Commodity price pain, or sustainable opportunity?
08/01/2008
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Paul Westbrook,
sustainable development manager,
Texas Instruments
Resource constraints are appearing with increasing frequency in our work and personal lives. Those constraints usually present themselves in the form of higher prices—as predicted by the classic supply-and-demand economic model. The price of gas at the pump might grab the most headlines, but there are also constraints in supplies we all depend on to manufacture our semiconductor chips. For the last couple of centuries, the industry focus has primarily been placed on machinery, tools, and automation to boost output productivity. The challenge now, as well as the opportunity, is to make great gains in our resource productivity. The companies that improve their resource efficiency will have a business advantage and will enjoy better insulation against these commodity price swings.
Zero wasted resources
“Green “is certainly a popular term. We hear about it in the news and every aspect of culture and business, from fashion to entertainment, building construction to the bottom line. But what does it mean? A better term and goal is “sustainability,” or “meeting the needs of the present without compromising future generations’ ability to meet their needs.” A simple definition is “the balance of people, profit, and the planet.” Sustainability captures the real essence of resource productivity: efficiency and zero waste.
Sustainability is a journey toward zero wasted resources. Minimizing waste is good for business—and pretty good for the planet, too. For example, several years ago, TI had a silicon waste stream from pilot and scrap wafers that were no longer usable in manufacturing. Rather than paying to dispose of the material, TI found that solar photovoltaic (PV) manufacturers could use this material to make solar panels. TI reduced waste, saved PV manufacturers money, and generated additional revenue—now up to $14 million over several years. In the process, the company helped alleviate some portion of the silicon shortage, which was putting pressure on its own raw silicon costs.
Efficiency
Energy consumption in a typical wafer fab or assembly/test facility is about the same as a small city of 10,000 people. People will debate the relative issues with coal, nuclear, natural gas, solar, wind, and other sources, but the most cost-effective and environmentally friendly energy source we have is readily available to all of us: the negawatt. The term was first coined by Amory Lovins of the Rocky Mountain Institute and it describes a unit of energy efficiency. It’s the watt you don’t have to produce because you designed out the need for it. The lesson is that precious capital isn’t needed to expand supply capacity. Instead, demand should be designed out.
The concept applies to more than just electricity. Water, exhaust, gases, chemicals, and more, are all opportunities to negate unnecessary excess. To achieve the greatest benefits, whole system optimization is required with everyone working together instead of multiple sub-optimized processes. It is resource productivity at its best.
If you think this has merit, then the next logical question would be about where to start. Where does operating sustainably begin? In the semiconductor industry, we might ask ourselves how many kilowatt-hours it takes to produce a wafer or chip. How about gallons (or liters) of water? Are these metrics tracked and managed like cost, yield, throughput, and cycle time? Resource costs represent a significant portion of the cost of manufacturing and offer great opportunity for efficiency gains. Resource efficiency can be a competitive advantage.
Environmental regulations are sometimes thought of as a cost. When you realize that it is financially wise to reduce your environmental footprint, you’ll easily exceed regulations and increase your profit at the same time. This method benefits people, profit, and the planet—and not by compromising in any area, but optimizing across all areas. Opportunities await.
Contact Paul Westbrook at Texas Instruments, PO Box 650311, MS 396, Dallas, TX 75265; ph 214/567-7311; e-mail [email protected].