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Sustainable Manufacturing
1
Sustainable Manufacturing
Alan S. Gutterman
_______________
One of the most important steps in the product development process is large-scale
manufacturing of the products.
1
Manufacturing involves a wide variety of different
activities dedicated to the commercial production of a company's products in quantities,
and at rates which are consistent with market demand for the products. Manufacturing
has matured into a complex discipline that demands expertise in such diverse areas as
cost accounting, quality control, procurement, and technology management. Companies
may adopt a variety of strategies in this area, including internal manufacturing of all
required parts and the finished product, or contracting all or a portion of the
manufacturing process to outsiders. It is also common for companies to do most of the
manufacturing internally yet rely on one or more vendors to supply the company with
essential parts and products. While product development clearly can be quite expensive,
manufacturing—both “in house” and outsourced—also represents a significant cost to the
company, and every effort should be made to reduce manufacturing costs to obtain a
pricing advantage over competitors and maximize the margins that can be earned from
sales of finished products.
Effective manufacturing requires an understanding that the process is actually a complex
set of steps that are required in order to convert the raw materials (e.g., components or
parts) into finished goods that meet the expectations or specifications of the users of such
goods. However, it is not sufficient that the finished goods conform to technical and
other performance specifications, the manufacturing process itself must be well planned
such that the resources expended in the process are not out of proportion to the revenues
generated from sale of the finished goods. As such, manufacturing must be approached
in a systematic fashion that considers the need for planning and controlling all aspects of
the conversion process, including management of materials, scheduling equipment, and
human resources, coordinating with suppliers and key customers and developing or
acquiring technology necessary for improving the mechanical aspects of the
manufacturing process. Manufacturing is obviously closely related to product
development activities and specialists from the manufacturing function should be
included in decisions relating to key product development issues such as feature and
materials selection, production planning, testing, scale up scheduling, warranties, and
customer support. Also, as is the case with research and development, manufacturing
1
It is useful to have a working definition of the term “manufacturing” before exploring areas such as
manufacturing strategy and design of the organizational function. When used as a verb, manufacturing
refers to the production or processing of raw materials into a finished product, especially using industrial
machines as part of a large-scale industrial operation. Manufacturing is also used as a noun when the term
is used to refer to the act, craft or process of manufacturing products including the processes and techniques
used in making a product. For detailed discussion of manufacturing strategies and contracting
arrangements for the manufacturing of products, see A. Gutterman, Manufacturing (Oakland CA:
Sustainable Entrepreneurship Project, 2023).
Sustainable Manufacturing
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should include development and maintenance of a manufacturing-focused knowledge
base.
Manufacturing capabilities, whether based on “in house” resources or relationships with
skilled and experienced third parties, can provide a company with a significant
competitive advantage. Consider the following examples:
• In cases where unit costs play an important role in determining the profitability of the
product line, companies that can achieve the lowest manufacturing costs can realize a
competitive advantage.
• If the manufacturing process is proprietary, perhaps even eligible for patent
protection, a manufacturer can gain an advantage due to the difficulty confronting
competitors in replicating the process.
• Use of automated equipment as part of the manufacturing process can lead to cost
economies and perhaps a higher level of profitability in relation to competitors.
• Manufacturers can have an advantage over competitors if raw materials and/or labor
inputs associated with the process can be obtained at a lower cost in relation to
competitors.
• Strong supplier relationships can reduce manufacturing costs, create unique sources
of supply, and often lead to further cost-saving technological advances through
collaborations with suppliers.
• Internal manufacturing processes can be constantly improved through formal
activities and programs focusing on quality control, training, cost reduction and other
productivity enhancements.
Sustainable Manufacturing
The US Department of Commerce has defined sustainable manufacturing as “the creation
of manufactured products that use processes that minimize negative environmental
impacts, conserve energy and natural resources, are safe for employees, communities,
and consumers and are economically sound”, and the Lowell Center for Sustainable
Production defined sustainable production as “the creation of goods and services using
processes and systems that are Non-polluting, conserving of energy and natural
resources, economically viable, safe and healthful for workers, communities, and
consumers, socially and creatively rewarding for all working people”.
2
Rosen and Kishawy explained how sustainability has been applied to many fields,
including engineering, manufacturing and design.
3
For example, manufacturers have
recognized the relationship between their operational processes and the natural
environment and sustainability has become an increasingly important factor in their
decision-making regarding product design and production. In fact, many manufacturers
view improving environmental stewardship and sustainability, while maintaining
profitability and productivity, as important strategic goals and have openly adopted
2
M. Rosen and H. Kishawy, “Sustainable Manufacturing and Design: Concepts, Practices and Needs”,
Sustainability, 4 (2012), 154, 159.
3
Id. at 155, 157, 164.
