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Plehn 110805 apms_11_environmental_performance_indicators


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Plehn 110805 apms_11_environmental_performance_indicators

  1. 1. Development of a Structural Framework of Environmental Performance Indicators for Production Processes Johannes Plehn1 , Alexander Sproedt1 , Tomomi Nonaka2 , Paul Schönsleben1 , 1 ETH Zurich, BWI Center for Industrial Management, 8092 Zurich, Switzerland {jplehn, asproedt, pschoensleben} 2 Keio University, Graduate School of System Design and Management, 4-1-1, Hiyoshi, Kohoku-ku, Yokohama, Kanagawa, 223-8526, Japan Abstract. A structural framework with corresponding environmental performance indicators (EPIs) is one key element in the concept of environmental performance measurement. Despite the availability of several standards and guidelines providing a structural framework with typologies of EPIs, no approach has become prevalent on a company level. Furthermore, no framework exists to assess production processes from an environmental perspective. This paper provides a comprehensive state of the art analysis and description of the current typologies of performance indicators and develops a structural framework for production processes by filtering EPIs according to their relevance and applicability in production using the SCOR model. Keywords: Sustainable Manufacturing, Structural Framework, Environmental Performance Indicators, Environmental Performance Management 1 Introduction Manufacturing companies face new challenges in integrating aspects of sustainability in their traditional business objectives. According to Kleindorfer, Singhal et al. [1] the reasons for this trend are threefold:  Costs of materials and energy are continuously growing due to their scarcity and the increasing demand of rapidly industrializing countries like China and India.  Public pressure to improve environmental performance is rising, resulting in governmental regulations.  Customer demand is shifting to environmentally friendly products, empowering improved environmental performance as a selling proposition. Beside the efforts made by manufacturing companies in the past to improve their supply chain structure towards a higher environmental performance, manufacturers notice that they must also take advantage of their influence in internal production processes to fully exploit their improvement potential. A change in production can
  2. 2. 2 Johannes Plehn1, Alexander Sproedt1, Tomomi Nonaka2, Paul Schönsleben1, have a significant environmental impact on the upstream process chain (e.g. increase of material efficiency in production can reduce transportation of the inbound logistics). The stronger focus on production can also be observed in a recent study including 300 experts in factory planning in Germany. The peer group identified environmental sustainability as a major trend with 73% of the experts rating this aspect as ‘important’ or ‘very important’ [2]. A key prerequisite for managing and improving environmental performance in production is a sufficient environmental performance measurement system (EPMS). Beside a procedural framework defining a step-by-step process to develop a customized set of indicators considering the specific situation of the company, a EPMS is based on a structural framework, specifying a generic typology of performance indicators [3]. Although there are several structural frameworks or even standards defined by various organizations (e.g. ISO 14031 [4]), there is neither a consensus regarding a set of indicators and corresponding metrics on company level nor for production processes. The resulting non-transparency bears the risk to define irrelevant indicators including the corresponding expenses to measure them or of neglecting indicators that are relevant for the system, impeding a sufficient performance measurement. To support manufacturing companies and especially decision makers in production this paper provides:  A comprehensive state of the art analysis and description of structural frameworks including a classification of their indicator typologies according to the structure of indices defined by the ISO 14031 and Global Reporting Initiative (GRI) framework  The development of a new structural framework of environmental performance indicators for production processes based on the condensed and customized indicators of the classified frameworks 2 Methodology The research methodology of this paper can be described in four steps. First, a comprehensive literature review is conducted to reveal the state of the art of structural frameworks and the recommended typologies of indicators. Second, the frameworks ISO 14031 [4], Global Report Initiative [5] and the VDI 4070 [6] are investigated in detail identifying 91 different EPIs. Third, the EPIs are assigned to the Plan, Source, Make, and Deliver processes using the SCOR model and filtered according to their relevance for production processes. Fourth, the resulting 58 EPIs are embedded in a structural framework. 3 Results A multitude of approaches exist trying to define a structural framework for manufacturing companies. In most cases structural frameworks define typologies of EPIs and give recommendations and examples of adequate EPIs. Furthermore, to support decision makers a structural framework should be not only generic enough to enable companies to benchmark performance or test their compliance with standards,
