Sustainable Manufacturing

Transcription

1 Sustainable Manufacturing Remaking Today s Manufacturing Enterprise for Tomorrow s Economy Greg Gorbach Vice President, ARC ggorbach@arcweb.com North American Plant-to-Enterprise Conference September 21-23, Orlando, FL

2 Sustainable Manufacturing Remaking Today s Manufacturing Enterprise for Tomorrow s Economy The following Strategic Initiatives of MESA International are associated with this presentation: Lean Manufacturing Quality & Regulatory Compliance Product Lifecycle Management (PLM) Real-Time Enterprise Asset Performance Management (APM)

3 ARC Advisory Group Over Twenty Years Focused on Manufacturing Andy Chatha Founder & President ARC Specializes in Manufacturing: Covering Manufacturing and Supply Chain Technologies and Trends: Production Management, Control Systems, Supply Chain, Asset Management, PLM, ERP, etc. Research-Based Strategies, Best Practices, and Market Data Interoperability and Integration Global Analyst Coverage: US, UK, Germany, France, Japan, China, India Established in 1986

4 Agenda Emergence of the Climate-Driven Economy Climate/Resource Risk Increasing The Marketplace Demands Sustainability Available Strategies for Solving the Climate Problem Enterprise-wide Sustainable Manufacturing Implications for Business, Supply Chain, Engineering, and Operations Sources & Resources

5 Emergence of the Climate-Driven Economy

6 Challenge Question #1: Who said the following? Sony is committed to working toward a sustainable society for the next generation. As we know, the world is facing such serious challenges as climate change, poverty, disease and educational needs. It is our generation s responsibility to address these issues to create a better society and maintain the global environment for the next generation. Howard Stringer Chairman and CEO Representative Corporate Executive Officer Member of the Board Sony Corporation Sony CSR Report 2007

7 Direct Observations of Recent Climate Change Source: Intergovernmental Panel on Climate Change, Fourth Assessment Report, 2007

8 Challenge Question #2: Who said the following? "Climate change is a global problem that requires global solutions. At JPMorgan Chase, we are doing our part by identifying opportunities to promote environmental sustainability - including our own impact on the environment as well as investments in technology and research that helps our clients and communities " Jim Fuschetti, Managing Director, Environmental Affairs, JPMorgan Chase. April 22, 2008

9 Human Contribution to Climate Change Source: Intergovernmental Panel on Climate Change, Fourth Assessment Report, 2007

10 Challenge Question #3: Who said the following? Energy supply and climate change are the most urgent environmental issues facing society. Dow (We) accepts the U.N. IPCC conclusion that it is very likely that human activities contribute to global warming William F. Banholzer, PhD Executive Vice President Chief Technology Officer The Dow Chemical Company What Can Chemists and Chemical Engineers Do About Greenhouse Gases? June 24, 2008

11 Global Anthropogenic Greenhouse Gas Emissions a) Global Anthropogenic GHG Emissions; b) Share of Anthropogenic GHG Emissions in 2004; c) Anthropogenic GHG Emissions Share by Sector in 2004 Source: Intergovernmental Panel on Climate Change, Fourth Assessment Report, 2007

12 Challenge Question #4: Who said the following? A third challenge we face is addressing the risks of climate change. Many more questions on this complex subject remain, and require continued research. But it has become increasingly clear that climate change poses risks to society and ecosystems that are serious enough to warrant action by individuals, by businesses, and by governments. Remarks by Rex W. Tillerson Chairman and CEO, Exxon Mobil Corporation World Energy Congress, Rome, Italy November 12, 2007

13 IPCC Schematic Framework of Anthropogenic Climate Change Drivers, Impacts and Responses Source: Intergovernmental Panel on Climate Change, Fourth Assessment Report, 2007

14 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.

15 The New Quality Product Sustainably Manufactured Quality Sustainably Manufactured Quality Product (SMQ) Source: ARC Advisory Group

16 Climate/Resource 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

17 What Can be Done? Available Strategies for Solving the Climate Problem

18 Abatement Opportunities for Industry Identified by the International Energy Agency (IEA) In primary steel production, efficiency improvements on the order of 20 to 30% are available based on existing technology Improvements to steam supply systems and motor systems offer efficiency potentials on the order of 15 to 30% Combined heat and power generation can bring 10 to 30% fuel savings over separate heat and power generation Waste recycling reduces energy demand, but is limited by the availability of waste materials The production of paper from pulp can use close to zero energy. Outdated smallscale paper plants in developing countries, notably China and India, could substantially reduce energy needs with larger plants, more efficient drying technologies and black liquor gasification The cement and chemicals industries are approaching the theoretical minimum energy use in many countries. However, China could improve the energy efficiency of its cement industry by almost 50% Using biomass feedstocks and recycling more plastic waste could reduce life-cycle CO2 emissions substantially