Sustainable Manufacturing
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sustainable manufacturing measures and strategies. This trend has accelerated with
growing recognition and acceptance of the serious consequences that traditional usage of
natural resources (i.e., energy, materials, and water) may have on the lives of people all
around the world. The issues a manufacturer faces are complex and involve a variety of
factors including technology and engineering, economics, environmental stewardship,
health and welfare of people and the communities in which they live and work, social
desires, and government strategies, procedures, and policies. Manufacturers need to
balance, and make trade-offs between, the economic, environmental, and social goals and
pressures, and must have access to meaningful information on sustainable manufacturing
to deploy sustainability as a positive force in their manufacturing strategies and activities.
In addition, they must contend with pressures for sustainable manufacturing from a wide
range of stakeholders including employees, investors, suppliers, customers, competitors,
communities, governments, and regulatory bodies.
Potential business benefits from sustainable manufacturing include access to an
expanding green marketplace, opportunities to satisfy the demands of retailers for
suppliers who are responsive to green customers, enhanced financial value by developing
a “green reputation”, opportunities for cost savings in manufacturing processes that will
ultimately increase overall profits and access to talented workers who value sustainability
and demand green workplaces.
4
Important contributors to sustainable manufacturing
include the following
5
: sustainability indicators, policies and procedures; company
procedures, culture and conditions for sustainability: sustainable design; supplier attitudes
and support for sustainability; customer attitudes and support for sustainability;
environmental controls, monitoring and remediation; and community engagement for
sustainability. While manufacturers have made significant progress in integrating
sustainability and specific tools such as life cycle assessment with manufacturing and
relevant decision-making structures, Rosen and Kishawy argued that there were several
specific needs for further enhancement of manufacturing sustainability
6
:
• Approach: A more comprehensive, broad and integrated approach is needed for
sustainability, one which goes beyond individual companies and encompasses
economic, social, environmental and other relevant considerations with the goal of
making the manufacturing industry more sustainable.
• Methods and Tools: Enhanced methods and tools for manufacturing are needed to
foster and support sustainability.
• Data: More detailed, comprehensive and robust data, standardized where feasible, are
needed to support environmental impact and sustainability assessments, and measures
across the overall product life cycle.
• Manufacturing Company Practices: Manufacturing companies should incorporate
sustainability into their practices holistically with particular emphasis on improved
measuring and monitoring of sustainability indicators by companies, company
policies and governance that focus on sustainability, improved efforts to control a
4
http://www.oecd.org/innovation/green/toolkit/aboutsustainablemanufacturingandthetoolkit.htm
5
M. Rosen and H. Kishawy, “Sustainable Manufacturing and Design: Concepts, Practices and Needs”,
Sustainability, 4 (2012), 154, 169.
6
Id. at 163.
Sustainable Manufacturing
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company’s environmental impact, establishing a sustainability-supportive company
culture and working conditions, enhancing awareness of sustainability among
suppliers and customers, responding to their requirements and measures, and
engaging the community to promote sustainability.
• Government Policies: Governments and relevant agencies need to cooperate and
collaborate with internal and external partners to incorporate into policies, programs
and operations stronger consideration of sustainability, environmental factors, and
clean processes.
• Research: Additional resources need to be shifted toward increasing collaborative
research in industry and academia in the fields of sustainability, manufacturing,
design and environmental impact.
Rosen and Kishawy made predictions on the evolution of the sustainability of
manufacturing.
7
They noted that in the past manufacturers were focused on accumulating
and reconfiguring economic, human, natural and information resources so that the
financial resources emerging from their internal production systems were larger than
those that entered. However, achieving sustainability of manufacturing means companies
must also satisfy social and environmental objectives or constraints while they are
undertaking reconfiguration of resource inputs. In order to be successful in these efforts,
companies must shift their traditional approach to investments in plants and
corresponding improvement and optimization efforts that have typically been driven by
increased productivity, reduced operating costs and work effort and enforced regulatory
compliance and incorporate new goals and objectives such as increasing the utilization
efficiency of energy, materials, human and information resources and related technology
and equipment. Specific predictions about changes in approach by Rosen and Kishawy
included the following
8
:
• A shift from required environmental compliance to enhanced environmental
compliance often exceeding minimal requirements
• A shift from a focus on economic operational efficiency to increased operational
efficiency beyond that necessitated based solely on traditional economics
• A shift from communication that supports business objectives (i.e., reputation, brand
recognition, etc.) to communication to support expanded business objectives
including corporate social responsibility
• A shift from simply meeting legal regulations for compliance with little voluntary
activity to compliance with more voluntary activity driven partly by market forces for
sustainability objectives
At the same time these evolutionary changes are occurring, companies are able to
improve their operating cost structures, and their economic operational efficiencies, by
implementing technological improvements to their energy systems.
OECD Sustainable Manufacturing Toolkit
7
Id. at 160-161.
8
Id. at 161.
