Green: The New Ripple of Lean

Companies are discovering how energy savings can add up.

From the August 2013 issue.
By John Connelly

Green is the new ripple of lean manufacturing at Pier Foundry in St. Paul, Minnesota

It wasn’t that long ago that many manufacturers could see no connection between lean and green. In fact, there are many who still don’t.

“For too long manufacturers viewed “green” and “lean” as two different, even oppositional approaches, methods, and philosophies,” says John Connelly, director of consulting at Enterprise Minnesota says. Lean was driven to make manufacturing systems go faster and work more efficiently by removing wasted time; green represented add-on processes that were imposed on manufacturers at the political/regulatory behest of environmentalists.

“Lean is easy to deal with,” Connelly says. “When we remove time, we make the process faster and more cost effective. We improve our price and our margins. We improve quality.”

Green, on the other hand, he says, is correlated with expenses that inflate price, suppress margins and possibly slow down completion. Where once manufacturers merely disposed of waste by putting something down a drain or hauling it away, green regulations now required that they had to treat it, or separate it, or flush it with water.

The ultimate merging of Green and Lean principles seemed incompatible. One reduced costs, the other added expense.

At the same time, some companies were taking on green/lean initiatives with very encouraging results.

In 2011, Le Sueur Incorporated (LSI) was one of a handful of companies who participated in a 30-month Minnesota Jobs Skills Partnership program, administered by Enterprise Minnesota, that helped the organizations identify and remedy sources waste through green/lean techniques.

In one set of Kaizens, the company identified sufficient waste around compressed air that saved the company $120,000 per year.

Savings focused mainly on leaks, but there also examples also mis-use. “There were some big ones,” Zwart remembers. His team discovered, for example, that employees were using compressed air to clean areas underneath large band-saws. “It was a clever idea because they didn’t have to sweep underneath,” he says, “but at what cost?

Zwart became a fan of green/lean initiatives. “It was an extremely valuable experience for us,” he said. It certainly saved more money than any of us would have expected. I thought that was a great lesson learned. And when you are going through the process, you discover that there are other opportunities.

He now thinks there may be a half million dollars in potential energy savings throughout his plant.

Connelly describes the evolution of green and lean in terms of waves. “Think of a company’s productivity as a pond,” he says. “Poke the center and watch the ripples.” Connelly says, the center ripple – operational efficiency – began decades ago when manufacturers began to comprehensively analyze their processes to identify the fastest, most efficient ways to make parts, or to make a machines run faster. Operational efficiencies are so ingrained in modern manufacturing, he says, that manufacturers seldom pay attention to it. “It’s inherent in the way they do business.”

More than 20 years ago, Connelly says, manufacturers recognized that there’s “a chunk of non value-added time” within every one of those processes. To address this, they added the second ring, the lean ring. Lean experts characterized eight non value added wastes that take place outside of what’s valuable in the process itself: overproduction, waiting, excessive transportation, non value-added processing, unnecessary inventories, unnecessary motion, defects, and underutilized people. And they devised 12 tools to get rid of those wastes.

“They could say, I got the machine down to the tightest number I could, but it still took too long and cost too much money to make the part, because these pieces weren’t well managed,” Connelly says. “This is the non-value added within that process. That is the ripple that has occupied most manufacturers for the past 20 years. It is really simple to understand, challenging to apply and well worth the effort.”

John Connelly, Enterprise Minnesota director of consulting
John Connelly, Enterprise Minnesota director of consulting


The third ripple, the green ripple, involves what Connelly calls reducing waste that occurs outside the process itself. These overhead issues include energy, compressed air, chemicals, water and solid waste. “In essence, it is about how we control these overhead issues to further reduce non-value added waste,” he says.

The ability to experience savings from green activities – the concept of actually merging the philosophies of green and lean -- has taken time to evolve for at least a couple reasons beyond the bad wrap that green added costs. One is that it was simply not on the radar screens of manufacturers. Connelly recalls early on asking the director of operations for a client company how much he paid for electricity.

“He didn’t know. He assumed it wasn’t an issue,” Connelly says. Of all the budget elements he managed, electricity was a bill that got paid. “The machines were electric and we need electricity to run them. What else did he need to know?”

The “what else,” Connelly says, turned out to be meaningful. The manager discovered his electric bill was five digits on a regular basis. “That’s not a case where they resisted being green, it was a place where it wasn’t on their radar.

Industry experts call this learning to see, Connelly says. “Green/lean becomes viable when manufacturers comprehend its positive impact on productivity and profitability. My premise is that we won’t learn how to get rid of these overhead costs until we learn to see them.”

A second impediment to green lean is how to easily quantify results. While lean wastes can be measured in units of time, green inputs can seem more vague. A manufacturer might be paying $35,000 in energy over a period of time, but doesn’t necessarily see the portion of that total bill which is part of a specific process. I go through a half million gallons of water in a month, but I don’t know exactly how much is tied to this process.

“That’s part of learning to see,” he says.

Many Enterprise Minnesota customers have learned to see in money-saving ways. Other local manufacturers have embraced the synergies of green and lean.

Jones Metal Products in Mankato, for example, invested in a machine that captures solvent for re-use, thereby eliminating hazardous waste disposal and the need to buy more solvent. St. Paul-based Pier Foundry used a value stream mapping to categorize the type and disposal of waste. In addition the company identified a method replacing plastic containers for holding hazardous materials with metal. Foldcraft eliminated the need to rent, light and heat at least 35,000 square feet of space, saving $634,000 in utilities and even more in avoided truck traffic between multiple sites.

Employees at Medtronic’s Brooklyn Park site launched a sustainability council that dove headfirst into to reducing waste, discovering opportunities for reusing and recycling by literally jumping into its garbage containers to see what it was throwing away. The company has continued to pursue waste reduction in a variety of areas, including water and electricity conservation, and recycling of plastic, cardboard, metal, light bulbs and batteries. Today, 52 percent of the industrial waste created at the Brooklyn Park facility is reused or recycled, up from 27 percent six years ago. At its Brooklyn Park facility alone, Medtronic has saved 1.5 million gallons of water, reduced wood and packaging by 200,000 pounds, and has sustained an annual savings of $215,000 through its green and lean efforts.

There’s no question that there is a substantial business case to be made combining lean with green. Ryan Bruers of Xcel Energy says that the average manufacturer could use green practices to save about a third of its energy bill each year.
 

John Connelly is director of consulting at Enterprise Minnesota.