A Starting Point in Making Production More Green

Dimitrios Matsoulis


This is a summary of an article titled "More from less: Making resources more productive" by Markus Hammer and Ken Somers published by McKinsey Quarterly in August 2015.

The quest to get the most output from the fewest resources is never ending. In manufacturing terms, this means wising up on how we use raw materials, energy and water, sprucing up our recycling and energy recovery strategies, and producing minimum waste.

Manufacturing activities are so complex and involve so many different parameters that we can always find an endless number of opportunities to improve and make our operations more profitable. At the end of the day, what makes the real difference is fine tuning the details.

To mobilize management and personnel to take action, it's important to look at the following parameters and communicate them properly across your organization:

Lean Activities

Pioneered by Toyota, the lean principle is now used extensively across the industrial sector. It eventually boils down to value-stream mapping, or, in other words, following a product all the way along its production cycle, or a service all the way through to its final point in operations. That analysis reveals what exactly is happening, and opens up the opportunity to question existing methods and propose improvements. In their article, Hammer and Somers mention the example of baking a cake. What would happen if we tried to optimize our ovens to limit heat loss and use as little electricity as possible, on top of finding a new use for every raw food ingredient we'd typically discard?

Theoretical Limits

In general, people don't like the idea of using fewer resources. One way to overcome this mindset is to think of parameters that make sense under ideal world conditions, and then compare them to the actual numbers. The difference between those two realms is usually in the losses -- that's where you should look if you want to establish realistic goals towards shrinking the gap between fantasy and reality.

Profit per Hour

Measuring financial performance in terms of total resources used is a typical performance measure. But some measures are a lot more meaningful than others. The traditional profit-per-ton unit doesn't take into account one of the most critical parameters of your operation: time. Two products might turn similar profits per each ton produced, but clearly the easier and faster one to make has the edge because we can produce and have the opportunity to sell more of it in a given accounting window. Profit per hour is a powerful decision tool that helps management steer a company towards faster break even times and a more profitable product mix.

The Analytics Advantage

Manufacturing involves so many parameters that it's impossible to make sense of the effect of each individual one, or even their many different combinations, in your organization's overall financial performance. This is where analytics comes in. It crunches through masses of data, investigates different scenarios and meaningfully highlights the areas that have the most potential. A precious material company used data analysis to investigate the correlation between yields and ore grades. It unexpectedly found out that sufficient oxygenation in the process overcame raw material quality fluctuations, and increased yields by 8% in just three months.

Company Culture

This is one of the factors that we so often overlook because of our fixation with methods, measurements and operations. What we do not realize is that once we get away from the "use-assemble-throw away" principle, both management and employees can approach their work with a more holistic attitude, and are more likely to dream up new ideas on how to improve your operation. When employees feel satisfied and useful, they're capable of coming up with a surprising number of approaches towards resource optimization. It's just a matter of tapping in on all that potential.