Days 5 and 6: Value Chain – Design, Sourcing and Supply Chain MIM 511/BA 548 Winter 2011 Scott Marshall School of Business Portland State University

Overview of Concepts 1.Eco-Design 2.Eco-Effectiveness 3.Bio-Mimicry 4.Eco-Efficiency 5.LEAN Manufacturing 6.EH&S and EMS ISO Closed Loop Systems 8.Life Cycle Analysis Design Measure Impact of Design and Manufacturing Operations & Supply Chain Design & Operations/SCM Type II Linear Value Chain Type III Closed Loop Value Chain

Type II Linear Value Chain  Environmental impact is related to business factors  Improving eco-efficiency means increasing product value or reducing environmental impact  Units and measurement methods are suggested Product or service value Eco-efficiency = Environmental influence Eco-Efficiency

Type II Linear Value Chain 1. Reduce Material Intensity of Goods and Services  Johnson & Johnson: Targeted 25% reduction in packaging by Reduce Energy Intensity (to produce and consume)  Whirlpool: Low energy refrigerators (Energy Star) 3. Reduce Toxic Dispersion  Novartis (Swiss life sciences company) combined insecticide with pheromones Eco-Efficiency

4. Increase Recyclability  HP: printed circuit boards are refined to recover precious metals 5. Increase Durability (extending the useful life of products)  Ricoh: increase durability of copy machines (leased – so remain a revenue stream; not about products but about materials and energy) Eco-Efficiency Type II Linear Value Chain

“Doing more with less”  Industry interested because eco-efficiency means greater economic benefit.  Companies quickly took up extensive programs promoting eco-efficiency.  Based on Reduce, Reuse, Recycle, and Regulate. Eco-Efficiency Type II Linear Value Chain

Origins  Toyota Production System (TPS) generally considered the source of the concepts of Lean Manufacturing.  The Usual Focus:  Set of TPS 'tools' that assist in the identification and steady elimination of waste (muda), the improvement of quality, and production time and cost reduction.  Muda has an intuitive and practical relation to Eco- Efficiency. LEAN Manufacturing

Type II Linear Value Chain A second approach to Lean Manufacturing, as practiced by Toyota, focuses on improving the 'flow' or process variation (thereby steadily eliminating mura) throughout the system and not upon 'waste reduction' per se. mura  Maximizes contributions of people and materials… Common Adaptation - Focus only on mura – tools approach.  Only temporary success without focus on BOTH mura and unevenness – a systems approach. LEAN Manufacturing

EH&S: Environmental, Health & Safety  Departments of Organizations  Derived from Compliance Perspective  Can be difficult to integrate into lines of business…as a business strategy. EMS: Environmental Management System  Derived generally from continuous improvement standards of ISO Type II Linear Value Chain EH&S and EMS

Environmental Management Systems: Continuous cycle of planning, implementing, reviewing and improving the PROCESSES and ACTIONS that an organization undertakes to meet its business and environmental goals. Type II Linear Value Chain Major Components:  Policy  Planning  Implementation and Operation  Checking and Corrective Action  Management Review EH&S and EMS

Type II Linear Value Chain Environmental Management Systems This model leads to continual improvement based upon: Planning, including identifying environmental aspects and establishing goals [plan]; Implementing, including training and operational controls [do]; Checking, including monitoring and corrective action [check]; and Reviewing, including progress reviews and acting to make needed changes to the EMS [act]. EH&S and EMS

What is Design?  A discipline that explores the dialogue between products, people, and contexts.  A process that defines a solution to help people achieve their goals.  An artifact produced as the result of solution definition. Type III Closed Loop Value Chain Eco-Design

What is Industrial Age Design?  “Form follows Function”  Optimize the function, value and appearance of products and systems for the mutual benefit of both user and manufacturer.  Mechanistic – Engineered. Type III Closed Loop Value Chain Eco-Design

What is Eco-Design?  “Form co-determined with Function”  Optimize the function, value and appearance of products and systems for the benefit of the system and its constituents.  Whole Systems – Socio-Ecologically Engineered Type III Closed Loop Value Chain Eco-Design (Shu-Yang, Freeman and Cote, 2004)

Type III Closed Loop Value Chain Eco-Effectiveness Central design principle of eco-effectiveness is: waste equals food (heard this before?) Instead of using only natural, biodegradable fibers like cotton for textile production (a pesticide-intensive agricultural process), why not use non- toxic synthetic fibers designed for perpetual recycling into new textile products? Instead of minimizing the consumption of energy generated from coal, oil, and nuclear plants, why not maximize energy availability using solar and wind sources? From ‘cradle-to-grave’ to ‘cradle-to-cradle’ – closed loop systems