19 Marginal abatement cost curve for the industry sector 2030 Source: Vattenfall, IEA

20 Wedges of the Stabilization Triangle by Socolow & Pacala, Princeton University and CMI Source: Carbon Mitigation Initiative (CMI)

21 Available Carbon Emissions Reduction Strategies Category Strategy Description Transport efficiency Double the efficiency of all cars (2 billion cars) Increased Transport conservation Cut total passenger vehicle miles in half (increase public transportation) Efficiency and Building efficiency Apply best new technologies (insulation, heating, lighting, etc.) Conservation Electricity production Raise plant efficiency from 40% to 60% efficiency Fossil Fuel Apply CCS to Electricity generation Store CO2 from fossil fuel plants underground (700 large coal plants or 1400 natural gas plants) Based Apply CCS to Hydrogen Hydrogen fuel from fossil sources with CCS displaces hydrocarbon fuels Strategies and production (produce hydrogen at 10x current rate) Carbon Apply CCS to Synfuels Capture and store CO2 from Coal Synfuels production (at 180 large plants) Capture and production Storage (CCS) Fuel Switching Displace coal electric plants with natural gas (1400 1GW coal plants) Nuclear Energy and Renewables Nuclear electricity Wind Electricity Solar Electricity Wind Hydrogen Biofuels Displace coal electric plants with nuclear electric plants (add 2x current capacity; 50 yrs sustained effort) Displace coal electric plants with wind electricity (30x current capacity) Displace coal electric plants with solar electricity (700x current capacity) Produce hydrogen with wind electricity (for use by half of the world's cars) Displace petroleum fuels with biomass fuels (30x current capacity) Biostorage Forest Storage Soil Storage Source: Carbon Mitigation Initiative (CMI) Carbon stored in new forests; halt deforestation Carbon stored in agricultural soil; use conservation tillage on all the world's agricultural soils

22 Enterprise Sustainable Manufacturing

23 Today s Business Challenges Drive Change & Directly Impact Mfg Operations Globalization Rapid Product Innovation Process Innovation Emissions Reductions Sustainability Collaboration Synchronization Lean Continuous Improvement Compliance Risk Management Packaging Performance Flexibility Pull-based Production Etc. Raw Materials, Ingredients Supply Recipes, Formulas, Process Know-how Design Business Add Value in Production Operations Production Finished Goods Delivery

24 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

25 Mfg Systems Have Not Kept Pace Older Apps and IT Infrastructure Limit Performance Source: ARC Advisory Group Manufacturers have not invested enough in plant floor IT

26 What Would Sustainable Manufacturing Look Like? Business Design & Engineering Product Design, Asset Upgrades, Mfg Process Improvements, etc. Planning, Risk Assessment, Global/Regional, etc. Manufacturing Operations Energy Management, Efficiency, Packaging, Waste, etc. Source: ARC Advisory Group Supply Chain Carbon Tracking, SC Network design, etc.

27 Enterprise Sustainable Manufacturing Traditional Operations Focus: Assets & Efficiency Lifecycle Business Systems Supplier Network Even More Focus on Energy & Emissions is Needed Manufacturing Operations Customer Support Customers R&D Lab Plant Engineering Distribution Supply Chain ARC CMM Model Process Industries

28 Implementing Sustainability Will Require New Functionality and Additional Collaboration New Supplier Req ts SC Planning & Logistics PLM ALM Engineering Source: ARC Advisory Group SC Network Design Design Energy Efficient, Low- Carbon Product Energy BOM Carbon Tracking Route Carbon Optimization Design E&E Efficient Mfg Process New Plant Models with E&E Design Asset E&E Upgrades/ Replacements Design Facilities E&E Upgrades/ Replacements Business/IT E&E (Emissions & Energy) Planning and Visibility E&E Targets New Metering & Sensing Improve Energy/Emissions Performance Reduce Energy Consumption ERP New KPIs Operations Mgt Efficiency Automation Production Assets Facilities Tracking, Compliance Data Collection & Sharing Plant

29 Sustainable Manufacturing Plant Levers What Can be Done to Impact Sustainability? ARC Sustainable Manufacturing Plant Model Energy & Water Materials & Components Product Design Improve Performance Products Waste Emissions Improve Product & Process Design Mfg Capability Mfg Capacity Energy Burden Water Burden Carbon Burden Waste Burden Engineering Improve Physical Plant Source: ARC Advisory Group Engineering and Mfg Operations Have Critical Roles

