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Achieving Sustainable Growth Through Business ProductivityOptimization
May 8, 2023
Juan AguirianoManaging Director, WorldwideSustainable OperationsSustainable Solutions
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Sustainability Contact – The DuPont Bradley curve
Management Commitment
Condition of Employment
Fear/Discipline Rules/Procedures Supervisor Control,
Emphasis, and Goals Value All People Training
Personal Knowledge, Commitment, & Standards
Internalization Personal Value Care for Self Practice, Habits Individual
Recognition
Help Others Conform
Others’ Keeper Networking
Contributor Care for Others Organizational
Pride
Natural Instinct Compliance is the
Goal Delegated to
Manager Lack of
Management Involvement
Natural Instincts Supervision
SelfTeams Dependent Independent InterdependentReactive
Pro
duct
ivity
, Qua
lity,
P
rofit
abili
ty, S
afet
y Is
sues
Organization cultural maturity
Topics
• The Drivers for Sustainability
• DuPont Sustainability Journey
• The Roadmap to Sustainable Growth
• Sustainable Operations: The DuPont Production System
• DuPont Sustainable Solutions
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The Drivers for Sustainability
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Prime Minister of Malaysia driving sustainable growth...
BBC May 19, 2011: ‘Prime Minister Najib Razak wants to wave goodbye to "business-as-usual" growth
Kuala Lumpur May 17, 2011: The Malaysian Prime Minister announced the launching of an ambitious plan to build a "green economy" in Malaysia with the help of an international advisory council that includes an impressive cast-list*
The initiative is part of economic reforms instituted by Prime Minister Najib Razak aimed at pushing the Southeast Asian country towards developed-nation status by 2020.
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Including Jeffrey Sachs, special advisor to UN Secretary-General Ban Ki-moon; Rita Colwell, former head of the US National Science Foundation; Nobel Medicine laureate Richard Roberts, currently chief scientific office with New England Biolabs; and Kiyoshi Kurokawa, former science advisor to the Japanese prime minister. YBhg Dato' Shamsul Azhar Abbas
External “Drivers” for companies to be more sustainable
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External drivers Volatility, magnitude and escalation of raw materials costs
and energy are increasing the urgency to drive improvements in efficiency and productivity
Governments and global institutions are introducing new environmental and energy management regulations and policies, pressuring companies & societies into action.
Companies are expected to publish sustainability improvement goals and are being held accountable for delivering results.
Sustainability is being used as a powerful strategy to lower the cost of goods and attract customers at every level globally.
1. Resource costs
2. Public policy
4. Public accountability
5. Competition
The Investment community is increasing the scrutiny on a company’s sustainability performance and capabilities when making investment choices.
Sources: 1Generation IM (2007), 2Freshfields Bruckhaus Deringer (2005). 3EU Eurobarometer Survey (2008). 4Salterbaxter (2007)
3. Access to capital
Sustainability Challenges Across different sectors
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Energy (Oil & Gas, Power)
Exploitation of unconventional resources Resource nationalization and growth of NOCs Shift in global wealth distribution Adapt grid to intermittent renewables and new
uses of electricity (e.g., for electric cars) Increase access to electricity
Chemicals
Mining & Metals
Processing
Transportation (Rail, Aviation, Infrastructure)
Increasing and more stringent regulations Increasing prices of raw materials Shifting production and demand between
geographies and segments
Decreasing quality of ore fields leads and increasing exploitation difficulties lead to lower margins
Increasing regulations
Increased travel demand and changing behaviors
Fuel availability and price Aging transportation infrastructures
Climate change / carbon risk Smart energy Low-carbon / renewable energy EHS excellence Socio-economic impact of activities
EHS excellence Sustainable product portfolio Sustainable supply chain Product regulation
EHS management Climate change and carbon regulation Land use and claims Social development in rural area Human rights Clean technologies
Climate change Carbon regulation Impact of infrastructure
Key End Markets Industry challenges Sustainability challenges
Risk Mitigation
Cost Reduction
Competitive advantage
Revenue generation
Operational Efficiency Innovation
Influence on Society and the competitive landscape
Awareness and Compliance
Source: M. E. Porter and M. R. Kramer - ‘Strategy & Society - The Link Between Competitive Advantage and Corporate Social Responsibility’, Harvard Business Review, 12/2006
…Global players consider Sustainability as a prerequisite for business success driving them to a clear positioning to capture the benefits, for existing and future assets
Operational Excellence Sustainable GrowthLicence to Operate
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DuPont Sustainability Journey
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The creation of shareholder and societal
value while we reduce the
environmental footprint* along the
value chains in which we operate.
