United States
          Environmental Protection
          Agency
Solid Waste and
Emergency Response
(5302W)
Policy, Economics
& Innovation
(1807T)
EPA100-R-03-005
October 2003
www.epa.gov/
innovation/lean.htm
   Lean Manufacturing  and the Environment:

Research on Advanced Manufacturing Systems and the Environment and
  Recommendations for Leveraging Better Environmental Performance

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ACKNOWLEDGMENTS

This report was prepared for the U.S. Environmental Protection Agency's Office  of Solid Waste and
Emergency Response  (OSWER) and Office  of Policy,  Economics, and Innovation  (OPEI).  Ross  &
Associates Environmental Consulting, Ltd. prepared this report for U.S. EPA under contract to Industrial
Economics, Inc. (U.S. EPA Contract # 68-D9-9018).
DISCLAIMER

The observations articulated in this report and its appendices represent Ross & Associates' interpretation of
the research, case study information, and interviews with lean experts and do not necessarily represent the
opinions of the  organizations or lean experts interviewed or researched as part of this effort.   U.S.
Environmental Protection Agency (EPA) representatives have reviewed and approved this report, but this
does not necessarily constitute EPA endorsement of the observations or recommendations presented in this
report.

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                 Lean Manufacturing and the Environment:
        Research on Advanced Manufacturing Systems and the Environment and
          Recommendations for Leveraging Better Environmental Performance

                                   Table of Contents
Executive Summary	  1

I. Introduction	  6
       A. Purpose 	  6
       B. Project Activities	  7

II. Introduction to Lean Manufacturing  	  8
       A. What is Lean Manufacturing?	  8
       B. What Methods Are Organizations Using to Implement Lean?	  10
       C. Why Do Companies Engage in Lean Manufacturing?  	  14
       D. Who Is Implementing Lean?	  18

III. Key Observations Related to Lean Manufacturing and its Relationship to Environmental Performance
       and the Regulatory System	  21
       Observation 1 	  21
       Observation 2 	  29
       Observation 3 	  33
       Observation 4 	  40

IV. Recommendations	  44
       Recommendation 1  	  44
       Recommendation 2	  45
       Recommendation 3	  46

Bibliography 	  48

Appendix A:  Lean Terms and Definitions  	  51

Appendix B:  Lean Experts and Case Study Companies	  53
       Lean Experts Interviewed	  53
       Companies Addressed by Case Studies  	  53

Appendix C:  Case Study Summaries  	  54
       Apollo Hardwoods Company	  54
       General Motors Corporation	  57
       Goodrich Corporation - Aerostructures Group	  60
       Warner Robins U.S. Air Force Base	  64

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Lean Manufacturing and the Environment	October 2003 | Page 1
Executive Summary

Background

"Lean manufacturing" is a leading manufacturing paradigm being applied in many sectors of the U.S.
economy, where improving product quality, reducing production costs, and being "first to market" and quick
to respond to customer needs are critical to competitiveness and success. Lean principles and methods focus
on creating a continual improvement culture that engages employees in reducing the intensity of time,
materials, and capital necessary for meeting a customer's needs. While lean production's fundamental focus
is on the systematic elimination of non-value added activity and waste from the production process, the
implementation of lean principles and methods also results in improved environmental performance.

The  U.S. Environmental Protection Agency (EPA) sponsored a study on lean manufacturing in 2000 that
included a  series of case studies with the  Boeing  Company to explore the relationship between lean
production  and environmental performance.1 The study found that lean implementation at the Boeing
Company resulted in significant resource  productivity improvements with important environmental
improvement implications. The Boeing case studies also found evidence that some environmentally sensitive
processes, such as painting and chemical treatment, can be more difficult to lean, leaving potential resource
productivity and environmental improvements unrealized. These findings led EPA's Office of Solid Waste
and Emergency Response (OSWER), in partnership with the Office of Policy, Economics, and Innovation
(OPEI), to  pursue new research to examine further the relationship between lean manufacturing and
environmental performance and the  regulatory framework.   The goal of this effort is to help public
environmental agencies understand ways to better  leverage lean manufacturing,  existing government
environmental management programs and initiatives, and regulatory requirements in the hope that even
greater environmental and economic benefits will result.

What is Lean Manufacturing?

In its most basic form, lean manufacturing  is the systematic elimination of waste from all  aspects of an
organization's operations, where waste is viewed as any use or loss of resources that does not lead directly
to creating the product or service a customer wants when they want it.  In many industrial processes, such
non-value added  activity can comprise more than 90 percent of a factory's total activity.2

Nationwide, numerous  companies of varying size  across  multiple industry sectors, primarily in the
manufacturing and service sectors, are implementing  such lean production systems, and experts report that
the rate of lean adoption is accelerating. Companies primarily choose to engage in lean manufacturing for
three reasons: to reduce production resource requirements and costs; to increase customer responsiveness;
and to improve product quality, all which combine to boost company profits and competitiveness.  To help
accomplish these improvements and associated waste reduction, lean involves a fundamental paradigm shift
from conventional "batch and queue" mass production to product-aligned "one-piece flow" pull production.
Whereas "batch and queue" involves mass production of large lots of products in advance based on potential
or predicted customer demands,  a "one-piece flow" system rearranges production activities in a way that
processing steps of different types are conducted immediately adjacent to each other in a continuous flow.
        1 U.S. Environmental Protection Agency. Pursuing Perfection: Case Studies Examining Lean
Manufacturing Strategies, Pollution Prevention, and Environmental Regulatory Management Implications.  U.S.
EPA Contract # 68-W50012 (August 20, 2000).

        2 Simon Caulkin. "Waste Not, Want Not," The Observer (September 2002).

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Lean Manufacturing and the Environment	October 2003 |  Page 2
This shift requires highly controlled processes operated in a well maintained, ordered, and clean environment
that incorporates principles of employee-involved, system-wide, continual improvement. Common methods
used  in  lean manufacturing include:  Kaizen; 5S;  Total  Productive  Maintenance  (TPM);  Cellular
Manufacturing; Just-in-Time Production; Six Sigma; Pre-Production Planning (3P); and Lean Enterprise
Supplier Networks.

Research Observations

Written material research, telephone interviews with "lean experts" from relevant industry, academic, and
non-profit entities, and a series of brief lean case studies generated four main research observations. Key
points are summarizes under each of these observations below.

•      Lean produces an operational and cultural environment that is highly conducive to waste
       minimization and pollution prevention (P2). Lean methods focus on continually improving the
       resource productivity and production efficiency, which frequently translates into less material, less
       capital, less energy, and less  waste per unit of production.  In addition, lean fosters a systemic,
       employee-involved, continual improvement culture that is similar to that encouraged by public
       agencies'  existing voluntary  programs and initiatives, such as those focused on  environmental
       management systems (EMS), waste minimization, pollution prevention, and Design for Environment,
       among  others.   There  is strong evidence that  lean  produces  environmental performance
       improvements that would have had very limited financial or organizational  attractiveness if the
       business case had rested primarily on conventional P2 return on investment factors associated with
       the projects.3  This research indicates that the lean drivers for culture change—substantial
       improvements in profitability and competitiveness by driving down the capital and time intensity of
       production and service processes—are consistently much stronger than the drivers that come through
       the "green door," such as savings from pollution prevention activities and reductions in compliance
       risk and liability.

       This research found that lean implementation efforts create powerful coattails for environmental
       improvement. To the extent that improved environmental outcomes can ride the coattails of lean
       culture  change, there is  a win for business and a win for environmental improvement. Pollution
       prevention may "pay," but when associated with lean implementation efforts, the likelihood that
       pollution prevention will compete rises substantially.

•      Lean can be leveraged to produce more environmental improvement, filling key "blind spots" that
       can arise during lean implementation. Although lean currently produces environmental benefits
       and establishes a systemic, continual improvement-based waste elimination culture, lean methods
       do not explicitly incorporate  environmental performance  considerations, leaving  environmental
       improvement opportunities on the  table.  In  many cases, lean methods have "blind spots" with
       respect to environmental risk  and life-cycle impacts.

       This research identified three key gaps associated with these blind spots, that, if filled, could further
       enhance the environmental improvements resulting from lean implementation. First, lean methods
       do not explicitly identify pollution and environmental risk as "wastes" to target for elimination.
       Second, in many organizations, environmental personnel are not well integrated into operations-
       3 Examples of conventional P2 return on investment factors include reductions in liability, compliance
management costs, waste management costs, material input costs, as well as avoided pollution control equipment.

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Lean Manufacturing and the Environment	October 2003 | Page 3
       based lean implementation efforts, often leading environmental management activities to operate in
       a "parallel universe" to lean implementation efforts. Third, the wealth of information and expertise
       related to waste minimization and pollution prevention that environmental management agencies
       have  assembled over the past two decades is not routinely making it into the hands of lean
       practitioners.

       Despite these gaps, there is evidence that lean provides an excellent platform for incorporating
       environmental management tools such as life-cycle assessment, design-for-environment, and other
       tools designed to reduce environmental risk and life-cycle environmental impacts.

       Lean experiences regulatory "friction " around environmentally-sensitive processes. Where there
       are environmentally-sensitive  manufacturing processes, the  right-sized, flexible,  and mobile
       operating environment sought under lean initiatives can be complex and difficult to implement.
       This research indicates that the number  of environmentally sensitive processes that generate
       complexity and difficulty is relatively small, including:

               •       Chemical point-of-use management;
               •       Chemical treatment;
               •       Metal finishing processes;
               •       Painting and coating; and
               •       Parts cleaning and degreasing.

       "Friction," in the form of uncertainty or delay, typically results where environmental regulations did
       not explicitly contemplate right-sized, mobile production systems or fast-paced, iterative operational
       change.  This results in situations where either environmental performance improvements can be
       constrained, or the risk of potential non-compliance with environmental regulations  is increased.
       Where companies are delayed or deterred from applying lean to environmentally-sensitive processes,
       not only are they less able to address competitive industry pressures, they also do not realize the
       waste reduction benefits  around these processes that typically result from lean implementation.
       Alternatively,  lack  of regulatory precedent  or clarity  can cause even the  most well meaning
       companies to  misinterpret requirements  and experience violations, even where environmental
       improvement has  resulted.  This  research found that regulatory relief is not necessary to address
       these friction areas, but rather that increased clarity around acceptable compliance strategies (and
       regulatory interpretations) for leaning these environmentally-sensitive processes and  increased
       government responsiveness within its administrative activities are likely to reduce this friction.

       Environmental agencies have a window of opportunity to enhance the environmental benefits
       associated with lean. There is a strong and growing network of companies implementing, and
       organizations promoting, lean across the  U.S.   For those companies transitioning into a lean
       production environment, EPA has  a key opportunity  to influence their lean  investments and
       implementation strategies by helping to explicitly establish with  lean methods environmental
       performance considerations and opportunities. Similarly, EPA can build on the educational base of
       lean  support  organizations—non-profits, publishers,  and consulting firms—to  ensure  they
       incorporate environmental considerations into their efforts.

       As several lean experts suggested, efforts to "paint lean green" are not likely to get far with most
       lean practitioners and promoters. Instead, public environmental management agencies will be better
       served by being  at the  table with practitioners and  promoters,  seeking  opportunities  to fit

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Lean Manufacturing and the Environment	October 2003 | Page 4
       environmental considerations and tools, where appropriate, into the context of operations-focused
       lean methods.

Recommendations

The observations gained from this research indicate three overarching recommendations and several potential
actions that the EPA can take to facilitate improved  environmental performance  associated  with lean
implementation.

Recommendation 1:   Work with lean experts to identify and address the environmental "blind spots"
                      that typically arise in lean methods

By addressing the few environmental blind spots and gaps in lean manuals, publications, training, and lean
implementation,  environmental regulatory  agencies  have an  opportunity  to harness even  greater
environmental improvement from industry lean implementation efforts. To address this opportunity, EPA
should consider involving "lean experts" in developing and implementing strategies for raising awareness
among companies of opportunities to achieve further environmental improvements while leaning, and
developing books, fact sheets, and website materials for corporate  environmental managers that articulate
the connection between lean endeavors and environmental improvements. Such materials would articulate
the connection between lean endeavors and environmental improvements, and explain ways in which
additional  environmental  considerations and questions  can potentially be  incorporated  into  lean
manufacturing methods.   For example,  questions could draw  on EPA's substantial pool  of waste
minimization and  P2 methodologies that could be considered in the context of a kaizen rapid process
improvement event (e.g., Does the process have waste streams? If so, what are the pollutants? Can materials
with lower toxicity be used? Can they be reduced or eliminated?).  More specific actions the EPA can take
to facilitate this process include:

       Develop an action plan for raising awareness among companies of opportunities to achieve further
       environmental improvements during lean implementation;
       Partner with lean promoters to  develop and modify lean tools, manuals, training, and conference
       sessions to address environmental performance topics;
       Develop and disseminate resources and tools for environmental practitioners to help them better
       understand lean manufacturing techniques and benefits;
       Develop resources, fact sheets, and website materials that highlight important environmental
       questions and criteria that can be incorporated into lean methods; and
       Conduct explicit outreach  (e.g., materials, conference presentations, workshops) to  corporate
       environment, health, and safety (EHS) managers to raise awareness about techniques they can use
       to integrate environmental considerations into their companies' lean initiatives.

Recommendation 2:   Develop  a  pilot/demonstration program  to encourage  companies who are
                      implementing  lean  to achieve more waste reduction and P2 by  explicitly
                      incorporating environmental considerations and tools into their lean initiatives.

EPA can help build the bridge between lean manufacturing initiatives and environmental management by
assisting companies who are implementing lean to achieve more waste reduction and P2 through the explicit
incorporation of  environmental  considerations  and  tools into  their lean  initiatives.  Beginning  a
pilot/demonstration program with specific companies could open avenues for putting the wealth of pollution
prevention expertise, techniques, and technologies developed in recent decades for driving waste and risk
out of these processes into the hands of lean practitioners who are engaged in  process innovation. By

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Lean Manufacturing and the Environment	October 2003 | Page 5
building such a "bridge," environmental agencies will be better positioned to understand lean implementation
processes and to realize  greater environmental improvement  result from lean initiatives.  Specific
pilot/demonstration activities could include:

        Work with companies to document and disseminate case study examples of companies that have
        successfully integrated environmental activities into lean.  In addition , EPA could  explore and
        highlight case study examples that illustrate how companies have effectively used lean as a platform
        for  implementing  environmentally  sustainable tools  (e.g.,  life-cycle analyses,  Design  for
        Environment);
        Partner with selected industry sectors and associated organizations in which there is large amount
        of lean activity to improve the environmental benefits associated with lean. For example, EPA could
        explore partnership opportunities with the Lean Aerospace Initiative or the Society for Automotive
        Engineers to bridge lean and the environment in these sectors; and
        Expand  individual EPA initiatives,  such as   OSWER's "Greening  Hospitals"  initiative, by
        integrating waste  reduction and product stewardship techniques into the  organizations' lean
        initiatives. This effort could include conducting a pilot project with a hospital  implementing lean,
        designed to integrate waste reduction and product stewardship techniques into its lean initiatives.
        The resulting lessons could then be publicized for the benefit of other hospitals.

Recommendation 3:    Use pilot projects and resulting documentation to clarify specific areas of
                      environmental regulatory uncertainty associated with lean implementation and
                      improve regulatory responsiveness to lean implementation.

This research suggests that public environmental management agencies have  an important opportunity to
align the environmental regulatory system to address key business competitiveness needs in a manner that
improves environmental performance.  Lack of regulatory precedent associated with mobile, "right-sized"
equipment begs  the need for environmental  agencies to articulate acceptable compliance  strategies for
addressing applicable requirements in the lean operating environment.  At the same time,  regulatory
"friction"—cost, delay, uncertainty—can often arise when regulatory "lead  times" (e.g., time to secure
applicability determinations, permits, and approval) slow the fast-paced, iterative operational change that is
typically associated with lean implementation.

Using pilot projects with specific companies, EPA can address specific areas  of environmental regulatory
uncertainty associated with lean implementation as  well as improve regulatory responsiveness to lean
implementation.  EPA can then communicate the results of such endeavors through guidance documents for
companies implementing advanced manufacturing methods that clarify the appropriate regulatory procedures
for leaning environmentally-sensitive processes, and replicable models for reducing the lead times associated
with certain regulatory processes. More specific actions EPA can take to facilitate this process include:

•       Developing guidance on acceptable compliance strategies for implementing lean techniques around
        environmentally sensitive processes (for example, clarifying acceptable approaches for addressing
        RCRA satellite hazardous waste  accumulation requirements in the context of implementing
        chemical point-of-use management systems);
•       Developing acceptable  compliance strategies  and permitting tools  that can accommodate  the
        implementation of mobile, right-sized equipment around environmentally sensitive processes; and
•       Identifying and documenting guidance regarding acceptable strategies for applying lean to other
        environmentally sensitive processes, including painting and metal finishing.

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Lean Manufacturing and the Environment	October 2003 | Page 6


I.   Introduction

A.  Purpose

The U.S. Environmental Protection Agency (EPA) through work in various innovation initiatives with
regulated industries over the past decade has recognized an emerging and very real transformation of the
economic landscape.  Largely, this change has arisen in the context of today's competitive global market,
increasing the pressure on U.S. companies to conceive and deliver products faster, at lower cost, and of better
quality than their competitors. Pioneered by the Toyota Motor Company in Japan in the 1950s, a variety of
advanced manufacturing techniques are increasingly being implemented by U.S. companies across abroad
range of manufacturing and service industry sectors in response to these competitive pressures.  "Lean
manufacturing," which focuses on the systematic elimination of waste, is a leading manufacturing paradigm
of this new economy  and competitive landscape.

In 2000, the U.S. EPA sponsored a study on lean manufacturing that included a series of case studies with
the  Boeing Company.4 The study found that lean implementation at the Boeing  Company resulted in
significant resource productivity improvements with important environmental improvement implications.
Moreover, the continual improvement, waste elimination organizational culture engendered by lean methods
at Boeing closely resembled the organizational culture that environmental agencies have been working
successfully to encourage through the development and promotion of environmental management systems
(EMS), pollution prevention, waste minimization, Design for Environment, and other voluntary initiatives.
At the same time, the Boeing case studies found that certain environmentally sensitive processes, such as
painting and  chemical treatment, can  be  difficult to lean,  leaving potential resource productivity and
environmental improvements unrealized.

EPA's Office of Solid Waste and Emergency Response (OSWER), in partnership with the Office of Policy,
Economics, and Innovation (OPEI), initiated this project to examine further the relationship between lean
manufacturing,  environmental performance, and the environmental regulatory framework.  The goal of this
effort was to help public environmental agencies better understand the environmental implications of lean
manufacturing and to help them adjust environmental management and regulatory initiatives to boost the
environmental and economic benefits of lean initiatives. Through this effort, EPA aimed specifically to:

•      Better understand the transformation occurring in the U.S. economy as companies shift to lean
       production systems as well as the environmental benefits associated with this change;

       Identify opportunities to better align existing public agency pollution prevention and sustainability
       promotion initiatives, programs, and tools to encourage improved environmental performance
       through increased integration with lean production techniques and tools;

•      Understand the potential areas where environmental regulations and requirements, including those
       associated with the Resource Conservation and Recovery Act (RCRA), may impede and/or help
       companies' abilities to implement and optimize lean production systems; and

       Identify opportunities  to improve public agencies' responsiveness to needs associated with
       organizations'  implementation of lean production systems,  while improving  environmental
       performance.
       4 U.S. Environmental Protection Agency. Pursuing Perfection: Case Studies Examining Lean
Manufacturing Strategies, Pollution Prevention, and Environmental Regulatory Management Implications. U.S.
EPA Contract # 68-W50012 (August 20, 2000).

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Lean Manufacturing and the Environment	October 2003 | Page 7
B.  Project Activities

This project sought to address the objectives listed above through a multi-pronged research approach. Key
research activities are summarized below.

       The research included extensive review and analysis of academic, business, news, and internet
       publications addressing lean manufacturing trends, methods, case studies, and results.

•      A series of telephone interviews with "lean experts" from both industry and non-profit entities
       actively involved in promoting, implementing, and studying advanced manufacturing methods were
       conducted to collect information and opinions related to the above-mentioned  objectives (see
       Appendix B for a list of interviews conducted). These interviews provided numerous examples and
       mini-case studies that highlight the relationship between  lean implementation and environmental
       performance. Several of these examples are woven through this report.

       A series of brief case studies were completed to document four organizations' experience with
       implementing lean production systems, and the implications for environmental management and
       performance.  The case studies typically included analyses of publically available information,
       supplemented  in most cases  by telephone  interviews with company representatives or others
       responsible for or familiar with the detailed aspects of lean manufacturing implementation at their
       facilities.5  A  site  visit was also  performed in the case  of Goodrich Corporation.  Case study
       organizations were selected based on information obtained in the review of lean literature and
       recommendations obtained during lean expert interviews, with an attempt to cover a variety of
       different business sectors.  The case studies include: Apollo Hardwoods Company; General Motors
       Corporation; Goodrich Corporation;  and Warner Robins Air Force  Base (see Appendix C for
       summaries of the case studies).

•      The results of this research has been compiled into this report and its attachments.  Section II
       provides  background information on lean manufacturing,  section III  documents  four  key
       observations on the relationship between lean manufacturing and environmental management, and
       section IV discusses recommendations  for EPA and other public  environmental management
       agencies based on the observations from this research.
       5 The Warner Robins Air Force Base case study was assembled based on published interviews with Air
Force officials and articles documenting the base's lean implementation efforts and results.  See Appendix C for
information on the specific information sources.

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Lean Manufacturing and the Environment	October 2003 | Page 8


II.  Introduction  to Lean  Manufacturing

A.  What is Lean Manufacturing?

James Womack, Daniel Jones, and Daniel Roos coined the term "lean production" in their 1990 book The
Machine that Changed the World to describe the manufacturing paradigm established by the Toyota
Production System.6  In  the  1950s, the Toyota Motor Company pioneered a  collection of advanced
manufacturing methods that aimed to minimize the resources it takes for a single product to flow through the
entire production process. Inspired by the waste elimination concepts developed by Henry Ford in the early
1900s, Toyota created an organizational culture focused on the systematic identification and elimination of
all waste from the production process. In the lean context, waste was viewed as any activity that does not
lead directly to  creating the product or service a customer wants when they want it.  In  many industrial
processes, such "non-value added" activity can comprise more than 90 percent of the total activity as a result
of time spent waiting, unnecessary "touches" of the product, overproduction,  wasted  movement, and
inefficient use of raw materials, energy, and other factors.7 Toyota's success from implementing advanced
manufacturing methods has lead hundreds of other companies across numerous industry  sectors to tailor
these advanced production methods to address their operations.  Throughout this report, the term "lean" is
used to describe broadly the implementation of several advanced manufacturing methods.

