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Heidrich 2013
Heidrich 2013
To cite this article: Oliver Heidrich & Abhishek Tiwary (2013) Environmental appraisal of green production systems:
Challenges faced by small companies using life cycle assessment, International Journal of Production Research, 51:19,
5884-5896, DOI: 10.1080/00207543.2013.807372
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International Journal of Production Research, 2013
Vol. 51, No. 19, 5884–5896, http://dx.doi.org/10.1080/00207543.2013.807372
School of Civil Engineering and Geosciences, Cassie Building, Newcastle University, Newcastle upon Tyne, NE1 7RU, UK
(Received 27 April 2012; final version received 10 May 2013)
This paper presents a snapshot of key challenges encountered by small and medium-sized enterprises (SMEs) devoted to
green production systems acting on the call to substantiate their environmental claims. It highlights the overriding
barriers of SMEs to meeting the standards for conducting credible product life cycle assessment (LCA), in terms of
accessibility to customised data and epistemological limitations. This is illustrated using a real-world example describing
the material and process flows for a recycling company. We demonstrate that the rigour towards compiling large (and in
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some cases nested) data sets, involving expert know-how and adequate representation of system boundary can pose oper-
ational barriers. This is underpinned by complications of conducting green production and process-based LCA, deemed
essential in ascertaining product and process sustainability. Finally, the paper discusses issues highlighted by the case
study and provides useful directions for production researchers, SMEs and consultants.
Keywords: green production; life cycle analysis; SME; material flow; resource management; sustainable manufacturing
1. Introduction
Responding to increased pressures from clients, consumer groups and governments, businesses commit resources to
improve environmental performances of their designs, processes, products and services. For example, numerous green
production systems utilise waste as a resource alongside virgin production lines. However, substantiation of environmen-
tal claims requires objective evidence, recognised by suppliers, manufactures and clients. Small- and medium-sized enter-
prises (SMEs) offer both opportunities and challenges in reducing life cycle environmental impacts – the former owing
to cascading demand of green production through supply chains and the latter due to their limited resources in imple-
menting environmental management and life cycle engineering skills (Woolman and Veshagh 2007). The costs associated
with environmental management, specifically those associated with the consumption of natural resources (water, natural
raw materials, etc.) and the disposal of wastes have pushed SMEs to improve the environmental performance of their
processes and products. In addition, growing impetus on ‘triple bottom line’ approach, i.e. encompassing wider sustain-
ability than just the economic imperative, as well as the limitations of traditional decision-making, has forced businesses
to examine the environmental performance of their design, process, product or system (Bullinger, Steinaecker, and Weller
1999; Bevilacqua, Ciarapica, and Giacchetta 2007; Le Pochat, Bertoluci, and Froelich 2007; Lee and Klassen 2008).
There are strategic and organisational changes needed to make themselves ‘greener’ through adequate adoption of sus-
tainable production systems (Heidrich, Harvey, and Tollin 2009; Lee 2009; Ates and Bititci 2011; Yalabik and Fairchild
2011). A number of diagnostic tools have been proposed to facilitate sustainability and/or environmental performance in
SMEs, for example, the Perform and Benchmark Index in the UK, VerdEE (Verifica dell’Eco-Efficienza – Verification of
Eco-Efficiency) tool in Italy (Masoni et al. 2004) and the ecoBiz assessment used in Australia (Woolman and Veshagh
2007) alongside generic tools that can be used by SMEs and large companies such as: product life cycle management
(Bullinger, Steinaecker, and Weller 1999; Hu and Bidanda 2009); green supply chain assessment (Sarkis 2003; Lu, Wu,
and Kuo 2007); eco labels or product declarations (Houe and Grabot 2009; Kengpol and Boonkanit 2011); material flow
analysis (Bullinger, Steinaecker, and Weller 1999; Hicks et al. 2004); quality function deployment for the environment
(Bevilacqua, Ciarapica, and Giacchetta 2007; Sakao 2007); eco-design or design for the environment (Bovea and Wang
2007; Le Pochat, Bertoluci, and Froelich 2007; Mascle and Zhao 2008; Kim et al. 2010); life cycle assessment (BS EN
ISO 14040 2006, Guinee et al. 2011); and more recently, a hybrid tool combining both input-output spreadsheet-based
and process-based life cycle analysis techniques (Berners-Lee et al. 2011; Wiedmann et al. 2011).
