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MANAGING SUSTAINABLE PRODUCT DESIGN BY INTEGRATING CORPORATE PRODUCT DEVELOPMENT PRACTICE WITH ISO14001 ENVIRONMENTAL MANAGEMENT SYSTEMS by Yilun
Yang
A Dissertation Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy
ARIZONA STATE UNIVERSITY December 2005
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MANAGING SUSTAINABLE PRODUCT DESIGN BY INTEGRATING CORPORATE PRODUCT DEVELOPMENT PRACTICE WITH ISO14001 ENVIRONMENTAL MANAGEMENT SYSTEMS by Yilun Yang
has been approved October 2005
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ACCEPTED:
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1 1 , 1 1 , 1
Director of the Program
iean, Division of Graduate Studies
ABSTRACT Sustainable Product Design (SPD) and ISO14001 Environmental Management System (EMS) are emerging as two important approaches to corporate strategic solutions toward sustainability. Integrating product design management with ISO14001 EMS can be a promising way to fulfill a corporate strategic goal on the triple bottom-line (economic, environmental, and social) benefits. An extensive literature review shows that there is currently no comprehensive model and approach for corporate integration management. The major research question of the dissertation is what are the successes and problems experienced in American manufacturing companies when integrating SPD practice with corporate ISO14001 EMS towards building sustainable business? The dissertation describes the interrelationship between sustainable design practice and contemporary management theory. The study involves two separate phases. In the first phase, a comprehensive evaluation research is adopted to identify companies having superior performance on corporate environmental management and sustainable design practices. A survey research is also conducted to benchmark the cuttingedge integration management practice in the American manufacturing industry. These researches show that there is a critical distinction between leading companies and other manufacturing companies in terms of their practice and performance of integrating corporate SPD and EMS. The key research method adopted in the second phase is an embedded single-case study. Herman Miller, Inc. is selected as the case company and the iii
research focuses on the interaction among the corporate EMS organization, the SPD group, and the product project teams through comprehensively describing the integration management process adopted by the companys Mirra project. Herman Millers experience further confirms that managing corporate sustainability innovation through integrating product design and environmental management can be an effective approach to achieving competitive advantages. By focusing on the process of managing product development toward corporate sustainable development policy in manufacturing firms, the dissertation advances the first integration management theory and discovers that, to be effective and comprehensive, corporate integration management of SPD with ISO14001 EMSs should be implemented in four levels: policy integration, organization integration, process integration, and tool integration. The dissertation further develops relevant models to formalize corporate SPD and management activities. Together, these findings form the basis for developing guidelines for the integration management of SPD with ISO14001 EMS and contribute to the new paradigm for corporate sustainable innovation management.
iv
To my parents, my wife, and my daughter, for their love and patience.
ACKNOWLEDGEMENTS I would like to thank all the individuals and organizations that have been supportive and helpful during my dissertation research. I am especially grateful for the guidance and encouragement from my committee chair, Dr. Jacques R. Giard. I thank my committee advisors, Dr. Michael D. Kroelinger, Dr. K. David Pijawka, and Professor Jeffrey Cook (19342003). Additional thanks go to Herman Miller, Inc. for kind permission to conduct interviews at the company and use its material and information for case study applications and to Mr. Joseph N. Schwartz, the former Senior Vice President of Sales and Marketing of Herman Miller, for introducing me to the Environmental Quality Action Team of the company.
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TABLE OF CONTENTS Page LIST OF TABLES................................................................................................ LIST OF FIGURES.............................................................................................. CHAPTER 1 INTRODUCTION..................................................................................... 1.1 1.2 1.3 2 Research Background................................................................... Problem Statement........................................................................ Organization of the Dissertation................................................... 1 3 6 8 10 10 19 23 30 34 34 36 45 45 58 72 72 72 x xii
LITERATURE REVIEW.......................................................................... 2.1 2.2 2.3 2.4 Product Design and Sustainability................................................ Corporate EMSs and Sustainable Business................................ Managing SPD in the Context of E M S ........................................ A Preliminary Theoretical Framework.........................................
RESEARCH METHODOLOGY............................................................. 3.1 3.2 Scope of Research........................................................................ Research Methods........................................................................
EVALUATION RESEARCH.................................................................... 4.1 4.2 Leading Companies in EMS......................................................... Leading Companies in DfE............................................................
BENCHMARK SURVEY......................................................................... 5.1 5.2 Introduction.................................................................................... Methodology................................................................................... vii
CHAPTER 5.3 5.4 5.5 6 Key Themes.................................................................................... Findings........................................................................................... Case Study and Interview Design................................................
Page 76 89 91 98 100 102 107 111 113
HERMAN MILLER DRIVING TOWARDSSUSTAINABILITY............ 6.1 6.2 6.3 6.4 6.5 6.6 Company Background.................................................................... U.S. Office Furniture Industry and Sustainable Business Herman Millers Environmental Legacy and New Challenges Product Design at Herman M iller.................................................. ISO14001 EMSs at Herman M iller................................................ Corporate Integration of Design and Environmental ManagementThe Mirra Task Chair Project............................... 6.7 Case Study Findings and Discussion...........................................
120 183 199 199 205
INTEGRATION MANAGEMENT MODELS.......................................... 7.1 7.2 7.3 Management Implications Integration Theory............................ Integration Must Happen at the Policy Level................................ Organization Integration Must Happen at All Management and Operations Levels................................................................... 7.4 7.5 7.6 Process Integration Design Leadership..................................... Tool Integration and Management Techniques........................... Integration Process Model towards Sustainable Improvement....
210 214 223 226 237 237
CONCLUSIONS AND RECOMMENDATIONS.................................... 8.1 Research Conclusions...................................................................
CHAPTER 8.2 Limitations....................................................................................... 8.3 Recommendations for Future Research........................................ REFERENCES................................................................................................... APPENDIX...........................................................................................................
Page 240 242 244 254
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LIST OF TABLES Table 2.1 3.1 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 5.1 5.2 5.3 Summary of the Major SPD Theories..................................................... Tactics to Improve Quality of the Single-Case Study............................. The The Corporate EMS Evaluation Matrix............................................... List of the 100 Companies Identified by Phase I Screening Page 15 43 51 53 55 56 61 62 64 65 66 79 80
Final Selection Phase II.......................................................................... Selection of Best EMS Organizations by Peer Group............................ The The Manufacturing Subsectors and the Related Design Categories Corporate Product Design Evaluation Matrix............................
The Ten Most Frequently Mentioned DfE Principles.............................. Top 15 Design Companies and DfE Companies in Manufacturing Correlation Analysis (Coefficient Values)................................................ Output from Factorial ANOVA with SPSS 12.0....................................... Output from Multiple Comparisons........................................................... Common Elements of Corporate Practice on Integration of Environmental and Sustainability Issues..................................................
84 87 97 103 104 115
5.4 5.5 6.1 6.2 6.3
Superior Integration-Performing Companies and Reasons.................... Selection of Interview Respondents......................................................... U.S. Office Furniture Breakdown of Production by Product Type U.S. Office Furniture Industry G row th................................................... Herman Millers Environmental Policy......................................................
Table 6.4 Herman Millers Environmental Goal-Setting Related toProduct Design.......................................................................................................... 6.5 GREENGUARD Certification Standards for Low EmittingProducts for the Indoor Environment: Office Furniture (Seating)........................... 6.6 6.7 7.1 The DFX Indices Matrix for the Mirra Project......................................... The Idea Tracking Sheet.......................................................................... Examples of Value Statements............................................... ................
Page
119
148 168 171 207
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LIST OF FIGURES Figure 2.1 2.2 2.3 2.4 2.5 3.1 3.2 4.1 4.2 5.1 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 Sustainable levels of different SPD practices.......................................... A human-centered SPD definition............................................................ Forecast IS014001 registration trend..................................................... The generic value chain m odel................................................................ A PDCA management model................................................................... The research methodology and roadmap............................................... The roadmap of the evaluation research in Phase 1.1............................. Phase I screen by sector.......................................................................... Descriptive analysis of total award-winning products............................. The survey respondents by manufacturing sector................................. Environmental management organizations at Herman Miller................ The Mirra task chair.................................................................................. Herman Millers task chairs: Ergon, Equa, and Aeron............................ The EMS and DfE integration management at Herman M iller.............. The EMS organizational chart of the Seating Division........................... The organizational chart of the Mirra project........................................... The LCA tool for the Mirra design............................................................ The Mirra chair is designed as 100% disassembly................................ The Mirra's comfortable, flexible TriFlex back adapts to the sitter and lets air flow through............................................................................. 157 Page 16 17 21 25 27 37 39 52 63 74 117 121 122 129 130 132 142 143
Figure 6.10 The Mirra's total back support and balanced ride keep people comfortable for the duration...................................................................... 6.11 The EtQ environmental management system.......................................... 7.1 The POPT integration hierarchy model....................................................
Page
161 176 202
7.2 The extended POPT value chain model of sustainable design management............................................................................................... 7.3 7.4 The system control theory behind the integration management............ A special SPD unit should be established to support corporate integration management structure............................................................ 7.5 The management model of sustainable design and EMS integration.... 211 227 204 208
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CHAPTER 1 INTRODUCTION
One of the central paradoxes of our modern business culture is the irreversible accumulation of the total stock of human-made wealth, on the one hand, and the degradation of natural capital and ecological environment, on the other. Although the challenges are of a magnitude and complexity that far surpass knowledge and technology created under the existing business culture, the new initiatives of sustainable business are stimulated to develop the best corporate management practice to grapple with sustainable development. Over the last two decades corporate sustainability and environmental concerns have been considered as a concatenation of issues interlinked to business profitability and customer satisfaction in managements agenda about competitiveness in American manufacturing (Yang & MacLean, 2004). According to research from the National Association of Manufacturers in 2003, pollution abatement expenditures of American manufacturers expressed as a percent of total GDP are higher than those of all major trading partners including the so-called green European economies (Leonard, 2003). The increasingly stringent European environmental regulations defining extended producer responsibility also have had a considerable influence for those active in the European market. No doubt in part due to realizing the compatibility between environmental performance and profitability, American manufacturers are going beyond compliance-based management practices to proactive corporate environmental policies and strategies to improve the environmental performance of both their organizations
2 and products/services, which are usually the respective targets of corporate environmental management and product design and development functions (Yang & Giard, 2003). Managing corporate sustainability innovation through integrating product design and environmental management is now recognized by many leading companies as one important element in achieving competitive advantages. For many years the corporate environmental management system (EMS) and sustainable product design (SPD) have been developed independently within their own relevant functional departments of companies. The wide acceptance of IS 0 14000 family of standards provides strategic vision and direction of cross functional involvement between EMS and SPD. Most recently, the release of the ISO14062 Technical Report in 2002 promoted the integration strategy by describing the general frame and standards to incorporate environmental aspects into product design process. However, integrating SPD practices with corporate EMSs is still a relatively new field in corporate sustainable development strategy developed to contribute to sustainable enterprise. Its basic objective is to improve performance of both corporate EMS and SPD practices and to sustain companys benefits from the triple bottom-line (economic, environmental, and social benefits). The challenges of the corporate integration management are involved in extensive issues such as business strategy and values, organizational structure, new product development process, and management technique innovations. The dissertation focuses on contemporary management theories, models, and practices about
3 corporate sustainable product development and how the activity of product design can be integrated with corporate EMSs.
1.1 Research Background 1.1.1 Sustainable Product Design: Easier Said Than Done With the general acceptance of sustainability concept in both academia and industry, people increasingly believe that the importance of environmental and sustainability issues is shaping future production and consumption systems. Many manufacturers and their suppliers are seeking new product plans to approach the environmental solutions under the driving force from both environmental legislation and market demand. Product design is identified as a strategic tool to be incorporated into the corporate sustainable solutions (Argument, Lettice, & Bhamra, 1998; Burall, 1996; Dechant, Altman, Dowining, & Keeney, 1994; Eyring, 1992; Fiksel, 1996; Fuller, 1999; Hawken, 1993; Mackenzie, 1997; Manzini, 1994). However, when top management begins to consider a policy that embraces the sustainability principles into corporate design strategies, they frequently find that the existing product design organizations and management models cannot fit into the proposed sustainable design policy. Although an increased number of product designers and design managers believe that sustainable design can help companies to gain substantial competitive advantages such as capital efficiency, innovation promotion, and product differentiation, they also realize that developing effective design and management tools towards sustainability may consume more time and cost and
4 lead to a final failure to fulfill the objectives of corporate new product projects (Lenox, King, & Ehrenfeld, 2000). Little literature in the areas of design and management paradigms has argued about how to integrate SPD practices, addressing a balance among the environmental, social and economic benefits, with the existing business operation models as an alternative solution to fulfill a corporate strategic goal on both environmental performance and the triple bottom-line benefits (Charter & Chick, 1995).
