http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/RSS.ashxVestas Win[d] PagesTue, 30 Oct 2007 13:48:43 +0100http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=1http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=11 No. 10 Year 04 6 November 2007Wind WIND, OIL AND GAS Spotlight on suppliers Contracts under review Support for clean development in India The rst year of the Vestas Graduate Programme Protecting birds Vestas is expanding itself smaller for greater transparency Wind energy 2020 You talk, we listen Sigma. It is all about control2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=2http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=2A rst place with obligations No. 1 in Modern Energy. That is how we at Vestas are now presenting ourselves to the outside world. And we are proud of our leading position in a sector that is to play a central role in the energy supply of the future a sector which is already standing out through its work on an inexhaustible, competitive, local and clean source of energy. Brie y put Modern Energy. However, we are also well aware that our statement carries obligations. It will take a lot of hard work to retain our position and to take the lead in future development. We at Vestas are to raise ourselves to a whole new level, well aware that we are still a small and young company in relation to the energy concerns with which we are now comparing ourselves. We are therefore also making completely new demands on our own products and the way in which they are manufactured. Moreover, we are going one step further and tightening up the requirements we make on our own suppliers to ensure that they live up to the same quality stand ards. The reason for this is that it is absolutely essential that all parties in the value chain improve not only their professionalism, but also the quality of their products so as to allow both Vestas and the industry as a whole to continue to develop towards achieving their full potential. And the potential is huge. In China, it has been decided that sustainable energy is to account for 15 per cent of total energy supplies in the country in 2020. The EU has agreed that 20 per cent of its energy supply in 2020 is to stem from sustainable sources. And in the United States, there are clear indications that what is known as the Production Tax Credit PTC scheme is to be extended for an appreciable period, and that a national 15 per cent Renewable Portfolio Standard RPS is to be established. If these decisions are followed up with terms and conditions that actually make this giant increase possible, our sector will be on the verge of a period of truly gigantic growth. So it is no accident that we at Vestas have a vision that states Wind, Oil and Gas and that we are presenting ourselves as No. 1 in Modern Energy. Because we at Vestas know that when it comes to the energy of the future, wind power belongs at the top of the elite division. Best regards, Ditlev Engel, President and CEO Vestas Wind Systems AS2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=3http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=3Content 4 The greatest challenge Wind power has the potential to play a leading role in the global supply of energy in the very near future but this demands action on many fronts. Now. 8 Vestas is expanding itself smaller The introduction of a new ERP system is to stream line a growing company. 12 It is good to talk Vestas Italia has launched a series of improvement initiatives based on Dialogue for Development feedback. Three customers talk about the differ ence they have seen so far and their hopes for future change. 18 It all starts with a loyal supplier With the Supplier Loyalty project, Vestas aims to reinforce links with its many strategic suppliers. Dialogue and shared responsibility for the results are the keys to success and the results so far are promising. 26 Clean Development in India Customers in India are seeing a new side of Vestas that of a consultant in connection with projects that qualify for overseas nancing on the basis of the Kyoto Protocol. 30 The best deals bene t all Vestas Contract Review Function balances risk and income and ensures customers get what they expect. 34 Good quality pays off The key to pro table production is to maintain the greatest possible control of the processes that are critical to quality. The level of control is measured in Sigma, and even a small improvement can generate signi cant savings. 38 In real life failure is never an option Every ten minutes, 24 hours a day, Vestas receives almost half a million data signals from wind tur bines all over the world. Read about the challenge of structuring all these ones and zeros, and using them constructively to predict and prevent errors. 42 The department for good behaviour On the door to one of the central departments at Vestas head of ce are the words Safety Envir onment. However, it soon becomes apparent that the scope of this departments responsibility is much broader than that. 48 Taking care of the birds What is the impact of wind power plants on bird life The wind industry is going to great lengths to answer this question and to ensure that bird mortality is minimal. 54 Graduating from Year One Passed or not Wind takes a closer look at a challenging rst year for the Vestas Graduate Programme. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=4http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=442007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=5http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=5The greatest challenge 5 A great many crucial, wideranging and modern decisions will have to be made, if wind energy is to ful l the leading role in energy supply that it has the potential to take on as early as 2020. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=6http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=6In 2007, the world witnessed three bound arybreaking initiatives in the eld of energy and the environment, which are sure to have signi cant consequences for the supply of sustainable energy in the future. In China, the decision has been made to ensure that sustainable energy covers 15 per cent of the countrys total energy supply in 2020 primarily through the use of hydroelec tric power and wind energy. A total of USD 265 billion has been set aside to achieve this aim, a sum equivalent to one tenth of Chinas gross domestic product. At the same time, the EU has agreed that 20 per cent of the total energy supply in 2020 is to stem from renew able sources. Moreover, this ambition involves binding goals for the member states. And nal ly, the House of Representatives in the United States approved a bill, the provisions of which state that what is known as the Production Tax Credit PTC scheme is to be extended for another four years, and that a national 15 per cent Renewable Portfolio Standard RPS is to be established. The proposals have now been passed on to the American Senate. In other words, the world is choosing, and everyone seems to agree that sustain able energy is the energy of the future. No other source of energy can match wind power from both nancial and environmental per spectives so there is good reason to believe that wind power will be given a key role to play in the energy mix of the future. If wind power, which is currently the most attractive sustainable source of energy, is to cover at least 10 per cent of the global electricity consumption in 2020, this means that the 75, 000 MW of wind power that had been installed in 2006 is to be increased to no less than at least one million megawatts in 2020. 1, 000, 000 MW. This would translate into an annual growth rate of approximately 20 per cent. In this regard, it is worth noting that the industry has actually grown by 29 per cent on average over the past 10 years, so the new vision is in no way unrealistic. Here in 2007, 2020 can look like a date far, far in the future. And it is certain that 2007 looked just as far away when we were all writing 1994. But 13 years can pass amazingly quickly, and as enormous changes are already taking place in the global energy supply, we have to start including all kinds of considerations now in our deliberations about how we are to act. This is the reason why we at Vestas are currently so busily engaged in developing our business on a number of fronts a process that is continuously being intensi ed in step with the ongoing increases in the demands for quality, professionalism and volume. It is essential to launch many vessels to assure a supply of sustainable energy in the future. Many of these must be launched by the wind power industry itself, which is one of the reasons why Vestas has taken the lead in rais ing the level of professionalism in the sector through particular focus on the supply chain. At the same time, however, it is essential that other players continue along the same, positive track. Even though there is now appreciable political will in most places, growth can only occur if both politicians and civil servants make allowance for development and lay down the framework for it in their plans. This means that the coming years will demand enormous investments investments from players in the wind power industry itself investments from suppliers and, in particular, investments from the authorities in the countries that want to participate in setting a new agenda for the supply of sustainable energy. One of the main challenges is that of the transmission grids. Large parts of the grids around the world simply do not live up to the requirements made by a modern informa 62007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=7http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=7tion society. The situation today can best be compared to sur ng the Internet though an old dialup modem. What is required, therefore, are major replacements and upgrades of the existing grids. This is a global problem which, when it is solved, will open up fantastic oppor tunities for integrating wind power as a bearing element of the global energy supply to an even greater extent. But there are other weighty reasons why decisions have to be made now, if wind power is to be able to ful l its key role in the energy supply of the future. Thousands of people need to be trained. Teaching institutions all over the world need to be ready to offer ap propriate i. e. very closely targeted courses, and here, too, it is essential that the industry, the teaching institutions and other relevant decision makers work together to shoulder the responsibility for the assignment, so that the attractive career paths in the wind power industry shine out like beacons. Wind power is modern energy. It is clean, it is independent, it can be installed very quickly, and the price is both predictable and competitive. In other words, it is the appropri ate response to the challenges we are facing if we are to achieve the vision of sustainable energy supply in 2020. Therefore, it is no accident that the Vestas vision is Wind, Oil and Gas because we know that wind power belongs at the same level. Achieving this ambi tion is not just possible it is essential. And if we are to move from 75, 000 MW to at least 1, 000, 000 MW in 2020, it is not in 2020 that we have to act. It is now. 7 Wind power is modern energy. It is clean, it is independent, it can be installed very quickly, and the price is both predictable and competitive. In other words, it is the appropriate response to the challenges we are facing. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=8http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=8Overview, transparency and uniformity are key concepts when a company of Vestas calibre is to assimilate so many new employees and, at the same time, assure momentum and quality in its business. That is why Vestas is putting the May ower reorganisation project into effect, a project that involves the implementation of a new Enterprise Resource Planning ERP system and applies to the business processes in all sales and service units, all staff functions and Vestas Technology RD. Over the coming years, more than 6, 000 employees at all levels will be participating in a comprehensive training programme. 82007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=9http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=9Vestas is expanding itself smaller Everyone says that Vestas is growing, but as I see it, Vestas is growing smaller, too, because the company is constantly becoming more straightforward, more uniform and easier to understand. So says Henrik Nørremark, Group CFO, who is at the helm of one of the most farreach ing change projects in the history of Vestas. The project was launched last year under the name of May ower, and over the next two years, it will ensure that a large number of the compa nys current business systems are amalgamated into one shared system. The concept is known as ERP Enterprise Resource Planning and the software is being supplied by SAP. The ultimate aim of the project is to streamline a company that is currently enjoying almost explosive development, and it involves radical changes in the form of completely new work processes, control instruments, reporting procedures and the like. The implementation of the May ower pro gramme represents recognition of the need to assure the future growth of Vestas. We are reinforcing the companys framework and creating a platform that ensures correlation between the internal lines and generates a situation in which what we say we are going to do is based on reliable and very accurate facts from the business, explains Henrik Nørremark. Accurate information New employees are joining Vestas every day, and every single corner of the company is humming with activity. And there are plenty of corners in a company with more than 14, 000 employees at facilities in more than 20 countries all over the world. 