Driving business value through sustainable manufacturing is becoming a priority for global healthcare companies. Shaun Newlon and Terry Simmons of Baxter International explain why a long-term strategic approach to environmental issues can help organisations to reduce harmful emissions, protect staff and promote growth.
The rising cost of raw materials, energy and waste management, as well as high-profile sustainability issues such as climate change and water availability, are leading more and more companies to the conclusion that to be successful in a competitive global economy, mere environmental compliance is no longer sufficient. Today, many stakeholders expect companies to take a leadership role in addressing these issues and organisations understand that doing so can also bring real business value.
As a global healthcare company, Baxter International has for more than three decades worked to embrace the principles of sustainability and incorporate them into its daily operations. The company integrates environment, health and safety (EHS) programmes into its manufacturing operations to protect staff and drive continual improvement in the reduction of waste, water, energy usage and greenhouse gas emissions. It also leverages Baxter’s leadership position to influence suppliers through its Global Supplier Sustainability Programme.
The importance of EHS
Baxter pioneered environmental financial reporting in 1994 to ensure that the high standards it applied to monitoring expenses in other parts of the business were also used to track environmental costs, savings and cost avoidance. The company’s environmental financial statement demonstrates to senior leadership and other internal and external stakeholders the value of a proactive, global environmental programme. The return on investment for these initiatives is further proof of their success. EHS programmes completed in 2010 realised savings and cost avoidance totalling $11.5 million, or 61% of the cost of Baxter’s basic global environmental programme. Over the past decade, the company has received an annual return of approximately three dollars for every dollar invested in a proactive global environmental programme.
Baxter achieved these savings in part by integrating EHS programmes into many aspects of its manufacturing operations and supply chain. It uses a lean energy programme to drive enhancements company-wide, particularly at principal manufacturing facilities.
Baxter improves energy efficiency through its global energy management programme and by systematically implementing energy conservation projects at facilities worldwide. The primary utility systems and major uses of energy at Baxter’s manufacturing facilities, such as lighting, are routinely reviewed by experts. During these energy reviews, engineers share current technologies with facility personnel, identify improvement opportunities and document best energy practices to be shared with other company facilities. For example, Baxter’s facility in São Paulo, Brazil, installed a ceramic roof that reduces solar heat gain and decreases building heating and cooling losses. This improvement saves an estimated 84,600kWh of energy a year. The facility also expanded its use of solar tube lighting above the production mezzanine area bringing in outdoor light, which will save another 500kWh annually.
In 2010, the company placed into service a new cogeneration unit at its facility in Castlebar, Ireland. The 3MW unit uses natural gas reciprocating engines to generate electricity, hot water and steam. These units are typically 30% more energy efficient than traditional utility electricity generation units.
Due to the strong link between energy usage and water treatment and pumping systems at certain Baxter facilities, minimising water use and optimising water processing systems is a key focus of the company’s facility energy assessments. It integrates lean manufacturing principles and tools, such as value-stream mapping with water management to help facilities identify areas for additional water conservation. For example, after an assessment at Baxter’s facility in Aibonito, Puerto Rico, the company began reusing water from one specific process to provide more than 2,300m3 of water annually for a site cooling tower and recapture and reuse 550m3 of condensate water annually from specific HVAC equipment.
The facility also began using large above-ground storage tanks to capture more than 3,500m3 of rainwater in 2010 for beneficial uses, including cooling tower make-up and onsite irrigation needs. Since 2005, the facility has decreased its absolute water use by nearly 2.9 million litres annually.
Driving a sustainable supply chain
Many of Baxter’s broader environmental impacts occur within its supply chain, where the company concentrates its sustainability efforts on procuring raw materials and other goods and services with reduced environmental impacts, and collaborating with and recognising suppliers that improve their environmental performance.
Baxter’s Global Supplier Sustainability Programme builds on several sustainability-related standards that govern its supplier relationships. Baxter’s supplier quality standard and ethics and compliance standards provide a framework for consistent supplier evaluation and selection, and define policies and expectations for ethical behaviour when conducting business. Baxter evaluates and approves all suppliers before purchasing any materials, components, products or services.
The supplier quality standard specifically addresses sustainability issues, including indentured child labour, employment standards, waste and energy reduction, and ethics. Baxter’s Ethics and Compliance Standards for suppliers, available in 19 languages, also covers: child labour; human trafficking; confidential information; intellectual property; gifts and entertainment; anti-corruption; conflicts of interest; trade compliance; employment opportunities; and environment, health and safety.
Since 2009, Baxter has also incorporated 20 sustainable criteria into its purchasing procedures to provide its procurement organisation with a framework to evaluate suppliers’ sustainability initiatives. Baxter structured these criteria to fall into four categories that align with its own sustainability efforts. In 2010, Baxter added a fifth category to evaluate suppliers’ protection of human rights since the company considers this an important component of sustainability commitments. Each year, Baxter conducts a survey of its select 100 suppliers to evaluate their performance against these sustainable criteria. The company uses the responses to learn more about suppliers’ sustainability programmes and identify opportunities for best practice sharing and collaboration designed to improve the performance of both Baxter and its suppliers.
Baxter’s e-Impact programme documents, communicates and recognises environmental initiatives launched in collaboration with suppliers. In 2010, Baxter worked with a hazardous waste management company to recycle and dispose of approximately 8,600 anesthetic vaporiser devices. The process included the disassembly of device components for recycling, such as circuit boards and alkaline batteries, and draining and proper disposal of any hazardous or regulated materials. A total of 87 tons of materials were recycled, approximately 90% of the total weight.
In May, Baxter also collaborated with an office supply company in the US to change its minimum order requirement from $35 to $50, resulting in a reduced number of office supply shipments. This change saves approximately 4.3 metric tons of carbon-dioxide-equivalent emissions and 2,100 corrugated boxes annually. Baxter and the supplier also worked together to modify the Product Alternative Programme for 183 commonly used office supplies, offering options made of recycled materials for 47 of the items. The supplier also added FSC (Forestry Stewardship Council)-certified paper to Baxter’s office supply list at the same price as standard copy paper.
Clearly, the benefits of environmental initiatives transcend mere cost avoidance and energy or raw-material savings. Many of the programmes Baxter has put in place have also led to higher production output, greater production flexibility, optimisation of manufacturing assets and higher quality levels, as well as reduced scrap material and waste generation. By focusing on measurable environmental goals, Baxter has become a more competitive and a more sustainable organisation.
This article was first published in our sister publication Medical Device Developments.