1.1.2 Sustainable Design Management SPD emphasizes a system-based, long-term, and integrated approach. Traditional corporate culture and operations systems are not normally appropriate for the objectives of SPD to establish a new product/service system (Frei, 1998; Hawken, etc., 1999). Consequently, SPD represents a contemporary design viewpoint that successful product design frequently implicates the participation of management practice toward rapid changes and dynamic consumer markets. Design management (DM) is such a discipline that connects product design and business operations. In the systems of production and consumption, designers and managers play the same important role on product decision, both involved in addressing sustainability and environmental issues and distributing natural resource. (Papanek, 1995; Simon, 1994; Vogel, 1996; Wann, 1996; Wright, 1997) Many companies use DM not only as a tool to manage design projects and product planning, but also as a tool to develop corporate design policies and strategic goals (Blaich, 1993). Therefore, while designers and
5 engineers keep exploring design methods on SPD, an appropriate DM system for companies that plan to implement SPD projects or plans should be developed to facilitate and evaluate the design process. Furthermore, some researchers believe that top management commitment is critical to establishing such a system and implementing SPD projects (Frei, 1998).
1.1.3 Environmental Management Systems An encouraging trend is that an increasing number of companies acknowledge the strategic significance of ISO14001 certification, a new international EMS standard. The ISO14001-certified EMS can provide a satisfying corporate cultural environment and an enthusiastic commitment from the top management; however, it does not naturally mean detailed guidance to sustainable product design (Parry, 2000). Manufacturers in particular, with the certification of ISO14001, are eager to take advantage of their management resources to achieve important competitive priorities via successful environmental product development. Research on SPD in the context of ISO14001 EMS is significant especially to manufacturing industries, where major resource consumption and pollution take place. To date however, little attention has been paid to the practical model in which sustainable product development can be integrated into the ISO14001 environmental management system, or to the question of whether there should be procedures for companies to follow when integrating sustainable design practice with corporate ISO14001 environmental management systems.
6 1.2 Problem Statement Integrating SPD practices with IS014001 EMS is being adopted in manufacturing industries and this effort has been so since the late 1990s. However, it is not difficult to identify that there is no structured approach to DM for SPD and incorporating SPD into corporate ISO14001 EMS (Charter and Chick, 1995; Brezet and Rocha, 2001). There is also no identical framework of the design management system to appreciate ISO14001 standards while approximately 4,500 certificates to ISO14001 have been issued to American companies as of May 2005 (Peglau, 2005). Consequently, the problem statement in this research is: What are the successes and problems experienced in the American manufacturing companies when integrating sustainable product design practice with corporate ISO14001 environmental management systems towards building sustainable business? This research should develop an understanding of the relationship between corporate design management systems and ISO14001 EMSs. Three initial subsidiary questions drive this study: 1. What are the driving forces that prompt the integration of SPD with ISO14001 EMS in the American manufacturing companies? Why do organizations choose to implement an ISO14001 EMS? What are the basic objectives of SPD in the companies? Which environmental, social, and economic aspects are improved significantly in those observed companies?
What are the advantages and benefits perceived from the integration of design management and environmental management?
2. How can these companies integrate product design management with their environmental management practices? What are the major issues addressed by contemporary corporate SPD practices in the manufacturing companies? What organizational aspects are important to implement the integration of corporate design management and ISO14001 EMS? Which tools are developed to facilitate design and management? Is there any framework or model to combine sustainable design management with the established corporate environmental management systems? Are suppliers part of the value chain?
3. What are the important factors which impact on corporate SPD practice integrated with the corporate ISO14001 EMSs? What are the major barriers to the corporate SPD practices? What are the limitations of corporate SPD practice integrated with the corporate environmental management? These initial research questions can be modified by the subsequent literature review to provide a preliminary theoretical frame and research foundation. Basically, the study focuses on the mutual influence between DM and ISO14001. An exploration of the approaches to the integration of DM and ISO14001 is also identified as a significant expansion.
1.3 Organization of the Dissertation The dissertation is structured to present the research process conducted in practice and report the major activities and findings in a logical order. Chapter 1 offers an overview of the research background and core questions that lead the interdisciplinary exploration in the relevant domains. Chapter 2 introduces the major research areas and sets the context of the research by an extensive literature review. Chapter 3 defines the research scope and develops a set of research methods to explore the research questions. Chapter 4 presents an evaluation study to identify the leading American manufacturing companies with superior performance on both corporate SPD and EMS practices. Chapter 5 summarizes the findings from a peer survey to benchmark the best practice of the integration management of SPD and EMS in the manufacturing industry. Chapter 6 focuses on a critical case study about Herman Miller and its successful Mirra project. The chapter describes the comprehensive integration management process adopted by Herman Miller to integrate SPD practices into corporate EMSs that have been IS 0 14001-certified. Chapter 7 advances the integration management theory and discusses several design management models in relation to research findings. The chapter also intends to provide the easy-to-follow guidance and step-by-
step instructions for the framework and the process to manage the corporate integration of sustainable design and ISO14001 EMSs. Chapter 8 concludes the dissertation with the major research contributions and gives suggestions for future research in the academic areas.
CHAPTER 2 LITERATURE REVIEW
2.1 Product Design and Sustainability Many corporations are beginning to acknowledge that an acceptable environment performance accounts for corporate strategic success. Among the varied corporate environmental solutions, product design addressing environmental issues is identified as an effective approach to corporate environmental strategies. For most products, about 80-90% of the lifecycle economic and ecological costs can be specified during the design process (Design Council, 1997). Consequently, industrial designers can and should play an important role in delivering environmental value via the product design process. In general, the short history of environmentally conscious product design has evolved byway of three major phases: green design, eco-design, and SPD. There are even various design terms in each phase but they can be classified into a same category in that all of them provide consistent design principles. Under many circumstances, people consider that the concepts of these three phases are interchangeable. From a design terminology perspective, however, each of them represents a different design philosophy to address environmental and sustainability issues. Borrowing nomenclature from green politics in the 1970s, green design launched research into design and environment, and frequently focused on single-issues and primary analyses in the core design
11 process (Madge, 1997). Eco-design further broadened the green design vision toward the full product life cycle in the late 1980s. Compared to green design and eco-design, the concept of SPD originated from the environmentally conscious design terms, but made a conceptual breakthrough in understanding the relationship among design, environment, business, and society. Besides these concepts, design for environment (DfE) is frequently used to refer to sustainable design practices by people from different academic and industrial areas. In this dissertation, both SPD and DfE refer to the design and management practice of system-based integrated product development for sustainability. Sustainability is an ecological term that has been used since the early 1970s, and in Buttons Dictionary of Green Ideas, it means: the capacity of a system to maintain a continuous flow of whatever each part of that system needs for a healthy existence (Button, 1972). When applied to ecosystems containing human beings, it refers to the limitations imposed by the ability of the biosphere to absorb the effects of human activities. There are numerous definitions associated with the term sustainable development or indeed of sustainability. Even in the same disciplinary, the concept of sustainability has been used with different meanings. Although design scholars and professionals began to embrace the concept around 10 years ago, several different design theories were fostered to contribute to the mainstream of SPD theory. Tischner and Charter (2001) tried to summarize SPD models but failed to provide a profound analysis of the theoretical background for each model. Consequently, the major difference
12 between these models and how they were influenced by major sustainability theories have been kept unclear. The dissertation attempts to present a holistic view of these theories and their applications in the design discipline.
2.1.1 Brundtlands Classic Definition and Datschefskis Total Beauty of Sustainable Products The term sustainable development was first introduced by Our Common Future, the final report of the Brundtland Commission, which was published for the United Nations Earth Summit 1992. According to Brundtlands definition, sustainable development is a development that meets the needs of the present without compromising the ability of future generations to meet their needs (WCED, 1987). The report indicates that the basic theme of sustainability is to maintain functioning systems in the long run and to leave to future generations the choice of how they wish to use their heritage to provide the kind of quality of life they prefer. In this sense, sustainability can be understood as consisting of three dimensions: environmental, social, and economic dimensions. Based on Brundtlands theory, several environmental innovation principles are identified as the eco-efficiency oriented integration in the context of industrial design by Edwin Datschefski, the founder of BioThinking International and the author of The Total Beauty of Sustainable Products. He has developed five design requirements for sustainable products: cyclic, solar, efficient, safe, and social (Datschefski, 2001).
13 2.1.2 Orrs Technological Sustainability vs. Ecological Sustainability and McDonoughs Eco-Effectiveness vs. Eco-Efficiency One very influential way of designating the different stands within the environmental movement in the context of sustainability is David Orrs classification of technological sustainability and ecological sustainability (Orr, 1992). According to Orrs definition, ecological sustainability is in favor of lowimpact technology, and is concerned with the environmental impact of rampant economic growth and large-scale industrial development. Conversely, technological sustainability is characterized by an unswerving belief in the ability of human science and high technology to manage the environment for the benefit of present and future generations. However, natural capital, which refers to the earths natural resources and ecological systems that provide vital life-support services to all living things, cannot be replaced by manufactured capital. So, the technological sustainability inevitably leads to abundant people and labor-saving machines, but diminishing natural capital. Furthermore, The Natural Step (TNS), a non-profit environmental education organization, offered more substantive and scientifically-based sustainability principles, based on laws of thermodynamics and natural cycles. Under these principles, sustainability means that we should not consume natural resources and generate waste faster than nature can absorb and recycle waste (Burns, 2000). Based on Orrs theory, William McDonough, of McDonough Braungart Design Chemistry (MBDC), established his sustainable design principles by
14 distinguishing his eco-effectiveness concept from another earlier concept ecoefficiency in the design context (McDonough, 1998). McDonough argued that relying on eco-efficiency to save the environment will in fact achieve the opposite it will let industries finish off everything quietly, persistently and completely. An alternative is what he called eco-effectiveness. From a product design perspective, eco-effectiveness means products that work within cradle-tocradle life cycles rather than cradle-to-grave life cycle. So, the principles for sustainable product design are to: Equate waste with food; Use current solar income; Respect diversity.
2.1.3 Papaneks Design Ethics and Walkers Sustainable Local Design As a scholar with a design background, Victor Papanek explored the ecologically and ethically centered design ideas and principles. Papanek argues that both designers and end-users should ask whether a design helps disenfranchised and poor sections of society, if it eases pain, whether it aids environmental sustainability, and so on (Papanek, 1995). He also emphasized the importance of the social and moral responsibilities of designers in terms of resolving the realworld problems. The ethics and localization issues in a design context were also discussed by several scholars (Hawken, 1993; Van der Ryn & Cowan, 1996).
15 Based on Papaneks theory, Stuart Walker advanced his SPD prototypes to incorporate the ethics and localization issues into design activities (Walker, 1998). He developed several experimental products that were designed for local production by using off-the-shelf parts, simple tools and local labor rather than mechanized production (Tischner & Charter, 2001). Walker (1998) believed that product design for localization has the potential to provide fulfilling employment while enhancing the possibilities for product repair, maintenance and the cyclic use of materials. He further developed four SPD principles: social, ethics, environment, and economics.
Table 2.1 Summary o f the Major SPD Theories

Datschefskis Theory Brundtlands Origin definition of sustainable development Triple bottom line Design philosophies (economic, social and environmental value) Cyclic Solar SPD principles Efficient Safe, and Social Equate waste with food; Use current solar income: Respect diversity Social Ethics Environment, and Economics McDonoughs Theory Orrs technological sustainability vs. ecological sustainability Eco-effectiveness and cradle-to-cradle Social and local issues W alkers Theory Papaneks design ethics
Summary
Summary Despite the vast difference between the respective philosophical positions of these theories, SPD is consistently identified as a long-term, system-based, integrated design solution. Table 2.1 summarizes the core belief and principles indicated by these SPD theories. In a short term, Datschefskis sustainable product theory is helpful for moving from a product-level design focus to a function-level design vision (Figure 2.1). In terms of a long-term design strategy toward sustainable business, McDonoughs eco-effectiveness and Walkers sustainable design principles make sense to a system-level innovation by appreciating the natural capital, ethics and localization issues.
System-Level Innovation Function-Level Innovation Product-Level Innovation
hort-Tcrm-Orientc
Long-Tcrm-Oriented
Figure 2.1 Sustainable levels of different SPD practices Source: Rathenau Institute, 1996
17 Although these SPD theories tried to give a comprehensive definition about SPD, none of them built a connection between sustainability principles and human needs, and fail to demonstrate how product design can be an enabler to optimize the interaction between natural ecological system and human production-consumption system. The gap between the existing SPD theories and contemporary design theory where the user-centered design philosophy is dominant can slow down or even prevent the extensive application of SPD practice in industry. Human-Centered Product Design
Economic Needs
Social Needs
Environmental Needs Figure 2.2 A human-centered SPD definition
Figure 2.2 illustrates a human-centered SPD definition that is developed and adopted in this research. According to this model, SPD is a systematic way
18 of incorporating environmental, social, and economic attributes into the design of products and services to promote a production and consumption system which contributes to human well-being without systematically impoverishing the Earths ecological functions. The definition translates the classic triple elements of sustainability into needs of human as customers and users that a humancentered SPD should focus on: economic needs, environmental needs, and social needs. While companies have to develop detailed design principles and objectives relevant to their products and business, designers and product development teams can use this model to easily incorporate most common design factors they usually consider in their design practices. For example, a cost/price issue can be set as an indicator of customers economic needs and ergonomic issues can lead to a series of indicators of customers social needs. However, sustainability is still a complicated issue in the context of design. When companies try to embrace sustainability issue into their product design practice, they have to develop their own definitions about sustainability and ensure that they are operational and can be used to identify measurable design objectives. Design managers frequently meet challenges such as making suitable design policy, controlling and evaluating sustainable design process, and improving organizational learning and buy-in by effective knowledge management. Management and design tools also need to be identified to integrate existing corporate resources into the SPD process.