Overall, life cycle assessment (LCA) has been widely used to assess environmental aspects and impacts of a process,
product or service (Ness et al. 2007; Guinee et al. 2011). It was demonstrated that new technologies, green production
systems and LCA are important to implement greening strategy and to maximise the benefits of the supply chain (Wee
and Chung 2009). Green product innovation cannot be considered as a marginal issue for most companies. From a
practical viewpoint, the improvement of product environmental performance is a complex management task for the
SMEs. On the one hand, it often requires a renewed view of a product life-cycle, encompassing the manufacturing
process, logistics, procurements, use and disposal as well as re-use/recycling. On the other, it needs to meet evolving and
ever-stringent stakeholders’ views on green production systems and its products across the supply chain – involving
suppliers, retailers, customers and final users (Heidrich, Harvey, and Tollin 2009; Lee 2009).
However, assessing environmental performance covering, for example, resource depletion, recycling or re-use
requires large data sets and adequate support can be beyond the resources of SMEs (Zackrisson et al. 2008; Li et al.
2010). Such shortfalls in accurate and reliable data could compromise the quality of the assessment (Wee and Chung
2009; Wiedmann et al. 2011). This paper highlights the challenges of SMEs in establishing green credentials through
a case study. It is among only a handful of published studies that provide evidence and discussions of the existing
limitations and possible future directions for SMEs using LCA. In general, the paper aims to provide some urgently
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needed discussion in production research on the challenges SMEs are faced with in implementing LCA to ascertain
green production. Through a case study we argue that the methodological understanding of assessments and the rigour
needed to compile large datasets can manifest into barriers for small businesses to engage with the sustainability
agenda. The first part of the paper highlights generic operational issues of LCA/LCI studies that SMEs, and to some
extent even large companies, are typically faced with. This is followed by the case study offering the evidence-base
for strategy development in SMEs towards promoting green production through better understanding of the manufac-
turing process across the supply chain and the challenges therein. Future directions on overcoming the inherent chal-
lenges for SMEs in conducting LCA as well as the incentives for investing in modest sustainability appraisals are
discussed.
system (Bottrill 2007; Moss, Lambert, and Rennie 2008). This is unlikely for green production systems as these are
new and unique processes where standardised data is not readily available. In most cases online calculators (e.g. www.
carboncalculator.co.uk) only provide a rough estimate of emissions; they cannot be location- or process-specific (Bottrill
2007; Moss, Lambert, and Rennie 2008).
Overall, the sustainability indicators and guidelines formulated to improve the resource planning and environmental
performance of SMEs are crudely theoretical in approach and often considered a task of ‘Herculean proportions’ (Barker
and Frolick 2003). This is mainly owing to the heavy price upfront which is likely to be paid in the short- to
medium-term of its implementation, be it in the form of organisational reformation and/or drop in productivity (and
profits) before the payoff is realised. For many SMEs this is usually considered a step too far in the direction of corpo-
rate uncertainty, making them more vulnerable in withstanding the pressures to outperform and acquire green credentials
compared with larger companies and multinationals. The costs associated with environmental management, specifically
those associated with the consumption of natural resources (water, natural raw materials, etc.) and the disposal of wastes
have pushed SMEs to improve the environmental performance of their processes and products (Paulraj and de Jong
2011). However, introducing the environmental dimension in a company strategy is quite complex for SMEs of green
production systems, primarily owing to the following complications:
Multi-dimensionality: This is because implementing ‘green’ production usually implies investing in many different
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technologies that usually are beyond the traditional technological grasp of an SME.
Systems scale implications: The initiatives have systemic impacts on the whole organisation, including marketing, R&D,
manufacturing, logistics and procurements, quality control etc., as well as the whole supply chain, involving suppliers,
retailers, customers, final users and other non-traditional stakeholders.
Evidence generation: There is considerable managerial and data commitment required from SMEs to provide impartial
evidence that their product or process is ‘green’.
Financial commitment: The environmental initiatives can have significant associated costs (Noci and Verganti 1999;
Bititci et al. 2012).
Life cycle inventory (LCI) differs from LCAs in not having an impact assessment stage: the inventory obtained at
the LCI stage is used in the interpretation phase (BS EN ISO 14040 2006). The LCI determines environmental aspects
(i.e. an element that can interact with the environment) of a system but not necessarily the environmental impacts (i.e.
the change to the environment resulting from the environmental aspect).
