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Copyright ©2012 E. I. du Pont de Nemours and Company. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates.
Achieving Sustainable Growth Through Business ProductivityOptimization
March 19, 2012
Juan AguirianoManaging Director, WorldwideSustainable OperationsSustainable Solutions
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Sustainability Contact – The DuPont Bradley curve
� Management Commitment
� Condition of Employment
� Fear/Discipline
� Rules/Procedures
� Supervisor Control,Emphasis, and Goals
� Value All People
� Training
� Personal Knowledge, Commitment, & Standards
� Internalization
� Personal Value
� Care for Self
� Practice, Habits
� Individual Recognition
� Help Others Conform
� Others’ Keeper
� Networking Contributor
� Care for Others
� Organizational Pride
� Natural Instinct
� Compliance is the Goal
� Delegated to Manager
� Lack of Management Involvement
Dependent Independent InterdependentReactive
Pro
ductivi
ty, Q
ualit
y,
Pro
fita
bili
ty, S
afe
ty Issu
es
Organization cultural maturity
Topics
• The Drivers for Sustainability
• DuPont Sustainability Journey
• The Roadmap to Sustainable Growth
• Sustainable Operations: The DuPont Production System
• DuPont Sustainable Solutions
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The Drivers for Sustainability
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Prime Minister of Malaysia driving sustainable growth...
� BBC May 19, 2011: ‘Prime Minister NajibRazak wants to wave goodbye to "business-as-usual" growth
� Kuala Lumpur May 17, 2011: The Malaysian Prime Minister announced the launching of an ambitious plan to build a "green economy" in Malaysia with the help of an international advisory councilthat includes an impressive cast-list*
� The initiative is part of economic reforms instituted by Prime Minister Najib Razakaimed at pushing the Southeast Asian country towards developed-nation status by 2020.
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Including Jeffrey Sachs, special advisor to UN Secretary-General Ban Ki-moon; Rita Colwell, former head of the US National Science Foundation; Nobel Medicine laureate Richard Roberts, currently chief scientific office with New England Biolabs; and Kiyoshi Kurokawa, former science advisor to the Japanese prime minister. YBhg Dato' Shamsul Azhar Abbas
External “Drivers” for companies to be more sustainable
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External drivers� Volatility, magnitude and escalation of raw materials costs
and energy are increasing the urgency to drive improvements in efficiency and productivity
� Governments and global institutions are introducing new environmental and energy management regulations and policies, pressuring companies & societies into action.
� Companies are expected to publish sustainability improvement goals and are being held accountable for delivering results.
� Sustainability is being used as a powerful strategy to lower the cost of goods and attract customers at every level globally.
1. Resource costs
2. Public policy
4. Public accountability
5. Competition
� The Investment community is increasing the scrutiny on a company’s sustainability performance and capabilities when making investment choices.
Sources: 1Generation IM (2007), 2Freshfields Bruckhaus Deringer (2005). 3EU Eurobarometer Survey (2008). 4Salterbaxter (2007)
3. Access to capital
Sustainability Challenges Across different sectors
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Energy (Oil & Gas, Power)
� Exploitation of unconventional resources� Resource nationalization and growth of NOCs� Shift in global wealth distribution� Adapt grid to intermittent renewables and new
uses of electricity (e.g., for electric cars)� Increase access to electricity
Chemicals
Mining & Metals
Processing
Transportation (Rail, Aviation, Infrastructure)
� Increasing and more stringent regulations� Increasing prices of raw materials� Shifting production and demand between
geographies and segments
� Decreasing quality of ore fields leads and increasing exploitation difficulties lead to lower margins
� Increasing regulations
� Increased travel demand and changing behaviors
� Fuel availability and price� Aging transportation infrastructures
� Climate change / carbon risk� Smart energy� Low-carbon / renewable energy� EHS excellence� Socio-economic impact of activities
� EHS excellence� Sustainable product portfolio� Sustainable supply chain� Product regulation
� EHS management� Climate change and carbon regulation� Land use and claims� Social development in rural area� Human rights� Clean technologies
� Climate change� Carbon regulation� Impact of infrastructure
Key End Markets Industry challenges Sustainability challenges
Risk Mitigation
Cost Reduction
Competitive advantage
Revenue generation
Operational Efficiency
Innovation
Influence on Society and the competitive landscape
Awareness and Compliance
Source: M. E. Porter and M. R. Kramer - ‘Strategy & Society - The Link Between Competitive Advantage and Corporate Social Responsibility’, Harvard Business Review, 12/2006
…Global players consider Sustainability as a prerequisite for business success driving them to a clear positioning to capture the benefits, for existing and future assets
Operational Excellence Sustainable GrowthLicence to Operate
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DuPont Sustainability Journey
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The creation of shareholder and societal
value while we reduce the
environmental footprint* along the
value chains in which we operate.
