What is life cycle management and how it impacts us - Free Essay Example

Why life-cycle management? A convenient way of understanding the issues that underlie life-cycle thinking is through the notion of our footprint on the planet. Some footprints such as carbon, water, and energy can be quantified. Other more ecological footprints resist calculation although they remain a useful general concept in discussion. A footprint is taken to be the total effect of all the steps in the life-chain of products and materials we consume (Wikipedia, 2009). A more holistic management of these accumulated impacts is a prerequisite for achieving a sustainable lifestyle that is within the resource capacity of our planet. For a better understanding of issues that underlie life-cycle is through the notion of footprint on the planet. Some of them include carbon, water, and energy which can be quantified. A footprint is taken to be total effect of all the steps in the life- chain of products and materials we consume. A more holistic management of these impacts is a prerequisite for achieving a sus tainable lifestyle which is within the resource capacity of our planet. Most of the environmental impact we see today is due to the surprisingly low resource efficiency of our modern society. Overall, only about 6 per cent of total resource consumption goes into the final manufactured product. The other 94 per cent is discarded as (unwanted) by-product at various places along the production-consumption cycle (Senge et al. 2002). Wasteful technologies and throwaway products are often highlighted as the principal problems. However, the root cause of inefficiencies is also the uncoordinated nature of the value chains. Optimization of individual steps does not necessarily lead to a reduction of the biggest impact, nor does it result in an optimization of the system as a whole. In many cases, impacts are simply pushed along the life-chain, rather than being mitigated in any real way. A simple example below illustrates this problem in a practical way: Leather tanners who purchased r aw hides from foreign sources for processing regularly found themselves out of regulatory compliance with respect to pesticide levels in their wastewater. Pesticides are added by cattle farmers and slaughterhouses to protect the freshly skinned hides from bacterial and insect attack. The embedded chemicals pass along the entire value-chain in the leather industry and some end up in wastewater wherever a washing stage occurs. There was no intra-sector communication and negotiation framework to solve this problem, as each link in the value-chain acted independently. Ultimately the added cost of sophisticated wastewater treatment at the tanning stage exceeded the value of the product, and contributed to the decline of the industry in the UK. The problem could have been solved if life-cycle management systems had been in place. An industry-wide initiative relating to chemical use throughout the product cycle could have been negotiated. Individual tanners could have spent more time manag ing their supply-chain. Government regulation could have addressed the root causes, i.e. slaughterhouse practice, rather than applying wastewater standards at the tanning end-point. Lack of appreciation of the life-cycle management concept and the absence of a life-chain partnership meant that none of the above were applied at the time. This type of burden shifting situation is common in many industries. To better understand the structure of the possible solutions, we need to briefly look at the foundations of LCM and the principles on which they are based. Most of the environmental impact seen is because of low resource efficiency of the society. Wasteful technologies and throwaway products are often the problems. However the main problem is also due to lack of coordination in the value chains. Optimization of individuala steps always do not lead to reduction of the impacts, as it just pushes it along the life chain rather than mitigating it. Life-cycle management framewor k and concepts The various definitions of life-cycle management often reflect the particular viewpoints of different stakeholders. According to UNEP life-cycle management (LCM) is a product management system aiming to minimize environmental and socioeconomic burdens . . . during the entire life-cycle . . . [relying on] . . . collaboration and communication with all stakeholders in the value chain. This simple notion belies the difficulties in its implementation. Figure 1 from the food sector gives an indication of the challenge involved. It clearly shows the complex materials that flow in our food supply and where various types of environmental impact occur. LCM works with partners at all these points to effectuate both local and system-level improvements. LCM is not yet a standardized discipline, but rather it is an umbrella framework for combining and applying other management instruments in a more holistic life-chain perspective. The advantage of LCM is its ability to more explicitly take into account upstream and downstream impacts, including situations in which they are widely distributed geographically and socially. It can more easily address global issues and system dynamics than instruments designed for individual company use. A particular feature of LCM is the democratization of the management exercise through the involvement of different value-chain partners. For the present discussion, we group LCM approaches into three broad categories based on their owners. We will elaborate further on these in section 4: Organization of a holistic form of sustainability management within individual companies using, for example, supply-chain management and product design (Five Winds International, 2009). Government life-cycle policies and regulations to address system dysfunctions or to deal with certain product issues such as chemical contamination. Multi-stakeholder voluntary codes