S ti bl M f t i S ti bl M f t i Sustainable Manufacturing Remaking Today’s Manufacturing Enterprise for Sustainable Manufacturing Remaking Today’s Manufacturing Enterprise for Remaking Today s Manufacturing Enterprise for Tomorrow’s Economy February 2009 Remaking Today s Manufacturing Enterprise for Tomorrow’s Economy February 2009 February 2009 February 2009 Greg Gorbach Vice President ARC Advisory Group [email protected]
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S t i bl M f t iS t i bl M f t iSustainable Manufacturing
Remaking Today’s Manufacturing Enterprise for
Sustainable Manufacturing
Remaking Today’s Manufacturing Enterprise forRemaking Today s Manufacturing Enterprise for Tomorrow’s Economy
February 2009
Remaking Today s Manufacturing Enterprise for Tomorrow’s Economy
Climate And Resource Constraints are Beginning to Drive ManufacturersBeginning to Drive Manufacturers• Climate-Related Risk Increasing• Marketplace Demanding SustainabilityMarketplace Demanding Sustainability• Scale of Needed Changes is Large
Source: Intergovernmental Panel on Climate Change, Fourth Assessment Report, 2007
Marketplace Pressure for Sustainable Manufacturing is GrowingMarketplace Pressure for Sustainable Manufacturing is Growing
Wal-Mart president and CEO Lee Scott in their March 2008 Global Sustainability Newsletter: “We will require all suppliers who work with us through global procurement, who are domestic or importers, or who manufacture Sam’s Club or Wal-Mart private brands, to demonstrate that their factories meet specific environmental social and quality standards Wefactories meet specific environmental, social and quality standards. We have already started doing this, and we hope to extend the requirements to all of the above-mentioned suppliers within three to five years. yWe will only work with suppliers who maintain our standards throughout our relationship, so certification and compliance will be part of our supplier agreements. We will favor – and in some cases even pay more – for suppliers that meet our standards and share our commitment to quality and sustainability. Paying more in the short term for quality will mean paying less in the long term as a company ”
What Can be Done? Available Strategies for Solving theWhat Can be Done? Available Strategies for Solving theAvailable Strategies for Solving the Climate ProblemAvailable Strategies for Solving the Climate Problem
The Eight Wedges of the Stabilization Triangle by Socolow & Pacala, Princeton University and CMIThe Eight Wedges of the Stabilization Triangle by Socolow & Pacala, Princeton University and CMI
Available Carbon Emissions Reduction StrategiesAvailable Carbon Emissions Reduction Strategies
Category Strategy Description
Increased ff d
Transport efficiency Double the efficiency of all cars (2 billion cars)Transport conservation Cut total passenger vehicle miles in half (increase public transportation)
Efficiency and Conservation
Building efficiency Apply best new technologies (insulation, heating, lighting, etc.)
Electricity production efficiency
Raise plant efficiency from 40% to 60%
Fossil FuelApply CCS to Electricity generation
Store CO2 from fossil fuel plants underground (700 large coal plants or 1400 natural gas plants)Fossil Fuel
Based Strategies and
Carbon Capture and Storage (CCS)
ge e at o 00 atu a gas p a ts)Apply CCS to Hydrogen production
Hydrogen fuel from fossil sources with CCS displaces hydrocarbon fuels (produce hydrogen at 10x current rate)
Apply CCS to Synfuels production
Capture and store CO2 from Coal Synfuels production (at 180 large plants)
Fuel Switching Displace coal electric plants with natural gas (1400 1GW coal plants)Fuel Switching Displace coal-electric plants with natural gas (1400 1GW coal plants)
Nuclear Energy
Nuclear electricity Displace coal-electric plants with nuclear electric plants (add 2x current capacity; 50 yrs sustained effort)
Wind Electricity Displace coal-electric plants with wind electricity (30x current capacity)
S l El t i it Di l l l t i l t ith l l t i it (700 t it )and Renewables
Solar Electricity Displace coal-electric plants with solar electricity (700x current capacity)
Wind Hydrogen Produce hydrogen with wind electricity (for use by half of the world's cars)
Biofuels Displace petroleum fuels with biomass fuels (30x current capacity)
BiostorageForest Storage Carbon stored in new forests; halt deforestationSoil Storage Carbon stored in agricultural soil; use conservation tillage on all the
world's agricultural soils
Source: Carbon Mitigation Initiative (CMI)
Enterprise Sustainable ManufacturingEnterprise Sustainable Manufacturingp gp g
Market Pressures Operations HeadachesShifting customer requirements impact business every dayMarket Pressures Operations HeadachesShifting customer requirements impact business every day
Faster turnaroundReduced priceConsistently high qualitySmaller lotsDelivered on my terms and yscheduleGreen packaging and transportSocially responsible y pproductionMore products and more variationsMore real-time info about my ordersComponent traceabilityYou handle recyclingBe more responsive when
Sustainable Manufacturing Plant LeversWhat Can be Done to Impact Sustainability?Sustainable Manufacturing Plant LeversWhat Can be Done to Impact Sustainability?
