Measure and Manage
Interface and JD Edwards promote the role of sustainability.
by Monica Mehta, August 2010
Sustainable business: a persistent catchphrase that means many things to many companies, from clever marketing campaigns to serious initiatives to reduce a company’s environmental footprint. But few go as far as Interface, an Atlanta, Georgia-based carpet manufacturer with leadership committed to eliminating any negative impact the company has on the environment by 2020.
And Interface is already nearly halfway toward its goal—no small feat for the world’s largest maker of modular carpet, with manufacturing processes that use tons of raw materials, water, and nonrenewable energy; release tons of greenhouse gas (GHG) emissions; and generate millions of pounds of waste. With the visionary leadership of Interface Founder and Chairman Ray Anderson, Interface managers today consider the environment in every decision they make—from product design to the lightbulbs in corporate offices.
In an effort as ambitious as this, metrics are vital. The team at Interface has created a complex measurement system, called EcoMetrics, that keeps track of everything from the pounds of petroleum used to make its carpet tiles to the amount of recycled paper its catalog is printed on, so managers can accurately chart sustainability progress. To glean such metrics, access to relevant, accurate information is vital. Interface decision-makers rely on corporate IT, which today includes Oracle’s JD Edwards EnterpriseOne, to deliver this information. Supplied with the right data, the company fully incorporates the axiom, “what gets measured gets managed.”
Both Interface and Oracle also recognize the importance of getting sustainability reporting to the level of financial reporting—enabling sustainability metrics to flow as freely from the systems as financials do today. This is an active area of interest to both companies and one in which they see tremendous incremental value. “Time, energy, and effort could all increasingly shift from the creation of metrics to acting on those metrics,” says Erin Meezan, vice president of sustainability at Interface.
A “Spear in the Chest”
Interface is best known for its InterfaceFLOR and FLOR products—squares of carpet that can be laid down as rugs and wall-to-wall coverings in workplaces and homes. Anderson founded Interface in 1973 and started producing the first free-lay carpet tiles in the U.S. Aside from complying with governmental regulations, he didn’t think much about the environment as he grew the business. Then, in 1994, on the eve of making a speech about the company’s approach to the environment, Anderson read Paul Hawken’s book, The Ecology of Commerce, and experienced an epiphany that he says was like a “spear in the chest.”
“I was running a company that was plundering the earth,” he told the New York Times in 2007.
In his speech, Anderson outlined his vision for what is known today as “Mission Zero”—to eliminate any negative impact the company has on the environment. Acknowledging that achieving full sustainability would be like climbing “a mountain higher than Everest,” Anderson laid out the “Seven Fronts on Mount Sustainability” that would lead the company there. They include eliminating waste; having benign emissions; using renewable energy; using resource-efficient transportation; and in the end, creating “a new business model that demonstrates and supports the value of sustainability-based commerce.”
To achieve these ambitious goals, Interface executives have remade the company and the modular-carpet-manufacturing business. Renewable resources such as recycled and biobased carpet fibers are replacing virgin-oil-based fibers in the products. Reducing power consumption and embracing renewable power sources such as wind, biomass, and solar have transformed Interface’s energy use. Programs minimize material usage and improve the efficiency of equipment and processes, drastically reducing waste in the manufacturing process. Manufacturing redesigned the carpet-making process to enable nylon carpet fiber waste to be recycled into new carpet fiber.
And Interface leadership has partnered with a number of eco-friendly suppliers to maximize strategic transport of its products, thus reducing its transportation footprint. The best practices learned in the process of embracing this approach to business have even led to the creation of a consulting team called InterfaceRAISE that advises other companies on how to weave sustainability into the core of their business (see Taking the Sustainability Message Global).
“Sustainability is in our DNA,” says Interface’s Meezan. “We are striving to become a sustainable enterprise that takes nothing from the planet that cannot be replaced—and we respect that principle in our day-to-day business operations.”
Through these efforts, Interface is already almost 50 percent to its goal of becoming what Anderson calls “the first fully sustainable industrial enterprise, anywhere.” Since the beginning of the effort, use of fossil fuels has been reduced by 45 percent, and greenhouse gas emissions have been slashed by 44 percent. Water used in manufacturing plants has slowed by 80 percent, and recycled and bio-based raw materials now make up 36 percent of the total materials used in manufacturing. 30 percent of the company’s energy is from renewable sources, and the energy used to manufacture the carpet is down 43 percent. Landfill contributions have been cut by a remarkable 80 percent.
So far, the success of Interface and its sustainability efforts belies the notion that corporate environmental responsibility isn’t good for the bottom line. The waste program has netted US$433 million in cumulative avoided costs. Meanwhile, since 1996, sales are up 27 percent, and the company is achieving record levels of profitability worldwide. And all of this took place in a time period that included the severe downturns in the carpet business’ core markets in 2001 and 2009. Anderson and his company have received much publicity for their efforts and have garnered numerous accolades. They perennially appear on “best corporate citizen” lists and receive environmental awards from governmental, environmental, and professional organizations. In 2007, Time magazine named Anderson, who has written two books on his quest for corporate sustainability, a “Hero of the Environment.”
