’t completely hands-off; the requirement is now on the table, and IBM will provide assistance to the suppliers that need it, in the form of tools and mentoring such as a webinar on IBM's approach to EMS. Without one mention of the word risk, IBM follows through on a prediction we made a few years ago that related sustainability to risk - Your suppliers' problems will become your own, especially when they are related to sustainability.

Let us know how you're approaching the challenges of supplier management, especially related to risk and sustainability.

Keywords

survey, risk

Two New Sustainability Surveys – Connecting to Financials and the Employees

Tue, 16 Feb 2010 16:26:35 +0000

Entry by Kimberly Knickle

Entry

By now, you've probably noticed that IDC does surveys in a big way. All that survey work means that I pay close attention to surveys produced by other companies. I read through the results with a healthy dose of skepticism, but recently I've found two very interesting ones related to sustainability - one from Ceres and another from Brighter Planet.

Ceres Survey: Asset Managers' Practices Related to Sustainability

The first is a Ceres survey released in January - Investors Analyze Climate Risks and Opportunities: A Survey of Asset Managers' Practices. At this point only a handful of asset manager are including climate change risks and opportunities in their investment analysis, with 44% of respondents indicating climate change is not material to their investment decisions. I'd like to give a copy of our financial analysis to those respondents - Seeing the Business Benefits of Sustainability - Revenue, Profit, and Inventory Management (MI219564). In our report, we demonstrated the stronger financial performance of manufacturers in the Dow Jones Sustainability Index relative to their peers. Maybe those asset managers want to rethink their position that climate change is not material to their investments.

If our report results aren't enough motivation, they need to consider a late January announcement from the U.S. Securities and Exchange Commission (SEC). The SEC issued new interpretive guidance that clarifies what publicly-traded companies need to disclose to investors in terms of climate-related 'material' effects on business operations, whether from new emissions management policies, the physical impacts of changing weather, or business opportunities associated with the growing clean energy economy. It sounds fairly obvious to me that sustainability AND financial reporting is changing, and asset managers are going to change their tune. In turn, manufacturers definitely need better IT based tools for sustainability performance management and analytics.

Brighter Planet Survey: Employee Engagement Related to Sustainability

The second survey is an Employee Engagement survey announced earlier in February from Brighter Planet, a US-based company that provides "climate change solutions" that include a personal footprint calculator and credit cards and offsets that fund renewable energy projects, with Ceres president Mindy Lubber as a member of its advisory board.

The Brighter Planet survey was conducted in November 2009 and produced more than a thousand US responses, of which only 3% are in manufacturing and 5% are in IT/Internet, but I think the results are generally applicable across industries. 91% of the respondents classify themselves as reasonably engaged in sustainability in their daily lives, meaning they are willing to make some sacrifices for sustainability. There's a sense of humor to the report - the responses of those that have low "environmental inclinations" are labeled as "sustainability is for sissy tree huggers". It's a quick read, and I'd recommend taking a look if just to read some of the verbatim comments.

The two facts I found most interesting are :

The most effective engagement programs feature an organizations' management or board as the main advocate for employee sustainability. These are three times as effective as those in which an employee sustainability director was the main advocate.

Employees are generally dissatisfied with their employers' sustainability engagement efforts. Over 60% of respondents want to learn more about their employers' sustainability efforts, and 67% would like their employees to change their stance on sustainability.

I found the survey particularly interesting because Brighter Planet's results match what we've identified in our manufacturing sustainability case studies - that sustainability leaders understand the organizational implications of sustainability.

Sustainability Organizational Leadership Examples

In our research, organizational leadership examples include:

Presenting clear executive sponsorship for sustainability
Creating a cross-functional sustainability team so sustainability isn't the job of just one department or one person, such as a sustainability director
Recognizing the value of sustainability in employee recruitment and retention
Soliciting and accepting sustainability ideas and feedback at all levels in the organization.

The Connection Back to IT for Sustainability

I'm an IT analyst, not an HR director (any Star Trek fans out there?), so let me bring this back to IT. One of the best and simplest example of IT for Green in practice is in Medtronic's use of an "idea capture" workflow supported by Adobe, in the style of a high-tech suggestion box that doesn't require paper or any hands-on administration. Employees can submit their ideas for saving money or becoming more green, and the ideas are automatically routed via built-in workflows to the appropriate senior managers where they are evaluated and potentially put into effect by a designated team.

