Exploring the Next Frontier
October 1, 2010
by Dan Malovany
Small steps can lead to big results, but often it takes a map to lead a company in a bold new direction. That’s exactly what Frito-Lay North America discovered three years ago when the Plano, TXbased company evaluated the progress of its burgeoning environmental sustainability program.
Since the late 1990s, the nation’s largest snack producer had installed literally dozens of innovative, resourcesaving technologies across the nation. They ranged from using solar panels to harness solar energy at its distribution centers to capturing landfill gas to make chips at its Rosenberg, TX, plant. The company also relies on cogeneration systems to produce electricity and reuse waste heat from the cooking processes at its facilities in Bakersfield, CA, and Killingly, CT, according to Al Halvorsen, Frito-Lay’s director of environmental sustainability.
Putting these myriad technologies on a large-scale map simply allowed the engineering and operations management teams to visualize the big picture. It also prompted them to ask a couple of curious questions that laid down the gauntlet as well.
“What if we were able to take all of that technology and [use] it in one location?” Mr. Halvorsen recalled. “How might we run a plant pretty much off the grids — off the water grid, off the electric grid and off the natural gas grid? Could we optimize the use of renewable energy and recycled water for the production of our products?”
The big “what if ” resulted in Frito-Lay partnering with the US Department of Energy and its National Renewable Energy Lab to evaluate the locations of its 32 snack facilities to determine which one might serve as the best laboratory for pushing the envelope on the company’s environmental sustainability program. The choice ended up being Frito-Lay’s Casa Grande, AZ, facility, which turns more than 500,000 potatoes into Lay’s and Ru• es brand chips every day. Located in a desert location, the snack operation has both plenty of sunshine for its solar panels producing electricity and a pressing need to conserve water. In fact, Mr. Halvorsen noted, the facility recently began running process water from the plant through a membrane bioreactor with a low-pressure, reverse-osmosis system and now reuses it to wash potatoes and cook corn.
“It’s a slow process, but we think we can probably get to a 75 to 80% water recovery system” he said. “At the start of the day, if I brought in a gallon of water, at the end of the day, I would have 0.8 gallons for the next day of operation.”
BHAGS BEGAT BIG HOUSE. During the past two years, Casa Grande, which literally means “big house” in Spanish, has been retrofitted to make the building gold- certified LEED-EB (Leadership in Environmental and Energy Design for Existing Buildings) by the US Green Building Council. Ultimately, the goal is to use 90% less water, 80% less natural gas and 90% less electricity as well as eliminate 99% of solid waste such as potato peelings, corn husks and paperboard from landfills, according to Frito-Lay. Achieving those objectives remains a work in progress, but the company will take significant steps toward reaching them in 2011.
To reduce its dependence on electricity and natural gas at Casa Grande, for instance, Frito-Lay is constructing a photovoltaic field to harness the Arizona sun and installing a large-scale biomass boiler that will be fed by wood and other natural waste debris prevalent in the area. Together, these systems will produce 70 to 75% of the snack operation’s power from renewable sources, Mr. Halvorsen said. “In typical Frito-Lay fashion, it’s gotten bigger as we started looking at net zero energy along with net zero environmental footprint,” he said. “We know we’ll never get completely off the grids or completely eliminate our environmental footprints, but we’ll try to get as close as we can.”
Today’s “typical Frito-Lay fashion,” in which sustainability programs are now locked step-in-step with business strategy, took years to develop since the company began its environmental program in earnest in 1999. Like many baking and snack operators today, Frito-Lay initially perceived sustainability as a side benefit that resulted in additional cost savings from strategic capital investments and good manufacturing practices. “At that time, our environmental program was 100% focused on productivity and how we could flow the benefits of that program to the bottom line,” Mr. Halvorsen explained.
Initially, the engineering team set what it thought were realistic goals that would reduce water, gas and electricity usage by 10 to 15%, but these proposals were sent back for revision by the top executives in Frito-Lay’s operations department, which was looking to establish some Big Hairy Audacious Goals (BHAGs), a term coined by the book “Built to Last” that had been popular at that time. Shortly thereafter, the company re-established aggressive long-term goals of 50% reduction per pound of product for water as well as a 30% reduction for national gas and a 25% reduction for electricity per pound of product.
“That really got us fundamentally looking at our business, the environmental program and our efforts in a dramatically different way,” Mr. Halvorsen said. “It wasn’t just ‘let’s go and get a 1% a year reduction and feel happy about it.’ It was ‘how do we fundamentally change our course of business by setting those large, aggressive goals?’”
Back then, there was no “grande” plan to make a quantum leap to achieve those targets, but the objectives did send momentum moving in the right direction. “By no means did we have action plans that said, ‘we were going to get there in three, five or seven years,’ but those BHAGs made people feel uncomfortable enough to sit up in their chairs and say, ‘we have to look at our business dramatically differently.’”
PERFORMANCE WITH PURPOSE. Part of that change has been driven through a parallel initiative by Frito-Lay’s parent company, PepsiCo, Purchase, NY, that offers a wealth of resources and technological innovation coming not only from its beverage business but also from its international subsidiaries, according to Mr. Halvorsen. Moreover, Indra Nooyi, PepsiCo’s chairperson and c.e.o, has embraced environmental sustainability and made it one of the main planks of the company’s vision of “performance with purpose.” With that top-down directive for change, all of PepsiCo’s other major businesses such as its Quaker, Tropicana, Gatorade and Pepsi operations are focusing on using fewer natural resources, reducing their carbon footprint and a whole lot more.
