The past five years have seen supply chain sustainability creep up executives’ list of priorities.
Multinationals, such as Walmart or Unilever, have already extended their sustainability strategies so that they trickle down through the supply chain. Suddenly, their suppliers are drawn into these global giants’ sustainability agendas, and these suppliers must comply with their sustainability goals, or risk falling off their list of providers.
Governments are also putting supply chain concerns on executives’ desks with revised legislation and rules that force firms to be more accountable for the environmental impact of their products. Examples include the European Union’s Registration, Evaluation, Authorisation and restriction of Chemical substances (REACH), and the Restriction of Hazardous Substances (RoHS) Directives. While in the U.S., the Consumer Product Safety Improvement Act and the Toxic Substances Control Act regulate environmental product compliance.
So where should executives start to assess supply chain sustainability? Given that many firms’ sustainability strategies are in their infancy, adding supply chains to the carbon footprint equation is a challenge, to say the least. But recent Verdantix research finds that a growing number of new product life cycle assessment (LCA) software offerings are responding to this demand.
Basic product LCA software enables a LCA in accordance with ISO 14040 standards — quantifying the environmental impact of a product throughout its entire lifespan, from raw material extraction to end-of-life disposal. This cradle-to-grave approach sees manufacturers using LCA software to map out a product’s evolution, with primary source data inputted by manufacturers, or via a database such as ecoinvent and the European Reference Life Cycle Database. Users select an impact assessment method and weight criteria, and the software then assesses the potential environmental impacts of individual products.
A product LCA may seem straightforward, but high levels of accuracy cost both time and money. With regulatory, stakeholder and client pressure demanding answers now, many manufacturers require a simplified approach, and software suppliers are responding to this. Our research has identified new market entrants, bringing solutions to mainstream business concerns and strategic decision making. These suppliers have come from related fields, such as computer aided design and life cycle management software, adding in new functionalities – for example, the ability to compare multiple product scenarios.
In a recent report, "Smart Innovators: Product LCA Software," we identified 18 suppliers offering LCA software that can help firms analyze supply chain data. Given the difficulties of selecting the most appropriate tool for resolving individual supply chain challenges, Verdantix analyzed the new functionalities and key user groups for each of these suppliers, assessing them in line with their business imperative. We recommend firms shortlist product LCA software by pinpointing which of the four supply chain challenges they face, and shortlisting the software most appropriate for that usage scenario:
1. Compliance Concerns
EH&S and sustainability managers face a maze of regulations, standards and environmental legislation. To ensure product compliance, LCA software can accurately track regulated substances throughout a product’s entire life.
2. Supply Chain Optimization
Cost cutting is a buzzword in these cash-strapped times. Product LCA pinpoints supply chain weaknesses, enabling sustainability and procurement managers to optimize logistics and quickly reduce costs.
3. Sustainable Product Design
Streamlined software solutions can help green product portfolios. The ability to compare the environmental impacts of different designs enables sustainability decisions to be made early on in the product life cycle.
4. Sustainable Product Communications
Sustainability’s a trend that marketing managers cannot afford to ignore. Robust data from product LCA software will back their green claims, giving them a unique selling proposition.
Verdantix research into product LCA software providers — ranging from consultants such as Bureau Veritas, PwC and WSP Environment & Energy, to specialists such as PE International, PRé Consultants and SolidWorks — finds different suppliers take a different approach to assessments. Some focus on a single supply change challenge, while others cater for multiple usage scenarios. SAP and WSP Environment & Energy support simplified (and cheaper) calculations systems, while ifu Hamburg, PE International and PRé Consultants opt for more accurate tools for LCA experts.
The product LCA software market is still at an early stage of growth, and its price point reflects this — new online applications are available for as little as $85 a month. But Verdantix forecasts market growth will accelerate in 2012 as executives pay more attention to green procurement and regulations push their firms to report on Scope 3 emissions.
Many majors are already on board – the business case for LCA projects is clear for players such as Apple, Levi’s, Marks & Spencer and Michelin. And it’s just a question of time before their competitors start to play catch-up.
Image CC licensed by Flickr user Nick Saltmarsh.