LEAN MANAGEMENT CASE STUDY : GM MBA1 FISE

Many organizations have found that implementing lean concepts and tools results
in improvements in environmental performance, even when lean activities were not
initiated for environmental reasons.
Since environmental savings are often not part of the "business case" for lean
improvement activities, however, organizations implementing lean do not
necessarily quantify the environmental performance gains associated with their
lean initiatives.

TASKS: according to these cases:

- Determine the types of environmental benefits that result from lean
implementation.
-Describe the organization's lean activities and the environmental implications
of those activities.

Case1: study General motors

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.

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.
LEAN MANAGEMENT CASE STUDY : GM MBA1 FISE

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.

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 MANAGEMENT CASE STUDY : GM MBA1 FISE

Lean Enterprise Supply Chain Development

In the early 1990s, 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. 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.
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 that 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
LEAN MANAGEMENT CASE STUDY : GM MBA1 FISE

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 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

• 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 supplier to 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.
LEAN MANAGEMENT CASE STUDY : GM MBA1 FISE

Case2: 3M

From “Pollution Prevention Pays” to

Sustainability at 3M
3M is widely recognized as a pioneer in corporate pollution prevention. In 2005, 3M’s
Pollution Prevention Pays (3P) program celebrated its 30th anniversary. Over the last
31 years, the program has prevented more than 2.6 billion pounds of pollutants and
saved more than $1 billion based on aggregated data from the first year of each 3P
project. The 3P program helps prevent pollution at the source—in products and
manufacturing processes—rather than removing it after it has been created. 3P
projects typically focus on product reformulation, process modification, equipment
redesign, or recycling and reuse of waste materials. As of 2006, 3M employees
worldwide have completed more than 6,300 3P projects.
3P is a key element of 3M’s environmental strategy and in moving toward
sustainability. 3P has achieved that status based on the belief that a prevention
approach is more environmentally effective, technically sound, and economical than
conventional pollution controls. The 3P program targets key environmental metrics:
VOC emissions, TRI releases, water releases, waste generation, energy consumption
and greenhouse gas emissions. With 3P and other environmental management
systems in place, 3M continues to commit to environmental reductions and become
a sustainable growth corporation—one whose products and processes have a
minimal impact on the environment.
3M’s focus on sustainability and sustainable development has increased in recent
years (www.3m.com/sustainability). 3M produces a corporate sustainability report
using the Global Reporting Initiative guidelines. In 2007, 3M was once again selected
for inclusion into the Dow Jones Sustainability Index and named as the Industrial
Goods and Services Sector Leader. 3M has been included in the index and named
leader of its sector since its inception.

Lean Six Sigma at 3M

3M has also been a pioneer in the use of Lean Six Sigma methods and tools to
improve operations and quality. (Lean Six Sigma is a process-improvement
methodology and a collection of statistical tools designed to reduce process
variation and improve product quality.) While Lean Six Sigma activity had been
LEAN MANAGEMENT CASE STUDY : GM MBA1 FISE

underway throughout 3M for several years, 3M launched a corporate-wide Lean Six

Sigma initiative in February 2001, with senior leadership support. As of 2006, more
than 55,000 salaried employees at 3M have been trained in Lean Six Sigma processes
and methodologies, and more than 45,000 Lean Six Sigma projects have been
initiated or closed. Lean and Six Sigma methodologies provide a strong focus for
enterprise wide implementation and are now viewed as basic components of 3M’s
corporate culture. 3M’s Lean Six Sigma vision, “Achieving Breakthrough
Performance for our Customers, Employees and Shareholders,” is firmly rooted in
the company’s long history and culture of innovation.
Lean Six Sigma and Environmental
Goals
3M Environmental, Health, and Safety managers view Lean Six Sigma as a powerful
tool for achieving current and future corporate EHS and sustainability goals. The
company noted that while Lean Six Sigma projects focused on improving operational
efficiency and product yield, direct reductions in energy use, air emissions, waste
reduction, greenhouse gas emissions, and other environmental impacts also
coincided. With its 2000-2005 Environmental Targets (ET’05), 3M began tracking
whether 3P projects have a Lean Six Sigma component by including a check box on
the 3P project form. In 2006, more than 70 percent of all 3P projects relied upon Lean
Six Sigma methods, at least in part.
Lean Six Sigma has helped to reinvigorate the 3P program at 3M, yielding impressive
results. In 2000, 3M set ET’05 goals to address environmental issues through eco-
efficiency and pollution prevention metrics. They were complemented by individual
business unit goals that incorporated product life cycle management within the
unit's strategic plan. The ET’05 goals and results are summarized below.
LEAN MANAGEMENT CASE STUDY : GM MBA1 FISE

In 2005, 3M established a new set of corporate environmental goals from 2005 through 2010
(ET’10), as follows1.

