Is carbon management important when manufacturers are struggling in a recession? Some say yes, and that product life cycle analysis is an unavoidable part of modern manufacturing, with several tangible benefits beyond the environmental, says Will Stirling..
Incorporating sustainability into products is not an altruistic decision. A report by consultancy Accenture identifies a raft of factors influencing product sustainability. Manufacturers, depending on their business, must comply with a range of environmental compliance legislation — including ELV, RoHS, WEEE and more recently REACH — that pushes them deeper into product lifecycle analysis. Government economic stimuli worldwide have been linked to improvements in product sustainability, especially carbon emission reduction, making sustainability a strategic imperative for some. And there are now the first universal carbon lifecycle assessment standards, such as PAS 2050 in the UK.
In addition, there is encouragement and support from organisations like EEF and MAS for considering the environment in product planning. And the world has never been more carbon-conscious; customers and consumers are demanding greener components and products.
But building sustainability into product costs time and money, today arguably better spent on more pressing business priorities. Accenture identifies several benefits from product PLM beyond helping the environment. “Developing approaches to reduce carbon emissions can also improve energy efficiency, cut waste and boost throughput efficiency – the key challenge is to develop simple and cost effective approaches which can provide direction on cost and carbon without incurring significant expense,” its Mastering Manufacturing Innovation report points out. Although now might feel like a difficult and expensive time to invest time or funds in sustainability, “it is probably fundamental to both short term operating cost reduction (efficiency measures) and longer term business strategy imperatives (demand-side measures).”
Cut carbon, cut costs
Tight cashflow means short term investment in LCA is harder to implement than long term, planned product modification. But short term cost savings are demonstrable, says Seb Hoyle, manager, supply chain management practice at Accenture. “Across the supply chain with our clients we see clearly the business case that ties-in cost with sustainability. If carbon emissions is your sustainability metric, because fossil fuel is a big component of the carbon footprint of manufactured products, essentially cost and carbon is more or less same thing. In those business cases where efficiency improvements produce savings in both the distribution and manufacturing supply chain, if you can reduce those operational costs and, simultaneously, carbon emissions, waste reduction etc, then you’re on to a good thing. Savings can be very quick, e.g. reducing fuel costs by combining transport deliveries.”
Boss Design, an award-winning office seating manufacturer in Dudley, is a certified carbon neutral company with a stringent corporate social responsibility policy. It has implemented LCA by calculating the carbon footprint of its best selling product, engaging its suppliers in the process. It has reduced total waste by about 60% and its sustainability practices have had good return on investment, mainly a software package and time.
Another good example of LCA in practice is Formula One (see case study at end of article).
Products right for the time
Sustainability and cost drive product modification. Accenture’s report illustrates those companies more likely to be winners and losers in recessions based on attitudes to innovation, technology and other criteria. One part of this is to identify and satisfy changing demands early. “Of the likely winners, there are those who’ll be successful in getting their costs appropriate for the scale of the business if sales have declined,” says Stephen Proud, senior executive, supply chain management practice at Accenture. “The other element is those who get their product just right for the times. The objective is to retain market share, or to even grow, by landing just the right product for the times against competitors that may be floundering. A subtext to that is very much the carbon reduction element, which may attract people to buy the product because it may be driven by marketing claims, or [the new product line] may be correlated to some form of cost-out.”
Design and regulation
There is more to sustainability than reducing carbon emissions. Product design is crucial in building in the full gamut of environmental issues into products. Accenture says to achieve “cost reduction targets, new environmental legislation requirements or consumer expectations on sustainability, firms therefore need to look to their designers to balance sustainability with other criteria.” It says companies need to build environmental targets into the design and product lifecycle management (PLM) processes, to address the majority of the carbon footprint which gets lockedin upfront in the design.
“Sustainability is one of the main objectives that you need to weave into the mix about how you optimise a portfolio of products through their life, and to look at this as one of the key design criteria upfront as well as what the cost will be through life,” says Proud. “It should not be an opportunity missed, particularly that people are now having to look more closely at the composition of their products for cost reasons, as well as to satisfy consumers’ growing demand for sustainably produced goods.”
Regulations from several directions force manufacturers to look at product LCA. “Manufacturers are facing increasing regulation, which is growing in number, complexity, and scope,” says Neil Dunsmuir, vice president EMEA marketing at Siemens PLM Software. “The costs of achieving and maintaining compliant products are high, but the costs of being found to be non-compliant are even higher. Non-compliant products can lead to lost customers, fines, lost revenue and/or exclusion from key regional markets. For example, Europe, China, Korea and California have all enacted environmental laws that ban certain toxic substances from products.”
Siemens Teamcenter PLM software documents, enforces and tracks product compliance throughout the entire product lifecycle, documenting and manage regulatory requirements by tracking accountability. Siemens PLM has written a white paper on how environmental compliance can help companies to understand how to design and manufacture products to comply with international regulations like REACH.
What should a manufacturer do?
LCA seems to be a business imperative from several standpoints — regulatory (responsible disposal of product), environmental, cost saving and the need to satisfy environmentally conscious customers. Accenture’s report says companies should examine the strategy of its business around sustainability, the scope of any action required and the most effective way to take action.
Research suggests a move to a more sustainable product portfolio is part of a necessary strategic platform for a strong emergence from the downturn. “What needs to be drawn very clearly is sustainability of the financial business case hand-in-hand with more environmentally sustainable issues,” says Accenture’s Hoyle. “They’re not mutually exclusive. Its finding the opportunities to align those things where possible or to achieve the best possible compromise between financial cost drivers in the business case — time to market, cost and quality — and a third dimension which is sustainability.” Go to the Accenture link for a suggested response plan.
Further information can be found at:
www.siemens.co.uk/plm/compliance – links to the white papers at the bottom
Case study: LCA in action: Williams Hybrid Power
Williams Hybrid Power Limited (WHP) was formed when in 2008 Williams F1 acquired a shareholding in Automotive Hybrid Power, which develops flywheel energy storage technology for vehicle applications. The technology is a kinetic energy recovery system, based on an electricallydriven flywheel, that can be used in a hybrid engine system.
In 2009 for the first time the rules of Formula One were changed to allow teams to store and reuse energy on the cars. The F1 regulator introduced this regulation mainly to encourage the development of these technologies in the hope that they move from F1 into more mainstream industries. “F1 gives a boost to the quicker development of these technologies because you’ve got 10 teams with engineers who work just in this area,” says Alex Burns, COO of Williams F1 and a director of Williams Hybrid Power. “WHP is developing the flywheel for use on our own F1 car, and it’s actively marketing that technology to other industries. Rather than just say it’s good that F1 is developing technology which may be applicable elsewhere, we want to go further – we’re not just developing them, we’re actively pushing them into other industries.”
The end game for WHP is to develop and sell a KERS system with demonstrable energy recycling properties, which would in practice reduce fuel consumption, to mainstream car companies. WHP is talking to several UK and foreign companies about using its KERS commercially, particularly in applications which “stop and start a lot” says Burns. “A flywheel can accept energy and release energy very quickly. The disadvantage is that the maximum amount of energy you can store is relatively low. So a flywheel is good in a hybrid car where you’ve got a petrol engine doing some of the work and when you’re cruising or braking some of the energy is stored in the flywheel. When you want to accelerate hard you take the energy out of the flywheel to give extra assist to the petrol motor, meaning this can be smaller and a car that overall produces lower emissions.”
Meanwhile, F1 provides a rigorous test platform – commercial partners will be better convinced that KERS works if test data is supplied from demanding race conditions. (Accenture provides consultancy to Williams Hybrid Power in applying the KERS commercially).