Even during an economic slowdown, innovators will rise to the occasion. A bakery in Victoria, Ferguson Plarre Bakehouses, is doing just that as my colleague Craig Beaver has recently uncovered in a recent article in Manufacturing Supply Chain Magazine. Savings on carbon emissions by the company demonstrated that by some fairly straight forward engineering delivered landfill, gas and electricity emissions reductions of 92, 76 and 62%, respectively, along with water savings of 2.5Ml per annum. This led to an overall reduction of more than 5000 CO2e annually and tens of thousands of dollars in cost savings, a strong business improvement in itself. But what caught my eye was the story around how the improved safety culture of the bakery was reducing bottom line costs, and well below its industry peers. The company has demonstrated a strong correlation between sustainability effort and performance, and its safety metrics. For example, during the transformation to a sustainability–focused business, turnover reduced from 10% to 2 % per annum, incidents reduced by 58% from 33 to 14 per annum, and near misses decreased from 29 to 21 per annum. As Craig illustrates, aside from the impact of carbon emissions and energy savings, it’s worth taking a deeper look at the impact of their sustainable business practices on their health and safety performance. As a simple exercise: They employ 150 people. Assume average salary of $75,000 per annum. Total wages bill equals $11,250,000 per annum. Industry average worker’s compensation premium for their sector is 3.8860% of payroll. Therefore their worker’s compensation premium should have been $437,175 per annum. The really interesting piece here from a HSE perspective, is concurrent with their sustainability program, Ferguson Plarre Bakehouses have achieved significant improvements in their safety performance, such that their worker’s compensation premium is 1.8394% of their payroll – almost half the industry average! Therefore their estimated workers compensation premium is in fact $206,932 per annum. This equates to an estimated saving of $230,243 per annum. As Craig points out, this is on top of all the financial returns from their other sustainability initiatives documented in the article. This company is no stranger to those of you working in sustainability. Ferguson Plarre Bakehouses clearly have the ingredients for success as a sustainable business, taking the principles of sustainable development and mixing them into their every day work.

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38
Y
ou just have to mention the word ‘sus-
tainability’ and for many people, their
eyes glaze over. There is too much
emotion and subjectivity around the subject.
Everyone has a different definition and a dif-
ferent point of view, and the politicians aren’t
helping at all, given the way they have politi-
cised the whole debate with continuous scare-
mongering.
The challenge today is to shift the paradigm
from seeing sustainability as a cost of compli-
ance to a return on investment, where the
greater the investment, the greater the return.
When you break the subject of sustainability
down into objective building blocks, you will
see that sustainable manufacturing, sustainable
operations and sustainable supply chain man-
agement is just smart business.
With the ever-rising costs of fundamental inputs
including energy, fuel, raw materials, labour,
waste disposal, etc., it is smart business to:
1. Reduce electricity consumption;
2. Reduce gas consumption;
3. Improve fuel efficiency of vehicles;
4. Reduce water consumption;
5. Reduce landfill and waste disposal costs;
6. Reduce raw material input costs by smarter
product design;
7. Reduce reworking by better quality control;
8. Reduce work-in-progress by better produc-
tion planning;
9. Improve supply chain efficiencies by better
supply planning;
10. Reduce warehousing space by better CPFR;
11. Reduce the inventory holding costs of both
current and obsolete stock by better CPFR;
12. Improve staff productivity;
13. Increase staff retention;
14. Enhance public profile and brand awareness;
… and the list goes on.
Each of these initiatives directly, or indirectly,
reduces greenhouse gas emissions, and in doing
so can be classified as a sustainability initiative.
In the first part of the 20th century, safety
was not a big issue. Now look at the priority
given to safety. There is a whole science around
safety that has delivered significant reductions
in workplace accidents, injuries and fatalities.
In addition to the saving of life and limb, sub-
sequent benefits are the substantial savings in
both the direct and indirect costs of accidents.
Research has shown that these improvements
in safety performance have also led to increased
productivity and greater staff retention.
Sustainability is to the 21st century what
safety was to the 20th century. Whilst Australia
leads the world in many initiatives, unfortunate-
ly, sustainability is not one of them.
In March, 2013, the European Union pub-
lished the DIN EN 16258 standard for Green
Logistics. This standard will enable companies
in the transport industry to calculate green-
house gas emissions for each freight delivery.
Freight forwarders in France, and suppliers to
France, will need to verify the CO2e emissions
generated by their respective transport activities
from July 2013 onwards. This will eventually
come to Australia.
In the UK, leading soft drink producers and
suppliers, including Coca Cola and Britvic,
have signed onto the Soft Drink Sustainability
Roadmap initiative, a supply chain study that
aims to reduce the environmental footprint of
the industry’s products and operations. Here
in Australia, the industry (including Coca Cola)
is fighting a nationwide deposit-based recy-
cling scheme.
Australia is just now rolling out an e-waste
strategy under the National Television and
Computer Recycling Scheme, whereas Europe
and the UK have had one for a number of years
now. How many people in Australia are aware of
this scheme, let alone know the location of their
nearest drop-off depot?
Sustainability is more than just tofu and kaftans, it is smart business.
More than tofu and kaftans
Craig Beaver
MHD Supply Chain Solutions — September / October 2013
S UPPLY C H AI N38

