Information for business decision making - environmental assessments, audits and reviews


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  • But you will have noticed that it’s been a year in which David Cameron has quietly ditched his promise - allowing George Osborne to block plans for a Green Investment Bank, watering down the feed-in tariff scheme for renewable energy, and now refusing to back the independent Committee on Climate Change's recommendations for new emissions targets.
  • GM-Fiat Worldwide Purchasing Ltd ExampleGM-Fiat Worldwide Purchasing (WWP) source automotive components and modules for various different business units (i.e. Vauxhall, Opel and Saab). The organisations key purchasing metrics include quality, service, price and recently technology. Each supplier is contained on a bid list displaying the different performance metrics for each key determinant. The following notes concern the various measures under the quality category.  Each local unit (country) is responsible for monitoring their own supply base using the following prioritised data to drive quality improvement on the top performance problems and in order to inform future sourcing decisions: Major disruptions – These are the worst situation a supplier can causeSpills – a major supplier quality issue effecting plant Downtime incidentsStockouts – insufficient stock available Quantity of problem reporting and resolution issues (PRR’s) – A list of the problem incidents caused by supplierParts per million defects (PPM) – This is the key measurement of suppliers an example of how PPM is calculated can be viewed in Appendix A PRR’s are used to communicate, document, track and solve identified supplier quality problems. The supplier must reply and contain the situation within 24 hours, and have a permanent corrective action within 15 days. This process is supported by supplier quality improvement engineers; the organisation will impose cost recoveries and implement controlled shipping activities (i.e. 100% end of line inspection away from the production process at the supplier site) to ensure a level of confidence.Every year, end of life vehicles generate between 8 and 9 million tonnes of waste in the European Community which should be managed correctly. In 1997, the European Commission adopted a Proposal for a Directive which aims at making vehicle dismantling and recycling more environmentally friendly, sets clear quantified targets for reuse, recycling and recovery of vehicles and their components and pushes producers to manufacture new vehicles also with a view to their recyclability.
  • 16 step supplier quality improvement process. If a supplier cannot satisfy controlled shipping activities the next stage is to hold a GM-Fiat driven three day supplier quality workshop to address quality issues. A supplier showing unsatisfactorily levels of improvement at this stage will be reviewed by executives and possibly the parts will be resourced.
  • An example of the bid list is shown displaying other measures for service, technology and price. For instance, the plant material planning department’s rate suppliers based on overall supplier delivery performance of service parts. An example of a price measure includes actual savings provided by supplier for the current year compared to target. Each metric has set criteria to determine whether a supplier is categorised as red, yellow or green. The organisation works towards supporting suppliers to obtain green status in all areas. A supplier with red metrics may not be able to bid for future business unless substantial improvements can be demonstrated.
  • Information for business decision making - environmental assessments, audits and reviews

    1. 1. “For even as we celebrate tonight, we know the challenges thattomorrow will bring are the greatest of our lifetime - two wars, aplanet in peril, the worst financial crisis in a century”. – Barack Obama Victory Speech (2008)David Cameron promised to lead:the greenest government ever. - David Cameron, 2009If the federal government had been around when the creator wasputting his hand to this state, Indiana wouldnt be here. Itd still bewaiting for an environmental impact statement.“ - Ronald Reagan, 40th President of the United States, 1981-89 7-1
    2. 2. Dr. Miles Weaver,Senior Lecturer in Strategic Management,Leicester Business an ongoing debate:With your lecturer: @DrMilesWeaverClassmates & the world using #GreenBiz Student appointments & availability each week: Or via the ‘Green Business’ blackboard site link
    3. 3. After this lecture and independent study you should be able to:- Discuss how organisations use information to inform decision- making on environmental issues Describe what an Environmental Impact Assessment (EIA) is and when one should be completed Understand how an organisation might measure current environmental performance (i.e. environmental review) Understand how an organisation might monitor and evaluate environmental performance (i.e. environmental auditing) Describe how an organisation might minimise environmental impact (i.e. life cycle analysis or assessment) Miles Weaver 1-3
