Thursday, December 5, 2013

Extending the life of products

Déjà vu all over again!

The last few postings have been concentrating on effective utilization of resources and resource productivity as a driver for manufacturing (including green manufacturing) innovation. In part 3 of that series a list of seven ways to improve resource effectiveness was given. These were (and see part 3 for the details):

1) Avoid use of a resource in the first place
2) Light-weighting
3) Increased yield
4) Reduced footprint of resources
5) Insure high re-use yield and low "cost" of reuse
6) Leveraged resources
7) Extended life

It's that last one that is the focus in this posting - extended life. With apologies to Yogi Berra (who I believe is the source of the subtitle of this posting!) the goal is to get people to use products longer or, conversely, give products a longer useful life. Sort of a "ground hog day" for products if you recall the film by that name some time ago. Simply put, the longer a product lasts the lower the amortized impact - impact/unit of time. And, this is generally better.

One caution - as was covered in the posting on Green and Frugal (including graphs on trade-offs in replacement of products) the one circumstance that might cause this "longer is better" scenario to play out badly is if the technology of the product (or material, or production methodology or operating characteristics) change, meaning for the better or lower impact or consumption, then it might actually be better to replace the product more frequently. Of course you'd want to 'do the numbers' on this to make sure the net effect was positive.

If this is to work, it requires the ability to update products, accept "older" styles, design and build products to last longer, change consumer preferences to accept the longer use of a product, etc. The focus here is on "updating the product" both technically as well as, to some extent, stylishly.

Before launching into this "make the product last longer" one might ask - What do consumers want? I am not an expert on consumer preferences. But, it seems reasonable that, with respect to product use by a consumer, there are some simple categories that can define behavior. So, at the risk of getting way in over my head on this, let's charge ahead.

These categories might be consumers who:
    1) replace a product when it is broken (as long as the product is still needed)
    2) replace a product  when they are tired of it or it is "out of style"
    3) replace a product when the technology is improved enough (as opposed to simply style)

I am aware that there is a class of consumer called the early adopters or some thing like that - folks who will always buy the latest and greatest. That is not the group targeted here.

Let's wade in a bit deeper on the discussion. So, with these three classes of consumer behavior for replacement, the second and third category fits for products that are still functional but no longer cutting edge. They might still be productive and even relatively low impact. Within these categories I can imagine that there are products for which style actually does not matter as well as those for which style is important. By style here I mean appearance or the ability to engender envy from others. A wash machine might be an example of a product that would not be swapped out because it did not look stylish anymore. A smart cell phone would.

We'd like to design products that lend themselves to longer lives or design for upgrading - basically, design for long life. There are likely two basic strategies. For "not style" products, just make the components out of materials and processes that last longer. For "style" products, make them so that the technological and/or stylish features can be easily upgraded when new technology and/or style comes along.

Can we do this?

I recently read an article in the Christian Science Monitor weekly edition of November 25, 2013 discussing in some detail what Chris Gaylord, the author, called "snap together a custom cell phone."  See a companion article on line. The Monitor article describes Motorola's (now Google's) project "Ara" (details on the phone) for the development of a new user designed smart phone. The customer would be able to assemble bits and pieces of the phone, sort of like a Lego toy, and select battery type and life, camera features, covers (front and back), etc. According to Paul Eremenko of the Motorola Advanced Technology and Projects group, writing on a blog posting, their goal is " to drive a more thoughtful, expressive, and open relationship between users, developers, and their phones." He goes on to state that this will "give you the power to decide what your phone does, how it looks, where and what it’s made of, how much it costs, and how long you’ll keep it."

Again, it's the last bit that caught my eye - how long you keep it! 

Here might be an early example of a product clearly in the "replace when something new comes along" category that is designed to be upgraded both technologically and stylishly. 

An image of modules designed for this "build it yourself" phone is below.

Another statement about this was also impressive - it could offer a solution to the 'alleged wastefulness' of the current two year cycle of cell phones.

Will this work? Who knows … consumers are finicky but if this is the start of a trend towards trying to address the throwaway instincts in much of society today it could be an important first step. And it will be a great challenge to manufacturers to come up with the goods.

Can it work technologically? Concerns raised in the Gaylord article include "packaging" … meaning essentially bespoke design to fit all the necessary parts into a very small package. This is pretty challenging if all the pieces are functionally individual to allow the "'plug and play" mode.

We'll follow this ... and the whole discussion about re-making products to keep them current without discarding them.

Finally, I posted this on the Green Manufacturing Facebook site earlier today ... but in case you missed it ... this is a great video following the path of a T-shirt from conception to market. It makes you think about what you buy to wear and where it came from!

Saturday, November 9, 2013

Sustainability as a Driver for Manufacturing Innovation

7th Wu Lecture at University of Michigan

I was invited to present the Seventh S. M. Wu Lecture in Manufacturing Science at the University of Michigan in Ann Arbor on October 28th, 2013. The topic was billed as "innovation in advanced manufacturing" but I used the occasion to shift rapidly into a discussion about sustainability as a driver for manufacturing innovation - a familiar topic to reader of these posts!

The lecture was videotaped and made available to stream on-line to anyone interested. In place of a written blog this time around I am offering this lecture instead. There is a link to the video post of the lecture at the end of this text section.

