Ethiopian Society of Chemical Engineers (ESChE)
Capacity Building Training on Greening of Ethiopian Manufacturing1
As part of Capacity Building Training European Union External Actions No.: ENV/2017/391-389 Through the Ethiopian Chamber of Commerce and Sectoral Associations
Module one Sustainable production and consumption and Greening of businesses
1 This training document is prepared by the Team of Ethiopian Society of Chemical Engineers consisting of: Professor Desta Mebratu, Dr. Hundessa Desalegne and Engineer Lelissa Daba. Ato Heyeru Hussein from Ethiopian Chamber of Commerce and Sectoral Associations provided comments and inputs in finalizing the document
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Outline of the Module
Training Guide
1. Sustainable Consumption and Production (SCP) and Green Economy 1.1 Basic concepts of Sustainable Consumption and production and Green Economy 1.1.1 What is sustainable production and consumption (SCP) 1.1.2 What is Green Economy 1.1.3 Relevance of SCP and Green Economy for SMEs in Developing countries 1.1.4 Exercise: Identify opportunities related to your enterprise on SCP and Green Economy
1.2 Practical tools for SCP and Green Economy 1.2.1 What is Cleaner Production 1.2.2 Basic tools of Cleaner Production 1.2.3 Cleaner Production audit 1.2.4 Exercise: Identify possible cleaner production opportunities in your enterprise
1.3 Work ethics and Motivation related to sustainability and Green Businesses 1.3.1 Why sustainability principle is important for a Green Business 1.3.2 Key sustainability principles for Green Businesses 1.3.3 Key work ethics for Green Business 1.3.4 Exercise: Identify key possible areas of improvement you would work on to improve the sustainability profile of your enterprise.
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
Training guide
The main purpose of this training program is to equip participating enterprises with the basic necessary knowledge and skills that will enable them to continuously improve their Page | 2 industrial operations and become a more sustainable businesses. While the training to be provided under the three modules will provide you with the basic information under the key topics related to Greening of Ethiopian Manufacturing, the ultimate utility and outcome of the training will be very much dependent on your level of preparedness to be creative and innovative. Experience from similar training in other developing countries have shown that changing existing dominant mindsets in relation to industrial operation is the major obstacle faced by most trainees. The following are some of the manifestations of the dominant mind sets that hamper industries and enterprises from being creative and innovative in their operation. • We have always worked like this • We are too big/too small for this • Do not forget we have to earn money • This does not affect my department • It is not my business • I am very busy, let someone else do this • It is too early for this or it is too late now
There are a number of steps the trainees could take in order to overcome most of these mental barriers at the personal level. From methodological perspective, it is valuable to divide the process of creative problem solving into the following four stages. • Problem analysis: The focus of this phase is to arrive at a clear understanding and description of the problem and related opportunities. During this phase, the focus should be drawn to identifying and understanding the actual problem. Some of the key questions to ask are, for example: where do I stand in sustainability of my business? Where do I want to be in five or ten year time? What are the key challenges and problems? What has been done in the past to solve the problem, what has worked, what has not worked? • Options identification: The purpose of this phase is to identify all the possible options that could be considered to utilize available opportunities and manage the key challenges. This step requires to take a step back from the problem and look at it from a broader solution framework perspective. Option identification is done as an open- ended idea generation process and should build on all available information. The goal is to end up with as many creative ideas as possible and is supported with processes such as brainstorming. • Evaluation: In the evaluation phase, the options generated from the previous phase are evaluated one-by-one on the merits of their technical feasibility, their economic payback time and their ecological impact. The most promising options are selected for either trial or full scale implementation after going through detailed evaluation.
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
• Realization: options selected through the above process are implemented under this phase. This may require developing an implementation plan which will start with the least-cost operational management options and move towards more complex interventions that may require higher investment and technological know-how. Having clear designation of responsibility and engagement of different teams is one of the key prerequisite for effective implementation. Page | 3
Carrying out different levels of brainstorming as a team is another useful approach that assists overcoming some of the mental barriers and promote creativity and innovation. There are four principles of brainstorming that should be strictly followed to support the creative process of brainstorming. • Any kind of criticism is strictly forbidden: in the creative innovation process there should be a strict separation between the phase of actual generation of ideas (brainstorming) and the evaluation phase. This is because criticism too early can break the flow of association and prevent the team from using all their experience and resources. • No limits to creativity: There are no stupid ideas and there are no ideas too wild to be considered in the process. The limits of our knowledge should be explored. Every association, every idea that possibly could contribute to the identification of a new way of solving a problem is welcome. • Quantity comes before quality: As already explained the idea of brainstorming is to explore the full width and range of possible innovative approaches to problem solving. This is sometimes known as ‘blue sky thinking‘. The individual quality of brainstormed ideas is assessed in the Evaluation Phase. The goal is to come up with as many ideas as possible. • Adapting is encouraged: Take up the ideas of others and develop them further. There is no right to intellectual property during the process of brainstorming. Many good ideas are triggered when ideas are connected, combined or varied with the ideas of others. Starting with someone else’s idea might stimulate new ones in the minds of the participants. So, connecting and building on other ideas is strongly encouraged in brainstorming.
At the end of each presentation sessions of the training, Trainers will ask you to carry out to address specific questions in a combination of individual and group exercise. This will provide you the basis to apply combination of the above approaches and develop the required appreciation on creative process. You will also be encouraged to engage the resource persons in interactive discussion by raising questions that are directly relevant to your operation and functions. This reading material will be complemented with a set of presentation slides for each session that would highlight the key concepts, principles and approaches on the respective topics.
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
Module 1: Introduction to Sustainable Consumption and Production (SCP) and Green Economy and Work Ethics The promotion of the transition to sustainable consumption and production and the development of Green Economy have provided the basis for the emergence of tens of thousands of Green Businesses across the world. Under this module, trainees will be: introduced to the Page | 4 basic concepts and tools related to sustainable consumption and production and Green Economy; assisted to identify possible opportunities related to their enterprises; and be trained about the core work ethics and principles that need to be upheld by sustainable enterprises. They will also be guided to carry out exercises on utilizing available tools and techniques;
1. Basic introduction on SCP and Green Economy In this section, trainees will be introduced to the basic concepts and tools associated with sustainable consumption and production and Green Economy and will be assisted to identify possible opportunities related to SCP and Green Economy in relation to their own enterprises. They will also be introduced to the basic principles of work ethics and motivation for sustainability.
1.1 Basic concepts of Sustainable Consumption and production and Green Economy The last few decades have been a time of dynamic changes across the world. Increasing demand for energy, food, water and other resources has resulted in resource depletion, pollution, environmental degradation and climate change, pushing the earth towards its environmental limits. With society consuming more resources than ever before, the current patterns of development across the world are not sustainable. One of the key elements for achieving sustainable development is the transition towards Sustainable Consumption and Production (SCP). This need was first highlighted at the Rio Earth Summit in 1992 and was later reiterated in the outcomes of the United Nations Conference on Sustainable Development, also called Rio +20 summit, in 2012. The Rio+20 Summit adopted the 10 Year Framework of Programs. SCP is about fulfilling the needs of all while using fewer resources, including energy and water, and producing less waste and pollution. SCP can contribute to poverty alleviation and the transition towards a low carbon, green economy and is essential for improving the lives of the world’s poorest people, who depend so closely on the natural resources provided by their environment. SCP can lead to an improved quality of life and greater employment opportunities, complementing poverty reduction strategies. In particular the continuing infrastructure developments required across the region provide immense opportunities for SCP. One has to recognize the following three key points when looking at the concept of sustainable consumption and production. There are different of definitions of SCP given by different institutions that may vary slightly but the underlying principles remain the same. The terms “SCP”, “Green Growth” and “Green Economy” are inextricably linked and lead to the same overall objective which is sustainable development. SCP is closely linked to Resource Efficiency – the optimal usage of resources, particularly scarce and non-renewable resources.
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
1.1.1 What is sustainable production and consumption (SCP) The 20th century, and especially the second half of the century, was a time of remarkable change and progress for humankind. The world has seen global increases in population, average incomes (and consumption rates), urbanization (and infrastructure investment) and huge growth in production activities. In many countries these trends have contributed immensely to economic development, creating jobs, increasing the material Page | 5 standard of living of many people, enabling investment in public infrastructure and reducing poverty levels. However, the rapid economic growth and human development that has occurred since the 1950s has come at a cost, however, of very large and growing environmental pressures and impacts. The use of natural resources – biomass, fossil fuels, ores, minerals and water – has grown dramatically from less than 10 billion tons in 1950 to over 70 billion tons in 2010 (UNEP, 2011). This level of resource use was largely based on the assumption of limitless resources and overlooked the connections between resource use and environmental impacts. The rise in resource use has been coupled with growth in waste and emissions contributing to a series of pressure points including climate change, reduced food security, water scarcity and air pollution. It has also lead to supply insecurity for a number of resources that are strategically important in modern production and consumption systems. The concept of SCP has evolved over time and is defined in a number of ways. A commonly used definition is: “the use of services and related products which respond to basic needs and bring a better quality of life while minimizing the use of natural resources and toxic materials as well as the emission of waste and pollutants over the life cycle of the service or product so as not to jeopardize the needs of future generations” (ISSD 1994). Another widely used and more recent definition is provided by UNEP: “SCP is a holistic approach to minimizing the negative environmental impacts from consumption and production systems while promoting quality of life for all” (UNEP 2011). Despite the variety of definitions given by different institutions, the practice of sustainable consumption is guided by some key common principles that are followed by all. The following are some of the key principles for sustainable consumption and production. i. Improving the quality of life without increasing environmental degradation and without compromising the resource needs of future generations. ii. Decoupling economic growth from environmental degradation by: a. Reducing material/energy intensity of current economic activities and reducing emissions and waste from extraction, production, consumption and disposal; and b. Promoting a shift of consumption patterns towards groups of goods and services with lower energy and material intensity without compromising quality of life. iii. Applying life-cycle thinking which considers the impacts from all life-cycle stages of the production and consumption process. iv. Guarding against the re-bound effect, where efficiency gains are cancelled out by resulting increases in consumption.
The implementation of sustainable consumption and production policy and programs is based on introducing a life-cycle approach on production and consumption the covers all stages
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
starting from resource extraction to end-of-life management of products. This process is presented in Figure 3.1.1 below and has the following key elements. Sustainable resource management: this recognizes the natural systems as the foundation for all consumption and production activities and focuses on employing a sustainable resource management approach in extraction and use of natural resources. Page | 6 Design for sustainability (D4S): the ultimate efficiency of a given product system is determined by the design of the respective products (both goods and services) and this can be improved by applying design for sustainability (D4S) principles. Cleaner production and resource efficiency: the conversion efficiency of all resource inputs into useful products is key in determining the profitability of a company and its impact on the environment. This can be improved by applying resource efficient and cleaner production methods. Sustainable transport: the distribution infrastructure and networks of products to consumers is a significant contributor to their environmental impacts, particularly in relation to their contribution to climate change. Utilizing a sustainable routing and logistics systems contributes to the reduction of such negative impacts. Ecolabelling and certification: securing an eco-label or environmental certification for a given product is an important vehicle for assisting consumers to make an informed and environmentally friendly decision while at the same time contributes for increased profitability and market sustainability of the company.
Figure 3.1.1. Life cycle approach for SCP
Source: Briggs, E. 2015
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
Sustainable procurement and marketing: these are two inter-related mechanism that assist to utilize the power of market forces for the promotion of sustainable consumption and production. They represent the interaction of a given (public and private) organization as a buyer from and supplier to the market. Sustainable lifestyles: the transition to sustainable consumption and production Page | 7 ultimately depends on a shift to a sustainable lifestyle at the society level. All of the preceding stages contribute to such a transition. Waste management: the reduction of generation of waste at all the preceding stages of the cycle combined with optimizing the possibility of waste-to-resource conversion at the end of life of a product is at the core of waste management under sustainable consumption and production.
1.1.2 What is Green Economy Most economic development and growth strategies encouraged rapid accumulation of physical, financial and human capital, but at the expense of excessive depletion and degradation of natural capital, which includes the endowment of natural resources and ecosystems. By depleting the world’s stock of natural wealth – often irreversibly – this pattern of development and growth has had detrimental impacts on the wellbeing of current generations and presents tremendous risks and challenges for the future. The recent multiple crises are symptomatic of this pattern. On top of the major environmental crisis faced by the international community, the global financial crisis of 2008 were key indicators of the gravity of the situation. This provided the basis for the development of the Green Economy concept as a way of addressing the confluence of economic, environmental and social crisis we are facing today. Perhaps the most prevalent myth is that there is an inescapable trade-off between environmental sustainability and economic progress. There is now substantial evidence that the greening of economies neither inhibits wealth creation nor employment opportunities. To the contrary, many green sectors provide significant opportunities for investment, growth, and jobs. For this to occur, however, new enabling conditions are required to promote such investments in the transition to a green economy, which in turn calls for urgent action by policy makers. A second myth is that a green economy is a luxury only wealthy countries can afford, or worse, a ruse to restrain development and perpetuate poverty in developing countries. Contrary to this perception, numerous examples of greening transitions can be found in the developing world, which should be replicated elsewhere. UNEP defines a green economy as one that results in “improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities” (UNEP 2010). In its simplest expression, a green economy is low carbon, resource efficient, and socially inclusive. In a green economy, growth in income and employment should be driven by public and private investments that reduce carbon emissions and pollution, enhance energy and resource efficiency, and prevent the loss of biodiversity and ecosystem services. The key aim for a transition to a green economy is to eliminate the trade-offs between economic growth and investment and gains in environmental quality and social inclusiveness. The main hypothesis of Green Economy is that the environmental and social goals of a green economy can also generate increases in income, growth, and enhanced well-being. In addition, the main
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
indicators of economic performance, such as growth in Gross Domestic Product (GDP) need to be adjusted to account for pollution, resource depletion, declining ecosystem services, and the distributional consequences of natural capital loss to the poor. The concept of a green economy does not replace sustainable development; but there is a growing recognition that achieving sustainability rests almost entirely on getting the economy right. Decades of creating new wealth through a “brown economy” model based on fossil fuels Page | 8 have not substantially addressed social marginalization, environmental degradation, and resource depletion. Central to the transition to Green Economy is the decoupling of the improvement of the wellbeing of people and economic growth from environmental degradation. There are generally two stages of decoupling, namely: resource and impact decoupling.
Figure 1.1.2: Resource and impact decoupling
Source: Swilling et.al. 2013. Resource decoupling means reducing the rate of resource use per unit of economic activity. This dematerialization’ is based on using less material, energy, water and land resources for the same economic output. Resource decoupling leads to an increase in the efficiency with which resources are used, indicated when economic output (GDP) is increasing relative to resource input. Impact decoupling: Impact decoupling, by contrast, requires increasing economic output while reducing natural resource use and environmental impacts from economic growth. Decoupling will lead to absolute reductions in resource use only when the growth rate of resource productivity exceeds the growth rate of the economy.
The dilemma of expanding economic activities while reducing the rate of resource use
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
and reducing the environmental impact of any such use poses a serious challenge to society. Decoupling economic activity from undesirable environmental impacts requires an improved understanding of resource-use trends and their drivers. The key strategies deployed for the promotion of Green economy from a life cycle perspective can be broadly categorized under supply-side and demand-side management strategies. A supply-side strategy involves redesign and improving the efficiency of processes and Page | 9 technologies employed in the major materials-intensive subsectors of the manufacturing sector (ferrous metals, aluminum, cement, plastics, etc.). On the other hand, if a green economy means improving not only productivity but also efficiency by a factor of four or more, a demand-side strategy is also required. A demand-side strategy involves changing the composition of demand, both from within industry and from final consumption. This requires modifying output, i.e. to use final goods embodying materials and energy much more efficiently and/or to design products that require less material in their manufacturing. For instance, the need for primary iron and steel from energy-intensive integrated steel plants can be reduced by using less steel downstream in the economy (i.e. in construction, automobile manufacturing, and so on). The supply-side and demand-side approaches consist mainly of the following components: Re-design products and/or business models so that the same functionality can be delivered with fundamentally less use of materials and energy. This also requires extending the effective life-time of complex products and improving quality, by incorporating repair and remanufacturing into a closed-cycle system. Substitute “green” inputs for “brown” inputs wherever possible. For example, introduce biomass as a source of chemical feedstock. Emphasize process integration and upgrade of process auxiliaries such as lighting, boilers, electric motors, compressors and pumps. Practice good housekeeping and employ professional management. Recycle internal process wastes, including waste-water, high temperature heat, back pressure, etc. Introduce combined heat and power (CHP) if there is a local market for surplus electric power. Use materials and energy with less environmental impact, e.g. renewables or waste as inputs for production processes. Find or create markets for other process wastes, especially organics. Introduce new, cleaner technologies and improve the efficiency of existing processes to leapfrog and establish new modes of production that have a fundamentally higher material- and energy efficiency. To start with, major savings potential in manufacturing lies in improving the resource efficiency of existing processes. Redesign systems, especially the transportation system and urban infrastructure down- stream, to utilize less resource-intensive inputs. The first target must be to reduce the need for and use of automotive vehicles requiring liquid fuels in comparison to rail- based mass transportation, bus rapid transit and bicycles.
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
1.1.3 Relevance of SCP and Green Economy for SMEs in Developing countries
Resource scarcity is an increasing threat to future economic growth and a real challenge to the manufacturing industries. In the case of direct impact and dependency on biodiversity, the industries most implied include the pulp and paper industry as well as the textile and leather industry. Land use is mainly a problem related to agriculture and food production. But industry Page | 10 is likely to face a significant challenge with regard to water in some countries or regions although it is responsible for less than 10 per cent of water use globally. Owing to expected high growth of industrial production, water use by industry is expected to grow to over 20 per cent of global total demand by 2030. At the same time, by 2030, a potential water shortage of 40 per cent of expected demand compared to maximum sustainable supply is projected at the global level. The implications of this are that industries operating in regions of high water stress, and regions where industrial water demand is relatively important compared with other water demand, must improve their water productivity greatly. This is particularly true for industries with high water use, such as the paper and pulp, textiles and leather, and the steel industries. The greening of manufacturing is essential to any effort to decouple environmental pressure from economic growth. Green manufacturing differs from conventional manufacturing in that it aims to reduce the amount of natural resources needed to produce finished goods through more energy- and materials-efficient manufacturing processes that also reduce the negative externalities associated with waste and pollution.
Table 1.1.1. Investment and environmental returns from energy-efficiency initiatives in developing countries
Source: UNEP 2011.
From Green Industry perspective, enterprises should adopt business strategies where they look to maximize resource efficiency and cleaner production. More simply, they should adopt “3 R’s” strategies Reduce, Recycle, Reuse. This requires them to first maximize the efficiency with which they use their energy and raw materials, using cleaner production, pollution prevention, green productivity or similar approaches. It is estimated that material and energy costs account for 40-60% of the operating costs of enterprises in the developing countries. Therefore, not only is this a necessary strategy
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
to adopt from an environmental point of view, there is also a pressing economic case for enterprises to do so, especially in the current economic downturn, since greater material and energy efficiency will reduce their operating costs. Enterprises can also promote decoupling by switching from non-renewable to renewable sources of energy and materials. Enterprises must also maximize the recycling and reuse of any remaining wastes they generate; increased efficiency will not eliminate all wastage. In some cases, enterprises can recycle and Page | 11 reuse their wastes themselves, but often it will be others who recycle and/or reuse them. The use of management systems is the most effective means for any enterprise to ensure that it efficiently and continuously implements 3R strategies. Through environmentally sound product design, enterprises can assist in bringing about broader decoupling throughout societies. At one level, enterprises can redesign their products so that they contain fewer materials (dematerialization). At another level, they can redesign them so that they consume less energy, less water, less detergents, and so on, during their use. Enterprises can bring about an even more fundamental form of decoupling by getting away from the idea of their being sellers of products and instead think of themselves as sellers of services. A moment’s thought will show that in most cases we are not interested in the product we purchase per se, but in the service that the product renders for us.
The basic steps laid out above for greening enterprises in the developing countries will stand them in good stead when faced with the immediate commercial challenge of attempting to enter – or remain in – world markets and having to meet an increasing number of environmentally-related standards to do so. These standards require enterprises to reconfigure their products and/or processes to meet the requirements of their international customers or the laws of the countries into which they wish to export, and to certify that they have done so. In other words, they must be able to: Redesign their products so that they meet any pertinent environment related product standards; Reconfigure their processes so that they meet any pertinent environmentally-related process (technology and management) standards; Certify that their products and/or their manufacturing processes meet these standards.
Exercise: Where would you position your company in relation to Green industry and what are the specific areas of possible improvement for your company to transition to a Green Manufacturing?
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
1.2 Practical tools for SCP and Green Economy
Industry continues to be a major cause of environmental problems, both globally and locally. It has a strong influence on both the local environmental situation and quality of life. In recent years, the serious impact of municipal operations on the state of local environment has attracted attention. Over the past decades, the industrialized nations have responded to Page | 12 pollution and environmental degradation in five characteristic ways: not recognizing—or ignoring—the problem of environmental pollution; diluting or dispersing pollution, so that its effects are less harmful or apparent; seeking to control pollution and wastes (the end-of-pipe or pollution control approach); trying to develop and improve environmental technology that will help close the loops in material flow streams during the production process, and facilitate reuse and recycling, and Most recently, by implementing Cleaner Production through the prevention of pollution and waste generation at source.
In the past, command and control methods were widely used by environmental agencies until their disadvantages became apparent. Traditional pollution control solutions proved less effective than they initially appeared, and there came a point beyond which further requirements became prohibitively expensive. More often than not, end-of-pipe technology simply shifted waste or pollutants from one environmental medium to another, as in the case of air and water pollution control devices that produced concentrated hazardous waste for leaking landfills. The most significant disadvantages of the command and control method is that firstly, it does not allow companies to explore other, cheaper ways to reduce pollution, and secondly that enforcement is both complicated and expensive because of the need for a strong and qualified administration. All in all, pollution control approaches of the 1970s and 1980s were no longer sufficient, and a new more flexible approach, had to be put in place that allowed creative solutions to be developed jointly by industry, government and environmentalists. In the mid-eighties, two new methods, the recycling of waste and energy recovery came into common use, alongside the traditional pollution control approach. By the end of the decade, the common-sense concepts of resource conservation, risk reduction and pollution prevention became widely accepted by both governments and industry. There was an intellectual shift from the question of what to do with pollution to the question of why pollution is generated and how it can be prevented. Since the beginning of the nineties, the concepts of Cleaner Production, pollution prevention, waste minimization and eco-efficiency have been gradually gaining popularity and acceptance. The sequence of ‘ignore, dilute, control, improve processing and prevent generation’ culminated in an activity that combines maximum positive effects on the environment with economic savings both for industry and society. As far as the near future is concerned, a number of new concepts have emerged, such as industrial ecology, factor 4 (producing twice the input with half the resources) and zero emissions initiatives. Other new trends include integrated product policies, the wider use of the life-cycle approach and a focus on dematerialization and substitution. Industrial ecology and industrial metabolism represent new patterns of industrial production and are closely related to the concept of Cleaner Production.
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
1.2.1. What is Cleaner Production?
Cleaner production is an integral, necessary component for achieving sustainable development. By eliminating or reducing waste at the source, economic development can continue to occur, but in a more environmentally sustainable manner. Some of the intrinsic concepts in CP that directly support sustainable development include: Page | 13 Reduction of waste at source and reducing the use of raw materials as a more sustainable practice for the Earth’s limited resources; Pollution prevention, which covers the environmental portion of the triple bottom line; Greater degree of partnerships and communication with local governments, universities, and communities to ensure local participation and encourage equity; Return on investment calculations that help the economy and the environment.
CP not only protects the environment and human health, but also improves the economic efficiency, competitiveness and profitability of enterprises. CP can bring significant financial and economic advantages as well as environmental benefits at the local and global level. According to UNIDO’s holistic approach, Cleaner Production is a preventive, integrated strategy that is applied to the entire production cycle in order to: Increase productivity by ensuring a more efficient use of raw materials, energy and water; Promote better environmental performance through reduction at source of waste and emissions; Reduce the environmental impact of products throughout their life cycle by the design of environmentally friendly but cost-effective products.
The net effect is to give enterprises in developing and transition countries a more competitive edge, thereby facilitating their access to international markets. It has to be stressed that Cleaner Production is a preventive approach to environmental management. Cleaner Production is a “win-win” strategy, because it protects the environment, the consumer and the worker while at the same time improving industrial efficiency, profitability and competitiveness. Cleaner Production approaches include hardware (goods, services, equipment) and software (technical know-how, organizational and managerial skills and procedures). Compared with standard methods, Cleaner Production techniques and technologies use energy, raw materials and other inputs [material] more efficiently, produce less waste, facilitate recycling and reusing resources and handle residual wastes in a more acceptable manner. They also generate less harmful pollutants and can assist in lowering emissions.
It might be useful to note that there is a key difference between pollution control and Cleaner Production basically in terms of timing. Pollution control using end-of-pipe measures is an after-the-event, “react and treat” approach. Cleaner Production, on the other hand, is a forward-looking, “anticipate and prevent” philosophy. CP is neither a legal nor a scientific definition but rather a broad term that covers what some countries or institutions call pollution prevention, waste minimization, eco-efficiency or green productivity. The key principle of Cleaner Production is that pollutants and waste should be prevented where they originate. During the production process CP can involve a combination of conserving raw materials, water and energy, eliminating toxic and dangerous raw materials and reducing the quantity and toxicity of all emissions and wastes at source.
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
Cleaner Production aims to reduce the environmental, health and safety impacts of products over their entire life cycles, from the extraction of raw materials, through manufacturing and use, to the ultimate disposal of the product. Life-cycle analysis is a tool that can be successfully applied in this context. Finally, Cleaner Production implies incorporating environmental concerns into the designing and delivery of services. It is important to keep in mind that the design of a service is a crucial stage. It is not just a question of, “Are we doing Page | 14 things right?”, but rather, “Are we doing the right things?” and even further, a question of, “Are we doing these right things the right way?” Cleaner Production can be achieved in any single, or combination of, the following ways: good housekeeping and operating procedures, materials substitution, technology changes, on-site recycling and product or service redesign. Pollution and risks to human health and safety are reduced at source, rather than the end of the production process, i.e. at the end- of-pipe stage. The adoption of Cleaner Production typically involves improving maintenance practices, upgrading or introducing new technology, changing production processes and modifying management and quality control procedures. Cleaner Production is considered a management tool, as it involves rethinking and reorganizing the way activities are carried out inside an enterprise. For CP to be implemented successfully and sustainably, the concept must have the support of middle and top management; this reinforces its function as a management tool. CP is also an economic tool, because waste is considered a product with negative economic value. Each step to reduce the consumption of raw materials and energy and prevent or reduce the generation of waste, can increase productivity and bring financial benefits to an enterprise. Since CP involves minimizing or eliminating waste before any potential pollutants are created, it can also help reduce the cost of the end-of-pipe treatment that may still, in many cases, be necessary, albeit for lower quantities of emissions. CP is also an environmental tool, given that it prevents the generation of pollution in the first place. The environmental advantage of Cleaner Production is that it solves the waste problem at its source, while conventional end-of-pipe treatment often simply moves pollutants from one environmental medium to another, the scrubbing of air emissions, for example, generates liquid waste streams, while waste water treatment produces significant quantities of harmful sludge.
Finally, the systematic avoidance of waste and pollutants reduces process losses and increases process efficiency and product quality. The continuous attention and focus on the organization and management of activities in an enterprise brings the added benefit of an improvement in the quality of products, and a reduction in the rate of rejects. All in all, Cleaner Production is more cost-effective than pollution control. By minimizing or preventing waste generation, the costs of waste treatment and disposal are reduced. The improved efficiency of processes and better quality control result in economic savings and contribute to enhanced competitiveness. Finally, by reducing emissions, CP protects the environment. This is why it is a win-win situation. The terms eco-efficiency, pollution prevention, source reduction and waste minimization, and green productivity are often used synonymously with Cleaner Production. The following are some of the related concepts to cleaner production that are promoted at different levels. Eco-efficiency: The term “eco-efficiency” was coined by the World Business Council for Sustainable Development in 1992, and is defined as the delivery of competitively priced goods and services that satisfy human needs and bring quality of life, while progressively reducing ecological impacts and resource intensity throughout the life cycle, to a level at
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
least in line with the Earth’s estimated carrying capacity. Eco-efficiency is a combination of economic and ecological efficiency, and is basically about doing more with less. Waste minimization: The concept of waste minimization was introduced by the United States Environmental Protection Agency (EPA) in 1988. It defined the waste prevention approach and its techniques as the on-site reduction of waste at source by changes in the input raw materials, technology changes, good operating practices and product changes. Page | 15 Off-site recycling by direct reuse after reclamation are also considered waste minimization techniques, but have a distinctly lower priority than on-site prevention or waste minimization. Pollution prevention: The United States Environmental Protection Agency defines pollution prevention as source reduction—preventing or reducing waste where it originates, at source. This includes practices that conserve natural resources by reducing or eliminating pollutants through increased efficiency in the use of raw materials, energy, water and land. The terms “Cleaner Production” and “pollution prevention” are likewise often used interchangeably. Green productivity: Green productivity is a term used by the Asian Productivity Organization (APO) to address the challenge of achieving sustainable production. APO started its green productivity programme in 1994. In common with Cleaner Production, green productivity is a strategy for enhancing productivity and environmental performance in order to improve overall socio-economic development.
In summary, it should be underlined that the differences between Cleaner Production, pollution prevention, waste minimization, waste prevention and eco-efficiency are, for all practical purposes, minimal. Each concept shares a common emphasis on: simultaneous achievement of economic and environmental benefits; integration of environmental management into mainstream management practice; application of an integrated, preventive environmental strategy to production processes as well as to products throughout their life cycle; minimization of risks to human health and the environment; and sustainable use of natural resources.
In other words, CP is about achieving the same production output with less inputs (materials and energy) and consequently with less pollution. The application of Cleaner Production can significantly improve the resource efficiency and environmental performance of existing production processes, with no or little investment in the first stages. It does not obviate the need to upgrade or replace old equipment; similarly, although it reduces the requirement for end-of-pipe treatment facilities, it does not entirely eliminate it. In contrast to end-of-pipe pollution control, CP and preventive approaches do not take as a given that pollution must be generated and only then treated. Rather, prevention is the first step, instead of damage control.
1.2.2. Cleaner Production assessment
Detailed process assessment, involving analysis of the material and energy flows entering and leaving a process, is a central element of CP. Conducting a Cleaner Production assessment relies on a logical and methodical approach that makes it possible to identify opportunities for cleaner production, to solve waste and emission problems at source, and to ensure continuity of CP activities in a company. This analytical assessment approach is embedded in the CP methodology, shown in Figure 1.2.3.
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The basic CP methodology consists of the following principal elements: Planning and Organization; Pre-assessment; Assessment; Feasibility Analysis; and Implementation and Continuation.
Figure 1.2.3: Cleaner Production Assessment (CPA) Methodology Page | 16
Source: UNEP, 2004.
Conducting a Cleaner Production Assessment (CPA) is at the center of developing and implementing cleaner production at any enterprise. A good CPA helps the enterprise in many ways, including: Identification, characterization and quantification of waste streams and thus environmental and economic assessments of loss of resources (material and energy) Identification of easy to implement and low-cost cleaner production options that enterprises can immediately implement; and Preparation of investment proposals to financing institutions for undertaking medium to high cost cleaner production measures that may require technology or equipment change.
Additional benefits of a CPA include: Building a “cleaner production culture” in the company, which is crucial for long-term sustainability; Generating local examples / case studies which could be effectively used in training and awareness-raising programs; Helping in the estimation of the potential of cleaner production in the concerned sector and thus in the formation of the basis for sectoral policy reforms; and Helping in identifying the technology and skill development needs of the company and sector.
