Sustainable Manufacturing
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  • As we’ve talked to manufacturers over the last several years, some common objectives – or strategies or principles - have surfaced among those who want to take things to the next level. It’s not that all manufacturers should do all of these, but ARC does recognize that manufacturing leaders are selecting and following many of these strategies. And all of these strategies have implications for IT in Operations. In some industries, proven strategies are evolving and others are needed. Take the Pharmaceutical industry, for example. While they have focused on compliance for years, the new, risk-based approach to compliance changes the approach significantly. Instead of “validate a process and never change it”, managing risk necessitates an active program. So monitoring real-time performance, continuous improvement programs, synchronization, and rapid innovation, all suddenly take on a new importance. And these are exactly the strategies necessary to compete in today’s dynamic competitive environment.
  • With the flat world effect and the familiarity with new technology, buyers have access to more potential suppliers, and they have higher expectations. They want more… They demand (read list) All of these impact manufacturing Operations

Sustainable Manufacturing Presentation Transcript

  • 1. Sustainable Manufacturing Remaking Today’s Manufacturing Enterprise for Tomorrow’s Economy February 2009 Greg Gorbach Vice President ARC Advisory Group [email_address]
  • 2. Topics
    • Climate And Resource Constraints are Beginning to Drive Manufacturers
      • Climate-Related Risk Increasing
      • Marketplace Demanding Sustainability
    • Enterprise-wide Sustainable Manufacturing
      • Business, Supply Chain, Engineering, Operations
    • Toolbox Lists
  • 3. Climate Science and Emerging Business Imperatives
  • 4. Direct Observations of Recent Climate Change Source: Intergovernmental Panel on Climate Change, Fourth Assessment Report, 2007
  • 5. Human Contribution to Climate Change Source: Intergovernmental Panel on Climate Change, Fourth Assessment Report, 2007
  • 6. Global Anthropogenic Greenhouse Gas Emissions Source: Intergovernmental Panel on Climate Change, Fourth Assessment Report, 2007 a) Global Anthropogenic GHG Emissions; b) Share of Anthropogenic GHG Emissions in 2004; c) Anthropogenic GHG Emissions Share by Sector in 2004
  • 7. Marketplace 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 . 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 .
    • We 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.”
  • 8. Climate Induced Risk is Growing
    • Cost
      • Energy Cost
      • Emissions Cost
      • Water Availability
      • Waste Cost
      • Materials Scarcity
    • Market Valuation
      • Product Mix Risk
      • Customer Environmental Awareness
        • Brand Valuations
        • Reputational Risk
        • Product/Service Opportunities
  • 9. What Can be Done? Available Strategies for Solving the Climate Problem
  • 10. The Eight Wedges of the Stabilization Triangle by Socolow & Pacala, Princeton University and CMI Source: Carbon Mitigation Initiative (CMI)
  • 11. Available Carbon Emissions Reduction Strategies Source: Carbon Mitigation Initiative (CMI) Category Strategy Description Increased Efficiency and Conservation Transport efficiency Double the efficiency of all cars (2 billion cars) Transport conservation Cut total passenger vehicle miles in half (increase public transportation) Building efficiency Apply best new technologies (insulation, heating, lighting, etc.) Electricity production efficiency Raise plant efficiency from 40% to 60% Fossil Fuel Based Strategies and Carbon Capture and Storage (CCS) Apply CCS to Electricity generation Store CO 2 from fossil fuel plants underground (700 large coal plants or 1400 natural gas plants) 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 CO 2 from Coal Synfuels production (at 180 large plants) Fuel Switching Displace coal-electric plants with natural gas (1400 1GW coal plants) Nuclear Energy and Renewables 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) 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) Biostorage Forest Storage Carbon stored in new forests; halt deforestation Soil Storage Carbon stored in agricultural soil; use conservation tillage on all the world's agricultural soils
  • 12. Enterprise Sustainable Manufacturing
  • 13. Today’s Business Challenges Continue Sustainability Layers onto Existing Drivers
    • Globalization
    • Rapid Product Innovation
    • Process Innovation
    • Emissions Reductions
    • Sustainability
    • Collaboration
    • Synchronization
    • Lean
    • Continuous Improvement
    • Compliance
    • Risk Management
    • Packaging
    • Performance
    • Flexibility
    • Pull-based Production
    • Etc.
    Supply Delivery Design Business Production Raw Materials, Ingredients Recipes, Formulas, Process Know-how Finished Goods Add Value in Production Operations
  • 14. Market Pressures  Operations Headaches Shifting customer requirements impact business every day
    • Faster turnaround
    • Reduced price
    • Consistently high quality
    • Smaller lots
    • Delivered on my terms and schedule
    • Green packaging and transport
    • Socially responsible production
    • More products and more variations
    • More real-time info about my orders
    • Component traceability
    • You handle recycling
    • Be more responsive when things change
  • 15. Sustainable Manufacturing Lifecycle Engineering and Operations are Critical to Achieving Goals ARC CMM Model – Discrete Industries Customers Dealer Lifecycle Supply Chain Business Systems Logistics Emissions Waste Product Support Power Water Supplier Network Design Engineering Mfg Operations
  • 16. Sustainable Manufacturing Lifecycle Engineering and Operations are Critical to Achieving Goals ARC CMM Model – Discrete Industries Recycle Re-use Fuel Emissions Customers Dealer Lifecycle Supply Chain Business Systems Logistics Emissions Waste Product Support Power Water Supplier Network Design Engineering Mfg Operations
  • 17. Sustainable Manufacturing Lifecycle Engineering and Operations are Critical to Achieving Goals ARC CMM Model – Discrete Industries Potential for a Significant Change to the Business Model Recycle Re-use Fuel Emissions Customers Dealer Lifecycle Supply Chain Business Systems Logistics Emissions Waste Product Support Power Water Extraction Raw Materials Supplier Network Emissions Design Engineering Mfg Operations Emissions Logistics Emissions
  • 18. What Would Sustainable Manufacturing Look Like? Business Planning, Risk Assessment, Global/Regional, etc. Supply Chain Carbon Tracking, SC Network design, etc. Design & Engineering Product Design, Asset Upgrades, Mfg Process Improvements, etc. Manufacturing Operations Energy Management, Efficiency, Packaging, Waste, etc.
