GreenSage E-zine 03/2008

Nature Provides Recipe For Sustainable Manufacturing
By Gregory C. Unruh

Sustainability – the capacity of healthy ecosystems to continue functioning indefinitely – has become a clarion call for business.

Consider Coca-Cola Co.'s efforts to protect water quality, Wal-Mart's attempt to reduce packaging waste and Nike's removal of toxic chemicals from its shoes.

These and other laudable efforts are steps on a road described by the aluminum giant Alcan in its 2002 corporate sustainability report: "Sustainability is not a destination. It is a continuing journey of learning and change."

But Alcan had it wrong. Sustainability should not be a distant, foggy goal but rather a real destination. We already know exactly what sustainability on planet Earth looks like.

A perfect model, refined through billions of years of trial and error, is our planet's biosphere. By studying the principles that account for Earth's sustainability, managers can learn how to build ecologically friendly products that reduce manufacturing costs and prove highly attractive to consumers.

Rule 1: Use a parsimonious palette. Out of more than 100 elements, nature uses just four – carbon, hydrogen, oxygen and nitrogen – to produce all living things. The biosphere's elegant simplicity is the opposite of the approach taken by manufacturers that readily adopt every new synthetic material science pumps out, from Teflon to Kevlar. But there is one overriding reason to emulate nature's parsimony: It makes recycling easy.

Rule 2: Cycle up – virtuously. When an organism dies, the biosphere recovers its materials and reinserts them into its production processes. Up-cycling maintains the value of materials without loss of quality or performance.

Down-cycling destroys original value, as when a plastic computer casing is melted into a speed bump. The biosphere doesn't down-cycle materials.

Rule 3: Exploit the power of platforms. The basic architecture of life was set by the earliest multicelled organisms more than 3 billion years ago. The design is a general-purpose platform that has been leveraged over and over again to create the planet's astounding biodiversity. Luckily for managers, industrio-logic concurs with this biosphere rule.

Rules in action
Few companies have built sustainable manufacturing systems that conform to all three of the rules. Shaw Industries, a Berkshire Hathaway company, has come close. Shaw produces carpet tile, an industrial flooring used in office buildings. In 1999, Shaw embarked on a major initiative to rethink its business.

Carpet tile is made of backing, which holds the carpet flat, and face fiber, which creates the soft walking surface. Until 1995, Shaw produced a backing made from PVC plastic. But PVC is potentially toxic and difficult to recycle, so, at substantial expense, the company went in search of a more sustainable solution.

Its choice of Nylon 6 face fiber, branded Eco Solution Q, and polyolefin backing, called EcoWorx, gave Shaw materials that could be cycled from high-value application to high-value application without losing performance or functionality.

The company developed a production system that could take carpet at the end of its useful life, separate the backing, grind it up, and put it right back into the manufacturing process. Coming out at the other end was brand-new carpet tile.

The primary input for both the backing and the fiber of most carpets is petroleum. When Shaw began its efforts, oil was $19 a barrel. With oil prices at five times that, the company seems like a savvy visionary.

Phasing in
Because a shift to sustainable manufacturing is dramatic, managers are likely to confront organizational rigidities as they try to implement the biosphere rules. Those rules can, however, be phased in over time in a way that limits disruption.

Step 1: Think fewer materials. Rethink sourcing strategies and simplify the number and types of materials used in production.

Furniture maker Herman Miller had more than 200 components in its leading Aeron desk chair. It parlayed this knowledge into the subsequent design of its award-winning Mirra desk chair, released in 2003, whose dramatically simplified materials palette is 96 percent recyclable.

Step 2: Rethink design. To make virtuous recycling work, managers should plan at the beginning of design for the end of their product's useful life. Environmentally conscious managers have tried to minimize the materials in their products in the name of eco-efficiency. This makes sense if the products are to be thrown away when customers are finished with them, but it can be insidious if you're trying to recover the materials economically.

Step 3: Think scale economies. A parsimonious palette and a virtuous recycling process can establish sustainable platforms for entire product lines.

In 2005, outdoor gear retailer Patagonia announced just such a platform strategy in partnership with Teijin, a Japanese fabric manufacturer. Teijin virtuously recycles Patagonia's Capilene brand performance underwear into second-generation polyester fibers that Patagonia reuses in the following season's clothing.

Simplifying a materials palette for sustainability reduces supply chain complexity, shrinks the vendor count, generates volume discounts and improves the service of suppliers as more business is sent their way. Companies may discover that cost savings emerge from the virtuous recycling of materials. For example, Patagonia's energy costs to recycle the materials in its underwear are 76 percent below those for virgin sourcing.

Step 4: Rethink the buyer-supplier relationship. Companies will have to manage the transition period as a product goes from 100 percent virgin materials to nearly 100 percent virtuously recycled materials.

That will require finding ways to profitably recover products and put them back into the production process.

Following the biosphere rules will radically change the traditional buyer-supplier relationship: Customers will play a dual role as buyers of the company's products and suppliers of its materials.

Managers will also face the complex issue of reverse logistics – getting the used product back to the factory for reprocessing.

Patagonia, for example, urges customers to mail back their used (and, it is hoped, clean) underwear or drop it off at retail outlets.

Gregory C. Unruh is the director of the Lincoln Center for Ethics in Global Management at the Thunderbird School of Global Management in Glendale, Ariz.

For another angle on turning to nature for inspiration, Biomimicry, design inspired by nature, is becoming a core sustainability strategy for companies looking for ways to cut their ecological footprints.