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What Green Can Do for Brown

9/24/2008 --

Tauber Institute students go green and deliver savings to UPS.

ANN ARBOR, Mich.—A team of students from the Ross School's Tauber Institute for Global Operations (joint with the College of Engineering) created a green business model that could help United Parcel Service (UPS) save more than $7 million in less than six years by utilizing landfill gas as a sustainable energy source.

Findings by Tauber Institute students Thomas Evans, Bruna Ferro, and David Heiser stood out at the institute's annual Spotlight! competition, co-sponsored by the University of Michigan's Ross School of Business, the College of Engineering, and 18 corporations from around the globe. During the daylong event, students were judged on results achieved during 14-week internships loosely designed as real-time consulting assignments. Each team was tasked with solving a real problem and saving real money for a real company. Team UPS took the winning slot with each member earning $5,000 in scholarship funds.

Wondering whether "green equals green," the winning threesome examined the potential of landfill gas as a sustainable energy source for UPS. Their thesis: Tapping this resource could reduce operational costs and provide a volatility hedge against the rising price of non-renewable fossil fuels. After performing in- depth analyses of UPS's energy consumption profile, local energy and renewable energy markets, billing structures for different energy types, and the costs and benefits associated with landfill gas, the team presented UPS with a plan to install a 10-megawatt combustion turbine to generate electricity from landfill gas. The model created by Evans, Ferro, and Heiser predicts a 5.86 year payback period and a 20-year net present value of more than $7.26 million.

"The expected environmental benefit is equivalent to reducing the carbon dioxide emissions of 3,125 UPS delivery trucks annually," the team asserted in its report.

The Tauber students concluded that incorporating landfill gas utilization into the greater UPS sustainability strategy will yield increased market share with environmentally conscious customers and a reduction of greenhouse gas emissions for years to come.

"Our plan identifies the end uses of landfill gas that will provide the highest economic, social, and environmental value," said Team UPS.

Representatives from UPS immediately recognized the Tauber students' outstanding work.

"This was our first year as a Tauber project sponsor and the experience we had with the students was phenomenal," said Bill Eidenire, energy program manager at UPS and supervisor of the project. "The caliber, quality, and knowledge of the students were extremely beneficial to the success of our project."

Other Tauber Institute project sponsors had similar accolades for the student consultants.

"The two students we had performed extremely well. We're delighted with what they achieved," said Peter Marshall, global supply chain improvement leader of performance plastics and chemicals at Dow Chemical Co., whose company has been a Tauber project sponsor for three years running. "Actually, what the students left behind is not only something that got implemented in one of our businesses, but it's also a template that can be used elsewhere across the company."

The Tauber summer internships are just one pillar of the Ross School's commitment to action-based learning. As in years past, students interfaced with a wide range of company personnel, from top-ranking executives to workers on the assembly line, in resolving operations and business issues.

"It's not a classroom assignment. It's real life to the people who are on the floor," said Elizabeth Smith, MBA '09. "So if you get a 'C' on a paper or a case, that's one thing, but when you're trying to improve processes that these people have been doing for 25 years, that's something that will stick and you want to do a good job."

Smith and engineering student Kelly Sanderson spent 14 weeks at Alcoa Howmet Dover Castings and were able to net the company an additional $15.1 million in projected annual revenue. They applied lean manufacturing principles learned in core courses to operations conducted at a New Jersey plant.

Other teams were similarly successful in saving companies' time and money by getting onto the floor at Ametek, Boeing Co., BorgWarner, Children's Hospital and Regional Medical Center of Seattle, Cisco Systems, Cummins, Dell, Eaton Corp., General Electric Aviation, Intel Corp., Pfizer, Raytheon Space and Airborne Systems, Schlumberger, Steelcase, and Target Corp.

Team Cummins, consisting of Juan Lopez and Joshua Johnson, took home second place and $4,000 each in scholarships with "North American B-Series Engine Remanufacturing Operations Value Stream Assessment."

Third place was a tie between BorgWarner Transmission Systems-Germany's team of Robert Mersereau and Punit Shah for "Process Improvement for Global Product Launch" and Intel Corp.'s team of Andrew Lesko, Dan Nathan-Roberts, and Jaime Olaiz for "Effective Hub Networks and Maximized Customer Satisfaction: A Low Cost Solution." Each third-place team member took home $3,000 in scholarships.

In all, 20 student teams competed for $38,000 in scholarship awards. But success is measured by more than a winning award, said Joel Tauber, who founded the institute (a joint program of Ross and the College of Engineering).

"The reason for the success of this institute is people, relationships, team-building, and collaborative working," he said. "That's what makes for the success here, success in business, and success in life."

Thomas Evans, a member of the first-place team, seems to have had just that kind of success during his time at UPS.

"I couldn't have expected more from the project, but it was everything I wanted and more," he says. "It's the most satisfying experience I've had yet. In four-and-a-half years of experience, I've never done anything I'm more proud of."

—Leah Sipher-Mann

For more information, contact:
Bernie DeGroat, (734) 936-1015 or 647-1847, bernied@umich.edu