Establishing Sustainable Manufacturing Practices in SMEs Rainer Seidel, Manuel Seidel, Mehdi Shahbaz

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Establishing Sustainable Manufacturing Practices
in SMEsRainer Seidel, Manuel Seidel, Mehdi
Shahbazpour
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Presentation Contents

• Sustainable Manufacturing in New Zealand
• Case Study Background
• Project Strategy and Approach
• Tools and Methods Applied
• Achievement and Outcomes
• Conclusions

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Sustainability in New Zealand

• A clear emphasis on environmental aspects is
  essential for New Zealand companies as well as
  for its people
• New Zealand has an image overseas of a clean,
  green country with products and services to
  match. With food and drinks export sales alone in
  the region of NZ14 billion (about 7.8 billion),
  New Zealand stands to lose a lot if it can not
  demonstrate to our customers around the world
  that it practices what it preaches
• New Zealand Business Council for Sustainable
  Development, November 2003
• However, implementing sustainable manufacturing
  practices is a challenge for New Zealand SMEs
  and at this stage there are still relatively few
  public resources, no major funding mechanisms,
  and little experience to support the development
  of sustainability in manufacturing enterprises
  in this country

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Project Background CML Ltd.

• Mediumsized, family-owned New Zealand
  manufacturing company
• Largest panel furniture manufacturer in Australia
  New Zealand
• Capacity ½ million pieces of furniture per year
• 70 of production exported Australia, USA
• Growth achieved through good cost/quality mix,
  and flexibility and variety of products
• Very competitive market, high pressure of low
  cost imports
• Profitability and cash flow a major problem
• No prior experience with sustainable
  manufacturing

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Origin of Sustainability Programme

• The establishment of the sustainability programme
  at CML in 2004 was based on the serendipitous
  synergy of a range of factors
• The CFO of CML developed a personal relationship
  with a potential European customer, who informed
  him about environmental legislation and trends in
  the EU, and raised his interest in
  sustainability.
• University staff and project students associated
  with CML expressed interest in green
  manufacturing work, which provided an external
  drive and low cost development resources
• First signals were emerging from Australian
  government agencies that sustainability would
  become a factor in government projects
• Sustainability was identified as an emerging
  competitive factor to ensure CMLs future
  competitiveness

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Project Strategy and Approach

• Building a strong foundation for the strategic
  integration of sustainability in CMLs management
  processes, in order to make optimum progress and
  to gain the maximum benefit from the project
  developments
• Develop an in-depth understanding of
  sustainability in general, and of its benefits,
  risks and opportunities for CML in particular
• Evaluate CMLs current situation, and identify
  the factors in its business environment and its
  existing and prospective markets with a potential
  impact on or benefit from sustainable production
• Identify tools, methods and mechanisms, as well
  as support programmes and best practice examples,
  that could be used to make progress

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Business Tools Applied

• SWOT Analysis
• Framework for achieving insights into the
  situation and for formulating development goals
  in line with the requirements of the organisation
  and other stakeholders
• Covering both macro- and microeconomic (business)
  levels
• Consideration of the salient parameters of the
  existing and future external environment
• Stakeholder Analysis
• Identification of the roles and views of
  stakeholders affected by the integration of
  sustainability
• Considering the three dimensions that determine
  the salience of stakeholders Power, Legitimacy
  and Urgency
• Categories of stakeholders covered internal
  stakeholders, stakeholders along the value chain,
  stakeholders in the local community, and societal
  stakeholders
• Causal Loop Analysis
• Identification of the effects, interrelationships
  and dynamics of implementing sustainability

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SWOT Analysis
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Conclusions from SWOT

• Products qualify for entry into markets with more
  stringent environmental legislation such as
  Europe and Japan.
• The company will gain the image of being the
  forerunner in the furniture market in
  Australasia.
• Sustainability can be added as a new
  order-winning criterion to CMLs mix of
  capabilities, to further differentiate its
  products in the local market which is heavily
  under competition from Chinese manufacturers.
• Significant reductions in energy usage and
  savings in waste disposal are achievable.
• Risks due to up and coming environmental
  legislation in New Zealand will be significantly
  reduced.

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Causal Loop Analysis Understanding the
Relationships
Important conclusions - Reinforcing effects are
strong, but acting mostly long term -
Balancing effects are dangerous for short term
profitability
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Refined Project Strategy

• Develop a long term work plan for all
  sustainability activities
• Use a step-by-step approach and low cost
  resources
• Establish a life cycle inventory of furniture
  production to quantify potentials and impacts
• Identify opportunities to increase the
  sustainability of CMLs manufacturing processes
  and set targets
• Integrate sustainability in CMLs management
  processes.

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Further Tools

• Life Cycle Inventory
• Main objective To identify the environmental
  impact of the used resources and of the produced
  waste
• Initial focus on internal processes to achieve
  immediate improvements, visibility and
  credibility
• Foresighting and scenario building
• Understanding of alternatives and their impacts
• Eco-labels and -programmes
• Alignment with standards
• Communication of achievement to markets
  branding
• Guidelines and milestones for sustainability
  project

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Results from Life Cycle Inventory
Ranked waste types
Ranking criteria
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Enviro-Mark NZ Programme

• Five step, structured approach to achieving ISO
  14001
• Adopted as the main tool to create focus and a
  project plan with milestones and measurable
  outcomes
• Used communicate CMLs commitment to
  sustainability and the project achievements to
  its customers (through packaging, marketing
  material and company website)
• Since project start in 2004, four levels have
  been successfully achieved Platinum Level in
  December 2006
• A range of individual improvement activities
  (e.g. the sustainable packaging project) have
  been integrated in the overall programme
• The audit for the final Diamond Level will be
  organised in the next few months

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Conclusions

• The implementation of sustainable manufacturing
  practices in SMEs requires a strategic and
  well-structured approach
• The application of a broad range of business
  analysis tools such as SWOT, Stakeholder and
  Causal Loop Analysis, and environmental analysis
  tools such as Life Cycle Inventory and
  Foresighting is essential for success
• SA structured programme such as the Enviro-Mark
  NZ scheme creates a solid framework that gives
  the sustainability project direction and helps
  motivate staff and stay on track