* DuPont defines “footprint” as all injuries, illnesses, incidents, waste,
emissions, use of water and depletable forms of raw materials and energy.
The Mission of DuPont
SUSTAINABLE GROWTH
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Business Integration
1970 1980 2000
Compliance
Journey Toward Sustainable Growth
CEO Ed Woolard
takes a stand, 1989
CorporateEnvironmentalism
Va
lue
Footprint Reduction Goals
Toxic air emissions: 70%
Air carcinogens: 90%
GHG emissions: 40%
Hazardous waste: 35%
Actual Reductions by 2000
Toxic air emissions: 75%
Air carcinogens: 92%
GHG emissions: 55%
Hazardous waste: 46%
1990
Based on a foundation of environmental stewardship
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Journey Toward Sustainable Growth
Based on a foundation of environmental stewardship
Business Integration
1970 1980 2000 2010
Compliance
CEO Ed Woolard
takes a stand, 1989
CorporateEnvironmentalism
SustainableGrowth
Market-facingGoals
Va
lue
Footprint
Reduction Goals
Energy Goals
1990
CEO Chad Holliday,
Sustainable Growth
Mission
13
Cost savings: Over $6 Billion (USD)
Industry recognition: “Laggard” to “Leader”
427th consecutive quarter dividend
So far, DuPont has achieved a significant footprint reduction
* TRI = Toxic Release Inventory
Sources:
� DuPont Global Reporting Initiative (GRI) report:http://www2.dupont.com/Sustainability/en_US/assets/downloads/2011_DuPont_GRI_Report.pdf
� DuPont Sustainability Progress Report:http://www2.dupont.com/Sustainability/en_US/index.html
Striking the Sustainability Balance: Establishing & Implementing an Effective Sustainability Strategy7/10/2013
14
Reducing Environmental Footprint
� Greenhouse Gas Emissions > 14.62 MM metric tCO2eq
� Water Conservation > 32 billion gallons
� Fleet Fuel Efficiency > 100% leading tech vehicle
� Air Carcinogens > 0.9 million pounds
� Independent Verification of Site Programs > 100 % site
Serving the Marketplace
� Environmentally Smart Market Opportunities from R&D Efforts > 640 MM$
� Products that Reduce Greenhouse Gas Emissions > 2 Billion $ revenues
� Revenues from Non-Depletable Resources > 8 Bllions $ revenues
� Products that Protect People > 1.000 products
We are also on track to deliver on our 2015 Footprint and Market Facing Goals
Achieving Sustainable Growth Through Business Productivity Optimization7/10/2013
DuPont Sustainability Progress Report:http://www2.dupont.com/Sustainability/en_US/DuPont_2010_Sustainability_Progress_Report.pdf
The Roadmap to Sustainability
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16
In the early 90’s, Chad Holliday, DuPont CEO’s at that time, identified the critical success factors for sustainable growth
1. Vision Clearly Defined by Leadership at the Top
2. An Implementer
3. Set Public Goals/Metrics so Everyone has Something to Measure Progress Against
4. Organizational Engagement and Culture Transformation
5. Corporate Sustainability Planning Process – Fully Integrated with Strategic Business Planning Process
6. Implementation Excellence
7. Recognize Key Programs & Accomplishments
8. Form External Relationships with Key Stakeholders
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Success depends on the ability to integrate and execute the following sustainability roadmap
5 STEPS BENEFITS
� Optimal allocation of resources to ensure the highest return on sustainability investments
� Accelerated progress towards sustainability goals
� Reduced corporate sustainability risks
� Increased organizational alignment, clarity, and operational discipline
� Increased national and international recognition, reputation and interest level for investors
Develop competencies and support cultural change
Manage risks, reduce costs and build stakeholder’s value
Integrate sustainability in the ambition, strategy and objectives
Build the business case for sustainability
Understand the impact of the key drivers
1
2
3
4
5
