Environmental Systems Design and Implementation

ENVIRONMENTALLY CONSCIOUS PRODUCT DESIGN THROUGH TOTAL QUALITY MANAGEMENT

Bruce Paton

The actions o fgovemments, customers, and competitors are influencing corporate environmental management in unprecedented ways. Market requirements are affecting both revenues and costs in ways that individual firms cannot control. The uncertainty that these new requirements create underscores the critical importance ofplanningand implementinga system- atic approach to the design ofproducts and the processes used to build, ship, support, and recover them. In this article the author shows how Total Quality Management offers a useful framework for aligning a company’s market focus, its business plans, and its management of critical business processes. This alignment is critical, if companies are to create environmentally conscious products while remaining competitive in a global marketplace.

fter decades of managing environmental emissions from their plants, corporations are turning their attention to the envi- A ronmental effects of their products. Two revolutions, which are

occurring simultaneously, are responsible for this expansion in the scope of corporate environmental management.

The first revolution is a dramatic increase in the scope of environ- mental laws and regulations. Governments around the world are imposing broad new requirements that address the environmental effects of packages and products and of the processes used to make and support them. After more than two decades of regulating waste emissions from plants, governments are imposing requirements that are much more intrusive to the manufacturer’s internal processes.

The second revolution is the emergence of strong market pressures for products and processes that create fewer demands on the environ- ment. As global awareness of environmental issues increases, compa- nies are feeling increasing pressure from their customers and share- Bruce Paton is a quality

program manager in Hewlett-Packard’s Product Processes Organization. He is currently developing user documentation for HP’s Qualiy Maturity System. Previously he managed HP’s Product Stewardship program, which addressed the environmental impacts of products.

holders to reduce the environmental impacts of their operations. This second revolution has been gaining momentum over the past few years, as businesses have begun pressuring other businesses, including their suppliers and their competitors, to reduce their environmental impacts.

These requirements are raising the stakes for design decisions and posing unprecedented challenges for manufacturing companies. They are forcing manufacturers to reexamine their approaches to a wide

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TQM’s traditional emphasis on the customer.

range of concerns, including product and packaging design, material selection, production processes, and energy consumption, to name just a few. In an era of brutal international competition, companies must reconcile these new requirements with other imperatives, par- ticularly pressures to compete on cost and time-to-market. Total Quality Management offers valuable insights for integrating these new requirements into the fabric of business.

Total Quality Management Total Quality Management has emerged over the last two decades

as a powerful framework for managing change. Traditional TQM concepts have emphasized the following:

Focusing on customer needs Encouraging participation by all employees in improvement efforts Applying process management methods to all business activi- ties Using a disciplined, fact-based approach to make improve- ments Continuously improving all aspects of the business

Many companies have experienced dramatic improvements in the quality of their products and services and in the performance of their businesses. Despite this success, many other companies have been disappointed at the results from their substantial investments of time and resources in TQM efforts.

Over the past few years, many companies have been forced to examine the results from their Total Quality Management programs. This examination is gradually producing a new synthesis of quality concepts with a stronger focus on business results. Several new elements have been added to the traditional concerns of TQM. For example, many businesses are beginning to understand the critical role of leadership in driving business improvements.

Several elements of this new synthesis are particularly relevant to environmentally conscious product design. This article highlights two concepts that are central to this new business focus in TQM: market focus and alignment.

Market focus expands TQM’s traditional emphasis on the cus- tomer. It addresses customer needs in the context of the other factors that affect a company’s performance in the marketplace. These factors include competitors, global economic trends, and governmental requirements. Market focus can motivate a company to anticipate customer needs by providing advance notice of emerging trends that will shape the nature of the business environment in the future.

Alignment stresses the importance of coordinating critical ele- ments of business strategy. (See Exhibit 1) Alignment among market focus, business planning, and process management is particularly

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Planning Process

Exhibit 1: Alignment among Critical Business Elements

Process Management

\

important in developing environmentally conscious products.

Market Focus Market focus allows an organization to deliver superior value to

customers at a cost that provides appropriate returns. But it requires an organization to be effective in detecting market trends and in mobilizing to respond to these trends appropriately. The forces driving businesses to create environmentally responsible products are growing rapidly. These pressures are driven by both market forces and government action.