19 2.2 Corporate EMSs and Sustainable Business Building sustainable business has emerged as a new core strategy for companies. This era of relative abundance of cheap resources and energy will eventually end as natural ecosystems fail to keep pace with human resource and energy use (Hawken, etc., 1999). Consequently, being environmentally responsible is no longer viewed as something that is primarily done for publicity sake. Sustainability is becoming the rational business driver and goal. International corporations that market the same products worldwide need consistent commercial standards to be able to fully exploit economies of scale and to realize the potential that globalization offers. IS014000, a universal and international system of environmental management standards, has been developed in response to the tremendous costs that have been incurred by international marketers due to many separate, and sometimes incongruent, regional and national environmental standards. IS014000, launched by the International Organization for Standardization (ISO) in 1996, is a series of international standards on environmental management. ISO14001 EMS is the cornerstone standard of the IS014000 series and specifies a framework of control for an EMS against which an organization can be certified by a third party. It focuses on both the management systems and the environmental attributes of products and processes. Although it is a voluntary standard, increasing companies report many advantages and benefits of ISO14001 Certification:
20 Top-management environmental commitment; Integrated Management system; Continually improved process; Increased operations efficiency; Changed corporate culture, environmentally educated employees, and better community relations; Opened internal and external communications; and Required contractors and suppliers consistence with the EMS (Parry 2000; Woodside et al. 1998). The ISO14001 standard is basically organized to have several sections to specify applicability, definitions, and EMS requirements. Among the sections, the EMS requirements as the core of ISO14001 describe the details to which a certified company must conform. There are five key elements defined in the requirements: Environmental Policy; Planning; Implementation and Operation; Checking and Corrective Action; and Management Review (ISO, 1996).
One of the major benefits from implementing an ISO14001 EMS is that it facilitates a company to establish and maintain a procedure for evaluating compliance with environmental regulations, although ISO14001 does not require
21 the company to be in compliance with all applicable environmental laws and regulations. ISO14001 is not a legislative or regulatory requirement in the United States, but the federal government has been promoting EMSs at the international level, as reflected in a guidance document on EMSs generated by the Commission for Environmental Cooperation (CEC), an arm of the North American Free Trade Agreement (CEC, 2000). According the Environmental Protection Agency (EPA), having an EMS that conforms to the requirements of ISO 14001 can lower the potential criminal penalties for violations of environmental law by as much as 75%.
8000 6000
+ -
C
| 4000
<
2000
00
01
02
03
04
05
06
Year
Figure 2.3 Forecast ISO14001 registration trend
By the early of 2005, over 4,500 companies in the U.S. had been certified to ISO14001 (Figure 2.3), compared to only 500 in 2000 (Peglau, 2005). Many American companies have begun to realize that ISO14001 can not only lead to trade advantage, environmental benefits and fewer fines for non-compliance, but
also be used to meet the broader needs of sustainable business (Burns, 2000; Valero, 2000). For an ISO14001 EMS to be useful for sustainable development and for business, the objectives for the planning (i.e. complying with the system conditions and identifying relevant measurable sustainability indicators/objectives) and specific activities and associated metrics to meet these objectives need be incorporated into the structure of the EMS. Thus, ISO14001 can actually provide a foundation for sustainability.
Summary ISO14001 EMS has become a wide-spread administrative tool in the field of corporate responses to sustainability. As a framework for the administering of sustainable development in firms, ISO14001 in itself does not require strategic planning for sustainability. Furthermore, the requirements for an ISO14001certified EMS frequently focus on the overall environmental performance of an organization instead of its products and services. If a company wants to implement an IS014001-certified EMS to obtain competitive advantage, a key issue will be how the EMS fits the needs of its customers and the more extensive needs from all stakeholders. Therefore, integrating other corporate operations with ISO14001 EMS (such as product design for environment and environmental accounting) may prove to be a valuable strategy for promoting continuous improvement toward more sustainable environmental performances. The result is a strategic planning framework that adopts the minimum relevant requirements
23 for a sustainable business in certain industry and embeds them in a corporate process (e.g. product design process) to assist firms in their sustainability initiatives.
2.3 Managing SPD in the Context of EMS Sustainable design and ISO14001 EMS are emerging as two important approaches to corporate sustainable development. Both corporation managers and design scholars are beginning to explore strategies that can effectively connect sustainable design efforts and corporate environmental management practice (Brezet & Hemel, 1997). A promising solution to manage sustainable innovation is the corporate integration management of SPD practices and ISO14001 EMSs. Tischner and Charter (2001) and Brezet and Rocha (2001) argued that SPD is involved in a broad range of management practices instead of merely a design issue. To be effective, SPD strategies and processes should not only focus on design activities, but also incorporate management action. To pursue a sustainable business agenda, a company should develop corporate strategies to build an effective management system and a forward-looking leadership that can manage sustainable innovation and change. SPD is among these strategies. The corporate design practice should firstly inspire and motivate employees and stakeholders to embrace sustainability as an opportunity to learn and change.
24 Organizational barriers are frequently the major obstacles that need to be overcome when implementing SPD practices (Resetar et al. 1998). Sustainable design is involved in a series of decision-making processes integrated with environmental and social issues among designers, product line engineers, project managers, accountants, marketing engineers, and other relevant stakeholders. The organizational barriers, such as the incompleteness of design teams and the lack of integrated and environmental awareness, can lead to internal resistance to sustainable product development. The objectives setting and implementing process of a sustainable design require not only sufficient technology but also appropriate management metrics and information networks. For most companies, a sustainable design team needs to accommodate a multitude of design parameters and sustainability measures, such as improved product quality, cost, appearance, environmental performance, manufacturability, social factors, etc. In addition, corporate management has to consider the cost of the design itself, such as product development time. Even the product environmental performance alone also includes many attributes such as the use and reuse of recyclable materials, energy efficiency, and the design for disassembly. Establishing management metrics and information networks can be an effective means of measuring progress
25 and product evaluation and are effective communications systems for all stakeholders in sustainable design activities. For many companies, one of the major objectives for adopting SPD practice is to obtain competitive advantage. Created by M. E. Porter (1985), the concept of the value chain provides a systematic approach to examining the development of competitive advantage (Figure 2.4). Product design and development as one of the primary business activities is a typical value added process. SPD practices require a managerial analysis of design activities by develop a related value chain model.
HUMAN RESOURCE M AN AG F M ENT TECHNOLOGY DEVELOPMENT
|PROCUREMENT!
OPERATIONS
MARKETING & SALES
SERVICE
PRIM ARY ACTIVITIES
Figure 2.4 The generic value chain model (Porter, 1985)
New studies on the relationship between sustainable design and environmental marketing (Polonsky & Mintu-Wimsatt, 1995), sustainable
26 design and environmental accounting (Schoffman & Tordini, 2000), sustainable design and supply chain management (DGXI 2000) demonstrate that the success of an sustainable design program relies on a set of decisions pertinent to a clear design policy, organized design resources, and controlled design process. All of these decisions define both the scope and content of design management. In addition, the development of a sustainable design management framework requires a strong top-management support. Because the implementation of a sustainable design program and its management is involved in great changes of the corporate organization and culture, it is difficult to implement changes in a company unless those changes have the full support of those who are affected. Furthermore, the development of a sustainable design management system for both organizations and products is a matter of time and cost consumption for most companies that lack environmental expertise, awareness, design resources and even product design management experience. A corporate integration management resolution of the aforementioned problems is to build a design management system. A design management system can be defined as a management structure that provides an organization with a framework to identify corporate design strategy and control and evaluate the value-added process of corporate design practice. An ISO14001 EMS can provide such a systematic and structured approach for managing an organizations environmental and sustainability issues and opportunities. This is
27 a theoretical foundation of the corporate integration management of SPD and EMS. The management system paradigm behind ISO14001 EMS is the Shewhart Cycle or the Plan-Do-Check-Act (PDCA) Cycle (Shewhart, 1939; Deming, 1986). Figure 2.5 illustrates the systematic approach and stages based on the PDCA management model. It emphasizes a management system coordinating continuous improvement efforts through a repeatable process. The PDCA model can be applied to a design management system in order to systematize design activities. One of the goals of corporate integration management of SPD and EMS is to develop and modify a comprehensive PDCA model to suit the individual organization.
Managem ent implications and process form alization Evaluate the out the strategy or |
|i
In itia te the strategy or plan
W hat to identify or accomplish?
Figure 2.5 A PDCA management model
28 Therefore, a product-oriented and performance-based ISO14001 EMS may be a potential framework by which managing sustainable product design can fulfill the sustainable business strategythe triple bottom-line benefits. Two recent studies explored the potential advantages of incorporate environmentally conscious design into corporate EMSs. Schoffman and Tordini (2000) believe that companies should develop an environmental management system that goes beyond compliance so that investment in the environment can no longer be viewed as an unavoidable cost of doing business. ISO14001 should place environmental issues in the business management context and provide guidelines to help managers make decisions about product design. Furthermore, DfE is a logical part of environmental management in helping businesses to achieve environmental policy objectives. Its systematic application means that ad hoc environmental initiatives are replaced by a system approach that prioritizes environmental objectives, while at the same time reinforcing other business goals. Brezet and Rocha (2001) argue that the effectiveness of eco-design activities might be limited if they are not integrated into corporate EMSs focusing on the strategic management and daily operation of companies. Standardized EMSs are appealing to industry as they are increasingly becoming recognized as providing an adequate structure for implementing a companys environmental strategy aiming for continuous improvement of environmental performance, and eco-design can be seen as a continuous improvement process in line with the
29 EMS. Their case studies about some Dutch companies indicate that from an existing ISO14001 environmental management system as a point of departure it is feasible for product-developing companies to apply the same management structure in an effective and efficient way to integrate environmental considerations into its product development processes.
Summary ISO14001 EMS can be the vehicle to make SPD a part of a companys strategies and daily practices and may enable sustainable product innovation and design management. ISO14001 EMS embodies a new approach not only to environmental performance improvement, but also to capacity building, awareness raising, operational integration, and behavior modification. It provides guidelines and an improved business environment for establishing and developing a sustainable product design management framework. Yet, few studies present the business drivers of integrating SPD with ISO14001 EMS in American companies and none of them describes the operational process for such integration. In response to criticism of little product orientation, ISO launched in 2002 a new technical report ISO14062to offer suggestions about integrating environmental aspects into product design and development. Focusing on providing technical instructions on the design process and activities, however, ISO14062 fails to give a clear description of the connection between corporate product design practice and EMS efforts. Furthermore, it fails to outline
30 a comprehensive solution to the key integration management problems. Neither corporate strategic solutions to environmental issues nor sustainability integration are components of ISO14062. Therefore, it is critical to develop relevant integration management theory and models in terms of presenting operational process guidance for corporate SPD practice and overall management supports.
2.4 A Preliminary Theoretical Framework The literature review has developed a holistic view of contemporary sustainable design theories and corporate IS 0 14001-certified EMS practice. The context set for managing sustainable innovation in corporate America is the integration management of SPD and EMS. The major findings from the literature review indicate that SPD is not only a product design practice but also a management initiative towards sustainable business. Integration of SPD with corporate EMS is a business strategy involved in the change of core values and the co-ordination of efforts of all corporate operations. To be successful, a corporate integration management practice should consider business policy adjustment, goal-setting process, organizational structure and resource availability, formalized operation process, stakeholder involvement, and related management and technology supports. Many leading American companies actually have launched pioneer integration programs. The dissertation research aims to explore their integration experiences and develop management implications and theoretical foundations.
31 Based on the literature review, a preliminary theoretical framework of integration management has been established and relevant research questions have been developed below to frame the study about the leading American companies. 1. Design Vision and Strategy Did a company have a clear policy for integration management? Who and at what level of the company was the policy established? What were the key success factors for the company? How did the policy address the factors? What were the primary reasons for the company to seek ISO14001 certification? 2. Design Organization and Resources What was the organizational structure for the integration management at the company? Who was responsible for the development of a product design policy that incorporated sustainability issues? How was the product design policy developed? With respect to the environmental and product design policies of the company, how was the design team constituted and structured? Where did the decision-making authority rest in the final design?
3. Management Goals and Measurements What were the primary reasons for implementing a sustainable product design strategy in the company?
32 How did goal-setting of environmental management relate to product design? Did the company set priorities when embracing a sustainable product design strategy in product development? Did the company set quantitative standards and/or objectives for economic, environmental and social performance for the product? Did the company identify relevant legislative, regulatory and other environmental requirements? What were the most significant ones? How was the sustainability performance of the products measured? Was there a process to regularly review the companys sustainable design activities and process? If so, what is that process? Did the company document the process? 4. Design Process What tools, e.g., management matrix, were used to identify potential technological barriers to improvements? What were the companys major barriers to an effective practice of sustainable product design? Was a life-cycle assessment used to determine high-leverage areas of product design? Of prioritized investment? How did the design team communicate with each other? With other stakeholders?
Who within the company monitored and tracked the application of environmental concerns in the design of the product in order that established targets are met?
Were the design processes and environmental attributes linked to financial concerns? If so, how were they linked?
Was the procedure documented? Was it included in the environmental management documents?
5. Design Analytical and Training Tools Were there comprehensive yet easy-to-use tools that a designer could use to make quick design trade-offs based on sustainability targets? In what way(s) did the company identify and determine the significant sustainability impacts of its activities, products and services? What were some advantages and benefits that occur in the company as the result of the integration of SPD practice and EMS? Did the company offer regular training/educational programs on the subject of environmental awareness? If so, what were they?