The content of the lecture is as follows:

    - Some history from Madison
    - Advanced manufacturing
    - What is sustainable manufacturing
    - How is sustainability linked to  productivity and innovation?
    - Riding the “wave of big data”
    - Some examples

Some explanation about this lecture series and my involvement … Professor S. M. Wu was a pioneer in the application of statistical methods to the understanding and optimization of manufacturing processes. While he was at UW-Madison in the late '70's I was one of his PhD students (actually PhD #29 out of some 118!). He later moved to Univ. of Michigan in Ann Arbor where he had a very successful career applying these methodologies to a host of challenging manufacturing problems in, among others, the auto industry. He passed on in 1992 and this lecture series is in his memory. So, it is appropriate to start with some nostalgia about the "Madison days" as a grad student with Professor Wu. You can skip that if you like.

The actual lecture starts at slide 7 (00.07:48 into the video). The video presentation is accompanied with the slides presented at the bottom of the screen.

This is an hour long lecture. If you want to watch the whole lecture you might like to break it up into pieces. The start times in the video for each section are listed below:

    - What is sustainable manufacturing - 00.09.45
    - How is sustainability linked to  productivity and innovation? - 00.22.59
    - Riding the “wave of big data” - 00.30.00
    - Some examples - 00.41.06
        - Material selection/process + system design - 00.41.06
        - Social impacts and manufacturing - 00.46.45
        - Leveraging manufacturing for maximum effect - 00.50.27
    - Summary/Acknowledgements - 00.57.12
    - Question and Answers - 00.59.30

Please follow this link to the Seventh S. M. Wu Lecture in Manufacturing Science. The lecture is introduced by Professor Jun Ni of Univ. of Michigan, also a student of Professor Wu.

I'd appreciate any comments or feedback on the content on the lecture.

Monday, October 21, 2013

Effective utilization of resources, Part 3

So … what is effective?

In the last posting we covered some additional background about “resource productivity” as a driver for innovation in (sustainable) manufacturing. That also covered some of the established definitions of resource productivity and gave an an example of efficient production technology relative to a metal forming manufacturing process. This process, in exquisite alignment with the Ricoh Comet Circle (see an earlier posting on the Comet Circle if you don't recall this!) Returning product back to the consumer with as little intervention from recycling, reprocessing, etc. as possible.

In trying to tie the resource productivity concept to the labor productivity measure so commonly referred to these days, the Wikipedia definition was cited as:

“…  the quantity of good or service (outcome) that is obtained through the expenditure of unit resource. “

The Wikipedia definition distinguished between “the efficiency of resource production as outcome per unit of resource use (resource productivity)” and” the efficiency of resource consumption as resource use per unit outcome (resource intensity).”

Our interest stems from (if you recall earlier postings in this series) the desire to wring more value of materials/processing/product per unit of impact to the environment (measured however you choose - greenhouse gas (GhG), other pollution of land, water or air, etc) as well as minimize the use of resources in the process - materials, water, other consumables and, of course, energy.

This fits with our fundamental focus, in this blog, on manufacturing. I had mentioned the "creating value" discussion (and blog posting) in my graduate class last semester - meaning that there are three fundamental ways to create wealth (real, new wealth founded in tangible assets): agriculture, mining, and manufacturing.

A recent article in SME's Manufacturing Engineering magazine  noted, with respect to the "other" forms of economic activity as follows:

"Think about it. Bankers, lawyers, doctors, barbers, landscapers—they all provide services. Those services are valuable, but they don't, in themselves, create wealth. Financial instruments and financial dealings don't create wealth—they may package wealth, shift it around, and enable investment in wealth-creating enterprises, but they don't directly create wealth."   

This interpretation is not universally accepted .... But, it clarifies our thinking on the role of manufacturing and resource productivity. Might we then say that the most efficient use of resources is in manufacturing (I'm not forgetting agriculture or mining here but will stick to what I know!) because it both creates new wealth and provides the products that help increase, or at least maintain, a standard of living?

So, then, the logic is something like this (and this is built on the IPAT equation). To offer a sustainable manufacturing solution one must be able to show that the value created by a manufactured product must be large enough so that there is a factor of 10 improvement in value to impact (this is from the July 1, 2013 blog where this idea of resource productivity for sustainable manufacturing was introduced). This means that, worse case scenario from a resource productivity point of view, assuming that value of the product is constant, the productivity must increase by a factor of ten.

Ok, how can this happen? In the last posting we reviewed some work in Germany on reusing material from end of life automotive sheet metal components by circumventing the normal recycling procedure (i.e., transport to recycler, crush, melt, alloy, cast, form to sheet) and directly "re-forming" some components from recovered sheet material - paint and all.

This is certainly one way. You will recall that, even with this German process, the amount of material recovered as a "new formed product" was not 100% of the reformed sheet - maybe closer to 60% tops. So, a ways to go but in the right direction.

Here are a number of ways to improve resource effectiveness in an attempt to get the the "10X" improvement needed (in no special order and I am sure there are others):

1) Avoid use of a resource in the first place; if the product can be successfully manufactured with fewer materials that can be a big advantage.

2) Light-weighting; this was mentioned in an earlier posting and is often associated with the automotive and aerospace industries. This is the use of materials with higher strength to weight ratios than the current materials (either by shape, alloy content, material type or strategic reinforcement) that can meet the operating requirements of the product with less material. Common examples are fiber composite materials in planes and aluminum or high strength steel in automobiles.