Sustainable Manufacturing
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The Organisation for Economic Co-operation and Development (“OECD”) has created and distributed a
useful toolkit for small- and medium-sized enterprises (“SMEs”) seeking to introduce sustainability into
their manufacturing processes which includes a start-up guide and web portal
(http://www.oecd.org/innovation/green/toolkit/aboutsustainablemanufacturingandthetoolkit.htm) with
detailed explanations of sustainability indicators, technical advice on performance management and links to
further guidance. The OECD noted that while there is no single common definition of sustainable
manufacturing, the concept is adequately summed up by the Sustainable Manufacturing Initiative of the US
Department of Commerce: “The creation of manufactured products that use processes that minimize
negative environmental impacts, conserve energy and natural resources, are safe for employees,
communities, and consumers and are economically sound.” Sustainable manufacturing involves
acknowledging and balancing economic, environmental and social aspects, as depicted in this graphic from
the OECD:
Three-Dimensional Aspects of Sustainable Manufacturing
The OECD recommended the following seven action steps for sustainable manufacturing to SMEs:
• Map your impact and set priorities: Bring together an internal “sustainability team” to set objectives,
review your environmental impact and decide on priorities.
• Select useful performance indicators: Identify indicators that are important for your business and what
data should be collected to help drive continuous improvement.
• Measure the inputs used in production: Identify how materials and components used into your
Sustainable Manufacturing
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production processes influence environmental performance.
• Assess operations of your facility: Consider the impact and efficiency of the operations in your facility
(e.g. energy intensity, greenhouse gas generation, emissions to air and water).
• Evaluate your products: Identify factors such as energy consumption in use, recyclability and use of
hazardous substances that help determine how sustainable your end product is.
• Understand measured results: Read and interpret your indicators and understand trends in your
performance.
• Take action to improve performance: Choose opportunities to improve your performance and create
action plans to implement them.
The OECD cautioned that the “seven steps are not necessarily a one-way journey” and that companies
should apply them for a cyclical management process which results in continuous learning, innovation and
improvement.
Assessment of the Environmental Impact of Products
The environmental impact of a company’s products can be assessed through several
different dimensions
9
:
• The design process for the products is obviously an important factor and companies
have increasingly focused on identifying and measuring the environmental impacts of
their products over the product life cycle and using the information to integrate
environmental improvements into their products while retaining competitiveness.
Methods that manufacturers have deployed in their product design processes include
“design for environment”, “product flexibility”, “life cycle management”, “life cycle
analysis” and “product stewardship”. Consideration of product flexibility drives
companies toward solutions such as materials substitution and is also important as
product life cycles decrease and product customization increases.
• The manufacturing process itself is fertile ground for environmental improvements
and companies are pursuing zero-emission (i.e., closed-loop) manufacturing through
increased emphasis on reduction, reuse, recycling and remanufacturing. Companies
are developing capabilities for pollution prevention (e.g., substitution) and waste
reuse. In addition, in order to achieve greater flexibility in their manufacturing
processes companies must introduce manufacturing equipment that can accommodate
variations in material flows, a solution that also reduces waste and enhances
sustainability. Advances in sustainability in the packaging area have been achieved
through recyclable packaging designs.
• Companies are adopting formal organizational manufacturing practices such as ISO
14000 certifications. While practices do not guarantee that environmental
improvements will occur, they do increase the likelihood that companies will
incorporate manufacturing sustainability into their strategies, develop and maintain
new environmental programs and technology and implement benchmarking and
performance measurement programs. Changes in processes are also occurring to
integrate attention to and measurement of resource consumption, emissions of toxic
substances and pollution.
9
M. Rosen and H. Kishawy, “Sustainable Manufacturing and Design: Concepts, Practices and Needs”,
Sustainability, 4 (2012), 154, 158.
Sustainable Manufacturing
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Models for Manufacturing and Improved Sustainability
Rosen and Kishawy suggested that the environmental health and safety technology
engagement model proposed by Harland et al. that could also serve as a basis for
demonstrating how sustainability objectives could be implemented during the
development and commercialization of a product or process.
10
Their model included
three phases, each of which included specific opportunities for addressing sustainability:
• Research: The research phase offers manufacturers the first significant opportunity to
influence the design process. At this point, the manufacturer can evaluate and
examine a wide range of specific sustainability requirements such as energy and
resource use, pollution and climate change impacts and, if necessary, allocate
research-related resources toward solving manufacturing environmental issues. In
general, the potential for modifications at this phase is low to medium.
• Development: During the development phase, manufacturer typically attempt to
improve environmental performance by focusing on equipment and material selection
and system design and implementing various sustainability tools and methods such as
“design for environment”, environmental footprint assessment and life cycle analysis.
At this stage, manufacturers should be working closely with vendors to identify and
promote environmental improvements and the potential for modifications that
enhance sustainability characteristics is high during this phase.
• Commercialization: Once the project has moved from development to
commercialization, manufacturers should continue to extend and refine the efforts
begun during the development phase and work closely with suppliers, vendors and
customers. While the potential for modifications is relatively low at this stage and
time pressure is building due to the forthcoming launch of commercial modification,
the cost benefit of proper decisions is high.
