GREEN SUPPLIERS NETWORK

An Innovative Industry-Government

Collaboration

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•Challenges:

•Outsourcing causes environmental impacts to move

down supply chain

•Manufacturers can be held publicly responsible for suppliers’

environmental performance

•Small and medium-sized manufacturers are pressured to

reduce costs and improve environmental performance with

little resources

Tier N Suppliers

OEM

Tier 1 Suppliers

Tier 2 Suppliers

Responding to Industry’s Needs

Response:

The Green Suppliers Network provides lean and environmental technical assistance to lower tier suppliers

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Green Suppliers Network in a Nutshell

• Green Suppliers provides Lean & Clean technical assistance to small and mid-sized manufacturers that improves competitiveness through environmental and economic benefits

• A Lean & Clean approach expands the traditional Lean definition of waste from eliminating non-value added time, labor, and money to include environmental wastes (e.g. energy, emissions)

• A collaborative venture among industry, the National Institute of Standards and Technology Manufacturing Extension Partnership (NIST MEP) Program, the States and the U.S. EPA

• This voluntary initiative aligns original equipment manufacturer (OEM), supplier and government interests

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What is Lean and Clean?

Clean strives for:

• Nature-friendly Substitutes

• Optimized Material

Efficiency

• Waste Elimination

• Air/Water Emission

Reductions

• Solid/ Haz Waste Reduction

• Toxic Material Reduction

• Efficient Packaging

Lean reduces:

• Defects

• Overproduction

• Waiting

• Non-utilized People

• Transportation

• Inventory

• Motion

• Extra processing

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What Makes Green Suppliers’ Unique?

• OEMs drive supplier participation

• Only engaging interested sectors and OEMs– Suppliers’ environmental performance is the OEM’s problem

• Brings suppliers cost savings • Encourages OEMs to re-visit specifications that hinder

improvement• Collects aggregate data through NIST MEP database• Marries NIST MEP system with state environmental

resources• Bolsters and expands State and Regional programs

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Green Suppliers Network Results

Cost Savings from Environmental Impact Opportunities $4,4985,730/yr

Energy Conservation (MM BTUs) 221,789

Water Conservation (Gallons) 8,930,459

CO2 Emission Reduction (lbs) 128,250

Solid Waste Reduction (lbs) 573,669

Cost Savings from Lean Opportunities $12,846,250yr

Cost Savings from Other Opportunities $189,193/yr

Total Potential Cost Savings $17,534,173/yr

Cost Savings from One-time Lean Opportunities $9,065,466

Potential savings for 30 Green Suppliers Network Reviews:

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Innovation through Collaboration

The Green Suppliers Network brings together:

• Government & Industry– US EPA, OPPTS– US Department of Commerce’s National Institute of

Standards and Technology’s Manufacturing Extension Partnership (MEP)

• State Economic and Environmental Resources– State environmental program – NIST Manufacturing Extension Partnership

• Lean Manufacturing & P2

• Supply chains– Original Equipment Manufacturers– Suppliers

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Green Suppliers’ Industry Champions

• Aerospace – Boeing, Lockheed-Martin, Northrop Grumman, Pratt & Whitney,

Raytheon, Rockwell Collins, United Technologies Corporation

• Automotive (Suppliers’ Partnership for the Environment)– DaimlerChrysler, General Motors and 30 suppliers

• Healthcare/Pharmaceutical– Abbott Labs, Baxter Healthcare, Bristol-Myers Squibb, Eli Lilly,

GlaxoSmithKline, Johnson & Johnson, Pfizer, Roche and Wyeth

• Office Furniture– Haworth, Herman Miller, HNI/AllSteel, Kimball, Light Corp, Steelcase

• Any facility can benefit from the Green Suppliers Network

State Perspective

Marcia Horan

Michigan Department of Environmental Quality

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It’s All About Community

• Focus on inter-relationships at the community level

• State programs complement EPA objectives

• Creates the potential to leverage a successful model to enhance

economic development, manufacturing support and environmental

performance

• Provides the supplier with follow-up support activity in waste

reduction/energy efficiency implementation and realized cost

savings.

