This IDC Manufacturing Insights blog shares recent findings on how manufacturers are working with service providers on sustainability needs, as well as insights into the types of projects manufacturers are completing, their motivation, and their benefits.
I must admit - the economic environment and fairly minimal changes in environmental regulations have impacted sustainability investments. But that assessment is greatly oversimplified. Manufacturers worldwide continue to improve their environmental performance for many reasons -- cost savings, satisfying customer needs or stakeholder requirements, and creating opportunities to step ahead of the competition. For manufacturers, sustainability (and environmental compliance) is a long, slow road, and I see evidence that companies aren't waiting to start down that path. I've just wrapped up some research on how manufacturers are working with service providers on a broad range of sustainability needs, and I've gained some insight into the types of projects manufacturers are completing, their motivation, and their benefits.
Manufacturers don't always have sufficient internal resources to invest in improving their environmental footprint. As a result, I expect the industry to increasingly turn to professional services organizations for a portion of their sustainability investments, whether that's for strategic or tactical support, for efficiency improvements or expertise. I've found that manufacturers often require external support to execute projects in a timely and cost-efficient manner; others require the combination of business and sustainability expertise a service provider can offer. Most importantly, these service providers are keeping manufacturers ' environmental compliance and sustainability progress moving forward.
Defining Sustainability Projects
From a high level, I've noticed two core types of projects within manufacturing organizations:
- Product or process-specific and related to key processes or departments, such as product lifecycle, manufacturing operations, or supply chain
- Corporate-wide and related to the overall company or cross-company needs, such as defining a sustainability strategy, benchmarking, auditing or creating GRI or other standards based reporting, and evaluating tax implications
But I've also bucketed projects into one of four categories, depending on the skills requirements:
- Consensus building and/or business process improvement
- Decision making with long term impact
- Data collection and/or people coordination
- Deep industry or company specific knowledge
Understanding the Motivation and Benefits for Investment
To understand why manufacturers are spending money on sustainability projects, I spoke to 20 manufacturers and asked them each the same following questions:
- What were the reasons you initiated this project?
- What are the benefits you received from this project?
The most frequent reason for the project was compliance or risk management, a fairly negative motivator. Overall, I'd say the reasons were more skewed toward negative motivators - compliance, risk, and cost savings. But when I asked them to identify the most important reason for the project, their responses were much more varied, with more of a positive slant - with reputation, leadership, and innovation coming into play.
As for the benefits of the project, my attempt at neatly categorizing benefits was only moderately successful. Reducing costs, enhancing brand image, and improving public reputation were some of the most frequent responses for project benefits, but basically, the most common response was other than one of my predefined reasons. Examples include "market requirement", "customer relationship", "internal education and influence", "freeing working capital", and more.
Linking Sustainability to Business Priorities
Our research continues to show that overall business priorities are still more about productivity and efficiency rather than increasing revenue. Sustainability isn't exempt from that perspective; the majority of projects must yield efficiency or cost savings benefits. But I think we also need to keep in mind is that sustainability can't exist in its own little world; it must be linked to the success of the business now and in the future.
I'll be sharing more information on this research project, in addition to publishing a report on the participating vendors, which includes Accenture, Capgemini, Fujitsu, HCL, IBM, Infosys, KPMG, PwC, and TCS. I've been impressed with their ability to provide high quality sustainability services to manufacturers, although how they work with manufacturers varies from vendor to vendor. Please join me and IDC analyst Cushing Anderson in a September 26th IDC Manufacturing Insights webcast when we'll discuss more details on the projects and how the vendors' offerings differ, as well as what manufacturers should consider when selecting a partner for their sustainability needs. Bring your questions along or send them to me in advance - firstname.lastname@example.org. I look forward to hearing from you.