Riordan Manufacturing

A Business Proposal to Reduce Waste, Increase Energy Efficiency, and Raise Profits1

Prepared for
Kenneth Collins Senior Vice President, Research and Development Riordan Manufacturing

Prepared by
Caitlyn Gartz Vice President, Marketing Lunsford Environmental

June 10, 2010 Proposal Number: RM09-01

This is a fictitious proposal created for a fictitious company. The statistics, facts, and figures, while based on somewhat realistic assumptions, are not real. This proposal and its entire contents have been artificially created for demonstration purposes.

Riordan Manufacturing: A Business Proposal

Riordan Manufacturing
A Business Proposal to Reduce Waste, Increase Energy Efficiency, and Raise Profits Executive Summary Background Riordan Manufacturing, Inc. is a global plastics manufacturer employing 550 people with projected annual earnings of $46 million. The company is an industry leader in the field of plastic injection molding. With state-of-the art design capabilities, Riordan Manufacturing provides innovative plastic designs that have earned international acclaim. The company is wholly owned by Riordan Industries, a Fortune 1000 enterprise with revenues in excess of $1 billion. Its products include plastic beverage containers produced at its plant in Albany, Georgia; custom plastic parts produced at its plant in Pontiac, Michigan; and plastic fan parts produced at its facilities in Hangzhou, China. Currently, Riordan Manufacturing is in need of company-wide consultation services, including the analysis and evaluation of energy performance. Because of rising energy costs, Riordans profits have been steadily declining since 2004. This reduction in profits has been largely the result of increasing energy costs associated with manufacturing processes that require a large amount of energy. Undergoing a comprehensive review and systematic energy evaluation process will position Riordan Manufacturing to implement effective methods of decreasing energy costs and place into operation environmentally sound practices. Objective Riordan Manufacturing is in need of expert consultation services that provide research data, expert analysis, and data-driven recommendations designed to improve energy efficiency and increase environmental protection. Due to the increasing costs associated with energy-dependent industries, Riordan Manufacturing must find ways to improve energy efficiencies using data-driven, performance-based recommendations. Goals Riordan Manufacturings research-and-development programs are conducted at the corporate headquarters in San Jose, California. Based on production capabilities and market demands, Riordan Manufacturing leaders then assign production quotas to each of the divisions around the world. These quotas are presented to each division in the form of sales and production goals based on current and expected contracts with a variety of customers. Riordan Manufacturings major customers are automotive parts manufacturers, aircraft manufacturers, beverage makers and bottlers, appliance manufacturers, and the U.S. Department of Defense. These customers expect the attention to detail, extreme precision, and enthusiastic quality control that are the hallmarks of Riordan Manufacturing. To continue to meet the needs of existing customers with quality products and services, Riordan Manufacturing now requires consultation services that provide specific programs, policies, and procedures designed to increase energy efficiency and reduce waste. These consultation services can be encapsulated in four primary goals: Measure and document current energy usage

Riordan Manufacturing: A Business Proposal Review overall heating, cooling, and ventilation requirements Inspect and evaluate all energy-consuming machinery and processes Create and implement an aggressive environmental compliance program

These goals will guide Lunsford Environmental, Inc. as we provide research data, expert analysis, and data-driven recommendations designed to improve energy efficiency and increase environmental protection for Riordan Manufacturing. With these goals in mind, Lunsford Environmental will create a comprehensive program and provide specific written recommendations to help Riordan Manufacturings facilities around the globe achieve increased energy efficiency, reduce waste, and become more environmentally friendly. Methods Lunsford Environmental provides expert consultants who have expertise, training, and experience in a wide variety of professional arenas. Based on the experience and knowledge of our team members, Lunsford Environmental relies on an organized and professional teamwork approach to research our clients needs. We focus our efforts in two primary areas: First, we use the most sensitive and technologically advanced equipment available on the market today. Our measurements are designed to provide clients with highly specific information that can achieve substantial cost savings when applied to large-scale companies such as Riordan Manufacturing. We meticulously scour every aspect of your operating procedures and examine all areas of energy usage. Second, we rely on valid and reliable human resources metrics (various employee assessments, structured interviews, etc.) to gather important information from employees about the companys operating procedures at every level. Together, these two approaches help us provide our clients with best-practice recommendations based on a thorough review and evaluation of company processes. Costs The following table presents an initial estimate of costs. Table of Estimated Costs ______________________________________________________________________________ Initial Monitoring and Information Gathering Units Rate Total Cost ($) 585 hrs. $56 hr. (avg.) $32,800 ______________________________________________________________________________ Evaluation and Diagnosis of Company-wide Energy Efficiency Units Rate Total Cost ($) 440 hrs. $55 hr. (avg.) $24,175 ______________________________________________________________________________ Consultation for the Implementation of Energy-efficient Alternatives Units Rate Total Cost ($) 445 hrs. $58.50 hr. (avg.) $26,000 ______________________________________________________________________________ Total Project Costs $82,975 ______________________________________________________________________________

Riordan Manufacturing: A Business Proposal

Market Forecast Energy-reliant companies are facing increased competition within our global economy. This competition will increase the pressures on companies to perform more efficiently, especially within the environment of todays national and international economic slowdown. Economic conditions have resulted in downsizing, outsourcing, and repurposing human resources in every organization at every level. As companies respond to these challenging circumstances, energy management has become an important way that costs can be leveled or reduced and that profits can be increased, providing a foundation for a growing economy and stability in an uncertain market. Lunsford Environmental is well positioned to ensure that companies like Riordan Manufacturing take the appropriate steps to continue its role as a leader within the plastics manufacturing industry.

