Make Green Initiatives Lean Initiatives: Another tale of waste.

Today's Financial Post had an interesting article about a success story of using "Prepaid corporate incentives".  There is a large photo of  smiling man who's business is going greener by giving visa prepaid gift cards as incentives to customers.

K Dental was looking to reduce its carbon footprint , says Tom Pizio manager for sales and business development at the Toronto-based dental equipment supplier. "We realized clients were buying just a few items at a time. In some cases we were sending 10 to 15 shipments a month to one customer."

"Now about 50% of our customers have reduced the number of shipments to support our Eco project" On average, he says, K Dental sends out 100 gift cards per month. 

Well at first glance it may seem to be a nice green initiative, but I will tell you why my spidey senses started tingling on this one.  In the world of Lean, every business is better off giving the customer what they want, when they want it. That is the meaning of "Customer Pull" or Just-in-time. The lean business must produce smaller batches more frequently ( gaining substantial profits in doing so!). On the other hand, giving incentives and discounts to push larger and larger batches on customers is wasteful, in fact it is the very definition of a "Push"system.  The K Dental approach is adding cost by managing waste instead of reducing cost by eliminating waste. In this case the customer is effectively paid to take more product at a time to "gain" the carbon footprint of the reduced deliveries. If this company took a Lean approach to reducing their carbon footprint this initiative would be the absolute last thing they would do. 

Use Lean to reduce carbon

 If a company put lean techniques to work on a carbon footprint reduction initiative, then they would  be sure that the most cost effective measures were taken.  There would be data collected so that the cost and impact of carbon reduction initiatives could be compared, and the lowest cost/highest impact projects would be targeted for priority execution. If  analysis (a simple Pareto chart)  is done, they would undoubtedly find that it is more rewarding in carbon reduction (and dollars) to change themselves, not to pay customers to change for them instead.

Using Lean methodology to meet the customer pull is the fundamental way to extract maximum value out of the supply chain. Simply, by taking a lean approach to their business (including their suppliers) the carbon foot print would be reduced because of massively reduced waste in their own functions. By involving suppliers, where they naturally have leverage, carbon reduction is easier.  By the time they have thoroughly cleaned up (and leaned up)  their own act, they could approach customers about win-win partnering on efficient carbon reduction.  Think about it: if the customer truly wanted large bulk deliveries, you would not have to pay them to take it. 

In the end a  lean supply chain keeps more carbon in the ground, and out of the air, because the absolute minimum inventory of products is manufactured and transported. Nothing is made and trucked around, with no buyer, waiting to be discounted. That is both Green and Lean.