The Life Cycle Management (LCM) Pilot Project: Enablers ...€¦ · recruitment of the firms and allowed a baseline to be established for the measurement of LCM adoption. The second

The Life Cycle Management (LCM)

Pilot Project: Enablers and

barriers to adoption

The Life Cycle Management (LCM) Pilot Project: Enablers and

barriers to adoption

Anthony Hume1, Claire Mortimer

2

Landcare Research

Prepared for:

Ministry of Economic Development

PO Box 1473

Wellington 6011

New Zealand

Project partners: New Zealand Trade and Enterprise, Business New Zealand, Ministry for the

Environment, Ministry of Economic Development, Landcare Research.

May 2011

1Landcare Research, PO Box 10345, the Terrace, Wellington 6143, New Zealand

2Landcare Research, 231 Morrin Road, St Johns, Private Bag 92170, Auckland 1142,

New Zealand

Reviewed by: Approved for release by:

Jonathan King

Research Leader

Landcare Research

Bob Frame

Acting Science Team Leader

Sustainability & Society

Landcare Research Contract Report: LC 202

Disclaimer

While every effort has been made to ensure the information in this publication is accurate, the Ministry of

Economic Development does not accept any responsibility or liability for error of fact, omission, interpretation

or opinion that may be present, nor for the consequences of any decisions based on this information.

© Landcare Research New Zealand Ltd 2011

No part of this work covered by copyright may be reproduced or copied in any form or by

any means (graphic, electronic, digital or mechanical, including photocopying, recording,

taping, information retrieval systems, or otherwise), in whole or in part, without the

written permission of the Ministry of Economic Development.

Landcare Research Page 1

Contents

Executive Summary ..................................................................................................................... 3

1 Introduction ..................................................................................................................... 15

1.1 Intended use and scope of this document ........................................................................ 15

1.2 Report structure ................................................................................................................ 16

2 Life Cycle Management definition .................................................................................. 16

2.1 Glossary of project terms .................................................................................................. 17

3 Objectives ........................................................................................................................ 17

4 The LCM project .............................................................................................................. 18

5 Research methods ........................................................................................................... 19

5.1 Baseline interviews ............................................................................................................ 19

5.2 Follow-up interviews ......................................................................................................... 19

5.3 Finding key enablers and barriers ..................................................................................... 20

6 Firm LCM adoption experiences ...................................................................................... 20

6.1 AHI ..................................................................................................................................... 20

6.2 Comvita.............................................................................................................................. 21

6.3 David Trubridge Design ..................................................................................................... 22

6.4 Mastip ................................................................................................................................ 24

6.5 Nufarm ............................................................................................................................... 25

6.6 Verda ................................................................................................................................. 26

6.7 LCM adoption highlights .................................................................................................... 27

6.8 LCM foundation activities .................................................................................................. 29

7 Company profiling ........................................................................................................... 37

7.1 Reasons for adopting LCM................................................................................................. 37

7.2 Company size ..................................................................................................................... 39

The Life Cycle Management (LCM) Pilot Project: Enablers and barriers to adoption

Page 2 Landcare Research

7.3 Type of product ................................................................................................................. 39

7.4 Market type ....................................................................................................................... 40

7.5 Influence on supply chain .................................................................................................. 41

7.6 Growth strategy................................................................................................................. 41

7.7 Data Issues ........................................................................................................................ 42

7.8 Time in LCM project .......................................................................................................... 43

8 Life Cycle Studies (LCS) .................................................................................................... 44

9 Student projects .............................................................................................................. 46

10 Environmental Management Systems (EMS) .................................................................. 46

11 New Zealand and international adoption ....................................................................... 47

12 Implications and findings ................................................................................................. 51

13 Recommendations ........................................................................................................... 56

13.1 Adoption recommendations ............................................................................................. 56

13.2 Recommendations to amplify LCM uptake in New Zealand ............................................. 57

14 Acknowledgements ......................................................................................................... 59

15 References ....................................................................................................................... 59

Appendix 1 – Glossary of Enablers and Barriers ....................................................................... 61

Appendix 2 – Comparison to the organisational change and international literature ............ 67

Appendix 3 – Enablers and barriers organised by organisational activity areas ...................... 72


Executive Summary

The Life Cycle Management (LCM) programme was a collaborative programme between Landcare Research, the Ministry of Economic Development, the Ministry for the Environment, Business New Zealand, and New Zealand Trade and Enterprise. Initially envisaged as a five-year programme (2008–2013), it sought to build capability among New Zealand manufacturing companies for product-oriented environmental management.

This report focuses on the findings from a two-year LCM pilot project between 2008 and 2010 and outlines the enablers and barriers that influence the adoption of LCM as experienced by the participating firms. The six case studies discussed in this document are Fletcher Building Roof Tile Group (AHI Roofing or simply AHI), Comvita NZ Ltd, David Trubridge Design (David Trubridge), Mastip Technology (Mastip),1 Nufarm, and Verda New Zealand (Verda).

LCM aims to minimise the environmental impacts associated with products throughout their entire life cycle and across the supply chain. LCM enables firms to deal with different environmental issues, e.g., carbon emissions, energy and waste that might be relevant to their products in coordinated process. The approach involves the strategic and operational consideration of the options to reduce product environmental impacts through every day business practice, related company policy decision-making and within relationships both up and down the supply chain.

Results from this research are intended to inform amplification activity of the LCM programme, including spreading key learnings to other New Zealand companies in the years following the LCM pilot project. The findings relate to the process of adoption of LCM in the six companies, particularly the ways in which companies can most efficiently integrate life cycle thinking into their strategic and operational business practices.

The intended audience for this document is the LCM Programme Project Management Group and the Project Governance Group. The content of this report should be treated sensitively because of the information revealed about firm performance.

Goal and objectives

The goal of the LCM programme was to develop capacity in the manufacturing sector to facilitate adoption of LCM within New Zealand. The objective of the enablers and barriers research is to identify key factors that affect the development and adoption of LCM in the manufacturing sector. Findings from this research are intended to inform further initiatives for LCM adoption in New Zealand.

1 Mastip withdrew from active participation in the LCM pilot project in March 2010 but did participate in the enablers and barriers research in the latter part of 2010.



Approach

The enablers and barriers research was completed through a company LCM project within each of the firms.

The main activities of the LCM pilot project included:

• Appointment of a LCM Champion in each company to act as a focal point for activity

• 10 single-day training workshops to be attended by the LCM Champion covering different aspects of LCM, including developing a LCM strategy, Life Cycle Assessment (LCA), green marketing, supply chain management and carbon footprinting, etc.

• A Life Cycle Study (LCS) for each company to quantify the environmental impacts of a product the firm produces, completed by Landcare Research in collaboration with the companies

• Free entrance of the firms into the Enviro-Mark programme for a year

• Supporting postgraduate training of up to six students in LCA techniques

• A research project to identify barriers and enablers to LCM adoption in New Zealand and provide a better design for the LCM use in the future.

Identifying key enablers and barriers

During the LCM pilot project data were collected through qualitative research including interviews, survey analysis, training and evaluation workshops, and from regular telephone conversations with the nominated LCM Champions within the firms. The research into enablers and barriers was completed in two stages. The first stage was completed just after recruitment of the firms and allowed a baseline to be established for the measurement of LCM adoption. The second stage allowed changes due to the LCM project to be captured and qualitatively researched.

Enablers and barriers collated from interviews, workshops, etc., were aggregated into themes to establish the key enablers and barriers. For example, the interviews highlighted increasing customer interest in business-to-business markets and some niche markets (e.g., natural healthcare-related markets) as enablers for LCM adoption. This enabler was aggregated with others within the theme of “taking market opportunities” and are represented by the key enabler ‘desire to penetrate environmentally conscious markets’ (See Figure 1 below and Appendix 3 for the list of all enablers and barriers).

The key enablers and barriers were also examined to identify their potential sequencing to build a coherent picture of LCM adoption across the different activities within each firm.

Finally, enablers and barriers identified in the research with participating firms were compared with enablers and barriers discussed in the international literature review to establish whether the two set of enablers and barriers differed.



LCM adoption

It is important to understand the relative progress in LCM adoption achieved by each firm in the LCM pilot as it provides useful context for the discussion of the enablers and barriers experienced by the firms. Adoption of LCM varied between the firms, with some making better progress than others, for example, by the end of the project three firms (AHI, David Trubridge, and Verda) had begun to implement further LCM related initiatives, e.g., consideration of product redesign or longer term planning.

The research also highlighted a number of examples of how the participating firms were achieving the integration of LCM within business systems and culture, including:

• Integrating business sustainability into top-level targets and reporting

• Integrating environmental actions into business planning, including personal objectives and short-term incentive schemes to drive employee activity

• Aligning LCM with Lean project implementation and using Environmental Management Systems (EMS) to drive business efficiencies and increase growth

• Collaboration between marketing and manufacturing objectives to deliver LCM improvement projects of value to customers and the business

• Several of the firms re-designing products and taking them to market.

LCM was viewed by all firms as a company project with long-term benefits; however, most of the companies have so far only tackled the ‘low hanging fruit’, e.g., easily achieved waste reduction or design measures. None of the firms made much progress in addressing longer term LCM issues, e.g., supply chain management or product end-of-life management.

In many ways the firms feel they are still learning and are not yet ready to talk confidently and openly about practising LCM. In some cases the companies do not feel they have the knowhow to talk about their achievements. While the evidence to date is mainly that benefits have been achieved on productivity growth, an effect on revenue growth in the future is expected by all the companies.

A range of business benefits were achieved by the firms during adoption of LCM, including:

• Gaining market access through demonstrating the firm’s commitment to take the lead on and address product environmental issues

• The provision of key information to meet increasing customer demands for environmental product performance

• Identification of options to address carbon reductions within their supply chain and planning for meeting corporate targets

• Product redesign to reduce environmental impacts as a result of the life cycle study

• Reduction in waste costs through combining LCM activities with other projects.



Enablers and Barriers to LCM adoption

While the research was conducted on a small sample of six companies, it was able to follow the companies closely during the adoption process, which facilitated a rich level of insight and analysis of the issues. In total, 23 key enablers and 22 key barriers for LCM adoption were identified. The key enablers and barriers in Figure 1 below were indentified as being either positive or negative, as experienced by the firms.

In Figure 1 the key enablers and barriers have been clustered under six foundation areas representing the sequence of business activities undertaken by an individual firm during set up and adoption of LCM. Foundation activity areas 1 to 3 relate to the strategic alignment of LCM to the company and the set up of the project. Foundation activity areas 4 to 6 primarily support implementation and continuous improvement of LCM.

1) A strong business case. Building a relevant, clear and well-articulated business case for implementing LCM at an early stage is required to achieve LCM adoption. The long-term and intangible nature of business benefits from LCM adoption makes it difficult to justify when compared with more tangible, shorter term business needs.

2) Across-board commitment of management. The management team, including the board members/CEO, must be actively committed to enhancing their business performance through adopting LCM. A respected senior management project sponsor (preferebaly at board level) is normally required to support project activities, and cross-functional implementation must be supported by a number of senior managers for LCM adoption.

3) Capability to initiate project. Enblers and barriers in this area include ensuring that staff involved in the adoption of LCM have the correct skills to influence others and communicate the key changes required. An important resource required to implement LCM is the LCM Champion. The Champion will need adequate time allocated to coordinate and drive LCM. This research suggests that failure to resource the LCM Champion adequately will lead to a disintegration of activity.

4) Integration of LCM across business functions. LCM is a management framework, not a single tool or role for one department. LCM adoption affects most key business functions and integrated, cross-functional implementation is a major factor for success. For a company to adopt a life cycle approach successfully, business functions such as R&D, marketing, finance, supply chain, and operations must all be actively committed to supporting LCM action.

5) Supply Chain Management. For the products of the firms examined during the project, significant environmental impacts were found in the supply chain. One of the main factors that distinguish LCM from other environmental management frameworks is its focus on a product’s environmental impacts across the whole supply chain through to ultimate disposal. Adoption of LCM requires a committed shift over time to addressing impacts in the supply chain.

6) Commitment to continuous improvement. The reasons for doing LCM activity may frequently not be believed, prioritised or acted on by all staff, and LCM activities can easily be overlooked under pressure to achieve other pressing, short-term business



priorities. Like any other business activity, continued LCM adoption needs to be managed robustly. To ensure this, LCM activity must not only be integrated across relevant business decision making and embedded in day-to-day projects, but should also be periodically reviewed, prioritised and re-focused in line with other business review processes.

The enablers and barriers attributed to the foundation areas – Supply chain and Continuous improvement – emphasise that LCM extends beyond traditional organisational boundaries. While firms undertaking LCM initially need to focus on their own organisational set up and adoption, new forms of inter-organisational collaboration are required to manage the environmental impacts of a product throughout its life cycle. For example, cooperation by several organisations is often needed to support communication up and down a supply chain to achieve a reduction in overall product environmental impacts.

The enablers and barriers highlighted in Figure 1 are those experienced by the majority of the case-study firms. Overall, it is the significance of enablers and barriers to each individual firm, in combination with their relative distribution between the foundation areas, that provides insight into LCM adoption.

The pattern of the results shows that most companies experienced a higher proportion of key enablers than of barriers to set up and adoption during the project. The majority of firms experienced 11 of the potential set of enablers, compared with 9 of the potential key barriers. This is a simple measure that should be treated with caution as it was not possible, due to the small sample, to definitively determine the relative importance of the different enablers and barriers to one another. The individual nature of LCM adoption within each firm means it is likely that the most important enablers and barriers vary between organisations and further research is needed to establish which of the key enablers and key barriers are the most relevant for a wider set of New Zealand companies.

The aggregation of data underpinning Figure 1 hides a number of trends within the enablers and barriers that are more easily spotted when each firm’s individual enablers and barriers are reviewed (section 6). For example, most companies had as many barriers as enablers to developing a strong business case and most firms found it difficult to juggle the requirements of LCM with other competing strategic initiatives. To overcome the latter problem most companies attempted to involve senior managers more in LCM work and align activities with other ongoing initiatives as the company LCM project progressed.

It is notable that firms such as AHI, David Trubridge, Nufarm, and Verda did not experience overwhelming barriers to integration of LCM business processes but did find it difficult to establish enablers for tackling the supply chain and renewing the business case to ensure continuous improvement.



Business caseBoard

commitment Capability Supply chainIntegration

Continuous

improvement

Set up barriers Adoption barriers

Feedback Set up enablers Adoption enablers

Limited knowledge of

customer’s views

Eco-labelling confusion

Customer resistance to

pay more for ‘green’

products

Intangible outcomes of

LCM

Low engagement by

senior managers in

developing LCM

Competing strategic

priorities (e.g. rapid

growth, other projects)

Underestimating the

scale and complexity

of LCM adoption

Lack of data collection

systems

Lack of staff resources

Ambiguity of best

environmental option

Key LCM staff confined to

operational units

Competing operational

priorities

Some product processes

can’t be changed

Limited communication

along the supply chain

Limited materials or

supplier options

Low influence on

suppliers

Lack of cooperation

Long-term business case

weak

Lack of environmental

reporting in NZ

Lack of data to support

LCM business

performance

Change of business

priorities

Initial costs outweigh

benefits

Desire to penetrate

environmentally

conscious markets

Sustainability in brand

values

Increased customer

demand

Maintain access to markets

Senior LCM sponsor

Senior managers’

sustainability commitment

Sustainability already

embedded in operations

Culture of investment for

long-term strategic

benefits

Alignment with other

initiatives

Staff driving LCM have

influence and relevant

skills

Dedicated LCM

champion

LCM tailored to firms’

goals

Staff across firm take

ownership of LCM

Environmental objectives

in staff performance

evaluations

Formal written

procedures e.g. product

development

Early tailored internal

communications

Flexibility in production

Buying power for

product materials

Close supplier and

customer relationships

Reduced costs/ improved

environmental performance

realised

Early focus on financial

quick wins

Increased depth of

understanding and new

ideas

Figure 1 Key enablers and barriers identified by LCM pilot project firms. Enablers and barriers highlighted in bold were experienced by the majority.



Company profiling

The literature suggests successful implementation requires sustainability to be internalised as a cultural value, rather than relying solely on there being a sound business case based on financial indicators (although the business case is no doubt an essential enabler). The analysis of key barriers and enablers for each firm was extended to consider their relationship to different factors related to the firm’s operations and the market in which the firm operates. Many of the characteristics examined have an important effect on business culture as well as the business case for LCM adoption in the firms. The different factors influencing LCM adoption include:

• The reasons for adopting LCM, e.g., personal commitment to tackling sustainability

• Company size

• Type of product

• Market type

• Supply chain issues

• Company growth strategy

• Data management

• Time in the LCM project

Product type, company growth strategy, supply chain issues, and data management all provided notable influences on whether a firm experienced key enablers and barriers to LCM adoption. However, the experience of enablers and barriers by different firms rarely showed distinct trends, and the results often illustrated that a barrier for one company was not necessarily experienced in the same way by another firm. For example, growth strategies at both Comvita and Mastip inhibited LCM adoption because growth activity competed with LCM for resources and funds. At Verda, however, growth strategy is related to product innovation, which seeks to differentiate their products from the competition. Verda’s growth strategy fitted well with the goals of LCM adoption, with the result that LCM eventually became closely linked to the growth strategy, e.g., gaining market access in Europe.

New Zealand and international adoption

One of the questions the LCM project addressed was whether enablers and barriers to LCM adoption experienced by the firms in New Zealand differed from enablers and barriers identified by companies in other countries.

A comparison of the findings from this study with the findings of the international literature review suggests there is a strong overlap between the enablers and barriers identified in the LCM project and those in the literature. Hence , the project does not provide evidence that LCM adoption differs widely between New Zealand and the the international experience. That said, implementing LCM does suffer from national contextual issues that are associated with doing business in New Zealand, for example, distance to market, and being situated in a small market often lacking alternative suppliers.