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In fact, conducting the CPA is an excellent method of building competence of the staff in the CP implementing company. A CPA should be conducted in a systematic form. A structured approach is necessary to get the best results. In practice, different institutions and practitioners have expanded and/or modified the steps in this basic methodology and have developed specific tasks at each step that suit local conditions and specific requirements. A typical empirical CP methodology is presented in Figure 1.2.4. Page | 17
1.2.2.1 Planning and organization: The following are the key steps that are covered under the planning and organization stage of cleaner production assessment. Obtain commitment of top management: Planning can begin once one or a few of the staff members of an enterprise become interested in cleaner production. Often, this is a result of the awareness-raising and training programs. However, a CPA can only be initiated after a decision has been made by the management to take action. The commitment of top management takes the form of: o Directing the formation of a cleaner production team; o Making the required resources available; and o Being responsive to the results of CPA. Involve employees: The success of a CPA also depends on the collaboration of the staff. It is important to remember that successful CPAs are not carried out by persons external to the enterprise, such as consultants or the staff of RECP Centers, but by the staff of the enterprise itself, supported if and where necessary by external persons. The staff includes not only the senior management but also the staff on the shop-floor, involved in everyday operations and maintenance. The staff on the shop-floor often has a better understanding of the process and is able to come up with suggestions for improvement. Organize a cleaner production team: CPAs are best performed by teams, so the formation of one or more teams is an important part of the planning of a CPA. The teams should consist of staff of the enterprise, supported and assisted where necessary by the staff of the center or by local consultants. Efforts should be made to gel the members of the team by holding frequent meetings. Getting the right mix of team members is crucial, otherwise it is possible that the team may face hindrances from within as well as outside (e.g. from the staff and the workers of the enterprise). Identify impediments and solutions to the CPA as a process: In order to develop workable solutions, the cleaner production team should identify impediments in the CPA process for a particular enterprise. For instance, there could be impediments in obtaining information from some of the departments. The team should highlight such difficulties right away so that adequate directives can be issued by the management to resolve the issue before the start of the CPA itself. Other impediments could include lack of awareness and / or skills amongst the workers and staff of the enterprise on cleaner production. Solutions to such impediments would typically include performing in-plant awareness-raising sessions, conducting associated training activities, providing and explaining relevant case studies and so on. Decide the focus of the CPA: Deciding the focus of the CPA involves making decisions concerning: . The scope; i.e. whether to include the entire plant or limit the CPA to certain
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units / departments; and . The emphasis in terms of materials; e.g. water, energy or chemicals.
1.2.2.2. Pre-assessment: The first step the cleaner production team will execute is a pre- assessment which provides the basis for compiling and preparing the basic information. This consists of the following four important tasks. Page | 18 Preparation of Process Flow Diagram (PFD) and Flowcharts: The preparation of a PFD is an important step i n the CPA. To construct a PFD, it is best for the cleaner production team to start by listing the important unit operations right from receipt of raw materials to the storage / dispatch of final products. Next, each of the unit operations can be shown in a block diagram indicating detailed steps with relevant inputs and outputs. By connecting the block diagrams of individual unit operations, a PFD can be constructed. Conducting a number of walkthroughs can help to refine the PFD and the flowchart. Conducting a walkthrough: A walkthrough is the most effective technique for getting first-hand information about a production operation in a short time. A walkthrough should not be done when the operations are closed (e.g. on the weekend, or during low production cycles, or night shifts). The CP team should begin every walkthrough from the raw materials receiving area and end it at the department concerned with the finished product. A walkthrough thus essentially follows the PFD. The walkthrough should also cover all the support utilities such as boilers, power generators, fuel storage tanks, pump-houses, refrigeration plants, raw water treatment plants, wastewater treatment facilities, etc. Preparation of an eco-map: Eco-mapping is a simple and practical tool to represent visually issues of concern captured during the walkthrough as well as note some of the good practices. Using an eco-map, corrective measures can be implemented to improve not only the environmental performance of a company but also the efficiency of its operations. Eco-maps are often direct indicators of the housekeeping status of the enterprise. Eco-maps can be developed for specific themes such as the following: o Water consumption and wastewater discharge; o Energy use; o Solid waste generation; o Odours, noise and dust; and o Safety and environmental risks. To draw up eco-maps it is easiest to use layout maps of the site.
Preparation of a preliminary material and energy Balance: A material and energy (M&E) balance is a basic inventory tool, which allows for the quantitative recording of material and energy inputs and outputs. The basis of the material balance is the PFD. An essential step in the M&E balance is to check that “what goes in must come out somewhere.” All inputs should thus have related outputs. Material balances are typically carried out to make an inventory of the material flows (raw materials, chemicals, water, energy etc.) entering and leaving a manufacturing / service company. Energy balances are useful to find options to minimize the use of energy or to recover
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the energy lost in the system. An energy balance is generally carried out through the following steps: For each type of fuel used (e.g. electricity, gas, diesel, fuel oil, etc.), write down the amount consumed over a given period, along with the per unit cost and the total cost for the period, show which of the fuels is used in each area of operations, and show energy flows between the areas. Page | 19 Estimate the proportion of each fuel used i n each area of the operations. To do this, the cleaner production team should prepare a list of the rated energy consumption of the equipment, number of equipment and the type of the fuel used. Once done for each of the areas, the percentage usage of each fuel in each area can be calculated.
1.2.2.3. Assessment: This is the main part of Cleaner Production Assessment that will essentially determine the final outcome and the following are its key elements. Preparation of detailed material & energy balance: The M&E balance is extremely useful when costs are assigned to the materials lost or the waste streams that have been identified in the balance. Experience has shown that this could be the single most important information in convincing the management of an enterprise, of the value of cleaner production and securing their commitment for the next steps. While assigning a monetary value to the materials or waste streams, CP team should consider the following: The cost of raw materials / intermediate products / final products lost in the waste streams (e.g., the costs of unexhausted dye in waste dye liquor); The cost of energy in waste streams, in terms of the energy consumed to heat or chill them; The cost of treatment / handling / disposal of waste streams, including tipping or discharge fees if any; The costs incurred, if any, in protecting the workers and maintaining safe working conditions (e.g., shop floor exhaust systems); A detailed M&E balance provides the team clues to identify the cause of waste generation or low productivity. It serves as a basis to conduct cause diagnosis by using a tool known as the fishbone diagram, cleaner production option generation through brainstorming.
1.2.2.4. Feasibility Analysis: the assessment phase is followed by the feasibility analysis which will look at the economic viability of the options. Preliminary screening of options: rapid screening of the developed cleaner production options is conducted to discern between i) directly implementable options (simple options that are obvious and can be implemented straightaway e.g. options related to housekeeping (e.g., plugging leaks and avoiding spills) or simple process optimization (e.g., control of excess air in combustion systems) and ii) options requiring further analysis (options that are technically and/or economically more complex related to management improvement, raw material substitution, and equipment / technology change, etc).
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Figure 1.2.4.: CP Assessment Steps
Page | 20
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Detailed screening of options: the options in the category requiring further analysis are assessed in order to determine which of the options are technically feasible, and ascertain both the economic and the environmental benefits of implementing these options. The options undergo technical, economic/financial and environmental evaluations against a list of set criteria before selection for implementation Page | 21 1.2.2.5. Implementation of Cleaner Production Options: the final phase of CPA focuses on preparing the basis for the implementation of the identified options. Prioritization of cleaner production options: different options have differing levels of technical feasibility, economic viability, and environmental performance. Since it is not desirable to implement all the options at the same time it will be necessary to prioritize the cleaner production options. To assist the process of prioritization, a common evaluation framework will be necessary. A weighted-sum method could be considered for this purpose. Once weights are assigned for the technical, economic and environmental evaluations, simple indicators such as “scores” are developed to assess the relative performance of each option. Preparing a cleaner production implementation plan: An implementation plan consists of the organization of the projects required to implement the options, the mobilization of the necessary funds and human resources, and logistics. Training, monitoring and establishment of a management system such as EMS are also often important components of an implementation plan. The implementation plan should clearly define the timing, tasks and responsibilities. This involves: . Prioritizing implementation of options depending on available resources; . Preparing the required technical specifications, site preparation, preparing bidding documentation, short-listing submissions, etc.; and . Allocating responsibilities and setting up monitoring/review schedules.
Implementing options that are low in cost, easy to implement and / or are a pre-requisite for the implementation of other options is of paramount importance for the success of the CP project.
Sustaining cleaner production assessment: It is important to ensure that the CP Audit is implemented as an on-going activity, by integrating the concept of cleaner production into the enterprise’s management system. This continuous improvement approach is the foundation of CP practices for the provision of technical solution to prevent pollution at source. CP provides the technical solution while implementing Environmental Management System (EMS) which in turn serves as a framework that provides a ‘live’ structure for CP implementation.
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1.2.3. Techniques of Cleaner Production
Cleaner production techniques/options could fall under one of the following categories: Housekeeping: – Improvements to work practices and methods, proper maintenance of equipment etc., fall under this category. Efficient housekeeping can provide significant benefits in terms of saving resources. These options are typically low cost Page | 22 and provide low to moderate benefits. A simple example of good housekeeping in a dyeing operation is to clean the floors and machines of dirt, grease, rust, etc. regularly, which will reduce the possibility of accidentally soiling the fabric, and thus minimize the need for extra washing. Process optimization: – Process optimization involves rationalization of the process sequence, combining or modifying process operations to save on resources and time, and improve process efficiency. For instance, certain washing operations may not be required due to changes in raw materials or product specifications.
Figure 1.2.5.: Major cleaner production options/techniques
Raw material substitution: – Primary / auxiliary raw materials can be substituted if better options exist in terms of costs, process efficiency, and reduced health and safety related hazards. Such an approach may be necessary if the materials already in use are difficult to source, or become expensive, or come under the purview of new environmental or health and safety regulations. In all cases of material substitution, it is crucial to test the suitability of the new material in terms of environmental and economic benefits, optimum concentration, product quality, productivity, and improved working conditions. For instance, sodium sulphide and acidified dichromate tend to be used as auxiliary agents in the sulphur black textile dyeing process. However, both these agents are toxic and hazardous to handle. Their usage may leave harmful residues in the finished fabric and generate effluents that are difficult to treat and damage the
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environment. Both these agents may be safely substituted without a decline in fabric quality, thus eliminating adverse health and environmental impacts. The substitution of these dyes either with other less toxic chemical or with natural dyes may also be cited as an example of raw material substitution. New technology: Adopting and transferring new technologies can often reduce resource consumption, minimize wastes, as well as increase the throughput or the Page | 23 productivity. These options are often capital intensive, but can lead to potentially high benefits. Modifications in equipment design can be another option, which tends to be slightly less or equally capital intensive as the option for new technology, and can lead to potentially high benefits. New product design: Changing the product design can cause impacts on both the “upstream” as well as “downstream” side of the product life-cycle. Product re-design for instance, can reduce the quantity or toxicity of materials i n a product, or reduce the use of energy, water and other material s during use, or reduce packaging requirements, or increase the “recyclability” of used components. This can lead to benefits such as reduced consumption of natural resources, increased productivity, and reduced environmental risks. Often, this helps in both establishing as well as widening the market. Product re-design i s, however, a major business strategy and may require feasibility studies and market surveys, especially if the supply-chain around the product is already established and is complex. Recovery of useful byproducts / resources: This cleaner production option entails the recovery of wastes as byproducts / resources, which may have useful applications within the industry itself or outside it. This type of options essentially leads to the reuse / recycle, and thus minimization, of waste as well as to cost savings. A common example of recovery from a waste stream for many industries is heat recovery through the use of heat exchangers. Such options are typically medium cost and can provide moderate to high benefits. Onsite recycling and reuse: Onsite recycling and reuse involves the return of a waste material either to the originating process or to another process as a substitute for an input material. For instance, in the case of a textile dyeing unit, instead of draining off the last cold washes, they can be collected in an underground tank, adjusted for pH6, and then filtered prior to reuse in subsequent washing operations. These options are typically low to medium cost and can provide moderate to high benefits.
Exercise: Identify possible cleaner production opportunities in your enterprise by reflecting on the potential application of the options and opportunities highlighted in section 1.2.3 above.
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1.3 Work ethics and Motivation related to sustainability and Green Businesses
1.3.1 Why sustainability principle is important for a Green Business Green business can be defined as business practices which are evaluated to be environmentally friendly. These practices might include the use of organic and natural products to build its facilities, tighter protections against emissions, environmentally responsible Page | 24 sourcing of supplies and designing organizations and processes in order to efficient and economical use of resources. Green business is to adopt principles, policies and practices that improve the quality of life for customers and protect resources. Using renewable energy resources, enhancing material recyclability, reducing toxic dispersion are all eco-efficient practices while doing green business. Managing a green business can be considered as a cost unit or as an opportunity for saving money. It can be integrated to daily operations at a different level of environmental consciousness. Furthermore, the organization can develop approaches on the leading edge of current environmental practice and thinking as a pioneer. Most of the managers suppose they have to make a choice between planet and profit, but with proper understanding of environmental issues, this dilemma can be considered as a win-win situation. Benefits of implementing Sustainability Principles for Businesses are: • Saves costs due to improved resource efficiency • Facilitates compliance to laws and regulations • Facilitates access to more demanding global markets • Improves the environmental condition through protection • Reduces hazardous waste/materials through waste management program • Minimizes accidents and problems • Improves environmental liability • Motivates employees to be creative in generating and implementing Cleaner Production improvement ideas • Enhances company image and stature positively
1.3.2 Key sustainability principles for Green Businesses
Sustainable business, or a green business, is an enterprise that has minimal negative impact, or potentially a positive effect, on the global or local environment, community, society, or economy—a business that strives to meet the triple bottom line. Often, sustainable businesses have progressive environmental and human rights policies. In general, business is described as green if it matches the following four criteria: 1. It incorporates principles of sustainability into each of its business decisions. 2. It supplies environmentally friendly products or services that replace demand for non-green products and/or services. 3. It is greener than traditional competition that is aimed at profiting at any expense to society and the environment. 4. It has made an enduring commitment to environmental principles in its business operations.
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A sustainable business is any organization that participates in environmentally friendly or green activities to ensure that all processes, products, and manufacturing activities adequately address current environmental concerns while maintaining a profit. In other words, it is a business that “meets the needs of the present [world] without compromising the ability of future generations to meet their own needs.” It is the process of assessing how to design Page | 25 products that will take advantage of the current environmental situation and how well a company’s products perform with renewable resources. Sustainable development within a business can create value for customers, investors, and the environment. A sustainable business must meet customer needs while, at the same time, treating the environment well. To succeed in such an approach, stakeholder balancing and joint solutions are key. Sustainability is often confused with corporate social responsibility (CSR), though the two are not the same. Bansal and DesJardine (2014) state that the notion of ‘time’ discriminates sustainability from CSR and other similar concepts. Whereas ethics, morality, and norms permeate CSR, sustainability only obliges businesses to make inter-temporal trade- offs to safeguard intergenerational equity. Short-termism is the bane of sustainability.
1.3.3 Key work ethics for Green Business The official U.N. definition of sustainability has 3 dimensions, or 3 pillars, also known as the "Three Es" of sustainability. These are environmental protection, economic development, and social equity. It proposed sustainability as an integral framework, in which economic development, social equity, and environmental protection are seen as inseparably related goals. Sustainability has now become a concern of virtually every sector of human society. It enjoys more popular support than environmental resource conservation because it focuses on human needs, but also because it provides a positive vision for the future of the human family. From a motivational perspective, few people are inspired by the notion of "being less bad" in their environmental impact. In contrast, sustainability provides a framework and markers for making positive change. The social equity pillar has the clearest ethical component, that of socio-economic fairness or social justice. The lifestyles of the richest and poorest members of the human family pose the greatest threat to the integrity of our Earth's life support systems, but for different reasons. The wealthiest consume vastly more than their fair share of resources, more than the planet can provide for everyone. The poorest 1/3rd of human society, those living on less than $2 per day, have no alternative but to use resources in a short-sighted way, for example, cutting down trees for firewood before they are able to grow to their full height. The wealthiest countries have the capacity to make choices for a more sustainable lifestyle, while the poorest members of the human family generally do not. Thus, sustainability is built upon the practice of solidarity with the poor; fostering economic development for them will enhance sustainability. The social equity dimension suggests that sustainable development is an inherent moral good, but its consequences are likely to be ethically positive as well. The sustainability framework extends ethical concern to future generations. Human society now consumes natural resources faster than they can be replenished, and this is compromising the ability of future generations to meet their needs. Current and future generations are inheriting a world that is biologically impoverished, has fewer resources, and
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suffers from more pollution than ever before. Sustainability challenges present day humans to consider the well-being of future generations, to view their needs as worthy of our moral concern. Modern humans are not accustomed to considering future generations, but the power of our markets and technologies threaten their quality of life. We can express a moral concern for the future by restraining our consumption of non-renewable resources today. Note that some resources, such as minerals, are essentially finite. Other resources, such as wind and plants, Page | 26 because they draw their energy from the sun, can be managed so as to provide a continuous source of goods. An ethical approach to sustainability suggests that society has an obligation to restrain wasteful uses of resources among the affluent, but it also has a special obligation to foster economic development for the poorest of the poor, all while maintaining environmental resource protection.
Ethics is a compilation of morals, beliefs, integrity, conscience, principles, ideas, codes, and values. These conventions of behavior or conduct are defined by individual, group or culture. However, when one refers to business ethics it infers the proper and honorable philosophies and ideologies that oversee and administrate the manner which employees conform within the business workplace. Business ethics managers deal with ethics in the following areas: Employee relations - how the company or manager relates and works with the employees Investor relations - the relationship a company has with those that support it financially Customer relations - how a company takes care of, relates to and communicates with its customers Vendor relations - the relationship a company has with those that supply the products and services it needs
Managers handle these four areas in the same manner with a focus on being fair and communicating honestly. To be fair, it is hard to deal openly and honestly in all four of these areas because there's information that cannot or should not be told to some of these people. For example, if a business is struggling financially, the manager might not tell his/her employees because they do not want to create panic. In this case, ones personal definition of ethics comes into play. Some people would agree that it is ethical to not tell them because that would prevent panic, but others would say they have every right to know. This supports our theory that ethics is subjective and takes on different meanings from person to person and situation to situation. Managers must make decisions every day, and many of these decisions have an ethical dimension. Ethical decision-making is a cognitive process where people consider ethical rules, principles or guidelines when making decisions. Ethics is a system of values and principles of right or proper conduct. For example, most ethical systems find lying to be a violation of an ethical rule of being truthful. Ethical behavior is acting in ways that are consistent with how the business world views moral principles and values. Business ethics determine employees' everyday conduct
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Many individual factors affect a person's ethical behavior at work, such as knowledge, values, personal goals, morals and personality. The more information that you have about a subject, the better chance you will make an informed, ethical decision. Values are an individual's judgment or standard of behavior. They are another individual factor that affects ethical behavior. To some people, acting in an improper Page | 27 way is just a part of doing business. Would you feel that it is ethical to make up lies about your competitor just to win a contract? Some people's standard of behavior will feel that lying for a business financial win is not unethical. Morals are another individual characteristic that can affect an individual's ethics. Morals are the rules people develop as a result of cultural norms and values and are, traditionally, what employees learn from their childhood, culture, education, religion, etc. They are usually described as good or bad behavior. Different cultures have norms that vary from place to place in the business world. It's difficult to say exactly what ethics is, but we can say that it involves a standard of what is right and wrong based on what people ought to do. This may include: Our obligation to society What benefits society rather than the individual Being fair to others
1.3.4 Exercise: Identify key possible areas of improvement you would work on to improve the sustainability profile of your enterprise.
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Resource documents
Briggs, E. 2015. Sustainable Consumption and Production: a Handbook for Policy Makers. United Nations Environment Program (UNEP), Paris. Page | 28 Fresner, J., Dobes, V., Burki, T., Angerbauer, C., & Tiefenbruner, K. 2010. Promoting Resource Efficiency in Small and Medium Sized Enterprises. UNEP and UNIDO, Paris. ISSD, Symposium: Sustainable Consumption, 1994. Available from:
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Page | 29
Ethiopian Society of Chemical Engineers (ESChE)
Training on Greening of Ethiopian Manufacturing
As part of Capacity Building Training European Union External Actions No.: ENV/2017/391-389 Through the Ethiopian Chamber of Commerce and Sectoral Associations
Module two Resource Efficiency and Sustainable Product Development
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
Page | 30 Outline of the Module
2.1 Resource efficiency and waste management in SMEs 2.1.1. What is resource efficiency 2.1.2. A systematic approach for Resource Efficiency in SMEs 2.1.3. Resource efficiency assessment components 2.1.3.1 Material efficiency 2.1.3.2 Energy efficiency 2.1.3.3 Water efficiency 2.1.3.4 Chemical efficiency 2.1.4 Integrated waste management 2.1.5 Exercise on developing Resource Efficiency Improvement Program
2.2 Sustainable product development 2.2.1 Principles and opportunities for sustainable product development 2.2.2 Concepts and Principles of Product Design for Sustainability 2.2.3 Concepts and Principles of Product Quality Control 2.2.4 Case studies on Sustainable product development: 2.2.5 Individual and group exercises on the main issues covered.
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2. Resource efficiency, product development and waste management in SMEs
One of the major challenges that has been faced by industries across the world in the last couple of decades is increasing resource scarcity. With increasing resource prices, it is becoming difficult for SMEs to sustain the high costs of energy, water, and material resources for production while remaining competitive in the market. Furthermore, industries are facing Page | 31 increasing public and legal pressure to reduce the waste they are discharging to the environment. However, this is also creating new opportunities of innovation and productivity improvement that lead to more profitability. Resource efficiency and sustainable product development are the major industrial approaches used by enterprises to reduce their operational cost, improve their competitiveness and ensure their long-term sustainability. This module equips the trainees with the key concepts and tools that assist enterprises to optimize their processes, improve their competitiveness and sustainability.
2.1 Resource efficiency and optimization The training on resource efficiency will cover the fundamental concepts, tools and techniques that are used for improving the resource efficiency of an enterprise building upon the relevant practical experiences and examples from developing countries. The training covers the whole range of measures that could be taken by enterprises to increase their resource efficiency and manage their waste more efficiently. Trainees will also be guided and assisted to identify opportunities and develop a preliminary Resource efficiency Improvement Program (REIP) for their respective enterprises.
2.1.1 What is resource efficiency Process optimization, productivity, and resource efficiency are the common terms that are used in relation to improving industrial production and profitability. While there are some common elements that run across all three approaches, there are qualitative differences associated with each of the approaches both in terms of the boundary of the system and the specific methodologies deployed. The following are the most basic definitions given to these three approaches. Process optimization: is the discipline of adjusting a process so as to optimize (make the best or most effective use of) some specified set of parameters without violating some constraint. The most common goals are minimizing cost and maximizing throughput and/or efficiency. When optimizing a process, the goal is to maximize one or more of the process specifications, while keeping all others within their constraints. Productivity: describes various measures of the efficiency of production expressed as the ratio of an aggregate output to a single input or an aggregate input used in a production process, i.e. output per unit of input, typically over a specific period of time. Productivity can be measured at the level of an enterprise, sector or a national economy. Resource efficiency: is the maximizing of the supply of money, materials, staff, and other assets that can be drawn on by a person or organization in order to function effectively, with minimum wasted resources, including natural resources. It also means using the Earth's limited resources in a sustainable manner while minimizing environmental impact.
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Historically, the relationship between industry and environment has gone through the following major stages of management depending on the different stages of industrial development. Dilution: the natural environment has been used as unlimited source of input for industrial production and dumping ground for all types of industrial waste discharged. Hence dilution of industrial waste into natural systems was the dominant practice of the Page | 32 first two centuries of industrialization. Treatment: during the second half of the twentieth century, industry started to be forced to treat their waste before discharging to the natural environment. This was necessitated as the impact of industrial pollution on the quality of the natural environment in general and its related health impact on humans became more noticeable. Waste minimization: the cost of treatment continued to become significant part of operational cost as national regulations on environmental requirement became more stringent. This encouraged industries to invest more on waste minimization operations and techniques thereby reducing their operational cost while at the same time improving their profit margin. Cleaner production: the experience gained from waste minimization and pollution prevention measures across the world led to the evolution of cleaner production approaches in the 1990s. Cleaner production is a preventive, company-specific environmental management strategy that is intended to minimize waste and emissions and maximize product output. Resource efficiency: is the latest and much more comprehensive industrial environmental management strategy that focuses on the economic, social and environmental efficiency of an industrial operation from life cycle perspective. It is comprehensive as it looks at the efficiency of industrial operations over the complete supply chain from extraction, processing, manufacturing, distribution, consumption and end-of-life of products.
In this context, Resource Efficiency deals with the broader impact of production and consumption patterns and systems from life-cycle perspective. This would involve, primarily: • Designing of products (goods and services) with a life cycle perspective (Cradle to Cradle) • Careful selection of raw materials and energy inputs • Responsible management of material and energy flows during the production process • Minimization of waste, emissions, hazards and risks • Attention to the use, recycling and disposal phases of the product life cycle
When done properly, Resource Efficiency can be a relatively economical and fast way to reduce waste as well as the cost of any subsequent treatment process and disposal costs. Reusing resources can also save companies money, because if they can efficiently use the resources they already have, they will need to buy less new resources. Regulations and diminishing natural resources will increase the incentive to use and reuse the latter even more efficiently in the future. Benefits of Resource Efficiency for companies include: • Reduction in cost for materials, chemicals and energy • Reduction in cost for disposal of waste and treatment of emissions
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• Reduced cost for compliance with laws governing waste, emissions and the use of chemicals • Over the long term Resource Efficiency applied at large secures the supply of resources to businesses at large • Resource Efficiency meets the growing customer demand for sustainable business practice Page | 33
2.1.2 A systematic approach for Resource Efficiency in SMEs Resource Efficient and Cleaner Production (RECP) is a preventive, enterprise-level approach to improving resource use, reducing environmental pollution and contributing to sustainable industrial development. It is based on the continuous application of an integrated preventive environmental strategy to processes, products and services in order to increase overall efficiency and to reduce risks to humans and the environment. RECP can be applied to the processes used in any industry, to products and to various services provided in society. RECP acts as a catalyst to productivity by optimizing the use of natural resources by companies. It further promotes environmental management by preventing the generation of waste and emissions. RECP involves determining where waste and emissions are generated and where and how resources are used inefficiently. This then serves as a basis for deciding how to best address or eliminate the source or cause of these problems. You can only manage what you know and can measure! A set of key performance indicators is a must for any improvement program, including RECP. There are numerous frameworks and tools that could be used to plan, implement and monitor RECP activities. However, a small set of key indicators is all you need to get started with managing and decreasing your company’s resource use and pollution. Resource efficiency performance indicators enable companies to monitor their use of energy, water and materials and the generation of waste and emissions. There are various types of indicators that can be utilized to measure and monitor change. At the outset of working with indicators, there are two different types that are of primary relevance. Absolute indicators measure basic data in a given time frame, typically one year, for example: Tons of Carbon Dioxide (CO2) emitted annually; Tons of wastes generated annually; Annual production.
Relative indicators, sometimes also called normalized indicators, are a measurement of absolute consumption or emission figures relative to reference data. In terms of environmental performance, productivity and intensity ratios are central relative indicators. Productivity ratios quantify the amount of product output per unit of resource use, e.g., the tons of product output per ton of materials used or the volume of services delivered per cubic metre of water used. Sustainability considerations require productivity ratios to INCREASE over time, leading to more production per unit of resources used. Intensity ratios quantify the amount of resources used or the amount of emissions per unit of production, e.g., CO2 emissions per unit of production or waste
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generated per unit of production. Sustainability considerations require intensity ratios to decrease over time, leading to less pollution per unit of production.
Relative indicators can also be used to tie physical and monetary data together, for instance, cost of waste-water treatment per unit of customer service. While absolute amounts are important, it will be important to place an emphasis on linking resource use and pollution Page | 34 generation to product outputs, thereby creating relative indicators that can be tracked over time. Monitoring and measuring performance will help you to: Compare resource productivity and environmental performance over time; Highlight improvement and optimization potentials; Identify and follow up on resource productivity and environmental targets; Discover market opportunities and cost-reduction potentials; Communicate your results to external stakeholders; Involve, educate and motivate staff and promote organizational learning; Support decision-making by providing concise information about the current status and trends with regard to resource use and performance; and Implement environmental management systems or generate information needed for your current environmental management system.
Monitoring needs to be embedded in the way you run your business on a day-to-day basis. A practical approach for systematic performance monitoring and management includes the following four key steps: Step 1: Define the right issues and performance measures. Step 2: Prepare by establishing the most suitable performance management and measurement framework. Make sure that you are using the most effective indicators. Develop robust processes for implementing your system. Step 3: Embed your performance measurement system into your business activities. Collect data from business units and third parties. Step 4: Show your internal and external stakeholders what you have been doing and what results you have achieved.
The level of effort you will need to implement the performance-monitoring system depends on how you design the system. Care should be taken to develop a system that is suited to your needs and available capabilities. It may initially be far more beneficial to design a simple robust system that is easy to integrate into your accounting routines, rather than to create a complex system that requires significant investments in the form of time, advanced measurement systems and comprehensive changes in accounting and information management procedures. That said, you can and should work continuously to improve your system, procedures and data quality.
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A proper baseline assessment is the starting point for the effective implementation of your indicator system. It is basically the result of the first-time application of the indicator set, including the collection of data through measurement, estimation and calculation. It is used as your point of reference for tracking changes and improvements over time. Your baseline should, ideally, be based on data for one complete year. Shorter periods of time can be subject to fluctuations owing to various circumstances, such as seasonal variations, and may not Page | 35 provide you with a sufficiently representative picture. A six-month period could be possible depending on the sector and type of business. All your consecutive measurements and calculations need to be for the same period as the baseline and the same units must be used. An important step in implementing any indicator system is to determine where and how to obtain the data. Possible sources include: internal sources within the company (departments or persons in charge of accounting, sales, purchasing, production, maintenance, human resources, environment); invoices from suppliers and public utilities; industry-sector organizations; local and regulatory authorities; government; and International organizations. Different data sources lead to different types of values, including: Metered (or gauged) value: A value that is scaled by means of a balance or other instrument. Estimated value: A value based on common practice. The method and tools that you elect to use for making estimates should be disclosed. Calculated value: A value based on (user-) defined algorithms. The inputs into the calculation can be values of different quality levels (e.g., metered, estimated) and/or defined conversion factors. Empirical value: A value based on empirical studies/research and scientific evidence. Reference value: A value used to normalize a dynamic development. Through normalization, results for different entities with different levels of activities and dynamics are transformed into the same unit, so they become comparable. Conversion factor: A consensus value based on generally accepted scientific standards, concepts or models.
These absolute indicators are used to calculate three resource-productivity indicators (product output per unit of resource consumption) and three pollution-intensity indicators (emissions or waste generation per unit of product output). The indicators referring to resource use are: Energy use: final energy use of your company, measured in megajoules or kilowatt hours, including energy content of fuels used (gas, oil, petrol, biomass, etc.) and electricity consumption; Materials use: total mass of materials used by your company, measured in tons, including raw materials, packaging and distribution materials, auxiliary materials, etc., but excluding the weight of fuels; Water use: total water consumption of your company, measured in kilolitres or cubic meters, including all sources (ground water, tap/drinking water, surface water) and all applications (process water, cooling water, sanitary water, etc.).
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The indicators covering pollution are: Air emissions: covering all sources in the enterprise, but limited to greenhouse gas (GHG) emissions, measured in tons of equivalent emissions of the primary greenhouse gas, namely, carbon dioxide (CO2). This includes on-site energy- related GHG emissions, off-site energy-related GHG emissions and process-related GHG emissions (both CO2 and non-CO2, particularly CH4 and N2O); Page | 36 Waste water: the total volume of contaminated water leaving the company boundaries, measured in kilo liters or cubic meters, regardless of the final disposal method (sewer, surface water), excluding water streams discharged without chemical or biological load (thereby excluding cooling water); Waste: the total value of waste (solid or liquid) trucked or otherwise transported from the site or disposed and stored on the site, measured in tons, regardless of the respective disposal methods (e.g. incineration, landfill, recycling, etc.).
The absolute production indicator or reference indicator covers the product output or value created by the enterprise. It is preferably measured in a relevant physical unit (tons, kilo liters or units) of production or service of the enterprise. However, when different products or services are created, it might be acceptable to use the economic value (sales value) as proxy. These absolute indicators are used to compute the following six relative indicators under resource-productivity and pollution-intensity indicators highlighted below: Resource productivity o Energy productivity (product output per unit of energy used); o Materials productivity (product output per unit of material used); o Water productivity (product output per unit of water used). Pollution intensity o Carbon intensity (greenhouse gas emissions per unit of product output); o Waste intensity (waste generation per unit of product output); o Waste-water intensity (waste-water generation per unit of product output).