3) Increased yield; this is the "Allwood effect" after Julian Allwood of Cambridge University (see "Less is More, Part 3"). This is the introduction of improved manufacturing processes that result in more product from the input material stream. Reduced scrap, for example, in process. A corollary of this would be improved processing to reduce defects in production.

4) Reduced footprint of resources; this focuses on the utilization of resources that require lower energy for processing or preparation for use in production. The advantage of this is, at least, honest accounting of potential outsourcing of resource impacts and, at best, inclusion of these external impacts into the analysis.

5) Insure high re-use yield and low "cost" of reuse; Re-use yield refers to the degree to which similar value of use is maintained for re-used materials - that is, not substantial down-cycling. The example in the posting about the German automotive reuse of sheet metal is an example of "same-cycling" of materials - sheet metal part to sheet metal part in the same industry (if possible). Cost of re-use is the added resources required to reuse the resources! It is not usually free. This must be accounted for in the reuse calculation to insure that, net, you have a positive balance.

6) Leveraged resources; The term "leveraging" as used in green manufacturing has been discussed before with respect to processes. This is the use of process technology that, in itself, is not particularly low impact but adds features to the product that, over its life time, makes a much lower impact. This is ideal for "use phase" heavy impacts. Same idea for resources. In spite of 4) above, there may be situations in which the use of a "higher impact" resource may be leveraged to produce a much lower life cycle impact in the use phase of a product.

7) Extended life (amortized resource burden); Simply put, the longer a product lasts the lower the amortized impact - impact/unit of time. Generally this is better. It requires the ability to update products, accept "older" styles, design and build products to last longer, change consumer preferences to accept the longer use of a product, etc.

Note that all of these suggestions assume the "value" of the product is not reduced!

We will dig into some of these more in the future. I have examples of most of them and, as I think about this, will probably add one or two more strategies for improving resource productivity and effectiveness.

Thursday, August 29, 2013

Effective utilization of resources, Part 2

Examples of productive use of resources

The posting in July discussed thinking more seriously about “resource productivity” as a driver for innovation in (sustainable) manufacturing paralleling the focus we have on labor productivity. We all know the examples of more output per worker hour thanks to a wide variety of developments from automation to training and scheduling.  But, for getting at the root of “impact per unit of GDP” and setting up a path for reduction of that impact, resource productivity is one very important element – perhaps the most important if we think holistically about the costs of resources.

Turns out, not surprisingly, that there is a lot of information available about resource productivity.

For example, the European Union  (EU) defines resource productivity as:

“… a measure of the total amount of materials directly used by an economy (measured as domestic material consumption (DMC)) in relation to economic activity (GDP is typically used). It provides insights into whether decoupling between the use of natural resources and economic growth is taking place. Resource productivity (GDP/DMC) is the European Union (EU) sustainable development indicator for policy evaluation.

Resource productivity of the EU is expressed by the amount of GDP generated per unit of direct material consumed, i.e. GDP / DMC in euros per kg. When making comparisons over time or between countries it is important to use the correct GDP units so that the figures are comparable and changes are not due to changes from inflation or in prices.”

One needs to be careful that we consider carefully the contribution of services (which one might argue are typically less material intensive than, say, automobile manufacturing) to GDP growth so we are not seeming to be improving the “by to fly ratio” as we’ve discussed in the past but it is really reflecting shift, or growth, in other forms of commerce. But, I am not an economist so that’s sufficient warning for me!

Wikipedia defines resource productivity, and couples it to sustainability, as:

“…  the quantity of good or service (outcome) that is obtained through the expenditure of unit resource. “

“Resource productivity and resource intensity are key concepts used in sustainability measurement as they attempt to decouple the direct connection between resource use and environmental degradation. Their strength is that they can be used as a metric for both economic and environmental cost.”

The Wikipedia definition distinguishes between “the efficiency of resource production as outcome per unit of resource use (resource productivity)” and” the efficiency of resource consumption as resource use per unit outcome (resource intensity).”

They note that from the point of view of sustainability, the objective is to maximize resource productivity while minimizing resource intensity.

So, how do we do this?!

At the recent International Academy for Production Engineering  (called CIRP  – but that is an acronym for the French translation of the name – College International pour la Recherche en Productique!) General Assembly in Copenhagen, a working group meeting on Efficient & Effective Resource Utilization (EERU) met to discuss exactly this issue. The group is working through the various stages from design to end of life in production that impact this and a number of researchers presented ideas towards that goal. The focus of this particular EERU meeting was resource efficient production technologies and the presentations included water and material utilization in a range of industries from automotive to semiconductor.

As an example of efficient production technology, Professor Erman Tekkaya of the Technical University of Dortmund gave a number of examples for material utilization in metal forming applications. Professor Tekkaya started with a figure from Professor Kurt Lange of Stuttgart from some 20 years ago based on his work with the German auto industry. The diagram shows the utilization of material (essentially the “buy to fly ratio“) for a range of manufacturing processes. It also shows energy use per mass of finished part.