to manage sustainability issues for selected commodity ma terials and products, e.g. the Cyanide Code described in the following. In practice, there is a good deal of synergy in these approaches, and they are best used in combination, as, for example, when government regulation enables or supports industry codes or multi-stakeholder mechanisms. As few tools have been developed specifically for implementing LCM, the partners are currently obliged to draw on the existing set of corporate management instruments and government regulations to see what combination of these can be effectively applied along the entire life-chain. The more common ones (see Table I) include supply-chain management (SCM), corporate social responsibility (CSR), environmental design (DFE), and product-service systems (PSS). Some organizations have packaged the most useful instruments into a toolbox (Maplecroft, 2009). As a general comment, many of the current instruments also need to evolve further if they are to play a full part in LCM. The expanded range of objectives in a full sustainable development agenda, and the need to consider the entire value-chain stretches many of them to their limit. For example, while the Global e-Sustainability Initiative (GESI) has developed an electronic tool for sustainability evaluation of electronics suppliers (E-TASC, 2009). This tool considers only a part of the life-chain, often ignoring the impacts of mining the metals that the industry uses. Another example is LCA itself, which is mainly used to assess numerical parameters such as materials and energy flows, whereas the full sustainability agenda includes many non-quantifiable issues such as biodiversity and social aspects. Partnerships are at the core of LCM. There is no single procedure for identifying partners, and indeed some such as the end-consumer are frequently left out. There is still a reluctance to expand the LCM partnerships too far up and down the life-chain, partly out of fear of losing control and partly to keep the management exer cise simple. As a counter example, Figure 2 shows ALCANs vision on products in a company context. Not all corporations are yet interested in including end-consumers in their work on LCM. We can usefully illustrate the above analysis through a case study from the mining industry. This is an example of multi-stakeholder LCM, i.e. item (iii) in the preceding grouping, but the conclusions also have a more general validity: The gold mining industry uses sodium cyanide to leach gold out of crushed mineral ore. Its toxicity means that careful handling is required at all stages of its life chain. Government safety regulations spell out the standards to be followed. After the widely reported spill of 70 tons of cyanide from a mining operation into the Danube River system in 2000, the industry funded an international multi-stakeholder steering group to develop a new (life-cycle) instrument the International Code for Cyanide Management and a membership-based mechanism for its implementati on (ICMI, 2008). The code defines a formal relationship for the key LCM partners: the chemical supplier, the transporter, and the mining company. It thus constitutes a cradle to grave management process. The code incorporates safety objectives, technical standards, and operational procedures to be applied by the LCM partners. Supply-chain management ensures these standards are applied right up to the original chemical manufacturer. Independent audits and a requirement for public consultation ensure that the entire life cycle remains visible to the community. Many private mining investment decisions and government approvals now require companies to be members of this code. Companies on their side have found that the procedures of the code also make their operations more cost-effective. More than 50 per cent of world gold production now takes place by companies that are members of the code. Safety incidents have markedly decreased. But the code also has limitations. In particula r its character as a voluntary agreement means it suffers from the free-rider problem (remedied in part by the tendency of some governments to require adherence to the code as a condition of approval). There is also a problem in application to small operators who have less influence over their supply-chains. Similar experiences have been observed in natural resources, chemicals and minerals, and other sectors. LCM, when systematically applied, can be a major factor in achieving the goals of sustainable development while keeping the company competitive. Its effectiveness increases when there is a synergy between business procedures, e.g. financing, and government approvals, and is at its best when public interest groups also contribute to the arrangements. However, close management control is needed to ensure meaningful objectives to the exercise and to provide effective operational supervision. How is LCM applied now? LCM in business Firstly to make extensive use of LCM was the business sector. They used it as a way to shape its response to market competition, consumer pressure, product quality assurance, workplace and consumer safety, meeting sustainability targets etc. fig.3 shows how companies have seen the usefulness of LCM in a corporate framework. LCM is being promoted as a way of improving companies CSR programs; ex improving their products sustainability performance by the World Business Council for Sustainable Development. Below are given two examples of LCM companies, which emphases on product design and supply chain management respectively: As per Nokia, life cycle covers al major impacts in the life cycle of a product and thus includes the basis for all environmental activities at Nokia along with a framework for actions. Based on this. Targets are set for further improvement of environmental performance. For Nokias two primary product types i.e. the mobile phones and network equipment the life cycle profiles