back to the main page

Business Learns Lean and Green Together Slash Costs, Lower Risk

Efficiency, competitive agility, reduced waste—these hallmarks of lean production practices have attracted manufacturers for years. Now, innovative companies are finding another compelling reason to adopt lean—the economic and environmental benefits of going green.

Growing evidence, spurred by case studies, academic research, and government programs, shows that by combining lean and green practices, companies can potentially save millions of dollars a year by reducing production and energy costs.

“Lean manufacturing minimizes wasted material and energy usage, as well as storage space and transportation expenses,” says Rich Kroes, Oracle’s principal product strategy manager for supply chain management (SCM) applications. “Supply chain managers are starting to recognize that being green benefits not only the environment, but also their companies' bottom line by reducing costs, reducing risks, and building revenue potential."

A Natural Bond
New research tracks how quickly the lean/green combo is catching on. In the latest IndustryWeek Census of U.S. Manufacturers, recycling and reuse programs came in second as the most popular strategic practices identified by respondents. The first? Continuous improvement programs, such as lean techniques. Other frequently mentioned strategic practices include energy and environmental management, the latter showing the largest percentage increase in the survey category from the year before.

A natural affinity between lean and green comes in part because each often evolves using similar organizational techniques, such as work teams that push themselves to achieve daily performance improvements, rather than relying on incentives developed by central managers.

Both sensibilities also have a natural aversion to what lean practitioners call “muda,” the Japanese word for waste. By using lean strategies to reduce muda, companies simultaneously consume less energy and materials.

Lean + Green = Gold
Waste reduction has proven especially valuable for automakers that adopt “just-in-time” supply chains and accurate customer-demand models that respond to the “pull” of customer demand. The alternative, the “push” of traditional systems, creates inventories of autos in the sometimes dashed hope that enough buyers will be found to claim all of the vehicles.

“We ensure, through a planning process, that we know what is happening in the market and that we correct—constantly, if possible—the supply situation in alignment with the market situation,” says one of Oracle’s automaker customers. “The biggest waste that you can have is a vehicle that is built for which you do not have a customer.”

On its lean/green Web site, the U.S. Environmental Protection Agency (EPA) highlights other success stories. One small manufacturer in the aerospace industry identified more than $1 million in potential savings from a revised surface-coating process that uses lean and environmentally sound principles. Similarly, a large producer of jet engines tapped the methods to reduce greenhouse gas emissions and $1 million in fuel consumption costs.

Stories like these bolster a comprehensive study by the EPA that looked at the lean/green duo. Lean produces an operational and cultural environment that is highly conducive to waste minimization and pollution prevention, the study concluded.