We see that for processes like cold forging (formation in dies with the material at room temperature – called “net shape processing as the material is reformed with little loss) the material use is very high (85% due to the fact that the process generates little scrap) versus cutting processes which typically have a lot of chips and waste generated as a “subtractive technology.“ (The third type of material processing is “additive“, like welding and 3-D printing – we’ll be talking about this more in a later posting.) As a result, similar to the figures we saw from Allwood in previous postings (see the “less is more“ series), processes such as cold forming have lower energy/mass values. It must be pointed out that the numbers in this figure do not reflect the whole process chain needed for these operations such as manufacturing of the tooling and dies for forging. But, the numbers are indicative of the impact of more efficient material use.

Professor Tekkaya’s presentation covered four examples – including direct material saving during processing (here a clever washer production process that used a technique similar to wire forming for nails to create washers with no waste due to the center hole or remainder from a blanked sheet), and reduced primary energy of initial material.

Let me elaborate on this second one.

The traditional life-cycle of metallic components, say automobiles, is that at end of life the vehicle is crushed (after some components are removed), collected, re-melted and recast as strip or sheet material and then reformed into new components – say a new hood for an automobile. Allwood points out that although this is helpful, the waste from the first production oft the hood (sheet metal forming is not net shape) and the requirement to re-melt, etc. is a tremendous energy burden on the material. Professor Tekkaya showed an example of reusing portions of a recovered automotive sheet metal part and a side panel from a PC with novel forming processes to create “new“ products without going through the traditional material recycling cycle.

The figure below, from Tekkaya, shows the creation of re-formed parts and process sensitivity to controlling the sheet feeding in to the mold/die setup for a sheet trimmed from a used automobile hood panel.  The trimmed sheet shown outlined from the engine hood

is formed using a process called “hydroforming“ (in which the metal sheet is deformed against a form using hydraulic pressure – this avoid the problem of the nonuniform shape and flatness of the original trimmed sheet that would prevent normal closed die forming). The sheet is deformed into a mold with the desired finished shape. The reference to sheet feeder control refers to a method to control the flow of material into the mold during forming. In one case the metal is annealed or softened to remove the work hardening from the prior manufacturing operation. But, as seen in the figure, the resulting shape is impressive – even if some of the original paint is still in place!

For the reuse of the PC side panels, Tekkaya experimented with a process called incremental sheet metal forming to create another workpiece for another product.

Consider the potential if the designers of the parts planned a bit to allow easier reuse of panel portions of the metal parts – thus enhancing the possibility of direct reforming for reuse.

There is still some scrap as evidenced by the trimmed pieces in the figure. But, compared to crushing, melting, recasting, rolling and re-forming the sheets, as usually done with recycled automotive metals, this is a tremendous improvement in “resource productivity.“

This is just one example. But, it demonstrates the role process innovation can play in improving manufacturing and promoting efficient and  effective resource utilization. Consider other "large flat sheets" used in products - sides of washers and dryers, refrigerator housings, etc. These area ready for re-use.

Wednesday, August 7, 2013

Resource Sustainability and Embedded Costs will Define Future Manufacturing Competitiveness

Interview with Sustainability Outlook Magazine - India
This is the text of an interview with an Indian on-line magazine “Sustainability Outlook”. I was interviewed by them in June this year as part of a focus on “Sustainability as a Key Driver for Innovation” (a theory I wholeheartedly subscribe to!) and the article just appeared in their on-line issue. The conversation centered on ways in which sustainability can drive innovation in the Indian manufacturing sector but the topics are in general much broader and may be of interest. The magazine covers a broad range of environmental and sustainability issues in India and the world. The article is reprinted here with their permission.

How would you define what Green Manufacturing is?

Green manufacturing is about implementing any kind of substitution in the manufacturing process which leads to a reduction in energy consumption, resource consumption, waste by-products, and water usage. Any and every step that makes the production of a product, component or part of a system more sustainable can be termed as Green Manufacturing. Sustainability as a phrase is a discrete term – one is either sustainable or not. However, the problem in manufacturing is that it is difficult to accurately quantify all steps in the process and thus be able to assess with precision whether the processes are truly sustainable or not. 

Where do you think lies the link between innovation and green manufacturing?

 I believe that Sustainability is a great driver for innovation. If you look at the big transitions that have happened in the last 100 years or more, you will notice that they have always been promoted by the need to get more value out of a process or reduce cost or inefficiency. Henry Ford epitomized this when he pushed the transition from a craft production to an automated production. People like these took the inefficiency out of random organization and made the whole process more organized. As a result productivity went up, cost went down and controlling ability elevated further.  I think sustainability presents the same kind of opportunity now. People are inherently, as part of good business practices, trying to reduce the cost of ownership of manufacturing machinery, trying to increase productivity, maintain high quality and reduce variability.

Sustainability gives us the opportunity to reflect on things which might not have been considered in the past. Issues like the cost of energy, which suddenly is now obvious to everybody but which some years ago no one paid attention to; the cost of water, the treatment of it and the condition in which it can be released, the cost of materials etc. are things which are slowly coming into the mainstream dialogue and emerging as key parameters with which processes’ efficiency can be judged. In addition, we now need to factor in social variabilities which are not necessarily technical in nature but can lead to disruption of entire supply chain.  This new way of thinking  is propelling efforts towards an enhanced manufacturing approach which factors in all of these issues and identifies areas which need and could be improved – leading to not only a reduction in adverse environmental impacts but also an enhancement in the financial bottom-line of the firm; as also an efficient and cost-effective process.