are different. For ne twork equipment the energy consumed during use phase and for mobiles the extraction of raw materials and productions of components have huge environmental impacts (fig.4). This perspective has led to a reduction in the material consumption for phones and today many weighing below 100gm. IKEA tries to produce home furnishing products which are low cost, little influence on environment and produced in a socially responsible way. They have developed a code of conduct that represents minimum demand to its 1600 suppliers in terms of social, environmental and work related conditions. Life cycle thinning has ensured that company is abreast of development trends and also contributes to ensure a sustainable development for IKEA itself and its suppliers. SCM factors include resource use. Sustainable forestry practices and training for employees. It is thus seen from examples that there are different options for LCM depending on the objectives of the companies. Nokia markets its products with lower embedded pollution impacts. But failed to mention social impacts ex: the mining of metals on which electronic circuitry depends, and which has actually led the industry participating in the Gesi initiative. Nokia thus is addressing selectively value chain of its products. IKEA as a distributor exercises better control over its numerous suppliers, including social impact and bio diversity criteria and waste but however it would become difficult for them in influencing suppliers of suppliers. Both examples thus illustrates major challenges facing LCM; i.e. identifying a way the length of chain necessary to resolve sustainability issues in life cycle of products and materials. Other companies which have a life chain approach towards environmental management programs include Alcan, Siemens, Ford, Magna International and Veolia. LC assessment underpins many of these management exercises. Improvements of sustainability performance are led by information of materials and energy flows also by reducing waste, pollution and redesigning products. Now also major distribution chains are focusing on CSR, usage of LCA is also increasing. For ex: In the future shopper at Wal-Mart can also expect to know about the carbon and water footprints and pollution generated during that products manufacture. Its their aim to create a comprehensive indexing system which will provide to its customers the world behind their product. Among its huge suppliers Unilever and PG are supporting this. Its rivals are also being asked to join so as to avoid proliferation of separate indexing systems. This initiative will also have a great impact on supply chain. Manufacturers and suppliers will have to make sustainability major criteria in their operations. Though LCM users were individual companies, now business associations are catching up. The International Council on Metals and Mining (ICMM) statement on materials stewardship is an example of life chain management advocac y for an entire industry sector. It promotes an integrated life cycle approach for production and use of minerals in ensuring alignment with sustainable development fundamentals. Value chain partners are encouraged to take up responsible design, use, re-use, recycling and disposal of materials. Other sector includes the chemicals industry with its Global Products Strategy that is dedicated to improving the responsible handling of chemicals throughout the value-chain. Still there are many challenges for business. Its seen that value chains are being managed are still quite short, and the sustainability objectives are reduced. Stakeholders, mainly end-customers are locked out of the LCM exercise. Smaller companies have insufficient leverage in to manage their supply chain or to redesign its products. And coordination, monitoring, checking actions of the upstream and downstream partners is a major exercise. There is lack of standardization of LCM which leads to diversity of inconsis tent approaches. LCM initiatives of companies also depend upon the government regulatory where sustainability targets are set, information is demanded and procedures are mandated. Even in the political level there are challenges. Instead of achieving real sustainability improvements companies manage LCM process in their own way. This leads to the need of international standardization and or governmental regulation. Many a times governments in the emerging companies become suspicious of western corporate attempts in controlling their supply chains and try using international forums like WTO for blocking such practices. LCM in government Regulators realized that approach to managing environmental quality needs to be in a more comprehensive life-cycle approach. It indeed is difficult due to complex, interconnected web of government regulation in most countries, which mostly is based on single media legislation. Still many of the environmental ministries are trying out a proact ive strategic instrument and policy based life cycle approaches; and some regional and national authorities are putting in holistic legislation which fits into broad area of sustainable consumption and production (SCP) policies. Leadership has come especially from intergovernmental bodies like the European Union (EU), which has taken a visible stance on upstream approaches through, for example, its Integrated Product Policy. Integrated action can be general or applied to a specific class of materials or products. The REACH process in the European Union for potentially hazardous chemicals is a relevant recent example. Another good example of life-cycle legislation is the Restriction of Hazardous Substances Directive 2002/95/EC, commonly referred to as the (RoHS). This limited the usage of 6 hazardous materials like lead, mercury or cadmium in the manufacturing of electrical equipment. It is closely linked to the Waste Electrical and Electronic Equipment Directive (WEEE) 2002/96 /EC, which