Riordan Manufacturing: A Business Proposal

Riordan Manufacturing
A Business Proposal to Reduce Waste, Increase Energy Efficiency, and Raise Profits Introduction Lunsford Environmental, Inc. would like to thank Riordan Manufacturing, Inc. for the opportunity to respond to the request for proposal (RFP) issued on March 24, 2010. We have gathered information during the past four weeks about your company and have worked with many of your outstanding personnel. Particularly helpful were the payroll and human resources departments, as they provided extremely helpful information about your current energy-conservation practices and associated energy costs. Your environmental engineering department also provided timely and accurate information that was instrumental in our efforts to respond effectively to your RFP. As a result of teaming with various departments within Riordan Manufacturing, our project team at Lunsford Environmental is pleased to present the following business proposal. Background As you are aware, energy costs are increasing at phenomenal rates. In fact, many companies operating within energy-dependent sectors spend as much as 75% of their operating costs on energy-related products, some even more (see Figure 1). Some companies have seen energy costs increase more than 250% during the past decade. Average Percentage of Energy Costs for U.S. Companies

Figure 1. On average, energy-dependent companies spend a large portion of their budget on costs associated with energy and the manufacturing process. In response to these rising costs, an increasing number of national and international companies are taking steps to improve energy efficiency. These companies have realized that exploring ways to reduce waste and increase energy efficiency is not only environmentally friendlyit is also good business.

Riordan Manufacturing: A Business Proposal

As of today, hundreds of companies across the United States and around the world are looking for ways to attract and retain methods that provide sustainable energy (see Figure 2). These companies are looking to solar power, bioenergy, geothermal energy, wind power, and hydropower as ways to help lower their energy costs and increase their profits. According to one report, General Electric has a division dedicated to alternative energy. Citicorp announced last year that it had allocated $50 billion for environmental investments. Nike is changing the way all of its products are made by using eco-friendly materials . . . .2 These global leaders have committed human resources, financial resources, and intellectual resources to the exploration of alternative forms of energy, and they lead the way in helping our nation reduce its dependence on foreign energy. Percentage of Fortune 1000 Companies Exploring Alternative Energy Sources

Figure 2. During the past 35 years, an increasing percentage of Fortune 1000 companies have begun to explore alternative sources of energy. This movement toward alternative energy sources represents just a few of the changes taking place in our global environment. Large corporations, retail chains, and even independently owned establishments are starting to embrace eco-friendly alternatives, and we are pleased that Riordan Manufacturing has allowed Lunsford Environmental an opportunity to provide consultation services to help take the next step. Proposed Action Our first step is to review your organizational operations from a systems perspective. Many energy
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Riordan Manufacturing: A Business Proposal consultants provide suggestions, but without a complete review of the ways Riordan Manufacturing operates on a company-wide basis, important energy-saving processes could be overlooked. A complete systems analysis will also allow Lunsford Environmental to examine Riordan Manufacturings energy use throughout its entire scope of operation, not just at one facility or division. The process starts with a comprehensive, diagnostic assessment of Riordan Manufacturings current energy usage and environmental compliance strategies. These assessments include the following: Initial monitoring and information gathering Evaluation and diagnosis of company-wide energy efficiency Consultation for the implementation of energy-efficient alternatives We will construct tailored surveys designed to elicit critical and targeted company-wide information from your first-line employees, middle managers, and executive officers. These surveys will help us determine the most appropriate recommendations based on best practices in human resources management. Preliminary research findings suggest that significant energy savings could be realized by implementing, in part, the following alternative energy platforms: Solar power Thermal power Wind power Hydroelectric power These procedures represent just a portion of the extensive diagnostic procedures Lunsford Environmental will implement to identify opportunities for Riordan Manufacturing to increase energy efficiencies.

