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Jill Kauffman Johnson Executive Director, Chemical Strategies Partnership

Testing Chemical Management Services In Schools and Universities WRPPN Conference October 16, 2003. Jill Kauffman Johnson Executive Director, Chemical Strategies Partnership 423 Washington Street, 4 th Floor, San Francisco, CA 94111, USA Jill@chemicalstrategies.org

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Jill Kauffman Johnson Executive Director, Chemical Strategies Partnership

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  1. Testing Chemical Management Services In Schools and Universities WRPPN Conference October 16, 2003 Jill Kauffman Johnson Executive Director, Chemical Strategies Partnership 423 Washington Street, 4th Floor, San Francisco, CA 94111, USA Jill@chemicalstrategies.org www.chemicalstrategies.org

  2. 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 Mission • To reduce chemical use, waste, and cost through transformation of the chemical supply chain

  3. 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

  4. CMS…managing the entire chemical lifecycle • The Chemical Lifecycle upstream downstream Chemical management can cost up to $10 for every $1 of chemical purchased.

  5. Under the CMS model, formerly conflicting incentives are now aligned • Traditional relationship: • Conflicting incentives • CMS model: • Aligned incentives • Service provider • Supplier • Buyer • Buyer • Material • (cost, volume) • Lifecycle costs (material, labor, waste management) • wants to increase • wants to decrease • wants to decrease • wants to decrease • Changing the supply chain model results in potential costs savings and environmental gains

  6. 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

  7. CMS providers Customers Overall cost savings reported by CMS customers are significant • Savings as a percent of total program costs • 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 • Year 1 • Year 2 • Year 3 • Year 4 • Year 5 Source:CMS Industry Report 2000, Chemical Strategies Partnership

  8. Customers CMS providers Improved data management is the benefit most widely cited by customers • Benefits cited, percent of respondents • Improved data management • Reduced chemical purchase costs • Improved inventory management • Improved delivery • Reduced waste costs • Reduced labor costs • Reduced overhead/fixed costs • Decreased process down time Source:CMS Industry Report 2000, Chemical Strategies Partnership

  9. Environmental benefits are especially strong • Benefits cited, percent of customer respondents • Chemical use reduction • Environmental information management • Improved MSDS management • Elimination of hazardous materials • Waste reduction • Waste cost reduction • Other Source:CMS Industry Report 2000, Chemical Strategies Partnership

  10. 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

  11. CSP pilot case study: Raytheon Company • Streamlined Operations Automated 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 Quality On-time delivery rose from a base of 82% to an average of 91% in the first 5 months. Scrap rate dropped considerably. • Reduced Costs Payback 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.

  12. 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

  13. 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

  14. 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.

  15. 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

  16. 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”

  17. 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

  18. 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 Sample data

  19. 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

  20. 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

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