The research highlights the short-term business case (focused on potential financial returns) as the main means of facilitating LCM adoption in most of the firms included in the project. However, the project was also completed during the recent global economic recession and this event influenced the firms' approach to LCM adoption, e.g., increasing the emphasis on short-term financial gains. Further research would be required to establish whether this finding is specific to the period in which the LCM pilot project took place or is representative of an enabler of LCM adoption in general.

Implications and findings

Of the six foundation activity areas listed above the most important in this study are strong business case, across-board commitment, and capability to initiate, which relate to the set up and strategic alignment of LCM with a company’s goals. Those companies that experienced a strong set of enablers in the set-up foundation areas experienced a more coherent and deep-rooted LCM adoption. When firms experienced a high level of barriers in the set-up foundation areas, the following adoption stage was problematic in the face of competition for time and resources from other important projects or other initiatives.

Due to the general lack of systematic monitoring environmental indicators and in some case and market analysis on environmental issues, several of the companies were not able to establish a rigorous and convincing long-term business case for the adoption of LCM. This was not crucial for Verda and David Trubridge, where alignment of LCM with brand values are likely to support continued implementation even in the absence of a solid business case. However, without a clear business case LCM adoption is likely to be piecemeal and disjointed and most companies are unlikely to continue to invest in systematic implementation. Lack of data to justify LCM benefits, when faced with competing business initiatives with defined short-term financial drivers and indicators of success, is a risk to continued implementation.

One of the major issues for firms considering LCM is that the business benefits of LCM are often thought to be intangible, particularly before work towards LCM adoption has started. Articulating the business case was an issue with which all companies struggled, even though benefits to the business were experienced. However, AHI roofing, David Trubridge, Nufarm, and Verda managed to recognise LCM’s longer term value to their organisation, and achieved the most practical environmental and business-related win/win outcomes.

LCM adoption tends to work best with medium- or long-term strategic and operational objectives, e.g., developing new greener products, working with suppliers to reduce environmental impacts or future proofing the business against upcoming environmental product standards. Developing a business case for LCM requires management to be strategic and innovative in the way they think about addressing environmental issues and the associated economic benefits, e.g., in product marketing and when faced with market requirements.

The overlap of the enablers and barriers experienced both in this study and in the literature suggests many of the experiences of the case-study firms are similar to those of international firms. However, implementing LCM in New Zealand means facing country-contextual issues, e.g., distance to market, lack of alternative suppliers, etc.



Another important issue broadly examined in the research is the acceptance of LCM into the business culture of firms. LCM was viewed by the firms as a project with long-term benefits, but for which they had only tackled the ‘low hanging fruit’. None of the companies (except Verda) appeared to adopt the underlying philosophy of LCM in its fullest sense (i.e. managing environmental impacts of a product in the supply chain and increasing life-cycle thinking in every-day decision making). Additionally, there is only limited evidence in the firms of LCM decision making being integrated across business functions.

The LCM project required a number of intensive changes by firms within a relatively short period of time. The intensive nature of change required was therefore a factor in adoption, particularly as the firms usually underestimated the complexity of LCM adoption. This problem was compounded further by the firms’ relative inexperience in dealing with environmental issues and by the steep learning curve they faced. However, LCM adoption is often viewed an iterative process (Mortimer 2011) and it is possible that, given the planned future LCM activities within the firms, these issues would eventually become less influential.

During the research a number of factors that influence the firm’s operations, the market operated in and the supply chain were examined to see how they influenced LCM adoption. A number of characteristics were found to have some influence on the progress of LCM adoption. These characteristics include alignment with or competing strategic priorities, e.g., type of growth strategy, market type, supply chain issues, etc. In several cases the firms growth strategy was the catalyst for either enablers or barriers, depending on the firm’s individual situation, e.g., as as a method for furthering LCM adoption or alternatively as competition for internal resources. To inform the structure of a company LCM project the impact of these different characteristics should be examined closely before embarking on LCM adoption and should be used as part of a tailoring process.

Recommendations

It is important to note that increasing uptake of LCM across the New Zealand manufacturing sector will require a broad, strategic approach across a number of interested stakeholders. A number of possible recommendations are listed below.

Recommendations to improve LCM adoption with NZ firms

• Assessment of suitability: The research (including the literature review and programme evaluation) in this project shows that LCM is not suitable for all companies. Additional steps should be developed to assess companies before they enter any LCM project. The assessment should focus on the strategic enablers and barriers identified in this research as they are part of the set up and development process for a LCM adoption project within the company.

• Market intelligence: The business case for LCM adoption needs to be based on recent market intelligence and understanding of customer sensitivity to environmental issues. Methods to provide greater support for companies to gain market intelligence (e.g., via NZTE beachheads and other services) should be considered. General market intelligence on development of opportunities and threats relating to the key concerns of the export markets should be promoted more widely within the business community. A number of organisations, such as NZTE, are undertaking pieces of this work, but



greater value may be created by pulling all the separate pieces together in an accessible product to be used by a range of different business sectors. This may be a role for an industry group or a government agency (e.g., BusinesNZ, NZTE or MFAT).

• Clarify the LCM business case: Developing a clear and coherent business case for LCM at the company level is essential to successful adoption. Being able to build, articulate and demonstrate business benefit (either in terms of productivity, earnings or access to new markets) is an area that needs further attention and is crucial as an underpinning for LCM adoption by export companies.

• Strategic board-level adoption of LCM: LCM adoption requires strategic thinking and clarity about key environmental concerns within a company’s markets (see market intelligence above). An element of future LCM training within a company therefore needs to be targeted at and provide greater support for strategic adoption of LCM with the commitment of the board/CEO (in smaller firms) and senior management team in the set up of the company LCM project. To ensure barriers to adoption are addressed, board-level commitment is essential before activities can start within an LCM project.

• An ongoing role of senior management: A senior management sponsor is needed to monitor and support LCM adoption activities by an LCM Champion and ensure access to key players during adoption of LCM. The senior management sponsor needs to be active in emphasising the enablers for LCM and overcoming barriers during adoption activities.

• Develop cooperative and collaborative approaches: The research highlights a lack of sector-level cooperative approaches to LCM activity in New Zealand. Sector-level LCM approaches were used successfully in the MAF Greenhouse Gas (GHG) Footprinting Strategy. The sector approach has facilitated carbon reductions both upstream and downstream in the supply chain and forged new links with customers. This sector-based model could potentially be adapted for use within sub-sectors of New Zealand manufacturing (e.g., plastics, etc.).

• Develop simple KPIs for companies related to LCM: LCM activity needs to be underpinned by a basic level of data collection, measurement and management. When companies do not have this information building the business case and demonstrating the on-going benefits of LCM are difficult. Low-cost solutions to enable companies to collect data on waste, electricity, and materials inputs and outputs data should be explored and publicised to companies. Potentially, where a sector has a sufficient numbers of companies to avoid competition issues, sector-level performance indicators/benchmarking could help companies establish where they are compared with others and highlight the improvements needed to meet best practice within the sector.

• Bolster credibility: LCM is a relatively new concept for many New Zealand companies. Options that boost the credibility of LCM, e.g., potential developing a standard and auditing process for LCM, still need to be developed. The objective of the standard and audit would not be to provide a visible marketing label for LCM, as such a labelling scheme would not necessarily be recognised internationally, but rather to provide a company with credible reference to discuss the robust processes underpinning the development of LCM adoption.

• Build greater understanding of enablers and barriers for industry sub-sectors: The qualitative research on the small sample of firms in the LCM pilot project has provided an in-depth understanding of a number of internal and external factors effecting a firm’s



adoption of LCM. To overcome barriers, further research, e.g., a quantitative survey of a wider set of firms, is needed to test the findings across a number of different industry sub-sectors and develop appropriate business-led solutions. In recent years similar quantitative research has been conducted in Australia and Spain both to inform government policy and to identify the relative importance of different enablers and barriers in the adoption of proactive environmental strategies including LCM.

Recommendations to amplify LCM uptake in New Zealand

Successful amplification of the LCM pilot project requires more than just promotional and marketing activities. It also requires work to facilitate the creation of an enabling environment for LCM in New Zealand. The recommendations below are based on the research in this project and take into account elements of the study discussed in Mortimer and Hume (2011).

• Develop case studies: Develop and communicate a range of LCM New Zealand case studies that demonstrates the benefits and difficulties of undertaking LCM and describe how different firms went about applying LCM. The LCM pilot project is a source of several good case studies. Part of the challenge in doing this well is articulating the intangible (e.g., improved staff morale) as well as the tangible benefits realized.

• Build communities of practice: In the short term this could, for example, involve establishing community-of-practice networks for firms and those staff implementing LCM, as this could help build the skill base within New Zealand and support LCM practitioners. The LCM Champions valued the ability to network with other people/firms undertaking LCM. International experience (Mortimer 2011) indicates that LCM communities of practice do not need to be confined to one sector (e.g., the manufacturing sector) but work well across sectors. This is the approach of CPM, the Swedish community of practice for LCA, which networks different industries, academic institutes and government (see www.cpm.chalmers.se).

• Cooperate with other groups: In New Zealand, the recent formation of the Life Cycle Association of New Zealand (LCANZ) and the New Zealand Life Cycle Management Centre (NZLCM) are positive initiatives. The NZLCM Centre, although focussed on the primary sector, offers courses for professionals from all backgrounds wishing to apply LCM to their products. LCANZ runs seminars on LCM, and the development of a series of workshops and seminars would help stimulate interest and provide professional network forums, e.g., on LCM adoption, LCA and design innovation. LCANZ is also developing resource materials including information to help companies commission LCM research and interpret the findings of LCA studies.

• Provide supporting life cycle data: Identify common materials used by exporting firms, e.g., long-haul transport, and fund LCS that can be used to underpin Life Cycle Inventory (LCI) data development across the manufacturing sector or sub-sectors in New Zealand. The NZLCM is working with LCANZ is to create a database of essential data for completing New Zealand based LCAs. Establishing data for common components of LCS, such as the environemental impacts of electricity generation, would help many firms by reducing the cost of providing new data. Partnering with LCANZ is important in this process to build the business case for the development of LCI as they are looking at creating an open access life cycle datasets for widespread use by industry.



• Policy review: A policy review could be undertaken to assess whether there are any specific interventions that might be applicable to support LCM adoption in the manufacturing sector. The international literature review indicates that comparative institutional analysis with countries, including Sweden for LCM, and Taiwan for environmental supply chain management, may be particularly useful (Mortimer 2011).


1 Introduction

The Life Cycle Management (LCM) programme was a collaborative programme between Landcare Research, the Ministry of Economic Development, the Ministry for the Environment, Business New Zealand, and New Zealand Trade and Enterprise. Initially envisaged as a five-year programme (2008–2013) it sought to build capability among New Zealand manufacturing companies for product-oriented environmental management.

This report is centred on the findings from a LCM pilot project conducted as part of the LCM programme. The pilot project ran for two years between late 2008 and the end of 2010 and involved case studies from Fletcher Building Roof Tile Group (known as AHI Roofing (AHI) when participating in the LCM pilot project), Comvita NZ Ltd, David Trubridge Design (David Trubridge), Mastip Technology (Mastip)2, Nufarm, and Verda New Zealand (Verda). Results from this research are intended to promote a wider understanding of the findings from the pilot project and spread key learnings to other New Zealand firms and organisations.

The content of the report draws on international literature review findings (Mortimer 2011) on designing effective environmental programmes and should be read in conjunction with the findings of the LCM pilot project evaluation (Mortimer & Hume 2011).

1.1 Intended use and scope of this document

The main audience for this document is the LCM Programme Project Management Group and Project Governance Group. With this in mind, the document includes a relatively frank assessment of the ways in which the participating firms have approached implementation. It is understood the content of this document will be used as the basis for further publications in presentations, business magazines or academic journals. As it is likely various versions of the contents of this report will be needed, the contents should be treated sensitively before wider dissemination as part of any amplification and communication strategies are implemented.

The research completed in this study is appropriate for establishing the enablers and barriers of the six case companies in the LCM project. While the data obtained from the research project are rich, recognising the limitations of the study is important for interpretation of the findings presented.

The project included six companies selling to different markets and operating in diverse ways. Attempting to find patterns in the analysis of a small sample of companies that apply to the entire manufacturing sector or a wider set of New Zealand SMEs is difficult. Extrapolating the results to the whole of the manufacturing sector and a wider set of New Zealand businesses should be approached with caution.

2 Mastip withdrew from active participation in the LCM pilot project in March 2010 but did participate in the enablers and barriers research in the latter part of 2010.



In some instances work on grouping enablers and barriers to LCM adoption includes subjective judgements based on the observations, experience and expertise of the research team. The research team welcomes discussion of the findings to facilitate a constructive debate on the best methods for LCM adoption in New Zealand.

1.2 Report structure

This report investigates enablers and barriers identified within the LCM project.

The different sections of the report include:

• The definition of LCM (Section 3)

• Objectives of the LCM project (Section 4)

• Elements of the project (Section 5)

• Research methods (Section 6)

• LCM adoption highlights (Section 7)

• Company characteristics affecting enablers and barriers to LCM (Section 7)

• Collective experiences of key enablers and barriers (Section 8)

• Discussion of student work in case study firms (Section 9)

• The influence of the life cycle studies (Section 11)

• The use of environmental management systems (Section 12)

• A comparison of key enablers and barriers to the international literature (Section 12)

• Implications and findings (Section 14)

• Recommendations (Section 15)

2 Life Cycle Management definition

LCM requires an organisation to expand the scope of its environmental management activities from focusing on specific operations, such as end-of-pipe compliance (i.e. approaches to pollution control that concentrate on treatment or filtration before emissions are discharged into the environment) and/or activities at individual sites, to encompass the complete environmental life cycle of a product. The environmental life cycle of the product includes all activities within the supply chain from extraction of raw materials, through manufacture, distribution, to final disposal of the product. The process of expanding consideration of product impacts from cradle (conception) to grave (disposal and beyond) is commonly termed life-cycle thinking. LCM is not a single tool or method but rather a product management system (McLaren & McLaren 2009).

The United Nations Environment Programme / Society of Environmental Toxicology and Chemistry (UNEP/SETAC) Life Cycle Initiative defines LCM as the “systematic application of life cycle thinking in business practice with the aim of providing more sustainable goods and services. It involves the development and implementation of a product-oriented



management system; this seeks to improve the sustainability of an organisation’s product portfolio(s) across the entire life cycle and supply chain” (UNEP & SETAC 2007 page reference).

The key aim of LCM is to embed life cycle thinking within an organisation’s decision making, and deliver products and services that support improvements in sustainable production and consumption at the same time as adding economic and social value to stakeholders in the value chain (McLaren & McLaren 2009).

2.1 Glossary of project terms

In this report several different terms are used that relate to different elements of the work completed. The list below is provided to avoid confusion when discussing these different work streams.

• LCM programme, i.e., the collaborative programme between Landcare Research, the Ministry of Economic Development, the Ministry for the Environment, Business New Zealand, and New Zealand Trade and Enterprise.

• LCM Pilot project, i.e.., the 10 training workshops, company membership of Enviro-Mark scheme, student projects and research project delivered by Landcare Research and overseen by the project partners listed above. The pilot project was completed between late 2008 and the end of 2010.

• Company LCM project, i.e.., the internal company project developed by the LCM Champions in conjunction with senior managers to facilitate LCM adoption in the six firms that joined the LCM pilot project.

• LCM adoption, i.e., the process of applying LCM in a firm from setting up a LCM company project, establishing the business case for LCM adoption, integrating into day-to-day decision-making, implementing related activities, and developing approaches to facilitate continuous improvement.

• LCM Amplification, i.e.., the process of increasing capability for LCM support and adoption in the manufacturing sector. Amplification also includes the promotion of the business case to the wider New Zealand manufacturing sector.

3 Objectives

An overarching goal of the LCM programme is to develop a systematic understanding of how the manufacturing sector could best implement LCM within New Zealand. The primary objective of the enablers and barriers research is to identify key aspects that will affect the development of LCM in the manufacturing sector. A further objective is to target potential methods to promote enablers and overcome barriers to adoption in the future. Findings from this research will inform any further development of the LCM programme, and spread learning to other New Zealand companies and organisations.

The focus of the research was not on what had or had not been achieved by the case study firms, but on identifying what the companies themselves saw as the enablers and barriers for



LCM adoption (the process of integrating LCM into decision making and implementing initiatives), and the advantages and disadvantages of undertaking LCM.

This research on enablers and barriers to LCM adoption is supplemented by a separate evaluation of the LCM pilot project design and delivery. The LCM pilot project evaluation reviews the experience of the LCM pilot project delivery by identifying improvement options developed out of consultation with the participating case study firms and the LCM pilot research team. The results of the LCM pilot project evaluation and any implications for the amplification of LCM activity are presented in Mortimer (2011).

4 The LCM project

The LCM pilot project ran between late 2008 and December 2010. The activities in the project consisted of several different work streams made up of 19 different components. The research presented here was an integral part of the project activities and completed in parallel to company training and in-house LCM pilot activities. The project had a six month recruitment phase and then 18 months of training and active research with the six firms.

For the LCM pilot project the specific aims were to:

• develop a systematic understanding of how to apply LCM in companies across the manufacturing sector in New Zealand

• have six case study companies that are more competitive in environmentally sensitive markets after LCM adoption that can act as ‘trailblazers’ for wider adoption of the LCM approach in the manufacturing sector.

The main activities of the LCM pilot project included:

• Appointment of a Champion in each company to act as a focal point for activity.