CHAPTER 3 RESEARCH METHODOLOGY
3.1 Scope of Research The research focuses on companies from the U.S manufacturing industry and their environmental management systems as well as interaction with their sustainable product development practice. The primary reasons are shown below: Manufacturing is one of the biggest sectors in the American economy as a percentage of Gross Domestic Product (GDP) and as employment numbers. According to the U.S. Department of Labor, manufacturing accounted for about 15.5% of total U.S. GDP and 14.1% of total employment in 2000 (U.S. Department of Labor, 2001). Companies in this sector have a significant environmental impact in generating large volumes of waste and in the consumption of natural materials and energy. They face increasing societal demands to reduce their environmental footprint and begin to adopt new paradigms to support their commitment to sustainable development. According to research from the National Association of Manufacturers in 2003, pollution abatement expenditures of American manufacturers expressed as a percent of total GDP are higher than those of all major trading partners including the so-called green European economies (Leonard, 2003).
35 Increasing public concern on environment has led to demands for more and more legislation to control industrial activity. The major federal statutes relating to environmental law, such as the Solid Waste Act, Toxic Substance Control Act (TSCA), Clean Air Act, Clean Water Act, and Comprehensive Environmental Response Compensation and Liability Act, had been developed in the 1970s and strengthened in the 1980s in the United States. Almost all manufacturers are among the main targets being scrutinized by these environmental laws and regulations (Parry, 2000). The increasingly stringent European environmental regulations such as WEEE & RoHS (Directive on Waste Electrical and Electronic Equipment & Directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment) defining extended producer responsibility also have had a considerable influence for those active in the European market. For companies in the manufacturing sector, this has meant re-examining their products and processes with an eye toward the reduction or elimination of any resulting waste streams. Most industrial and consumer products in the U.S. are made by companies within the manufacturing sector. Design decisions and the whole-life cycle of these products become a major determining factor in the overall environmental impact of the manufacturing sector. Industrial and product design for sustainability can make a significant contribution to the American manufacturing. Integrated with corporate
36 environmental management, SPD can play a critical role in all the social, economic and environmental dimensions of sustainable business. In order to drive these changes throughout their organizations, industry needs an expanded "tool-kit" for integrating social and environmental criteria into their business practices. The manufacturing industry in the new millennium will focus on developing processes that are more sustainable and that give environmental, social and economic benefits.
3.2 Research Methods Research about sustainable product design management in the context of ISO14001 is still in its exploration phase. Given the immaturity of this subject many companies have made their own efforts to integrate new product development into their environmental management practice toward sustainable business. Therefore, it was decided that the approach to adopt for the research be one of an exploratory nature (Robson, 1993). There is little evidence of a common entry point to sustainable product design, nor is there an existing theory to provide a systematic framework for corporate integration management of product design for sustainability and ISO14001 EMSs. The goal of this study is to explore the successes and problems experienced in the manufacturing industry when integrating SPD practice with corporate ISO14001 EMS. Therefore, a qualitative approach beginning with research questions, followed by an extensive survey and a detailed single case study, fits this research better (Miles & Huberman, 1994).
37
{Develop theory
Phase I
Evaluation Research
"W
m m m m m m /m M m m m m
Survey Research Modify Theory Select Case Company Design Data Collection Analyze Case Study Evidence Draw Conclusions
Case Study
Phase II
Develop Management Implications
Figure 3.1 The research methodology and roadmap
Given the research purpose and type, this study is accomplished through a two-phase effort (Figure 3.1). The major approach used in Phase I is an evaluation research and a benchmark survey complemented by extensive data collection and interviews about the companies from the American manufacturing industry. The Phase I study aims to shape the preliminary theory and research questions by identifying factors that influence the perceived effectiveness and efficiency of the corporate integration management. Furthermore, the research of this phase evaluates and selects American manufacturing companies with superior performance in both environmental management and sustainable product design practices. However, what the Phase I study does not do is to permit detailed understanding of decisions, perceptions, and processes. As a
38 result, it is decided to complement the Phase I study with the more detailed insight provided by a critical case study in Phase II.
3.2.1 Phase I: An Evaluation and a Survey Research In this phase, a leading manufacturing company is selected for the critical case study in Phase II through an evaluation based on a set of criteria and weighted scoring and a peer survey among the thought leaders and professionals. The external corporate evaluation in this phase adopts multiple measures that can be combined to form on overall proxy that serves as indicators of organizational and design effectiveness. Each specific measure is an approximation of the outcome. For example, the study combines a variety of indicators to assess companies environmental management performance, including environmental management awards (e.g., World Environmental Center Gold Medal), participation in cutting edge programs (e.g., the total number of ISO14001 EMS Certified facilities), advanced composite indicators (e.g., Dow Jones Sustainability Index and Domini 400 Social Index), and several classical environmental performance measures (e.g., corporate On-site Toxic Releases Sales Ratio). Evaluating the performance of a companys product design is always difficult due to potential bias of subjective assessment and inconsistence of criteria used in objective assessment, both of which are common in contemporary design reviews. As a result, the study adopts award-based indicators to assess corporate design practice.
39 A preference matrix was created to quantify the selection process. This evaluation is also accomplished through the effort of two additional sub-phases consisting of: Phase 1 .1 selection of 100 manufacturing companies with superior EMS performance by using the multiple indicators (Yang & MacLean, 2002). A preference matrix rates a company according to dozens of performance criteria. The criteria can be scored from 1 (worst possible) to 10 (best possible). Each score is weighted according to its perceived importance, with the total of these weights equaling 100. The total score is the sum of the weighted scores (weight times score) for all the criteria. For example, the Dow Jones Sustainability World Indexes is assigned a weight of 5. If a company in the index, for example, is also a top-5 company in a sector of the index, it has a score of 10 and gets a weighed score of 10 x 5 = 50 points.
S&P 500 Companies
First-Level Screening
Pre-selected 100 Companies Second-Level Selection
Final 25 Companies
Figure 3.2 The roadmap of the evaluation research in Phase 1 .1
40 Phase 1 .1 1 the selection of 15 manufacturing companies with superior EMS and SPD practices by using the multiple indicators (Yang & Giard, 2002). This is done by using the indicators of the cumulative industrial/product design award over the last three years (2000-2002), including the analysis of the peer survey. Similarly, a preference matrix is built to rate a company according to several profession-level design awards and the weighted score method is also used to quantify performance of corporate design and SPD practice. For example, the Industrial Design Excellence Awards (IDEA) is assigned a weight of 8. If a company has one Bronze-Award-Winning product in 2000, two SilverAward-Winning products in 2001, and one Gold-Award-Winning product in 2002, it then has a score of (5 x 1) + (7 x 2) + (10 x1) = 29 and gets a weighed score of 29 x 8 = 232 points. The total score for a company is the sum of the weighted scores for all the selected design awards. The same method is applied to calculate the total score of a company for its SPD practice. The Phase I research is based on the Standard & Poors 500 Index companies (Standard & Poors, 2002). Because the index is one of the most widely used benchmarks of equity performance and usually concentrates on manufacturing companies, it is hypothesized that environmental and sustainability issues are strategically important to S&P 500 companies and that these companies are more likely to provide the opportunity to imbed superior EMS organizations and SPD practices. Complying with the new North American
41 Industry Classification System (NAICS, 2002), the study includes all companies from the major manufacturing sector involved in industrial and/or product design for environment practice. It should be noted that the definition of industrial and product design in this research did not include interior design, exhibition design or digital media/graphic design. The data to evaluate the corporate EMS performance were obtained from the U.S. EPA, the Investor Responsibility Research Center (IRRC), professional consulting companies, and other published resources. To collect the cumulative corporate design award data, the study uses information from the peer survey and the major published resources and official websites of organizations involved in industrial/product design. Six national and international design awards are identified and all the information about the award-winning products from the American manufacturing companies from 2000 to 2002 is entered into a database. The research analyzes the data by using the Statistical Package for the Social Services (SPSS 12.0) and Microsoft Excel (2002).
3.2.2 Phase II: An Embedded Single-Case Study The key method adopted for this research phase is an embedded single-case study. Yin describes the case study as, an empirical inquiry that investigates a contemporary phenomenon within its real-life context, especially when the boundaries between phenomenon and context are not clearly evident (Yin, 1994). Yin further states that case studies are the preferred strategy when how or why questions are being posed, when the investigator has little control over
42 events. The case study method is a favored method to study practices of design management because it can be used to carry out research of an exploratory nature and allow the design management researcher the freedom to enrich their findings by collecting information involved in how to integrate design with other business functions. Managing corporate sustainable design practice by integrating product development and ISO14001 environmental management systems is still a complex issue in that both of SPD and EMS are new concepts to many American manufacturing companies. The integration management practice towards sustainability is involved in the fundamental change of companys core value as well as existing operations. A case study research can develop an understanding of such a complex issue and can extend experience and add strength to what is already known about corporate sustainable solutions through previous research. In addition, a single-case study is an appropriate design...when it represents the critical case in testing a well-formulated theory (Yin, 1994). Compared to a multiple-case method, a typical and revelatory single-case study can provide a comprehensive description and analysis of the entire management process of corporate integration of SPD and EMSs in a leading manufacturing company. Furthermore, the case study method emphasizes detailed contextual analysis of a limited number of events or conditions and their relationships (Hamel, Dufour & Fortin, 1993). The SPD and EMS integration management is involved in two corporate functions product development and environmental managementand their operations in both corporate- and divisional levels.
43 Consequently, to further develop and test the preliminary integration management theory, an embedded single-case study is designed to focus these units in a particular company. More importantly, the case study explores how a proactive company has implemented the key elements of the integration of SPD and EMS practice.
Table 3.1 Tactics to Improve Quality of the Single-Case Study Quality Criteria Tactics for the Single-Case Study Design Use multiple sources of evidence
o
Phase of Research
Documentation Archival records Data collection Interviews Physical artifacts (i.e. products)
Construct validity
o o o
Establish a chain of evidence Internal validity External validity Conduct an extensive evaluation and a benchmark survey to select a case company Use a case study protocol Reliability Data collection Develop a case study database Adopt a theory-building structure Data analysis Use logic models Use a preliminary theory Research design
Note: adapted from Case studies and organizational innovation: Strengthening the connection, by COSMOS Corporation, 1983.
44 Many criticisms about the case study method focus on the poor basis for generalizing that a single case can offer. The embedded, single-case design adopted by this research identifies several tactics to improve the quality of the case study (Table 3.1). The selection of a company for the single-case study is based on the result from the Phase I evaluation and surveythe top American manufacturing companies with high performance on both environmental management systems and corporate sustainable product design. The single-case study design includes both primary and secondary data collection methods, and comprises company document reviews and case study interviews. There are different opinions as to the amount of prior instrumentation required before conducting case study interviews for qualitative research (Miles & Huberman, 1994). In this study, an interview protocol is developed based on the research questions and the findings from Phase I. The further detailed questions for each interviewee depend on the role that they play in the integration management. The researcher traveled to the respondents facilities to carry out on-site interviews. The respondents were carefully chosen in order to cover all key areas that the integration management was involved (See Chapter 5, Table 5.5). A detailed case report was structured to follow the theory-building logic depend on the specific topic and integration elements. The final conclusions and discussion were developed to contribute on the perspective theory and integration management models.
CHAPTER 4 EVALUATION RESEARCH
4.1 Leading Companies in EMS1 4.1.1 Introduction The performance of corporate EMS organizations has been the subject of intense scrutiny during the last few years. Specifically, business executives have challenged EMS departments to demonstrate that they are both performing optimally and adding value. There are, however, no standardized methods and procedures for assessing the performance of EMS organizations. Among the difficulties impeding such standardized approaches are issues relating to data quantification and validity, as well as information collection and mining. As a result, there is no absolute benchmark measurement of EMS performance. The key objectives of this phase of the research are to: Develop an evaluation matrix for the assessment of corporate EMS performance; Identify the top companies with superior EMS performance (i.e., those that are more likely to have superior EMS organizations); and
1 The section is adapted from a journal article coauthored by Richard MacLean (Yang & MacLean, 2004) and with his permission. The author of this dissertation was employed by Mr. MacLean, the president of the Center for Environmental Innovation (CEI), to independently conduct a study from which the article resulted. The study is also the first phase of a benchmarking program in support of a research project called Organizations in Transition: Guidelines and Best Practices for Structuring EH&S Organizations for Superior Performance.
46 Serve as a preliminary exploration of the organizational and operational factors that contribute to EMS success.
4.1.2 The Evaluation Matrix This section describes an evaluation matrix that has been developed to assess the performance of U.S.-based corporate environmental, health, and safety organizations, and explains how it was used to evaluate corporations EMS performance over a recent three-year period (2000-2002). The matrix uses a system of input variables, intervening variables, and outcome indicators. The design of the matrix was purposely tailored to identify companies that are likely to have superior EMS organizational structures and practices. This selection process was developed to support benchmarking research into organizational best practices. By adjusting the weighting factors, or by adding or removing variables, researchers can adapt the evaluation matrix as a methodology for identifying other top-performing companies for benchmarking into other EMS areas of interest.
