Managing For Environmental Sustainability

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Executive summary

Scholz Industries is an electric products manufacturer and air conditioning firm, which treats environmental goals as part of its strategic advantage. However, the company lacks environmental information gathering mechanisms. Furthermore, no organisation-wide team exists to handle environmental matters. The CEO is committed to the environment but mid to low level employees do not share this enthusiasm.

Nonetheless, the company has a series of initiatives in office operations, manufacturing processes and product management that ensure it maintains environmental safety and some degree of conservation. It was recommended that the company revise its environmental sustainability goals to make them more realistic. The firm needs to train employees on the relevance of the environment in their work. It should also set information gathering systems, response plans as well as use other operational avenues for sustainability.

Introduction

Scholz Industries is an Australian-based air conditioning and electrical manufacturing firm. The company has been in business for 15 years and has built a brand name for itself among stakeholders in the industry through high quality, immediate delivery and strong customer support. The firm consists of two key divisions: Scholz Industries Electric and Scholz Industries Climate division.

The Climate group has two sub divisions, which merged into one entity; Air Additions and Rayson industries. Rayson specialises in sheet products like flexible ducts, kitchen canopies, grilles, and other customised duct products. Air Additions focuses on the production of cooling, ventilation as well as heating products. Conversely, Scholz Electric focuses on electric products.

It carries out manufacture, research and distribution of the merchandise. Some of the subsidiaries of the Electrical division include Solar Spec, Lumex Lighting, BPT, Opal Air and Appliance Test Tags. The latter group provides lock out and electrical test tags to manufacturers. Opal Air deals with the provision of ceiling fans and other air conditioning equipment.

BPT is a supplier of home automation solutions that facilitate door entry. Lumex Lighting is an LED lighting specialist while Solar Spec offers solar installations in homes and commercial areas (Scholz Industries 2013a). The Scholz family owns the company with Oliver Scholz as the founder and Erik Scholz as the managing director. It is a propriety company that possesses shareholders who are less than 50.

Through partnerships with other organisations, ownership has also been spread among a series of other stakeholders. Scholz shows a strong market presence in the air conditioning and electrical industry. The company sells its products to almost all regions of Australia and even has presence in New Zealand.

Its consumers mostly come from the manufacturing sector although other commercial organisations also contribute substantially to their profit margins. It had an annual turnover of approximately 4 billion Euros. The company enjoys this huge success due to great business decisions, as well as high quality products. It often engages in alliances with organisations that are good at what they do.

A case in point was the merger of Rayson and Air Additions in the Climate division. Rayson Industries was a mature brand that had a track record for high quality sheet making. This ensured that Air Additions would be better able to offer its clients the best products in the market.

Major products sold by the firm are lighting equipment, home automation products, ceiling fans, test tags, and several other ventilation, cooling, and heating equipment. The firms also sells sheet metal products like kitchen canopies or home canopies, spiral ducts, grilles, Zoning systems as well as accessories that accompany the installation of the above-mentioned products.

Definition of the company’s key target markets

Scholz mostly targets large institutions in various sectors of the economy. Some of them may be public facilities like hospitals or recreation centres. Alternatively, others may be commercial establishments such as commercial kitchens or cold stores. The firm often works with plants and industries as these organisations require various sheet products.

Its electrical clients could either be pre-existing commercial entities or builders. Such individuals may be interested in upgrading their electrical systems or installing new ones in ongoing constructions. Geographical coverage for the company extends across various sectors of Australia and New Zealand. Its large projects testify to this vast coverage.

For instance, the organisation installed ducts for an Ice Skating Centre called Henke Rink in West Melbourne. It also did ventilation ducting for a Cold Store at Oxford. Scholz also installed exhaust hoods for a Golf Club at Riversdale and placed ventilation ducts at a Children’s Hospital in Parkville (Scholz Industries 2013b). The provision of services spans across different parts of the region.

Transportation and communication for the firm largely revolves around air freight, sea and trucking of packages. Although the firm manufactures most of the commodities that it sells, its raw materials are imports from different parts of the world. Furthermore, some products also come when fully manufactured such that Scholz only has to import them and sell them as they were originally.

