GREEN SUPPLIERS NETWORK An Innovative Industry-Government Collaboration

2 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

3 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

4 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

5 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

6 Green Suppliers Network Results Potential savings for 30 Green Suppliers Network Reviews:

7 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

8 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

10 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

11 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

12 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

13 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, additional suppliers engaged in the Green Suppliers learning process. December, Green Suppliers assessments scheduled for 2006

14 Partnering MBP3, EMS, C3 Business Benefits Reduced Costs Increased Profits Business Drivers Economic, Social, Environmental Transparency New Direction with Business - Sustainability Along the Supply Chain as Standard Operating Procedure

15 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.

16 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 )

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

18 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

20 MANUFACTURING WASTE LINKS TO LEAN AND ENVIRONMENTAL IMPACTS

21 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

22 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

23 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

24 Operation AOperation B Value Stream Raw MaterialFinal 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

25 Understanding the Current State Value Stream Mapping

26 VSM with Environmental Metrics & EHS Icons

27 VSM with Materials Line and EHS Icons

28 Future State VSM with Materials Line and EHS Icons

29 Understanding the Current State Process Mapping A schematic depiction of a process Used to enhance resource utilization Used to identify, eliminate/reduce wastes Process Raw Material Final Product Energy Water Lubricants Contaminated Water Atmospheric Emissions Used Oil

30 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

31 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

32 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, Used $700,000/year on electricity and natural gas; recommended a 10 percent conservation goal; achieved over 12 percent, saved $85, Develop an Environmental Management System team that integrates the Lean Team

33 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

34 Waste Types LeanEnvironmental 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

35 The End Result is, Any Type of Waste has Multiple Negative Impacts to Your Profit Margin

36 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

37 Contact Information For more information about the Green Suppliers Network visit or contact: Tom Murray – Pollution Prevention Division, US EPA or ) Marcia Horan – Environmental Science and Services Division, Michigan Department of Environmental Quality or ) Bill Stough – The Right Place, Inc. or )