I can also envision all sorts of social media applications for sharing company information, promoting green projects, and knowledge collaboration and communication. In fact, I think that's the key - knowledge collaboration and communication, and IT can be a great enabler in this sustainability scenario as well as in sustainability performance management. Let me know how your company gets you engaged in sustainability.

Keywords

sustainability, surveys, organizations, financial reporting, sustainability performance management

Auto Industry Change: Sustainability & PLM

Mon, 25 Jan 2010 19:20:41 +0000

Entry by Kimberly Knickle

Entry

The pace and complexity of change the automotive industry is facing is staggering. If we look ahead 10 or 20 years, how many times will the product need to change? Joe Barkai and I have taken a look at just a few of the high profile announcements we've seen over the last couple months - from recent auto shows, investments in new technologies, and even the relationship between the industry's products and regulations, voluntary or involuntary. A common theme runs through many of these announcements - sustainability.

For the auto industry, sustainability isn't just about one issue or one product. It's about addressing a combination of environmental, social, and economic issues, such as customer expectations, government regulations, and financial pressures, all at the same time; knowing the risks and opportunities across every aspect of the business and across the lifecycle of every product is crucial.

Earlier in January, at Detroit's auto show, much of the conversation was about incorporating new greener technology into the products. "Green technologies are the master key to the future of the automobile," said Thomas Weber, the head of research and development at Mercedes-Benz.

A wave of technology and business innovation is upon us in the form of electric vehicles and new supporting infrastructure. In December, 40 cities around the world announced that they will focus on four key areas necessary for becoming electric vehicle ready in collaboration with BYD Auto, Mitsubishi, Nissan, Renault and the Clinton Climate Initiative. Cities in the United States include Chicago, Houston, and Los Angeles.

Better Place, an infrastructure provider for electric cars founded by former SAP executive Shai Agassi, raised $350 million in equity as part of a second round of financing. Better Place is working on creating a network of battery-swapping stations (to complement a network of battery charging spots) for plug-in electric vehicles. In September of 2009, Renault and Better Place signed an agreement to bring the infrastructure and Renault's first passenger electric vehicle to Israel.

Automakers also need to respond to the growing pressure to capture their product's environmental footprint, for their own use as well as for outside interests, including regulators and even car buyers. The Product Life Cycle Accounting and Reporting Standard is one of two new GHG Protocol standards that defines a method to account for emissions associated with individual products across their life-cycles and of corporations across their value chains. The standard was developed in 2009 and recently introduced by the World Resources Institute, which developed the standards along with the World Business Council for Sustainable Development. Ford Motor Company is one of the companies testing this new reporting standard.

We also acknowledge that it's going to be years before we have a regulated or de facto standard for green autos and a supporting green infrastructure. But this industry can't wait. It's essentially guaranteed that automakers are going to have to redesign their products over and over again in response to changing customer expectations, regulators, and the available infrastructure. For an industry that is characterized by very long engineering cycles and multiple iterations to align technology, quality, and customer adoption, this is going to pose yet another significant challenge for which it may not be ready.

We think that it's this complexity inherent in sustainability-centric decisions that makes product lifecycle management (PLM) such an important component in a company's sustainability efforts. We expect PLM to be essential for companies in the auto industry to evaluate vehicle platforms and pick the optimal design. And we expect companies to rely on PLM to be the basis for change when that design has to change once again.

Are you using PLM for your sustainability projects? Let us know.

Keywords

sustainability, PLM, regulations

Creating Sustainability Intelligence in 2010

Sun, 17 Jan 2010 21:38:15 +0000

Entry by Kimberly Knickle

Entry

Earlier in January, IDC Manufacturing Insights presented our top 10 2010 predictions for manufacturers, and I briefly introduced my sustainability prediction for manufacturers.

Armed with Metrics, Manufacturers Move from Sustainability Reporting to Intelligence.

Increasing numbers of manufacturers are producing corporate reports on their sustainability, publicly disclosing information relevant to the environment, such as greenhouse gas emissions, energy consumption or energy saved through efficiency improvements, material substitutions, and the development of new greener products. These reports are also becoming more standardized among companies, for example using the Global Reporting Initiative's G3 guidelines, and more publicly reported, for example through the Carbon Disclosure Project.