Rosen and Kishawy emphasized that designing a new manufacturing product or services
often takes a significant period of time and that opportunities for implementing
sustainability objectives vary depending on the phase of development. They noted that
manufacturers should not consider sustainability factors at a single point in the
development process but instead must be prepared to make a long-term commitment to
integrate sustainability that begins with early research and continues forward throughout
commercialization and the accompanying engagement of outside parties such as
suppliers, vendors and customers. Some manufacturers operate under discipline time
frames and models for new product development that ensure that ample time is available
for building sustainability into products and processes prior to commercialization.
Tools and Processes for Design and Sustainability
Product developers need environmental design tools, which are conceptual frameworks
that allow weighting, grouping, and comparison of completely different aspects of the
10
Id. at 162-163 (citing J. Harland, T. Reichelt and M. Yao, “Environmental Sustainability in the
Semiconductor Industry” in Proceeding of the IEEE Symposium on Electronics and the Environment (San
Francisco, CA, May 2008), 1).
Sustainable Manufacturing
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product’s life cycle.
11
Common tools and processes used for integrating sustainability
into the design process include “design for environment”, “design for sustainability”,
“life cycle thinking” and the “environmental impact matrix”. Rosen and Kishawy
explained that “design for environment” entailed the consideration of environmental
impact throughout the design process and the full life cycle of a product or process in
order to develop a holistic and comprehensive understanding of environmental impacts.
12
Design for environment relies on “life cycle assessment” (“LCA”), which involves
analyzing the environmental impacts of a product or service through all phases of its life,
with the objective of reducing environmental damage, in part by enhancing resources
conservation and efficiency. There are four steps in LCA: goal and scope definition, life-
cycle inventory analysis, impact assessment and interpretation. The LCA process looks
at consumption of energy and other resources and environmental discharges of material
and energy wastes, and the information generated from the LCA can be used to develop
and implement strategies for the design/selection of products, materials, processes, reuse,
recycling and final disposal. LCA is incorporated into the ISO Series 14040 standards.
13
A report prepared by the Design Work Group (“DWG”) of the West Michigan
Sustainable Business Forum noted: “Life cycle assessment (“LCA”) of consumer
products can be a very complicated endeavor. A full LCA provides detailed analyses of
processes and materials involved in raw material acquisition, material manufacture,
product manufacture, filling/packaging, and consumer use/product disposal.
Environmental aspects of these activities may include resource consumption, energy
consumption, water usage, airborne emissions, waterborne effluents, and solid/hazardous
waste generation. Finally, risk assessment should be used to determine the potential for
adverse environmental impacts to humans and wildlife.”
14
Rosen and Kishawy described “design for sustainability” as incorporation of
sustainability objectives into design activities and noted that several different approaches
aimed at design for sustainability had been reported.
15
For example, McDonough and
Braungart proposed a “triple bottom line” approach to design for sustainability in which
11
Designing Products and Services with Sustainable Attributes: An Internal Assessment Tool for Product
Developers (Grand Rapids, MI: The Design Work Group West Michigan Sustainable Business Forum,
1999), 4.
12
M. Rosen and H. Kishawy, “Sustainable Manufacturing and Design: Concepts, Practices and Needs”,
Sustainability, 4 (2012), 154, 164.
13
M. Rosen, “Energy efficiency and sustainable development”, International Journal of Global Energy
Issues, 17 (2002), 23; C. Hendrickson, A. Horvath, J. Satish, L. Lave, “Green design: Economic input-
output models for environmental life-cycle assessment”, Environmental Science Technology, 32 (1998),
184A; R. Harms, T. Fleschutz and G. Seliger, “Life Cycle Management of production facilities using
semantic web technologies”, CIRP Annual Manufacturing Technology, 59 (2008), 45; and ISO 14040:
Environmental Management-Life Cycle Assessment—Principles and Framework (Geneva: International
Standards Organisation).
14
Designing Products and Services with Sustainable Attributes: An Internal Assessment Tool for Product
Developers (Grand Rapids, MI: The Design Work Group West Michigan Sustainable Business Forum,
1999), 4.
15
M. Rosen and H. Kishawy, “Sustainable Manufacturing and Design: Concepts, Practices and Needs”,
Sustainability, 4 (2012), 154, 165.
Sustainable Manufacturing
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firms balanced traditional economic objectives with social and environmental concerns.
16
The EcoDesign approach recognizes and balances three key contributors: design,
economics and ecology.
17
Eco-efficiency strategies focus on maintaining or increasing
the value of economic output while decreasing the impact on ecological systems.
18
Rosen and Kishawy noted that suggestions for improvements to methodologies for design
for sustainability have included using an engineering approach within lean product
development systems for managing product development and a more sophisticated
inclusion of environmental and sustainability issues in constraints and design parameters
in order to permit evaluation of the effect of sustainability on product costs, project
complexity and process design in a more holistic and data driven manner.