Engineering and Mfg Operations Have Critical Roles
Sustainable Manufacturing LifecycleEngineering and Operations are Critical to Achieving GoalsSustainable Manufacturing LifecycleEngineering and Operations are Critical to Achieving Goals
Sustainable Manufacturing LifecycleEngineering and Operations are Critical to Achieving GoalsSustainable Manufacturing LifecycleEngineering and Operations are Critical to Achieving Goals
Sustainable Manufacturing LifecycleEngineering and Operations are Critical to Achieving GoalsSustainable Manufacturing LifecycleEngineering and Operations are Critical to Achieving Goals
The Manufacturing Balance Has ChangedIt is time to revisit technology justificationsThe Manufacturing Balance Has ChangedIt is time to revisit technology justifications
Ch EYESTERDAY:
Cheap EnergyCheap WaterCheap Waste‘Free’ EmissionsP di t bl
$$$PredictableRaw MaterialsAvailable Talent Pool
Expensive Controls & Automation TechnologyExpensive Software and IT
Cheap Controls & Automation Technology
TODAY:
Energy cost swingsWater cost risingExpensive Waste
Expensive WasteExpensive EmissionsUnpredictable Raw MaterialsLimited Talent Pool
Sustainable Design & EngineeringFull-Featured, Collaborative Systems Speed the Work Sustainable Design & EngineeringFull-Featured, Collaborative Systems Speed the Work
ARC CMM ModelBusiness
ERPHR FIN
Increasing need for energy efficiency, emissions monitoring, process changes, packaging changes, asset upgrades, and
new controls and metering…
CustomersSuppliers
CRMSCM
places greater demands on Design, Engineering teams
A collection of useful ‘nuggets’ to help you in your Sustainable Manufacturing Journey:your Sustainable Manufacturing Journey:
Goal Setting Examples• Prevention of Global Warming Targets
R C i T• Resource Conservation TargetsReporting Sustainability ProgressPotential Sustainability Initiatives by Departmenty y pPrioritizing Business vs. Environmental NeedsThe Role of Collaboration in SustainabilityAssessing new Technologies and Business ProcessesAssessing new Technologies and Business ProcessesContinuous Improvement and SustainabilityGovernance of Sustainable Manufacturing
Set Sustainability GoalsSample Prevention of Global Warming Targets Set Sustainability GoalsSample Prevention of Global Warming Targets
Reduce emissions of greenhouse gases, calculated in terms of CO2 emissions, from all sites by 10 percent or 2 , y pmore in 2009 and 30% or more by 2012.Reduce CO2 emissions during transport of products or materials by 20% or more.a e a s y 0% o o eReduce manufacturing CO2 per vehicle produced (per unit produced) by 25% by 2012Reduce energy consumed in manufacturing per vehicleReduce energy consumed in manufacturing per vehicle produced (per unit produced) by 25% by 2012Reduce energy consumption of products in use by 15% or moreor more.Produce 2 new profitable major products that help reduce GHG
Reporting CO2 Reduction ProgressAmount of CO2 Emissions From Manufacturing FacilitiesReporting CO2 Reduction ProgressAmount of CO2 Emissions From Manufacturing Facilities
Amount of CO2 Emissions From All Manufacturing Facilities
400
Kt CO2
330
10097.9
99.9 98.2
93.9
100
%
300
200217
236
282299
286
81.1
90
80
100
0
70
0
~~
2002 2003 2004 2005 20061990(FY)0 0
Amount of CO2 emissionsIndex per unit of manufacturing value (compared to FY 1990)
Manufacturing Value = Total production cost excluding direct material cost, other facilities’ components, and procured components
Index per unit of manufacturing value (compared to FY 1990)
Set Sustainability GoalsSample Resource Conservation Targets Set Sustainability GoalsSample Resource Conservation Targets
Reduce waste from manufacturing sites by 25% or moreAchieve a waste reuse/recycle ratio of 95% or moreReduce waste generated per vehicle produced (per unit produced) by 40% by 2012produced) by 40% by 2012Achieve a reduction in volume of water purchased or drawn from groundwater for manufacturing purposes at sites of 20% or moreat sites of 20% or moreConduct life cycle assessments for all major productsContinually increase resource recovery and re-use from
Reporting Waste Reduction ProgressAmount of Waste From Manufacturing FacilitiesReporting Waste Reduction ProgressAmount of Waste From Manufacturing Facilities
Volume of Waste Generated by All Manufacturing Facilities
30
40
Kt
28 5 27 630.5
100
75
%
100 99.9
85.0
99.4 99.6 99.099.597.796.8
30
20
24.3
28.5 27.624.8
75
50
2002 2003 2004 2005 2006 2010(FY)
10
0
25
0
~~
( )
Recycled VolumeIndex per unit of manufacturing value (compared to FY 2005)
Manufacturing Value = Total production cost excluding direct material cost, other facilities’ components, and procured components
Index per unit of manufacturing value (compared to FY 2005)
Recycling Ratio
