Greener and Cheaper

WSJ.com has a good article on how greener and cheaper go together.

Greener and Cheaper

The conventional wisdom is that a company's costs rise as its environmental impact falls. Think again.

By ALAN G. ROBINSON and DEAN M. SCHROEDER

For years, it was the conventional wisdom: If you improved quality, costs would also rise. But then companies discovered the opposite was true. By redesigning processes -- reducing mistakes, doing things right the first time -- companies could provide better products and services and cut their costs.

Now it's time to learn this lesson all over again, as it applies to going green.

Despite what many companies think -- that reducing their environmental impact is a nice idea, but impractical because of the cost -- businesses can go green and lower costs at the same time. No one disputes that it's expensive to cap smokestacks and process hazardous waste. But as the earlier lesson suggests, the focus shouldn't be on cleaning up and its costs -- the focus should be on creating less mess to begin with.

As an example, WSJ goes into detail on greening of Subaru’s auto plant.

The experience of an auto plant in Indiana helps illustrate how re-engineering processes with green principles and greater efficiency in mind can not only improve a company's standing with nature, but increase its profits and give it competitive advantages as well.

The Stumbling Blocks to Going Green

2:48

WSJ's Jennifer Merritt speaks to University of Massachusetts professor Alan Robinson about how companies can integrate green efforts into their infrastructure.

Subaru of Indiana Automotive Inc., a factory of more than 3,000 workers who make roughly 800 automobiles a day, has pursued green initiatives since its launch 20 years ago in Lafayette, Ind., by Japan's Fuji Heavy Industries Ltd. With employees at every level of the plant looking for ways to save energy, reduce waste and generally make processes more efficient, one measure of its success is a 14% reduction in electricity consumption on a per-car basis since 2000. An even bigger achievement: It has not shipped any waste to a landfill since May 2004.

The authors, skeptical themselves at first, have confirmed the company's claims with their own detailed research. How did Subaru do it? By redesigning numerous plant processes, thus producing less waste and requiring less material as inputs. Since 2000, the company says, it has reduced the amount of waste it generates per vehicle by about 47%. Of the solid waste that the factory still generates, 99.9% is recycled or used by other companies as manufacturing inputs or as raw materials that they process to resell. The remaining 0.1% is hazardous waste that must by law be incinerated by a licensed facility.

Committing the plant to reducing its overall environmental impact has required a mix of solutions over the years, some simpler than others. Subaru's engineers continuously look for ways to improve the plant's green performance, increase efficiency and lower costs.

The article was written by Dr. Robinson.

Pity the competitor who is forced to do in 18 months what Subaru of Indiana took two decades to get right.

—Dr. Robinson is a professor at the Isenberg School of Management, University of Massachusetts, Amherst. Dr. Schroeder is the Herbert and Agnes Schulz professor of management at the College of Business Administration, Valparaiso University, Valparaiso, Ind.