19
Fava provided the following description of “life cycle thinking” and contrast to life cycle
assessment (“LCA”)
20
: “Life cycle thinking is a unique way of addressing environmental
problems from a systems or holistic perspective. In this way of thinking, a product or
service system is evaluated or designed with a goal of reducing potential environmental
impacts over its entire life cycle. The essential difference is that life cycle thinking does
not normalize the results to a functional unit, as is done as part of a formal LCA study.
Additionally, with life cycle thinking the results may be expressed either qualitatively or
quantitatively. In LCA, the results are generally quantitative in nature.”
A report prepared by the Design Work Group (“DWG”) of the West Michigan
Sustainable Business Forum noted that “when designers are commissioned by an
employer or a customer to create a new product or service, they are required to consider a
number of variables including aesthetics, availability, durability, maintenance, materials,
processing technology, cost, customer needs, and performance specifications” and that it
has often been difficult for them “to include environmental considerations because of a
16
W. McDonough and W. Braungart, “Design for the triple top line: New tools for sustainable commerce”,
Corporate Environental Strategy, 9 (2002), 1711.
17
R. Karlsson and C. Luttropp, “What’s happening—An overview of the subject area of eco-design and the
papers in this special issue”, Journal of Clean Production, 14 (2006), 1291.
18
M. Braungart, W. McDonough and A. Bollinger “A. cradle-to-cradle design: creating healthy
emissions—A strategy for eco-effective product and system design”, Journal of Clean Production, 15
(2007), 1337;
19
M. Borea and B. Wang, “Redesign methodology for developing environmentally conscious products”,
International Journal of Production Research, 45 (2007), 4057; C. Grote, J. Jones, G. Blount, J. Goodyer
and M. Shayler, “An approach to the EUP directive and the application of the economic eco-design for
complex products” International Journal of Production Research, 45 (2007), 4099; T. Sakao, “AQED-
centered design methodology for environmentally conscious product design”, International Journal of
Production Research, 45 (2007), 4143; J. Morgan and J. Liker, The Toyota Product Development System:
Integrating People, Process, and Technology (New York: Productivity Press, 2006); and D. Johnson and R.
Srivastava, “Design for Sustainability: Product Development Tools and Life Cycle Economics” in
Proceedings of the 39th Annual Meeting of the Decision Sciences Institute (Baltimore, MD, November
2008), 1711.
20
J. Fava, “Life Cycle Assessment: What Is It and How Does It Fit Into a Broader Environmental
Framework?”, Society of Environmental Toxicology and Chemistry Newsletter (January 1999) (as quoted
in Designing Products and Services with Sustainable Attributes: An Internal Assessment Tool for Product
Developers (Grand Rapids, MI: The Design Work Group West Michigan Sustainable Business Forum,
1999), 3.
Sustainable Manufacturing
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lack of a generic systems approach to compare material specification options”.
21
Noting
that this situation makes it difficult for design professionals to document environmental
sustainability improvements in their products, the DWG proposed a new tool, which they
referred to as the Environmental Impact Matrix (“EIM”) Rating System, to evaluate
progress toward achieving sustainability in new products and services.
22
The DWG explained that users of the matrix must allocate numeric values, by material
type, for sustainable and environmental attributes for each product being evaluated.
23
The horizontal rows in the matrix would list specific materials or sub-processes related to
the product or service being evaluated. The vertical columns in the matrix would identify
environmental aspects potentially associated with a product or service. The recommended
environmental aspects (and their sub-components) included Building/Operations
(reusability/recyclability, maintenance requirements and life expectancy/durability);
Energy (transportation and manufacturing energy consumed); Health/Welfare
(community health and welfare, building occupant health and worker/installer health);
and Environment/Ecosystem (acute/chronic toxicity, biodiversity/habitat loss, land and
soils, resource depletion, water quality and air quality).
24
The basic EIM system used a rating from 0 to 5, with 0 signifying least impact and 5
signifying most impact. They explained that since the EIM was only to be used within a
single company to compare similar products, the absolute score was irrelevant, but should
be consistent within comparisons). Numeric values were subjective and company
specific and should take account specific factors such as regulatory considerations,
industry consensus, company preference, or a combination of influences relevant to the
company’s corporate values, internal business, social, and environmental ethics and
goals.
25
The EIM was not intended as a tool for comparing a company’s internal product
to a competitor’s product, but rather was to be used as a means for evaluating how
changes to a product over time during the development process resulted in a more
sustainable product and for comparing alternative product options against one another.
The DWG argued that the EIM was easy to use, straightforward and logical, and if used
consistently it would allow companies to measure product to product improvements. At
the same time, however, the EIM was not suitable for a complete life cycle assessment
and hard data may not be available to support each company’s index values, meaning that
the value of the process lies heavily with the experience and judgement of those involved
in the analysis.
