Today, many UK businesses are ensuring their development is economically and environmentally sustainable. Their experiences have largely shown that environmental and societal improvements go hand in hand with profit-making and improved competitiveness. Many small and medium-sized businesses (SMEs) are yet to embrace these great opportunities. Given the current climate, they may be struggling with their short-term survival (get in touch if you need to increase sales quickly or ensure that you can deliver reliably). Or they may simply not know where to start. The Organisation for Economic Co-operation and Development (OECD) recognises three dimensions to sustainable manufacturing: economic, environmental, and societal. Sustainability within the economy means creating jobs, contributing to the local economy, paying tax responsibly and generating profit. To be environmentally sustainable, your business must minimise waste and emissions, use energy and resources efficiently, protect biodiversity and minimise the use of hazardous substances. This article will look specifically at how you can improve your business’ social conscience.
Good practice is increasingly becoming seen as essential in the eyes of investors, customers, and the communities where you operate. The consequences of failing to be sustainable include fines, local unrest and customers choosing to go elsewhere. On the other hand, success can build your reputation, attract investment, and secure repeat business and loyal customers.
The first area you can look to improve your sustainability within society is building good community relations and treating your suppliers fairly. The best way to keep your suppliers happy is to create win-win deals where both businesses benefit. Most suppliers offer a discount when you buy in bulk. They will also likely have minimum order quantities which encourage larger orders. This isn’t good for your business… Yes, you will have gained materials/product at a discounted rate, and yes, the purchasing department will look good with prices and variances. But to look at the business holistically means recognising that this is not a good deal for the company. What you gained from the discount you likely lose in storage costs and overproduction. Depending on your industry, the goods you are now storing will have some level of perishability or shelf life – then the pressure is on to sell them quickly. Or maybe they simply get damaged in storage (through moisture, transportation, relocation, etc). Ultimately, the biggest problem with buying in bulk from your suppliers is that your cash flow is negatively affected. It is never good for a company’s cash flow to have large amounts of money tied up in inventory that won’t shift, or at least won’t shift for a while. This is money that could (and should) be spent elsewhere: developing new products, adding new lines, upgrading processes, and so on. Suppliers often encourage businesses to place large orders. On the surface everyone stands to benefit – the customer gets a discounted rate, and the supplier secures large orders which are more convenient to package and produce (e.g. less machine start-ups). However, suppliers rarely recognise the damage that making and supplying big batches inflicts on their capacities and lead-times. The win-win deal is to order less, more frequently. This way the supplier can easily absorb the smaller quantities and guarantee shorter lead-times – giving them an edge on their competition. They will also have a more regular stream of invoiced sales rather than the more unstable system which promotes customers buying large quantities once and not returning for months and months as they have purchased more than enough already. In short, repeat business is far more likely. The win for your business, as a customer, is a dramatically improved cash flow and the guarantee of shorter replenishment lead-times. This win-win solution would mean your business does its bit for the wider community. This is a sustainable solution that benefits everyone.
Respecting human rights and ensuring good working conditions is essential to being a socially conscious business. Making sure your people are safe and happy at work is key. This can be achieved through many different means: offering development opportunities, maintaining good working relationships, recognising, and rewarding good work… the list goes on. To ensure good working relationships we promote the Thinking Processes Tools of the Theory of Constraints.
Resolve conflict in a respectful way using the Evaporating Cloud method. When two conflicting parties share a common objective, there is always a solution which can satisfy both sets of needs to reach a shared goal. Another way to ensure good working relationships is to go through the layers of buy-in when making important decisions. This means aligning and communicating with colleagues to get agreement on the problem, the direction of solution, the benefits and how to deal with obstacles. The huge benefit of involving everyone in the discussion is that they understand how their job/role fits into the big picture and there is ultimately less stress and friction.
Mental health has been brought to the forefront of business considerations following the anxiety surrounding the pandemic. A recent news story saw the dating app Bumble give all its staff a week off work to recover from the stress of the pandemic and prevent people from burning out. Of course, Bumble is a huge company – this idea simply isn’t feasible for most SMEs. However, there are plenty of options to help improve the mental health of your workforce. Some companies offer mental health days off, some offer gym memberships or yoga classes, some are offering access to counselling, or flexible working hours – whatever works for you.
If you are not looking to invest in anything specific to improve the mental health of your workforce, a simple and free way to achieve a similar result is simply to avoid overloading them. There are many benefits to controlling the release of work into the system (shorter lead-times, higher output, improved Due Date Performance – get in touch for resources that can show you how). One of these benefits is that you will have better visibility over the Work In Process (WIP) and will be able to ensure your people are never overloaded. A manageable workload will improve the mental health of any employee. Another very simple way to boost your team’s mood is to acknowledge their good work. Use positive reinforcement to encourage the behaviours you want to see in your organisation and recognise people’s efforts. Naturally, this will make people feel seen and strive to continue their good work.
There are many ways to become a more socially conscious business, we have only touched on a few here. We live in a society which is constantly confronted with social justice issues. The Black Lives Matter (BLM) protests last summer, the Women’s Safety movement sparked by the death of Sarah Everard back in March, Marcus Rashford’s #EndChildFoodPoverty petition, the continuous battle against climate change… these are just some of the issues prevalent in our society. Any business seen to be promoting social justice will likely benefit from a good reputation and increased customer loyalty.
By Lauren Wiles, Phil Snelgrove
© 2021, Goldratt UK