Why SMEs should follow the public sector’s lead in resource efficiency
In an increasingly borderless world, how can resource efficiency help businesses cut costs, boost margins and ultimately remain competitive?
Competitiveness is high on the business agenda. In an increasingly borderless world, business leaders must continuously ask whether they can keep up with rival offerings at a price that keeps them profitable. The flipside to globalization is that what looks like a competitive business model in one country could easily become threatened by a lower cost base elsewhere.
Customer experience is also a battleground for competitiveness. Digitally-fueled rivals with closer, data-led customer relationships are threatening incumbents’ profits in almost every sector. This is external disruption that can have a big impact on competitiveness. But business leaders would do well to consider internal levers, too.
Competitiveness and efficiency are close bedfellows, for example. When companies prioritize resource efficiency they inevitably feel the cost savings on the bottom line, which tends to boost margins and ultimately competitiveness.
Sometimes regulation provides a useful blueprint. Take the EU’s Green Public Procurement (GPP) directive. The European Commission hopes to inspire local authorities to choose greener products and services when making their purchasing decisions.
This is not solely about protecting the environment. Public authorities are major consumers, spending approximately two trillion Euros across Europe every year, equivalent to a fifth of EU GDP. By choosing goods and services with lower impact on the environment, local authorities can make an important contribution to sustainability, and also boost their own operational efficiency.
These twin benefits are significant. Resource efficiency is becoming increasingly important as consumption across Europe accelerates. According to the EC: “If the world as a whole followed the EU's pattern of consumption, global resource use could quadruple within 20 years.” Apart from the resulting cost to the environment, overconsumption could threaten economic growth by restricting access to important natural resources, raising the cost to businesses of raw materials, such as energy. In short, overconsumption is making companies less competitive.
This is where the private sector has much to learn from public sector regulation. GPP was introduced to encourage local authorities to take the lead in resource efficiency. But there’s no reason why SMEs and larger firms can’t follow the same guidelines.
One route is innovation. Simply by doing things differently, firms can find new efficiencies and boost competitiveness. Epson devotes a significant part of its R&D budget towards finding ways for its business customers to drive greater resource efficiency. Because Epson inkjet printers use much less heat in the printing process, they consume far less power than comparable laser printers, which in turn reduces their running costs. This is made possible by Epson's piezo printhead. Low heat generation means that much less power is needed to run the printer, helping businesses to lower their electricity consumption. Reduced electricity consumption means lower bills, and of course a reduced impact on the environment.
Maintaining competitiveness requires a close eye on external factors, such as digital disruption. But progress can be made via operational routes, too.
If more private sector companies followed the guidance of GPP, procuring cleaner and more efficient technologies across the board, then the twin benefits would be greener practices and greater operational efficiency. With more efficient operations, those companies would become more competitive. It’s one reason why Green Public Procurement should also mean greener private procurement.