* DuPont defines “footprint” as all injuries, illnesses, incidents, waste, emissions, use of water and depletable forms of raw materials and energy.
The Mission of DuPont
SUSTAINABLE GROWTH
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Business Integration1970 1980 2000
Compliance
Journey Toward Sustainable Growth
CEO Ed Woolardtakes a stand, 1989
CorporateEnvironmentalism
Valu
e
Footprint Reduction GoalsToxic air emissions: 70%
Air carcinogens: 90%GHG emissions: 40%
Hazardous waste: 35%
Actual Reductions by 2000Toxic air emissions: 75%
Air carcinogens: 92%GHG emissions: 55%
Hazardous waste: 46%
1990
Based on a foundation of environmental stewardship
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Journey Toward Sustainable Growth
Based on a foundation of environmental stewardship
Business Integration1970 1980 2000 2010
Compliance
CEO Ed Woolardtakes a stand, 1989
CorporateEnvironmentalism
SustainableGrowth
Market-facingGoals
Valu
e
FootprintReduction Goals
Energy Goals
1990
CEO Chad Holliday,Sustainable Growth
Mission
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Cost savings: Over $6 Billion (USD)Industry recognition: “Laggard” to “Leader”427th consecutive quarter dividend
So far, DuPont has achieved a significant footprint reduction
* TRI = Toxic Release Inventory
Sources: DuPont Global Reporting Initiative (GRI) report:
http://www2.dupont.com/Sustainability/en_US/assets/downloads/2011_DuPont_GRI_Report.pdf
DuPont Sustainability Progress Report: http://www2.dupont.com/Sustainability/en_US/index.html
Striking the Sustainability Balance: Establishing & Implementing an Effective Sustainability Strategy05/08/2023
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Reducing Environmental Footprint Greenhouse Gas Emissions > 14.62 MM metric tCO2eq Water Conservation > 32 billion gallons Fleet Fuel Efficiency > 100% leading tech vehicle Air Carcinogens > 0.9 million pounds Independent Verification of Site Programs > 100 % site
Serving the Marketplace Environmentally Smart Market Opportunities from R&D
Efforts > 640 MM$ Products that Reduce Greenhouse Gas Emissions > 2
Billion $ revenues Revenues from Non-Depletable Resources > 8 Bllions $
revenues Products that Protect People > 1.000 products
We are also on track to deliver on our 2015 Footprint and Market Facing Goals
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DuPont Sustainability Progress Report:http://www2.dupont.com/Sustainability/en_US/DuPont_2010_Sustainability_Progress_Report.pdf
The Roadmap to Sustainability
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In the early 90’s, Chad Holliday, DuPont CEO’s at that time, identified the critical success factors for sustainable growth
1. Vision Clearly Defined by Leadership at the Top2. An Implementer3. Set Public Goals/Metrics so Everyone has
Something to Measure Progress Against4. Organizational Engagement and Culture
Transformation5. Corporate Sustainability Planning Process – Fully
Integrated with Strategic Business Planning Process
6. Implementation Excellence7. Recognize Key Programs & Accomplishments8. Form External Relationships with Key Stakeholders
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Success depends on the ability to integrate and execute the following sustainability roadmap
5 STEPS BENEFITS
Optimal allocation of resources to ensure the highest return on sustainability investments
Accelerated progress towards sustainability goals
Reduced corporate sustainability risks
Increased organizational alignment, clarity, and operational discipline
Increased national and international recognition, reputation and interest level for investors
Develop competencies and support cultural change
Manage risks, reduce costs and build stakeholder’s value
Integrate sustainability in the ambition, strategy and objectives
Build the business case for sustainability
Understand the impact of the key drivers
1
2
3
4
5
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Lower Risk Exposure
Strengthen Bottom Line Revenue Growth
Market Share Reputation Leadership
Paid Dividends Free Cash
Flow Cost of Capital
Shareholder
Stakeholder
VALUE
Smaller Footprint
Better and Safer
Processes
Better Products
Cost Reduction
A sustainability business case is grounded in products, processes and footprint…
…looking at pragmatic actions that can unlock value for the organization…
…generating tangible & intangible value…
…for all the company stakeholders.
1. Build the business case for sustainability, identifying and quantifying its tangible and intangible value1
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2. Understand the impacts of the key external drivers on the company and combine them with the company ambition to be sustainable
Cost/benefitWhat is the potential social and
environmental impact reduction and which actions improve your business
value?
CompetitionHow is the current sustainability
performance of the industry and what are the best practices?
Your own ambitionTo what extend do you wants to
match/exceed stakeholders expectations?
Stakeholder expectationsWhat do stakeholders expect from your
company regarding sustainability related issues?