Lean production typically represents a paradigm shift from conventional "batch and queue," functionally-
aligned mass  production to "one-piece flow," product-aligned pull production. This shift requires highly
controlled processes operated in a well maintained, ordered, and clean operational  setting that incorporates
principles of just-in-time  production and employee-involved,  system-wide, continual improvement.  To
accomplish this, companies employ a variety of advanced manufacturing tools (see profiles of core lean
methods later in  this section) to  lower the time intensity, material intensity, and capital intensity of
production. When companies implement several or all of these lean methods, several outcomes consistently
result:

•      Reduced inventory levels (raw material, work-in-progress, finished product) along with associated
       carrying costs and loss due to damage, spoilage, off-specification, etc;
       Decreased material usage (product inputs, including energy, water, metals, chemicals,  etc.) by
       reducing material requirements and creating less material waste during manufacturing;
•      Optimized equipment (capital equipment utilized for direct production and support purposes) using
       lower capital and  resource-intensive machines to drive down costs;
       Reduced need for factory facilities (physical infrastructure primarily in the form of buildings and
       associated material demands) by driving down the space required for product production;
•      Increased production velocity (the time required to process a product from initial raw material to
       delivery to a consumer) by eliminating process steps, movement, wait times, and downtime;
       Enhanced ^m^action flexibility (the ability to alter or reconfigure products and processes rapidly to
       adjust to customer needs and changing market circumstances) enabling the implementation of a pull
       production, just-in-time oriented system which lowers inventory and capital requirements; and
         James Womack, Daniel Jones, and Daniel Roos.  The Machine That Changed the World (New York:
Simon & Schuster, 1990).

       7 Simon Caulkin. "Waste Not, Want Not," The Observer (September 2002).

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Lean Manufacturing and the Environment
October 2003 | Page 9
       Reduced complexity (complicated products and processes that increase opportunities for variation
       and error) by reducing the number of parts and material types in products, and by eliminating
       unnecessary process steps and equipment with unneeded features.

At the same time, lean implementation consistently fosters changes in organizational culture that exhibit the
following characteristics:

•      A continual  improvement culture focused on identifying and eliminating waste throughout the
       production process;

•      Employee involvement in continual improvement and problem-solving;

•      Operations-based focus of activity and involvement;

•      A metrics-driven operational setting that emphasizes rapid performance feedback and leading
       indicators;

•      Supply chain investment to improve enterprise-wide performance;  and

•      A whole systems view and thinking for optimizing performance.
Lean methods typically target eight types of waste.8 These waste types are listed in Table 1. It is interesting
to note that the "wastes" typically targeted by environmental management agencies, such as non-product
output and raw material wastes, are not explicitly included in the list of manufacturing wastes that lean
practitioners routinely target.

Table 1.  Eight Types of Manufacturing Waste Targeted by Lean Methods
        Waste Type	Examples
Defects
Waiting
Unnecessary Processing
Overproduction
Movement
Inventory
Unused Employee Creativity
Complexity
Production of off-specification products, components or services that result in
scrap, rework, replacement production, inspection, and/or defective materials
Delays associated with stock-outs, lot processing delays, equipment downtime,
capacity bottlenecks
Process steps that are not required to produce the product
Manufacturing items for which there are no orders
Human motions that are unnecessary or straining, and work-in-process (WIP)
transporting long distances
Excess raw material, WIP, or finished goods
Failure to tap employees for process improvement suggestions
More parts, process steps, or time than necessary to meet customer needs
         Productivity Development Team, Just-in-Time for Operators (Portland, Oregon: Productivity Press,
2000)3.

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Lean Manufacturing and the Environment	October 2003 | Page 10
B.  What Methods Are Organizations Using to Implement Lean?

There are numerous methods and tools that organizations use to implement lean production systems. Eight
core lean methods are described briefly below. The methods include:

1.      Kaizen Rapid Improvement Process
2.      5S
3.      Total Productive Maintenance (TPM)
4.      Cellular Manufacturing / One-piece Flow Production Systems
5.      Just-in-time Production / Kanban
6.      Six Sigma
7.      Pre-Production Planning (3P)
8.      Lean Enterprise Supplier Networks

While most of these lean methods are interrelated and can occur concurrently, their implementation is often
sequenced in the order they are presented below. Most organizations begin by implementing lean techniques
in  a particular production area or at a "pilot" facility, and then expand use  of the methods over time.
Companies typically tailor these methods to address their own unique needs and circumstances, although the
methods generally remain similar. In doing so, they may develop their own terminology around the various
methods.  Appendix A includes a glossary of common lean manufacturing terms.

Kaizen Rapid Improvement Process.  Lean production is founded on the idea of kaizen, or continual
improvement. This philosophy implies that small, incremental changes routinely applied and sustained over
a long period result in significant improvements.   Kaizen, or rapid improvement processes, often are
considered to be the 'building block" of all lean production methods, as it is a key method used to foster a
culture of continual improvement and waste elimination. Kaizen focuses on eliminating waste in the targeted
systems and processes of an organization, improving productivity, and achieving sustained continual
improvement. The kaizen  strategy aims to involve workers  from multiple functions and levels  in the
organization in working together to address a problem or improve a particular process. The team uses
analytical techniques, such as Value Stream Mapping, to quickly identify opportunities to eliminate waste
in  a targeted process.  The team works to rapidly implement chosen improvements (often within 72 hours
of initiating the kaizen event), typically focusing on ways that do not involve large capital outlays.  Periodic
follow-up events aim to ensure that the improvements from the kaizen "blitz" are sustained over time.
Kaizen can be used as an implementation tool for most of the other lean methods.

5S. 5 S is a system to reduce waste and optimize productivity through maintaining an orderly workplace and
using visual  cues to achieve more consistent operational results. It derives from the belief that, in the daily
work of a company, routines that maintain organization and orderliness are essential to a smooth and efficient
flow of activities. Implementation of this method "cleans up" and organizes the workplace basically in its
existing configuration, and it is typically the starting point for shop-floor transformation. The 5 S pillars, Sort
(Seiri), Set in Order (Seiton), Shine (Seiso), Standardize (Seiketsu), and Sustain (Shitsuke), provide a
methodology for organizing, cleaning, developing, and sustaining a productive work environment.   5S
encourages  workers to improve the physical  setting of their work and teaches them to reduce waste,
unplanned downtime, and in-process inventory. A typical 5S implementation would result in significant
reductions in the square  footage  of space  needed for  existing operations.  It  also would result  in the
organization of tools and materials into labeled and color coded storage locations, as well as "kits"  that
contain just what is needed to perform a task. 5 S provides the foundation on which other lean methods, such
as  TPM, cellular manufacturing, just-in-time production, and six sigma, can be introduced effectively.

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Total Productive Maintenance (TPM). Total Productive Maintenance (TPM) seeks to engage all levels and
functions in an organization to maximize the overall effectiveness of production equipment. This method
further tunes up existing processes and equipment by reducing mistakes and accidents. Whereas maintenance
departments are the traditional center of preventive maintenance programs, TPM seeks to involve workers
in all departments and levels, from the plant-floor to  senior executives, to ensure effective equipment
operation. Autonomous maintenance, a key aspect of TPM, trains and focuses workers to take care of the
equipment and machines with which they work.  TPM addresses the entire production system lifecycle and
builds a solid, plant-floor based system to prevent accidents, defects, and breakdowns. TPM focuses on
preventing breakdowns (preventive maintenance), "mistake-proofing" equipment (orpoka-yoke) to eliminate
equipment malfunctions and product defects, making maintenance easier (corrective maintenance), designing
and installing equipment that needs little or no maintenance (maintenance prevention), and quickly repairing
equipment after breakdowns occur (breakdown maintenance).  TPM's goal is the total elimination of all
losses, including breakdowns, equipment setup and adjustment losses, idling and minor stoppages, reduced
speed, defects and rework, spills and process upset conditions, and startup and yield losses. The ultimate
goals of TPM are zero equipment breakdowns and zero product defects, which lead to improved utilization
of production assets and plant capacity.

Cellular Manufacturing/One-Piece Flow Systems. In cellular manufacturing, production work stations and
equipment are arranged in a product-aligned sequence that  supports a smooth flow of materials and
components through the production process with minimal transport or delay. Implementation of this lean
method often represents the first major shift in production activity and shop floor configuration, and it is the
key enabler of increased production velocity and flexibility, as well as the reduction of capital requirements,
in the form of excess inventories,  facilities,  and large production  equipment.  Figure A illustrates the
production flow in a conventional batch and queue system, where the process begins with a large batch of
units from the parts supplier. The parts make their way through the various functional departments in large
"lots," until the assembled products eventually are shipped to the customer.
Rather than processing multiple parts before sending them on to the next machine or process step (as is the
case in batch-and-queue, or large-lot production), cellular manufacturing aims to move products through the
C u s to m
6 T
          P irts
         S upp lie i
         S h ip p in g
        R e c e iv in g
  W ire h o u se
C hem ic il
Tre itm e nt
  D ep t.
                                            M illing
                                             D e pt.
                                       E or ing
                                       D ep t.
                                                                              P i in ting
                                                                               D e pt..
                                                                  A s s e m b ly
                                                                    D e pt.
                                     D eb urrin g
                                        D ept.
 Figure A: Functionally-Aligned, Batch and Queue, Mass Production

manufacturing process one-piece at a time, at a rate determined by customer demand (the pull).  Cellular
manufacturing can also provide companies with the flexibility to make quick "changeovers" to vary product
type or features on the production line in response to specific customer demands. This can eliminate the need

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Lean Manufacturing and the Environment
                                 October 2003 | Page 12
for uncertain forecasting as well as the waste associated with unsuccessful forecasting. Figure B illustrates
production in this product-aligned, one-piece flow, pull production approach.
       Culture  Change
     - Continuallmprovement
     Waste Elimination  Culture
          -  M etrics D riven
     -  Supply Chain Investment
        - Operations-Based
      - Employee Involvement
       - W hole System  View
C hemical
Treatm ent
 M achine
  Figure B:  Product-Aligned, One-Piece Flow, Pull Production
Cellular manufacturing methods include specific analytical techniques for assessing current operations and
designing a new cell-based manufacturing layout that will shorten cycle times and changeover times. To
enhance the productivity of the cellular design, an organization must often replace large, high volume
production machines with small, mobile, flexible, "right-sized" machines to fit well in the cell.  Equipment
often must be modified  to stop and signal when a cycle is complete or when problems occur, using a
technique called autonomation (orjidoka).  This transformation often shifts worker responsibilities from
watching a single machine, to managing multiple machines in a production cell. While plant-floor workers
may need to feed or unload pieces at the beginning or end of the process sequence, they are generally freed
to focus on implementing TPM and process improvements. Using this technique, production capacity can
be incrementally increased or decreased by adding or removing production cells.

Just-in-time Production Systems/Kanban.  Just-in-time production,  or JIT, and cellular manufacturing are
closely related, as a cellular production  layout is  typically a prerequisite for  achieving just-in-time
production. JIT leverages the cellular manufacturing layout to reduce significantly inventory and work-in-
process (WIP).  JIT enables  a company to produce the products its customers want, when they want them,
in the amount they want. JIT techniques work to level production, spreading production evenly over time
to foster a smooth flow between processes. Varying the mix of products produced on a single line, often
referred to as shish-kebab production, provides an effective means for producing the desired production mix
in a smooth manner. JIT frequently relies on the use of physical inventory control cues (or kanban), often
in the form of reusable containers, to signal the need to move or produce new raw materials or components
from the previous process.  Many companies implementing  lean production systems are also requiring
suppliers to deliver components using JIT.  The company signals its suppliers, using computers or delivery
of empty containers, to supply more of a particular component  when they are needed.  The end result is
typically a significant reduction in waste  associated with unnecessary inventory, WIP,  packaging, and
overproduction.

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Six Sigma.  Six Sigma was developed by Motorola in the 1990s, drawing on well-established statistical
quality control techniques and data analysis methods. The term sigma is a Greek alphabet letter used to
describe variability. A sigma quality level serves as an indicator of how often defects are likely to occur in
processes, parts, or products.  A Six Sigma quality level equates to approximately 3.4 defects per million
opportunities, representing high quality and minimal process variability. Six Sigma consists of a set of
structured, data-driven methods for systemically analyzing processes to reduce process variation, which are
sometimes used to support and guide organizational continual improvement activities. Six Sigma's toolbox
of statistical process control and analytical techniques are being used by some companies to assess process
quality and waste areas to which other lean methods can be applied as solutions. Six Sigma is also being used
to further drive productivity and  quality improvements in lean operations.  Not all companies using Six
Sigma methods, however, are  implementing lean manufacturing systems or using other lean methods.  Six
Sigma has evolved among  some  companies to include methods for  implementing and maintaining
performance of process improvements.  The statistical tools of the Six Sigma system are designed to help
an organization correctly diagnose the root causes of performance gaps and variability, and apply the most
appropriate tools and solutions to address those gaps.

Pre-Production Planning (3P). Whereas other lean methods take a product and its core production process
steps and techniques as given, the Pre-Production Planning (3P) focuses on eliminating waste through
"greenfield" product and process  redesign.  3P represents a key pivot point, as organizations move beyond
a focus on efficiency to incorporate effectiveness in meeting customer needs.  Lean experts typically view
3P as one of the most  powerful and transformative advanced manufacturing tools, and it is typically only
used by organizations  that have experience implementing other lean methods.  3P seeks to meet customer
requirements by starting with a clean product development slate to rapidly create and test potential product
and process designs that require the least time, material, and capital resources. This method typically
engages a diverse group of employees (and at times product customers) in a week-long creative process to
identify several alternative ways to meet the customer's needs using different product or process designs.
Participants seek to identify the key activities required to produce a product (e.g., shaving wood for veneer,
attaching an airplane engine to the wing), and then look for examples of how these activities are performed
in nature.  Promising designs  are quickly "mocked up" to test their feasibility, and are evaluated on their
ability to satisfy criteria along several  dimensions (e.g., capital cost, production cost, quality, time). 3P
typically results in products that are less complex, easier to manufacture (often referred to as "design for
manufacturability"), and easier to use and maintain. 3P can also design production processes that eliminate
multiple process steps and that utilize homemade, right-sized equipment that better meet production needs.

Lean Enterprise Supplier Networks. To fully realize the benefits of implementing advanced manufacturing
systems, many companies are working more aggressively with other companies in their supply chain to
encourage and facilitate broader adoption of lean methods. Lean enterprise supplier networks aim to deliver
products of the right design and quantity at the right place and time, resulting in shared cost, quality, and
waste reduction benefits.  As companies  move to just-in-time  production, the implications of supply
disruptions due to poor quality, poor planning, or unplanned downtime become more acute. Some suppliers
may increase their own inventories to meet their customer' s j ust-in-time needs, merely shifting inventorying
carrying costs upstream  in the supply chain. At the same time, some lean companies are finding value in
tapping supplier knowledge and  experience by collaborating with key suppliers to design components,
instead of sending out specifications and procuring from the low bidder.  It is estimated that many companies
can only lean operations by 25 to 30 percent if suppliers and customer firms are not similarly leaned.9  Some
larger companies have initiated lean enterprise supply chain activities to support the implementation of lean
         Womack, Jones, and Roos, 1990, 266.

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Lean Manufacturing and the Environment	October 2003 | Page 14
methods throughout their supply chain. Specific techniques can include training, technical assistance, annual
supply chain meetings, site visits,  employee  exchanges, and joint projects (e.g., product or component
design).

C.  Why Do Companies Engage In Lean Manufacturing?

Fundamentally, organizations implement lean to achieve the highest quality product or service at the lowest
possible cost with maximum customer responsiveness. To accomplish this, they typically focus on three key
goals:
       Reducing product or service production resource requirements in the form of capital and materials;
•      Increasing manufacturing velocity and flexibility; and
       Improving first time product quality.

Economic and competitiveness factors related to customer responsiveness, product quality, and cost are
increasingly driving U.S.  companies  to implement lean  production systems.  Global competition is
intensifying across nearly every business sector. The integration of financial markets, reductions in trade
barriers, and increased industrial development in Asia and other regions where production costs are often
lower are eroding barriers to competition.10 In this context, being "first to market" and quick to respond to
customer needs, improving product quality, and reducing production costs (to help maintain or lower prices)
are critical to success. Lean production, with its fundamental focus on the systematic elimination of waste,
has quickly emerged as a prominent strategy  for meeting  these objectives and  maintaining  business
competitiveness.

C.I  Production Resource Requirements and Costs.  Advanced manufacturing methods can improve a
company's profitability by reducing production costs in a variety of ways.11

Lean reduces the amount of cash tied up in inventory and "work in process" (WIP) and shortens the time
between when a company purchases  inputs and receives  payment for product  or  service delivery.
        10 Numerous books written in recent years document the competitive pressures arising from globalization
and other factors.  See: Thomas Friedman., The Lexus and the Olive Tree: Understanding Globalization (Thorndike,
ME: Thorndike Press, 1999);  and Gary Hamel and C.K. Prahalad. Competing for the Future (Boston: Harvard
Business Review Press, 1996).

        11 Most of the available evidence on the benefits of lean production systems comes in the form of case
studies and anecdotes assembled by various companies, organizations, academics, and authors investigating lean.
Looking across multiple sources, there appears to be robust patterns in the levels of performance improvements that
are typically possible through lean implementation (e.g., resource productivity improvements ranging from 30 to 70
percent).  The few empirical studies that have been conducted on the economic benefits of lean appear to support the
case study evidence. For example, a study of 249 small automotive part suppliers used statistical techniques to test
the relationship between lean manufacturing and  production performance outcomes.  The study, based on a 1992
survey by the Midwest Manufacturing Technology Center, found that key facets of lean production (i.e., a lean
supplier system; a high involvement, team-based  organization; a built-in quality system; and just-in-time production
systems) are each associated with production performance improvements, as measured  by shopfloor efficiency,
product quality, and machine uptime. The study  also found that firms implementing a combination of just-in-time
production, total productive maintenance, and kaizen-type, team-based continual improvement systems experienced
a multiplier effect, achieving even higher levels of production performance improvement. See Steven F. Rasch.
"Lean Manufacturing Practices at Small and Medium-Sized U.S. Parts Suppliers-Does It Work?" Becoming Lean:
Inside Stories of U.S. Manufacturers (Portland, Oregon: Productivity Press, 1998).

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Lean Manufacturing and the Environment	October 2003 | Page 15
Conventional large-lot mass production methods use a functionally-aligned,12 "batch and queue" approach
where large quantities of parts are produced in batches and wait "in queue" until the lot moves to the next
process step.  This results in the need to hold significant stocks of inventory that in turn takes up floor space
and increases energy requirements and costs. Lean manufacturing realigns the production process to focus
on products, grouping all of the machines and conducting all of the process steps in a compact "cell" that
"flows" one part through the process as it is needed.  This realignment substantially reduces inventory
requirements and associated factory  floor and  energy needs with the result that the capital intensity of
production has been substantially reduced. As one company representative quipped, "We suddenly realized
we're working in a factory, not a warehouse!" Lean implementation also increases "inventory turns" (the
number of times per year a facility's inventory turns over), reducing the probability of product deterioration
or damage, minimizing the potential for overproduction and obsolescence, releasing cash for other productive
uses, further driving down inventory stock requirements, and reducing the overall time intensity of product
production or service delivery.

For example, implementation of lean methods at Warner Robins U.S. Air Force Base in Georgia has reduced
the number of days it takes to overhaul a C-5 transport plane from approximately 360 to 260. This has major
resource requirement implications for the Air Force, since the 25 to 30 percent reduction in maintenance time
means that the Air Force needs to procure fewer total planes (i.e., maintain a lower inventory of planes) to
maintain a target number of planes in service. According to one Air Force official, "If we can achieve even
half of the typical lean results, we would expect to be able to cut the programmed depot maintenance time
of our systems [e.g., planes] in half. This would put up to 10 percent more of our aircraft in flying status at
any given time."13  As a result, the  total cost of maintaining a given in-service aircraft target level is
substantially reduced.

As another example of WIP reductions and competitiveness, advanced manufacturing systems have enabled
Maytag Corporation's higher-priced, water-saving washing machines to compete against  lower-priced
competitors.  Maytag's Jackson, Tennessee dishwasher  plant cut work in process by 60 percent, reduced
space needs by 43,000 square feet, and improved quality by 55 percent, while increasing capacity by 50
percent and enabling the plant to quickly switch the production mix to respond to department store demand
for various models.14

Lean lowers the capital equipment requirements of production, and makes it less costly to increase or
decrease production levels or to alter the mix of products produced. Underthe conventional mass production
approach, companies often purchased large pieces of equipment with sufficient capacity to meet peak
forecasted demand levels, plus some. Large machines could then be used to perform the same function (e.g.,
milling) on different part types, using (often complicated and time consuming) tooling changes. Functional
departments established in this  manner then look to minimize marginal cost by processing large lots of
identical parts over longer time frames.  This can fully utilize the capacity of the machines and minimizes
tooling changes, but comes at the expense of requiring large inventories, substantial added overall production
time, limited flexibility, and the need to predict demand accurately or bear the expense of overproduction.
        12 "Functionally-aligned" refers to the conventional production approach which establishes processing
departments such as milling, heat treating, etc. that requires parts to move from department to department.

        13 Interview with Gary Waggoner, Director of Lean Programs, Air Force Research Laboratory's Materials
and Manufacturing Directorate, as published in "Lean Becomes a Basic Pillar In Air Force Manufacturing
Technology  Program," Manufacturing News (January 15, 2002).

        14 The Economist, July 14,2001,65.

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Lean Manufacturing and the Environment	October 2003 | Page 16
Lean methods, on the other hand, focus on developing smaller, "right-sized" equipment specifically tailored
to a particular product or product line that meet current needs in a manner that is significantly less capital
intensive and more flexible.

