CS

PChemical Strategies Partnership

a project of The Canopy Institutefounded by The Pew Charitable Trustswith major support from The Heinz Endowments

Jill Kauffman JohnsonExecutive Director, Chemical Strategies

Partnership423 Washington Street, 4th Floor,

San Francisco, CA 94111, USA Jill@chemicalstrategies.org

www.chemicalstrategies.org

Testing Chemical Management Services In Schools and

Universities

WRPPN Conference

October 16, 2003

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What is the Chemical Strategies Partnership?

• The Chemical Strategies Partnership (CSP) is a non- profit project funded by foundations, government, and private companies

• CSP is helping to promote the economic and environmental benefits of chemical management services (CMS)

CSP MissionTo reduce chemical use, waste, and cost through transformation of the chemical

supply chain

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Chemical Management Services (CMS) is a market-based approach to reducing chemical use and costs

• A strategic, long-term relationship in which a customer contracts with a service provider to supply and manage the customer's chemicals and related services

• The provider's compensation is tied primarily to quantity and quality of services delivered, not chemical volume

• Goes beyond invoicing and delivering product; CMS optimizes processes and continuously reduces chemical lifecycle costs, risk, and environmental impact

• These chemical services are often performed more effectively and at a lower cost than companies can do by themselves

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CMS…managing the entire chemical lifecycle

upstream downstream

The Chemical Lifecycle

Chemical management can cost up to $10 for every $1 of chemical purchased.

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Under the CMS model, formerly conflicting incentives are now aligned

Traditional relationship:Conflicting incentives

Material(cost, volume)

Supplier

wants to increase

Buyer

wants to decrease

CMS model:Aligned incentives

Lifecycle costs (material, labor,

waste management)

Service provider

wants to decrease

Buyer

wants to decrease

Changing the supply chain model results in potential costs savings and

environmental gains

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CMS is a growing trend in the US

CMS market penetration across sectors

• Automotive ≈ 50-80%

• Aerospace ≈ 10%

• Metalworking ≈ 20%

• Electronics ≈ 35%

Range in types of CMS Providers• Stand-alone chemical service providers• Chemical manufacturers with service

offerings• Chemical distributors with service offerings

Source: CMS Industry Report 2000, Chemical Strategies Partnership

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Overall cost savings reported by CMS customers are significant

Key results

•5-25% savings in first year

•30-80% of long-term savings from reducing management costs

•80% of customers report chemical volume reduced

CMS providersCustomers

Savings as a percent of total program costs

0

10

20

30

40

50

60

70

Year 1 Year 2 Year 3 Year 4 Year 5

Source: CMS Industry Report 2000, Chemical Strategies Partnership

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80

80

67

67

53

40

33

93

87

93

73

73

60

73

73

87

Improved data management is the benefit most widely cited by customers

Improved data managementReduced chemical purchase costsImproved inventory management

Improved delivery

Reduced waste costs

Reduced labor costs

Reduced overhead/fixed costsDecreased process down time

CustomersCMS providers

Benefits cited, percent of respondents

Source: CMS Industry Report 2000, Chemical Strategies Partnership

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Environmental benefits are especially strong

80

73

53

47

40

27

40

Chemical use reduction

Environmental information management

Improved MSDS management

Elimination of hazardous materials

Waste reduction

Waste cost reduction

Other

Benefits cited, percent of customer respondents

Source: CMS Industry Report 2000, Chemical Strategies Partnership

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Case study: General Motors

Programs in over 90% of plants worldwide• Average total chemical use reduction of 30%

• Total cost savings above 30%

• Environmental benefits: Reductions achieved over 6 years in one CMS contract

– 54% decrease in purge solvent– 77% decrease in paint stripper– 80% decrease in solvent masking– 75% decrease in VOC emissions– 83% reduction in detackification chemicals

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CSP pilot case study: Raytheon Company

Streamlined OperationsAutomated ordering, chemical gate-keeping, on-line MSDS

and EHS data for reporting, chemical use and waste generation tracking, consolidated sourcing, procurement and inventory management

Improved Service and QualityOn-time delivery rose from a base of 82% to an average of

91% in the first 5 months. Scrap rate dropped considerably.