Key external drivers for strategic positioning
TechnologyWhat technology can help you reduce your social and environmental impact across the regions and value chain?
RegulationHow are regulations influencing your
business now and in the future?
YOUR COMPANY
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2000 2011 2020
Sust
aina
bilit
y Pe
r for
man
ce
Timeline
Leading edge
Trailing edge
Zone of acceptability
Release value
Set strategy and Implementation roadmap
Sustainable Growth
Define ambition
3. Set the ambition and integrate sustainability into the business vision, strategy and objectives of the company
Sustain results
3
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4. Implement an integrated sustainability management system to manage risks, create options, reduce costs, and build stakeholder’s value; measure and communicate the performances externally
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Commitment Policies & principles Performance Goals & plans
Supportive staff Accountability Integrated structure Performance & motivation
Management Best practices Communication processes Training & development Learnings, Audits & re-evaluation
Strong Leadership
Appropriate Organizational
Structure
Systems Processes and
Actions
Sustain the results in your operations: develop competencies and drive cultural change with the appropriate organizational structure and management processes to “operationalize” sustainability
PeopleManagement
Culture
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Sustainable Operations:
The DuPont Production System
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DuPont Global Integrated Operations – At a glance
2007 2008 2009 2010 2011
80
90
10
0
110
1
20 Supply Chain Costs
Production Volumes
DuPont Integrated Operations WorldwideIncluding “Danisco”Global Supply Chains 117Plant sites 239 Sites
Warehouses 450+Shipping Major Container userEmployees (approx.) 38,000+ Countries 45Contract operations 1000+ SitesNew Product Launches 5%-25%NPS “Avg Annual Imp” 2%-3%Annual Gross Productivity > $1B per year PTOI
Delivery to Promise (DTP)
Diverse Operations Seeds Discrete Parts Food Additives Industrial Biotech Paint production Film production Polymer Production Fiber production Consumer goods Electronic materials Continuous chemical process Fine and custom chemicals Fluorine Chemicals
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Initiatives have had a variety of effectiveness and impact !
20062008
DuPont Operations – CI Journey
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
•Total Quality Management
• DuPont Continuous Improvement Criteria (DCIC)
20042003 2005 2006 2007
CMLTBfPC BfQ&PC
CELTAPLT
IQC/CIC
CFM •World Class Technologies
BfAPC
• Integrated World Class Technologies & Assessment Process
AELT
•Supply Chain Integration & Management (cycle time reduction)
•MRP II
2009
Integrated Operationssectors to SBUs, smaller central groups
•UPtime Excellence Self-Assessment•External Benchmark of Practices and Assessments
•Mfg Excellence Self-Assessment -Dacron®• Operations Excellence
Self-Assessment
•Maint. Exc. Recognition Process
•Internal Benchmark of Mfg Managing Practices at site level and business level
• Maintenance Benchmark Study
• Adv. Process Control Benchmark Study DuPont/McKinsey
Operations DiscoveryBenchmark – Five
Strategic Building BlocksA.T. Kearney
The Saturday Review
Lean Technology
Process Control CoC
Maintenance & Reliability
Energy CoC
Quality Management
•Mfg Standards (10)• Corporate Yield, UPtime
and Production Capability
CI Drivers• Permanent Investment Turnover•Cash Flow Cycle Time• Fixed Cost Productivity• Variable Margin
•Mfg Standards (10)• Corporate Yield, UPtime
and Production Capability
CI Drivers• Permanent Investment Turnover•Cash Flow Cycle Time• Fixed Cost Productivity• Variable Margin
SECTORS &STRONG CENTRAL FUNCTIONS
ONE DUPONTFUNCTIONALCOMPETENCY
2010
•High Performance Work Systems - HPWSOrganizational Effectiveness• Levels of Thought• Modes of Behavior
DuPont-McKinsey Operations
Benchmark Study
DuPont Operations: From Continuous Improvement Journey to Transformational Change
Top manufacturing companies
DuPont
2006 2010Time
Gap to top quartile
x
x
xR
elat
ive
Com
petit
iven
ess
DuPont OperationsTOP QUARTILE
Performers
Need for Step Change Improvement
Opportunity range
Non-energy raws (yields, waste)
1%-2%11,000 100-200
Energy 5%-7%1,100 50-100Other variable costs ~1%1,800 20
Fixed costs ex Maintenance 7.5%-15%4,000 400-600
Maintenance ex materials 10%-20%540 50-100
Turnaround maintenance – Uptime
2.5%-10%330 10-40
Maintenance materials 7.5%-15%200 15-30
Uptime (capacity release) 1%-2%29,000 300-600
Total 900-1,700+
Prize$ millions
Raw materials procurement tbd tbd11,000
High Cut Estimates
CategorySpend/basis$ millions
June / December 2006 – The size of the prize
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Sustainable Operations: The DuPont Production System
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Required Business Outcomes
Focus on what really matters, with the right
people
The right tools and practices to solve root
level problems
People instinctively
doing the right things
The right skills and coaching
Mindsets and Behaviors
Role modeling/ coaching dialogue/ difficult
discussions
Capabilities Engine
Technical ModelManaging Process
Delivery example
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An integrated management system that fully develops people and organizational capability for effectiveness and creativity in utilizing assets and eliminating all waste.
