The following paragraphs summarise findings from the exploration of the two South-East Queensland SMEs where eco-products are manufactured, referred to as ‘Firm A’ (FA) and ‘Firm B’ (FB). In the following paragraphs, we identify eight key influences – or drivers – that can promote sustainable business practice, informing the strategy model for lean and green processes. The use of lean and green tools by the two SMEs is then discussed in relation to achieving more sustainable business practice.

Profiles of the two case studies

Firm A is an example of an architectural coating enterprise, manufacturing a range of eco-products such as paint and renders. This firm has been recognised with an award for leadership in business sustainability for proactive engagement in environmental practices. Firm A uses natural and easily-renewable resources where possible, to manufacture products catering to the needs of contemporary customers. They are also the pioneers in establishing a state-of-the-art, dry-mix render plant with high quality and environmental standards, making it the first of its type in Australia. The innovative gravitational system and modern technological standards to manufacture high quality pre-mixed, bagged cement render products enabled this SME to further focus on improving efficiency in energy, water and resource usage. They practise a ‘minimum intervention model’ where effective measures are taken to ‘do no harm’ to the environment and society.

Firm B is a business that has diversified from farming enterprise to establish a value recovery process of recycling and colouring waste pallets and crates, into commercial mulch. They have previously received a business excellence award in environment and sustainability for commitment to eco-efficient management strategies. Firm B has been pioneering the collection of timber and urban waste, and the recycling of these materials to make mulch. This firm has a holistic approach to increase utilisation of urban waste that is perceived as ‘wrong time and place’ materials, to ‘right time and place resources’. They are modelling lean and green strategic behaviours at a small-scale farming level, while also manufacturing a range of products such as premium feeder and decorative mulches, potting mixtures, growing media, sands and animal bedding. Waste material including clinker from industrial boilers are used as a sterile drainage material in potting mix blends, highlighting how an SME can continue to diversify and further develop lean and green strategies.

Drivers promoting sustainable business practice

As SMEs in the South-East Queensland manufacturing industry, both enterprises identified the strategic need for engaging in sustainable business practice. Through the case study analysis, the authors observed a number of drivers influencing their capacity to engage in sustainable business practice. These drivers were considered and categorised as ‘normative’, ‘mimetic’ and ‘coercive’ drivers described in Institutional Theory. For example, the Operations Manager of Firm B (FB-P3) highlighted that the National Association for Sustainable Agriculture Australia (NASAA) recommends potting mixes without peat products, as invasive mining processes are extracting peat at a rate higher than it can be replenished. NASAA has a powerful position in the agricultural product manufacturing sector and have illustrated some level of coercive influence on Firm B to manufacture products without peat products.

The eight distilled drivers are shown in Table 3, including: 1) awareness and educational foundation; 2) desire to learn from industry leaders; 3) previous stewardship experiences and cultural alignment; 4) desire to deal with future uncertainty; 5) connection with government and stakeholders; 6) previous training and work experience; 7) focus on process efficiency; and 8) technological advancement. Table 3 also includes examples provided by senior decision makers of the studied SMEs, to provide qualitative evidence for the drivers within the firm's operating context. We intend that these examples encourage and enable other SMEs to understand how to drive engagement in sustainable business practice. According to Table 3, normative drivers were dominant in the observed case studies compared mimetic and coercive drivers. The coercive drivers were not prominent in the interview findings and this highlights the need for government and policy makers to engage in actions to encourage SMEs to be adopt sustainable business practice. Further, this confirmed the drivers found in literature on stakeholder engagement [86, 87], legislation and knowledge [87] and focus on streamlining processes and business direction [88]. In addition, new drivers were identified, comprising a desire to deal with future trends, societal expectations for legitimate business practice, previous training and work experience, and technological advancement.

Table 3 Identified drivers and examples of sustainable business practice Full size table

Environmental performance

Both SMEs already engage in a variety of environmental management practices that particularly focus on waste, water, energy emissions and chemical management. Firm A was specifically demonstrating high level of natural resource usage instead of chemical synthetic material for their paint and render manufacturing. Firm B showed strong performance in resource recovery and waste management where they have diversified their business from sugar cane farming to recycled mulch manufacturing and food waste composting. A range of environmental performance outcomes were observed in the two case studies, as shown in Table 4, under the headings of waste, water, energy, chemical and emissions management (Table 4). The approaches of the two SMEs are then elaborated in the following sections with regard to environmental management, regenerative business practice, and creative innovation.