• 10 training workshops to teach each the companies about different aspects of LCM including developing a LCM strategy, Life Cycle Assessment (LCA), green marketing, environmental supply chain management and carbon footprinting.

• A Life Cycle Study (LCS) for each company to quantify the environmental impacts of a product made by the firm, completed by Landcare Research in collaboration with the companies.

• A research project to identify barriers and enablers to LCM adoption in New Zealand and provide a better design for the LCM use in the future.

• Entrance into the Enviro-Mark programme for a year.

• Supporting postgraduate training of up to six students in LCA techniques.

Further support was offered to the companies in terms of ongoing advice to the Champions from the project team on different aspects of implementation when necessary. Further advice and support for the Champions involved the research team meeting with senior managers in the firms twice throughout the project to discuss issues facing the Champions directly.



5 Research methods

The enablers and barriers research was completed through a company LCM project with each of the case study firms. Several different research techniques were employed during the project to identify enablers and barriers. Primarily, data were collected through interviews, survey analysis, and training and evaluation workshops. Data were also collected from telephone conversations with the LCM Champions. This research also drew on literature review findings (Mortimer 2011), and the evaluation of the LCM pilot project design (Mortimer and Hume 2011).

A summary of the methods used is provided below. The research into enablers and barriers was completed in two stages. The first stage allowed a baseline to be established for the measurement of LCM adoption. The second stage allowed changes due the LCM project to be captured and analysed.

5.1 Baseline interviews

The first stage of the research project involved semi-structured interviews carried out during July and August 2009 for all firms except Nufarm, who joined the project later in the year. The results were then organised according to six outcome areas of research interest, these were: Management outward focus (e.g., strategic alignment of LCM with company strategy and business planning), Sales and marketing, Finance, Management inward focus (e.g., the cross-functional nature of LCM implementation), Product design, Manufacturing and supply chain. Refer to Appendix 3 for an extended list of enablers and barriers experienced by the case study companies, categorised according to the six business outcomes.

5.2 Follow-up interviews

The second stage of the research involved interviews completed in August and September 2010, approximately 18 months after the majority of companies had embarked on the project. This second set of interviews built on the research in the baseline interviews and developed an understanding of the changes in the firms due to LCM adoption. The interviews included assessment of the variables that contributed either to successful adoption or to difficulties.

Interviews were subjected to thematic analysis3 to provide a list of enablers and barriers experienced by each of the case study companies. Additional feedback on the results of the follow-up interviews was gained from the LCM Champions during the final training workshop. The results of these two processes are documented in Appendix 3.

3 Thematic analysis is a general method used to analyse transcripts and interview data where responses are grouped into recurring or common “meaning units” or themes.



5.3 Finding key enablers and barriers

To establish the key enablers and barriers, different enablers and barriers were aggregated where possible under headings. The aggregation of enablers and barriers involved analysis of:

• potential sequencing, timing or knock on effects of enablers and barriers

• clusters of enablers and barriers within essential activity areas for the adoption of LCM, e.g., enablers and barriers for developing a strong business case for LCM or integration of LCM across business functions, etc.

• enablers and barriers identified in the international literature review compared with those identified in LCM pilot project

• a firm’s defining characteristics, including company size, type and complexity of product, growth strategy, customer type and relationship, and motivation for joining the project.

6 Firm LCM adoption experiences

In this section a short case study of the experience of each of the firms in the LCM project is provided to provide context to the enablers and barriers established in the research. At the end of this section a series of diagrams are used to summarise the key enablers and barriers observed and experienced at each case study company.

6.1 AHI

AHI is part of the Fletcher Building Group of Companies and employs 130 staff at their Auckland site. The firm’s main product is a steel roofing tile that is coated before installation with either a crushed stone finish or paint. AHI has a strong presence in the domestic housing market and also has export sales to over 80 countries.

At the start of the LCM project AHI was working towards achieving certification of their environmental management system to the international standard ISO 14001 and quantifying product-orientated environmental impacts. Protection of the environment at a local level is part of daily operations and site-related decision making, driven partly by organisational values to demonstrate good environmental practice and partly by a desire to comply with local environmental legislation.

The key barriers and enablers as experienced by AHI are illustrated in Figure 2 (p. 31). The firm’s experience highlights a strong set of enablers for initiating LCM. During the project AHI acknowledged it had received a growing number of requests for environmental information on the product but suggested that LCM would most likely ensure they were able to maintain market access by responding to international trends that require environmental impacts of building materials to be reduced over time, e.g., the growth in the Green Star building code. Before joining the project there was some confusion in AHI over how to respond to these measures and what messaging was needed on product environmental impacts. The company LCM pilot project enabled the firm to consider the best methods for replying to the queries and communicating with different parts of the supply chain.



One of the major benefits of the company LCM project was that it provided an answer to the company’s questions of what to do next e.g., improve measurements of carbon emissions to enhance corporate level planning to reduce emissions over time. It also provided a solid structure and framework to identify issues within the supply chain and develop a more strategic approach to managing any business risks from environmental issues that were highlighted.

A major enabler for AHI was the full-time environmental coordinator who was chosen as the LCM Champion. Later in the project the LCM Champion’s role was switched to the Roof Tile Group Engineering & Product Development Manager who operated at a more senior level in the company. The switch benefited adoption by providing a better link to the senior management of the firm and increasing the influence of the champion’s activities on others. Alongside the advantage of an influential champion, LCM adoption was increasingly aligned to current internal projects already compliant with ISO 14001, in particular waste reduction initiatives that would provide a quick financial return.

Overall, the LCM project has been an excellent education and awareness process for AHI, highlighting methods for future-proofing the business against product environmental risks by providing a framework for deeper understanding of the issues. LCM helped structure responses to the management of product environmental issues and the knowledge gained is highly valued. The changes as a result of the company LCM project have delivered both intangible and tangible financial benefits. For example, waste costs were reduced by re-examining processes using an LCM perspective. However, perhaps the greatest benefit for AHI has been the ability of senior managers to improve planning on how to address corporate Fletcher Building Group targets in relation to carbon reductions related to the Group’s involvement in the Carbon Disclosure Project.

6.2 Comvita

Comvita is a natural health company best known for its medicinal honey product range. The company has around 250 employees worldwide and exports to 14 countries including China, the UK, and the USA.

In recent years the company has experienced rapid growth through the acquisition of other companies to expand their product range. For example, in a strategy to become the global leader in medical honey, Comvita acquired the Australian company Medihoney in 2007.

The enablers and barriers experienced by Comvita during the LCM project are shown in Figure 3 (p. 32). Comvita have environmental considerations as a key element of their brand and they aim to express this as a part of their product proposition to the market. For example, Comvita’s natural health vision includes issues related to environmental performance and says, “Comvita is always working towards measured sustainability…products and packaging are designed to be eco-effective and recyclable” (Comvita 2010).

The firm’s customers take an increasing interest in the environmental credentials of the products they supply. Some customers, such as Holland and Barrett in the UK, have already requested more information in this area.



However, despite a strong set of enablers for developing a coherent business case, Comvita appeared to struggle with this aspect. A failure to develop, agree and articulate a business case for LCM activity resulted in several other business drivers constantly out competing LCM for management attention. Subsequently progress in aligning LCM adoption with overall business strategy was weak.

Responding to the global recession was at the forefront of Comvita management attention throughout the LCM project. It was felt the recession had influenced customer decision making by placing a greater emphasis on price concerns rather than on company or product environmental performance. In addition, later in the project Comvita experienced a number of pressing operational requirements that resulted in an ‘all hands on deck’ response, and resources that had previously been allocated to LCM activities were re-allocated.

Comvita chose to split LCM adoption work between two staff members. Both champions were from the new product development team and one had a part-time role to advance sustainability issues within the company. The LCM Champions believed they had been constrained by a reduction of allocated internal resources to LCM during the project and a low level of senior management commitment due to the recession and other competing demands.

The problems experienced in adoption of LCM were observed in several ways throughout the company LCM project. First, communication about LCM appeared to be more problematic for Comvita than the other companies because the company was experiencing difficult production demands. Second, the company also had a variety of projects underway including a large Lean programme, leading to confusion in internal communications and difficulties with prioritising resources. Third, the champions reported they had not achieved the influence on product development that had been expected. In dealing with the supply chain the champions believed the company would struggle to influence suppliers to provide useful product information or address environmental issues due to the low value their business represented to their larger suppliers. The champions also pointed out that their options for finding reliable alternative suppliers who were efficient and consistently delivered good service were often limited due to a lack of alternative suppliers in New Zealand or Australia.

The Comvita team did not make as much progress towards LCM adoption as they wanted due to the barriers experienced. Towards the end of the LCM Project the results of their LCS raised interest in LCM and this could provide a basis for further action. The team are currently investigating bottom-up initiatives in supply chain, carbon footprinting and initiating environmental data collection and regular reporting, which indicates a level of slow progress towards LCM adoption.

6.3 David Trubridge Design

David Trubridge is a designer and manufacturer of premium priced furniture, lighting and accessories with significant export sales in Australia and Europe, alongside healthy sales within New Zealand. In 2008 the company’s Spiral Islands light fitting design won Gold at the Institute of New Zealand ‘Best’ awards.

David Trubridge was the smallest firm in the project with just 10 full-time employees. Over a number of years the company has developed an extensive knowledge of sustainability-related



issues through links with the international Design for the Environment (DfE) community. As a small firm David Trubridge has experienced both advantages and disadvantages due to their size in the process of adoption and implementation of LCM. The enablers and barriers experienced by David Trubridge during adoption and implementation of LCM are outlined in Figure 4 (p. 33).

The advantages of the company’s size were largely related to the ease with which LCM activity was informally communicated and coordinated among individuals. A wide range of employees across different functions were well informed about the project activities and they had obtained a depth of understanding that was not common in the larger firms.

The disadvantage of their small size was that implementation required proportionately higher resources than in the bigger firms within the company LCM project. For this company, committing the staff time and travel expenses to work on LCM and Enviro-Mark was a major drain on resources.

In a similar fashion to several other firms in the project, David Trubridge had not spoken to their suppliers directly about environmental issues as a result of their LCM activity. In general their staff did not believe they could influence the operations of suppliers to reduce environmental impacts due to their small size.

It is notable that David Trubridge suggested that high initial resource costs require an investment approach be taken to LCM implementation, with longer term payback expected rather than immediate return on investment. An investment approach takes into account long-term benefits and costs and weighs them against initial costs.

The business case is closely linked to the personal beliefs of the management team. The team believes strongly that the environmental impacts of production should be reduced as part of everyday practice. For the company, the ultimate motivation and reward from implementing LCM is not necessarily financial gain but satisfaction in ‘doing the right things’ to bolster their branding. That said, as David Trubridge’s personal image forms a large part of the company’s brand and LCM adoption demonstrates proactive action on his personal beliefs by extension this will probably strengthen the company’s brand and eventually lead to greater sales.

The three areas in which David Trubridge sought to make progress included the design process, environmental certification, and the development of new products. Progress has been made in all three areas. One example of the progress made during company LCM project is achieving Enviro-Mark Bronze certification.

The largest tangible benefits in terms of costs reduction and environmental benefits were achieved by the redesign of several products to increase the use of flat packing of products. Using information from the LCS, several products have been designed using the seed system that enables the product to be flat packed during transport, reducing the products volume and in turn lowering freight costs and environmental impacts. The product is assembled by the customer on delivery and the company is able to demonstrate their commitment in this area to environmentally conscious consumers by providing educational literature aimed at explaining the product development process.



6.4 Mastip

Mastip is a global solutions provider for the hot runner and steel valve industry, and currently supplies complete Hot Half injection moulding units or manifold solutions to global markets. Mastip designs parts and components to order for customers, using injection-moulding applications. The company has customers in 32 countries, including Australia, Canada, the Middle East, Europe, South America, and the USA.

Mastip’s participation in the LCM project coincided with a reorientation of the company around the development of high performance manufacturing to better meet customer needs. An organisational restructuring process was put in place to support these aims, together with the adoption of LCM, Lean manufacturing practices, and a re-engineering project.

As 2010 was also a period of rapid growth in sales for Mastip, staff resources were stretched as the company attempted to deal with a combination of high production demands and a number of organisational changes. The company eventually withdrew from the LCM project as an active participant in March 2010, but agreed to contribute to the research process.

The enablers and barriers to adoption and implementation of LCM are given in Figure 5 (p. 34). Mastip experienced just 7 out of 23 key enablers and 15 out of 22 key barriers identified during the project. Nevertheless, LCM thinking has had an effect on workplace practices and, to a more limited extent, product improvements.

There was little evidence at the beginning of the project that environmental issues were part of the firm’s operational practices or brand values. The firm’s management laboured to commit to an environmental mission statement to communicate their intent to address environmental issues of concern. While other participants, including David Trubridge, Nufarm and Verda, recognised the value of LCM adoption, Mastip had difficulty involving senior managers in the LCM adoption and ultimately making the case for the business to continue in the project.

The Operations Manager (a member of the senior management team) at Mastip suggested the firm had been naïve about the requirements both in terms of resources and the commitment needed for LCM adoption. The importance of having a ‘sponsor’ for the project in the senior management team was highlighted and it was felt the project had suffered from not having a more active advocate within the senior management team. In part, this occurred because the internal strategy for LCM had not been communicated clearly to senior managers by the Champion.

Communication to staff about LCM was not started early, which resulted in confusion later in the project because some staff did not understand why they were asked to do things differently. The firm had several company-wide projects on the go simultaneously, which led to confused communications and difficulties with the prioritising of resources. Having good systems in place was emphasised by Mastip, who had experienced problems with prioritising LCM and communicating clearly about the differing objectives of different projects. As had happened with Comvita, Mastip reported that many of their direct customers were still very price driven as a result of the global recession, but unlike Comvita they were taking little interest in environmental impacts of the product supplied.



On the positive side, due to the nature of their product Mastip found it relatively straightforward to integrate life-cycling thinking into their product-development process. A series of trade-offs were, however, noted, e.g., selection of different raw materials may increase energy use during injection moulding. As certain materials or design features are often required for technical performance reasons and to meet industry standards, there is a very slow acceptance rate of changes by customers. In some situations products are tailored to customer specifications and are one-offs.

6.5 Nufarm

Nufarm is one New Zealand’s leading producers of crop protection products that include pesticides, herbicides, and insecticides. The Auckland based firm is a semi-independent subsidiary of the Australian branch of the company. Nufarm was the last of the six case-study companies to join the project, approximately 6 months after the other participants. Unlike the other case study companies in the pilot project, the majority of the Nufarm’s sales are domestic to New Zealand.

Nufarm’s involvement in the LCM project followed their previous involvement with the Lean programme and LCM has dovetailed with Lean thinking. Lean manufacturing is focussed on increasing efficiency and decreasing waste in business processes and operations based on principles originally developed by the Toyota car company (Lean Enterprise Institute 2011). LCM has been closely aligned with organisational strategy and the strong internal drive for Health and Safety and Lean. Traditionally, on-site environmental responsibility is strong and this is expected to grow over time. Figure 6 (p. 35) shows Nufarm experienced a relatively even balance between the key enablers and barriers to LCM adoption during the project.

The New Zealand Country Manager was instrumental in securing the firm’s involvement in the LCM project and took a keen interest in the development of the project from the outset. Responsibility for adoption of LCM was quickly delegated to the Engineering Support Manager, Marketing Manager and Logistics Managers to support the LCM Champion to ensure an integrated approach to implementation. In combination with significant new capital investment, Nufarm expect to achieve future major efficiency and operational savings from LCM. In particular, Nufarm used LCM to reduce packaging types and focus on product application in the field.

As a result of LCM adoption, the LCM Champion (the company’s Plant Production Manager) has recently been appointed to a new role of Sustainability Manager. This new position is more senior, with wider responsibility across the organisation than the old role of the Operations Manager. The role of Sustainability Manager will be to use resources efficiently by focusing on detailed cost monitoring at the product level and to identify and reduce environmental impacts in the supply chain. Although the business case for further work could not be fully established during the reduced LCM project period, LCM is seen as a proactive driver for the businesses by widening their product range and enhancing their ability to meet more diverse future customer demands, e.g., helping farmers or growers drive down carbon emissions.



6.6 Verda

A few years ago Verda was a commodity timber business predominantly focussed on the national construction market. In 2006 the business shifted from a commodity market to a market niche for outdoor timber products (or solutions) in the Australian and European market. The company develop, manufacture, and market outdoor products that are made from plantation-grown Pinus radiata. Their product portfolio includes attractive quality decking, raised gardens, fencing systems, balustrades, pergolas, and furniture.

Verda had recently undertaken a re-branding process with sustainability becoming a core part of their brand. The company aims to reduce environmental impacts in all aspects of its operations including the use of sustainably grown timber, sustainable manufacturing and using sustainable supplies. All timber used in the products manufactured by the firm is Forestry Stewardship Council (FSC) certified.

Key enablers and barriers for adoption of LCM as experienced by Verda during the project are summarised in Figure 7 (p. 36). Verda displays the highest number of key enablers identified of all the companies in the project. During the project Verda was the only one of the case study companies where increased sales could be demonstrated as being in part due to communication of product environmental credentials.

As with other firms with stronger LCM adoption, the close involvement of Verda senior managers in the project was important for prioritising activities. A willingness to allocate adequate resources to the company LCM project ensured progress was made and Verda decided to communicate their participation and aims in the project as early as possible.

The firm experienced positive results with visual performance indicators such as putting information up on walls and identifying short key messages, which helped communicate information to staff with low literacy and numeracy skills. Senior managers also provided more information to staff and included them more fully in waste reduction discussions with great success.

Verda experienced a number of tangible benefits from involvement in the LCM project, including gaining market access, reducing costs, and stimulating product innovation. The company’s experience serves as an example of the benefits that can be observed if whole-of-supply-chain issues are addressed at all levels within an organisation.