Jointly, these six relative indicators constitute your enterprise-level RECP profile. Increases in any of the three productivity ratios and decreases in any of the three intensity ratios over time are beneficial from the environmental and sustainability viewpoints and substantiate the successful implementation of RECP practices and technologies. Besides looking at the primary productivity and efficiency of an industrial systems, a systematic resource efficiency program should look at the secondary effect of the resource utilization efficiency on different components of the resource inputs. This is because efficient utilization of one resource input will have a positive efficiency effect on another component of the resource input while the reverse is also true on the negative side. The table below shows the different level of secondary overlaps across different components of resource.
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Table 2.1.1: Cross-cutting thematic synergy
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2.1.3 Resource efficiency components
2.1.3.1 Material efficiency While scarcity of natural resources, other than water and energy, does not appear to impose a substantial restraint on industrial activities, conserving those resources does provide benefits. Increasing material efficiency brings a number of benefits. First, natural resources are conserved, ensuring that the use of the most accessible and lowest-cost resources will be extended, reducing the cost of production, improving living standards and ensuring the resources will be available for future generations. Second, reducing the demand for raw materials will reduce the impacts of raw material extraction, including both environmental and social impacts. The environmental impacts of mining and primary processing, in particular, can be severe, including water pollution, air pollution and land degradation. Third, energy will be conserved and greenhouse gas emissions reduced. Recycling of materials can save most of the energy required for refining and processing. Typical energy savings from recycling relative to raw material extraction are estimated at: aluminum 95%, iron and steel 74%, plastic 80%, paper 64% and glass about 10%. Fourth, increasing material efficiency will reduce the amount of waste material going to landfills or to be incinerated, reducing land use, water and air pollution and other negative impacts from waste handling. Finally, improved collection and recycling of waste, particularly drink containers and plastic bags, could reduce the amount of litter cluttering land and water and in some cases clogging drainage systems. In fact, the desire to reduce litter for aesthetic reasons has been a major driving force behind municipal recycling schemes in many areas.
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Material Flow Analysis is a systematic approach aiming at presenting an overview of the materials used in a company with a purpose of identifying the point of origin, the volumes as well as the causes of waste and emissions. Materials Flow Analysis creates a basis for an evaluation and forecast of future developments and defining strategies to improve the overall situation. Problems of waste and emission for a company arise at those points of production Page | 38 where materials are used, processed or treated. If a company wants to find a strategic solution to environmental problems, it is essential to capture the current material flows in a model to identify points of origin, volumes and causes of waste and emissions. Furthermore, in a material flow analysis the composition of the used substances is analyzed, their economic value is estimated and possible future developments are forecasted. A material flow analysis is a systematic reconstruction of the way a chemical element, a compound or a material takes through the natural and/or the economic cycle. A material flow analysis is generally based on the principle of physical balance. • Step 1: Draw a Materials Flowchart: one of the objectives of a material flow analysis is to retrace the flows of goods and/or certain chemical compounds or single elements through the company with regard to various criteria (costs, risks, safe disposal, volumes, etc.). It is important to decide at the beginning how exact this analysis will be. • Step 2: Create a Material Balance: when drawing up a balance, remember the principle of conservation of masses. This applies to the entire company as well as to the system elements defined as ‘production steps’. In a stable system the mass input into an element has to be equivalent to the output. All raw and processed materials entering a certain system have to leave it as a product, waste or emissions. For this reason we have to calculate in mass units [kg]. A good estimate is always preferable to having no balance at all. An estimate with an accuracy of 80 to 90% is usually sufficient. Table 2.1.2.: Key assessment steps on material efficiency
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• Step 3: Consider Options: this requires retracing material paths and calculate key efficiency and performance ratios for the individual production steps as well as for the company as a whole. To do this, pinpoint where waste is generated and determine the ratio between raw materials and waste; compare real efficiency to the estimated efficiency you projected previously. Weak points in the system can be detected by Page | 39 comparing information on the real efficiency of processes to reference efficiency data.
The following strategies can lead to an improved material utilization: • Good housekeeping in the sense of thoughtful use and handling of raw and processed materials (respecting product formulations, complete emptying of containers, sealing of leakages, etc.) • Substitution of hazardous raw and processed materials (e.g., raw materials containing formaldehyde, heavy metals or chloride, etc.) • Product and Process modifications (automatic control, etc.) • Light weighting: The simplest and most direct form of improving material efficiency in industry is reducing the amount of material that goes into a product, or ‘light weighting’.
Exercise 2.1.1: Identify the most critical material resource input of your production process and think about the possible efficiency improvement options.
2.1.3.2 Energy efficiency Studies show that SMEs can achieve a variety of benefits and create new possibilities and opportunities by saving energy. This includes: improved capacity for compliance with environmental demands; better marketing opportunities due to improved energy efficiency. Furthermore, energy efficiency measures in SMEs could lead to the following direct benefits: reduced operating costs; reduced risks through decreased dependence on volatile and rising energy prices; improved reliability of equipment and manufacturing processes; and better positioning in production chains. Indirect benefits of energy efficiency measures in SMEs are: internal effects on the employees and their working environment, such as: improved indoor Environment Quality (IEQ)/working conditions; improved personnel attitudes; and minimized personnel fluctuations The payback period for most investments in energy efficient systems are relatively short, ranging from 3 months to 3 years. The non-energy benefits of higher efficiency systems are: better process control, reduced disruption and improved product quality; sometimes reliability is also improved. Overall cost savings related to these benefits can be in the same order of magnitude as the energy cost saving itself. A successful energy efficiency program should begin with a well-thought-out plan. The following are the key steps to follow in developing and implementing an energy efficiency program. • Step 1: Collect data: The prime objective of energy efficiency is to create the company’s product or service with the minimum energy input. Therefore, this background information focuses on the energy service and not on the use of energy. Data on the annual consumption as well as costs have to be collected separately for
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each type of energy source. These data are available on energy bills or from suppliers of heating oil or diesel as well as in records of the in-company petrol station or electricity plant, etc. Peak loads and power factor are additional relevant information that will have an impact on the electricity bill.
2.1.3.: Key assessment steps on Energy Efficiency Page | 40
• Step 2: Draw-up a list of equipment: Drawing up a list of company equipment with respective consumption data will show which equipment is responsible for what energy use. This information will be used as a basis to brainstorm improvement options. • Step 3: Record data: Based on specific energy consumption, the energy situation in a company can be analysed and controlled. In this case, the following points have to be considered: Has specific energy consumption increased? What could be the reason? Which areas have expanded? Has this expansion caused the higher specific energy consumption? Have energy sources been substituted? If the specific energy consumption has decreased: is the decrease due to specific energy saving measures? Have the targets been met? Has the consumption decreased because energy sources were substituted? • Step 4: Benchmark consumption: For the evaluation of a company’s energy consumption, key performance indicators are valuable. For instance, in the case of a brewery, an indicator can be the fuel oil consumption per hectoliter of beer. These reference values can differ substantially depending on the type of energy or the characteristics of the company. Typical reference values are production volume, turnover, number of staff, heated surface, transported volume, mileage, etc. Some benchmarks are included in Chapter 9 of this manual. Please go to the Virtual Assessment section of the electronic toolkit for detailed sector and unit specific benchmarks.
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Exercise 2.1.2: Identify the highest energy consuming equipment or unit operation in your production system and discuss the possible measures you may consider for energy efficiency improvement.
2.1.3.3 Water efficiency Page | 41 Water is an essential resource input for any industrial production process even if the quality and quantity of water may vary from one sector to another. A water efficiency program is essential not only from the perspective of savings on water consumption cost but also for its critical importance for improving efficiency across other resource inputs and saving water for other broader societal purposes. For a country like Ethiopia, where majority of the population is lacking safe drinking water, saving on industrial water consumption has much broader societal impacts. The following are the key steps to follow for developing and implementing an efficient water efficiency program. • Step 1: Draw a Water Flowchart: To identify potential water efficiency opportunities, it is first necessary to gain a thorough understanding of the site’s water uses through a water assessment. The first important task is to construct a water flow diagram, which identifies all water use from its source through the on-site processes, machines, buildings and landscape irrigation to evaporation and wastewater discharge. • Step 2: Collect Data: Once all types of sources, uses and discharges of water have been identified, it is necessary to quantify all single mass flows. Compared to many other material flows, collecting data of water consumption is relatively easy because the following documents or tools are in most cases available: annual payment to provider or to disposal companies, water meter, design specifications by manufactures of equipment, the bucket method and measuring wastewater e.g. by using the V-notch method. An alternative might be measuring the change in the level of the water tank (switch off the supply pump and measure the level drop in a certain time e.g. by using a dip stick, then calculate the volume flow from the difference in level and the cross section and the time elapsed). • Step 3: Benchmark Performance: Benchmarking is a process of comparing your organization’s operational performance to that of other organizations to become ‘best in class’ and make continual improvements. Benchmarking is more than simply setting a performance reference or comparison; it is a way to facilitate learning for continual improvement. • Step 4: Consider Options: Many general approaches exist for identifying water-saving opportunities. The installation of meters is the essential first step for monitoring usage and providing motivation for operators to save water. In addition to fixing leaks and stopping unnecessary use, industries can look at saving in sanitary/sewage water uses, Boilers, cooling water, cleaning and Rinsing Applications. Maximizing utility of in- process water is accomplished by using it more than one time to do work. Water quality characteristics will determine if multifunctional use of in-process water is acceptable for achieving necessary product quality control/assurance. Water consumption can be reduced by 10 – 50% simply by increasing employees’ awareness and by educating them on reduction consumption.
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Table 2.1.4.: Key assessment steps on water efficiency
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The following are some of the major benefits of water efficiency for business: • Saving water will reduce the cost of water for the community at large by lowering demand and thereby the associated costs of extraction, transport by pumps, treatment and wastewater disposal either in a company owned facility or a publically owned treatment plant. • Saving water can provide opportunities for developing efficiencies in other areas. For example, using less water may mean that pumping water around the site is reduced leading to savings in electricity costs and greenhouse emissions. • Saving water can reduce the risk of environmental contamination or pollution, as water efficiency initiatives will lead to less wastewater. Additional general environmental benefits of water efficiency: • Fewer sewage system failures caused from excess water overloading the system. • Healthy, rather than depleted and dried-up, natural pollution filters such as downstream wetlands. • Reduced water contamination caused by polluted runoff due to over irrigating agricultural and urban lands. • Reduced need to construct additional dams and reservoirs or otherwise regulate the natural flow of streams, thus preserving their free flow and retaining the value of stream and river systems as wildlife habitats and recreational areas. • Reduced need to construct additional water and wastewater treatment facilities. • Elimination of excessive surface water withdrawals that degrade habitat both in streams and on land adjacent to streams and lakes. • Efficient water use can also reduce the amount of energy needed to treat wastewater, resulting in less energy demand and, therefore, fewer harmful byproducts from power plants.
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Exercise 2.1.3: Identify the highest water consuming operations of your facility and consider the possible water efficiency improvement options you could consider.
2.1.3.4 Chemical efficiency All chemical exposures have potential consequences on human health. Depending on Page | 43 the toxicology and concentration, the effects of chemical exposures may be immediate (acid burns) or long term (chronic beryllium disease or cancer). Chemical exposure may result in life-threatening outcomes. Air pollutants can cause respiratory diseases in humans and have an impact on the environment e.g. in the form of acid rain or the greenhouse effect. Chemicals discharged into water bodies can poison the organisms living in these ecosystems or lead to extreme algae growth, as is the case with nitrate. Chemicals may cause physical damage such as explosions or fires resulting in serious injury and facility damage. Facility and emission-related effects can include corrosive actions that degrade equipment performance and residual contamination that limits the future use of facilities and equipment. Environmental issues may arise as a result of spills, releases or waste chemical inventories. In addition to the health effects, physical damage or environmental effects that may result from a chemical incident, companies will need to pay for incident mitigation. Because of safety risks to workers and the environment, and on the other hand losses of efficiency, it is very important for companies to implement a chemical management program. One of the most common chemicals that may cause significant occupational and environmental hazards are the Volatile Organic Compounds (VOCs). Volatile organic compounds are compounds that have a high vapor pressure and low water solubility. Many VOCs are human-made chemicals that are used and produced in the manufacture of paints, pharmaceuticals and refrigerants. VOCs typically are industrial solvents, such as trichloroethylene; fuel oxygenates, such as methyl tera-butyl ether (MTBE); or byproducts produced by chlorination in water treatment, such as chloroform. VOCs are often components of petroleum fuels, hydraulic fluids, paint thinners and dry cleaning agents. VOCs are common ground-water contaminants. VOCs include a variety of chemicals, some of which may have short- and long-term adverse health effects. Concentrations of many VOCs are consistently higher indoors (up to ten times higher) than outdoors. Benefits of chemical efficiency: the following are some of the major benefits that industries could gain from having an efficient chemical efficiency management program. • Reduced cost and environmental impact: Chemicals can represent a major part of the production cost for companies. Any measures that can be taken to reduce the loss, waste, contamination and expiry of these substances will bring cost savings to companies and at the same time, reduce their environmental impact. • Competitive advantage: While chemicals are often used to achieve certain characteristics and qualities in a product – consumers are increasingly resistant to the presence of harmful chemicals in the products they buy or in the environment. Companies that avoid using banned and restricted substances can avoid having their products rejected in the marketplace. Customers and the community will appreciate companies who voluntarily abstain from using illegal chemicals that have negative health and environmental attributes.
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• Improved worker health and safety: Chemicals alone or mixed with other substances can cause injury, disease, or even death for people handling these materials. The misuse of chemicals may result in fires and explosions. Accidents involving chemicals create additional costs for companies in terms of lost materials, damaged equipment and facilities, and personal injury. Reducing health and safety risks for employees improves their motivation and productivity and reduces absenteeism due to injury and Page | 44 illness.
The following are the key steps that need to be carried out in order to carry out an effective chemical assessment and introduce an efficient chemical management program. • Step 1: Identify Substances: explains how to create a structured information base that can be used to make continual improvements towards chemical efficiency in your company. It involves systematically identifying all chemical substances stored and in use in your company. Establishing an inventory of hazardous chemicals allows for a better understanding of where some of the main chemical hazards in your company are located and an opportunity to identify risk reduction actions through stock control and storage practices before tragedy strikes. It could also lead to identification of redundant products and reduction of losses due to substances expiring in storage. An industry need to know the types of chemicals, characteristics/properties, and storage requirements. The minimum information to include in a chemical Inventory are: the chemical name, trade name/Chemical Abstract numbers (CAS) number; where it can be found, stored and/or used; amount in use, the whereabouts of MSDS (Material Safety Data Sheets) and their availability in the language of the workforce. It should also include notes about handling, use, storage, disposal conditions, etc. • Step 2: Identify Hazardous Substances: An MSDS of a chemical substance contains details of the hazards associated with this specific substance and gives information on its safe use. An MSDS helps you determine the effect of the chemical on end products (e.g. intended quality and characteristics, etc.), allows you to determine chemical compatibility and do proper mixing, provides information about proper storage and handling (e.g. ventilation), enables you to prevent losses from the expiry of materials, indicates appropriate security precautions and needed controls, including the use of personal protection equipment, spells out emergency procedures in case of spills, fire and explosion, specifies the hazard level, which gives clues about the possible effects on water, soil, human health, specifies the flashpoint (the lowest temperature at which a chemical releases flammable vapor); the lower the flashpoint, the more hazardous the chemical is as a source of fuel for fire or explosion and the boiling point, which is used to determine volatility; the lower the boiling point, the higher the volatility.
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Table 2.1.5.: Key assessment steps on chemical efficiency
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• Step 3: Design the Flowchart: Once you have all the information needed on the chemicals, you need to prepare a process flow diagram. This will help you understand where chemicals are used and located. Process flow means both the sequence of activities you undertake at your company, and the external activities that you can influence in your business, ranging from the products and services you procure, to the products and services that you provide. • Step 4: Identify health, environmental, social and economic risks: at this stage, the risks of all kinds of chemicals need to be assessed to determine which safety measures are necessary to prevent harm. When new information on a chemical becomes available, the risk assessment should be reviewed and, where necessary, revised to ensure the maximum safety possible at all times. • Step 5: Consider options: finally, you need to determine and implement the appropriate measures to reduce and control risks. Appropriate measures can include elimination of non-essential chemicals, substitution by safer products or processes (such as using detergents instead of chlorinated solvents for cleaning), isolation of incompatible chemicals and ignitions sources, and/or introduction of other engineering or administrative measures such as reducing the area of contamination in the event of spills or leaks.
Exercise 2.1.4: Identify the most critical chemical inputs of your production system, including their potential hazards, and discuss the possible measures to take in achieving efficient chemical utilization and reduction of possible chemical hazards.
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2.1.4. Integrated waste management As was noted in the earlier section, the dominant practice of waste handling has been largely based on dilution and dispersion of the waste into the natural environment. National governments started to impose treatment requirements on industries as the volume of industrial waste discharged into the natural environment started to have visible negative impacts on humans and the natural environment. This led to the development of different types of Page | 46 treatment technologies for all types of industrial waste. The move towards an integrated approach to waste management began in the 1970s when this approach was described as “viewing the problem in its entirety as an interconnected system of component operations and functions”. An Integrated Waste Management systems combine waste streams, waste collection, treatment and disposal methods into a practical waste management system that aims to provide environmental sustainability, economic affordability and social acceptance. The development and implementation of an Integrated Waste Management program is based on systematic application of a waste management hierarchy that clearly shows the order of preference of the different waste management options, starting with prevention and ending with disposal. • Prevention: refers to all activities which aim to optimize product design and manufacturing processes so that wastes are not generated in the first place. • Reduction: also known as waste minimization, refers to the reduction of waste at source, by understanding and changing production processes to reduce waste. Waste reduction can include the substitution of less environmentally harmful materials in the production process. • Reuse: refers to using an item more than once. A product may either be reused for its original purpose, such as the repeated use of a plastic bag to carry groceries home from the market, or for some other purpose, such as when glass jars are reused in a workshop to hold screws and nails.
Figure 2.1.5.: Waste management hierarchy
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• Recycling: recycling is the act of recovering materials from the waste stream and reprocessing them so they become raw materials for new applications. For example, aluminum cans may be melted (processed) and then either reformed as aluminum cans or made into other aluminum products. Plastics and paper can also be reprocessed into different products. Page | 47 • Composting and treatment: is the term used to describe the aerobic degradation of organic materials under controlled conditions, yielding a usable soil fertilizer or mulch. Similarly, wastes, particularly liquid wastes can undergo through different kinds of (mechanical, biological and chemical treatments) before being discharged to the natural environment. • Energy Recovery: Energy recovery refers to any waste treatment that creates energy in the form of electricity or heat from a waste source that would have been disposed of in landfill. Energy recovery is also called Waste-to-energy (WtE) or energy-from- waste (EfW). More advanced Waste-to-energy processes result in a usable fuel commodity, such as hydrogen or ethanol. Energy recovery processes include combustion, pyrolysis and gasification. • Disposal: Landfilling describes the disposal of solid waste at engineered facilities in a series of compacted layers on land. Landfills are lined with impermeable materials to prevent leachates from polluting groundwater, and covered with soil. Incineration is a waste disposal method that involves the combustion of waste at high temperatures. This is particularly applicable for hazardous and toxic wastes such as hospital waste.
In the absence of good waste management, particularly the following industries may face toxicity challenges: Textile industry and leather industry in relation to dying and tanning products; Paper and pulp industry in relation to bleaching processes and related water emissions; Chemical and plastics industry, depending on the type of chemicals produced; and High-temperature processes such as in the cement and steel industry, where the formation of by-products or emissions of metals can be a problem.
Exercise 2.1.5: Identify the major stream of wastes that are coming out of your production systems and consider the potential and possibility for applying the different stages of integrated waste management on each of them.
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Resource documents
Briggs, E. 2015. Sustainable Consumption and Production: a Handbook for Policy Makers. United Nations Environment Program (UNEP), Paris. Gradl, C., Herrndorf, M., & Krämer, A. (2009). Towards Triple Impact: Toolbox for Analysing Sustainable Ventures in Developing Countries. United Nations Environment Page | 48 Programme, Paris. Fresner, J., Dobes, V., Burki, T., Angerbauer, C., & Tiefenbruner, K. 2010. Promoting Resource Efficiency in Small and Medium Sized Enterprises. UNEP and UNIDO, Paris. Crul, M., Diehl, J. C., & Ryan, C. (2009). Design for sustainability-A step-by-step approach. UNEP: Paris. Fiksel, J. (2009). Design for environment: a guide to sustainable product development. McGraw Hill Professional. UNIDO & UNEP. 2009. Enterprise-Level Indicators for Resource Productivity and Pollution Intensity: A Primer for Small and Medium-Sized Enterprises. Vienna:UNIDO Van Weenen, J.C. 2001. Sustainable Product Development in Developing Countries. Research Report: University of Amsterdam.
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2.2. Principles and Opportunities for Sustainable Product Design and Development Page | 49 2.2.1 Principles and opportunities for sustainable Product Design
A product is something sold by an enterprise to its customers. Product development is the set of activities beginning with the perception of a market opportunity and ending in the production, sale, and delivery of a product. Although much of the material in this module is useful in the development of any product, we explicitly focus on products that are engineered, discrete, and physical. Throughout the nineteenth century, the term ‘designer’ was vague and ambiguous, referring to a wide range of occupations: fine artists, architects, craftsmen, engineers and inventors. By the twentieth century the profession of design had developed into Industrial Design as we know it today, existing in design teams and governed by management structure It is because of these complex roots that Industrial Design has been described as a pendulum which swings between art and engineering. This is a rich metaphor that creates a valuable picture of how different fields influence the subject. It can be made even more powerful, if one imagines Industrial Design to be represented by a steel plumb which is hung as a pendulum, surrounded by a series of magnetic discs, which represent the other forces which act upon it, such as the business, marketing and the consumer(Cassar et al., 1969), as illustrated in Figure 3.2.1
Figure 2.2.1: Elements of consideration in process design
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Product life cycle impacts are a major contributor to many of society’s environmental and social challenges and thus a problem worthy of our attention. Sustainable product development is also a means for companies to become and remain competitive. The design stages of the product development process have a direct influence over about 70 per content of the final product as this is where the most critical decisions with respect to: cost, appearance, materials selection, innovation, performance, environmental impact, and Page | 50 perceptions of quality such as longevity, durability, reparability are made. As such, designers have an unprecedented opportunity to influence the impact that products have on the environment and society. Our decisions have positive and negative social and environmental impacts which ricochet around the world. For example, the nature and substance of the materials that we specify will impact the communities who provide the labor to mine, process, and deliver these materials, and the land from which they are taken. These decisions can lead to positive social impacts such as the provision of reliable labor and fair income streams which lead to improved healthcare and education, or negative social impacts such as unfair pay, child labor, slavery and civil war. Designers have to take further responsibility because of the role they play as industry’s connection with the marketplace, interacting between people and products. Designers can directly influence the decisions people make about what they buy and why. These decisions reflect peoples’ perceptions of lifestyle and their associated status in the world. The decisions that designers make also have the opportunity to influence the way that consumers behave. For example, if a designer decides to include a stand by option on the portable television she is designing, she is providing future users with the opportunity to behave in a wasteful manner. Research has shown that stand by facilities use 8 per cent of all domestic electricity (Smith and Henderson, 2006). Whereas the decision to leave out that function would by default encourage more sustainable behavior. The section on ‘impact of use’ later in the chapter demonstrates different ways that designers can encourage sustainable behavior.
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Figure 2.2.2: Role of Design/designers Integrating sustainable development with existing product design processes and practices is critical for successful implementation of sustainable product design. Even the international standard ISO14006:2011 describes sustainable product design as involving the integration of sustainability considerations into product. design. We therefore describe ‘sustainable product design’ as the integration of (1) sustainable development and (2) design processes and practices—such that the product design helps society to transition to a sustainable future.(Bhamra & Lofthouse, 2007)
2.2.2 Concepts and Principles of Product Design for Sustainability To keep pace with the rapidly changing industrial setting, many environmental movements have expanded their scope to include social and economic concerns. This combination of environmental, social, and economic priorities is referred to as ‘sustainability.’ Like many other environmental concepts, Eco-design has evolved to include both the social and profit elements of production and is now referred to as sustainable product design. The concept of ‘Design for Sustainability’ (D4S) requires that the design process and resulting product take into account not only environmental concerns but social and economic concerns as well. The D4S criteria are referred to as the three pillars of sustainability - people, profit and planet. D4S goes beyond how to make a ‘green’ product and embraces how to meet consumer needs in a more sustainable way. Companies incorporating D4S in their long-term product innovation strategies strive to alleviate the negative environmental, social, and economic impacts in the product’s supply chain and throughout its life-cycle.
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Figure 2.2.3: Spectrum of design for sustainability. This step-by-step approach to D4S provides companies and intermediate organizations in developed and developing economies with practical support for both incremental and radical product innovation. It should be noted that by no means has incremental redesign or greening of products lost its relevance in today’s marketplace. D4S essentially builds on these concepts and aims to drastically improve the efficiency and social qualities of production processes by developing new products, services, and systems. This publication provides examples and approaches on how to accomplish these goals. The D4S: A Step-by-Step Approach was compiled by Delft University of Technology’s Design for Sustainability (DfS) Programme for UNEP’s Sustainable Consumption and Production Branch of the Division of Technology, Industry and Economics. Both organisations have been active in the area of promoting more sustainable product design since the introduction of these concepts in the 1990s. Design for sustainability is part of the bigger picture of sustainable development, a subject which has received considerable media attention in recent years due to a range of worldwide crises which have manifested themselves as political problems: climate change, famine, disease and poverty. There are many business benefits to adopting design for sustainability principles and that to be most effective these decisions need to be integrated at a strategic level. For companies that are involved in product manufacture this means that their designers need to better understand the negative environmental and social impacts of the products they produce and understand how to make the required changes to develop products which contribute to a sustainable business. The ultimate aim for businesses should be to design and develop profitable products which are both environmentally and socially responsible.
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Table 2.2.1: Design for sustainability
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2.2.2.1 Methods and Tools for Design for Sustainability The challenge for designers is to find meaningful tools which engage with the design process and help them to tackle design for sustainability. Rather than providing an exhaustive list of the tools available, this chapter introduces a selection of those which have proved to be relevant to design students and practicing designers alike. They are grouped into five sections Environmental Assessment Strategic Design Idea generation User centered design and Information provision
2.2.3 Principles and opportunities for sustainable product development The economic success of most firms depends on their ability to identify the needs of customers and to quickly create products that meet these needs and can be produced at low cost. Achieving these goals is not solely a marketing problem, nor is it solely a design problem or a manufacturing problem; it is a product development problem involving all of these functions. This training provides a collection of methods intended to enhance the abilities of cross-functional teams to work together to design and develop products.
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Figure 2.2.4: Product Development Process
From the perspective of the investors in a for-profit enterprise, successful product development results in products that can be produced and sold profitably, yet profitability is often difficult to assess quickly and directly. Five more specific dimensions, all of which ultimately relate to profit, are commonly used to assess the performance of a product development effort:(Ulrich & Eppinger, 2012) Product quality: How good is the product resulting from the development effort? Does it satisfy customer needs? Is it robust and reliable? Product quality is ultimately reflected in market share and the price that customers are willing to pay. Product cost: What is the manufacturing cost of the product? This cost includes spending on capital equipment and tooling as well as the incremental cost of producing each unit of the product. Product cost determines how much profit accrues to the firm for a particular sales volume and a particular sales price.
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Development time: How quickly did the team complete the product development effort? Development time determines how responsive the firm can be to competitive forces and to technological developments, as well as how quickly the firm receives the economic returns from the team’s efforts. Development cost: How much did the firm have to spend to develop the product? Page | 55 Development cost is usually a significant fraction of the investment required to achieve the profits. Development capability: Are the team and the firm better able to develop future products as a result of their experience with a product development project? Development capability is an asset the firm can use to develop products more effectively and economically in the future.
High performance, along these five dimensions, should ultimately lead to economic success; however, other performance criteria are also important. These criteria arise from interests of other stakeholders in the enterprise, including the members of the development team, other employees, and the community in which the product is manufactured. Members of the development team may be interested in creating an inherently exciting product. Members of the community in which the product is manufactured may be concerned about the degree to which the product creates jobs. Both production workers and users of the product hold the development team accountable to high safety standards, whether or not these standards can be justified on the strict basis of profitability. Other individuals, who may have no direct connection to the firm or the product, may demand that the product make ecologically sound use of resources and create minimal dangerous waste products.
2.2.3 .1 The Challenges of Product Development Developing great products is hard. Few companies are highly successful more than half the time. These odds present a significant challenge for a product development team. Some of the characteristics that make product development challenging are: Trade-offs: An airplane can be made lighter, but this action will probably increase manufacturing cost. One of the most difficult aspects of product development is recognizing, understanding, and managing such trade-offs in a way that maximizes the success of the product. Dynamics: Technologies improve, customer preferences evolve, competitors introduce new products, and the macroeconomic environment shifts. Decision-making in an environment of constant change is a formidable task. Details: The choice between using screws or snap-fits on the enclosure of a computer can have economic implications of millions of dollars. Developing a product of even modest complexity may require thousands of such decisions. Time pressure: Any one of these difficulties would be easily manageable by itself given plenty of time, but product development decisions must usually be made quickly and without complete information. Economics: Developing, producing, and marketing a new product requires a large investment. To earn a reasonable return on this investment, the resulting product must
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be both appealing to customers and relatively inexpensive to produce. For many people, product development is interesting precisely because it is challenging. For others, several intrinsic attributes also contribute to its appeal: Creation: The product development process begins with an idea and ends with the production of a physical artifact. When viewed both in its entirety and at the level of individual activities, the product development process is intensely creative. Page | 56 Satisfaction of societal and individual needs: All products are aimed at satisfying needs of some kind. Individuals interested in developing new products can almost always find institutional settings in which they can develop products satisfying what they consider to be important needs. Team diversity: Successful development requires many different skills and talents. As a result, development teams involve people with a wide range of different training, experience, perspectives, and personalities. Team spirit: Product development teams are often highly motivated, cooperative groups. The team members may be co-located so they can focus their collective energy on creating the product. This situation can result in lasting camaraderie among team members.
2.2.3 .2 Product Development Process A process is a sequence of steps that transforms a set of inputs into a set of outputs. Most people are familiar with the idea of physical processes, such as those used to bake a cake or to assemble an automobile. A product development process is the sequence of steps or activities that an enterprise employs to conceive, design, and commercialize a product. Many of these steps and activities are intellectual and organizational rather than physical. Some organizations define and follow a precise and detailed development process, while others may not even be able to describe their process. Furthermore, every organization employs a process at least slightly different from that of every other organization. In fact, the same enterprise may follow different processes for each of several different types of development projects. A well- defined development process is useful for the following reasons: Quality assurance: A development process specifies the phases a development project will pass through and the checkpoints along the way. When these phases and checkpoints are chosen wisely, following the development process is one way of assuring the quality of the resulting product. Coordination: A clearly articulated development process acts as a master plan that defines the roles of each of the players on the development team. This plan informs the members of the team when their contributions will be needed and with whom they will need to exchange information and materials.
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Figure 2.2.5: Product Development procedures
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
Planning: A development process includes milestones corresponding to the completion of each phase. The timing of these milestones anchors the schedule of the overall development project. Management: A development process is a benchmark for assessing the performance of Page | 58 an ongoing development effort. By comparing the actual events to the established process, a manager can identify possible problem areas. Improvement: The careful documentation and ongoing review of an organization’s development process and its results may help to identify opportunities for improvement.
Exercise 2.2.1: Review one of your product against the key principles and steps highlighted in this section and identify the potential areas for possible improvement in their design and development.