Since their clients are also in different parts of Australia and New Zealand, it needs to organise the delivery of these items safely. Consequently, sea and air transport are essential in the delivery of products. Locally-delivered products rely on road transport as this is both economical and convenient. During transportation of the products on roads, it may sometimes be difficult to maintain the shapes and structure of certain ducts or hoods unless transportation arrangements exist.

If a hood is 15 by 6 metres, it cannot fit into a typical truck, so the firm must use unconventional trucks for this work. Customer buying habits are different from one person to another in this industry. It depends on the person interests. Many of them often buy electrical products after doing extensive research on product specifications.

They may focus on the nature of the product rather than price. Therefore, they do not compromise on quality. For instance, if a buyer requires solar panels, he or she will buy one that can use sufficient power for his or her needs. It should be noted that the buying process is sometimes a complex one in which the client has the favourable position.

Large projects may entail offers in which Scholz has to compete to prove that it is capable of meeting its consumers’ needs (Scholz Industries 2013b). Most times, the buyer and Scholz will sign contracts if the firm is convincing enough to those who are concerned. Buyers also respond positively to complementary services such as installation efficiency, customer support and good order tracking.

Several customers in this industry want a company that delivers its services quickly. The distribution system within the organisation is involved with contractors and electrical distributors. Most of them carry out multiple functions such as sales, marketing, logistics handling, and customer service (Scholz Industries 2013b).

In order to make a good relation with Scholz, the company must ensure that contractors and distributors have a proper understanding of their products. They also train them on how they would like their products to be sold. Marketing communication takes place through a series of avenues, and these include the company website as well as other associate websites, conferences, brochures, trade nights and event sponsorships.

Scholz Industries has a comprehensive website in which it informs its clients about various components of business. The firm talks about what it does and describes the products and services that clients can buy from them. The website also contains visual representations of the items as well as unique features about each of them. Contact information is also available for those buyers who want details about making a transaction.

The website also summarises some of the projects that the company has engaged in as well as the strategic decisions that it has made. This creates a better understanding of the company’s workings among its clients. Scholz Industries’ representatives often attend conferences on energy efficiency, carbon footprint reduction and other climate-related issues.

This exposes the company to stakeholders who will require their services or products in order to achieve their environmental goals. Furthermore, the company also interacts with potential suppliers or partners in these events. Trade nights are also another significant source of marketing communication. The company will display some of its products in such programs and thus expand its market base.

Additionally, sponsorship of events is another element of marketing communication. In this channel, target clients will get information about the firm’s capabilities from a third-party, which adds credibility to their marketing message. Pricing at Scholz depends on the quality of products sold. The firm is neither too expensive nor cheap.

It tries to offer clients value for their money by charging them amounts that match product input (Scholz Industries 2013c). If a certain product requires much preparation, customisation and pre-assembly, then concerned individuals need to pay a premium for this price. However, it sells finished and non-customisable products at standard rates.

Comparison of Scholz products with competitors’ products

Some of the key competitors for the organisation are Pierlite and Clipsal. Pierlite is a lighting solutions provider that sells different types of luminaries such as lamps, LEDs, floodlights, emergency lights and roadway lighting products. Conversely, Clipsal is an electrical solutions provider that specialises in electric products like cabinet lights, switches and power points, energy saving solutions and circuit protection.

Scholz is unique in that it offers products from both its competitors’ portfolios; that is lighting services and electrical solutions. Furthermore, its products are targeted at environmentally-conscious clients. Its high product diversification allows the company to merge competencies from its primary divisions in order to give clients the best offer possible.

In addition, the company is a proud of itself in the level at which it incorporates new innovation and designs in its products. This ensures that buyers get value for their money by enjoying a longer product life. Most of Scholz’ products often have longer life than that of their competitors. Although Clipsal and Pierlite have green products, Scholz is the only competitor that has dedicated an entire division towards green objectives.

As a result, the firm is better able to meet the unique needs of environmentally-conscious consumers. Scholz’s products also come with a series of complementary services such as installation, assembly and usage tips. Clipsal also offers this service, so it is a force with which to consider. This competitor also has a loyalty program known as Club Clipsal, where it rewards clients for repeat business.