sets collection, recycling and recovery targets for electrical goods and is part of a legislative initiative to solve the problem of toxic electronic waste. RoHS has both upstream and downstream components to help reduce health and environmental impacts in developing countries where much of todays high-tech trash ends up for recycling. Even though individually governments have tried in incorporating LCM elements into sustainable development policies, they have experienced many difficulties in giving them effect through regulations. Thus the French parliament in 2008 refused the ministers proposal in introducing differential pricing based on accumulated environmental impact. There is also inherent difficulty in creating legislative lings along extended supply chains as many are international trade process which goes beyond national jurisdiction and only amendable to regional or global initiatives. Sometimes governments do practice a form of LCM directly in a piecemen t fashion. Specific high profile substances like radio active materials, pharmaceuticals, and genetic material can be controlled through a set of independent but interlocking regulations along the life chain, often being under coordination bodies on which interested govt. departments may be represented. Road safety is another issue often subject to a systems approach where vehicles, road infrastructure, user permits, driver behavior, alcohol sales, medical services, etc. are all incorporated into a type of life-chain process where each component is optimized in relation to the others. This has worked in some countries in reducing the road toll, demonstrating that effectively managed holistic approaches can deliver good results in addressing complex problems. Due to the political and logistic challenges, national governments have chosen coordination over integrated regulation. Because of the constraints of LCM emphasis is given on assessment stage (i.e. LCA), promoting research an d data collection and then aligning it with product legislation. Thus it focuses on the consumption end of the value chain rather than production cycle. Other options which are also available with governments are softer form of actions which include product labeling, product awards, and consumer information have increased consciousness of the world behind the product, and thereby provoked more fundamental product rethinking by manufacturers. For example, the EU Energy Label for most white goods, light bulbs, packaging, and cars have been particularly effective in improving the energy efficiency of key products. Major opportunities are being missed which includes government being societys biggest consumer of goods and service. Incorporation of life chain performance criteria in public purchasing and tendering would make suppliers use LCM and realize its commercial advantages. Still, political and cost factors dominate most government supply contracts. Apart from the political c onstraints, constraint at governments part is that role in LCM is constrained because of lack of positioning at a definable point along the value chain. The chief role being to provide and enabling framework that obliges various life-chain partners in adopting LCM. Cooperative life-chain management In some situations, as with many products no company singly dominates the value chain, nor is possible for governments to legislate due to the nature of global market place. In such case, a different model of LCM can be introduced, one of a formal management structure and agreed performance codes. Rather than LCM implementation on a single company initiative (as that of Wal-Mart example) this approach relies on a multi stake holder coalition for taking the process forward. Along with direct supply-chain partners, others who could also be included in these coalitions are civil society groups, intergovernmental organizations and consumer groups. Prominent examples include from the natural resources area, mining, forestry and fisheries where consumer and NGO activity have focused their attention to upstream and downstream issues along with impact of direct operations. Unlike corporate LCM, there is a formal life-cycle management framework which brings all stakeholders in formulating sustainability objectives. Elaboration on performance standards, introduction of monitoring and verification processes and engaging in open communication with end users for quality assurance purposes are carried out by them as a group. Among the best-known examples of LCM partnerships for sustainable resource exploitation are the Forest Stewardship Council and the Marine Stewardship Council: The production and supply of sustainably harvested timber embraces life-cycle management through the certification process put in place by an international instance, the Forest Stewardship Council (FSC). The multi-stakeholder FSC was created after UNCED in 1992, when it became clear that only a collective management agreement would reduce the confliction situation concerning timber harvesting. Under the instrument, both forest operations and the timber product are subject to strict conditions with regards to independent auditing and certification, including public reporting. The sustainably produced timber is marketed as such by retailers who have targeted a major consumer segment interested in such products. Some forest product companies claim similar sustainable practices outside such formal agreements, however, little independent auditing usually takes place. As evidence of the effectiveness of the FSC instrument, the WWF reports that 1.2 million hectares of forests in the Congo Basin achieved certification in 2008. The aspect of the consumption side is taken more clearly into account in the fishing sector, under the Marine Stewardship Council. This is also based on a certification procedure but has a mission to inform and educate (but not exert obligations on) consumers of the product. The life-chain