4.1.3 Research Methodology Design Overview The study described here focuses on corporate EMS performance during a recent three-year period (2000 through 2002) among companies listed in the
47 Standard & Poors 500 index (S&P 500). Although companies tend to give their EMS departments different names, EMS and EHS (Environmental, Health, and Safety) are common names in practice. The chapter uses EMS to represent corporate organizations responsible for the environmental function. The research hypothesizes that EMS-related issues are important to S&P 500 companies (because of their size, the shareholder scrutiny they receive, and the importance of their reputations), and that leaders among these companies thus are likely to have superior EMS organizations and practices. Another consideration is that large corporations generally have sophisticated organizations. Some have several major business groups that themselves approximate mid-size to large corporations, as well as individual factories that resemble small corporations in their EMS organization and practices. By focusing on major corporations, the benchmarking will, it is anticipated, yield insights into best practices that may also be applicable to small and mid-size corporations.
Phase I Phase I ranks the S&P 500 companies by readily available outcome (i.e., results) indicators to narrow the list down to the top 100. Phase II rates these pre screened companies according to 16 internal management indicators that potentially reflect superior organization. The top 30 are then selected for followup benchmarking.
48 Phase I consists of five major categories subdivided into 20 outcome indicators: Awards (six indicators); Peer recognition (two indicators); Classical performance measures (three indicators); Financial results (three indicators); and Published composite EMS outcome indices (six indicators).
The hypothesis is that superior EMS organizations will exist in financially viable corporations that are successfully managing EMS issues and attaining EMS peer recognition and awards. The reasons for including common and customary EMS outcome indicators in Phase I are self evident. The rationale for including overall business financial results may be less obvious, but is supported by research which has shown that the superior environmental performance of large American corporations is often related to superior financial performance. The S&P 100 companies are leaders in their respective industries; they represent almost 53% of the market capital of the S&P 500. Similarly, the companies in the Forbes Super 500 have the highest composite ranking scores for all four categories: sales, profits, assets, and market value.
Phase II There are two major categories within Phase II:
49 Input variables measuring management support (one indicator) and the characteristics of the industry sector (three indicators); and Intervening variables measuring sophisticated organizational processes (three indicators), participation in progressive or cutting-edge trade associations or activities (six indicators), and specific cutting-edge programs established (three indicators). The rationale for considering these factors is that a company that cultivates effective EMS leadership is more likely to focus its employees on environmental, health, and safety goals, while also fostering EMS programs that maximize the potential of all employees. Similarly, companies that support long-standing membership in progressive trade associations and involvement with cutting-edge EMS programs are more likely to be well-organized and staffed, since they have resources focused on issues beyond day-to-day compliance and firefighting. In Phase II, certain input variables (e.g., number of Superfund sites and Toxic Release Inventory information) were calculated as positive factors, while environmental violations and penalties were viewed as negative. Using negative scoring to rank companies with recent compliance problems is intuitively obvious. Assigning positive scores for significant toxic emissions and Superfund sites appears, at first, counter-intuitive. However, according to a 2001 EPA research program conducted by Professor Madhu Khanna of the University of Illinois at Urbana-Champaign, companies with a higher level of
50 potential liabilities and larger levels of pollution per unit of output are more likely to have a higher quality environmental management system. Because of this, large companies like DuPont and Johnson & Johnson are frequently identified as industrial leaders of corporate EMS practice, even though they still produce substantial quantities of toxic releases and wastes. On the other hand, the total dollar amount of fines levied by EPA for violations of environmental statutes may more accurately reflect the extent of poor environmental management performance.
Data Collection and Scoring The primary data sources used were: the U.S. Environmental Protection Agency (EPA); the Investor Responsibility Research Center (IRRC); professional consulting companies; respected journals and magazines; and independent thirdparty research organizations. In order to acquire a more complete collection of corporate EMS data, the study also includes information obtained through searches of major EMS issuerelated sources and official websites. Appendix contains a detailed listing of each data source, the nature of the information, and the weight (i.e., emphasis) it received in the scoring. A preference matrix (Table 4.1) was used to score each criterion from 1 (worst) to 5 (best). Each score is weighted according to its perceived importance, with the total of these weights equaling 100. The total score is the
51 Table 4.1 The Corporate EMS Evaluation Matrix

W E I G H T 5 5 5 2 6 S&P 500 Index Com panies Sector I A Com pany W eighted Score Score
Corporate EMS Perform ance M easurem ent
Input Variables
Industrial/Sector Characteristics Top M anagem ent Support Organizational Process
Num ber o f Superfund Sites O n-site Toxic Releases-Sales Ratio O ff-site Transfers-Sales Ratio Clear, Aggressive Statem ent of Com m itm ent Best EMS organization: Peer recognitions by environm ental, health, and safety professionals Leadership Baldrige Award (Baldrige National Q uality Program ) Global Environmental M anagem ent Initiative (GEM I) EPA Industry Partnerships (Project XL and National Environmental Perform ance Track) Coalition for Environm entally Responsible Econom ies (CERES) O rganization Resources Counselors (ORC) The C onference Board (TCB) IS 0 1 4 0 0 0 EMS Certification (or EM AS or BS 7750) Annual Report under Global Reporting Initiative (GRI) O ther significant, cutting edge project or alliance partnerships W orld Environm ent Center Gold Medal EPA Awards (Energy Star, Pesticide Environm ental Stewardship, Green Chem istry, Natural G as Star, ClimateW ise, W asteW ise, Partners for the Environm ent Program Award, Evergreen Award, Environmental Excellence Award) O ther Awards By environm ental, health and safety professionals (MacLean, 2003) By CEOs IRRC Research Data C om pliance Violation Penalty (Civil Penalties 1994and1995) Standard & Poors 100 IW U.S. 500 Forbes 100/500 Dow Jones Sustainability W orld Indexes FTSE4GOOD US 100 Index Domini 400 Social Index INNOVEST ranking system (EcoValue'21 Rating) Business Ethics 100 Best Corporate Citizens Fortune 100 Best to W ork For and Most Adm ired Com panies Total
2 2 2 5
Intervening Variables
Participation in progressive or cutting edge trade associations or activities
4 1 1 6 2.5 1.5 2 6
Specific cutting edge programs established
EMS Awards and Recognitions
Peer recognitions
1 6 4 6 -5 4 5 3 5 3 3 3 2 2 100
Outcome Indicators
Classical perform ance m easures for EMS Financial Results
Com posite indicators of perform ance (Indices)
52 sum of the weighted scores (weight x score) for all the criteria. There is no scientific methodology to precisely determine the importance of each weight factor. In this study, the individual weight factors were determined by the best professional judgment of the six researchers associated with Organizations in Transition. By varying the weight factors, the matrix can be adapted to other selection processes.
10 (E nergy)
15 (M aterials) 4 5 (IT) 3 2.0 % 2 0 (Industrials)
8 .0 %
12 .0 %
(C .D iscretionary) 3 5 (H ealth C are) 1 6.0 % 3 0 (C .S taples) 4 .0 %
2 0 .0 %
Figure 4.1 Phase I Screen by Sector
4.1.4 Initial Screening Results Phase I screening results (Table 4.2) are summarized in Figure 4.1, which breaks down companies by industry sector. As shown, companies from two industries information technology (including sub-sectors such as computer equipment, office electronics, semiconductor equipment, and telecoms and
53 Table 4.2 The List of the 100 Companies Identified by Phase I Screening
Rank 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. Com pany Intel Corp. Hewlett-Packard Johnson & Johnson Procter & Gam ble DuPont (E.l.) International Bus. Machines 3M Com pany Sun Microsystems Dow Chemical Bristol-Myers Squibb Xerox Corp. Motorola Inc. General Electric Microsoft Corp. Ford Motor Cisco Systems Texas Instruments Merck & Co. Baxter International Inc. Whirlpool Corp. Eastman Kodak Exxon Mobil Corp. General Motors Lucent Technoloqies NIKE Inc. PPG Industries Verizon Communications Delphi Corporation G oodyear Tire & Rubber Boeing Com pany Pfizer, Inc. Black & Decker Corp. Qualcom m Inc. Coca Cola Co. Pitney-Bowes Visteon Corp. Kimberly-Clark United Technologies Apple Computer Anheuser-Busch Dell Computer Maytag Corp. Gillette Co. Johnson Controls Lockheed Martin Corp. Abbott Labs Snap-O n Inc. Advanced Micro Devices Allergan, Inc. Conoco Inc. Score 440 335 326 305 292 2 75 261 226 200 194 188 181 173 172 171 164 159 158 153 152 150 150 149 149 145 144 144 142 132 131 124 124 118 117 116 116 114 113 109 108 106 104 104 103 102 98 97 97 96 96 Rank 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. Com pany Alcoa Inc Herman Miller Inc. W eyerhaeuser Corp. Avon Products Kerr-M cGee Cooper Tire & Rubber Solectron Honeywell Int'l Inc. Colgate-Palm olive Micron Technology Sherwin-W illiams AO L Tim e W arn er Inc. Lilly (Eli) & Co. ChevronTexaco Corp. Rohm & Haas Rockwell Collins ITT Industries, Inc. Dana Corp. Caterpillar Inc. Corning Inc. International Paper Eaton Corp. Textron Inc. Georgia-Pacific Group Occidental Petroleum Altria Group Inc. Marathon Oil Corp. Kraft Foods Inc. ConAgra Foods Inc. Sprint Corp. PepsiCo Inc. Interface Inc. Millennium Chem icals Inc. Archer-Daniels-Midland Co. BellSouth Corp. Sara Lee Corp. Loews Corp. Northrop Grum m an Corp. Raytheon Co. W yeth Lear Corp. Sunoco Inc. Pharmacia Corp. Deere & Co. General Dynamics Corp. Emerson El Paso Corp. Am erada Hess Corp. Dominion Resources Inc. Schering-Plough Corp. Score 95 93 93 92 91 90 88 84 82 80 78 76 72 72 70 69 68 66 66 62 60 58 58 52 50 44 44 40 40 40 38 38 36 35 32 32 30 20 20 20 16 12 10 4 2 0 0 -4 -8 -30
54 networking equipment) and health care (including sub-sectors such as health care equipment, supplies, facilities, and pharmaceuticals) account for over 50 percent of the companies included in Phase I. These results do not demonstrate that EMS organizations from these two sectors are superior to those in other sectors. Corporate EMS management in certain other sectors (especially the chemical and petroleum industries) often faces more technical and political challenges. The results may, however, suggest that executive managers in the information technology and health care sectors view EMS as a strategic issue, and purposely maintain a high profile in their EMS performance.
4.1.5 The Top 25 Out of these 100 companies, the top 25 with superior EMS practices were selected using the same preference matrix method that was used in the screening phase. In Phase II, the corporate EMS evaluation matrix included five categories (two input variables and three intervening variables) and 16 indicators. Table 4.3 lists the 25 companies finally selected in Phase II.
4.1.6 Discussion o f Findings Selecting best in class companies is relatively straightforward if the attributes being benchmarked are very specific, with measurable and publicly available
metrics to distinguish top performers. The challenge presented by this study is that no single rating or scoring system can provide an absolute measure of the best EMS organization. Indeed, there is not even common agreement over what constitutes a best in class EMS organization.
Table 4.3 Final SelectionPhase II

Total Score 668 584 571 538 537 479 468 459 457 400 400 396 393 381 381 341 334 322 307 302 300 295 288 278 271
Rank 1. 2. 3. 4. 5. 6. 7. 8. 9.
10.
Company DuPont (E.l.) Johnson & Johnson Intel Corp. 3M Company International Bus. Machines Ford Motor General Motors Procter & Gamble Hewlett-Packard Bristol-Myers Squibb Texas Instruments Dow Chemical Motorola Inc. Baxter International Inc. Eastman Kodak Xerox Corp. Lucent Technologies Herman Miller General Electric Lockheed Martin Corp. Pfizer, Inc. Merck & Co. Visteon Corp. Sun Microsystems Exxon Mobil Corp.
11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.
56 In the preliminary research (MacLean, 2003), for example, 60 senior EMS professionals submitted answers to the following question: When you think of companies that have the best EMS organization, what companies come to mind and why?
Table 4.4 Selection o f Best EMS Organizations by Peer Group (MacLean, 2003) Company DuPont Number of Citations 15 Reasons EMS part of culture; good mix of qualified staff; EMS integrated with business organization EMS linked to operational excellence; centralized staff, many now in business units; strong international auditing network; line management owns EMS performance Global management of risk and performance metrics; good blend of centralized/decentralized; very high staffing levels Matrix-hybrid organization design; highly focused staff Strong innovation and cross training; strong core corporate staff accountability at profit centers Community involvement groups; board of external experts to evaluate EMS programs; integrated systems Organization designed around customer support and regional needs; good site EMS coordinator training and guidance; director of sustainability Good mix of qualified staff Rank in Top 25 1
Baxter International
14
Johnson & Johnson
Intel 3M
6 6
3 4
Dow
12
Procter & Gamble
Bristol-Myers Squibb
10
57 As outlined in a prior article, a bewildering array of companies and reasons were returned by the survey participants. In total, 74 companies were cited as having superior EMS organizations. No clear pattern emerged from the reasons provided. Table 4.4 lists the companies that were most often cited, and summarizes the reasons for their inclusion. This table does illustrate, however, that the senior EMS professionals surveyed were one-hundred percent accurate in identifying top EMS performers i.e., those companies that the evaluation matrix identified as among the top 25assuming for the moment that this study offers the definitive analysis of best-in-class EMS organizations. Indeed, even the relative ranking within the top four closely approximated the top positions in this study. So why not just solicit opinions as a means of selecting benchmark companies when the means for selection are not precisely defined or readily available? In effect, why not leave this murky process to the experts? This approach may be reasonable if a sufficiently large number of independent experts were solicited and one wanted to benchmark with only a few companies. The latter point is critical. The outstanding companies generally are wellknown and readily identified by professionals in the field. As soon as one goes further down the scale, however, consensus is elusive. In this case, once the top eight companies were identified, the remaining companies could not be differentiated.