First, the LCM project was used as a demonstration of the firm’s environmental commitment to customers in new markets, e.g., France. The LCM project activities enabled Verda to show their strategic approach to tackling issues important to customers and ensured the firm had a licence to operate in environmentally sensitive markets.

Project activities were focussed on several areas within the supply chain and combined with ongoing Lean projects. Upstream cost saving was identified both by simplifying energy use at the sawmill and by upgrading chemical management. Downstream investigation of options for changes to packaging and product disposal also produced savings. LCM has contributed by increasing productivity growth. For example, for one of their major lines (worth around $15 million) a recent 3% rise in gross margin can be attributed in part to the LCM activities regarding packaging re-design and process efficiencies.



Finally, Verda accepted that life cycle thinking needed to be introduced into their product development processes to eliminate problems in the disposal of the product and provide further unique selling points for the company’s product.

The intention of this section is to summarise the experience of the case study companies in the project. The focus of the discussion for each company presented below is on the distinguishing features of adoption of LCM in each case to avoid repetition of data and information. For easy reference general themes are addressed in the implications and findings section.

6.7 LCM adoption highlights

The purpose of this report is not to judge the efforts of each of the firms within the project but rather to identify and analyse the enablers and barriers experienced to improve future adoption of LCM.

The summary of the achievements of each firm in Table 1 is intended to provide greater understanding of the findings highlighted in this report. To answer the question of whether the firms in the project were successful is not straightforward. The small sample of six companies means the data are easily skewed by unusual results. Many factors, including type of product, size, growth pattern and market drivers, can influence the adoption of LCM. Many of these factors are discussed later in this report but for now is it best to note that the simple analysis of company expectation measured against implementation outcomes presented in Table 1 provides only a limited picture of achievements.

In many ways the case study firms feel they are still learning and are not yet ready to talk confidently and openly about practising LCM. In some cases even after training on green marketing during the LCM pilot project the companies do not feel they have the knowhow to talk about their achievements. While the evidence to date is mainly that benefits have been achieved on productivity growth, an effect on revenue growth in the future is expected by all the companies.

The companies found that LCM implementation took longer than initially expected and that value comes over time, which they did not anticipate. The slower than expected rate of progress in implementation can also partially be attributed to the difficult economic conditions experienced during the period over which the research was conducted.



Table 1 The progress of LCM adoption by the six case study companies

Company Expectations Adoption outcome

AHI Continuation of EMS (ISO 14001)

work across the whole supply chain

Reduced waste and costs over and above ISO

14001 performance

Information to meet customer demand on

environmental product performance

Determine business risk in supply

chain

Identification of options to address carbon

reductions within supply chain and planning for

meeting corporate targets

Comvita Insights into the environmental

impact of product and packaging

Environmental impacts of supply chain quantified

and options for improvement identified, e.g.,

reduction of energy use in warehouse operations

Understanding the implications of

carbon footprinting for Comvita

Assessment of carbon management options for

key customers

Development of overall approach to

managing product environmental

issues

Understanding of product environmental issues

across the supply chain and consideration of next

steps for other product platforms, e.g., olive

products

David Trubridge Quantification of product

environmental impacts

LED light fitting to lamp to avoid impacts in use,

flat packing of products reducing cost and impacts

from airfreight

Challenge negative assumptions

about the environmental impacts of

products

Environmental performance of product turned

into a unique selling point, e.g., seed system

Development of a coherent approach

to product environmental

management

Four new products designed to reduce

environmental impacts as a result of the life cycle

study, e.g., reduce transport and energy impacts

Mastip Determine business risk in supply

chain from European Union

legislation

Improved energy performance of product

including cost reductions

Environmental criteria added to product

development information

Provide information for customer on

environmental product performance

Quantification of product environmental impacts

NuFarm Understanding environmental supply

chain issues

Quantification of product environmental impacts

Internal review of performance New role created to support LCM activity and spot

market opportunities

Benchmarking and reporting for corporate parent

company

Verda Quantification of environmental

impacts in the supply chain

Market access via demonstration of commitment

to address and take the lead on product

environmental issues

Development of new approaches to

product innovation and value

creation

Waste cost reduction and incorporation of

environmental criteria in product design



6.8 LCM foundation activities

To enable successful LCM adoption, the research points to a sequence of six foundation activity areas. The first three foundation activity areas relate to the strategic alignment of LCM to the company and enablers and barriers in the set up of the project. The latter three foundation activity areas primarily support the implementation and continuous improvement of LCM. The six foundation areas are explained in greater detail below and are used to group and understand the key enablers and barriers experienced by each firm.

1) A strong business case. Building a relevant, clear and well-articulated business case for implementing LCM at an early stage is required to achieve LCM adoption. The Return on Investment (ROI) for LCM is often not easy to define financially (Mortimer 2009). The business benefits of LCM are relatively intangible and often need to be assessed in the medium- or longer term payback period. The intangible nature of many medium- or long-term benefits makes it difficult to justify LCM adoption when compared with short term business needs.

2) Across-board commitment of management. The management team must be actively committed to enhancing their business performance through adopting LCM. A stated commitment to improving environmental business practice is necessary but insufficient to deliver LCM adoption. A respected senior management project sponsor is normally required to support project activities, and cross-functional implementation must be supported by a number of senior managers to ensure ‘buy in’ to the decisions to start an LCM project.

3) Capability to initiate project. An important resource required to implement LCM is the LCM Champion. The champion will need adequate time allocated to coordinate and drive LCM. This research suggests that failure to resource LCM adequately will lead to a disintegration of activity. Medium- or large-sized companies may have an advantage in this respect as they may have the scale to invest in an LCM Champion more readily than smaller organisations. However, more important, the champion selected must be up to the task. Champions must be effective and experienced change agents, respected by their peers, and have a range of skill including the ability to influence others regularly. The champion should sit at the right level in the organisation to effect change and have regular access to senior management and other influential personnel.

4) Integration of LCM across business functions. LCM is a management framework, not a single tool or role for one department. LCM adoption affects most key business functions and integrated cross-functional implementation is a major factor for success. LCM adoption will falter if the actions are dependent on the efforts of just the LCM Champion or single department. For a company to adopt a life cycle approach successfully, business functions such as R&D, marketing, sales, supply chain, and operations must all be actively committed to supporting LCM action; thereby taking ownership and driving forward positive action to integrate life cycle thinking into day-to-day business decision making. Actions that demonstrate that LCM adoption has clear senior management backing and is producing positive change demonstrates a clear commitment to other staff that increases buy-in for ongoing improvements.



5) Supply Chain Management. One of the main factors that distinguish LCM from many other environmental management frameworks is that it focuses on a product’s environmental impacts across the whole supply chain and beyond. Product-orientated environmental impacts often occur either upstream or downstream of the product manufacturer. In all the products of the case studies examined during the project, significant environmental impacts were found in the supply chain. While adoption of LCM requires a committed shift over time to addressing impacts in the supply chain, attempting to address such impacts is difficult and often requires perseverance when the impacts are caused by other operators.

6) Commitment to continuous improvement. Like any other business activity, continued LCM adoption needs to be managed robustly and seriously. To ensure this, LCM activity must not only be integrated across relevant business decision making and embedded in day-to-day projects, but should also be periodically reviewed, re-prioritised and re-focused in line with other business review processes. This reflects the fact most business improvements are achieved incrementally rather than in one large transformative step. An important activity in maintaining a commitment to continuous improvement is renewal of the business case. While a defined business case is critical, maintaining and continuing to reinforce the business case is also essential to on-going implementation. The reasons for doing LCM activity may frequently not be believed, prioritised or acted on by different members of staff across an organisation, and LCM activities can easily be overlooked under pressure to achieve other pressing, short-term business priorities.

In the diagrams below these foundation activity areas have been arranged horizontally in the sequence described above, while key enablers and barriers for each area are arranged vertically.

In total each company could have experienced 23 potential key enablers and 22 potential key barriers. In each case it is the pattern of the different enablers and barriers in combination with the balance between these factors that provide the greatest insights into LCM adoption.

The qualitative research used with the firms was able to follow the companies closely during the adoption process and facilitated a number of important insights about the adoption of LCM. However, due to the small sample size it was not possible to determine definitively which enablers and barriers are more important than others. The same enabler or barrier might be have been experienced by several different companies but each firm might attach a different level of importance to a particular enabler or barrier. It is therefore not possible to identify with absolute certainty patterns in the barriers and enablers to show that one is more important for LCM adoption than another and must be addressed above all others. Generally in this study (and in the diagrams below) each of the key enablers and key barriers has been treated as equally important. Further research is needed to test the applicability of the key enablers and barriers with a larger sample of firms in the manufacturing sector to identify whether any should be given greater importance than others.

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Figure 2 Key enablers and key barriers identified at AHI (highlighted in bold). Enablers and barriers not in bold were not experienced directly by AHI but by other firms.

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Figure 3 Key enablers and key barriers experienced at Comvita (highlighted in bold). Enablers and barriers not in bold were not experienced directly by Comvita but by other firms.

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Figure 4 Key enablers and key barriers identified at David Trubridge (highlighted in bold). Enablers and barriers not in bold were not experienced directly by David Trubridge but by other firms.

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Figure 5 Key enablers and key barriers identified at Mastip (highlighted in bold). Enablers and barriers not in bold were not experienced directly by Mastip but by other firms.

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Figure 6 Key enablers and key barriers identified at Nufarm (highlighted in bold). Enablers and barriers not in bold were not experienced directly by Nufarm but by other firms.

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Figure 7 Key enablers and key barriers identified at Verda (highlighted in bold). Enablers and barriers not in bold were not experienced directly by Verda but by other firms.



7 Company profiling

In order to provide greater depth to the analysis of key barriers and enablers for each company several important firm characteristics were investigated to establish whether they had influenced adoption of LCM. These characteristics and the influence of several other aspects of the project are discussed in this section.

The literature suggests successful implementation requires sustainability to be internalised as a cultural value, rather than relying solely on there being a sound business case based on financial indicators (although the business case is no doubt a critical enabler as discussed in the main report). The next few pages examine the general cultural approach to environmental issues within the firms. The discussions below on the reasons for adopting LCM, company size, product type, market type and growth strategy all have an influence on the firm’s culture.

7.1 Reasons for adopting LCM

The views of customers are seen as key enablers for addressing environmental issues. All the companies in the project cited increased customer demand for information as a significant driver for LCM adoption and an important part of the business case.

Both David Trubridge and Comvita joined the project in the first instance to find out about methods for quantifying their environmental impacts, e.g., through completing the life cycle studies. However, there were usually other reasons for joining the project, e.g., Comvita hoped the management framework would take hold and change the way they addressed environmental issues. Several firms, including Comvita, David Trubridge and Verda, wished to join the project in the hope of growing their business in their environmentally sensitive export markets.

In all of the firms there was a reasonably high degree of congruence between the goals of LCM and the company’s strategic direction at the start of the project, but this was achieved in different ways. For example, AHI Roofing, Mastip, and Nufarm are more traditional manufacturing firms, where environmental issues have typically been considered part of their organisational values. By joining the LCM pilot project, these firms wanted to broaden the focus of their environmental activity, and in part to understand how the environmental issues affected their products.

Organisational and brand values

Organisational values describe the psychology, attitudes, experiences, and beliefs both personal and cultural of an organisation. For example, AHI and Nufarm had invested in site-specific Environmental Management Systems (EMS) in one form or another for several years before tackling LCM adoption. For both AHI and Nufarm minimising the risk to the business posed by addressing relevant environmental issues at a local level has been a part of daily operations and site-related decision making, driven partly by organisational values and partly by a desire to comply with local environmental legislation.



AHI, Mastip and Nufarm all work in more traditional manufacturing sectors (e.g., agri-chemicals and metal processing) where environmental issues have tended not to be defined as part of the brand values of a company, but are considered as an aspect of the manufacturing process, and hence a part of the organisational values. Environmental issues also tended to be viewed as a mechanism for proving competitive advantage or a response to future perceived changes in the market (future proofing) rather than being linked directly to the brand of the company. The result was both competitive advantage and future proofing featured heavily in the business case for LCM of these companies.

Comvita, David Trubridge and Verda all have environmental considerations as a key element of their brand values and aim to express this as a part of their positioning in the market. Brand values can be defined as values expressed and embodied in an organisations brand, where a brand is the identity of a specific product, service, or business. Brand factors relate to how an organisation wishes to portray their company externally but also can have indirect impacts on internal perceptions of employees. For example, at David Trubridge nearly all employees identify closely with the brand of a company and believe their actions contribute to realising the sustainability of the products produced.

Whether it is more important to have an explicit commitment to addressing environmental issues as part of the brand value rather than as part of the organisational company values is not clear from the results of this study. However, it is reasonable to say that both Verda and David Trubridge often referred to their explicit brand commitment to tackling the issues raised in the project as a justification for action when a direct financial benefit could not be identified. A previous partial exposure to or experience of dealing with environmental issues was a beneficial enabler for the adoption of LCM. Companies often start with some organisational values of environmental issues, e.g., managing site-related issues as with AHI and Nufarm, then realise there is more to be gained by addressing environmental issues up and down the value chain. In contrast, Mastip’s previous exposure to dealing with environmental issues either at organisational or brand level was weak; this posed an important barrier to the adoption of LCM.

In summary, developing a response to LCM based on brand values is a good basis for establishing adoption, and is therefore an enabler. However, a more traditional company approach to site-related environmental responsibility is also a good basis from which to develop LCM adoption. It is not possible from the research completed to definitively state whether brand or organisational values provide the strongest enabler for LCM adoption. It is probable that interaction of other key enablers and barrier with organisational and brand had a greater influence in the six firms studied. Most importantly, for progress to be evident in day-to-day company decision making and operations it is imperative for a company to build a wider commitment to LCM adoption by demonstrating solid progress in delivering the company LCM project. Further research is needed to determine into the influence of brand and organisational on LCM adoption to improve the design of company LCM projects.



7.2 Company size

New Zealand is predominantly a nation of SMEs. For policy purposes SMEs are defined in New Zealand as enterprises with 19 or fewer employees. 97.2% (463,278) of enterprises in New Zealand fit into this range meaning, and SMEs dominate in most industries (MED 2009). When compared with the definition of SMEs in other countries most of New Zealand’s SMEs would typically be classified as either micro or small businesses. For example, the EU classifies businesses with fewer than 250 employees as medium enterprises, fewer than 50 employees as small and fewer than 10 employees as micro (European Commission, 2011). Using the New Zealand classification system only David Trubridge out of the firms that joined the LCM pilot project would be considered an SME. The other five firms would classify as larger businesses. However, compared to other measures even the larger participants in the LCM project would be considered as medium sized enterprises.

It is easy to assume that larger companies are better equipped to manage the process of LCM adoption than the smaller SMEs in the project. Larger companies are usually expected to have more funds and resources available to complete adoption, but from the results in this study the size of the firms had a limited but important influence on the overall adoption of LCM.

While staff resources and time needed for LCM were underestimated by all the firms, the smaller companies performed better in some respects than several of the larger participants, e.g., in communicating the benefits of LCM to all employees and in product innovation. In other respects, however, there is little doubt the small size of David Trubridge was an inhibiting factor in their ability to address some aspects of LCM, e.g., the ability to address issues involving the performance of suppliers or invest in a dedicated LCM Champion. The costs associated with training (i.e. attending the workshops) were also relatively high for the smaller companies.

In relation to internal communications, both size and stability appear to matter. Communications appeared to have been most successful in the small firms (David Trubridge, Verda) where informal relationships dominate and in large firms where often well-established communications mechanisms are in place. Communications appeared to be most problematic in Mastip and Comvita, both of whom were experiencing difficult production demands that acted as a barrier to adoption. In contrast, the ability of the larger firms (AHI, Nufarm and Comvita) to communicate and integrate LCM across functions depended both on having effective formal processes and on the degree of influence the LCM Champion had across each organisation. However, these two barriers were tempered by enablers due to brand or operational values held by company employees to deliver the project objectives.

7.3 Type of product

LCM was applicable to all the products made by the firms. All the companies in the project manufacture physical products in the traditional sense, none were purely service providers. Compared with a laptop or a car, the products of the project companies are not particularly complex. Even so, the products made by each company are of high quality and often have to be manufactured within tight production specifications with unique specialist skills, methods, or technology.



Tight product specifications were often viewed as a barrier to LCM adoption because products had to be made with certain materials and in specified ways to meet customer requirements. In such a situation the options for product innovation to address environmental impacts often appear limited. The barrier posed by tight specification may be compounded by issues surrounding the cost and time needed for effective research and development into new materials.

The influence of this barrier was most pronounced in the cases of AHI, Mastip and Nufarm, where it was believed that the ability of the company to change the product in order to solve potential problems was restricted. Comvita, Verda and David Trubridge have greater flexibility in both the design and the production of their products.

7.4 Market type

Probably more important than product type were the companies’ supply chain and the firms’ relationships with different customers. The only company with a strict business-to-business relationship with their customer was Mastip, which is a specialised component supplier for other businesses making plastic parts that are later incorporated into finished products, e.g., caps for soft drink bottles. All the other companies supply their finished product to a third party where it is assembled, installed or sold, e.g., Comvita’s honey products are often sold by retailers in export markets.

The specific market drivers for each of the individual firms in terms of environmental product performance are important. All companies had collected some information on end-user views regarding their product. In most companies a push down the supply chain on the company could be observed where end-user views were represented through the increased emphasis on product environmental issues by other members of the supply chain, e.g., procurement surveys sent out by retailers.