The Tools to Reach Zero
Managing key business processes is a large part of the effort toward sustainability. In 2004, seeking an enterprise resource planning (ERP) application that would help management improve manufacturing and financials processes, Interface chose Oracle’s JD Edwards EnterpriseOne. With the help of Oracle Consulting and Oracle partner CSS International, Interface implemented JD Edwards EnterpriseOne in 2008 across the company for financial processes and is in the process of implementation for manufacturing. Interface is also supportive of Oracle’s efforts to continue to advance in the cutting edge area of sustainability reporting overall.
“The JD Edwards EnterpriseOne application suite has a lot of functionality and configurability options,” says Larry Wallace, vice president of global IT strategy at Interface. “We chose JD Edwards because it best fit our business requirements.”
Interface has implemented the financial management application in each of its three divisions—the Americas, Europe, and Asia Pacific—and has already seen benefits from the software, including increased consistency of data, faster closings, and more-flexible reporting capabilities, according to Wallace. The manufacturing application is being implemented throughout the eight manufacturing facilities, and Wallace says he expects it to lead to better visibility of inventory and increased manufacturing efficiencies.
Already, the JD Edwards EnterpriseOne implementations to date are helping Interface with its sustainability effort in a number of ways. First, JD Edwards EnterpriseOne is providing financial information in a more streamlined, accessible way. “Access to accurate, timely information is increasingly critical to accelerate the creativity and innovation needed to radically reduce environmental impact,” says Jim Hartzfeld, managing director of InterfaceRAISE at Interface.
In addition, Oracle partner CSS helped Interface set up the manufacturing application to capture and report key data such as the amount of raw materials versus recycled content in a product.
“One of the reasons Interface chose JD Edwards for manufacturing was to better manage their raw materials inventory, so they could reduce waste and costs. JD Edwards EnterpriseOne will give them the ability to do that,” says Bill Franklin, vice president of industry solutions at CSS. “Interface will be able to better see which steps of the manufacturing process are creating the most waste.”
Hartzfeld says transparency in manufacturing and supply chain processes is critical for making sustainable business decisions. “Increasingly, whole-supply-chain analysis is required to uncover the highest leverage opportunities for change,” says Hartzfeld.
The application suite will also enable Interface to eliminate much of its shop-floor paperwork, says Franklin. “The plan is to eliminate virtually all of the paperwork that flows through the manufacturing process, and we are succeeding in making it as paperless as possible.”
In addition, JD Edwards EnterpriseOne is helping Interface decrease its IT footprint. Historically, Interface’s business units have independently purchased and implemented software to run their business. “By switching all business units to JD Edwards EnterpriseOne, the cost of ownership will be reduced,” says Interface’s Wallace, “and by having fewer servers, the amount of electricity and physical space required to operate will be decreased.”
The area of sustainability-related automated reporting from systems remains truly cutting edge. Interface is supportive of Oracle’s efforts to continue to advance in this area, as perhaps one of the most important aspects of Mission Zero is the company’s principle of transparency. This transparency has created a powerful source of external and internal credibility for the company, but being transparent often involves laborious processes. “The gathering and consolidating of the data necessary to support the level of transparency we require has been a huge and still remains an often manual task,” says Hartzfeld.
JD Edwards EnterpriseOne is currently integrated with many of Interface’s legacy systems and will eventually replace many of them, Wallace says. In the coming year, Wallace plans to extend the company’s Oracle footprint by integrating JD Edwards EnterpriseOne with other Oracle tools at work in the data center, such as Oracle Business Intelligence Suite, Enterprise Edition and Oracle Hyperion Financial Management. “There are a lot of synergies with using Oracle applications together, as they’re designed to work together very well,” says Wallace.
The company is currently on JD Edwards EnterpriseOne release 9, and Wallace says staying up-todate has allowed Interface to realize several benefits. “The latest version runs faster,” says Wallace, “and the additional functionality will replace customizations we put in place. Our goal has always been to limit customizations, and the additional functionality in the latest version makes that easier.”
Oracle and Interface are working together to share ideas about further integration of the Oracle systems with the sustainability metrics Interface currently tracks. “As more and more metrics are captured in JD Edwards EnterpriseOne, less manual input will be required,” says Wallace. “Along with Oracle’s strategy of using Oracle Business Intelligence Suite, Enterprise Edition as its reporting tools for sustainability, eventually, reporting on sustainability could be as seamless as reporting financial information. With the interest of IT companies in this space such as Oracle, our hope is that this day will not be far off.”
For More Information
Taking the Sustainability Message Global
Oracle’s JD Edwards EnterpriseOne
Profit Online “Special Report: Sustainability Reporting”
Monica Mehta is freelance writer in Northern California.