The colour of money

E&T discovers that going green should mean saving money, not spending more.

Since adopting a new 'lean and green' operating philosophy, IT manufacturer Blue Coat Systems is on target to reduce its carbon dioxide emissions by 3,000t (tonnes) a year.

It also expects to save $5m a year in overheads and other costs, says Dave Cox who, as Blue Coat's senior vice-president of operations, is responsible for driving forward its 18-month-old BluePlanet environmental initiative.

Blue Coat designs and manufactures networking equipment, such as Internet security and gateway devices. Most of its uniqueness is in its software, which it installs onto hardware built by contractors in China. BluePlanet has brought people together from across the company in multidisciplinary groups focused on doing things better.

Beyond WEEE and RoHS

Cox says the company realised some years ago that it had to do something on the eco front, if only to meet the demands of regulations such as the EU's Waste from Electrical and Electronic Equipment (WEEE) and Restriction of Hazardous Substances (RoHS) directives. However, the idea that going green could also make it more efficient and save money seemed pretty unbelievable at first.

"When we embarked on this I was leery," he admits. "I said yes we could do it, but isn't it just a cost? Isn't it money we could spend elsewhere? We embraced WEEE and RoHS, but those are table stakes - they are minima.

"But a consultant convinced me to try bringing people together for multidisciplinary workshops, and I was blown away by a hardware engineer realising that, while he had been designing for ease of assembly, he could also make the product easier to disassemble and therefore easier to recycle.

"That convinced me to try focus groups and ask people how important the environment is to them. Two or three people would say, 'If you start an environmental initiative, I want to be part of it'."

So the company invited its employees to submit ideas on how it could be lean-and-green, with seven initiatives coming out which it rolled together as its BluePlanet programme.

However, while BluePlanet's collaborative groups are initially built on people's concern for the environment, they are also racking up all sorts of financial benefits.

Reduce, reuse, recycle

Blue Coat recently launched a recycling service: customers upgrading from one of its older devices to a newer model are invited to use the new carton to ship their old one back for free, where its parts will be reused or recycled.

Not only could this reduce waste by as much as 90 per cent, as the company estimates it will be able to use much of what it gets back, but that reuse will also generate operational savings of up to $750,000 a year, according to Cox.

"We have to do take-back from a regulatory perspective, but we could have outsourced it, for example," he explains. "Now we are able to refurbish returned parts and use them for repairs and replacements - it avoids us having to buy end-of-life components."

Other initiatives that have saved Blue Coat both carbon footprint and money include consolidating some 80 computer servers into just three, and a switch from providing free canned soft drinks to free soda-fountains, which the staff actually prefer.

The company also now holds its general management meetings virtually, which it reckons saves $200,000 a year.

But perhaps the biggest savings are in the manufacturing process.

The company's network devices are built by subcontractors in China. Previously they travelled by sea to California for assembly, testing and software installation, and would be shipped to the customer by air.

Following a review, the company has now pushed the rest of the manufacturing and test process to China and moved software installation to its regional offices, so a device bound for Europe will now go straight there from China by sea. Cox claims this alone is saving $2m a year. 

Quantifiable ROI

"We attach a very quantifiable ROI model to every initiative, and we also look at it as a competitive advantage," he says. He notes that some customers - especially in areas such as government - demand environmental policies from supplier companies, as do some potential employees, and that not all Blue Coat's competitors can match it in this respect.

"I believe that, in future, companies that aren't focused on this are going to miss out on the top-notch employees coming onto the market," Cox says.

He adds: "In the case of the environmental subset of CSR [corporate social responsibility], we need to connect the dots for people to show this is win-win for everyone. Eighteen months ago I was sceptical; since then I've been amazed by what we've been able to do."

But if there were so many cost savings just waiting to be seized, how come it took the BluePlanet initiative to bring them out? Cox says it's easy in business to lose sight of the bigger picture.

"In our industry, you're racing so fast and growing - it's all about chasing revenue," he explains. "It takes an initiative like this to pull people together, and it requires the CEO or someone at vice-president level to keep it going.

He adds that the key to the new lean-and-green operating model is the use of multidisciplinary groups to build strong connections between departments, sites and business functions that had formerly become hierarchical and siloed.

Cross-functional thinking is key

"A big part is the cross-functional thinking, while the motivation [for staff] is what's in it for them," says Cox. "A lot of people are environmentally motivated, but you can also show them cost reductions, brand building for the company and so on. It also requires cross-site thinking, for example our site managers have best-practice meetings.

"So far, the only blockers have been people such as engineers who don't believe in global warming. They can have strong political beliefs and some have challenged me. I say: if the carbon footprint element doesn't motivate you, then how about the cost reduction element and how many new employees the company could hire with the $5m we'll save this year?

He continues: "I find the percentage of people who are cynical is very small, but you do have to make it real for people - put it in terms they understand. The key is to offer [green and financial] benefits, as employees are motivated by both."

So what is Cox's advice for anyone else wanting to go lean-and-green? "Either find a consultant to help you get started, or start interviewing the people in your organisation to find out who's already interested," he suggests.

"If people can see the opportunity, you cannot afford not to do an environmental programme because you will be amazed how much it will benefit you. I didn't believe it would win for the bottom line."

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