  3. 3. Development of a Structural Framework of Environmental Performance Indicators for Production Processes but also specific enough to allow companies to assess their performance adequately within their specific environment. 3.1 Literature Review – Typologies of EPIs A state of the art analysis was conducted to identify the different characteristics of the approaches and to analyze the recommended typologies of indicators (indices). The term index is used according to the definition given by the World Resource Institute as an aggregation of EPIs due to calculation or interpretation [7]. For example the index energy in the ISO 14031 framework is composed of several indicators (e.g. quantity of energy used per year or per unit of product). Table 1 presents the results obtained from the analysis giving an overview of ten approaches, namely the ISO standard 14031 [4], the Sustainability Reporting Guidelines from the GRI [5], The two standard procedures VDI 4070 and VDI 4075 [6, 8], the typologies provided in the Green SCOR framework [9] and the indices provided and discussed in the research papers of Veleva and Ellenbecker [10], Michelsen et al. [11], Fan et al. [12], Paju et al. [13] and Jasch [14]. Table 1. Overview of approaches and recommended indices Indices [4] [5] [6] [8] [10] [11] [9] [12] [13] [14] Materials X X X X X X X X X Energy X X X X X X X X X Supporting Services X Products X X X X X Provided Services X Waste X X X X X X X X X X Emissions X X X X X X X X X Physical Facilities X X X Transport X X Compliance X Biodiversity X Overall X X - recommended To distinguish between the different approaches, the indices defined by ISO 14031 and the Global Reporting Initiative (GRI) framework have been selected as reference. The ISO 14031, a subcategory of the ISO 14001, defines eight indices and recommends 59 operational performance indicators to measure the environmental performance of an organization’s operations. To ensure the consideration of all aspects of environmental performance measurement, the ISO 14031 set of indices has been extended by the supplementary GRI indices (transport, compliance, biodiversity and overall). The GRI is a network-based organization that develops and publishes
  4. 4. 4 Johannes Plehn1, Alexander Sproedt1, Tomomi Nonaka2, Paul Schönsleben1, sustainability reporting guidelines defining nine indices and 30 EPIs which are already used by more than 1000 organizations, [5]. The Table illustrates the main characteristic of the current frameworks available to assess environmental performance. There is no consensus due to the different understanding in terms of areas that need to be investigated to assess environmental performance. Most of the frameworks focus mainly on physical input (e.g. materials and energy) and output (e.g. emissions and waste). Moreover, the indices proposed by VDI 4075, Veleva and Ellenbecker and Jasch also consider products, as part of the output streams leaving the system and therefore need to be analyzed. In contrast, the ISO14031 and GRI frameworks see the need to include also supporting activities and services, as well as transport, compliance and biodiversity. Beyond the differences in recommended indices, there is also a diverging scope of the indices proposed. The GRI framework for example recommends EPIs in ten different indices, whereas the Green SCOR suggests EPIs only in two. The multitude of indices and their difference in scope illustrated is even aggravated due to the fact that beside the differences in proposed typologies of EPIs, the approaches also differ strongly in their recommendations concerning the EPIs an index is based on. This issue can be observed when analyzing the approaches in detail. For example, the consolidation of the EPIs proposed by ISO 14031, GRI and VDI 4070 leads to 99 different indicators in total and 91 EPIs after erasing similar indicators. Considering the implications for manufacturing companies in terms of transparency we see the dilemma decision makers face today. With no consensus established as a reference, a company is forced to select the relevant indices and indicators out of a multitude of possibilities. On one side this selection needs to be broad enough to ensure the consideration of all relevant aspects of EPMS, on the other side the selection must not include irrelevant indices and indicators. Companies need to focus on their core competencies and therefore must concentrate strongly on the indices relevant for their purpose, in particular SMEs with low capacity for activities in EPMS [15]. Especially in the production environment this task of selecting appropriate EPIs is even more complicated. Decision makers first of all need to identify which indices and EPIs are relevant for production and then decide whether the typology or indicator is relevant for their specific situation. To keep the effort for decision makers in operations to define a sufficient set of EPIs at an acceptable level, a structural framework is needed with a special focus on the production environment. 3.2 Structural Framework of EPIs for production processes The structural framework developed in this paper is based on the indices and EPIs defined and recommended by ISO 14031, GRI and VDI 4070. The three frameworks have been selected due to their broad scope, detailed documentation of EPIs and importance for practical application [16]. First, the structural frameworks were combined and similar indices and indicators were erased, ending up with 12 different indices and 91 different indicators. Second, the Plan, Source, Make, Deliver and Return processes defined by the SCOR model were used to classify the remaining indices and indicators and to identify their relevance for production processes (Make