“All politics are local.”

Eugene “Tip” O’Neal, Former Speaker of the U.S. House of Representatives

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Synergistic Connections

RETAP Internship Program

Mentoring

Product Stewardship

Clean Corporate

Citizen

GSN

Green Suppliers Network connects to other EPA programs and to state programs

Design for the

Environment

Performance

Track

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• Retired Engineer Technical Assistance Program (RETAP)

• RETAP Internship Program

• Small Business P2 Loan Program

• RETAP P2 Technical Demonstration Grant

• Michigan Business Pollution Prevention Partnership (MBP3)

• Clean Corporate Citizen (C3)

• Environmental Management Systems (EMS)

State Program Support Michigan Examples

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Real World Connections

• Five Green Suppliers assessments performed

• Three included RETAP engineers

• Three RETAP Interns placed Summer 2003 – 2005

• Two OEM and one Supplier awarded Clean Corporate Citizen (C3) status in 2004

• October, 2005- 12 additional suppliers engaged in the Green Suppliers learning process.

• December, 2005- 2 Green Suppliers assessments scheduled for 2006

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PartneringMBP3, EMS, C3

Business BenefitsReduced Costs

Increased Profits

Business DriversEconomic, Social,

Environmental

Transparency

New Direction with Business - Sustainability Along the Supply Chain as Standard Operating Procedure

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Green Suppliers Network Catalyzes Action

• Metal Works, Inc.- Supplier working on EMS, joins the Michigan Business Pollution Prevention Program (MBP3) and is setting a goal of gaining C3 status by the end of 2005

• Environmental Coatings Inc. - Supplier agrees to an Investment Grade Audit with RETAP participation and the Delta Institute.

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Energy Conservation (MM BTU's)

69,745

Water Conservation (gallons) 5,561,000

Air Emission Reduction CO2 (lbs.) 2,200

Solid Waste Reduction (lbs.) 207,669

Water Pollution Reduction (gallons) 90,000

Green Suppliers Aggregate Potential Environmental Data for Office Furniture Suppliers in Michigan-5 Technical Reviews (NIST-10-12-05)

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Green Suppliers Aggregate Potential Dollars Savings Data for Office Furniture Suppliers in Michigan- 5 Technical Reviews (NIST-10-12-05)

Lean Savings $1,031,617/ yr

Clean Savings $ 892,227/ yr

Total Potential Recurring Savings $1,923,844 / yr

One Time Conversions To Cash (Inventory Reduction)

$2,401,782

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The Rewards

• Creates a comfort zone• Connections are supported• Opportunities develop• Business growth and innovation occurs• New directions of state support are created

The Review

Bill Stough

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MANUFACTURING WASTE

LINKS TO

LEAN AND ENVIRONMENTAL

IMPACTS

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What is the Manufacturing Extension Partnership?

• The NIST Manufacturing Extension Partnership (MEP) program help’s America’s small manufacturers improve their productivity, economic competitiveness and technological capability.

• Created or retained 50,315 jobs

• Increased $1.483 billion in sales

• Retained sales of $2.638 billion

• Realized $686 million in cost savings

• Invested $912 million in modernization, including plant and equipment, information systems, and workforce training

• Served 18,422 clients in FY 2003

*Survey results of clients served from October 2002 through September 2003

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Green Suppliers Network Review Process

Step 1 – Green Suppliers Network review team (NIST MEP and State environmental experts) engage supplier to complete Transformation Planner

Step 2 –The team works with supplier to determine which process and areas to focus on

Step 3 –The team works with supplier to create value stream map and process map while training them at the same time

Step 4 – The team uses these maps to find improvement opportunities

Step 5 – NIST MEP completes final report including a cost benefit analysis of all identified opportunities

Step 6 – The team conducts follow-up with supplier to assist in implementation

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Understanding the Current StateBenchmarking Exercise

Activities

Questionnaire

Data Comparison

Results Discussion

Identify Opportunities

Estimate financial Benefit

& Generate Final Report

Implementation

Responsibility

Supplier

NIST MEP Center

NIST MEP Center, State TAP

NIST MEP Center, State TAP

NIST MEP Center, State TAP

NIST MEP Center, State TAP

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Operation A Operation B

Value Stream

Raw Material Final Product

Understanding the Current StateValue Stream Mapping

A Value Stream is the set of activities (both value added and non value added) required to bring a specific product or service from raw material through to the customer.

