Simon Jacobson: Time to dust off that EH&S strategy
Simon Jacobson -- Manufacturing Business Technology, 4/1/2007
After years of passive compliance and lackluster software spending, manufacturers are waking up to the risks and opportunities associated with environmental compliance. Its broadening reach requires assessing and repairing the environmental risks across global supply networks.For many companies, the aging workforce that has held together yesterday’s disconnected environmental health and safety (EH&S) processes with manual work practices, homegrown software, and plenty of smarts is retiring—taking years of valuable knowledge out the door.
An AMR Research survey completed at the end of 2006 underscores how environmental concerns have captured the minds of both IT and line-of-business executives. For this year alone, 44 percent of companies surveyed indicated an 11-percent or greater increase in IT spend to support environmental compliance. Both parties expect increases in their budgets for environmental initiatives in the next year after discovering they need smarter commercial software and services to augment dwindling EH&S capabilities.
EH&S compliance spans production assets, materials, personnel, and processes—as well as how products are distributed and disposed. To succeed, it requires the architected development of composite applications that span multiple best-of-breed applications, and integration with the data models of enterprise applications.
Studies show increased funding for the incorporation of EH&S compliance into a company’s active compliance architecture. This will not only help pull EH&S compliance into the higher-profile scope and funding of an organization’s governance, risk, and compliance (GRC) strategy, but also will put environmental performance in context with overall organizational performance.
The current EH&S market is fragmented, and no single vendor has the full gamut of functionality. This makes the task of identifying software to support a comprehensive EH&S compliance strategy a very different proposition from a traditional ERP or CRM selection process. Additionally, it’s tough to integrate EH&S compliance throughout the organization without enterprise-class software, and, unfortunately for the short term, ERP does not stand for “environmental” resource planning.
As such, market leaders are responding by linking EH&S initiatives to corporate social responsibility (CSR) programs. Managers understand negative publicity is a difficult obstacle to overcome, and have identified environmental compliance as a cornerstone of their CSR initiatives. Many are currently working to establish corporatewide, systemic architectures for active environmental compliance, as well as defining their needs for increased IT support in these areas.
Consider this: The documentary, An Inconvenient Truth, was a hit with critics and the movie-going public. Homeowners are purchasing water-saving showerheads, dishwashers, and washing machines; and consumers are using more energy-efficient light bulbs to reduce their energy bills. Some consumers are willing to pay the price for environmental stewardship. The moment of truth, however, is when they turn their backs on the companies and brands that shirk their environmental responsibilities, and reward those that proactively “green” their supply chains.
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