92007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=10http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=1010 There are many differences from one country to the next market conditions, IT systems, legislation, national culture and it is here that a uniform approach to the business as such is an essential precondition for keeping control of every single aspect of the company. May ower is all about ensuring that we in the Group can exchange accurate infor mation about our core processes. This will allow us to measure very accurately how the company is developing and, consequently, re spond very rapidly whenever necessary if any area starts to deviate from the course we have mapped out, says Henrik Nørremark. In this context, May ower is a signi cant catalyst in making Vestas more competitive, he stresses. As I like to put it, we have a strategy entitled The Will to Win, and May ower is The Tool to Win, says Henrik Nørremark and makes it clear that the effects of the May ower project will naturally rub off on the companys customers. We will be able to react much more quickly, and our customers will also see us as a more uniform Vestas. Of course, there will be some local variations, but our fundamental actions and attitudes will be the same, he continues. An important catalyst Henrik Nørremark stresses that May ower is a change project, not an IT project. The road from drawing board to nished turbine is paved with complex business pro cesses and work procedures that have to be adapted to a binary ERP system which cannot think for itself, but can only deal with yesno questions. Convincing our employees of the bene ts of this change is a project in itself, he explains. As the programme sponsor, Henrik Nørre mark is also president of the steering commit tee that from Day 1 has monitored the project closely to ensure it is making the necessary progress. Training is the key to change The May ower project and the implementation of the ERP system apply to all sales and service units, all staff functions and Vestas Technology RD. Vestas production units, on the other hand, will continue to use the Mapics ERP system. Over the coming years, the May ower project will affect more than 6, 000 employees, and a comprehensive training programme is at the heart of this internal change project. In this training, great emphasis has been placed on ensuring that everyone employees and managers alike understands his or her role in the broader context. It is therefore just as important to answer the question Why as the question How. We believe that once you understand the reason why something has to be done a certain way, you will be much more open to and willing to accept the changes, says Roald Ja kobsen, President of Vestas People Culture. Focus on classroom teaching The principal training method will be class room teaching for which there are, of course, good reasons. Classroom teaching is fundamentally dif ferent to elearning. For example, you can ask questions and get the answers straight away, As I like to put it, we have a strategy entitled The Will to Win, and May ower is The Tool to Win. Henrik Nørremark, Group CFO. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=11http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=11 The differences between the various countries are very important. People in Singa pore and Italy may not neces sarily perceive things in the same way but classroom teaching promotes dialogue and understanding, says Roald Jakobsen, President of Vestas People Culture. May ower will help make Vestas more competitive. The company will be able to react more rapidly, and customers will encounter a more uniform Vestas. As I like to put it, we have a strategy called The Will to Win and May ower is The Tool to Win, says Henrik Nørremark, Group CFO. Facts about ERP Improved ef ciency In an ERP system, com ponents and solutions are integrated in real time. This signi cantly improves ef ciency, and the data need only be entered once. In addition, data can be reused, which means that they can be used in multiple contexts without having to be moved from one database to another and they will be more valid. From cradle to grave With an ERP system, it is possible to document an entire project all the way from cradle to grave. This generates transparency and an overview that Vestas can, for example, use to limit inef cient procedures, improve work processes, identify new business opportunities, and realign rapidly when markets change. Automation and correlation An ERP system automatically activates work processes that would otherwise have to be carried out manually. In addition, the system assures correlation between the various parts of the organisa tion, because it is possible to view the status of the various phases that make up a project at all times. which is incredibly important. The May ower project will be rolled out in more than 20 countries, and the differences between the various countries are very important. People in Singapore do not necessarily perceive things the same way as people in Italy do. Classroom teaching promotes dialogue, and the teach ers can easily sense whether what they are teaching is being understood and accepted, or whether they need to go into more detail, explains Roald Jakobsen. However, the work will not stop once the May ower project has been rolled out in all the countries involved. The need for training in the ERP system will naturally continue in step with the in ux of new employees, which is why Vestas People Culture is setting up a complete organisation to handle the future training requirements. 112007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=12http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=12Dialogue for Development has been well received by Vestas customers, who appreciate the opportunity to voice their views on the service they obtain. Wind has interviewed three customers in Italy about the customer satisfaction survey and followup dialogues. Some have already noticed that their views are making a difference. 12 It is good to talk2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=13http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=1313 Vestas Italia achieved a positive score in the customer satisfaction questionnaire sent out to global customers at the beginning of the year. All the same, the sales unit wasted no time be fore starting the task of identifying the should do betters on the customer response sheets. With less than a year to the next survey, im mediate action was critical to bring about a noticeable change. A series of improvement initiatives has since been launched as part of an umbrella project entitled Working relationship with Vestas. All of them target key areas of the customers value chain recognised by Vestas as the loyalty drivers that encourage customers to return again and again. Continuous improvement is, of course, what Dialogue for Development is all about. Changing market conditions and customer demands present an ongoing need to review the status quo and develop initiatives for meet ing new requirements. The annual customer satisfaction survey and individual followup dialogues are today an integrated part of The Will to Win strategy. Listen, re ect, act Anna Fanelli is the Dialogue for Development anchor at Vestas Italia. Although encouraged by her sales units score, for her, the latest result has only highlighted the many improve ments that still need to be made. The customers perception is important, and we would like to improve in relation to all loy alty drivers. This year we have made working relationships our main focus after we dis covered that our performance in some areas was not so good, she says. That is the whole point of Dialogue for Devel opment listen, re ect, act. Vestas Italia arrived at the decision to focus on working relationships after a series of internal meetings and individual dialogues with customers, who have proven only too happy to explain the background for scores given in the survey. Among the many important points made is that Vestas needs to realign its approach to meet the dynamic market condi tions created by the EUs renewable energy directive of 2001. The directive requires 25 per cent of Italys gross electricity consumption to come from renewable energy sources by 2010 a considerable leap up from the current 14. 5 per cent. With Italys geothermal and hydro sources at saturation point, wind is seen as the top renewable energy contributor of the 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=14http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=1414 future. Against this background, in 2006, the Italian wind energy sector grew 37 per cent. Wind energy is big business in Italy. To day we have bigger customers and the frame work has changed. Our customers are asking us to direct more attention at their growing business and business requirements and improve our understanding of their organisa tion, explains Rainer Karan, General Manager of Vestas Italia, who, strongly believing in the importance of a dialogue with the customers as a basis for a longstanding relationship with them, is the main sponsor of Dialogue for Development in Italy. Because any project with improved work ing relationships as its goal may feel like an indigestibly large mouthful, Vestas Italia has di vided the initiative into three more manageable chunks, targeting sales, projects and service. Each has its own set of objectives. Stronger customer interface Within sales, a core target is improved com munications both internally and with the customer. Vestas Italia is working to establish a common internal platform for customer infor mation, which can then be shared among rele vant employees. A new behavioural standard is also underway to ensure customer requests are prioritised and that customers know when they can expect a response. Where projects are concerned, Vestas Italia has now started to appoint a dedicated customer project team at the beginning of each wind project, providing the customer with an organisation chart showing the roles and responsibilities of each team member. The organisation chart is to be shared with the customer at a project kickoff meeting, when the customer will also be asked to provide an organisation chart of their own. To ensure customer experiences improve, the internal resources dedicated to each project team have been increased. Faster, more accurate reports A particular criticism of the Vestas service package was the incomplete nature of service reports and the long delay before they were sent to the customer. This has caused Vestas Italia to put service reports in focus with more and better training for service technicians, a commitment to producing complete and ac curate reports, and regular report assessments to ensure they are of the necessary standard. One initiative already implemented is the wel come document sent to customers at the onset of each service contract. Six months after the Working relation ship with Vestas project swung into action, the rst positive feedback from customers has arrived. Much remains to be done on that Vestas Italia and its customers agree but there are clear signs of change in the right direction. At Vestas Italia, all eyes are on the scores when Dialogue for Development moves into the next annual cycle. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=15http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=15John Matthew is Vice President of asset management at Allianz Specialized Investments, a leading global provider of nancial services. With three wind farms in Germany and one in Italy, for Allianz, wind power is a strategic investment. The end of the secret society win secret so eme ider o any and o ent ng erm trate thew es. Opening up a dialogue between the service provider and the enduser can only be bene cial. The lack of information and time taken to supply it has made the wind indus try something of a secret society, so a global exercise like Vestas Dialogue for Develop ment is long overdue. Generally my relationship with Vestas is very good. The sites are running and generating electricity, so I dont have too many concerns. The key is keeping customers informed and giving out relevant information. What I nd amazing is that, in 2007, we are still dealing with inef cient paper ser vice reports. Electronic reports would be slicker, reduce transcription errors and be more user friendly. I have previously worked with Vestas in Japan where the technician had a laptop and all information stored on a local database. That would be a great step forward at our wind farms in Germany and Italy. During construction, we deal directly with the project manager on site. The on going dialogue is extremely useful, and I would like to see that with the aftersales service. Operation and maintenance is very good, but the enduser tends to be the last of their thoughts. They are becoming more proactive at Vestas Italia, though, so I do get the impression this will change. 152007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=16http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=16Close collaboration makes good partners EDF EN Italia is a subsidiary of the international renewable energy player EDF Energies Nouvelles EDF EN. Today wind energy accounts for over 80 per cent of EDF ENs total installed capacity. Gian Paolo Cesaraccio, Business Development Manager, and Emilia Visconti, Project Manager, are encouraged by Vestas customer focus. One year ago, the Vestas Italia organisation changed and became managed from Spain, At that time, they changed the way they negotiated contracts, and we experienced trouble obtaining information on technical and legal issues, says Gian Paolo Cesaraccio. It was dif cult to obtain information on the turbines, and it took a long time to get a response to our requests, Emilia Visconti adds. Prompt and accurate service reports are essential to meet bank nancing require ments and for the monthly feedback to EDF EN head of ce in France. After participat ing in the Dialogue for Development survey and a followup meeting, EDF EN Italia has experienced a positive change, as Gian Paolo Cesaraccio explains Vestas Italia understands exactly why we answered the questions the way we had. We talked about the need to be closer, to receive all necessary information and to feel ourselves partners in the wind projects. Now there is more collaboration, and we know who is responsible for each single issue we have. Emilia Visconti nods in agreement. This dialogue with Vestas is very useful. Vestas today has a more open approach and responds more quickly. 