IT for Green: Impacting the Triple Bottom Line - People, Planet, and Profits. Webcast May 21, 2008

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1 IT for Green: Impacting the Triple Bottom Line - People, Planet, and Profits Webcast May 21, 2008

2 Webcast Logistics Audio lines are muted until Q&A session Submit your questions via the Live Meeting Chat window at any time Slides available within 24 hours for Manufacturing Insights clients and attendees All other requests: Problems? Manufacturing Insights, an IDC company. All rights reserved. Slide 1

3 Manufacturing Insights, an IDC company Provides industry business leaders with informed opinions on the technologies required to create a competitive advantage Presents strategic and insightful market positions, trends, and crossindustry segmentation data Aging / Emerging Workforce IT for Green RFID and Sensor Networks Remote Services Technology Sustainability Warranty and Quality Management Encourages an open dialogue with our expert analysts to support key investment decisions Asia/Pacific, Europe, North America Leverages IDC s worldwide network of resources and data 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 2

4 Introducing our Speaker Kimberly Knickle, Practice Director, Emerging Agenda Responsible for research and analysis on emerging applications related to sustainability, supply chain, RFID, sensor networks and more. Continuous analysis and data compilation for our industry IT spending guides, within the process sector, including consumer packaged goods and chemicals Extensive experience as both a practitioner and market researcher at companies such as AMR Research, Hurwitz Group, Inc., Charles River Strategies, Entre Computer Center, Boston Center for Computer Applications, and Underwriters Laboratories, Inc Manufacturing Insights, an IDC company. All rights reserved. Slide 3

5 Today s Agenda Sustainability Research Overview Stages of Maturity and Business Drivers Building Sustainability into the Business Role of IT & Measuring Progress Essential Guidance Questions? Kimberly Knickle, Practice Director, Emerging Agenda 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 4

6 Sustainability Research Overview Meeting the needs of the present without compromising the ability of future generations to meet their own needs." IDC: Green IT Focus on IT Asset Lifecycle and Data Center Manufacturing Insights: IT for Green: Supply Chain & Product Lifecycle Management Manufacturing Employees, Suppliers, Customers Global perspective on the ground experts in Milan, China, and Singapore Reach across segments: Asset, Brand, Engineering, Technology Cross-industry perspective: Retail, Energy, Government 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 5

7 Defining Sustainability in Business Context Triple Bottom Line: People, Planet, Profits People: Web 2.0, more collaboration, reduced travel, increased telecommuting, reduced facility spend, attracting employees of future Planet: Environmental issues, greenhouse gas emissions including carbon, regulatory compliance, voluntary compliance, customer mandates Profits: Efficiencies and productivity, customer loyalty, process and product innovation I have found that people are usually much more moved by economics than by morals. Norah Phillips 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 6

8 Stages of Maturity Resource Allocation Companies that persist in treating climate change solely as a corporate social responsibility issue, rather than a business problem will risk the greatest consequences. Harvard Business Review, Oct A Strategic Approach to Climate by Michael E. Porter and Forest L. Reinhardt Green Products (Coordinated Product Lifecycle Management and Supply Chain) External Operations (Material spend/criteria for suppliers/partners, carbon trading) Internal Operations (Energy/ water efficiency measures, recycling, telecommuting) Corporate Social Responsibility (Marketing/PR) Legal Compliance (Compliance and Mandates) 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 7 Time

9 Business Driver: Legal Compliance ROHS, WEEE, TREAD, REACH Energy Independence and Security Act of 2007 Regional Greenhouse Gas Initiative (RGGI) in the Northeast U.S. Lieberman-Warner bill Carbon trading exchanges What s next??? Legal Compliance 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 8

10 Business Driver: Public Perception and the Consumer Corporate Social Responsibility 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 9

11 BIG Issues Pressures: globalization, economy, cost of energy and raw materials Business change More than cost and efficiency Value chain What s the priority? How to measure success? 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 10

12 Manufacturing Projects Redesign products and services Motivate employees, customers, and suppliers Evaluate energy and water consumption Minimize GHG emissions Reuse, Reduce, and Recycle Calculate environmental footprint 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 11

13 BIG Picture Perspective Material selection Sourcing policies Resource consumption and emissions End-of-life postponement and management Customer demand fulfillment External Operations What is IT s role? Internal Operations 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 12

14 Supply Chain - IT for Green People: Your Suppliers Problems Become Your Own Collaboration Guidelines, Service Level Agreements, & KPIs Planet: Productivity, efficiency Profits: Risk management Profitable proximity Matching business objectives: decreasing costs & improving SC decision-making Measuring success: Shared costs, shared benefits 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 13