Manufacturing has gone through its own evolutionary process – from craft production to mass production and now to mass customization. To what end do you think there is going to be a fresh wave of manufacturing which will take into account sustainability?

I absolutely think that the time will come, if it hasn’t already, to take into account resource sustainability and “embedded costs”. Of late there have been a lot of studies trying to understand why companies embody sustainable business plans. The first set of drivers that one notices includes reputation, competitiveness, product awareness and solid business strategies because people tend to like companies that at least attempt to be more sustainable. The next level tends to be about cost related issues. Going back to Henry Ford, he was no environmentalist but he was smart enough to realize that if one bought some material and didn’t utilize it to its optimum use and threw some part of it away, one is essentially throwing something that one has already paid for. Equally importantly, one is also essentially paying someone to dispose-off that waste.

Up until recently accounting systems and performance measurement systems weren’t in place to allow manufacturing to track those costs separately. For instance, of late there has been a huge push in the metal cutting industry to reduce the usage of coolants because as it turns out, analysis showed that the costs of cutting fluids, the handling of it and its disposal, amounted to a huge hidden cost and was a burden to the production process. Before the study, however, nobody had actually known what the cumulative peripheral costs were and couldn’t extract a specific cost.

Now I think you can actually make good arguments as to what the total benefits are: including cost benefits, business benefits while keeping in mind things like regulatory issues. If you use less of some material that is highly regulated, then you end up paying less to dispose it, pay less to protect your employees while they work with it, pay less to handle it and store it in your facility. It’s like light weighting in automotive industry – the more you reduce the weight of the vehicle but keep the same strength, the better the fuel economy gets. It’s kind of like materials and resourcing in factories – the more you reduce, the more agile you become.

To what extent do you think manufacturing units are aware of the energy footprint of their products? Do you think that green manufacturing as a concept has been mainstreamed enough in commercial manufacturing, in India particularly?

I think the increasing cost of electricity and other resources has forced people to understand and to pay attention to how they use resources. People are increasingly trying to understand how much energy they are using, how much of it is being used productively and how much of it is being wasted through sheer negligence. So increasing cost of electricity is one of the reasons why more people have started thinking on these lines. The next is water – the cost and availability scenario has induced people to start paying attention. The ones that are a little bit trickier include cost of packaging, the cost of other resources used in the facility that might not be associated directly with the process, etc. But the rapidly changing energy picture has been a huge eye-opener.

Manufacturing in India has very significantly come down in the past few years. What in your opinion could provide a fillip to the manufacturing sector?

India has a huge consumer base and a tremendous market and an exceptionally entrepreneurial society which essentially means that efforts can be converted into products quite nicely. There is a culture of education and technology which is quite strong. Some countries have lots of energy, others have a lot of natural resources; I think to India’s benefit there is a strong education, information science culture and capability – as time goes on, this is going to make processes more efficient and will definitely catalyze waste reduction efforts  as also optimal use of resource or energy. It is the infrastructure that needs to be in place to ensure that the variability of these things can be guaranteed. My sense is that the potential of having the right set of tools for the next big industrial revolution is probably higher in India – rather than say China or even Europe. If you look at Central Europe, they have a very strong manufacturing infrastructure but do not quite have the same affinity for information processing and IT that exists in India. Also there is a huge market in India, which is hard to come by anywhere else.

What do you see as the major challenge to environmentally friendly manufacturing? Is it to do with less diffused and available technology or does economic feasibility play a role in this?

The two are probably tied together and this applies everywhere. If you are trying to grow your business, you will require additional resources and will need more energy, water, materials, access to transportation and access to these can be variable and inconsistent. What is needed is the sort of lean technologies which help to make processes more scalable in the presence of variable demand. The Japanese pioneered the Toyota principle which essentially allows the production system to accommodate huge variability in demand or huge variability in exchange rate between the yen and the euro.

My sense is that with respect to environmental issues or green technology, companies will benefit by having another degree of responsiveness to changes in availability or the lack of it in resources, supply chain disruptions etc. The companies which figure this out will become more competitive because if there are disruptions or reductions or unavailability of resources, then these are the companies which will be prepared for such challenges.


The next blog posting will focus on the environmental pros and cons of additive manufacturing! And make sure to check out the Green Manufacturing Facebook page for interesting tidbits on green manufacturing in the news. And, of course, hit the "like" button!

And - save the date - August 29th. LMAS researchers present as part of a webinar sponsored by Sustainable Minds on Creating Knowledge Workers for the Greener Product Marketplace Part 6: Showcasing Sustainable Manufacturing at UCB. Register for this free webinar at the Sustainable Minds link above.

Friday, July 12, 2013

The effective utilization of resources

How about resource productivity?

As part of thinking about mechanisms, and metrics, for driving green manufacturing, it came to mind that there is always a lot of talk, specially in the US, about the tremendous advances in labor productivity that have occurred over the last several decades. The Bureau of Labor Statistics (or BLS) is the official keeper and generator of this statistic about the performance of the US economy.

The BLS website defines labor productivity as the relationship of "output to the labor hours used in the production of that output." It measures these in terms of two  productivity metrics - major sector and industry productivity. BLS states that "The Major Sector Productivity program publishes quarterly and annual measures of output per hour and unit labor costs for the U.S. business, nonfarm business, and manufacturing sectors. These are the productivity statistics most often cited by the national media. The Industry Productivity program publishes annual measures of output per hour and unit labor costs for U.S. industries."

