Riva Krut, Chief Sustainability Officer from Praxair, discusses sustainable productivity
Riva Krut spoke at NC State today, and shared the exciting story of sustainable productivity at Praxair. The company focuses on industrial gases, and serves multiple sectors, including gases that might be in your beer or soda. The company covers a lot of different segments, and with a mission of making the planet more productive, they have developed many sectors around technologies to sustain and protect our planet. Riva noted: “One thing people don’t think about – is that gases don’t travel very well. We prefer not to transport our product, yet we do a lot of trucking transportation, and drive many miles. But our preference is to be based on dense concentrations, not to be spread all over the place.
Some of the key business drivers at Praxair are Emerging Economies, Environment, and Energy. With an emphasis on growth in emerging economies, and the global growth of refinery hydrogen and coal gasification, as well as oil and gas services, the environment and regulatory issues become critical. Execution emphasizes again that low cost and sustainable productivity is one of the biggest challenges as the backdrop for driving these changes.
Riva emphasized that “We need to create metrics that we have intention to follow. And the metrics we care about deeply include zero waste on all our sites. We want a metric that leads to business value – and a leading indicator of business value. Another is 27% revenue growth and 2X benefits from environmental applications. They also seek $112M from sustainable productivity. So each indicator related to sustainability is directly mapped to business value.”
Riva went on to note that “…. the easy stuff has gone away – how do we continue to drive new ideas, and how to retain program momentum and ROI as administrative burden decreases. And my proposal to the productivity organization was to drive productivity improvements we HAD to look at sustainability. The way we make productivity savings is by saving money – and one of the biggest costs we have is energy. We are one of the biggest energy drivers in the world – and so this is a likely opportunity.”
“This worked well – as we got $32M the first year which then doubled in year 2. And this got people’s interests up – and it doubled again in 2012…the point is that this now had some real traction. It took some time to get people to take it seriously – but the path is set.
Some of the major opportunities included:
– Reducing power consumption
– Process improvements for carbon dioxide recovery
– Logistics optimization – improving driver routing and gas or pipeline use
– Process energy efficiency focused on energy requiremetns for turbines, compressors or fans, etc.
Skeptics Lean Six Sigma people dismissed this at first, noting that “we would have done that anyway.” But this is something fundamentally new. Several characteristics are important here:
- Replication is key – can we leverage our knowledge, and the investment can be applied to another project. Take the smart people and move them somewhere else and run the project elsewhere. Praxair has a 29% replication rate on productivity but sustainability productivity had 50% replication rates. It has higher value than most projects! So the first value of sustainable productivity is that it is a key to improving replication and Return on capital.
- Employee engagement is fundamental. Our director speaks to this all the time – and says that ideas are coming from people all over Praxair – not just productivity teams. For example, this includes recycling, saving power, cafeteria waste, organic cleaners, turning off electricity, recycling rain, and multiple other ideas from around the company. Employees around the world are taking environmental action at work and at home. We have captured the hearts and minds, and are retaining our people. So the second value is that we have captured the values of our employees and to channel that energy into bringing business benefits.
Riva concluded” “We were surprised that none of these ideas were in the database. The productivity database simply came out of ideas in terms of the financial return, and on that basis only. This was not well documented however. So in some cases we looked at some of the old ideas as well as the new ones, and we became much better at it then before. And inviting people to think about the environment FIRST and then seeing the financial benefit second is what really turned this around.”