Technology Forecasters, Inc.
Global Consulting and Research for Outsourcing and the Environment
I recently attended two presentations by electronics companies at the Green Manufacturing Expo, a conference I chaired in Anaheim, Calif., that ought to inspire even those who are most skeptical that green can be profitable.
In one, a Nokia manager explained how it had reduced its environmental impact by down-sizing cell phone packaging. In the other, a Hewlett Packard manager discussed its product stewardship initiative. I’ll report on Nokia today and on HP in a future post.
Two years ago, Nokia reduced by half the size of the box for its cell phone. According to David Conrad, head of environment for Nokia North America, about 250 million phones – half the total sold from February 2006 to the end of 2007 – have been shipped in the new box, for a savings of $150 million in materials and transportation.
Nokia can put 1,100 new boxes on a shipping pallet, compared with 480 old boxes, which results in 5,000 fewer tractor trailers on the road. The new packaging, made entirely of recycled paperboard stock containing 55 percent post-consumer recycled content, has saved about 855 trees, eliminated nearly 5,000 pounds of waterborne waste, and diverted more than 77,000 pounds of landfill waste – to name just some of the environmental advantages to date.
Conrad said the only way to have a substantial environmental impact is to challenge convention. Nokia had to get diverse thinking involved in the process. For example, whatever marketing people might lack technically, they more than make up for with creativity. “You have to challenge convention, re-ask questions that have been answered again and again, to make people rethink the way products can be designed, manufactured, and packaged,” he said.
Nokia has been a leader in the green movement in other bold ways. For example, it recently released a cell phone with a case made of plant-based plastic, not petroleum based. Conrad explained the reason for Nokia’s commitment: “Corporate sustainability and environmental sustainability are not mutually exclusive or mutually agreeable; they are mutually dependent.”
That’s exactly the point we’ve been making for 10 years at Technology Forecasters. How do you see it? Do you want to make corporate sustainability and environmental sustainability mutually dependent at your company?
Another Green Manufacturing Expo, organized by Canon Communications, is scheduled for September 23 and 24 in Rosemont, Ill. Let me know if you are interested in attending.
For a number of years, I’ve been predicting how the path to greener electronic products and facilities would unfold through the next decade. We’ve published TFI’s “Electronics Industry Environmental Timeline” on our web site to give clients context about key directives and other regulatory events since the 1970s, and to forecast environmental trends above and beyond the imposition of any single compliance standard.
For example, by 2010 I expect we will see moderate use of alternative, non- or less toxic materials throughout the electronics, and that this trend will accelerate to widespread use by 2015. Some of this will be compliance driven and some of it will be driven by the fact that electronics companies will come to see that using fewer and non-oil-dependent materials can be profitable.
I elaborated on these projections in a recent podcast with Design News.
Though the European Union’s Restriction of Hazardous Substances (RoHS) Directive loomed large for the industry in recent years, even RoHS will be nearly forgotten in time.
What will be remembered is how the electronics industry seized this moment to make bold and significant changes in the way it designs and manufactures products using drastically reduced carbon footprint, with fewer toxic chemicals, and wasting virtually nothing – using or recycling everything from the raw materials except the squeal (as the meat industry used to say about pigs).
The point is to get out in front of the timeline for business benefit. Learn how by attending the Green Manufacturing Expo next week in Southern California (which I am chairing) or by asking me about our high-return environmental and social responsibility partnerships with electronics companies. A good place to start is to take a look at the road map.
As always, we’d like your thoughts here, too.
Has your company made any New Year’s resolutions yet? If you need some ideas, try one of these offered by Technology Forecasters consultants. Or share your own with us.
Think Lean: In 2008, wherever your company is in its adoption of Lean principles, extend them. If one manufacturing site is already Lean, take Lean to other sites. If all plants are Lean; bring Lean to non-manufacturing operations. If you’re 100 percent Lean, globally and every other way, start applying Lean to your supply chain—pick a key supplier or three and Lean the processes among yourselves.
Go Green: Keeping in mind that Green (the environment) is Green (profitable, competitive, etc.), take stock of your State of Green, and establish a five-year roadmap for eliminating waste and becoming more environmentally efficient, including at least three Green goals to accomplish this year. (We’ll have more to say about environmental roadmaps in the months ahead.)
TCO: This one’s especially for OEMs. Location is everything in real estate, but not in electronics manufacturing. Total cost of outsourcing (TCO) is. With the dollar weak and the price of oil high, TCO is a moving target. Resolve to consider each individual outsourcing decision on its own merit, based on TCO. (Need help with TCO? See TFI’s Outsourcing Navigator).