The kind of "news" this generates is typical of the following, from the BLS website, reported on June 5, 2013. "Productivity increased 0.5 percent in the nonfarm business sector in the first quarter of 2013; unit labor costs decreased 4.3 percent (seasonally adjusted annual rates). In manufacturing, productivity increased 3.5 percent and unit labor costs decreased 10.0 percent."

This means that, thanks to a number of improvements in industry, manufacturers managed to squeeze out 3.5 percent more output per unit of labor input. This could be due to work organization, automation, simplified production, incentives, etc. This is generally considered to be "good news."

In fact, the increase of productivity in the US labor market is a driver for business competitiveness. Higher productivity maintains a strong labor-cost advantage (at present, US productivity is 3x Mexico, for example) and has been growing at about 2.5% each year.

So, what does all this have to do with green and sustainable manufacturing!?

Why not measure and track resource productivity too?

Seems obvious when you think about it. Why not consider resource productivity along with labor productivity as a measure of competitiveness for manufacturing (or any industrial sector for that matter)?

Gary Pisano and Willy Shih in their book "Producing Prosperity – Why America Needs a Manufacturing Renaissance," Harvard Business Review Press, Boston, 2012, discuss productivity as a measure of innovation in manufacturing. They refer to something called "Total Factor Productivity" which combines all inputs – labor, capital, and others – to create a measure of overall efficiency for an economy. This is driven by innovation in products and processes and makes a company, country, region attractive to productive activities. (Note: this is a good read if you are thinking about broader manufacturing issues and not "just" green manufacturing!)

So, how does this fit in?

Recall the IPAT impact equation? Its been discussed a number of times in this blog (most recently back in May) and it proposes a simple methodology for assessing the impact of technology (and manufacturing of products) based on the population, a measure of affluence or standard of living (here the GDP/capita - an imperfect but useful metric) and the impact per unit of value created in manufacturing (impact/unit GDP).

You may remember that I made some note that the only thing manufacturing engineers can affect in this equation to move towards reducing impact is the impact/unit GDP - that is, the impact (in terms of consumption or generation of damage) of the products we create. If we can offer the same or greater value with reduced impact we are on the right path.

So, sounds a lot like productivity doesn't it?!

The problem is, we've got to get moving!

At present our impacts are too large.  According to Dr. Margot Hutchins, the Associate Director of the Laboratory for Manufacturing and Sustainabiity (LMAS) at UC-Berkeley, we are utilizing 1.5 times the capacity of the planet in terms of resource consumption with an impact of emissions of CO2 and pollutants, depletion of resources, solid waste, etc. The usual problems.

Looking to the future she predicts that population (the P in IPAT) will will increase by ~40-30% by 2050. Affluence, A in IPAT,  is also growing quickly in many nations – ~3-5x increase by 2050. And this is to be expected. Everyone wants a better standard of living. The result is that we may need to increase our efficiency (that is, reduce the T) by a factor of nearly 10!!! Meaning, we've got to reduce impact of our products while maintaining their value - or growing it - in the eyes of the consumer.

Tall order. So, how would resource productivity come into this? 

First of all, how should we define this? Following on the definition of labor productivity, resource productivity would be the amount of output (value) created per unit of resource expended (or unit of impact).

How might we measure this? These units of resource (or impact) could be employed -
     - Global warming gases emission (CO2, methane CH4, N2O, CFC’s)
     - Yield or % Recyclability
     - % Reuse of materials or remanufacturing
     - Pollution (air, water, land)

and these could be per capita, per GDP, per area/nation, and so on.

As with higher labor productivity which bolsters a nation's labor-cost advantage, higher resource productivity maintains a strong resource-cost advantage.

More value, lower impact - sounds like something we should look into.

It is sort of like the term used in the aerospace industry - the “buy to fly ratio.” This term came up in this blog back in July of 2010 as part of a discussion on "Degrees of Perfection". It is, in a nutshell, the amount of material, for example, that ends up flying on the aircraft normalized by the amount that was purchased and processed at the start of the production line. It is often, for some aerospace components, a very low number.

But we also see this in other products. You may recall a conversation on this back in June of 2011 under the topic of "Less can be more"! based on some research by Professor Julian Allwood at Cambridge University on the yield of material in processing to create some common products - like beverage cans, automotive panels, etc. But Professor Allwood is more careful in his counting. He doesn't just track yield gate to gate in part of the production but all the way from the melt on creation to the finished product. In the case of both steel and aluminum the "cumulative yield" (meaning the amount of material from the raw stock - in this case liquid metal in the ladle after it was refined - to the finished product) was as low as 40-50% in some cases and, for some aerospace components fabricated of aluminum, in the low 'teens.

And the "cumulative impact" of that material when it finally got into a product necessarily included the energy that processed the "wasted" material along the path to production. Just because you recycle material that is left on the shop floor doesn't mean you "hit the reset button" on imbedded energy, or its environmental impact,  in the product.

This did not mean that the manufacturers were being necessarily wasteful - just that the process technology was not able to extract more finished product out of the material without large amounts of waste.