30 Sustainable Design & Engineering Full-Featured, Collaborative Systems Speed the Work Business ARC CMM Model Increasing need for energy efficiency, ERP emissions monitoring, HR FIN process changes, packaging changes, asset upgrades, and new controls and metering places greater demands on Design, Engineering teams Suppliers Design SCM Design & Engineering PLM Product Process & Assets Enterprise Infrastructure Energy Efficiency Carbon Footprint TMS Operations Mgt Systems Equipment & Automation Production Support CRM Product Design Customers Alternative Materials Energy BOM Process Engineering Reduce Asset Energy, Water, Carbon, and Waste Burdens Improve Flexibility Virtualization

31 Sustainable Manufacturing Operations Flexible, Collaborative Platforms Ease the Transition Suppliers Design SCM Business Increasing need for energy efficiency, emissions monitoring, and regulatory ERP tracking HR FIN requires new functionality, enhanced visibility and planning, and greater collaboration in and with Manufacturing Operations PLM Operations Management Production Execution Enterprise Infrastructure Detail Scheduling Energy Management TMS Operations Mgt Systems Equipment & Automation Production Support ARC CMM Model CRM Customers Water Management Waste Management Compliance Assurance Production Efficiency Asset Energy Monitoring & Maintenance etc

32 Real-time Plant Floor Energy Management Enables Operators to Make Energy Decisions in Real-time Analysis & Management Tools Targets Real-time Plant Floor Energy Management Visibility & Alerts Data Gathering Energy Info Production Info Metering Source: ARC Advisory Group Production Steps Plan and Track Energy Consumption by Unit Produced

33 Enterprise Sustainable Manufacturing Map of ESM Elements and Initiatives Enterprise Supply Chain Production Operations Product Design Process/Plant Design Energy Reduction Carbon Trading Energy Planning Emissions Reduction Green Office Facilities Transport Asset Efficiency Carbon Tracking Plant Asset Efficiency Renewable Power e.g. Wind Energy Management Production Efficiency Energy Efficient Products Low Carbon Footprint Products Energy BOM Flexible Production Optimized Processes Additional Metering & Sensing Virtual Validation & Pilot Source: ARC Advisory Group Scarce Water & Raw Materials Hazardous Materials Reputational Risk and Brand Valuation Management Green Product and Service Opportunity Identification Increased Internal and External Collaboration Manufacturing Site Location Planning & Optimization SC Network Planning & Optimization Green Construction REACH Alternative Materials Alternative Processes Consumer Labeling Waste Mgmt & Recycling Packaging

34 Another Challenge Question: Who said the following? ABB (We will continue to follow the so-called triple bottom ) line approach to business, seeking a balance between economic success, care for the environment and a commitment to social progress. We know that acting responsibly as a corporation helps us to do better business and is good for business. And we know that sustainability is part of our success. Michel Demaré, CEO and CFO, ABB ABB Annual Report 2007, Sustainability Review

35 Sustainable Manufacturing Resources

36 Sustainable Manufacturing Organizations of Note 3C Initiative BDI Initiativ Business for Climate Carbon Disclosure Project Carbon Mitigation Initiative Chicago Climate Exchange (CCX) The Climate Group Clinton Global Initiative/Energy and Climate Change Resource Center The Energy Conservation Center, Japan (ECCJ)

37 Sustainable Manufacturing Organizations of Note - continued Energy Future Coalition Environmental Defense European Commission: Climate Action Policy International Energy Agency (IEA) Industrial Technology Program, US Department of Energy Intergovernmental Panel on Climate Change International Organization of Standardization The Japan Center for Climate Change Actions (JCCCA)

38 Sustainable Manufacturing Organizations of Note - continued Korea National Cleaner Production Center Millennium Factory Institute (Brazil) National Development and Reform Commission (NDRC) People s Republic of China United States Climate Action Partnership (USCAP) US Green Building Council

39 Final Thoughts

40 Now is the Time to Act Enterprise Sustainable Manufacturing Supply Chain Operations 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 Design & Eng 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 Source: ARC Advisory Group Manufacturers Can Benefit by Taking an Enterprise-Wide Approach

41 Final Challenge Question: Who said the following? Climate change may be the first sustainability issue to fundamentally reshape our business, but it will not be the last. How we anticipate and respond to issues like human rights, the mobility divide, resource scarcity and poverty will determine our future success. Alan R. Mulally President and Chief Executive Officer Ford Motor Company Sustainability Report 2007/2008

42 Thank You Greg Gorbach