Day: December 10, 2015

What Is a Sustainable Business?

The Earth’s natural resources are not infinite. As the world’s burgeoning population places increasing strain on those resources, sustainability has grown in importance. From maintaining environmental ecosystems to manufacturing goods from recycled materials to developing renewable energy sources, sustainability has become the modern watchword for efforts to meet mankind’s present needs without jeopardizing the survival of future generations. Perhaps because of the relative newness of sustainability in the social consciousness, defining sustainability in a business sense is still a bit of an abstract art.

Consensus is only just beginning to gel about what it means to operate a sustainable business. While some companies continue to define sustainability in terms of resources used and recycled, more businesses are taking a broader view. According to a 2008 report by the Institute for Supply Management, “The largest percentage of respondents (37%) indicated that their companies define sustainability as ‘the triple bottom line’ — the integration of social, environmental and economic objectives.”

The survey polled a broad section of U.S. supply professionals including manufacturers, government, transportation, finance, healthcare, utilities, service providers and other players in traditional U.S. supply chains. However, manufacturers made up the bulk (45%) of the respondents. Here’s the breakdown on how survey participants said their companies defined sustainability:

  • 37% social, environmental and economic issues 
  • 9% social and environmental issues only
  • 11% environmental issues only
  • 11% unsure of company’s definition
  • 14% company had no definition
  • 11% in process of developing definition 

While the ISM report indicates that considerable differences in individual perception remain regarding various components of sustainability, the ISM survey indicates that U.S. industry is moving closer to adopting Carter and Rogers’ 2008 definition of sustainability:

“… the strategic, transparent integration and achievement of an organization’s social, environmental and economic goals in the systemic coordination of key interorganizational business processes for improving the long-term economic performance of the individual company and its supply chains …”

While consensus is growing for the broader definition, the survey found that companies defined different elements of sustainability quite differently. For example, when asked to provide examples of how their company related “community” to sustainability, respondents replied their efforts were directed as follows:

  • 17% volunteerism
  • 17% supporting community through use of local suppliers
  • 25% financial value of sourcing through local suppliers

While the ISM report focused on sustainability in the U.S. supply chain, DJ Products would be interested to know how material handling firms and their customers define and utilize sustainability. Click “comment” to share your views.

Bootstraps Still in Fashion for Budding Entrepreneurs

It’s heartening to hear that entrepreneurship is alive and well in America despite the dismal economy. A new business organization is growing in the heart of the American Midwest where it seems that bootstraps are still in fashion! The International Bootstrapping Association held its inaugural meeting in Columbus, Ohio this week. Its goal is to give budding entrepreneurs, known as bootstrappers, a leg up, help them get started, and teach them to survive on self-funding while the economy fights its way back to full recovery.  

“A bootstrapping entrepreneur has to solve problems with creativity and perseverance because they can’t buy the answer,” association co-founder Bill Troy told Margaret Harding of The Columbus Dispatch in an article that appeared on April 10, 2009. “They have to come up with some creative solution that doesn’t cost money.”

Most entrepreneurs don’t have the luxury of investment funding, particularly in the current economy. To keep American entrepreneurship alive, successful Ohio entrepreneurs have pooled their talent and resources to create a self-help organization by entrepreneurs for entrepreneurs. The organization provides an opportunity for would-be entrepreneurs to learn from the start-up experiences of their already successful, experienced counterparts. The group hopes to create a model that could spark similar chapters nationwide.

The first meeting debuted with a panel discussion followed by work groups. “We really focus on experience, not advice,” Troy, president and founder of Troy Research, told the Dispatch. The group takes a real-life approach to problem solving during its discussions. “It’s what people have really tried and done in the situation, not people telling you what you should do,” Troy explained.

Concerned about the pitfalls of investor-driven business, as all too clearly elucidated by recent events, the Ohio group aims to give entrepreneurs the tools to survive on their own. Troy believes that to survive U.S. entrepreneurship needs to return to the perseverance and scrappiness that defined its early pioneers.

As innovators in the field of ergonomically-designed, battery-powered material handling equipment, DJ Products understands the challenges faced by today’s budding entrepreneurs and salutes the launch of the International Bootstrapping Association. 

Light Glimmers at End of Tunnel

A light is beginning to glimmer at the end of the tunnel. Financial gurus are now predicting that the recession will ease by the end of the year. That’s the prognosis of financial experts assembled by Dow Jones Indexes to assess the effect of President Obama’s stimulus package and the government’s efforts to combat the economic recession.

Gus Faucher, director of macroeconomics at Moody’s Ecomony.com, told David Pitt of the Associated Press that he expects the economy to pull out of America’s longest post World War II recession by the end of the year, ending 24 months of trials and tribulations. Experts expect unemployment to peak at 10% by mid year, thanks primarily to the federal $787 billion stimulus package. Without government intervention, Faucher said unemployment increases would have continued throughout 2009, rising to 12% and possibly higher.

“That would take what is now a severe recession and actually turn it into a deep depression,” Faucher told the Associated Press. “We think the fiscal stimulus package is vital in turning around attitudes toward the economy.”