This is not usually accounted for (except in the price of the component which reflects the material and processing supply chain). But the associated impacts for sure aren't accounted for.

What if we were measuring, along with labor productivity, the resource productivity? Would this drive us to innovate in the process technology to improve the "buy to fly ratio"? It would reduce the impact in proportion to the increase in yield of material processed - less waste means, in addition to less cost, less impact. Each kg of wasted material has embedded energy, water, and other resources in it.

Let's start talking about resource productivity when we speak of manufacturing. And this can be a strong driver for manufacturing innovation as well.

In the next postings we'll address some of the follow-on innovation that could improve our resource productivity and, in the process, explore some ideas on tracking resource productivity.

And, a reminder about the Green Manufacturing Facebook page  - more frequent comments and items on green and sustainable manufacturing and the issues that affect it. 

Thursday, June 6, 2013

Cheap Labor, out of Fashion?: New Models for Assessing Supplying Decisions after the Bangladesh Factory Collapse

Social Aspects of Green and Sustainable Manufacturing

From time to time this blog will include appropriate contributions from others. This posting is one of those and comes from a PhD researcher in the Laboratory for Manufacturing and Sustainability, Ms. Rachel Simon.

The Rana Plaza factory collapse in Bangladesh, with a final death toll of 1,127 workers, officially ranks as one of the worst manufacturing disasters of all time. The tragedy exhibits a new reality for producers with supply chains that are global and complex: a diversity of suppliers along the value chain may protect producers from the vulnerabilities of disruptions, but it can also expose them to additional risks—such as hidden costs and a damaged reputation—resulting from using even a single supplier with any bad environmental or social practices. In light of these developments, what will be needed for companies to consider and mitigate these risks?

You may recall from earlier articles about labor and the social impacts of sustainability  we have discussed here the “triple bottom line.” For those that did not read these postings, the “triple bottom line” term originated in 1994 with John Elkington (he called it the 3-P’s: profit, people and planet) with the “people” part indicating “a measure in some shape or form of how socially responsible an organization has been throughout its operations.” What remains debated is what the social responsibility measurements of a company should be, and how they can be accurately assessed. While we, at our lab, have been working on identifying the best social metrics for manufacturing, supply chain management, and risk aversion, it is often difficult to pinpoint the perfect social metrics because, they are, in general, an indirect and imperfect measurement of a conceptual ideal.

Similar to the environmental issues that result from production, there are often social costs to workers and surrounding communities, the burdens of which are borne by people beyond the scope of production and consumption (you may also recall our reference in the blog to Elizabeth Kolbert’s analogy on externalities about global warming being like a drunk man that the public must pay for in the cost of a police escort home or a visit to the emergency room). For instance, while companies may contribute to the costs of the rescue and relief efforts at Rana Plaza, their contributions will not likely exceed the long term total costs to survivors, the families of workers, and the Bangladeshi public. Also, just as with environmental issues, it is a short-sighted perspective that often leads to business decisions that create entrenched social issues. With sourcing garments from Bangladesh, companies have been mostly concerned with the cost of sourcing per unit produced. However, when everything is taken into account, companies may end up spending more to compensate for these disasters, repair their damaged reputation, find and build relationships with new suppliers, or improve the existing conditions in Bangladesh in order to continue doing business there. Social metrics are precisely what are necessary to prevent producers from being associated with, or contributing to, the conditions that led to the tragedy in Bangladesh repeating in the future. Regardless of which party is ultimately responsible, these disasters in the production chain put brands at risk, and the issues that created them need to be handled to achieve sustainability.

One of the benefits to a company that outsources components is that they do not have to invest their own resources into managing the conditions under which they are produced. Companies have challenged the idea that they hold a large part of the responsibility to enforce the working conditions of their suppliers. However, in Bangladesh, brand owners appear to be past the point where they can debate on the principles of what should be. Instead, they have been faced with strong public sentiment about their role in incidents such as the Rana Plaza collapse, and the Tazreen factory fire that preceded it which killed 112 workers last November. In both of these catastrophes, labor groups and the media have been quick to identify which fashion labels have been found in the rubble of the fallen factories. In the wake of Rana Plaza, the Los Angeles Times, the New York Times, the Wall Street Journal, and the Washington Post, have all featured articles about which retailers have signed a proposed legally binding agreement on worker safety and building regulations for Bangladesh. Sumi Abedin, a survivor of the Tazreen factory fire, who jumped three stories—not to save her life, but to save her body in hopes that her family could identify her remains—tours the United States, advocating companies and consumers to improve the working conditions for garment workers like her in Bangladesh.

Now companies that do not wish to further tarnish their brands are faced with the decision to continue to source from Bangladesh, and help improve the working conditions there, or sever their ties with a location that has proven to be risky. Unfortunately, neither option can be implemented immediately, or without costs. For manufacturers wishing to leave Bangladesh, the limitations on the existing production capacity elsewhere makes it impossible to do so anytime in the near future. KeithBradsher reports in the New York Times that only a few countries in the world—China, Bangladesh, Vietnam, Indonesia; and potentially, Cambodia and Pakistan—have developed the production systems necessary to turn out the quality and volume which retailers need within the timeframe in which they want it. He further notes that this production capacity in alternative Southeast Asian factories is already being fully utilized. In fact, a leading garment sourcingcompany estimates that only 10 to 20 percent of Bangladesh’s current output, or $2 billion to $4 billion worth of goods per year, could be shifted in the next nine months to other countries. So, even for companies wishing to move out of Bangladesh, the feasibility to do so is questionable. In the meantime, companies will likely have to develop a strategy for their continued sourcing from Bangladeshi factories.