Table 4 Environmental performance across the two case study SMEs Full size table

The analysis investigated the ways in which these firms integrated environmental management practices with lean methods and anticipated the cumulative benefits. With regard to environmental management, respondents from both SMEs related to the need to integrate: “Lean and green thinking is an interesting marriage of philosophies. These lean and green practices have really helped us to improve our environmental performance” (FA-P1). Firm A believed 5S is a fundamental tool to create a clean and neat environment, as well as reduce unwanted raw materials, overproduction, and instruments lying around the factory premises. “If we look at the lean toolbox, 5S is everybody’s start point. As far as environmental management is concerned that really comes out from a 5S approach. Simply because 5S is considered as a housekeeping tool rather than anything else. But for lean and green practice, this is just the beginning only because it starts to form a structure where people can follow” (FA-P2), “It’s the best tool we could have” (FB-P3). The use of 5S is followed by the use of the PDCA (Plan-Do-Check-Act) cycle, which aims for continuously improve the organizational practices, and “Allows people to plan, do, check and act. I even started using the Deming cycle, which is study instead of check” (FA-P3).

Both Firm A and B used the tool of Process Mapping (PM) to draw the workflow diagram, to clearly understand their manufacturing processes. Value Stream Mapping (VSM) was then used to further visualise the manufacturing process and identify bottle necks, extra lead times and non-value-added activities. This tool clearly overlaps with environmental management, as it enables the user to determine environmental impacts in the manufacturing process and improves environmental performance through reducing scrap material and defects.

Sustainable-Value Stream Mapping (Sus-VSM) was used by Firm A, using integrated resource, energy and emission matrices to reduce waste by showing the times and points of waste generation: “Halfway through a process where people start looking at it, why are we doing this? We have to keep them focussed till the end. So, we need to start with the process map and go to value stream map” (FA-P3). Firm B utilised Four Fields Mapping (FFM) in conjunction with Sus-VSM while coordinating with team members, phases, tasks and standards. This is a clear example of overlapping areas of lean and green thinking in the potential integration of lean and green tools when aiming for sustainable business practice. These practices co-exist with the first NRBV strategy of pollution prevention and helped Firm B to identify waste in their manufacturing process, which could then be re-used as an erosion blanket.

Both firms used creative innovation to find innovative solutions that reduce impact on the environment while, at the same time, improve efficiency and productivity in the manufacturing process. For example, FA-P4 highlighted how the inspiration of nature led to the development of a range of natural products including natural lime, clay and straw bales, all of which have a low embodied energy, as a strategy that contributes to the second NRBV strategy of product stewardship: “Biomimicry is the gold standard, we are looking at our clay building products and we look at how nature builds things. In nature, swallows use clay, bees use wax. We can get an inspiration from natural materials and use them”.

With regard to regenerative business practice, both SMEs highlighted the need to advance sustainable business practice and to be more engaged with restoring and creating a healthy ecosystem, as reflected by FA-P1: “We focus on designing a healthy and a liveable environment for people”, and FB-P3: “We are regenerating, without burning or landfilling the waste we make mulch out of it to improve the soil conditions in landscape yards”.

Economic performance

A large number of tools were acknowledged by respondents across the two SMEs as shown in Table 5. Tools such as capacity planning, quality circles, lean culture, pull approach, lean supply chain management, Just-In-Time (JIT), inventory reduction, maintenance of buffer level, 5S, Total Productive Maintenance (TPM), Value Stream Mapping was observed in both SMEs. A range of economic outcomes are discussed in the following paragraphs, under the strategic work streams of integrated vision, process efficiency and effectiveness and risk assessment. Respondents across both SMEs discussed journeys of incremental change through incorporate lean practices to minimise waste and increase efficiency in manufacturing processes. By using lean tools such as automation, JIT, Kaizen, and Value stream mapping, SMEs can improve their economic performance. For example, the business development manager in Firm B stated, “We use JIT for producing different coloured mulch and continue to supply to our customer demands on time”. The production manager added by stating, “In true Kaizen sense we get a cross section of a team to design purposeful steps for better performance.” These lean tools were used to reduce the lead time, unblock bottle necks and eliminate non-value adding activities which has positive impact on their bottom-line savings and economic performance in these SMEs. Table 5 shows a summary of lean tools used by the two SMEs to improve their process efficiency and increase profitability.