For example, Apollo Hardwoods, a veneer manufacturing start-up company, is using lean methods to create
"right-sized" equipment that is approximately one half of the capital intensity  of the typical large-scale
equipment used in the industry today.  Companies such as the Boeing Company,  Goodrich Aerospace, and
Hon Industries have developed small, mobile equipment (e.g., parts washers, paint booths, presses, drying
ovens) that cost a fraction of the cost of conventional large equipment, and that can be readily duplicated to
meet increases in demand.  Under a conventional mass  production approach with large equipment, it is
typically not possible to add new capacity in small increments and without major new investment in capital
equipment.

Lean substantially reduces the facility footprint of production. The realignment of production around
products and into cells using right-sized equipment—which in turn drives inventory requirements and
movement out of the production system—has allowed companies to reduce by as much as 50 percent their
floor space requirements. This can significantly reduce facility capital costs (e.g., property, buildings), as
well as facility operating expenses (e.g., maintenance, utilities).  For example, Goodrich Aerostructures
consolidated the manufacturing operations at its Chula Vista, California facility into two buildings from five
while doubling output as a result of implementing lean methods.  This decreased overall facility space needs
by 50 percent, enabling the facility to  sell property to the city for waterfront  redevelopment.15

Lean reduces operating costs associated with material use, movement, equipment downtime, rework, and
other factors.  Lean tools  and methods seek the optimization of any given manufacturing, service, or
administrative process, enabling companies to drive down operating costs and time requirements.  Material
use reductions result from lean methods that address inventory control, point- of-use material management,
and workplace organization; movement reductions result from production process realignment; equipment
downtime reductions result from the implementation of Total Productive Maintenance (TPM) activities that
prevent errors  and malfunctions; and  defects and rework  reductions result  from "mistake-proofing"
equipment and processes. These individual tools and methods are embedded in "whole systems thinking"
that can allow paying higher prices—for materials, for example—if it reduces overall system costs due to
efficiency gains in other areas such as time, mistakes, and material loss. For example, this thinking may lead
a company to pay more to have smaller amounts of chemicals delivered in "right-sized" containers rather than
buying bulk chemicals at cheaper prices. Optimizing processes and reducing operating costs can occur both
before  major conversion to product-aligned, cellular manufacturing or after.  The combined impact of
reducing various operating costs using lean tools and continual improvement efforts can produce  large
dividends. For example, applying lean methods to a small number of maintenance operations at Robins Air
Force Base has saved the Air Force about $8 million.16

C. 2 Velocity and Flexibility.  Lean enables companies to increase substantially the velocity and flexibility
of the manufacturing or service process. These  outcomes produce two critical benefits: reducing the cash
requirements of the process  by shortening the time frames  between material acquisition expenses and
customer payments; and  increasing customer and marketplace responsiveness.   Responsiveness to
       15 Case study interviews with Goodrich Aerostructures Group representatives on October 3, 2002 and
"Aerospace Industry Mimics Toyota," Financial Post, Canada (March 10, 1999).


2001).
16 George Cahlink. "Air Support," Government Executive Magazine, (http://www.govexec.com) (June

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Lean Manufacturing and the Environment	October 2003 | Page 17
marketplace and customer needs, in particular, is a high priority for companies implementing lean. Such
responsiveness involves meeting rapidly changing customer "just-in-time" demands through similarly rapid
product mix changes and increases in manufacturing velocity. Time is often a critical dimension of customer
responsiveness—getting the customer what they want when they want it. To compete successfully, many
companies need to improve continually the time responsiveness both for current products (promptly
delivering products meeting customer specifications) and new products on the horizon (by reducing total
time-to-market for product development and launch).

For example,  global competition, coupled with computer-aided design and advanced manufacturing
techniques, has shrunk the new vehicle development process among leader companies in the automotive
industry from 5 years to as little as 18 months.  Fragmentation of market demand is  expanding the mix of
products, while customers are requesting shorter lead times for new vehicle delivery. Ford, General Motors,
and other car makers are participating in the "3 Day Car" initiative to reduce vehicle lead times from 60 days
to 3. The percentage of "built-to-order" vehicles is also rising, with customers requesting increased variety
in vehicle types and features.  Automotive companies indicate that diversifying product mix, shortening
product lead times, and building to customer orders are key elements of their competitive strategies.17

Lean producers constantly strive to reduce "flow time" (total time to produce one unit of a product), "cycle
time" (time it takes for a machine to perform a single operation), and "lead time" (the total amount of time
it takes to get  an order into the hands of the customer).   In the lean operating environment, optimizing
production around "takt time" (the rate at which each product needs to be completed to meet customer
requirements) becomes a central focus.  As a further example, stiff competition during the 1990s  has lead
many aerospace companies to pursue lean production systems, enabling them to reduce lead times for filling
customer orders and to  shorten the time between outlaying cash for input procurement and collecting cash
upon airplane delivery.  For example, Boeing's 737 airplane production facility in Renton, Washington until
recently utilized three production lines and required more than 22 flow days to assemble an airplane. Upon
collapsing the  three lines to a single, more efficient, continuously moving, one-piece flow assembly line,
Boeing has reduced flow time for the 737 to 15 days and envisions further reductions to as low as 5 days.18

C.3   Product Quality.  Maintaining high and  consistent product  quality is  a  key dimension  of
competitiveness, affecting both product cost and customer loyalty.  Product defects compound production
costs  due to added time  and space for rework and repair, waste materials, and  waste disposal costs.
Recurring delays in product delivery and defects in products or parts can reduce sales or trigger the loss of
lucrative supply contracts to large manufacturers, distributers, or retailers. For example, between 1993 and
1997, Delphi Automotive System's Saginaw Steering Systems plant utilized lean methods to reduce defect
rates from almost 2,000 defective parts per million (ppm) to 75 defective ppm, providing a key factor in
General Motors' decision to continue sourcing steering components from Delphi.19
        17 "A Long March: Special Report on Mass Customization," The Economist, July 14, 2001, 63-65. Also
see Mickey Howard and Andrew Graves. "Painting the SDaycar: Developing a new Approach to Automotive
Coatings and Lean Manufacture," SAE Technical Paper Series (Warrendale, PA: SAE International, 2001).

        18 James Wallace. "Just 15 Days to Assemble a 737," Seattle Post-Intelligencer (May 24, 2002) Cl, and
discussions with Boeing Company representatives on June 21, 2002 and October 23, 2002.

        19 Daniel Woolson and Mike Husar.  "Transforming a Plant to Lean in a Large, Traditional Company:
Delphi Saginaw Steering Systems, GM" in Jeffrey Liker. Becoming Lean: Inside Stories of U.S. Manufacturers
(Portland, Oregon: Productivity Press, 1998) 121-159.

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Lean Manufacturing and the Environment	October 2003 | Page 18
There are a number of ways that lean production, when compared to conventional large-lot mass production,
can significantly improve product quality. Under conventional "batch and queue" mass production methods,
large quantities of inventory, or "work in process" (WIP), often remain on the factory floor for lengthy
periods of time, increasing the probability of product deterioration or damage.  Defects typically are not
discovered until an entire batch is completed, at which point repair is often time consuming and costly. Lean
production offers several techniques for identifying and addressing product defects at earlier (and less costly)
stages  of the production process. These include: cellular, one-piece flow manufacturing, which enables
employees to quickly stop the production process at the first sign of quality problems; kaizen-type rapid
improvement processes for rapidly  involving cross-functional teams to  identify and  solve production
problems; Six Sigma, a statistical process for controlling product defect rates; poka-yoke, which involves
"mistake-proofing" equipment and processes; and total productive maintenance, a procedure that helps
ensure optimal performance of equipment.

D.  Who Is Implementing Lean?

Numerous companies of varying size across multiple industry sectors are implementing lean production
systems, and the rate of lean adoption is increasing. Implementation of lean production systems in the U.S.
has increased significantly since being introduced in the U.S. in the 1980s. Interest in lean began in the U.S.
automotive sector, but has spread rapidly to other sectors such as  aerospace, appliance manufacturing,
electronics, sporting goods, and general manufacturing, and even in service sectors such as health care and
banking.  Some lean experts indicate that between 30 and 40 percent of all U.S. manufacturers claim to have
begun  implementing  lean methods, with approximately five percent aggressively implementing multiple
advanced manufacturing tools modeled on the Toyota Production System.20  While a few companies in heavy
industries such as steelmaking, primary metals, chemical production, and petroleum refining are adopting
lean principles and methods such as kaizen and 5S, these sectors have not had areas of significant lean
implementation activity to date.  Much of the current lean implementation activity is focused in the
manufacturing and service sectors.

Lean experts interviewed for this research suggested that the economic downturn in recent years has
prompted  an increasing number of organizations to look to advanced manufacturing techniques to remain
competitive.  Intensifying competitiveness and supply chain pressures are leading increasing numbers of
small and medium-sized companies  to implement lean systems.  This coincides with the expansion of
government, university, and not-for-profit technical assistance programs providing training and support for
implementation of lean production systems. The transition to lean production systems frequently takes an
organization from five to ten years (or more), and the degree of lean implementation can vary significantly
among facilities across a company.

Implementation of lean production systems in the U.S. began in the  early to mid-1980s in the automotive
sector. Strong productivity and quality performance among Japanese auto manufacturers such as Toyota and
Honda raised the competitiveness bar, prompting U.S. companies to investigate the Toyota Production
System. The New United Motor Manufacturing Inc. (NUMMI), a joint venture initiated in 1984 between
the classic mass producer, General Motors (GM), and the classic lean producer, Toyota, was one of the first
plants to pioneer the implementation of lean production systems in the U.S. Compared to a conventional GM
plant, NUMMI was able to cut assembly hours per car from 31 to 19 and assembly defects per 100 cars from
       20 Rick Harris, President of Harris Lean Systems, Inc. as quoted in Austin Weber. "Lean Machines,"
Assembly Magazine (March 2002). Also based on interviews with lean experts.

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Lean Manufacturing and the Environment	October 2003 | Page 19
135 to45.21 By the early 1990s, the success of NUMMI, among other factors, made it increasingly clear to
the "big three"auto manufacturers (DaimlerChrysler, GM, and Ford) that lean manufacturing offered potent
productivity, product quality, and profitability advantages over conventional mass production, batch and
queue systems. By 1997, the "big three" indicated that they intended to implement their own lean systems
across all of their manufacturing operations.22

In the 1990s, numerous small, medium, and large suppliers of automotive components began the transition
to lean production systems. As auto assemblers moved towards just-in-time production, their expectations
for improved responsiveness, quality, and cost from suppliers also evolved. Some companies indicated that
they would not continue to pay the  costs associated with their suppliers' carrying  large inventories.
Increasing numbers of automotive suppliers view lean production  systems as the key to meeting these
evolving cost, quality, and responsiveness expectations and to improving profitability. In some cases, large
auto manufacturers are supporting supplier implementation of lean systems. For example, Toyota established
the Toyota Supplier Support Center in Lexington, Kentucky in 1992 to provide free  assistance to U.S.
companies interested to learn  about lean manufacturing. Large  integrated automotive suppliers such as
Delphi Corporation, Donnelly Corporation, Eaton Corporation, and  Johnson Controls, Inc. are among the
leaders in lean implementation.  Several other medium-sized companies in diverse manufacturing sectors
were early adopters of lean systems.  Companies such  as the Danaher Corporation, Freudenberg-NOK,
Garden  State Tanning, and the  Wiremold Company posted significant productivity,  quality, and cost-
competitiveness improvements.23

During the early-1990s, the aerospace industry stepped up efforts to implement lean production systems. In
1993, the U.S. Air Force, the Massachusetts Institute of Technology, 25 aerospace companies, and labor
unions initiated the Lean Aerospace  Initiative to support lean implementation in the aerospace sector.
Companies such as The Boeing Company, Lockheed Martin, and Raytheon are implementing lean production
systems across many parts of their organizations.  Lean implementation has also grown rapidly among
aerospace parts and components suppliers, such as Goodrich Corporation. The U.S. Air Force has moved
aggressively in recent years to implement lean production methods throughout its operations, from Air
Logistics Centers to contractor manufacturing and maintenance operations.24

Hundreds of other companies across multiple industry sectors are implementing lean production systems to
varying degrees. Leader companies in lean implementation have emerged in numerous industry sectors, from
Alcoa in metal processing to the Maytag Corporation in  appliance manufacturing. Evidence of increasing
business interest in and adoption of lean manufacturing can be  found in the rapidly increasing rates of
company participation and membership in lean networks and organizations.

•       The Northwest Lean Manufacturing Network (NWLEAN)  provides training and on-line forums
       through which lean practitioners can share lean  experiences, knowledge, and practices. There are
       over 5,100 members of NWLEAN, representing organizations in diverse industry sectors including
       21 Womack, Jones, and Roos, 1990, 83.

       22 Jeffrey Liker, 1998,6.

       23 See Womack, Jones, and Roos, 1990 and Jeffrey Liker, 1998 for discussions and case studies of early
lean implementation in the U.S.

       24 Interview with Gary Waggoner, Manufacturing News, January 15, 2002.

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Lean Manufacturing and the Environment	October 2003 | Page 20
       automotive, aerospace, furniture, healthcare, luxury goods, metal processing, paper products, and
       sporting goods.25

•      The  Shingo Prize for Excellence  in  Manufacturing  awards companies that excel in lean
       manufacturing.   Dubbed "the Nobel prize for manufacturing excellence" by Business  Week
       magazine, applications for the prize have increased between 40 to 60 percent each year over the past
       several years. Past award recipients come from small, medium, and large manufacturers in industry
       sectors including aerospace, automotive, chemical processing, construction equipment, electronics,
       furniture, medical equipment, and metal processing.26

Interviews indicate that lean production methods have made fewer inroads in industrial sectors and processes
that  have very large-scale, fixed capital assets,  such as primary metals,  foundries,  bulk chemical
manufacturing, and  petroleum refining.   Lean experts suggested that advanced manufacturing tool
implementation in these sectors, where practiced, focus on work practice standardization (e.g., 5S, standard
work, visual controls) and equipment effectiveness (e.g., TPM). The interviews and case studies conducted
for this research did not identify sufficient information to understand potential barriers to applying fully lean
techniques to these industry sectors and processes.

Recently, companies in service industries such as banking and health care have begun to adopt lean methods
to reduce waste in service delivery and administrative processes and to more efficiently meet customer needs.
For  example, several hospitals  across the  Pacific Northwest  are  applying  lean  methods to hospital
management, addressing processes such as  supply inventory management, instrument sterilization and
surgery prep, medical waste management, and patient appointment scheduling. For example, as part of a
four-year strategic plan, Virginia Mason Hospital  in Seattle, Washington has dedicated itself to  "lean
thinking," applying lean production techniques to its healthcare administration operations. Virginia Mason
is evaluating everything from how long a patient waits for an appointment to the amount of paper used in
offices and waiting  rooms to identify opportunities for minimizing "waste" (e.g., waiting, materials,
inventory, movement). In 2002, Virginia Mason's top 30 executives attended a two-week training session
in Japan on lean production methods.27
       25 Northwest Lean Manufacturing Network (NWLEAN), http://www.nwlean.net, September 1, 2003.

       26 See http://www.shingoprize.org

       27 Lisa Heyamoto. "Hospital on Cost-Cutting Mission Adds Trip to Japan." Seattle Times (June 6, 2002).

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Lean Manufacturing and the Environment	October 2003 | Page 21


III.     Key  Observations   Related   to   Lean   Manufacturing   and   its
Relationship to Environmental Performance and the Regulatory System

Observation 1:  Lean produces an operational and cultural environment highly conducive
to waste minimization and pollution prevention

Atthe heart of successful lean implementation efforts lies an operations-based, employee-involved, continual
improvement-focused waste elimination culture. While environmental wastes (e.g., solid waste, hazardous
wastes,  air emissions, wastewater discharges) are seldom  the explicit targets of or drivers for lean
implementation efforts, case study and empirical evidence shows that the environmental benefits resulting
from lean initiatives are typically substantial. The business case for undertaking lean projects—substantially
lowering the capital and time intensity of producing products and services that meet customer  needs—is
frequently tied to "flow and linkage." Although not explicitly targeted, environmental benefits are embedded
in creating this smooth and rapid flow  of products through the production process with minimal defects,
inventory, downtime, and wasted movement. For example, reducing defects eliminates the environmental
impacts associated with the materials and processing used to create the defective product, as well as the
waste and emissions stemming from reworking or disposing of the defective products.  Similarly, reducing
inventory and converting to a cellular manufacturing layout lessen the facility space requirements, along with
water, energy, and material use associated with heating, cooling, lighting, and maintaining the building. The
cumulative effect makes lean manufacturing a powerful  vehicle for reducing the overall environmental
footprint of manufacturing and business operations, while creating an engine for sustained and continual
environmental improvement.

Fostering a Continual Improvement, Waste Elimination Organizational Culture

Over the past twenty years, public environmental regulatory  agencies have worked to promote waste
minimization, pollution prevention, and sustainability through environmental management systems (EMS),
voluntary partnerships,  technical assistance, tools and guidance,  and  pollution prevention planning
requirements. A common theme emerges when one looks across such federal, state, and local initiatives: to
make sustained environmental improvement progress that  moves  beyond the "low-hanging  fruit," an
organization must create a continual improvement-focused waste elimination culture. Common elements of
this organizational culture, as identified by public agency EMS and pollution prevention guidance, include:

•      A systemic approach to continual improvement;

       A systemic and on-going effort to identify, evaluate, and eliminate waste and environmental impacts
       that is embraced and implemented by operations personnel,

•      Environmental and pollution prevention metrics that  provide performance feedback; and

•      Engagement with the supply chain to improve enterprise-wide performance.


The organizational culture engendered by lean methods, as outlined  earlier in this report and described by
experts in the interviews and case studies for this research, is remarkably similar to the organizational culture
being promoted by public environmental management agencies. Standard work establishes clear procedures
for the proper performance of jobs and tasks, and visual controls reinforce desired procedures and practices;
Kaizen events involve employees from the shop floor in rapid process improvement events to identify and
eliminate waste; 3P taps worker creativity to develop innovative process and product designs that improve
efficiency and effectiveness; and total productive maintenance empowers workers to maintain and improve
operations and equipment in their work areas, preventing breakdowns, malfunctions, and accidents.

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Lean Manufacturing and the Environment	October 2003 |  Page 22
During the interviews, lean experts and implementers consistently pointed to culture change as the most
difficult aspect of lean implementation. Overcoming the inertia, skepticism, and even fear that can inhibit
behavior change is typically the greatest hurdle to creating and sustaining an organizational culture conducive
to lean production and waste elimination. Leadership and organizational need were identified during the
interviews and case studies as two key factors affecting the success of efforts to change organizational
culture. These findings are consistent with the  challenge often identified by environmental experts of
incorporating pollution prevention and waste minimization into an organization's culture in a sustained
manner.28  Similarly, many organizations wrestle with the challenge of "breathing life" into their EMS and
integrating EMS elements and procedures into organizational operations and activities, to avoid the EMS
becoming just a paper pushing exercise.29

Given the difficulty  of creating  and sustaining  an operations-based,  employee-involved,  continual
improvement-focused waste elimination  culture, the observation that lean  implementation is  gaining
momentum among U.S. companies and is creating a similar organizational culture is noteworthy.  Several
lean experts identified a boom in U.S. companies implementing lean systems in recent years, and indicated
that the economic downturn and intensifying global competition are creating compelling reasons for many
companies to attempt the culture change necessary to implement successfully lean methods.  Our research
indicates  that  the  lean drivers  for  culture  change—substantial improvements  in  profitability and
competitiveness by driving down the capital and  time intensity of production and service processes—are
consistently much stronger than the drivers that come through the "green door," such as savings from
pollution prevention activities and reductions in compliance risk and liability.  To the extent that improved
environmental outcomes can ride the coattails of lean culture change, there is a win for business and a win
for environmental improvement.   The  next sections explore  the  actual  relationship  between  lean
implementation and organizational environmental performance.

Establishing the Link Between Lean and Environmental Improvement

Research  for this report indicates that environmental performance is  almost never the objective of lean
initiatives and that the financial contribution to the lean business case of environmental performance
improvements (e.g., less material loss, lower waste management costs, lower liability, reduced regulatory
burden) are often trivial. The benefits associated with driving capital and time out of the production process
are so potent, that other potential benefits such as environmental improvement are rarely necessary to justify
action or even worth quantifying to make the business case.  And yet, lean implementation produces very
real environmental benefits.

Several lean manufacturing experts and company representatives  indicated in the interviews that the
environmental benefits associated with implementation of lean systems are frequently not calculated or
reported by companies. The lean experts cited three reasons to explain the relatively limited availability of
specific company information on environment benefits resulting from lean initiatives.  First, there are
relatively  few forums available for publicly  sharing information on the environmental results of lean
implementation. While some companies include environmental benefits from lean initiatives in their overall
voluntary P2 reporting, many other companies do not publicly share such information to protect competitive
advantages or because they do not see value in voluntarily disclosing it.  As mentioned, most case study
        28 Natural Resources Defense Council, Dow Chemical, et al. Preventing Industrial Pollution at its Source:
A Final Report of the Michigan Source Reduction Initiative (New York: NRDC, 2000).

        29 Howard Brown and Timothy Larson, "Making Business Inte
Managers," Environmental Quality Management 7, no.3 (Spring 1998).
29 Howard Brown and Timothy Larson, "Making Business Integration Work: A Survival Strategy for EHS

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Lean Manufacturing and the Environment	October 2003 | Page 23
examples come from a handful of research projects and profiles of lean award-winning companies. Second,
environmental benefits such as solid and hazardous waste reduction are seldom used to make the business
case for investing in lean systems. As a result, estimating or tracking environmental improvement associated
with lean implementation often does not occur. The business case is instead generally based on factors with
greater impact on profitability, such as reductions in product flow time, inventory carrying costs, and defect
rates, as well as increases in productivity. Essentially, environmental benefits are often ancillary, although
nonetheless environmentally important. Third, in many companies, personnel engaged in implementing lean
systems (e.g., operations,  engineering, R&D)  often operate  in a "parallel universe"  to environmental
personnel.  While both seek to drive waste out of the organization, environmental personnel are not always
aware of a company's lean initiatives or at the table during discussion and assessment of them. Lean experts
suggest that operations personnel are less likely to focus on environmental benefits, or that they are more
likely to consider them under the umbrella of resource productivity improvements.