Rising markets: This one’s for EMS companies. Resolve to investigate at least one new market where outsourcing penetration is still relatively low — medical, defense, industrial, instrumentation, etc.
Outreach: Reach out once a week to a customer, supplier or supply chain expert. This regular effort may help with your own supply chain challenges, create an opportunity to help a partner resolve a challenge and build a diverse pipeline of inputs for a stronger supply chain.
If you’ve got your own resolutions, we’d like to hear from you.
Compared to recent years, 2007 was quiet in regard to product environmental regulations. Aside from China’s Restrictions on Hazardous Substances taking effect, there were few new governmental requirements or actions. There were no major RoHS or WEEE enforcements, and a bill to expand California’s RoHS legislation was vetoed.
Unfortunately, 2007 was also the “quiet before the storm.” As we enter 2008, it would be prudent to expect a tumultuous year - and a tumultuous next 10 years - for many reasons.
First, we have crossed the “greening of industry” tipping point. One example: Several thousand scientists participated in a Nobel Prize-winning scientific consensus when they produced material for the Inter-Governmental Panel on Climate Change’s Fourth Report. Hundreds of corporate executives are calling for mandatory caps on greenhouse gas emissions. Virtually every leading company is launching energy-related initiatives in regard to products, facilities and logistics.
Second, it appears that we will finally see China RoHS’s Phase 2 Catalogue. An initial public meeting to discuss it was set for this week. Products in the catalogue will be required to undergo pre-market testing.
Third, we will see the first wave of implementing legislation from the European Union’s Energy-Using Products Directive. For covered products, there will likely be requirements for energy reductions and for life-cycle analysis.
Fourth, results of the E.U.’s review of the RoHS regulation will be published. It is likely that at least some medical devices and control and monitoring instruments will be included in the directive’s scope. Certain exemptions may be removed, and additional substances may be added.
Finally, the E.U.’s Registration, Evaluation and Authorization of Chemicals (REACH) will kick into high gear with a 2008 pre-registration period and subsequent registration deadlines over the next 10 years. In my estimation, REACH will be to “toxicity in products” what climate change is to “energy use in products.”
Why? Because REACH addresses tens of thousands of substances for which health and environmental testing is scarce; because it will require companies to obtain authorization to use the most detrimental 1,500 of those substances; and, most importantly, because it is an unequivocal statement: “No data. No market. No E.U. sales revenue.”
For companies that see the green handwriting on the wall, design innovation is the key. Gathering full-disclosure substance data is a must. Capturing new business from slower movers is the reward.
Happy New Year to all and rest up for the wild ride ahead.
I was meeting with executives at an electronics company to discuss their environmental roadmap. When we broke for lunch, I went to wash my hands. An employee next to me started talking about the water being wasted by the automated spout. (It did run too long.) “Doesn’t the company care about wasting water?” she asked me. To her, I was a total stranger with a visitor’s badge.
In my consulting experience, most employees are like this woman: Conscious of environmental waste. And they’re willing to point it out, when asked by sincere managers who realize that reducing environmental waste is not only everybody’s responsibility, but also good for corporate cost reductions. When I conduct workshops on environmental and corporate-social responsibility we invite employees from various departments. The executives who organize the events are always surprised at the good ideas and passion their employees have for this matter.
I’m not surprised. I’ve seen it for a decade. Years ago I began to warn executives that their employees would be a wellspring of ideas – but they’re still surprised at the quantity and rapidity of ideas from employees who are asked how the company can be more socially or environmentally responsible.
Maybe the executives are surprised because they don’t think these are issues employees notice or care about. That’s proven not to be true in every case I’ve witnessed. Maybe executives think they’re doing employees a favor if they don’t impose outside issues on them. But, employees want to be proud of what their companies are doing for environmental and social responsibility.
A May 2007 Harvard Business Review article, “Why Employees Are Afraid to Speak,” may shed some light. The researchers concluded that employees are reticent to share creative ideas because they believe — often without justification — that they’ll be reprimanded if they speak up. The short article is part of HBR’s free content and worth reading.
In my experience, employees are bursting with ideas on the environment and just waiting to be asked – or given permission. TFI Environment can help you to harvest employee’s and other stakeholders’ profitable ideas.