3.2.4 Concepts and Principles of Product Quality Control New products create new processes and new business risks, and therefore new product development initiatives open up opportunities for continuous improvement and associated Six Sigma projects. Six Sigma is a measure of quality that drives an organization to achieve near perfection through a management-by-fact and data-driven process that defines a defect as anything outside customer specifications. A defect in Six Sigma terms is six standard deviations between the mean and nearest specification limit. In new product development this process is often called DMADC (define, measure, analyze, design, verify) as shown in Fig. 3.2.6. An improvement program used to develop new products and new processes at Six Sigma levels. The objective is to target customer requirements—nothing more and nothing less. The company goal is to avoid wasteful and expensive rework and processes, and produce a product as close to specification as possible the first time. One application of this quality concept is called integrated test management. New product processes require complete test coverage and tracking systems to ensure that issues associated with the product that are discovered in testing are evaluated and resolved. This requires traceability, the capacity to link every performance specification with a test and data point. The point is to ensure that new products meet stated requirements and functional standards set by customer need. The focus of quality in new product development is to get the customer requirement right because it drives everything else. Quality is not the highest performance you can achieve; it is what the customer “requirements.” Looking at new products this way, you see new product development from the customer’s perspective and recognize that the risk is not only that the product will not meet customer requirements, but also that you will get the customer requirements wrong to begin with. As the major stakeholder and the project sponsor, the customer/client pays the price at the end of a project if these risks are not well managed. Product quality is the group of features and characteristics which determines the capacity of the product to meet the specification requirements of a standard or of a customer. It is often defined as ‘the ability to fulfill the customer’s needs and expectations’. It is also sometimes defined as ‘meeting specifications at the lowest possible cost’ as well as ‘delivering
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the value that a customer derives from a product’. Product quality needs to be defined firstly in terms of parameters or characteristics, which vary from product to product. The quality of the product can be controlled during its manufacturing and it makes the product free from deficiency and defects. A specification is the minimum requirement according to which the producer makes and delivers the product to the customer. In setting specification limits, the following is required to be considered. Page | 59 The user’s and/or customer’s needs Requirements provided for in national and/or international standards Requirements of specifications of national and/or international standards with restrictions to meet specific needs of the customer The competitor’s product specifications, in order to gain marketing advantages Brand related requirements of the product. Requirements relating to product safety and health hazards provided for in the statutory and regulatory requirements
As described above, the product quality is the ability to satisfy the stated needs. From this definition, product quality can be described by nine dimensions or characteristics. These nine dimensions are as follows. Performance – It is the product’s primary operating characteristics. Product is to give expected performance during its use. Product features – The product is to meet the requirements of its features. For example a rebar is to have two longitudinal ribs and several cross ribs at specific intervals. Reliability – It is the probability of the product surviving over a specified period of time under specified conditions. Conformance –It is the degree to which the physical and performance characteristics of the product meet the requirements of the standards. Durability – The amount of use one can get from a product before it needs to be replaced. Serviceability – The ease with which the product can be serviced or repaired Aesthetics – It represents how the product looks and how it is aesthetically pleasing. Safety – It is assurance that the product is safe during its use and it does not fail prematurely Perceived quality – The product fulfills the requirements of its brand created though brand image or brand name.
In 2000, M. Harry and R. Schroeder published ‘Six Sigma: The Breakthrough Management Strategy Revolutionizing the World's Top Corporations’. Since that time, there has been considerable interest in this subject. In this book, the authors devoted much space to a review of the concept. In the Six Sigma world, the Quality Planning Process is referred to as Design for Six Sigma (DFSS). DFSS is focused on creating new or modified product designs that are capable of significantly higher levels of performance (using Six Sigma Methodology). They emphasized on a Define-Measure-Analyze-Design-Verify (DMADV) sequence of quality planning and design methodology that can be used for product or service designing. The DFSS matrix is a tool which captures the important quality planning information that
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allows a six sigma team to record the vital planning information and deliver as required in the DMADV phases.
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Figure 3.2.6: The six sigma of quality control
Exercise 2.2.2: Take one of your product and critically evaluate it against the nine dimensions of product quality and identify possible areas for improvement.
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
2.2.5 Case studies on Sustainable product development Sole Rebels Ethiopia In early 2005, fresh out of college in Addis Ababa, Bethlehem founded the trailblazing footwear company soleRebels that was based on production of shoes from locally-sourced raw materials and recycled waste. The company started production by providing solid community- Page | 61 based jobs, with particular focus on providing jobs to women. After producing many models of fashionable shoes and creating hundreds of creative, dignified and well-paying jobs, soleRebels became the planets fastest growing African footwear brand within five years. It also became the world’s first and only World Fair Trade Federation [WFTO] FAIR TRADE certified footwear company and the very 1st global footwear brand to ever emerge from a developing nation. Known as the Ecommerce pioneers of the African continent, soleRebels moved beyond the groundbreaking online retail partnerships forged years back with the planets ecommerce giants Amazon, Endless, Javari, Amazon UK and the EU’s #1 online footwear retailer spartoo.com. Now hailed as the Nike of Africa, soleRebels stands as living proof that creating innovative world-class brands is the best road to greater shared prosperity for developing nations like Ethiopia. soleRebels emerges as the first African brand to become an international job creation powerhouse with its international stores forecasted to create over 600 jobs in the countries where they are located by end 2015. (www.solerebelsfootwear.co.).
African Bamboo PLC African Bamboo is a Tropical Bamboo engineering company based in Ethiopia and the Netherlands. It is a vertically-integrated forestry, manufacturing, distribution, and research and development operations that has pioneered a business model that diligently applies design thinking and maintains environmental and social consciousness. African Bamboo describes itself as the premier African enterprise to produce world class, sustainable, and socially responsible Tropical Bamboo products. The company’s operation is guided by an overall guiding principle stated as ‘Disrupt thoughtfully and act responsibly’. This is further elaborated by figure 3.2.1 that consists of the following five components: think diligently in designing products; act responsible in relation to the environment; disrupt thoughtfully through innovation, promote transparency in trace value; and respect social value unequivocally.
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African Bamboo PLC produces a variety of bamboo-based products that have wider applications in the construction industry. African Bamboo’s bio-composite panels are comprised of Ethiopian highland bamboo, which has material characteristics proven ideal for bamboo products (https://www.african-bamboo.com/).
Ecological products and services of Ethiopia (Ecopia Plc) Page | 62 Ecopia Plc stands for natural products and tour services. For over 10 years, Ecopia has been guided by the desires and aspirations of producing organic products for our national and international consumers. Now, more than ever, Ecopia stands for high quality products and services processed in social and environmental sustainable methods. As a social for Profit Company, we are always conscious of our environmental and social responsibility to our communities. The human and the environment factor plays a crucial role in our success in Ethiopia and worldwide. It is with this policy and values that Ecopia entered the national and international market with more than 15 organic food products, 30 cosmetics and herbal medicinal plant based products traceable to our 11,000 organic farmers. In order to safeguard the future of the company and the brand, it trained more than 5000 organic farmers in more than 14 different regions in Ethiopia. Ecopia is also involved in organization of Farmers Weekend Market and community-based eco-tourism. Through the transfer of simple conservation techniques combined with modern mobile technology, Ecopia enables thousands of Ethiopian small organic farmers to improve their livelihood in enabling them to bring out the true value of their products. (http://www.ecopia.de/welcome/)
References Bhamra, T., & Lofthouse, V. (2007). Design for sustainability: a practical approach. Retrieved from http://books.google.com/books?id=vEKOG_HQ0ikC&pgis=1 Cassar, D. J., Richards, C. J., Langer, J., Bhamra, T., Lofthouse, V., Jonker, G., … Remanufacturing, C. (1969). Engineering for Sustainability: A Practical Guide for Sustainable Design. Green Chemistry and Chemical Engineering (Vol. 54). https://doi.org/10.1007/978-1-4939-9060-3_1079 Jamnia, A. (2018). Introduction to Product Design and Development for Engineers. Retrieved یاه هناسر و گنهرف=from http://www.ghbook.ir/index.php?name ن وی ن&E =khsahkhc&37=egap&05631=di_koob&enilnodaer=ksat&koobd_moc=noitpo D9C9491B4&Itemid=218&lang=fa&tmpl=component Ulrich, K. T., & Eppinger, S. D. (2012). Product Design and Development Product Design and Development. The McGraw-Hill Companies (Vol. 5th). https://doi.org/10.1016/B978-0- 7506-8985-4.00002-4 Wei, J. (2019). Product Engineering: Molecular Structure and Properties. Journal of Chemical Information and Modeling (Vol. 53). https://doi.org/10.1017/CBO9781107415324.004
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
Annex 1: Checklist for Leather Sector Assessment
Leather Sector OBJECT ASSESSMENT RESULTS WATER Water Determine water usage and treatment Page | 63 Management
Pollutants in Determine wastewater parameters (water flow, wastewater - chemical oxygen demand, biological oxygen demand, bovine hides Chromium contents). Pollutants in Determine wastewater parameters (water flow, wastewater - chemical oxygen demand, biological oxygen demand, sheepskins Chromium contents). Wastewater Determine wastewater parameters (water flow, load in chemical oxygen demand, biological oxygen demand, vegetable Chromium contents). tanning Beamhouse Check whether fresh, dry, or salted hides are used. Check whether hair saving / unhairing is used Check whether spent liquor is recycled Check whether lime spliting is used Tanning Check recipes and actual dosage of chemicals Check float rate Check whether liquors are reused Check exhaustion of chromium bath
Waste water Determine emission load of wastewater treatment Retanning, Check exhaustion of fleet dyeing Check exhaustion of dyestuff Check whether there is mechanical drying before drying ENERGY Energy Determine energy consumption Consumption Drying How much energy is used in drying? How are airflow, humidity and temperature in the dryers controlled?
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WASTE Trimming in Identify trimming waste according to stage beamhouse, tanning, dyeing CHEMICALS
Determine type of finisher (water based or solvent based Page | 64 Determine amount of finisher used Finishing Determine overspray in finishing Use HVLP spraying guns Compile a list of chemicals used Check hazardous properties Check storage (volumes, separation of incompatible Storage of chemicals, containment, drip trays, proper containers) chemicals Check personal safety equipment use Check proper labelling of containers Check expiry date
Chemicals Determine kind of chemicals used and check for Substitution potential substitutes
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Annex two: Checklist for Textile Sector Assessment
TEXTILE SECTOR OBJECT ASSESSMENT RESULTS WATER Page | 65 Improve Identify working practices Working Are there clear working instructions? Practices Is there overflow from tanks? Identify sequence of cleaning steps (collecting of residual inks, dry cleaning, rinsing) Printing Identify procedures, training, monitoring practices Determine water consumption for cleaning operation for screens, for pipes carrying inks)
Dyeing Determine liquid ratio (ratio of fleet volume to materials (General) volume)
Determine liquid ratio (ratio of fleet volume to materials Dyeing (Fabric) volume)
Dyeing (loose Determine water and energy consumption of dyeing fibres) process
Determine water and energy consumption of dyeing Dyeing (yarn) process Determine water consumption of washing machine, presence of automated stop valves and whether washing Washing machine has separated chambers and countercurrent Machine water flow. Determine energy consumption of the washing machine ENERGY
In order to develop energy 65inimization options in a process, a detailed understanding of the plant wastes and General Energy operations is required. In particular, optimal use of water Savings Options and energy should start from monitoring of water, heat and power consumption of sub-units of the process. Determine energy consumption of stenter Determine water content of exhaust air and the function of the airflow control (manually, automated control by Stenter exhaust air humidity) Determine exhaust airflow and presence of variable speed fans Determine presence of a heat exchanger in the exhaust air Stenter (heat steam recovery) Determine exhaust airflow and exhaust air temperature
Stenter Determine surface temperature of encasement and (insulation) insulation thickness
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Check heating system: direct fired or with heat transfer Stenter (heating medium (steam, thermo fluid) system) Check burner technology used: design should allow for a steady flame with undisturbed combustion Dyeing (loose Determine water and energy consumption of dyeing fibres) process. Page | 66 Dyeing (yarn) Determine energy consumption of dyeing process. MATERIALS Machinery, Determine maintenance plans and last maintenance of Pumps and equipment (machinery, pumps, pipeworks, valves, level Pipework switches, etc.) Printing Determine printing paste supply in rotary screen printing machine (how the paste is supplied and how much per printed fabrics) WASTE
In order to develop waste and energy minimization options in a process, a detailed understanding of the plant wastes General Waste and operations is required. In particular, optimal use of Minimization water and energy should start from monitoring of water, Options heat and power consumption of sub-units of the process and characterization of the facility waste streams. Determine the amount of residual printing paste and how residues are removed (scraped and/or washed) Determine how the printing paste will be prepared Printing (manually, computer assisted.) Determine what happens with leftover printing paste and residues CHEMICALS Minimization Make chemicals assessment, i.e. determine chemicals used and in certain processes, collect material safety data sheets and Optimization of assess information provided there Chemical Use - General Options
Determine chemicals handling at mercerizing plant and concentration of dyes Mercerizing Determine presence of dye recovery and energy consumption of dye recovery evaporator
Printing Determine urea content of printing paste
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Ethiopian Society of Chemical Engineers (ESCHE)
Training on Greening of Ethiopian Manufacturing
As part of Capacity Building Training European Union External Actions No.: ENV/2017/391-389 Through the Ethiopian Chamber of Commerce and Sectoral Associations
Module three Sustainable Value Chain and Marketing
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Table of Contents
Introduction
3.1. Value Chain Analysis (VCA) – Concept, Variants and Methodologies
3.1.1. Value Chain Concept 3.1.2. Variants of Value Chain 3.1.3. Contents of Value Chain 3.1.4. Integrated Value Chain Analysis Methodologies 3.1.4.1. Creating a Product Value Chain 3.1.4.2. Developing an Integrated Value Chain Analysis (IVCA) 3.1.5. Advantages of Integrated Value Chain Analyses 3.1.6. Concepts of Greenhouse Gas Emission and Effects
3.2. Concepts of Sustainable Marketing 3.2.1. Green/sustainable Procurement 3.2.2. Eco-labeling 3.3. EXERCISE: VCA-GHG Emissions and Sustainable Marketing
ESChE Training Document for Greening Ethiopian Manufacturing (GEM) Project
Introduction
The term Value Chain Analysis (VCA) was first introduced by Prof. Michael Porter in his book “Competitive Advantage: Creating and Sustaining Super-performance, 1985”. The concept of value chain is related to the disaggregated activities of an organization to deliver a Page | 69 product or service to its customers through the evaluation of which activities adding value to the organization’s product or service. Nowadays, the value chain analysis is a widely used analytical tool for identifying and pinpoint where effective interventions can be made in order to implement improvement measures on the value adding activities along the stages of delivering products or services and thereby achieve sustainable competitiveness. There are three types of approaches to conduct VCA such as the lead firm approach, sub-sector/product approach that includes Integrated Value Chain Analysis (IVCA) and, hybrid approach. The IVCA approach shall be discussed in this manual in more detail due to its expanding application worldwide for different products and services including practical examples and exercises to provide trainees with the basic skills. The objective of this training manual is to help trainees understand the concept of VCA and the merits of IVCA as analytical tool to identify technical, financial, and administrative and policy interventions to improve the competitiveness of strategic sectors. Value Chain Analysis (VCA) can be defined in a number of ways which have more or less the same meaning for application. Some VCA practitioners in the economic development and competitiveness field express a value chain and/or a value chain analysis to mean in a nutshell the braking down of a company’s primary activities into a distinct value adding stages that are linked and managed together so as to provide maximum benefits to the company’s competitive position. The boxes below present the most common terms and definitions used to answer the question “What is a Value Chain/Value Chain Analysis?”
Box – 1 As per “Competitive Advantage: Creating and Box – 2 Sustaining Superior Performance” of Michael Porter, As per a Handbook for Value Chain Research,” 1985: Raphael Kaplinsky and Mike Morris, The value chain disaggregates a firm into its International Development Research Center, strategically relevant activities in order to understand 2001”: the behavior of costs and the existing and potential The value chain describes the full range of sources of differentiation. activities which are required to bring a product Every firm is a collection of activities that are or service from conception, through the performed to design, produce, market, deliver, and different phases of production (involving a support its product. All of these activities can be combination of physical transformation and the represented using a value chain. input of various producer services), delivery to The relevant level for constructing a value chain is a final consumers, and final disposal after use. firm’s activities in a particular industry (the business unit). An industry- or sector-wide value chain is too broad because it may obscure important sources of competitive advantage.
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Box – 3 Box – 4 As per “How-to Notes: Value Chain Analysis,” Dealing As per “Global Value Chain Analysis: A Primer,” Center with Governance and Corruption Risks in Projects, on Globalization, Governance, and Competitiveness, May September 2010”: 31, 2011”: A value chain describes the full range of activities that “Value Chain Analysis is a tool used by the private sector firms and workers perform to bring a product from its to categorize the primary activities firms undertake to conception to its end use and beyond. This includesPage | 70 produce and deliver (or “add value” to) a final product. By activities such as design, production, marketing, breaking the service-delivery process into its aggregate distribution and support to the final consumer. parts, value chains help businesses identify inefficiencies The activities that comprise a value chain can be and weaknesses in their own supply chains.” contained within a single firm or divided among different firms. Value chain activities can be contained within a single geographical location or spread over wider areas.
3.1. Value Chain Analysis (VCA) – Concept, Variants and Methodologies
3.1.1. Value Chain Concept
The concept of VCA gained prominence in the 1980s when it arose from the theory of firm competition and was developed primarily as a strategic concept of competitiveness of firms. In the 1990s, the concept of ‘global commodity chains’ emerged as an approach complementary to the theory of firm competition.
Based on these conceptual frameworks, the value chain analysis as a tool gained in popularity in the late 1990s with the onset of globalization and intense competition, for companies found it necessary to remain Box – 5 competitive through The Value Chain describes the full range of activities identification and analysis of required to bring a product or service from conception, through the different phases of production to delivery to the the underlying strategic issues final consumer. of their value adding activities. The phases of production involve a combination of physical transformation and the input of various producer services. The term value chain analysis has been misunderstood and is being used in place of supply chain analysis. Even though these terms have certain things in common, there is a wide difference in concept and meaning for their respective practical application. Specifically, VCA should be viewed as one of many tools available to development practitioners to help them with identifying and quantifying constraints along the value chain and supply chain (See Box 6).
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VCAs, therefore, should be treated as a tool that is useful for shedding light on key policy, technical and market based distortions that undermine Box – 6 Users of VCA should have a clear understanding of the competitiveness of a given difference between supply chain and value chain analysis. sector/industry (VCA can be Page | 71 Supply chain analysis focuses on transaction costs along a done at the product level and/or value chain when goods are physically transferred from one at broader sector/industry level stage of value addition to another location where additional depending on methodology). value is added or the product is sold. For example, an analysis of costs associated with moving maize from the VCA should be used to identify farm gate to a milling facility or the cost of accessing opportunities for specific policy, fertilizers and other agricultural inputs by a maize farmer technical, economical and both fall under supply chain analysis (transport-logistics administrative interventions to costs, licensing fees, taxes, etc). On the other hand, value be implemented so as to bring chain analysis focuses on the processes and costs associated with transforming an input into a marketable good. Using about improvements that change maize as an example, a value chain analysis identifies each the competitive position of the process and the corresponding costs associated with firm or sector. transforming maize seed into the finished product (grain, milled flour, animal feed or food products utilizing maize meal).
3.1.2. Variants of Value Chain
Value Chain Analysis can be classified into three variants based on the methodologies used for conducting the analysis, namely, lead firm approach; sub-sector/product approach; and hybrid approach. Lead firm approach: VCA tools that apply the lead firm approach focus on identifying key stakeholders along the entire product supply chain, and work with such firms to help develop strengthen and deepen the supply chain network in a target sector. In this context, the analysis focuses primarily on identifying product-specific production costs according to major input categories (labor, material, utilities, etc), and transaction costs (transport/logistics, taxes, licensing and other fees) associated with bringing a specific product to market. In this process, the tool helps identify different constraints along the supply chain that distort competitiveness. This information is then used to develop a suite of financial, technical, human resources and market linkage support activities to reduce transaction costs along the supply chain. Sub-sector/product approach: VCA tools that apply the sub-sector/product approach focus primarily on disaggregating production costs for a specific product and redistributing these costs along key processing (or value adding) stages (for example, in crop production; land preparation, planting, fertilizing/spraying, weeding, harvesting, etc. are common stages of value addition). Depending on resource availability and the objectives of a project, each process can be broken down into one or more sub-processes, which provides two distinct advantages: 1) the method makes it possible to identify the highest value adding stages along a value chain; and 2) it digs deeper into each stage of value addition. When combined, these two analytical steps of this approach can be used not only to help pinpoint specific policy, technical and market based constraints that undermine competitiveness of a given value chain, but also helps to prioritize interventions based on the assessed importance of each stage of a value chain. This information is then used to benchmark specific variables against key
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competitors as a way of identifying strategic intervention activities to help improve competitiveness of a given value chain. Integrated Value Chain Analysis (IVCA) is a proprietary analytical tool of VCA that integrates the analyses of supply chain costs, production costs and the value addition costs along the entire activities from acquisition of inputs through transformation of inputs into product/services and delivery to market. It is currently being widely used as a diagnostic tool for competitiveness that captures Page | 72 input, production, administration, distribution, and marketing costs in a multi-part, data-intensive, dynamic software model. IVCA helps users identify time and cost reductions as well as policy interventions that will enable an organization to bring products to market on schedule and at optimal price points. IVCA, therefore, has strengthened and deepened the approach and the application of the Sub-sector/product approach. Hybrid approach: VCA tools utilizing a hybrid approach take into account supply chain dynamics and a sub-sector/product approach. The supply chain aspect of the analysis is very much similar to the lead firm approach where players along the supply chain are identified. However, at the implementation level, rather than picking specific lead firms, the information regarding the value chain is made available more broadly to stakeholders, and support is provided along the entire supply chain to stakeholders who meet specified selection criteria. In addition, the hybrid approach applies some methods of the sub-sector/product VCA where production costs are collected and analyzed, but the data is generally not put in the context of assessing their relative impact across different value adding stages as in the case of the sub-sector approach. As a consequence, prioritization of interventions is more difficult, which is especially important in situations where project resources may be limited. Considering the fact that no unified methodology can be discerned in this approach, benchmarking is generally difficult to accomplish.
3.1.3. Contents of Value Chain
Under this section, the IVCA approach and methodology shall be discussed in detail for the training due to the practical benefits the trainees will obtain from understanding and exercising the most comprehensive approach that incorporates supply chain, production cost analysis as well as the disaggregation of production processes into value adding activities thereby gaining full knowledge of applying VCA.
Table 3.1.: What is the Difference between Production Cost Analysis, Supply Chain Analysis and Value Chain Analysis?
Production Cost Analysis: An analysis of the cost of production according to various inputs (labor, materials, utilities, etc), E.g. 1
Supply Chain Analysis: An analysis of transaction costs associated with the transfer of goods and services from one stage of production to another (transport cost, brokerage fees marketing cost, etc.)
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E.g.2
Page | 73
Figure 3.1.: Value Chain Analysis: An analysis and breakdown of value adding activities according to different stages of production
Table 3.2: Textile value chain
E.g. 3
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Global Development Solutions LLC developed its proprietary Integrated Value Chain Analysis (IVCA) approach and methodology to determine the significant policy, sector specific bottlenecks as well as market based distortions inhibiting growth and competitiveness of products and services in various and divers sectors. The IVCA outcome serves as a basis for assessing the prospects for enhancing the marketing of the products coupled with additional identification of interventions that would help remove or mitigate the existing bottlenecks. Page | 74 The IVCA employs its channel mapping methodology which is a process of tracing a product flow through an entire channel from the point of product conception to the point of consumption. This process highlights the underlying patterns of inputs, constraints and competitive (dis)advantages along a particular value chain. It also traces the path of all value adding and non-value adding activities associated with the production of a good and approximates costs involved at each stage.
The IVCA methodology provides opportunities to benchmark one producer against another, as well as to benchmark production activities across regions and countries. This methodology is an ideal tool for measuring and quantifying the cost of Box – 7 administrative distortions that hinder competitiveness of Integrated Value Chain AnalysesSM (IVCA) is an analysis products and industries. of every step from raw material to the ultimate end-user. It…… Consequently, channel Provides a detailed breakdown of each stage of mapping methodology of the production, IVCA is used as an effective Determines the value added at each stage, tool to identify discrete areas Identifies and quantifies administrative and market- for policy reform. The IVCA based constraints inhibiting the competitiveness of provides a detailed breakdown the product, of each stage of production, Calculates and prioritizes key value adding estimates the cost at each stage, activities, and as well as calculates the Accounts for supply chain and trade logistics costs relative significance of these associated with movement of goods from one costs to the overall value of an segment of the value chain to another end product.
While more traditional methods of product and market analysis isolate operational costs along various stages of production, the IVCA is a much more comprehensive tool, particularly as it takes into account an entire spectrum of activities and inputs associated with a product. Although the IVCA is usually employed at a product level, output from the analysis provides useful indicative data on production and operational costs associated with a specific cluster as well its policy-related bottlenecks.
3.1.4. Integrated Value Chain Analysis Methodologies The major methodologies for developing an Integrated Value Chain Analysis comprise of two stages: creating a Product Value Chain; and Developing an Integrated Value Chain Analysis (IVCA). These two methodologies are discussed illustratively below.
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3.1.4.1.Creating a Product Value Chain An important point of departure for conducting an IVCA is to understand how to breakdown and categorize various activities associated with the production of a good or service to be analyzed. The IVCA can be used for everything from agricultural commodities to complex engineered products, as well as services such as tourism, see example of a value Chain for Safari Package in Tanzania. But the effectiveness of the IVCA is principally a function of Page | 75 whether an analysis is conducted using categorization of value adding and non-value adding activities associated with a product/service. Creating a value chain requires products to be defined and categorized according to various production processes and procedures that capture all value adding and non-value adding activities associated with a final product. Depending on the complexity of the product and the level of detail required for an analysis, the number of categories of activities along a value chain can range from as few as 5 to as many as 25 or more. For example, depending on the situation, a value chain for coffee can have 15 to 20 process categories clustered under three major value adding activities, namely farming, post-harvest, and export processing/administration. A sample of the process segmentation along a coffee value chain is presented below.
Figure 3.2.: Value Chain for Safari Package
Table 3.3.: An Example of a Value Chain for Coffee
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Farming Post-Harvest Export Processing/ Administration Land preparation Transport to Fumigation Fertilizer/manure processor Phytosanitary certification Pesticides Pulping Transportation Plant maintenance Drying Port charges Page | 76 Harvesting Hulling & grading THC Bagging Customs clearance, Shipping Bank interest Misc. Source: Global Development Solutions, LLC
Each of the process segmentations represents important value adding and non-value adding activities relevant for tracing a product from its very beginning until it reaches the final consumer (farm-to-cup).
3.1.4.2.Developing an Integrated Value Chain Analysis (IVCA)
A principal challenge for developing credible cluster and product level market analysis in any country is the acute absence of reliable up to date baseline data. As a result, much of the raw data required to analyze industries and markets must be compiled through rigorous local research and individual in-depth firm level interviews. Experience shows that intensive one-on-one interviews tend to yield the detailed data and information required to develop a representative value chain analysis. The GDS value chain methodology does not rely on a survey mechanism since surveys do not yield the types and level of detail required to conduct an effective value chain analysis.
Data collection and Information gathering
Collection of primary data and gathering information through in depth interviews of stakeholders of an industry is the most crucial input for developing an IVCA of the selected product or service. In order to collect the most accurate and credible data and information the following steps are generally followed:
1. Identification and selection of strategic product / service based on its potentials for competitiveness and impacts on marketing, driving economic growth, income generation and poverty alleviation, creation of employment opportunity, forex saving and earning etc.; 2. Identification and invitation of key stakeholders involved along the value chain of the product/service: the VCA promoter in consultation with the VCA practitioner identifies the key stakeholders in relation with the product / service selected for analysis and sends out invitation letters so that they avail themselves to actively participate in the project kick off workshop; 3. A kick off workshop: - A kick of workshop of the stakeholders of the industry is conducted where the objective of developing the VCA is explained with vivid examples on how VCA is developed and the role of the stakeholders in the sector with emphasis on the accuracy of data; - The data to be collected should be representative; - In order to ensure that the data are representative, a number of firms that represent the industry are selected by the stakeholders participating at the kick-off workshops whereby the firms so selected and the rest of the stakeholders express their willingness
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and commitment to provide the necessary data and information to the VCA practitioner; - Identify and select key actors in the sector – input and logistical service providers, processors and marketers and other stakeholders with regard to institutional support providers (both public and private) as well as regulating bodies for field visits and interviews; Page | 77 4. Preparation of data collection templates and questionnaires for interview: the VCA expert prepares in advance data collection templates and questionnaires for interviewing stakeholders based on inputs from literature survey, secondary data from research outputs and feed-backs from the kick –off workshop. The template and questionnaire do help for starting the field work initially but they are enriched and get depth progressively and dynamically as the data collection and interactive interviews advance during the field work. The skill of the VCA expert in interviewing and probing for more and more pertinent and relevant data and information is very crucial. The VCA expert must exercise the utmost professionalism and ethical approaches to build the confidence of information providers that any data and information obtained shall Box – 8 not be revealed to any other party and shall be The “10 percent rule” reflects the level of deviation in the data set which private sector buyers of goods and services are used only for the purpose willing to tolerate. For example, if the cost of a specific input of developing the IVCA such as fertilizers and chemicals, and the usage of such inputs without revealing the does not deviate more than 10% from one interview to the source. Therefore, trust next, this suggests that the data is reflective of standard building and good practice recognized by the stakeholders in the sector. In this context, the field team continues to interview stakeholders at interpersonal skill is very each level of the value chain until each variable along the crucial at this stage. value chain complies with the “10 percent rule”. Three very important Generally, anywhere from 5 to as many as 50 interviews are points during the data required for each major segment of the value chain until the ’10 percent rule’ can be achieved. collection are:
1. The data shall be related to productivity and unit costs so that they have common denominators for comparing them across the firm in the sector for all stages of the value chain as well as for benchmarking with best practices; 2. In order to arrive at reliable and representative figures, the variation between data collected from different firms across the sector for value adding activities should not exceed 10%. This calls for an iterative approach during data collection and interviews with many actors in the value chain going back and forth till fairly reliable data are obtained. Here care has to be taken not to incur unnecessary ‘fatigue’ of interviewees and data providers.
Note that in some instances, there is an acute absence of consistency where the “10 percent rule” can not be applied. Specifically, each response various so widely that no pattern emerges from the interview process. While this is not a frequent occurrence, when this situation arises the field team maps out the variances between each answer to determine whether the question is incorrect or whether the way the question is framed and asked is incorrect. If questions are not being presented in the right manner, the field team will frame the question in a number of different ways to see whether a pattern of answers emerge. In some instances, no pattern ever emerges, which reflects the lack of know-how and understanding amongst the stakeholders regarding best practice, and that decision making along the value
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chain is ad hoc. This type of inconsistence in the interview data is often found when new crops or products are introduced into the market where no previous experience can be used to help guide the decision making process of stakeholders.
3. Initial interviews are generally conducted with firms in the middle of a value chain that are familiar with both buyers and sellers along the entire value chain. To conduct a successful Page | 78 value chain analysis, it is essential to trace a single product or a good from one end of the value chain (raw material) through to the other end of the value chain (finished product). In this context, interviews are conducted and an IVCA model developed with companies, farms and individuals that share a common value chain. (Three very important points during the data collection)
Data analysis, interpretation and report writing:
Data analysis,
Tabulation of Data: After data collection and information gathering to the required level, the data are categorized into the different stages of the value chain that help in the development of the primary value chain. The primary chain data are tabulated under production, processing, overhead, transportation and marketing indicating the percentage contribution of each chain to the total value adding cost. The costs of each value chain stage are further disaggregated or broken down into costs of input- materials, labor, utilities (energy, water, steam compressed air, etc.) and so on as is feasible. These costs are again tabulated indicating their percentage contributions to the values of the primary value chains for each stage, thereby, serving as a source for developing secondary value chain. The disaggregation of costs of the secondary chains can further be carried out to develop tertiary value chain and so on as necessary for further interpretation and identification of effective interventions for improvement.
It should also be noted that the objective of a value chain analysis is to take a ‘snapshot’ of a value structure representative of a particular product or industry. The IVCA is a 'dynamic' model where variables within a value chain can be adjusted to reflect changes in the market. To ensure that the analysis is adjusted for any data uncharacteristic of the market, emphasis is placed on cross checking all firm level data against other similar enterprises to help ensure that data used for the value chain analysis mirrors realities facing local enterprises.