The ‘natural’ product companies (e.g., Comvita, David Trubridge, Verda) may have less to prove, but their commitment to environmental performance is expected. The key issues for these companies are reputational and business risks associated with not meeting demanding customer expectations.

It is interesting that both the companies furthest up the supply chain from the product end-user, AHI and Mastip, do not foresee an opportunity to grow business in environmentally conscious markets as an enabler for their company. This suggests that the more business-to-business orientated the supply chain the harder it is to define a business case based solely on customer demand and that other factors need to be considered. In the case of Mastip the type or a limited number of customers the company has in the middle of the supply chain may not be aware of customer or care about the end users concerns over environmental issues.



7.5 Influence on supply chain

Influencing the supply chain was seen as a major barrier to implementation of LCM by most firms. The companies believed they had few options to change the activities of other supply chain operators. Several important barriers were highlighted in this area including the relatively low value of the business of the case study firms represented to major suppliers, limited alternative options, and increased costs. The firms in the LCM pilot project also often suffered from difficulties in changing the design or specifications of products supplied to them even when they had a good relationship with the supplier. If a firm competes for the supplier’s attention with a major company their requests are ignored. For example, Comvita had tried on a few occasions to change the design of packaging of several products but the suppliers main focus was supplying these products specifications outlined by the much larger (in terms of value) Colgate.

The inability to address issues highlighted in the supply chain was a common barrier among the firms. AHI was the only company that felt equipped to manage their supply chain with confidence both upstream and downstream in the supply chain. Although changes have yet to be driven through the supply chain, the company perceives that environmental aspects are ‘part and parcel’ of good business practice among suppliers who operate responsibly. The extra influence that AHI receives as part of the Fletcher Building Group probably plays a large role in addressing issues within the supply chain. This illustrates the power of collective arrangements between companies and large business groups to increase buying power when addressing environmental impacts across a supply chain.

7.6 Growth strategy

Comvita, Mastip and Verda were aggressively attempting to grow the size of their business through different mechanisms throughout the project. Three types of growth were exhibited by the companies in this survey: growth in term overall market was experienced by Mastip; growth by acquisition was experienced by Comvita; and growth of market share was experienced by Verda.

Comvita entered the LCM project towards the end of this growth phase when the company was searching for methods to consolidate and standardise operations across their different product lines. Mastip’s growth was aimed mostly at boosting orders and sales with companies based in Asia. In both situations, while LCM fitted relatively well with the strategic direction of each company, it was often considered secondary to strategies for growth and associated operational requirements.

The approach to growth at Verda can be distinguished from that at Mastip and Comvita. In Verda’s approach, LCM activity was viewed as more closely aligned to company growth strategy rather than as a competing objective. Product innovation is central to the company’s growth strategy, where demonstration of product performance and improvements to the service provided by the product were prioritised. In Verda’s approach the focus on product innovation can extend to design, supply, production, distribution and end-of-life management. The differences in approach listed above are not intended to suggest that Mastip and Comvita do not concentrate on product innovation but to highlight the interaction of LCM with the different growth strategies observed in the project.



7.7 Data Issues

The early stages of LCM adoption are often data intensive and introduce new requirements for data collection, retention and management. In the project three types of data were targeted: 1) data for developing an EMS within the Enviro-Mark scheme; 2) data for the LCS; 3) companies were surveyed to establish the financial benefits of LCM. The case study firms were given support by the Landcare researchers, Enviro-Mark consultants, and Business New Zealand to collect data for these aspects of the project.

In several cases the companies struggled with the new data requirements and often lacked systematic processes for management of relevant data. This is unsurprising, given that most companies are inexperienced at collecting data to tackle environmental issues, and there is likely to have been little business incentive in the past to collect data of this nature.

AHI, Nufarm and Mastip were the companies best equipped to provide data for the LCS and other project activities. AHI, for example, had collected useful data during the development of their ISO 14001 EMS; with advice and support the company was quickly able to provide the details needed for the LCS. AHI and Nufarm both generated environmental data for reporting, but this was the result of higher corporate initiatives rather than their own LCM adoption activity.

Nufarm had data collection systems e.g. energy management systems included as part of process management to ensure regulatory compliance. Mastip had collected considerable amounts of process data as part of their reengineering project but did struggle with the broader data needed for the development of the EMS including information on environmental legislation that affected the company.

The remaining firms did not have a historical basis for the collection of data and struggled sometimes with data collection tasks. In the case of David Trubridge the reasons relate heavily to their small size and lack of resources, e.g., it was harder for a smaller firm to allocate the resources needed to capture and retain important data. Verda did eventually manage to respond to several different demands for data after collating data from their Lean project. At Comvita, competition of LCM with other ongoing projects and the lack senior management engagement reduced the effective ability of the champions to collect data for the EMS and LCS.

Financial and environmental data

To determine the potential economic benefits associated with companies implementing LCM, a survey of the case-study companies was conducted by Business New Zealand at the outset of the project (Pask 2010). In 2009 a survey was emailed to the six companies with several follow-up requests for information.

The survey aimed to obtain information at the beginning of the project and to analyse any significant changes at a later stage to determine the economic benefits and costs associated with the introduction of LCM. Two sets of data were examined: the first looked at generic (aggregate level) financial and environmental data for the various companies; the second targeted specific product data related to environmental issues for the company’s selected product, e.g., the same product studied in the company’s LCS.



The information provided differed widely between companies, but overall the information available on environmental issues/costs was generally scarce. There are several probable reasons for this:

• The general absence of sound basic data on environmental issues (water, waste and emissions). With hindsight, this should not, perhaps, have been totally unexpected, given the project was a new departure for the companies involved (hence the reason for joining the LCM project in the first place).

• For some companies, environmental issues (waste, emissions and water) are not commonly thought to be a big determinant/cost of their production process and hence weren’t monitored.

• The firms (with exception of Verda and Mastip) generally lacked the necessary technical expertise required to capture the data (economies of scale) was likely to be lacking in some cases.

• In at least one company the confidentiality of financial data was a major issue.

The difficulty that most companies had in defining key financial or environmental metrics such as energy use, transport and waste at the company or product level related to LCM highlights the difficulties the firms often faced when defining the need for LCM adoption activity in the face of competing priorities of objectives, e.g., accountants were not well motivated to provide useful financial data. In some cases it was hard for the firms to obtain individual accurate data as information was aggregated for a number of tenants on their industrial estate.

For some companies, the lack of any effective and efficient way of pricing environmental factors meant they had not adequately considered such factors. The general focus of most reporting is simply on bottom-line financial reporting, consistent with financial reporting standards required for audit and tax purposes. It should also be noted that few New Zealand businesses have reporting systems that focus on anything more than financial indicators, and corporate responsibility or environmental reports are rarely produced. Given the relative infancy of LCM in New Zealand, there is a lack of internal or external resourcing available to companies to compile relevant information.

7.8 Time in LCM project

Most of the case-study companies joined the LCM project at the same time, early in 2009, with the exception of Nufarm, who entered the project in December 2009. The experience of Nufarm compared with the other firms in the project may provide further insights into LCM adoption. Fifty percent of Nufarm’s training workshops were completed on a one-to-one basis usually via video conference. The remaining 50% were completed with the group of other case study companies. There is little direct evidence that the fast-track process completed by Nufarm neither improved nor hindered adoption of LCM. It is more probable that the business driver, e.g., their focus on domestic rather than export sales, has been the overriding factor in their form of LCM adoption.

Nufarm experienced similar enablers and barriers as other firms in the project but was also observed to struggle with some of the elements of the project, particularly when a great deal of strategic thinking and input was needed in a quick period of time. Therefore, Nufarm



needed extra support and greater advice from the research team than the other companies. As might be expected, this would suggest that the faster the LCM training and project are delivered the more flexible and targeted the support for LCM has to be.

8 Life Cycle Studies (LCS)

The LCS provided new data and environmental information that acted as enablers for LCM. The main aim of the studies included identifying the environmental impacts and areas of potential concern (‘hotspots’) to create a foundation for environmental improvements. The LCS was beneficial to all the companies and for most represented an essential tangible demonstration of participation in the LCM Project. The results of each companies LCS are summarised in Figure 8. The results show that important environmental impacts were identified in the supply chain for each of the products included in the LCS. Rarely were important environmental impacts identified from on-site activities.

The data obtained from the LCS have been used by the company in a number of useful ways including:

• aiding product and packaging redesign, e.g., flat packing kit sets of products exported to reduce environmental emissions from transport

• identifying areas for the reduction of energy use and waste generation on site or within the supply chain

• reducing the transport of product components before assembly

• investigating environmentally preferable materials for use in products

• providing information for key customers on the environmental product credentials

• using the data for internal or corporate planning in relation to reduction targets, e.g., response to Carbon Disclosure Project

• highlighting the need for environmental criteria in product development

• targeting areas for further research, e.g., by the students in the project.

Another major benefit of the LCS is that the process of completing the studies deepened each firm’s understanding of how to address issues within their wider supply chain. In most cases the results highlighted important impacts in areas of the supply chain other than the firm’s site. Issues both upstream and downstream of the company provided examples of areas where the companies needed to take additional responsibility for the product’s environmental credentials to reduce environmental impacts. For example, David Trubridge is now actively seeking to provide the correct light fittings and bulbs to promote energy efficiency and reduce impacts from energy use in their major Australian export market. Also in response to the LCS, David Trubridge has redesigned a number of their new products to reduce environmental impacts after learning from the study where these key impacts are.

The LCS positively informs companies’ knowledge about their product environmental impacts, and can determine improvement areas and potential actions. While product change may not be immediately possible, firms appreciate the understanding and rigour LCS brings to their environmental thinking, despite some companies finding aspects difficult to handle.



Verda, Nufarm and David Trubridge in particular are now thinking differently about product design and packaging use as a result of the influence of the study, and these companies, together with AHI, have made changes to their product development process to incorporate aspects that will raise future environmental consciousness. In these four companies the studies and refinement of the product development process are enablers for LCM.

Supply Production Distribution Use Disposal AHI

Supply Production Distribution Use Disposal Comvita

Supply Production Distribution Use Disposal David

Trubridge

Supply Production Distribution Use Disposal Mastip

Supply Production Distribution Use Disposal Nufarm

Supply Production Distribution Use Disposal Verda

Figure 8 Aggregated results of LCS for the six case-study firms showing areas (red) where important environmental impacts were identified within the supply chain. In this diagram production represents on-site activities.

While all companies gained benefits from the LCS completed, the use of the study in itself was not enough to facilitate improvements within the firms without further support and training. Comvita and David Trubridge both found the LCS results were difficult to interpret and did not necessarily make management decision making any easier. Ongoing support and advice were provided to firms so they could gain a better understanding of the results, as it was observed that it can often take some time for the implications of the study to be fully understood.

Both the strategic alignment and timing of the LCS are often important to the overall LCM project. First, the LCS needs to be strategically aligned with the needs of the company. For example, in some cases the case-study firms decided after joining the LCM pilot project that they would have preferred to undertake a carbon footprinting study rather than a more comprehensive LCS identifying a number of different environmental impacts. In this situation the impact of the LCS results was less effective because the company was only interested in a small segment of the results provided in the study. The LCS study results include useful information related to carbon emissions but are not the best method to provide



a carbon footprint suitable for use in marketing materials, which was frustrating for some of the case-study companies.

The LCS study can have a significant influence on LCM adoption activity so the timing of the study should be considered carefully. If the LCS study is delivered too early in the adoption process a company may not have had sufficient time to decide how best to use the study and this may lead to pressure to redo the study with an alternative scope. In cases where the LCS is delivered too late, companies often wait for the results of the study before attempting other activities, thereby slowing and reducing the effectiveness of the adoption process.

9 Student projects

An important element of the LCM project design was the intention to train up to six students in life cycle techniques so as to provide extra capacity for the case study firms during the process of adoption. Three Masters-level students played an active role in the adoption of LCM at Comvita, David Trubridge and Nufarm. All three students were trained to do LCS over 2 days in a training workshop. In the remaining companies it was not possible to place a student with interests that matched the needs of the project outlined by the company.

At David Trubridge and Nufarm the projects included collecting data and analysing different scenarios as a further development of the LCS completed at each company. At Comvita the project was used to investigate the options for product carbon footprinting that would best suit the company’s needs. In all three cases the students made a valuable contribution to removing barriers to data collection in the LCS or developing responses to key environmental impacts.

10 Environmental Management Systems (EMS)

At the start of the LCM project all the case study companies were entered into the Enviro-Mark environmental management scheme, free of charge, for one year.

The main reason for including Enviro-Mark in the project was to ensure all the firms had a structured method for addressing on-site environmental issues alongside any activities that would need to be addressed in the supply chain. If used successfully by firms an EMS can provide an important foundation for building towards LCM adoption. This was clearly observed at AHI where the work towards gaining ISO14001 certification meant the company had addressed many of the important barriers for data management (see section 6.1).

Several firms, including Verda and Comvita, struggled with the requirements of Enviro-Mark due to resource conflicts with Lean and other projects. As Enviro-Mark was important to some firms and not relevant to others, its (or other equivalent EMS) strategic relevance to the business case for LCM at each firm should be determined at the start of an LCM project and not made a blanket requirement (Mortimer 2011). The experience of the case-study companies with Enviro-Mark was mixed; both Comvita and David Trubridge renewed their membership of Enviro-Mark after the initial subscription ended. However, a number of companies did not necessary find a strong business case for actively participating in Enviro-Mark. For example, AHI had been working towards an ISO14001 certified EMS scheme.



AHI initially thought that achieving Enviro-Mark platinum would be a good preparation to test their readiness for the ISO14001 certification audit but AHI eventually decided to go for a pre-qualification audit for ISO14001 rather than Enviro-Mark because of the standards greater recognition for their key stakeholders. In the case of Nufarm the company was looking for a system for onsite emissions that would resonate better with the chemical industry than Enviro-Mark.

11 New Zealand and international adoption

One of the important questions the LCM project aimed to address was whether enablers and barriers to LCM in New Zealand are different from those typically experienced in adoption internationally as described in the LCM international literature review (Mortimer 2011).

To address this issue the enablers and barriers identified in the case-study firms were re-examined and compared with the enablers and barriers identified in the international literature review. Figure 9 (next page) shows the organisational change model and the different factors effecting organisational change that enablers and barriers were categorised into during this process. The model is based on institutional theory developed in European and New Zealand research and includes previous findings by Landcare Research.

Twenty-two enablers and barriers identified in the literature review are highlighted at the organisation level by the experience of the six firms in LCM pilot project. The majority of these enablers and barriers fell within the organisation-related activities, as shown in Table 2. As the six businesses in the pilot project cover a number of different business sizes and SMEs it is possible to cautiously assume the experience of the firms is generally representative of the potential experience of many New Zealand companies in adopting LCM. The full set of enablers and barriers identified in the literature review is provided in Table A2.1 in Appendix 2.

A simple comparison of the findings from this study with the literature suggests there is a strong overlap between the enablers and barriers identified in the project and those in the literature. The project does not provide substantial evidence to suggest LCM adoption differs widely in New Zealand from the international experience detailed in the literature. That said, LCM adoption does face well-known national contextual issues associated with doing business in New Zealand, for example, distance to market, and being situated in a small market often lacking alternative suppliers. Table A2.2 in Appendix 2 shows the full results of the comparison between the LCM project and the international literature.

One area highlighted strongly in the literature (Mortimer 2011) but not considered of direct relevance by most of firms for LCM adoption was the influence of change management. Successful adoption requires the ability of the firm to learn and innovate, and to do so in a way that reflects on their underlying assumptions. If a firm develops a conscious culture and the processes to enable the members of the firm to reflect on their practice this enables people to shift their basic assumptions/values. The LCM pilot project emphasised the importance of change management for LCM adoption at several points during the training including during strategy development and through a workshop aimed at highlighting particular issues of importance.



Figure 9 A model for change for sustainability and associated factors (source: Mortimer 2011 adopted from Potter et al. 2009).

It is difficult to know definitively whether the LCM Champions and firms broader views on change management were reflections of the training they received in the LCM pilot project or a reflection of a more deep-rooted adverse attitude toward the issue in general. However, the importance of change management to LCM was generally underestimated and some of the LCM Champions were observed as passive rather active players in the change process waiting for senior management to take the lead rather acting proactively. In some cases the Champions felt they did not have the authority, ability or skills to ‘sell’ change to other key players without help from senior management or the Landcare Research team. This led many champions to seek more active involvement of senior managers in LCM adoption and is reflected in the need for an active senior management sponsor as key enabler for the majority of firms.

Another important tenant of LCM adoption is that firms have to address activities beyond their immediate sphere of influence, control and traditional responsibilities (Mortimer 2011). This requires significant shifts in the institutional norms within and between firms. Firms have to respond flexibly to customer requirements in an increasingly complex and rapidly changing environment and this often requires close cooperation between firms in a supply



chain. Therefore firms wishing to accelerate LCM adoption have sometimes developed more collective forms of cooperation. These forms of cooperation are separated by two different approaches. The first involves going it alone as the company sees a competitive advantage in distinguishing itself from its competitors. The second form of cooperation involves developing industry standards and is usually a response by a group of competitors to a sector wide threat (a new threat to the market from a customer voluntary and legislative requirement).

The benefits of cooperative approaches include fostering closer relationships, enable cost sharing, increased bargaining power and reduced transitional costs (Mortimer 2011). However, most firms in the LCM pilot project could not identify solid opportunities for cooperation in either the hub or go it alone approaches. The low influence the firms generally felt they had on their suppliers may have played a role in forming this view. Competition between companies within a small market such as New Zealand is believed to often prevent the use of LCM cooperative approaches. Some firms suggested competition often made it difficult to develop cooperative approaches because companies are often wary of providing data that may provide their major competitor(s) with a product, marketing or sales advantage.

