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Retailers who pursue a green agenda have a substantial opportunity to simultaneously reduce costs, according to a new study by SSA & Co., a global operations consulting firm. The study, “Going Green in the Retail Industry,” draws on more than 20 environmental projects with leading retail companies. Among the results, the study found retailers were able to improve their performance by an average of 30 percent to 40 percent in areas such as energy consumption, recycling and waste reduction, saving those companies millions of dollars annually.
“Going green isn’t just good corporate citizenship -- it’s a strategy for driving out inefficiency,” says Suzanne Long, SSA & Co.’s retail practice leader. “Retailers spend millions of dollars on their green agendas, but never see the opportunity those agendas present to operate smarter, more efficiently and with lower cost.”
According to Long, a 15-year veteran of the retail industry, efforts to reduce environmental waste ought to be a huge target for retail managers. A recent study of the grocery industry, for example, estimated that nearly $20 billion worth of food products are thrown into the waste stream annually. “Retailers should be attacking these issues with full force, not only because it’s good for the environment, but because it's an incredible opportunity to improve financial performance.”
“It is a myth that going green means increased costs,” says David Niles, president of SSA & Co. “The fact is, environmental waste and inefficiency are no different than other types of waste and inefficiency in a business. By using factual data, solid analysis and focused effort, we have been able to save retailers tens of millions of dollars annually.”
SSA & Co. helps retailers go green profitably through a methodology founded on the principles of Lean Six Sigma, a process improvement methodology. The three critical steps in this methodology, as applied to environmental projects, are:
1. Identifying the greatest sources of waste
2. Conducting statistical analysis of the causes of that waste
3. Addressing process fundamentals that make green initiatives possible
“Going Green in the Retail Industry” also provides examples of the impact of employing process improvement methodologies in green projects. For example, one U.S. retail company reduced cardboard and plastic waste by more than 4 million pounds annually, reduced compactor waste by more than 10 million pounds annually and reduced total bag use by 8 percent, or more than 14 million bags per year.