Renewed focus on resource efficiency can deliver savings equivalent to 12% profits

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Resource efficiency is once again rising up the agenda as the topic de jour. A stream of reports has landed on desks in the past few weeks but none quite as exciting as the Next Manufacturing Revolution (NMR).

While the media may pass over these reports (resource efficiency isn't a particularly media-friendly subject), manufacturers ignoring this growing body of work would be passing over an opportunity to substantially increase their margins.

Indeed, the authors of NMR (consultants Lavery/Pennell in association with the University of Cambridge's Institute for Manufacturing and 2degrees) argue in their report that resource efficiency represents the next untapped opportunity to enhance manufacturing productivity. Rather than the traditional focus on labour productivity they set out the case for focusing on non-labour resource productivity.

Following a year-long study, the report gathers together the evidence to demonstrate the magnitude of the value that is available and which is already being captured by early movers: While many UK manufacturers have achieved 10-15% efficiency gains over the last decade, leading companies have achieved over 50% improvements in the same timeframe. The authors estimate (they argue conservatively) that there is £10bn of annual additional profits available to UK manufacturers, equivalent to a 12% rise in profits. Actions could also lead to greenhouse gas savings of 27 million tonnes of CO2 equivalent.

The topics examined will be familiar – energy efficiency, packaging, transport, supply chain, circular resource use and process waste reduction – but the study finds that efficiency savings have rarely been pursued to their full potential, not least because they have never been explicitly quantified and aggregated to secure senior management attention, resources and expertise.

The report also shows that there are a range of barriers that prevent manufacturers from going further. The next phase of NMR will involve bringing together manufacturers and their representatives and partners to help address them. EEF will clearly be involved with this phase of work.

What excites me is the low-risk potential to boost profits while enhancing your sustainability credentials. Furthermore, the infrastructure that is currently being put in place to move this forward is genuinely welcome. Whether you agree with all the analysis or not, a new NRM and 2degrees platform is currently being developed which will enable peer-to-peer discussion – something which I suspect many environmental practitioners within manufacturing would wholeheartedly welcome. The approach, which has been highly successful in retail supply chains, will allow manufacturers to talk to their peers, share expertise, tools and benchmarks to help overcome information gaps, develop compelling business cases and reduce costs through collaborative procurement.

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