In the cases where companies do calculate and communicate environmental  benefits associated with lean
implementation,  lean experts indicated that they typically include  only direct benefits (e.g., reductions in
material use, water use, energy use,  and waste generation).  Other less direct environmental  benefits,
including those experienced throughout the product life cycle, are rarely considered:

       Reduced demand for raw materials avoids environmental impacts from their extraction, processing,
       and transport;

•      Higher quality products often have greater longevity, decreasing the frequency of product repair and
       replacement and the associated environmental impacts; and

       Lean design for manufacturability can reduce the number of parts and materials in a product, and
       therefore may make it easier to recycle products or product components.


Despite the findings that organizations rarely undertake lean initiatives for environmental performance
improvement reasons and that the specific environmental benefits are  not frequently tracked, there is
significant and expanding evidence that enhanced  environmental  performance  is resulting from lean
implementation.

Since the mid-1990s, several environmental experts and researchers have identified a strong relationship
between lean manufacturing and environmental improvement, with most basing this finding on a combination
of an analyses of lean principles and case study experience.30 Joseph Romm's 1994 book Lean and Clean:
How to Boost Profits and Productivity by Reducing Pollution recognized the environmental benefits inherent
in the waste elimination philosophies and tools espoused by Henry Ford and, later, the Toyota Production
System. His book provides case study examples of the productivity and environmental improvements that
companies such as Mitsubishi Electric America, Compaq, and Martin Marietta (now Lockheed Martin) have
achieved through the use of lean methods.31 Results such as these have led some, including Paul Hawken,
Amory Lovins, and L. Hunter Lovins in their book, Natural Capitalism, to advocate lean manufacturing as
a strategy that can not only improve substantially the resource productivity of companies, but also reduce
the  ecological footprint of economic activity overall.
       30 SeeSoltero and Waldrip, 2002; Pojasek, 1999; Florida, 1996; Hart, 1997.

         Joseph Romm., Lean and Clean Management: How to Boost Profits and Productivity by Reducing
Pollution (New York: Kodansha International, 1994).

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Lean Manufacturing and the Environment	October 2003 | Page 24
Interest in the relationship between lean and environmental performance has continued to grow in recent
years.  In 1999, the National Institute of Standards and Technology's Manufacturing Extension Partnership
(NIST/MEP), in collaboration  with  the National Environmental Policy Institute (NEPI), launched  an
initiative to raise awareness of this connection between lean manufacturing and environmental performance.
This "Lean & Clean" initiative  focused primarily on small and medium-sized manufacturers in the U.S.,
encouraging the integration of environmental management principles with lean manufacturing approaches.
Policy-level "Lean & Clean Symposiums" were held in Washington, DC in 2000 and 2001, and a white paper
with brief case study examples of the environmental benefits associated with lean implementation was
released with recommendations for  improving the  environmental performance of small and mid-sized
manufacturers.32   Although they  may  not directly reference  lean  manufacturing or  other advanced
manufacturing trends, some recent studies have both examined the reasons why companies are increasingly
viewing proactive  environmental management as good business practice and discussed the public policy
implications of this occurrence.33

There is a growing body of evidence to support the theoretical links between lean production systems and
environmental benefits. Most of this evidence comes in the form of case examples that have been collected
by researchers, published directly by companies, or assembled for lean manufacturing award competitions
such as the Shingo Prize for Manufacturing Excellence .For example, Bridge stone/Fire stone' s Aiken County,
South  Carolina plant produces  passenger and light truck tires.  As  this facility has implemented lean
processes since 2000, they have  seen a reduction in hazardous and solid waste generation of 53 percent and
a decrease  in material scrap of 38 percent.34  Hyde Manufacturing, a Massachusetts tool maker, also
implemented lean systems, which resulted in reduced hazardous waste generation by 93 percent and solid
waste generation by  85 percent.35  The Naugatuck Glass Company in Connecticut cut product lead time,
enhanced equipment longevity,  and improved quality while using  lean and had a 50 percent reduction in
material scrap, a 40 percent decrease in water use, and a 19 percent reduction in energy use.36 In Michigan,
Howard Plating, through implementing lean methods, lowered volatile organic compound (VOC) emissions
by 90 percent, water use by 40 percent, and energy use by 25  percent.37
        32 Key recommendations included: (1) increase investment in pollution prevention technical assistance and
compliance assistance programs, (2) develop partnerships between environmental agencies and manufacturing
extension programs (e.g., NIST-MEP Centers), (3) supply chain relationships can be leveraged to encourage
behavior change, and (4) the financial services sector should be engaged to increase incentives and/or responsiveness
to good environmental performance. See NEPI. Getting to Green Through "Lean and Clean, " White Paper:
Findings and Recommendations of the Lean & Clean Project: Improving the Environmental Performance of Small
and Mid-Sized Manufacturers. Washington, DC: NEPI, (November 6, 2000).

        33 For example, see Dennis Rondinelli. Rethinking U.S. Environmental Protection Policy: Management
Challenges for a New Administration. The PricewaterhouseCoopers Endowment for the Business of Government,
November 2000.

        34 See Shingo Prize 2002 Business Prize Recipients at http://www.shingoprize.org.

        35 National Institute of Standards and Technology's Manufacturing Extension Partnership, Clean
Manufacturing Executive Overview (Washington DC: NIST-MEP, July 2002) CD-ROM.

        36NIST,2002.

        37NIST,2002.

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Lean Manufacturing and the Environment	October 2003 | Page 25
As previously mentioned, the EPA-supported case studies at the Boeing Company in 2000 found significant
environmental benefits associated with Boeing's lean implementation efforts. The Boeing Company has
consistently realized resource  productivity improvements ranging from 30 to  70 percent when lean
production programs are implemented. Boeing's Everett, Washington production facility implemented a lean
chemical point-of-use system to reduce mechanic movement and downtime that also lowered chemical usage
by 12 percent per plane.38 The case studies conducted as part of this research effort also found evidence of
environmental improvement associated with lean implementation efforts, as described in the examples below.

       Goodrich Aerostructures sites in California shifted to lean point-of-use chemical management
       systems to eliminate wasted worker movement and downtime.  As an additional benefit, these shifts
       reduced chemical use and associated hazardous waste generation. Under the lean system, employees
       in many work areas that require chemical primers, bonders, or other substances receive right-sized
       amounts -just what they need to perform their job - in work "kits" or from "water striders" that
       courier materials to the point-of-use. This avoids situations where chemicals are dispensed or mixed
       in quantities greater than needed, which both decreases chemical use and hazardous  waste
       generation.  Goodrich has also worked with suppliers to get just-in-time delivery of chemicals in
       smaller, right-sized containers. This minimizes the chance of chemicals expiring in inventory. One
       lean expert from another company estimated that, prior to lean implementation, 40 percent  of his
       company's hazardous waste generation resulted from chemicals that were never productively used
       (e.g., chemicals  that were mixed in  excess of the quantity needed, chemicals  that expired in
       inventory). Goodrich's point-of-use and just-in-time chemical management system has enabled the
       company to eliminate four 5,000 gallon tanks containing methyl ethyl ketone, sulfuric acid, nitric
       acid, and trichloroethane. This eliminated the potential for large scale spills associated with these
       tanks, as well as the need to  address risk management planning and other chemical management
       requirements for these tanks under Section 112®) of the 1990 Clean Air Act Amendments.

       Using IP, a Pennsylvania company called Apollo Hardwoods has developed an innovative process
       and collection of right-sized machines for manufacturing wood veneer panels for cabinetry that
       require significantly less capital investment in equipment and facilities while enabling the company
       to use lower cost wood in the process. As additional benefits, the new  process and right-sized
       equipment use less energy and conserve forest resources.  A conventional veneer manufacturing
       process typically relies on large pieces of equipment that typically cost several million dollars. For
       example, conventional wood dryers typically cost $1.5 million for a 20 foot by  100 foot oven that
       blows  180 degree forced air on the wood.  These machines typically require 12 foot boards of fine
       wood for slicing, despite  the fact  that veneer panels are cut down to  smaller sizes  for most
       applications such as cabinets and furniture. The equipment developed at Apollo Hardwoods using
       the 3P process simplifies the  flow of material and  improves material yield. By converting the log
       into veneer in single piece flow, yields are improved and scrap is reduced. Through 3P innovations,
       the flow time from log to veneer has been reduced by more than  50 percent. In addition, energy
       consumption has been significantly reduced. (Apollo heats their production plant using natural gas
       rather than using wood scrap - a rather radical departure from the forest products industry norms.)
       Their strategic priority  of converting  logs into finished products  with high yield and rapid flow
       results in the consumption of fewer trees to produce the same amount of product. Apollo's process
       also is well suited to using a wider variety of log grades, which allows the company to use logs that
       are more representative of what a given timber stand offers. This matching of the production process
       to the natural state of the forest also contributes to putting less consumption strain on the forest.
       38 U.S. Environmental Protection Agency, August 20, 2000.

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Lean Manufacturing and the Environment	October 2003 |  Page 26
        General Motors (GM) has implemented lean manufacturing principles and methods throughout many
        parts of the company, including its Saturn automotive manufacturing plant in Spring Hill, Tennessee,
        to  reduce production  costs, lower process  flow time,  and improve  quality.  Environmental
        performance benefits often accompany lean operational improvements. For example, Saturn now
        receives more than 95 percent of its parts in reusable containers as a result of implementing a kanban
        system to support its just-in-time efforts. This system eliminates tons of packaging wastes each year
        and reduces the space, cost, and energy needs of managing such wastes. A new process for molding
        interior plastic parts, designed to reduce process flow time and costs, also eliminated the need for
        painting.  This saved  17 tons per year in air emissions and 258 tons per year  in solid waste.
        Improved "first-time" quality and operational improvements linked to lean production systems
        reduced paint solvent usage at Saturn by 270 tons between 1995 and 1996. Through continual
        improvement efforts, Saturn reduced hazardous waste generation from 9.0 pounds per car in 1992
        to 3.2 pounds per car in 1996.39

        GM's Purchased Input Concept Optimization with Suppliers (PICOS) initiative has helped many GM
        supplier companies to implement lean techniques using technical assistance. Environmental benefits
        typically result from these lean implementation efforts as well.  For example, GM worked with a
        supplier to reduce the flow time and improve the quality of its steering column shroud manufacturing
        operations.  Incorporation of an injection molding step into the manufacturing process eliminated
        the need to  send the parts to an external site for painting.  This  saved the supplier an estimated
        $700,000 per year, while improving quality of the component for GM. The elimination of the time
        consuming painting step had the added benefit of avoiding paint and solvent usage, waste generation
        from overspray and clean-up rags, energy use and emissions from transporting the parts for the
        painting step, and 7 tons per year in air emissions.

Case study findings of environmental benefits stemming from lean implementation efforts are supported by
the relatively few empirical academic research studies performed in the U.S.

•       Research at New York University's Stern School of Business, analyzing 17,499 U.S. facilities from
        1991 to 1996, uncovered empirical evidence demonstrating a positive link between lean production
        practices and  corporate environmental performance.   Specifically, the researchers  found that
        facilities engaging in lean-type quality activities and maintaining low inventory levels generate less
        waste and have "significantly lower total emissions" than facilities that are not, based on analysis
        of Toxic Release Inventory (TRI) data. The researchers report that weighting the results by toxicity
        does not change the findings.40

        Researchers  at the  Rochester Institute  of  Technology,  University of  Pittsburgh, and  the
        Massachusetts Institute of Technology  examined the link between advanced manufacturing and
        environmental performance by focusing specifically on automotive assembly plants in the U.S. and
        Japan. Using statistical analysis and case study techniques, this study found that lean management
        process improvements  contribute to improved production resource efficiency.   For example,
        advanced production methods can result in more efficient use of paints and cleaning solvents for the
        39 Saturn Corporation, Saturn Environmental Report: From the Beginning (Spring Hill, TN: Saturn
Environmental Affairs) 29-30.

        40 Andrew King and Michael Lenox. "Lean and Green? An Empirical Examination of the Relationship
Between Lean Production and Environmental Performance." Forthcoming in Production and Operations
Management (September 13, 2000).

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Lean Manufacturing and the Environment	October 2003 | Page 27
        industry, which decreases air emissions and hazardous waste. The study did, however, find a more
        complex relationship between lean implementation and emissions of volatile organic compounds
        (VOCs). The research suggests that companies implementing advanced manufacturing systems are
        likely to  emphasize pollution  prevention  over control equipment in meeting air emissions
        requirements.  In this study, lean plants reported that 53 percent of their air emission reductions over
        a year were achieved through pollution prevention, compared to less than 37 percent for non-lean
        facilities (which relied more heavily on end-of-pipe pollution control equipment).  This is not
        surprising given lean thinking's focus on eliminating non-value added capital investments. Pollution
        prevention improvements, on the other hand, are typically tied to value-creating operational and
        resource productivity improvements.41

        While both lean and non-lean automotive manufacturers in the study maintained air emissions below
        required levels, the study found  some evidence that increased reliance on  emissions  control
        equipment (instead of pollution prevention) can lead companies to have lower VOC emissions than
        companies implementing lean and emphasizing pollution prevention.  This results when controls
        produce emissions reductions in large blocks, which sometimes  creates larger margins between
        emissions levels and regulatory thresholds. On the other hand, lean implementation efforts may lead
        to greater overall emissions reduction in the longer-term as continual improvement and process
        optimization efforts incrementally lower emissions. Focus on lean implementation and P2 can also
        reduce the need for pollution control equipment and the environmental impacts that are associated
        with building and operating such equipment, such as energy use and criteria pollutant emissions (i.e.,
        in the case of thermal oxidizers). In addition, lean initiatives to  reduce flow time such as the 3-day
        Car initiative  are actively driving research into alternative vehicle  coating technologies (e.g.,
        thermoplastic panels) that do not produce the VOC emissions associated with solvent-borne painting
        and coating operations.42

As more companies move to implement advanced production methods, academic interest in the relationship
between lean implementation and environmental performance is growing, according to researchers contacted
through this project.

Mechanisms for Environmental Improvement Through Lean Implementation

With the expanding evidence consistently demonstrating that lean implementations yield environmental
improvements, it seems appropriate to ask what are the mechanisms by which these improvements are being
achieved.  Conceptually, the link between  lean production and environmental improvement is strong. As
discussed in Section II  of this report, the fundamental objective of lean systems is the systematic elimination
of waste by focusing on production costs, product quality and delivery, and worker involvement. At a whole
systems level, advanced manufacturing methods work to lower the resource intensity necessary to deliver
a product or service to meet customer needs. This means that organizations implementing lean methods
continually seek to reduce the materials, energy, water, space, and equipment needed per unit of production.
Even though environmental endpoints, such as hazardous waste, air emissions, and wastewater discharges,
are frequently not directly identified in the  types of manufacturing wastes targeted by lean initiatives,
improvements in these areas are deeply embedded in the other types of manufacturing wastes. Table 2 lists
        41 Sandra Rothenberg, Frits K. Pil, and James Maxwell. "Lean, Green, and the Quest for Superior
Environmental Performance." Production and Operations Management, 10, no. 3 (Fall 2001).

        42 Mickey Howard and Andrew Graves, 2001, 1-4.

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Lean Manufacturing and the Environment
                                                            October 2003 | Page 28
seven common types of waste that lean works to eliminate, along with the environmental impacts that are
often associated with each of them.
Table 2.        Environmental Impacts Linked with Manufacturing Waste

   Waste Type	Examples	Environmental Impacts
 Defects
Scrap, rework, replacement
production, inspection
Raw materials consumed in making defective products
Defective components require recycling or disposal
More space required for rework and repair,  increasing
energy use for heating, cooling, and lighting
 Waiting
Stock-outs, lot processing
delays, equipment downtime,
capacity bottlenecks
Potential material spoilage or component damage
causing waste
Wasted energy from heating, cooling, and lighting during
production downtime
 Overproduction
Manufacturing items for which
there are no orders
More raw materials consumed in making the unneeded
products
Extra products may spoil or become obsolete requiring
disposal
 Movement
Human motions that are
unnecessary or straining,
carrying work in process (WIP)
long distances, transport
More energy use for transport
Emissions from transport
More space required for WIP movement, increasing
lighting, heating, and cooling demand and energy
consumption
More packaging required to protect components during
movement
 Inventory
Excess raw material, WIP, or
finished goods
More packaging to store work-in-process
Waste from deterioration or damage to stored WIP
More materials needed to replace damaged WIP
More energy used to heat, cool, and light inventory
space
 Complexity
More parts, process steps, or
time than necessary to meet
customer needs
More parts and raw materials consumed per unit of
production
Unnecessary processing increases wastes, energy use,
and emissions
 Unused
 creativity
Lost time, ideas, skills,
improvements, and
suggestions from employees
Fewer suggestions of P2 and waste minimization
opportunities
An analysis of advanced manufacturing methods,  accomplished through  a review  of publications
documenting lean methods supplemented by input from lean experts, reveals multiple ways in which each
of the lean methods has implications for environmental performance. Each of the lean methods examined
for this analysis have multiple ways in which they can produce environmental benefits. While there are a
few cases where lean methods have potential to result in increased environmental risks or impacts, most of
these situations can be mitigated or eliminated through the incorporation of environmental considerations
during method implementation (see discussion under Observation 2).  The results of this  analysis of lean
methods are documented in Appendix B.  These profiles of eight core lean production methods contain
sections  that discuss the range of potential environmental benefits and drawbacks that  can result from
implementation of the methods.

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Lean Manufacturing and the Environment	October 2003 | Page 29
Lean Manufacturing's Coattails for Environmental Improvement

In many cases, it appears that the environmental improvements resulting from lean implementation are
improvements for which there would not likely have been a strong business case in the absence of the lean
initiative.  For example, Goodrich representatives indicated that had the business case for developing
right-sized parts washers, paint  booths, and chemical treatment baths been based on  environmental
improvement factors such as reduced chemical use, hazardous waste generation, and air emissions, they
would not have been undertaken.  In reality, the environmental benefits were not calculated in making the
business case. Improving "flow and linkage" in the production process, and reducing the capital and time
intensity of production, overshadowed other benefits, creating a compelling case for the conversion to a
right-sized, cellular manufacturing environment.  Savings in operational costs, such as reduced chemical or
material use and reduced waste disposal costs, may be significant, but they are significantly smaller than
business benefits achieved from  reduced capital and time intensity of production.  In other words, the
business case for change did not enter through the "green door".

Even in cases where "pollution prevention pays," such projects often have difficulty competing effectively
for limited organization attention and investment resources.  As documented in the Natural Resource Defense
Council's  Report on the Michigan Source Reduction Initiative, even when P2 and waste minimization
projects have very high positive rates of return (e.g., 300 percent) they often are too small in dollar value to
capture organizational attention and resources from other larger and higher priority projects.43

Lean implementation efforts, on the other hand, are typically central to an organization's competitiveness
and operational strategy. Interestingly, in discussions with several case  study company representatives, it
was evident that lean implementation had somewhat altered the process for evaluating and selecting internal
projects. Several of the companies have moved away from traditional project evaluation processes that rely
on calculating a project's return on investment (ROI) and comparing it with a hurdle rate. They indicated
that many  lean implementation projects focused on particular process steps would not compete effectively
on these grounds, since the real benefits arise from the optimization of the overall system's flow and linkage.
This is consistent with Joseph Romm's findings in Lean and Clean Management that conventional project
evaluation techniques often turn  a blind eye to  life-cycle costs or the impacts on the whole production
system. Doug DeVries from Hyde Manufacturing indicated that lower cost equipment and components
frequently have the highest lifecycle costs.44 Instead, lean companies seem to have faith in the ability of their
intense focus on  reducing flow time and eliminating waste to deliver productivity and profitability gains.
The lean operational environment can fundamentally alter the business case for waste minimization and P2,
insofar as they follow on the hefty coattails of improving flow and linkage, and of reducing the eight types
of manufacturing wastes.  If the operational change is already being made, then pollution prevention can
"pay" even more, and, at times, pollution prevention that does not "pay" can be adopted because it
contributes to overall lower systems cost. In effect, lean can help  pollution prevention to better compete.

Observation 2: Lean can be leveraged to produce more environmental improvement, filling
key "blind spots" that can arise during lean implementation

Despite the evidence of significant resource productivity and environmental benefits resulting from lean
implementation efforts, there are  signals that opportunities for additional environmental improvement are
sometimes left untouched. Relative to the environmental performance preferences of public environmental
       43NRDC,2000.
       44Romm, 1994, 158.

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Lean Manufacturing and the Environment
                                           October 2003 | Page 30
management agencies, lean exhibits "blind spots" with regard to environmental risk and product lifecycle
considerations. This research identified three key gaps associated with these blind spots, that, if filled, could
further enhance the environmental improvements resulting from lean implementation. Furthermore, evidence
from the case studies suggests that the marginal effort of explicitly addressing environmental considerations
during lean implementation can be low, particularly when compared with efforts to implement similar
pollution prevention, waste minimization, and "eco-sustainability" activities in isolation and based primarily
on their environmental performance and associated financial benefits. In effect, the complementarity of lean
methods and existing voluntary environmental programs and initiatives, such as pollution prevention, waste
minimization, Design for Environment, gives lean strong coattails for environmental improvement.  In
addition, the systemic, continual improvement-based waste elimination culture engendered by lean methods
appears to create an effective platform to address environmental risk and lifecycle considerations.

Bridging Environmental Blind Spots and Gaps in Lean Methods

Interviews and case studies  indicated  that  lean methods do not typically include  consideration of
environmental risk and lifecycle environmental impacts. As illustrated in Figure C, lean methods have a low
attentiveness to environmental risks—such as the toxicity of substances—in the production process and in
products. While lean implementation often reduces environmental risks (e.g.,  productivity improvements
that reduce chemical use and hazardous waste generation), environmental  risk factors are not routinely
examined by lean methods. Similarly, lean methods do not typically identify or consider the environmental
impacts or costs associated with the extraction of materials used in the manufacturing process, the disposal
of non-product output or waste generated during production, or the use or disposal of the resulting product.

