Like many good business ideas, IBM’s plunge into water management technology started with its own pain. The story is told in Charles Fishman’s new book, The Big Thirst: The Secret Life and Turbulent Future of Water. Fishman warns that the era of easy water is over. “The new water scarcity will reshape how we live, how we work, how we relax. It will reshape how we value water, and how we understand it,” Fishman writes. The managers at IBM’s chip plant just outside Burlington, Vt., had their consciousness reshaped before many others did. Water is plentiful for them, but they use a lot of it and the water they use has to be ultra-pure, so it’s mighty expensive.
At the Burlington plant, IBM creates huge quantities of purified water for washing delicate components during the semiconductor manufacturing process–1.7 million gallons a day. The bill for purified water is nearly $10,000 per day, including the cost of water, chemicals and energy. It used to be much higher–more like $20,000. But, starting more than a decade ago, under pressure to cut costs, IBM’s managers realized that situation was unsustainable. So they launched a water management initiative that ultimately became a data-rich system for managing all of the water used in the plant. And that system grew up to be the company’s Smarter Water business. “Burlington has helped IBM change the way it thinks about itself,” writes Fishman. “IBM wants to do for its customers–for companies, for cities, for utilities, for whole natural ecosystems–what it has done in IBM Burlington.”
For IBM, natural resource management has evolved over the past decade from an internal discipline into an expression of global advocacy. The company’s annual corporate social responsibility report lays out the internal benefits of conservation and environmental sustainability. For instance, IBM saved over $50 million in electricity expenses and conserved 523,000 megawatt hours of electricity since 2008. The company’s global conservation program involves 3,100 conservation projects at more than 350 IBM facilities in 49 countries. Conservation is a good investment, too. Over the years, IBM estimates that its focus on environmental sustainability has realized savings and avoided costs at a rate of approximately $1.60 for every $1.00 spent.
As the Smarter Planet business initiatives continue to develop, those savings will increasingly be supplemented with new revenues. IBM’s experience points to a big, convenient truth: conservation is good for business.
Burlington’s water management odyssey started in earnest about a decade ago when the plant shifted from making chips mainly for IBM to making them for the commercial market and competing with low-cost Asian manufacturers. The pressure was on to cut costs. The operations managers performed deep analyses of all of their supplies and processes, and water came into sharp focus.
More than half of the water the plant used was ultra-pure, meaning it’s 10 million times cleaner than tap water. Ninety percent of water-related costs were connected to the ultra-pure stuff. So that’s were the savings had to come from. Less than one third of the cost was for the water itself. The rest came from electricity,chemicals, filters, labor and the energy used to warm chilly Lake Champlain water to 70 degrees, says Jeff Chapman, the plant’s pure-water engineer.
The first steps were monitoring and measuring. The operations team set up a sensor-based monitoring system that tracked movements and temperatures of water and the cost of energy in each step of the purification process. Then they borrowed the statistical process control system that was being used in the chip fabrication process to help analyze their processes so they could tweak them so they used less water and energy. One major source of savings was using heat created in the manufacturing process to warm up the ultra-pure water to room temperature. Now they make additional efficiency improvements each year. “We optimize the resources, the systems and the relationships between the systems. We’re the ultimate smart enterprise,” says Janette Bombardier, the director of Burlington site operations.
Bombardier and her colleagues enjoyed Fishman’s visit when the traveled to Burlington for a tour of the site last year. He seemed especially impressed with the massive plumbing system. Eric Berliner, the water manager at the plant, told Fishman, “When you start to think like we think, you don’t see water in the pipes. You see dollar signs.” Fishman liked Berliner’s comment so much that he put it in the book.
These days, the flow of dollars is definitely slowing. Overall, the total annual cost of water at the plant has gone down $3.6 million over the past decade in spite of a 66% increase in water rates and a 30% increase in manufacturing output. The Burlington plant has become a showcase for smart water management.