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Environment Friendly Management

Sunday, August 1st, 2010
Environment friendly

There are always fads and trends not only in fashion, but also in business management strategy. Six sigma was once a must have tag to improve the manufacturing processes. According to the book “Institute’s Six Sigma Breakthrough and Beyond,” by the late 1990s about two-thirds of the Fortune 500 organizations had begun Six Sigma initiatives with the aim of reducing costs and improving quality.

There was Quick Response Manufacturing (QRM), a companywide strategy for reducing lead times, which was first developed in the late 1980s. ISA-95, an international standard for developing an automated interface between enterprise and control systems, has been developed for global manufacturers.

Customer relationship management (CRM) is also a broadly recognized, widely-implemented strategy for managing company’s interactions with clients. Supply chain management (SCM) is used in executing supply chain transactions. Knowledge management (KM) is a relatively new strategy since the turn of millennium. AKorean business newspaper established an economic forum called ‘World Knowledge Forum’ in 2000. The current Korean administration even changed the name of ministry from ‘Ministry of Commerce, Industry and Energy’ to ‘Ministry of Knowledge Economy’ in 2008.

Sustainable Management (SM) also caught the eyes of the public as people are concerned about environment. Sustainability has three substructures: the environment, the needs of present and future generations and the economy. The environment was part of sustainable management, but environmental awareness led to environmental friendly management and may bring “zero-carbon management.” Under the United Nations Framework Convention on Climate Change, Korea is classified as developing country that is not required to reduce emissions. Still, the Korean government ratified the Kyoto Protocol and already had policies in place to reduce greenhouse gases.

Accordingly, Korean companies set goals to reduce carbon emissions and some earn money and cut expenses. Hankuk paper is one of them. Aprinting paper manufacturer, Hankuk paper buys surplus steam from Korea Zinc Inc. to dry wet and thick pulp to produce paper. The steam is cheaper than bunker Coil and also it hardly emits carbon dioxide unlike Bunker COil. The cooperation benefits Hankuk paper, reducing fuel costs, and Korean Zinc Inc. earns money from the deal. It is win-win for both firms.

This idea started from good location and a simple communication with companies in the same industrial complex. Each company and/or factory is in the range of 3 to 5 km from Hankuk Paper in the complex.

Kim Jong-Soo, team head of technology planning, said “As people of each company know each other, sometimes we share ideas of reducing green house gases and expenses. Reducing carbon emission is a new mission for Korean companies.”

Hankuk Paper put much effort into managing environmental friendly processing in the paper manufacturer to get rid of the misconception that the paper industry is responsible for environmental pollution and disruption due to its logging. While he was sharing ideas with colleagues and employees from neighborhood companies, he learned that his company needed steam and Korea Zinc Inc. had overabundant steam from its manufacturing process.

“We consume 1.06 million tons of steam per year for paper making in the paper mill. To generate 1 ton of steam, 67 liters of Bunker COil needs to be burnt, which means we need to buy 71 million liters of Bunker COil annually. It costs around 44 billion won ($35 million),” Kim explained.

Burning Bunker COil is not only expensive, but also fumes out greenhouse gas. If steam replaces Bunker COil, the paper making process will not emit carbon dioxide that makes Hankuk Paper as a carbon-zero company. Two companies started negotiating the steam trade. As Korea Zinc Inc. is 3 km away from Hankuk Paper, establishing a pipeline between the two companies is enough to deliver steam.

The negotiation took a long time. One year was spent making the deal happen. Hankuk Paper and Korea Zinc Inc. agreed to trade half million tons of steam per year. Hankuk Paper will be supplied steam from next year for seven years.

Why did it take so long to make the deal? “Because we didn’t know how to assess the price of steam and Carbon Emission. There was a not clear criterion to judge or many precedents to consider,” Kim said.

From three companies, Hankuk Paper gets 1.06 million tons of steam annually, and expects to save 44 billion owns in oil expenses. Considering the company’s estimated operating profit for fiscal 2010 is 45 billion won, it has a very positive effect economically and environmentally.

This cooperation is also good for Korea Zinc Inc. The company used to generate electricity with steam to save costs and the environment. However, generating electricity from steam lost much of its heat energy during the process. Selling the steam to Hankuk Paper is more effective for Korea Zinc Inc as well.

It is the first case in the paper industry that a firm is using steam from another company. Competitors in the paper industry are considering establishing a cogeneration plant. Kim thinks Hankuk Paper was lucky to be near other companies in an industrial complex.

Hankuk Paper also hopes that recycling steam gives it better credit from the public as an environmental friendly company. The paper industry is an energy-consuming industry.

The late chairperson, Dan Sa-Chun, the founder of Hankuk Paper foresaw that the carbon emissions would be a big social issue. He ordered forest trees in a size of 52 million square meters plantation to prevent climate change. At the same time, the company has come up with an answer to reduce carbon emissions.

Kim also hopes that people think the paper industry is a friendly one. “Paper companies have spent a big amount time to consider less energy consuming processing. At the same time, they have planted numerous trees -- more than which are consumed.”

This kind of cooperation between companies in a same industrial complex is encouraged, especially in Eco Industrial Parks (EIP). Hankuk Paper and Korea Zinc Inc. are in a same Ulsan Eco Industrial Park. The Ministry of Commerce, Industry and Energy launched on a project to build ECOindustrial park which pursues zero-emissions by recycling byproducts, waste, used energy generated from the industrial complex, so that they could be used as material or energy sources for other production activities. There are currently five Eco Industrial Parks including Banwol-sihwa, Ulsan, Yeosu, Cheongju, and Pohang. As part of the ECOindustrial park project, waste heat (steam) generated from the Ulsan-Seongam incinerator is channeled to the Hyosung company (located within the industrial park), which not only provides economic benefits, but also reduces the use of fossil fuels, and consequently decreases CO₂ emissions. Through this project, Hyosung company saves 3.9 billion won annually, as well as reduces 55,500 tons of carbon emissions.

From next year, another newly launched incinerator will channel waste heat to the Hyosung company, which will increase Hyosung’s savings on fuel to 5.9 billion won per year.

Korea Industrial Complex Corporation (KICOX) has led the Eco Industrial Park project since 2006. During that time, KICOXhas invested 29.3 billion won to five Eco Industrial parks including Banwol-sihwa, Yeosu, Cheongju, Pohang and Ulsan-Seongam incinerator to get 49.8 billion won in economical effects, with a reduction of 197,000 tons of carbon emissions.

In Pohang, Dongkuk steel mill Co., DSI and POSCO cooperated to reuse steel waste as a substitute of scrap metal. In Cheongju, Hynix Semiconductor Inc. separate and refine waste sulfuric acid and waste hydrochloric acid, then supply it to companies which need sulfuric acid. Annually, 10,000 tons of waste acid is reused by the system. The Eco Industrial Park project also helps to hire people to generate new jobs. The official at KICOXsaid “Eco Industrial Park aims for Carbon zero emission to be a future green industrial complex.”

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