Market Forces Four primary issues are currently driving the market forces: global

environmental awareness, industry initiatives, supplier scrutiny, and environmental codes of conduct.

1. Global environmental awareness. The bulk of growth in demand for many products such as computers, peripherals, and medical instruments for the past several years has occurred in Europe. Environmental awareness is very high in Europe, particularly in Germany and the Scandinavian countries. Re- cently, awareness of environmental issues has become increas- ingly apparent in the industrialized countries in Asian, particu- larly Japan, Singapore, and Korea. This awareness has been expressed in political pressure for more stringent controls and in publicity regarding environmental effects of products.

2. Industry initiatives. Companies in avariety of industries have raised expectations concerning environmental performance. Most notably, the auto industry in Europe has created and publicized systems for recycling cars at the end of their useful life. Similarly, the chemical industry has developed and publi- cized “responsible care” programs to manage chemicals “from cradle to grave.” Recently, several electronics companies, in- cluding IBM, Siemens, Nokia, and Hewlett-Packard, have gained publicity for their provisions to take back products for recy-

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3.

4.

cling or disposal. These actions have created an awareness, particularly among some large customers, that manufacturers can play an active role in minimizing waste. Supplier scrutiny. Several large companies have begun to incorporate environmental performance requirements in their purchase specifications. IBM and British Telecom have been active in supplier evaluations. This scrutiny by powerful cus- tomers has put the manufacturers that supply them on notice that environmental practices are becoming an important vari- able in purchase decisions. The expectations articulated by these large companies address diverse issues, such as environ- mental effects and energy efficiency of manufacturing the product, package and product recycling, and material content. A few companies have begun to incorporate procurement specifications that include recycling provisions as well as guidelines or requirements for recycled content. Environmental codes of conduct. Companies in a wide range of industries have come together to endorse and publicize codes of environmental conduct, such as the International Chamber of Commerce’s Business Charter for Sustainable Development. These codes of conduct have raised community and customer expectations regarding business contribution to environmental improvement.

Table 1 summarizes the key customer requirements emerging from these market pressures.

Government Action Four major trends currently dominate the government influences

on environmentally conscious product design: upward harmoniza- tion, solid waste legislation, product labeling, and government pro- curement policies.

1. Upward harmonization. Environmental laws and regula- tions in the EC and EFTA countries are rapidly harmonizing

Table 1: Emerging Customer Requirements

Make packaging reusable or recyclable. Prevent adverse health effects from using product. Provide reuse/recyling programs for batteries, cartridges, and other consumables. Provide information on material content and materials used in manufacturing. Use energy and materials efficiently. Provide upgrade paths that minimize disposal of existing products. Collect and reuse or recycle products after their useful life.

386

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oluntary V labeling systems use market forces to motivate companies to address a wider range of environmental issues.

upward. The stringency of environmental regulations varies widely within Europe. However, the EC is driving initiatives that require all community members to pass laws comparable to the most stringent laws of any member country.

A less formal version of upward harmonization is also visible in Asia and North America. Governments on both continents are escalating requirements in response to deepen- ing environmental problems. Similarities among recent laws and regulations in different jurisdictions indicate that signifi- cant sharing of ideas is contributing to the general increase in environmental requirements.

2. Solid waste legislation. Germany has been pioneering legisla- tion to limit the amount of waste destined for disposal. A packaging law, which took effect in December 1992, requires manufacturers to collect packaging materials for reuse, recy- cling, or disposal (at no cost to the consumer). A proposed law, which would take effect in 1994, would require electronics manufacturers to take back products at the end of their useful lives.

Solid waste management legislation in the United States has been passed at the state and local levels. After more than a decade of struggling to cope with siting new solid waste disposal facilities, many states have been developing legisla- tion to reduce the sources of solid waste. The majority of these have focused on packaging and consumables such as batteries. A few state laws prohibit the disposal of products such as stoves and washing machines. The U.S. Congress is also considering revisions to the Resource Conservation and Recovery Act (RCRA), which would affect solid waste generation.

3. Product labeling. Product labeling has begun to emerge as a potential market differentiator of products. Product labeling provisions include both mandatory and voluntary programs.

