Six typical cost reduction examples : raw materials and supplies; water and waste water; energy; waste management; transport and travel; and packaging.

Cost Reduction -- A Benefit of Environmental Management

I. Introduction
The practical examples presented here are taken from the book, Reducing Costs through Environmental Management (Kosten senken durch Umweltmanagement), and show how to achieve not only environmental benefits but also economic success. The book is edited by Dr. Maximilian Gege and prepared in cooperation with the German Environmental Management Association (B.A.U.M.) team, giving more than 1000 examples of cost reductions achieved through environmental management.

This paper presents six typical examples that are easy to transfer to other contexts. The examples are categorized into six areas: raw materials and supplies; water and waste water; energy; waste management; transport and travel; and packaging.

II. Environmental action in six areas

1. Raw materials and supplies

The following are the most frequently used measures with the greatest cost cutting effect in the materials and auxiliary materials sector:

Environmental optimisation of products and changes in production processes to reduce material input, in particular for material which is hazardous for the environment

.Recovery of production residues and return of used products, recycling them directly for new products.

An example from
Louis Leitz International GmbH & Co. (office supplies):

Use of recycled injection die casting granulate (savings: DM 450,000)

The manufacture of plastic articles using injection die casting technology gives rise to small quantities of waste, which previously went to the recycling industry. A crusher has been installed in order to return this waste material directly into the production process, after transforming the waste material to a granulate.The granulate obtained in this way can be added to the production process without impairing product quality. The savings are about 220,000 kilograms of new injection die casting granulate per annum. As the cost of making the granulate is 75% below the cost of new material, this reduces purchasing cost by DM 418,000 per annum. It also eliminates the disposal charge for used plastic. Waste disposal costs were thus reduced by about DM 32,000 per annum.

Total savings were DM 450,000 per annum. The amortisation period for the crusher plant was just one year.

2. Water and waste water

The following are the most frequently used measures with the greatest cost cutting effect in the water/waste water sector:

Establishment of water recycling circuits, mostly in connection with cleaning operations, to allow process water to be used several times in the production process.

Replacement of water-intensive processes by new technologies which require only small quantities of water or do not use water at all.

Example from
Siemens Nixdorf Informationssysteme AG (electronics):

Water recycling circuit in electroplating (DM 714,000)

A closed-cycle rinsing water system was established in electroplating. The system includes mechanical filters and an ion exchanger for contaminant removal before the water is reused for rinsing.

Related to total water consumption, about 70% of the water is retained in the cyclical system, which means savings of some 140,000 m2 of water per annum (DM 714,000). The investment in the closed-cycle system and the ion exchanger was DM 1.1 million, giving a payback period of about 1_ years.

3. Energy

The following are the most frequently used measures with the greatest cost cutting effect in the power sector:

Use of combined heat and power systems (CPH) in companies having a high demand for electricity and process heat.

Energy management system, i.e. including all energy flows and individual solutions based on this.

Use of waste heat from machines, cooling water, etc., for space heating or process pre-heating.

Control of machines, heating, lighting, air-conditioning, etc., closely matched to needs. This avoids idle time and saves energy.

Example from
Grammer AG/Grammer Bürostühle GmbH (office furniture):

"Energy Commissioners" identify saving potentials (DM62,000)

The appointment of "Energy Commissioners" enabled this company to achieve economies of about 9% on power in the 1995 to 1996 period, with consequent savings of some DM62,000. Individual measures included:

Switching off machinery during breaks.
Replacement of the central compressed air system by small compressors, thus permitting shutdown wherever compressed air is not required.
I Identification and elimination of leaks in the compressed air system. Separation of power supplies to the individual production areas, thus making it possible to disconnect each area individually.

4. Waste management

The following are the most frequently used measures with the greatest cost cutting effect in the waste management area:

Waste stream separation, i.e., development of a comprehensive separation concept, ideally with colour coding, to ensure separation of recycling materials from residual materials throughout the process.

Recycling of materials directly in the production process, wherever possible. This eliminates charges for waste disposal and at the same time reduces the cost of purchasing raw materials and supplies.

Example from
Carl Schenck AG (plant and machinery building):

Colour coding system to sort materials for recycling (DM180,000)

A unified colour coding system was set up to mark the bins used to sort recyclable materials.

This reduced the amount of household-type industrial waste by 30%, thus cutting the cost of waste disposal by DM180,000 per annum.The payback period for the purchase of new collecting bins and for colour coding was less than one month.

5. Transport and travel

The following are the most frequently used measures with the greatest cost cutting effect in the transport and travel sectors:

Optimisation of transport logistics for optimal use of transport capacity and avoidance of standstill times and empty trips.

Replacement of business travel by using modern electronic communications.

Example from
Felix Schoeller Holding GmbH & Co. KG (plastics processing):

Reduction of paper sludge quantities (DM350,000)

Activities were introduced to reduce the production of paper sludge, in order to reduce transport costs and their environmental effects.

The sludge pressing machinery was expanded and modified for mechanical reduction of the residual moisture content in paper sludge de-watering. This reduced the tonnage of paper for disposal, with savings of DM350,000 per annum at one location. The investment of DM 250,000 paid for itself in eight months.

6. Packaging

The following are the most frequently used measures with the greatest cost cutting effect in the packaging sector:

The use of disposable packaging materials of all kinds, e.g. re-use of cardboard boxes, and the development and use of reusable plastic containers.

Reduction of packaging material quantities by using less packaging, different packaging, and changing unit sizes; changing from high-cost, environmentally harmful materials to more environmentally acceptable materials.

Example from
Viessmann Werke GmbH & Co. (plant and machinery):

Newly developed re-usable packaging system using wood (DM2.2 million)

This company developed a re-usable packaging system using untreated wood, for all series products in the small and medium output range, e.g. for boilers.This system qualifies for the "Blue Angel" environmental label, and is designed for fast and easy removal of the equipment from the packaging. The packaging elements are then tied together for easy handling by means of elastic clamping fixtures which are already attached to the packaging material, and are collected by the manufacturer for re-use as packaging material.

The return rate is more than 80%. This means each packaging set can be re-used more than seven times. The reduction in wood consumption is more than 90%. There are further reductions in the waste and energy sectors. The cost saving with this re-usable packaging system is about DM 2.2 million per annum.

III. Summary
The cost reduction examples given here, and the others cited in the book, Reducing Costs through Environmental Management, are characterised by some common points among the companies involved:

High priority is given to environmental protection.

Environmental protection is firmly established in company organisation, with clearly defined responsibilities and contact persons.

Environmental guidelines and goals are clearly defined.

More than half these companies are validated/certified (at least at some plants) in accordance with the EMAS (EU's Eco-management and Auditing Scheme) or ISO 14001, or intend to obtain these qualifications in the near future.

Know-how is disseminated rapidly and effectively by inter-company exchange of experience, as organised by member associations of INEM, e.g. B.A.U.M. in Germany and KÖVET in Hungary.

This exchange of experience is very important, especially to enable small and medium-sized businesses to achieve savings.

Source : Dr. Maximilian Gege
Bundesdeutscher Arbeitskreis für umweltbewusstes Management (B.A.U.M. e.V. )
Osterstrasse 58
20259 Hamburg
Germany

Home Page: http://www.baumev.de

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