Operation C

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Understanding the Current StateValue Stream Mapping

Market Forecast

Total Lead Time = 68 days Value Added Time = 15 min

CustomerA

2 people

C/T = 4 minC/O = 3 hrUptime = 61%

Assembly &Inspection

2 people

Milling

C/T = 2 minC/O = 2 hrUptime = 74%

3 people

C/T = 7 minC/O = 4 hrUptime = 48%

Painting

I I I3 people

Shipping

7 min4 min2 min

15 days 8 days10 days 30 days

Production ControlAnnual Production Plan

Weekly delivery schedule

Wee

kly

sch

edul

e

Daily sch

edu

le

Daily schedule

Daily schedule

WK

I

5 days

D ID

30 daysWK

Receiving

C/T = 2 minC/O = 30 minUptime = 93%

Welding

5 days

2 min

CustomerBSupplier

1Supplier

2

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VSM with Environmental Metrics & EHS Icons

Market Forecast

Total Lead Time = 68 days Value Added Time = 15 min

CustomerA

2 people

C/T = 4 minC/O = 3 hrUptime = 61%Haz. Waste = 20 lbs

Assembly &Inspection

2 people

Milling

C/T = 2 minC/O = 2 hrUptime = 74%Haz. Waste = 5 lbs

3 people

C/T = 7 minC/O = 4 hrUptime = 48%Haz. Waste = 60 lbs

Painting

I I I3 people

Shipping

7 min4 min2 min

15 days 8 days10 days 30 days

Production ControlAnnual Production Plan

Weekly delivery schedule

Wee

kly

sch

edul

e

Daily sch

edu

le

Daily schedule

Daily schedule

WK

I

5 days

D ID

30 daysWK

Receiving

C/T = 2 minC/O = 30 minUptime = 93%

Welding

5 days

2 min

CustomerBSupplier

1Supplier

2

EHS EHS EHS

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VSM with Materials Line and EHS Icons

Market Forecast

Total Lead Time = 68 days Value Added Time = 15 min

CustomerA

2 people

C/T = 4 minC/O = 3 hrUptime = 61%

Assembly &Inspection

2 people

Milling

C/T = 2 minC/O = 2 hrUptime = 74%

3 people

C/T = 7 minC/O = 4 hrUptime = 48%

Painting

I I I3 people

Shipping

7 min4 min2 min

15 days 8 days10 days 30 days

Production ControlAnnual Production Plan

Weekly delivery schedule

Wee

kly

sch

edul

e

Daily sch

edu

le

Daily schedule

Daily schedule

WK

I

5 days

D ID

30 daysWK

Receiving

C/T = 2 minC/O = 30 minUptime = 93%

Welding

5 days

2 min

CustomerBSupplier

1Supplier

2

EHS EHS EHS

Total Materials Used = 195 lbs Materials Needed = 110 lbs

20 lbs5 lbs80 lbs

40 lbs 20 lbs15 lbs120 lbs

5 lbs

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Future State VSM with Materials Line and EHS Icons

Market Forecast

Lead Time = 68 days Value Added Time = 15 min

Customer A

Customer B

2 people

C/T = 4 minC/O = 3 hrUptime = 61%

Assembly &Inspection

2 people

Milling

C/T = 2 minC/O = 2 hrUptime = 74%

3 people

C/T = 7 minC/O = 4 hrUptime = 48%

Painting

3 people

Shipping

Production Control

Supplier 1

Supplier 2

Annual Production Plan

Daily schedule

Daily schedule

C/T = 2 minC/O = 30 minUptime = 93%

Total Materials Used < 150 lbsMaterials Needed = 110 lbs

Welding

<90 lbs

5 lb

EHSEHS EHS

DI

7 min4 min2 min

15 days 8 days10 days5 days2 min

20 lbs5 lbs<25 lbs 20 lbs15 lbs

80 lbs

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Understanding the Current StateProcess Mapping