   Figure C. Lean "Blind Spots":  Risk and Lifecycle Impacts
         Extraction;
           Energy
          Materials
         Attraction:
         Knowledge
           Capital
    Key:
         Lulu Ln3-i Manufacturing
         Atentiveness
         High Leai Ivbnufecturing
Transformation Processes:
          Too Lnng
        Too Complex
         Too Sloppy
          Too Risky
                                    _t
  Energy
Inefficiency
 Non-Product
   Output
	1	
                          Product:
                        Too Complex
                      Too Much Material
                      Too Pi sky Material
                        Too Risky Use
 Disposition;
  Destruction
   Disposal
   Dispersal
J  Reuse
1 Recycle
Figure C also highlights several areas in the product or service lifecycle where lean methods do address
characteristics that align with the preferences of public environmental regulatory agencies, such as reducing
energy inefficiency and decreasing the complexity and material in products.

The interviews  and case study research indicate that there are three gaps associated with current lean
implementation initiatives that result from lean methods' lack of attentiveness to environmental risk and

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Lean Manufacturing and the Environment	October 2003 | Page 31
lifecycle considerations. Case study evidence suggests that efforts by public environmental management
agencies to address these gaps are likely to enhance the environmental benefits resulting from lean initiatives.

       First, lean methods do not explicitly identify pollution and environmental risk as "wastes" to target
       for elimination. When one looks at the list of eight common types of manufacturing waste targeted
       by lean methods (see Table 1 in Section II), it is interesting to note that the list does not include the
       types of wastes that are commonly targeted  by environmental management activities.   As
       representatives from case study companies pointed out, lean implementers often think of waste
       somewhat differently from the way environmental regulatory agencies think of waste. Pollution
       endpoints, such as solid and hazardous waste, air emissions, and wastewater discharges, are typically
       not explicitly addressed by lean  initiatives; nor is resource consumption, such as use of materials,
       energy, and water, directly targeted. All of these environmental waste types, however, are often
       embedded in the eight manufacturing waste types. For example, as mentioned previously, reducing
       defects and inventories typically reduces material use, energy consumption, and environmental
       impacts stemming from unnecessary processing.

       Efforts to expand the type of wastes targeted by lean methods to explicitly include pollution and risk
       are likely to have environmental improvement returns.  Several lean experts suggested that by asking
       the right questions at key points during the implementation of lean methods such as kaizen rapid
       improvement processes and 3P design  sessions, organizations  can  leverage pollution and risk
       reductions. For example, a representative from Apollo Hardwoods indicated that 3P events offer a
       good opportunity for designing  environmental pollution and risk out of a production process or
       product. 3P typically involves the development of multiple design approaches that meet customer
       needs while minimizing time, materials, and capital requirements. By also asking for design options
       that eliminate or minimize the use of toxic substances, the use of energy and water, or the generation
       of waste streams, 3P events can unleash creative energy to reduce further environmental impacts and
       the life-cycle costs of managing the process or product. For example, Goodrich Aerostructures
       found that they could meet customer specifications, increase bond strength, and reduce process flow
       time, while eliminating chrome from some of its anodizing process steps.

       Second, in many organizations,  environmental personnel are not well integrated into operations-
       based lean implementation efforts, often leading environmental management activities to operate in
       a "parallel universe" to lean implementation efforts. This appears to be particularly true in the early
       stages of lean implementation, when environmental managers may not be familiar with lean methods
       being adopted by their organization.  As discussed more below, the involvement of environmental
       personnel  in lean  implementation efforts can both reduce the  risk of non-compliance with
       environmental regulations and increase  opportunities for realizing more environmental benefits
       through the more explicit consideration of environmental aspects. For example, representatives from
       General Motors indicated that the company found it beneficial to have personnel involved in their
       PICOS program, which provides technical assistance to suppliers on lean implementation, trained
       and  mentored by  representatives with environmental  management  expertise on how  lean
       improvements impact environmental performance. Similarly, environmental managers at Goodrich
       Aerostructures and the Boeing Company reported that they have worked to become more involved
       in lean implementation  activities  and to utilize lean methods  to implement environmental
       management practices and systems.

       Third,  the  wealth  of information and  expertise related to waste minimization and pollution
       prevention that environmental management agencies have assembled over the  past two decades is
       not routinely making it into the hands of lean practitioners. The interviews revealed situations where
       kaizen  rapid improvement events did not benefit from the  extensive pollution prevention, waste

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Lean Manufacturing and the Environment	October 2003 | Page 32
       minimization, and Design for Environment information available about the targeted industrial
       process or activity. Public environmental agencies and non-profit organizations promoting P2 and
       waste minimization have compiled many specific actions that organizations can take to improve the
       resource productivity and environmental performance of environmentally sensitive processes. The
       interviews suggest that this information does not frequently find its way into the hands of lean
       practitioners, leaving them to reinvent many ideas on their own. For example, rapid improvement
       efforts at one manufacturer to improve yields in a paint process identified several techniques
       commonly promoted by pollution prevention advocates, such as optimizing hanging patterns for
       parts and adjusting spray nozzles to reduce overspray. The interviews suggest that finding effective
       mechanisms  to  get process-specific pollution  prevention and waste minimization ideas and
       techniques into the hands of lean practitioners could help seed lean implementation efforts with ideas
       for both improving resource productivity and environmental performance.

Lean as a Platform for Sustainability

Interestingly, the case studies and interviews suggest that, over time, lean implementation can create an
effective  platform for addressing sustainability objectives, such as eliminating environmental risk and
addressing environmental impacts throughout the product or service lifecycle. After firmly establishing lean
methods and processes in their organizations, several companies have found benefits from closing the gaps
identified above. The initial lean resource productivity (efficiency) drive established organizational cultures
and methods that enabled a smooth transition to what is, in effect, "eco-effectiveness" thinking.45

Once environmental personnel gain familiarity and proficiency with lean methods and processes, there is
evidence that  lean tools can be  used to explicitly address environmental objectives such as waste
minimization and risk reduction. For example, environmental personnel at Goodrich Aerostructures not only
participate  on kaizen teams, they have begun  to lead kaizen events that target specific environmental
endpoints such as hazardous waste generation and measurement.  Similarly, environmental managers at the
Boeing Company have found that the standard work procedures and visual controls implemented under lean
provide an  effective platform  for  integrating procedures  and  information  from the organization's
environmental management system.

Lean implementation can also reduce the marginal effort and cost of implementing sustainability activities,
such as Design for Environment and Extended Producer Responsibility, to eliminate environmental impacts
at the product design stage and to manage products at the end of their productive use. One company found
that its lean implementation activities, including 3P "design for manufacturability" techniques, drove many
environmental impacts out of its production process, while simplifying its product line to a small number of
parts made  from recyclable materials. When  new government environmental procurement guidelines
addressing the company's product line were adopted in one U.S. state, the company teamed with other
companies in its industry to protest the difficulty of meeting the new standards. Much to the company's
surprise, when it assessed its product lines using the new  standard, it found that one fully met the standard,
and the second barely missed meeting the standard due to  formaldehyde off-gassing. The company worked
to address the off-gassing and subsequently landed a multi-year contract with the state that is valued at over
$60 million. This experience has led the company to integrate Design for Environment tools and practices
into its lean design processes. Company executives now see advanced manufacturing and environmental
management tools as  complementary and integral to the company's competitive advantage.
       45 See McDonough and Braungart, 2002, for a discussion of "eco-effectiveness" and how it relates to "eco-
efficiency".

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Lean Manufacturing and the Environment	October 2003 | Page 33
Even if organizations implementing lean production processes naturally evolve to addressing environmental
blind spots and gaps overtime, environmental benefits can be enhanced by both ensuring this occurs and by
shortening the time it takes for integration to occur.

Observation 3:   Lean experiences regulatory friction around environmentally sensitive
processes

The  conversion to a right-sized, flexible, and mobile operating environment, which is often desired by
organizations implementing advanced manufacturing methods, can be complex and difficult to implement
around environmentally sensitive processes.   Such processes, including painting and  metal finishing,
typically involve the use, generation, or release of regulated substances (e.g., toxic chemicals, hazardous
waste, air emissions)  that have the potential to adversely  impact  worker health and  safety and the
environment. When organizations consider applying lean methods to environmentally sensitive processes,
"friction" can arise in the form of regulatory uncertainty or delay. This, in turn, can result in situations where
either the risk of potential non-compliance with environmental regulations is increased, or environmental
performance improvements are constrained. This section explores the interface between lean implementation
and the environmental regulatory framework, with specific focus on requirements underthe Federal Resource
Conservation and Recovery Act (RCRA), the Clean Air Act (CAA), and the Clean Water Act (CWA).

Understanding the  "Friction " That Can Arise Between Lean and Environmental Regulations

"Friction" associated with the environmental regulatory framework can arise in two primary ways during
implementation of advanced manufacturing methods.

First, there can sometimes be confusion or uncertainty over the applicability of certain environmental
regulatory requirements or the acceptability of compliance strategies in the  context of a  cellular
manufacturing environment with right-sized, flexible, and mobile equipment.  In some cases, this can result
from a lack of regulatory precedent for requirements in a lean operating environment.  For example, as
discussed later in this section, there appears to be recurring confusion over acceptable compliance strategies
for satisfying satellite hazardous waste accumulation requirements when implementing a dispersed chemical
point-of-use management system.  For the most part, environmental regulations and relevant guidance
evolved to address conventional mass production processes, where large pieces of equipment are installed
and remain in a fixed location. Right-sized machines, on the other hand, are often built on wheels or easy
to move skids to increase production flexibility. As such, a mobile, right-sized environment, where multiple
small and mobile paint booths and parts degreasers are spread around the plant floor can trigger the need for
new compliance strategies to meet regulatory requirements. The uncertainty surrounding environmental
obligations can be troublesome in the context, for example, of a lean implementation exercise (such as a
kaizen event) where quick factory floor changes may face considerable delay while regulatory obligations
are researched, or where workers may not fully understand how regulatory requirements may be in play due
to certain equipment reconfigurations or modifications.

Second, regulatory time frames can sometimes be poorly aligned with the operational change time frames
needed to implement lean methods.  Lean methods' focus on rapid, continual improvement frequently
necessitates making rapid, and often iterative, operational and equipment changes. Lag in these improvement
time frames can undermine the key drivers for change.  For example, kaizen improvement events typically
depend on making (or "closing out") all changes within one week to achieve the desired productivity
improvements and  sustain momentum.  Situations where a company must  wait weeks for a regulatory
applicability determination or months for a permit, permit modification, or other regulatory action can
conflict with lean implementation initiatives and valuable waste reduction. In such instances, regulatory

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Lean Manufacturing and the Environment	October 2003 |  Page 34
requirements and processes can act as a barrier to systemic, continual improvement efforts that have been
promoted for years as critical to sustained pollution prevention progress.

Discussions with lean experts and case study company representatives indicate that there can be a range of
responses to these two types  of regulatory friction.  Frequently, organizations slow down their  lean
implementation process to accommodate time frames necessary to secure input, approval, or permits from
regulatory agencies.  At the other end of the range, organizations opt to bypass certain environmentally
sensitive processes during lean implementation.  In a few cases, companies have participated in innovation
pilot projects with EPA and state and local agencies to develop regulatory approaches that are better aligned
with the operational and equipment change time frames needed for rapid continual improvement and quick
changeovers. For example, automotive manufacturing plants in Spring Hill, Tennessee (Saturn) and Newark,
Delaware (DaimlerChrysler) have worked with EPA and State permitting authorities to develop Title V air
permits that advance  approve broad categories of operational and equipment changes.46

The  regulatory friction discussed above can have two implications that are likely to be of interest to
environmental regulatory agencies.  First, the friction can increase the likelihood of organizations being out
of compliance with  environmental regulatory  requirements.  This scenario could be  exacerbated at
organizations where  personnel with environmental  regulatory expertise  are not well  integrated  into
operations-based implementation teams.  Second, the friction can lead organizations to delay or not pursue
lean projects around environmentally sensitive processes, even when the lean projects would ultimately result
in environmental improvements, such as reduced hazardous waste generation, air emissions, or wastewater
discharges.

Environmentally Sensitive Processes and Monuments

Research indicates that a relatively limited number of industrial processes have the potential to pose
regulatory challenges for organizations implementing lean systems.  These include:

               Chemical point-of-use management;
               Chemical treatment;
               Metal finishing processes (anodizing, electroplating, passivation, etc.)
               Painting and coating; and
               Parts cleaning and degreasing.

According to lean experts and  company representatives contacted through this research, most regulatory
friction appears to arise around the industrial processes  listed  above.   While  it appears that some
organizations have successfully applied lean methods to some or all of these  processes, others have chosen
not to apply lean techniques around these processes.  Processes that are purposefully excluded from ongoing
advanced manufacturing initiatives are often referred to as "monument" processes. Monument processes
typically cause a break in the product-aligned cellular manufacturing layout, as product components must
leave the one-piece flow production cells to go in batches through the monument process (e.g., paint shop,
chemical treatment area), before returning to the cells for continued processing.
       46 EPA conducted an evaluation of these and other flexible air permits in 2002. See the following websites
for information on this evaluation and the DaimlerChrysler and Saturn flexible air permits:
http://www.epa.gov/ttncaaal/t5/meta/m24005.html; http://www.epa.gov/ttncaaal/t5/meta/m24297.html; and
http://www.epa.gov/ttncaaal/t5/meta/m24902.html.

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Lean Manufacturing and the Environment	October 2003 | Page 35
Lean experts and company representatives were clear to indicate that environmental regulatory factors were
not the only factors that can make leaning of environmentally sensitive processes more complex or difficult.
Depending on the process, other factors such as the capital cost of conversion, availability of (or complexity
of designing) right-sized equipment, OSHA safety requirements, and building and fire codes can also lead
companies to postpone or not undertake lean implementation for monument processes. In addition, they did
not characterize environmental regulatory requirements as barriers to lean implementation, but rather as
factors that can increase the complexity or difficulty of applying lean methods to these processes. The
bottom line, however, is that the industrial processes that environmental management agencies are most
interested in improving are, for a variety of factors, some of the most resistant to leaning. As a result,
substantial performance improvements occur all around these processes while they continue to operate in
a less environmentally friendly manner. The sections below examine the interaction of lean implementation
and environmental regulatory areas in greater detail.

Several lean experts indicated that, over the past few decades, many companies (particularly small and
medium-sized organizations) outsourced environmentally sensitive processes, such as metal finishing and
painting, to avoid dealing with the regulatory and environmental and safety management complexities that
can  accompany  these processes.   Increasingly, companies implementing  lean are  finding that such
outsourcing can substantially lengthen production flow time, leading them to investigate bringing these
processes in-house.  This process of bringing environmentally-sensitive processes back in house can
encounter the challenges discussed above.

RCRA and Lean Implementation

Regulations and requirements under the Federal Resource Conservation and Recovery Act (RCRA), which
addresses the identification, tracking,  and management of solid and hazardous wastes, can result in some
friction when companies are implementing lean principles and methods. While some friction areas, such as
those related to the definition of solid waste or delisting, are not limited to organizations implementing lean
production systems, they can emerge during rapid continual improvement events that seek to  eliminate
various types of waste from a process.  In a  1998 EPA survey of stakeholders, RCRA was deemed "the most
problematic of the major environmental statutes" due primarily to its "cradle to grave" requirement for the
tracking  and treatment of hazardous  wastes, and the definition of solid waste that forms the basis of
determining what substances need to be regulated in such a manner.47  While difficulties surrounding
regulatory interpretations of RCRA have been an issue for the regulated community for some time  (and EPA
is aware of and engaged in efforts to address some of these issues), framing concerns in the context of lean
manufacturing may be a new and valuable reference point to consider. Interviews and case studies have
revealed two primary ways in which RCRA can increase the complexity and difficulty of implementing lean
improvements and reducing waste.

Chemical Point-of-Use and Satellite Accumulation of Hazardous Waste.  The interviews  and case studies
indicated that many companies implementing one-piece flow advanced manufacturing methods move to a
point-of-use system for managing material inputs to a production process, including chemicals and resulting
hazardous wastes. Under point-of-use  systems, chemicals are typically stored at or delivered to the point-of-
use in small quantities, as opposed to conventional batch and queue systems that frequently utilize centralized
chemical disbursement centers. For example, when chemicals are delivered to the point-of-use, they often
come in right-sized containers (e.g., containing just the right amount of the material to do the job) as part of
       47 As quoted in: Environmental Law Institute, Innovation, Cost and Environmental Regulation:
Perspectives on Business Policy and Legal Factors Affecting the Cost of Compliance (Washington D.C.: ELI, May
1999) 11.

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Lean Manufacturing and the Environment	October 2003 | Page 36
a "kit" for performing the job. Hazardous wastes from the job, or unused chemicals, may be placed back in
the kit for collection at the end of a job or shift. While right-sized, point-of-use chemical management
systems can often reduce the amount of chemicals used and waste generated, they typically require
reorganization of the organizations' satellite hazardous waste accumulation and management activities.

Interviews with case study  organization representatives  and lean  experts indicated  that there can be
considerable confusion surrounding the application of RCRA requirements to point-of-use chemical
management. Chemical waste in factories is conventionally stored in central locations; this consolidation
facilitates the identification of hazardous wastes (i.e., the waste designation process) and subsequent waste
management.  While RCRA does allow the accumulation of hazardous chemical waste  in "satellite" areas
"at or near the point of generation [of the waste]," provided such areas are under "the control of the
operator," neither the regulations nor the preamble to the regulations expressly define the terms "at or near
the point of generation" or "under the control of the operator" with reference to the distance from the point
of generation or the level of control required. Therefore, EPA regions (or more typically, authorized state
environmental agencies) evaluate each situation on a case-by-case basis in order to determine if a storage area
qualifies as a satellite accumulation area. While this site-specific flexibility is important to the success of
satellite accumulation approaches, interviews also revealed that the uncertainty (and potential inconsistency
between authorized states) concerning requirements and procedures for satellite accumulation has created
confusion among some organizations implementing point-of-use systems.

This study identified three organizations that have moved to lean, chemical point-of-use systems in their
facilities, and that have engaged in a detailed analyses of hazardous waste  accumulation rules to ensure that
they were comfortable with their interpretations of satellite waste accumulation  requirements.   The
interviews and case study discussions indicated that enhanced predictability regarding acceptable compliance
strategies  in the context of a point-of-use chemical management system would have greatly facilitated this
process. They also suggested that increased clarity or guidance would reduce the likelihood of inconsistent
regulatory interpretations and lessen the risk of non-compliance.

While uncertainty over  acceptable compliance  strategies  for  addressing  satellite  hazardous  waste
accumulation requirements in a lean operating environment was clearly the most significant RCRA-related
area of friction identified by lean experts and implementers, three other areas were also identified.   As
mentioned previously, these other potential areas of regulatory friction—definition of solid waste, delisting,
and RCRA permitting—are not issues that are new or limited to companies implementing lean systems.
Rather, several lean experts indicated that lean implementation can increase the frequency with which these
issues surface, due to lean methods'  emphasis on making rapid changes to optimize production processes.

Definition of Solid Waste, Process Improvement, and Reclamation.  Determining what is and what is not
classified  as a hazardous waste is central to the  RCRA program.  The regulations contain guidelines for
answering this question, as  well as for determining which wastes are exempt  from certain  RCRA
requirements when recycled in an appropriate manner.   Although recycling is encouraged under RCRA,
some recycled materials can still pose a threat to the environment and are therefore not always exempt from
the definition of solid waste and continue to be  regulated.  The decision to exempt a recycled substance
generally is determined by the manner in which the material is recycled, and the ultimate  use of the recycled
material.  This, however, is not always a clear-cut decision, leaving uncertainty as to the regulatory status
of many recycling efforts.  This lack of clarity has the potential to result  in non-compliance situations for
even well-intending manufacturers.

The uncertainty surrounding  the "status" of a given substance (hazardous waste or reclaimed material) can
be particularly troublesome in a lean manufacturing environment that is focused on rapid continual process
improvement.  A by-product can, for example, start out (briefly) as  a waste and then be  reclaimed into a

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Lean Manufacturing and the Environment	October 2003 | Page 37
usable product input that may result in waste or another reusable by-product at the end of the stream.
Similarly, although recycling processes are clearly exempt from RCRA requirements, management leading
up to an actual recycling process may be regulated. Finally, some recycled hazardous wastes remain subject
to certain notable RCRA requirements if they are "used in a manner constituting disposal," that is, used to
make products that will be placed in or on the land as part of their normal use. Determining where recycling
processes begin and  where management is occurring outside of recycling can be difficult, especially for
complex manufacturing processes or systems. This complexity can be exacerbated by the uncertainty of any
given interpretation of what constitutes a "waste" (as opposed to a "by product" or other designation), and
can impair lean implementers' ability to drive waste  out of certain industrial processes.  For example, a
representative from  one  company indicated that reclaiming paint solids and solvents  in paint booths,
identified as a process improvement area during the company's lean implementation efforts, has been
impeded by the RCRA definition of solid waste that treats the substances as hazardous wastes as soon as they
leave the spray guns, thereby requiring both management activities (e.g., inspections and monitoring) and
record keeping activities (e.g., waste tracking) during the time that it takes overspray to be collected in the
both and routed to the reclamation system.

There are two other  areas under RCRA—delisting and permitting—that were identified by several lean
experts and case study company representatives as having potential to affect lean implementation efforts due
to the lead times typically associated with these regulatory processes. It should be noted that specific
instances where these regulatory processes have actually created friction (e.g., uncertainty or delay) during
a lean implementation effort were not found during this research.  Several lean experts suggested, however,
that there are likely  to be ways  to streamline or otherwise reduce the lead times associated with these
regulatory processes without adversely impacting public participation processes, technical  or scientific
review, or environmental protections.

Delisting.  Part of the waste identification approach  under  RCRA  is to list as hazardous wastes the by-
products from certain industrial  processes or other sources. These hazardous waste listings are source
dependent, based on  an assessment by EPA of representative processes or other sources and their wastes,
rather than on case-by-case waste stream testing.  Because of facility-specific changes in raw materials and
process designs, on occasion, wastes from a specific process or source may not exhibit qualities that warrant
their management as hazardous wastes,  even though it remains listed.   In these situations, facility
owners/operators can apply to EPA for a site-specific  delisting of a waste stream.