162007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=17http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=17Asja Ambiente Italia S. p. A. is one of Italys leading renewable energy developers. Guy Teuwissen, Wind Energy Sector Manager, and Vincenzo Massaro, Area Manager, praise the Dialogue for Development initiative and look forward to more improvements. We work with Vestas because the people and the quality of the materials are very good. Guy Teuwissen has high praise for Vestas Italia. But even the best of relationships can be improved upon. His main suggestion is that Vestas provides customers with an indicative price at the very outset of each project. I need an indicative price to put in our business plan so we can immediately evalu ate the business plan for each project and start negotiations with the banks, he explains. The in exibility of the contracts is another issue, he goes on The conditions of the present Vestas contract mean the developer cannot be sure that the turbines will arrive on time, unless the developer buys them long before the nal construction authorisation has been obtained. Guy Teuwissen is hopeful these needs will be met through the Dialogue for Devel opment initiative. Turning to project management, he and Vincenzo Massaro congratulate Vestas project managers for their expertise and experience. However, more autonomy to project managers would be an advantage for ef cient decisionmaking in the eld. Vincenzo Massaro speaks of the service developments he has experienced follow ing his individual dialogue with Vestas Italia. Vestas is doing a good job on our plants. Previously we have had some problems with maintenance being performed on days with a lot of wind, causing us to lose pro duction. We spoke with Vestas about this, and now we work much better together on maintenance schedules. The frequency and quality of service reports has also noticeably improved, he adds We need good reports for our quality management systems. In the past we only received a report from Vestas once a month. Today we receive one every time Vestas has made an intervention. Improving a strong relationship Im el o ative the mat ja Am opers , Area and lo the Italia. But even th that Vestas p ct. sin g relationshiprrr 172007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=18http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=18182007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=19http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=1919 It all starts with a loyal supplier Companies often display a tendency to focus on the customeroriented part of their value chains. In contrast, the interplay with suppliers has more to do with negotiating the best possible conditions and then making sure that they are met. However, any good partnership demands commitment from both sides, which is why Vestas has launched a project intended to reinforce working relationships with strategic suppliers the Supplier Loyalty project. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=20http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=20Customer loyalty has long been one of the key focus areas for Vestas, and with the annual customer satisfaction survey as an indicator, work is well underway on pointing this section of the Group value chain in the right direction. Therefore, when the Presidents of Vestas four production business units and Vestas Technol ogy RD got together at the end of 2006 and sketched out the rst draft of a project based on a holistic and very unconventional approach to working relationships with suppliers, the move constituted quite a shift in the attitude to the value chain. The title of the project, Supplier Loyalty, alone indicates the advent of a new approach after all, why devote time and energy to reinforcing ties with suppliers Surely all they have to do is live up to their obligations and otherwise provide optimal service The world is not that simple today, explains Søren Husted, President of Vestas Nacelles and the man with ultimate responsi bility for the project. Fundamentally, we are increasing our requirements on our suppliers performance. But it is essential to remember that their performance is dependent upon our own performance, so you could say that with our Supplier Loyalty concept, we are taking a dose of our own medicine. Søren Husted goes on to explain that the challenges stem in particular from the fact that today, many suppliers have multiple contacts with Vestas. We have to admit that as things stand today, our suppliers do not always receive the same signals. That is why Supplier Loyalty largely has to do with calibrating the processes and producing a more uniform approach to supplier partnerships. Søren Hus ted is convinced that, at the end of the day, the return on the project will provide Vestas with speci c information about areas where there is room for improvements, and he expects the subsequent improvement initiatives to be deployed throughout the value chain, thus im proving performance in relation to customers which, in turn, will have a positive domino effect on customer loyalty. According to Søren Husted, the Supplier Loyalty project is to be considered a more longterm, proactive initia 20 It is essential to remember that the performance of our suppliers is dependent upon our own performance, so you could say that with our Supplier Loyalty concept, we are taking a dose of our own medicine. Søren Husted, President, Vestas Nacelles. Amir Farooq, Project Manager. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=21http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=21tive intended to help the Vestas supply chain achieve its goal of world class performance, which is still a long way off at present. Constructive dialogue The Supplier Loyalty project is rmly rooted in Vestas new Global Capacity Planning depart ment. Amir Farooq, Project Manager, explains that there are many parallels between the new supplier concept and the customer loyalty pro gramme Dialogue for Development. Supplier Loyalty comprises four phases, of which the three rst are carryovers from Dialogue for Development. The four phases are 1. Listen 2. Re ect 3. Act 4. Follow up In the Listen phase, Vestas carries out structured telephone interviews with sup pliers just like in the Dialogue for Develop ment programme, relates Amir Farooq, who stresses that during this phase, the strategic suppliers are given an unlimited opportunity to comment on the working relationship so as to highlight both positive and less positive as pects. One of the key aspects of the concept is constructive dialogue, and here, honesty is absolutely crucial. At the same time, it is an aspect that carries obligations, because in this context, constructive means backing words up with actions. Otherwise, we will simply end up with a lot of wellmeaning words and good intentions without having made any progress in any direction, says Amir Farooq. Loyalty is a twoway street In connection with Supplier Loyalty, the very concept of loyalty is to be seen in a broad context. As such, it is not simply a question of whether a supplier wants to carry on supplying Vestas or not. Mutual loyalty between Vestas and the supplier largely has to do with the willingness to lay down and pursue a range of shared goals for improvements, emphasises Amir Farooq We are already well aware that our own commitment to the working relationship is crucial to the results we achieve, which is why in practice, this project actually starts in the internal arena. Quite simply, we have to encourage the entire organisation to review its approach to suppliers so as to make it more uniform and holistic. The aim is to recognise, to a much larger extent, that we are dealing with actual partnerships based on mutual depend ence rather than conventional customersup plier relationships, he says. From words to action Once the strategic suppliers have provided their input in the form of answers to question naires and interviews, Vestas gets to work processing the results. The company will re ect in depth on the numerous answers from each and every supplier to make it immediately possible to identify the areas of initiative that are to take top priority in the ongoing work. Based on the suppliers answers, wishes, ideas and comments, Vestas will now prepare proposals for initiatives and actions intended to reinforce the working relationship and improve the shared results. Each draft is to be presented to the supplier in question at a followup meeting, where the entire survey will also be examined and discussed in detail in an atmosphere conducive to open and constructive dialogue. On the basis of these followup discussions, we work together with the supplier to draw up a speci c action plan and launch improvement initiatives, relates Amir Farooq. He then explains that the initia tives in an action plan may, for example, have to do with everyday communication, long term production planning and the wording of contracts. He also makes it clear that this is a twoway street. In other words, both Vestas and the supplier are to make an active effort to improve performance. 21 The four phases are 1. Listen 2. Re ect 3. Act 4. Follow up2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=22http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=2222 Shared framework for product development While the four production business units are busy optimising the partnerships with their various suppliers through the Supplier Loyalty programme, Vestas Technology RD the Vestas Business Unit for technology and de velopment is working to expand its external partnerships. In this context, the relationships are if that were possible even more crucial to the results. We at Vestas work with integrated product development, so smoothly functioning collaboration with our suppliers is naturally a vital parameter, explains Finn Strøm Mad sen, President of Vestas Technology RD, who believes that all the players in the entire sector are facing a major challenge in profes sionalising the value chain and building up greater mutual understanding of each others businesses. In this regard, he considers the Supplier Loyalty concept to be a key factor. Finn Strøm Madsen stresses that during the initial phase of the project, the focus is very much on operational performance, which means that the production business units sup plier relations must take centre stage. In the longer term, however, I expect us to develop and re ne the concept such that it also com prises technology, research and development. To highlight the fact that supplier partner ships are of crucial importance to the work carried out at Vestas Technology RD, Finn Strøm Madsen also refers to the fact that the new home of this business unit which is currently being built in Skejby, close to Århus in Denmark is to include facilities for sup pliers. Quite simply, we will be giving them the opportunity to work side by side with us at times, and they will also have access to our new and epochmaking test centre, which we are currently constructing at the harbour in Århus, he says. Interaction with Supplier Scorecard In the future, Supplier Loyalty will interact closely with another important initiative con cerning the empowerment of Vestas suppliers the introduction of the Supplier Scorecard. According to Amir Farooq these two concepts together will provide a ne balance between identifying where suppliers are to improve, and establishing where Vestas would do well to turn the spotlight on itself. You could say that the Supplier Scorecard is the everyday management tool, focused on the transaction oriented area of the working relationship with the supplier, while Supplier Loyalty centres to a larger extent on relationships per se and on the futureoriented, proactive actions. Global launch on track In autumn 2007 and the rst few months of 2008, Supplier Loyalty will be rolled out to Vestas 110 biggest suppliers. The process will start with the Listen and Re ect phases so that, according to Søren Husted, the company should be in a position to present speci c re sults and an overall loyalty index on Suppliers Day next April. 