Such a strategy makes it hard for competitors like Scholz to attract customers away from Clipsal. Perhaps another key component about the nature of competition between these firms is the fact that the products in each firm are unique. Pierlite mostly has large-scale products like floodlights for sports arenas and bulkheads (Pierlite 2012). Conversely, Clipsal mostly sells electrical circuit systems and technologies.

Scholz’s electrical products revolve around green consumption like LED, solar specifications and many more. Therefore, the highly specialised nature of products from all the organisations makes competition less dramatic. Nonetheless, there are situations in which similar products can be found in all three organisations. It is for these products that competition becomes stronger.

Pricing in all three firms depends on the quality of products sold. Scholz always tries to offer reasonable prices in comparison to the quality of products. Most of the competitors often avoid price competition because this may undermine the amount of effort put into the production of their commodities. In fact, the lack of price competition is not an uncommon feature in the electrical industry because products are not fast moving.

Fast moving consumer goods often attract price competition because value differentiation is difficult to achieve; this is not the case for products within this industry. Promotional strategies for Scholz focus on selling at fixed prices on bulk purchases. For instance, the company offers free bulbs if a customer buys 20 or more. Additionally, it encourages individuals to purchase similar products as a bundle.

They often promote the purchase of solar and LED products together as buyers are likely to respond to such green initiatives in a similar manner. As mentioned earlier, Clipsal has a promotional strategy that involves loyalty points while Pierlite also gives discounts for certain purchases. On the other hand, other promotional strategies like sponsorship and trade nights also allow Scholz’s competitors to gain exposure in the industry (Scholz Industries 2013c).

Pierlite even has an annual magazine that highlights some of the lighting conferences attended or products that buyers can get from the institution. Distribution of products from all three competitors occurs across Australia. Just like Scholz, Clipsal has a range of wholesalers and distributors throughout the country. Pierlite also sells most of its products through distributors.

The company mostly has wholesalers for trade goods or products targeted at commercial enterprises. They sell some of their products in New Zealand, as well. Scholz has the largest market share in the industry because of its business strategies.

It has operated for only 15 years but has partnered with players who have been in the industry for over half a century. Leveraging on other business’ expertise has won the company substantial support. Clipsal is the second most important competitor while Pierlite has the least amount of shares among the three competitors.

Planning

In corporate planning, Scholz intends on growing and developing its current branches. It wants to reach markets that had previously been ignored by the organisation. Since the company’s branches are only six in number, it is essential to ensure that the services and products sold at those branches are high quality. The company can work on logistics, customer care as well as other areas of production in each of the branches.

It can also standardise high performance so as to create a satisfactory image among the clients (Damall et. al. 2006). The strategic plan spans across manufacturing, human resources, marketing and environmental sustainability. In the human resource department, the firm intends on training its workers concerning the business.

This will create a culture of efficiency within the organisation. Furthermore, it will create a lot of morale and set the stage for organisational development in the company. Scholz intends on conducting a training needs analysis and responding to it by educating its workers. Since innovation is a vital part of the company’s corporate strategy, it intends on encouraging this phenomenon by equipping workers with the knowledge needed to achieve this.

In manufacturing, the company plans on increasing the number of lights manufactured using solar power fittings like RASYN. This will meet its sustainability goals and ensure that the firm delivers green products to those who require them. In addition, the company wants to increase the number of locally-made electrical products.

Importing products not only creates additional financial constraints for the firm, but it also weakens its environmental sustainability goals. This would allow the company to pass on cost savings to consumers or it could reach a new set of buyers who consider ecological footprints of products during production (Gulland-Milner & Rowcliffe 2007).

To achieve this goal of local manufacture, the organisation would have to increase its production capacity as well exercise strategic decision making in the selection of suppliers. It will also be essential to look into inventory management as well as expand warehouse capacity in order to increase the amount of locally-made electrical.

In marketing, the company intends on creating more advertisements on its websites and increasing the number of events that it will sponsor in the future. The online communication channel is an effective way of reaching one’s clients in this competitive period. Firms need to make as much information as possible available to potential buyers.

Scholz wants to provide product information through advertisements. It especially wants to focus on those items or services that buyers do not know. Furthermore, it aims at increasing the degree of dynamism on its websites by making it easy for clients to find what they are looking for. Event sponsorships will also increase the level of exposure that the company gets amongst stakeholders.

