Sustainability: the key to profitability?
06 March 2019
Supply chains are under pressure to put purpose ahead of profitability, but it is possible to have both. Stewart Gosling of Red Diamond Distribution, the exclusive UK importer of Mitsubishi Forklift Trucks, explains how.
Big opportunities are afoot for consumer companies, with some 1.8 billion people set to join the growing consumer class by 2025. Alongside this, households are expected to spend even more of their growing budgets on personal goods.
Experts predict that the next 20 years will be ones of strong growth — typically at a rate of 5 percent per year. Figures like these are impressive to the much-needed investors who make it all possible.
But companies need to grow in a sustainable way. Poor environmental and social impact affects performance, bringing growth to a standstill or worse.
For a business to make and sell consumer products, it needs the permission from shoppers, investors and regulators to do so, as well as affordable and reliable supplies of energy and natural resources.
We used to take factors like these for granted. But that’s no longer possible. Scientific consensus and pledges from governments and industry leaders are calling for dramatic improvements in this area.
Experts suggest that up to 90 percent of a company’s environmental impact can be found in its supply chain. Research from McKinsey indicates that choosing strategic suppliers with “green credentials plays a critical role”.
But it’s important to understand just why. There are three types of emissions that companies must account for: direct, indirect and embedded. Embedded emissions are those generated by your contractors and subcontractors along the supply chain.
And it is here where savvy businesses can make the biggest gains. But according to McKinsey, just one in four are.
Mitsubishi recognised early on that the environment businesses operate in has changed significantly.
With companies required to provide a quick and appropriate response, Mitsubishi is always looking for ways to increase the efficiency of its own operations. As well as a Green Procurement Policy, the organisation is supporting improvements to energy efficiency and solid waste emissions.
This means it can continue providing customers with products that demonstrate exceptional energy efficiency, without costing the Earth.
You see, sustainability is good for your bottom line. A recent study by HSBC revealed that nearly a third of the 8,500 companies surveyed — operating in 34 regions — plan to make sustainability changes to their supply chains for precisely that reason.
For those making these ethical or environmental changes, the main motivators for doing so are cost efficiencies (84 percent) and improved revenues/financial performance (84 percent).
Think about it. What’s good for the environment can be good for your pocket too. For example, making the switch from incandescent to LED bulbs can mean your lighting costs up to 80 percent less and they need far fewer changes.
And it’s thinking like this which has transformed Mitsubishi forklift and warehouse trucks in recent years. Just as Mitsubishi improved its practices as a company, its designers have done so too.
While their green policy requires our products to be eco-friendly, our designers have gone beyond this to help companies work smarter and more sustainably.
If you are running an electric truck in a challenging environment, it means you can use far less fuel and the truck will require much less maintenance. Realistically, you can expect to spend as much as 25 percent less over the truck’s lifetime, compared to an ICE truck. Making that switch alone could save a company up to £13,000 per machine.
Even better, EDiA EM three-wheelers can be equipped with 360-degree steering — eliminating the need for conventional three-point turns. For operators, it means no time wasted stopping — saving two seconds each time. Plus, it makes it safer and smoother to drive.
But even our IC engine trucks benefit from this kind of thinking. GRENDiA ES LPG models, for example, use a three-way catalytic converter that significantly reduces your truck’s fuel consumption. Over a typical five-year lease, that could give you savings of more than £10,000.