Building Organizational Capability for Life Cycle Management
Thomas E. Swarr, Anne-Claire Asselin, Llorenç Milà i Canals, Archana Datta, Angela Fisher, William Flanagan, Kinga Grenda, David Hunkeler, Stephane Morel, Oscar Alberto Vargas Moreno, and M. Graça Rasteiro
Abstract Corporations are being pressured to integrate life cycle thinking and practices across global supply chains. The UNEP/SETAC Life Cycle Initiative has been developing a life cycle management capability maturity model (LCM CMM) to help mainstream life cycle assessment (LCA) and life cycle management (LCM). Pilot projects in small-to-medium-sized enterprises (SMEs) to apply the model showed the companies were able to identify and implement projects that delivered both near-term business value and developed the organizational capability for LCM. A key benefit of the life cycle approach was enhanced cross-functional integration and collaboration with suppliers and customers. The projects did identify a need for more guidance on how to interpret the business impact of environmental concerns and to align LCM efforts with company business strategy. Collaborative networks where more advanced companies can share their knowledge are a key enabler, particularly in developing economies.
Keywords Business • LCM capability maturity model • Life cycle assessment • Life cycle management • Life cycle thinking • Sustainability • UNEP/SETAC life cycle initiative • Value chains
Advances in information and communication technology have enabled companies to rationalize their production systems across the globe for peak efficiency, providing a continuous stream of innovative and low-cost consumer goods. The dramatic expansion of the market economy has been extremely successful in raising the material standards of living. However, there is growing awareness that the material and energy intensive modes of current production systems are unsustainable as the size of the global middle class consumer market is expected to grow from 1.8 billion in 2009 to 4.9 billion by 2030 (Pezzini 2012). Business has recognized the challenge and is moving from a narrow focus on short-term economic value to a broader concept of shared value, defined as policies and operating practices that enhance the competitiveness of a company while simultaneously improving the economic and social conditions in its host community (Porter and Kramer 2011). Leading companies, as well as some new firms, are working to develop value chain indices that measure and price all externalities, from raw materials to final product disposal enabling direct comparison of products at the point-of-sale (Chouinard et al. 2011; UNEP/SETAC 2014, 2015). Life cycle assessment (LCA) is an internationally standardized method for quantifying environmental impacts of product systems and has been recognized as the primary methodology for helping decision-makers select effective improvement strategies while avoiding burden shifting between impact categories or life stages (Guinée et al. 2011; Hellweg and Milà i Canals 2014). However, there is concern that small-to-medium-sized enterprises (SMEs) lack the capacity to provide quality data for the various supply chain metrics, let alone conduct comprehensive LCAs.
The UNEP/SETAC Life Cycle Initiative has been working to promote the implementation of life cycle management, or the effective integration of life cycle thinking into the day-to-day routines of business (UNEP/SETAC 2013a) for more than a decade. During Phase I (2002–2007), researchers identified a need for training materials and technical resources to build capacity for life cycle management (LCM), particularly in developing economies and small-to-medium-sized enterprises (SMEs) (Saur et al. 2003). During Phase II (2007–2012), one of the work areas was life cycle approaches for capability development (including institutional empowerment, training, curricular development, etc.), with a particular focus on addressing challenges in implementing LCM in SME suppliers as part of sustainable value chain initiatives (Swarr et al. 2011). That effort was continued in Phase III (2012–2016) with the funding of a series of pilot projects to apply a LCM Capability Maturity Model (LCM CMM) to help guide the implementation of a life cycle based improvement project.
The LCM CMM builds on well-established methods from the process quality improvement discipline and provides a structured framework to help companies incrementally build the organizational capacity for more comprehensive and powerful life cycle (LC) methods (Swarr 2011). Previous research on organizational change has shown that ~70 % of failed change initiatives were attributed to inadequate attention to 'softer' issues of organizational health (Keller and Price 2011). Sustained high performance requires a balance between top-down initiatives for results-driven action and bottom-up organizational development efforts to instill a culture of learning and continuous improvement (Beer 2001). Thus, the LCM CMM complements top-down efforts to drive sustainability measures across global supply chains with bottom-up organizational development efforts to build the necessary skills in SMEs to enable them to provide high quality data and to adapt LCM objectives to meet their specific competitive and stakeholder pressures.
The capability maturity model (CMM) concept originates from a quality management maturity grid proposed by Phil Crosby (1979), subsequently developed for numerous functions, such as software engineering, integrated product development, systems engineering and more. The CMMI Institute (cmmiinstitute.com) integrated these models, but they are extremely complex and inappropriate for SME suppliers (Sukhoo et al. 2007). Development of a simpler and more practical LCM CMM is described under Methods. A series of company case studies are then presented to compare the theory of CMMs with the real world practice of LCM. In some cases, the company projects explicitly applied the LCM CMM developed by UNEP/ SETAC. In other cases, the company projects made no direct application of CMM, but were simply efforts to apply LCM principles to address specific objectives. The focus of the case studies is on the change management issues that can promote or inhibit success of company improvement initiatives. These company experiences are then reviewed and reconciled with the LCM CMM concepts to develop a framework that companies can use to tailor LCM to their specific competitive context, environmental constraints and opportunities, and strategic priorities. The basic premise is that a structured approach to help address these softer management issues can be a useful strategy to mainstream LCM in business. Finally, the chapter concludes with recommendations for future research to expand business capacity for LCM and to promote its effective integration into routine business decision-making processes.