2. Reflect 3. Act 4. Follow up 1. Listen2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=23http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=2323 We are already well underway with the interviews and with preparing action plans for the rst set of suppliers, and it is no secret that I am very keen to get my hands on the extensive data pool, says Søren Husted, who stresses that Vestas is sure to learn a great deal from this initiative. I said at the start that with Supplier Loyalty, we will be taking a dose of our own medicine, and to continue the metaphor, I am convinced that in both the short and the long terms, the project will give Vestas a healthier relationship with all its loyal and skilled suppliers. Tested in a pilot project In all, the four Vestas production units work with approximately 1, 500 suppliers who manufacture a variety of parts and components for the companys wind turbines. The suppliers are based all over the world, in countries including Australia, Canada, China, Denmark, Egypt, France, India, Italy, Korea, Mexico, South Africa, Spain, Great Britain, Germany, Vietnam and the United States. At the start of 2007, prior to the of cial launch of the Supplier Loyalty project, Vestas carried out a pilot project under the leadership of Anna Signe Lindasdat ter Troelsen, Project Manager. Eight sup pliers were involved in this pilot project two from each of Vestas four production units. In all, 26 people were interviewed. Anna Signe Lindasdatter Troelsen relates that generally speaking, the feedback from the participants in the pilot project was very positive. However, the results also showed that there is room for improvement in a number of key areas and processes. Moreover, the pilot project made it clear that to a large extent, the same ten dencies are repeated in the four produc tion units, says Anna Signe Lindasdatter Troelsen, who stresses that it is essential to understand that both customers and suppliers perceive Vestas as a single company. Our internal value chain and the ows between the individual business units are, in principle, of no concern to them they only see the company as a whole. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=24http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=24 CT OW U Pilot project with promising results 24 One of the partners of Vestas Towers is Alumeco AS, the leading supplier of aluminium in Scandinavia. The company supplies plat forms and other internals for the wind turbine towers, and Jan Berthel, Sales Manager, makes no secret of the fact that his rst reaction was surprise when Vestas asked if Alumeco would be interested in participating in a pilot project intended to reinforce the loyalty among strate gic suppliers. Well that is coming at things from the other direction, was the rst thought to cross his mind, but it did not take him long to see the perspectives of the project. In real ity, this is a dream situation for any supplier, and it is almost a luxury to have the initiative come from the customer with the customer undertaking to play an active role in achieving the desired improvements, says Jan Berthel. In fact, he has become so impressed with the thinking behind the concept that he is consider ing introducing a similar concept for some of Alumecos own suppliers. We certainly have room for a range of free improvements, and let there be no doubt that I think this is a really good idea. Fully in keeping with the intentions behind the concept, Jan Berthel noted that the introductory interview that was conducted by members of the Vestas Supplier Loyalty team was carried out in an open an honest man The Supplier Loyalty concept was of cially launched on Suppliers Day last April. However, prior to the launch, the project group had carried out a pilot project that involved carrying out the entire process with a total of eight suppliers two each from Vestas Nacelles, Vestas Control Systems, Vestas Blades and Vestas Towers. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=25http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=25UP 25 ner. Subsequently, a meeting was held at which Alumecos every day contact at Vestas was also present. According to Jan Berthel, this meeting was distinguished by broad consensus concerning the interpretation of the results. On the basis of this meeting, a sixpoint action plan was prepared, and each point was accompanied by statements of what was to be done, what timeframes would apply, and who would be holding the ball at any given moment. It is something of a relief for us to have prepared a structured action plan and to have received clari cation about some of the aspects in relation to Vestas about which we were previously a little unsure, relates Jan Berthel, who goes on to stress that he experienced wholehearted commitment from Vestas throughout the process. I have previously seen major customers come up with all kinds of good intentions for improving a working relationship. However, these often fell apart when it was time to turn words into actions. For this reason, it was a real pleasure to see what can be achieved when the will to participate in a constructive dialogue is actually present, says Jan Berthel, who adds that he is looking forward to seeing Supplier Loyalty integrated as a xed component of his com panys partnership with Vestas. Closer dialogue ABB, one of the leading suppliers of power technologies and automation in the world, is also positively disposed towards the new initiative from Vestas. Jens Holst Jørgensen, Sales Engineer, tells it like it is It really raised Vestas standing in our eyes when they con tacted us about this project. Even though we have always enjoyed a good working relationship, we still needed to streamline communication between our development departments, for example, even more. A total of six people at ABB were inter viewed individually during the Listen phase. The ABB people were then invited to a meet ing at Vestas, where they were presented with the results and conclusions drawn from the numerous responses. At the same meet ing, both parties agreed on what action to take to move forward and reinforce the working relationship even further. For our part, it was largely a question of setting up a tighter framework for the communication, and improving the structure of both personal and telephone dialogues, says Jens Holst Jørgensen. He continues Our development staff can, for example, provide better input on an enquiry if they are given more information about the wider context in which a speci c component is to be used. As a result, we have now de ned more clearly what we can expect to be asked about, and we have established that our staff can, in a manner of speaking, ask back. So instead of a simple exchange of information, we are now well on our way towards a situation in which the working relationship is based on genuine dialogue. This is a dream situation for any supplier, and it is almost a luxury to have the initiative come from the customer with the customer undertaking to play an active role in achieving the desired improvements. Jan Berthel, Sales Manager, Alumeco AS. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=26http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=2626 In India, Vestas is assisting customers receive carbon credits making both economic and environmental sense. Clean Development in India 262007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=27http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=2727 In order to give customers the best possible support throughout the process of developing a wind power project, Vestas India has set up a Carbon Advisory Services team in Chennai. The team is dedicated to qualifying wind power projects in India for carbon credits under the Clean Development Mechanism CDM, set up as a result of the Kyoto Protocol. The CDM allows industrialised countries to reduce global CO2 emissions by nancing, for instance, wind power projects in countries with no reduction commitment under the agreement. These countries include, amongst others, India and China. For the industrial ised countries, nancing the projects counts towards achieving part of their own emission targets. Vestas Carbon Advisory Services was set up as the Kyoto Protocol came into effect by February 2005. Today, the team has been involved in qualifying 112 MW of wind power projects for CDM. Our customers have been very positive about the initiative and we have been able to build up valuable expertise on all the proce dures involved in the complicated process of qualifying the projects for approval, says Vice President Joseph Chaly, Marketing, Vestas India. To qualify a project for approval under the CDM, it needs approval from the CDM Execu tive Board and from an independent third party agency. The quali cation is to ensure that the project will result in measurable and lasting reductions in CO2 emissions. In general, it takes Vestas Carbon Advisory Services six to eight months to prepare a project for approval. This includes preparation of the project docu 272007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=28http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=28ment and achieving the necessary approvals and endorsements. Following the approval, the Vestas Carbon Advisory Services team then acts as a facilitator in the process of selling the carbon credits, either through a brokerage rm or directly to the buyer. As a large number of projects in India are rather small, we have grouped the individual projects into larger CDM projects, based on the location of each project. Grouping the projects reduces the cost of the application process and reduces the risks for each of the smaller projects, explains Joseph Chaly. The Clean Development Mechanism helps make the individual wind power project viable. It will contribute to making the project more economically attractive, for instance by reducing the projects payback time, he adds. 282007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=29http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=2929 Since its establishment two and a half years ago, Vestas Carbon Advisory Services team has so far been successful in qualify ing 60 wind turbines, all of which are Vestas turbines. But what makes Vestas consultancy different from others in the eld We feel that it is a clear advantage for us working exclusively on Vestas projects and with Vestas clients. This ensures that we have an indepth knowledge of both the project and the turbines from the outset, says Joseph Chaly. We are looking at diversifying and using the expertise that we have built up in India in other countries which have Vestas projects as well. The Kyoto Protocol and CDM The Kyoto Protocol sets targets for the emission of CO2 in the countries that have rati ed the protocol. Overall, the 169 countries must reduce their CO2 emission by 5 per cent by 2012, compared to the level in 1990. However, not all countries have a uniform reduction target, meaning that some countries have a reduction target much higher than the average, i. e. Denmark with a 21 per cent reduction target. Three exible mechanisms, including the Clean De velopment Mechanism, were established at the same time as the Kyoto Protocol came into effect, allowing for transfers of emission rights or reduction credits be tween nations. This enables countries with a reduction target to support a sustainable development abroad, while achieving part of their own emission target. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=30http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=30Complicated sales contracts that run into many millions of Euro require much more than a signature on the dotted line and a handshake. At Vestas, the Contract Review Function sees to it that customer transactions satisfy all expectations regarding content, value creation and risk pro le. The best deals bene t all 302007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=31http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=31312007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=32http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=32Each and every Vestas sales contract is a com plex piece of work that draws on the know ledge of all those involved in the order pro cess. So it can be no surprise that the general requirements for sales transactions are charac terised by a high level of detail, re ecting the needs of a strongly professional environment. For Jørgen Peter Nielsen, Vice President of the Contract Review Function, the general requirements are a core factor in improving the companys bottomline result not to mention in enhancing customer loyalty in the years ahead. In the past, the balance between risk and income was neither good nor well under stood, says Jørgen Peter Nielsen. Today, the sales and service units re ect the requirements in the content of their agreements and the way they evaluate the associated risks. It is a change that has de nitely given the sales and service units improved business, with better control over risks and earnings, and the con dence that comes from knowing what is expected. More value for customers Drawn up by the Contract Review Function, the general requirements are based on the goals and values of The Will to Win strategy plan, input from the six sales and service units and the initial experiences of the review team. With their focus on content, risk and expected earn ings, they bring customers a number of valuable bene ts. More detailed analyses, for example, ensure all aspects of a project are wellde ned and the responsibility for them clearly allocated. Contracts have also become more quali ed and characterised by a uniform risk and commercial pro le, whether a customer buys a Vestas prod uct in the USA or China. Customers can be sure that Vestas is still here tomorrow because we only accept a bal anced risk pro le and ask a price that re ects this risk and our earning requirements, Jørgen Peter Nielsen adds. Strategic initiative The Contract Review Function was among the initiatives introduced in connection with The Will to Win strategy plan in 2005. Employed at Vestas since 1989 with a Masters in Business 32 Customers can be sure that Vestas is still here tomorrow because we only accept a balanced risk pro le and ask a price that re ects this risk and our earning requirements. Jørgen Peter Nielsen, Vice President, Contract Review. