Where does sustainability fit inside the four walls?
January 16, 2011 - MMH Editorial
What does it mean to go green in the warehouse, plant and DC? That’s a question I put the other day to Tom Pincince, CEO of Digital Lumens.
Pincince describes Digital Lumens as a intelligent lighting systems company, one that marries energy-saving LED-based fixtures with intelligence and controls “to provide 100% of the lighting you want at 10% of the energy.” The company focuses entirely on the industrial sector, servicing warehouses, plants and DCs “because these are enormous footprints that use lots of energy,” says Pincince.
Digital Lumens’ concept is that energy should be a managed asset, no different than inventory, raw materials, parts and components. “How you deploy energy in your facility is important,” says Pincince. “You shouldn’t just pay your energy bill, you should manage it. You should be strategic.”
The company designs everything from the fixtures to the software system that allows you to control the system from your desktop and provide the reporting that can be shared with stakeholders. The retrofitted LED fixtures use considerably less energy than traditional industrial fixtures; the software gives control over when those fixtures are in use. Instead of just flipping a switch in the morning, Digital Lumens’ customers can light only those parts of a facility in use at any given time. Pincince claims the approach can reduce the energy used for lighting by 90%. The ROI is typically two years or less.
I wanted to talk to Pincince because there is an interesting dynamic going on in the country right now.
Going green is definitely out of favor on Capital Hill where it is entirely a political discussion. The result is that whether you believe in climate change, global warming or whatever you want to call it, the political climate is such that we are ceding the emerging green energy business to other countries, including Spain and China. I just read a story in the Boston Globe about Evergreen Solar, a manufacturer of solar panels that is closing its plant in Massachusetts, laying off 800 manufacturing jobs and moving production to China. Low cost labor played a minimal role in the decision since labor is a very small part of the cost of making solar panels. Evergreen was lured away by the lost cost of capital and government incentives. China and its financial institutions are supporting the burgeoning green energy industry with interest rates so low they would make Ben Bernanke blush and very generous repayment terms. In this case, neither interest nor principal are due until the loan matures.
At the same time, sustainability seems to remain very much top of mind among corporate CEO’s and the business strategy of many Fortune 500 companies. I continue to be struck by ecomagination, ecomagination, an initiative at GE designed to incorporate some aspect of green and sustainability into every one of its business units.
In our end of the world, manufacturing, distribution and logistics, I think we all know that our corporate bosses are interested in getting green but struggle with how to translate those goals into what we do in the plant, warehouse and distribution center. Long preamble, but that brings me to my conversation last week with Pincince.
I asked him what he thinks green means today. His response is that green should be about sustainability, or doing right by the environment, but it also should be about the green that comes back to the business as cash. Now, that sounds a lot like marketing speak designed to get a Digital Lumens’ sales person in the door with a message that isn’t just about saving polar bears. After all, who can argue with saving money?
However, that’s also where the asset approach comes into play. In Pincince’s view, asset-rich businesses want sustainable business models, meaning they can dial them down in a recession or ramp them up in a boom. “If you think that way, energy is one of the key things you can attack,” he says.
Like safety, it also becomes part of your DNA. Pincince told a story about one of his first customers, a fifty-year-old warehouse attached to a manufacturing plant. The first time he walked in the joint, he noticed that the kilowatt hours used the day before was on the same white board as the days since the last accident. Both numbers were updated every day. “This was a relatively large space and it was energy hungry,” Pincince says. “From the C-level to the individual operator, everyone knows that participating in making the company a stronger entity is a good thing to do and that happens around saving energy.”
Pincence says he has found support for the greening of the facility by employees, and that it begins to extend to other areas of the facility unrelated to energy. Most important, he says some businesses are beginning to realize that sustainability can make a difference to the bottom line. “The industry is getting to the point where you can make a sustainable choice and make a difference in the profitability of your company,” Pincince says.