Scholz Industries wants to turn into a household name by sponsoring a series of high-profile events. The firm’s environmental plan revolves around reduction of its carbon footprint. It intends on achieving this through three key approaches: education, operations and office practices. The company wants to enter drop by drop a culture of sustainability among its workers by educating them about the issue.

It wants to have environmental experts in almost all aspects of business so that they can each incorporate green decision in their daily operations. Additionally, the company wants to change its business operations so that they introduce carbon reduction. Some of the components include process efficiencies as well as carbon efficiencies in the facilities. In office practices, the organisation plans on redesigning its office practices in order to use resource efficiency and waste minimisation (EPA 2009).

Current environmental information gathering system

Scholz has no formal methods of gathering environmental information. A knowledge gap in this sector exists even though the firm has a whole climate division. Most information relates to the products created in the climate division rather than the actual processes utilised in the institution. Monitoring and gathering environmental information is not a vital part of the management process in this business.

The logistical and time constraints that give out from having an complicated information system created this (Tyteca et. al. 2001). Essentially, one cannot describe the nature of information collected as the company does not have a way of doing this. It is, however, aware that its sustainability goals cannot be met unless there is a goal that the company is working towards.

Since no information gathering takes place, then the issue of distributing information to key decision makers does not apply to the organisation. Employers decide most of the issues that relate to sustainability without real time data from the organisation (Berkhout et. al. 2001).

Organisational response mechanism

The decision-making style in the institution is decentralised. The CEO entrusts his senior managers as well as other employees to make decisions concerning environmental sustainability. Therefore, the response mechanism to environmental issues lies in the hands of typical workers within the organisation. Both deservingness and non-deservingness of the idea exist for the institution.

It can benefit from fast decision making as well as high employee morale. On the other hand, this style of leadership also defines the CEO from environmental matters and may prevent allocation of resources to green projects. Scholz does not have an organisation-wide environmental task force. Instead, the firm has a team in the solar department.

Their work mostly centres on the provision of products that will meet consumers’ green needs. They do not focus on what can assist their own firm in doing the same. Clearly, the organisation is in need of a taskforce that can guide it in environmental matters. The firm needs to understand the relationship between its everyday decisions and the impact that those decisions have on the environment quantitatively.

Unclearness is the biggest challenge for the organisation because although sustainability is one of its goals, it has not come up with ways of scientifically achieving it. The lack of reference information causes the organisation to use mechanisms that may not be effective or efficient for it.

Speed of response to environmental information does not apply to this situation because no data collection exists in the first place. Had the company instated mechanisms for collecting data that could be immediately related to the costs and benefits accrued to Scholz, then this would immediate a reasonable speed of response.

However, because no such information exists, then the latter consideration is not relevant. Comparability of the information gathered by those parties over time or across different plants would also have increase the speed of response to this information (Tyteca et. al. 2002).

Behavioural audit

The organisation tracks energy consumption in order to determine how much power it consumed. However, this does not occur through information gathering. It occurs by observation and then noted mentally by those concerned (Giordano 2012). Since electricity is a main area of focus for Scholz, they try to minimise electricity consumption. This is also because the organisation is a manufacturer, which uses a lot of energy in production.

The raw materials used in the company come from BlueScope as well as several overseas suppliers. It is difficult for an organisation to control its ecological footprint if it sources most of its materials from external markets. Some of the environmental goals applicable in Australia may not necessarily apply to suppliers in China or other parts of the world.

Furthermore, geographical proximity often translates into less resource and energy consumption. The main method of transportation used by the institution from its suppliers is sea transport. However, the company transports products from Blue Scope to the organisation using trucks. Likewise, the company also makes use of trucking for transport of commodities between the firm and its key markets.

As mentioned earlier, most of its buyers are in Australia and New Zealand; therefore, the fastest and most convenient method is trucking. It should be noted that sea transport is highly economical and environmentally applicable since it facilitates the maximisation of space.

The company has one of the key emission level targets: to reduce its electricity bill to zero. While this may seem like a key goal, one can question the reasonability of achieving such accomplishment especially if one is a manufacturer. The company may utilise the benefits of solar electricity, but it is unlikely that this will lead to total independence from the electricity grill (Olsthoorn et. al. 2001).