The advantage of LCA is that it takes into account the differing environmental impacts of inventory items (which
can be hundreds of items) and summarises them into categories such as global warming potential or eutrophication.
About 15 categories are typically used (Guinée 2002; Ness et al. 2007), but not all factors have an accepted scientific
basis such as human toxicity, eco toxicity, local conditions and land use (Guinée 2002). Uncertainty can also come from
a lack of inventory data, which will have a large influence on the impact assessment (Bevilacqua, Ciarapica, and
Giacchetta 2007; Ness et al. 2007). Several LCA software programs such as SimaPro®, GaBI® and Boustead® (Rice,
Clift, and Burns 1997; Curran 2006; Guinee et al. 2011) are available, which use databases such as Ecoinvent,
ETH-ESU 96, BUWAL 250 or the European Reference Life Cycle Data System (ELCD).
International Journal of Production Research 5887
causality or, if this is not possible, using economic arguments (BS EN ISO 14044 2006).
When systems are compared, processes which are common to both systems, and which have identical environmental
aspects or impacts, can be disregarded (PD ISO/TR 14049 2012). This is called ‘zero burden assumption’ (Ekvall et al.
2007, 990). In the context of production engineering, LCA/LCIs of different product systems can begin at the process
stage, provided that the quantities and composition of the materials entering the alternative systems and aspects
(impacts) upstream of the systems are identical (Ekvall et al. 2007). Thus comparing systems with common life cycle
stages reduces the data requirements (PD ISO/TR 14049 2012).
Data quality is defined as ‘characteristics of the data which relate to their ability to satisfy stated requirements’ (BS
EN ISO 14044 2006, 4). The data quality requirements include age and geographical origin of the data, technology mix
on which the data is based, precision, completeness, representation, consistency, reproducibility and source of data plus
uncertainty of the information (e.g. data, models and assumptions). The equivalence of systems, units and data quality
is of high importance to avoid misrepresentation and miscalculations (BS EN ISO 14044 2006).
3.1 Description of the company (RecyCo) and its green production system
RecyCo is a small British recycling company that mainly supplies the UK and European market with a sustainable
drainage product (SDP). The company was established in 2000 with a turnover for 2009/10 of £350,000, it holds world-
wide patents on its green production system and the product. It has nine employees and one managing director and
operates a quality (ISO 9001:2008) and environmental management system (ISO 14,001:2004). RecyCo is aware that
stakeholders are interested in how it ascribes and delivers sustainability goals (Heidrich, Harvey, and Tollin 2009).
LCA/LCI provides evidence of its environmental commitment and structures data of SDP allowing the company to
compare its systems with traditional products, processes and systems (Williams, Heidrich, and Sallis 2010). RecyCo
applies an open-loop recycling process that produces a SDP from MPW which is installed as a sustainable drainage
product system (SDPS). The green production process of RecyCo utilises MPW which would otherwise go to landfill.
To understand the material, water and energy flows the stages of the manufacturing process are illustrated schematically
in Figure 1.
5888 O. Heidrich and A. Tiwary
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• unstructured interviews;
• daily production records;
• electricity costs per month per kilo-watt hour (kWh);
5890 O. Heidrich and A. Tiwary
Transport distances (expressed in tonne-kilometre (tkm) and km respectively) from the three companies delivering the
raw material to RecyCo were calculated (Table 2). Generally, transport of goods is expressed and computed as tkm in
LCA software, i.e. multiply tonnes transported by the distance over which they are transported. As Company 3 operates
a ‘milk round’ system to collect and deliver the MPW a smaller load is delivered using a trailer that is towed by a
passenger car. Thus the system parameter is km rather than tkm as the passenger car inventory is expressed per km and
not per tkm by the LCA software.
SimaPro® 7.2.2 LCA software (Pré Consultants BV 2012) was used to calculate the potential environmental aspects
and impacts of each system component per functional unit using the midpoint impact assessment method. The calcula-
tion method allowed each inventory to be exported from SimaPro® 7.2.2 into a Microsoft Excel spreadsheet. The system
component inventories were calculated by multiplying the inventories (expressed for a unit quantity) with the relevant
system parameter in an Excel spreadsheet. Then the whole system inventory was obtained by simple summation of the
system component inventories. Owing to the large volumes of data involved, three checks were built into these
spreadsheets in order to ensure that only inventory items bearing identical names, burdening the same compartment
(raw material use, air, water or soil) and with identical units, were summed.
In order to express the aspects and impacts consistently it was necessary to convert the units from the inventories.
