Module based design and manufacturing drives re-localisation

This week we present a new "Article from the sustainable future"

One major change brought about by the rise in energy prices was the shift to module based product design and manufacturing. On the face of it, the change was minor, but it required a major shift in. attitude. Our reporter talks to Jeff Handly, from the PORENA manufacturing and distribution unit.

Many people still don’t see the difference between module based manufacturing before and after the energy shortages – can you explain?

In module based manufacturing final assembly is done by one local unit which is not owned by the brand, and the product goes straight from manufacturing to the customer. The other main difference is that the product always goes back to the factory. It is never scrapped. So products’ life time is far longer.

The other difference – and this is what gets some people – is that each product actually has more material in it. This is because there is more redundancy in each module used to make up the product.

Thanks. Can we start by reviewing the shortcomings of design and manufacturing for retail before the energy price hikes?

As fossil fuel production plateau’d, the average number of steps to get a product to the customer was seven. Each step was energy consuming, and the transport between steps started to get impossibly expensive. And the average usage life time of a product was short, much shorter than its MTBF – mean time between failure. The amount of scrap was incredible, much too much to be taken care of effectively. The average amount of material converted to waste was 30 kg for every 1kg of product. That meant – with a product life time of 3 years – a total of 31 kg of waste for 3 year’s service. The question became: how do you provide people with good quality products, ones that can be updated as well, without many manufacturing and transport steps and waste creation?

The first thing to do is eliminate the last step … the retail trade. Getting your goods straight from manufacturing eliminates transport, warehousing, retail space, etc. It also makes sure you manufacture exactly what the customer wants ... no unwanted products sitting on the shelf.

The next step to eliminate was scrapping. Components – and we are talking everything from furniture to TVs – all have different life times and uses. For example: when people scrapped their VCRs for DVDs 80% of the components were similar. So this was solved by designing products for update. You just took the product back to the manufacturer to get it updated, upgraded, mended, whatever.

This ties together with the third step, dematerializing of brands. The brand as we knew it evolved into being a pure design company – and I don’t mean just physical design, but technical as well. The dematerialized company provided manufacturing instructions to an assembly company, which was local. Consumers ordered their product, and the assembly shop put it together based on designs by the brand. The components were mostly standard with a small percentage of custom parts.

This paved the way for the fourth step: eliminating the shipping of finished goods. All that is shipped is modules to be put together locally. The assembly is carried out in the same organization that takes care of service and upgrading. .So you would find at least one assembly and service shop at each town.

So how much more effective is module based manufacturing?

We estimate there is a 30% reduction in energy intensity in the whole system, without counting the average lifetime of the product is extended from 2 to 12 or even 20.

Perhaps you could go over the main features and benefits of the system again for listeners?

Sure, let’s see…

• One local assembly shop; gives economies of scale for assembly and recycling, and closeness to the customer.
• Brand as design. Allows companies to concentrate on their particular Brand values and look and feel - using global competence to reach a pinnacle of excellence whilst giving them global reach.
• Standard modules; These modules actually allow for more variation and product variants, which are often endless.
• Return to local shop. The benefit is no scrap, 100% recycling, a long lifetime which is energy effective, and no mass transport of goods.
• Long product lifetime. This reduces the overall ecological footprint of the use of the product over its full lifetime.

This Report from the future is an extract from the second book in the Inventing for the Sustainable planet series soon to be available as an e-book from http://avbp.net/html/porena.html

Swedish Banks unpeturbed by oil threats, forecast economic growth

Stockholm 8th February 2006. Despite intentions of oil independence by 2020, and all that will mean as the economy transitions,” business as usual” is a strong force in Sweden. The same day the Swedish press published figures showing how production and acquisition of new reserves in the world’s largest oil companies is declining, Swedish banks Nordea and SEB forecast economic growth for 2006 and 2007. Whilst the good news is that Swedes will see an improvement in their consumption, these developments and attitudes make Sweden more vulnerable to coming energy shortfalls.

According to SvD, Shell, and Exxon showed slightly lower production figures for 2005 compared with 2004. Hurricanes included, these falls in production were not unexpected. Exxon’s total production was 4,235 million boe (barrels of oil equivalent) in 2004, 4,065 in 2005. Shell’s production fell by 6.7 percent from 3,772 million boe in 2004 to 3,518 in 2005. BP showed a slight increase, producing 3,997 million boe in 2004 and 4,014 in 2005.

For the 13th year running BP reports reserve acquisition sufficient to replace the previous year’s production. Shell reports reserve replacement of only 60 -70 percent of production. Exxon wll report later in the year. As world oil consumption is increasing these figures will mean a loss of market share for the giants.

Swedish banks seem unperturbed by oil and gas markets. Economic growth this year is expected to reach 3.3 percent (SEB), 3.6 percent (Nordea). They also believe disposable income will rise by 3.6 and 3.4 percent respectively, bringing an increase in consumption between 3.4 and 3.5 percent.

Those who would like to see a more coherent approach to oil independence would have liked to hear how the large banks are aware of oil and gas price risks and how the transition would be starting over the next two years.