Reporting Water Reduction ProgressAmount of Water Used by Manufacturing FacilitiesReporting Water Reduction ProgressAmount of Water Used by Manufacturing Facilities
M 3
Volume of Water Used by All Manufacturing Facilities
100
88.7 90.040
Mm3
6.05 5 976.35
100
%
30
20
6.05 5.975.67 5.55 75
50
10
0
25
0
~~
2002 2003 2004 2005 2006 2010(FY)0 0
Index per unit of manufacturing value (compared to FY 2005)
Enterprise Sustainable ManufacturingMap of Potential ESM Initiatives by DepartmentEnterprise Sustainable ManufacturingMap of Potential ESM Initiatives by Department
Energy Reduction
EmissionsReduction
Scarce Water & Raw Materials
Hazardous Materials
Waste Mgmt & Recycling
Reputational Risk and Brand Valuation Management
Green Product and Service Opportunity Identification
Enterprise
Manufacturing Site Location Planning & Optimization
Green Office Facilities
Carbon Trading
Energy Planning
Increased Internal and External Collaboration
Supply Chain
Manufacturing Site Location Planning & Optimization
Align Business and Environmental NeedsSustainable Manufacturing Priority Matrix (Example) Align Business and Environmental NeedsSustainable Manufacturing Priority Matrix (Example)
Each Manufacturer Should Establish ESM Priorities Based on its Unique Circumstances
LCF = Low Carbon Footprint GHG = Greenhouse Gas
Collaboration and SustainabilityNew Processes and Functions Cut Across Groups and AppsCollaboration and SustainabilityNew Processes and Functions Cut Across Groups and Apps
Real-time Plant Floor Energy ManagementEnables Operators to Make Energy Decisions in Real-timeReal-time Plant Floor Energy ManagementEnables Operators to Make Energy Decisions in Real-time
Visibility & AlertsTargets
l i &Real-time Plant Floor
Energy Management
Analysis & Management
Tools
Production Info
Energy Info
g
Data Gathering
Metering
Production Steps
Plan and Track Energy Consumption by Unit Produced
Assessing New Technologies & ProcessesConsider cost, benefit, and production impactAssessing New Technologies & ProcessesConsider cost, benefit, and production impact
No ProjectBenefit
TypeNo. of
InstancesEstimated
CostPotential
Benefit/yrROI +/-
Time to Benefit
Disruption Factor
Pilot ID'd?
Lead Dep't FTEs
Impacted Dep'ts PriorityNo. Project Type Instances Cost Benefit/yr +/ Benefit Factor ID d? Dep t FTEs Dep ts Priority
101Track Energy by Unit for Product XYZ GHG 13 $10M 200 KT CO2 pos 18 mos med yes Mfg 3 Design, IT
102Green Lighting in Plants GHG 44 $4M 25 KT CO2 pos 6 mos lo n/a Facilities 1 n/a
103NA Inbound Packaging Reduction Waste 28 $0.25M 50 K Ft3 pos 10 mos lo yes
Supply Chain 0.5 Mfg
104Eliminate Compressed Air Controls GHG 7/100's $13M 200 KT CO2 neg 24 mos med yes Mfg 2 n/a/ $ g y g /
Production Technology Improvements Can Reduce Energy, Resource Consumption, Waste and GHG’s
Sustainable Manufacturing DMAICApply continuous improvement techniques to new issuesSustainable Manufacturing DMAICApply continuous improvement techniques to new issues
Define process improvement goals (e.g. energy and emissions reductions) that are consistent with market )demands and the enterprise sustainability strategy.
Measure key aspects of the current process and collect data.
Analyze the data to verify cause-and-effect relationships.Analyze the data to verify cause and effect relationships. Determine what the relationships are, and attempt to ensure that all factors have been considered. Establish costs and benefits of mitigation options. Identify ‘low-hanging fruit’
Improve or optimize the process based upon data analysis.
Control to ensure that any deviations from target are corrected before they result in defects (e.g. energy or emissions spikes).
A Governance Model for Sustainable MfgEnterprise Focus, Visibility, and Accountability are CriticalA Governance Model for Sustainable MfgEnterprise Focus, Visibility, and Accountability are Critical
CxO
Executive Team
Sustainable Manufacturing (SM) SM Manager
CSO
Corporate Sustainability Officer
CxO
VP
gGovernance Council
Business Unit
Bus/Fin SM
SM Manager(Business Unit SM Leader)
ctiv
es SM Governance Council Members:• CSO (Leader)• CIO• Representatives of Business and Corporate
Manager
/Leadership
TeamOversight
Team SM Oversight Team Members (example):• VP Manufacturing (Leader)• SM Manager (Facilitator)• IT Manager• Operations Manager SM Initiatives g
Anticipate Evolving Corporate Requirements for Sustainability
Our Challenge:Successfully Transition to 21st Century Manufacturing ModelOur Challenge:Successfully Transition to 21st Century Manufacturing Model
Climate change and sustainability will yfundamentally change manufacturing as each company revisits where plants are located, how materials are sourced and shipped, and tradeoffs in how goodstradeoffs in how goods are produced. Productivity, efficiency, tracking quality andtracking, quality, and visibility will be more important than ever.