Mandatory labeling has emerged recently in the United States with requirements that any product made with ozone- depleting chemicals bear a visible label. Fear of the market consequences of such labeling has been a powerful motivator for companies to accelerate their programs to phase out the use of these chemicals.

Voluntary labeling systems use market forces to motivate companies to address a wider range of environmental issues. A recent EC directive established a communitywide eco-labeling system. The system establishes criteria defining environmen- tally favorable characteristics for specific product categories. These criteria could then become de facto standards that customers would expect all products to meet.

4. Government procurement policies. Several governments (in- cluding Switzerland and Canada) have realized that existing markets are not readily accepting many recycled materials.

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Accordingly, they have announced environmental procure- ment specifications that include recycling provisions as well as guidelines for recycled content similar to those developed by large industrial customers. Several other countries, including the United States, are reportedly considering similar action.

Table 2 summarizes the key requirements emerging from govern- ment forces.

Aligning Market Focus, Business Plans, and Process Management

These emerging market pressures will require companies to de- velop effective management practices capable of driving major im- provements in environmental performance. An effective response will require companies to align their business plans and the manage- ment of their critical processes to meet these emerging market require- ments.

A well-implemented program should improve a company’s envi- ronmental record and its business performance. Achieving this bal- ance requires a clear vision that addresses both the business and environmental impacts of product decisions.

The vision should specify at least six environmental characteris- tics. Products should:

Minimize environmental impact Be safe for their intended uses Optimize consumption of energy and materials Meet or exceed all applicable legal requirements Be reusable and/or recyclable Ultimately be disposed of in an environmentally responsible manner

The vision should also specify the desired business effects of decisions regarding the environmental characteristics of the product.

Table 2: Emerging Government Influences on Product Design

Label products made with CFCs. Label environmentally favorable products. Collect and reuse/recycle packaging materials Create recycling programs for batteries. Include recycled materials in new products. Collect and recycle products after useful life. Eliminate specific materials (e.g., cadmium). Comply with environmental specifications in sales to government.

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Environmentally responsible products should provide a measur- able source of competitive advantage and business success by:

Contributing to revenues, profits, and growth Minimizing delays in market introduction Avoiding mistakes that harm sales Eliminating barriers that prevent worldwide acceptance

This balanced vision can help all parts of the business focus on succeeding in the marketplace by meeting the market’s environ- mental requirements. Achieving this vision will certainly not be easy, but the absence of a clear vision almost guarantees a future of repeated and ineffective reaction.

Businesses in markets affected by environmental requirements should address these needs in their business plans. The business plan can create a framework that provides clear marching orders for all business functions based on a realistic assessment of current and future conditions. It clarifies the importance of the company’s envi- ronmental practices to its business success. This clarity helps define the environmental features that will be necessary for product families to be successful over the planning period. The plan should address at least four topics: motivations, financial and strategic importance, strategies and goals, and timetables for implementation.

The plan should specify the motivations for action. The magni- tude of the changes required to meet environmental requirements calls for a realistic appraisal of which problems need to be addressed and when they need to be solved. Companies will typically be motivated by some combination of company values, shareholder expectations, legal requirements, customer expectations, and com- petitive pressures. A careful inventory of motivations can be particu- larly useful in persuading different departments (for example, manu- facturing, marketing, research and development) to contribute to the solutions.

The business plan should assess the importance of environmental requirements in relation to other factors influencing the strategy. Severe cost pressures might constrain environmental design efforts for some products. Conversely, the opportunity to advance against a key competitor could lead to faster adoption of certain elements of environmental design.

Assessing the financial impact of an environmental requirement can motivate environmentally conscious design efforts that might otherwise be stifled by other priorities. For example, several computer companies have assessed the potential financial risk from proposed product return requirements and concluded that design for disassem- bly is a much more urgent priority than customer data alone would indicate.

Approaches to design for the environment will not, and probably should not, be implemented all at once in most cases. The business

he can create a

Famework that provides clear marching orders for all business fimctions.. .

plan T

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plan should address the timing for implementation of specific design elements. The plan will be most useful if it identifies the obstacles to success, specific responses to those obstacles, and quantifiable goals to be achieved by specific dates.

