plehn 110805 apms_11_environmental_performance_indicators

Development of a Structural Framework of

Environmental Performance Indicators for Production

Processes

Johannes Plehn1, Alexander Sproedt

1, Tomomi Nonaka

2, Paul Schönsleben

1,

1ETH Zurich, BWI Center for Industrial Management,

8092 Zurich, Switzerland

{jplehn, asproedt, pschoensleben}@ethz.ch 2Keio University, Graduate School of System Design and Management, 4-1-1, Hiyoshi,

Kohoku-ku, Yokohama, Kanagawa, 223-8526, Japan

[email protected]

Abstract. A structural framework with corresponding environmental

performance indicators (EPIs) is one key element in the concept of

environmental performance measurement. Despite the availability of several

standards and guidelines providing a structural framework with typologies of

EPIs, no approach has become prevalent on a company level. Furthermore, no

framework exists to assess production processes from an environmental

perspective. This paper provides a comprehensive state of the art analysis and

description of the current typologies of performance indicators and develops a

structural framework for production processes by filtering EPIs according to

their relevance and applicability in production using the SCOR model.

Keywords: Sustainable Manufacturing, Structural Framework, Environmental

Performance Indicators, Environmental Performance Management

1 Introduction

Manufacturing companies face new challenges in integrating aspects of

sustainability in their traditional business objectives. According to Kleindorfer,

Singhal et al. [1] the reasons for this trend are threefold:

Costs of materials and energy are continuously growing due to their scarcity and

the increasing demand of rapidly industrializing countries like China and India.

Public pressure to improve environmental performance is rising, resulting in

governmental regulations.

Customer demand is shifting to environmentally friendly products, empowering

improved environmental performance as a selling proposition.

Beside the efforts made by manufacturing companies in the past to improve their

supply chain structure towards a higher environmental performance, manufacturers

notice that they must also take advantage of their influence in internal production

processes to fully exploit their improvement potential. A change in production can

2 Johannes Plehn1, Alexander Sproedt1, Tomomi Nonaka2, Paul Schönsleben1,

have a significant environmental impact on the upstream process chain (e.g. increase

of material efficiency in production can reduce transportation of the inbound

logistics). The stronger focus on production can also be observed in a recent study

including 300 experts in factory planning in Germany. The peer group identified

environmental sustainability as a major trend with 73% of the experts rating this

aspect as ‘important’ or ‘very important’ [2].

A key prerequisite for managing and improving environmental performance in

production is a sufficient environmental performance measurement system (EPMS).

Beside a procedural framework defining a step-by-step process to develop a

customized set of indicators considering the specific situation of the company, a

EPMS is based on a structural framework, specifying a generic typology of

performance indicators [3]. Although there are several structural frameworks or even

standards defined by various organizations (e.g. ISO 14031 [4]), there is neither a

consensus regarding a set of indicators and corresponding metrics on company level

nor for production processes. The resulting non-transparency bears the risk to define

irrelevant indicators including the corresponding expenses to measure them or of

neglecting indicators that are relevant for the system, impeding a sufficient

performance measurement. To support manufacturing companies and especially

decision makers in production this paper provides:

A comprehensive state of the art analysis and description of structural frameworks

including a classification of their indicator typologies according to the structure of

indices defined by the ISO 14031 and Global Reporting Initiative (GRI)

framework

The development of a new structural framework of environmental performance

indicators for production processes based on the condensed and customized

indicators of the classified frameworks

2 Methodology

The research methodology of this paper can be described in four steps. First, a

comprehensive literature review is conducted to reveal the state of the art of structural

frameworks and the recommended typologies of indicators. Second, the frameworks

ISO 14031 [4], Global Report Initiative [5] and the VDI 4070 [6] are investigated in

detail identifying 91 different EPIs. Third, the EPIs are assigned to the Plan, Source,

Make, and Deliver processes using the SCOR model and filtered according to their

relevance for production processes. Fourth, the resulting 58 EPIs are embedded in a

structural framework.

