Coors Brewing Company

Coors Brewing Company has cultivated a corporate culture that supports technology, ingenuity, and self-reliance, in which eliminating waste before it is generated has been a major focus. In conjunction with the corporate reorganization in 1992, Coors implemented and further developed four tools that are designed to continuously improve both the environmental and economic performance of the company:

Corporate environmental principles that establish "zero- based resource budgeting" -- i.e., principles that presume pollution and waste can be driven toward zero, at a net cost savings.

Environmental audits that isolate waste, identify options to eliminate it, and show the potential improved efficiency.

Decentralized management systems that give every division and every employee both the responsibility and the authority to reduce waste under their control.

Two environmental accounting methods -- Environmental Management System (EMS) and Coors Business Information System (CBIS) -- that track the purchase, use, and waste of materials, and assign the costs of waste to the responsible profit centers, to motivate reductions. These programs have had impressive results. In the five years from 1987 to 1992, non-hazardous wastes sent to landfills was reduced by 50%. From 1989 to 1994, toxic releases, as measured by the EPA's Toxic Release Inventory, dropped from abut 400 tons a year to just over 100 tons a year. What is more impressive, is the number of spin-off operations that Coors has developed over the years by finding a new idea or process for their wastes. For example, brewery waste is processed into fertilizer and feed, wood waste into compost, and the search for a less toxic cleaner into the development of Bio-T, a citrus based cleaning product.

Royal Dutch Shell

In the early 1970's, planners at Royal Dutch/Shell anticipated the 1973-1974 oil crisis. Managers, however, were not willing to accept these new predictions because they were counter to existing business models. Shell planners realized that managers would not use the energy crisis scenarios for decision making until managers began to question their existing decision models. To do this, Shell planners presented a set of scenarios and underlying assumptions to managers: some scenarios using the status quo, some using the energy crisis scenario. When managers saw that the assumptions necessary for the status quo to hold were unrealistic, they began to accept the new scenario and its implications. Because Shell managers were able to act within a new decision framework, Shell rose from being the weakest of the seven big oil companies in the 1970's to one of the two strongest in the 1980's.Source: Joe Romm, Lean and Clean Management

Union Pacific and Exxon

If the relationship between quality management and environmental protection seems tenuous, compare the cases of the Exxon Corporation with Union Pacific Railroad. Like many corporations, both have experienced a wave of downsizing that has required the elimination of jobs. And both have experienced environmental spills.The major environmental issue confronting railroads is the potential of accidents that spill contaminants. Thus, maintaining rail-bed is of great significance. Union Pacific, the number one hazardous waste carrier among American railroads, improved its capacity to deal with that problem, among others, by eliminating the vast hierarchy of managers who supervised the condition of siding track owned by UPRR's customers. When Union Pacific reduced employment, it collapsed its organizational pyramid as well, decentralizing authority, and trusting employees to exercise good judgment. Environmental incidents declined. Before these changes, when a Track Inspector found a problem, that set in motion a series of internal reporting requirements and a long delay in dealing with the customer. Now the Track Inspector has the authority to deal with the customer directly. Instead of answering to a big, impersonal bureaucracy, the customer now responds to the familiar Track Inspector. Overall, the new organization of UPRR has doubled productivity and profits, raised customer satisfaction, and significantly improved its environmental safety record. This reorganization took place in just 120 days.