    4. 4. 1. Different responses to environmental challenge: range from do nothing/minimal compliance to pro- activity2. Decisions and actions need to be based on information about the firm and its operations 1-4
    5. 5.  Think of a product  What types of questions might this producer wish and discuss with to ask to minimise its your partner what environmental impact? activities the  How might this producer producer takes to measure its minimise its impact environmental impact? on the  Consider would this be environment? different if it was a service? 7-5
    6. 6. 3. Key questions include: 4. Key activities include information gathering; analysing and evaluating;  current environmental monitoring; managing; impact? formulating and implementing decisions  impact of proposed new projects?  performance against 5. Processes and procedures integral part of shaping stated environmental policies objectives/policies/ and strategies and gov’t regulations? establishing an environmental  cradle-to-grave impact? management system 1-6
    7. 7. EXAMPLE ….1. EIA (or Environmental Assessment) basically NEW VECTRA AND ASTRA a procedure for identifying, analysing and evaluating the impacts of a proposed action (e.g. new development) on the environment prior to the action taking place2. Welford and Gouldson (1993) describe it as a framework or methodology to minimise the potential impacts of new developments at the earliest possible stage - the design and development stage New Vectra/Astra example (product design)  End of Life Vehicles Directive ( Directive 2000/53/EC - the "ELV Directive")  officially adopted by the EP and Council in September 2000 and was published in Official Journal L269 on 21st October. 7-7
    8. 8. Where is the natural environment emphasised in: Organisational theory? Strategic management? But …… Where does the Information for business decision-making come from? Environmental assessments, audits and reviews 7-8
    9. 9. 3. Procedure helps decision-makers (e.g. planning authorities) to decide whether new proposals should be allowed to go ahead (e.g. route of new motorway: new airport/extension to existing airport) DISCUSSION POINT: HEATHROW EXPANSION?  What is the potential impact of a new runway at Heathrow on the environment?  Who or what might it effect be?  How has the potential impact been measured?  Or HS2? Miles Weaver 1-9
    10. 10. 4.Impacts include social and economic as well as environmental consequences of proposed development - expressed in appropriate measures (e.g. habitat loss) - cf CBA which utilises monetary values5.Anticipatory and participatory EM tool - measures all major elements of proposal and relates to operational environment (existing and future). Baseline information on current position and likely changes if project proceeds 1-11
    11. 11. 6. Developer responsible for assessment. Needs to identify impacts and measures to minimise adverse effects7. Occurs before a decision - allows review, reconsideration, discussion of alternatives, preventative action where necessary8. Traditionally associated with decision-making on planning applications - formal process of information gathering and analysis on impact of new proposals likely to have significant environmental impact 1-12
    12. 12. 9. Came to prominence in EU with Commission Directive of 1985 (implemented 1988) making it compulsory for certain projects (e.g. oil refineries; storage of radioactive waste; chemical institutions; motorways; power stations)10. ‘Directive’ i.e. implementation decided by national governments (in EU) 1-13
    13. 13. 11. Other (non-mandatory) projects subject to planning laws (e.g. in UK-developments in environmentally sensitive areas)12. Relates to projects but can also be used to assess policies, plans and programmes (i.e. strategically). Welford and Gouldson (1993) say its use can be good business practice (e.g. assists internal decision-making process) 1-14
    14. 14. 13.Roberts (1995) suggests 4 basic principles to EIA:  identification of consequences of proposed action (including possible alternatives/locations)  identification of relevant aspects of environment affected  evaluation of impacts - initially and subsequently  management of beneficial and adverse impacts  Implicit in basic structure of an EIA (see blackboard for document) 1-15
    15. 15. 14.Key requirements include:  identifying nature of and reasons for project  discussion of alternative sites/processes and justification for choice  provision of baseline data on local environment and ecosystem  assessment of physical, social and economic impact (e.g. direct/indirect; short/medium/long term; temporary/permanent; positive/negative; cumulative)  identification of mitigating measures (e.g. techniques/technologies/ alternatives/ likely effectiveness)  consideration of contingency measures/ risk assessment etc.,  recognition of difficulties in underlying assessment (e.g. information problems; risk assessment) 1-16