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=33http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=33Law under his belt, Jørgen Peter Nielsen was asked in September that year to establish a global structure to ensure contracts are in tune with corporate goals. His extensive experience with nancial, legal and insurance matters along with his technical knowledge gave him exactly the right pro le for the job. With Jørgen Peter Nielsen in the driving seat, the Contract Review Function has grown to become a busy department. In 2006, the department reviewed 150 transactions from around the world. Multimillion contracts in focus The Vice President of the Contract Review Function stresses that the general require ments are only a tool for communicating corporate expectations to the sales and service units. Responsibility for the sales transactions and for ensuring they satisfy the requirements lies with the sales and service units at all times. Only contracts in excess of 15 million Euro are reviewed by the Contract Review Func tion at group level a measure introduced to ensure all major transactions support corporate goals. Final approval is given by the Contract Review Board, comprising executive manage ment and headed by Henrik Nørremark, Group CFO. All serious businesses must have an approval process when dealing with unique projects that comprise such large investments, Jørgen Peter Nielsen remarks. The documentation for each contract is hefty, perhaps lling two A4 les or more. In addition to the customer documentation, the review focuses on technical veri cation, sub contractor commitments and the sales and serv ice unitss internal risk and cost assessments. Reviewing the contents typically takes around three days depending on the departmental workload and the weekly meeting of the Con tract Review Board a process the sales and service units must account for when planning. Based on the ndings of the review, the sales and service units may be required to make revisions. In some cases, additional as sessments by the Review Board are necessary. Looking ahead Jørgen Peter Nielsen recognises that changes to the general requirements can pose prob lems for customers longterm planning and put trustworthiness at risk. I am con dent that changes of the scale so far seen will not be on the agenda in the years to come, he says. But the improve ment process will continue in order to keep the requirements up to date. Changes to be initiated by the Contract Review Function during 2007 and 2008 will primarily be aimed at internal processes rather than customer documents. In particular, a new project is being launched to develop a training programme that will ease understanding of the requirements, their objectives and the link to Vestas nancial models. Vestas still has much to do in terms of es tablishing best practices. The Contract Review Function plans to establish an of ce to support the sales and service units in de ning and ensuring implementation and completion of salesrelevant improvement projects designed to establish and maintain a best practice sale. The ultimate aim is to embed these tools and standards in a best practice culture with continued improvement as an important driver, Jørgen Peter Nielsen concludes. For a department that has only been in existence for just two years, the Contract Review Function has steadily proven itself an indispensable part of the organisation. Creat ing value, supervising risk and, before long, reinforcing best sales practice makes good business sense for the company, its investors and its customers. 33 Jørgen Peter Nielsen, Vice President of the Contract Review Function. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=34http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=34With the introduction of Six Sigma, Vestas can now put gures on the quality of products and processes at both its own production units and those of its external suppliers. And even small improvements of the Sigma level can generate appreciable bene ts and pro t for all parties. Good quality pays off 342007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=35http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=3535 At the Suppliers Day event in April, Ditlev Engel laid down a challenge for all the sup pliers in attendance. On the basis of a review of Constitution Project No. 5, he encouraged all suppliers to work concertedly towards achieving a Sigma level of 4 before the end of 2008. A similar goal has been laid down for Vestas own production business units they are all to reach 4 Sigma in 2008. Ultimately, Constitution Project No. 5 has to do with improving the quality of compo nents delivered, thus reducing the numerous expenses caused by poor quality which are referred to collectively as COPQ Cost Of Poor Quality. Because, as Ditlev Engel made clear on Suppliers Day, the famous Rule of 10s also applies to the Vestas value chain. This means, for example, that if an error is detected before the product in question leaves the sup pliers factory, the cost of putting it right is EUR 1, 000. However, if it is not detected until the product reaches Vestas production process, the associated cost rises to EUR 10, 000. And if the defective component passes unobserved through the entire process and is installed in a wind turbine at a site, the total cost of repairing the fault will be around EUR 100, 000. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=36http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=36Control of the process The reason why it is so important to raise the Sigma level both at Vestas own production units and at those of key external suppliers, is that this level directly re ects the degree of control of the Critical To Quality CTQ proc esses. The Sigma level is thus a measurement of variance in the process and therefore crucial to the uniformity of the quality produced. Sigma level Sigma level is a measure of how much vari ation exists in a process when compared to the speci cation limits of the process. Looking at gure 1 we see a graph showing a distribution of data plotted with the speci ca tion limits. The distribution is created by plotting the measured values of a part dimension how big or small something is against how often the value is measured frequency. The speci cation limits the upper and lower limits for size are determined by examining the dimensional limits that are de ned in the original design. If we cal culate the variance of the measured values using the standard deviation, we can then determine the Sigma level by measuring how many stand ard deviations we can t between the average measured value and the closest speci cation limit value. The number of standard deviations we can t between these values is the Sigma Level. The Sigma level gives an indication of how many products or processes could potentially fall outside the threshold values Defects Per Million Opportunities DPMO and therefore constitute defects e. g. too small or too large a shaft diameter if the defect management process fails. Sigma Defects per million level opportunity 1 697, 700 2 308, 700 3 66, 810 4 6, 210 5 233 6 3. 4 Even a quick look at the chart makes it abundantly clear why there is every possible reason to strive for a high Sigma level. A level of 4 Sigma or above indicates control over the production processes, while a level of 3 Sigma or below means high expenses. The major bene t The following example, which is based on the performance of a supplier with a Sigma level of 1. 4, clearly indicates that the potential bene ts of raising the Sigma bar apply in practice and not just in theory. The supplier in this example manufactures shafts for wind turbines, and by checking the direct and indirect expenses, it is possible to calculate the total COPQ Cost Of Poor Qual ity of his supplying a shaft that exceeds the maximum diameter limit. Sigma level 1. 4 Annual production 450 components Defective components per year 36. 3 COPQ per defective component EUR 3, 550 COPQ per year EUR 129, 000 Raising the Sigma level 4 will produce the fol lowing result Sigma level 4 Annual production 450 components Defective components per year 2. 8 COPQ per defective component EUR 3, 550 COPQ per year EUR 9, 920 This means that by raising his Sigma level from 1. 4 to 4, the supplier from this example can save EUR 119, 080 per year. Fleet of boats in a narrow canal Mark Colwell, one of the people with primary responsibility for Constitution Project No. 5, explains that the main challenge here and now 36 Vestas production business units are all to reach 4 Sigma in 2008. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=37http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=37is to establish the Sigma level gures for the companys strategic suppliers. Quite simply, we are assessing their current levels, so we have launched a range of initiatives intended to provide us with the base we need to start work on the improvements and, ultimately, raise the suppliers levels to at least 4 and ideally 5 Sigma. One of the key efforts in Vestas is the Supplier Development Group which will inter face with many of the companys key suppliers to assess the current Sigma levels of processes and work with suppliers to improve through the use of standard tools and techniques such as PPAP Production Part Approval Process. A colleague of Mark Colwell has an ef fective example to express the Sigma issue in everyday terms. It is to compare the produc tion process to a canal. Imagine that you have to sail a eet of boats components down a canal components speci cation limits. The closer your boats are grouped together pro cess variance and more centered in the canal, the easier it will be for them to sail down the canal without crashing into the banks process cabability. And this is precisely what your production process capability is all about. If you operate with a low Sigma level, it is like trying to negotiate the canal in boats that are distributed all over the canal and therefore many of them crash into the banks. To continue Mark Colwells analogy, there is every reason to chart a course towards a level of capability that provides the greatest possible control of the production process and, as a result, of the quality of the nished products. 37 Figure 1. Two normal distributions showing 3 Sigma and 6 Sigma. Lower Specification Limit 3 Sigma 6 Sigma Defects per Million 66, 810 3. 4 Lower Specification Limit Upper Specification Limit Reduction of Variance Upper Specification Limit2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=38http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=38What do you get if you let 3, 200 wind turbines send 135 different data signals to a central server every ten minutes, 247, 365 days a year More than 22 billion data signals. And it is this immense volume of data that a group of IT experts at Vestas Technology RD has been ploughing through so as to make the Group even better at identifying and ensuring higher reliability 247. In real life failure is never an option 382007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=39http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=39At Vestas, a great many decisions are based on hard data, particularly during the develop ment of the wind turbines. For example, the expected service lives of many components are, to a large extent, calculated on the basis of the temperatures to which these components are expected to be subjected. The develop ment phase is also the time when all kinds of calculations are carried out on the basis of the wind speeds and directions that the designers expect the rotor to have to cope with, and the intensity of the turbulence forecast for a given site. As regards this last aspect, it has previ ously been necessary to run highly complex computer simulations in order to generate a quali ed guess about the wind conditions at a given site. To this end, the designers have built detailed models of the terrain and then applied a builtin correlation factor to produce a spread for the wind conditions at the site. While it is true that for several years, Vestas has been receiving a constant stream of relevant wind data from the Internetbased control systems SCADA at a number of wind farms, the company has not had access to the tools necessary to structure and analyse them before. As a result, it has not previously been possible for Vestas to process these huge volumes of data suf ciently. A new culture However, under Constitution Project No. 9, one of the 13 improvement projects that form part of the strategy plan entitled The Will to Win, a team from Vestas Technology RD is currently working hard on introducing a com pletely new data culture at Vestas a culture centred on taking action and acting proactively on the basis of speci c knowledge from the many, many wind turbines. Russell Young, Vice President of Operations in Vestas Technol ogy RD and the man responsible for this project, explains that the overriding objective of Constitution Project No. 9 was to develop new software with the capacity to deal with the colossal volumes of data and turn them into something that makes sense to Vestas engineers and technology staff and to the service technicians at the six sales and service units. We constantly receive vast amounts of data that are of little importance because they refer to turbines that are operating perfectly. With Constitution Project No. 9, we are aiming for the capacity to sort these data in order to identify the important gures so that we can then act on what they are telling us. Russell Young goes on to relate that the ultimate aim of the project is to put the company in a position to prevent unscheduled stoppages. We do not simply want to be able to predict that one 392007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=40http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=40component or another is likely to fail soon, so that we can order a new part and repair the fault when it occurs. Rather, we aim to use the data to identify cases where something is on the verge of going wrong, so that we can pinpoint the root causes and actually prevent the fault or error from occurring by making an appropriate change to a design that may already