15 IT s Role: Supply Chain & MES Transportation management Procurement and supplier relationship management Manufacturing execution systems Supply network optimization Transportation evaluations based on impact to the environment, such as the trade-off between fuel consumption and arrival time and fleet optimization In-depth details on recycling-friendly materials, processes, or packaging, as well as supplier environmental scorecards Production-line efficiencies, including energy efficiencies in conveying and sorting Transition to fulfillment execution to manage operations Shifting from low-cost country sourcing to profitable proximity Bigger-picture look at transportation costs and manufacturing & distribution center locations 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 14

16 Product Lifecycle Management: IT for Green People: Collaboration across global development teams Web 2.0 communities for innovation Planet: Design for Sustainability Alternative materials Serviceability, Recycling, Reuse, Disposal Profits: New service revenues Cost Service Green Philosophy Recovering materials and remanufacturing Consumer acceptance vs product diversification balance Measuring success: Component reuse, recycling, increase in innovation success rates 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 15

17 IT s Role: PLM & EAM Product life-cycle management Returns processing Enterprise asset management Guidelines for design for compliance and the environment for making trade-offs in the product life cycle Designing green products Documentation related to recycling and warranty replacement processes internally and at third-party service providers Incorporating green criteria into optimizing assets Tracking energy consumption and creating alerts for preventative maintenance when energy use increases 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 16

18 How to Measure: With Carbon Footprint??? Dow Jones Sustainability Index Global Reporting Initiative Corporate Citizenship & Sustainability Reports Carbon Trading Cap and Trade, Exchanges, etc. Carbon Footprint Calculators Greenhouse Gas Protocol Climate Registry indirect GHG emissions by weight EN18 Initiatives to reduce GHG Global Reporting Initiative (GRI) Sustainability Guidelines Performance Indicators EN3 Direct energy consumption by primary energy source EN6 Initiatives to provide energy-efficient or renewable products and services EU37 Demand-side management programs EU38 MWh saved through demand-side management programs EN16 Total direct and indirect GHG emissions by weight EN18 Initiatives to reduce GHG emissions and reductions achieved EN19 GHG emissions EN20 NOx, SOx, and other significant air emissions EN26 Initiatives to mitigate environmental impacts of products and services EN28 Fines for non-compliance with environmental regulations EN30 Total environmental protection expenditures and investments by type 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 17

19 Wal-Mart If You Can t Measure, You Can t Manage It Supplier value networks $500M investment per year in technologies and innovation Measurable targets 2007 Energy Existing stores 20% more efficient in 7 years New stores 25 30% more efficient in 4 years Fleet 25% more efficient in three years Waste 25%reduction in solid waste in 3 years All private brand packaging improved in 2 years Products 20% of supplier base aligned with our sustainability goals in 3 years Preference given to aligned suppliers in 2 years 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 18

20 Praxair Reduce greenhouse gas emissions by 8% and water usage by 10% over 10 years Satisfy increasing demand during high capacity utilization rates requiring older less efficient facilities and new LNG plant startups Approach Challenge Define supplier expectations re Praxair environmental and materials handling policies Minimize fuel consumption of distribution fleet Improve energy efficiency of systems and processes Add incremental production capacity in local markets to improve overall efficiency and reduce transportation costs Market Green Technologies: 2/3 annual revenue from technologies that can reduce customer s environmental footprint Role of Technology Analytic programs to evaluate the aerodynamic performance of compressors and expansion turbines Logistics system to balance customer service and minimizing miles driven to reduce fuel consumption, air emissions, and operating costs Advanced control systems to optimize production processes 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 19

21 Essential Guidance Take the easy wins. Rethink your business model. Make it easy for your customers to go green. Don t change your ROI requirements for green operations, products, and services, BUT consider the big picture. Reduce and reuse are the first steps, then comes recycling. Green Products & Services 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 20

22 Essential Guidance Continued Make public commitments, including your targets, and report on your progress. Ask for participation from employees and suppliers. Take advantage of government programs and your peer group. Shift from qualitative to quantitative in goals, performance metrics, opportunities, and more. Green Products & Services 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 21

23 Related Reports and Your Questions Making Sustainability Real Sustainability 1Q08 Update: Introduction and Going Green and IT's Role Aravo Intends to Provide Supply Chain Visibility for Sustainability Efforts Sustainability: Using IT to Support and Benefit from Going Green Worldwide Manufacturing 2008 Top 10 Predictions Kimberly Knickle, Practice Director, Emerging Agenda Kimberly Knickle, Practice Director, Emerging Strategies 2008 Manufacturing Insights, an IDC company. All rights reserved. Slide 22

24 Meet with Kimberly June Progressive Manufacturing Summit & Awards June 10-12, Las Vegas, Nevada Kimberly Knickle, practice director, Emerging Agenda as she participates as a panelist on "Orchestrating Around Trends: Growing Movement for Sustainability" Contact Kira Shapiro to set up your briefing Or call Manufacturing Insights, an IDC company. All rights reserved. Slide 23

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