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Build Environmental
Conditions into Product Design |
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Other themes in
this case study: |
For similar case
studies: |
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- Prequalification of
suppliers |
Quantum Corporation |
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- Cooperate with
suppliers to deal with end-of-pipe environmental issues |
Intel Corporation |
|
- Inform suppliers of
corporate environmental concerns |
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THE CHALLENGE
"Dig inside the Xerox
Corporation�s newest stand-alone digital copier, and the nuts and
bolts of a big shift in manufacturing swing into view," began a recent
New York Times article. The article was about the shift to
remanufacturing and featured Xerox�s efforts to address this emerging
trend. The "big shift" has been prompted by a number of issues.
The role of business is moving steadily
toward product stewardship and extended product responsibility. In the
future, companies will no longer be able to simply sell a product and
wipe their hands of it, heedless of the disposal burden at the end of
the product�s life. In the past few years, Xerox has recognized both
regulatory and market forces driving this trend. With a history of
leasing products, the company has been dealing with the issue of
end-of-life reuse, recycling, and disposal for quite a while.
Developing take-back legislation in Europe illustrates that
governments are increasingly requiring companies to accept
responsibility for products at the end of their life. Xerox�s
customers themselves have requested that the company take
responsibility for managing its waste streams. This vocal expression
of concern from customers has added a powerful market dimension to the
equation.
In the early 1990s, these factors led
Xerox to look anew at its design and production processes. The company
realized that if it were to be accountable for a product at the end of
its life, it needed to design products to minimize end-of-life
burdens. Xerox, however, has gone a critical step further and decided
that it makes business and environmental sense to design products to
maximize their end-of-life asset potential. Although "design for
environment" often means including fewer hazardous substances and more
recycled and recyclable materials, "design for remanufacturing" means
creating parts and products that can be reused, not just recycled.
The changes that Xerox is undergoing
represent a fundamental shift in how products are conceived, designed,
and produced. Xerox has needed to rethink old ways of doing business,
including dealing with suppliers. Design for remanufacturing demands
that companies work with suppliers to make "smarter" parts and
products. It is a complicated and difficult process, but it has also
proved rewarding.
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Xerox and
Remanufacturing |
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The
push for remanufacturing at Xerox is part of an ambitious set of
worldwide company goals:
Waste-free
factories/waste-free manufacturing. "Waste-free
factory" status is achieved with 90 percent reductions in
emissions, hazardous waste, and solid waste to landfill (using
1990 as a baseline) along with 25 percent use of recycled
content in parts and packaging and a demonstration of efficient
energy use. By using specific goals, plant managers can
incorporate these metrics into their normal business processes
and track their progress.
- Waste-free products.
This effort encompasses product design goals for minimal
material usage and maximum "remanufacturability," energy
efficiency, reduction in emissions, and efficient use of paper
through duplex capability, and other paper-saving features.
- Waste-free offices.
The intention of this program is to enable customers to meet
their waste-free office goals. For example, Xerox products,
consumables, and packaging are designed for durability and reuse
to minimize customers� waste issues. Xerox copy/print cartridges
and toner containers are shipped to customers with prepaid
return labels. Customers ship used cartridges back to Xerox,
reusing the packaging from new cartridges. The returned
cartridges are then remanufactured to the same quality standards
as new ones.
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THE SOLUTION
Having set up a fairly extensive
set of requirements for suppliers, Xerox�s EHS department
has found that communication between the company and the supplier
is a natural result. Often, communication is initiated by the
supplier, which may not fully understand the requirements or
compliance measures. One of the most rewarding results of this
discourse is that some of Xerox�s suppliers are now using its SCEM
tools with their own suppliers, extending the reach of the SCEM effort
to tier II suppliers and beyond.
The Lakes Family of Machines
Although design for remanufacturing is
being incorporated by Xerox product design teams worldwide, it is
being most intensively applied in a family of products dubbed the
Lakes machines. Because environmental concerns and remanufacturing
priorities have defined this product group from its inception, it
provides the best example of how the company is addressing these
issues.