Once LCM adoption has progressed to an appropriate level of maturity within a firm it is natural for firms to want to leverage some advantage from their successful implementation through informal and formal marketing and sales routes. The literature suggests that firms that have had success with green products have generally undertaken a very proactive sales approach and have distributed in mainstream outlets. A potential difference between the participants in the LCM pilot project and the international experiences is the ability of the companies to communicate the results of LCM adoption. None of the firms in the LCM project felt comfortable communicating the results of adoption activities. In most cases the firms believed they had not developed the experience to communicate effectively on these issues and translate outcomes into messages their customers would easily understand. This barrier is partially highlighted in the enablers and barriers diagrams above as lack of environmental reporting in NZ. Without further research it is difficult to establish if this situation would change with time as greater experience with LCM is gained or whether this is a real or perceived difference. However, it is an issue that should be given further consideration to enhance the uptake of LCM in the future.

Finally, the research also highlights the short-term business case (preferably containing a solid understanding of the potential financial rewards) as the main means of facilitating LCM adoption in most of the firms included in the project. However, the LCM pilot project was also completed during the recent global economic recession and this event undoubtedly influenced the firms' approach to LCM adoption, e.g., emphasising the need for quick financial wins. Further research is therefore needed to investigate whether this finding would represent a true reflection of widespread LCM adoption.



Table 2 Enablers and barriers explicitly highlighted during the LCM project from those described in the international literature at the organisational level

Adoption factor

categories

Barriers Enablers

Bro

ad

er

syst

em

1. Societal,

institutional,

regulatory and

market drivers

Limited knowledge about

customer views and important

environmental issues to

customers

Org

an

iza

tio

na

l fie

ld

2. Ability to

implement supply-

chain environmental

management

Company (or group) is a major customer

for materials used in product

3. Customer demand

and firm’s marketing

approach

Increased customer demand for product

environmental information/ reduced

product environmental impact

Org

an

iza

tio

n

4. Clear strategic

intent and ability to

tailor LCM to firm’s

context

Low engagement by board/

senior managers in developing

LCM

Competing firm priorities (e.g.,

rapid growth, other

programmes)

Lack of corporate

environmental reporting in NZ

Culture of investment for long-term

strategic benefits

Sustainability/ environmental performance

issues already embedded in operations

Sustainability/ environmental values held

by senior managers

Influential senior management LCM

sponsor

5. Cost/benefit of

LCM adoption

Delayed & intangible nature of

LCM benefits, e.g., hard-to-see

benefits at the outset of LCM

process

Desire to penetrate environmentally

conscious markets

6. Ongoing

commitment and staff

support from

management

Lack of staff resources Dedicated LCM Champion role to act as

focal point of activity (possibly easier for

larger firms)

7. Existing

sustainability culture

and practice

Alignment with other initiatives, e.g., LEAN

or EMS

Environmental objectives in staff


8. Ability to apply

LCM pragmatically

throughout processes

and functions

Limited materials or supplier

options, e.g., aspects of

product process cannot be

changed

Lack of firm data to

demonstrate LCM business

performance

Formal written procedures, e.g., for

product development

Early tailored internal communications

either informal for small companies or

using established communication

mechanisms for larger firms

9. The firm’s ability to

learn and change

Inability to link change to

ongoing business case aims

and goals producing a weak

business case

Lack of data to monitor or

drive change to support LCM

performance



Adoption factor

categories

Barriers Enablers In

div

idu

al

10. Influence and

skills of key staff

Non cross-departmental

approach to LCM

12 Implications and findings

While the research was conducted on a small sample of six companies, it was able to follow the companies closely during the adoption process, which facilitated the identification of a number of rich insights. The research indicated the smallest firms experienced common enablers and barriers in attempting LCM adoption. For example, it was harder for smaller firms (David Trubridge and Verda) to invest in dedicated champions and systematic of LCM.

The research provided numerous illustrations of how individual case-study firms were achieving the integration of LCM within business systems and culture, including:

• Integrating business sustainability into top level targets and reporting

• Integrating environmental actions into business planning, including personal objectives and short term incentive schemes to drive employee activity

• Aligning LCM with Lean implementation and using Environmental Management Systems to drive business efficiencies and increase growth

• Collaboration between marketing and manufacturing objectives to deliver LCM improvement projects of value to customers and the business

• R&D team redesigning products and taking them to market.

LCM adoption is being viewed as a process with long-term benefits, and the companies have so far only tackled the ‘low hanging fruit’ of LCM. None of the companies appear to have made much progress in addressing some of the harder to handle long-term issues, such as those related to supply-chain management and product end-of-life management.

None of the companies (except perhaps Verda) appeared to adopt the underlying philosophy of LCM in its fullest sense. For example, both the practical and cultural company changes needed to fully facilitate LCM were not fully accepted by the six firms involved in the pilot project. In most cases there is currently only limited evidence of integrated decision making across business functions. Was this because it was too challenging? Was this because expectations were too high? Or was it simply part of the developmental process and attitudes might have changed in a year’s time?

Despite the benefits provided by the LCS, students project and other formal element of the LCM pilot it would appear the last question is closest to the truth in this study. There is little doubt that the project required a number of intensive changes within a relatively short 18-month period. The intensive change required for LCM adoption within this project was therefore a factor in adoption, particularly as the firms usually underestimated the complexity of LCM adoption. This problem was compounded further if the company had little previous experience of dealing with environmental issues because of the steep learning curve required.



However, LCM adoption is often viewed an iterative process (Mortimer 2011) and therefore it is possible with future activities aimed at LCM adoption within the firms these issues would eventually become less influential. Most companies are now reflecting on the results of the project and identifying potential opportunities to go forward.

The research summarised in this report has identified key enablers and barriers experienced by the six case-study companies within the LCM project. In total, 23 key enablers and 22 key barriers have been identified. The key enablers and barriers are spread across six foundation activity areas that illustrate the sequence of LCM activities through set up and adoption in the individual firms.

Of the six foundation activity areas described in section 7 the most important in this study are strong business case, across-board commitment, and capability to initiate, which relate to the set up and strategic alignment of LCM with company’s goals. Those firms that experienced a strong set of enablers in the set-up foundation activity areas experienced a more coherent and deep-rooted LCM adoption. When firms experienced a high level of barriers in the set-up foundation activity areas adoption was problematic in the face of competition for time and resources from other important projects or other initiatives, e.g., company growth strategy.

While it was not possible to determine which enablers and barriers were relatively more important than others due to the small sample of just six companies, a major observation based on the research team’s experience is presented in the following paragraphs. The potential importance of the key enablers and barrier identified from the project are emphasised in Figure 10. The colours used in Figure 10 potentially illustrate the importance of different groups of enablers and barriers experienced in the study. Firms that displayed a large number of the key enablers in set up foundation areas, e.g., developing a strong business case, obtaining a strong board commitment and that had a strong capability to support LCM adoption displayed stronger adoption. In Figure 10 this is highlighted by green zone of the diagram. Firms that experienced a higher number of key barriers in the set up foundation areas (shown as the red zone in Figure 10) tended to achieve weaker adoption of LCM. The enablers and barriers in the amber zones in Figure 10 are usually important but tend to influence the form and nature of adoption but not the commitment to secure improvement through LCM adoption. For example, key barriers in the supply chain are important but other LCM adoption activities may be pursued if the firm displays a reasonable number of set up enablers have been experienced.

It appears the main reason why several companies, including Verda, AHI and David Trubridge, were able to make greater progress toward LCM adoption was the presence of a large number of key enablers in one or more of the three first foundation areas. For example, Verda experienced a high number of key enablers across all the three foundation areas. In the case of AHI the large number of key enablers experienced from good senior manager involvement and a strong capability to initiate LCM activity improved adoption.

While this appears relatively obvious in some respects it is important to understand that most of the firms tended to focus on issues related to the adoption through operational issues rather than thinking about how adoption feeds into the overall company strategy or affects the company culture for addressing customer needs.



Business case Board

commitment Capability

Supply

chainIntegrationContinuous

improvement

Enab

lers

Barr

iers

Barr

iers

Set up Adoption

Enab

lers

e.g. delayed nature of

benefits

e.g. gain market access

or increased customer

demand

e.g. competing priorities

or lack of influence on

supply chain

e.g. quick wins and

renewal of business case

Feedback

Figure 10 Findings from the six case-study companies showing the importance of strategic set up enablers to successful LCM adoption.

The LCM business case

Like many other studies a finding from LCM pilot project is that defining a clear and appropriate business case for LCM is of particular importance in the adoption of LCM. One of the major issues faced with LCM is that business benefits are often viewed as intangible during the set up of a company LCM project. Articulating the business case was an issue with which all companies struggled, even though benefits to the business were eventually realised. AHI roofing, David Trubridge, Nufarm, and Verda managed to recognise LCM’s long-term value to their organisation and achieved the most practical environmental and business win/win outcomes.

Given the experience of LCM adoption at Comvita, it is important to ask whether the company was suited to the aims and objectives of the LCM project from the outset. The answer would appear to be that while LCM may be aligned with a company’s general strategic direction, it may be secondary to other strategies for growth and to short-term operational requirements when senior management support is lacking during development.

The experience of LCM adoption at Comvita also indicates that short-term business priorities with tangible payback will frequently out-compete adopting the more intangible long-term LCM options. For this reason gathering relevant data and linking LCM adoption to financial



and environmental data wherever possible are advisable as this will support the ongoing business case for LCM adoption.

At some point during LCM adoption, quantification of impacts (e.g., through a LCS and monitoring and measuring) action becomes essential to support the adoption of LCM. The difficulties the firms experienced around into defining key financial or environmental metrics related to LCM aligns with the company feedback that identifying an appropriate business case is an important driving force in LCM adoption because without a clear business case collection of data for metrics is difficult to justify.

However, financial analysis alone may not be sufficient and embedding the business case for adopting an LCM approach requires persuasive and diplomatic skills, and concerted communication efforts. Developing a business case for LCM requires management to be more strategic and innovative in the way they think about addressing environmental issues and the economic benefits that can be obtained, particularly in the marketing of products and the requirements of the markets in which they seek to operate. Measures should also be taken to integrate LCM into the culture of the company including outlining a company commitment to the reduction of product environmental impacts.

Often employees involved in the project described their company’s consideration of strategic market threats or opportunities beyond the next six months as limited. This poses a significant problem for LCM adoption, which tends to work best on medium- or long-term strategic and operational objectives, e.g., developing new greener products, working with suppliers to reduce environmental impacts, future-proofing the business against upcoming environmental product standards, or growing market share in environmentally sensitive markets.

Company profiling

The literature suggests successful implementation requires sustainability to be internalised as a cultural value. The analysis of key barriers and enablers for each company was extended to consider their relationship to different important firm characteristics. Many of the characteristics examined have an important affect on business culture as well as the business case for LCM adoption in the firms.

Product type, company growth strategy, supply chain issues, and data management provided notable insights on why a firm experienced particular key enablers and barriers to LCM adoption. Smaller firms, e.g., David Trubridge and Verda, experienced common enablers and barriers in attempting LCM adoption. For example, while it was harder for smaller firms to invest in dedicated champions and systematic implementation of LCM; the firms’ small size made it easier to communicate to staff and integrate LCM across business functions. However, the experience of enablers and barriers by different firms, as influenced by the different characteristics, often showed no distinct trends, and the results often illustrated that a barrier for one company was not necessarily experienced in the same way by another firm.

LCM adoption in the New Zealand context

Is LCM adoption different within a New Zealand context? From this research the answer to the question is yes and no. The commonality of the enablers and barriers experienced both in



this study and in the international literature suggests that many of the experiences of the case-study companies are similar to those experienced by firms outside New Zealand. On the other hand, implementing LCM in New Zealand does face several well known national enablers or barriers that are generic issues associated with doing business in New Zealand, e.g., distance to market, being situated in a small market lacking alternative suppliers, etc.

LCM adoption requires firms to address activities beyond their immediate sphere of influence, control and traditional responsibilities and often this is achieved through cooperative action. The firms participating in the LCM pilot project believed the opportunities for cooperation were limited mainly due to a lack of opportunity, low influence on suppliers and the desire to avoid action that reduces competitive advantage. Another potential difference is in the confidence of the firms to communicate the results of LCM adoption. Most of the firms felt they did not have the experience to talk confidently about their achievements in LCM adoption. However, this situation might change as the firms gain more experience with using LCM principles and opportunities arise in key export markets that can be accessed by effective communication.

The research also highlights the short-term business case (preferably containing a solid understanding of the potential financial rewards) as the main means of facilitating LCM adoption in most of the firms included in the project. However, the LCM pilot project was also completed during the recent global economic recession and this event undoubtedly influenced the firms' approach to LCM adoption, e.g., emphasising the need for quick financial wins. Further research is therefore needed to investigate whether this finding would represent a true reflection of widespread LCM adoption.



13 Recommendations

The section draws on information from the final workshop of the LCM pilot project with LCM Champions as detailed in Mortimer and Hume (2011) and the literature review (Mortimer 2011). It is important to note that significantly increasing uptake of LCM across the New Zealand manufacturing sector is likely to require a broad strategic approach across a number of interested stakeholders. A number of possible recommendations are listed below.

13.1 Adoption recommendations

• Assessment of suitability: The research (including the literature review and programme evaluation) in this project shows that LCM is not suitable for all companies. It is therefore recommended that additional steps be developed to assess companies before they enter an LCM project. The assessment should focus on the strategic enablers and barriers identified in this research and are part of the development process for LCM adoption within the company

• Market intelligence: The business case for LCM adoption needs to be based on recent market intelligence and understanding of customer needs for environmental issues. Methods to provide greater support for companies to gain market intelligence via NZTE beachheads and other services should be considered. General market intelligence on development of opportunities and threats relating to the key concerns of the export markets should be circulated more widely within the business community. A number of organisations, such as NZTE, are undertaking pieces of this work but greater value may be created by pulling all the separate pieces together in an accessible product to be used by a range of different business sectors. This may be a role for an industry group or a government agency (e.g., NZTE or MFAT in similar fashion to their food and beverage export reports).

• Clarify the LCM business case: Developing a clear and coherent business case for LCM at the company level is essential to successful adoption. Being able to build, articulate and demonstrate business benefit (either in terms of productivity, earnings or access to new markets) is an area that needs further attention and is crucial as an underpinning for LCM adoption by export companies.

• Strategic board level adoption of LCM: LCM adoption requires strategic thinking and clarity about key environmental concerns within a company’s markets (see market intelligence above). An element of future LCM training within a company therefore needs to be targeted at and provide greater support for strategic adoption of LCM with senior management in the set up of the company LCM project. To ensure barriers to adoption are addressed, board-level commitment is essential before activities can start within an LCM project.

• An ongoing role of senior management: A senior management sponsor is needed to monitor and support LCM adoption activities by an LCM Champion and ensure access to key players during adoption of LCM. The senior management sponsor needs to be active in emphasising the enablers for LCM and overcoming barriers during adoption activities.

• Develop cooperative and collaborative approaches: The research highlights a lack of level or cooperative approaches to LCM activity in New Zealand. Sector level LCM



approaches were used successfully in the MAF Greenhouse Gas (GHG) Footprinting Strategy. The sector approach has facilitated carbon reductions both upstream and downstream in the supply chain and forged new links with customers and other supply chain operators. This sector-based model could potentially be adapted for use within sub sectors of New Zealand manufacturing (e.g., plastics, etc.). In cooperative approaches emphasis should be placed on facilitating greater information flow on environmental issues up or down the supply chain.

• Develop simple KPIs for companies related to LCM: LCM activity needs to be underpinned by a basic level of data collection, measurement and management. When companies do not have this information building the business case and demonstrating the benefits of LCM are difficult. Low-cost solutions to enable companies to collect data on waste, electricity, and materials inputs and outputs data should be explored and publicised to companies. Potentially where a sector has sufficient numbers of companies sector level performance indicators/benchmarking could help companies establish where they are compared others and show the improvements needed to meet best practice within the sector.

• Bolster credibility: LCM is a relatively new concept for many New Zealand companies. Options that boost the credibility of LCM, e.g., potential developing a standard and auditing process for LCM, still need to be developed. The objective of the standard and audit would not be to provide a visible marketing label for LCM, as such a labelling scheme would not necessarily be recognised internationally, but rather to provide a company with credible reference to discuss the robust processes underpinning the development of LCM adoption.

• Build greater understanding of enablers and barriers for industry sub-sectors: The qualitative research on the small sample of firms in the LCM pilot project has provided an in depth understanding of a number of internal and external factors effecting a firm’s adoption of LCM. To overcome barriers further research e.g. a quantitative survey of a wider set of firms, is needed to test the findings across a number of different industry sub-sectors and develop appropriate business led solutions. In recent years similar quantitative research has been conducted in Australia and Spain to inform both government policy and wider business initiatives in promoting adoption of proactive environmental strategies including EMS and LCM.

13.2 Recommendations to amplify LCM uptake in New Zealand

Successful amplification of the LCM pilot project requires more than just promotional and marketing activities but also work to facilitate the creation of an enabling environment for LCM in New Zealand.

• Develop case studies: Develop and communicate a range of LCM New Zealand case studies that demonstrates the benefits and difficulties of undertaking LCM and describe how different firms went about applying LCM. The LCM pilot Project has provided the basis for several very good case studies. Part of the challenge in doing this well is articulating the intangible benefits (e.g., improved staff morale) as well as tangible benefits realized.

• Build communities of practice: International experience (Mortimer 2011) indicates that building LCM communities of practice are important to the development of life cycle



approaches to environmental management. LCM Communities of practice do not need to be confined to one sector (e.g., the manufacturing sector) but should work well across sectors. This is the approach of the Swedish community of practice for LCA (which networks of different industries; academic institutes and government departments (see www.cpm.chalmers.se). In the short term a positive step towards building a community of practice could involve establishing networks for firms and staff implementing LCM, as this could help build the skill base within New Zealand and support LCM practitioners. The LCM Champions found the project workshops valuable as they enabled them to network with other people/firms undertaking LCM.