Chanel mapping of Data: Chanel mapping is the graphical presentation of the value chains in sequenced boxes, preferable, chevrons, in which the percent contribution of the value chain from the tables discussed earlier, are indicated.
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The chevrons are then painted with a set of core code to provide visual meaning in a consistent way to the reader (See an example of a primary, secondary and tertiary value chain practiced by the GDS in Box – 9). The color codes used by GDS carry the following standard meaning:
Page | 79 Box – 9: Example of a Value Chain for Safari Package in Tanzania (3 Star/7 day – full board: Northern Circuit)
Figure 3.3.: Full board vale chain for Safari Package
. Red – highest contribution to the overall value chain; . Yellow - second highest cost contributor in the value chain; . Green - third highest costs contributor in the value chain; . Gray – Chains that do not have significant cost contribution in the value chain.
As indicated in the example in Box – 9, significant values in the chain are further broken down into secondary and tertiary value chains connected by arrows.
Interpretation of the integrated value chain By referring to the tables and the graphics representations of the value chain, one can discern and discuss cost contribution of the value chain stage by stage and at different levels by pinpointing the significance of important cost contributions in the value chain. This gives a pretty description of the cost structures of the value chain.
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The cost breakdowns and the percent contribution obtained will serve as indicators that can be compared against benchmarks from the performance of leading firms in the sector or other best practicing organizations elsewhere. Armed with this knowledge one can then critically evaluate the cost contributions of the significant chains in order to check whether they are contributing towards the competitiveness of the product in the market. Furthermore, this analysis helps to identify the underlining causes for the cost contribution that lead to the Page | 80 uncompetitiveness of the product. The underlining causes could emanate from, say input material cost, processing, inefficient logistics and service, poor infrastructure, lack of skilled human resources, policy, institutional capacity and management, lack of proper application of technology, know-how, etc..
Box – 10 The VCA expert then Executive Summery identifies the appropriate Summary of Findings intervention for improvement Background Information and suggests the level at which Objective of the Study the interventions have to be Methodology made, i.e. at firm level, at Production and Supply Chain corporate level or government Policy Environment and Institutional Framework level. IVC Analysis Existing Challenges and Source of Challenges Report writing Major Issues for Intervention Conclusion and Recommendation Although the IVCA is the core component of the study on any product or service, the report that would be prepared should give a holistic picture of the context in which production or service takes place.
The information gathered for the study from all possible stockholders including regulators and policy makers and related institutions are systematically discussed and structured till final conclusion and recommendations in order to enlighten decision makers and help them the necessary measures that bring about the desired changes in order to achieve competitiveness of the strategic product / service.
Validation and Strategy Formulation Once an IVCA has been done, it has to go through the process of validation by relevant stakeholders. This can be accomplished by conducting a workshop after the IVCA report has been distributed to the stakeholders prior to the meeting. The findings of the analysis have to be confirmed by the participants of the workshop (policy makers, industry actors, infrastructural institutions etc.). The interventions to be made at firm level, intuitional level, and Government level have to be reinforced by the participants and agreed upon so that sector’s competitiveness strategy emerges and is accepted and understood by all involved. This process shall ensure that the formulation of the strategies is done via a participatory approach. The participatory approach will result in gaining of ownership by the concerned stakeholders for later implementation and follow-up.
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Design and Implementation
The development of an overarching sector strategy based on the IVCA and its validation paves the way for design and implementation of the strategy. The aim of the design and implementation phase is to: 1. Establish intervention points along the already analyzed value chain that are aligned to Page | 81 the overall sector strategy and project goals. 2. Determine the resource requirements and financing avenues for the identified intervention points (financial and non-financial) and how to finance such resources. 3. Determine intervention timeline (time required to effectively implement and yield concrete results from each activity).
These three elements (value chain intervention points, their resource/financing requirements and the timeline) are interdependent. As a result, the design and implementation phase typically incorporates these elements in an integrated process rather than in a discrete, linear fashion. Therefore, the design and implementation of an IVCA involves: VC selection, VC analysis, identification of constraints and opportunities, identification of market-based solutions, selection of market-based solutions, assessment of solutions, identification of interventions and selection of interventions.
3.1.5. Advantages of Integrated Value Chain Analyses
The IVCA provides the following advantages with distinguishing features in contrast to other management and analytical tools: Due to its depth of analysis, the IVCA is able to precisely pinpoint, quantitatively and qualitatively, the prevailing market as well as policy bottlenecks along an entire value chain of a product (or group of products) from its inception to its delivery to market; Instead of providing a superficial laundry list of issues prevailing in any given cluster’s value chain, the IVCA prioritizes the issues with highest impact on competitiveness along a value chain, thus informing policy as well as cluster strategy makers on most pressing issues to be addressed; and As a result of the depth of its global coverage of countries and industries, Global Development Solutions maintains rich, up-to-date industrial and infrastructure costing benchmarks against which the business climate can be benchmarked.
Once the analyses are completed for chosen products, the team in conjunction with stakeholders will begin to develop possible solutions to problems identified in the interview process. This is also done through an interview format, but through individual discussions with stakeholders revolving around ‘what if’ scenario to understand the reaction of the stakeholders to possible solutions. The scenario exercise is conducted with stakeholders along each part of the value chain, where the field team poses questions about ‘what if’ players along a different part of the value chain changed their behavior. For example, if buyers changed their purchasing behavior to reflect a more open and transparent system, how would sellers react to this change, and what would sellers do to help improve efficiency along their portion of the value chain?
A number of specific scenarios are developed and posed to stakeholders along the value chain not only to solicit a response, but also to develop a number of viable solutions where consensus can be formed among key stakeholders along the entire value chain. In this context, the scenario process lays the groundwork for identifying possible market and policy interventions as well as technical assistance measures along the value chain. Empowered with
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the newly acquired knowledge about the prevailing situations in their respective value chain, stakeholders actively participate and help the design of an action-oriented program to address issues identified. An initial kick-off workshop with key stakeholders and subsequent meetings and validation workshop are critical to ensuring the quality of the IVCA findings.
The major sectors where IVCA has shown its usefulness as a decision making tool are: Page | 82 Agriculture and livestock production (cash crops, tree crops, horticultural products, incl. cut flower); Fisheries and Aquaculture Light manufacturing (textile/apparel, leather processing, metal works, electronics, automotive parts, handicrafts, etc.) Heavy manufacturing (incl. construction and construction material) Food processing Mining Service sector (incl. tourism and entertainment)
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Enabling Environment for Developing and Implementing an IVCA
The major factors that enable successful design and implementation of a competitive value chain are Policies; Institutions/human resources; Infrastructure; Page | Technical/operational support services; and 83 Supply chains networks.
The identification and assessment of the existing gaps and weaknesses in each of the above mentioned factors of the enabling environment, that have varying influences, during the design phase is a key activity in order to ensure the successful implementation of the IVCA as well as for providing the essential support for implementation, monitoring and follow-up.
Accordingly, taking the stock of the prevailing strengths and weaknesses in each of the five key factors to identify major gaps that restrict or undermine the development of competitive value chains is a crucial activity to design a proper implementation plan. The implementation plan should consist of the selected interventions, resource requirements (financial and non-financial), means of financing for the implementation and the timeline of the implementation to achieve the targeted results as well as identification of responsible implementing agents.
Complexity of the sub-sector/product and market structure will generally define the range of value chain partners required to develop a competitive value chain. For example, the production of cash crops is defined by a relatively simple value chain consisting of one or two input suppliers, a farmer, trader/brokers (in some instances where production consolidation is required), and an end buyer or processor. A complex manufactured product such as garments, on the other hand, requires multiple input suppliers, a more complex and efficient supply chain, subcontractors, trader/brokers, transport and logistics provider, and an end buyer. In this context, the role of the value chain analysis is to identify the potential supply and value chain stakeholders, and to assess the complexity and constraints along the chain where interventions are required to ensure a competitive product.
It is important to recognized that in most instances there are no forums or mechanisms that allow stakeholders along the entire producer-to-consumer value chain to communicate key concerns that each stakeholder has about the value chain (both actual and perceived). As a result, mistrust and the lack of transparency among stakeholders often undermine value chain dynamics that are essential for efficient and effective production and product flow. Moreover, a public- private partnership approach that brings together different interest groups, including policy makers, producers, input suppliers, service providers, and buyers helps create a platform where stakeholders are able to identify a shared objective to develop a specific value chain.
3.1.6. Concepts of Greenhouse Gas Emission and Effects
Real sustainability can only be truly achieved when all parts of the value chain work together, Sustainable & circular value chains mean low environmental and positive societal impact value chains for its product and system design, emphasizing the use and re-use of materials. Sustainable value chains have evolved from a traditional simple value chain analysis to one that is filled with complexities and uncertainties. The increase in input raw material preparation, production process, transportation and marketing has resulted in an escalation in the emission of greenhouse gases (GHG) into the atmosphere, impacting climate change. The investigation in the implementation of sustainable value chain analysis in reducing GHG
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emissions within the production system of an industrial product is one of the core concepts of a sustainable value chain management (SVCM).
What are Greenhouse Gases (GHG)?
. Chemical compounds in the atmosphere that trap heat there and retain a proportion of the Page | sun's heat that include carbon dioxide (CO2), Methane (CH4), Nitrous Oxide (N2O), 84 chlorofluorocarbons (CFCs), and Water Vapor , etc. . All economic activities, including agriculture, generate some GHGs. . Major greenhouse gases generated from agriculture are carbon dioxide (CO2), Methane (CH4) and Nitrous Oxide (N2O)
Greenhouse Effect
. Mechanism through which the sun’s heat is trapped by GHGs in the atmosphere. . Natural phenomenon arising from the fact that the Earth's atmosphere acts like the glass of a greenhouse – allowing the heat of the sun to enter, and then capturing it. . GHGs in the atmosphere intensify the greenhouse effect by trapping the sun’s infrared rays that are reflected by the Earth leading to Global Warming.
Global Warming
. Global warming is the rising average temperature of Earth's atmosphere and oceans and its related effects. . In the last 100 yrs, the Earth's average surface temperature increased by ~0.8°C; almost 2/3 of which occurred in the last 3 decades. . Increment could reach 2°C in next 50 yrs unless all countries take mitigating measures. Severe weather changes will result! . The more GHGs in the atmosphere, the more it heats up resulting in global warming. NOTE: different GHGs have varying contributions to global warming.
Global warming potential (GWP)
. The varying contributions of different GHGs to greenhouse effect and global warming can be brought together in terms of tonnes of CO2 equivalents (tCO2 e) referred to as their global GWP. . The GWP (in terms of CO2 ) of the GHGs important to agriculture are as follows:
Greenhouse gas emission Life time (Year) 100 yr GWP (SAR) 100 yr GWP (AR4) Carbon dioxide (CO2) - 1 1 Methane (CH4) 12 21 25 Nitrous oxide (N2O) 114 310 298 AR4 - Fourth Assessment Report, SAR - Second Assessment Report
Why Calculate GHG Emissions?
. Measures to mitigate against the greenhouse effect should focus on the causes of the greatest GHG emission.
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. Causes of GHG emissions differ according to the type of gas; e.g., CO2 is emitted through burning, tilling (soil breaking), application of UREA, etc. Methane (CH4 ) is emitted through anaerobic decomposition. . Calculation of GHG emissions allows an understanding of the contribution of different GHGs to the greenhouse effect identification of productive activities that cause the greatest GHG emission by Page | type of gas 85 . Once activities that cause greatest GHG emissions are identified, action can be taken related to them.
Tools and Methodology of VCA - GHG
. There are 2 main approaches to studying GHG emissions and their causes Life cycle assessment (LCA): product by product assessment focusing on inputs used throughout the life cycle of a product and their environmental impact. Value chain analysis (VCA): a product by product analysis focusing on the production and related processes along value chains and calculation of GHG emissions from each process/activity.
Analysis will consist of the following: 1. Identification of relevant processes/activities along value chains (E.g. f agricultural products and current methods used to carry out activities as well as possible alternative practices; e.g., Tilling is one activity along the value chain – it can be carried out with 2 buffalo/oxen or a tractor of a certain power level Fertilization is another activity – different type of chemical fertilizers can be applied with varying amounts and different combinations, or composting could be adopted NOTE: GHG emissions levels differ for each practice)
Information base 1. To identify relevant processes/activities along value chains through: • Literature review • Interviews with stakeholders to determine exact practices in different countries for different agro-ecological zones; 2. To calculate GHG emission from different activities (GHG emission sources), the study will use: • IPCC modules • Research findings on specific emission factors for specific countries; • Default emission factor as per IPCC estimates if country specific research data are not available
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Table 1: Example of analytical framework - (land preparation for rice) Value Activity/Proc Source of Type of Emission Chain ess Emission C C N2 Stage O2 H4 O Land Diesel from Preparati machine √ √ on Benzene Page | Site Clearing from 86 machine √ √ Residue burning √ √ Diesel from machine √ √ Benzene Tilling from machine √ √ Soil breaking √ Diesel from machine √ √ Leveling Benzene from machine √ √ Diesel from machine √ √ Canaling Benzene from machine √ √ Diesel from machine √ √ Water Benzene Management from machine √ √ Diesel from machine √ √ Benzene Fertilizing from machine √ √ Decomposit ion √ √ Diesel from √ √ Spraying machine
Similar output will be provided for all activities in the value chains: 1. Input sourcing 2. Production • Land preparation • Transplanting • Cultivation and fertilization • Harvesting 3. On farm processing (cleaning, parboiling, husking, milling/polishing, bagging) ESChE Training Document for Greening Ethiopian Manufacturing
4. Transportation and Marketing
3.2. Concepts of Sustainable Marketing
The concept of sustainable marketing holds that an organization should meet the needs Page | of its present consumers without compromising the ability of future generation to fulfil their own 87 needs” Philip Kotler and Garry Armstrong: Principles of marketing. Sustainable marketing is a new concept in marketing and business, but it is already proving to be a game changer. Based on ideas of environmental and social sustainability, sustainable marketing seeks to meet the needs of this generation without messing up the future. The five principles of sustainable marketing that you can embrace today and put to work in your organization are: 1. Consumer-oriented marketing, 2. Customer value marketing, 3. Innovative marketing, 4. Sense-of-mission marketing, and 5. Societal marketing.
A customer-oriented organization places customer satisfaction at the core of each of its business decisions. Customer orientation is defined as an approach to sales and customer- relations in which staff focus on helping customers to meet their long-term needs and wants.
Customer Value is the level of satisfaction of your customer towards your business. The word “Value” can have a number of definitions or meanings. ... On the flipside, there's money for value, which means people are willing to pay for the things they see as valuable benefits. A marketing innovation is the implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing. Sense-of-Mission Marketing is essentially a principle of marketing that states that an organization must define its mission in such a way that it has a broader social context rather than being merely product oriented. The societal marketing is a marketing concept that holds that a company should make marketing decisions not only by considering consumers' wants, the company's requirements, but also society's long-term interests.
3.2.1. Green/sustainable Procurement2
Green procurement is the purchase of environmentally friendly products and services, the selection of contractors and the setting of environmental requirements in a contract. Green procurement steams from pollution prevention principles and activities. Also known as green or environmental purchasing, green procurement compares price, technology, quality and the environmental impact of the product, service or contract. Green procurement policies are applicable to all organizations, regardless of size. Green procurement programs may be as simple as purchasing renewable energy or recycled materials or more involved such as setting environmental requirements for suppliers and contractors.
2 Sustainability Concepts, Green Procurement, Hari Srinivas, Concept Note Series E-008. March 2015 https://www.gdrc.org/sustdev/concepts/14-gproc.html
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"Green" products or services utilize fewer resources, are designed to last longer and minimize their impact on the environment from cradle to grave. In addition, "green" products and services have less of an impact on human health and may have higher safety standards. Whilst some "green" products or services may have a greater upfront expense, they save money over the life of the product or service. Before a green procurement program can be implemented, current purchasing practices and Page | policies must be reviewed and assessed. A life cycle assessment of the environmental impacts of 88 products or services is required and a set of environmental criteria against which purchase and contract decisions are made has to be developed. The outcome is a regularly reviewed green purchasing policy that is integrated into other organisational plans, programs, policies. A green purchasing policy includes date-stamped priorities and targets, the assignment of responsibilities and accountability and a communication and promotion plan. Green procurement policies and programs can reduce expenditure and waste; increase resource efficiency; and influence production, markets, prices, available services and organizational behavior. They can also assist countries in meeting multi-lateral requirements such as the Kyoto Protocol and Rotterdam Convention. International Standards Organization and other bodies have established guidelines for green procurement programs. Obstacles to implementing a green procurement program include: lack of readily available environmental friendly products; expensive or zero environmental alternatives; inaccurate studies; lack of organizational support; and inaccurate or unsupported environmental claims by manufacturers and suppliers. Legislation, organizational policies, directives, environmental management systems or multi-lateral agreements often require organizations to implement a green procurement program.
Case Studies and Examples: 1. Fujitsu Fujitsu Japan has a green procurement policy that selects materials; parts; products; and production equipment based on price; environmental impact; quality; and delivery. Environmental considerations include: avoidance of toxic substance during production and disposal; resource and energy conservation; recyclablity; and ease of disassembly for processing and disposal.
2. Ikea Ikea, a furniture and household goods retailer, has implemented a code of conduct for its 2,000 suppliers. The code of conduct focuses on environmental impact and working conditions. An external body verifies information submitted by suppliers. If suppliers do not meet the code, they are requested to remedy the situation and if suppliers continually breach the code, they can be removed from Ikea's suppliers list.
The code includes a list of supplier musts (waste and emission reductions, handling, storage and disposal of hazardous chemicals, recycling, etc) and must nots (use of chemical compounds and substances banned or restricted by Ikea and source of wood).
3.2.2. Eco-labeling3
Eco-labels are affixed to products that pass eco-friendly criteria laid down by government, association or standards certification bodies. The criteria utilize extensive research based on the product's life cycle impact on the environment. Examples of eco-labels include the
3 Sustainability Concepts, Green Procurement, Hari Srinivas, Concept Note Series E-008. March 2015 https://www.gdrc.org/sustdev/concepts/05-e-label.html
ESChE Training Document for Greening Ethiopian Manufacturing
Japanese Eco Mark, International Energy Star, USA Green Seal and UK BREEAM. Eco-labels differ from green symbols and environmental claims in that the latter are unverified and created by the manufacture or service provider. Products awarded an eco-label have been assessed and verified by an independent third body and are guaranteed to meet certain environmental performance requirements. Eco-labels may focus on certain environmental aspects of the product, eg energy Page | consumption, water use, source of timber, etc, or they may encompass the multiple environmental 89 aspects, eg BREEAM, Blue Angel, etc. Eco-labels are usually funded and backed by the national government, but administered by an independent body. Compliance with eco-label requirements is voluntary, but offers industry a competitive advantage both domestically and internationally, as well as demonstrating good environmental performance. Consumers also benefit from eco- labeling schemes through education, and the ability to compare prices and environmental performance of products. Eco-labeling can have implications for trade and can influence the design and manufacture of products.
ESChE Training Document for Greening Ethiopian Manufacturing
Case Studies and Examples 1. Eco Mark Africa (EMA) The Eco Mark Africa (EMA) has established a recognition system for sustainability standards which functions as a quality assurance mechanism. A set of threshold criteria has been defined including ecological, social and climate-relevant requirements as well as credible implementation mechanisms. National and international standards systems fulfilling these requirements will be able to use the EMA label. Using this recognition system, EMA will encourage standards systems to address climate- Page | relevant issues such as product carbon footprints or carbon offsetting schemes, which have often not 90 yet been tackled adequately by existing standards systems. Furthermore, regional and sectoral up- scaling activities of existing standards in Africa will be facilitated. The use of one common label awarded on the basis of clear threshold criteria combines high credibility with the value of African brand recognition. This will improve the image of sustainable African products and thereby foster their trading and marketing opportunities. Creating synergies through reduced marketing expenditure and certification costs, EMA will foster the cooperation of different voluntary ecological and social standards. For the consumer, the approach means enhanced transparency while at the same time maintaining the benefits of competition among the standard initiatives. (https://ecomark.arso- oran.org/)
2. Blue Angel
The first eco-labeling program was introduced by Germany in 1977. Known as the Blue Angel, industry participation is voluntary. Product groups are regularly assessed to reflect technological and design developments and only those products that exceed the average are awarded the Blue Angel. Approved products are re-assessed every few years. More than 4,000 products in 71 categories are covered by the German eco-label. Since 1991, manufacturers of Blue Angel products must reclaim the product at the end of its useful life. Blue Angel criteria include: efficient use of fossil fuels, alternative products with less of an impact on the climate, reduction of greenhouse gas emissions and conservation of resources.
3. Forestry Products
The Indonesian Eco-labeling Institute (LEI) promotes sustainable management of Indonesia's forests through the establishment of an eco-labeling certification system for Indonesia's forest products. Current eco-labeling certification, or certification programs being developed by LEI include: (a) forestry (natural forests, plantation forests, community-based forest management and non-timber forest products, and wood-based industry), (b) chain of custody (timber tracking), (c) marine products, (d) industrial products and (e) mining products. LEI is working with the Forest Stewardship Council to gain international recognition of its certification procedures and conduct a joint certification program.
4. Fish and Seafood
The International Food and Agriculture Organization (FAO) developed eco-labels for fish and seafood that are harvested or raised in a sustainable manner.
ESChE Training Document for Greening Ethiopian Manufacturing
3.3. EXERCISE: VCA-GHG Emissions and Sustainable Marketing
3.3.1 Individual Test
. What are the 6 main greenhouse gases? ANS: The Kyoto Protocol covers six greenhouse gases: carbon dioxide, methane, nitrous oxide, Page | hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride. Of these six gases, three are 91 of primary concern because they are closely associated to human activities.
. How do greenhouse gases cause global warming? ANS: The greenhouse effect is the process by which radiation from a planet's atmosphere warms the planet's surface to a temperature above what it would be without this atmosphere. Radiatively active gases (i.e., greenhouse gases) in a planet's atmosphere radiate energy in all directions.
. What is the problem of global warming? ANS: Global warming is projected to have a number of effects on the oceans. Ongoing effects include rising sea levels due to thermal expansion and melting of glaciers and ice sheets, and warming of the ocean surface, leading to increased temperature stratification.
. How are humans damaging the environment? ANS: Some human activities that cause damage (either directly or indirectly) to the environment on a global scale include human reproduction, overconsumption, overexploitation, pollution, and deforestation, to name but a few.
. How will global warming change ecosystems and the environment? ANS: Unchecked global warming could affect most terrestrial ecoregions. Increasing global temperature means that ecosystems will change; some species are being forced out of their habitats (possibly to extinction) because of changing conditions, while others are flourishing.
. What is value chain analysis? ANS: Value chain analysis is a strategy tool used to analyze internal firm activities. Its goal is to recognize, which activities are the most valuable (i.e. are the source of cost or differentiation advantage) to the firm and which ones could be improved to provide competitive advantage.
. What are the benefits of value chain analysis? ANS: A big advantage is that the value chain is a very flexible strategy tool for looking at your business, your competitors and the respective places in the industry's value system. The value chain can be used to diagnose and create competitive advantages on both cost and differentiation.
. What is the purpose of value analysis? ANS: Value analysis an approach to improving the value of an item or process by understanding its constituent components and their associated costs. It then seeks to find improvements to the components by view the full answer.
. What is the difference between a company's internal value chain and the industry value chain? ANS: The internal value chain covers those distinctive activities which are both physical and technological, within the industry and moreover which adds value to the product whereas industry value chain covers those activities which are involved to convert the raw material into a final product or service, ready for final consumption by the ultimate consumers.
ESChE Training Document for Greening Ethiopian Manufacturing
. What's the difference between supply chain and value chain? ANS: Difference between Supply Chain and Value Chain. Supply Chain refers to the integration of all activities involved in the process of sourcing, procurement, conversion and logistics. ... Value Chain, on the other hand, is a set of activities that focuses on creating or adding value to the product Page | 92 . What is global value chain analysis? ANS: Global Value Chain Analysis: The value chain describes the full range of activities that firms and workers perform to bring a product from its conception to end use and beyond. This includes activities such as design, production, marketing, distribution and support to the final consumer.
. What is the meaning of customer oriented? ANS: A customer-oriented organization places customer satisfaction at the core of each of its business decisions. Customer orientation is defined as an approach to sales and customer- relations in which staff focus on helping customers to meet their long-term needs and wants.
. What is the difference between social marketing and societal marketing? ANS: Societal marketing uses regulatory issues and other efforts to protect customers. It works within the company and it is a supply-side factor that focuses on how the market behaves rather than involving target customers. In contrast, social marketing is more of a customer-oriented approach.
. What are the five sustainable marketing principles? ANS: Here are the five principles of sustainable marketing that you can embrace today and put to work in your organization: Consumer-oriented marketing, …. Customer value marketing. ... Innovative marketing. ... Sense-of-mission marketing. ... Societal marketing.
. What is the sustainable marketing concept? ANS: Sustainable marketing is a new concept in marketing and business, but it is already proving to be a game changer. Based on ideas of environmental and social sustainability, sustainable marketing seeks to meet the needs of this generation without messing up the future
3.3.2. Group Work
Conduct a VCA-GHG analysis for products 1. Textile 2. Leather Shoe Product 3. Finished Sheepskin The analysis would be based on the production stage indicated in the tables below. The analysis should also include inputs at each processing level.
The inventory data shall be collected from primary source for the analysis and determination of value addition at each stage of the production activity as well as environmental impacts. The primary (i.e. empirical) data collected from the textile or shoe or ternary plants shall be supplemented by secondary data (i.e. from research literature/databases) for the analysis. The
ESChE Training Document for Greening Ethiopian Manufacturing
analysis will lead to determination of options to mitigate barriers to competitiveness while minimizing environmental impacts of the manufacturing plant.
Textile Process Fiber preparation 7. Scouring Yarn spinning 8. Bleaching Page | Slashing/sizing 9. Mercerizing 93 Weaving 10. Dyeing Knitting 11. Printing Desizing 12.Finishing
Leather Shoe Product Process Cutting Sub-assembly Stitching Lasting and finishing Packing
Finished Sheepskin (Tannery)
Process Pickling Wet blue Crusting Finishing
ESChE Training Document for Greening Ethiopian Manufacturing
Resource Efficiency Improvement Program Report template (Template for the Development of a Resource Efficiency Improvement Programme in SMEs)
Company’s name:
1. Profile of the company: describe the general profile of the company including year of establishment, start-up capital (registered capital), production capacity, total number of workers, annual turn-over (at the start and current; use national currency, indicate exchange rate to US$), physical location of Page | the industry (industrial/residential, environmental sensitivity, etc.). Type of activity (sector, industry or service) 94 and ownership (state or private owned) Year of establishment Start-up capital
Production capacity (by types of products)
Total number of workers Annual turn-over - start-up Annual turn-over - last business year (if available, last three years) Physical location (industrial/residential, types of neighbouring facilities (hospitals, schools, markets, natural reserves), resulting limitations, evaluation of environmental sensitivity (water consumption (potential impact on drinking water, impact on agriculture), chemicals, noise, dust, smell, social impact etc. 2. Products description Type of the product % of total product % of material input Produced for (local/foreign) local/export market
3. Process description: Describe the key steps of the production process. Reference your material flow diagram (on a separate full page), which clearly indicates the specific inputs and outputs from each stage and the potential hazards and accidents associated within your production process.
ESChE Training Document for Greening Ethiopian Manufacturing
Selected focus area:
4. Process review: Identify the specific thematic issues related to the key steps of the process for the main product and determine their relative importance for improvement. (Please use the relevant checklists from your handouts in undertaking the thematic reviews)
Unit operations Energy by sources Water (by sources) Materials Chemicals(with Waste (Liquid, solid Page | (renewable and non- highlights on and air emissions) 95 renewable) hazardous)
UO-1
UO-2
UO-3
UO-4
UO-5
(add more lines if required)
At this stage you may determine the specific area (process step and/or thematic area) you would like to focus on for the initial intervention that will improve environmental performance and/or increase resources utilization and/or reduce risks.
5. Detailed assessment and benchmarking: conduct the required input/output analysis and benchmark your industry’s performance against the sector’s average performance values. (Please use the relevant calculation tools and benchmarking information for this section): please insert in each cell three number: - Your actual consumption (AC) - The global average consumption (GA) - The possible target (PT) 4
4 This needs to be defined as a moving target taking into consideration the existing gap between the current consumption and the global average and the possibilities for organizational and technological improvement. ESChE Training Document for Greening Ethiopian Manufacturing
Unit operations Energy by sources Water (by sources) Materials [kg/unit] Chemicals (with Waste (Liquid, solid (renewable and non- [m³/unit] emphasis on and air emissions) renewable) hazardous) [kg or m³/unit] [kWh/unit] [kg or m³/unit] UO-1
UO-2 Page | 96
UO-3
UO-4
UO-5
(Add more lines if required)
6. Improvement options: based on the outcome from the preview and detailed assessment identify all possible measures and options that could be considered for improving the Resource Efficiency of the factory. 6.1 Organizational: this covers factors that have direct bearing on the efficiency of the factory, including factors such as production planning, working procedures, training of personnel, etc.
6.2 Product specifications and design: covering aspects related to changing the specification and/or design of a product in order to have a better yield with the same or improved functionality.
ESChE Training Document for Greening Ethiopian Manufacturing
6.3 Materials acquisition and management: covering possible changes that could be made on the material selection procurement and handling of inputs that are required for the production process.
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6.4 Process control and modifications: this covers the specific improvements that could be made in controlling the relevant process parameters and the related modifications that could be made to improve the efficiency of the industry.
6.5 Technology substitution: this covers the specific areas where there is a need to invest in acquisition of new technologies in order to address significant bottlenecks for moving towards a higher Resource Efficiency level.
ESChE Training Document for Greening Ethiopian Manufacturing
6.6 Safer production and accident prevention: covering the specific areas and practices where actions need to be taken in order to promote safer production and prevent or reduce the potential for industrial accident. (You may refer to UNEP’s toolkit on responsible production)
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7. Options analysis: Analyze generated options from the perspective of required resource input, the possible results and outcomes to be obtained. Please insert here the results of feasibility analysis only for “high” cost (feasibility study for two technical options, which are considered most practical). No detailed analysis for no/low cost options is required,
7.1. Economic cost and benefit analysis: calculate the possible payback period of each option based on the investment it requires and the direct economic return it generates (simple payback calculation).
7.2. Tangible and intangible benefits: identify other tangible and intangible benefits that could be obtained from the implementation of individual or combination of options.
ESChE Training Document for Greening Ethiopian Manufacturing
7.3. Thematic complementarities: analyze the specific complementarities between the different thematic interventions with a focus on identifying the positive influence of action taken in one thematic area resulting in improvement in another area and vice versa, (thematic complementarities are also known as synergy).
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8. Implementation plan: develop an implementation plan taking into consideration the outcome from the option analysis. 8.1 Short-term: This covers improvement option that can be implemented immediately or in a short period of time with zero and minor costs (also known as “low-hanging fruit”).
8.2 Medium-term: this covers options that may require some level of organizational preparation or investment, which also involves going through different stages of planning and budgeting.
ESChE Training Document for Greening Ethiopian Manufacturing
8.3 Long-term: these are options that are aimed at making some basic changes in the technological base of the production process and which may require more longer-term investment decisions. Options under this category usually provide good basis for rehabilitation and expansion programmes.
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9. Review and monitoring mechanism: this covers the allocation of specific responsibilities for implementations, performance indicators for reviewing implementation and monitoring and reporting schedule for the programme implementation.
10. Adjust and redefine: this covers the mechanism for adjusting and revising set goals and targets as per the findings of the review and monitoring and define the specific focus for the next cycle of improvement. Describe briefly (five lines) what will remain in the company from the project. Which activities will be continued? the Resource Efficiency management system elements (responsibilities for periodic data collection, monitoring, analysis, identification of improvement options, targets and indicators used.
Team Leader: Members of the team Date: 1. 2. 3. 4.