The delisting process is facility-specific, and the petition containing information about the waste along with
rationale for delisting is initiated by the facility generating the waste in question.  The petition  undergoes
extensive review by  EPA or an  authorized state environmental agency, and is published in the Federal
Register for public review and  comment.  While recent improvements to the delisting process have
dramatically decreased review times, in some situations, delisting can take years to complete  and cost a
company over $100,000.48  Interviews suggest that this potential expense, coupled with the uncertainty
associated with the final outcome (between 1980and 1999, only 13 percent of delisting petitions made were
        48 As quoted in: U.S. Environmental Protection Agency, Office of Solid Waste. RCRA Hazardous Waste
Delisting: The First 20 Years, EPA/530-R-02-014 (Washington DC: US Government Printing Office, June 2002).
See http://www.epa.gov/earthlr6/6pd/rcra c/pd-o/delist.htm for information on various innovations that have been
developed to improve the delisting process.

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Lean Manufacturing and the Environment	October 2003 | Page 38
approved),49 can inhibit efforts to use delisting as a positive step towards eliminating application  of
hazardous waste regulations to materials that do not warrant such controls.

Interviews suggest that lead times and uncertainty associated with delisting can create disincentives for
discovering innovative processes to reduce the hazardous characteristics of wastes. Interviews also suggested
that these issues could be heightened by lean implementation, due to the increased frequency and scope of
process and material changes that is often associated with lean implementation. There may also be instances
where wastes are rendered less hazardous through application of lean techniques, but where the cost, time,
and unpredictability associated with delisting are deemed too cumbersome. Here, lean facilities will continue
to be burdened by a disruption in production processes associated with implementing hazardous waste
regulations, a disruption that can inhibit other waste reduction as traditionally defined by lean.

It should be emphasized that, as with the discussion of satellite accumulation, above, it is not clear whether
the issue with delisting is the actual cost and  lead time associated with the decision making or simply
interviewees fears and perceptions about potential costs and lead times. In recent years, EPA has undertaken
a number of  initiatives to improve  the delisting  process -  perhaps increasing awareness  of these
improvements (rather than additional changes) would be adequate to address the issue.

RCRA Permitting.  Interviews indicate that the lead times that are often associated with obtaining  or
modifying a RCRA permit for  waste treatment, storage, or disposal have potential to delay an organization's
ability to treat, store, or dispose new types of waste. If rapid material changes driven by lean implementation
efforts resulted in the generation of new types of wastes not contemplated in the source's permit, then the
organization may be required to ship the new waste off-site for treatment or disposal, rather than being able
to use existing on-site capabilities. This activity could be less efficient, more costly for the source, and more
risky due to the need to transport the waste to a different site. The interviews and case studies completed
for this research effort did not  yield sufficient evidence to determine the likelihood of this situation actually
occurring or creating friction around lean implementation efforts.

The Clean Air Act and Lean Implementation

The case studies and interviews suggest that potentially the greatest area of environmental regulatory friction
that can arise during lean implementation relates to air permitting under the Clean Air Act. Organizations
implementing advanced manufacturing techniques are typically engaged in making rapid, and often iterative,
changes to processes and equipment. The conversion from a batch and queue mass production layout to a
cellular layout generally entails significant movement of equipment, where production activities are
rearranged so as to link process steps in the order needed to create a continuous, one-piece flow to make the
product.  For example, Goodrich Aerostructures representatives reported that the company used a 5-day
kaizen event to rearrange a 100,000 square foot facility. In addition to the movement of equipment under
such a conversion, new, right-sized, mobile equipment is often introduced to replace larger,  less flexible
equipment.  Such  changes in the location  and type of equipment,  particularly where the  process has
associated air emissions or the  potential to "debottleneck" air emissions elsewhere, can often trigger the need
for a major or minor New Source  Review construction permit and/or a modification to an existing air
operating permit.

In addition to the major operational and equipment changes that often accompany the conversion to cellular
manufacturing, ongoing rapid continual improvement events often identify changes to equipment and
       49 56 percent of petitions were withdrawn; 15 percent denied; and 13 percent remained incomplete or in
process. RCRA Hazardous Waste Delisting: The First 20 Years (June 2002).

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Lean Manufacturing and the Environment	October 2003 | Page 39
equipment location.  In some cases, this may involve an iterative process where the performance changes
from an operational or equipment modification are measured, and based on that information, additional
modifications are made to further optimize the process. In most cases, organizations seek to complete actions
identified during kaizen rapid improvement events within one week. The need to make rapid operational and
equipment changes can also arise when existing product designs are modified or new products are introduced
into the factory for  production.   To accommodate these different rapid change  scenarios, right-sized
equipment is often built on wheels or easy-to-move skids.

Friction often arises due to the time frames that are typically associated with  permitting planned changes,
or modifying permits to accommodate them. New Source Review permitting processes in many jurisdictions
often take from three to nine months, or longer. These changes are typically significantly out of alignment
with the time frames associated with lean implementation efforts, where an organization desires to make the
change within one week.  This results in situations where either environmental performance improvements
are constrained or delayed,  or the risk of potential non-compliance with air permitting requirements is
increased.

The Clean Water Act and Lean Implementation

The interviews  and research for this project did not identify instances where Clean Water Act regulations
and requirements create significant friction for lean implementation. One area surfaced during the interviews
with lean experts, however, that may warrant further investigation by the  EPA.  Several lean  experts
indicated  that,   over  the past few decades, many  small  and  medium-sized companies  outsourced
environmentally sensitive processes, such as metal finishing and painting, to avoid dealing with the
regulatory and environmental and safety management complexities that can  accompany these processes.
Increasingly, companies implementing lean are finding that such  outsourcing can substantially lengthen
production flow time, leading them to investigate bringing these processes in-house. The interviews suggest
that as they contemplate this change, businesses are often not aware of more environmentally friendly
technologies, such as citric acid based passivation as an alternative to nitric acid based passivation,50 that may
reduce wastewater discharge pollutants and volumes. In addition, even right-sized environmentally friendly
technologies may trigger federal effluent limitations (e.g., metal finishing) that require a source-specific
NPDES permit (for direct dischargers) or compliance with categorical standards for indirect dischargers, both
of which involve more rigorous monitoring requirements. Several lean experts suggested that guidance and
other efforts to facilitate the implementation of environmentally friendly technologies in processes such as
metal finishing, painting, parts cleaning and  degreasing, and chemical treatment may aid companies  in
reducing production flow times while improving overall environmental performance.

As the above discussions of the relationship between lean implementation and RCRA, Clean Air Act, and
Clean Water Act requirements highlight, there appear to be two key implications that are likely to be  of
interest to  environmental management agencies.   First, lack of regulatory  precedent or clarity around
acceptable compliance strategies for lean operating environments can increase the risk of non-compliance
        50 Passivation is an industrial process that involves the chemical treatment of stainless steel for the purpose
of enhancing corrosion resistant properties. Traditionally, a nitric-acid bath is the oxidant used, which removes
excess "free iron" contamination from the steel surface, thereby enhancing the steel's chromium-based layer and its
corrosion resistant properties.  A citric acid based alternative is available for some applications (e.g., approved in
1999 for some uses in the aerospace sector per SAE specification guidelines) that is non-toxic, non-corrosive, and
biodegradable. The citric acid based process can occur at room temperature (requiring less energy) and it takes less
time, thereby improving production flow. For a description of one citric acid based passivation technology, see
http://www.stellarsolutions.net.

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Lean Manufacturing and the Environment	October 2003 | Page 40
situations. For both the company and the regulatory agency, uncertainty and friction increases the overall
transaction costs of managing each change in the most environmentally appropriate manner. It is possible,
too, that lack of regulatory precedent or clarity in these areas will cause even the most well meaning
companies to misinterpret requirements and experience violations, even where environmental improvement
has been achieved.  To the extent that environmental regulatory agencies can clarify acceptable compliance
strategies that accommodate lean operating environments and mobile, right-sized processes and equipment,
it is likely that non-compliance situations can be minimized.

Second, environmental regulatory processes that have lead times for providing companies with regulatory
information and determinations or source-specific approval (e.g., permits) that are incompatible with lean
operating environments can delay or deter lean implementation projects. Where companies are delayed or
deterred from leaning environmentally sensitive processes, not only are they less able to address competitive
industry pressures,  but they also do not realize the waste reduction benefits that typically results from lean
implementation.    From an environmental performance  standpoint,  enabling  organizations to lean
environmentally sensitive processes is likely to have the greatest impacts on reducing hazardous waste and
toxic releases. To the extent that environmental regulatory agencies can improve the responsiveness of key
regulatory processes, such as permitting and other approvals and applicability determinations, it is likely that
more environmental improvement will be achieved faster, while increasing the competitiveness  of U.S.
businesses.

Observation 4:  Environmental agencies have a  window of opportunity to enhance the
environmental benefits associated with lean

An assessment of lean implementation trends indicates that public environmental regulatory agencies have
a key window of opportunity over the next few years to both enhance the environmental benefits and reduce
the risk of non-compliance situations resulting from lean implementation. This window of opportunity stems
from both the overall status of lean implementation in the U.S., as well as its status within organizations
pursuing lean methods.  The Recommendations section of this report discusses key opportunity areas that
the EPA might consider to advance environmental improvement through lean manufacturing efforts. When
contemplating potential actions, EPA may want to consider opportunities to partner with organizations
already engaged in promoting and supporting lean implementation among U.S.  companies. A strong and
growing network of organizations and consulting firms are promoting advanced manufacturing principles
and techniques and are  assisting companies to implement them.  This lean manufacturing network has a
shared goal—elimination of waste from business—with the environmental management network promoting
environmental improvement,  waste  minimization, pollution  prevention, Design for Environment, and
sustainability. At present, however, there is very little coordination or collaboration between these networks.

Ripe Timing for Coordination and Collaboration on Lean and Environment

Lean implementation in the U.S. is past the "early adoption" stage and is becoming mainstream in multiple
industry sectors. As previously mentioned, some lean experts indicate that between 30 and 40 percent of all
U.S. manufacturers report to have begun implementing lean methods, with approximately 5 percent well
down the road of implementing multiple advanced manufacturing tools .5' Advanced manufacturing methods
are sufficiently established in the U.S. for public environmental management agencies to take active steps
to  engage with lean practitioners and promoters. As more companies and organizations move to implement
       51 Rick Harris, President of Harris Lean Systems, Inc. as quoted by Austin Weber. "Lean Machines,"
Assembly Magazine (March 2002). Also based on interviews with lean experts (see list of interviewees in Appendix
C).

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Lean Manufacturing and the Environment	October 2003 | Page 41
advanced manufacturing systems, occurrences of the friction described in Observation 3  are likely to
increase.  Failure to address this friction has potential both to  increase the likelihood of regulatory
compliance violations and to discourage or delay organizations from achieving resource productivity and
environmental performance improvements by applying lean methods to environmentally sensitive processes.

At the same time, environmental regulatory agencies have a window of opportunity to work with lean
implementers and promoters to incorporate environmental performance considerations into lean methods,
tools, resources, and training programs.  Small additions to lean methods, such as incorporating questions
or design criteria that encourage teams to identify and consider options to reduce risk and pollution endpoints
during kaizen and 3P events, create opportunities to achieve more environmental improvement faster. The
more time that elapses before this integration occurs, the more environmental improvement opportunities will
be left unrealized. In addition, it may become more challenging to leverage modifications to lean methods
once they have been firmly established in numerous industries and companies and if lean promotion networks
fragment to focus on specific industries or geographical regions. Interviews with lean experts indicate that
the demand for and availability of books, videos, computer tools, and publications on lean production is
rapidly increasing.

An important window of opportunity for enhancing environmental improvements stemming from lean
implementation also relates to the status of lean implementation within organizations. Many companies are
in the early stages of lean implementation and are engaged in a transition that frequently takes from five to
ten years (or more).  At the  point where an organization begins the conversion to a cellular, one-piece flow
process layout, an important window of environmental performance improvement opportunity opens, while
the likelihood that regulatory  friction will emerge increases.  This conversion typically initiates the
acquisition or development of right-sized, mobile equipment and process infrastructure. While interviews
indicate that the capital cost of such equipment is often one-twentieth that of conventional equipment, the
point of investment in new equipment is a crucial time for the economics of pollution prevention and waste
minimization.  During the  investment in new equipment, the marginal cost  of  addressing additional
environmental considerations is likely to be relatively low. The business case for investing in the right-sized
equipment is based on powerful  financial drivers that result from improved process flow and linkage.
Following the investment, the business case for switching to a more environmentally friendly right-sized
machine or lean process approach must rest primarily on the environmental management and regulatory
compliance benefits.  Once  investments have been made, lean companies will likely continue to improve
equipment yield and efficiencies, but new investments whose business cases are primarily based on
environmental benefits are much less likely to be undertaken.

For example, a company considering a conversion to a right-sized passivation process may not be aware of
the citric acid based wash that results in significantly less environmental impact compared to nitric acid
based solutions.  By investing in a right-sized nitric acid based unit, they miss a potential opportunity for
additional environmental  improvement  while  increasing the marginal  cost  of moving  to a more
environmentally friendly process down the road. In other words, there is a far greater likelihood of a given
company investing in or developing more environmentally friendly lean equipment if they contemplate or
are aware of the possibilities before their capital investments are made. EPA therefore has a key opportunity
to work with companies and organizations supporting lean to incorporate potential environmental and
pollution prevention  considerations  into their investment decisions that ultimately can improve waste
reduction results while facilitating even greater economic benefits of lean.

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Lean Manufacturing and the Environment	October 2003 | Page 42
Lean Support Networks as Potential Partners

Fortunately for public environmental management agencies, there are  a number of well positioned
associations, non-profit organizations, publishers, and networks of lean practitioners and promoters that
could be potential partners for public environmental agencies in efforts to enhance further the environmental
benefits of lean implementation.  Organizations such as the Lean Enterprise Institute, the Association for
Manufacturing  Excellence, SAE International,  and numerous university-based  centers are promoting
advanced manufacturing techniques through research, publications, and conferences. Productivity, Inc., a
leading publisher of lean production materials, offers translations of classic lean books by Japanese lean
masters such as Taiichi Ohno, Hiroyuki Hirano, and Shigeo Shingo, along with a full line of lean curriculum
materials, tools, and resources.  Manufacturing publications  such as Manufacturing News and Assembly
Magazine are increasingly publishing articles on lean manufacturing topics. Finally, scores of management
and engineering consulting firms have emerged to deliver lean manufacturing consulting services to U.S.
businesses.

There are also a few organizations working to bridge lean promotion and support efforts with environmental
improvement methods. For example, the National Institute of Standards and Technology's Manufacturing
Extension Partnership (NIST/MEP), a nationwide network of not-for-profit manufacturing assistance centers
in over 400 locations nationwide, provides training and technical assistance to small  and medium-sized
companies on lean production.  As of June 2002, more than 20,000 business employees have  received
training on how to implement lean production systems in their organizations. Over the past year, NIST/MEP
has developed a new training program for small and medium-sized businesses called "Clean Manufacturing"
that integrates environmental considerations into a lean manufacturing framework and methods.

Importantly, as more and more businesses and business sectors are adopting a lean manufacturing mind set,
an increasing number of organizations are focused on providing critical support, through conferences,
training, publications, and consulting, to facilitate  these manufacturing transitions.   As mentioned in
Observation 2, however, very few of these organizations incorporate environmental considerations into their
lean guidance, nor are they positioned to clarify or address regulatory friction that may arise when leaning
environmentally sensitive processes.  As these organizations  continue to build upon their lean production
support efforts and tools, the EPA  has an opportunity to work with these organizations to optimize the
incorporation of environmental considerations into lean methods.

Pitching Environment to Lean Practitioners

Lean is fundamentally about competitiveness, not environmental improvement.  Attempting to change this
basic premise would undermine the powerful drivers that are compelling organizations to  make major
changes in organizational culture and production processes. Weakening the engines driving the creation of
continual improvement-focused, employee-involved, waste elimination cultures also  stands to weaken the
environmental benefits that ride the coattails of lean implementation.  This has important implications for
the manner in which public environmental management agencies approach opportunities to build a bridge
between lean and the environment.

As several lean experts suggested,  efforts to "paint lean green" are not likely to get far with most lean
practitioners and promoters.  Instead, public environmental management agencies will be better served by
being at the table with practitioners and promoters, seeking opportunities to fit environmental considerations
and tools, where appropriate, into the context of operations-focused lean methods. Entering through the
"operations door" rather than the "green door" may require some environmental managers to become
conversant with lean principles, drivers, and methods, but it is likely to expand markets for environmental
tools and information.  Such integration may seem somewhat subtle, but opens a significant new market for

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Lean Manufacturing and the Environment	October 2003 | Page 43
the expertise and tools developed by environmental management agencies over the past decades, including
P2 and waste minimization techniques, design for environment methods, environmental management systems
and procedures, and life-cycle analysis techniques.

That said, the business and economic value of incorporating environmental considerations can be significant.
Numerous publications discuss the multiple direct and indirect ways that environmental improvement
activities can add value to organizations, ranging from waste disposal cost savings to less tangible value of
enhanced company image.52  The more that lean practitioners become aware of the business value that can
stem  from folding  environmental considerations into their  lean  initiatives, the more environmental
improvements will result.
        52 For example, see U.S. EPA Office of Pollution Prevention and Toxics. 1995. Introduction to
Environmental Accounting as a Business Management Tool: Key Concepts and Terms. Washington, DC: U.S. EPA.
and Global Environmental Management Initiative. 1998. Environment: Value to Business. Washington, DC: GEMI.

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Lean Manufacturing and the Environment	October 2003 | Page 44
IV.  Recommendations

The observations gathered in this report indicate a clear connection between lean manufacturing and
environmental improvement.  In many respects, lean implementation engenders organizational cultures and
operating environments that are very similar to those desired by public environmental management agencies
and pollution prevention advocates, and that appear to be effective platforms for advancing sustainability
objectives.  Furthermore, the evidence suggests that public agencies have an opportunity to leverage more
environmental improvement from lean initiatives by addressing key blind spots and gaps, and by reducing
regulatory friction that can inhibit organizations' abilities to lean waste out of environmentally sensitive
processes. This represents an important opportunity to align the environmental regulatory system to address
key business competitiveness needs in a manner that improves environmental performance.

Three primary recommendations, detailed below, capture this opportunity for EPA to enable additional
environmental improvement from lean manufacturing endeavors.

Recommendation 1:  Work with lean experts to identify and address the environmental "blind
                      spots" that typically arise in lean methods

As mentioned throughout the report,  what drives companies to implement lean manufacturing is  not the
environmental improvement that results, but the  substantial profitability and competitiveness gains that
driving time and capital out of the product production and service delivery process creates. The objective
of Recommendation  1 is not to change the  perspective of lean  implementers  so that environmental
considerations become their primary goal, to turn lean practitioners into environmental experts, or to overtly
make lean green. This could run the risk of dampening the powerful profitability and competitiveness drivers
that lean depends on to drive nearly complete cultural and operational overhaul within organizations.
Instead, the goal  is to ride these powerful coattails by filling the gaps between  lean objectives and
environmental improvement opportunities. By filling these gaps, EPA can ensure companies engaging in
lean are attentive to environmental considerations and aware of environmental  performance improvement
opportunities such that they are more likely to seek the support of environmental professionals, and more
likely to be cognizant of ways to incorporate important environmental questions and criteria into their leaning
endeavors.  With such a "bridge," it is anticipated that environmental agencies  will be in a better position
to ensure even greater environmental improvement can result from lean manufacturing. This can begin by
training select EPA staff in the fundamentals of lean methods, so a common language can be developed, and
so that staff are better able to identify ways existing agency programs can work to further incorporate
environmental benefits and pollution prevention expertise into lean initiatives.

By addressing the few environmental blind spots and gaps in lean manuals, publications, training, and lean
implementation,  environmental  regulatory  agencies  have an  opportunity  to  harness even  greater
environmental improvement from industry lean implementation efforts. To address this opportunity, EPA
should consider involving "lean experts" in developing and implementing strategies for raising awareness
among companies of opportunities to achieve further environmental improvements while leaning, and
developing books, fact sheets, and website materials for corporate environmental managers that articulate
the connection between lean endeavors and environmental improvements.  More specific actions the EPA
can take to facilitate this process include:

•      Develop an action plan for raising awareness among companies of opportunities to achieve further
       environmental improvements  during lean implementation.  Engage "lean experts" (academics,
       consultants,  industry organizations, companies, right-sized equipment suppliers, publishers) in
       developing and implementing a strategy and action plan for raising awareness among companies of

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Lean Manufacturing and the Environment	October 2003 | Page 45
       opportunities to address the key gaps discussed in Observation 2 of this report and to achieve further
       environmental improvements during lean implementations.  The goal would be to have key lean
       promoters incorporate key environmental information and tools, where appropriate, into their
       methods, publications, and/or consulting approaches.

•      Develop resources, fact sheets, and website materials that highlight important environmental
       questions and criteria that can be incorporated into lean methods.  Such materials would articulate
       the connection between lean endeavors and environmental improvements, and explains ways in
       which additional  environmental  considerations can potentially be  incorporated  into  lean
       manufacturing methods. Questions could draw on EPA's substantial pool of waste minimization and
       P2 methodologies that could be considered in the context of a kaizen event (e.g., Does the process
       have waste streams? If so, what are the pollutants? Can materials with lower toxicity be used? Can
       they be reduced or eliminated?).  Identify and disseminate P2 guidance and resources applicable to
       environmentally sensitive processes (e.g., painting and coating, parts cleaning, chemical treatment)
       that are most frequently targeted for leaning.

•      Develop and  disseminate resources and  tools  for  pollution prevention  and  environmental
       practitioners to help them better understand and become more proficient in lean manufacturing
       techniques and benefits. Such resources could introduce P2/environmental practitioners to key lean
       methods (e.g., kaizen, 5S, TPM, standard work,  visual control systems, cellular manufacturing,
       JIT/kanban,  Six Sigma, 3P, lean enterprise/supply chain, design for manufacturability), profile links
       to environmental performance for each method, and articulate recommendations for working with
       lean manufacturing managers to identify and realize optimal environmental improvement from lean
       implementation.

•      Partner with organizations engaged in promoting lean manufacturing such as the Lean Enterprise
       Institute, the Association for Manufacturing Excellence, Productivity Press, the  Shingo Prize for
       Manufacturing Excellence, andNISTs Manufacturing Extension Partnership to develop and adapt
       lean tools, training, and conference sessions to address or incorporate environmental performance
       topics.

•      Conduct explicit outreach (e.g., materials,  conference presentations,  workshops) to corporate
       environment, health, and safety (EHS) managers to raise awareness about techniques they can use
       to integrate environmental considerations into their companies' lean initiatives.