be in production, for example. Vestas Turbine Monitor In addition to the 135 data signals sent to the central server in Randers, Denmark, every ten minutes from the VMP controllers in 3, 200 wind turbines all over the world, the system also receives around 45, 000 VDF tracks as they are called every month. VDF tracks are High Speed Data that provide informa tion about a range of parameters when a wind turbine has been subjected to wind speeds or turbulence in excess of expected levels in connection with a tornado or hurricane, for ex ample. According to Russell Young, this means that Vestas is actually monitoring a total of around 13, 200 wind turbines. At the moment, we have 3 Terabytes of data at the Vestas Data Centre in Randers, but what is perhaps more incredible is that the amount of data on the server is currently increasing by 80 Gigabytes every month. The data are simply streaming in, and there is no way we can analyse them all unless the process is automated, he says. As a key factor of Constitution Project No. 9, IT experts from the Plant IT unit under Vestas Technology RD have developed new software that they call Vestas Turbine Moni tor. Plant IT is also handling the development of the two SCADA systems Vestas Online Business SCADA and Vestas Online Compact SCADA so the unit already has indepth knowledge of the data signals received from the wind turbines included in the system. The primary task of the new software is to identify and separate the signi cant data and then present them in a userfriendly and operational manner to the people who need to act on the basis of them, i. e. the staff of the develop ment departments and at our various sales and service units, explains Russell Young. It takes just ve minutes With the Vestas Turbine Monitor software it is now possible to create models that, in just a few minutes, provide answers that would previously have taken days or weeks to gener ate. As an example of how ef cient the system is, Russell Young describes how it takes him just ve minutes to have the software identify the single turbine among 3, 200 spread all over the globe that has been subjected to the strongest wind during a given year. It would take an engineer a weeks hard work to analyse all the data and nd this information, but our newly developed software can do it in just ve minutes. And what is more, it can do so automatically. As yet another example of the application potential of the new software, Russell Young explains that Vestas performs what is known as a Wind and Site check when determining whether or not a given wind turbine model can be installed at a particular site. As it stands today, the test produces a pass or fail result, he says and continues However, the various classi cations such as IEC Class 2 contain a whole range of permitted wind speeds and turbulence levels. So it is interesting to know whether the site in question is at the lower end of the scale, close to IEC Class 3, or actually so close to the top of the scale that it can almost be classi ed as IEC Class 1. With the Vestas Turbine Monitor software, we can establish precisely what wind regimes will hit each turbine and thus predict more accurately the expected service life of a particular turbine in relation to the other turbines at the same site. Russell Young relates that to date, the performance center has developed around 300 different models for the software, and that work is currently underway to validate them. 40 Performance Analyst Anne Lund Christophersen is analysing turbine performance to predict possible failures and improve reliability and availabili2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=41http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=4141 IEC Classi cation In some cases, this involves actually taking measurements out in the eld. It is only when the models have been properly validated i. e. when we are absolutely sure that everything is functioning as it should that we will release them for the sales and service units. At present, Russell Young cannot say whether the software will subsequently be released for direct use by Vestas customers. That is another of the issues we are looking into at the moment, he concludes. IEC, the International Electrotechnical Commission, formulates standards for technical, technological and associated product areas. The objectives of the commission include facilitating global business by removing technical trade barriers. At the same time, the IEC standards help to raise the bar in areas such as health, safety and the environment. The most recent IEC standard, which centres on design requirements for wind turbines, is entitled IEC614001 Ed. 3. 0 i. e. third edition. This standard allows wind turbines to be designed within four different IEC classes I, II, III and S. Each of these classes contains a speci c range for different param eters that are of importance to the design, such as mean wind based on a 10minute average, and extreme wind. Class I turbines must, for example, be able to withstand a mean wind speed of 10 ms, while the corresponding values for Classes II and III are 8. 5 ms and 7. 5 ms. Class S is used for cases in which manufacturers wish to de ne the parameters themselves. This is the case, for example, for Vestas offshore wind turbines, because there is much to be gained by developing a special design for a speci c site. In addition to the four IEC Classes, three categories are applied to express the level of turbulence a wind turbine can withstand at a given site without the expected service life of the turbine being affected. These three categories are A, B and C, where A refers to high turbulence, B to medium turbulence and C to low turbulence. Denominating its turbines, Vestas will therefore refer to them as, for ex ample IEC IIA, which means a turbine that is designed for sites with a mean wind speed of 8. 5 ms and high turbulence. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=42http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=42The department for good behaviour 42 At the central department for the environment and occupational health and safety at Vestas, longterm, strategic and ambitious thinking is the order of the day. The tasks are numerous and varied, but all share one important common trait it is all about ensuring that Vestas, in every way and at all times, can stand proudly by its actions, particularly in the eld of safety. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=43http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=4343 Not good enough So says Jakob Larsen, Dir ector of Safety Environment at Vestas when asked to comment on the industrial injuries that have affected Vestas employees so far this year. Since Ditlev Engel took over as President and CEO, safety has had top priority at Vestas, and even though we have been moving in the right direction in recent years, we still face a major challenge as the current incidence of industrial injuries of 33 clearly indicates, he says before going on to explain An incidence of industrial injuries of 33 actually means that moreorless one in twenty of our operational employees is injured at work during the course of a year. Naturally, this is a situation we neither can nor wish to live with. Four pillars From the organisational perspective, Safety Environment is part of the Vestas People Culture business unit and functions as a central department with the primary aim of develop ing the Groups strategies and policies within a range of relevant areas. As part of the process of developing and, in particular, implement ing the various initiatives, Jakob Larsen and his staff remain in constant contact with, for ex ample, the Safety Environment departments of the individual business units around the world. One of our important tasks is to act as a 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=44http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=44sounding board for our local departments and, at the same time, to ensure that the decisions taken in the elds of safety, the environment, etc. are followed all the way to their conclusion and actually result in speci c initiatives being implemented, says Jakob Larsen. He relates that the department started out as a conventional environmental and occupa tional health and safety department, but that, in step with the almost explosive development of Vestas, it has come to rest on additional pillars. Today, Safety Environment is respon sible for four signi cant areas Worldclass safety When talk turns to employee safety, the enthu siasm of the Head of the Safety Environment Department shines through We have very high ambitions in this area, and in the short term, our goal is to reduce the incidence of industrial injuries in 2008 to half the gure for 2006, states Jakob Larsen before asking a very important question Is it possible to eliminate industrial injuries completely in a company that employs 14, 000 people Most people would probably say no, but personally, I believe that it is. For example, if you look at the industrial injuries that have occurred so far in 2007, there is not a single one that could not have been avoided. Not one Jakob Larsen makes it clear that the question of safety is not just a matter of the company looking after its employees it is just as important from the customers perspective. At the same time, he stresses that the arrival on the market of large, multinational energy companies among customers has sharpened focus on safety. They, more than anyone else, understand the importance of making sure safety arrangements are in order, and they accept no deviations. That is why it is essential that we be proactive, to prevent safety becom ing something that is constantly improved reactively once the damage has been done. In practice, the work so far has produced two global safety training courses, one for service technicians and one for managers. The course for service technicians consists of 57 days safety training. The current staff of service technicians are to have completed the parts of the course they have not yet taken, and all new technicians who join the company after 1 January 2008 will be required to take and pass the course as a part of their induc tion process. Only when they have done so can they start work out at the individual sites. The management course, which is entitled Safety Awareness, is a threeday course run in close collaboration with Du Pont, one of the leading industrial concerns in the world when it comes to safety. As regards the question of whether it is realistic to expect zero industrial injuries from a workforce of 14, 000 people, Jakob Larsen relates that Du Pont has managed to complete an entire year without reported industrial injuries and this is a company with more than 60, 000 people on the payroll. No stone unturned In its work to build up a strong safety culture, Vestas has many strings to its bow. In addition to the two courses mentioned above, the company constantly focuses on upgrading its wind tur bines, for example. Moreover, to underline the 44 1. Safety 2. The environment 3. Language management and translations 4. Corporate Social Responsibility If you look at the industrial injuries that have occurred so far in 2007, there is not a single one that could not have been avoided. Not one Jakob Larsen, Director of Safety Environment. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=45http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=45fact that everyone in the senior Group manage ment takes the challenge very seriously, CIM cases to do with safety are automatically placed at the front of the queue CIM Continuous Improvement Management, i. e. the technol ogical upgrading of existing wind turbines. Safety Environment is also currently working to tighten things up in relation to both internal and external reporting. As from 2006, all Vestas units have been obliged to report speci cally de ned information about a wide range of aspects including absence due to illness, injuries, nearmisses, environmental accidents and complaints from neighbours, relates Jakob Larsen, and adds that these large volumes of factual data are used, for example, to increase the level of transparency in relation to the outside world. Spotlight on language One of the more unconventional tasks that is being carried out under the auspices of Safety Environment is the development and implementation of a language strategy for Vestas. What on earth do correct transla tions have to do with safety and the environ ment Everything Especially when we are talking about safety, stresses Jakob Larsen, who explains As our turbines are becoming more and more hitech, it is essential that the documentation that individual employees have at their disposal is written in unambiguous and straightforward language. For this very reason, Safety Environment is focusing initially on the companys technical documentation, with a view to developing a structured writing and translation process and, at the same time, ensuring translation of the highest quality. According to Jakob Larsen, the work in this area is already far advanced, and he expects to be able to launch speci c initiatives in the immediate future. The greenest company in the world If the development of a new language strategy is a relatively special assignment for a Safety Environment department, it is, on the other hand, completely natural to nd the Group strategies and policies for environmental issues being handled here. While other companies are ghting a tough battle to improve their environmental pro le as perceived by the outside world, Jakob Larsen states that Vestas challenge in this area has more to do with continuously ensuring the greatest possible accordance between, on the one hand, the positive perception the outside world has of the company and, on the other, the actual realities. At present, we