Wednesday, October 12, 2016

My real-life example: Proctor & Gamble Taicang Plant

Speaking of sustainability, I'd like to introduce you the place I have worked: Proctor & Gamble Taicang Plant in China.
It is built in 2012 and looks like this from the outside, a modern plant with a big beautiful garden.


What is special about it? It is one of the most environmentally friendly plants in P&G:
1.100% wind power usage for production
2. reduced water usage by rain water collection system and waste water recycling
3. 0 manufacturing waste landfill
4. Administrative building obtains LEED Gold Certificate for green building, which is the first in P&G history

As a former insider of the plant project, I believe in P&G supply chain's efforts to be sustainable in the way it produces its products, but as I recall, the project encountered a lot of difficulties:

1. Cost: In order to realize all these green efforts, there was around 20% incremental capital investment, and around 10% incremental on-going production cost because of extra depreciation and wind power premium. Although the project was initially supported by Product Supply function during the funding and construction phase, after the factory was up and running, it was very heavily challenged by Finance function for its higher production cost.  - As the financial analyst at the time, I really had a difficult time to survive.

2. Product marketing: it was very difficult to market the Taicang-produced products by the concept of sustainability at the time. Chinese consumers were not ready - they are indifferent to the wind-power and environment concept, but very sensitive to price promotions. Therefore, the company bears more cost but cannot see return from incremental sales.


So, what do you think? Should companies expect returns from their green efforts, or should they do it purely for the environment's sake (which is unlikely....)?


To see more on Taicang plant, here is a link that introduces its environmentally friendly efforts:

http://www.mcdonoughpartners.com/projects/pg-taicang-100-wind-powered-beauty-plant/

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