  • 19. Sustainable Manufacturing Plant Levers What Can be Done to Impact Sustainability? Product Design Engineering and Mfg Operations Have Critical Roles ARC Sustainable Manufacturing Plant Model Products Waste Emissions Energy & Water Materials & Components Mfg Capability Mfg Capacity Energy Burden Water Burden Carbon Burden Waste Burden Engineering Improve Physical Plant Improve Performance Improve Product & Process Design
  • 20. The Manufacturing Balance Has Changed It is time to revisit technology justifications
    •  Cheap Energy
    •  Cheap Water
    •  Cheap Waste
    •  ‘ Free’ Emissions
    •  Predictable Raw Materials
    •  Available Talent Pool
     Expensive Controls & Automation Technology  Expensive Software and IT YESTERDAY: TODAY:
    •  Energy cost swings
    •  Water cost rising
    •  Expensive Waste
    •  Expensive Emissions
    •  Unpredictable Raw Materials
    •  Limited Talent Pool
     Cheap Controls & Automation Technology  Cheap Software and IT $$$ $$$
  • 21. Sustainable Design & Engineering Full-Featured, Collaborative Systems Speed the Work Business Customers Equipment & Automation Suppliers Production Design Enterprise Infrastructure Support ARC CMM Model
    • Product Design
    • Energy Efficiency
    • Carbon Footprint
    • Alternative Materials
    • Energy BOM
    • Process Engineering
    • Reduce Asset Energy, Water, Carbon, and Waste Burdens
    • Improve Flexibility
    • Virtualization
    FIN ERP HR TMS Operations Mgt Systems CRM SCM PLM Increasing need for energy efficiency, emissions monitoring, process changes, packaging changes, asset upgrades, and new controls and metering… places greater demands on Design, Engineering teams Design & Engineering Product Process & Assets
  • 22. Sustainable Manufacturing Operations Flexible, Collaborative Platforms Ease the Transition Business Customers Equipment & Automation Suppliers Production Design Enterprise Infrastructure Support Operations Management ARC CMM Model
    • Production Execution
    • Detail Scheduling
    • Energy Management
    • Water Management
    • Waste Management
    • Compliance Assurance
    • Production Efficiency
    • Asset Energy Monitoring & Maintenance
    • Carbon Tracking
    • Process Control
    • etc
    FIN ERP HR TMS Operations Mgt Systems CRM SCM PLM Increasing need for energy efficiency, emissions monitoring, and regulatory tracking… requires new functionality, enhanced visibility and planning, and greater collaboration in and with Manufacturing Operations
  • 23. Sustainable Manufacturing Toolbox
  • 24. Sustainable Manufacturing Toolbox
    • A collection of useful ‘nuggets’ to help you in your Sustainable Manufacturing Journey:
    • Goal Setting Examples
      • Prevention of Global Warming Targets
      • Resource Conservation Targets
    • Reporting Sustainability Progress
    • Potential Sustainability Initiatives by Department
    • Prioritizing Business vs. Environmental Needs
    • The Role of Collaboration in Sustainability
    • Assessing new Technologies and Business Processes
    • Continuous Improvement and Sustainability
    • Governance of Sustainable Manufacturing
    More Details to Come in Later Presentations…
  • 25. Final Thoughts
  • 26. Now is the Time to Act Enterprise Sustainable Manufacturing Manufacturers Can Benefit by Taking an Enterprise-Wide Approach Operations Design & Eng Supply Chain Business
    • Sustainability Strategy
    • Tradeoffs and Priorities
    • Brand and Reputation Risk Management
    • Mfg Location Planning
    • Energy, Emissions Policies
    • Facilities Improvements (Lighting, HVAC, etc.)
    • New Construction Policies
    • Upgrade Policies
    • Master Scheduling
    • Supply Chain Network Design
    • Carbon Tracking
    • Route Carbon Optimization
    • Regulatory Tracking
    • Supplier Packaging Policies
    • JIT vs. Emissions Tradeoffs
    • etc
    • Product Design
    • Energy Efficiency
    • Carbon Footprint
    • Alternative Materials
    • Energy BOM
    • Process Engineering
    • Reduce Asset Energy, Water, Carbon, and Waste Burdens
    • Improve Flexibility
    • Virtualization
    • Production Execution
    • Detail Scheduling
    • Energy Management
    • Water Management
    • Waste Management
    • Compliance Assurance
    • Production Efficiency
    • Asset Energy Monitoring & Maintenance
    • etc
  • 27. How Shall We Measure Progress? What Metrics Are Being/Should Be Used for Sustainability? Product Design A Potential Benchmarking Opportunity? ARC Sustainable Manufacturing Plant Model Products Waste Emissions Energy & Water Materials & Components Mfg Capability Mfg Capacity Energy Burden Water Burden Carbon Burden Waste Burden Engineering Improve Physical Plant Improve Performance Improve Product & Process Design
  • 28. Our Challenge: Successfully Transition to 21 st Century Manufacturing Model
    • Climate change and sustainability will fundamentally change manufacturing as each company revisits where plants are located, how materials are sourced and shipped, and tradeoffs in how goods are produced. Productivity, efficiency, tracking, quality, and visibility will be more important than ever.
  • 29. Thank You