To assist companies in (re)designing eco-effective products, Cradle to Cradle Design Protocol assesses materials used in products and production processes.  The four categories are: Green: Little or no risk. This chemical is acceptable for use in the desired application. Yellow: Low to moderate risk. This chemical is acceptable for use in the desired application until a green alternative is found. Orange: There is no indication that this is a high risk chemical for the desired application, but a complete assessment is not possible due to lack of information. Red: High risk. 'Red' chemicals (also sometimes referred to as 'X-list' chemicals) should be phased out as soon as possible. 'Red' chemicals include all known or suspected carcinogens, endocrine disruptors, mutagens, reproductive toxins, and teratogens. In addition, chemicals that do not meet other human health or environmental relevance criteria are 'red' chemicals. Type III Closed Loop Value Chain Eco-Effectiveness

Type III Closed Loop Value Chain Eco-Effectiveness Human Health Criteria  Carcinogenicity  Teratogenicity  Reproductive Toxicity  Mutagenicity  Endocrine Disruption  Acute Toxicity  Chronic Toxicity  Irritation of Skin/Mucous Membranes  Sensitization  Carrier Function or Other Relevant Data Environmental Relevance Criteria Algae Toxicity Bioaccumulation (log Kow) Climatic Relevance/Ozone Depletion Potential Content of Halogenated Organic Compounds (AOX) Daphnia Toxicity Fish Toxicity Heavy Metal Content Persistence/Biodegradation Toxicity to Soil Organisms (Bacteria and Worms)

Cradle-to-Cradle  MBDC’s certification MBDC’s certification  gDiapers – Cradle-to-Cradle Certified gDiapers – Cradle-to-Cradle Certified Type III Closed Loop Value Chain Eco-Effectiveness

“The conscious emulation of life's genius is a survival strategy for the human race, a path to a sustainable future. The more our world looks and functions like the natural world, the more likely we are to endure on this home that is ours, but not ours alone.” —Janine Benyus, author of BiomimicryJanine Benyus, author of Biomimicry Type III Closed Loop Value Chain Biomimicry

Type III Closed Loop Value Chain Orb Weaver Spider Silk  The spider’s fiber is stronger and more resilient than anything on the market today. This new renewable material could be used in parachute wires, suspension bridge cables, sutures, protective clothing, etc. Biomimicry

Blue Mussels  The blue mussel byssus is the material that attaches the mussel to a rock. This sealant eventually degrades after its mission is finished. This could inspire an alternative to plastics, e.g., a time-release coating for disposable biobased cups and cutlery which would eventually degrade, allowing the degradable material underneath to be composted.  Columbia Forest Product’s PureBond (Case Study Video) Columbia Forest Product’s PureBond Type III Closed Loop Value Chain Biomimicry

Type III Closed Loop Value Chain Close Loop Systems From: Cleaner Production International LLC Also look at Figure 53.5 in Towards Sustainable Operations Management

Type III Closed Loop Value Chain Close Loop Systems Ricoh’s “Comet Circle”

Type III Closed Loop Value Chain Close Loop Systems From: Cleaner Production International LLC

 At the end of useful life - Recovery Options Direct reuse Repair Refurbishing Remanufacturing Cannibalization Scrap Type III Closed Loop Value Chain Close Loop Systems From Figure 53.4 in Towards Sustainable Operations Management

Type III Closed Loop Value Chain Life Cycle Analysis Takes a holistic view of and measures environmental and social impacts from raw material extraction to final use/disposal. Key factors: Consumption of input materials (water, non-renewable resource, energy at each life cycle stage), and Production of output materials (waste, water, heat, and emissions)

Stages of LCA 1. Definition of Goals and Scope 2. Life Cycle Inventory Analysis: measure materials and energy used and environmental releases that arise along entire continuum of the product or process life cycle 3. Life Cycle Impact Assessment: examine actual and potential environmental and human health effects associated with use of resources and materials and with the environmental releases that result. 4. Life Cycle Improvement Assessment: systematically evaluate and implement opportunities to make environmental improvements based on previous assessments. Type III Closed Loop Value Chain Life Cycle Analysis

Type III Closed Loop Value Chain From the Institute for Lifecycle Environmental Assessment Life Cycle Analysis

Type III Closed Loop Value Chain Life Cycle Analysis

Type III Closed Loop Value Chain Life Cycle Analysis

Type III Closed Loop Value Chain Life Cycle Analysis

Type III Closed Loop Value Chain Hypothetical example of LCA impacts of Shoes A leather) and B (synthetic) Life Cycle Analysis

Type III Closed Loop Value Chain Social Life Cycle Analysis  An emerging concept…  Social Fingerprint Analysis? Social Fingerprint Analysis?