The Lakes family of products is the
test program for reaching company goals to minimize
waste associated with office equipment products. At the heart of the
Lakes product family is a "zero to landfill" goal, which means that
the product is designed to be completely remanufactured, reused, or
recycled at the end of its life. This is an ambitious goal. The first
product from the Lakes line to be released was the Document Centre 265
DC, a mid-volume digital copier.
Designing machines that can be easily
and effectively remanufactured entails a number of changes from
traditional design and even from DFE. Some of these are:
- Process and product changes.
The Lakes team needed new processes to handle the requirements of
remanufacturing, in addition to new products. For example, a
comprehensive parts data base was needed and created to track
materials.
- Design for disassembly.
For remanufacturing to be convenient and cost-effective, products
needed to be disassembled easily.
- Fewer parts. It is
important that products to be remanufactured include fewer parts to
facilitate easy disassembly.
- New part specifications.
Parts that are designed to be easily reused without a loss in
quality or performance are at the heart of the remanufacturing
issue.
- New tools.
Remanufacturing requires new tools for product testing and tracking
that ensures product quality and performance equivalent to that of
newly manufactured equipment.
Together, these elements represent a
new design paradigm. Suppliers had to be involved for this effort to
be successful. "Such an ambitious project," says Anne Stocum, manager
of environmental market leadership at Xerox, "required intense
partnership with suppliers." Xerox, therefore, involved suppliers in
the project early in the process. Ed de Jong, principal environmental
systems engineer, explains the process: "We brought in all of our
external suppliers early on and explained our philosophy to them. We
wanted them to understand the project and to support it. And we needed
their help." The suppliers for the Lakes machines were brought to the
program site for a supplier symposium, at which the environmental
vision behind the products was explained. Lakes staff discussed
remanufacturing and the company�s waste-free goals.
This event gave suppliers early
exposure to new ideas and gave them the opportunity to decide whether
or not to be part of the project. Those that "bought into" the concept
accepted responsibility for actively participating in the design
process for their parts or assemblies and for providing waste-free
solutions for their products. Furthermore, most of the suppliers
involved in the project accepted responsibility for remanufacturing
their parts or for recycling any material determined to exist at the
end of its life.
Remanufacturing has, therefore, meant a
considerable shift in focus for most of the projects� suppliers. Their
business with Xerox is gradually involving fewer and fewer "new-build"
orders and more and more remanufacturing. The Lakes team believes that
most suppliers are satisfied with this change. Although they needed to
adapt their operations, they are guaranteed ongoing business, as Xerox
customers return the Lakes machines for remanufacturing.
Xerox established multifunction teams
to see the Lakes project through various stages of development. These
teams have worked closely with suppliers along the way, setting goals,
involving suppliers in design and decision processes, and supporting
suppliers after products reached the point of
manufacture and remanufacture. Part of the design for remanufacturing
process has been to add new components to part specification drawings.
It is now standard for the drawings to include remanufacturing and
disposition codes. These ensure that it is clear whether each part is
to be reused, remanufactured, or replaced and how it is to be recycled
at the end of its life. To facilitate the remanufacturing and
recycling processes, suppliers are required to mark products clearly
with this information. (See "SCEM at Xerox" box below.)
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SCEM at Xerox |
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Design for remanufacturing goals are incorporated into Xerox�s
more general program to "green the supply chain." This program is
defined in their Global Purchasing Supplier EHS Requirements (EHS
1001). Five specific requirements are:
- Suppliers agree to comply with
all applicable governmental EHS regulations.
- Suppliers agree to provide Xerox
with chemicals, supplies, parts, assemblies, and end items that
have not been processed or manufactured using ozone-depleting
substances (ODSs) and/or do not contain any ODSs.
- Suppliers agree to provide
packaging and packaging components, such as inks, dyes,
pigments, adhesives, and stabilizers, that do not contain toxic
heavy metals, including cadmium, lead, mercury, or hexavalent
chromium.
- Suppliers agree to work with
Xerox to achieve the environmental leadership�driven goals for
product design (where applicable), as the company specifies in
EHS 1001. These specifications include prohibited/restricted
materials, packaging material guidelines, recycled content and
recyclability requirements, and hazardous materials minimization
guidelines.
- Suppliers are to mark all
plastic parts, assemblies, and end items provided to Xerox with
the resin content identification as specified by Xerox.
