Environmental Sustainability for Manufacturers in 2012: Part II

Editor’s Note: This is the second installment of a two-part forecast written by Kimberly Knickle, practice director, IDC Manufacturing Insights.

More Work to Do – The Product Footprint and Lifecycle Assessment (LCA)

Where we continue to see manufacturers struggle is in calculating (and understanding) the product footprint, a reasonably precise calculation of a product’s impact on the environment during its lifecycle from design to end-of-life or cradle to grave. This product footprint is the result of a lifecycle assessment (LCA) which to put it simply, measures Scope 1, 2, and 3 Greenhouse Gas Emissions or CO2 equivalent along the entire value chain and product lifecycle. (For more information, check out a recent report from the Greenhouse Gas Protocol Initiative.)

A growing number of leading manufacturers are focusing in on the product footprint to help them make tradeoffs in their existing products and processes and inform new design. Even though we know manufacturers are greening their products and processes, without a precise measurement of their product’s footprint, it’s difficult to know what changes will have the most environmental impact, or which impacts are most effective from both a cost and environmental perspective. We also find that the product footprint evaluation creates a means of sharing information internally - to drive product and process tradeoffs or improvements, and externally - to defend their products against claims of green washing and respond to customer inquiries. While the emotional element of sustainability may drive a level of engagement, it’s the data and the logic behind a product footprint that create a foundation for common goals and priorities and the use of corporate resources (e.g. time, money, expertise, and IT).

Calculating the Product Footprint Isn’t Easy, but It’s Incredibly Valuable

This is the bad news: calculating a detailed LCA is often too challenging for manufacturers to conduct on every product in their portfolio. Corporate resources aren’t limitless; suppliers don’t necessarily have the capabilities to measure or track at the level required for a LCA; customers aren’t (yet) asking for this level of detail; internal data is inconsistent, and spread among too many systems; and the list of excuses go on. But the reality is that the individual product footprint is where we’re headed because of a much needed level of sustainability transparency they bring to manufacturers. With transparency, manufacturers can make better (and more strategic) product and process decisions in the short and long term.

The Most Advanced Manufacturers Focus on the Product

In the next couple years, we expect manufacturers to seek ways to receive, as much as possible, the benefits of LCA without the current levels of cost and complexity. And we also expect IT to play an increasing role in how manufacturers transition from just a few, costly and often services-based LCAs to LCAs for many products, at a much lower cost per LCA. Automation, integration, workflow, data quality checks, documented processes – all of these are ways IT can contribute. Yes, there will be some shortcuts such as using databases when suppliers aren’t up to speed, but the process will be transparent and manufacturers will know where the gaps are and how they can improve that process over time.

Most Manufacturers Prepare in the Factory

To some extent, we’ve hedged our bets with our IDC Manufacturing Insights sustainability prediction for 2012 - Manufacturers Will Shine the Environmental Sustainability Spotlight on the Factory. While manufacturers are working out how to get to LCAs, we believe that they will review how they collect and use facility data and how that will help them get to more product-specific decisions and calculate product footprints across product families. Ideally, they will be able to supplement product knowledge gained in the factory with information from other sources, including from suppliers (energy, water, waste, and GHG emissions, for example).

Answering a More Strategic Question

Only when manufacturers get to the product level will they be able to think strategically and plan for where their customers are headed. In an era where manufacturers increasingly focus on the customer, knowing your products’ footprints is really going to count. Customers (or other stakeholders) will ask for sustainability information at a product level, if they aren’t already. And one of the most important benefits – manufacturers will be able to answer a new question – what’s the profitability and environmental impact of an individual product?