Perspectives on Sustainable Production: Delivering Economic Value and Serving the Greater Good

Rockwell Automation Manufacturing Perspectives White Paper Series Perspectives on Sustainable Production: Delivering Economic Value and Serving the Greater Good 2 | Perspectives on Sustainable Production Reduce dependence on fossil fuels Boost energy savings Build your competitive advantage Reduce emissions and waste Measure and report results Improve financial performance Minimize raw material waste Protect workers Protect your products and customers Preserve the integrity of your brand Perspectives on Sustainable Production | 3 Delivering Economic Value and Serving the Greater Good Global manufacturers face economically challenging times with a complex and crowded agenda. Today’s market pressures require manufacturers to balance multiple priorities: productivity, globalization, innovation and, sustainability. Rising prices and shortages of resources, whether of talent, dollars, energy, or materials, have re-written the economics of manufacturing. The unexpected downfall of some of the world’s once-most powerful financial institutions highlights the new sense of urgency for companies to build trust, operate transparently, and reduce risk. Sustainability is no longer just the right thing to do; it’s a business imperative. Rockwell Automation believes manufacturers who adopt sustainable production practices turn marketplace challenges into advantages. We define sustainable production as cleaner, safer and more energy efficient operations. Production is cleaner when it reduces waste, eliminates emissions, and consumes fewer natural resources. Production is safer when it protects workers, processes and equipment, and product integrity and quality. Sustainable production is more energy efficient when companies produce more goods with less energy. Sustainable production practices deliver economic value and serve the greater good. They provide a long-term solution to volatile energy, scarce raw materials, costly workers compensation, lost worker productivity, and product liability costs. While regulatory compliance may have been the motivator in the past, today’s resource shortages and economic demands require safer, cleaner and more energy efficient manufacturing. 4 | Perspectives on Sustainable Production Perspectives from Industry Leaders We invited Rockwell Automation customers, industry leaders who have successfully adopted sustainable production practices, to offer their insights. These executives come from world-class brands, including The Boeing Company, Coca-Cola, and General Mills, as well as an executive from our own company. We asked them to address sustainability’s evolution, the importance of information and metrics to create change, and the need to deliver business results. Our customer panel also discusses why safety and water are important facets of their sustainability agendas. The increase in media attention on sustainability the past few years implies it’s a relatively new issue, a trend. How has your company addressed sustainability and how has it evolved? Coca-Cola, Mark Lee, Director, Commercial Products Supply Engineering/ELSP: It’s a bit surprising this appears new because from a manufacturing perspective, sustainability is just good business. Energy efficiency, improvement in recycling, and eliminating waste are things we’ve been doing since the 1990s. Now these efforts are part of our manufacturing excellence program, our lean initiative. We’ve bundled lean and green together to further reduce our manufacturing costs through improved productivity, energy reduction, waste elimination, and reduced water consumption. While these efforts are now part of a more formalized program, it’s work that has been going on for years within the manufacturing sector of our company. The change for us is a move from strictly an internal focus toward a more outwardly focused effort, including our supply chain. We’ve shared some of the good work we’ve done with our customers, consumers, and suppliers and we’re assessing what they need from us to help them become more sustainable in their business practices. General Mills, Jim Schulz, Director, Controls and Information Systems: Sustainability is something we’ve always done. Like Mark said, it’s been part of our business all along because saving energy and water makes good business sense. What I think maybe shifted for our company is we now view it as an ingredient in almost every formula we make. So, for example, along with sugar, water and flour, sustainability, quality and safety are also ingredients in our products. Sustainability is more than an initiative, which always seems like it’s an optional activity. Rockwell Automation, Bob Ruff, Senior Vice President, Control Products and Solutions: What I’ve noticed that has changed over the years is that sustainability was once driven around regulatory requirements, but now it’s an imperative because of the shortages of power, resources, and clean water. These demands have shifted priorities across industries. Now we’re seeing people take their capital budgets and prioritize with a sustainable number in them that we hadn’t seen in the past. Perspectives on Sustainable Production | 5 As Bob indicated, while priorities have shifted, it also appears the priority list has grown. What are the sustainability priorities for your company? Boeing, James W. Fonda, Advanced Technologist, Networked Systems: We have goals to reduce energy consumption, greenhouse gases and hazardous waste, and increase recycling by 2012. We’re looking at how we order our materials to make sure we have less waste and to make it easier for us to finish parts in house while reducing the overall time and complexity. Then we want to make sure that the waste material we generate in our finishing process goes back to a supplier who can then recycle it back into the supply chain. With our fleet of aircraft, we try to reduce fuel demand for every new generation of aircraft we build. My role specifically is to look at how we can provide more visibility into energy consumption and optimization. Then, how to use that information to get workers more involved so they can give feedback on how they think we can make our processes more energy efficient. Coke, Lee: From a purely manufacturing perspective energy, water, and safety are priorities. It just makes good business sense. Obviously water is a big component of our product so we have to steward that appropriately and energy savings go to the bottom line. From a supply chain perspective, the focus is on sustainable packaging, eliminating waste, and improving recycling. Food safety and quality are core components of our system and that’s also part of any sustainable business model and corporation. We’ve made a 20 percent net gain in water efficiency since 2002. We have another goal of 20 percent improvement by 2012. We have also Make sure there is a business made substantial gains on energy reduction. We look at both energy in terms of mega joules per kilogram of product produced and CO2 reason to improve and post emissions. As part of our work with the World Wildlife Fund we have gains against sustainability a slogan, “grow the business not the carbon.” So even though we intend to grow the business in places like China and India where metrics greenhouse gas factors are extremely high, we want to keep those emissions flat or reduce them in both absolute and production terms. General Mills, Schulz: Water usage, energy usage, greenhouse gas emissions, and the solid waste stream. Which is most important really depends on the business justifications for improvement, and that will vary by region and country. Where water is in shorter supply it’s going to be much more of a business benefit to improve the water usage or where energy costs or distribution costs are higher, we’re going to work on energy. We try not to have the metrics drive the wrong behavior but more the right behavior and the way we do that is to make sure there is a business reason to improve and post gains against those metrics.