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OM in the News: Life Cycle Assessment (LCA) and Sustainability

September 30, 2015

lca“In the last 20 years, life-cycle assessment (LCA) has grown from an academic exercise to an accepted decision making tool for sustainability management,” writes MIT Sloan Management Review (Sept. 22, 2015). As we note in Supplement 5 (Sustainability in the Supply Chain), a large number of companies, from UPS to Frito-Lay to Coke, employ LCAs in their sustainability work, often at substantial expense. At its roots, LCA is a method to quantify total sustainability impacts — like resource use and environmental damage — over the entire life of a product, from “cradle to grave.” While there is value in the basic exercise, the real utility of LCA is in comparing one product’s sustainability impacts with another’s. These comparisons can be made with existing products, or they can be made with future drawing board innovations.

Companies perform an LCA on existing products to assess baseline environmental performance. An LCA product profile will highlight “eco-hotspots” in the lifecycle, which are where the bulk of environmental impact occurs. At Siemens, an LCA of lighting found that the majority of environmental impact came from the use phase in customer’s homes and spurred the company to improve lamp efficiency. Alternatively, LCAs identify hotspots in manufacturing processes, as in the microchip industry, where LCA fingered toxic solvents in chip production as a major impact and led to cleaner substitutes like lemon juice.

When used as a product development tool, LCA can evaluate the environmental implication of design choices at each step of the development. Product modifications, such as new material choices, can be screened not just for immediate environmental impacts but impacts further down the life cycle — say, in the customer use phase or end-of-life. Levi Strauss used this approach when developing its Dockers WellThread line of clothing; through careful design choices it improved manufacturing, use, and end-of-life performance of its clothing. Improving LCA performance may also mean rethinking sourcing decisions. SC Johnson, for example, uses screening approaches to identify toxic materials in the inputs it purchases from suppliers and works to find more environmentally responsible substitutes.

Classroom discussion questions:

  1. Why is LCA now being frequently used as an operations tool?
  2. Provide an example of how a company you are aware of could use LCA to improve its product line.
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