Recommendation  2:  Develop a pilot/demonstration program to encourage companies  who are
                      implementing lean to achieve more waste reduction  and P2 by explicitly
                      incorporating environmental  considerations  and  tools into their lean
                      initiatives.

EPA can help build  the bridge between lean manufacturing initiatives and environmental management by
assisting companies who are implementing lean to achieve more waste reduction and P2 through the explicit
incorporation  of environmental  considerations and  tools into their  lean initiatives.   Beginning a
pilot/demonstration program with specific companies could open avenues for putting the wealth of pollution
prevention expertise, techniques, and technologies developed in recent decades for driving waste and risk
out of these processes into  the hands of lean practitioners who are engaged in process innovation.  By
building such a "bridge," environmental agencies will be better positioned to understand lean implementation
processes and to realize greater environmental  improvement result from lean initiatives.   Specific
pilot/demonstration  activities could include:

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Lean Manufacturing and the Environment	October 2003 | Page 46
•      Expand existing EPA waste elimination initiatives by incorporating lean considerations.  For
       example, EPA could seek to involve more companies implementing lean into the National Waste
       Minimization Partnership Program and Waste Wise Partnership Program by inviting the participation
       of lean practitioners.  EPA could also work with existing current partnership members implementing
       lean to better understand the waste minimization implications of lean and to identify opportunities
       for enhancing these benefits.

•      Document and disseminate case study examples of companies that have successfully integrated
       environmental activities into lean.  In  addition , EPA could  explore and highlight case study
       examples that illustrate how companies  have effectively used lean as a platform for implementing
       environmentally sustainable tools (e.g.,  life-cycle analyses, Design for Environment, etc.).

•      Partner with selected industry sectors and associated organizations in which there is large amount
       of lean activity to improve the environmental benefits associated with lean. For example, EPA could
       explore partnership opportunities with the Lean Aerospace Initiative or the Society for Automotive
       Engineers to bridge lean and the environment in these sectors.

•      Expand individual EPA initiatives, such as OSWER' s "Greening Hospitals" initiative, by integrating
       waste reduction and  product stewardship techniques into the organizations' lean initiatives. This
       effort could include  conducting a pilot project with  a hospital implementing lean, designed to
       integrate waste reduction and product stewardship techniques into its lean initiatives.  The resulting
       lessons could then be publicized for the benefit of other hospitals.

Recommendation 3:  Use pilot projects and resulting  documentation to  clarify specific  areas of
                      environmental regulatory uncertainty associated with lean implementation
                      and improve regulatory responsiveness to lean implementation.

This research identified that there  are certain environmentally sensitive processes that can be difficult for
companies to lean due to a lack of regulatory certainty and/or regulatory response times. Such regulatory
"friction" can not only hinder a company's profitability, but can also stand in the way of achieving optimal
environmental improvement.  To facilitate common goals of factory efficiency and environmental gain, EPA
can initiate efforts to  promote greater clarity and  responsiveness to lean initiatives that will touch
environmentally  sensitive  processes.  To understand the nuances and effectively tailor guidance and
regulatory innovation in this area, it will be useful to work with specific companies in "pilot project" mode
that will best facilitate an understanding of "friction" areas, and result in the most effective solutions. Pilot
projects could involve one company with the environmentally-sensitive process, plus appropriate local, state,
regional, and federal  environmental agency representatives.  Companies would be recruited if they have
encountered regulatory friction or anticipate encountering friction associated with an upcoming "lean
implementation."

Using pilot projects with specific companies, EPA can address specific areas of environmental regulatory
uncertainty associated with  lean implementation as well as improve  regulatory responsiveness to lean
implementation.  EPA can then communicate the results of such endeavors through guidance documents for
companies implementing advanced manufacturing methods that clarify the appropriate regulatory procedures
for leaning environmentally-sensitive processes, and replicable models for reducing the lead times associated
with certain regulatory processes.  More specific actions EPA can take  to facilitate this process include:

       Develop  guidance  that clarifies acceptable approaches for addressing RCRA satellite hazardous
       waste  accumulation  requirements in the context of implementing lean chemical point-of-use
       management systems. This could involve analyzing the relationship of RCRA to material point-of-

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Lean Manufacturing and the Environment	October 2003 | Page 47
       use management systems by working with different companies who have begun to implement, or are
       about to implement, chemical point-of-use management systems.

       Develop  replicable models for reducing the lead times associated with air permitting and other
       regulatory  processes  to  accommodate  the  lean transition to  mobile,  right-sized  operating
       environments.  Such efforts could help harness lean implementation efforts to drive waste from
       environmentally sensitive processes, while reducing the pressures that can result in non-compliance
       with environmental regulations.  In addition, these efforts could draw on regulatory innovations
       developed as part of other initiatives, such as the air permitting techniques developed and piloted
       through EPA's Pollution Prevention in Permitting Program (P4).

       Develop  documentation regarding acceptable compliance strategies for applying lean methods to
       other environmentally sensitive  processes, including painting,  chemical treatment, and metal
       finishing.

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Lean Manufacturing and the Environment	October 2003 | Page 48
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                                                            October 2003 | Page 51
Appendix A:  Lean Terms and Definitions
 Batch and queue



 Bottleneck

 Cell
 Cellular
 Manufacturing
 Chaku-Chaku


 Changeover Time


 Constraint

 Cycle Time



 Inventory

 Just-in-Time



 Kaikaku

 Kaizen



 Kanban


 Kanban System
 Large Lot
 Production

 Lead Time

 Lean Supplier
 Network
 Mistake Proofing
The mass production process of making large lots of a part and then sending the batch to wait
in the queue until the next operation in the production process begins.  Contrast with one-
piece-flow.

Any part of a production line that adversely affects throughput. See also constraint.

An arrangement of machinery, tools, and personnel designed to most logically and efficiently
complete a production sequence.  Cells help enable one-piece/low.

An approach in where manufacturing work centers (cells) have the total capabilities needed
to produce an item or group of similar items; contrasts to setting up work centers on the basis
of similar equipment  or capabilities, in which case items must move among multiple work
centers before they are completed.

A method of conducting one-piece flow,  where the operator proceeds from machine to
machine, taking the part from one machine and loading it into the next.

The time that elapses between the completion of one production run and the beginning of
another production run.

Anything that limits a system from achieving higher performance, or throughput.

The amount of time to accomplish the standard work sequence for one product, excluding
queue (wait) time. If the cycle time for every operation in a complete process can be reduced
to equal takt time, products can be made in one-piece flow.

The money the system has invested in purchasing things it intends to sell.

A production scheduling concept that calls for any item needed at a production operation -
whether raw material, finished item, or anything in between, to be produced and available
precisely when needed.

Japanese for "radical improvement of an activity," designed to eliminate waste.

The incremental and continual improvement of production activities aimed at reducing waste,
and designed around planned, structured worker-oriented events.  Japanese for "to take apart
and make good."

A card or sheet used to authorize production or movement of an item.  See also Kanban
System.

A system that controls production inventory and movement through the  visual control of
operations.  See also  Kanban.

The manufacture of the same product in large quantities during a single, designated period of
time.

The total amount of time it takes to complete an order for a customer.

A buyer-supplier relationship where  designated lean production protocols,  supporting
sustained  interactions between members, helps  produce  a network-based  competitive
advantage.

Technology and procedures designed to prevent defects and equipment malfunction during
manufacturing processes. Also known in Japanese as Poka-Yoke.

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                                                             October 2003 | Page 52
 Monument
 Muda
 Non-Value-Added
 One-Piece Flow
 Point-of-Use
 Poka-Yoke

 Pre-Production
 Planning (3P)
 Pull Production
 System

 Right-sized
 Queue Time

 Supply Chain


 Takt Time



 Value Stream
 Value Stream
 Mapping

 Visual Controls

 Work In Progress
 (WIP)
A production machine or tool that is difficult and/or costly to move (e.g., into one-piece flow)
due to its size or other physical constraint.  Often, materials must instead be brought to the
monument in batches.

The Japanese term for any human activity which absorbs resources, but creates no real value,
i.e., "waste"; activities and results to be eliminated. Within manufacturing, categories of waste
include: excess and early production; delays, movement and transport; poor process design;
inventory; inefficient performance  of a process; and defective items.

Activities or actions  taken that add no  real value to the product or service,  making such
activities or actions a form of waste.

A  situation in which products proceed, one complete product at a time, through  various
operations in design, order-taking, and production, without interruptions, backflows, or scrap.
Also known as single-piece/low.

A system in which all necessary supplies, chemicals, etc. are within arm's reach of the worker,
and positioned in a logical sequence of use.

See Mistake Proofing

A  lean method for product and/or process design.  3P designs and implements production
processes,  tools,  and  equipment  that   support  one-piece  flow,  are  designed  for
manufacturability, and  achieve appropriate cost, quality,  and lead time. Also known as
Production Preparation Process.

A  production system in which nothing is produced by the upstream supplier until a need is
signaled by the downstream customer. See also Kanban.

The matching of production tooling and equipment in a scale that enables its use in the direct
flow of products such that no unnecessary transport or waiting is  required.

The time a material spends waiting in line for use in the production process.

A group of all suppliers involved in the manufacture of a product, beginning with the simplest
part and ending with the production of the final product.

The available production time divided by the rate of customer demand. Takt time sets the pace
of production to match the rate of customer demand  and becomes the heartbeat of any  lean
system.

The  set of specific  actions required to bring a specific product through three  critical
management tasks of any business: problem solving,  information management, and physical
transformation.

A process mapping method used to document the current and future states of the information
and material flows in a value stream from customer to supplier. See Value Stream.

Displaying the status of an activity  so every employee can see it and take  appropriate action.

Production material in the process of being converted into a saleable product.

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Appendix B: Lean Experts and Case Study Companies


                             Lean Experts Interviewed

George Koenigsaecker
Lean Investments LLC

JeffMcAuliffe
Swedish Medical Center
Ross Robson
Shingo Prize for Excellence in Manufacturing

Sandra Rothenberg
Rochester Institute of Technology
Kevin Spencer Smith
Productivity, Inc.
Conrad Soltero
Texas Manufacturing Extension Center

Gregory Waldrip
Manufacturing Extension Partnership
National Institute of Standards and Technology (NIST)

Judy Wlodarczyk
The Connecticut State Technology Extension Program (CONNSTEP)
James Womack
Lean Enterprise Institute
                      Companies Addressed by Case Studies

Apollo Hardwoods Company

General Motors Corporation

Goodrich Corporation - Aerostructures Group

Warner Robins U.S. Air Force Base

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Appendix C:  Case Study Summaries

Apollo Hardwoods Company

Background

        The start-up of Apollo Hardwoods in 2003 provides a unique example of a business enterprise
        designed and launched with lean principles in mind from the beginning.  The company is applying
        lean production techniques to manufacture custom "cut-to-size" cherry plywood for cabinetry made
        from fine northwestern Pennsylvania cherry wood.

        Ed Constantine founded  Apollo Hardwoods  in Pennsylvania after  leading numerous lean
        implementation efforts at HON INDUSTRIES and with Simpler Consulting (a lean consultancy
        which he founded) and Lean Investments LLC.

        Apollo Hardwood's founders and investors saw the wood products manufacturing  industry as an
        industry ripe for the successful application of lean techniques. First, veneer manufacturers typically
        have significant capital tied up  in large "monument" processes and equipment (e.g., slicers, dryer
        ovens). Second, wood products manufacturers generally carry large inventories of wood which
        requires  substantial space  and can result  in  damage  or  spoilage to  inventories. Third, the
        manufacturing processes typically result in significant amounts of wood scrap and waste, which is
        often burned for energy recovery. It became apparent that because the 12 foot slices produced by
        the conventional process and equipment were ultimately trimmed down to a usable (less than 6 foot)
        size, using a veneering process that is "right-sized" to more usable dimensions would not only
        require smaller, less expensive equipment, but also will allow the  business to use  a much wider
        variety of logs all while obtaining similar quality end-results.

Conventional Veneer Manufacturing

        The conventional veneer panel  manufacturing process typically consists of six main steps:
        (1) Slicing. The log is cut into a square and left to soak in 160oF water for up to several days. The
        log, up to 12 feet long, is then held horizontally in a vice-like fixture.  A razor sharp blade then
        vertically slices the log into veneer.
        (2) Drying. Veneer is fed into  large dryer ovens designed to reduce the moisture content of each
        piece to facilitate a strong, permanent adhesive bond.
        (3) Lay-up and Gluing. When the veneers have been dried to their specified moisture content, they
        are conveyed to a lay-up operation, where a urea-formaldehyde adhesive is applied.  The pieces are
        then glued to a plywood core.
        (4) Pressing. The laid-up assembly of veneers is then sent to a press designed to press the glue into
        a thin layer. After being unloaded from the press and after cooling, panels are trimmed to precise
        sizes.
        (5) Sanding.  To smooth raised grains and/or remove glue from the surface, the panel product is
        often sanded using manual or automated sanders.
        (6) Grading. After sanding, the plywood is graded and prepared for storage or shipping.

        A conventional veneer manufacturing process typically relies on large pieces of equipment (e.g., hot
        water soaking tanks, veneer slicers, drying ovens) that typically cost several million dollars.  For
        example, conventional wood dryers typically cost $1.5 million for a 20 foot by 100 foot oven that
        blows 180 degree forced air on the wood.

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•       The primary environmental impacts from conventional veneer manufacturing include air emissions,
        energy use, and run-off. The primary source of air emissions are organic compounds from the drying
        process. The type and quantity of emissions depends on the wood species and type of dryer, but are
        typically ducted through separate stacks (for heating zones and cooling sections). Hot pressing
        operations also release some volatile organic compounds (VOCs), but these emissions typically
        remain uncontrolled.  Particulate emissions (PM) typically result from log debarking, cutting and
        sanding, and drying and pressing. Organic compound emissions (formaldehyde and other hazardous
        air pollutants) can also result from gluing and hot pressing. Sawdust and other small wood particles
        are generated by cutting and sanding operations, which are typically controlled and collected to use
        as fuel. Wood storage piles can also be a source of PM and VOC emissions. Uncontrolled runoff
        can also result from large inventory piles,  because unused logs need to be sprayed with water to
        prevent cracking.

•       Another environmental dimension of cherry veneer manufacturing is the deteriorating supply of
        black cherry  trees in Pennsylvania. Although the Allegheny Plateau contains some of the highest
        quality black cherry trees in the world (particularly well suited for high quality veneer), their supply
        is limited. In part, this is because conventional veneer manufacturing practices require high quality,
        defect-free logs that can produce 12-foot veneer slices. This length requirement, in turn, frequently
        requires companies to harvest large diameter mature black cherry trees.

•       Veneer products can provide environmental benefits by significantly reducing the consumption of
        slow growing, high quality hardwoods.  With veneer which is typically 1/42" thick, one hardwood
        tree can cover approximately 20 times  as  much  furniture  when compared with  using  solid
        hardwoods. Often, veneer is laminated onto cores of particle board or mdf which often contain a
        combination  of wood waste products and chipped up low grade logs.  Putting lower cost faster
        growing species in the core of a veneer-covered furniture component is good for the forest.

Applying Lean Principles to Veneer Manufacturing

        Apollo Hardwood's founders see  an opportunity  to significantly reduce the  amount and cost of
        capital required for  veneer manufacturing.  This opportunity stems from lean principles that
        emphasize making capital investments only where necessary and when necessary, allowing for the
        highest possible return-on-investment. This strategy is particularly relevant to start-up companies,
        where one of the quickest routes to profitability is minimizing capital costs while producing a quality
        product. Conventional manufacturing wisdom might lead a company to buy larger equipment, so
        that the plant can accommodate production increases. Lean thinking, however, suggests that the
        company may be better served by investing in capital needed for current production, and adding
        additional capital incrementally to meet growth needs.  This lean strategy relies heavily on the
        availability of "right-sized" (and sometimes mobile) equipment that can be easily replicated (and
        improved) at significantly lower cost when compared with large, conventional equipment (e.g.,
        "monuments").

        Conventional debarking, cutting, slicing and drying equipment have many attributes of monuments,
        and these processes  were targeted by Apollo Hardwoods. The goal was to find a less capital
        intensive process for slicing and drying veneer that would also address other business needs such
        as product quality, flow time, and cost. Since such a process and associated equipment were not
        available, Apollo Hardwoods sought to develop them in-house using the lean method typically
        referred to as 3P (pre-production planning). The 3P method was initially developed as part of the

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       Toyota Production System, and it focuses on optimization and waste elimination at the product
       and/or process design stage.

       Apollo Hardwoods recruited a team to assist in a series of 3P events to design a lean veneer slicing
       and drying process and associated equipment.  Team members were carefully selected to ensure that
       the team did not have too much familiarity with conventional veneer manufacturing methods, which
       could limit creativity during the 3P events.   Success parameters were set for the 3P events that
       articulated the desired takt time (i.e., the rate at which product must be turned out to satisfy market
       demand) and a dollar limit for building the process equipment.

       The 3P team assembled for a week-long event to work through the following steps. First, the team
       described and mapped the  steps necessary to produce  veneer, and brainstormed key words to
       describe each step, such as "shave" and "cut." Second, the group went through a "back to nature"
       step in which they considered where in the natural world these processes took place. For example,
       they identified that beavers' tree gnawing activity resembles the slicing activity that they were trying
       to mimic in the plant. Research at the local library revealed useful information about beaver cutting
       "techniques."  The team found that beaver teeth have a harder enamel layering on the front sides of
       their teeth than on the back, enabling their teeth to self-sharpen and to therefore be "built to wear."
       Third, the group engaged in a "try-storming" exercise in which they developed prototype equipment
       to test various approaches and techniques identified through earlier brainstorming activities. For
       example, the team mocked up a slicing tool, with the metal on one side of the blade harder than on
       the other, mimicking beavers' teeth. The team  tested  and evaluated the various prototypes, and
       eventually selected those that appeared to be most promising for meeting the success criteria defined
       at the beginning of the 3P event. Following the 3P event, the process of building actual production
       equipment from the 3P prototypes began. The 3P method was also applied to the drying process
       with similar results.

       By applying lean principles and methods to veneer manufacturing, Apollo Hardwoods has achieved
       significant results.  Production is arranged in  one-piece flow cells, where production operates in a
       continuous flow with no piling of inventory in-between process steps. The equipment comes in at
       approximately half the capital intensity of the industry's conventional machinery, has much lower
       energy demands, and fits into small production cells that can be easily replicated to accommodate
       production increases.   The machines also work with smaller pieces of wood that  require less
       trimming to meet customer size specifications. This means that Apollo will use less logs to deliver
       the same amount of finished product.  The right-sized equipment and smaller veneer pieces also
       significantly reduce the amount of wood scrap generated. Whereas most veneer companies burn
       their wood scrap for energy recovery, Apollo sees high quality cherry wood as an expensive energy
       source. By reducing wood scrap  and energy use through lean implementation, the company is
       creating a highly competitive business model  that significantly lessens the environmental impacts
       of veneer manufacturing.

       Apollo Hardwoods indicated that future lean improvement events will likely target other aspects of
       the production process, such as the gluing process. In particular, the company is interesting to
       finding ways to reduce formaldehyde emissions by exploring alternative adhesives in the future.

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General Motors Corporation

Background

       General Motors Corporation (GM) has one of the most wide-spread lean manufacturing initiatives
       in place in the U.S.  GM grew interested in lean manufacturing in the early 1980s, as it examined
       elements of the Toyota Production  System that had  been adopted by several Japanese auto
       manufacturers.

       In 1994 GM and Toyota formed a joint venture called the New United Motor Manufacturing Inc.
       (NUMMI) to pioneer implementation of lean methods at an automotive manufacturing plant in the
       U.S. Compared to a conventional GM plant, NUMMI was able to cut assembly hours per car from
       31 to 19 and assembly defects per 100 cars  from 135 to 45. By the early 1990s, the success of
       NUMMI, among other factors, made  it  increasingly clear that lean manufacturing  offers potent
       productivity, product quality, and profitability advantages over traditional  mass production,
       batch-and-queue systems.  By 1997, the "big three" U.S. auto manufacturers indicated that they
       intend to implement their own lean systems across all of their manufacturing operations.

       Since the early 1990's, GM has worked actively to integrate lean manufacturing and environmental
       initiatives through its PICOS Program (described below). In addition, GM's WE CARE (Waste
       Elimination and Cost Awareness Reward Everyone) Program complements lean implementation
       efforts at GM facilities, as many projects result in both operational and environment improvements.
       The WE CARE Program is a corporate initiative that formalizes Design for the Environment and
       Pollution Prevention efforts into a team-oriented approach.

Example Lean Projects and Results

•      Saturn Kanban Implementation. Saturn's Spring Hill, Tennessee automotive manufacturing plant
       receives more than 95 percent of its parts in reusable containers. Many of these reusable containers
       also serve as kanban, or signals for when more parts are needed in a particular process area. This
       "kanban"-type system eliminates tons of packaging wastes each year and reduces the space, cost, and
       energy needs of managing such wastes. Saturn has also implemented electronic kanban with some
       suppliers, enabling the suppliers to deliver components "just-in-time" for assembly.  For example,
       seating systems are delivered to the shop floor in the order in which they will be installed.  Saturn
       also found that improved "first-time" quality and operational improvements linked to lean production
       systems reduced paint solvent usage by 270 tons between 1995 and 1996.

•      Fairfax Assembly Paint Booth Cleaning.  At GM's Fairfax Assembly Plant, paint booths were
       originally cleaned every other day (after production) to prevent stray drops or chips of old paint from
       attaching onto  subsequent paint jobs. It was discovered, however, that the automated section of the
       painting operations  really  only needed to be cleaned once a week, as long as the  cleaning was
       thorough, and  larger holes  were cut in the floor grating to allow for thicker paint accumulations.
       The reduction  in cleaning frequency facilitates improvements in the process "up-time" and flow.
       As an additional benefit, through this  and other more efficient cleaning techniques, use of purge
       solvent decreased by 3/8 of a gallon per vehicle. When combined with reductions achieved by
       solvent recycling, VOC emissions from purge solvent reduced by 369 tons in the first year following
       these adjustments.

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       Application of Lean Methods to Administrative Processing in the Purchasing Group. In addition
       to applying lean thinking to manufacturing processes, GM has looked at ways to lean its internal
       administrative processes. For example, GM's purchasing group investigated the company's Request
       for Quote (RFQ) processes by which supplier products are sought. Because each RFQ has to include
       a detailed listing of system requirements, RFQ's under the prior paper-based system could be quite
       large, ranging in size (in total paper "thickness") from 3/4 of an inch to 6 inches thick.