“Sustainability is not just driving the bottom line, but we’re seeing if we can use it to potentially help improve the top line as well,” Mr. Halvorsen said. “It’s become embedded in our DNA with our c.e.o. setting the vision and driving it to PepsiCo’s performance. It’s not only a subsection of the engineering department here, but it’s also about how marketing looks at sustainability or how purchasing look at it? How do we outreach to our copackers to talk about energy, utilities and sustainability? How do we get our R&D department to produce products differently and have a positive environmental impact everywhere we can?”
As a result of these ongoing initiatives, PepsiCo and Frito-Lay have been widely recognized for their efforts. In fact, the company has been named as one of the nation’s greenest energy users by the US Environmental Protection Agency, and currently has more than 15 manufacturing plants and office buildings world-wide LEED certified.
Ten years ago, such proposals to install energy management systems or retrofit an existing facility to become LEED certified often got tabled early on during budget discussions, but those attitudes continue to change, according to David Dixon, senior director, strategic accounts, Burns & McDonnell, an engineering firm based in Kansas City, MO. “Back then they said, ‘we can’t do it because it’s going to add 5 or 8% to the cost of capital,’ but as the whole movement picked up steam, you can make the right choices on your projects, and now none of them add additional capital,” he said.
Part of the transformation has to do with advances in technology that didn’t exist five years ago, added Bob Zak, general manager and president of Powerit Solutions North America, Seattle, WA. In fact, the cost of installing new technology that can help companies identify and curtail waste has become more affordable and, in many cases, a more common practice, he said.
“It’s so inexpensive to put in a wireless sensor now where before you would have to put in the sensor, get the power to it, install the wiring all the way back to the control system that’s gathering this data,” he explained. “And then on top of that, you had to get a contractor in who’s going to be banging around dusty conduits, forcing you to shut down production so he can be on a ladder all the way up in the rafters” he explained.
TAKING FIRST STEPS. It’s not only the big players in the food industry that are making significant strides toward environmental sustainability. In its initial steps to drive continuous improvement, Grecian Delight Foods, Elk Grove Village, IL, has reduced municipal waste by 66%, increased recyclable materials by 50% and recognized as a US EPA Waste Wise Program Partner, said Tom Valnoha, vice-president of operations. Waste Wise is voluntary program where a business makes a public commitment to reduce waste, then reports about its activities on a monthly and annual basis against its performance criteria.
For its recycling program, Grecian Delight Foods has a designated “solid waste champion” who inspects the disposal containers to remove any potentially recyclable contents prior to sending them to the landfill. Additionally, the pita and flatbread producer established a universal waste storage containment area for proper storage of batteries, burnt out light bulbs, used oil, paint thinner and other potentially hazardous materials , Mr. Valnoha said.
“Many times, businesses struggle with cost reduction or waste minimization strategies, but if you look at it, it could be likened to lean manufacturing programs,” Mr. Valnoha said. “Many times, we are unable to see the things that are right before us because we work with them everyday.”
To reduce electricity, the regional food manufacturer installed high- effi ciency, T-8 fluorescent lighting in its new 130,000-sq-ft production facility, which is scheduled to offi cially open in October and will produce a wide variety of flatbreads. Grecian Delight Foods is also retrofitting its existing 180,000-sq-ft food processing plant to make it more energy efficient. “When we approached it from the perspective of ‘what can I do to improve the work environment,’ which made it more enjoyable for employees, and from being more productive, improving lighting by switching over from the old fluorescent lighting to the new T-8s was obvious,” Mr. Valnoha said. “They give more light for the same amount of energy, and more importantly, they deliver the light where the employees need it most.”
Retrofitting existing buildings can provide a host of challenges. Often a building’s age may mean its insulation is not up to current standards; roof loads may not be able to support new heat recovery units; technology cannot be transferred because of inadequate energy load; or existing equipment may be incompatible with advances in automation, according to Mr. Halvorsen. Despite these engineering hurdles, Frito-Lay now has six LEED-EB Gold certified buildings, including its Plano headquarters and snack facilities in Casa Grande, Topeka, KS, Modesto, CA. Perry, GA, and most recently in Beloit, WI.
The Perry facility reduced natural gas consumption by 35% and electricity by 27% per lb of product since 2000 by installing heat recovery boilers, upgraded oven burners and improved maintenance practices. It cut water consumption by 38% though a companywide low-water corn cook process and by installing low-flow, solarpowered faucets and flush valves. Additionally, Frito-Lay noted, water is used to irrigate the facility’s 1,500-acre lot instead of going into the sewer. Moreover, less than 1% of the facility’s solid waste goes to landfill through an employee-led plastic recycling program, reusing cardboard shipping boxes multiple times and allocating product waste to animal feed.
Mr. Halvorsen likened the Casa Grande facility to a learning lab or petri dish as Frito-Lay challenges all of its plants develop their own near net zero plants by working with their facilities’ employee-based Green Teams and environmental compliance committees to adapt new technology that will step up its environmental sustainability efforts to the next level. Those options, he added, have become more plentiful as PepsiCo and Frito-Lay continue to explore new frontiers in sustainable technology.
“Maybe it’s recovering waste heat off the potato chips’ fryer stack and using it to heat the building. Maybe it’s making a fleet that’s as fuel efficient as possible,” Mr. Halvorsen said. “Can our facilities get to less than 1% landfill waste? They may not be as fully turnkey as Casa Grande, but they are taking steps in the right direction, learning from what we’re doing in Casa Grande and seeing if they are able to apply the learnings to their facilities.” •