issues for marine fisheries are well summarized by Ecotrust (Scholtz, 2007). The FSC and MSC are practical management initiatives that bind various partners under common objectives and procedures along the value chain. The partners have an opportunity in participating in the governance instrument. This is in contrast with the international Tropical Timber Agreement, an intergovernmental treaty established under UN for encouraging governments in implementing sustainable harvesting practices, but which does not have binding procedures, targets, obligations or monitoring. Individual companies used instruments like audits, product specifications, certification etc and also relied on the governmental regulations like approvals, product standards etc. in a sense the, cooperative LCM which focuses on building strong, formal partnerships is a step to further develop the individual LCM initiatives which is already in place. Its the nature, strength and influence of the partnership coalition which sets it apart from LCM models. These have advantages of not a single government or company being able to exercise leadership. Financial institutions have become a more powerful influence by showing interest in the certification aspects of such LCM exercises as a way of orienting their project funding. The difficulties faced by cooperative process include cost and time consumption in managing. In case of diverse partnership there are often stakeholders who wish to control process in order to reduce the commitment of other partners. The Green Lead Project (2005) suffers from this problem. Reducing the exercise to only a few steps in the life-chain is the most common weakness of life-cycle coalitions (as it is in most LCM exercises), since the joint interests of a diverse group of partners is likely to be concordant only for a limited number of issues. Finally, binding standards never popular with business and compliance me chanisms are essential for a broad coalition to act in a coherent fashion. Here, the weakness of the Tropical Timber Agreement, which has no standards at all, is noteworthy in comparison to the clear procedures of the FSC. Implementation of LCM The diversity of LCM methods above gives a reflection of growing complexity of life chain issues as international trade is expanding. Implementation approach varies with the purpose of the exercise. For product optimization within a single company the parameters of the LCM exercise will be dominated by internal corporate factors like CSR. And conversely, in the case of cooperative LCM, LCM is used for bringing global improvement in chemical safety throughout the entire industry. Also here CSR becomes a subordinate tool in its implementation. LCM will become most effective when business; industry and community work together, each bringing additional value to its implementation. In implementing company initiatives government provides a clear regulatory framework and standards on which business depends upon. Public bodies contribute to the articulation of agreed sustainability targets and to exchange information. This partnership basis to LCM has its strongest expression in the cooperative model. For working towards broader community outcomes on sustainability also the partnership model helps. Business LCM still focuses on achieving narrow corporate outcomes of improved image, marketing, and cost without explicitly and visibly factoring broader global and societal goals into the exercise. Also due to the complexity of the political factors the governments gave reduced ability on their own to make LCM work. The aspirations and objectives of all the social partners can be more easily is taken into account through a multi stake holder LCM. LCM did bring out its effectiveness in many of the circumstances, still many of it depends on the situation; following are the number of factors that stand out: LCM is lik ely to work well where these conditions are met. But there are also problems which can delay LCM implementation. Firstly its the lack of awareness in many sectors that LCM is an appropriate response to their situation. For ex: the UK tanners didnt have the vision to engage with upstream suppliers. Their traditional independence and ingrained perception that downstream government regulations were solely responsible for environmental management led to inaction till it was late. Next being the complexity in dealing with all actors across all sectors of value chain and thereby addressing all issues (as Wal-Mart trying to do). Though influence over immediate suppliers could be done through direct supply chain inclusion of suppliers of the suppliers becomes a big problem needing coordination or surveillance. Its already seen that Gesi initiative excluded metals mining form this program in spite of it being the controversial areas of sustainability agenda. Similarly, Nokia and IKEA e xamples which illustrated current tendency for companies of considering only short sections of the supply chain. Even on the government side it was noted that life-cycle legislation is both complex and politically sensitive due to number of vested interests. But there is no way around this. If a life-cycle approach is required for optimizing sustainability issues for the community rather than a company, it got to be done by learning to deal with extended life-chains and multiple partners. Also finally acknowledgment has to be given for the fact that radical changes in procedure, management resistance are key factors in slow implementation of LCM. As seen before traditional approaches are dying. Corporate managers do not welcome always the higher degree of transparency and sharing of responsibility required. LCM is inevitably an exercise in partnership building. Corporate SCM identifies partners after the issues have already been defined, in case of collaborative approach, the partnership is formed first around a generalized problem. They then develop objectives