Slimming and Greening Your Supply Chain with Product Lifecycle Analysis

Many executives believe they are caught between a rock and a hard place when it comes to reducing supply chain costs at the same time of enhancing green business practices.  Can firms reconcile these two important objectives, which on the surface appear mutually exclusive?  Yes they can if their companies implement Product Lifecycle Analysis (PLA) programs on their supply chains.  A PLA is the process of understanding a product’s environmental impact from raw materials to disposal, and then redesigning each product to minimize its bearing both on their supply chain and environmental footprint.

Although PLA has no standardized methodology, many companies have successfully used this instrument to achieve significant cost reduction, improve sustainability results as well catalyze preparations for pending environmental regulations (e.g., cap and trade policies). The Initiative for Global Environmental Leadership in conjunction with Knowledge@Wharton recently published a paper, Green Evolution:  Managing the Risks, Reaping the Benefits in which it summarized PLA and outlined some best practice firms.  While some companies like Walmart have well-publicized PLA programs with ambitious goals, two enterprises, furniture maker Herman Miller and document manager Xerox, deserve special mention.

Herman Miller

Building an efficient, sustainability-driven supply chain is old school at this high-end manufacturer of office furniture.  According to its 2009 environmental report, HM has reduced hazardous waste by 95% and landfill waste by 88% since establishing ambitious goals back in 1994. Its customers obviously approve. More than half it’s annual sales come from products using “design for the environment” principles.  PLA thinking has also helped the company save nearly $4.6M by moving into newly designed LEED Gold-certified buildings.

Xerox

In addition to implementing its own sustainability efforts, Xerox’s is helping its customers green their supply chains and generate significant cost savings. For Dow Chemical, Xerox undertook a paper and printing analysis on their 16,000 printers.  A collaborative process helped decrease the printer install base by over 65% to 5,500 units.  This reduction saved an estimated $20M-$30M in printing costs and dramatically cut Dow’s environmental footprint.  Xerox is also using a proprietary Sustainability Calculator to help customers green their supply chains.  When applied to a single sector of defense giant Northrop Grumman’s operations, the Calculator helped trim NG’s energy costs (-27%), climate emissions (-26%) and solid waste (-33%).

Getting Started

Every PLA exercise applies 3 fundamental steps to each product as it makes its supply chain journey from raw inputs to disposal:

1. Lifecycle inventory — an audit of energy and raw material usage, air emissions, water pollution and solid waste generated;
2. Lifecycle impact assessment — an analysis of the likely environmental and human health effects of the inventory; and
3. Lifecycle improvement analysis — recommendations on opportunities to reduce or eliminate the environmental footprint across the product or service’s lifecycle.

PLA is not always a simple exercise.  There are no standardized protocols for undertaking this kind of analysis.  Additionally, the PLA process can be challenged by the heavy lifting needed to collect and synthesize reams of data, particularly where the product has a large and complex supply chain like those found in retail, automotive and IT sectors.  Not every supplier will be cooperative nor will the data always be accurate or current.  Finally, companies run the risk of a consumer and interest group backlash if they implement well-publicized but superficial and intellectually dishonest PLA initiatives.  

Notwithstanding the execution challenges, PLA is a valuable exercise for every firm in any sector both from an efficiency, profitability, brand image and sustainability perspective.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

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