• Cooperate with other groups: In New Zealand, the recent formation of the Life Cycle Association of New Zealand (LCANZ) and the New Zealand Life Cycle Management Centre (NZLCM) to improve the use of LCM in the primary sector are positive initiatives. The NZLCM Centre, although focussed on the primary sector, offers courses for professionals from all background wishing to apply LCM to their products. These courses could act as potential pathway process for firms wishing to do further work on LCM in an organised programme like the LCM pilot project. For example, a representative of a firm that has completed a professional course at the NZLCM Centre may be interested in involving his firm in the LCM related training provided by an LCM project. The NZLCM centre is also working with LCANZ to create a database of essential data for completing New Zealand based LCS. LCANZ has started to run seminars on LCM, and the development of a series of workshops and seminars would help stimulate interest and provide professional network forums, e.g., on LCM adoption, LCA and design innovation. LCANZ is also developing resource materials for LCA information including information to help companies commission LCM research and interpret the findings of LCA studies.

• Provide supporting life cycle data: Identify common materials used by exporting firms, e.g., long-haul transport, and fund LCS that can be used to underpin Life Cycle Inventory (LCI) data development across the manufacturing sector or sub-sectors in New Zealand. Partnering with LCANZ is important in this process to build the business case for the development of LCI as they are looking at creating an open access life cycle datasets for widespread use by industry.

• Policy review: A policy review could be undertaken to assess whether there are any specific interventions which might be applicable to support LCM adoption in the manufacturing sector. The international literature review indicates that comparative institutional analysis with countries including Sweden for LCM, and Taiwan for Environmental supply chain management would be particularly useful (Mortimer 2011).



14 Acknowledgements

Landcare Research is grateful to the project partners and the six case study companies for the opportunity to have been part of the LCM programme. It has been very rewarding to witness the level of engagement by both the partners and the case study companies, and the energy exhibited by the LCM Champions. The LCM Champions for each company are listed below:

• Ray Shanley and Geoff Allan (AHI)

• Karoline Jonneson and Elisabeth Andrews (Comvita)

• Peter Tang (David Trubridge)

• Johann Saymann (Mastip)

• Brendan Redmond (Nufarm)

• John Gifford (Verda)

The authors wishes to thank Jonathan King (Landcare Research), Jake McLaren (McLaren Consulting), Rose Ryan (Heathrose Consulting), Sarah McLaren (Massey University), and Carla Coelho (Landcare Research) for their continued support and input into the analysis and presentation (including diagrams) of enablers and barriers results.

Thanks are also extended to all the others who worked in developing the research programme during that time, in no particular order they are: Timothy Allan (Locus Research), John Pask (Business New Zealand), and Christine Harper (Landcare Research).

The gratitude of the authors must also be extended to members of the Project Management Group not already mentioned above: Martin Knoche (New Zealand Trade and Enterprise), Jacinta Syme (Business New Zealand), and Jane Tier (Ministry for the Environment).

15 References

Comvita Ltd 2010. Natural performance: Comvita annual report. Te Puke, New Zealand, Comvita.

Lean Enterprise Institute 2011. What is Lean? www.Lean.org.

European Commission 2011. Small and medium-sized enterprises (SMEs): SME Definition. http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htm

Mortimer C 2011. Enablers and barriers to adoption of Life Cycle Management. NZLCM Centre Working Paper 01/11. Palmerston North, New Zealand, New Zealand Life Cycle Management Centre.

Mortimer C, Hume A 2011. The Life Cycle Management (LCM) pilot project evaluation. Landcare Contract Report LC 146 prepared for the Ministry of Economic Development, Wellington, New Zealand.



Potter N, McLaren S, Frame B 2009. Organisations, institutions and transitions to sustainability. Landcare Research Working Paper: LC0809/096 prepared for The Foundation for Research, Science and Technology.

Pask J 2010. Report on economics of LCM. Unpublished report prepared for the Ministry of Economic Development, Wellington, New Zealand.

McLaren J, Ryan R 2011. Life Cycle Management programme: final stage research report: a review of LCM implementation within six New Zealand Companies and the enablers and barriers to success. Report prepared for Landcare Research, Wellington, New Zealand.

McLaren J, McLaren S 2009. Life Cycle Management. In: Frame R, Gordon R, Mortimer C eds Hatched: the capacity for sustainable development in New Zealand. Lincoln, New Zealand, Landcare Research. Online at www.landcareresearch.co.nz/publications/researchpubs/bridging_lifecycleman.pdf

Ministry of Economic Development SMEs in New Zealand: Structure and Dynamics 2009, med.govt.nz, Wellington, New Zealand.

United Nations Environment Programme and SETAC Life Cycle Initiative 2007. Life Cycle Management: a business guide to sustainability. Paris, UNEP DTIE.



Appendix 1 – Glossary of Enablers and Barriers

The descriptions in this appendix are intended to provide further detail on the key enablers and key barriers used in Figures 1 to 7. Whenever possible the description is included here has cross referenced with those highlighted in the literature review detailed in Mortimer 2011 for consistency.

Key Enablers

Business case

• Desire to penetrate environmentally conscious markets: Alongside drivers associated with customer demand firms may be seeking to take advantage of opportunities that arise in a number of growing environmentally conscious export markets e.g. Europe. Legislation or voluntary standards may act as important triggers to shift businesses behaviour towards addressing environmental impacts from products.

• Sustainability in brand values: Having sustainability as a core company value and/or brand value is a good basis for establishing a culture to support LCM adoption. Companies expressing brand values associated with sustainability action are often more willing to seek and prioritise the greater understanding of environmental product performance delivered by LCM adoption.

• Increased customer demand: Globally, the business sector is facing increasing demand from stakeholders to improve the environmental performance of their products. Stakeholders include customers wanting green products, public authorities, employees and potentially local health impacts.

• Maintain customer to markets: Legislative, customer expectations, and competitor action mean in some markets it is essential to address LCM adoption to gain or retain access to that market. In such situations the environmental performance improvements from LCM adoption add to credibility in proving minimum market requirements are met or exceeded.

Board Commitment

• Senior LCM sponsor: Many firms in the LCM pilot project found that having an active senior management sponsor supporting the LCM Champion led to improved LCM adoption and helped overcome potential barriers to the company LCM project.

• Senior managers’ sustainability commitment: Owners, CEOs and senior managers commitment to address LCM adoption e.g., CEOs can have a strong influence on the direction of their organisations. If their beliefs, knowledge, and vision are aligned to LCM adoption and to improving environmental performance, they will lead and support LCM adoption within their business.

• Sustainability already embedded in operations: The presence of existing environmental values within a firm, particularly ones recognising that sustainability in a firm needs go beyond compliance appears to increase the level the level of LCM adoption. This is not surprise as firms with underlying assumptions concerning



environmental protection require less organisational change than others to achieve LCM adoption.

• Culture of investment in for long-term strategic goals: An investment approach takes into account long-term benefits and costs and weighs them against initial costs and firms that have a culture of implementing longer term investment projects tend to find it easier to define the business case for LCM adoption.

Capability

• Alignment with other initiatives: SMEs may be tackling more than one initiative simultaneously that are complimentary or can be integrated with LCM adoptions. For example, firms that integrated Lean and LCM adoption appear to provide examples of stronger LCM adoption than those that continued to operate separate projects for both initiatives.

• Staff driving influence and relevant skills: Staff supporting LCM adoption need to have a range of technical, communication and change management skills. Staff driving LCM adoption must be equipped with the skills necessary to positively tackle issues arising from the political and cultural characteristics of the organisation.

• Dedicated LCM Champion: Firms attempting LCM adoption benefit from a dedicated staff resource that acts as a focal point for activity. In many SMEs the availability of such resource should not be taken for granted and must be planned into LCM adoption. The champion must be given the time and provided with the resources to execute the role efficiently.

• LCM tailored to the firms’ goals: Company LCM projects tailored to the individual context of each firm appears to increase effectiveness of adoption. Therefore, LCM adoption plans e.g. training and communication must be tailored and refined to meet the firm’s strategic goals and objectives overtime.

Integration

• Staff across firm take ownership of LCM: LCM adoption must be supported by staff other than the LCM Champion. Staff must be empowered and supported to develop their own initiatives within their own departments and act to address issues that are most relevant to their day-to-day activities.

• Environmental objectives in staff performance evaluations: LCM adoption activities might often be sidelined by other pressing operational priorities. An effective way to avoid this problem is to include objectives relating to environmental issues of concern as part of annual staff performance review process. The objectives should be tailored and specific to the role rather than a reflection of general commitments.

• Formal written procedures, e.g., product development: Some firms will have development processes that are relatively informal, while other companies have a much more developed and systematic R&D and design process. For companies with a formal procedure it was straightforward to add environmental ‘prompt’ questions were added to the process to raise consciousness.

• Early tailored internal communications: Firms experienced positive results early and tailored communications, e.g., with visual performance indicators such as putting information



up on walls and identifying short key messages. Conversely, firms that had not commenced communications to staff early enough, found this resulted logjams at a later point because some staff did not understand why they were trying to do things differently

Supply chain

• Flexibility in production: LCM adoption will be stronger and more deep rooted where a company has a lot of flexibility in the design and production of products. For example, designing out product characteristics can be an effective method for reducing or eliminating environmental impacts up or down the supply chain.

• Buying power for product materials: Where a firm was a major buyer of product materials this enabled the company feel confident to negotiate changes supplier activities to reduce environmental impacts through LCM adoption.

• Close supplier and customer relationships: Long term or close supplier relationship may enable a firm to develop an effective partnership with others in the supply chain to address product environmental impacts.

Continuous improvement

• Reduced costs/ improved environmental performance realised: When cost savings and environmental benefits are demonstrated this acts as a strong catalyst for further improvements. Communication of benefits internally is essential to reinforce commitments to LCM adoption.

• Early focus on financial quick wins: SMEs tend to have a focus on financial bottom lines and on addressing day to day issues versus longer term strategic benefits. Therefore prioritising LCM adoption activities to achieve financial savings early on is important and helps to demonstrate that LCM is achievable.

• Increased depth of understanding and new ideas: Successful LCM adoption requires the ability of the firm to learn and innovate. If a firm develops a conscious culture and the processes to enable the members of the firm to reflect on their practice this enables people to shift their basic assumptions/values.

Key Barriers

Business Case

• Limited knowledge of customer’s views: SMEs are frequently less aware of international trends relating to environmental issues and have fewer resources to keep abreast of international trends in legislation and markets with regard to environmental issues. The effect may be more pronounced if the firm sits in the middle of a supply chain and has little or no contact with the product or service end-user.

• Eco-labelling confusion: Many firms that have been working on improving the environmental performance of their products would like to obtain a marketing advantage by obtaining an eco-label to distinguish their product from competitor products. However, eco-labelling can be confusing for customers due to the



proliferation of labels, while a lack of rigour in some eco-labelling formats can reduce customer trust.

• Customer resistance to pay more for green products: Previous investigations of LCM have shown that many businesses are sceptical about the ability of firms to charge a premium for green products. Firms often believe that consumers want green products at the same price and convenience of green products. Therefore important costs are incurred by LCM adoption but with little financial return.

• Intangible outcomes of LCM: At the outset of a company based LCM project the long-term benefits of LCM are often unclear because the company is usually inexperienced at dealing with the issues that might be raised or is unclear over the business case for LCM adoption. The time lag between medium- and long-term benefits being experienced from LCM adoption is hard to justify commercially, when faced with short-term competing commercial issues with a more tangible financial returns.

Board Commitment

• Low engagement by senior management in developing LCM: LCM adoption needs to be supported by a board consensus that ensures it is aligned with overall strategic direction of the firm. A company LCM project that is set up without the key elements of the strategy and plan actively supported by the board from the outset is likely to fail.

• Competing strategic priorities (e.g., rapid growth, other projects): With limited resources SMEs are not always able to prioritise the different strategic initiatives, e.g., rapid growth in sales or the building of new plant facilities, effectively stretching resources. Board commitment is needed to ensure that the medium- and longer term objectives of LCM adoption are prioritised among other strategic outcomes. This barrier is closely linked to the previous barrier above.

Capability

• Underestimating the scale and complexity of LCM adoption: Often firms underestimate the scale and complexity of social change that is required to implement environmental improvements. Substantial environmental improvements usually require changes to core values of an organisation which will often be more fundamental than originally thought or planned.

• Lack of data collection systems: Data on environmental issues that can support LCM adoption is often available but will take time to gather and needs to be analysed effectively to be contribute the development targets or business case for LCM adoption. Several firms did not have the data or the data infrastructure needed to support LCM adoption.

• Lack of staff resources: Support for staff is an extremely important factor for successful adoption of LCM. The resources provided to the LCM Champion, e.g., time, skills and knowledge are insufficient to facilitate adoption on their own. Other staff will need to be drafted in to work with champion, e.g., staff in accountancy to help gather useful data.



Integration

• Ambiguity of best environmental option: Assessment of different environmental options is frequently a complex process. When a firm develops and compares alternative options for product there is a rarely a clear cut choice. Each option may have different environmental impacts that require complex decision making to resolve.

• Key LCM staff confined to operational units: The LCM Champions picked by the firms tended to be limited to operational departments. This approach is unsurprising as traditionally, environmental management can be best implemented from within this part of the firm. However, this approach is also problematic because LCM adoption requires an integrated strategic approach to support LCM related day to day business practice.

• Competing operational priorities: On a day-to-day basis firms reported difficult internal operational problems, e.g., changes to processes and procedures related to Lean or reengineering projects would use time allocated for LCM related activities.

• Some product processes cannot be changed: Tight product specifications were often problematic for LCM adoption because products had to be made with certain materials and in specified ways to meet customer requirements. Tight specifications of products can suppress product innovation to address environmental impacts.

Supply chain

• Limited communication along the supply chain: Supply chain management related to environmental issues is information intensive. Firms need to develop enhanced information systems to enable data to be shared across the supply chain. Inter-organisational data sharing the raises issues about who has access to that data and who controls the information. Therefore confidentiality can also be a problem.

• Limited materials or supplier options: Limited options regarding choice of raw materials were reported by all firms as a barrier. This prevents a company switching to environmentally preferable materials or influencing supplier to improve their own environmental performance in ways that provide benefits for the firm’s product.

• Low influence on suppliers: SMEs often lack influence to impose standards or sanctions when they are a tiny customer of their supplier. Also requiring environmental performance data from suppliers in addition to meeting quality standards adds to the complexity of maintaining good relationships.

• Lack of cooperation: Most firms could not identify solid opportunities for cooperative approaches to addressing supply chain issues. Competition between companies within a small market such as New Zealand is believed to often prevent the use of LCM cooperative approaches.

Continuous improvement

• Long-term business case weak: Most business improvements are achieved incrementally rather than one major step forward. Despite seeing benefits from LCM benefits some firms did not feel they would be able justify continued LCM adoption in the longer term due to the emphasis on short-term business planning and perceived concerns around intangible nature of LCM outcomes.



• Lack of environmental reporting NZ: A lack of corporate reporting and communication by companies on environmental issues contributed to the fact companies were not comfortable with communicating the results of adoption. The lack of reporting firms in general was also seen as reflection that environmental issues were given a low priority by New Zealand business as a whole and there was little incentive to continue further adoption activities.

• Lack of data to support LCM business performance: Lack of data to justify LCM benefits, in particular when faced with competing business initiatives with more clearly defined financial drivers and indicators of success, is a risk to the continued implementation on LCM. Few SMEs will have moved to the use of environmental or LCM related performance indicators to drive strategy in their own businesses or own business units.

• Change of business priorities: The LCM pilot project was completed during the recent global recession. Often firms diverted resources into tackling issues around boosting sales. Environmental initiatives like the company LCM project despite being free at the point of access were sometimes considered a luxury rather than necessity for enhancing product sales.

• Initial costs outweigh benefits: The benefits of LCM need to outweigh and justify the complexity with dealing with suppliers and customers, and with applying the tools. Businesses are less likely to adopt LCM over other tools where it can be demonstrate a risk-return that is available from other.



Appendix 2 – Comparison to the organisational change and international

literature

Table A2.1 Adoption categories against the Organisational Change for Sustainability Model (Aggregated key results) from the literature source (Mortimer 2009). Note the description of key enablers and barriers is taken from the literature and may be have been modified for use in the main report.

Adoption factor categories

Key Adoption barriers Key Adoption enablers

Bro

ader

sys

tem

1. Societal, institutional, regulatory and market drivers

Constraints from geographical separation in patterns of production and consumption, e.g., offshore outsourcing, throw-away versus repair consumer culture

The market imposing few if any direct requirements for companies to carry out LCM

Increased stakeholder demand for environmental performance, which is shifting beyond an end-of-pipe focus

Org

aniz

atio

nal

fie

ld

2. Ability to implement supply-chain environmental management

Suppliers often won’t or can’t provide data on their products

Lack of sustainable material options

SMEs lack ability to influence the value chain

The risks posed by increased dependency on suppliers/ customers due to cooperative approaches

Emergence of strategic and cooperative approaches to implement LCM across value chain

Existence of long-term supplier and customer relationships

3. Customer demand and firm’s marketing approach

Customers’ limited understanding of environmental issues and confusion over eco-labels

Customer resistance to paying more or switching brands for green products

Firm having existing or identified ‘green’ customer segments

Long-term and close relationships with customers

Heavy promotion and distribution through mainstream outlets

Org

aniz

atio

n

4. Clear strategic intent and ability to tailor LCM to firm’s context

SMEs often less aware of international trends and less future focussed

Time is taken at start of programme to clearly define firm’s strategic focus and to tailor LCM to the context of the organisation

5. Cost/benefit of LCM adoption

The direct and transactional costs of LCM may outweigh the immediate benefits

Factoring indirect and less tangible benefits into cost–benefit analysis

Prioritise projects that provide quick financial success, especially for SMEs

Regulation and pollution taxes may improve the cost benefit

Working on a sector standard approach




Key Adoption barriers Key Adoption enablers

6. Ongoing commitment and staff support from management

Reliance on cost–benefit analysis alone to build management commitment and environmental policies to change staff practice

Clear LCM vision and goals developed with staff

Long-term tangible commitment to implementing LCM

Providing staff with resources, training, recognition

Ensuring majority of staff committed and actively involved across all functions

7. Existing sustainability culture and practice

Firm has an existing sustainability culture and practice

8. Ability to apply LCM pragmatically throughout processes and functions

High level of product complexity

Ambiguity around best environmental options

Complexity of assessment tools and limitations of LCM as a design tool.