  5. 5. Development of a Structural Framework of Environmental Performance Indicators for Production Processes processes). Consequently an indicator has been assigned to the Make processes and therefore is regarded as relevant if:  The indicator is reflecting the performance of Make processes (e.g. quantity of hazardous materials used in the production process is linked to Make 1.3 - Produce and Test) or  The indicator may be affected by the execution of Make processes, although measured in other areas (e.g. % of materials that are recyclable/reusable in Source 3.1 may depend on the process design in the production process). Subsequently indicators with no such characteristics have been filtered as not relevant to assess environmental performance for production processes (e.g. share of regenerative energy sources is part of Plan 3.4 and therefore categorized as a Plan process). The result of the classification is a structural framework based on 58 EPIs applicable in the production environment covering all 12 indices mentioned in Table 1. Most of the 32 neglected indicators were linked to Plan processes. For an overview of the identified EPIs see Table 2. The majority of the recommended indicators of the structural framework presented in Table 2 are related to input and output streams discussed before and expressed in the indices materials, energy, products, wastes and emissions. Within the index materials, there are EPIs recommended which may be relevant for the environmental performance of production processes in the areas of materials, water and packaging. The index energy covers both the measurement of energy consumption as well as the EPIs to assess the efforts made to reduce energy consumption and the reductions achieved. The EPIs recommended by the index products have a strong focus on the production processes. The EPI rate of defective parts is strongly related to the quality management in production whereas the indicator number of units of by-products generated per unit of product is determined by the process design. The index category wastes can be subdivided in EPIs covering waste disposal and the amount of waste reduced, reused or recycled. Emissions includes 14 recommended indicators. Beside EPIs for heat, vibration, light, noise and radiation, the core areas are emissions to air and emissions to water. In addition to the most frequently mentioned indices presented in Table 1, the structural framework in Table 2 also pays attention to the areas of services supporting the organizations operation, service provided by the organization, physical facilities and equipment, transport, compliance, biodiversity and overall. The index services supporting the organization’s operation covers all activities that are related to production processes but are executed or supported by contractors. The indicator quantity of materials used during after-sales servicing of products recommended in the index services provided by the organization should be only considered if the result is dependent from process design in the production processes. Within physical facilities and equipment there are EPIs proposed which are dependent from maintenance in production (e.g. shut-downs) and reflect the influence of the infrastructure used by production on the environment. Transport covers the environmental impact of the transportation of goods and the workforce needed. The index compliance pays attention to the sanctions for non-compliance due to production processes, whereas biodiversity is focusing on the impacts and effects of
  6. 6. 6 Johannes Plehn1, Alexander Sproedt1, Tomomi Nonaka2, Paul Schönsleben1, Table 2. Structural framework for production processes quantity of materials used per unit of product quantity of water per unit of product quantity of processed, recycled or reused materials used quantity of water reused quantity of packaging materials discarded or reused per unit of product quantity of hazardous materials used in the production process quantity of auxiliary materials recycled or reused packaging material ratio quantity of raw materials reused in the production process returnable packaging ratio quantity of energy used per year or per unit of product direct energy consumption by primary energy source quantity of energy generated with by-products or process streams initiatives to reduce indirect energy consumption and reductions achieved quantity of energy units saved due to energy conservation programmes initiatives to reduce indirect energy consumption and reductions achieved amount of hazardous materials used by contracted amount or type of wastes generated by contracted service providers amount of recyclable and reusable materials used by contracted service providers number of products introduced