Table 5 A summary of lean tools used by the two case study SMEs Full size table

Firm A appeared to value the use of lean and green practices to reduce employee workload, while maintaining process efficiency through eliminating non-value adding activities. This was made explicit by participant 3 of Firm A, who commented, “Through eliminating non-value adding areas after visualising the process, actually there is less work for employees. So I’m asking them to do less work and produce more”. The lean flow also significantly reduced unnecessary motions and have created a sequence of production going beyond departmental boundaries in Firm A. The defined key performance indicators have created a structured methodology in the SMEs with the area targets and indicators to monitor. For example, “KPIs really help our employees to have a clear idea of what they have to work for. Simple KPIs make this process work” (FB-P4).

Firm A practised integrated lean and green thinking by using bio-degradable bags and an efficient pull system as illustrated by the following example. Participant 3 in Firm A reflected specifically on the need to ensure information and material is pulled based on customer demand, “We are fairly good at inventory reduction and pull system. We have very little products that sits around a very long time. Our packaging material is bio-degradable. It’s recyclable, compostable. We make sure our product packaging breaks down wherever it ends up even if it’s landfilled or recycled”. They also addressed the common waste handling issue of packaging material going into landfill by taking mitigation measures of packaging products in bio-degradable bags. Together with pull system and using bio-degradable bags, the SME was able to achieve performance improvements in both economic and environmental areas. Firm A highlighted the importance of risk profiling using tools such as SWOT and 5 Why, to evaluate the level of risk, when investing in a sustainable business initiative to give internal and external factors (FA-P1). “I would use SWOT. It gives you both internal and external points. We also use five whys as a system to get people to think and get down to that lowest common denominator.” The iterative approach of always asking why by using 5 Why tools, has appears to have supported Firm A to cultivate lean culture proactive attitude. Both enterprises strategically engaged with lean and green tools in the work areas of integrated vision, process efficiency and effectiveness, and risk assessment.

Social performance

Interviewees from both SMEs expressed how their enterprise was governed by unique values and beliefs but still needed a structure to support measurable, explicit social outcomes. Table 6 presents a number of social-cultural activities observed in SMEs. Firm A embedded the ‘do no harm to the environment’ phrase into their business culture, in addition to embedding ongoing education and awareness. Among these activities providing freedom in decision making and testing new ideas was a highlight in Firm A. Organisational freedom was claimed as a key approach used in Firm A to facilitate sustainable practice. “It’s part of the organisational freedom that we are moving towards and helping people to be sustainable. We are modelling on the re-inventing organisation, which is an organisation freedom methodology by Frederic Laloux” (FA-P1).

Table 6 Observed social-cultural activities in the two case study SMEs Full size table

The SME participants also highlighted conducting strategic meetings, and clearly communicating the key messages regarding the correct implementation of lean and green tools were powerful in increasing awareness on why lean and green thinking is critical in driving sustainable business practice.

Furthermore, both SMEs considered consulting external experts, relevant government professionals and academics as a key move for them to learn about best practices and advance from doing ‘business as usual’. For example, Firm A was engaged in community restoration activities after a natural disaster in their areas and supported renovations of houses affected. This was aligned with their outward social action and corporate social responsibility agenda. They also commented on previous research enquiry with ‘The Natural Edge Project’ research team (Urban Research Program, Griffith University), demonstrating a longer-term engagement with research and education. Firm B commented on engagement with government professional bodies such as ‘Citysmart’ and local councils to develop socially acceptable and sustainable recycling practices. Firm B also continues to work with three universities and support their research projects to advance the evidence base on sustainable manufacturing practices, and strategies to close the loop. They are involved with local councils to develop a food waste monitoring tool and to reduce the odour issues in the social environments and provide solutions to reduce the waste going into landfills. Engaging with these networks appears to have supported both firms to contribute to the mainstreaming of sustainable business practice in South east Queensland.