Managing Critical Business Processes Business process management offers many opportunities to influ-

ence the environmental impact of products and the processes used to create and support them. The time-based factory model (see Exhibit 2) provides a useful framework for addressing the major business processes affecting the environmental impacts from products. This model, developed by several organizations at Hewlett-Packard, has emerged from the increasing pressures to bring new products to market quickly. The model makes an important distinction between the physical factory and the information factory.

The physical factory includes all of the activities where materials are processed and assembled to make products. The information factory incorporates all of the processes that create information that affects the manufacturing, sale, and delivery of the product.

The physical factory has been the traditional focus of cycle time reductions, cost reductions, quality improvements, and environ- mental emission controls. Practitioners and researchers looking at the physical factory from a wide variety of perspectives have realized in recent years that improvement efforts are bringing diminishing re- turns. Further progress in improving quality and reducing cycle time, costs, and environmental impacts demands that we address the information factory.

The Information Factory

The Physical Factory

Exhibit 2: The Time-Based Factory

Process Developmen

Fulfillment

Managemen

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T) roduct design is A- the process that harnesses the company's creative energies to satisfi customer and market requirements.

The time-based factory model focuses on four flows of information and material through the factory. Product and process development transforms customer needs into the product designs and manufactur- ing processes required to make products. Materials management in- cludes both the selection of materials to be used in the product and the procurement of those materials from suppliers. Physica2 production refers to the assembly and testing of the product. Order filfillment transforms customer orders into completed product shipments. Each of these flows is a composite of the kinds of business processes that Total Quality Management programs typically manage. Each of these flows offers significant opportunities for reducing the environmental impact from products and the processes used to manufacture them.

Product and Process Development Product design is the process that harnesses the company's cre-

ative energies to satisfy customer and market requirements. Design processes allow the product development team to fulfill the environ- mental requirements specified in the business plan.

Product definition plays a critical role in product and process design. A product definition is a statement of the features that a specific product should have when development is completed. It provides the basic specifications that the product development team relies on throughout the design process. This step is crucial to clarifying where environmental requirements fit in the hierarchy of product requirements that designers must address. If environmental requirements are not factored into the basic definition, designers will have great difficulty finding time to work on them and will not know how to make appropriate trade-offs with other design objectives.

Design for reuse (particularly for items requiring frequent replace- ment, such as batteries and cartridges) can reduce material costs, encourage repeat purchases from the original manufacturer, provide relief from future requirements for recycled content, and reduce recycling costs. Effective design for reuse requires a thorough analysis of the product and the system for recovering it from customers. Particularly for high-volume products, the environmental and finan- cial stakes can be major.

Cost-effective design for recycling requires at least two types of care. First, materials that are likely to be recycled (such as plastic parts) need to be marked for efficient sorting. For example, protocols for marking plastic parts have already been suggested in the plastics design community. These identify the basic resins used and any material added to change the appearance or engineering properties of the plastic.

Second, products must be designed for cost-effective disassembly. This typically involves classic elements of design for manufacturability, such as reducing the number and variety of fasteners. Design for disassembly may also require some innovation to overcome some effects of design for manufacturability. For example, products as-

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sembled with snap-fit fixtures will be easier to assemble, but harder to disassemble than comparable products fastened with screws or bolts. One relatively new solution uses snap-fit fasteners that can be broken apart during disassembly.

Process development offers many opportunities for reducing envi- ronmental impacts. In many industries, manufacturing process tech- nologies change extremely rapidly. Often the most effective strategy for improving environmental performance is to focus on new pro- cesses. (Recent experience with removing chlorofluorocarbons [CFCs] from existing processes illustrates the high cost of retrofitting.) Two strategies are important in new process design: selecting new process technologies, and selecting new equipment.

Careful analysis of new process technologies prior to purchase can avoid many environmental problems. Often multiple approaches are available, each with different trade-offs among cost, effectiveness, and environmental impact. Selection of the technology defines the broad parameters affecting environmental performance.

Chemical use management is an important component of tech- nology selection. Careful scrutiny of chemicals used in new processes can prevent you from creating new environmental problems. This process often involves searching for appropriate substitutes.