Lack of structured formalised procedures (common in SMEs)

Simple products with few suppliers

Integration of thinking and tools into existing management systems

Whole-organisational approach to LCM with integrated decision making across functions

9. The firm’s ability to learn and change

Underestimating the scale and complexity of organisational change required to implement LCM

Implementing a practice of reflective learning and innovation within the firm

Ind

ivid

ual

10. Influence and skills of key staff

Key LCM staff confined to operational departments

Narrow skill-set in LCM project teams

Owner of an SME committed to LCM/environmental performance of company

Project team have technical and organisational-change skills and decision-making authority or direct access to authority

LCM community of practice to support staff and grow competencies



Table A2.2 Alignment of enablers and barriers from LCM project and the aggregated international literature review results e.g. enablers and barriers highlighted in both literature and LCM pilot project. Note: the wording in the table may differ slightly from that used in the main report due to the need for abridged text in diagrams etc.


Key Barriers Key Enablers

Bro

ader

sys

tem

1. Societal, institutional, regulatory and market drivers

Limited knowledge of customer’s views on important environmental issues to customers

The market imposing few if any direct requirements for companies to carry out LCM Change of business priorities, e.g., recession reduced customer sustainability demand

Constraints from geographical separation in patterns of production and consumption, e.g., offshore outsourcing, throw-away versus repair consumer culture

Maintain access to markets e.g. environmentally conscious markets (both existing and emerging)

Org

aniz

atio

nal

fie

ld

2. Ability to implement supply- chain environmental management

Limited communication along the supply chain e.g. suppliers often won’t or can’t provide data on their products

Limited materials or supplier options e.g. lack of sustainable material options

Low influence on suppliers e.g. small and medium firms ability to influence the value chain

The risks posed by increased dependency on suppliers/customers due to cooperative approaches

Buying power for product materials e.g. being a major customer for materials used in product

Close supplier and customer relationship relationships e.g. existence of long-term supplier and customer relationship

Emergence of strategic and cooperative approaches to implement LCM across value chain

3. Customer demand and firm’s marketing approach

Eco-labelling confusion, e.g., customers’ limited understanding of environmental issues and the meaning of eco-labels/ environmental messaging

Customer resistance to pay more for ‘green’ products or switching brands for green products

Increased customer demand for product environmental information/ reduced product environmental impact

Desire to penetrate environmentally consicious markets e.g. firm having existing or identified ‘green’ customer segments

Long-term and close relationships with customers

Heavy promotion and distribution through mainstream outlets

Org

aniz

atio

n 4. Clear strategic intent and ability to tailor LCM to firm’s context

Long-term business case weak, e.g., companies often less aware of international trends and less future focussed (beyond 6 months)

Culture of investment for long-term strategic benefits

Sustainability is existing brand value or an existing organisational value embedded in operations



Low engagement by senior managers in developing LCM

Competing firm priorities (e.g., rapid growth, other projects)

Lack of environmental reporting in NZ, e.g., corporate reporting

Sustainability/environmental values held by senior managers

Senior management LCM sponsor

Time is taken at start of programme to clearly define firm’s strategic focus and to tailor LCM

to the context of the organisation

5. Cost/benefit of LCM adoption

Delayed & intangible nature of LCM benefits, e.g., hard to see financial benefits at the outset of LCM process

Reduced costs/ improved environmental impact

Prioritise projects with quick financial success

Factoring indirect and less tangible benefits into cost–benefit analysis

Regulation and pollution taxes may improve the cost benefit

Working on a sector standard approach

6. Ongoing commitment and staff support from management

Reliance on cost–benefit analysis alone to build management commitment and environmental policies to change staff practice e.g. harder to handle issues not tackled


Dedicated LCM Champion role to act as focal point of activity (easier for larger firms)

Clear LCM vision and goals developed with staff

Change of business priorities, e.g., long-term tangible commitment to implementing LCM can prevent short-term influences dominating

Providing staff with resources, training and recognition

Staff across firm take ownership of LCM majority of staff committed and actively involved across all functions

7. Existing sustainability culture and practice

Alignment with other firm initiatives, e.g., LEAN or EMS

Environmental objectives in staff performance evaluations

Firm has an existing sustainability culture and practice

8. Ability to pragmatically apply LCM throughout processes and functions

Flexibility in production, e.g., aspects of product process cannot be changed

Lack of firm data to support LCM business performance

Ambiguity around best environmental options e.g. complexity of assessment tools and limitations of LCM as a design tool

Lack of structured formalised procedures (common in SMEs)

High level of product complexity

Formal product development process and written procedure

Early tailored internal communications either informal for small companies or established communications mechanisms for larger firms.

Integration of thinking and tools into existing management systems

Whole-organisational approach to LCM with integrates decision making across functions

Simple products with few suppliers

9. The firm’s ability to learn

Inability to link change to ongoing business case aims and

Implementing a practice of reflective learning and innovation within the firm



and change goals

Lack of data to monitor or drive change

Underestimating the scale and complexity of organisational change of LCM adoption

Ind

ivid

ual

10. Influence and skills of key staff

Non cross-departmental approach to LCM

Key LCM staff confined to operational departments

Narrow skill-set in LCM project teams

Owner/CEO and senior management committed to LCM/environmental performance of company

Project team have technical and organisational-change skills and decision-making authority or direct access to authority, e.g., staff not confined to operational units

LCM community of practice to support staff and grow competencies



Appendix 3 – Enablers and barriers organised by organisational activity areas

This appendix provides the full extended list of enablers and barriers experienced by the six LCM case study companies as detailed in McLaren and Ryan (2011). This extended list of enablers and barriers was re-examined in to develop the key enablers and key barriers highlighted in the main report. In many cases the wording for the enablers and barriers differs because the extended list is non aggregated data that has been categorised differently before further analysis during the project. The enablers and barriers are categorised according to the six business outcome areas including Management outward focus (e.g. strategic alignment of LCM with company strategy business planning), Sales and marketing, Finance, Management inward focus (e.g. the cross-functional nature of LCM implementation), Product design, Manufacturing and supply chain. Each of the business outcome areas is introduced by a brief description of their importance based on the findings of the LCM literature review (Mortimer 2011).

Management – outward focus

This outcome area was based on environmental performance being central to the organisation’s strategy and business planning. As noted in the literature review, adoption (mostly referred to as implementation in this appendix) of LCM is more successful when programmes are customised according to the firm’s specific context.

In assessing the degree of strategic alignment between LCM and company strategy we were interested in the extent to which companies saw environmental performance as being central to their business operations, including the extent to which it is explicit in business planning, whether environmental performance is measured and reported on, and whether the companies engage in decision-making processes that are integrated across all functions at a senior management level. The survey asked firms to assess the extent of strategic alignment between LCM and their overall strategic direction at the beginning and end of the programme and the result are shown below.

The key themes regarding enablers and barriers to implementation reported were as below:

Extended Enablers Extended Barriers

It’s already our strategic direction.

Already expressed in our brand and products.

Our parent company has environmental programme

& KPIs.

LCM is a great way to find innovation and different

perspective for our company.

We needed most robust verification for the market.

LCM has led us to ask new and different questions.

Environment has always been missing from our

business strategy and implementation process.

Business managers don’t involve us in strategy/they

listen to us but don’t involve us.

Environment never makes the top 3 key issues; those

are the key business focus areas.

Unfortunately we missed including environment in

the strategy planning round this year

The important findings for management – outward focus are listed below:

• Having sustainability as a core company value and/or brand value is a good basis for establishing a culture of LCM activity, and is therefore an enabler. A more traditional



company approach to site-related environmental responsibility is also a good basis from which to develop an LCM programme.

• It is also important for these values to be evident in day-to-day company decision making and operations, for a company to ‘walk to talk’.

• LCM is being used as a long-term, future-focused business approach, and the companies have so far only tackled the ‘low hanging fruit’.

• There is little evidence of integrated LCM decision making, joined up across business functions. The firms are not driving forward a coherent LCM programme that addresses all phases of the life cycle in a connected fashion.

Sales and marketing

The literature review notes the importance of customer demand for increased environmental performance as a key element in the uptake of LCM. Where customers place high value on environmental factors as a key attribute of the products they purchase, firms who have adopted LCM can take advantage of this to increase their market share or achieve a price premium. At the same time the literature notes that markets are uneven in their requirements for improved environmental performance, and that adoption of LCM has been more common in those industry sectors that are both highly polluting and producing simple goods, e.g., chemical, electronics, textiles automobiles and plastics.

In asking the six firms about their sales and market strategies we were interested in both the extent to which the markets in which they operate had become more demanding, and the extent to which the firms featured the adoption of LCM or environmental management processes in their sales and marketing material and strategies. This included whether LCM (or Enviro-Mark certification) had been used as a tool to influence demand.



Increasing customer interest. Particularly business-to-

business markets and some niche markets such as

natural healthcare and related LOHAS markets.

Green product ratings exist in our market, they are

steadily increasing.

We needed more robust verification for the market.

Achieved this through LCM.

We developed a set of core sustainable product

attributes.

We developed a brand theme that included the

environment; our people are increasingly taking

ownership.

Our sustainable communication of product and

company is integrated and consistent internally and

externally.

We have a verified sustainable raw material source –

this is a core aspect of our brand.

Some customers more concerned with price. (All

companies report this)

Our focus has been cost during the recession.

Limited internal understanding in sales &

marketing team. They pass the questions to us.



• The case-study companies communicate conservatively with regard to environmental claims. They understand the value from LCM activity comes over time and try to avoid ‘greenwash’.

• Companies are conscious of the need to present third party verified environmental accreditations to their markets.

Finances

We were interested in the extent to which the overall costs either outweighed the benefits of implementing LCM or, alternatively, whether tangible and/or intangible benefits were seen to have accrued. What was anticipated from the literature was that direct implementation costs would be incurred but that costs of production would decrease largely as a result of greater efficiencies in production and reduced waste. The outcomes that were intended for the companies were the minimisation of material and energy inputs, efficient transportation, and the avoidance of environmental liabilities.



Product and process efficiencies have been made

($/margin).

Cost benefit has been realised.

We have reduced costs with improved environmental

performance.

It’s a key part of brand values and our proposition

(intangible).

LCM helps with future business opportunities.

Waste reduction has achieved financial benefits.

Alignment with Lean manufacturing works well.

Programme costs were negligible for us (our people are

on-board).

Our focus on growth means environmental

performance indicators are secondary, or not

included.

Programme costs exceed the benefits for us, the

input level was high.

The important findings for the finances category are listed below:

• Some (smaller) businesses may find it difficult to invest in the resources needed for the systematic implementation of an LCM, including the initial LCA study and the related management systems such as Enviro-Mark.

• Time required for implementation was in excess of that originally estimated by the companies despite the contract between companies and Landcare Research underlining a 90-day commitment to facilitate LCM adoption within the LCM pilot project.

• For larger companies such as AHI having the scale and willingness to dedicate a single person to drive LCM is a significant enabler.

• Availability of a dedicated resource addresses a key barrier to implementation as well as the principal cost required to start implementing LCM.



• The time lag between benefits being experienced from LCM implementation is hard to justify commercially, when compares are faced with short-term competing commercial issues with a more tangible financial ROI.

Management – inward focus

The nature of LCM is that it requires a “whole of organisation” approach, from top to bottom and across all organisational functions. This is assisted when environmental sustainability is part of the culture of the company, and where LCM is bedded in, rather than bolted on as a “project”. The literature suggests successful implementation requires sustainability to be internalised as a cultural value, rather than relying solely on there being a sound business case based on financial indicators (although the business case is no doubt a critical enabler as discussed in the main report). We were interested to explore these issues, considering in particular on-going management commitment to maintaining LCM, the extent to which the programme and the principles on which it is based had been communicated across the company, and whether improved environmental performance was somehow becoming internalised within the company’s ways of operating.



Sustainability message is at the heart of our company.

The overall environment strategy targets trickle down.

Environment is included to our personal objective plans.

We have the scale to invest people in change projects.

Senior management is aware due to reporting and other

corporate information sharing.

We developed a brand theme that included the

environment; our people are increasingly taking

ownership.

Combination of strategy and implementation has made

the thinking richer and more meaningful.

Tailored internal communication helps to influence

change

We started to communicate regular indicators in

newsletters; people get interested in that.

Lack of top management commitment.

The business focus changed, LCM staff were

redirected.

Key business priorities are pulling people in a

different direction.

Our staffs are not empowered to make it happen;

they have other key focuses.

Getting the attention and commitment of staff

outside my department is difficult.

The project champion at operational level lacks

effective change management and influencing

skills.

Poorly targeted or communications or conflicting

priorities

The important findings for management – inward focus are listed below:

• LCM is a cross-functional issue, and requires the commitment of a range of senior managers to enable operational change.

• Lack of cross-functional management commitment is a major barrier.

• A senior project sponsor who holds the respect of cross-functional managers is an enabler for change.



• LCM Champions at an operational level must be respected and effective, cross-functional change agents.

• LCM Champions require good communications skills and experience in effectively influencing others across disciplines. These skills are critical enablers.

• Companies that have good business systems, including data management systems, are better placed to implement LCM.

• Systematic management systems make continued improvement much easier than businesses operating in a ‘fire fighting’ management style.

• Companies may fail in implementation if they do not implement change projects well, or try to implement too many different types of change at once.

Product and design

For LCM to have an on-going impact, a shift needs to take place in product development processes away from minimising environmental impact to ensuring environmental considerations are taken into account during the design phase for new and in some cases redeveloped products. We asked firms about the extent to which their product development processes had changed, and whether there are formal processes for ensuring that environmental issues are taken into account.



The LCS was really useful to us. We discovered some

things.

We will include this more formally in the new R&D

process. The inclusion of trigger questions in the

development process stimulates increases

consciousness.

We have developed a more materially efficient product

line, marketing call it ‘eco’. (This was business as usual

not LCM driven)

We are experimenting with new product opportunities.

New software will enable more opportunity of exploring

options.

Recyclable packaging could make life easier for our

customers.

We found the LCS difficult to interpret. It didn’t

always clarify things, or make decision making

easy.

Our materials make it difficult to change the

product, but our manufacturing process can be

more efficient.

Aspects of our processes are fundamental and

can’t be changed.

The important findings for product design are listed below:

• Embedding and legitimizing life cycle thinking during new product development is a central goal to make improvements using an LCM approach. Each company has to find their own way to enable this activity within their product development culture.

• Product LCS are viewed as a significant addition to company knowledge; the studies were highly valued by the companies.



• LCS often reveal surprising results, and can be a significant catalyst for life cycle-based product environmental improvements.

• The LCS results informed product development decision making in some cases, and led to product re-design in the case of one company.

• Companies with formal product development processes are able to include checks and questions to ensure that environmental issues are considered during product development.

• Product development is always about trade-offs, and in all product sectors there will be valid reasons that limit changes to products and/or processes. However, LCM can impart value to even to companies with highly technical product and process constraints.

Manufacturing and supply chain

The literature review notes that one of the distinguishing features of LCM is its need for inter-organisational collaboration to manage the impact of a product from raw material to design, through to production, use and disposal. There are, however, many difficulties in achieving this in practice. We explored with the firms participating in this study the extent to which they had discussed environmental considerations with their suppliers and what opportunities they had for influencing these relationships. We also asked them about whether production processes had changed during the course of the project, and the extent to which they considered end-of-life issues.



Manufacturing enablers:

Lean manufacturing and environmental issues in

manufacturing are often aligned.

We indentified a range of manufacturing efficiency

savings and are achieving these.

Gaining Enviro-Mark was a big deal for us, and useful for

marketing.

ISO14001 is up and running, it adds value.

Supply chain enablers:

Our scale and influence to control makes change

possible.

Manufacturing barriers:

Aspects of our manufacturing process are

fundamental and can’t be changed.

The Enviro-Mark system included H&S

requirements, which we couldn’t implement. This

slowed us down.

Supply chain barriers:

Key technical and environmental issues in our

supply chain are outside our control.

Little ability to change supply chain. We don’t have

the power.

Limited availability of material alternatives, some

companies mentioned materials supply limitations

specifically within New Zealand.

Are suppliers comfortable enough with their LCI

data to share it?



The important findings for Manufacturing and supply chain are listed below:

• Enviro-Mark was viewed as a valuable process for companies who did not already have EMS activities or process in place.

• The combination of implementing Lean manufacturing and EMS systems is a powerful enabler for improving operational efficiency.

• The companies are not bold in taking up LCM issues outside their immediate site boundaries.

The Life Cycle Management (LCM) Pilot Project: Enablers ...€¦ · recruitment of the firms and allowed a baseline to be established for the measurement of LCM adoption. The second

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