3 Results

A multitude of approaches exist trying to define a structural framework for

manufacturing companies. In most cases structural frameworks define typologies of

EPIs and give recommendations and examples of adequate EPIs. Furthermore, to

support decision makers a structural framework should be not only generic enough to

enable companies to benchmark performance or test their compliance with standards,

Development of a Structural Framework of Environmental Performance Indicators for

Production Processes

but also specific enough to allow companies to assess their performance adequately

within their specific environment.

3.1 Literature Review – Typologies of EPIs

A state of the art analysis was conducted to identify the different characteristics of the

approaches and to analyze the recommended typologies of indicators (indices). The

term index is used according to the definition given by the World Resource Institute

as an aggregation of EPIs due to calculation or interpretation [7]. For example the

index energy in the ISO 14031 framework is composed of several indicators (e.g.

quantity of energy used per year or per unit of product). Table 1 presents the results

obtained from the analysis giving an overview of ten approaches, namely the ISO

standard 14031 [4], the Sustainability Reporting Guidelines from the GRI [5], The

two standard procedures VDI 4070 and VDI 4075 [6, 8], the typologies provided in

the Green SCOR framework [9] and the indices provided and discussed in the

research papers of Veleva and Ellenbecker [10], Michelsen et al. [11], Fan et al. [12],

Paju et al. [13] and Jasch [14].

Table 1. Overview of approaches and recommended indices

Indices [4] [5] [6] [8] [10] [11] [9] [12] [13] [14]

Materials X X X X X X X X X

Energy X X X X X X X X X

Supporting Services X

Products X X X X X

Provided Services X

Waste X X X X X X X X X X

Emissions X X X X X X X X X

Physical Facilities X X X

Transport X X

Compliance X

Biodiversity X

Overall X

X - recommended

To distinguish between the different approaches, the indices defined by ISO 14031

and the Global Reporting Initiative (GRI) framework have been selected as reference.

The ISO 14031, a subcategory of the ISO 14001, defines eight indices and

recommends 59 operational performance indicators to measure the environmental

performance of an organization’s operations. To ensure the consideration of all

aspects of environmental performance measurement, the ISO 14031 set of indices has

been extended by the supplementary GRI indices (transport, compliance, biodiversity

and overall). The GRI is a network-based organization that develops and publishes


sustainability reporting guidelines defining nine indices and 30 EPIs which are

already used by more than 1000 organizations, [5].

The Table illustrates the main characteristic of the current frameworks available to

assess environmental performance. There is no consensus due to the different

understanding in terms of areas that need to be investigated to assess environmental

performance. Most of the frameworks focus mainly on physical input (e.g. materials

and energy) and output (e.g. emissions and waste). Moreover, the indices proposed by

VDI 4075, Veleva and Ellenbecker and Jasch also consider products, as part of the

output streams leaving the system and therefore need to be analyzed. In contrast, the

ISO14031 and GRI frameworks see the need to include also supporting activities and

services, as well as transport, compliance and biodiversity. Beyond the differences in

recommended indices, there is also a diverging scope of the indices proposed. The

GRI framework for example recommends EPIs in ten different indices, whereas the

Green SCOR suggests EPIs only in two.

The multitude of indices and their difference in scope illustrated is even aggravated

due to the fact that beside the differences in proposed typologies of EPIs, the

approaches also differ strongly in their recommendations concerning the EPIs an

index is based on. This issue can be observed when analyzing the approaches in

detail. For example, the consolidation of the EPIs proposed by ISO 14031, GRI and

VDI 4070 leads to 99 different indicators in total and 91 EPIs after erasing similar

indicators.

Considering the implications for manufacturing companies in terms of

transparency we see the dilemma decision makers face today. With no consensus

established as a reference, a company is forced to select the relevant indices and

indicators out of a multitude of possibilities. On one side this selection needs to be

broad enough to ensure the consideration of all relevant aspects of EPMS, on the

other side the selection must not include irrelevant indices and indicators. Companies

need to focus on their core competencies and therefore must concentrate strongly on

the indices relevant for their purpose, in particular SMEs with low capacity for

activities in EPMS [15]. Especially in the production environment this task of

selecting appropriate EPIs is even more complicated. Decision makers first of all need

to identify which indices and EPIs are relevant for production and then decide

whether the typology or indicator is relevant for their specific situation.