By contrast, many consider Exxon a textbook case of the failure of a corporation to deal with the quality issue at its highest levels. When the Exxon Valdez incident occurred, the media focused attention on the drinking habits of the captain of the tanker. But the more important question, in the minds of many, is how the organization as a whole failed to prevent the spill. The answer appears to lie in Exxon's 1986 restructuring, a policy that reduced the world-wide workforce by 28%. Exxon's restructuring did not follow the same process as that of Union Pacific. Exxon responded in precisely the manner that TQM's Deming opposes: pushing employees to "tighten up" operations instead of analyzing the systemic causes of the problems. Some refineries have been put at risk by the hiring of temporary workers. Even full-time employees may operate in emergencies on the basis of "rules of thumb" that contain serious misinformation. They have never been properly trained, and the procedural manuals are too hard to understand, so workers develop informal procedures. (That was apparently one cause of the New York harbor spill.) But instead of a long-term program to improve operational quality, managers just provided pep talks. As Deming explains, that sort of management is counter-productive because it lowers worker morale. The Alaskan spill was only one of several major accidents which followed Exxon's restructuring. Exxon was also plagued with an oil spill in New York harbor, a refinery explosion in Baton Rouge, and some smaller spills. Even now, more than five years after the Exxon Valdez spill, Exxon is still paying the costs and fighting the scars to its reputation.

Painting Process Improvements

Modifications in painting processes to reduce paint waste, reducing the toxicity of paints and solvents, and improving batch processes have resulted in substantial costs savings and reductions in waste for many companies. Three examples:

A facility that manufactures and paints 2.5 million car and truck mirrors annually installed hydroclones to remove paint solids from the paint booth water curtain drainage, allowing water to be recirculated. The company also sends paint sludge to a drying service to reduce disposal volume. These changes, motivated by regulations and high disposal costs, result in annual savings of over $225,000 a year, at a cost of just over $25,000 -- a rate of return of almost 900% and a payback period of less than two months.

Another automotive mirror manufacturer replaced a solvent based painting process with electrostatic powder coating, again motivated by high material and disposal costs and regulations. The changes cost $236,000, and save almost $140,000 annually, a 59% ROI and payback of 1.7 years.

A manufacturer of metal office furniture replaced part of their spray and dip-painting with an electrostatic powder coating system, reducing air emissions, paint sludge, and solid paint waste. The new system cost $151,000, and generates annual savings of $50,000, a ROI of 33% and payback of 3 years. Source: Pollution Prevention Review, Autumn 1993.

Quad/ Graphics

Quad/Graphics is a Pewaukee, Wisconsin based printer of magazines, catalogs, and newspaper inserts. The employee-owned company applies a team-approach to problem solving, and uses brainstorming techniques to identify opportunities to reduce solvent waste. The waste reduction program was initiated in 1989, and follows the company philosophy that: A sound business and a sound environment go hand-in-hand." In order to stimulate employee thinking about waste issues, one manager stopped the presses and brought in 16 drums of waste ink and asked employees how long they thought it took to generate the amount. Employees were stunned to find that the drums were generated in only 1 month, and began developing options to reduce the volume of waste. While most of the reduction opportunities were simple low-cost production changes, the resulting decrease in ink waste was significant. Some examples of the reductions and innovations at the Wisconsin plants:

Liquid waste has dropped from 1,525 barrels in 1988 to 991 drums in 1993, a 35% reduction.

Company-wide, drums of waste ink have dropped from 762 in 1989 to 292 in 1992, a 62% reduction. This reduction is attributed to brainstorming and committed efforts of employees. These reductions occurred despite increases in production and the addition of two more printing plants.

Since 1991, Quad/Graphics has used a centrifuge to extract 353 drums of solvent from press-cleaning rags. Previously, the solvent-filled rags were passed on to the laundry to deal with.

Cost savings related to ink recovery in 1989 and 1990 were estimated to be $515,000, plus an additional $77,250 savings in disposal costs.

Chemical Research/Technology, the manufacturing division of Quad/Graphics has developed vegetable-based Environ/Tech ink to replace petroleum - based inks for heatset, web offset printing. This ink can be used on clay- coated paper for magazines and catalogs, unlike soy-based inks, which are not absorbed on the paper. The two types of Enviro/Tech ink for the inside of books and covers reduce VOC emissions by about 15% and 23%, respectively. The ink "rivals the standard inks," according to Lands' End Company production supervisor, which uses the inks, as well as a number of other catalogs and magazines. The ink is being continuously improved, according to CR/T manager Terry Gille, "Succeeding generations will continue to reduce the VOCs and the non-renewable resources."