are receiving fantastic acclaim from the media. For example, last June The Independent called us the greenest company in the world. Of course, while we are very pleased with and proud of recognition of this kind, it does highlight the need to have strong, factbased communication with our most important stakeholders, to make sure that we do not suddenly nd ourselves caught in a gulf between perception and facts. Jakob Larsen makes it abundantly clear that in many areas, Vestas is a particularly green company not only on account of its products and their positive in uence on the climate and the environment, but also due to a succession of environmentally friendly initia tives. As an example, he mentions that two thirds of the electricity that the Vestas Group consumes stems from sustainable sources of energy. Similarly, the Group focuses heavily on reducing energy consumption, sorting refuse at source, using environmentally friendly materials, and so on. Our primary task at the moment is to focus on the total CO2 strategy for the entire Group, and we are looking at all kinds of options and opportunities in this context, he says. Environmental goods declarations One of Safety Environments top initiatives at the moment in the area of the environment is to have environmental goods declarations 452007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=46http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=46prepared for all Vestas wind turbines. These are not technically advanced reports, but simple and straightforward documents that, as a supplement to the technical and commercial product brochures, inform customers of the environmental bene ts and, of course, the environmental impact linked to a given wind turbine model. I think that declarations of this kind will prove very valuable at trade fairs all over the world, because they will enable us to tell the whole story about our products, from both commercial and environmental perspec tives, says Jakob Larsen, who stresses that today, competitiveness on nancial parameters is crucial to wind turbine customers, while the environmental aspects are primarily just an added bonus. In fact, the environmental goods declarations for wind turbines are largely generated on the basis of the advanced life cycle assessments which make up another of Safety Environ ments important tasks. Can you grade good behaviour At the presentation of the 6month interim re port for 2007, Ditlev Engel, President and CEO of Vestas, gave an added boost to the process which in just a few years may make Vestas an appreciably larger and betterknown company, with many more employees. As a launch pad for the process, Ditlev Engel used the same occasion to introduce Vestas new communica tion platform No. 1 in Modern Energy. This is a platform that turns the spotlight on the glo bal need to think in terms of new, competitive and clean sources of energy. At the same time, it stresses that wind is one of these sources and that Vestas, on account of its experience and innovative market position, is currently the leading light in this area. However, becoming a betterknown company while at the same time signi cantly increasing the workforce automatically draws more attention and greater expectations from the outside world with regard to how Vestas does business worldwide. Rather simply put, you could argue that Corporate Social Responsibility CSR can be summarised under a general policy of our all behaving correctly in every context, but unfortunately, the world is not quite that simple when you are a global company even though I have jokingly suggested that the Safety Environment be renamed The Department for Good Behav iour, he says. As the rst important step towards protecting both the company and its employ ees from unwanted moral dilemmas, Safety Environment is currently formulating a Code of Conduct for Vestas. This code is to collate and further develop the Groups current poli cies in this area. To start with, it will primarily be directed towards nancial issues such as bribery, corruption and personal con icts of interest, but in the long term its scope will become much broader. With this initiative, we will be telling our employees clearly and un equivocally what we expect and what we will not accept as a company. In this way, we will also be shifting responsibility from individual employees over to the company, emphasises Jakob Larsen. 462007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=47http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=47Fall During the production of a 44metre blade, an employee steps backwards and falls off the gantry he was working from. He falls 1. 3 metres, hits his head and is off sick for three days. Cut During a service procedure on a wind turbine, a service technician has to remove a cable bracket from the ladder on the middle platform. While doing so, he cuts his wrist and forearm injuries that result in his having to take three days off work. Fall A service technician is cleaning up after the work done in a wind turbine. He is walking through the narrow part of the nacelle by the turbine yaw gears, but slips on the frame and falls on the bre glass shell. As he falls, he hits his head against the gearbox and dislocates his right shoulder. As a result of his injuries, he has to take 40 days off work. Examples of industrial injuries at Vestas2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=48http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=48Taking Care Of Birds 482007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=49http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=49Wind turbines have very little impact on the environment compared to fossil fuels, and bird mortality is minimal. All energy production comes at a cost. Carbon dioxide and other emissions from fossil fuels are harmful to human health, wildlife, and the environment. In comparison, wind turbines are environmentfriendly and safe. But there is concern about how wind turbines affect birdlife. The question of the relationship between wind turbines and bird mortality rst arose because of the Altamont Pass Wind Resource Area in California, which is one of the oldest and biggest wind power plants in history, con sisting of approximately 5, 000 wind turbines in a 50squaremile area. The turbines, which were installed during the 1980s during the early days of wind energy, range in size from 40 to 400 k W. The wind farm is still today the worlds largest wind farm, producing 1. 1 billion kilowatthours k Wh of electricity an nually, enough to power 200, 000 households according to the California Energy Commis sion. When installed, no one was aware that bird kills could even be a problem. But unfortunately, they were and still are at Altamont. After a few years, it was discovered that hundreds of raptors such as redtailed hawks and golden eagles and other birds are killed annually by the turbines in the pass and environmentalists were in an uproar. According to the Center for Biological Diversity, the turbines kill an estimated 880 to 1, 300 eagles, hawks, falcons and owls each year. The controversy was further fuelled by the fact that the Altamont Pass spans an inter national migratory bird route and that several of the species of birds that are killed, such as the golden eagle, are protected by various state and federal laws protecting endangered species. To understand the problem, the National Renewable Energy Laboratory in the USA NREL initiated research into the relationship between wind turbines and bird mortality. One of the scientists involved in the research, which has been going on since 1998, is the independent wildlife biologist and ecologist Shawn Smallwood. 492007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=50http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=50A complex issue When talking to Smallwood about his research at Altamont Pass, it becomes clear that the bird issue is far more complex than most people suspect. It is very dif cult to make across theboard judgments about the relationship between wind turbines and birds, says Small wood. There are simply too many variables involved and there is still so much we dont know about bird behaviour and bird ight pat terns in relation to turbines. Smallwood says the problem is so complex because different species of birds behave differently and every wind turbine site is unique in terms of what type of birds y in the area and what their ight patterns are in relationship to the landscape. The situation at Altamont Pass is very unfortunate, says Smallwood, because the birds in that area are ying low to the ground and the old turbines at the site are also very low to the ground. It is important to realise that if a site is going to be placed in a location with a high level of bird activity, the height of the rotor blades should not be at the level where bird ights are most frequent. But this again depends on the location of the site and the type of birds that y in the area. Smallwood believes problems like this are de nitely solvable. We will not be able to eliminate bird deaths completely, but we can de nitely achieve much lower levels of mortal ity. As for Altamont Pass, Smallwood says that plans to take down the old turbines and put up new, bigger and taller turbines should improve the situation. American Wind Fortunately, it turns out that Altamont Pass was and is an exceptional case. In the early 1990s the National Wind Coordinating Committee NWCC, a multistakeholder association con sisting of US government of cials, environ mental groups, and utilities was formed to address the windavian issue. Then in 1994 the NWCC formed a Wildlife Group to provide a forum for dialogue among researchers, conservationists, wind industry representa tives, and federal, state, and local of cials to better understand bird and bat interaction issues. Since then, the NWCC has conducted ve national research meetings and produced a number of documents and a fact sheet on wind, birds and bats. What the research shows The NWCC fact sheet Wind Turbine Inter actions with Birds and Bats1, which is a summary of the research on bird and bat wind interaction, distinguishes between two types of possible impacts on birds at existing wind plants 1. direct mortality from collisions, and 2. indirect impacts from avoidance, habitat disruption and displacement. In terms of direct mortality from collisions, the research shows that both migrating birds and resident birds sometimes die as a result of collisions, but that the number of bird deaths is relatively small. An average of 2. 3 birds is killed per year per turbine in the US, with the exception of California, because of the Alta mont Pass wind power plant. In addition to direct mortality from collisions, there is also the question of how wind power plants in uence bird behaviour in general. According to the NWCC study, some studies have documented that the number of birds who y over or near turbines has decreased and that some birds avoid the turbines altogether. But the study also says that the level of indirect impact varies depending on the species and that ongoing research is exploring the distance of avoidance caused by the turbines. The studies also indicate that some birds seem to relocate to other areas. 502007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=51http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=51Germans study the risks Another recent study into the impact of wind turbines on birds comes from Germany. With more than one fourth of the global wind capacity, Germany is one of the leading wind energy countries in the world in 2004, 10 per cent of the power supply in Germany was generated from renewable sources and a sub stantial portion more than half came from wind energy2. Like the US studies, the German study reports that the main potential hazards to birds and bats from wind power plants are disturb ance leading to displacement andor collision mortality. According to the German study, colli sion rates varied between 0 and approximately 50 collisions per turbine per year for both birds and bats. Obviously, location is a crucial factor when it comes to the number of collisions. Birds are at high risk at wind power plants close to wetlands where gulls were the most common victims and at wind power plants on mountain ridges USA, Spain, where many raptors are killed. Although there is a high degree of agree ment among experts that wind power plants may have negative impacts on bird populations, no statistically signi cant evidence of negative impacts on populations of breeding birds could be found according to the German study. The 512007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=52http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=52impact of wind power plants on nonbreeding birds was stronger, but disturbances of migrat ing or ying birds andor the timing of migration of birds remain unknown. The German study also stated that further research into the issue is still needed, particularly when it comes to the new, bigger turbines that will replace the present generation of wind turbines. The report did not study the impact of offshore wind power plants on marine life or birds. Learning from the studies Even though there is still much more to learn about wind turbines and birds, wind power plant developers are becoming increasingly aware of the importance of considering the im pact on bird life when nding appropriate sites for wind power plants. Both the German and the US study offer guidelines to help wind de velopers choose the right location and layout for a wind farm. Here are some examples of the guidelines that wind power plant develop ers are now using when choosing wind power plant locations Avoiding sites with unusually high densities of birds avoidance of wetlands, woodlands, important sites for sensitive nonbreeding birds and mountain ridges with high num bers of raptors and vultures. Making wind power plant sites less attractive to potential collision victims by avoiding sites where turbine heights correspond with bird ight levels. Avoiding sites that are located in the path way of migratory birds andor are important to breeding and wintering birds. Identifying the various species of birds that transit or reside in the area and understand ing the ways in which they may use the site, since different types of birds behave differ ently in relation to wind turbines. Taking the topography of the area into consideration because certain topographic features may present greater risk to birds than others, such as the prevailing windward aspects of ridges and hills. Taking the con guration of turbines within wind power plants into consideration plac ing turbines parallel to and not across the main migration or ight directions of birds. Another factor that the industry believes should signi cantly reduce the potential for bird kills is the fact that newer turbines are much larger than earlier models, which means that far fewer turbines are needed at any one given site to produce the same amount of power. For example, only 30 x 3. 