• Reduce volatile air emissions by 25 percent.

• Improve energy efficiency by 20 percent.
• Reduce waste by 20 percent.
• Implement 800 3P projects.

Lean Six Sigma is anticipated to play a major role in 3M’s efforts to achieve the ET’10
goals. Lean Six Sigma has become a powerful engine supporting expanded pollution
prevention activity and effectiveness at 3M. Given Lean Six Sigma’s focus on involving
different voices through the use of cross-functional teams, personnel with environmental
expertise are often involved in Lean Six Sigma project teams. “Voice of Customer” interviews
and survey results also reflect increasing interest in environmental performance results. As the
pace of Lean Six Sigma activities increase at 3M, much of the waste and variation targeted for
elimination in Lean Six Sigma projects will bring environmental improvements on their
coattails. Lean Six Sigma control plans and post-project audits will help to ensure that these
achievements endure.

Lean Six Sigma and Environment,

Health, and Safety Operations at 3M
Since 2001, 3M’s Environmental, Health and Safety Operations (EH&SO) organization has
deployed Lean Six Sigma to improve corporate EHS services and activities. As of February
2007, the EH&SO organization had two Lean Six Sigma black belts and a master black belt
LEAN MANAGEMENT CASE STUDY : GM MBA1 FISE

focused on corporate EHS projects and coaching (for approximately 100 team members). All
EHS team members are required to become Lean Six Sigma green belts and to lead at least one
Six Sigma project. EHS team members receive two weeks of Lean Six Sigma green belt
training, and coaching is provided by black belts. EHS Lean Six Sigma projects have focused
on topics ranging from compliance or due diligence activities to data collection and
management to communications.
While some of the Lean Six Sigma projects launched by 3M’s EH&SO organization have a
positive return on investment using conventional cost reduction-value creation measures, many
projects are justified by driving 3M toward sustainable practices and enhancing 3M’s
reputation.
In addition to the Lean Six Sigma projects launched by the EH&SO organization, multiple Lean
Six Sigma projects are undertaken by EHS personnel at 3M’s numerous manufacturing and
research and development (R&D) facilities worldwide.

3M Innovation and Sustainability

In 3M’s sustainability journey Lean Six Sigma has driven projects in a number of business
processes, including R&D and manufacturing, and with customers. 3M’s large R&D
operations offer both fertile ground for 3P pollution prevention projects and a talented
laboratory for developing products and processes aligned with the company’s commitment to
sustainable development. Going forward, 3M expects to continue capitalizing on these R&D
resources, in addition to continuing a strong focus on manufacturing excellence, reduced
variability and increasing speed for customers. Lean Six Sigma is anticipated to play a
continued central role in driving breakthrough improvements and products that sustain 3M’s
leadership in innovation and sustainability.

All goals are indexed to net sales, except for the goal about the number of 3P
1

projects. 3M had a TRI release reduction goal under ET’05 program. Since most of
3M’s TRI releases are volatile air emissions, these releases are addressed by 3M’s
volatile air emissions reduction goal under the ET’10 program.

Useful Resources
Productivity Press Development Team. Kaizen for the Shopfloor (Portland, Oregon:
Productivity Press, 2002).
Soltero, Conrad and Gregory Waldrip. "Using Kaizen to Reduce Waste and Prevent
Pollution." Environmental Quality Management (Spring 2002), 23-37.
Productivity Development Team. Just-in-Time for Operators (Portland, Oregon:
Productivity Press, 1998).
Productivity Press Development Team. Kanban for the Shopfloor (Portland, Oregon:
Productivity Press, 2002).