ESChE Training Document for Greening Ethiopian Manufacturing
Figure 3.4 An IVCA for Exportable Coffee Beans, Country A The three highest cost components (red, The three highest cost Lab Mat yellow, green highlights) are broken down in components of the or erial greater detail to understand precisely what value chain will be constitutes these costs and to establish Fertil Sprayi Page | 101 determined – 4% 96% market and policy competitiveness issues Land izing ng Plant Harvesti intervention in these related to the cluster’s value chain. Weedi ng areas likely to produce Typical market and policy distortions Prepar 50.2 ng Maintenan highest impact. identified and quantified by the IVCA: poor ation % 12.8 % ce association among cluster members to 35.2% increase buying power, poor/costly Farming1.8% Post-Harvest 0% Export availability of auxiliary inputs (packaging, Processing/ freight, etc), time-consuming customs 15.5% 35.5% Admin clearance, unreliable/costly electricity, 49.0% poor/expensive access to finance, etc..
Dr Pac Delivery Recei Pulpi yin king Transpo Ad ving ng g / rt min Loa 0.8 % Trans 0. ding /O A detailedport value chain32. for each4 component25.8 H 7% % % is provided. For example, the pulping CIC Frei Port Tra Insu Age Inte Wei Ad valu24.2%e addition stage is further broken ght16.1 nsp ranc nt rest ght min Lev % down as follows below and quantifies y Cha ort e Doc rges Fees Los OH uncompetitive electricity pricing faced by s. 18.5 s Benchmarking the Cost of Inland Transport, the pulping sub-cluster in the country: High11.6 levy 9.2 Goroka – Lae:24.9 300 km 1.2 2.1 % 17.9 charges 0.7 % Transport %charge: K7.4/bag% % 200X 13.9 % % % $/km/ton: $0.149 % US$/km-ton Lab Energ Oth or y er Country A 0.149 Comparative Cost of Electricity, 2008 India 0.019
US$/kWh Indonesia 0.023 Country A 0.186 South Africa 0.200 Country B 0.04 Etc Country C 0.07
Note: Percentages depicted here are for illustration purposes only.
ESChE Training Document for Greening Ethiopian Manufacturing Training on Greening Ethiopian Manufacturing Program introduction and training guidelines
Delivered by: Professor Desta Mebratu Lead Trainer Structure of the training 2 Module 1: Basic introduction on SCP and Green Economy 1.1 Basic concepts of Sustainable Consumption and production and Green Economy 1.2 Practical tools for SCP and Green Economy 1.3 Work ethics and Motivation related to sustainability and Green Businesses Module 2: Sustainable Value Chain Analysis and Marketing 2.1 Sustainable Value Chain Management/Analysis 2.2 Sustainable Marketing and International Marketing Module 3: Resource efficiency and sustainable product development 3.1 Resource efficiency 3.2 Sustainable product development
Training on Greening Ethiopian Manufacturing-ESChE Modality of delivery 3 A synthesised training document covering the key concepts, tools and techniques shall be provided to all trainees to use it as a reference both during and after the training Presentation shall be made on each topics covered under the three modules and a summary of the slides will be provided as a supplement to the training document Both the presentations and the hand-outs for further reading shall consist of: i) Concepts and principles, ii) Tools and techniques, iii) relevant case studies, and iv) individual and group exercises on the main issues covered. Each section of the modules are followed by relevant exercises and tasks that will be carried out individually and collectively Technical guidance and support will be provided to the trainees to develop a preliminary Resource Efficient Improvement Program for their respective enterprises
Training on Greening Ethiopian Manufacturing-ESChE Schedule of the training 4 02-06 December 2019, Module one: Introduction to sustainable consumption and production and work ethics; Delivered by: Professor Desta Mebratu and Engineer Lelissa Daba 09-13 December 2019, Module two: Sustainable value chain and international marketing, Delivered by: Professor Desta Mebratu and Dr. Hundessa Desalegne 16-20 December 2019, Module three: Resource Efficiency, Green Industry, waste management, product development and quality management, delivered by: Professor Desta Mebratu & Dr. Hundessa Desalegne. 23-27 December 2019: individual/group exercise on developing preliminary Resource Efficiency Improvement Program (REIP) 30 December 2019: Concluding workshop of the training
Training on Greening Ethiopian Manufacturing-ESChE Training guidelines 5 The main purpose of this training program is to equip participating enterprises with the basic necessary knowledge and skills that will enable them to continuously improve their industrial operations and become a more sustainable businesses. The ultimate utility and outcome of the training will be very much dependent on your level of preparedness to be creative and innovative. Experience from similar training in other developing countries have shown that changing existing dominant mind-sets in relation to industrial operation is the major obstacle faced by most trainees.
Training on Greening Ethiopian Manufacturing-ESChE Barriers to creativity and innovation 6 We have always worked like this We are too big/too small for this Do not forget we have to earn money This does not affect my department It is not my business I am very busy, let someone else do this It is too early for this or it is too late now
Training on Greening Ethiopian Manufacturing-ESChE 7 Key steps of creative problem solving Problem analysis: develop clear understanding and description of the problem and related opportunities and identify and differentiate the actual problem Options identification: identify all the possible options that could be considered to utilize available opportunities and manage the key challenges Evaluation: the options generated from the previous phase are evaluated one-by-one on the merits of their technical feasibility, their economic payback time and their ecological impact Realization: options selected through the above process are implemented under this phase with clear designation of responsibility and engagement of different teams
Training on Greening Ethiopian Manufacturing-ESChE 8 Principles of brainstorming Any kind of criticism is strictly forbidden: in the creative innovation process there should be a strict separation between the phase of actual generation of ideas (brainstorming) and the evaluation phase. No limits to creativity: There are no stupid ideas and there are no ideas too wild to be considered in the process. Every association, every idea that possibly could contribute to the identification of a new way of solving a problem is welcome. Quantity comes before quality: Brainstorming is sometimes known as ‘blue sky thinking‘ and the goal is to come up with as many ideas as possible. The individual quality of brainstormed ideas is assessed in the Evaluation Phase.. Adapting is encouraged: Take up the ideas of others and develop them further. There is no right to intellectual property during the process of brainstorming. Many good ideas are triggered when ideas are connected, combined or varied with the ideas of others.
Training on Greening Ethiopian Manufacturing-ESChE Training on Greening Ethiopian Manufacturing
THANK YOU Training on Greening Ethiopian Manufacturing Module one Sustainable Consumption and Production, Green Economy and Work Ethics
Delivered by: Professor Desta Mebratu and Engineer Lelissa Daba 2 Presentation outline 1. Sustainable Consumption and Production (SCP) and Green Economy
1.2 Practical tools for SCP and Green Economy 1.2.1 What is Cleaner Production 1.2.2 Basic tools of Cleaner Production 1.2.3 Cleaner Production audit 1.2.4 Exercise: Identify possible cleaner production opportunities in your enterprise
Training on Greening Ethiopian Manufacturing-ESChE 3 Practical tools for SCP and Green Economy At the completion of this course the participants will have understanding of :
- Evolution of environmental strategies, concept of sustainable development
- Basic concepts of preventive environmental approaches
- Methodology of CP implementation in industrial enterprises
- How to develop and implement CP project
Training on Greening Ethiopian Manufacturing-ESChE 4 Practical tools for SCP and Green Economy "Environment" means the totality of all materials whether in their natural state or modified or changed by humans, their external spaces and the interactions which affect their quality or quantity and the welfare of human or other living beings, including but not restricted to, land, atmosphere, weather and climate, water, living things, sound, odour, taste, social factors, and aesthetics;
Training on Greening Ethiopian Manufacturing-ESChE 5 Practical tools for SCP and Green Economy Contextual Background for SCP Tools
"3.2 -- Environment
Surroundings in which an organization operates, including air, water, land, natural resources, flora, fauna, humans, and their interrelation.
NOTE – Surroundings in this context extend from within an organization to the global system. “Includes environment and natural resources, but does not require the inclusion of safeties & industrial hygiene."
Training on Greening Ethiopian Manufacturing-ESChE 6 Contextual Background for SCP Tools
"3.3 -- Environmental Aspect
Element of an organization's activities, products or services that can interact with the environment.
“Interact’ -- positive, neutral or negative”
NOTE -- A significant environmental aspect is an environmental aspect that has or can have a significant environmental impact." 7 Contextual Background for SCP Tools
"3.4 -- Environmental Impact
Any change to the environment, whether adverse or beneficial, wholly or partially resulting from an organization's activities, products or services.“
The combination of environmental aspects with the environmental impacts is the first step in establishing the significance of the environmental aspect. Background-Environment & Economy 8
ECONOMY
Goods & services Production Consumption Factors of production
E1 Energy E2 Waste & material sink
E3Amenity E4 –global Life support services
ENVIRONMENT Training on Greening Ethiopian Manufacturing-ESChE Functional limit to economic growth
Impact on nature Economic growth
Quality of life Two planets needed by 2050
If current patterns of production & consumption are maintained
1900 2002 2050 2100 The De-coupling challenge
Quality of life
Changes on Production and Changes Consumption Economic on growth Production
Use of nature Examples of Tools for SCP or Environmental Protection
Cleaner Production(CP) or Resource Efficient and Cleaner Production (RECP) Environmental Management System(EMS) Energy Management System(EnMS) ECO-LABELLING 13 APPROACHES TO ENVIRONMENT PROTECTION: AN OVERVIEW
Approach Implications for Implications for business environment Dump Pollute - Risk of penalty, action by the enforcement authorities
Convert & Dump Reduce pollution - Unproductive activity - Invest in unproductive assets
Convert & Use Reduce pollution - Enables generation of resources - Limited application
Minimize Waste Minimize pollution at source - Cuts operating costs - Increases profitability - Increases market share 14 Pollution Prevention Hierarchy - Pollution should be prevented or reduced at source whenever feasible - Pollution than cannot be prevented should be recycled in an environmentally safe manner whenever feasible. - Pollution that can not be prevented or recycled should be treated in an environmentally safe manner whenever feasible, and - Disposal or the release into the environment should be employed only as a last resort and should be conducted in an environmentally safe manner. 15 Pollution Prevention Hierarchy Sustainable Development Cleaner Production Recycling
Treatment
Dilution
REACTIVE PROACTIVE 16 Implications of Environmental Management ⧫ Managing the source and sink function is the core of environmental management;
⧫ Society is approaching the limit of the source and sink function of the natural environment;
⧫ Development can not be sustained without prudent environmental management;
⧫ Environmental management is essentially development management. 17 Changes in Environmental Management Practice
1995 1990 EMS Standards (BS 7750) EMAS/Reporting 1989 Certification ISO14001 Cleaner Production standards for EMS 1985 Environmental Management: EMS and Strategic 1980s management Auditing Total Quality 1970s Pollution Prevention Total Quality Environmental Management End-of-Pipe Approach Management
Productivity 1960s Environmental Awareness:Dilution as the solution to pollution The Evolution of Attitude to Environment Management world wide has significantly changed, from remedial to proactive CLEANER PRODUCTION: DEFINITION (UNIDO) 18 The continuous application of an integrated preventive environmental strategy applied to processes, products, and services to increase overall efficiency & reduce risks to humans & the environment:
▪ Production Processes: conserving raw materials and energy, and water; eliminating toxic raw materials; and reducing the quantity and toxicity of all emissions & wastes
▪ Products: reducing negative impacts along the life cycle of a product, from raw materials extraction to its ultimate disposal
▪ Services: incorporating environmental concerns into designing and delivering services Cleaner Production Definition 19
“The continuous application of an integrated preventive environmental strategy applied to processes, products, and services to increase overall efficiency and reduce risks to humans and the environment.”
(United Nations Environment Programme) 20 Cleaner Production Definition
Continuous Products Processes Humans
Preventive STRATEGY for Risk Reduction
Integrated Services Environment What is RECP?
Resource Efficient and Cleaner Production (RECP) is the continuous application of an integrated preventive environmental strategy to processes, products and services to increase efficiency and reduce risks to humans and environment It specifically works to advance: Production efficiency through improved productive use of natural resources by enterprises Environmental conservation through minimization of the impact on nature by enterprises Human development through reduction of risks to people and communities from enterprises and supporting their development
21 22 Passive environmental strategies
Dilute & disperse 23 Reactive environmental strategies
end-of-pipe approaches 24 Reactive environmental strategies
On - site recycling 25 Proactive environmental strategies: Cleaner Production
Prevention of Waste generation: - Good housekeeping - Input substitution - Better process control - Equipment modification - Technology change - On-site recovery/reuse - Production of a useful by-product - Product modification What is waste? 26
There are literally hundreds words for different types of waste:
• allowance • greenhouse loss • BOD • hidden losses • broke • leakage • contaminated • non-conforming material solids • overfill • core loss • packaging • customer returns • process loss • damage • draining • rework • dust • second quality • effluent • stock loss • evaporation • washings • furnace loss and etc. What is waste? 27
“Waste“ is any substance which is discarded after primary use, or is worthless, defective and of no use. ... Examples include municipal solid waste (household trash/refuse), hazardous waste, wastewater (such as sewage, which contains bodily wastes (feces and urine) and surface runoff), radioactive waste, and others. 28 !!!
Waste is waste what ever you call it : take the opportunity to cut waste and increase profits! Cleaner Production Financing The “Cost of Waste” Iceberg 29
THE HIDDEN COST OF WASTE
Adapted from: Bierma, TJ., F.L. Waterstaraat, and J. Ostrosky. 1998. “Chapter 13: Shared Savings and Environmental Management Accounting,” from The Green Bottom Line. Greenleaf Publishing:England. 30 Properly implemented CP :
always
reduces long-term liabilities which companies can face many years after pollution has been generated or disposed at a given site Properly implemented CP : 31
Usually • increases profitability • lowers production costs • enhances productivity • provides a rapid return on any capital or operating investments required • increases product yield • leads to the more efficient use of energy and raw materials 32 Properly implemented CP :
usually (continuation) • results in improved product quality • increases staff motivation • relies on active worker participation in idea generation and implementation • reduces consumer risks • reduces the risk of environmental accidents • is supported by employees, local communities, customers and the public 33 Properly implemented CP : often
• avoids regulatory compliance costs • leads to insurance savings • provides enhanced access to capital from financial institutions and lenders • is fast and easy to implement • requires little capital investment Exercises 34 What types of wastes are generated in your enterprises? Could you list all the types of wastes generated in your enterprise? Can you classify the wastes as hazardous/toxic or as non- harmful? Can you identify wastes that can be recycled or reused in the enterprise? Are there wastes that can be used outside the enterprise?
Training on Greening Ethiopian Manufacturing-ESChE 35 How CP could be applied in practice? 36 Cleaner Production practices
CP Options/ Techniques 37 Cleaner Production practices
1. Good housekeeping take appropriate managerial and operational actions to prevent: - leaks - spills - to enforce existing operational instructions 38 Cleaner Production practices
2. Input substitution substitute input materials - by less toxic - or by renewable materials - or by adjunct materials which have a longer service life-time in production 39 Cleaner Production practices
3. Better process control modify: - operational procedures - equipment instructions and process record keeping in order to run the processes more efficiently and at lower waste and emission generation rates 40 Cleaner Production practices
4. Equipment modification
modify the existing production equipment and utilities in order: - run the processes at higher efficiency - lower waste and emission generation rates 41 Cleaner Production practices
5. Technology change replace of: - the technology - processing sequence - synthesis pathway in order to minimise waste and emission generation during production 42 Cleaner Production practices
6. On-site recovery/reuse - reuse of the wasted materials in the same process for another useful application within the company 43 Cleaner Production practices
7. Production of a useful by-product
Consider transforming waste into a useful by-product, to be sold as input for companies in different business sectors 44 Cleaner Production practices
8. Product Modification
Modify the product characteristics in order: - to minimise the environmental impacts of the product during or after its use (disposal) - to minimize the environmental impacts of its production CP versus End-of-Pipe approach 45
Cleaner Production Pollution Control and Waste Management
Continuous improvement One-off solutions to individual problems
Progress towards use of closed loop or continuous cycle Processes result in waste materials for disposal processes -- a pipeline with resources in and wastes out
Solutions are developed by experts often in Everyone in the community has a role to play; isolation partnerships are essential Reactive responses to pollution and waste after they are created Active anticipation and avoidance of pollution and waste Pollutants are controlled by waste treatment Elimination of environmental problems at their source equipment and methods
Involves new practices, attitudes and management Relies mainly on technical improvements to techniques and stimulates technical advances existing technologies 46 What is not CP?
Off-site recycling
Transferring hazardous wastes
Waste treatment
Concentrating hazardous or toxic constituents to reduce volume
Diluting constituents to reduce hazard or toxicity What are the benefits of Cleaner Production? 47
Improving environmental situation
Continuous Increasing economical benefits environmental improvement
Gaining competitive advantage Increasing productivity CP barriers 48
- Lack of information and expertise Internal to the companies: - Low environmental awareness - Competing business priorities, in particular, the pressure for a short term profits - Financial obstacles - Lack of communication in firms - Middle management inertia - Labour force obstacles CP barriers 49
External to the companies:
-Difficulty in accessing cleaner technologies
The failure of existing regulatory -Difficulty in accessing approaches external finance CP motivators and drivers 50
Internal to the companies: - Improvements in productivity and competitiveness - Environmental management systems and continuous improvement - Environmental leadership - Corporate environmental reports - Environmental accounting CP motivators and drivers 51
External to the companies:
- Innovative - Soft loans from regulation Financial institutions
- Economic - Community incentives involvement
- Education and - International trade training incentives
- Buyer – supplier relations The52 role of international organizations in CP development
• United Nations Environment Programme (UNEP)
• United Nations Industrial Development Organisation (UNIDO)
• Organisation for Economic Co-operation and Development (OECD)
• World Business Council for Sustainable Development (WBCSD)
• Development Finance Institutions (DFIs) 53 Team for CP success
Managers, engineers and finance people in industry and commerce, in particular those responsible for business strategy, product development, plant operations and finance
Government officials, both central and regional, who play an important role in promoting CP
Media representatives who play an important role in disseminating information on good environmental practice Exercises 54 What types of wastes are generated in your enterprises? What are the opportunities for avoiding or reducing wastes in your enterprise? Which CP techniques are applicable in your enterprise to reduce wastes at source? What are the measures that you propose to be taken to handle wastes in your enterprise in order to avoid or minimize pollution?
Training on Greening Ethiopian Manufacturing-ESChE Cleaner Production procedures
The recognized need 55 to minimise waste
The first step Planning and Organization
The second step Assessment Phase
The third step Feasibility Analysis Phase
The fourth step Implementation
Successfully implemented CP projects 56 1. Planning & Organization
Obtain management commitment Identify potential barriers and solutions Set plant-wide goals Organize a project team 57 2. Assessment
Identify sources Identify waste/ pollution causes Generate possible options 58 Material and energy balances
Heat Power The Energy Balance
Raw Materials The Industrial Products & Process Waste
The Cooling Mass Balance 59 Why are material and energy balances so important? The material and energy balances are not only used to identify the inputs and outputs of mass and energy but their economic significance is related to costs, such as: • cost of raw material in waste • cost of final product in waste • cost of energy losses • cost of handling waste • cost of transporting waste • cost of solid wastes disposal • cost of pollution charges and penalties Possible causes for waste generation 60
Choice of Technical Product Production Status of Specifications Technology Equipment
Choice & Process Quality of Process Efficiency Input Materials
Management Personnel Planning & Wastes & Skills & Information Emissions Motivation Systems Option generation (1) 61 Creative Problem Solving (CPS): - Find facts and Identify the problem - Generate ideas to solve the problems - Define criteria to be used to select solutions/ideas
Screening of ideas / options:
- Select all ideas/options that may be implemented immediately - The remaining options/ideas should then be divided into three boxes:
- Good housekeeping
- Interesting options but more analysis is needed
- Waiting box + Rejected Weighted sum method to prioritise options in second group: - What are the main benefits to be gained by implementing this option? - Does the necessary technology exist to implement the option? - How much does it cost? Does it appear to be cost effective, meriting in depth economic feasibility assessment? - Can the option be implemented within a reasonable timeframe without disrupting production? 62 Option generation (2) Traditional brainstorming
• Formulate problem (problem identification) • Define objective of the brainstorming session • Follow the rules of brainstorming: - Select a secretary to write down all ideas (The secretary can't take part in the idea generation) - Select a group leader (the group leader shall control that the four main rules are followed) • Close the idea generation after 30-40 minutes 63 CP assessment practices
Good Input Better Process Housekeeping Substitution Control
Equipment Process Technology Modification Change
On-site Production of Recovery/ Product Useful Modification Reuse By-Product 64 3. Feasibility Studies
• Preliminary evaluation • Technical evaluation • Economic evaluation • Environmental evaluation • Selection of feasible options 65 Payback Period
Capital investment Payback period = ______Annual operating cost savings
- period of time (years) needed to generate enough cash flow to recover the initial investment 4.66 Implementation & Continuation
• Prepare a CP plan • Implement feasible CP measures • Monitor CP progress • Sustain Cleaner Production 67 CP attacks the problem at several levels at once. The implementation of an industry/plant level program requires,
- the commitment of top management - a systematic approach to CP in all aspects of the production processes CP management system
68 Marketing
Top management commitment
Pre-assessment
CP policy declaration
Start CP project
Top Management reviews Project organisation
Final report Assessment The continuous CP loop Measure progress CP options
Project implementation Feasibility analysis
Assessment report 69 How can governments promote CP?
• Applying regulations
• Using economic instruments
• Providing support measures
• Obtaining external assistance What are the benefits of Cleaner Production? 70
Financial advantages: Usually a short Payback Period of only months Many low-cost options Quick to implement Improved cash flows Greater shareholder value Better access to capital and appeal to financial institutions Inherent preventive approach leads to insurance savings What have we learned? 71 • The CP approach reduces pollutant generation at every stage of the production process
• CP can be achieved through: - good operating practices - process modification - technology changes - raw material substitution - redesign and/or reformulation of product
• The economic advantages of CP are: - cost effectiveness - increased process efficiency - improved product quality and enterprise competitiveness - cost of final treatment and disposal is minimized
• Effluent treatment, incineration, and waste recycling outside the production process are not regarded as CP 72 Broader application of CP
CP is closely linked to:
• Environmental Management Systems
• Total Quality Management
• Health and Safety Management Cleaner Production and Sustainable 73Development
Sustainability
Environmental space Responsible Entrepreneurship
Economic Instruments Eco-efficiency Co-regulatory agreements Factor X Cleaner Production Command & control Agenda 21 Compliance
Government Agenda Sustainable development
EHS ICC Business EMS Agenda Auditing Charter Time 74 !!!
CP is a journey not a destination Exercises 75 Discuss on the steps you would take to conduct a CP assessment (CP audit) in an enterprise Identify a CP Option and estimate its payback period
Training on Greening Ethiopian Manufacturing-ESChE Training on Greening Ethiopian Manufacturing
Thank you TRAINING ON GREENING ETHIOPIAN MANUFACTURING Module one Sustainable Consumption and Production, Green Economy and Work Ethics
Delivered by: Professor Desta Mebratu and Engineer Lelissa Daba Presentation outline
2 1. Sustainable Consumption and Production (SCP) and Green Economy
1.3 Work ethics and Motivation related to sustainability and Green Businesses
1.3.1 Why sustainability principle is important for a Green Business 1.3.2 Key sustainability principles for Green Businesses 1.3.3 Key work ethics for Green Business 1.3.4 Exercise: Identify key possible areas of improvement you would work on to improve the sustainability profile of your enterprise.
Training on Greening Ethiopian Manufacturing-ESChE Work ethics and Motivation related to sustainability and Green Businesses 3
At the completion of this course the participants will have understanding of :
- The meaning of a green business and green products
- Basic concepts of environmental ethics and behaviour
- Basic understanding of business/workplace ethics in connection with values, moral beliefs and codes
- Importance of Behavioural Change to internalize the application of CP and SCP practices
Training on Greening Ethiopian Manufacturing-ESChE Work ethics and Motivation
4 Sustainable business, or a green business, is an enterprise that has minimal negative impact, or potentially a positive effect, on the global or local environment, community, society, or economy—a business that strives to meet the triple bottom line. Often, sustainable businesses have progressive environmental and human rights policies
Training on Greening Ethiopian Manufacturing-ESChE Work ethics and Motivation
5 The four criteria of a green business
It incorporates principles of sustainability into each of its business decisions. It supplies environmentally friendly products or services that replace demand for non-green products and/or services. It is greener than traditional competition. It has made an enduring commitment to environmental principles in its business operations.
Training on Greening Ethiopian Manufacturing-ESChE Work ethics and Motivation 6 A sustainable business is any organization that participates in environmentally friendly or green activities to ensure that all processes, products, and manufacturing activities adequately address current environmental concerns while maintaining a profit. Sustainable development within a business can create value for customers, investors, and the environment. A sustainable business must meet customer needs while, at the same time, treating the environment well. Work ethics and Motivation
The Three Dimensions or7 Pillars of Sustainability
Sustainability encompasses environmental protection, economic development, and social equity (Three Es" of sustainability) seen as inseparably related goals. The social equity pillar has the clearest ethical component, that of socio-economic fairness or social justice. The sustainability framework extends ethical concern to future generations, not to compromise the ability of future generations to meet their needs. The social equity dimension suggests that sustainable development is an inherent moral good, but its consequences are likely to be ethically positive as well. Work ethics and Motivation
8 Sustainability challenges present day humans to consider the well- being of future generations, to view their needs as worthy of our moral concern. We can express a moral concern for the future by restraining our consumption of non-renewable resources today. Note that some resources, such as minerals, are essentially finite. An ethical approach to sustainability suggests that society has an obligation to restrain wasteful uses of resources among the affluent, but it also has a special obligation to foster economic development for the poorest of the poor, all while maintaining environmental resource protection.
Training on Greening Ethiopian Manufacturing-ESChE Work ethics and Motivation Ethics is a compilation of morals, beliefs, integrity, conscience, principles, ideas, codes, and values. These conventions of behavior or conduct are defined by individual, group or culture. However, when one refers to business ethics it infers the proper and honorable philosophies and ideologies that oversee and administrate the manner which employees conform within the business workplace Work ethics and Motivation
Business ethics
Business ethics management deal with ethics in the following four areas: Employee relations - how the company or manager relates and works with the employees Investor relations - the relationship a company has with those that support it financially Customer relations - how a company takes care of, relates to and communicates with its customers Vendor relations - the relationship a company has with those that supply the products and services it needs Work ethics and Motivation
Business Ethics
Ethics is a system of values and principles of right or proper conduct.
For example, most ethical systems find lying to be a violation of an ethical rule of being truthful.
Ethical behavior is acting in ways that are consistent with how the business world views moral principles and values.
Business ethics determine employees' everyday conduct Work ethics and Motivation Many individual factors affect a person's ethical behavior at work, such as knowledge, values, personal goals, morals and personality. Values are an individual's judgment or standard of behavior. They are another individual factor that affects ethical behavior. To some people, acting in an improper way is just a part of doing business. Morals are another individual characteristic that can affect an individual's ethics. Morals are the rules people develop as a result of cultural norms and values and are, traditionally, what employees learn from their childhood, culture, education, religion, etc. They are usually described as good or bad behavior. Different cultures have norms that vary from place to place in the business world. Work ethics and Motivation
It's difficult to say exactly what ethics is, but we can say that it involves a standard of what is right and wrong based on what people ought to do. This may include: Our obligation to society What benefits society rather than the individual Being fair to others Exercises 14
Do you think that having a clean environment is a human right? Which CP techniques are applicable in your enterprise to conform to ethical behaviour by all workers? What are the behavioural changes you recommend to take place in your enterprises for ensuring sustainability?
Training on Greening Ethiopian Manufacturing-ESChE TRAINING ON GREENING ETHIOPIAN MANUFACTURING
Thank you Training on Greening Ethiopian Manufacturing Resource Efficiency and industrial Waste Management in SMEs
Delivered by: Professor Desta Mebratu Lead Trainer Outline of presentation 2 What is resource efficiency A systematic approach for Resource Efficiency in SMEs Resource efficiency assessment components Material efficiency Energy efficiency Water efficiency Chemical efficiency Integrated waste management Exercise on developing Resource Efficiency Improvement Program
Training on Greening Ethiopian Manufacturing-ESChE Variants of Resource Efficiency 3 Process optimization, productivity, and resource efficiency are the common terms that are used in relation to improving industrial production and profitability. Process optimization: focuses on maximizing one or more of the process specifications, while keeping all others within their constraints Productivity: describes various measures of the efficiency of production expressed as the ratio of an aggregate output to a single input or an aggregate input used in a production process Resource efficiency: is maximizing of the supply of money, materials, staff, and other assets in order to function effectively, with minimum wasted resources, including natural resources.
Training on Greening Ethiopian Manufacturing-ESChE Conceptual trajectory of RE 4
2005 Green Industry Resource 1990 efficiency & Cleaner Decoupling production & Pollution 1988 Source prevention reduction & waste minimization 1984 Low and End of pipe non waste management technology
Training on Greening Ethiopian Manufacturing-ESChE What is Resource Efficiency? 5 Resource efficiency: is a systematic and integrated approach to managing energy, water, environmental and financial resources, eliminating or minimizing waste and emissions to the environment, on a sustainable and cost-effective basis. enhances the means to meet human needs while respecting the ecological carrying capacity of the earth by producing more wellbeing with less material consumption. is measured by the reduction of the resource use and the environmental impact from materials, emissions, accidental releases per unit of production, trade and consumption of goods and services over their full life cycles.
Training on Greening Ethiopian Manufacturing-ESChE Resource Efficiency deals with the overall impact of 6 production and consumption patterns and systems from life-cycle perspective. This would involve, primarily: Designing of products (goods and services) with a life cycle perspective (Cradle to Cradle) Careful selection of raw materials and energy inputs Responsible management of material and energy flows during the production process Minimization of waste, emissions, hazards and risks Attention to the use, recycling and disposal phases of the product life cycle
Training on Greening Ethiopian Manufacturing-ESChE Benefits of Resource Efficiency for Companies 7 Reduction in cost for materials, chemicals and energy Reduction in cost for disposal of waste and treatment of emissions Reduced cost for compliance with laws governing waste, emissions and the use of chemicals Over the long term Resource Efficiency applied at large secures the supply of resources to businesses at large Resource Efficiency meets the growing customer demand for sustainable business practice
Training on Greening Ethiopian Manufacturing-ESChE 8 Performance measurement and monitoring You can only manage what you know and can measure! A set of key performance indicators is a must for any improvement program, including RECP A proper baseline assessment is the starting point for the effective implementation of your indicator system Relative indicators, sometimes also called normalized indicators, are a measurement of absolute consumption or emission figures relative to reference data of output These indicators are used to calculate three resource- productivity indicators (product output per unit of resource consumption) and three pollution-intensity indicators (emissions or waste generation per unit of product output)
Training on Greening Ethiopian Manufacturing-ESChE Resource productivity 9 Energy productivity (product output per unit of energy used); Materials productivity (product output per unit of material used); Water productivity (product output per unit of water used). Pollution intensity Carbon intensity (greenhouse gas emissions per unit of product output); Waste intensity (waste generation per unit of product output); Waste-water intensity (waste-water generation per unit of product output). Increases in any of the three productivity ratios and decreases in any of the three intensity ratios over time represents progress
Training on Greening Ethiopian Manufacturing-ESChE Monitoring steps 10 Monitoring needs to be embedded in the way you run your business on a day-to-day basis. A practical approach for systematic performance monitoring and management includes the following four key steps: Step 1: Define the right issues and performance measures. Step 2: Establish the most suitable performance management and measurement framework. Make sure that you are using the most effective indicators. Develop robust processes for implementing your system. Step 3: Embed your performance measurement system into your business activities. Collect data from business units and third parties. Step 4: Show your internal and external stakeholders what you have been doing and what results you have achieved.
