Chemical Management Services (CMS)
Chemical Management Services (CMS) is a business model in which a customer purchases chemical services rather than just chemicals. These services can encompass all aspects of the chemical management lifecycle (PDF) (1 pg, 96K, About PDF) including: procurement, delivery/distribution, inventory, use (including chemical substitute research), collection, monitoring/reporting, training, treatment, disposal, information technology, and even process efficiency improvements; each of which poses its own costs and risks. Under CMS, the service provider is compensated based on the quality and quantity of services provided that reduce chemical lifecycle costs, risks, and environmental impacts, not on the volume of chemical sold. Therefore the service provider has the same objective as the customer: to reduce chemical use and cost. Both participants achieve bottom line benefits through reduced chemical use, cost, and waste. This model is now widely used in the automotive, aerospace, and microelectronics sectors where environmental benefits observed include reduced chemical use, reduced emissions, and reduced waste generation, as well as substantial cost savings. A total average cost reduction of 30% has been achieved in the first five years.
Benefits of CMS
- CMS saves money. The cost of chemical management ranges from $1.00 to $3.00 for every dollar of chemical purchased. Therefore, a facility purchasing $1 million in chemicals is spending an additional $1 million to $3 million managing them. These high costs are due to the expenses incurred as a result of using chemicals, such as compliance, safety, disposal, and floor space. CMS can reduce these costs.
- CMS helps manufacturers prioritize chemical management activities so they are performed more effectively. For most manufacturing companies, chemical management is not considered part of the core business. Chemicals are a very important part of manufacturing but managing them is usually not a high priority until something goes wrong. As a result, managing chemicals is often not done as efficiently and cost effectively as other manufacturing activities.
- In addition to lowering costs, a sound chemical management system reduces chemical use, emissions, waste, the number of accidents on site, and liability. This type of system also increases employee safety, frees up floor space for manufacturing, and improves staff productivity by eliminating chemical management tasks from their duties.
Overcoming CMS Hurdles
Even though the demonstrated benefits are impressive, getting companies to engage in these types of strategic partnerships can be difficult due to logistics, corporate culture, and management reluctance. Initiating a chemical service program requires an investment of time and resources but, in the majority of cases, the benefits significantly outweigh the costs. Companies often perceive chemicals as a small percentage of their overall operating costs but once a company actually conducts a total chemical lifecycle cost baseline, the true costs become readily apparent to management. Companies also perceive the switch to a comprehensive CMS program as complicated with very high transition costs associated but a well planned approach and workplan greatly reduces the transition costs with minimal complications.
Without strong management support, it can be very difficult to get a CMS program started because all levels and functions of a company must be involved in the program development. Lack of understanding and knowledge about supplier capabilities can also be a problem. CMS implementation has also been hindered by the lack of credible, third-party information on the benefits.
- Tools for Optimizing Chemical Management. A step-by-step manual for manufacturing firms that shows how to evaluate and design a comprehensive CMS program. This manual also includes the Chemical Management Cost Analysis Tool, an in-depth excel spreadsheet that allows you to calculate what your company currently spends on chemical management.
- Chemical and Waste Management Services: A Manual for Schools. A manual for guiding a school district through all the steps of analyzing, developing, and launching a successful chemical and waste service program. These steps include documenting a district's chemical and waste expenses, mapping current chemical and waste management, selling upper management on the program, and selecting a service provider. The manual also identifies several key decision points, including whether to implement a program in-house or seek service provider assistance.
EPA's Office of Solid Waste, OSW (renamed Office of Resource Conservation and Recovery, ORCR, on January 18, 2009) funded the Chemical Strategies Partnership (CSP) research pilot project Evaluation of CMS in Colleges and Universities (PDF) (2 pp, 112K, About PDF). CSP is a non-profit organization exploring the practicality of CMS as a business model that can continuously reduce chemical use and waste in a variety of industry sectors. The goal of this project was to see if the CMS model could be a cost-effective solution to chemical procurement and management issues in the college and university setting. The results of this project also reflect how CMS might work in other educational settings (including elementary and secondary schools) and research environments.
To begin, CSP examined current chemical management practices at colleges and universities and developed case studies depicting two in detail: University of New Hampshire (PDF) (18 pp, 360K, About PDF) and Dartmouth College. CSP then recruited Dartmouth College to participate in the actual CMS pilot. EPA's Region 9 has also funded a CMS pilot with the new University of California Merced Campus. The results show that CMS is a cost-effective option for colleges and universities. For more detailed findings and information, see Exploring Whether Chemical Management Services are a Potential Mechanism to Facilitate the Reduction, Reuse and Recycling of Chemicals in Educational Institutions (PDF) (20 pp, 255K, About PDF).
CMS and Resource Management in Schools
On February 1st, 2005, the GM/Lansing Public School District Pilot Project kicked-off in Lansing, Michigan. This project seeks to introduce CMS and Resource Management (RM) as a combined strategy to improve chemical and waste management in K-12 schools, most of which struggle to find cost-effective, long-term, holistic solutions. Schools continue to face diminishing resources under increasing demands from parents and federal, state, and local governments. RM, like CMS, is a servicing approach that changes the fundamental relationship between a customer and supplier from one where profit is based on quantity of product sold to one based on quality of services provided. Companies that have moved to CMS and RM experience reduced chemical use, reduced waste generation, enhanced recycling, and improved compliance. In the K-12 setting, these benefits may contribute to a healthy school environment that helps reduce sick days and enhance learning while reducing school operating costs. This project is also testing whether public/private partnerships can be an effective mechanism to bring potential chemical and waste management solutions to K-12 schools.
The project team's first activity was to tour several schools and building in order to gain an understanding of current chemical and waste management practices. This understanding was enhanced through meetings with key representatives including Lansing's Superintendent, Dr. Sharon Banks, and her cabinet, school principals and administrators, chief financial officer, director of purchasing and warehousing, director of transportation, director of physical plant and custodial and all his managers, director of public safety, and science teachers. The next step is to map out and collect extensive data on the costs and labor associated with chemical and waste management, from purchasing through disposal. Then, using this information combined with an understanding of servicizing capabilities, a servicizing business case will be developed and presented to the District. Visit this site frequently to follow the progress of this project.