and goals as a subsequent step. Even integrated government policy and regulation depends on consultation. However, partnership building is more of an inexact science which depends on human insight as much on from formal procedures and the subsequent achievement of unity of purpose along supply chain not being very easy. Thus it can be seen that negotiations on common objectives and procedures take many years. The above factors along with a lack of standardization of LCM technique have led to diverse views of LCM and its functionality and its benefits. Thus along the way the notion of LC assessment gets lost. Also there is confusion about its relationship with environmental management tools. Thus the end result is that LCM is presently standing as an umbrella concept in applying established environmental management tools instead of a rigorous standardized procedure in its own right. Still the res lot to do for promoting and improving of LCM at the level of individual value chains. Eventually the most fundamental issue to be addressed is the optimization of the entire production-consumption system, being the most complex life-cycle management challenge of all. This becomes beyond the capability of the current LCM players in achieving individually given that it requires redesigning simultaneously a wide array of products, services, infrastructure and marketing procedures and the resource base upon which it relies. Thus it will require a much stronger consensus about common sustainability goals. Global production-consumption system building will require sophisticated LCA processes for identifying key factors at play. While PSS will continue to play an important role, such system optimization will become impossible without new tools and instruments making it more important to develop better LC management models that could function at this scale. Synthesis and conclusions Our environment is under higher stress as global economy is continually touching more number of countries. Prevailing environmental approaches are focusing on individual points of production consumption chain, and many pollution abatement actions merely displace problem to another section of value chain. More widespread application of prevention-oriented-life-cycle thinking and emphases on optimizing the system as a whole is required for sustainable development. In order to pinpoint the key areas needing attention is carried out by life-cycle assessment. Efforts by companies, governments and consumer groups have gone into standardizing and promoting its application. LCM is still not a standardized discipline, rather an umbrella framework for applying existing instruments and procedures in a more holistic way and creating management partnerships between upstream and downstream actors. There are different LCM models identified each for a particular situation. The most successful outcome occurs when a broad, multi stakeholder partnership with a formal management framework gets established. Government and business need to make mutually complementary contributions for such coalition and ideally to all LCM initiatives. Until specific tools are developed for LCM, implementation will still depend on current set of environmental management tools which were originally developed for corporate use as for ex: SCM, environmental systems, and green purchasing. Major challenges for the current generation of managers who have grown familiar with a more limited range of applications are application, re orientation, and sometimes redevelopment of these tools in a new LCM framework. As company action on LCM currently been most widespread application, it also depends on government life-cycle policies and the setting of sustainable product standards. Currently most companies are aiming at improving individual products and company image. It doesnt have the mandate to add ress the global situation of unsustainable production and consumption, nor value chains of common commodity products in a global market. Governments are slow in incorporating LCM aspects into their policies and regulations. Their geographical jurisdiction makes it difficult for them to address global value chains. They also face problems in reconciling different political interests along the life-chain of products while attempting to adopt a life-cycle approach to regulation. Thus they are focusing more on information and coordination approaches. That said there remain large, unrealized opportunities as for example, in official procurement and purchasing policies. Even without practice of LCM, consumers are increasingly aware of life-cycle impacts, the so-called world behind the product. They act mainly on a limited product-by-product basis, disseminating information and promoting consumer boycotts. This mechanism has stimulated corporations in reviewing closely the life-chain impacts of their entire range of products as a way of avoiding future adverse publicity or legal liability. A major role is also played by consumer and environmental NGOs in cooperating LCM initiatives by helping in influencing the sustainability objectives. Taken everything together its seen that approaches have given encouraging results in improving management in a number of clearly identified value chains, as much still remains to be done. Overall a growing acceptance by society for a holistic life-cycle approach is necessary in managing global production-consumption system. Other approaches are also being tried put by various stakeholder groups both independently and as CLM partnerships and coalitions. In spite of LCM not being a standardized discipline, it has undisputed value in guiding application of current environmental management tools in arriving at results which cant be achieved through fragmented application like in the past. Further work needs to be done for enh ancing effectiveness of LCM, including its eventual standardization which will add momentum to this encouraging trend.