To keep the effort for decision makers in operations to define a sufficient set of

EPIs at an acceptable level, a structural framework is needed with a special focus on

the production environment.

3.2 Structural Framework of EPIs for production processes

The structural framework developed in this paper is based on the indices and EPIs

defined and recommended by ISO 14031, GRI and VDI 4070. The three frameworks

have been selected due to their broad scope, detailed documentation of EPIs and

importance for practical application [16]. First, the structural frameworks were

combined and similar indices and indicators were erased, ending up with 12 different

indices and 91 different indicators. Second, the Plan, Source, Make, Deliver and

Return processes defined by the SCOR model were used to classify the remaining

indices and indicators and to identify their relevance for production processes (Make



processes). Consequently an indicator has been assigned to the Make processes and

therefore is regarded as relevant if:

The indicator is reflecting the performance of Make processes (e.g. quantity of

hazardous materials used in the production process is linked to Make 1.3 -

Produce and Test) or

The indicator may be affected by the execution of Make processes, although

measured in other areas (e.g. % of materials that are recyclable/reusable in Source

3.1 may depend on the process design in the production process).

Subsequently indicators with no such characteristics have been filtered as not

relevant to assess environmental performance for production processes (e.g. share of

regenerative energy sources is part of Plan 3.4 and therefore categorized as a Plan

process).

The result of the classification is a structural framework based on 58 EPIs

applicable in the production environment covering all 12 indices mentioned in Table

1. Most of the 32 neglected indicators were linked to Plan processes. For an overview

of the identified EPIs see Table 2.

The majority of the recommended indicators of the structural framework presented

in Table 2 are related to input and output streams discussed before and expressed in

the indices materials, energy, products, wastes and emissions. Within the index

materials, there are EPIs recommended which may be relevant for the environmental

performance of production processes in the areas of materials, water and packaging.

The index energy covers both the measurement of energy consumption as well as the

EPIs to assess the efforts made to reduce energy consumption and the reductions

achieved. The EPIs recommended by the index products have a strong focus on the

production processes. The EPI rate of defective parts is strongly related to the quality

management in production whereas the indicator number of units of by-products

generated per unit of product is determined by the process design. The index category

wastes can be subdivided in EPIs covering waste disposal and the amount of waste

reduced, reused or recycled. Emissions includes 14 recommended indicators. Beside

EPIs for heat, vibration, light, noise and radiation, the core areas are emissions to air

and emissions to water.

In addition to the most frequently mentioned indices presented in Table 1, the

structural framework in Table 2 also pays attention to the areas of services supporting

the organizations operation, service provided by the organization, physical facilities

and equipment, transport, compliance, biodiversity and overall. The index services

supporting the organization’s operation covers all activities that are related to

production processes but are executed or supported by contractors. The indicator

quantity of materials used during after-sales servicing of products recommended in

the index services provided by the organization should be only considered if the result

is dependent from process design in the production processes. Within physical

facilities and equipment there are EPIs proposed which are dependent from

maintenance in production (e.g. shut-downs) and reflect the influence of the

infrastructure used by production on the environment. Transport covers the

environmental impact of the transportation of goods and the workforce needed. The

index compliance pays attention to the sanctions for non-compliance due to

production processes, whereas biodiversity is focusing on the impacts and effects of


Table 2. Structural framework for production processes

quantity of materials used per unit of product quantity of water per unit of product

quantity of processed, recycled or reused materials used quantity of water reused

quantity of packaging materials discarded or reused per unit of

product

quantity of hazardous materials used in the production

process

quantity of auxiliary materials recycled or reused packaging material ratio

quantity of raw materials reused in the production process returnable packaging ratio

quantity of energy used per year or per unit of product direct energy consumption by primary energy source

quantity of energy generated with by-products or process

streams

initiatives to reduce indirect energy consumption and

reductions achieved

quantity of energy units saved due to energy conservation

programmes

initiatives to reduce indirect energy consumption and

reductions achieved

amount of hazardous materials used by contracted amount or type of wastes generated by contracted service