Quartz Events recently asked 50 supply chain executives what concerned them most. Three topics were top of mind: Lean, green and visibility.
The informal survey, taken in September to help Quartz determine topics for the supply chain and materials handling trade shows it organizes, verifies what the organization has been hearing for sometime now.
“These are three areas I see consistently challenging supply chain executives as they focus on profitability, efficiency, and conscientiousness of our impact on the environment,” says Toby Harris, event director for Quartz.
Hardly a month passes now without something like Quartz’s survey to confirm that lean, green and visibility are increasingly important strategic thrusts for the electronics industry. Technology Forecasters has been consulting in these areas for years, and many of you know I wrote a book entitled, “Lean and Green.”
Electronics industry executives have a lot on their plates, but I hope they have room (even with Thanksgiving dinner coming) for these three main courses in their strategic thinking: Lean, green, and visibility.
Here’s an offer to our OEM and EMS clients: In March, I will speak at the Supply Chain Operations Private Exposition (SCOPE) East in Philadelphia on the topic of “‘Reduce to Grow’ is the New Imperative: For Profitability and Environmental Gain.” Other presentations will address lean and visibility.
If you already have lean, green, and visibility on your plate or if you think you should, I recommend you attend. SCOPE is by invitation only for senior executives in supply chain management, logistics and operations. As a speaker, I have 10 complimentary passes for our clients and contacts. Go to the SCOPE East site, click on Attendee Registration, and insert this invitation number: SCE1920
You can find out more about the event there, too. The pass includes access to all sessions and the exposition, and complimentary overnight accommodations at the Loews Philadelphia Hotel, plus lunches and a banquet.
How important are lean, green and visibility in your supply chains? Let us know.
“Sixteen Tons” was a hit song in the ’50s about the plight of coal miners. The left/right reference was to “one fist of iron and one of steel.” Nearly five years since the European Union passed the Restrictions on Hazardous Substance (RoHS) Directive, the lyrics seem appropriate to the plight of electronics companies being hit with a barrage of toxicity-related requirements.
One fist is “government:” Argentina, Australia, Brazil, China, Japan, Korea and Switzerland - and individual states like California - are just some of the localities implementing toxicity directives. Some of them address many more substances than EU RoHS. For example, Canada will restrict several hundred substances. The EU’s Registration, Evaluation, Authorization and Restriction of Chemicals Regulation (REACH) Directive, which took effect June 1, 2007, will eventually restrict up to 1,500 substances.
The other fist is “customer:” IBM, Nokia, Philips, Sony — every very large company that I’m aware of has its own substance list.
What’s going on?
In 1930, one million tons of chemicals were produced worldwide. Today, the figure is 400 million tons. Some of these chemicals pollute our air, water and soil; others impact our brains, kidneys and livers. A recent study (pdf) monetized environmentally attributable toxicity costs in regard to disease and disability for several states. For example, in Washington, the figure amounts to about 1 percent of the state’s economy.
Will it end? No, a threshold has been crossed.
What to do? Recognize that our industry is midway through a 30-year macro-shift that rivals the adoption of Total Quality Management practices in the 1980s and will shortly be an equally critical condition of doing business.
The biggest obstacle to successfully navigating this macro-shift is not money, time or the right software, but the “do-the-minimum” mindset that says: “We can skate by. Settle for Y/N certificates. Disregard all those directives. And pray our customers never require us to know the amount of every substance in our products.”
Instead, take a lesson from companies, including several GoodBye Chain Group customers, that have had an “aha” moment: The requirements are not about any individual substance; they are about broader materials of concern in their products. They are about treating substance data with the same precision as financial data. They are about reducing liability as well as toxins. And they are about innovative designs that generate employee pride as well as corporate revenue.
There have always been tradeoffs when devising an effective internal numbering system for electronic parts; hazardous substance restrictions make things even more difficult. Some clients have reached wits’ end over part numbering challenges created by the European Union’s Restrictions of Hazardous Substance (RoHS) Directive and similar regulations.
Some OEMs are trying to solve the problem by bringing all products to the highest level of environmental requirements as soon as possible, and keeping parts numbers the same. That’s easier said than done. Others are adding a suffix to each part number, such as 001 or 002, to indicate EU RoHS compliance level. But sales staffs often resist customer-facing part-number changes, and what about RoHS requirements from elsewhere?
RoHS is evolving with significant regional variations. From the narrow perspective of part numbering, we’d all be better off with one globally consistent standard, but no one expects that anytime soon.
