resource management
There is a profound change going on in business attitudes as seen in several business publications recently. A growing focus for companies is on conservation of energy and other natural resources (i.e., water, raw materials, etc.) they depend on for their product. Lately, there has been relatively great volatility in the global supply and demand of many of these, meaning risks (both cost and even business survival – of not being able to make your product in a reliable manner at a reliable cost) are real and potentially significant. For most industries, costs for energy and natural resources are a greater percentage of overall business costs than ever. Controlling these costs – or at least keeping them stable – are of growing concern.
laptopWhat is driving this price and availability volatility? Our global economy. Currently, we have about 7 billion people on Earth, but of these about 1 billion are “like us”: high energy and resource users. If you are reading this article, you probably are using a smart phone, personal computer, printer, or some combination of all three. And if you own and use these, you probably also own and operate one or several TVs, music systems, automobiles, go on frequent trips, and can control your comfort (heating and cooling) with the touch of a few buttons both at home and at work. Yes, you are a high energy user. There is nothing wrong with this. We work hard and deserve to use and enjoy the latest technologies. But this comes at a cost. According to the demographers who study this, by 2050 we will have about 9 billion people on Earth, but of greater concern is that we will triple the number of people who are high energy and resource users, over 2 billion additional middle class people in less than 40 years. Why? Because of economic growth in the BRIC countries. This is not a theoretical exercise based on a computer model. We are seeing frequent reports of large numbers of people in China, India, Latin America, etc. trading in their bicycles for automobiles, their multifamily, poor housing accommodations for larger, single family, climate-controlled homes, etc. This drives up global demand and prices for all of us gasoline, water, building materials, etc.
However, the resources that everybody on Earth needs to prosper and grow into this lifestyle (energy, drinking water, chemicals, cement, plastics, food) are, for the most part, finite. Therefore, based on discoveries of new sources and availabilities of such resources, both shortages and gluts of these resources have and will continue to occur, affects resource availability and price and the very the operations of any company or plant. For example, natural gas prices are currently quite low in the U.S. because of new sources being successfully exploited. Oil and coal, the fuels of choice in most of the developing economies, leads a growing global demand that will cause their prices to increase for all. Companies dependent on oil and coal to supply heat for processes or comfort will likely be hit hard in the bottom line by future volatility in energy prices and perhaps even availability of the fuel.
Therefore, your role as EHS or Sustainability Manager may need to change in the coming years as companies recognize the importance of conserving usage and diversifying sources. Instead of protecting your company’s emissions and discharges from violating rules and from damaging the local environment and worker and public health and safety and counting carbon and other parameters, your role may also include managing the needs of these valuable, dwindling resources. The less dependent your company is on energy, water, etc. (i.e., the less needed to produce the same amount of product), the lower your company’s costs and business risks are. Similarly, the ability to diversify your sources of energy, water, raw materials, etc. (i.e., ability to combust more than one fuel type, multiple agricultural raw material sources and areas for fresh water) will result in a much lower risk of not having a key resource available and to keep manufacturing your products consistently and to meet your business goals.
For example, I worked on a project several years ago for a U.S. manufacturer which wanted to build two new manufacturing plants in Southeast Asia making certain consumer products. One of their major concerns was the source of energy to power large boilers to produce the large amount of heat needed for prodution. We investigated sources of energy easiest available in that country, including renewable sources, and modeled likely long-term prices. We recommended (and the client accepted) designing the boiler system to combust one fossil fuel and one renew-able fuel source (local, easily regrown trees) for these new plants. These are the most available long-term energy sources, and will reduce their risk of running low on energy.
Business leaders are beginning to acknowledge this critical challenge. Therefore, your role in your firm may grow to include managing critical resources. You may need to keep track of the availability and of prices of these resources and contribute to determining and implementing strategies for your processes concerning usage of natural resources to conserve their use and diversify sources.
Management of natural resource usage does not only involve minimizing your direct dependence on those that you need to make your product, but also should include minimizing their need for use in your products used by your customers. For example, if your products force your customers to have to use (and spend) more on energy to operate them, then your customers will begin to investigate alternatives that are more energy efficient. Conserving resources by your products makes them more competitive.
So watch out for the new buzzwords of resource management being important to a well-being of a company given their growing relative costs. Provide the technical expertise and work with your business professionals to reduce costs and risks for long-term gains.
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