USEP-LeanManufacturingndTheEnviroment_USEP__4AH.pdf

United States

Solid Waste and

Policy, Economics

EPA100-R-03-005

Environmental Protection

Emergency Response

& Innovation

October 2003

Agency

(5302W)

(1807T)

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

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.

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

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).

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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