Emission levels controlled in the institution relate to those in its manufacturing plants. The company had not set targets for this consideration, so it did not record the measurements. On the other hand, it has a rough idea about the way in which it can minimise emissions. Whenever stakeholders identify corrective actions, they usually convey this information to the general manager through a meeting.

The General Manager will then identify a systematic way for handling the suggestion. Sometimes it may be recommended that it is still too early to implement the action and that more research needs to be done while, in other instances, it may be necessary to work on the corrective action as it is. Employees in the organisation seem to feel that environmental goals are relevant in production of solar panels, LED or other green products.

They do not focus so much on these goals in their organisation. The CEO feels that the environment is a vital part of production, and it needs to be incorporated into different aspects of business. Managers believe that the environment is essential in successful business performance, but many of them may not necessarily reflect this consideration into their daily operations.

The company is working on product –related efficiencies. First, it has realised that manufacturing efficiency and process reviews are essential in business success. Therefore, the firm intends on redesigning its products so as to enhance quality and efficiency through innovation.

In terms of manufacturing efficiency in equipments, technology and facilities, the firm has realised that using a certain plan of action is essential in changing the way it does business. First, it engages in the identification of problems. It then looks for ways of countering those problems in the use of technology, facilities or equipment.

Thereafter, it measures those considerations and incorporates them into the process (Wilfrid Laurier University 2012). In product developments, the company has redesigned products in order to introduce higher quality and efficiency. Since innovation is a crucial aspect of this process, then Scholz does product redesigns in order to improve the level of innovation.

Waste controls are a critical component of the firm’s environment management plan. It often measures its levels of scrap and works actively to minimise it. The firm realises that high amounts of waste indicates a high degree of inefficiency in the production process (Kraft & Kamieniecki 2012).

In addition to this consideration, the company also works on recycling steel, as well as paper. The metal is especially relevant to the company because it manufactures steel products. Therefore, there are always conventional and unconventional ways of using the product.

Packaging

Packaging in the organisation mostly depends on three considerations, which include quality, format and waste control. With regard to format, the organisation usually sends its products in boxes. In terms of quality, Scholz ensures that everything is up to standard by utilising check sheets. These contain all the information about the quantity of the product and its labels.

In waste control, the company recycles cardboard, and this ensures that it saves on the amount of paper needed to complete a transaction. The CEO of the organisation has the right attitude towards the environment. He often focuses on using and facilitating sustainable energy use. This attitude stems from his background in the electrical sector.

He has 20 years experience in the electric industry, so he understands why it is essential to have an energy-sustainable business. Besides, the CEO’s participation level in the operations of the business also favours the adoption of such technologies. The senior decision maker deeply involves himself in the daily operations of the business.

In office efficiency, the firm focuses on supplies, processes, technology and wastes. In supplies, it works on minimising paper waste. In terms of processes, the company ensures that invoicing, HR policies as well as payroll are efficient. In technology, the company controls its stock through the use of Momentum Pro. Recycling and process analysis facilitates waste reduction.

Analysis of Environmental safety actions

Scholz Industries uses both proactive and reactive ways of carrying out environmental, safety actions. Some of the proactive approaches include the protection of the environment from waste powder by redirecting them to appropriate ways. The company also upgrades the triple interceptor wash bay. Reactive methods include taking waste to landfills.

Reporting

Reporting at Scholz takes place after a fortnight as well as on a monthly basis. Some of the issues in the reports include sales, customer feedback and commencement of new work. The frequency with which this occurs may be comparable to most industry stakeholders (Schalteggera & Synnestvedt 2002).

Recommendations

Scholz’s top management believes in environmental goals; however, their interest needs to be transmitted to lower levels of the organisation (Johnson 2008). Employees should have training on how to incorporate environmental sustainability in their work (Jacobson & McDuff 2006). Sustainability should span across steel manufacture and not just electric products.

The company should focus an information gathering system that is relevant, efficient and standard-based. Additionally, it needs to have a plan for handling such information. It should also utilise several opportunities for carbon footprint minimisation in its processes (Tourism Queensland 2010). The sustainability goal of reducing energy consumption to zero should also be revised to make it realistic.

References

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