0 MW turbines are needed to produce the same amount of power as 300 of the old 100 k W turbines. Many believe that this in itself should reduce bird mortality, but as the NWCC study points out It is not yet clear whether larger or smaller turbines cause equivalent bird collision fatalities. 3 All in all, it is clear that the wind industry has learned a great deal since the early days of Altamont and is now able to develop and manage wind power plants that have very little impact on bird life. 52 For every 10, 000 birds killed in the US, only one bird death is caused by wind turbines. Wind Power Outlook 2007. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=53http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=5353 Sources 1. Wind Turbine Interactions with Birds and Bats A Summa ry of Research Results and Remaining Questions, National Wind Coordinating Committee, November 2004. 2. Impacts on biodiversity of exploitation of renewable energy sources The example of birds and bats. Htker, H. , Thomsen, K. M. H. Jeromin, Michael Otto Institut in NABU, Bergenhausen, 2006. 3. Wind Turbine Interactions with Birds and Bats A Summa ry of Research Results and Remaining Questions, National Wind Coordinating Committee, November 2004. 4. AWEA Wildlife Siting Initiative Message Document, May 5, 2004. 5. Earthwise Publications updates from the Union of Con cerned Scientists, Volume 6, Number 3, Summer 2004. 6. Windpower Outlook 2007, The American Wind Energy Association. According to Tom Gray, Communications Director of the American Wind Energy Association AWEA, the effect of collision or disturbance on bird populations is very small compared to the impact of house cats and man made structures on birds such as cars, plate glass windows and telecommu nication towers. The AWEA estimates that some of the primary causes of bird deaths in the US are4 Cats 1 billion per year Buildings 100 million to 1 billion per year Hunters 100 million per year Vehicles 6080 million per year Communications towers 1040 million per year Pesticides 67 million per year In comparison, wind turbines killed approximately 33, 000 birds in the US in 20015. Wind Power Outlook 2007 reports that for every 10, 000 birds killed in the US, only one bird death is caused by wind turbines6. The wind industry also points out that wind turbines have very little im pact on the environment compared to other energy forms such as fossil fuels. All energy production comes at a cost. Carbon dioxide, sulphur dioxide, and nitrogen oxide emissions from fossil fuels are all signi cantly harmful to human health, wildlife, and the environment, as are oil spills. The larger perspective2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=54http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=54While 2, 800 applications have been narrowed down to 34 participants in this years Vestas Graduate Programme, the rst ever participants have passed the halfway point in their twoyear tenure. The past year has been one of new challenges, great opportunities and a steep learning curve for both Vestas and its graduates. Graduating from Year One 542007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=55http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=5555 GRADUATE PROGRAMME GRADUATE PROGRAMME GRADUATE GRADUATE PROGRAMME GRADUATE PROGRAMME GRADUATE GRADUATE PROGRAMME GRADUATE PROGRAMME GRADUATE GRADUATE PROGRAMME GRADUATE PROGRAMME GRADUATE GRADUATE PROGRAMME GRADUATE PROGRAMME It was on his daily commute to the university in Dresden, Germany a journey that took him past several wind power plants that Lars Gehre rst thought of the wind power industry as a possible career path. A few months later, after completing his masters degree in Inter national Management, Finance and Economics, Lars was chosen as one of the 18 rst ever participants in Vestas Graduate Programme. The turbines themselves were what initially caught my attention and I started to look into the industry as a career opportunity. It soon became clear to me that Vestas was the leading player in its eld, and that the Vestas Graduate Programme was a very attractive opportunity, with a broad variety of challenges in various departments around the world, says Lars Gehre. The twoyear programme is aimed at attracting the best young professionals within a number of areas including nance, supply chain management, corporate social respon sibility and RD. During the two years, the graduates work in three business units, typical ly in three different countries, solving projects that are critical to Vestas reaching its strategic goals. At the same time, the graduates build up a strong network within Vestas and experience that will enable them to take up key positions in Vestas in the future. 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=56http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=56DUA AMM TE MME DUA AMM TE MME 56 In the rst year, Vestas received 800 applications for the programme from around the world. In 2007, that number rose to 2, 800. However, in spite of the rapidly growing inter est in the programme, Vestas is still working intensively to show what the industry has to offer as a workplace, explains Graduate Man ager Inge Mette Rosenberg Jørgensen, Vestas People Culture Inge Mette Rosenberg Jørgensen, Graduate Manager. FACTS ABOUT VESTAS GRADUATE PROGRAMME The rst 18 participants in the Vestas Graduate Programme joined the company in 2006. In September 2007, a further 34 participants from 15 different countries joined the programme. From 2008 onwards, 4550 participants will join every year. For more information on Vestas Graduate Programme, visit vestas. com. There is a great interest in the industry at the moment, and we need to build on that. In many parts of the world, there is very limited knowledge of the career opportunities the wind industry has to offer, and to ensure that we recruit the best global talents, including those for the Vestas Graduate Programme, we need to raise the awareness, she says. The wind industry is not very visible as a career opportunity in Germany, even though the German market has until recently been the largest in the world, Lars Gehre says, a state ment underlined by the fact that he himself rst caught eye of the industry as he saw the actual turbines. However, Vestas is working to change that situation. Employer branding initiatives, including setting up partnerships with a number of leading universities and business schools around the world, are aimed at raising the global awareness of the company. This is not something you do overnight, but I am convinced that we will see the results of the hard work from next years number of applications from top students, says Inge Mette Rosenberg Jørgensen. In addition to that, we need to align the recruitment process in order to handle the number of applications and minimise the risk of overseeing quali ed candidates, plan for the best time of the year 2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=57http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=57GRA GRA 57 ATE E ATE E to search for the top students and spot the internal recruiters that can help de ne the best possible match for the organisation, explains Inge Mette Rosenberg Jørgensen. Just as important as attracting new participants is ensuring the quality of the pro gramme. And the rst year has shown where improvements are needed. This is still a new programme, and we are working concertedly on optimising the policies and procedures, so that both the graduates and Vestas get the maximum possible bene t from the programme. If not, the investments made in the programme will simply not pay off, says Inge Mette Rosenberg Jørgensen. One key element is raising the awareness of the programme within Vestas. At the moment, the knowledge of the participants skills and potential is still limited in the organisation which increases the risk of graduates not being utilized to their fullest. The ability to take even better advantage of the skills and aspiration that these young talents bring to Vestas will need to be further developed as we go along, says Inge Mette Rosenberg Jørgensen. It has been a great year for me, although the perception of the programme and the ex pectations towards a graduate is not the same throughout the organisation. The fact that we have been the rst group in the programme has also meant that there have been a few practical issues along the way, but I suppose that is to be expected. We have built a strong network in the graduate team, which I see as a very valuable asset in a fast growing company, says Lars Gehre, who started the programme in the Group Finance Operations department in Denmark. He then moved on to the sales and service unit Vestas Asia Paci c in Singa pore. The last eight months of his participation in the programme he will be working in the Project department in Vestas Mediterranean. The fact that the graduates spend only eight months in each unit poses another challenge. With such short periods of time in each rotation, it is crucial that the tasks and expect ations for each graduates role is de ned quickly and clearly. To improve the programme in that area, we have increased the focus and have implemented performance assessments for each module a task which can easily be downgraded in an organisation as busy as Vestas. Though, we need to take it further, and strive for more speci c goal setting, feedback and followup, says Inge Mette Rosenberg Jørgensen. To Lars Gehre, the experience of moving between units has been a positive one. I have been given some very exciting assignments and worked with colleagues from very different professional and cultural backgrounds. That has given me a broad understanding of the company in a fairly short amount of time, says Lars Gehre, who, one year into his career with the company has a pretty good idea of what it means to have joined a company where things are moving ahead fast. Working for a company like Vestas which is experiencing such growth and development, you do sometimes feel challenged or stretched when things are not running as smoothly as you would like them to. Yet, what comes along with it is a unique opportunity to make a real difference in the company if you are willing to take on the challenges. That is what appeals to me, says Lars Gehre. Theres no doubt that it has been a very steep learning curve. However, I am glad that it has, because half way through, I have already reached many of the goals I set myself when entering the programme. So now, I have set the bar higher. I have been given some very exciting assignments and worked with colleagues from very different professional and cultural backgrounds. That has given me a broad understanding of the company in a fairly short amount of time, says Lars Gehre. LARS GEHRES ROTATIONS IN THE VESTAS GRADUATE PROGRAMME 1. 8 months in Group Finance Operations, Vestas Wind Systems AS, Randers, Dennmark. 2. 8 months in Finance IT, Vestas Asia Paci c, Singapore. 3. 8 months in the Project depa2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=58http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=58Vestas has installed more than 33, 500 wind turbines in 63 countries unmatched numbers in modern energy. vestas. com No. 1 in Modern Energy in every aspect2007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=59http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=592007-10-30T13:48:43+01:00http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=60http://nozebra.ipapercms.dk/Vestas/VestasWind/UK/UK1007/?Page=6060 Contacts Vestas Northern Europe 45 97 30 00 00 Sales and service in the UK, Ireland, Scandinavia, Poland and the Baltic area. Vestas Central Europe 49 4841 9710 Sales and service in Germany, Austria, Benelux, Russia and Eastern Europe. Vestas Mediterranean 34 902 41 98 00 Sales and service in the countries of the Mediterranean region, the Middle East, Latin America, the Caribbean, and North and West Africa. Vestas Asia Paci c 65 6303 6500 Sales and service in Australia, New Zealand, China, Japan, India and the rest of Asia. Vestas Americas 1 503 327 2000 Sales and service in North America. Vestas Offshore 45 97 30 00 00 Sales and service, offshore. For more information about Vestas sales and service units, go to www. vestas. com and click on Contact. Vestas Wind Systems AS Alsvej 21 DK8900 Randers Denmark Tel. 45 97 30 00 00 Fax 45 97 30 00 01 vestasvestas. com www. vestas. com EDITORS Peter Wenzel Kruse Editor in Chief and Hanne Poder Sørensen. TEXT Klaus Bundgård, Cath Mersh, Peter Gisselmann Rasmussen, Lene Finnemann Olesen and Barbara Berger. UK Wind WIND, OIL AND GAS2007-10-30T13:48:43+01:00