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Lower Risk Exposure
Strengthen Bottom Line
Revenue Growth
� Market Share
� Reputation
� Leadership
� Paid Dividends
� Free Cash Flow
� Cost of Capital
Shareholder
Stakeholder
VALUE
Smaller Footprint
Better and Safer
Processes
Better Products
Cost Reduction
A sustainability business case is grounded in products, processes and footprint…
…looking at pragmatic actions that can unlock value for the organization…
…generating tangible & intangible value…
…for all the company stakeholders.
1. Build the business case for sustainability, identifying and quantifying its tangible and intangible value
1
Achieving Sustainable Growth Through Business Productivity Optimization7/10/2013
19
2. Understand the impacts of the key external drivers on the company and combine them with the company ambition to be sustainable
Cost/benefitWhat is the potential social and
environmental impact reduction and which actions improve your business
value?
CompetitionHow is the current sustainability
performance of the industry and what are the best practices?
Your own ambitionTo what extend do you wants to
match/exceed stakeholders expectations?
Stakeholder expectationsWhat do stakeholders expect from
your company regarding sustainability related issues?
Key external drivers for strategic positioning
TechnologyWhat technology can help you reduce your social and environmental impact across the regions and value chain?
RegulationHow are regulations influencing your
business now and in the future?
YOUR COMPANY
2
Achieving Sustainable Growth Through Business Productivity Optimization7/10/2013
20
2000 2011 2020
Timeline
Leading edge
Trailing edge
Zone of acceptability
Release value
Set strategy and Implementation roadmap
Sustainable Growth
Define ambition
3. Set the ambition and integrate sustainability into the business vision, strategy and objectives of the company
Sustain results
3
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21
4. Implement an integrated sustainability management system to manage risks, create options, reduce costs, and build stakeholder’s value; measure and communicate the performances externally
4
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� Commitment
� Policies & principles
� Performance
� Goals & plans
� Supportive staff
� Accountability
� Integrated structure
� Performance & motivation
� Management Best practices
� Communication processes
� Training & development
� Learnings, Audits & re-evaluation
Strong Leadership
Appropriate Organizational
Structure
Systems Processes and
Actions
Sustain the results in your operations: develop competencies and drive cultural change with the appropriate organizational structure and management processes to “operationalize” sustainability
People
Management
Culture
Achieving Sustainable Growth Through Business Productivity Optimization7/10/2013
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Sustainable Operations:
The DuPont Production System
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DuPont Global Integrated Operations – At a glance
2007 2008 2009 2010 2011
80 9
0 100 110 1
20 Supply Chain
Costs
Production Volumes
DuPont Integrated Operations WorldwideIncluding “Danisco”
Global Supply Chains 117Plant sites 239 SitesWarehouses 450+Shipping Major Container userEmployees (approx.) 38,000+Countries 45Contract operations 1000+ SitesNew Product Launches 5%-25%NPS “Avg Annual Imp” 2%-3%Annual Gross Productivity > $1B per year PTOI
Delivery to Promise (DTP)
Diverse Operations� Seeds � Discrete Parts� Food Additives� Industrial Biotech� Paint production� Film production� Polymer Production� Fiber production� Consumer goods� Electronic materials� Continuous chemical process� Fine and custom chemicals� Fluorine Chemicals
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Initiatives have had a variety of effectiveness and impact !