2. The Australian Stock Exchange (ASX)
Corporate Governance Principles and
Recommendations (Revised Principles)
defines environmental and sustainability
risks as Material Business Risks. Under the
Commonwealth Corporations Act 2001,
company officers have a duty of care, and
must exercise due diligence and fiduciary
responsibility, to manage these material
business risks. In December 2012, the Pike
River Coal Mine Royal Commission recom-
mended that individual company officers
consider, if asked, how they could demonstrate
to a legal authority their own personal duty of
care and due diligence to manage material
business risk (around safety). Even though
the inquiry was held in New Zealand, these
findings will have serious repercussions for any
company officer here in Australia.
The definition of officer can be found in
Section 9 of the Corporations Act 2001 (C’th),
which provides that officers are persons:
• of a prescribed position (e.g. director,
company secretary etc.).
• who make, or participate in making, decisions
that affect the whole, or a substantial part, of
the business of the corporation.
• who have the capacity to affect significantly
the corporations financial standing.
• in accordance with whose instructions or
wishes the directors of the corporation are
accustomed to act.
In the broader context, every Australian company
officer (under the widest definition of the Act)
should ask themselves, if required, how they
could demonstrate to a relevant authority their
own personal due diligence, duty of care and
fiduciary responsibility in managing the material
business risk of sustainability, as well as safety.
Leading by example
One Australian company that is future-proofing
its business is Victoria’s Ferguson Plarre
Bakehouses, a fifth-generation family-owned
business that has survived a depression and
two world wars in the 20th century, and the
recessions and a GFC in the 21st century. Its
operation consists of a franchised bakery chain
supplied by a central bakery facility at Keilor
Park, an outer suburb of Melbourne.
By embracing sustainable business practices
to future-proof its business, Ferguson Plarre
Bakehouses have reduced:
• Landfill by 92%
• Electricity consumption by 62%
• Gas consumption by 76%
• Water use by 2.5 million litres, and
• Staff turnover from 10% pa to 2% pa.
(Source: Sustainable Baking by Ralph Plarre)
In addition to the resultant efficiencies and
cost savings, this has allowed Ferguson Plarre
Bakehouses to reduce its carbon emissions
by more than 5,000 tonnes of CO2e annually.
Smart business.
The range of initiatives in its emissions abate-
ment programme, at the purpose-built head
baking facility at Keilor Park, includes:
• Rainwater toilet flushing for office and staff
amenities.
Ralph Plarre (4th generation) and Steve Plarre (5th generation) planting trees as part of their
Greenfleet carbon offset program.
MHD Supply Chain Solutions — September / October 2013
S UPPLY C H AI N 39
39

3. 40
40
• Solar-heated hot water for office and staff
facilities.
• High-efficiency air conditioning for offices,
staff amenities and climate controlled produc-
tion areas involving outside air optimisation to
reduce power consumption.
• All hot water required for cake production
is pre-heated by energy recovered from the
refrigeration systems. This equates to a saving
of over 600 tonnes of CO2e per year through
reduced gas consumption.
• Use of the heat recovered from freshly baked
products (using exhaust fans and the heat
taken from cooling tunnels) to heat the main
production area in winter and to minimise
heat-bleed into refrigerated areas. This
equates to a saving of over 2,700 tonnes of
CO2e per year through a 60% reduction in
power usage per square metre.
• Installation of fully integrated SCADA
(Supervisory Control And Data Acquisition)
energy monitoring system to allow real-time
monitoring of all energy consumption, both
individually and collectively to allow full moni-
toring of all energy consumption of electricity
and gas and the resulting CO2e emissions.
This information is displayed on a screen in
a high-traffic corridor and brings an amazing
level of awareness to the team.
• Over 100,000 litres of rainwater tanks plumbed
for irrigation and truck washing, resulting in
approximately 625,000 litres saved per annum.
• Introduction of Victoria’s first diesel hybrid
truck with Sustainability Victoria. The
company will measure fuel use and bench-
mark the results against the fleet to assess
the effectiveness of this technology and the
likely payback period. Specialised insulation
was sourced for the cabin to reduce weight
and the associated emissions from carrying
such weight.
• The latest bulk raw material handling equip-
ment eliminates approx. 450 bags/week from
the system and halves the company’s require-
ments for land fill. Co-mingled waste has
already been reduced by 50%.
• A wastage regime that sees 95% of all waste
directed back into recycling streams (includ-
ing plastic, steel and assorted metal, card-
board, and food).
• Certified carbon neutral paper used to make
all cake bags and an oxo-degradable additive
to all plastic bags to help accelerate decom-
position while maintaining the strength neces-
sary to hold the weight of a large cake.
• An approval to go ahead with a 99kW solar
panel installation, which will generate 10%
of all power required to bake their award
winning cakes and savouries.
All of these initiatives had very positive ROI
and payback periods ranging from one to
five years. These demonstrated and validated
cost savings are a direct result of Ferguson
Plarre Bakehouses having a robust, properly
balanced and integrated sustainability strategy.
Smart business.
In addition, having this robust, properly
balanced and integrated sustainability
strategy has greatly improved Ferguson Plarre
Bakehouses safety performance. Between
2010-11 and 2012-13 its reported inci-
dents have reduced 58% (from 33 to 14
per annum). Similarly, between 2011-12
and 2012-13 its reported near misses have
dropped 28% (from 29 to 21 per annum). This
has meant a direct 25.7% savings in its insur-
ance premium. The projected average industry
premium rate it operates in is 3.8860%;
Ferguson Plarre Bakehouses’ premium rate
is of the order of 1.8394%. This is just smart
sustainable business!!
In conclusion, sustainable manufacturing,
sustainable operations and sustainable supply
chain management is just smart business that
can deliver a very real and very tangible return
on investment when you have the properly
balanced and integrated sustainability strategy.
Sustainable business is just smart business.
Craig Beaver is the principal of The Great
Southern Land Consulting Group. For more infor-
mation call 0409 975 335 or email cdbeaver@
bigpond.net.au.
For more information about Ferguson Plarre
Bakehouses’ sustainability performance and
awards visit www.fergusonplarre.com.au/History/
Greenhouse-Challenge.html
MHD Supply Chain Solutions — September / October 2013
S UPPLY C H AI N40