Warning: This “green” label may cause the customer anxiety, blurred vision, severe headaches or dizziness, an exaggerated sense of well-being, yawning, irritability, and/or a decreased desire to save the Earth.  Wikipedia defines greenwashing as the practice of companies disingenuously spinning their products and policies as environmentally friendly, such as by presenting cost cuts as reductions in use of resources.  It is a deceptive use of green PR or green marketing. The term green sheen has similarly been used to describe organizations that attempt to show that they are adopting practices beneficial to the environment. 

A recently cited article for example about Comcast’s ecobill has the slogan of “PaperLESSisMORE” but ComCast uses large amounts of paper for direct marketing. The Poland Spring ecoshape bottle is touted as “A little natural does a lot of good”, although 80% of beverage containers go to the landfill.  Kohler plumbing fixture ads have very different messages with their National Geographic ads touting water efficiency, while their Wired ads feature a nine-headed water-hog shower.

Daniel Goldman’s new book, Ecological Intelligence, urges us to look beyond the greenwashing claims of the marketing industry and his book takes a holistic approach, following products from the extraction of raw materials, the industrial processes that make a product, packaging, transporting, time in store, even what happens while you use it, and then disposal. His book champions the emerging discipline of industrial ecology using a method called life-cycle assessment (LCA), the history of each product can be revealed, with surprising results.  “The industrial ecologists render precise metrics for impacts on the environment, on our health and on the wellbeing of those who labour to make our stuff,” says Goleman.

He cites the example of the humble glass pasta jar, which in fact has 1,959 discrete steps in its development process, each of which has myriad impacts, from carbon costs and water use to the wellbeing of the workers who make it.  “We are making glass and concrete in the same way we did 100 years ago when we didn’t know about this stuff,” he says. “We still make glass by heating silica and a batch of chemicals to about 1,100 degrees for 24 hours – a method that dates from the 1850s.”

Rather than rely on organizations and individuals to reduce the impact of greenwashing, companies like Levi Strauss & Co. conducted a full LCA on their top-selling products and found that one of the phases with the most negative environmental impact was during use, when users wash their jeans. As a result, Levi Strauss is communicating to customers—through their labels, promotions, and store staff—that the jeans should be washed in cold water. This is a case in which the company is using LCA and communications in order to improve their products’ environmental performance.

This is a critical period for reshaping the relationship between business and society. Trust in corporations has plummeted, and business has a key role in shaping whether that trust will continue to diminish, or instead be reshaped.

By Warren White
Waller & Associates, LLC
www.WallerAssoc.com

It’s often difficult to determine what course of action will most benefit a company’s long-term business objectives.  Even more difficult is the acquisition of funding for speculative improvements in the way of financial and market uncertainty.  As a consequence, some of the complexity involved in choosing among capital projects requires a consultative approach to plan and provide systems equipment through competitive processes.

As we apply capital budgeting techniques, cash flow is essentially the “answer” we’re looking for when comparing today’s operation with tomorrow’s.  Every time one investment is compared to another a series of cash flows is generated for each year the investment remains in operation.

The capital budgeting approach offers a “systems solution” to a prospective customer in a manner that allows he or she to understand the financial impact of the buying decision on the business.  A lower priced solution is compared to one or more higher priced solutions. This is often thought of as a “step-up” method for evaluating each potential project.  In the capital budgeting world this process is referred to as incremental analysis.  Incremental analysis compares the differences in costs and benefits of each project to provide a series of evaluations for which the customer can see a starting point and ending point.  Utilizing this “number trail” leaves little doubt in the customer’s mind that the project selected will provide the greatest financial benefit to support the long-term business objectives of the company.

Understanding this relationship between a facility’s business objectives and lower operating costs, alternative means of conducting daily business will often include levels of technology or automation that can be easily compared to a company’s operating baseline.  In many instances the current logistics operation is indeed labor intensive (costly), and often has its belly exposed through uncoordinated, disjointed or frequently interrupted material flow referred to as a bottleneck to production managers and operations analysts.

Management preferences are often insurmountable.  Discounting, growth rates and various other financial considerations can be adjusted to satisfy these preferences.  In doing so, sensitivity analysis allows the company a “last look” to see how resulting costs will vary from expectations set forth during the appraisal process.  These costs are namely equipment and operating costs.

Larger operations are generally confronted with more than one alternative means of increasing capacities and lowering operating costs. However, some processes are difficult to improve upon.  Capital budgeting often shows that processes should stay in place due to lack of order activity or due to product constraints that prevent the application of more automated methods.  Logistics capabilities must be aligned to support this growth. In general, service is of high business value to our company regardless of material mix to our customers.

By Warren White
Waller & Associates, LLC
www.WallerAssoc.com

Arriving at a consensus on the method of inventory management in your distribution center network is not a simple process. There are many factors to consider before making a final decision. This blog post is designed to offer discussion points and topics to consider in the decision making process. These are not meant to be specific to an industry or sector. Rather, they are general characteristics commonly found with cycle counting and physical inventories.