By providing ongoing training, key SMEs can engage employees and encourage their participation in lean and green-driven sustainable business practice. For example, “Training is more about understanding and doing; if people understand the why, the reasons behind doing things, it makes a whole lot more sense to them” (FA-P3). However, it is only by integrating all environmental, economic and social outcomes that SMEs can move toward sustainable development, which is the third strategy of the NRBV theory.

A model for engaging in lean and green thinking

To overcome the potential for ad hoc use of lean and green tools currently observed in many SMEs in South East Queensland [35], the authors have developed an emergent ‘Lean and green strategy model’ (Fig. 2), including a 3P Matrix, as a useful guide for SMEs to engage the best tools and processes for their circumstances and aspirations, to improve their sustainable business outcomes. Within this structure, SMEs can follow four steps to: 1) explore, 2) prioritise, 3) invest, and 4) monitor and evaluate, to support the strategic selection of tools in their transition towards sustainable business practice, as discussed in the following paragraphs.

Fig. 2 Emergent lean and green strategy model for performance improvement Full size image

Step 1. Explore the existing context

Firstly, the SMEs need to explore the existing context of business operations. This exercise will enable SMEs to identify the high performing areas and opportunities for further improvement. For example, a SME may have a vision of becoming economically sustainable (i.e.: through improving efficiency, productivity and reducing lead time) as well as environmentally sustainable, however remain unclear on the type of tools they could use to optimise their environmental outcomes. Through the case studies it was evident that the industrial practitioners who are in need for continuous improvement constantly explores and evaluates their current processes. For example, respondent FA-P3 noted, “I always look at our process and think how we could make it more efficient. I think of what people will gain from our practices and how it will affect the quality of our work.”.

Within environmental management, SMEs could decide which aspect (i.e. energy, water or chemicals management) they seek to improve further before conducting a self-evaluation of their business practices to identify the opportunities for improvement available within their processes. They could further establish interest in learning new techniques to achieve sustainable business practice. For example, FB-P2 noted, “We researched and found there might be something to be used as an erosion barrier, within our lean flow. Different types of opportunities coming out of these types of exercises”.

In summary, SMEs could align opportunities for improvement to do more with less. In actioning the SME commitment, the subsequent model steps then enable SMEs to attain resource efficiency objectives, reduce pollution and keep resources in the life cycle for longer.

Step 2. Prioritise the most critical performance improvement areas

Secondly, SMEs could prioritise the most critical performance improvement areas out of environmental, economic and social areas. They could assess their business objectives, vision, mission and the targets to prioritise the types of work streams. In the case studies, SMEs used tools such as quality circles to reflect on critical areas, value adding and non-value adding activities. Quality circles enabled the industrial practitioners to generate new lean and green process solutions for SMEs to be more environmentally sustainable, as reflected by FB-P2 comment, “Once we identify the value adding and non- value not adding activities, the team will come up some ideas of why don’t we put these things there and some other stuff somewhere else and make a new product out of waste”. This exercise then led develop new ideas for opportunities to improve business performance. For example, Firm B prioritised critical performance area to be reducing ‘muda’ (waste) and waste management using a waste product of one process as a raw material for another. This practice also catalysed this company to shift its business agenda and diversify their agricultural products.

Firm B prioritised this phase of the manufacturing process and also prioritised technological advancement of automating the coir fibre hydrating process though automation. For example FB-P6 noted, “With our coconut fibre product, we have a manual way of hydrating coir fibre, we are looking at upgrade of that process and automate it. They’ll break up coir fibres and hydrate it automatically”.

In exploring critical performance improvement areas, SMEs can consider opportunities to align core business functions with the following streams:

People: Sustainability leadership and direction, Sustainability advocate, Ongoing education and training

Planet: Environmental management, Creative-innovation, Regenerative business practice

Profit: Integrated vision, Process efficiency and effectiveness, Risk assessment,

This initial analysis will aid the SMEs to find strategy-action gaps and then developing measures to capitalise on the performance improvement opportunities to close the gap. With considerations of business trends in the external environment, the SMEs can equip themselves with appropriate tools to remain competitive in the market.

