Lean, green and productive

In tough economic times, the drive to business excellence is more important than ever – reality highlighted by the line-up of local and international speakers at last month’s Learn-Share-Grow conference in Queenstown.
At what was billed as the first carbon neutral-certified event of its kind in New Zealand, the message was all about how to think leaner, be greener and become more productive – and there was plenty of information as to how various organisations had done just that.
Amongst the key speakers was Roland Jahnke, director of Deutsche Post World Net (including DHL) which, with workforce of over half million is engaged in just about every country in the world. It is also the first such company to set measurable goal to reduce its carbon footprint 30 percent by 2020 for each mailed letter, transported container and square metre of space used.
Stakeholder engagement is very much part of the rationale behind the company’s move – and the push is coming from consumers and customers who have their own climate goals as well as from shareholders and the wider society, says Jahnke. “Our carbon footprint is something we cannot ignore.”
The company is major player in the transport sector which, according to the UN, accounts for about 26 percent of the world’s annual energy usage. It operates one of the world’s largest private plane fleets, handles the shipment of around 2.8 million containers year and utilises over 120,000 vehicles and trailers. It also offers an exemplar for Kiwi exporters wanting to minimise their own transport costs – and reduce their carbon footprint.
The company has already reduced its plane fleet, optimising aircraft routes and replacing its 120,000-strong vehicle fleet with more fuel-efficient options. It is also planning to utilise new, more environmentally friendly planes in the near future. But the GoGreen initiative can only be achieved by getting buy-in from staff, says Jahnke. When they were asked for input in April this year, company employees came up with 11,000 suggestions for green initiatives, says Jahnke.
“Employees want to give and with this move to reduce our carbon footprint, we are also doing something they can be proud to be part of.”
Jahnke outlined the company’s transformative stages from the “big bang” of postal reform in 1989 when it started its journey from obsolete production processes in historic buildings to “No. 1” worldwide in logistics by 2005. It then focused on moving from “biggest” to “best” – introducing its First Choice (for customers) programme and empowering its employees to improve quality and productivity toward world-class performance. The principle of sustainability, which is part of an overall ‘corporate social responsibility’ programme, has played key role, said Jahnke.
He emphasises the need to not approach “sustainability” as separate issue but to look at it as part of an holistic approach alongside economic and social goals. On the latter, Deutsche Post uses its logistics expertise and worldwide network to provide disaster relief and prevention – in tsunami-devastated Indonesia and working with UNICEF to cut malaria deaths in Kenya.
Innovation both in product and process will play big part in reaching the company’s carbon reduction goal, says Jahnke.
“Our focus is really clear – to become sustainable – and if project makes sense then we will do it; if innovation makes sense, then we will push money at it. There are always different points of innovation.”
As to how New Zealand companies might approach their management of carbon emissions under the new Emissions Trading Scheme (ETS), several speakers highlighted how the systematic measure/improve approach of quality management could be applied to the task.
University of Canterbury senior lecturer in operations and quality management Pavel Castka, who serves as an expert on global standards panels, noted that the driving forces behind managerial decisions to get involved range from coercion to genuine interest or business opportunity. Approaches range from operational improvement and improving risk management to elevating corporate reputation or enhancing human resource management, while strategies can generally be divided into focusing on innovative and continuous operational improvement or focus on compensation.
Starting points for managers are risk management assessment including the cost implications of ETS for your business; value chain analysis; and relevant standards/certification. The whole exercise, he said, can bring benefits – from cost savings from improved processes to revelation of new opportunities.

Moving from command/control
One of the most interesting presentations at the conference came from Sarah Benjamin from UK-based consultancy Vanguard which helps service organisations shift from command-and-control to systems-thinking approach to the design and management of work.
She told conference delegates that the present management paradigm of command-and-control thinking (top-down perspective, functional specialisation, decision-making separated from work) leads to significant sub-optimisation – higher costs, poor service and low morale.
Benjamin outlined the three big mistakes of this approach.
1.Failure to understand the nature of demand and treating all demand as units of production. There are, she said, two types of demand – value (what customers want) and failure (not doing something right). When failure demand is running at 40 percent, the resourcing implications are huge.
2.Assuming workers can be held accountable for the work they do, whereas 95 percent of variation in worker performance is actually governed by the system.
3.Management acting in ways that damage the organisation’s ability to absorb variety – only people can absorb variety and they need to be in control, not controlled.
She also presented some counter-intuitive ideas. The cost is not found in the transaction but in the workflow. Instead of thinking that standardisation is good, design against demand. Rather than controlling through budget, targets and rules, control using measures versus purpose.
Management thinking needs to shift its perspective from top-down to outside-in, its design from functional specialisation to focus on demand, value and flow, and its decision-making from being separated from the work to being integrated with it. Instead of measuring budget, targets, standards, service levels and activity it should look at capability versus purpose and instead of an ethic based around managing budgets and people, managers should act on the system.
So far, so theoretical. But how does it work in practice.

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