The restrictions won’t end with the six substances covered by the EU RoHS Directive, which took effect July 1, 2006. Norway, for example, has proposed a regulation aimed at consumer products that would restrict 18 substances. Europe’s new Registration, Evaluation, Authorization and Restriction of Chemicals Regulation (REACH) may end up restricting a dozen or more substances per year starting as soon as 2010.
With the varied restrictions, suppliers either will need to target product designs for specific locales, or target parts that can be used globally - and identify those with an issue. Most OEMs won’t want to target product designs for specific locales so flagging issues with a part may prove to be the best approach.
This could be accomplished by flagging at the internal part number (IPN) level. The flag will need several values. OEMs will need to determine what the values are for different BOM levels (component parts vs. finished goods, for instance) then incorporate those into business processes (part selection, etc.).
It is not clear that any PDM or PLM software vendors have fully grasped the data management complexities of this or whether their tools are capable of doing what will need to be done.
Unfortunately we’re dealing with a moving target. What conventional wisdom accepts today as the best practice may not be best in the long run. How best to deal with this matter at any level, part through finished product, is still a big To Be Decided. What has worked for you?
Electronics OEMs doing business with the federal government are already steeped in the accessibility rules for that market. But the market for accessible products appears to be broadening, putting design for accessibility on the agenda at many other OEMs.
First some background.
In 1998, Congress amended the Rehabilitation Act to require federal agencies to make electronic and information technology accessible to people with disabilities. According to the government’s Section 508 web site, the law was enacted “to eliminate barriers in information technology, to make available new opportunities for people with disabilities, and to encourage development of technologies that will help achieve these goals.”
In addition, Section 255 of the Telecommunications Act of 1996 requires makers of telecommunications equipment and providers of telecommunications services to ensure that gear and services are accessible to persons with disabilities, if readily achievable.
Companies that sell services to the government and organizations that take federal money for research or other efforts, must also comply with these laws.
Leading organizations of disabled persons are lobbying for more accessible products, including cell phones, which are exempt under the 1996 telecommunications act.
Increasingly, the market for accessible products is broadening.
“There is growing demand,” says Danny Salinas, leader of product stewardship, who is responsible for design for accessibility and environment at Nortel Networks Corp. “It is starting to proliferate outside the federal government.”
Salinas cites several examples: Universities; the Canadian government, which is considering a U.S.-like law (Nortel is based in Canada); and states applying the federal rules and/or considering statutes. Some companies not in any way governed by federal rules are beginning to consider accessibility a trait of good corporate citizenship, he adds.
“Industry is paying more attention,” Salinas says. “In Nortel we have the disabilities business council that focuses on hiring disabled persons and so accommodating them whichever way we can to get these talented people into our population.”
There are 60 million people in the U.S. with some kind of disability, and about 600 million worldwide, Salinas says.
With no end in sight to the corporate talent war, companies can ill afford to exclude disabled workers because the work place does not offer accessible products.
Done properly, Salinas argues, design for accessibility does not - and in fact should not - add cost. With the right processes in place, engineers consider accessibility in the early stages of product design much in the same way they consider usability features.
Salinas believes - and we agree - that OEMs not already considering accessibility ought to add it to their design agenda.
What has been your company’s experience with the design for accessibility issue?
Green is green. That’s the central message corporate environmental champions need to convey to executive decision makers to get the green light for green projects.
By that I mean, products, processes and facilities designed to conserve resources typically save money, reduce costs and in some cases generate revenue. That’s why I named my book, “Lean and Green: Profit for your Workplace and the Environment.”
As I have written in the past, and emphasized again in a recent podcast, executives are completely - and properly - motivated by shareholder value. The best way to communicate green ideas - better product design, more efficient facilities, better process in manufacturing, even natural landscaping - is to demonstrate how they’ll save money, or increase revenue. And measuring financial benefits - and the financial risks of not being proactive in this area - can now be done with standard accounting models.
For a good example, read an article written last year by Bill Roberts, who now writes regularly for TFI, about Texas Instruments’ latest wafer fab. Through sustainable (green) design, TI expects to cut yearly operating costs as much as $4 million. That’s how TI’s green champions sold the idea to the decision makers.
Once green initiatives are adopted and implemented it is also imperative to measure the improvements so executives - and everyone - can see the savings. Then they will be motivated to continue in the lean and green direction.
The central truth about lean and green: What’s good for the environment is good for profits.
Write and tell us your experience in convincing executives to go green
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