Article from the future: Retford manages transition away from fossil fuels

Retford was slow in coming to the realization that ”business as usual” may not keep local citizens’ standard of living at an acceptable level. As they saw energy prices hike many were concerned the local economy was in danger of spiraling down out of control. Many others found it incomprehensible that energy security could be synonymous with economic security. Fortunately, the neighboring city of Porena had embarked upon a successful sustainable development process several years earlier. They turned to Porena city manager, Aaron Heathcliffe, for help. They have now managed to start activities rolling in eight major areas involving just about everyone in the area. Part of the reason for Retford’s success was getting people involved in a way that built a sense of urgency and importance.

But how serious and urgent was the situation? Says Jeff Small, coordinator for the Sustainable Development Office of Retford: “Our starting point was one of a need to understand the situation from the point of view of security of living standards. The national government had delegated responsibility for sustainable development down to the local level. We had received a list of goals to strive for.” Jeff continues, “how urgent was the situation? We had no idea. Some people were saying oil depletion would mean energy price hikes above the annual 4-5% we were seeing. Others were saying market mechanisms would prevail. Interestingly, very few actually knew how things worked in the local region. And even fewer could navigate the figures needed. We found ourselves comparing apples and pears. For instance; how much food do we need (often measured in calories), how much food do we grow (measured in tons) how much energy needed to grow food (measured in liters of diesel)”.

It was just this need to understand the situation that prompted Aaron Heathcliffe to use a data gathering and modeling approach. Based on the local council’s own GIS (geographic information system) he asked the office to set up a project group to find out how the living standard basics were provided. These included water, housing, food, jobs, transport etc. All figures and explanations were to be put into the GIS system so project members could “fly” through the area to gain an understanding of how these systems were working.

Jeff Small again; “The exercise was a real awakening; for example, we do not grow enough food in the area to feed all the population. There is massive commuting every day, and parts of the area are not served by public transport. The system was extremely useful. The group could ask the operator to, say, “show us the number of people living out of walking distance of public transport” – and we could see immediately the information in graphic form on the map”. It was the process of gathering the data that started to create both awareness and multilateral cooperation. For instance, it started to become apparent what was NOT known about water supply. People are just used to turning on taps, and very few had a view of the sewage treatment processes. The data gathering exercises produced very clear and comprehensive information, which the project published. Pictures from the studies helped create awareness for what was to come.

It was the next phase however, that really created the impetus for change. The project team started to bring in representatives of every stakeholder organization. Each basic element of living standard was mapped against the relevant stakeholder organization. The local business association, residents’ association and gardening club got very active early on.

The next step was to ask representatives to review the data, and to evaluate it. They got as the starting point the government goals and security of living standards. They were to come up with risks and priorities. A database related to the GIS system stored geographical positioning data, the issue description, risk and priority. All the data could be aggregated to give a general overview of the risk of potential of shortfall or excess for local residents. What was interesting was that from the point of view of each stakeholder organization’s purpose, as stated in their articles of association, the current situation was not really producing the sort of results they were after. Local businesses were struggling, resident’s associations complaining of falling standards, food quality was poor… Oil depletion risks were changing the situation from uncomfortable to downright disastrous.

Aaron Heathcliffe commented; “we never mentioned politics once. What was interesting was that no-one really disputed where the priorities lay. Maybe some had different ideas about how to solve them, but this fact-based method helped build a basis for consensus”. At this point, the stakeholder organizations were invited to send representatives to work out a plan of action. The plan would include commitments by each organization, so only representatives with enough mandate were sent to the action planning. The plans were based on the shortfall –excess evaluations. Excess would be a resource to use to mitigate shortfalls in other areas, by for example trading with other areas.

In the end, the groups had worked out about eight major areas to tackle and strategies for each. Commitments from the various stakeholder organizations were not enough, however, for real changes to be brought about. For instance, one scheme involved reducing commuting by job-swapping. Although the local business association had set the scheme up it needed employees to volunteer for the changes. To sweeten the deal, anyone who swapped their job would be given a free travel permit. Anyone who gave up their car would be prioritized for housing and so on.

So the next step was for each stakeholder organization to invite their members and members of the public to presentations. The office of sustainable development decided to stage a large exhibition in conjunction with the local May fair. Large displays took visitors through the analysis the project groups had gone through, and other displays asked for volunteers. Most of the key area booths took the form of displays with four sections. In the middle they showed how the area works today – what we have - the left pane showed - why we can’t go on – the right pane: what we need and the bottom pane – what we must do. The next set of displays talked about managing the transition, and the need for overall coordination of efforts. People would then drift to the display “get involved” just before the exit.

One group is planning to re-build some parts of the town to make easy walking access. And they are talking about a canal for energy efficient transport of heavy goods. One priority is diesel for the construction machines. They want to dig ditches and create the conditions for permaculture before the machines become useless. Jeff Small is excited; “from what looked to be a dark future we are hopeful we are headed for an easier, more social life, with a feeling of being closer to nature!”

This is an extract from the coming sequel to the book “Inventing for the Sustainable Planet” http://www.avbp.net/html/porena.html