Green Manufacturing:ERM

1
Another form of waste

• The coolest thing I learned in graduate school
  and my job at OSU
• Why do we care?
• If the goal of the organization is to make money
  why do we care ?
• Examples

2
Linkages

• Marketing - do we care?
• Maytag Neptune washer reverses a trend ?
• Negative effects
• the three eyed fish
• Valdeez
• Accounting / Finance / Law
• there are serious cost and liability issues
  involved with environmental regulation, spills,
  and the like.
• Louisiana Pacific
• Human resources - people generally do not want to
  work in unsafe environments
• All managers proactive organizations make more
  money than opportunistic and reactive.

3
Green Production Sustainability

• Green Production A system which integrates
  product and process design issues with issues of
  production in such a way as to minimize
  environmental impacts.
• Note that environmental impacts are generally
  waste.
• and waste is........
• Therefore the goal of ERM is waste elimination
  which is very similar to TQM and JIT

4
Key assumption

• If the elimination of waste is good than green
  production must be good as well.
• Note
• we have already accepted that other forms of
  waste are bad.
• pollution is really a form of scrap
• JIT defines waste as anything more than
  absolutely necessary so any environmental
  residual is bad

5
Why are firms starting to care ?

• Government pressure
• Pressure from customers
• Growth in environmental regulation
• Worldwide How green is your market
• Liability implications
• TQM and JIT
• Publicity
• Disposal costs
• They can make money - Xerox / The Military/ Green
  Chemistry / LP
• Note growth in GDP verses growth in energy use

6
How do companies make money on this?

• They can save on their costs reduce use of
  assets
• They need to create new and novel products and
  processes

7
An environmental success

• Herman Miller Inc. Zeeland MI. makers of wood
  office furniture.
• This company has undertaken many environmental
  initiatives
• Recently built a transparent factory
• however the best example of a competitive
  advantage through ERM is the power plant.
• On site generation from burning scrap wood (burns
  at very high temps to limit emissions)
• avoid landfill and energy costs
• competition pays to give them wood

8
Some other recent initiatives

• Herman Miller tends to focus on finding uses for
  what would have been deemed waste in the past
  others are focusing on never creating waste
  which is the true path to long term competitive
  advantage
• Ford river rouge plant
• Nike- biodegradable shoes
• Truly recyclable nylon note aluminum is an
  exception
• BASF- Savant Carpet- infinitely reusable
• Ice cube analogy
• Louisiana Pacific - EMS saving 25 million a year

9

10
Cost Savings 2003
12
11
Cost Savings 2003
12
What can companies do to reduce waste

• Product redesign to use less
• Parts concentrated detergent
• Energy -lighting / Military
• Substitution
• Coastwide cleaning products
• Reduce CD packaging
• Recycle Harley and Hallmark
• Rebuild - Xerox

• Remanufacture
• Reuse
• Prolong use
• Work with suppliers!!!
• Work with customers
• GMs electric car and electric truck

13
Companies then can

• Reduce the impact of their products
• Reduce the impact of their processes
• Most of these efforts are very different from
  traditional efforts at being environmentally
  safe
• Most companies have a knee-jerk reaction to
  environmental issues because they have
  traditionally taken a clean-up approach
• True leaders in this stuff take a prevention
  approach for instance 3M

14
Prevention results in general

• There have been numerous studies on the linkage
  between environmental and economic performance.
  They tell us that in general
• As environmental performance improves economic
  performance improves
• JIT companies do poorly when measured by the end
  of pipe but do very well on prevention
• Innovation is the key
• Investing in reducing the impact of operational
  processes leads to higher plant performance
• In other words prevention can make more money
  through the elimination of waste

15
Conclusions

• Most mangers view regulation and the environment
  as a cost - and it can be a major cost
• However, a few firms have realized that waste is
  waste - and that rather than fighting regulation
  they avoid the need for it.
• They may also get to set the legislative agenda
  which is another way to create a competitive
  advantage
• Like all forms of waste elimination this tends to
  improve firm performance