    16. 16. 15.Culminates in a statement - subject to public and political scrutiny16. Can be costly - but can be beneficial to undertake (in simplified form) even if not required by law17. Welford and Goulson (1993) suggest 4 main areas of benefit:  Business benefits (e.g. helps build environmental awareness; avoid future problems)  Operational benefit (e.g. can encourage improved efficiency, reduced waste, reduced risks, reveal new opportunities/savings, encourage EMS)  Legislative and stakeholder benefits (e.g. avoids possible future problems; encourages better practices; anticipatory behaviour)  External relationships (e.g. better community image) 1-17
    17. 17. 1. Basically an initial assessment of how a firm is performing environmentally - i.e. impact of its current activities. Also called ‘baseline environmental audit’2. Aid to policy-making ( e.g. company environmental objectives and policy) and to future planning for improvement - may be undertaken internally or through consultancy3. Precursor to introduction of EMS and of Environmental Audit 1-18
    18. 18. 4. Whereas environmental audits are part of regular cycle, reviews are one-off exercises to provide baseline information for subsequent finalisation of an environmental policy, establishment and implementation of an action plan, introduction of EMS and of regular audit of performance5. Process often starts with setting preliminary objectives and consideration of extent of programme to be undertaken (i.e. what is to be covered in programme, what are priorities, who should be involved, what methodology, data requirements etc.) 1-19
    19. 19. 6. Review process then essentially an exercise in gathering information and data on the environmental situation currently facing the firm (e.g. measuring environmental impact, examining legislative requirements, identifying management systems and their effectiveness)7. Equivalent to the ‘Environmental Effects Inventory’ under British Standard on Environmental Management Systems (BS7750) 1-20
    20. 20. 8. KEY CONCERNS INCLUDE:  identifying current  prevention and mitigation of environmental impact accidents/health and safety issues (e.g. noise, odour, effect  transport and distribution on air/water/land) systems (including dangerous/toxic  waste management processes (incl. recycling) waste)  materials  materials usage (e.g. paper and handling, storage, manage packaging) ment  legal liability assessment  sites and buildings (e.g.  information on external pressures, energy efficiency; constraints, opportunities potential for contamination of site) 1-21
    21. 21. 9. Review covers environmental aspects of input, throughput, output and distribution processes and these are subsequently re-examined by the environmental audit10. Usually culminates in a report outlining findings with recommended actions and targets. May include information on parts/divisions/departments within the organisation. Provides basis for adoption of an environmental policy and introduction of full system of environmental management and auditing 1-22
    22. 22. 1. Auditing is familiar process in business – essentially checking outcomes against stated aims/objectives/policies2.Environmental audits (‘green’ or ‘eco’ audits) – process for checking, on a regular basis, the environmental performance of the organisation (or activity) in relation to internal objectives/policies and procedures and the need to comply with statutory requirements3. May be done internally or through consultants 1-23
    23. 23. 4. Audits provide a means of:  Monitoring performance of EMS  Verifying compliance with statutory obligations  Verifying compliance with stated environmental objectives/policies  Minimising exposure to risk from the environment  Identifying and assessing the risk from potential environmental problems  Providing information on how to improve company performance Multistage process involving checking records, examining company policy and stated objectives, management processes and systems, interviewing staff, inspecting the site, sifting information/data, evaluating the findings, producing a report and producing an action plan where appropriate (e.g. if deficiencies/problems – see figure 7.2 in handout) 1-24
    24. 24. 5. While not a legal requirement in UK, most large companies and organisations now produce an environment report (e.g. state of the environment report) based on some form of audit6. Welford and Gouldson (1993) claim key benefits include:  Insurance – premiums often higher if no audit  Market forces/competition -attitude of consumers to corporate awareness/concern  Acquisitions – cost of contaminated land; cost of buying business with poor environmental record  Legislation – information may be needed to ensure compliance with legislative requirements 1-25
    25. 25. 7. Also pressures at intergovernmental level (e.g. EMAS)8. Eco-management and audit scheme (EMAS) came into operation in 1995 – voluntary for See: companies within EU emas/toolkit/ 1-26
    26. 26. 9. Basic objective to promote improvements in environmental performance by encouraging companies involved in manufacture waste disposal, mining, recycling, power generation to:  Establish and implement environmental protection schemes  Comply with legislative requirements  Carry out regular audits of environmental performance 1-27