       Upon applying a value stream mapping and analysis, GM identified a number of ways in which this
       process produced an excessive amount of waste. Not only did it require GM to purchase and use a
       great deal of paper, but also incurred costs and used raw materials associated with printing and
       packaging, in addition to cost and energy required to deliver each package to each potential supplier.
       GM's solution was to transform the RFQ process into an electronic-based system that is not only
       paperless, but that avoids the additional costs and waste associated with printing, packaging, and
       shipping each RFQ.   Using an  internet-based system called Covisint, GM is able to improve
       procurement efficiency while lowering costs by saving time and eliminating waste. By distributing
       RFQ's electronically, GM estimates that the company will save at least 2 tons of paper each year.

       Lean Enterprise Supply Chain Development. In the early 1990s GM assigned a group of engineers
       to work more closely with its suppliers to reduce costs and to improve product quality and on-time
       delivery.  GM realized that it was not sufficient to just lean GM's operations, as GM (and the
       customer) directly bears the costs of supplier waste,  inefficiency, delays, and defects. This effort
       has involved over 150 supplier development engineers conducting lean implementation workshops
       called Purchased Input Concept Optimization with Suppliers (PICOS).  As part of PICOS, small
       teams of GM engineers visit GM suppliers for several days to conduct training on lean methods and
       to lead a focused kaizen-type rapid improvement event. Follow-up was conducted with the suppliers
       at 3 and 6 months to determine if productivity improvements had been maintained, and to assist with
       additional process fine-tuning.

       Over time, GM found that having an engineer involved in the PICOS program who is familiar with
       environmental management provided  important benefits for leveraging additional environmental
       improvement from the PICOS events.  By working with suppliers on environmental improvement,
       GM has also, among many things, been able to promote the use of returnable shipping containers in
       lieu of single-use, disposable ones; communicate GM's guidelines for designing for recyclability and
       broadly disseminating its list of restricted or reportable chemicals; and communicate success stories
       to the supplier community as examples of what can be done. GM also announced  recently that by
       the end of 2002,  suppliers  will be required to certify the implementation of an EMS in their
       operations in conformance with  ISO 14001. GM is  currently developing a broader supply chain
       initiative, with involvement from EPA and NIST, that some participants hope will become a vehicle
       to integrate technical assistance on advanced manufacturing  techniques and environmental
       improvement opportunities. Two PICOS events are described below.

       Steering Column Shroud PICOS Event.  GM conducted a PICOS rapid improvement event with a
       key  supplier to enhance the cost competitiveness and on-time  delivery of steering column
       components. The  GM team used value stream mapping and the "five whys" to assess the existing
       process for steps that cause long lead times and delays. The assessment revealed that the supplier
       shipped the steering column shrouds (or casings) to an outside vendor  for painting prior to final
       assembly with the steering column, adding significant flow time to the production process.  Using
       the "five whys" technique, the team asked why the shrouds needed to be painted in the first place.
       The answer was "because the die (plastic mold) creates flaws that need to be covered." This  led the
       team to a simpler, less wasteful solution - improve the quality of the die, and mold the part using

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       resin of the desired color.  After some research, and capital investment of $400,000, the supplier
       incorporated an injection molding process for the shrouds into the assembly line, eliminating the
       need for the time consuming painting step. This project saved the supplier approximately $700,000
       per year, while shortening lead times and improving on-time delivery to GM.  This lean project
       produced environmental benefits, although they were not needed to make the business case for
       pursuing the project. Elimination of the painting process step also eliminated 7 tons per year of
       VOC emissions from the painting process step, all hazardous wastes associated with the painting
       process step  (including clean-up  rags, overspray sludge, off-spec  and expired paints), and
       environmental impacts associated with transporting the shrouds to the painting vendor and back.

       Thermoplastic Color Purging PICOS Event. While working with a supplierto reduce lead times and
       improve quality for the production of a thermoplastic molded component, a GM-facilitated team
       found additional waste elimination opportunities associated with color changeovers. At this time,
       the suppliers' operations were running seven days a week to meet customer demand. The team found
       that each time the supplier changed resin colors to  produce a new batch of parts, as many as 5 to 10
       large plastic parts needed to be scrapped. The accumulated scrap typically would fill a 30 yard
       dumpster every day, resulting in $3,000 to $4,000 per week in disposal costs. In addition, the
       supplier consumed more resin than necessary, contributing to higher material costs. By focusing the
       rapid improvement event on streamlining the die set up and color changeover process, the team was
       able to reduce the need to run overtime shifts to meet customer demand while eliminating a
       significant waste stream, as well as the extra resin and processing associated with the scrap.

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Goodrich Corporation - Aerostructures Group

Background

       Goodrich Corporation is a leading global supplier of nose to tail products and services to the
       aerospace industry, making everything from landing gear to evacuation systems and flight controls
       to engine satellite systems. Major customers include commercial, military, regional, business, space,
       and general aviation aircraft manufacturers, operators, and suppliers. The company is also a globally
       recognized premier supplier of aircraft maintenance, repair and overhaul services.  Goodrich
       Aerostructures, a division of Goodrich Corporation, is the world's leading independent full-service
       supplier of nacelles, pylons, thrust reversers, and other structural aircraft components.

       In the early to mid-1990s, customer pressure to improve performance at the Rohr  Riverside,
       California facility was of such concern that management evaluated options that included moving
       work and closing the plant. Airframe & engine customers were putting increasing pressure on the
       plant to improve its production activities. While attending a Lean Manufacturing training seminar
       offered by James Womack's Lean Enterprise Institute (see www.lean.org) the General Manager of
       the facility realized that the continuous improvement efforts that they had started were  in fact a
       "rudimentary model" of the Toyota Production System. Soon after this, the Riverside plant began
       to implement Lean Manufacturing techniques with vigor.

Lean Implementation at Goodrich

       In 1995 and 1996, the Riverside plant worked to aggressively implement lean techniques, adapting
       tools from the Toyota Production  System.  Efforts expanded as early successes and productivity
       improvements won increasing commitment from company senior leadership.   Later in 1996,
       Goodrich Aerostructures began applying lean techniques to administrative processes at the Riverside
       plant. In 1997, Goodrich Aerostructures moved to improve alignment of its organizational culture,
       structure, and strategy with its expanding lean operational initiatives through policy deployment.
       By 1999, Goodrich Aerostructures was expanding lean implementation efforts throughout many of
       its U.S. production facilities, and lean enterprise,  and the ability to continually improve, was
       becoming a core competency of the organization. Since 2000, efforts have focused on continual
       improvement and "value stream alignment"-structuring the organization around value streams (e.g.,
       pylon components for Boeing's 757 airplane, or nacelle components for Airbus A319, A320, A321)
       instead of around a conventional functional orientation (e.g., milling, chemical treatment).

       Goodrich Aerostructures managers indicated that the impending crisis  of facility closure was a
       powerful driver for the transition to lean. Significant focus and energy were necessary to implement
       the "mechanical" aspects of change, including (1) linkage and flow of process steps, (2) right-sizing
       of tooling and equipment, (3) identification of standard work, and (4) the implementation of visual
       controls.  Company representatives reported, however, that the "cultural"  aspects  of change,
       including (1) leadership role, engagement and behavior, (2) employee engagement, and (3) real time
       problem resolution, have proven to be most challenging.  As one strategy to address the cultural
       aspects of change, manufacturing managers and engineers have moved their offices out to the shop
       floor, improving real time problem resolution.  Even with senior management  support and
       commitment, however, changing organizational  culture requires substantial effort and powerful
       drivers.

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•      As part of its lean implementation efforts, Goodrich Aerostructures uses a variety of tools which the
       company has adapted from the Toyota Production System. Goodrich Aerostructures managers
       indicated that "policy deployment provides focus, alignment, and linkage. Lean tools provide the
       means to identify and eliminate waste." Rapid improvement events serve as a key tool for driving
       a waste  elimination-focused culture change.  For example, Goodrich Aerostructures facilities
       conduct more than 350 kaizen rapid improvement events each year to identify and eliminate waste
       from particular business and production processes.  Goodrich Aerostructures also uses 3P (Pre-
       Production Planning), which focuses on eliminating waste through process and product design.  In
       these rapid improvement efforts, employee teams are encouraged to move toward the "least waste
       way".

•      As the use of lean tools became a mainstream part of facility operations, company Environmental,
       Health, and Safety (EHS) personnel have worked to integrate EHS considerations and needs into
       lean tools and initiatives. For example, EHS objectives must be identified for each kaizen event and
       recorded on the  "scope sheet" for the  event.  Efforts are also made to involve EHS personnel in
       events that are likely to have important environmental dimensions, risks, or opportunities. More
       recently, Goodrich Aerostructures has begun to use kaizen and other lean techniques to explicitly
       target EHS issues, expanding the lean definition of "manufacturing wastes" to include environmental
       wastes and risks (see Hazardous Waste Minimization Kaizen Event summary below).  As another
       example, a safety kaizen event included having a team identify trip hazards in the plant and mark
       them with helium balloons to raise employee awareness and to ensure their elimination.

•      Goodrich Aerostructures managers identified an interesting transition at the plants that has moved
       them away from the use of conventional "return-on-investment"  (ROI) decision-making for
       determining whether to make operational or capital improvements. Many change projects are now
       driven by company lean continuous improvement efforts, with attention paid to process flow and
       linkage, cycle times, and other capital productivity metrics, as driven by Policy Deployment, instead
       of relying solely on a conventional ROI-based project proposal and approval process. An interesting
       question is "do traditional accounting practices provide an balance sheet rather than a tool to manage
       a business ?"

Examples of Lean Initiatives and Results

•      Conversion to Product-Aligned Cellular Manufacturing.  As part of its lean focus several Goodrich
       Aerostructures sites have dramatically changed the manufacturing layout of their facilities.  The
       conversion from a batch and queue mass production layout to a one piece pull, cellular layout
       generally entails significant movement of equipment. In this lean approach, production activities
       are rearranged into cells which link process steps in the order needed to create a continuous,
       one-piece flow to  make the product.  Instead  of big centralized departments and machines for
       milling, parts cleaning, painting, and other process steps, small, "right-sized" machines are placed
       where they are needed in production cells. In effect, the cellular approach brings the process to the
       product component, rather than continually moving and storing the product component to take it
       through process  steps.

       At Goodrich Aerostructures Chula Vista, California facility,  several production  cells include
       right-sized painting and degreasing stations. Referred to as "little houses on the prairie," these
       movable (on metal skids), enclosed stations enabled workers to degrease and paint small parts
       without needing to take them to large, centralized degreasing tanks and paint booths.  This creates
       substantial improvements in productivity, with ancillary environmental benefits associated  with

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       reduced chemical and paint use, waste generation, and air emissions since the equipment is sized to
       clean and paint the particular components produced in the cell.

       Goodrich Aerostructures  representatives indicated  that had the business case for developing
       right-sized parts washers, paint booths, and chemical treatment baths been based on environmental
       improvement factors such as reduced chemical use, hazardous waste generation, and air emissions,
       they would not have been undertaken. In reality, the environmental benefits were not calculated in
       making the business  case. Improving "flow and linkage" in the production process, and reducing
       the capital and time intensity of production, overshadowed other benefits, creating a compelling case
       for the conversion to aright-sized, cellular manufacturing environment. Savings in operational costs,
       such as reduced chemical or material use and reduced waste disposal costs, may be significant, but
       they are significantly smaller than business benefits achieved from reduced capital and time intensity
       of production. In other words, the business case for change did not enter through the "green door".

       Significant productivity benefits, a primary driver  for the conversion, improve  the  "flow and
       linkage"  of production process steps.  For example, metal skins for the  Boeing  717 fan cowls
       traveled 17,000 feet through the plant and took 43 days to manufacture. Following the conversion
       to cellular manufacturing, the metal skins travel 4,300 feet and are made in 7 days. In addition,
       since products and parts typically are not produced in large batches in cellular manufacturing,
       inventory needs are dramatically reduced, freeing up plant floor space.

       As a result  of  its conversion to  a  cellular manufacturing layout,  Goodrich Aerostructures
       consolidated the  manufacturing operations at the Chula Vista facility into two buildings from five
       while doubling output as a result of implementing lean methods.  This decreased overall  facility
       space needs by more than 50 percent, enabling the facility to sell property to the city for waterfront
       redevelopment.

       In most situations, reconfiguration of the manufacturing layout  requires rapid, and  sometimes
       iterative, change.  Conversions must be made quickly to reduce production downtime. For example,
       Goodrich Aerostructures Group's San Marcos plant reconfigured the production layout of its 100,000
       square foot facility in one week-long kaizen rapid improvement event. To facilitate such a massive
       and rapid configuration, the plant assembled a cross-functional team that included diverse skill-sets
       ranging from fork lift operation to electrical work to plumbing. Iterative changes are often necessary
       to optimize the cellular layout, or to accommodate the addition of new production cells.

       Standard Work  and Visual Controls.   A core element  of lean manufacturing at Goodrich
       Aerostructures has focused on reducing the variability in work practices by identifying standard
       work. In some cases, standard work procedures are documented in easy to read, laminated checklists
       affixed in production cells.  Goodrich Aerostructures representatives indicated that they  seek to
       incorporate environmental, health, and safety activities directly into standard work practices. Other
       visual controls are added throughout the plant to ensure that standard work practices are followed
       and to keep the facility well organized. For example, "kits" are assembled for workers that include
       only those parts, tools, and chemicals needed to perform their standard work practice. The primary
       driver for the use of kits is to save time and ensure consistent quality by eliminating the need for the
       workers to "chase down" parts, tools, and materials or to use tools or materials that are not optimal
       for the job.  At the same time, there are numerous  environmental benefits that can result from
       standard work and visual controls. For example, standard work, visual controls, and kits can
       significantly reduce waste from defective work, scrap material, and packaging. With "everything
       in its place," trip and spill hazards are also reduced.  Goodrich Aerostructures representatives
       provided numerous  examples  of environmental benefits that resulted on the coattails of lean

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       implementation efforts, although these benefits did not factor into the business case for change and
       were seldom quantified.  It should also be noted that standard work and visual controls do not
       eliminate opportunities for workers to exercise creativity, since they are engaged in defining their
       standard work practices, developing associated visual controls, and working to continually improve
       these systems through kaizen rapid improvement events.

       Lean Chemical Management.  Goodrich Aerostructures facilities  in California shifted to lean
       point-of-use chemical management  systems to eliminate wasted worker movement and downtime.
       As an  additional benefit, these shifts reduced  chemical  use and associated  hazardous  waste
       generation. Under the lean system, employees in many work areas that require chemical primers,
       bonders, or other substances receive right-sized amounts -just what they need to  perform their job
       - in work "kits" or from "water striders" who courier materials to the point-of-use (sometimes on
       tricycles). This avoids situations where chemicals are dispensed or mixed in quantities greater than
       needed, which both decreases chemical use and hazardous waste generation. Goodrich has also
       worked with suppliers to get just-in-time delivery of chemicals in smaller, right-sized containers.
       This minimizes the chance of chemicals expiring in inventory. At one California plant, Goodrich
       Aerostructures point-of-use and just-in-time chemical management system has enabled the company
       to eliminate four 5,000 gallon tanks containing methyl ethyl ketone, sulfuric acid, nitric acid, and
       trichloroethane. This eliminated the potential for large scale spills associated with these tanks, as
       well as the need to address risk management planning and other chemical management requirements
       for these tanks under Section 112®) of the 1990 Clean Air Act Amendments.

       Hazardous Waste Minimization Kaizen Event. Now  that kaizen rapid improvement events have
       become a routine aspect  of plant operations, EHS personnel are beginning to explicitly target
       environmental waste streams and risks with lean techniques. For example, one kaizen event in 2002
       focused on conducting a rapid assessment of hazardous environmental waste streams at the plant.
       Activities during the 2-day kaizen event included (1) identification of all hazardous environmental
       waste streams in a portion of the plant, (2) estimation of the total costs associated with managing
       these waste streams, (3) survey of staff about hazardous  waste management practices, and (4)
       development of measurements to track progress toward reducing waste streams. Follow-on activities
       and kaizen events have identified  and implemented various pollution prevention  and process
       improvement techniques that target reductions in priority waste streams.

       3P and Product & Process Design. Goodrich Aerostructures has increasingly focused lean thinking
       on the design of products and processes. Lean techniques, such as 3P, are being  used to eliminate
       waste-including materials, time, and complexity-out of products from the beginning. In some cases,
       Goodrich Aerostructures involves representatives from its customers or supply chain in these design
       events  to ensure that diverse perspectives and needs are considered.  In some  cases, rethinking
       product and process design can produce significant environmental benefits. For example, Goodrich
       found that they could meet customer specifications, increase bond strength, and reduce process flow
       time, while eliminating chrome from some of its anodizing process steps. Product & Process Design
       continues to be a significant focus  for Aerostructures.  Designing parts, products, processes and
       supportive processes & systems that provide the opportunity to maximize the return to the business
       by, amongst other things, minimizing E,H & S issues  is of paramount importance. This aspect of
       the business is reaping rewards much beyond expectations.

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Warner Robins U. S. Air Force Base53

Background

•      RAFB is home to the Warner Robins Air Logistics Center, a major depot for repairing aircraft and
       producing spare parts for the U.S. Air Force, and is the largest industrial complex in the State of
       Georgia.  Occupying about 85 percent of the installation (and employing 11,600 workers), the Air
       Logistics Center manages the Air Force' s F-15 fighter aircraft, C-141 and C-13 0 transport aircraft,
       11 types of cargo and utility aircraft, 4 series of helicopters, 3 types of remotely piloted vehicles, and
       8 missile systems.  Robins AFB is also the exclusive technology repair center for Air Force airborne
       electronics, gyroscopes, and life support systems.

•      Faced with base closures, outsourcing of military repair and maintenance operations, and pressures
       to avoid the need to purchase new aircraft while increasing the number available for service, RAFB
       began to implement lean in the late 1990s.

Example Lean Projects and Results

•      Lean and the  C-5.  In its first round of lean projects, RAFB improved resource productivity in
       targeted aircraft repair and maintenance shops by 30 percent to 50 percent and saved $8 million in
       the F-15 wing shop alone in the first year. Maintenance "flow days" for the C-5 cargo plane dropped
       from 360 days to about 180 days. As part of this effort, RAFB implemented numerous projects that
       have (1)  eliminated  or reduced the use  of hazardous chemicals,  (2)  reduced raw material
       consumption, (3) eliminated or reduced waste generation and/or emissions from a process, and (4)
       significantly reduced facility space needed for these operations. In addition, the reduced flow time
       increases the availability of C-5 aircraft by 180 days for every period between servicing, reducing
       the overall number of planes needed.

•      Applying Lean to  the C-130 Hercules Aircraft Paint Shop. RAFB lean teams used an adapted
       version of 5S, called  "Six  S" (safety, straighten, sort, scrub, standardize, and sustain), to begin
       applying lean to its C-130 aircraft paint system. 24 instructional classes were conducted on lean, and
       44 new initiatives came from mechanics as a result. These initial lean projects reduced flow days;
       increased production and worker safety; reduced emitted VOCs; reduced excess tools, materials and
       equipment by  39 percent; reduced the number of chemicals used from nine to three, as well as the
       overall amount of chemicals used; reduced storage space by 228 square feet; and generated $373,800
       in direct operating savings.

•      Plastic Media Blast (PMB) Paint Stripping. Dichloromethane (methylene chloride) was once the
       base' s primary means of removing paint from aircraft and parts. Annual use of dichloromethane was
       over one million pounds, with a large amount of resultant hazardous waste. In applying lean to
       maintenance operations, RAFB sought approaches that would both reduce flow time and  lessen
       environmental risk. The base identified the PMB method as an optimal lean process to remove paint
       from the F-15 fighter aircraft.  This method uses compressed air to blast small beads of plastic at
       the painted surface and works well on aircraft with thicker skins (e.g., fighters) but not on thin-
       53Information in this case study was drawn from several articles and web sites, including: "Lean Takes Root At Warner
Robins AFB," Manufacturing News. Volume 8, No. 20, November 16,2001; Lanorris Askew, "C-130 Paint Shop Leans Into
Cutting Flow Days," Aerospace News and Review, Journal of Aerospace and Defense Industry News.  January 4, 2002; also see
http://www.robins.af.mil/index.htm.

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Lean Manufacturing and the Environment	October 2003 | Page 65
       skinned aircraft (e.g., C-130 and C-141 transport aircraft). The spent PMB with paint chips is
       shipped to a manufacturer who uses the PMB/paint chip mixture to make a variety of plastic fixtures
       such as bathroom accessories.

       Alternate Depaint System. RAFB is taking other steps to further lean and improve the environmental
       performance of its paint removal activities. There are two main layers of paint on an aircraft: the
       primer coat and the top coat. The primer coat contains strontium chromate for corrosion protection,
       and the topcoat is for appearances. Finding a method that only removed the topcoat but leaving the
       primer coat intact,  could save a great deal  of time  and money, reduce  hazardous material
       consumption,  reduce hazardous  waste  generation and  reduce  health  risks to the  work
       force—providing a good example of ways in which lean objectives and environmental objectives
       are frequently aligned. The base is researching a two phase system that will allow it to remove the
       topcoat, leaving the primer coat intact. This will be accomplished by using medium pressure water
       (12,000 pounds per square inch pressure) with a semi-automated removal machine and a barrier coat
       that can be applied over the primer coat. RAFB estimates that the project will reduce the number
       of man-hours to  depaint an aircraft by 15 percent the amount of hazardous material used by 50
       percent.

       Next Steps. Based on the success at RAFB, the U.S. Air Force is moving aggressively to implement
       lean throughout its network of logistic centers, and beyond.  The drivers include:
              The Air  Force can significantly increase the percentage of its total aircraft fleet that is
              available for use at any given time without purchasing more aircraft due to the reduction in
              repair and maintenance flow days (saving billions of dollars).
              RAFB has demonstrated that lean can shave millions of dollars off logistic center operating
              budgets of by increasing efficiencies and reducing material costs.
              Lean has successfully fostered a continual improvement-based waste elimination culture that
              engages  employees from all parts of the organization and that can continue to achieve
              performance improvements.

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