The assembled financial gurus also predicted a mid-year turn around in home sales with a slow rise in prices expected in the last quarter of 2009. While home prices are not expected to return to the inflated values of two years ago, prices will definitely improve from their current record lows. Home prices are currently running at 35% their average value.

As federal programs buy up toxic assets, banks and financial firms will stabilize. Financial experts expect credit to be available again by the third quarter of this year. While credit terms and standards will be tougher than during the feeding frenzy that led to the current collapse, credit will be obtainable by both businesses and consumers.

All of this is good news for struggling American companies and consumers. Of course, given the size of the federal debt it’s taken to stop the bleeding, we’ll be paying for this for years to come. But it is heartening to hear from the specialists that the patient will live.

At DJ Products, we’ve never doubted that America would recover. Sure, we’ve been as concerned as everyone else; but Americans are tough fighters. Sometimes it seems that we’re at our best when we’re cornered. A lot of businesses have had to cut back, lay off and make tough choices during the current crisis. But the worst is nearly over and it’s time to think about the future. As everyone gets back on their feet, we want you to know that you can depend on quality DJ Products’ material handling products and our superior customer service to help you get back in the game.

Consolidation Mergers Can Strengthen U.S. Industry

Consolidation is the new industry watchword. As we discussed in our last post, industry experts expect consolidation to affect every sector of the U.S. economy as we struggle to climb out of the current recession. The good news is that some experts, particularly Federal Reserve Chairman Ben Bernanke, are now cautiously predicting an end to the recession this year. Echoing a statement he made to Congress last month, Bernanke said in an interview with CBS’ 60 Minutes this week that if the government’s shoring up of the U.S. banking system succeeds, “… we’ll see the recession coming to an end probably this year.”

That doesn’t mean that U.S. business will return to its pre-crash ways. The hard lessons learned during the past year are expected to have a lasting impact on U.S. businesses. Savvy business owners are expected to continue leaner, more-efficient practices adopted during the recession to protect themselves against a still uncertain future. But we’re not out of the woods yet. Consolidation is playing a major role in weeding out weak and under capitalized players and broadening the scope of strong companies. Consolidation mergers could play a significant role in strengthening U.S. industry across the board.

In a March 16, 2009 article posted on SupplyChainDigest online, Materials Handling Editor Cliff Holste says, “SCDigest predicts the automated materials handling industry will soon see rapid consolidation …” Holste reports that a merger between two of the conveyor systems industry’s biggest suppliers is imminent, barring any last minute glitch. It could be the first of many. Holste and SCDigest believe the material handling industry is ripe for consolidation. Contributing factors include:

  • Over-abundance of suppliers in a shrinking market. Even before the recession, Holste reminds us that many industry watchers didn’t believe there was enough business to support all the players profitably. The recession just accelerated what might have been a slower winnowing of the ranks.
  • Consolidation allows companies to increase their product and customer scope while cutting expenses, primarily in personnel cuts across the board. Mergers “can goose profits of the combined companies,” Holste notes, while nearly halving expenses.
  • Well capitalized companies are buying out poorly capitalized ones resulting in stronger firms better able to withstand the economy’s financial roller coaster and provide long-term products and services to their clients. 

Tough Economy Expected to Force Industry Consolidation

Consolidation across the American economy is one of the most discussed results of the down-turning economy. While economic gurus aren’t predicting a return to national monopolies, Americans will definitely have fewer choices to make by the time the economy turns the corner in the next year or two. Most industry watchers agree that this across-the-board contraction in U.S. markets will have a positive effect, both for industry and the consumer. Consolidation is expected to force industries in all sectors of the economy to become leaner and more efficient while improving product quality and customer service.

Times have changed since the breakup of the monopolies that controlled the American economy and workplace in the 1800s and early 1900s. It’s been a quarter of a century since the government split apart the Bell Telephone System, America’s last remaining monopoly, and some would say, opened Pandora’s Box. The plethora of phone options and short-lived providers that followed gives credence to the current view that too much competition is not always a good thing. Customers became annoyed by the constantly changing phone rates and service options. Many of the new companies were unable to maintain promised service levels and failed. While there is still healthy competition in the telecommunications industry today, there are fewer big players and each one is stronger. Consumers may have fewer products to choose from, but products are more dependable and reliable. 

The U.S. auto industry is undergoing a similar consolidation. True, if GM can’t stop the bleeding, the Big 3 may become the Big 2 which would be a considerable loss to U.S. industry. But on the plus side, each of America’s auto makers is pruning out the dead wood. Low-profit lines like Hummer and Saturn are on the chopping block. Labor contracts are being renegotiated to more reasonable and sustainable levels. Detroit is finally releasing its grip on “bigger is better” and embracing a fuel-efficient future. When the dust settles, industry experts expect the U.S. auto industry to be leaner, meaner and more competitive with foreign auto makers.

The same healthy consolidation is expected to happen across most sectors of the U.S. economy. Stay tuned Wednesday for more on this subject.