58 4.1.7 Findings The matrix-based selection methodology discussed in this section provides a technique capable of differentiating EMS performance among dozens of companies. Resources can then be applied to benchmarking EMS performance according to the priority implied by this ranking. By using a matrix based on a variety of ranking systems, no single element dominates the outcome, lending greater credibility to the results. Other researchers might consider using a similar matrix scoring system, and might even use many of the same variables discussed here, with weighted scores adjusted for the particular issue under investigation.
4.2 Leading Companies in SPD 4.2.1 Introduction Manufacturing firms in the United States have recognized the need to reconsider traditional methods of product development including market introduction. Incorporating environmental concerns in the design and manufacture of products is becoming one of industrys greatest strategic challenges, not only from a design and engineering perspective, but from a management and marketing perspective as well. Consequently, many manufacturers have introduced new design management to integrate their DfE practices with corporate EMS. The research questions addressed in this evaluation study can be summarized as follows:
59 What is the state of the art in corporate DfE practices in the United States? How many award-winning products address environmental issues? Are the companies with superior EMS performance more likely to have superior DfE practices? Are companies with superior industrial/product design abilities more likely to incorporate environmental issues into their new product development practices? What are the major issues addressed by contemporary corporate DfE practices? The key objectives of the evaluation research can therefore be summarized as follows: To develop an evaluation matrix to assess performance of corporate EMS and DfE organizations in the last three years (2000-2002); To provide a cumulative corporate product design and environmentally conscious design award study in the last three years (2000-2002); To analyze the correlations between EMS practice and corporate DfE practice implied by environmentally conscious design award over the last three years; To identify major issues addressed by contemporary DfE practices in major American manufacturing companies;
60 To select the top 15 companies with superior performance in both EMS and DfE practices for further investigation and research.
4.2.2 Research Methodology Focusing on the Manufacturing Industry Industrial and product design for environment can make a significant contribution to the American manufacturing industry. Integrated with corporate environmental management, DfE can play a critical role in all the social, economic and environmental dimensions of sustainable business. Complying with the new North American Industry Classification System (NAICS, 2002), the study includes all manufacturing companies from the major manufacturing sub-sectors involved in industrial and/or product design for environment practice (Table 4.5). As previously mentioned, the definition of industrial and product design in this research does not include interior design, exhibition design or digital media/graphic design.
Research Design The external corporate evaluation in this research adopts multiple measures that can be combined to form on overall proxy that may serve as indicators of organizational and design effectiveness. Each specific measure is an approximation of the outcome. Evaluating performance of a companys product design is always difficult due to potential bias of subjective assessment and
61 inconsistence of criteria used in objective assessment, both of which are common in contemporary design reviews. As a result, the study adopts awardbased indicators to assess corporate design practice.
Table 4.5 The Manufacturing Subsectors and the Related Design Categories Manufacturing Subsectors (NAICS, 2002) Computer and Electronic Product Manufacturing Electrical Equipment, Appliance, and Component Manufacturing Machinery Manufacturing Transportation Equipment Manufacturing Furniture and Related Product Manufacturing * Plastics and Rubber Products Manufacturing Textile Product Mills Apparel Manufacturing Wood Product Manufacturing Paper and Printing Manufacturing Design Categories Computer Products Business Products Industrial Equipment Consumer Products Instruments and Related Products Apparel and Textile Products Furniture and Fixtures Motor Vehicles and Transportation Equipment Medical and Scientific Equipment Packaging
A preference matrix (Table 4.6) is used to quantify the selection process. Based on the top 25 EMS manufacturing companies, a selection is made of the 15 companies with superior DfE practices. This is done by using the indicators of the cumulative industrial/product design award over the last three years (2000-2002). Similarly, a preference matrix is built to rate a company according
62 to several profession-level design awards and the weighted score method is also used to quantify performance of corporate design and DfE practice.
Table 4.6 The Corporate Product Design Evaluation Matrix

W E S& P 500 Index Com panies Sector I A Com pany Score W eighted S core
Corporate Design Practice Measurement (2000~2002)
1
G H T
Industrial and/or Product D esig n
Business Week and Innovation (Industrial Designers Society o f Am erica, IDSA) Industrial Design Excellence Awards (IDEA) International Design Design Review Innovation (IDSA) Innovations Design & Engineering Awards National Design Awards Business Week and Innovation (IDSA) Designs o f the Decade Awards (2000) Design News Best New Products and Excellence in Design Awards Business W ee/rand Innovation (IDSA) Industrial Design Excellence Awards (IDEA) International Design Design Review Innovation (IDSA) Innovations Design & Engineering Awards National Design Awards Business Week and Innovation (IDSA) Designs o f the Decade Awards (2000) Design News Best New Products and Excellence in Design Awards Total
8 8 7 10 10 7 8 8 7 10 10 7 100
D esign for Environm ent (A w ardW inning P roducts addressing environm ental issues)
Data Collection To collect the cumulative corporate design award data, the study used information from the major published resources and official websites of organizations involved in industrial/product design. Six national and international design awards are identified and all the information about the award-winning products from the American manufacturing companies from 2000 to 2002 are entered into the database.
63 4.2.3 Data Analysis and Results The research analyzes the data using the Statistical Package for the Social Services (SPSS) and MS Excel. No other credible structure currently exists to examine these issues.
1017
200
400
600
800
1000
1200
H Total Num ber o f Award-W inning Products Addressing Environm ental Issues Total N um ber o f Award-W inning Products
Figure 4.2 Descriptive analyses of total award-winning products
Identify Manufacturing Companies with Best DfE Practice To avoid repeated counting, the study only calculated the best award for a single product if several awards from different sources had been garnered. However, a company could get a high score if it had many different award-winning products from 2000 to 2002. As shown in Figure 4.2, the total amount of award-winning products studied in this research is 1017; only 12 percent, or 119, of them incorporate Design for Environment principles into industrial/product design. The study also indicated that large American manufacturing companies tend to integrate DfE principles into their design activity but do so by following a list of priorities. Table 4.7 illustrates the most frequently mentioned DfE principles
64 adopted by these award-winning industrial/product designs, which stand out from all competitors in design review due to their environmentally friendly features. It could also be implied that these design methods were widely used in contemporary DfE practice in the United States. They translate into business advantages and more likely help American manufacturers, who are facing challenges especially from long-term commercial success and new environmental legislation, build the triple bottom-line (economic, environmental, and social benefits).
Table 4.7 The Ten Most Frequently Mentioned DfE Principles 1 2 3 4 5 6 7 8 9 10 Design for Durability Design for Recyclability/Reusability Energy Efficiency Avoid Hazardous Substances and Releases Use Recycled Materials Reduction in Dimensions and Weight Design Upgradeable Components Use Renewable Forms of Energy Design for Disassembly Assure Product Biodegradability
65 By analyzing the cumulative corporate design award from 2000 to 2002 in the United States, the study identified the top 15 manufacturing companies with the best industrial/product design practice and the top 15 companies having the best DfE practice (Table 4.8).
Table 4.8 Top 15 Design Companies and DfE Companies in Manufacturing Top 15 Design Companies Apple Computer International Bus. Machines NIKE Inc. Herman Miller Hewlett-Packard Motorola Inc. General Electric Ford Motor Du Pont (E.l.) Gillette Co. Black & Decker Corp. Dell Computer Whirlpool Corp. General Motors 3M Company Top 15 DfE & EMS Companies Apple Computer Ford Motor General Motors Du Pont (E.l.) Herman Miller Maytag Corp. 3M Company International Bus. Machines NIKE Inc. Hewlett-Packard Intel Corp. Texas Instruments Procter & Gamble Eastman Kodak Motorola Inc.
Analysis of Correlations Correlation analysis was used in this study as a measure of the degree to which a companys EMS performance would affect its DfE practice. In general manufacturing, the correlation coefficient is only 0.38, which is much lower than
66 was expected (Table 4.9). It suggests that the relationship between corporate EMS performance and corporate DfE practice is weak.1 The basic reason for the weak relationship may be a lack of effective product-oriented environmental policy in the U.S. such as take-back obligations for manufacturers and distributors. Product-oriented environmental policy can not only help corporate
Table 4.9 Correlation Analysis (Coefficient Values) Subsector General Manufacturing Computer and Electronic Product Manufacturing Transportation Equipment Manufacturing Furniture and Related Product Manufacturing Industrial/Electrical Equipment, Appliance, and Component Manufacturing Apparel and Textile Products * p<05 .26* .52* o t> CO l_
0
High EMS Performance Good Design Practice .38*

.76*
.67*
.86*
O . Q CD
L U
.65*
.67*
.56*
.72*
O Q . O O
.32*
.58*
1Correlation analysis measures the inter-relationship between two variables. The output of this measurement is called the 'correlation coefficient'. A correlation coefficient will ranges between 1.0. In the study, we suppose that a low correlation coefficient (e.g., less than 0.40) suggests that the relationship between the two variables is weak or non-existent; and a high correlation coefficient (e.g., more than 0.60) indicates that the dependent variable will change when the independent variable (e.g. an indicator) predicts a change in the dependent variable.
67 EMS organizations focus on environmental compliance but also provide manufacturers with regulatory or economic instruments and ecologically friendly design vision towards the whole product life cycle other than only the production stage. In addition, other factors such as corporate geographic factor, product physical characteristics, and corporate organizational behavior can pose significant influence on relationship between corporate EMS performance and DfE practice. However, a subsequent analysis towards different sub-sectors (Table 4.9) indicated that high correlation coefficients exit for several manufacturing industries such as electronics (0.76) and automobile (0.65). It indicated that companies with superior EMS performance are more likely to have superior DfE practices in these sub-sectors. The study also indicated that a manufacturing company having good industrial/product design practice was generally more likely to have superior DfE practice no matter which sub-industry it belonged to. A possible explanation of these results is that companies from manufacturing industries like the electronics industry and the automobile industry face more challenging product-oriented environmental management tasks. Traditionally, product design is an integral part of corporate culture and marketing strategy in these companies. Therefore, DfE is naturally identified as an important tool to improve corporate environmental performance. However, correlation is not a static condition. The correlation between corporate EMS performance and DfE practice does change over time. What has
68 happened in the past may not predict exactly what will happen in the future. This caveat needs to be part of any study of the corporate environment and design management.
4.2.4 Findings and Discussion Usability vs. Reusability The study indicated that usability is the most common feature of the awardwinning products in the contemporary design review while few environmental issues such as reusability were included. It also implied that sustainability was not treated as a dominant design element like human factors or ergonomics in U.S. design practice. The usability issue is currently not only emphasized by almost all the industrial/product designers but also regarded as a necessary criterion for good design and recognized as such by almost all the design reviewers. Being partially responsible for the continuing degradation of the ecological environment, designers now should consider reusability as another necessary design rule besides usability and visual aesthetics. The Industrial Designers Society of America has been a leader in the promotion of DfE principles by incorporating environmentally friendly design as one of the five criteria of excellence in selecting award winners in 2003. Inevitably, an integrated teaching/training model, integrating sustainability issues into related design
69 courses, would be indispensable and effective to promote changes of value sets in design students (Yang & Giard, 2001).
Footprint vs. Ecological Footprint A reduced footprint is another popular design feature that is often part of many award-winning products. Reduction in product dimensions and weight become a win-win strategy for manufacturers not only to lower direct materials cost of products and to become more competitive but also to reduce product and process complexity and production releases. It is from this particular perspective that eco-efficiency clearly makes business sense. For its part the Ecological Footprint is more significant because pollution and waste are still produced under the premise of eco-efficiency. It cannot prevent the ecological environment, i.e., where we live, from reaching its own absorptive limits under the effects of industrial and other human activities. Developed by Mathis Wackernagel and William Rees, the Ecological Footprint measures the use of the earth's resources in terms of water and land area (Wackernagel & Rees, 1996). It becomes one of the most effective tools to track the ecological excesses of human economy and to place sustainability in simple but concrete terms. Therefore, ecological footprint should substitute for footprint as a design evaluation criterion in order to highlight the designers role in connecting corporate environmental performance improvement with long-term profitability.
70 Large Companies vs. Small and Medium-Sized Enterprises (SMEs) The focus of this research was large manufacturing companies in the United States. According to Cohens study in 1995, superior environmental performance was related to superior financial performance for large American corporations (Cohen, Fenn & Konar, 1995). Not surprisingly, each of these manufacturing giants has developed its own new product design projects with emphasis on environmental and sustainability issues. Their well-established organizational structures, efficient operation models, and economy of scale can be easily transferred as an advantage for absorbing the substantial costs of improving their environmental performance in order to gain a competitive advantage such as lower costs and a more positive image. The study provides further evidence to demonstrate that superior corporate DfE practice is related to superior corporate EMS performance for large American manufacturing companies, especially those in the electronics or automobile sectors. Small and medium manufacturers can also be leaders of both EMS and DfE practice. Actually, American SMEs like Interface, Inc. are not only leading global providers of environmentally friendly products but are also successful examples of corporations that are conscious of sustainable issues. However, many SMEs have few resources in management, capital, and labor and therefore may not be prepared to tackle new challenges such as environmental regulation and stakeholders concern about their environmental impact. Under these conditions, financial support from government and appropriate design training are necessary
71 for improving the SMEs environmental performance at both the level of the corporation and/or organization and the product.