in the market with reduced hazardous properties number of units of by-products generated per unit of product rate of defective products quantity of waste stored on site quantity of waste controlled by permit total waste for disposal quantity of hazardous waste eliminated due to material substitution quantity of hazardous, recyclable or reusable waste produced per year quantity of hazardous, recyclable or reusable waste produced per year quantity of waste per year or per unit of product quantity of waste converted to reusable material per year quantity of specific emissions per year quantity of specific material discharged to water per unit of product quantity of specific emissions per unit of product quantity of waste energy released to water quantity of air emissions having global climate-change potential quantity of material sent to landfill per unit of product quantity of air emissions having ozone-depletion potential quantity of effluent per service or customer quantity of waste energy released to air noise measured at a certain location total water discharge by quality and destination quantity of radiation released quantity of specific material discharged per year amount of heat, vibration or light emitted number of hours per year a specific piece of equipment is in operation initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation number of emergency events (e.g., explosions ) or nonroutine operations (e.g., shut-downs) per year percentage of inventory loss average fuel consumption of vehicle fleet complaints received due environmental burdens number of hours of preventive maintenance to equipment per year description of significant impacts of activities, products and services on biodiversity in protected areas number of IUCN Red List species with habitats in areas affected by operations, by level of extinction risk strategies, current actions and future lans for managing impacts on biodiversity emissions physical facilities and equipment transport overall materials energy quantity of materials used during after-sales servicing of products services supporting the organizatons operation products services provided by the organization wastes biodiversity compliance significant environmental impacts of transporting products and other goods and materials used for the organization’s operations, and transporting members of the workforce monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and environmental laws and regulations total environmental protection expenditures and investments by type production on protected areas and species. The last index overall defines the indicator total environmental protection expenditures and investment by type measuring the efforts made to protect the environment.
  7. 7. Development of a Structural Framework of Environmental Performance Indicators for Production Processes 4 Discussion The proposed structural framework gives an overview of indices and EPIs relevant for the environmental assessment of production processes. A filter was used to reduce the amount of EPIs to support decision makers when selecting appropriate EPIs for production by increasing the transparency of available and relevant indicators. Condensing the framework from the current approaches to measure environmental performance on company level, this approach ensures a sound integration of environmental performance measurement in the overall environmental assessment of manufacturing companies. The relevance of the proposed indices and indicators needs to be tested in industry to validate the applicability of the framework proposed. Particularly the relevance of the indices services supporting the organizations operation, service provided by the organization, compliance, biodiversity and overall is questionable due to lack of pressure enforced by material costs, legislation or customers. Moreover, the accuracy of recommended EPIs needs to be tested to avoid information overlap in the measurement procedure. This paper is based on a research project of the Center for Industrial Management (BWI) of the ETH Zurich, the Swiss Federal Laboratories for Material Science and Technology (EMPA) and the University of Applied Sciences (HTW) Berlin to develop a generic process model to evaluate and improve economic and environmental performance of production systems simultaneously. The project consortium includes companies from the plastics, steel and the metal working industry. One key element of the project is the development of an EPMS for production systems. During the next project steps the structural framework will be applied in four case studies. 5 Conclusion The manufacturing industry is still lacking a consensus on indices and EPIs relevant for the environmental performance measurement. Particularly in production this impedes a selection of suitable indicators. The structural framework presented in this paper is an approach to support decision makers in the production environment when assessing their processes. The applicability of the recommended framework still need to be validated in case studies. Acknowledgements. The authors would like to thank the industry partners and are grateful to the Swiss Federal Innovation Promotion Agency CTI for their support through project 12402.1 PFES-ES (EcoFactory).
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