2006
2008
DuPont Operations – CI Journey
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
•Total Quality Management
• DuPont Continuous
Improvement Criteria (DCIC)
20042003 2005 2006 2007
CMLT
BfPC BfQ&PC
CELT
APLT
IQC/CIC
CFM•World Class
Technologies
BfAPC
• Integrated World Class Technologies
& Assessment Process
AELT
•Supply Chain Integration & Management (cycle time reduction)
•MRP II
2009
Integrated Operations
sectors to SBUs, smaller central
groups
•UPtime Excellence Self-Assessment
•External Benchmark of Practices and Assessments
•Mfg Excellence Self-Assessment -Dacron®
• Operations Excellence Self-Assessment
•Maint. Exc. Recognition Process
• Internal Benchmark of Mfg Managing Practices at site level and business level
• Maintenance
Benchmark Study
• Adv. Process Control
Benchmark Study DuPont/McKinsey
Operations Discovery
Benchmark – Five
Strategic Building
BlocksA.T. Kearney
The Saturday
Review
Lean Technology
Process Control CoC
Maintenance & Reliability
Energy CoC
Quality Management
•Mfg Standards (10)
• Corporate Yield, UPtime
and Production Capability
CI Drivers
• Permanent Investment Turnover
•Cash Flow Cycle Time
• Fixed Cost Productivity
• Variable Margin
•Mfg Standards (10)
• Corporate Yield, UPtime
and Production Capability
CI Drivers
• Permanent Investment Turnover
•Cash Flow Cycle Time
• Fixed Cost Productivity
• Variable Margin
SECTORS &
STRONG
CENTRAL
FUNCTIONS
ONE DUPONT
FUNCTIONAL
COMPETENCY
2010
•High Performance Work Systems - HPWS
Organizational Effectiveness
• Levels of Thought
• Modes of Behavior
DuPont-McKinsey
Operations
Benchmark Study
DuPont Operations: From Continuous Improvement Journey to Transformational Change
Top manufacturing companies
DuPont
2006 2010Time
Gap to top quartile
x
x
xR
ela
tive C
om
petitiveness
DuPont Operations�
TOP QUARTILE
Performers
Need for Step Change Improvement
Opportunity range
Non-energy raws (yields, waste)
1%-2%11,000 100-200
Energy 5%-7%1,100 50-100
Other variable costs ~1%1,800 20
Fixed costs ex Maintenance 7.5%-15%4,000 400-600
Maintenance ex materials 10%-20%540 50-100
Turnaround maintenance –Uptime
2.5%-10%330 10-40
Maintenance materials 7.5%-15%200 15-30
Uptime (capacity release) 1%-2%29,000 300-600
Total 900-1,700+
Prize$ millions
Raw materials procurement tbd tbd11,000
High Cut Estimates
CategorySpend/basis$ millions
June / December 2006 – The size of the prize
28
Sustainable Operations: The DuPont Production System
Achieving Sustainable Growth Through Business Productivity Optimization7/10/2013
Required Business Outcomes
Required Business Outcomes
Focus on what really matters, with the right
people
The right tools and practices to solve root
level problems
People instinctively
doing the right things
The right skills and coaching
Mindsets and Behaviors
Role modeling/ coaching dialogue/ difficult
discussions
Capabilities Engine
Technical ModelManaging Process
6�
An integrated management system that fully develops people and organizational capability for effectiveness and creativity in utilizing assets and eliminating all waste.An integrated management system that fully develops people and organizational capability for effectiveness and creativity in utilizing assets and eliminating all waste.