Physical Inventory

   Pros

• Get a reasonably accurate count, adequate for inventory financial reporting purposes (the accountants like it)
• Usually only performed on an annual (most common) or biannual basis
• Periodic inventories (usually monthly) can be productive for smaller facilities that warehouse less than 3,000 SKU’s
• Accounts for all physical locations in the warehouse, not just the locations showing a system inventory balance

   Cons

• Typically requires a lot of time and manpower
• Does not provide real-time inventory accuracy
• Does not promote inventory discrepancy investigation in a timely manner
• Often there are advance preparations such as tags and forms to pull together
• Actual counting requires freeing a large number of personnel for a long period of time in every inventory location
• Interruptions to operations results in capacity and customer service issues
• Typically, clerical staff enters hand-written information into the appropriate system which is prone to errors
• Physical inventories are rarely accurate

Cycle Count

   Pros

• Improved, real-time inventory accuracy
• Aids continuous improvement through timely root cause investigation of inventory discrepancies before they impact operations
• Reduces stock-outs and excessive inventory levels
• Promotes ABC inventory classification which results in high velocity, high value and critical items being counted more often
• Does not require operations to be interrupted to count

   Cons

• Typically requires periodic accuracy audits for accounting verification purposes, using objective sampling techniques
• Requires dedicated inventory control personnel in larger facilities
• Very difficult to manage without adequate technology

I hope these discussion points assist you in the decision making process. If you other ideas or thought, please feel free to comment on this post
By Jeff Waller
Waller & Associates, LLC
www.WallerAssoc.com

A recent article about the Chernobyl Exclusion Zone – 21,000 square miles made uninhabitable for humans in 1986 – demonstrated that plants and animals have come back in force. The author commented that “saving the environment” is a misnomer because it puts the focus on the environment. We should call the movement “protecting the human race” – because Chernobyl shows that no matter what we do to the environment, it will be fine (extremely radioactive and unsuitable for humans, but fine)

Lean and green initiatives are not only good for the environment, but also good for the bottom line. Operationally speaking, a lean transformation is also green for many companies. Driving out waste helps companies tap into their green environmental conscience. Whether it is reverse logistics (a competitive advantage for large retailers), recycling, or any combination of supply chain processes – the leaner those processes, the more profitable the firm.

One firm that has adopted a green (or lean) perspective is U.S. beer producer SABMiller. They have a goal of zero waste in their breweries, and they currently recycle 99.9% of all packaging waste. In Europe, manufacturers are required by law (Verpackungsverordnung or 94/62/EC) to recover all packaging from distributors, retailers and consumers – which encourages the use of recyclable materials as well as reusable packaging. Similar laws have been proposed in the U.S. recently. 
By Warren White
Waller & Associates, LLC
www.WallerAssoc.com

It seems that everyone is talking Six Sigma and Lean around the supply chain industry and that they are the silver bullet that will resolve your operational issues. I do agree that they have great value within the evolutionary improvement process an organization takes, but many companies fail to go that final step with process engineering.

The evolutionary process normally starts when an organization realizes they need to make improvements within their operations to reduce costs or improve throughput. This process starts with adopting “industry best practices” that are learned from experiences within the industry. As the evolution takes place Six Sigma is traditionally the next step in the process, but 6? focuses mainly on quality issues and not operational improvements. The next step that normally progresses is implementing a Lean practice which really starts to focus on efficiency improvements within operations.

Once Lean has been implemented most organizations feel they have gained all of the operational improvements they can, but that is just not true. The final step in the process is Process Engineering or Work Measurement, and one that can be gone to initially and not through evolution. This will also assist with providing sustainability that is validated by engineered processes.

Implementing Process Engineering will scientifically identify the most efficient means to perform a given task or job. By using Process Engineering you will be able to identify actual productivity rates, facility throughputs, and it will assist with all operational planning.

Process Engineering eliminates the individual variances that can be created by doing time studies to identify a productivity rate and uses a predetermined motion time system that has been developed over many years. Maynard Operating Sequence Technique (MOST) is one of the more common forms of this practice around the world, and is growing in acceptance in the United States. MOST has been recognized as a valid form or work measurement within the Canadian auto unions which have agreed to a specific time allowance to perform a given task.

The key to success in a business is being proactive instead of reactive. By using Process Engineering you will be able to plan better and be better prepared for variances that arise within every operation. Process Engineering can, and should be, the cornerstone of information that becomes like building blocks for analysis. It can help in cost-benefit analysis for MHE (material handling equipment), facility planning/expansion, operational budgeting, facility capacity/throughput, and standardization.
By Douglas Cantriel
Waller & Associates, LLC
www.WallerAssoc.com

Benchmarking Overview

It has been my experience that to make profitable process changes you must first understand where you are and where you want to go within your process. How you measure and what you measure are always the two biggest questions to ask in production and labor management. Supply chain operations within an organization should be constantly reviewed to identify where improvements can be made or deficiencies eliminated. One method to help do this is to perform a series of benchmarking tests on their supply chain processes. Benchmarking or goal setting allows a company to assess the opportunities they may have for improving a number of areas in their supply chain including productivity, inventory accuracy, shipping accuracy, storage density and bin-to-bin time. The benchmarking process can provide a company some estimate of the benefits achieved by the implementation of any improvements.

Benchmarking is the process whereby an assessment of an act or performance is measured by some means, whether this is by a measurement of time, value or quantity. A benchmarking project will gather the assessments and develop a plan of action to improve the process that was assessed.

Look for in future Blogs:

Types of Benchmarking, Internal Benchmarking, External Benchmarking and Components of Benchmarking. 
By Bud Hayes
Waller & Associates, LLC
www.WallerAssoc.com