26
Another limitation of the EIM is that focuses only on those aspects that
are under the control of the performing the analysis since it is often difficult or
21
Designing Products and Services with Sustainable Attributes: An Internal Assessment Tool for Product
Developers (Grand Rapids, MI: The Design Work Group West Michigan Sustainable Business Forum,
1999), 2.
22
According to the DWG, much of the initial material used in developing the EIM was obtained from the
work completed by the American Institute of Architects, especially the Impact Assessment Matrix found in
their Environmental Resource Guide. Id. at 6.
23
Id. at 6.
24
Id. at 9.
25
Id. at 6.
26
Id. at 7.
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impossible to trace the origins of raw materials to their original sources to determine the
extent of environmental impact.
Sustainable Supply Chains
Companies cannot achieve optimal effectiveness in integrating sustainability into their
manufacturing activities without the cooperation of the members of their supply chain.
Wollmuth and Ivanova reported that stakeholder pressure from investors, shareholders,
customers and non-profits to push sustainability into the supply chain has increased and
that reporting guidelines, such as those issued by the Global Reporting Initiative (“GRI”),
required an increased focus on sustainability throughout the supply chain.
27
While
supply chain management provided opportunities for conservation of resources,
optimization of processes, product innovations, cost savings, increased productivity and
promotion of corporate values, companies often struggle with implementation and
Wollmuth and Ivanova offered the following list of basic steps for companies to move
toward establishing and maintaining sustainable supply chains
28
:
• Map your supply chain: Many companies do not have a comprehensive
understanding of the sustainability impacts of their supply chain. An early step is to
inventory suppliers, identify the most significant environmental and social challenges
they have, and prioritize efforts with suppliers. Companies may use the mapping
process to reduce the number of suppliers they do business with, in part based on
performance against sustainability criteria, and then focus on forming strong, positive
partnerships with the remaining suppliers.
• Communicate expectations: Focusing on sustainability within your supply chain is a
great way to communicate corporate values and culture to your suppliers and
customers. Establishing and communicating expectations through a supplier code of
conduct is a critical step in involving suppliers in your sustainability efforts.
• Baseline supplier performance: Once the key supplier have been identified and
targeted, companies need to set compliance standards and collect data from suppliers
through a simple benchmarking questionnaire or self-assessment that provides a
starting point for future programs to improve supply chain sustainability and help
assess where the greatest need for improvement exists. Content for assessments is
available from the GRI guidelines and industrywide surveys (e.g., Electronics
Industry Citizenship Coalition Self-Assessment Questionnaire and Pharmaceutical
Supply Chain Initiative Self-Assessment Questionnaire). Information from
questionnaires and assessment should be used to establish performance metrics that
become the basis for annual scorecards with top tier suppliers. In turn, these
scorecards provide a foundation for communications with suppliers on improvement
and collaboration.
• Develop training and capacity building programs: Training and capacity building
programs are needed in order to improve sustainability and drive behavioral changes
27
J. Wollmuth and V. Ivanova, “6 steps for a more sustainable supply chain” (January 24, 2014),
https://www.greenbiz.com/blog/2014/01/24/6-steps-more-sustainable-supply-chain
28
Id.
Sustainable Manufacturing
12
throughout the supply chain. Companies should leverage best practices and case
studies from top performing suppliers at annual vendor conferences, via online
training modules and through capacity building campaigns.
• Drive performance improvement: Once information from the supplier baseline
assessment has been converted into performance metrics, companies need to establish
and maintain audit programs to measure performance improvement over time. Audit
programs should go beyond questionnaires to include onsite inspections to gather
information on local practices and behavioral challenges. The results from the audits
should be used to develop and execute corrective actions for individual suppliers and
adjust training programs. Companies should also consider pairing assessment and
audits with incentive programs that encourage transparency and motive suppliers by
awarding more business to those suppliers that demonstrate the strongest
sustainability performance. Companies may be able to take advantage of common
auditing and assessment tools that have been developed in specific industries such as
apparel and chemicals.
• Join industry collaborations: Many companies have come to recognize that
complex supply chain challenges cannot be solved by individual efforts and that
industrywide collaboration is required. Peer companies can set aside their
competitive instincts and work together to develop common standards and best
practices for sustainability performance and allow suppliers to be evaluated on the
same metrics using standardized assessment tools that reduce audit fatigue.
Collaborations also allow participants to share knowledge about the sustainability
performance of their common suppliers.
Wollmuth and Ivanova suggested that companies with more mature sustainability
programs could take additional steps such as developing and/or deploying robust tracking
tools, including software solutions, to monitor supplier performance and improvement
over time; performing a logistics assessment to determine where sustainability
improvements can be made; integrating supply chain sustainability criteria into the
procurement process; creating a shift towards supply chain sustainability by leveraging
the company’s buying power and influence; expanding sustainability goals beyond direct
operations across the supply chain; and encouraging innovation.