Martin Marietta: Overcoming Obstacles

The Astronautics Group at Martin Marietta identified several keys to overcoming barriers to adapting a proactive attitude towards pollution prevention:

1. Ask provocative questions to challenge common practices.
2. Create a climate of openness to get manufacturing and line employees to participate up front on interdisciplinary teams.
3. Share information on the technological changes. Make the environmental benefits clear, and test rigorously, including pilot projects.
4. Build skills, awareness, and an environmental ethic through education and training. A commitment to pollution prevention boosts morale, which in turn boosts the company's commitment to prevention.
5. Stay true to your goals. Don't back down if they seem out of reach.
6. Exercise leadership in business and environmental partnerships.

Source: Joe Romm, Lean and Clean Management, p.136

Banca di America e di Italia (BAI): Reengineering for a paperless bank

In the late 1980's, BAI's CEO was determined to improve the bank's strategic position by creating a paperless bank based on just-in-time manufacturing principles. This was done through a team-based redesign process that systematically diagnosed processes and redesigned them without considering the constraints of the current organization. Transactions were broken down into ten "families" -- payments, deposits, withdrawals, etc.. Then the flow of processes within each family was evaluated. Once there was a detailed picture of the transaction, the team could redesign the process -- this plan was then handed to an information technology team, which, with the help of the tellers that would be using the systems, designed a computerized system for the new processes. Bank functions were streamlined, and paper use was reduced. Before redesign, each check-deposit transaction required 64 activities, 9 forms, and 14 accounts, after redesign it required only 25 activities, 2 forms, and 2 accounts. Overall, BAI redesigned 300 processes over a period of about 15 months. From 1987 to 1992 revenue at BAI doubled, with 24% of the increase attributed directly to the redesign. The bank added 50 new branches, without any increase in personnel, and with minimal investment in systems development.

Source: Gene Hall, Jim Rosenthal, and Judy Wade, "How to make reengineering really work." Harvard Business Review, Nov-Dec 1993

Taco Bell: Reengineering

John Martin took over a failing Taco Bell in 1983 -- a company that was "going backwards fast," entrenched in a command and control hierarchy that supposed to understand what customers wanted, but did not ask directly. The company undertook major, and ongoing reengineering efforts, focusing on what customers really wanted -- greatly simplifying their processes. This was achieved by automating, changing the organizational structure and management system, reducing kitchen space, and increasing customer space. These changes have had a huge impact on the company -- Taco Bell went from a failing regional Mexican -American fast food chain with $500 million in sales in 1982, to a $3 billion national company 10 years later, with a goal to expand further to $20 million. While the environment was not a factor in Taco Bell's reengineering, it has benefited through the reengineering process. For example the TACO program (Total Automation of Company Operations) provides sophisticated MIS technology for all employees, saving thousands of hours of paperwork -- and thus paper -- as well as promoting self-sufficiency and reducing time spent on administration. The K-Minus program, or kitchenless- restaurant, established a system where the large majority of food preparation occurs at central commissaries rather than in the restaurant, pushing 15 hours of work a day out of the restaurant, improving quality control and employee morale, reducing employee accidents and injuries, and resulting in substantial savings on utilities. The K-Minus program saves Taco Bell about $7 million a year.

Source: Michael Hammer and James Champy, Reengineering the Corporation, 1993

Compaq Computer

Compaq Computer's investments in their facility and energy consumption as part of their effort "to create a setting that stimulates creativity and enhances individual effort and productivity" resulted in significant savings in energy consumption. Improvements were made through daylighting, improved HVAC (heating, ventilating, and air conditioning) systems, and other modifications. Facility manager Ron Perkins identified four lessons to apply to make energy-efficiency work possible.

Spend money for information -- gather information before the project design period. Make energy-using systems key commodities and integral parts of the whole facility. Teach the value of collecting data. Substitute quality for quantity. Include building and facilities managers and maintenance staff in the process of upgrading.

Source: Joe Romm, Lean and Clean Management

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