Some inventory items (e.g. emission of carbon dioxide to air) did not have the same units and owing to the large
amount of data involved, the conversion was carried out using two Excel macros written in Visual Basic. The first of
these converted the original units into their corresponding SI equivalents. The second scaled the numerical value of the
inventory items by a factor appropriate to its new unit, e.g. values in grams were multiplied by 1000 to reflect the new
unit kilograms. The result of this conversion process was a set of inventories containing 389 items with the same units
across the system components. At the end of this step the LCI for the SDPS was calculated across the 16 system com-
ponents (Table 2). It is recommended that comparison of environmental aspects and impacts between systems must be
selective and compare only those most relevant and appropriate to the goal of the study (BS EN ISO 14044 2006;
UNEP and SETAC 2011). Some authors define ‘critical natural capital’ (i.e. natural resources that must be preserved)
as: energy, stratospheric ozone layer, and basic cycles, such as the carbon cycle, which maintain the bio-sphere
(Ekins et al. 2003, 169). To simplify the evaluation process and illustration purposes the case study considered three
environmental impact categories:
(1) Resource depletion (evaluated for coal, oil and natural gas).
(2) Greenhouse gas emissions to air (evaluated for carbon dioxide and methane).
(3) Ozone depletion (evaluated for CFC emissions).
International Journal of Production Research 5891
This resulted in the calculation of LCI for six resource depletion and emission evaluations for the 389 items, thus a
dataset of 2334 was produced. The above calculation method and conversions illustrate the mere multiplicity of high
quality datasets that need to be generated for realistic modelling of the production system.
trated in Figure 4, the most significant contributors to CFC-10 emissions are: production of sand (20.0%), transportation
of sand (19.1%) and pumping of the waste water (18.8%). This is a very different pattern of system component contri-
butions compared with the other environmental aspects and impacts examined above, where electricity generation and
transportation were dominant factors and waste water pumping had negligible impact.
The results show that transportation has significant contributions to the environmental aspects and impacts of the
SDPS. The transportation of MPW to RecyCo consistently figures in the top three most burdensome processes for every
aspect and impact examined. Considering the RecyCo system as a greener production process, this result appears to con-
tradict other LCA/LCI studies comparing recycling of plastics with landfill (Salhofer, Schneider, and Obersteiner 2007;
WRAP 2010). These studies show that the environmental aspects and impacts associated with the extra transportation
requirements of recycling processes are not significant compared to the environmental benefits of the recycling process.
This is unlikely to be as result of the moderately large transport distances for the MPW to RecyCo (246 km) as, for
plastic film, the distance at which the aspect and impact of transport exceed the avoided aspect and impact of recycling
was stated as a minimum of 5040 km (Salhofer, Schneider, and Obersteiner 2007).
Figure 3. Contributions of system components to coal depletion being 600 kg of coal per functional unit.
5892 O. Heidrich and A. Tiwary
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A sensitivity analysis following systematic procedures for key assumptions and for estimating the effects of the
choices made regarding methods and data on the outcome of a study for transport distance and energy mix had a
significant impact on the results. The modelling of the processes and the results can be confirmed as being robust
for the transport distances, but was less robust for electricity type. A change from the modelled electricity type
(gas-generated) to that assumed for processes in SimaPro® resulted in the system becoming more burdensome for
coal depletion. This highlights the high environmental aspects and impacts associated with different energy genera-
tion processes.
Further, the study has shown that data quality issues related to product LCI generation may require careful
pre-processing of information compiled from different sources with varying units and technical specifications. Although
a stepwise initiative for environmental product declaration was introduced to help SMEs in tackling product declarations
(Zackrisson et al. 2008) and a hybrid model (Berners-Lee et al. 2011) has been developed, there is still a lack of scien-
tifically robust assessment methodology to determine environmental aspects and impacts that can be readily adopted by
SMEs.
An a priori to interpretation of the results from any LCA is that the underlying LCI is representative of the
process modelled and that the outputs are resilient to sensitivity analysis. Ascertaining both of these constraints
involves expertise determining the effect processes have on the outputs generated. For example, the sensitivity anal-
ysis illustrated the dependence of the LCIA on transport distance and energy mix; this is heavily dependent on the
nature of the production and cannot be considered as a template for greener productions. Whereas larger firms or
consultants can deal with these constraints through their dedicated expertise to ensure quality assurance and quality
control of the data input and outputs this is often not the case for SMEs with limited expertise and access to
inventory data. Indeed access to resources is probably the main factor for SMEs not being keen on engaging
wholeheartedly with environmental issues in general (Lee and Klassen 2008). In addition, lifting the expertise bar-
rier will contribute substantially for SMEs to participate in such LCA activities (Le Pochat, Bertoluci, and Froelich
2007).