CHAPTER 5 BENCHMARK SURVEY
5.1 Introduction Given the relative novelty of corporate EMS and DfE functions and the learning curve of organizational absorption of ISO 14000 standards, a benchmark of the state-of-the-art integration practice has been unclear to American manufacturers. Furthermore, little literature addresses the real-world integration experience from corporate design management and environmental management to provide adequate guidance about how integration should be accomplished. The purpose of this chapter is to examine integration between sustainable product design and corporate environmental management at leading American manufacturing companies. For design and environmental management professionals, the chapter also identifies integration elements that have been successful in leading companies that consider product design in their implementation of EMSs.
5.2 Methodology 5.2.1 The Survey The benchmark study is based on a survey that is summarized in this chapter. The survey was circulated to 125 design directors of American manufacturing companies, including senior design professionals in charge of the industrial/product design functions of their companies. These design directors were randomly selected from the member database of the Industrial Designers Society of America (2004). They were also asked to forward the same survey to
73 the representatives of environmental management at their firms. Although the availability of environmental management function in these companies was unclear, many environmental management directors actually joined the survey. Therefore, the total number of questionnaires sent off was 250. Given that these companies have taken the step of appointing design and environmental directors, they are clearly larger and more involved in design and environmental issues than most other companies would be. A survey invitation letter was first sent by mail to each selected design director, which informed them that questionnaires would be sent to them by email or fax in one week after receipt of the invitation letter. By doing that, the survey tried to avoid sending a cold email or fax to potential respondents and increase the final response rate. Of the 250 questionnaires sent off, 46 were returned due to incorrect email address or fax number, which actually meant that 92 were returned. There were 82 responses to the survey, of which 68 were usablean effective overall response rate of 43 percent. Given the typical response rates ranging from 6 to 68 percent for email surveys (Schonlau, Fricker and Elliott, 2002), this response rate should be acceptable and should be evaluated in terms of how sensitive integration issues are for most American manufacturing companies. All of the responses were from individuals holding manager-level positions of corporate design or environmental management units. Among 68 respondents, 61 % of them were from product design units and 39% from environmental management units. More than two-thirds of respondents (69.2%) were from four
major manufacturing sectors: electrical & electronic equipment and component; furniture and related products; automotive and transportation equipment; and medical instruments and related products. (Figure 5.1) This is partly because these sectors are major contributors of the waste-stream, especially hazardous wastes and VOCs (volatile organic compounds) and they are among the major targets of environmental laws and regulations such as EPAs TSCA and EUs WEEE & RoHS. Consequently, both environmental management and product design have the demonstration abilities to improve environmental performance as the salient strategic issues in these manufacturing companies.
19.2%
0 Electrical & electronic equipm ent and com ponent (27.0% ) Autom otive and transportation equipm ent (11.5% ) Apparel and textile products (7.7% ) O ther m anufacturing (7.7% ) Plastics and rubber products (3.8% )
Furniture and related products (19.2% ) Medical instrum ents and related products (11.5%) Q Industry m achinery and equipm ent (7.7%) Com puter and other electronic equipm ent (3.8%)
Figure 5.1 The survey respondents by manufacturing sector
5.2.2 Measures and Data Analysis Interaction Effects between DfE and EMS The research intended to explore how corporate environmental design policy and environmental management practice influence a companys integration of environmental considerations into process and product design. Factorial
75 ANONA an inferential statistical techniquewas used to test if there was an interaction between the independent variables (DfE policy release and EMS implementation) in terms of their influence on the dependent variable (the degree of corporate integration of environmental considerations into design). Two questions were asked to obtain the data of independent variables: 1) Does your company have an environmental policy on DfE? 2) What is the status of the EMSs work in your company? The respondents were also asked to select all efforts of their firms from a list of corporate practices of integration of environmental considerations into design. Each option was scored by 1 point. Therefore, the dependent variable was expressed by the total score assigned to each response.
Integration Issues: Drivers and Success Factors The major objective of the study was to gather the various benefits and concerns to corporate integration of product design and environmental management practices. The management perspectives of these practices that have been experienced in American manufacturing companies are of particular interest. An open-ended survey question was asked: what are the primary reasons for your company to integrate product design and EMS? Respondents were asked to provide three or more answers for the question.
Leading Companies and Their Superior Integration Performance Another important objective of the study was to identify leading corporations and
76 the best practices that they utilize for integrating their design and environmental management functions to achieve competitive advantages. One question asked respondents to name three companies that came to mind when thinking of the best sustainable design and integration practices. Respondents were also asked to provide brief description (three or more reasons) of why they chose these companies. Analysis and synthesis of the data led to a benchmark identification of integration elements among the leading design and environmental management systems.
5.3 Key Themes 5.3.1 Design Managers vs. Environmental Managers The sample of the survey basically comprised two groups of respondents from different corporate functional units: product design and environmental management. One of the most interesting results from the survey was the lack of statistically significant relationship between the respondents functional status at their companies and their responses to the survey questions. In other words, there was no significant difference between design managers and environmental managers in terms of their opinions about the issues addressed in the survey questionnaire. The chi-squared tests (for nominal data) and independent sample t-tests (for parametric data) were used to evaluate the null hypotheses of two groups of respondents for all questions and their options of the questionnaire. Among the 28 tests, 26 of them (93%) had their P values (significance level) greater than
77 0.05 and so the null hypotheses cannot be rejected. Therefore, there was a 95% certainty that the respondents answer to the survey was not dependent on their position, that is, either as DfE or EMS manager. This might be partly because the respondents of the survey were from the American manufacturing companies. The environmental impact of their products represents a high percentage of the total environmental aspects of the whole organization and operations such as production and supply chain management. Design can play a key role in seeking win-win resolutions to sustainable business that are the common concern of both groups. It also further confirms validity and viability of the strategic foundation for corporate integration practice between product design for environment and environmental management. More important, the result also suggested that answers from both groups could be used in combination for further analyses.
5.3.2 Significant Interaction between DfE and EMS on Integration Levels The corporate practices of integrating environmental and sustainability issues into product design process are highly different among companies due to their core value and existing management resources. Obviously, these practices reflect the different levels of integration adopted by companies. It is likely that some integration efforts/activities may be relatively effective for certain parameter of performance (e.g. improving compliance), but less useful for other targets (e.g. minimizing cost or boosting environmental awareness among employees). Therefore, it is important to develop an extended and effective integration mechanism to manage the process. An existing EMS can have a positive impact
78 on the integration process (Frei, 1998; Brezet & Rocha, 2001). The influence of cross functional integration between DfE and EMS, however, has been unclear in the practice of U.S. manufactures. Two initial research questions were examined: 1) Is there a difference in the integration levels of companies having corporate-level DfE policy and those that do not have? 2) Is there a difference in the integration levels of companies having their EMSs certified or planning to certify and those having no EMS on site? In other words, given that incorporating DfE into corporate policy and implementing ISO14001 EMS indicate a strong corporate commitment to improvement of environmental performance of their organization and product, these companies are hypothesized to be more likely to adopt a broad range of strategies, tactics, and technologies than other companies. In addition to each of these main effects there is a third possible effect, for it is conceivable that whatever the effect of corporate EMS status on integration levels it may not be the same for companies having DfE policy and those do not have. Therefore, an appropriate null hypothesis can be: there will be no significant interaction between DfE and EMS on integration levels. A factorial ANOVA was carried out in preference to multiple one-way ANOVAs to avoid any increased risk in committing a Type I error and to enable both main and interaction effects to be tested. Table 5.1 shows the test results of both the main effects of DfE Policy and EMS Status and the interaction effect of DfE * EMS. Given the significance for DfE Policy is .006 (P<0.05), it means that there is only a 6 in 1000 chance that the overall mean integration score of
79
the company group having DfE policy is equal to that of another group that dont have; therefore the null hypothesis is rejected, that is, the two company groups have highly different mean integration levels (scores). Much the same situation exists for the test of EMS Status that has a significance of .028 (P<0.05), that is, companies having ISO14001 certifications or planning to certify have different mean integration level from those having no plan for a certified EMS or having no EMS action. The interaction hypothesis was also tested and the significance was given as .018. Therefore, at the 5% level of significance (.018<.05), the null hypothesis can be rejected; it was 95% confident that there was a significant interaction between DfE policy availability and EMS status on the levels of corporate integration of environmental and sustainability issues.
Table 5.1 Output from Factorial ANOVA with SPSS 12.0

Tests of Between-Subjects Effects Dependent Variable: Integration Levels Type III Sum Degrees of Freedom Source of Squares Corrected Model 104.416a 3 Intercept 1 100.556 DfE Policy 34.521 1 EMS Status 1 4.935 DfE * EMS 9.314 1 Error 28.386 18 Total 177.712 22 Corrected Total 21 132.802 a. R Squared=.827 (Adjusted R Squared=.815) Mean Square 34.805 100.556 34.521 4.935 9.314 1.577 F 2.918 8.431 21.895 3.129 5.906 Sig. .062 .009 .006 .028 .018
As the factorial ANOVA merely suggested that some means were significantly different from each other, post hoc comparisons were run to provide
80 further information as to how these factors and interaction effect influence the corporate integration levels. Table 5.2 shows the interaction effect on the mean score of integration levels. Apparently, companies having both DfE policy and ISO14001 EMS or certification plan have the highest mean value of integration score (8.678), although companies having only one of the two strategic actions (DfE mean=3.591 and EMS mean=2.962) also have higher scores than those having done none of them (0.872). This would appear to reinforce Freis research result that an existing EMS can have a positive impact on the integration process. Nevertheless, it is also evident that corporate sustainable efforts focusing on implementation of either ISO14001 EMSs or DfE strategy could not produce substantial changes and further support a systematic improvement of corporate environmental performance of their organization and product. Thus, this would appear to support that it would be most likely to be effective to integrate corporate sustainable design and environmental management practice for building a comprehensive corporate architecture to integrate sustainability issues and achieving competitive advantages.
Table 5.2 Output from Multiple Comparisons

Post Hoc Tests _________ Dependent Variable: Mean Score of Integration Levels Having DfE Having no Independent Variables policy DfE policy Having corporate EMS certified or planning 2.962 8.678a to certify Having no plan for a certified EMS or no 3.591 0.872 EMS action has been taken a. Maximum score is 12.
81 5.3.3 Cutting-Edge Integration: Benchmarks towards World-Class Systems Business Importance: Integration Drivers Companies are now experiencing increasing pressure and expectations to improve environmental performance from a broad range of stakeholders of sustainability issues, including consumers, regulators, shareholders, business partners and suppliers, and industry associations. Neither environmental management department nor product development function in a company can handle all these stakeholders issues with their own single-department sources. Integrating product design for environment and environmental management can provide an operational model to systematically manage all environmental issues from a strategic corporate-level perspective. Although many companies are now adopting the integration approach for the different reasons, the survey revealed several key drivers: Customer Demand Almost 90 percent of respondents reported that delivering customer value is a main driver for corporate integration of DfE and EMS. Comprehensive understanding of customers expectations is frequently a fundamental task of product design units at manufacturing companies. Integrating DfE and EMS can support environmental managements strategic alignment to corporate customer policy and motivate designers to improve overall product quality and performance, resulting in highly satisfied customers and improved loyalty. A well-established corporate
82 public image may not only enhance organization brand and increase sales but also attract more environmentally conscious investors. Environmental Liability Reducing regulatory concerns and improving relations with regulators are two core objectives of corporate environmental management. Integrating DfE and EMS provides an extended environmental regulation vision to design management towards global competitive advantages and promote a proactive approach to environmental responsibility. Many design respondents, especially those in electronic industry, reported that collaboratively working with experts from corporate environmental management departments is one success factor on which to build a reliable management matrix of product design by considering international environmental regulations like the European Unions WEEE & RoHS as a design parameter. Effective integration can also reduce duplication of effort in terms of hazard identification, environmental database and documentation, etc. Consequently, corporate integration of DfE and EMS facilitates informed decision during the design stage and avoid costly environmental liabilities. Marketable Profits The third main driver is improved corporate profitability due to decreased costs as well as increased sales. Corporate environmental management systems usually focus on the environmental aspects of organizational activities such as production rather than products. Integrating DfE and
83 EMS can support early adoption of sustainability issues in product design stage and minimize the compliance cost of production and pollution abatement expenditure at the end of pipeline. Designing for the 3Rs (recovery, reuse and recycling) and disassembly can lower material and labor costs and have a positive impact on a products bottom-line contributions to a company. General Responsibility The perceived value of good environmental stewardship is also an important driver for corporate integration. To successfully implement either environmental management or environmentally conscious product development, both top management commitment and full employee support are critical. DfE and EMS integration based on corporate culture building and awareness training makes both top down and bottom up approaches possible to cross-functional teams. When answering the survey question about drivers, more than half of respondents said that it is just the right thing to do. Innovation Opportunity More than one third of design and environmental managers believed that corporate integration can enhance the capability to alter the values, beliefs, and behavior and produce positive influence on organizational learning process that ultimately stimulates innovation and creativity. Implementation of corporate integration requires rigorous criteria of environmental, economic and social feasibility. Over the last decade, a
84 set of management technology and tools have been created to facilitate the integration process, such as corporate citizenship model, life cycle analyses, and full-cost accounting. They can open the company to a new vision and bring it to new opportunities of innovative ideas.