Other materials accompany these
requirements, including a list of ODSs, product design
environmental requirements, and a list of methods and requirements
for part-marking identification.
Before a potential supplier can be
placed on Xerox�s approved vendor list, the supplier must agree to
work toward full compliance with EHS 1001. After it has met the
prequalification requirement, suppliers interact with EHS through
a partnership between the EHS and Global Purchasing departments.
This partnership allows environmental criteria to be an added
phase of the supplier assessments, which occur regularly. |
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Quality issues
The Lakes team wanted to ensure that
the remanufacturing process would deliver a high-quality product
indistinguishable from a completely new product. To achieve
high-quality standards, all previously used parts are cleaned,
requalified, and tested to meet the same standards as newly built
parts. The Lakes machines are all manufactured on one line, so
machines with previously used components are equivalent in process,
appearance, and service from those containing exclusively newly built
parts. The final barometer of quality is the guarantee; remanufactured
products have the same "total satisfaction guarantee" as other Xerox
products.
Economic issues
Several economic issues are related to
remanufacturing. The most obvious is that the remanufacturing process
provides enormous savings in materials. Used products shift from being
a disposal liability to an asset. Remanufactured parts recover both
the cost of their raw materials and also much of the added value that
the original manufacturing process contributes. (This contrasts with
using recycled material, which recoups the cost of materials but not
the added value of the original manufacturing process.) Originally, it
may be more expensive to make parts that will be remanufacturable.
Extra costs are quickly recovered, however, with two or three uses. In
dollar terms, the costs of remanufacturing a part are substantially
lower than manufacturing from raw materials. In environmental terms,
of course, the impacts of remanufacturing are negligible in comparison
with manufacturing from raw materials.
The cost of DFE and design for
remanufacturing is the final economic consideration. DFE is often
perceived as costly. The designers on the Lakes team are trying to
spread the message that this is not the case; they have found that DFE
is no more expensive than regular design.
Extension to the Rest of the Company
The Lakes project was intended as a
pilot program, and its lessons are being distributed to the rest of
the company for application. The approach of the Lakes group
represents a fundamental culture change, one that may be difficult to
convince others to adopt. Yet the Lakes group has achieved significant
success in meeting environmental and financial goals and has a strong
track record for comparison purposes (see below). In addition to the
environmental benefits, the Lakes team is convinced that they can
prove to others that this new way of doing business is economically
beneficial.
THE RESULTS
Remanufacturing has taken a firm
hold at Xerox, extending from equipment and component parts to the
consumable supplies used in the machines. At this point, 90 percent of
Xerox-designed equipment is designed to be remanufactured. Within the
Lakes Document Centre 265 DC copier, 97 percent of the component parts
were designed to be recyclable and 84 percent to be remanufacturable.
In 1997 machine remanufacturing and parts reuse prevented 30,000 tons
of waste from going to landfills. The company offers a wide array of
consumables return programs, partnering with customers to return
cartridges, toner containers, and even waste toner to Xerox for reuse
or recycling. The company provides take-back services to customers on
demand; recent figures indicate that Xerox�s cartridge return program
for mid- and high- volume machines has enabled 65 percent of eligible
cartridges to be returned to Xerox for remanufacturing.
Several gauges of success for the
program exist. Costs and financial benefits, as always, are a keen
consideration. "The major metric of success," notes Anne Stocum, "is
financial savings." The program has succeeded in this category. The
Asset Recycle Manufacture Organization, which was the Xerox group
initially responsible for implementing recycling and remanufacturing
goals, recorded savings of more than $50 million in its first year of
operation. Remanufacturing programs continue to yield financial
savings by avoiding raw material purchases and landfill costs. In
fact, several hundred million dollars are saved each year. DFE,
meanwhile, is proving no more expensive than other design processes.
"The data from the Lakes program is being used to convince new product
engineers that designing for the environment is not a cost. It may
take more teamwork and knowledge, but Lakes has demonstrated that the
best design for the environment is also the most cost-effective
overall," reports Tim Sallade, manager of environmental design and
compliance at Xerox.
Progress toward environmental goals is,
naturally, another major metric of success. Remanufacturing is
certainly helping the company move toward its goals of producing
waste-free products in waste-free factories. The Lakes program goal of
"zero to landfill" has not yet been met, but the team is making
improvements, and they believe that they are close. Internally, they
are satisfied that they have the process capability to meet the goal.
