Measurement Indicators Case Study
Target Stores
In contrast to the marketing oientation of some environmental departments, Target's Environmental Affairs group is staffed with engineers who take a very quantitative approach to their programs, including detailed measures of the resources productivity and waste intensity ratios of all their stores. For example:
They have carried out dozens of source reduction and recycling programs in all aspects of the company. These have all been closely monitored, quantified and built into the stores practices and accounting.
They calculate all of their source reduction and recycling in terms of savings per unit of sales. They also determine the labor and capital savings related to purchasing, storing and handling. According to Jim Bosch: "If you can't measure it, you can't improve it" and "Sales is the main unit of production. Why else do it?"
They have achieved across-the-board 15-30% reduction in material consumption and waste generation per unit of sales.
Fisher Scientific
Fisher Scientific operates a chemical plant in New Jersey that learned by experience that "the only effective approach for their waste minimization committee is to have a full-spectrum multi-disciplinary team analyzing the problems." Once the multi-disciplinary team-based approach to process redesign was in place, Fisher implemented 28 waste minimization projects that realized savings of $529,000, cut waste 43%, and increased production yields 28%. The projects cost a total of $79,000, resulting in an overall return on investment (ROI) of 670% and a payback of less than two months.Source: Joe Romm, Lean and Clean Management
Xerox: Audits
In 1985, Xerox Corporation began an intensive and ongoing evaluation of all environmental hazards at their facilities, worldwide. The purpose being to identify, and then eliminate, all such hazards. Joseph Stulb, an operations manager in Environmental Engineering commented that "When we did our 1985 audit, we created a mass balance sheet of all inputs and outputs, this served as the foundation for all waste minimization activities." Xerox then prioritized their activities, starting with an examination of any operation that generated more than 10,000 pounds of hazardous waste. This focus on hazardous waste reduction has led to the elimination of CFCs in packaging, service, and manufacturing operations by the end of 1991, formulation of, and replacement of chlorinated solvents in refurbishing operations with a compound made from orange peels, replacement of TCA with a citric acid-based materials, eliminating 670,000 pounds of emissions annually, replacing methylene chloride for cleaning with non-toxic cleaning alternatives, and reduction of methylene chloride emissions from organic photoreceptor plants by more than 90%. The overall reduction of chlorinated solvents by 95% saves several million dollars annually, and replacing methylene chloride with non-toxic alternatives saves $400,000 a year in hazardous waste disposal costs.
GE Superabrasives Associates
GE Superabrasives Associates (GESA) in Worthington, Ohio is a leading manufacturer of industrial superabrasive products such as industrial diamonds for sawing, grinding and drilling, Borazon Cubic Boron Nitride for the grinding of ferrous materials, and Polycrystalline for machining, drilling and turning. The facility also manufacturers Chemical Vapor Deposition Diamond, used in the electronics industry. GESA has a POWER task force to measure waste reduction and minimization efforts (Pollution, Waste and Emissions Reductions), formed in 1990, and a Waste Minimization Task Force in 1989. These groups are cross-functional, with participants from all areas of the facility -- Marketing, Sales, Manufacturing, R&D, Purchasing, Environmental Engineering, and Marketing Order Service. In addition, participation is extended throughout the company through subcommittees, education and communication, recycling bins, and an employee suggestion program. An important tool used by the POWER team is the annual mass balance report, a foundation of the plants pollution prevention activities. The POWER team conducts workshops with shop managers and process engineers to help them prepare the balances. The team identifies all raw materials going into the shop, as well as all products and wastes that leave. The mass balances are used to determine priorities and projects for waste reduction. Monthly worksheets are also completed to increase tracking and accountability of some materials such as bag house dust.Results of the mass balance are used, in combination with a site-visit in each shop, to develop a check list for each shop to accomplish zero waste by 2000. A subcommittee from within the shop may be set up to help prioritize and implement the suggested actions. From 1988 to 1992, the facility's wastestream was reduced by 40% (to just over 6,000 tons), saving the company over $350,000 in four years. Recycling has resulted in a savings of another $100,000 per year. SARA III releases were reduced by 56% from 1987 to 1992, bromine, a hazardous substance, was designed out of the manufacturing process, Freon and TCA were replaced by water soluble cleaning agents.
Reducing Waste with ABC
ABC can be an important driver of source reduction and improved productivity. A department that suddenly realizes that 20% of their costs are related to waste disposal may quickly find ways to reduce waste disposed in order to reduce costs. A company that realizes they are spending a large amount of labor on sorting and filing paper is likely to find ways to reduce those costs, perhaps through an electronic filing system that also saves resources as well as time. In one case, a retail distributor found through ABC that breaking down used packaging was a high-cost activity.(1) The company reduced costs by asking their suppliers to reduce the size of the packaging and to design packages for easier break-up. This solution saved money and reduced waste. Before conducting an ABC analysis, one plastic manufacturer thought that the scrap plastic resulting from low quality extrusions was "free". (2) In their ABC analysis, the company found that it was expensive to produce the scrap, as well as to detect and correct quality problems. While ABC is a powerful tool to identify source reduction opportunities, it is also a tool to quantify and reward departments for source reduction activities that reduce costs, thus providing recognition and promoting further source reduction.
Sources:
1. Turney, Peter B.B., Common Cents: The ABC Performance Breakthrough . Cost Technology: Hillsboro OR, 1991.
2. Turney, Peter B.B.
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