Training on Greening Ethiopian Manufacturing-ESChE The resource challenge 11 According to International Resource Panel (UNEP, 2014), in the 20th Century: Extraction of construction minerals grew by a factor of 34 while extraction of industrial ores and minerals grew by a factor of 27, Extraction of fossil fuels grew by a factor of 12 and biomass by a factor of 3.6 and the total material extraction increased by a factor of about 8 to support a 23-fold GDP growth Annual extraction of ores, minerals, hydrocarbons and biomass has grown from 7 billion tons in 1900 to 60 billion tons in 2010 and this is set to reach 140 billion tons with BAU scenario by 2050
Training on Greening Ethiopian Manufacturing-ESChE Material efficiency 12 Broader benefits of material efficiency Natural resources are conserved, ensuring that the use of the most accessible and lowest-cost resources will be extended and reducing the cost of production Reducing the demand for raw materials will reduce the impacts of raw material extraction, including both environmental and social impacts Internal and external recycling of materials can save most of the energy required for refining and processing. Typical energy savings from recycling ranges from 10-95% Increasing material efficiency reduces the amount of waste material going to landfills or to be incinerated, reducing land use, water and air pollution and other negative impacts from waste handling
Training on Greening Ethiopian Manufacturing-ESChE Key assessment steps for material efficiency 13
Training on Greening Ethiopian Manufacturing-ESChE Material Flow Analysis (MFA) 14 Material Flow Analysis is a systematic approach aiming at presenting an overview of the materials used in a company with a purpose of identifying the point of origin, the volumes as well as the causes of waste and emissions A material flow analysis is a systematic reconstruction of the way a chemical element, a compound or a material takes through the natural and/or the economic cycle Materials Flow Analysis creates a basis for an evaluation and forecast of future developments and defining strategies to improve the overall situation. Problems of waste and emission for a company arise at those points of production where materials are used, processed or treated. If a company wants to find a strategic solution to environmental problems, it is essential to capture the current material flows in a model to identify points of origin, volumes and causes of waste and emissions. The composition of the used substances is analyzed, their economic value is estimated and possible future developments are forecasted, in a material flow analysis
Training on Greening Ethiopian Manufacturing-ESChE Possible strategies for material efficiency 15 Good housekeeping in the sense of thoughtful use and handling of raw and processed materials (respecting product formulations, complete emptying of containers, sealing of leakages, etc.) Substitution of hazardous raw and processed materials (e.g., raw materials containing formaldehyde, heavy metals or chloride, etc.) Product and Process modifications (automatic control, etc.) Light weighting: The simplest and most direct form of improving material efficiency in industry is reducing the amount of material that goes into a product, or ‘light weighting’
Exercise 3.1.1: Identify the most critical material resource input of your production process and think about the possible efficiency improvement options.
Training on Greening Ethiopian Manufacturing-ESChE Energy efficiency 16 Energy is one of the fundamental resource input for any industrial production process. Besides the direct contribution it makes to global warming, the consumption of energy constitutes significant percentage of production costs of many industries Energy efficiency audit is a systematic assessment of energy utilization in a given industry Utility scale audit: focuses on improving the energy efficiency of all equipment that are directly driven by energy input Facility scale audit: covers the energy efficiency of the overall production process of a facility
Training on Greening Ethiopian Manufacturing-ESChE 17 Atmospheric CO2 deposition from 1852-2014 Key observation points
•Significant spike seen due to wider use of coal in the second half of the 19th Century and wider use of petroleum around the beginning of the 20th century;
•Slow down observed around the time of the Great Depression through the Second World War;
•Major spike during the second half of the 20th century mainly driven by Globalization
Training on Greening Ethiopian Manufacturing-ESChE Key assessment steps for energy efficiency 18
Training on Greening Ethiopian Manufacturing-ESChE Benefits from energy efficiency 19 Direct benefits of energy efficiency measures in SMEs are: reduced operating costs; reduced risks through decreased dependence on volatile and rising energy prices; improved reliability of equipment and manufacturing processes; and better positioning in production chains It also leads to indirect benefits related to improved indoor Environment Quality (IEQ) that results in better working conditions; improved personnel attitudes; reduced occupational hazard; and minimized personnel fluctuations Exercise 3.1.2: Identify the highest energy consuming equipment or unit operation in your production system and discuss the possible measures you may consider for energy efficiency improvement.
Training on Greening Ethiopian Manufacturing-ESChE Water efficiency 20 Most of the country’s in the world are either already facing a water crisis or are under a water stress situation Water is an essential resource input for any industrial production process even if the quality and quantity of water may vary from one sector to another. A water efficiency program is essential not only from the perspective of savings on water consumption cost but also for saving water for other broader societal purposes. For a country like Ethiopia, where majority of the population is lacking safe drinking water, saving on industrial water consumption has much broader societal impacts.
Training on Greening Ethiopian Manufacturing-ESChE Water Withdrawals, Consumption & Pollution 21
• Number of People in Water Stressed Areas• Pollution of Major Water Bodies
Source: UNEP-IRP, 2015 (405 dead zones -100% increase in the past 5 years)
Training on Greening Ethiopian Manufacturing-ESChE Key assessment steps for water efficiency 22
Training on Greening Ethiopian Manufacturing-ESChE Benefits from water efficiency 23 Saving water will reduce the cost of water for the community at large by lowering demand and thereby the associated costs of extraction, transport by pumps, treatment and wastewater disposal either in a company owned facility or a publically owned treatment plant Saving water can provide opportunities for developing efficiencies in other areas. For example, using less water may mean that pumping water around the site is reduced leading to savings in electricity costs and greenhouse emissions Saving water can reduce the risk of environmental contamination or pollution, as water efficiency initiatives will lead to less wastewater
Exercise 3.1.3: Identify the highest water consuming operations of your facility and consider the possible water efficiency improvement options you could consider.
Training on Greening Ethiopian Manufacturing-ESChE Chemicals management 24 All industrial sectors utilize different chemicals as an input for their production process One of the most common chemicals that may cause significant occupational and environmental hazards are the Volatile Organic Compounds (VOCs) that have a high vapor pressure and low water solubility Depending on the toxicology and concentration, the effects of chemical exposures may be immediate (acid burns) or long term (chronic beryllium disease or cancer) Because of safety risks to workers and the environment, and on the other hand losses of efficiency, it is very important for companies to implement a chemical management program
Training on Greening Ethiopian Manufacturing-ESChE Key assessment steps for chemical efficiency 25
Training on Greening Ethiopian Manufacturing-ESChE Benefits from chemical efficiency 26 Reduced cost and environmental impact: any measures that can be taken to reduce the loss, waste, contamination and expiry of these substances will bring cost savings to companies and at the same time, reduce their environmental impact. Competitive advantage: companies that avoid using banned and restricted substances can avoid having their products rejected in the marketplace and expand their market access Improved worker health and safety: accidents involving chemicals create additional costs for companies in terms of lost materials, damaged equipment and facilities, and personal injury. Reducing health and safety risks for employees improves motivation and productivity Exercise 3.1.4: Identify the most critical chemical inputs of your production system, including their potential hazards, and discuss the possible measures to take in achieving efficient chemical utilization and reduction of possible chemical hazards. Training on Greening Ethiopian Manufacturing-ESChE Cross-cutting synergy of efficiency 27
Training on Greening Ethiopian Manufacturing-ESChE Integrated waste management system 28 The dominant practice of waste handling has been largely based on dilution and dispersion of the waste into the natural environment The move towards an integrated approach to waste management began in the 1970s in recognition of the limitation of end-of-pipe management approach An Integrated Waste Management systems combine waste streams, waste collection, treatment and disposal methods into a practical waste management system that aims to provide environmental sustainability, economic affordability and social acceptance. The development and implementation of an Integrated Waste Management program is based on systematic application of a waste management hierarchy that clearly shows the order of preference of the different waste management options, starting with prevention and ending with disposal.
Training on Greening Ethiopian Manufacturing-ESChE Waste Management Hierarchy 29
Training on Greening Ethiopian Manufacturing-ESChE 30 Prevention: refers to all activities which aim to optimize product design and manufacturing processes so that wastes are not generated in the first place. Reduction: also known as waste minimization, refers to the reduction of waste at source, by understanding and changing production processes to reduce waste. Reuse: refers to reutilizing a given waste for the same purpose or using it for another purpose after some reprocessing Recycling: is utilizing a given waste as a resource for another production process either internally or externally Treatment: this is a management option that reduces the environmentally harmful content of waste before disposal
Training on Greening Ethiopian Manufacturing-ESChE 31 Exercise What are the additional efficiency gains you may have from cross-thematic synergy between material, energy, water and chemical efficiency? Identify the most relevant elements from the sectoral assessment checklist and reflect on its applicability in your enterprise? Introduction to the exercise on the development of Resource Efficiency Improvement Program and clarification on the template.
Training on Greening Ethiopian Manufacturing-ESChE Training on Greening Ethiopian Manufacturing
THANK YOU TRAINING ON GREENING ETHIOPIAN MANUFACTURING Module Three
Sustainable Product Design
Delivered by: Professor Desta Mebratu and Dr. Eng. Hundessa Dessalegn Presentation outline
• Principles Sustainable Product Design • Consideration in Product Design • The design stages influence • Product Design for Sustainability • Fundamental opportunities of D4S
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 2 Training Outcomes
At the completion of this course the participants will have understanding of : - The meaning of a product design
- Motivation of Product Design - Basic understanding of Product Design Procedures
- Basic concepts of Design for sustainability
- Fundamental opportunities of D4S
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 3 Principles opportunities for sustainable Product Design
• A product is something sold by an enterprise to its customers.
• Product development is the set of activities beginning with the perception of a market opportunity and ending in the production, sale, and delivery of a product The term ‘designer’ was vague and ambiguous, referring to a wide range of occupations: fine artists, architects, craftsmen, engineers and inventors. In 19th Century The profession of design had developed into Industrial Design as we know it today
Product engineering is innovation and design of useful products that people want- Product Design and Development
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 4 Why Product Design? • There is a continuous need for new, cost effective, high quality products • Today’s products are complex and require a team of people with different backgrounds to take an idea from concept to market • ~85% of problems with new products not working as intended, taking too long to bring to market, or costing too much are the result of a poor design process. • There is a sense of urgency in this area because of a general feeling that the commodity chemicals sector has reached its maturity. • As the focus shifts towards consumer products, three issues need to be considered: what to make, how to make and the workflow.
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 5 Product Design: From Various Prospective What the Customer wanted What Marketing described
What Engineering designed
What Manufacturing built Design: A Decision Making Process
Flexibility ◦ Idea generation ◦ Assessment of firm’s ability to carry out ◦ Customer Requirements ◦ Functional Specification ◦ Product Specifications ◦ Concept Generation ◦ Concept Selection ◦ Engineering Design ◦ Engineering Evaluation ◦ Prototype and Testing
Manufacturing Design Cost
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 7 Few Successes Number
2000 Ideas 1750 Market Design review, 1500 requirement Testing, Introduction 1000 Functional 1000 specifications 500 Product 500 specification One 100 25 success! 0 Development Stage
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 8 Example: Vinyl-chloride Manufacture • To satisfy the need for an additional 800 M lb/yr of VCM, the following plausible alternatives might be generated: H Cl C C H H – Alternative 1. A competitor’s plant, which produces 2 M lb/yr of VCM and is located about 100 miles away, might be expanded to produce the required amount, which would be shipped. In this case, the design team projects the purchase price and designs storage facilities.
– Alternative 2. Purchase and ship, by pipeline from a nearby plant, chlorine from the electrolysis of NaCl solution. React the chlorine with ethylene to produce the monomer and HCl as a byproduct.
– Alternative 3. The company produces HCl as a byproduct in large quantities, thus HCl is normally available at low prices. Reactions of HCl with acetylene, or ethylene and oxygen, could produce 1,2-dichloroethane, an intermediate that can be cracked to produce vinyl chloride.
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 9 Example: Vinyl-chloride Manufacture
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 10 General Methodology to product design
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 11 Flow of Design Knowledge
Prototype/Product The Manuf. Customer
Engineering Designers
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 12 Consideration in Product Design
•Product life cycle impacts are a major contributor to many of society’s environmental and social challenges and thus a problem worthy of our attention. • Sustainable product development is also a means for companies to become and remain competitive.
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 13 The design stages influence The design stages of the product development process have a direct influence over about 70 per cent. of the final product as this is where the most critical decisions with respect to:
cost, appearance, materials selection, innovation, performance, environmental impact, and perceptions of quality such as longevity, durability, reparability are made. As such, designers have an unprecedented opportunity to influence the impact that products have on the environment and society
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 14 The design stages influence
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 15 Sustainable product design ◦ Integrating sustainable development with existing product design processes and practices is critical for successful implementation of sustainable product design. ◦ Even the international standard ISO14006:2011 describes sustainable product design as involving the integration of sustainability considerations into product design.
◦ We therefore describe ‘sustainable product design’ as the integration of
1. sustainable development and 2. design processes and practices—such that the product design helps society to transition to a sustainable future.
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 16 Product Design for Sustainability o To keep pace with the rapidly changing industrial setting, many environmental movements have expanded their scope to include social and economic concerns.
o This combination of environmental, social, and economic priorities is referred to as ‘sustainability.’
o Eco-design has evolved to include both the social and profit elements of production and is now referred to as sustainable product design.
o The concept of ‘Design for Sustainability’ (D4S) requires that the design process and resulting product take into account not only environmental concerns but social and economic concerns as well.
o The D4S criteria are referred to as the three pillars of sustainability - people, profit and planet. D4S goes beyond how to make a ‘green’ product and embraces how to meet consumer needs in a more sustainable way.
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 17 8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 18 D4S: multidimensional
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 19 4 Simple D4S Rules
1. Design products and processes with industrial materials that can be recycled continually with no loss in performance, thereby creating new industrial materials. 2. Design products and processes with natural materials that can be fully returned to the earth’s natural cycles, thereby creating new natural materials. 3. Design products and processes that do not produce unnatural, toxic materials that cannot be safely processed by either natural or industrial cycles. 4. Design products and processes with clean, renewable sources of energy, rather than fossil fuels.
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 20 benefits of adopting design for sustainability
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 21 Methods and Tools for Design for Sustainability The challenge for designers is to find meaningful tools which engage with the design process and help them to tackle design for sustainability
They are grouped into five sections
• Strategic Design • Idea generation • User centered design and • Information provision • Environmental Assessment
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 22 Final Message on D4S oThis is hard. oThis is important. oThis is our responsibility. oThis is a great opportunity… ◦ for businesses and entrepreneurs ◦ for scientists, engineers, and designers ◦ for researchers
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 23 Exercises
1. Do you think your enterprise needs to design new product with available resources and facilities ? If yes, why and how?
2. Is your production or product is designed in sustainable way ?
3. What are the steps you recommend to take place in your enterprises for D4S?
4. Individual writes down five need statements of your customer for your product
8 December 2019 GEM TRAINING -SUSTAINABLE PRODUCT DESIGN 24 TRAINING ON GREENING ETHIOPIAN MANUFACTURING
Thank you TRAINING ON GREENING ETHIOPIAN MANUFACTURING Module Three
Principles and opportunities for sustainable product development
Delivered by: Prof. Desta Mebratu and Dr. Eng. Hundessa Dessalegn Presentation outline
• Principles of Sustainable Product Development • What sustainable Product Development entails • Product Development team • Unit Process of Product Development • The Challenges of Product Development • Product Development Cash Flow • Exercises
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 2 Training outcomes
At the completion of this course the participants will have understanding of :
- The meaning of Product Development
- The Challenges of Product Development
- Opportunities of sustainable product development
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 3 Principles of sustainable Product Development
The economic success of most firms depends on their ability to identify the needs of customers and to quickly create products that meet these needs and can be produced at low cost.
Achieving these goals is not solely
◦ a marketing problem, ◦ a design problem or ◦ a manufacturing problem; it is a product development problem involving all of these functions.
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 4 Changing Dimensions of Competition
Competitiveness today is more than ever based on product development capability.
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 5 What sustainable Product Development entails ?
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 6 Cross-functional teams to design and develop products.
The best practice is to involve a team of people representing the necessary disciplines and skills (a cross- functional team)
Note: ◦ Assemble your project team of multi-disciplinary backgrounds as required.
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 7 8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 8 Unit Process of Product Development
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 9 Assessment of performance Product quality: How good is the product resulting from the development effort? Does it satisfy customer needs? Is it robust and reliable? Product quality is ultimately reflected in market share and the price that customers are willing to pay.
Product cost: What is the manufacturing cost of the product? This cost includes spending on capital equipment and tooling as well as the incremental cost of producing each unit of the product. Product cost determines how much profit accrues to the firm for a particular sales volume and a particular sales price.
Development time: How quickly did the team complete the product development effort? Development time determines how responsive the firm can be to competitive forces and to technological developments, as well as how quickly the firm receives the economic returns from the team’s efforts.
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 10 Assessment of performance
Development cost: How much did the firm have to spend to develop the product? Development cost is usually a significant fraction of the investment required to achieve the profits.
Development capability: Are the team and the firm better able to develop future products as a result of their experience with a product development project? Development capability is an asset the firm can use to develop products more effectively and economically in the future.
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 11 The Challenges of Product Development Some of the characteristics that make product development challenging are: Trade-offs: An airplane can be made lighter, but this action will probably increase manufacturing cost. One of the most difficult aspects of product development is recognizing, understanding, and managing such trade-offs in a way that maximizes the success of the product. Dynamics: Technologies improve, customer preferences evolve, competitors introduce new products, and the macroeconomic environment shifts. Decision making in an environment of constant change is a formidable task. Details: The choice between using screws or snap-fits on the enclosure of a computer can have economic implications of millions of dollars. Developing a product of even modest complexity may require thousands of such decisions.
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 12 The Challenges of Product Development Some of the characteristics that make product development challenging are: Time pressure: Any one of these difficulties would be easily manageable by itself given plenty of time, but product development decisions must usually be made quickly and without complete information. Economics: Developing, producing, and marketing a new product requires a large investment. To earn a reasonable return on this investment, the resulting product must be both appealing to customers and relatively inexpensive to produce.
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 13 Product Development Cash Flow Sales Revenue Operating Costs + Operating Profit
$’s Net Profit
Investment Development Payback - Time Time Break Even Time Time Product development is interesting For many people, product development is interesting precisely because it is challenging. For others, several intrinsic attributes also contribute to its appeal: Creation: The product development process begins with an idea and ends with the production of a physical artifact. When viewed both in its entirety and at the level of individual activities, the product development process is intensely creative. Satisfaction of societal and individual needs: All products are aimed at satisfying needs of some kind. Individuals interested in developing new products can almost always find institutional settings in which they can develop products satisfying what they consider to be important needs. Team diversity: Successful development requires many different skills and talents. As a result, development teams involve people with a wide range of different training, experience, perspectives, and personalities. Team spirit: Product development teams are often highly motivated, cooperative groups. The team members may be colocated so they can focus their collective energy on creating the product. This situation can result in lasting camaraderie among team members.
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 15 Concepts and Principles of Product Design for Sustainability Quality assurance: A development process specifies the phases a development project will pass through and the checkpoints along the way. When these phases and checkpoints are chosen wisely, following the development process is one way of assuring the quality of the resulting product. Coordination: A clearly articulated development process acts as a master plan that defines the roles of each of the players on the development team. This plan informs the members of the team when their contributions will be needed and with whom they will need to exchange information and materials. Planning: A development process includes milestones corresponding to the completion of each phase. The timing of these milestones anchors the schedule of the overall development project. Management: A development process is a benchmark for assessing the performance of an ongoing development effort. By comparing the actual events to the established process, a manager can identify possible problem areas. Improvement: The careful documentation and ongoing review of an organization’s development process and its results may help to identify opportunities for improvement.
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 16 Exercises
1. Think and discuss about the environmental impact of the products and services your company use.
2. Identify a product or service with reduced environmental impact.
3. Discuss how sustainable product development can be implemented in your company
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 17 TRAINING ON GREENING ETHIOPIAN MANUFACTURING
Thank you TRAINING ON GREENING ETHIOPIAN MANUFACTURING
Module Three Product Quality Control Delivered by: Prof. Desta Mebratu and Dr. Eng. Hundessa Dessalegn Presentation outline ◦ Concepts and Principles of Product Quality Control ◦ Why quality matters? ◦ Setting specification limits for quality ◦ Management Aspects of Quality Improvement ◦ Statistical Methods ◦ Design for Six Sigma (DFSS) ◦ Six Sigma as a Metric ◦ Exercises
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 2 Training outcomes
At the completion of this course the participants will have understanding of : - Concept of Quality
- Quality parameter setting
- Use of six sigma for quality control
- Importance of Behavioural Change to internalize the quality control
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 3 Concepts of Product Quality
◦ Product quality is the group of features and characteristics which determines the capacity of the product to meet the specification requirements of a standard or of a customer.
◦ Product quality needs to be defined firstly in terms of parameters or characteristics, which vary from product to product.
◦ A specification is the minimum requirement according to which the producer makes and delivers the product to the customer.
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 4 Why Quality Matters—Customer Satisfaction
Do you have dissatisfied customers? • Historically 1 in 25 unsatisfied customers express their dissatisfaction
• 1 unsatisfied customer typically tells 7-16 others.
• It cost about five times more to attract a new customer as it does to keep an old one.
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 5 Developing quality specifications
Design Design quality
Input Process Output
Dimensions of quality Conformance quality
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 6 Management Aspects of Quality Improvement
Quality Universty Planning Quality Assurance
Quality management
Quality Control & Improvement
7 8 December, 2019 TRAINING ON GREENING ETHIOPIAN8 MANUFACTURING-ESCHE 8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 9 8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 10 Statistical Methods Statistical process control (SPC) ◦ Control charts, plus other problem-solving tools ◦ Useful in monitoring processes, reducing variability through elimination of assignable causes ◦ On-line technique Designed experiments (DOX) ◦ Discovering the key factors that influence process performance ◦ Process optimization ◦ Off-line technique Acceptance Sampling
8 December, 2019 TRAINING ON GREENING ETHIOPIAN11 MANUFACTURING-ESCHE Product Quality and Six Sigma
◦ New products create new processes and new business risks, and therefore new product development initiatives open up opportunities for continuous improvement and associated Six Sigma projects.
◦ Six Sigma is a measure of quality that drives an organization to achieve near perfection through a management-by-fact and data-driven process that defines a defect . ◦ A defect in Six Sigma terms is six standard deviations between the mean and nearest specification limit. In new product development this process is often called DMADC (define, measure, analyze, design, verify)
◦ An improvement program used to develop new products and new processes at Six Sigma levels. The objective is to target customer requirements—nothing more and nothing less.
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 12 Setting specification limits for quality In setting specification limits, the following is required to be considered.
◦ The user’s and/or customer’s needs
◦ Requirements provided for in national and/or international standards
◦ Requirements of specifications of national and/or international standards with restrictions to meet specific needs of the customer
◦ The competitor’s product specifications, in order to gain marketing advantages
◦ Brand related requirements of the product.
◦ Requirements relating to product safety and health hazards provided for in the statutory and regulatory requirements
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 13 The nine dimensions or characteristics
1. Performance – It is the product’s primary operating characteristics. Product is to give expected performance during its use.
2. Product features – The product is to meet the requirements of its features. For example a rebar is to have two longitudinal ribs and several cross ribs at specific intervals.
3. Reliability – It is the probability of the product surviving over a specified period of time under specified conditions.
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 14 The nine dimensions or characteristics
4. Conformance –It is the degree to which the physical and performance characteristics of the product meet the requirements of the standards.
5. Durability – The amount of use one can get from a product before it needs to be replaced.
6. Serviceability – The ease with which the product can be serviced or repaired
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 15 The nine dimensions or characteristics
7. Aesthetics – It represents how the product looks and how it is aesthetically pleasing.
8. Safety – It is assurance that the product is safe during its use and it does not fail prematurely
9. Perceived quality – The product fulfills the requirements of its brand created though brand image or brand name.
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 16 Design for Six Sigma (DFSS). DEFINE Identify, prioritize, and select the right project(s)
MEASURE Identify key product characteristics & process parameters, understand processes, and measure performance
ANALYZE Identify the key (causative) process determinants
IMPROVE Establish prediction model and optimize performance
CONTROL Hold the gains
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 17 Improvement Methodology: DMAIC “Backbone”
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 18 TQM vs Six Sigma
TQM Six Sigma A management A philosophy that focuses philosophy of quality on defect reduction and improvement cost reduction Encourages involvement Relies on a selected group of all employees of highly-trained employees Senior management Senior management is held provides direct support accountable for results
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 19 Design for Six Sigma (DFSS). o – Standard Deviation, a measure of variability
o Six Sigma – A quality improvement philosophy that focuses on eliminating defects through reduction of variation in a process
o Defect – A measurable outcome that is not within acceptable (specification) limits
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 20 Six Sigma as a Metric
2 (xi x) Sigma = = Deviation ( Square root of variance ) n1
Axis graduated in Sigma
6 2 7 5 4 3 1
1 2 3 5 6 7
0 4
------
between + / - 1 68.27 % result: 317300 ppm outside (deviation) between + / - 2 95.45 % 45500 ppm
between + / - 3 99.73 % 2700 ppm
between + / - 4 99.9937 % 63 ppm
between + / - 5 99.999943 % 0.57 ppm
between + / - 6 99.9999998 % 0.002 ppm
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 21 Exercises
1. How do you plan for quality product in your enterprise
2. Do you have dissatisfied customers in product ? If yes, how you satisfy them?
3. How do you carry out quality assurance and control?
8 December, 2019 TRAINING ON GREENING ETHIOPIAN MANUFACTURING-ESCHE 22 TRAINING ON GREENING ETHIOPIAN MANUFACTURING
Thank you Training on Greening Ethiopian Manufacturing
Module Three Part I – Integrated Value Chain analysis (IVCA) Sustainable Value Chain and Marketing
Delivered by: Nebiyeleul Gessese (PhD) and Hundessa Dessalegn (PhD) Outline
Value Chain Analysis (VCA) – Concept, Variants and Methodologies
◦ Value Chain Concept ◦ Variants of Value Chain ◦ Contents of Value Chain ◦ Integrated Value Chain Analysis Methodologies Creating a Product Value Chain Developing an Integrated Value Chain Analysis (IVCA)
◦ Data collection and Information gathering Data analysis, interpretation and report writing: Validation and Strategy Formulation Design and Implementation
◦ Advantages of Integrated Value Chain Analyses Areas of IVCA application
Training on Greening Ethiopian Manufacturing-ESChE 2 Outline .... Cont’
Enabling Environment for Developing and Implementing an IVCA
Concepts of Greenhouse Gas Emission and Effects ◦ What are Greenhouse Gases (GHG)? ◦ Greenhouse Effect ◦ Global Warming Why Calculate GHG Emissions? Tools and Methodology of VCA - GHG ◦ Integrated Value Chain Analysis Methodologies ◦ Application of the value chain analysis ◦ Methodology for applying VCA in calculating GHG emissions Creating a Product Value Chain Developing an Integrated Value Chain Analysis (IVCA)
Training on Greening Ethiopian Manufacturing-ESChE 3 Outline .... Cont’
Concepts of Sustainable Marketing ◦ Green/sustainable Procurement ◦ Eco-labeling
EXERCISE: VCA-GHG Emissions and Sustainable Marketing ◦ Individual Test ◦ Group Work
Training on Greening Ethiopian Manufacturing-ESChE 4 What Is a Value Chain/Value Chain Analysis? As per “Competitive Advantage: Creating and Sustaining Superior Performance” of Michael Porter, 1985
◦ The value chain disaggregates a firm into its strategically relevant activities in order to understand the behavior of costs and the existing and potential sources of differentiation.
◦ Every firm is a collection of activities that are performed to design, produce, market, deliver, and support its product. All of these activities can be represented using a value chain.
◦ The relevant level for constructing a value chain is the activities of a firm in a particular industry (the business unit).
Training on Greening Ethiopian Manufacturing-ESChE 5 What Is a Value Chain/Value Chain Analysis? … Cont’
As per “a Handbook for Value Chain Research,” Raphael Kaplinsky and Mike Morris, International Development Research Center, 2001
The value chain describes the full range of activities which are required to bring a product or service from conception, through the different phases of production (involving a combination of physical transformation and the input of various producer services), delivery to final consumers, and final disposal after use.
Training on Greening Ethiopian Manufacturing-ESChE 6 What Is a Value Chain/Value Chain Analysis? … Cont’
As per “How-to Notes: Value Chain Analysis,” Dealing with Governance and Corruption Risks in Projects, September 2010
Value Chain Analysis is a tool used by the private sector to categorize the primary activities firms undertake to produce and deliver (or “add value” to) a final product. By breaking the service-delivery process into its aggregate parts, value chains help businesses identify inefficiencies and weaknesses in their own supply chains.
Training on Greening Ethiopian Manufacturing-ESChE 7 What Is a Value Chain/Value Chain Analysis? … Cont’
As per “Global Value Chain Analysis: A Primer,” Center on Globalization, Governance, and Competitiveness,
◦ A value chain describes the full range of activities that firms and workers perform to bring a product from its conception to its end use and beyond. This includes activities such as design, production, marketing, distribution and support to the final consumer;
◦ The activities that comprise a value chain can be contained within a single firm or divided among different firms;
◦ Value chain activities can be contained within a single geographical location or spread over wider areas
Training on Greening Ethiopian Manufacturing-ESChE 8 Value Chain Concept
As per “How-to Notes: Value Chain Analysis,” Dealing with Governance and Corruption Risks in Projects, September 2010 All the definitions of Value Chain formulated by different authors has been summarized as
The Value Chain describes the full range of activities required to bring a product or service from conception, through the different phases of production to delivery to the final consumer. The phases of production involve a combination of physical transformation and the input of various producer services. their own supply chains.
Training on Greening Ethiopian Manufacturing-ESChE 9 Variants of Value Chain
As per “Lead firm approach: VCA tools that apply the lead firm approach focus on ◦ Identifying product-specific production costs according to major input categories (labor, material, utilities, etc), and ◦ Transaction costs (transport/logistics, taxes, licensing, and ◦ Other costs associated with bringing a specific product to the market.
These are used to develop a suite of financial, technical, human resources and market linkage support activities to reduce transaction costs along the supply chain.
Training on Greening Ethiopian Manufacturing-ESChE 10 Variants of Value Chain …. Cont’
Sub-sector/product approach ◦ Disaggregates production costs for a specific product by redistributing these costs along key processing (or value adding) stages (for example, in crop production; land preparation, planting, fertilizing/spraying, weeding, harvesting, etc. )
◦ Integrated Value Chain Analysis (IVCA) is a proprietary analytical tool of VCA that integrates the analyses of supply chain costs, production costs and VCA along the entire activities from acquisition of inputs through transformation of inputs into product/services and delivery to market.
Training on Greening Ethiopian Manufacturing-ESChE 11 Variants of Value Chain …. Cont’ Hybrid approach: VCA tools utilizing a hybrid approach takes into account ◦ supply chain dynamics, and ◦ sub-sector/product approach. However, ◦ Specific lead firms is not selected, ◦ the information regarding the value chain is made available more broadly to stakeholders, and ◦ support is provided along the entire supply chain to stakeholders who meet specified selection criteria, ◦ the sub-sector/product VCA where production costs are collected and analyzed, but the data is generally not put in the context of assessing their relative impact across different value adding stages , and ◦ As no unified methodology can be discerned in this approach, benchmarking is generally difficult to accomplish..
Training on Greening Ethiopian Manufacturing-ESChE 12 Contents of Value Chain
Production Cost Analysis: An analysis of the cost of production according to various inputs (labor, materials, utilities, etc)
Training on Greening Ethiopian Manufacturing-ESChE 13 Contents of Value Chain …. Cont’ Supply Chain Analysis: An analysis of transaction costs associated with the transfer of goods and services from one stage of production to another (transport cost, brokerage fees marketing cost, etc.
Training on Greening Ethiopian Manufacturing-ESChE 14 Contents of Value Chain …. Cont’
Value Chain Analysis: An analysis and breakdown of value adding activities according to different stages of production.
Training on Greening Ethiopian Manufacturing-ESChE 15 Integrated Value Chain Analysis
Integrated Value Chain Analyses SM (IVCA) is an analysis of every step from raw material to the ultimate end-user. It… ◦ Provides a detailed breakdown of each stage of production, ◦ Determines the value added at each stage, ◦ Identifies and quantifies administrative and market-based constraints inhibiting the competitiveness of the product, ◦ Calculates and prioritizes key value adding activities, and ◦ Accounts for supply chain and trade logistics costs associated with movement of goods from one segment of the value chain to another
Training on Greening Ethiopian Manufacturing-ESChE 16 Integrated Value Chain Analysis Methodology
Creating a Product Value Chain; and Developing an Integrated Value Chain Analysis (IVCA).
Training on Greening Ethiopian Manufacturing-ESChE 17 Integrated Value Chain Analysis Methodology … Cont’ Creating a Product Value Chain An Example of a Value Chain for Coffee
Farming Post-Harvest Export Processing/ Administration Land preparation Transport to processor Fumigation Fertilizer/manure Pulping Phytosanitary certification Pesticides Drying Transportation Plant maintenance Hulling & grading Port charges Harvesting Bagging Terminal Handling Charge (THC) Customs clearance, Shipping Bank interest Misc.