Suppliers will be key in ensuring that the gap between goal and
reality is reduced.
Xerox hopes that the emphasis on
remanufacturing and high environmental standards will increase market
share and customer loyalty. The Document Centre 265 DC is certified to
several international environmental labels, including the German Blue
Angel, which has strict requirements for product design for
remanufacturing, energy efficiency, and emissions. Xerox officials are
confident that remanufactured products have gained market acceptance.
In terms of achieving customer loyalty, the company realizes that
helping customers achieve waste-free offices is an attractive aspect
of their program. The company policy of taking back everything that
goes into an office�from equipment to packaging�helps customers
achieve environmental goals and reduce landfill costs, and generates
customer satisfaction.
| An
additional benefit of the company�s environmental programs has
been the assurance that they will not encounter international
trade barriers or shipping prohibitions as a result of
environmental regulations. Part of the DFE program in its early
stages was to compile the world�s strictest environmental
regulations and make sure that Xerox products would not face
limited market access due to regulations. The DFE process has also
ensured that used parts being transported for remanufacturing and
recycling will not face shipping obstacles because of hazardous
waste content. In an era of changing definitions of material
toxicity and increasingly stringent regulations worldwide, Xerox
has designed products that will not cause EHS-related problems.
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"The
more we close the loop in the product delivery process, the more
we discover both the environmental and business benefits of doing
so. By remanufacturing and designing for the environment, we
reduce our costs, minimize the effect we have on the planet, and
please our customers. We are convinced that being good to the
environment is also good for business�and have every intention of
keeping it that way."
�1997 Xerox EHS
Progress Report |
The shift to remanufacturing has
resulted in benefits for suppliers as well. The savings from reduced
landfill costs that benefit Xerox also benefit its suppliers, and
suppliers benefit from reduced risk potential from hazardous wastes as
well. As discussed above, suppliers are guaranteed ongoing business
from the process of remanufacturing their parts. In addition,
cooperating in the design process and participating in a new approach
to manufacturing exposes Xerox�s suppliers to new techniques and
technology. As more companies adopt remanufacturing programs, these
suppliers will have a competitive advantage in a market seeking a new
approach to design and manufacturing.
The same "ahead of the game" argument
applies to Xerox. Company staff firmly believe that remanufacturing is
the way of the future�not for glamorous reasons, but for basic,
practical ones. "It is happening. It has to happen," says Ed de Jong:
"Companies simply can�t afford to buy new materials all the time."
Although the relationship between Xerox
and its suppliers is emphasized here, the story deserves some
attention in a different light. The remanufacturing program and many
of Xerox�s environmental initiatives have been spurred and encouraged
by its customers. Customer demand for extended product responsibility
and waste management, in fact, was one of the motivating factors that
brought about the remanufacturing focus. Kinko�s, one of Xerox�s large
customers, has been vocal in asking Xerox for waste management
assistance and in participating in working toward solutions. As a
result of its efforts as a green supplier, Xerox received the "Best of
Kinko�s Vendors for Environmental Awareness" award in 1997. This
serves as a reminder that product stewardship approaches are
increasingly affecting the extended supply chain.
COMPANY INFORMATION
Founded in 1906 as The
Haloid Company, the company was named Xerox Corporation in 1961. The
company produces document-processing products, systems, and services.
In 1998 revenues were $19.4 billion and the company employed 92,700
people worldwide.
CONTACT INFORMATION
Xerox�s web site is
http://www.xerox.com. EHS
information is located in the "About Xerox" section of the Xerox web
site.
| Contacts: |
|
| Elizabeth Campbell |
Anne Stocum |
| EHS Regulatory Affairs
Manager |
Manager, EHS Market
Leadership |
| Xerox Corporation |
Xerox Corporation |
| Building 205-99F |
Building 205-99F |
| 800 Phillips Road
|
800 Phillips Road
|
| Webster, NY 14580 USA |
Webster, NY 14580 USA |
| (716) 422-5421 |
(716) 422-1655 |
|
Liz.Campbell@usa.xerox.com |
Anne.Stocum@usa.xerox.com |
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