Sustainability Indicators
Rosen and Kishawy pointed out that the indicators for sustainability, which like all
indicators are important for tracking progress toward specific goals and overcoming
challenges and problems, are different from traditional indicators of economic, social and
environmental progress.
29
They argued that indicators for a sustainable community
identify where the links between economics, environmental stewardship and society are
inadequate, and suggest and prioritize approaches to address the problems. Indicators for
sustainability should focus on relations among the factors of each of the three aspects of
sustainability (i.e., economic, environmental and social) such as the following: the natural
resource base, which provides the materials for production on which jobs and profits
29
M. Rosen and H. Kishawy, “Sustainable Manufacturing and Design: Concepts, Practices and Needs”,
Sustainability, 4 (2012), 154, 156-157.
Sustainable Manufacturing
13
depend; employment, which affects wealth creation, living standards and poverty rates;
poverty, which relates to crime and social unrest and instability; resource, air and water
quality, which affects health; and resources used for production, which affects profits.
30
For example, unless health problems are addressed and remedied, business will suffer
from depressed worker productivity and higher costs of providing health insurance to
their employees. Similarly, businesses will incur expenses and see their profits reduced if
they have to implement water treatment processes in order to cure defects in water quality
when the success of their business is dependent on the availability of clean water.
According to Rosen and Kishawy, effective indicators for sustainability must be holistic
(i.e., taking into account not only economic well-being, but also the impact of economic
activity on social and environmental welfare in the community); relevant (i.e., they reveal
necessary information about a system or process); understandable (i.e., straightforward
and readily understood by experts and non-experts; reliable (i.e., they provide
information that is trustworthy); and assessable (i.e., based on data that is both available
and accessible).
31
As the sustainability movement has progressed efforts have been made
to integrate measures of sustainability into the decision-making practices of companies;
however, a consensus has been difficult to achieve. For example, according to a survey
by Parris and Kates of numerous attempts to define sustainability indicators, up to
indicators have been used and they vary greatly in terms of geographic extent (ranging
from global to local), ability to be managed by business decision makers, and the effort
and costs required to apply them.
32
Others have suggested it is possible to “monetize”
sustainability by incorporating the triple bottom line method into the manufacturing
system and its environment.
33
Rosen and Kishawy surveyed some of the performance measures for reporting
sustainability progress that have been developed, typically in the form of guidelines or
indicator sets, by companies and institutions at regional, national and international
levels.
34
For example, General Motors developed a set of about 30 metrics for
30
According to Rosen and Kishawy, some of the factors that comprise the three parts of sustainability
include the following: for the economic part: productivity, competitiveness, technology, living standards,
employment, wealth and poverty; for the environmental part: natural resources, efficiency, emissions,
environment (air, water, land) quality and recycling; and for the social part: health, poverty, education,
culture, lifestyle, happiness, social harmony and peace. Id. at 157.
31
Id.
32
Id. at 161 (citing T. Parris and R. Kates, “Characterizing and measuring sustainable development”, Ann.
Rev. Environmental Resources, 28 (2005), 559).
33
S. Stokes, Get Ready for Green 2.0 (Dusseldorf, Germany: AMR Research, 2009).
34
M. Rosen and H. Kishawy, “Sustainable Manufacturing and Design: Concepts, Practices and Needs”,
Sustainability, 4 (2012), 154, 166-167 (including citations for sources mentioned in this paragraph). See
also W. Thomas and P. Ong, “Locational adjustments to pollution regulations: The South Coast Air Quality
Management District and the furniture industry”, Economic Development Quarterly, 18 (2004), 220; Z.
Liu, B. Li, H. Huang and H. Zhang, “Research on Quantitative Assessment Methods of Environmental
Performance in Green Design” in Proceedings of the Proceeding of the 15th CIRP International
Conference on Life Cycle Engineering (Sydney, Australia, March 2008), 136; I. Jawahir, F. Badurdeen, A.
Gupta and A. Jayal, “Towards Developing Metrics for Sustainable Manufacturing” in Proceedings of the
7th Global Conference on Sustainable Manufacturing (Madras, Chennai, India, December 2009), 27; R.
Singh, H. Murty, S. Gupta and A. Dikshit “An overview of sustainability assessment methodologies”,
Ecological Indicators, 9 (2009), 189; United Nations Committee on Sustainable Development. Indicators of
Sustainable Manufacturing
14
sustainable manufacturing based on a review of state-of-the-art metrics for sustainable
manufacturing. These metrics covered six main areas: environmental impact, energy
consumption, personal health, occupational safety, waste management, and
manufacturing costs. Ford’s product sustainability index was developed by considering
life cycle assess, life cycle cost analysis, sustainable materials, safety, mobility capability,
noise and other factors and included eight indicators covering environmental, economic
and societal factors. The Walmart sustainability product index questions include 15
questions for suppliers intended to encourage suppliers to meet sustainability
requirements and to help customers to make purchase decisions. The Dow Jones
sustainability index focuses on both the financial and sustainability performance of the
top 10% of companies in the Dow Jones Global Total Stock using criteria covering
economic, environmental and social factors and based on information provided by the
companies, stakeholders and the media.