For many technologies, equipment is available from a wide selec- tion of vendors. These vendors typically compete on a variety of dimensions, including cost and environmental performance. Propri- etary systems are often available to minimize environmental impact. Incorporating environmental effects in the analysis of competing vendors can help clarify the trade-offs between environmental objec- tives and other business goals.

WO Strate&s are important in

new process design: selecting new process technologies, and selecting new equipment.

T

Materials Management Materials management is one of the most important levers for influ-

encing product recyclability and waste emissions. Four strategies are particularly important: design for reduced material usage, material selec- tion, hazardous materials elimination, and chemical use evaluation.

Reduction of material usage offers the greatest potential for mini- mizing environmental impact, particularly for high-volume products. Reduction of materials often translates directly into cost savings while offering environmental improvements. A design with less material requires smaller initial purchases, less shipping expense, less energy to build and transport, and a smaller burden when products are ulti- mately returned.

To avoid adverse environmental and cost effects, all products should be designed with materials that permit reuse or recycling. Currently, circuit boards for many products can be reused in the service and repair channels. However, plastic enclosures and many other parts may be difficult or expensive to recycle. Selection of appropriate materials can help create cost-effective (and sometimes profitable) relationships with recyclers and material vendors.

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Many products can be built using materials with some recycled content, particularly in enclosures. This approach can provide envi- ronmental benefits and promote sales. (Government procurement standards in many areas seem to be headed toward requirements for specified percentages of recycled materials to be included in each product.) Design specifications in many current products inhibit the use of materials with recycled content. Product lines may gain signifi- cant savings by changing specifications, when feasible and appropri- ate, to permit inclusion of recycled content.

Hazardous materials, such as cadmium or mercury, frequently inhibit sales in particular countries or to particular customers (espe- cially government agencies or defense contractors). Products should be designed, to the extent possible, without using materials that may restrict sales. This is particularly critical for products that rely on worldwide markets.

One relatively new approach incorporates a chemical use evalua- tion as a basic part of new product design reviews. This approach identifies potential chemical problems early enough in the design process to permit reengineering, if necessary, to reduce the environ- mental impact of the product.

Supplier management can play a critical role in creating environ- mentally sound products. Manufacturers should consider at least three supplier management strategies: technology partnerships, reuse or recycling relationships, and supplier evaluation.

Meeting environmental requirements may require developing new materials. For example, many plastics vendors have acknowl- edged that their long-term survival depends on their ability to create materials that can be recycled in a cost-effective manner. These vendors are developing plastic resins that meet new requirements while eliminating ingredients that inhibit cost-effective recycling. Many are also developing business relationships for cost-effective return and recycling of the resins.

Cost-effective recycling requires coordination between manufac- turers and their suppliers. Manufacturers may be able to improve the economics of reuse or recycling by developing explicit agreements with their suppliers. These may specify the degree of segregation required, the lot sizes required by the supplier, and, possibly, agree- ments to accept the recovered materials in future materials purchases.

Conformance with many environmental requirements will re- quire careful scrutiny of suppliers’ environmental practices. For ex- ample, a recently enacted U.S. regulation requires manufacturers to label products made with ozone-depleting chemicals. Products are considered to be made with those chemicals, if the product, or any component or subassembly, comes into contact with any of these compounds at any time. Manufacturers will be forced to understand their suppliers’ practices to evaluate whether labeling requirements will apply.

The manufacturing firm will need to be clear and consistent in its

roduct Zines may gain significant

savings by changing specifications.. . to permit inclusion of recycZed content.

P

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scrutiny of suppliers. I t should have a clear policy stating the purposes, methods, and consequences of its supplier evaluation. Motivations for evaluating suppliers may include:

Assuring that supply lines are not interrupted by fires, explo- sions, or regulatory shutdowns Reducing liabilities for suppliers’ misdeeds Certifying that suppliers comply with all applicable laws Choosing suppliers with the best environmental practices

The manufacturer’s motivations will determine the type and depth of the supplier evaluation. Emerging methods include survey questionnaires, audits, and third-party certifications.

