Book Excerpt: Sustainability and Dematerialization at HP

Source The Natural Step

URL: http://www.greenbiz.com/news/reviews_third.cfm?NewsID=26014

When it comes to materials use, Hewlett-Packard's philosophy is often "less is more." In this excerpt from the new book "Ants, Galileo, and Gandhi: Designing the Future of Business through Nature, Genius, and Compassion," HP consultant David Hudson and environmental manager Lynelle Preston detail four dematerialization initiatives that have helped the company pad the bottom line while boosting the environmental performance of its products.

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During the past century, materials use has exploded throughout the industrialized and developing worlds. Current usage patterns have reached levels many experts believe are not sustainable. As a result, dematerialization has become a pressing environmental and social imperative.

Business forces, however, are also driving both the materials use and the reduction trends on a unit level. In the world of information technology, customers constantly demand smaller, more powerful products. As electronics take-back legislation is globally enacted, dematerialization also reduces long-term recycling costs. An important example is the proposal for a Directive on Waste Electrical and Electronic Equipment recently adopted by the European Commission, which will mandate producer end-of-life responsibility for all electronics products. Reducing materials use lowers both direct and indirect costs, thereby enhancing the bottom line.

During the spring of 2002, Hewlett-Packard's Environmental Strategies and Sustainability group analyzed examples of dematerialization occurring throughout the company. Cases were chosen to represent the range of HP's business activities, including products, supplies, product-based services, and future innovations. Some examples, such as those occurring in Inkjet Supplies, were largely the result of deliberate attempts to improve environmental performance. Others, such as All-in-Ones, e-pcs, and Managed Print Services, were driven primarily by business variables such as customer preference and product differentiation.

The following case studies were developed based on interviews with more than 40 HP staff throughout the company, as well as extensive internal and external research. In each case, materials and energy savings were analyzed, as well as economic value added both to the customer and HP.

All-in-Ones

HP produces a popular line of multi-function devices called All-in-Ones (AiOs), which integrate printers, scanners, copiers, and sometimes faxes into a single device. Although AiOs were created primarily to save space and increase functionality and convenience, they also offer potential to reduce environmental impact. AiOs capitalize on the fact that standalone devices have many components in common, including imaging mechanisms, paper feeds, power supplies, and casings. Combining these devices provides comparable functionality while eliminating redundant components, thereby reducing overall materials use. In addition, packaging and energy use decrease significantly.

The dematerialization analysis compared AiOs to the comparable standalone devices using HP Product Environmental Profiles. For example, the AiO G55 was compared to the sum of the Deskjet 970 printer, the Color Copier 180, and the Scanjet 2200 Cl. Specific information was gathered on product weight, energy use in stand-by mode, cardboard packaging weight, and plastic packaging weight for every AiO and its corresponding standalones.

The study found that AiOs significantly reduce the amount of materials and energy required to deliver a given functionality. For example, the AiO G55 weighs 19.4 lbs. (42%) less than the sum of its comparables. The G55 also uses 3.9 fewer pounds of packaging and consumes 7.5 fewer watts of electricity in stand-by mode. AiOs that include faxes (the majority) realize even greater savings.

Despite these important material decreases, other key considerations remain from a sustainability perspective. For example, not every AiO customer would have otherwise purchased all comparable standalones. Due to the cost and space savings, some AiO customers purchase more functionality than they would have otherwise.

Even taking this rebound effect into account, however, total 2001 materials and energy savings were still dramatic: approximately 18,000 tons of product, 5,000 tons of packaging, and more than 100,000 MWh of electricity. Although the issue of obsolescence remains, the AiOs nonetheless demonstrate the potential of intelligent design to reduce environmental impact in relative and absolute terms.

e-pcs

e-pcs -- a line of small form-factor PCs designed for the business environment -- are created to conserve desktop space, simplify serviceability, and increase ease-of-use. The streamlined design of the e-pc consists of only three components -- hard disk drive, system chassis, and power supply. Although the driving force behind e-pcs was not environmental performance, the environmental benefits are significant.

To analyze e-pc materials and energy savings, HP compared the "average" e-pc with the "average" Vectra, an HP line of full-sized business PCs. The average e-pc weighs less than half as much as the average Vectra -- 10.2 lbs. compared to 23.1 lbs. -- and uses 30%-40% less packaging. The smaller form factor also results in lower shipping and warehousing costs. In addition, e-pcs consume about 6% less electricity in-use than Vectras.

One sustainability-related challenge, however, is that e-pcs achieve these reductions through a much simpler design that limits expandability and the ability to add hard drives, CD ROM drives, or other devices. Lack of expandability in turn affects materials efficiency, because expansion can extend a product's useful life.

Even taking this into account, however, the e-pc remains 75% more efficient in materials use, a savings of 7.6 lbs. per unit. In 2001, e-pc savings totaled several thousand tons of hardware, hundreds of tons of packaging, and more than 4,000 MWh of electricity.