Important institutional indicator sets have been developed by the United Nations
Commission on Sustainable Development, the Organization for Economic Co-operation
and Development (“OECD”) and the European Union and cover a wide range of themes
and policy areas (e.g., climate change, air pollution, biodiversity, toxic substance
dispersion) and environmental and economic factors. The OECD sustainable
manufacturing indicators are intended to assist internal management and decision making
and include the following 18 important and commonly applicable quantitative indicators
of environmental performance grouped into three categories (i.e., inputs, operations and
products)
35
:
• Inputs: Non-renewable materials intensity; restricted substances intensity; and
recycled/reused content
• Operations: Water intensity; energy intensity; renewable proportion of energy;
greenhouse gas intensity; residuals intensity; air releases intensity; water releases
intensity; and proportion of natural land
• Products: Recycled/reused content; recyclability; renewable materials content; non-
renewable materials intensity; restricted substances content; energy consumption
intensity; and greenhouse gas emissions intensity
Factors Impacting Successful Implementation of Sustainable Manufacturing
According to Rosen and Kishawy, the successful implementation of sustainability into
manufacturing organizations depends on many factors including the following
36
:
• Information: Organizations need the specific quantitative and qualitative information
required for them to make assessments (e.g., the quantity and type of metal a process
Sustainable Development: Guidelines and Methodologies, 3rd ed (New York: United Nations, 2007); and
OECD. Part B—Environmental Performance Indicators, OECD Rome Conference Proceedings-Volume II:
Framework s and Indicators (2000), 99.
35
http://www.oecd.org/innovation/green/toolkit/aboutsustainablemanufacturingandthetoolkit.htm
36
M. Rosen and H. Kishawy, “Sustainable Manufacturing and Design: Concepts, Practices and Needs”,
Sustainability, 4 (2012), 154, 161-162.
Sustainable Manufacturing
15
uses, the quantity and type of pollutants emitted); however, such information is not
always readily available and can often be difficult, if not impossible, to acquire.
• Management and Culture: Management needs to develop and disseminate a holistic
approach to sustainability issues that permeates the organizational culture and drives
decision making about environmental stewardship priorities and activities. Absent
such leadership from the top, specialized departments will make decisions based on
their own priorities and experiences, which ultimately leads to inconsistent
application and discourages the development of a sustainability-oriented
organizational culture.
• Procedures: A number of variable need to be taken into account when making
decisions regarding organizational activities and decision makers and staff need to be
provided with the methodologies and procedures required to ensure that the
organization’s sustainability objectives and strategies are taken into account in
decision making and applied effectively, efficiently, consistently and robustly.
Sustainable Manufacturing
16
_______________
About the Author
This Work was written by Alan S. Gutterman, whose prolific output of practical guidance and tools for
legal and financial professionals, managers, entrepreneurs, and investors has made him one of the best-
selling individual authors in the global legal publishing marketplace. Alan has authored or edited over 300
book-length works on entrepreneurship, business law and transactions, sustainability, impact investment,
business and human rights and corporate social responsibility, civil and human rights of older persons, and
international business for several publishers including Thomson Reuters, Practical Law, Kluwer, Aspatore,
Oxford, Quorum, ABA Press, Aspen, Sweet & Maxwell, Euromoney, Business Expert Press, Harvard
Business Publishing, CCH, and BNA. His cornerstone work, Business Transactions Solution, is an online-
only product available and featured on Thomson Reuters’ Westlaw, the world’s largest legal content
platform, which covers the entire lifecycle of a business. Alan has extensive experience as a partner and
senior counsel with internationally recognized law firms counseling small and large business enterprises in
the areas of general corporate and securities matters, venture capital, mergers and acquisitions, international
law and transactions, strategic business alliances, technology transfers and intellectual property, and has
also held senior management positions with several technology-based businesses including service as the
chief legal officer of a leading international distributor of IT products headquartered in Silicon Valley and
as the chief operating officer of an emerging broadband media company. He has been an adjunct faculty
member at several colleges and universities, including Berkeley Law, Golden Gate University, Hastings
College of Law, Santa Clara University and the University of San Francisco, teaching classes on corporate
finance, venture capital, corporate governance, Japanese business law and law and economic development.
He has also launched and oversees projects relating to promoting the civil and human rights of older
persons and a human rights-based approach to entrepreneurship. He received his A.B., M.B.A., and J.D.
from the University of California at Berkeley, a D.B.A. from Golden Gate University, and a Ph.D. from the
University of Cambridge, and he is also a Credentialed Professional Gerontologist (CPG). For more
information about Alan and his activities, please contact him directly at alangutterman@gmail.com, follow
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Copyright Matters, Permitted Uses, Disclaimers and Suggested Citation
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retained by Alan S. Gutterman; however, the copyright owner grants the public the non-exclusive right to
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