Performance Made Sustainable

Enabling Sustainability in the Consumer Industry

"Being a good steward of the environment and in our communities, and being an efficient and profitable business, are not mutually exclusive. In fact they are one in the same."

- Lee Scott, CEO Wal-Mart, Twenty First Century Leadership, October 24, 2005

At the recent Grocery Manufacturers Association Greenbrier Executive Conference, Linda Dillman, former Wal-Mart CIO and current executive vice president for sustainability, opened a compelling presentation on sustainability with the above quote from her CIO. Her presentation went on with a series of significant targeted savings including working with one category on packaging and process improvements to generate the following:

• Gallons of water saved----------------478.1MM
• Gallons of diesel saved----------------20.7MM
• Reduced # of trucks-------------------2.79MM
• Plastic resin reduction-----------------128.9MM lbs
• Reduced # of out of stocks------------50%
• Reduction in labor dollars-------------$91.4MM

While Wal-Mart with its 50,000 plus suppliers is taking a key role in building sustainability in its core strategies, we see similar concerns and efforts in leading global retailers including Lowe's, Target, Metro, Home Deport, Carrefour as well as leading manufacturers including Kimberly Clark, P&G, Unilever, Coca Cola and PepsiCo.

The questions many consumer executives are asking include:

• "Where should I place my emphasis and commitment?"
• "I know I have to leverage my manufacturing capabilities and processes; how do I reduce material requirements?"
• "Can I reduce waste by improving material utilization and machine effectiveness?"
• "Can I improve my transportation planning?"
• "Can I redesign packaging to maintain content levels, but lower the dimensions, weight and use of resin-based materials? Once I reach my targeted point can I still have continuous improvement?"

In a recent GMA report collaboration and operational integration were identified as two of the four enablers (strategic alignment and governance being the other two) for a successful sustainability program. As such, building initial manufacturing efficiencies and then creating a continuous improvement program is the cornerstone for reaching sustainability targets. Coupled with increased collaboration with retailers and distributors will support the underlying processes required to drive the requisite improvements.

The QAD Enterprise Applications 2007 (QAD 2007) Lean Manufacturing solution is positioned to support consumer-based manufacturing companies across all the various processes aligned with enabling sustainability. The underlying principles of lean manufacturing are to build effectiveness and efficiency across the entire supply chain and help companies maintain that through continued process improvement. These fundamental principles are also the building blocks for QAD's marketplace vision for a Perfect Lean Market. (Download the QAD Leadership Position Paper, Manifesto for a Perfect Lean Market to learn more.)

Consider the potential effects of applying lean manufacturing principles to the above Wal-Mart example. Could we see an additional 25 to 40 percent improvement over the next 3 to 5 years? Could manufacturers improve margins by 10 percent, retailers selling space by 5 percent and same store sales by 3 percent? Could sustainability drive the next paradigm shift in collaboration?

QAD Enterprise Applications is more than just Lean Manufacturing. Comprised of a full suite of applications that enable a consumer company to deploy and support a sustainability culture and program, QAD Enterprise Applications includes:

Where can QAD Enterprise Applications 2007 help our consumer products customers?

• QAD Enterprise Applications provides the core lean manufacturing solution for identifying overall requirements and aligning need to capacity ensures that production lines are optimized maximizing energy and raw product utilization.
  
  QAD Enterprise Applications also enables our consumer customers the ability to tightly align packaging material to specific production events resulting in more efficient use of material, reduction in waste and improved line and machine utilization.
  
• QAD Demand Planning provides the tools needed to support supplier and retailer collaboration, ensuring the right product is made at the right place at the right time. The ability to reduce short run times adds valuable production cycle capabilities, reducing the need for resource expense second and thirds shifts.
  
  The ability to make many and ship once significantly improves truck utilization and reduces fuel and other related costs.
• QAD Transportation Management Systems (TMS), working in conjunction with QAD's suite of consumer based applications, allows alignment with key shippers and generation of global regulatory documents to ensure that direct and indirect materials have arrived on-time. This reduces lost potential spoilage, improving manufacturing effectiveness and efficiency.
• QAD Enterprise Asset Management (EAM) ensures that plants, lines and machines are running at peak efficiency; this is a key component of enabling sustainability. QAD EAM ensures that spare parts are aligned with PM initiatives; PM requirements are flagged when required and that repair downtime is minimized.

Other QAD lean-based applications address the many aspects of meeting sustainability targets. More so, when aligned with process improvement programs they become the tracking, measuring and identifying sequential steps for improvement.

QAD understands the significant ecological and financial benefits that sustainability brings to manufacturers, retailers and consumers. We are strongly committed to working with our customers and, as part of the GMA thought leadership team, to the entire consumer manufacturing industry.

For more information, please contact your local sales representative or Phil Friedman, QAD vice president, consumer products at phf@qad.com.