But just knowing the current state of sustainability isn't enough. Leading manufacturers want to do more with the information they've collected from their own products, processes, plants, and supply chain. They need to analyze that data and create the type of intelligence that will support the decisions and the tradeoffs necessary to continue improving their environmental footprint. And we think a large number of manufacturers are ready to do the same - to build a feedback loop into how they measure and increase their sustainability, as well as develop a decision making process for future investments.

We call this next step creating sustainability intelligence - applying reporting information to make better decisions about their material selection, sourcing, use of limited resources, product life cycle, supply chain, and more. Companies are showing an increasing willingness to make changes to fundamental business processes, using concepts such as design for sustainability, cradle to cradle, and the green supply chain.

Analytics are going to play an important role in this transition from reporting to intelligence, but we also expect improvements to be made in the input - in data collection, perhaps through the addition of sensors and M2M - as well as improvements to be made in the output - better information sharing to get the information in the hands of people who can make the hundreds of necessary decisions that impact a company's environmental footprint. There's an element of accessibility that's important in this process, perhaps through integrated mobile devices, Web-based access, or even social networking.

All of these changes are going to be in play in 2010, and we expect manufacturers to do the more difficult work necessary to improve their environmental footprint and ease their regulatory burdens.

Keywords

predictions, sustainability, analytics, intelligence

Top 10 Sustainability Wishes – What Consumers (Like Us) Want from Manufacturers in 2010

Mon, 07 Dec 2009 20:06:18 +0000

Entry by Kimberly Knickle

Entry

This week, starting on December 7^th, is the kickoff of the UN climate change conference in Copenhagen, with diplomats from 192 nations. Although the type of high-level negotiations and goal setting at the conference are important steps in the process, I believe there are many smaller steps the manufacturing community can and should take to incorporate environmental sustainability into their products, processes, and plants. I've always said that manufacturers play a critical role in sustainability, and it's their job to make it easy for their customers to go green. Basically, manufacturers know their products best, and it's up to them to take a closer look at how they shape and influence the product lifecycle from cradle to cradle. From my perspective as a sustainability-conscious consumer, there are many changes I'd like to see in the coming year. In the spirit of the holiday season and our forthcoming Top 10 Predictions for 2010, here are the top 10 sustainability wishes for manufacturers, from a consumer perspective developed by myself and Simon Ellis, our supply chain practice director.

Offer easier to refill containers. That could mean selling smaller products with larger necks, selling your product in larger sizes, or even changing the formulation so it's easier to pour from one container to the next. Talking from personal experience from this past weekend – transferring antibacterial hand sanitizers from one container to another doesn't work very well.

Use more recycled content in your products or make your products easier to recycle. A component of this is giving cities and towns a reason to recycle more kinds of plastics, which brings us back to the first part of our wish by helping to create a stronger market for recycled plastics.

If you've reduced the water content in your product and increased the concentration, build in a measuring process. There are more concentrated liquids on the market than there were 10 years ago, and although logically we know the benefits such as decreasing water consumption and lower supply chain costs (less weight and smaller size to transport), there's still a nagging feeling that we're using more than we need.

Do a better job managing SKU options. We're close to sensory overload every time we walk in a retail store. If the manufacturer and retailer understood their customers better, would we still need 40+ options for mint toothpaste? And conservative (or reluctant) SKU management results in a proliferation of smaller sizes where the packaging/product ratio leads to higher packaging consumption and higher waste.

Have the "off switch" mean off, with absolutely zero power consumption. We feel surrounded by devices that use power even when they are theoretically powered down. Maybe it's as simple as having 3 options – on, charging, and off. Are we the only people tired of climbing under our desks to unplug our laptop cords?

Promote lower energy consumption options, especially when they have little to no impact on the effectiveness of your products. What jumps into our minds is how many lighting fixtures are not using CFLs or LEDs, purely because the customer didn’t consider it. We're sure there are other products to which this statement could apply, perhaps battery-driven or rechargeable devices that could have low power settings?

Incorporate smarter power consumption into your electrical devices. This follows on our two previous options, but in this case, we want the smarts to be built-in, much like our laptops have a snooze option. We know some manufacturers have made tons of progress in this area, but we want more.