• A schematic depiction of a process

• Used to enhance resource utilization

• Used to identify, eliminate/reduce wastes

ProcessRaw Material Final Product

EnergyWater

Lubricants

Contaminated Water

Atmospheric Emissions

Used Oil

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Next Steps: Implement Changes

Green Suppliers’ Implementation support

• $1,000 credit toward implementation assistance if suppliers work with MEP center on an environmental project within 3 months of review

MEP

• Create implementation recommendation report

• Share results and cost-benefit analysis with supplier

• Conduct follow-up survey within 6 months to assess impacts

State

• Direct supplier to state resources and programs

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Review Specifics

• Cost$7,000 Cost of review$2,500 U.S. EPA program discount*$4,500 Total cost to supplier for Green Suppliers review

• Supplier benefits often exceed 3:1 ROI• Reviews offered first come, first served• Reviews focus on single process• On-site reviews take 2-3 days• Reports generated in 4-6 weeks• Technical assistance providers disclosed before review

*Suppliers Must Qualify Under SBA Definitions

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Real World Examples

Metalworks, Inc., (a metal fabricator for furniture industry)

Green Suppliers Assessment recommended:

1. Used 21,828,138 gallons of water per year; recommended a 25 percent reduction; reduced water consumption to 8,500,000 gallons per year, a 60 percent reduction, saved $30,000.

2. Used $700,000/year on electricity and natural gas; recommended a 10 percent conservation goal; achieved over 12 percent, saved $85,000.

3. Develop an Environmental Management System team that integrates the Lean Team

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Review Results: H&L Advantage

Plastic Injection molding and assembly for furniture and automotive industries:

• Reduce Energy Use by 10 percent by joining the EnergyStar program, focus on improving air compressor efficiency.

• Reduce chemical use for cooling water system; reduce Water Use by 15 percent by

• “…The Lean and Green principles have become our way of doing business for everything we do at H&L, and it’s now in our DNA. I would encourage anyone who has an opportunity to become involved in the Green Supplier’s Network to take that opportunity. It is extremely valuable.” –Steve Beurkens, Sales Marketing Manager, H&L Advantage

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Waste Types

Lean Environmental

Defects Scrap, rework, replacement,

production, inspection

•Raw materials consumed in defective products•Defective components recycle or disposal•More space, more energy required

Waiting Stock-outs, lot processing delays equipment downtime

•Material spoilage or component damage/waste•Wasted energy during downtime

Overproduction Manufacturing items for which there are no orders

•Additional raw materials consumed to make extra•Products could spoil, become obsolete

Movement Human motions that are unnecessary or straining, carrying WIP long distances

•More energy and emissions for transport

Inventory Excess raw material, WIP, finished goods

•More space for WIP, extra lights, heat & cool•More materials to replace damaged WIP•More packaging, waste from storage damage, or more raw materials to replace damaged WIP & energy

Complexity More parts, process steps, time than customer needs

•More raw material consumed/unit of production•Extra processing adds waste, energy/emissions

Unused Creativity

Lost time, ideas, skills, innovations

•Fewer suggestions for P2/E2 opportunities

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The End Result is,

Any Type of Waste has Multiple Negative Impacts to Your Profit

Margin

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The Challenges

• Motivating engagement • Speaking the same language• Building trusting relationships• Maintaining a consistent message• Maximizing resources• Large scale adoption and diffusion system• Getting participants to implement recommendations

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Contact Information

For more information about the Green Suppliers Network visit www.greensuppliers.gov or contact:

Tom Murray – Pollution Prevention Division, US EPA(murray.tom-hq@epa.gov or 202-564-8829)

Marcia Horan – Environmental Science and Services Division, Michigan Department of Environmental Quality(horanm@michigan.gov or 517-373-9122)

Bill Stough – The Right Place, Inc. (srg@iserv.net or 616-301-1059)