Step 3. Invest in the most appropriate tools

The third step involves investing in the most appropriate tools related to the prioritised performance objective by referring to the associated 3P matrix presented (Table 7). Table 7 offers the first 3P Matrix tailored for SMEs to position their lean and green actions and identify tools which can offer multiple benefits across the streams described in Step 2. The SMEs conduct a cost benefit analysis and select the most beneficial and cost-effective set of tools.

Table 7 3P Matrix for performance improvement towards lean and green business practice Full size table

Respondents across both SMEs discussed journeys of incremental change through investing in appropriate lean practices to minimise waste and increase efficiency in manufacturing processes. For example, FA-P2 commented, “Our dry manufacturing plant was built with a lot of lean principles built into it. Quality is already in it. The speed, efficiency of the machinery was considered from the beginning”. Through this planning Firm A, invested in tools such as lean layout, 5S and capacity planning which were critical tools for their circumstance of building the dry manufacturing plant.

There are a variety of lean tools readily available to SME industrial practitioners looking to harness best outcomes in sustainable business practice. Of the 40 lean tools identified in Table 7, 5S, quality circles, PDCA cycles, internal training, internal auditing and green tools/concepts such biomimicry, waste and water management can be strategically used along all three performance improvement areas. There is a myriad of tools to support environmental management, creative innovation, process efficiency and effectiveness; out of 40 tools, 35 tools are useful in influencing environmental performance. PDCA cycle is a key problem-solving tool used in lean manufacturing and also a key principle in adhering to ISO 9001 (Quality Management System) and ISO 14001 (Environmental Management System). The 5S tool is the most widely used and the most prominent as a starting point for many SMEs in their lean and green journey. However, where 5S is used in conjunction with environmental management practices, it can result in cumulative benefits in both operational and environmental management.

There are 28 lean and green tools influencing economic performance. Among those tools, the pull system was valued as an effective tool for reducing inventory waste and improving process efficiency. Within the ten lean and green tools that impacted the social performance of 5S, internal audits and training played a key role in ongoing awareness and advocating sustainability.

Step 4. Monitor and evaluate towards sustainable business practice

Finally, SMEs need to monitor and evaluate the performance of the implemented lean and green tools, across desired environmental, social and economic outcomes. This model can be used as an iterative process for continuously addressing strategic work areas (see Fig. 2) through systematically trialling and integrating tools in a customised approach to improvement. In the two case studies the senior decision makers emphasized how this model should be an iterative process inspired by the PDCA cycle. For example, as noted by FB-P4, “PDCA cycle which is the continuous improvement cycle it allows people to Plan do check and act”.

Senior decision makers of Firm A did monitor and evaluate the usefulness of a procedural structure that enables better decisions and efficient use of resources to achieve environmental performance goals. For example, FA-P1 subscribed the importance of structure, and values structure: “And 5S is part of that discipline, which is required to work as efficient and effective as possible. Also, we are cautious about too much structure, or the limitations caused by it. It imposes on people, life, on creativity, on abundance. We are always monitoring very carefully.” This type of structural modifications induce creative innovation in this organization.

Considering the model and matrix in light of outward facing communications with government and the public, they provide a useful framework for prioritising and reporting against progress towards environmental and social benchmarks such as the UN SDGs. By incorporating lean and green thinking within business as usual will enable SMEs to advance their efforts in responsible production which will enable them to advocate resource and energy efficiency, sustainable infrastructure, and improve the quality of life of employees. Implementation of lean and green activities will strengthen the economic competitiveness and attract funding/ aids from professional bodies and government.

With this customised integration of lean and green tools, SMEs can overcome the challenge of ad hoc use of tools and facilitate their enterprises to identify where and how many of these tools can be used to better harness sustainable business outcomes. SMEs have opportunities to become leaner and greener through reducing waste, recycling towards more sustainable production achievement. This research is adds to the evidence base of using lean and green actions together by [25], where a framework for Lean and Green management was provided with associated indicators. Previous research presented a Lean and Green House with accessible procedures to foster synergistic Lean and Green implementation in manufacturing firms [37]. The summarised suite of tools can assist SMEs to strategically select the appropriate lean and green tools according to their business priorities and aspirations.