Reduced CostsPayback of the program in the first 6 months. Expected

savings over the 5 year contract is 30%

Reduced Waste– Consolidated regional inventories and higher inventory

turn rates have lead to lower scrap rates.

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CSP pilot case study: Seagate Technology

Benefits realized in first twelve months at one facility• Aligned incentives and guaranteed savings – supplier generates no profit from volume sales

• Reduced onsite chemical inventory/handling (JIT)- Reduced 10,000 sq. ft. of inventory by 50%- Reduced $800,000 in carrying costs of chemicals- Eliminated chemical scrap – approx. 7% of inventory

• Improved chemical processes/shared best practices- Photo-resist process: substituted more benign product and extended bath life 3-5 times, resulting

in savings of $50,000/month

• Eliminated distributor markup on chemicals

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Testing CMS in the Education and Research Institution Context

Project Goal

• To explore the viability of the Chemical Management Service (CMS) model for the education and research institution setting

Project Activities

• Develop case studies to illustrate current examples of “best practice” in chemical management

• Two pilot projects to explore whether a CMS program could more cost effectively facilitate chemical management

Funding provided by U.S. EPA Office of Solid Waste

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Why be concerned about chemical management in educational institutions …

Recent EPA enforcement initiatives focusing on universities

• identified violations of environmental regulations, including improper handling and disposal of chemicals

• safety concerns with old chemical storage and large numbers of people handling chemicals

• a wake-up call to universities/colleges for the need to improve chemical management

Universities/colleges are evaluating how to improve chemical inventory process, and tracking of chemical use, storage and disposal.

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Challenges for chemical management in the university setting …

• Decentralized chemical purchasing and management responsibilities- Chemicals brought on campus in “the trunk”

• Chemical profile: high diversity and low volume

• Lack of information on quantity of chemical use and disposal

• Strong resistance from chemical users - Researchers see any form of chemical

management or control as stifling to research and innovation

• Lack of resources to identify and implement alternative chemical management options

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CSP Pilot: Stanford Linear Accelerator Center (SLAC)

Key drivers for considering a CMS Program

1. Regulations driving the need for quality information

• Clean Air Act Title V

• DOE requirements

• CA based regulations

2. Cost reduction: chemical management cost analysis preliminary results - 4.8:1

3. Two primary goals for designing their CMS program

• “To structure the workplace in such a way it enables, rather than hinders, people’s ability to get the job done”

• “To see if efficiency can lead to cost savings”

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SLAC information system requirements

Core Requirements• Transaction-based chemical container tracking• Facility-wide HAPs, POC usage tracking• MSDS management• Facilitate ESH compliance reporting

Toxics Release Inventory (TRI)

Hazardous Materials Business Plans

Prop 65

California Air Toxics

California Accidental Release Planning and Prevention

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Reducing costs to the enterprise

Identifying the management costs associated with chemicals highlights the opportunities for cost reduction

Data Sources- Expense records- Inventory tracking system- Purchasing records- Facilities databases- Interviews/surveys- Production control

Inventory37.6%

Procurement5.2%

Emergency Response/Safety

4.2%

Disposal/Treatment26.6%

EHS8.6%

Use13.5%

Delivery4.3%

Sample data

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Approaches to overcome these challenges

University of New Hampshire

• Conducted two campus-wide inventory audits

• Developed an in-house information software for: barcoding/tracking of chemical inventory chemical exchange submitting on-line request for hazardous waste

disposal MSDS management and other laboratory safety

functions

• Established a centralized chemical receiving system to facilitate chemical tracking

St Mary’s College• Implemented an off-the-shelf program

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Would CMS be an effective option?

Pilot study: Dartmouth College

• Baseline chemical management costs Preliminary results 1.4:1

• Evaluate the value CMS providers can bring in

• Evaluate the cost-effectiveness of CMS vs. other management options

- internal solution

- off-the-shelf system

Pilot study: UC Merced• Greenfield campus

• Planning a best-in-class chemical management system