The Forecast is Green
Uponor uses lean process VSM to predict energy costs
As a result of his team’s leading edge effort to infuse the power of green-thinking with the financial values of lean process improvements, Uponor’s Rusty Callier is now developing a planning tool that will help forecast the often unstable costs of energy into its operations planning.
Uponor, a Finnish company that traces its corporate roots to the year 1620, uses its Apple Valley location to manufacture systems for plumbing, residential fire safety, radiant heating and cooling, as well as its Ecoflex® line of pre-insulated plastic distribution piping.
A 13-year veteran of the company, Callier is director of operations for Uponor North America. Equipped with a degree in land use planning, he earlier worked at Aveda under the company’s now famous sustainability principles and worked to apply them to operational work in ISO 9000 and ISO 14000. “Once I was working at Aveda, I knew that I loved operations.” After Aveda, he added an MBA.
Callier joined Uponor with a real commitment to sustainable development, from a systems approach. He spent time at Beltrami Environmental Consultants and Aveda, where he developed an enduring interest in ISO.“I was able to take the environmental perspective and tie it to a solid business perspective. I always wanted to believe that environmental and traditional business could work, but I never saw a really good integration of the two, at that point in time, 10-15 years ago.”
LOW HANGING FRUIT
At Uponor, Callier says, operations process improvements were critical, because of the company’s rapid growth. At the same time, Callier identified some “low hanging” green opportunities, whose success, he says, would inspire some confidence upon the financial decision-makers at the company. His Green Team (later officially dubbed the Uponor Sustainability Team), implemented light bulb change outs, better ballasting systems, and more sophisticated data measuring which enabled the company to monitor the energy use.
In 2010, Callier brought in consultants from Enterprise Minnesota to help incorporate its GreenLean® concepts into the Value Stream Mapping work with Uponor’s EcoFlex® line of insulated piping. “That was what we needed,” he says now. “We were working in operational excellence; we were doing the low hanging green projects.” Over time, his efforts proved successful both in terms of process efficiency and environmental sustainability. “We ended up putting in some that were quite simple and some that were quite ‘out there,’” he says. A major success was the implementation of a dry cooling system into its manufacturing process. Cooling water is a critical component of Uponor’s manufacturing processes. At the time, Callier says, Uponor’s process was using traditional chiller bundles on about 70-80 machines throughout the year.
“We were always running pumps, we were always moving water and basically have to do a heat removal process to get the hot water chilled down to the 65 degrees we need – not thinking anything about it – winter, summer, spring and fall, no matter what.”
These systems entail significant costs because they require maintenance and consume a lot of energy, water, and chemicals. Industry experts say that traditional chillers can account for more than 50% of the energy use as well as environmental concerns. Callier’s team replaced this process with a dry cooling system, which utilized the earth’s natural cooling any time temperatures got below 45 degrees Fahrenheit, enabling Uponor to shut down its chiller bundles and use the natural coolness.
That singular move, Callier says, conserved more than one million kilowatt hours and saved the company $100,000 in its first year, a result that surpassed his forecasts and that put the power of GreenLean on the map for the company. “It was a good financial decision and a good environmental decision,” he says, that scored the sustainable trifecta for corporate sustainability, a framework that widely includes measurements, social, environmental, and financial, commonly referred to as “people, planet, and profit.”
GREEN PROCESS AND PLANNING
Among Callier’s takeaways from Uponor’s experience with Enterprise Minnesota’s GreenLean® value stream mapping process was that the company could highlight opportunities for improvements in environmental inputs/outputs as well as in direct costs of manufacturing. For example, Uponor had teamed with SES Energy to install and network smart energy. meters throughout the plant, which logged specific energy utilization data, down to the second. Uponor could now plot energy inputs into a process.
This, Callier knew, could enable Uponor’s business planners to start to consider the sometimes elusive costs of energy in their formal planning – and could be used to enlist the considerable assistance of Xcel Energy.
“Every company has to wrestle with the common factor that utility costs are going to go up,” Callier says. “If you do nothing to change that you shouldn’t be surprised by rising costs in the overhead component.”
Further, it enabled him to recruit energy professionals at Xcel to engage in the process. Utility companies, he says, can easily report a manufacturer’s overall energy use in great detail, but can’t help reduce that energy use until they become more “intimate with the process.” The value stream mapping of the GreenLean process made that possible. Xcel, he says, is a willing partner in the process of reducing kilowatt consumption. The process of predicting energy use, Callier says, matches well with existing production plans. Uponor always knows
in great detail, for example, what products it will manufacture over the next 90 days. Similarly, planners use sales forecasts to predict production plans for the rest of the year, although less specifically. The 12-24 months prediction is also “fairly accurate” he says, based on mathematical regressions and statistics, but it is fairly accurate.
His GreenLean process now enables Callier’s team to speculate about kilowatt hours and water consumption the next 12-24 months out, which gives the company a cash flow tool that enables better decision making.
“It gives the business the sight to balance the triple bottom line (people, planet, profits),” he says. “It is one of the coolest projects we’re doing – and not because it’s mine,” Callier says, allowing that he doesn’t mind having “my fingerprints all over it.” “There is a very low risk of failure, but a very high (probability) of reward,” Callier says. “The project to me ties in so well with our sales and operations planning. Anybody would get excited about a project like that.”
The company’s innovative attention to GreenLean processes has contributed in part to several prestigious awards in the past year, including the 2013 Manufacturers Alliance Manufacturer of the Year, Sitecore Site of the Year, the StarTribune’s Top Workplaces, as well as being named an “Efficiency Partner,” by Xcel Energy.
Callier says Uponor links sustainability to its vision and mission as demonstrated by actions throughout the organization. Its sustainability pillars, he says, include:
• Strongly integrating sustainability into our corporate mindset
• Driving down our environmental impact
• Enriching life through our innovative solutions
• Engaging external stakeholders in our sustainability journey
Uponor targets reducing CO2 emissions by 15% by 2015 (basis year 2009).
All told, Callier thinks Uponor’s GreenLean experiences could be instructive to other manufacturers. He says GreenLean should be “Business 101” for manufacturers. “All of it rolls back to a systems approach,” he says. “You can prioritize your sustainability projects.”
The good internal publicity from small initial improvements will give the business more confidence in what you’re trying to accomplish.
At a higher level, he advises incorporating GreenLean into a manufacturer’s planning process. “Then you get a better understanding of how your overhead costs impact production, how they are going to affect future costs. “Patterns of the past will be patterns of the future, unless you change,” he says.
Planners should understand overhead costs in advance,” he says. “You aren’t going to control your material costs as well as you can control what you are turning on and off,” he said. “You just don’t have the power to control material costs, typically, at a high level. In addition, he says, manufacturers should try to include energy inputs and outputs in planning, he says. “Don’t give up on it merely because you haven’t done it before.”
And finally, Callier advises manufacturers to add GreenLean systems to existing process improvements. If they don’t, he says, “then you really can’t say that you are planning any better than just hoping everything stays the same,” he says – and we know that’s not the case. “Because utility costs have never gone down, without an intervention.”
Rusty Callier, director of operations for Uponor North America, heads the Uponor Sustainability Team.