    27. 27. 10. System of regular self- audit with external verification leading to accreditation. Kind of ‘benchmark’ to indicate commitment to high standard of environmental performance (i.e. stakeholder impact)11. Applicable to both public and private organisations (e.g. in UK – ICI, BP and National Power are registered under scheme) 1-28
    28. 28. 1. Recognition that products have impacts on environment throughout life cycle – from ‘cradle to grave’ 1-29
    29. 29. 7-30
    30. 30. 2. LCA is an attempt to identify and evaluate the total environmental impact of providing a good/service from beginning to end (e.g. ultimate disposal)3. Focuses attention on ongoing impact – provides opportunity to consider how to reduce environmental effects (e.g. redesign of product; marketing of product) Miles Weaver 1-31
    31. 31. 4. May involve change in materials and/or production processes, marketing, distribution, packing, disposal methods etc.,5. In EU ‘Eco-labelling scheme’ based on applications of LCA – seeks to encourage design, promotion, marketing and use of products which have a reduced environmental impact during their life cycle. (other schemes include German ‘Blue Angel’ scheme – see Welford and Gouldson (1993) pp. 168 – 174)6. Can have important marketing benefits 1-32
    32. 32. General Motors European Operations  Supplier WWP SUPPLIER QUALITY IMPROVEMENT PROCESS assessment (capability) n tioAddressing Current Quality Problems: GLOBAL SOURCING lu so IMPROVEMENT MEETING  Quality assurance Re-Monitor Supplier Performance Data QUALITY WORKSHOP and planning m-Prioritize and Focus on Poor Performers le ob-Increase Pressure on Suppliers / Management LEVEL II CONTROLLED SHIPPING Pr - Controlled Shipping LEVEL I CONTROLLED SHIPPING  Sample run - Executive Improvement Process PR&R (GP-5) - New Business Hold PERFORMANCE MONITORING  Containment CONTINUOUS IMPROVEMENT (GP-8) measures for poor TIME LINE s quality se EARLY PRODUCTION LIFE es CONTAINMENT (GP-12) oc OF PART RUN @ RATE (GP-9)  Improvement Pr Preventing Future Problems: action SQ PRODUCTION PART APPROVAL (PPAP) -Select Suppliers with Good PPM/ESQES History (reactionary) ed PROTOTYPE SAMPLE -Develop Manufacturable Designs nc APPROVAL (GP-11) -Develop Capable Processes va Ad PRE-PRODUCTION MEETING - Error-Proof Operations ADVANCED PRODUCT - Install Process / System Controls  In 2004 … QUALITY PLANNING (APQP) -Verify Process Capability prior to SOP Environmental SOURCING DECISION impact POTENTIAL SUPPLIER ASSESSMENT START OF assessment of PRODUCTION supply chain 2 Worldwide Purchasing operations? 7-33
    33. 33. 2003 Enhanced Bidders List (QSTP)  Quality Creativity Team Bid List (with enhanced performance metrics) C  ServiceQuality Performance For: ALL (Creativity Team) DRAFT PROPOSAL FOR 2003 (Major Function)  Technology Data as of: 10-Oct-02 Q S T P  Price Commercial Savings Financial Stress Math Capability and Controlled Shipping Controlled Shipping Severe Quality Math Data Quality QS / TS Cert. Impact Key measures: PRRs SOE - SSR Readiness  ISO 14001 SPDI Diversity PPM Activity Level II NBH LeadQ S T P Supplier Location Mfg. Duns Region  Quality defect rate Pro g . 6 M o. 6 M o. 6 M o. 6 M o. Aug. 02 Launch Mfg-SPWarr. Open6-Mo. APQP PRRs W arrant y M g mt M f g . 3 M o. Dec 01 3 M o.  ContainmentG G G G ABC Anytown, IL - 11223344 GME 33 0 0 0 0 0 Y Y N 3 2 G 2 measuresY G G BCD Sometown, IL - 22334455 NAO 26 0 1 0 1 4 Y Y N 4 1 2 G R G CDE Notown, OH - 33445566 GME No Data 0 0 0 0 0 Y Y N 0 1  Financial stabilityR R G DEF Someplace, 44556677 LAM 5768 0 0 0 0 0 Y Y N 0 R G 1R G G G EFG Noplace, DE 55667788 NAO 12 1 0 1 0 4 Y Y N 1 1 G 1  SavingsG Y Y G ABC Anytown, IL - 11223344 GME 0 0 0 0 0 0 Y N N 3 3 G Y 1R G G BCD Sometown, IL - 22334455 NAO 73529 0 0 0 0 0 Y Y N 1 1 1 CDE Notown, OH - 33445566 GME No Data 0 0 0 0 0 N Y N 0R R DEF Someplace, 44556677 LAM 146 0 0 2 0 0 Y Y N 1 R Y  … environmental Performance Criteria impact ofGY G Y G Y <= 277 <= 396 0 1 0 1 Y Y N W W 0 - 2 1, 2 3 G Y G Y 1, 2 >= 95% 3, 4 50 - 95% immediateR R R > 396 >1 >1 N N Y 3 - 5 4, 5 R R 0, 5 < 50% suppliers? NOTE: Overall Rank of the supplier is determined by the worst rating (R/Y/G) of the combined Q, S, P rating. Miles Weaver 7-34
    34. 34. "Increasingly, the world around us looks as if wehated it.“ - Alan WattsI came to your door as a stranger, I lived in your house as a guest, I leave your door as a friend, My earth Rabindranath Tagore, - 1st non-European to be awarded a nobel prize for literature in 1913, - Bengali poet, novelist, musician, playwright. 1-35
    35. 35. READING CONSIDER … Roberts, P. (1995)  Research a large organisation Environmentally Sustainable to understand what Business: A Local and Regional environmental assessment, Perspective, London, Paul audits and reviews take place  What impact have these had? Chapman Publishing  Could or should this organisation do more? Welford, R. and Gouldson, A. (1993) Environmental  Consider a product of your Management and Business choice, assess how the Strategy, London, FT producer may reduce its Management environmental impact? 1-36