Current and future require-ments for capability and performance
Continuous Improvement Validated Benefits
MM$ 2007Actual
2008Actual
2009Actual
2010Actual
2011Plan
Fixed Cost 335 209 505 275 200Variable Cost 165 397 652 460 350
Capacity Release
25 200 83 410 300
Total 525 621 1240 1100 850
Working Capital 401 412 997 430 375
DPS Deployment across all Regions and SBU’s
2007 2008 2009 2010 2011
Small Sites 0 2 23 54 44
Large Sites 2 13 23 12 3
DPS Deployment across all Regions and SBU’s
2007 2008 2009 2010 2011
Small Sites 0 2 23 54 44
Large Sites 2 13 23 12 3
Cumulative improvements of more than USD 5 billion(much more than initial estimate)
Sustainable Results
A production system implementation is the shortest and most robust way to success towards sustainable, world-class operations
3-5 years transformational journey
ROI/NPV drives the approach, to “pay-as-you-go”, which builds business leadership support
Cultural change enables sustainable results
The focus on operation transformation and integration of supply chain is critical to deliver full value to the client
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DuPont Sustainable Solutions
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DuPont Sustainable SolutionsSafer
WorkplaceProtecting the Environment
Enabled Workforce
IncreasedProductivity
ReducedFootprint
MECS Sulfuric Acid
Technology
STRATCO® Alkylation
IsoTherming®Hydroprocessi
ng
Employee Safety
Contractor Safety DILA
Process Safety
Scrubbing Technologies
Energy Efficiency
Sustainable Assets
Instructor Led Training
Media Tools
BELCO® Scrubbing
Technology
Environmental Management
eLearning Systems
DuPont Sustainable Solutions brings value to our clients
Improving the Management of Risk
Improving Profitability
Improving Sustainability
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Our unique proposition is to leverage DuPont owner operator experience and enabling our client to “operationalize” sustainability
As an owner we know that transformational changes are not only driven by: Strategy, Or Management Systems, Or Technical Solutions… Or Capabilities Development, Or Organisational Design…
…but by integration of the above, following a structured roadmap, building capabilities, and enabling cultural change to drive sustainable results from your operations
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Minimizing the risks and extracting the maximum value from an integrated operations system
FROM TO Experts Initatives & projects Slower, non-sustainable Higher risks Dependent culture Stove-pipe structure Push
Everybody on the shop floor Capability development Faster and sustainable Lower risks Interdependent culture Integrated architecture Pull
Risks & Footprint reduction Capacity release Debottlenecking Supply chain improvement Cost productivity
Unlock Value of Assets (people, Materials, Investment)
Innovation and Future business results
Sustainable Results
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Client Case: Designing & implementing an Integrated Production System that enables transformation towards world-class operational performance
Company performance improvement
Integrated approach to operations management: operations systems and procedures, management processes, people capabilities mindsets and culture.
Client’s needs Key questions & Approach Benefits
Leadership Alignment & Commitment
How can operations efficiency and effectiveness be improved in an integrated and sustainable way?
Production System Design
Integrated Production
System Develop executive
leadership alignment around operational objectives with the intent to determine top-to-bottom commitment to continually improving operations efficiency
Establish long-term operational goals
Establish case for change
Implementation of the system site-per-site
Structured approach: diagnose, implement, sustain
Focusing early on value release, optimizing existing activities in the process.
Leadership, teamwork and problem solving empowering employees, driving culture change
1 2 3
How can the corporation accelerate progress towards performance goals?
How should operations organize itself to ensure alignment and operational discipline in executing the corporate and business strategies?
Management Process Culture Transformation Capability Building Diagnose &
Improvement Tools Operations Energy M&R Lean Manufacturing
Technology Safety
A sustainable roadmap with significant year-on-year payback that enables to deliver the business objectives
Very significant contribution to the bottom line ( $1B, or up to 20% of operating costs)
World-Class Operational Practices and Culture in 4-5 years
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