Additionally, a move out of Bangladesh will be accompanied by increased costs. Today, Bangladesh is the cheapest place in the world to manufacture clothing on a large scale. For instance, the average Bangladeshi garment factory worker earns $37 a month, compared to $120 in Cambodia’s Phnom Penh, $145 in Vietnam’s Ho Chi Minh City; $190 and $300 in Indonesia’s Semarang and Jakarta and $500 in China’s Guangzhou. Historically, brands turned to Bangladesh for cheaper production when prices in China began to increase. As demand for the cheap Bangladeshi labor grew, the existing garment industry was not able to support it. Low wages, paired with an expiration of the quotas governing the amount of garments that U.S. companies could import, drove rapid development in Bangladesh to serve unmet demand. Elizabeth Cline, a journalist and author of Overdressed: TheShockingly High Cost of Cheap Fashion, notes that the approximately 4,000 factories in Bangladesh could not keep up with the pressure of trying to compete with the 40,000 garment factories in China. According to Kapner, Mukherji, and Banjo of the Wall Street Journal, labor groups in Bangladesh say that factory owners illegally converted hundreds of residential and other buildings into makeshift garment factories. They also cite monitors who claim that factory owners would often build additional floors on to existing factories without concern for fire or other building codes. From 2005 to 2012, the number of garment factories increased 30% to 5,400 factories, according to the Bangladesh manufacturers' association.
Not only did cutting corners allow factory owners to keep pace with the expanding demand, but it also allowed them to keep the prices low. The tragedies that have recently occurred in Bangladesh happened in factories where owners neglected to provide—and pay the overhead associated with—appropriate building construction and maintenance according to codes: adequate lighting, ventilation, and emergency exits, and the necessary oversight to enforce safety standards. Additionally, it became difficult for brand owners to determine precisely in what factory, and under which conditions, their garments were being made, as a network of sub-contractors grew to serve primary factories that were at capacity.
Certainly, fixing these long standing issues of negligence in the Bangladeshi garment industry will require a capital investment. However, the question that should be asked is: will the capital that is required to fix the existing issues in Bangladesh cost more or less over the long term than the higher prices of production in other locations. Also, and more broadly, is there a cost level below which ensuring a minimum level of working conditions become untenable?

While relocating can alleviate some of the issues associated with manufacturing in Bangladesh, it does not guarantee that the problems occurring there will not be duplicated elsewhere. Could new demand in a different country drive rapid expansion at the cost of building safety? Will factory owners elsewhere compromise standards to improve their profit margins? With demand for production exceeding supply, will unsafe factories be sub-contracted against the wishes of manufacturers? Investing in Bangladesh will likely improve the status quo, while it is uncertain if moving elsewhere will be trading in one set of problems for another.

What is clear is that the existing model of developing and monitoring corporate codes of conduct for suppliers has not worked in Bangladesh. Foxvog and Gearhart of the International Labor Rights Forum criticize corporate supply chain monitoring systems for placing additional requirements on factories without providing them the financial means necessary to meet them. They also claim that these systems encourage factories to keep safety risks secret, out of fear that the companies will stop doing business with them, if they were to find out. While these sentiments clearly reflect the perspectives of labor, their accuracy does not hold less true.

Extensive research has been conducted proving that the environment in which laborers work affects their productivity. Even without reference to such studies, it is easy to suppose that in Bangladesh, where the work force is already trained and incredibly effective, productivity may improve if factory employees had adequate lighting and a consistent power supply, and did not work while in fear of a fire or a building collapsing. For manufacturers, improved working conditions would also reduce the uncertainty and risks of disruptions resulting from a similar disaster, and the unrest that would likely follow it, such as was seen with the worker protest that following the Tazreen factory fires.

Multiple polls and studies have indicated that consumers have a desire to buy ethical clothing, and may even be willing to spend more on garments that are made with good labor standards (see, for example, a. Hiscox, M. J., and Smyth, N. F. (2006). Is There Consumer Demand for Improved Labor Standards? Evidence from Field Experiments in Social Labeling. Department of Government, Harvard University; b. Elliott, K. A., and Freeman, R. (2001). White hats or Don Quixotes? Human rights vigilantes in the global economy (No. w8102), National Bureau of Economic Research.; and Kimeldorf, H., Meyer, R., Prasad, M., & Robinson, I. (2006), Consumers with a conscience: will they pay more? Contexts, 5(1), 24-29). 

However, while this sentiment has been expressed for over 20 years, growth in the ethical fashion market in recent years has been small - so called ethical consumerism and ethical clothing (see, Mintel, 2009. Ethical Clothing –UK-2009. Mintel International Group Limited).

For garment manufactures currently sourcing from Bangladesh, moving past the Rana Plaza collapse will be a challenge, regardless of what steps they take. However, perhaps this point also serves as an opportunity to fill a niche that currently isn’t being served, for those with the foresight to pursue it.

Comments and inquiries about this posting will be referred directly to Ms. Simon for her response. 

More on the social aspects of sustainability next time.