These environmental benefits are matched by strong customer value. The Gartner Group recently performed a study comparing the total cost of ownership of small form-factor PCs to traditional PCs. The conclusion is that small form-factor PCs, such as the e-pc, can save companies $1,000 per computer over a three-year lifecycle. Benefits include factors such as decreased maintenance costs and reduced energy use.

The e-pc demonstrates the complexity of analyzing materials efficiency, and introduces the counter-intuitive claim that in some cases limiting expandability may actually increase materials efficiency. When a trade-off exists between size reduction and expandability, the critical factor is that the materials saved through the smaller design must exceed those forgone through expansion-related life extension. This ratio will vary product by product, and analysis requires detailed assumptions regarding expected product use.

Inkjet Supplies

Inkjet supplies refer to the ink cartridges used in HP Inkjet printers. Due to high unit volumes, even minor design changes in ink cartridges can result in sizable environmental and human health benefits.

One example of these benefits is clear from the HP redesign of its cartridges to eliminate the need for an adhesive. When heated to high temperatures, this adhesive forms an extremely strong bond between component parts. The strong bond made it difficult to recycle the cartridges. In response, HP design and manufacturing engineers created product components that snapped together mechanically. Eliminating the adhesive increased the cartridges' recyclability by approximately 25%. It also saved HP $2.4 million over four years, due to reduced manufacturing, capital equipment, and operations and maintenance costs.

Inkjet cartridge packaging changes also led to significant savings. When customers purchase printers, inkjet cartridges are provided in the printer box. Previously, the included cartridges used the packaging designed for retail sales to protect the cartridges from damage during shipping and display. That was unnecessary, since cartridges sold inside the printer box are already protected. A simpler package was created. Information insert design was also simplified. Overall, approximately $0.17 of packaging material has been eliminated from each cartridge sold with a printer. The new design resulted in 2.6 million pounds of paper and paperboard savings and diverted 3 million pounds of packaging from landfills in 15 months.

These examples demonstrate the benefits of introducing environmental objectives into the design process itself, as well as the overlap between environmental and business objectives. Indeed, the search for environmental benefits may uncover clear business benefits, such as reduced costs through materials savings.

Managed Print Services

A final example of dematerialization at HP is Managed Print Services, an outsourced printing service for large companies. Through MPS, HP assumes control of the design, implementation, and maintenance of a company's printing services and charges on a usage basis. The service reduces customer capital expenditures and resources dedicated to maintaining its distributed printing and imaging environment.

This business area has experienced rapid growth each of the past two years. As a product-based service, the value of a product is delivered without actually selling the product itself. This business model has significant potential to reduce materials use since the service provider assumes extended responsibility for the product. The product itself becomes a cost center, increasing the service provider's incentives to design efficient products that are easily maintained, and to recapture as much value as possible at the end of the products' useful lives.

Overall, the analysis estimated that in 2002 MPS would reduce printer mass on clients' sites by nearly 3,000 tons, increase toner cartridge recycling by tens of thousands of units, and save more than 700 tons of paper. Customers could save up to 30% in total printing costs, largely by outsourcing printer environment design, administration, and technical support needs to HP. Factors that increase customer lifetime value include guaranteed sales of supplies, the service annuity, and the opportunity to provide updated technology.

Lessons Learned

These dematerialization case studies vividly show the need for analysis across a product's entire life cycle to fully understand environmental impacts. Although ad hoc analysis of specific products or components does yield useful information, it often only reflects a fraction of the total impact. With products and supply chains as complex as those in IT, measuring full life cycle impacts requires substantial commitment and resources, yet is critical to effectively reduce impact.

Another conclusion from the research is that energy and materials are overlapping categories. Substantial energy is required to produce many materials, and substantial materials are required to generate energy. As a result, increasing energy efficiency is an effective dematerialization strategy, and dematerialization is an effective energy reduction strategy. Overall, HP's work on dematerialization has underscored the importance of addressing these two areas in an integrated fashion.

The dematerialization initiative also revealed that both products and the business models used to deliver those products to customers have a significant impact on environmental performance. The Managed Print Services case demonstrates that customers, HP, and the environment can all benefit from moving beyond product-based to service-based business models. HP plans to investigate opportunities to further this trend in other areas of its business.

A final conclusion is that to optimize decisions according to sustainability principles and parameters, a manufacturer must thoroughly record, analyze and understand its materials impacts. In the same way that a company cannot maximize its profits without rigorously tracking its finances, it cannot hope to maximize its environmental and social performance without comparable rigor and precision applied to other areas. Therefore, one outcome of the research is recognizing the need for a robust environmental performance tracking system. This system will collect the detailed data required to accurately measure and assess environmental impact and performance.