providers

amount of recyclable and reusable materials used by

contracted service providers

number of products introduced in the market with reduced

hazardous properties

number of units of by-products generated per unit of product

rate of defective products

quantity of waste stored on site quantity of waste controlled by permit

total waste for disposal quantity of hazardous waste eliminated due to material

substitution

quantity of hazardous, recyclable or reusable waste produced

per year

quantity of hazardous, recyclable or reusable waste produced

per year

quantity of waste per year or per unit of product quantity of waste converted to reusable material per year

quantity of specific emissions per year quantity of specific material discharged to water per unit of

product

quantity of specific emissions per unit of product quantity of waste energy released to water

quantity of air emissions having global climate-change

potential

quantity of material sent to landfill per unit of product

quantity of air emissions having ozone-depletion potential quantity of effluent per service or customer

quantity of waste energy released to air noise measured at a certain location

total water discharge by quality and destination quantity of radiation released

quantity of specific material discharged per year amount of heat, vibration or light emitted

number of hours per year a specific piece of equipment is in

operation

initiatives to mitigate environmental impacts of products and

services, and extent of impact mitigation

number of emergency events (e.g., explosions ) or nonroutine

operations (e.g., shut-downs) per year

percentage of inventory loss

average fuel consumption of vehicle fleet complaints received due environmental burdens

number of hours of preventive maintenance to equipment per

year

description of significant impacts of activities, products and

services on biodiversity in protected areas

number of IUCN Red List species with habitats in areas

affected by operations, by level of extinction risk

strategies, current actions and future lans for managing

impacts on biodiversity

emissions

physical facilities and equipment

transport

overall

materials

energy

quantity of materials used during after-sales servicing of products

services supporting the organizatons operation

products

services provided by the organization

wastes

biodiversity

compliance

significant environmental impacts of transporting products and other goods and materials used for the organization’s

operations, and transporting members of the workforce

monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws

and environmental laws and regulations

total environmental protection expenditures and investments by type

production on protected areas and species. The last index overall defines the indicator

total environmental protection expenditures and investment by type measuring the

efforts made to protect the environment.



4 Discussion

The proposed structural framework gives an overview of indices and EPIs relevant

for the environmental assessment of production processes. A filter was used to reduce

the amount of EPIs to support decision makers when selecting appropriate EPIs for

production by increasing the transparency of available and relevant indicators.

Condensing the framework from the current approaches to measure environmental

performance on company level, this approach ensures a sound integration of

environmental performance measurement in the overall environmental assessment of

manufacturing companies.

The relevance of the proposed indices and indicators needs to be tested in industry

to validate the applicability of the framework proposed. Particularly the relevance of

the indices services supporting the organizations operation, service provided by the

organization, compliance, biodiversity and overall is questionable due to lack of

pressure enforced by material costs, legislation or customers. Moreover, the accuracy

of recommended EPIs needs to be tested to avoid information overlap in the

measurement procedure.

This paper is based on a research project of the Center for Industrial Management

(BWI) of the ETH Zurich, the Swiss Federal Laboratories for Material Science and

Technology (EMPA) and the University of Applied Sciences (HTW) Berlin to

develop a generic process model to evaluate and improve economic and

environmental performance of production systems simultaneously. The project

consortium includes companies from the plastics, steel and the metal working

industry. One key element of the project is the development of an EPMS for

production systems. During the next project steps the structural framework will be

applied in four case studies.

5 Conclusion

The manufacturing industry is still lacking a consensus on indices and EPIs relevant

for the environmental performance measurement. Particularly in production this

impedes a selection of suitable indicators. The structural framework presented in this

paper is an approach to support decision makers in the production environment when

assessing their processes. The applicability of the recommended framework still need

to be validated in case studies.

Acknowledgements. The authors would like to thank the industry partners and are

grateful to the Swiss Federal Innovation Promotion Agency CTI for their support

through project 12402.1 PFES-ES (EcoFactory).


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