Order Fulfillment Order fulfillment processes are the means by which businesses

convert orders for existing products into completed sales and deliver- ies. They are not part of the physical product, but their design has a major effect on any product’s environmental impact. Three processes are particularly important to consider in design-for-environment systems: packaging, forecasting and inventory management, and

Packaging is the most visible design-for-environment issue in most parts of the world today. A detailed examination of this topic is beyond the scope of this article. However, several design strategies described above are beginning to show impressive results. Firms in the electronics industry have gained significant savings and prevented waste with packaging designs that use less material, improved mate- rials, and that are engineered for reuse or recycling.

Inventory management has become an important manufacturing strategy in recent years. Companies have worked very hard to improve their forecasting systems to minimize the volume of unsold products. However, inventory management remains a huge source of unneces- sary costs to many firms. At the same time, it is a very large, hidden source of environmental burdens. Unneeded products that are scrapped or transported for reprocessing are unlikely to appear in any of the existing environmental metrics but will become very visible as prod- uct recycling requirements become more prevalent. Bringing in- creased visibility to the high costs of poorly managed inventory can be a very significant contribution that design-for-environment makes to overall business success.

Energy management has always been a factor in the economics of distribution. Until recently, however, little attention has been paid to the resource usage implications of distribution systems. As the focus on life cycle analysis increases, this area will become increasingly important. This new scrutiny will raise difficult questions about where products are made and how they are distributed.

Relatively little has appeared in the design-for-environment litera-

ackaging is the most visible

design- for- distribution. environment issue in most parts of the world today.

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ture to help firms address the environmental aspects of distribution. However, many of the existing approaches to distribution manage- ment can be adapted to address constraints such as energy efficiency.

Physical Production Physical production includes both the initial manufacturing of the

product and the maintenance required after the product is sold. Traditional pollution prevention practices have focused largely on the physical production of products. Significant opportunities remain for reducing the impact of manufacturing through careful management of chemical usage, minimization of scrap and defective products, and reuse or recycling of unused materials.

Businesses' environmental strategies often overlook service and support processes. These processes, however, are taking on increasing importance financially and gaining increasing visibility in environ- mental requirements. Two elements of service and support have become particularly important: material sourcing for maintenance and repair and collection/recycle/disposal systems.

Material sourcing for maintenance and repair can provide an important outlet for reused materials. The shortening of product life cycles has simultaneously created a problem and an opportunity for manufacturing firms. Products such as printers or personal computers will typically remain in use after the company has ceased to make them. As a result, supplyingreplacement parts can be expensive for the manufacturer. Discarded products may be an excellent source for reusable components or circuit boards to refurbish. (This is similar to the long-standing practice of going to junk dealers for old car parts.) The large volume of products to be serviced and the high profitability of servicing them can make maintenance and repair services a ready outlet for a large volume of parts from discarded products.

Both legal and market requirements are forcing many businesses to collect and recycle or dispose of packages and products. The economics of these systems depend heavily on the design issues described above. Some firms, however, are realizing significant sav- ings by finding ad hoc markets for materials recovered from products that were not designed for reuse or recycling. For example, DEC has publicized its success in recycling plastic computer housings into roofing shingles for resale. Revenues from sale of the shingles help offset the costs of recycling. Each business will need to evaluate the economics and the logistical requirements for effectively complying with product return or recycle requirements. Legal and business constraints may force manufacturers to supplement their in-house capabilities with third-party vendor arrangements.

Since product return/recycle requirements are likely to become much more widespread, current business and product plans should include arrangements for addressing these needs. In addition, require- ments for recovering costs should be addressed for each product line. +

aterial sourcing for

maintenance and repair can provide an

reused materials.

M Outlet for

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Borsboom, T. “The Environment’s Influence on Design,” Design Management Journal, Fall 1991.

Brady, W.J. “Environmentally Conscious Products-An IBM Case Study,” Design for Environmentally Responsible Products, Con- ference Proceedings, Washington, DC, 1991.

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Office of Technology Assessment, Congress of the United States. Green Products by Design, Choices for u Cleaner Environment, Washington, DC: U.S. Government Printing Office, 1992.

Nussbaum, B. and Templeman, J. “Built to Last, Until It’s Time to Take it Apart,” Business Week, September 17, 1990.

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