# Presentation: 479982

## GREEN  SUPPLIERS  NETWORK

- An Innovative Industry-Government
- Collaboration

## 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

- 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**

## 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

## What is Lean and Clean?

**Clean strives for:**
**N**ature-friendly Substitutes
**O**ptimized Material Efficiency
**W**aste Elimination
**A**ir/Water Emission Reductions
**S**olid/ Haz Waste Reduction
**T**oxic Material Reduction
**E**fficient Packaging

**Lean reduces:**
**D**efects
**O**verproduction
**W**aiting
**N**on-utilized People
**T**ransportation
**I**nventory
**M**otion
**E**xtra processing

## 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

**Notes:**
OEMs are now realizing that their environmental responsibility extends to their suppliers – their suppliers environmental performance is their problem.  

## Green Suppliers Network Results

- Potential savings for 30 Green Suppliers Network Reviews:

## 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

**Notes:**
Government and Industry
US EPA, OPPTS
Role: Coordinates, runs and funds the Green Suppliers Network
US Department of Commerce’s National Institute of Standards and Technology’s Manufacturing Extension Partnership (MEP)
Role: Coordinates MEP centers nationally
State Economic and Environmental Resources
State P2 program 
Role: Conduct “clean” portion of technical reviews 
NIST Manufacturing Extension Partnership 
Role: Conduct “lean” portion of technical reviews
Lean Manufacturing & P2
Supply chains
Original Equipment Manufacturers
Role: Drive supplier participation and review product specifications as needed
Suppliers
Role: Participate and directly benefit

## 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

**Notes:**
We expect to do hundreds of these reviews 
Most sectors are reaching the end of their pilot stages: Aerospace with 6 common suppliers, Office Furniture with 5 suppliers, and Pharma with 5 suppliers. Numbers of nominated suppliers should increase rapidly when OEMs receive aggregated results.
As we work more with SMEs we will have an effect in several sectors e.g. electronics (tie to RCC)

## State Perspective

- Marcia Horan
- Michigan Department of Environmental Quality

## 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**

**Notes:**
Doing More with Less-Strategic collaboration happens at the local level.  P2 Field staff provide opportunity for face to face discussion with local agencies, companies and Manufacturing Extension Partnerships (MEPs).
Comfort level at working with familiar faces in the community
 Leveraging of Federal and State Funding promotes economic and environmental change.
Metrics from (NPPR Results Taskforce and 360vu National Green Suppliers Network Account). States and MEPs can utilize the metrics to document trends in environmental and production performance.  Metrics offer benchmark opportunity to enhance competitiveness.
Support is systemic and creates a long-term solution for government to meet industry needs in a more flexible way.

## Synergistic Connections

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

- Design for the
- Environment

- Performance
- Track

**Notes:**

 Builds capacity for interactions, i.e. internal and external teams, moves players from reactive to proactive mode
Takes advantage of programs such as design for the environment that 
Diffuses new technologies and ideas
Demonstrates value added opportunity
Creates a climate of stewardship and entrepreneurial innovation
Provides incentive to continue

## Retired Engineer Technical Assistance Program (RETAP)

RETAP Internship Program

Small Business P2 Loan Program

RETAP P2 Technical Demonstration Grant

- 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 **

**Notes:**

  Provides a collaborative marketing tool for existing programs, no need to “re-invent the wheel”.  Allows states to explore more efficient delivery systems for “bundling services” to industries and other clients.

 Internship placement helps ID achievable targets and catalyzes change and implementation within the company.

Technical demonstration of new technology allows for business to business mentoring across sectors.  Enhances business growth.

## 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**

**Notes:**
 Typical supplier employs 75-200 people.
 Incentive programs, such as the C3 allow for the customer and supplier to be in the same environmental arena.
 Outreach becomes program advocacy from the service recipient, rather than the government.  Successes and challenges are shared between customer, supplier.  Service provider becomes a participant in the process.

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

**Transparency**

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

**Notes:**
 Office Furniture Industry adopted industry-wide sustainability principles, 2004.  
  Provides guidance in applying the theories of sustainability.  Creates a framework for sharing best practices and progress.  States have a role in the diffusion framework.
 Guiding elements may include P2, energy and water conservation, Greenhouse Gas Reductions, recycling scrap, health and safety and community involvement.
  State recognition of environmental excellence reaffirms community confidence related to environmental protection.
  Supports industry community involvement,  benefits transparency/accountability

## 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.

**Notes:**
Metalworks and water use
-Company produces metal file cabinets for the Office Furniture Industry.
Past water use:  24 million gallons/yr
-2004 reconfigured conveyor wash system to recycle water before sending it down the drain.  RETAP engineer and Intern actively participate and support the decision-making and documentation process.
2004 water use:  11.5 million gallons/yr
2005 water : 8 million gallons/yr
All reduction occurred with no drop-off in production.
Municipal Water Costs:  Past = $45,000/yr. Present = $15,000/yr
More than recouping the $10,000 cost of upgrading the system.

Environmental Coatings Inc., Investment Grade Audit with Delta Institute relating to process efficiency preparing custom blended powder coats
Company produces custom powder coat paint for office furniture and auto industries.

 Adjustments at process level to improve energy conservation and waste reduction.  Reduce costs, increase profit margin.

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

| 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)

**Notes:**
  Collaboration with NIST and NPPR allow for GSN data to be aggregated to ID potential for the supply chain and the customer.  

 Individual company data remains proprietary.

 Allows for environmental benchmarking and trend analysis for states and industry.

## 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  |

**Notes:**
  Demonstrates potential for cost savings related to Lean and Clean
  Definitely gets the attention of industry
  Documents value added, return on investment for all stakeholders

## The Rewards

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

**Notes:**
  Focus on the customer not on government bureaucracy and organizational constraints
  Creates inter-connections that develop problem-solving relationships
  Replace “static” flows with “continuity” of purpose

## The Review

- Bill Stough

## MANUFACTURING WASTE 
LINKS TO
LEAN AND ENVIRONMENTAL
IMPACTS

**LINKS TO**
**LEAN AND ENVIRONMENTAL**
**IMPACTS**

## 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

## 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

**Notes:**
The Transformation Planner is a benchmarking tool used to help focus the review.  A questionnaire is completed by the company and is analyzed by MI MEP.  The information is compared the performance of other companies in the sector.  The results can help to determine which processes are in the most need of assistance and which areas may need to be a priority.

## Understanding the Current StateBenchmarking 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

## Understanding the Current StateValue Stream Mapping

- Operation A

- Operation B

- Value Stream

- Raw Material

- Final Product

**Understanding the Current State****Value 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

## Understanding the Current StateValue Stream Mapping

## VSM with Environmental Metrics & EHS Icons

## VSM with Materials Line and EHS Icons

## Future State VSM with Materials Line and EHS Icons

## Understanding the Current StateProcess Mapping

- A schematic depiction of a process
- Used to enhance resource utilization
- Used to identify, eliminate/reduce wastes

## 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

## 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

## 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

## 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

## 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 |

## The End Result is,

Any Type of Waste has Multiple Negative Impacts to Your Profit Margin

- Any Type of Waste has Multiple Negative Impacts to Your Profit Margin

## 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

** **

**Notes:**
 Resource intensive  
Regulator image is hard to shed
  Profits are most important
  Customer-Supplier relationships are fragile and dynamic
  Diversity is both a blessing and a curse
  Concentric Rings, Ripple Effect may represent the challenge of a larger scale model for adoption and diffusion.

## 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)