Training on Greening Ethiopian Manufacturing-ESChE 18 Integrated Value Chain Analysis Methodology … Cont’
Training on Greening Ethiopian Manufacturing-ESChE 19 Integrated Value Chain Analysis Methodology … Cont’
◦ Developing an Integrated Value Chain Analysis (IVCA) Data collection and Information gathering; Data analysis, interpretation and report writing; Validation and Strategy Formulation; Design and Implementation.
Training on Greening Ethiopian Manufacturing-ESChE 20 Integrated Value Chain Analysis Methodology … Cont’
◦ Data collection and Information gathering Identification and selection of strategic product / service; Identification and invitation of key stakeholders involved along the value chain of the product/service; A kick off workshop; Preparation of data collection templates and questionnaires for interview
Training on Greening Ethiopian Manufacturing-ESChE 21 Integrated Value Chain Analysis Methodology … Cont’ ◦ Data analysis, interpretation and report writing Data analysis Tabulation of data, and Chanel mapping of data. Interpretation Discuss cost contribution of the value chain stage by stage, Pinpoint the significance of important cost contributions in the value chain, and Describe the cost structures of the value chain. Report writing As the IVCA is the core component of the study on any product or service, the report should give a holistic picture of the context in which production or service takes place
Training on Greening Ethiopian Manufacturing-ESChE 22 Integrated Value Chain Analysis Methodology … Cont’ Report writing: the report should address ….. Executive Summery Summary of Findings Background Information Objective of the Study Methodology Production and Supply Chain Policy Environment and Institutional Framework IVC Analysis Existing Challenges and Source of Challenges Major Issues for Intervention Conclusion and Recommendation
Training on Greening Ethiopian Manufacturing-ESChE 23 Integrated Value Chain Analysis Methodology … Cont’
Validation and Strategy Formulation Validate the results and findings of the IVCA by stakeholders of the particular sector so that the competitiveness strategy of the sector emerges (participatory approach); Creation of acceptance and understanding of the strategies by all involved; Conducting of validation workshop a crucial vehicle (creations of opportunities for industry, policy, institutional and other stakeholders to be informed about the VCA findings, gaining ownership of the process).
Training on Greening Ethiopian Manufacturing-ESChE 24 Integrated Value Chain Analysis Methodology … Cont’
Design and Implementation Establish intervention points along the already analyzed value chain that are aligned to the overall sector strategy and project goals; Determine the resource requirements and financing avenues for the identified intervention points (financial and non-financial) and how to finance such resources, and Determine intervention timeline (time required to effectively implement and yield concrete results from each activity).
Training on Greening Ethiopian Manufacturing-ESChE 25 Advantages of IVCA ◦ Design and Implementation Enables to precisely pinpoint, quantitatively and qualitatively, the prevailing market as well as policy bottlenecks along an entire value chain of a product (or group of products) from its inception to its delivery to market …. Strong in-depth analysis; Prioritizes the issues with highest impact on competitiveness along a value chain, thus informing policy as well as cluster strategy makers on most pressing issues to be addressed; and Utilizes rich, up-to-date industrial and infrastructure costing benchmarks against which the business climate can be benchmarked
Training on Greening Ethiopian Manufacturing-ESChE 26 Areas of IVCA application
Agriculture and livestock production (cash crops, tree crops, horticultural products, incl. cut flower); Fisheries and Aquaculture; Light manufacturing (textile/apparel, leather processing, metal works, electronics, automotive parts, handicrafts, etc.); Heavy manufacturing (incl. construction and construction material); Food processing; Mining; and Service sector (incl. tourism and entertainment).
Training on Greening Ethiopian Manufacturing-ESChE 27 Enabling Environment for Value Chain Development
◦ Key factors impacting an effective enabling environment for developing IVCA can be categorized into the following categories: Policies; Institutions/human resources; Infrastructure; Technical/operational support services; and Supply chains networks. Light manufacturing (textile/apparel, leather processing, metal works, electronics, automotive parts, handicrafts, etc.);
Training on Greening Ethiopian Manufacturing-ESChE 28 Enabling Environment for Value Chain Development ….Cont’ ◦ Stakeholders and Ownership Requirements Sustainability of value chains and linkages requires the right combination of stakeholders and for each stakeholder to take ownership of different project activities : Types of ownership required; Roles and responsibilities; and Key drivers.
Training on Greening Ethiopian Manufacturing-ESChE 29 Enabling Environment for Value Chain Development ….Cont’ ◦ Monitoring and Evaluation M&E systems have in common the following characteristics: Clarifying the impact a project is expected to have for target beneficiaries; Deciding how progress and impact will be appraised; Gathering and analyzing the necessary information for tracking progress and impact; Explaining/evaluating the reasons for success and failure and using lessons learned to improve future actions.
Training on Greening Ethiopian Manufacturing-ESChE 30 Examples of Poor Institutional Support, Poor Quality Low labor training and poor skills Electricity and Poor Infrastructure on the Cotton T-Shirt Low Labor Productivity and Skills Value Chain in Lesotho Average labor output/worker/day (T-shirts): Lesotho: 16 Kenya: 20 – 25 Production supervisor (supervisors/line) Lesotho: 1/4 Poor quality and high cost Kenya: 1/6 of electricity diesel generator In-line defect rate: 2 – 3% (<1% in Kenya) Increasingly high incidents of HIV/AIDs related worker death
Labor Utilities Material Service Depreciation Input Input Electricity Fuel Water
72.3% 4.6% 3.9% 5.1% 13.9% 2.6% 83.9% 13.5%
Labor Utilities Material Service Depreciation Input Input 66.7% 14.5% 8.8% 2.5% 6.5%
Import Cutting/ Sewing/ Finishing/ Packing/ In-factory Admin Export Cost/Unit: $0.77 Transaction Layering Assembly Washing Loading Inspection Overhead Transaction Old Navy Cost Costs Costs Gap 8.3% 3.0% 22.4% 18.0% 14.0% 6.2% 16.5% 11.7%
High number of Late delivery of fabric from Asia expat managers – – poor rail freight; no Labor Utilities Service Transport Depreciation Admin limited number of Input Overhead local/regional sources of material qualified local 16.8% 0.4% 5.3% 1.3% 12.5% 63.6% managers Principal Labor Costs Principal Admin Cost Staff benefits: 36.7% Subcontract expense: 16.9% Building O & E F & F Computer Motor Staff salary: 63.3% Vehicle Sundry 14.0% High number of 4.0% 9.3% 22.0% 48.0% 16.8% Communication: 12.1% expatriate supervisors Example of Inefficient Supply Chain and Poor Institution Support Infrastructure on the Rice Value Chain in Cambodia
Low on-farm labor Labor Productivity in Rice Farming skills Kg/worker Poor access to Cambodia 43.49 Labor farming equipment Thailand 62.35 100% Cambodian farmers are 43% less Low irrigated farming productive than Thai farmers Land Seeding Transplant Prep 37% 11% 52%
Planting Harvest Milling Market Transport Shipping Fertilizing Drying Packaging Levies Port/Custom 26.7% 7.9% 8.5% 2.4% 4.5% Charges 10.3% 18% 2.9% 19.7%
Labor Fertilizer Port Cam Customs Fumigation Other 9% 91% Charges Control Clearance Phyto- Charges Sanitary 25% 18.8% 38% 0.3% 17.9%
Fertilizer Use/Yield Rate
Fert. Use Yield/ha High fertilizer price due to high import cost (tons) Cambodia $48/ha 1.85 Thailand $15/ha 2.09 Lack of competition in the fertilizer distribution sector – 70% of fertilizer sold in Cambodia is diluted to 1/3 – 1/2 of actual resulted in adulteration of fertilizers concentration Can Smallholder Production Compete with Large Scale Plantation Farming? Example from Kenya’s Coffee Value Chain
Smallholder Farm High cost of imported sprays Yield rate: 400kg/ha Labor Input Fungicides: 66.9% Cost: $0.18/kg Material 7.7% 92.3% Herbicides: 21.2% Yield/Tree: 2.16kg Insecticides: 11.9%
Land Fertilizing Spraying Plant Harvesting Preparation Maintenance Competitiveness of 7.6% 13.4% 33.4% 26.6% 19.0% smallholder coffee farmers – need to focus Large Plantation on crop quality Yield rate: 1,760 kg/ha • Poor labor skills Cost: $0.27/kg • Absence of on-farm extension support Yield/Tree: 9.11kg
Land Fertilizing Spraying Plant Irrigation Harvesting Maintenance Admin Preparation Maintenance Repair 5.4% 9.9% 16.2% 17.3% 17.2% 17.2% 5.6% 11.3%
High cost of imported sprays Fungicides: 81.9% High tax on spare parts Herbicides: 11.6% Insecticides: 6.5% Exercises Self Assessment Questions on the Understanding of IVCA Development and Implementation
1. What is the difference between Supply Chain Analysis and Value Chain Analysis? 2. What do Supply Chain Analysis and Value Chain Analysis have in common? 3. What does production cost consist of? 4. What is the difference between Value Chain Analysis and Integrated Value Chain Analysis? Give an Example. 5. What are the essential data and their scope to be gathered for conducting an Integrated Value Chain Analysis?
Training on Greening Ethiopian Manufacturing-ESChE 34 Exercises Self Assessment Questions on the Understanding of IVCA Development and Implementation
6. How does one ensure the collected data are accurate and representative? 7. Where and when does benchmark contribute to an Integrated Value Chain Analysis? 8. How does one identify the underlying causes that affect the competitiveness of a product/service and suggest an improvement measures? 9. At what levels can improvement measures taken? 10. How does one create an enabling environment for implementing an Integrated Value Chain Analysis?
Training on Greening Ethiopian Manufacturing-ESChE 35 Training on Greening Ethiopian Manufacturing Module Three Part II Value Chain (VC) – Greenhouse Gas(GHG) Emission Analysis Sustainable Value Chain and Marketing Delivered by: Nebiyeleul Gessese (PhD) and Hundessa Dessalegn (PhD) Outline
Value Chain Analysis (VCA) – Concept, Variants and Methodologies
◦ Value Chain Concept ◦ Variants of Value Chain ◦ Contents of Value Chain ◦ Integrated Value Chain Analysis Methodologies Creating a Product Value Chain Developing an Integrated Value Chain Analysis (IVCA)
◦ Data collection and Information gathering Data analysis, interpretation and report writing: Validation and Strategy Formulation Design and Implementation
◦ Advantages of Integrated Value Chain Analyses Areas of IVCA application
Training on Greening Ethiopian Manufacturing-ESChE 2 Outline .... Cont’
Enabling Environment for Developing and Implementing an IVCA
Concepts of Greenhouse Gas Emission and Effects ◦ What are Greenhouse Gases (GHG)? ◦ Greenhouse Effect ◦ Global Warming Why Calculate GHG Emissions? Tools and Methodology of VCA - GHG ◦ Integrated Value Chain Analysis Methodologies ◦ Application of the value chain analysis ◦ Methodology for applying VCA in calculating GHG emissions Creating a Product Value Chain Developing an Integrated Value Chain Analysis (IVCA)
Training on Greening Ethiopian Manufacturing-ESChE 3 Outline .... Cont’
Concepts of Sustainable Marketing ◦ Green/sustainable Procurement ◦ Eco-labeling
EXERCISE: VCA-GHG Emissions and Sustainable Marketing ◦ Individual Test ◦ Group Work
Training on Greening Ethiopian Manufacturing-ESChE 4 Concepts of Greenhouse Gas Emission and Effects A carbon footprint is the amount of greenhouse gases—primarily carbon dioxide-released into the atmosphere by a particular human activity.
What are Greenhouse Gases (GHG)? Chemical compounds in the atmosphere that trap heat there and retain a proportion of the sun's heat.
All economic activities, including agriculture, generate some GHGs.
Major greenhouse gases generated from agriculture are carbon dioxide (CO2), Methane (CH4), Nitrous Oxide (N2O), Chlorofluorocarbons (CFCs), and Water Vapor.
Training on Greening Ethiopian Manufacturing-ESChE 5 Concepts of Greenhouse Gas Emission and Effects … Cont’
Greenhouse Effect ◦ Mechanism through which the sun’s heat is trapped by GHGs in the atmosphere.
◦ Natural phenomenon arising from the fact that the Earth's atmosphere acts like the glass of a greenhouse – allowing the heat of the sun to enter, and then capturing it.
◦ GHGs in the atmosphere intensify the greenhouse effect by trapping the sun’s infrared rays that are reflected by the Earth leading to Global Warming.
Training on Greening Ethiopian Manufacturing-ESChE 6 Concepts of Greenhouse Gas Emission and Effects … Cont’
Global Warming ◦ Global warming is the rising average temperature of Earth's atmosphere and oceans and its related effects.
◦ In last 100 yrs, the Earth's average surface temperature increased by ~0.8°C; almost 2/3 of which occurred in the last 3 decades.
◦ Increment could reach 2°C in next 50 yrs unless all countries take mitigating measures. Severe weather changes will result!
◦ The more GHGs in the atmosphere, the more it heats up resulting in global warming.
Training on Greening Ethiopian Manufacturing-ESChE 7 Concepts of Greenhouse Gas Emission and Effects … Cont’
Global warming potential (GWP)
The varying contributions of different GHGs to greenhouse effect and global warming can be brought together in terms of CO2. referred to as their global GWP.
Greenhouse gas emission Life time (Year) 100 yr GWP (SAR) 100 yr GWP (AR4) Carbon dioxide (CO2) - 1 1 Methane (CH4) 12 21 25
Source:Nitrous AR4 oxide - Fourth (N2O) Assessment Report, SAR -114Second Assessment Report310 298
Training on Greening Ethiopian Manufacturing-ESChE 8 Value Chain-based GHG Emission Tool Capabilities
◦ Provide estimates and detailed measurement of GHG emissions along the value chain of strategic products Carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O) ◦ Analyze the relationship between the use of different production methods, technology and inputs and the rate of GHG emissions ◦ Simulate the impact of changes in production methods, technology and inputs on productivity and GHG emissions ◦ Aggregate individual farm level data to assess GHG emissions ◦ Apply a consistent yet dynamic methodology to enable benchmarking and comparisons across regions, countries, sectors and products.
Training on Greening Ethiopian Manufacturing-ESChE 9 Value Chain-based GHG Emission Applications
◦ Identify best practices to guide extension services ◦ Develop investment policies that promote environmentally sustainable economic growth ◦ Attract capital investments through the Clean Development Mechanism (CDM) ◦ Identify and trade credits through the International Emissions Trade (IET) mechanism ◦ Identify areas where appropriate green technologies can be applied to increase production while decreasing GHG emissions ◦ Monitor and evaluate the impact of green policies on sector competitiveness and environmental sustainability
Training on Greening Ethiopian Manufacturing-ESChE 10 Why Calculate GHG Emissions?
◦ Causes of GHG emissions differ according to the type of gas and production practice
. CO2: fertilizer (urea, lime), fuel burning (diesel, benzene) . CH4: anaerobic decompositions, manure, residue burning, fuel . N2O: fertilizer (urea, NPK, DAP, kali), manure, residue burning, fuel
. By understanding the greatest sources of GHG emission and their relationship to value creation, mitigation measures can be prioritized and targeted to have the greatest impact on emission reduction while addressing national goals for production, income and green growth
Training on Greening Ethiopian Manufacturing-ESChE 11 Tools and Methodology of VCA – GHG
Methodology for Applying VCA in Calculating GHG Emissions ◦ Step 1: Identification of activities within the value chain of a product, and its potential to cause GHG, by type of GHG, water effluent, solid waste ◦ Step 2: Calculate amount of GHG emission for each activity using specific measurements or default values from IPCC – and identify activities that cause the highest GHG emissions ◦ Step 3: Calculate amount of water effluent and solid waste for each activity ◦ Step 4: Identify possible adaptations on activities to reduce GHG emission, waste water and solid waste as mitigation measures
Training on Greening Ethiopian Manufacturing-ESChE 12 Tools and Methodology of VCA – GHG … Cont’ Analysis will consist of the following 1. Identification of relevant processes/activities along value chains coffee and current methods used to carry out activities as well as possible alternative practices; e.g., Tilling is one activity along the coffee value chain –it can be carried out with human labor, 2 buffalo or a tractor of a certain power level 2. Application of IPCC modules to the various types of agricultural practices identified to determine the type of GHG emitted from each activity considering current practices and possible alternatives, and calculate different GHG emission scenarios.
Training on Greening Ethiopian Manufacturing-ESChE 13 Tools and Methodology of VCA – GHG … Cont’ Information base 1. To identify relevant processes/activities along value chains through: • Literature review; • Interviews with stakeholders to determine exact practices in different countries for different agro-ecological zones
2. To calculate GHG emission from different activities (GHG emission sources), the study will use: • IPCC modules; • Research findings on specific emission factors for specific countries; • Default emission factor as per IPCC estimates if country specific research data are not available
Training on Greening Ethiopian Manufacturing-ESChE 14 Example of VC-based GHG Emission Tool for Tea Production in Vietnam VCA-GHG Emissions for Tea Production in Vietnam
Province Lam Dong Yield (kg/ha) 25,000 District Di Linh Cost ($/kg) $ 0.08 1 ton wet tea = 0.34 t CO2 e Commune Hoa Ninh t CO2e/ha 8.47
Farm Reference D7C2F1 t CO2e/ton output 0.34
Inputs $/ha % of Total
NH4(SO4)2 $ 533.33 32.6% NPK $ 533.33 32.6% Urea $ 533.33 32.6% Bio fertilizer $ 38.10 2.3% VCA ($/ha) $ 1,638.10
GHG (t CO2e/ha) 8.13 Inputs t CO2e/ha % of Total Urea 5.07 62.3% Manure 2.28 28.1% NPK 0.78 9.6%
Cultivation Fertilizing Spraying Plant Mgt Water Mgt Transport 98.8% 86.0% 8.9% 0.0% 5.0% 0.1% 99.2% 96.7% 0.0% 0.0% 3.3% 0.1% VCA GHG Harvesting Harvest Transport 1.2% 0.0% 100.0% 0.8% 0.0% 100.0%
Training on Greening Ethiopian Manufacturing-ESChE 15 Exercises Self Assessment Questions on the Understanding of VCA – GHG Development and Implementation
1. What are the 3 main greenhouse gases? 2. How do greenhouse gases cause global warming? 3. What is the problem of global warming? 4. How are humans damaging the environment? 5. How will global warming change ecosystems and the environment?
Training on Greening Ethiopian Manufacturing-ESChE 16 Training on Greening Ethiopian Manufacturing Module Three Part III - Sustainable Marketing Sustainable Value Chain and Marketing
Delivered by: Nebiyeleul Gessese (PhD) and Hundessa Dessalegn (PhD) Outline
Value Chain Analysis (VCA) – Concept, Variants and Methodologies
◦ Value Chain Concept ◦ Variants of Value Chain ◦ Contents of Value Chain ◦ Integrated Value Chain Analysis Methodologies Creating a Product Value Chain Developing an Integrated Value Chain Analysis (IVCA)
◦ Data collection and Information gathering Data analysis, interpretation and report writing: Validation and Strategy Formulation Design and Implementation
◦ Advantages of Integrated Value Chain Analyses Areas of IVCA application
Training on Greening Ethiopian Manufacturing-ESChE 2 Outline .... Cont’
Enabling Environment for Developing and Implementing an IVCA
Concepts of Greenhouse Gas Emission and Effects ◦ What are Greenhouse Gases (GHG)? ◦ Greenhouse Effect ◦ Global Warming Why Calculate GHG Emissions? Tools and Methodology of VCA - GHG ◦ Integrated Value Chain Analysis Methodologies ◦ Application of the value chain analysis ◦ Methodology for applying VCA in calculating GHG emissions Creating a Product Value Chain Developing an Integrated Value Chain Analysis (IVCA)
Training on Greening Ethiopian Manufacturing-ESChE 3 Outline .... Cont’
Concepts of Sustainable Marketing ◦ Green/sustainable Procurement ◦ Eco-labeling
EXERCISE: VCA-GHG Emissions and Sustainable Marketing ◦ Individual Test ◦ Group Work
Training on Greening Ethiopian Manufacturing-ESChE 4 Sustainability
Meeting the needs of the present without compromising the ability of future generations to meet theirs. It has three main pillars: economic, environmental, and social. These three pillars are informally referred to as people, planet and profits.
Training on Greening Ethiopian Manufacturing-ESChE 5 Sustainability
Training on Greening Ethiopian Manufacturing-ESChE 6 Concepts of Sustainable Marketing
Meeting the needs of organizations present consumers without compromising the ability of future generation to fulfill their own needs” Philip Kotler and Garry Armstrong: Principles of marketing.
Training on Greening Ethiopian Manufacturing-ESChE 7 Concepts of Sustainable Marketing … Cont’ What are the five sustainable marketing principles? Here are the five principles of sustainable marketing that you can embrace today and put to work in your organization: ◦ Consumer-oriented marketing, ◦ Customer value marketing, ◦ Innovative marketing, ◦ Sense-of-mission marketing, and ◦ Societal marketing.
Training on Greening Ethiopian Manufacturing-ESChE 8 Concepts of Sustainable Marketing … Cont’ ◦ Consumer-oriented marketing,
A customer-oriented organization places customer satisfaction at the core of each of its business decisions. Customer orientation is defined as an approach to sales and customer-relations in which staff focus on helping customers to meet their long-term needs and wants.
Training on Greening Ethiopian Manufacturing-ESChE 9 Concepts of Sustainable Marketing … Cont’
◦ Customer value marketing the level of satisfaction of your customer towards your business. The word “Value” can have a number of definitions or meanings. ... On the flipside, there's money for value, which means people are willing to pay for the things they see as valuable benefits.
Training on Greening Ethiopian Manufacturing-ESChE 10 Concepts of Sustainable Marketing … Cont’
◦ Innovative marketing
A marketing innovation is the implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing.
Training on Greening Ethiopian Manufacturing-ESChE 11 Concepts of Sustainable Marketing … Cont’
◦ Sense-of-mission marketing
Sense-of-Mission Marketing is essentially a principle of marketing that states that an organization must define its mission in such a way that it has a broader social context rather than being merely product oriented.
Training on Greening Ethiopian Manufacturing-ESChE 12 Concepts of Sustainable Marketing … Cont’
◦ Societal marketing
The societal marketing is a marketing concept that holds that a company should make marketing decisions not only by considering consumers' wants, the company's requirements, but also society's long-term interests.
Training on Greening Ethiopian Manufacturing-ESChE 13 Concepts of Sustainable Marketing … Cont’
◦ Green/sustainable Procurement
Green procurement is the purchase of environmentally friendly products and services, the selection of contractors and the setting of environmental requirements in a contract.
Green procurement programs is as simple as purchasing renewable energy or recycled materials or more involved such as setting environmental requirements for suppliers and contractors.
Training on Greening Ethiopian Manufacturing-ESChE 14 Concepts of Sustainable Marketing … Cont’
◦ Green/sustainable Procurement
Green procurement is the purchase of environmentally friendly products and services, the selection of contractors and the setting of environmental requirements in a contract.
Green procurement programs is as simple as purchasing renewable energy or recycled materials or more involved such as setting environmental requirements for suppliers and contractors.
Training on Greening Ethiopian Manufacturing-ESChE 15 Concepts of Sustainable Marketing … Cont’
"Green" products or services utilize fewer resources, are designed to last longer, and minimize their impact on the environment from cradle to grave. have less of an impact on human health and have higher safety standards. Whilst some "green" products or services may have a greater upfront expense, they save money over the life of the product or service.
Training on Greening Ethiopian Manufacturing-ESChE 16 Concepts of Sustainable Marketing … Cont’
Before a green procurement program is implemented ◦ current purchasing practices and policies must be reviewed and assessed. ◦ A life cycle assessment of the environmental impacts of products or services is required and a set of environmental criteria against which purchase and contract decisions are made has to be developed. ◦ The outcome is a regularly reviewed green purchasing policy that is integrated into other organizational plans, programs, policies. ◦ A green purchasing policy includes date-stamped priorities and targets, the assignment of responsibilities and accountability and a communication and promotion plan.
Training on Greening Ethiopian Manufacturing-ESChE 17 Concepts of Sustainable Marketing … Cont’
Green procurement policies and programs ◦ Reduce expenditure and waste, ◦ Increase resource efficiency, ◦ Influence production, markets, prices, available services and organizational behavior ◦ Contributes to: ◦ Meet multi-lateral requirements such as the Kyoto Protocol and Rotterdam Convention, ◦ Meet International Standards Organization in establishing guidelines for green procurement programs
Training on Greening Ethiopian Manufacturing-ESChE 18 Concepts of Sustainable Marketing … Cont’
Obstacles to implementing a green procurement program include: ◦ lack of readily available environmental friendly products; ◦ Expensive or zero environmental alternatives; ◦ Inaccurate studies; ◦ Lack of organizational support; and ◦ Inaccurate or unsupported environmental claims by manufacturers and suppliers.
Training on Greening Ethiopian Manufacturing-ESChE 19 Tool to Identify Policy-Based Distortion in the Market Value Chain for Maize Production
Seed Planting Fertilizer Harvest Packing Transport Tax, Rent Chemical OH 1% 6% 67% 6% 3% 4% 13% Phosphates: 57% Nitrates: 25% Potassium Chloride: 18%
High import tax on phosphates impacting the competitiveness of the dairy sector
Training on Greening Ethiopian Manufacturing-ESChE 20 Tool to Benchmark Competitiveness and Market-Based Distortions Low on-farm Value Chain for Rice Production in Cambodia Labour Productivity in Rice labour skills Farming Kg/worker Poor access to Cambodia 43.49 farming Thailand 62.35 equipment Cambodian farmers are 43% Animal Labor less productive than Thai Rent Low irrigated farmers 7.4% 92.6% farming
Land Nursery Transplant Weeding Spraying Fertilizing Harvesting Drying/ OH/ Prep Threshing Admin
11.7% 3.9% 19.6% 4.8% 9.1% 26.7% 11.0% 3.4% 9.7%
Labor Machine/ Labor Fertilizer Transport Machine/ Repair of Fert. Repair 12.4% 87.6% 8.2% 79.8% 7.3% 4.8%
Fertilizer Use/Yield Rate
High fertilizer price due to high import cost Fert. Use Yield/ha (tons) Lack of competition in the fertilizer distribution sector Cambodia $48/ha 1.85 Thailand $15/ha 2.09 70% of fertilizer sold in Cambodia is diluted to 1/3 – Global Development Solutions, LLC 1/2 of actual concentration
Training on Greening Ethiopian Manufacturing-ESChE 21 DiagramTool 5:for Value Investment Chain for Pea Farming Decision Commercial Farm Making South Africa
Seeds Labor Fuel Machine Mainten 54.9% 16.5% 13.8% 14.8% Lime Fertilizer Labor Fuel Machine Mainten. 27.5% 41.4% 20.8% 5.0% 5.3%
Land Planting Fertilizing Irrigation Spraying Harvesting Preparation 22.0% 8.1% 26.1% 8.0% 20.5% 15.4%
Yield and Production Cost
Yield Rate (pea pod/ha): 4,500 Spray Labor Fuel Machine Production Cost (Rand/kg of peas): 5.25 Mainten 60.4% 26.5% 6.3% 6.8%
Global Development Solutions, LLC™
Value Chain for Pea Farming, Smallholder Farm, Lesotho
Seeds Labor Fuel Tractor Labor Hire 87% 1.3% 9.1% 2.6% 100%
Land Planting Fertilizing Irrigation Spraying Harvesting Preparation 12.1% 22.2% 19.8% 0% 11.3% 38.6%
Yield and Production Cost Fertilizer Labor Fuel Tractor Hire 64.4% 3.6% 24.9% 7.1% Yield Rate (pea pods/ha): 3,750 Production Cost (Maloti/kg of peas): 4.14 Global Development Solutions, LLC™ Training on Greening Ethiopian Manufacturing-ESChE 22 Tool to Measure Productivity and
BetweenCompetitiveness Countries Low Labor Productivity and Skills Average labor output/worker/day (T-shirts): Lesotho: 16 Kenya: 20 – 25 Production supervisor (supervisors/line) Lesotho: 1/4 Kenya: 1/6 In-line defect rate: 2 – 3% (<1% in Kenya) Increasingly high incidents of HIV/AIDs related worker death
Labor Utilities Material Service Depreciation Input Input Electricity Fuel Water
72.3% 4.6% 3.9% 5.1% 13.9% 2.6% 83.9% 13.5%
Labor Utilities Material Service Depreciation Input Input 66.7% 14.5% 8.8% 2.5% 6.5%
Import Cutting/ Sewing/ Finishing/ Packing/ In-factory Admin Export Cost/Unit: $0.77 Transaction Layering Assembly Washing Loading Inspection Overhead Transaction Old Navy Cost Costs Costs 8.3% 3.0% 22.4% 18.0% 14.0% 6.2% 16.5% 11.7% Gap
Labor Utilities Service Transport Depreciation Admin Input Overhead 16.8% 0.4% 5.3% 1.3% 12.5% 63.6%
Principal Labor Costs Principal Admin Cost Staff benefits: 36.7% Subcontract expense: 16.9% Building O & E F & F Computer Motor Staff salary: 63.3% Vehicle Sundry 14.0% High number of 4.0% 9.3% 22.0% 48.0% 16.8% Communication: 12.1% expatriate supervisors Training on Greening Ethiopian Manufacturing-ESChE 23 Eco-labeling
◦ Eco-label (green label): a visual communication tool indicating environmentally preferable products, services or companies that are based on standards or criteria. ◦ Eco-labeling program or scheme: refers to the organization that creates an eco- label, and is responsible for its ongoing management and use. ◦ Certification: is a confirmation that a product meets defined criteria of a standard. According to ISO certification is: “any activity concerned with determining directly or indirectly that relevant requirements are fulfilled”.
Training on Greening Ethiopian Manufacturing-ESChE 24 Eco-labeling … Cont’ ◦ Standard: is a set of guidelines and criteria against which a product can be judged. ISO defines a standard as: "a document, established by consensus, approved by a recognized body that provides for common and repeated use as rules, guidelines, or characteristics for activities or their results." ◦ Green product certifications: these are intended to outline and confirm that a product meets a particular standard and offers an environmental benefit. An independent third party is responsible for conducting the product testing and awarding the certification. Many product labels and certification program certify products based on life cycle parameters (multi attribute program) which could include energy use, recycled content and air and water emissions from manufacturing, disposal and use. Other product labels focus on a single attribute which could be water, energy or chemical emissions that directly impact the indoor environmental quality.
Training on Greening Ethiopian Manufacturing-ESChE 25 Eco-labeling … Cont’
◦ Third party assessment: means that the evaluator is independent of the product manufacturer, contractor, designer and specifier that has no financial interest or ties to the outcome of the assessment. ◦ Second party assessment: refers when the evaluation is performed by an interested party such a trade association. ◦ First party assessment: refers when the evaluation is coming directly from an organization that is associated with the entity making the claim or that benefits from the claim.
Training on Greening Ethiopian Manufacturing-ESChE 26 Eco-labeling … Cont’ ◦ Green building rating or green certification system: this broadens the focus beyond products, to consider the project/building as a whole. Rating systems are a type of building certification system that rates or rewards relative levels of compliance or performance with specific environmental goals and requirements. Rating systems and certification systems are frequently used interchangeably. A few of these program are single-attribute, focusing solely on water or energy, while others are multi- attribute addressing emission, toxicity and overall environmental performance in addition to water and energy.
Training on Greening Ethiopian Manufacturing-ESChE 27 Eco-labeling … Cont’
◦ Attribute: The characteristics or elements of products or services that determine the type and extent of their short and longer term impacts on the environment or human health. Environmental attributes include, for example, biodegradability, recyclability, energy efficiency, water efficiency, indoor air emissions, hazardous waste, carcinogenicity, etc.
Training on Greening Ethiopian Manufacturing-ESChE 28 Exercises Self Assessment Questions on the Understanding of VCA – GHG Development and Implementation
1. What is the meaning of customer oriented? 2. What is the difference between social marketing and societal marketing? 3. What are the five sustainable marketing principles? 4. What is the sustainable marketing concept?
Training on Greening Ethiopian Manufacturing-ESChE 29