Current and future require-ments for capability and performance
Continuous
Improvement
Validated
Benefits
MM$ 2007Actual
2008Actual
2009Actual
2010Actual
2011Plan
Fixed Cost 335 209 505 275 200
Variable Cost 165 397 652 460 350
Capacity Release
25 200 83 410 300
Total 525 621 1240 1100 850
Working Capital 401 412 997 430 375
DPS Deployment across all Regions and SBU’s
2007 2008 2009 2010 2011
Small Sites 0 2 23 54 44
Large Sites 2 13 23 12 3
DPS Deployment across all Regions and SBU’s
2007 2008 2009 2010 2011
Small Sites 0 2 23 54 44
Large Sites 2 13 23 12 3
Cumulative improvements of more than USD 5 billion
(much more than initial estimate)
Sustainable Results
A production system implementation is the shortest and most robust way to success towards sustainable, world-class operations
� 3-5 years transformational journey
� ROI/NPV drives the approach, to “pay-as-you-go”, which builds business leadership support
� Cultural change enables sustainable results
� The focus on operation transformation and integration of supply chain is critical to deliver full value to the client
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DuPont Sustainable Solutions
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DuPont Sustainable Solutions
Safer Workplace
Protecting the Environment
Enabled
Workforce
Increased
Productivity
Reduced
Footprint
MECS Sulfuric
Acid
Technology
STRATCO®
Alkylation
IsoTherming®
Hydroprocessi
ng
Employee
Safety
Contractor
SafetyDILA
Process Safety
Scrubbing
Technologies
Energy
Efficiency
Sustainable
Assets
Instructor Led
Training
Media Tools
BELCO®
Scrubbing
Technology
Environmental
Management
eLearning
Systems
DuPont Sustainable Solutions brings value to our clients
Improving the Management of Risk
Improving Profitability
Improving Sustainability
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Our unique proposition is to leverage DuPont owner operator experience and enabling our client to “operationalize” sustainability
As an owner we know that transformational changes are not only driven by:
� Strategy,
� Or Management Systems,
� Or Technical Solutions…
� Or Capabilities Development,
� Or Organisational Design…
…but by integration of the above, following a structured roadmap, building capabilities, and enabling cultural change to drive sustainable results from your operations
34Achieving Sustainable Growth Through Business Productivity Optimization7/10/2013
Minimizing the risks and extracting the maximum value from an integrated operations system
FROM TO
� Experts
� Initatives & projects
� Slower, non-sustainable
� Higher risks
� Dependent culture
� Stove-pipe structure
� Push
� Everybody on the shop floor
� Capability development
� Faster and sustainable
� Lower risks
� Interdependent culture
� Integrated architecture
� Pull
� Risks & Footprint reduction
� Capacity release
� Debottlenecking
� Supply chain improvement
� Cost productivity
Unlock Value of Assets (people, Materials, Investment)
Innovation and Future business results
Sustainable Results
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Client Case: Designing & implementing an Integrated Production System that enables transformation towards world-class operational performance
� Company performance improvement
� Integrated approach to operations management: operations systems and procedures, management processes, people capabilities mindsets and culture.
Client’s needs
Key questions & Approach Benefits
Leadership Alignment & Commitment
� How can operations efficiency and effectiveness be improved in an integrated and sustainable way?
Production System Design
Integrated Production
System
� Develop executive leadership alignment around operational objectives with the intent to determine top-to-bottom commitment to continually improving operations efficiency
� Establish long-term operational goals
� Establish case for change
� Implementation of the system site-per-site
� Structured approach: diagnose, implement, sustain
� Focusing early on value release, optimizing existing activities in the process.
� Leadership, teamwork and problem solving empowering employees, driving culture change
1 2 3
� How can the corporation accelerate progress towards performance goals?
� How should operations organize itself to ensure alignment and operational discipline in executing the corporate and business strategies?
� Management Process
� Culture Transformation
� Capability Building
� Diagnose & Improvement Tools
� Operations
� Energy
� M&R
� Lean Manufacturing Technology
� Safety
� A sustainable roadmap with significant year-on-year payback that enables to deliver the business objectives
� Very significant contribution to the bottom line ( $1B, or up to 20% of operating costs)
� World-Class Operational Practices and Culture in 4-5 years
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