Organizational Challenges

LCM can be applied in all organizations from a very small-scale local vendor to large and multinational companies. However, the application procedure and its organization may vary in each company. This is mainly due the fact that the relevance of different aspects of sustainability varies from company to company, and it depends on factors such as the type of product system involved in the company, specific social and environmental issues they would like to address, their geographic scope and supply chain complexity and so on. As a life cycle approach, LCM is a dynamic process in which companies may begin applying it with specific goals and objectives depending on the resource they have. They may begin with using LCA as a tool to evaluate their environmental performance of a single product and find an alternative solution to reduce the environmental burden from this product. Through time they can adjust their goal and move forward step-by-step from one project to a more advanced and sophisticated life cycle management practice, with a process in place for multiple products, which require advanced tools and data-intensive programs. Another point of departure for a company could be to benchmark their products or services against ecolabel criteria to determine relevant aspects to consider in a life cycle perspective and to find inspiration for improvements. This, of course, requires that ecolabel criteria exist for the products or services in question.

One of the critical reasons for companies to be engaged with LCM practices is their pursuit for continuous improvements, covering economic, environmental and social aspects. Nowadays, companies are influenced by external and internal factors so that they envisage such improvements and develop strategic policies, apply a number of tools and establish programs that integrate LCM into the core operations of their business. Business strategy, market opportunities and requirements from the finance sector, as well as national legislations, trade block related regulations and international agreements are the key drivers behind the implementation of LCM. Evidently, companies have to apply it based upon high-level management decisions, only then LCM becomes an integral part of the organizations' policies and strategies in the short term and long term. However, it can also be implemented with a pioneer in one of the multiple departments of an organization.

Successful implementation of LCM demands continuous support from top level management such as:

• Providing the required resources for the sustainability initiative including time and educational resources

• Participating actively in setting up the strategic sustainability goals of the organization

• Communicating explicitly throughout the organization regarding the sustainability aims in an effective and clear manner

• Involving actively the employees with regard to ideas and suggestions for the use of life cycle approaches

However, in order for LCM to be accepted and get continuous support from top level management, it needs to highlight the economic benefits the company can profit from its implementation in addition to the social and environmental performance improvements.

A successful implementation of LCM also needs full participation by a range of employees in order to ensure that the initiative will be deeply rooted in the organization and that the focus will be on concrete improvements to a product's sustainability profile, rather than mere talk and data collection. Furthermore, broad participation ensures that the LCM program does not 'die' if a key employee involved leaves the organization.

Leading companies will undertake initiatives to increase market share and enhance the potential for product innovation. A business striving for increased resource efficiency may see a strategy for product sustainability as an opportunity to reduce costs. In more conservatively operating companies, intrinsic factors will include reduced penalties and risks since taking a life cycle approach can help identify important opportunities and risks. Other organizations may seek to gain competitive advantage through innovation, brand value enhancement and strategic positioning in the market.

In the case of product design and development processes, for example, design decisions take place within the broader corporate management structure. An integrated management system – covering quality, environment and health & safety – with policies, goals, performance measures and a strategic plan that supports continuous improvements will be a driver for integration of sustainability performance metrics and measures. In this context, life cycle (sustainability) management offers a framework that allows management to organize and align the various applied concepts and tools in such a way as to exploit the synergies and interrelations between them.

Another key factor for the success of LCM practices in an organization is the involvement of all departments. Such an initiative could impact all functions and departments of a company. For instance, an implementation of a new design idea may need the support from procurement and marketing departments. Any decision that changes the material composition of a product not only affects its quality, price and environmental profile but also raises questions regarding procurement of new material, potential new markets, consequences to the production process, new logistical demands, etc. Therefore, communication and sharing ideas within and across departments in an organization is key to LCM. Communication and interaction helps generate a range of news ideas and helps push ideas into realization. It is important to recognize also the environmental and social initiatives, which already exist in various

Fig. 2.5 All functions play an important role in life cycle management. The figure shows examples of how different departments in an organization can contribute to an LCM program (Remmen et al. 2007)

departments. Involving all departments means learning from what has done before. A life cycle perspective requires that all departments or functions work together, including product development, purchasing, production, logistics as well as marketing. All functions (illustrated in the following as departments) must therefore participate with ideas for initiatives and solutions, based on their particular expertise.

Figure 2.5 illustrates how different departments in a company can contribute to the establishment and running of LCM initiatives. In most cases, large, multinational companies have environmental, social responsibility and sustainability departments that could coordinate the implementation of LCM. These departments are typically responsible for reporting developments within environmental and sustainable policy and they can provide valuable inputs through training of employees in the other departments. However, it is crucial that the whole company is motivated and 'speaks the same language'.

However, most small and medium-sized enterprises (SMEs) do not usually have such departments. Therefore, the coordination of LCM activities could also be managed by forming a cross-organizational or cross-functional team with a representative from each relevant function, where a motivated employee (the pioneer) can act as coordinator and at the same time make sure that everybody has the necessary tools and materials to inspire and carry out the activities. The relevance for putting LCM into business practice of each department is summarized in Table 2.2.

Table 2.2 Departments in an organization and their relevance for life cycle management in practice (Based on the work from Remmen et al. 2007)

Department

Main activities

Production and Distribution

• Assess the environmental and social impacts associated with production processes and thus suggest an alternative solution to reducing resource consumption and the related impacts

• Provide a novel ideas and data for product and process improvements

• Identify and suggest a solution to reduce the impacts associated with the energy consumption connected to the transportations of raw materials, intermediate and finished products

Product Development and Design

• Move environmental and social considerations higher up on the design criteria list

• Develop a new product with the starting point of social, ethical and environmental considerations– for example a new clothes collection based on organic cotton and fair trade

• Make the existing product more sustainable, for example by replacing an environmentally harmful substance with a less harmful substance

• Shift from producing a product to supplying a service – the sale of answering machines shifts to an electronic answering service delivered by the phone company

• Assess the environmental and socioeconomic aspects of a product from two different angles based on a definition of the product system:

• A product life cycle perspective with assessment of the environmental and socio-economic impacts of a product system with tools such as Life Cycle Assessment (LCA) or Life Cycle Costing (LCC)

• A stakeholder perspective with assessment of impacts based on the stakeholders' view such as legal requirements, market demands, and competitors' products. Quality Function Deployment (QFD), interviews, etc. are commonly applied tools

Economy and Finance

• Provide a good financial performance to allow the company to see its impact on driving the company towards sustainability and LCSM

• Assess the life cycle avoided costs due to the implementation of LCSM project, for example, by tracking both the annual cost reduction and commutative savings from prior years

Purchase

• Play an important role in selecting the optimal raw materials,

semi-products and products for production, by applying some tools that integrate environmental and social considerations together with other factors such as price, quality, and functionality

• Encourage environmental considerations at their suppliers via questions and demands an overview of the supplier's environmental and social initiatives as well as policies; documentation of the impacts from the previous life-cycle stages; overview of working conditions at suppliers and sub-suppliers; and/or specific environmental and social data regarding raw materials, secondary materials, etc.

Sales and Marketing

• Ensure a good flow of information to and from the customers such as consumer behavior and preferences, product's eco-friendly use and disposal, etc.

• Promote the eco-friendly product e.g. by the use of ecolabels

Stakeholder Relations

• Identify and engage stakeholders (employees, suppliers, customers, etc.) so as to anticipate their opinions on the business, products and services and to identify what really matters to them

 
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