Once Lunsford Environmental has comprehensively reviewed Riordan Manufacturings operating procedures and identified opportunities to increase energy efficiency, we will provide you with a comprehensive, quantitative, easy-to-read report explaining the diagnostic procedures we conducted as well as the results of our analysis. Based on our findings, you will receive an environmental friendliness rating (EFR), which will rank your organization on a scale from 5 (very environmentally friendly) to 1 (environmentally unfriendly). This report will also provide a percentile ranking for your organization, situating it in relationship to other similar organizations regarding energy usage, energy costs, and energy efficiency. Lunsford Environmentals second step will be to provide specific recommendations for each of your operating units. Based on our review of the companys San Jose, California, operations, Lunsford Environmental can provide estimates for the companys plastic beverage containers plant in Albany, Georgia; its custom plastic parts plant in Pontiac, Michigan; and its plastic fan parts plant in Hangzhou, China. Because we provide exclusively designed systematic processes for monitoring, analyzing, and evaluating your companys energy efficiency, Lunsford Environmental is able to provide Riordan Manufacturing with a comprehensive and tailored plan of action to improve the energy efficiency and environmental friendliness on every floor of every building in every facility of Riordan Manufacturing. After our team of experts reviews your organizational operations from a systems perspective and provides specific recommendations for each of your operating units, we will help Riordan

Riordan Manufacturing: A Business Proposal

Manufacturing implement and monitor the energy-saving procedures we have recommended in this proposal. Although many consultation firms provide recommendations, Lunsford Environmental takes the process one step further. Our highly qualified and experienced team of experts will provide purchasing support for all your energy-efficient equipment needs, technological support for all hardware and software installations at all locations, electrical and mechanical engineering support for equipment installations, executive communication support, and general troubleshooting support for problems that may arise. In short, Lunsford Environmental will provide all the services you will need to make improvements in your operationsimprovements that are guaranteed to reduce energy consumption and lower costs. Costs The following table presents an initial estimate of costs. Table of Estimated Costs ______________________________________________________________________________ Initial Monitoring and Information Gathering Units Rate Total Cost ($) ______________________________________________________________________________ Review of heating, cooling, and ventilation requirements 150 hrs. $45 $6,750 Evaluate boilers, heat pumps, and furnaces 95 hrs. $55 $5,225 Review thermostat efficiency 45 hrs. $60 $2,700 Inspect and evaluate air conditioner size and cooling capacity 45 hrs. $60 $2,700 Inspect supply and exhaust ventilation system75 hrs. $60 Inspect and evaluate lighting needs 45 hrs. Locate direct and indirect air leaks on all exterior windows and doors 45 hrs. Survey and interview front-line employees, managers, and executives 85 hrs. $4,500 $60 $60 $65 $2,700 $2,700 $5,525

Subtotal: $32,800 ______________________________________________________________________________ Evaluation and Diagnosis of Company-wide Energy Efficiency Units Rate Total Cost ($) ______________________________________________________________________________ Review and evaluate high-efficiency and energy-efficient lighting 150 hrs. $45 $6,750 Review and evaluate geothermal, wind, and solar alternatives 100 hrs. $65 $6,500 Review and evaluate boiler, heat pump, and furnace efficiency 95 hrs. $55 $5,225 Review thermostat efficiency 45 hrs. $60 $2,700

Riordan Manufacturing: A Business Proposal Provide utility audit 50 hrs. $60 Subtotal: $3,000 $24,175

______________________________________________________________________________ Consultation for the Implementation of Energy-efficient Alternatives Units Rate Total Cost ($) ______________________________________________________________________________ Provide comprehensive and detailed documentation and recommendations 75 hrs. $60 $4,500 Provide guidance and support throughout the implementation process 250 hrs. $50 $12,500 Provide meter verification through exclusive Internet format (setup) 45 hrs. $75 $3,375 Install online automated utilities payment system 75 hrs. $75 $5,625 Subtotal: $26,000 ______________________________________________________________________________ Total Project Costs $82,9753 ______________________________________________________________________________ Note: This estimate includes financial information based on an initial review of Riordan Manufacturings San Jose corporate offices. It is based on information from the corporate offices, and although we expect these estimates to remain consistent throughout the companys additional manufacturing units, actual cost may vary once the consultation process begins. As a cost-saving option, the services in this table may be purchased on an as-needed basis. Closing Lunsford Environmentals experienced and professional team of environmental technologists, engineers, organizational management professionals, and eco-accountants will conduct a complete and thorough analysis of your companys energy use, environment-impacting processes, and energy-conservation procedures. From streamlining your supply chain to enhancing your distribution channels, Lunsford Environmental will help Riordan Manufacturing realize economic efficiencies that formerly have been overlooked. Together, our team of professionals has more than 150 years of combined experience in helping companies just like yours reduce environmental impact and increase energy efficiency. If you would like to accept the terms provided in this proposal, please provide your authorized signature in the space provided below and date the form. Please return this signature page with a deposit of 15%, which is our standard retainer. This proposal will expire on July 15, 2010. If you would like to discuss the terms of this agreement or the services outlined, please let me know. The entire Lunsford Environmental staff and I look forward to working with you. Sincerely,
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Figures in this table may not reflect the estimates of an actual environmental consulting firm.

Riordan Manufacturing: A Business Proposal

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Caitlyn Gartz
Caitlyn Gartz Vice President, Marketing Lunsford Environmental

Accepted for Riordan Manufacturing by Name: ___________________________________________ Signature: ___________________________________________ Date: _______