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Despite the challenges in evaluating their environmental performance, SMEs have practical incentives to engage in
product appraisals. Foremost, being pivotal to future economic growth, they need to deliver responses to market pres-
sures through strategic change and improvement (Ates and Bititci 2011) which manifest into two advantages. On one
hand, SMEs would benefit from holistic assessment using LCA/LCI to substantiate environmental claims by providing
objective evidence that will be recognised by suppliers, manufactures and clients. This will foster competitive advanta-
ges offering potentials for collaborative investments from larger firms (Moore and Manring 2009). On the other, it
enables them to understand their production system more closely, underpinning implementation of a more effective envi-
ronmental management, and enhancing their environmental and economic performance across the supply chain (Zeng
et al. 2011)
LCA/LCI is data intensive, time consuming and requires expert judgement, more so if it is used for a green produc-
tion system. For example, a recent study has reported 3931 processes/goods when analysing the life cycle impacts of
wind turbines (Wiedmann et al. 2011). This owns to the basic principle of production processes businesses in general,
green production systems in particular, to know its product and system at a very detailed level in order to substantiate
any claim. Conducting LCA/LCI not only provides such detailed knowledge but also identifies improvement measures.
Examining the whole supply and market chain supports the control of raw material supply, process, product and the
associated emissions (Suh 2005). During the case study it became evident that the company benefitted greatly from the
conceptualisation of its supply chains, operations and product installation and by dividing these into process flows and
system parameters. Through this exercise RecyCo has now acquired a level of detailed understanding of its supply-chain
that goes well beyond its competitors. The substantiated green credentials, acquired as a consequence of this detailed
knowledge of its environmental performance, has enabled it to promote its business in the UK, Singapore, USA and
Japan.
5. Conclusions
The paper has provided a brief overview of challenges SMEs are currently faced with in conducting LCI/LCA,
essentially limiting their role in achieving environmental assessment. We argued that this is underpinned by compli-
cations of conducting green production and process-based LCA. This was demonstrated by describing theoretical
and practical issues associated with LCA/LCI studies; in particular for SMEs involved in green production systems
such as using waste as a resource. We demonstrated that LCI require substantial calculations to compile data from
different sources and to standardise units and technical specifications. The results from the case study have shown
the importance of transportation and energy allocation and its relevance to the green production system that was
investigated.
We note that LCA/LCI provides valuable insights into the environmental aspects and impacts of a process and a
product, albeit at the expense of time, resources and expert knowledge. We argued that for SMEs simplification of the
design, execution and interpretation of LCA/LCI studies would hugely benefit its wider uptake. Nonetheless, we advise
caution in not oversimplifying the process and coming up with a carbon or ecological footprint style alternative, lacking
adequate diagnostic details. We identify the following feasible future directions to eliminate some of the operational
issues discussed in this paper:
5894 O. Heidrich and A. Tiwary
(1) To strengthen the capabilities of the SMEs through either pooling of resources across the supply chain or through
devising synergistic sustainability strategies with common interest.
(2) To encourage SMEs to develop surrogate corporate relations with larger firms with adequate capabilities to ensure
product appraisal on their behalf.
(3) To incentivise the SMEs in adopting LCA/LCI as an agent of value-creation through increased acceptability and
market creation on the one hand and enhanced environmental and economic performance on the other.
However, in the current context of lack of clear guidance on what inventory items or assumptions to be considered, this
can result in high variations of results leading to equivocal decision options, which may be defying its merit. Without
simplification of the LCA/LCI approach for SMEs and appropriate guidance for its implementation and interpretation
there is a danger that studies can be manipulated as a proof of point rather than being correct and impartial. The latter
would be negating the very reason why such studies are trusted in providing objective evidence to substantiate
environmental claims.
Acknowledgments
An earlier version of this paper was presented at the 21st International Conference Production Research (Stuttgart, Germany) and we
would like to thank the participants for their suggestions as well as the three anonymous reviewers for their insightful and
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constructive comments. We would also like to thank Econoplas Ltd. for their kind contribution and data provision.
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