EXECUTIVE SUMMARY
A Report To:
The United States Environmental Protection Agency
Prepared By:
Karen Shapiro
Allen White
November 1997
Corporate competitiveness traditionally has been achieved through new product development, quality performance, and cost control. Competitiveness in the 1990's and beyond will require extending these traditional elements to include the life-cycle environmental impacts of materials and final products. Three forces are driving this evolution. First, government regulations gradually are moving in the direction of life-cycle accountability whereby firms increasingly will face cradle-to-grave responsibility for their products and component parts. Second, emerging international standards with life-cycle requirements will affect access to, and competitiveness in, the global marketplace. Third, environmental "preferability" has emerged as a key criterion in both consumer markets and government procurement guidelines. Collectively, these developments have fostered a burgeoning corporate interest in the concepts of life-cycle design (LCD)—the application of life-cycle assessment (LCA) concepts to determine what a product contains, how it was produced, how it will perform, and what will be left after its useful life is expired.
Numerous firms have begun incorporating environmental effects as a criterion in product/process design. Because LCD is used as an internal decision-making tool, its strengths, successes, and limitations remain largely undocumented. Companies practicing, or inclined to adopt, LCD methods do not benefit from methodological advancements achieved by others and, with few exceptions, opportunities for cross-fertilization across firms has been limited.
With funding from the U.S. Environmental Protection Agency's Pollution Prevention Division, Tellus Institute has collaborated with three companies—(1) IBM, (2) Bristol-Myers Squibb (BMS), and (3) Armstrong World Industries—to understand why and how LCD is finding its way into business decision processes. Documenting, advancing and disseminating LCD practices is the central objective of this project.
Case Study Findings
Armstrong, BMS, and IBM demonstrate a range of LCD practices, indicating the reality that there is no one-size-fits-all approach in transforming LCA approaches into a working decision-support tool. While all three LCD programs continue to evolve, our study suggests a number of themes that serve as valuable lessons both for other firms and for government initiatives aimed at advancing LCD practices.
Motives. LCD initiatives are likely to be driven by linked environmental and economic pressures. Moving beyond compliance to stay ahead of regulatory trends, improving customer service and product quality, and creating green market opportunities, typically provide the impetus to building and sustaining an LCD program.
Pragmatism. Non-prescriptive, customized, and flexible describe the approaches to LCD adopted by the three companies. For these firms, rigid protocols simply do not mesh with business reality. For example, while BMS has developed a generic framework for PLC reviews, the framework is tailored to the varying needs of BMS' different business units to account for the differing regulatory frameworks under which each unit operates. Electronics firms, such as IBM, facing an average 18-month time horizon in translating product concepts to market cannot afford LCD methods which may delay a product cycle. Product cycle time and trade-offs with other design criteria (e.g., performance, reliability, safety, cost) necessitate an adaptive approach to LCD.
Buy-in. An effective environmental management structure, coupled with a solid corporate commitment to continuous environmental improvement, is key to a successful LCD program. Armstrong, IBM, and BMS have each established corporate environmental policies emanating from high levels within each company. Translating these polices into actions requires educating and achieving buy-in from employees across many levels of the company.
Streamlining. Complex, resource-intensive LCD systems may contain the seeds of their own undoing. They are tougher to market internally and more vulnerable to orphaning during business downturns and restructuring. Reducing the stages and impacts is one way of making LCD affordable and relevant to internal decision-making. All three companies practice such streamlining in some form, especially in the upstream extraction, transport, and intermediate manufacture stages of the product cycle.
Suppliers. Supplier relations as a component of LCD programs are uneven and slow to evolve. Our collaborating firms generally show an arm’s-length relationship with suppliers when it comes to implementing their LCD programs. Liability and proprietary concerns, and a reluctance to impose costly data development requests, are some of the impediments to more aggressively bringing suppliers into the LCD fold. Nonetheless, without supplier involvement—including information exchange between customer and supplier essential to support final design decisions—the absence of upstream inventory data will continue to impair a comprehensive life-cycle perspective on product design.
Teamwork. The most effective LCD programs are those that recognize the cross-functional nature of LCD, and integrate multiple business functions into the LCD process including product designers, materials engineering, process engineers, operations, marketing, and accounting/finance.
These themes point to a future in which LCD gradually continues to make inroads into corporate product development, but in diverse and often diffuse ways throughout the product life cycle. In the mid-term, realizing the benefits of LCD will require its integration in standard business functions such that each function sees its benefits. This kind of seamless integration will help LCD avoid the risk of being another "environmental" program which costs, rather than saves, and constrains, rather than strengthens, the market position of the firm and its products.