Make it easier to decide when to service a product, and if it's not serviceable, help us recycle them. We're not an impractical pair; we realize this probably applies to items that retail over $100. Both of us have junked $100+ items recently after they malfunctioned – one a printer and the other a bread machine, when we were confident they could have been repaired or more efficiently recycled. Shame on us but we want help.

Work toward intelligent home management and HVAC systems. This goes along with our smart power consumption request but focuses specifically on home/office systems. For boilers, water heaters, heating systems, and air conditioning systems, we want them to work together (and share data with each other) so they seamlessly balance the outside environment, our preferences, and lower energy and water consumption. And a personal confession – Kim wants a way to restrict her teenage kids' shower time and temperature without them knowing.

Push for consensus on green labeling. This is a plea to the industry – please come to some agreement on how to define a green product, even incorporating likely use patterns. We have plenty of ideas and research to contribute to this decision! We want to be able to compare product against product so we can make smarter choices. Having a generally accepted labeling scheme may also be the way to figure out when consumers, like us, will pay more for greener products.

We know you have an opinion or anecdote of your own to share about what you want to see change among manufacturers when it comes to environmental sustainability. Let us know your own pet peeves, or let us know if you work for a manufacturer that's making these changes already. And happy holidays.

Keywords

sustainability

Sustainability - SAP's Push to See the Data Clearly

Mon, 09 Nov 2009 17:16:16 +0000

Entry by Kimberly Knickle

Entry

Catching up on work after travel in the end of October and some time off, I'd like to return to one of the events I recently attended in New York City – SAP's World Tour. After a lead in presentation about how SAP can help companies achieve "business clarity" and plenty of references to seeing clearly, I began to formulate the title a la Bob Parker, our VP in Manufacturing Insights and a fan of song titles for his articles – something based on the song "I Can See Clearly Now".

The idea behind business clarity is that companies need to be able to leverage their business information to optimize their businesses. This builds well upon SAP's expanding integration of Business Objects' analytical capabilities, with "speed of thought" emphasizing the need for timely data and analysis. Much of the kickoff presentation was consciously sensitive to the current IT spending patterns – given the fact that SAP is aware of the need to generate value quickly from IT investments, with value as a primary goal and SAP responding with options such as "Best Run Now" and even a proposal that companies need a value management office. I don't have high expectations of companies creating value management offices, but I do accept the point that value resonates well with buyers.

From there, SAP's sustainability strategy was top billing at the New York World Tour. SAP featured two products to support economic social and environmental risks and opportunities – SAP Sustainability Performance Management (coming in December 2009) and SAP Carbon Impact (available now), with SAP beginning by revealing how SAP itself has used its own products to pull together the details of its sustainability performance.

Later in the event, SAP drilled down into both of those products, as well as others that can be used for sustainability and/or compliance. SAP Carbon Impact is the result of the acquisition of Clear Standard, and it's a carbon management product for those companies needing to track their carbon footprint and GHG emissions. For its own sustainability work, SAP uses a series of dashboards built from Xcelsius (SAP BusinessObjects) – Energy, Commuter, Printing, Carbon Impact, and Sustainability Report.

Peter Graf, SAP's Executive Vice President and Chief Sustainability Officer, talked about how these dashboards contribute to tracking SAP's own performance and as software segment leader in the Dow Jones Sustainability Index. (Worth noting is SAP's perfect rating for its environmental performance reporting.) In December, SAP will release pre-built analytics linked to Xcelsius and based on content mapped from the SAP Environment, Health, and Safety (EHS) Management application, and SAP customers can benefit from similar dashboards.

I'd like to conclude by referring to a remark from an SAP speaker – Larry Bossidy, former CEO of Honeywell. Mr. Bossidy was an entertaining speaker, talking about what companies need to do to develop their employees, and all sorts of wisdom of how to be a good employee and a good leader. My favorite was "Be prepared to change your mind in the face of data," and I think that's good advice when it comes to sustainability. All manufacturers can benefit from seeing their sustainability data clearly, to make the kinds of decisions that will benefit their business and environmental sustainability performance.

Keywords

sustainability, performance, carbon footprint, SAP

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