Table 5.3
Common Elements o f Corporate Practice on Integration of Environmental and Sustainability Issues
1) Internal and external communication 2) Product/service design process linked to mechanisms to address customer/stakeholder environmental needs 3) Suppliers are part of the value chain 4) Management metrics and performance measurement 5) Organizational leadership 6) Product design policy on environmental or sustainability issues 7) Engineering and design tools 8) Accounting techniques 9) Environmental considerations can override a compelling and profitable opportunity 10) Knowledge management and Training 11) Environmental review of all final product/service designs 12) Mechanisms in place to minimize life-cycle impacts 13) Participation of government programs such as Energy Star, with product requirements for obtaining certification 14) Compliance projects to meet minimum liability requirements
Integration Elements Although American manufacturing companies tended to adopt different strategies and tactics to improve environmental performance, the survey results confirmed that there were a number of common elements of their practice on integration of environmental considerations into product design. Table 5.3 listed all the integration elements that were reported by the survey respondents and they were
85 either being an integral part of their existing systems or had ever been used in the corporate integration practices. When American manufacturing companies became responsive to the wave of environmental issues in product design area in the early of 1990s, several characteristics of leading companies that integrated environmental issues into their design and process were identified as: 1. The companys environmentally conscious product and design strategy was compatible with its corporate objectives; 2. There was a sincere and visible top management commitment to product design for environment; and 3. Analysis tools were used to identify the environmental impact of a product throughout the life cycle (Burall, 1996; Sweatman & Simon, 1996; Fiksel, 1996). Nearly a decade later, the survey research found that what was characteristic of leading companies in the 1990s is much more commonplace today. Although the three principles cited above remained a constant, their level of intervention and scope broadened over the intervening years. For example, published environmental management and product policy, organizational leadership, and corporate mechanisms to minimize product life-cycle impacts became greater and more significant compared to yearsbefore. Furthermore, the leading American manufacturing companies are continuously building their management systems to comprehensively integrate environmental and sustainability issues into their whole business operations. As illustrated in Table
86 5.3, the most frequently cited five integration elements (more than two thirds respondents) were: 1) Effective communication; 2) Customer needs; 3) Supply chain integration; 4) Management tools; and 5) Organizational leadership. An explicit top management commitment was just one of several indicators of organizational leadership. Today, this level of commitment is not sufficient. Other actions must support this strategy such as a collaborative cross-functional team, which is more effective in to addressing stakeholders issues and the organizations core set of values.
Superior Integration-Performing Companies and Success Factors Sixty-six companies were named by respondents as having superior sustainable design management and integration performance. The average company received 2.5 votes, with a range of 1 to 26. The most frequently named ten companies and the reasons given for their listing are provided in Table 5.4. Most of these companies are basically from three manufacturing sectors: electrical and electronic equipment and component; furniture and related products; and automotive and transportation equipment. Not surprisingly, a variety of reasons was provided by survey respondents as success factors of superior corporate integration. There were, however, a number of common factors, as illustrated in Table 5.4. Furthermore, the reasons cited for voting a leading company basically fell into several overarching theme categories:
87 Table 5.4 Superior Integration-Performing Companies and Reasons

Leading Companies Intel Ford Herman Miller Interface Xerox IBM Apple HP Dow Steel Case Num ber of Citations 26 Success Factors * Exposure to marketing Customer value proposition Press releases and public image Stakeholder involvement from the beginning Cradle-to-cradle methodology M anagem ent techniques Increased margins Proactive liability m anagem ent (e.g. W E E E & R oH S) Accountable, well managed integration objectives and organization Top m anagem ent driven Innovation, core competency, visionary Lean manufacturing procedures Supply chain m anagem ent Tools and methodology to integrate Depth/breadth of commitment Cultural changes and strong environmental belief Environmental technology Formal integration into product development process Size and scale of the company and business Involvement in sustainable design projects
22 18 17 15 12 11 9 9 9
Corporate strategy and core values A published corporate sustainable design and environmental management integration policy is an indicator of strong company commitment to sustainability. The ultimate executive challenge is to maintain alignment between overarching company strategy and strategy for integrated product design and environmental management. The proactive integration strategy and goals should clearly articulate operational, measurable objectives with inputs of corporate core values, customer values, and the trend of international environmental regulations. Organization and resources for integration Implementation of corporate integration requires important organization
88 and culture changes in a company. The changes should be involved in structure and responsibility, training and awareness, and internal and external communication. Both top management commitment and co operation among all employees from all levels and functions with wellnourished awareness are critical. Companies also need to identify available resources and documented processes to support and manage changes. Management techniques Management techniques should be adopted to support decision-making, evaluate performance against established goal and objectives, and motivate continuous improvement. For example, information from use of holistic management matrix can help identify the most significant and profitable design specifications. In addition, supplier involvement in corporate integration project team was frequently cited as a success factor into leading company practices. Direct cross-functional, inter company communication was an extensively used technique in successful supplier integration. Formalized integration process Corporate design and environment management integration is a formalized process that requires in-depth understanding of related company functions capabilities and buy-in from in-house project team members. A formalized process can facilitate formulation of design parameters and control time and budget through the full cycle of product
89 design, from conceptual development to detailed design, from prototype testing to market launch, and from design planning to product review. Significant stakeholders such as consumers and suppliers integrated earlier in the process generally produce better results. Design and management tools Success integration can serve as a connection among different interests of corporate operations such as customer satisfaction and environmental improvements; the integration of management systems should be reflected by the integration of tools (v Ahsen, 1999; Quella & Schmidt 2003). Consequently, tools should be developed to support sustainable design and innovation, knowledge management, and technology and cost information sharing.
5.4 Findings These findings reveal that there is a critical distinction between leading companies and other American manufacturing companies in terms of their practice and performance of integrating corporate sustainable product development and environmental management systems. Overall, managing corporate sustainability innovation through integrating product design and environmental management can be an effective approach to achieving competitive advantages. The integration in leading companies continues to add value in the areas of improved corporate image, operational efficiency, and corporate culture and structure for managing changes. It also can help American
90 manufacturing companies find new business and innovation opportunities and envision their future competitive position. Both design managers and environmental managers believe that an effective integration relies on cross-functional collaborative efforts from design, environmental management, marketing, accounting, engineering, production, and supply chain. This reflects that design managers and environmental managers generally desire stronger ties and communication network throughout the company. The integration imperative is also explained by the multiple drivers reported by respondents: customer demand, environmental liability, marketable profits, general responsibility, and innovation opportunity. In order to strengthen corporate integration of product design and environmental management, the study suggests that companies have to continuously invest commitment and creativity in: Corporate sustainability strategy and policy; Organization leadership; Customer value and supplier involvement; Management techniques; Formalized integration process; Training; and Tool development. However, it is critical to relate these efforts to core values of an individual company and integrate them into the established management processes.
91 5.5 Case Study and Interview Design Based on the research results from the preliminary evaluation and survey study, Herman Miller, Inc. is selected for the subsequent single-case study. The basic reasons for choosing Herman Miller are: Herman Miller built a comprehensive environmental management system which was IS014001-certified; Herman Miller had a specific DfE team responsible for developing corporate sustainable design policy and implementing sustainable design practice; Herman Miller was identified as a company having superior performance in both SPD and EMS; Herman Miller was cited as a leading company in these areas not only by its competitors in the office furniture industry but also managers and designers from other sectors; The EMS team, the DfE team, and the Mirra project team at Herman Miller were fully committed to and supported the case study research. The preliminary study further modifies the original research framework and questions. A detailed interview protocol is developed to control the interview process. Interview questions are classified into five categories as below: Design Vision and Strategy What is your target market? What is the major competitive thrust in that market? What are the key success factors for Herman Miller?
92 Does Herman Miller have an environmental policy? If yes, what is the environmental policy of your company? Who and at what level of Herman Miller was this policy established? Does the Mirra Chair project have a design strategy/policy? If yes, what is it? What are the primary reasons for Herman Miller to seek ISO 14001 certification? How did your company integrate the environment into sustainable corporate strategies?
Design Organization and Resources Please describe the environmental organizational structure of your company. Please describe the environmental organizational structure of the Seating Division. Who was responsible for the development of a product design policy that incorporated environmental concerns? How was this policy developed? How was this product design policy developed? Where in Herman Miller does the commitment to sustainable design rest? With respect to the environmental and product design policies of your company, how was the design team constituted and structured? Where does the decision-making authority rest in the final design?
93 What role does senior management play in the integration of product design with ISO 14001? Are individuals within the environmental team in your company normally members of product development or product design teams?
Management Goals and Measurements What are the primary reasons for implementing a sustainable product design strategy in your company? What are the sustainable product design objectives of the companys product? How did goal-setting of environmental management relate to product design? How does your company match or reconcile design management goals with environmental management targets? Is there a clearly defined mechanism linking the product or service design process to address or anticipate customer and stakeholder environmental needs and issues? Did your company identify relevant legislative, regulatory and other environmental requirements? What were the most significant ones? Does your company set priorities when embracing a sustainable product design strategy in product development? What are they? What are the sustainable product design objectives of the project?
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Does your company set quantitative standards and/or objectives for economic, environmental and social performance for the product? What are they? How is the sustainability performance of Mirra Chair measured? How is the sustainability performance of your products, services, and activities measured? Is there a process to regularly review your companys sustainable design activities and process? If so, what is that process? Does your company document the process?
Design Process How did Herman Miller match the design process with the Plan-DoCheck-Act environmental management model? * Are there comprehensive yet easy-to-use tools that a designer can use to make quick design trade-offs based on ecological impact? What tools, e.g., management metrics, are used to identify potential technological barriers to improvements? Was a life-cycle assessment used to determine high-leverage areas of product design? Of prioritized investment? Were the design processes and environmental attributes linked to financial concerns? If so, how were they linked? How did the design team communicate with each other? With other stakeholders?
95 How did you manage information and knowledge involved in environmental management? How did you manage information and knowledge involved in sustainable design? How were designers/teams motivated to adopt sustainable design practice? How were suppliers included in sustainable design process? How did your company diffuse sustainable design practices across the product development teams? Who within the company monitored and tracked the application of environmental concerns in the design of the product in order that established targets are met? Was the procedure of design integration documented? Was it included in the environmental management documents? Was the procedure documented? Was it included in the environmental management documents?
Design Analytical and Training Tools What are the most significant achievements of your sustainable efforts in terms of improving corporate environmental, social and economic conditions at Herman Miller? In what way(s) does your company identify and determine the significant environmental impacts of Mirra Chair?
96 In what way(s) does your company identify and determine the significant environmental impacts of your activities, products and services? In what way(s) does your company identify and determine the significant social impacts of Mirra Chair? In what way(s) does your company identify and determine the significant social impacts of your activities, products and services? In what way(s) does product design in your company significantly improve environmental, social and economic conditions? What are some advantages and benefits that occur in your company as the result of the implementation of ISO 14001 EMSs?Seating Division. What are some advantages and benefits that occur in your company as the result of the implementation of ISO 14001 EMSs and design integration? What are some advantages and benefits that occur in your company as the result of the integration of product design and environmental management? What are major barriers to an effective practice of sustainable product design? What are your companys major barriers to an effective practice of such integration? What are major barriers to an effective practice of environmental management at Herman Miller? Does your company have a corporate culture? Can you describe it?
97 Does your company offer regular training/educational programs on the subject of environmental awareness? If so, what are they?
Table 5.5 Selection o f Interview Respondents EMS Corporate Level EQAT Manager ISO14001 Manager ELIP Manager Division and Project Level Seating Division Site Lead Seating Division Operations Manager Product Design The DfE Team New Product Development Program Manager Chemical Engineer Mirra Project Manager
The embedded single-case study develops a comprehensive understanding of the integration management of corporate sustainable design and ISO14001 EMSs practice at Herman Miller. To be effective, the interview is designed to include potential respondents from the EMS and product design functions in both corporate and division levels (Table 5.5).
CHAPTER 6 HERMAN MILLER DRIVING TOWARDS SUSTAINABILITY
"We contribute to a better world by pursuing sustainability and environmental wisdom. Environmental advocacy is part of our heritage and a responsibility we gladly bear for future generations." Herman Miller's Corporate Values Statement
More than ever, the act of designing products is a process that melds key concerns beyond the consumer and the environment. Corporate design and environment units, in their collaboration with other functions, are constantly dealing with change and new sustainability imperatives. However, most efforts by American manufacturing companies involve improvement of environmental performance by discrete and passive actions, i.e., compliance-based environmental and design management. Herman Miller, Inc., the $1.34 billion Michigan-based office furniture company, is a different case. Starting with a belief of D.J. DePree, the founder of the company, environmental stewardship has been the foundation of Herman Millers past and the key to its future for more than half a century. Being an industry leader in environmentally responsible product design and environmental management, the company has developed products and programs that deliver customers environmental needs as well as the corporate core values. Initiated by its Environmental Quality Action Team (EQAT), Herman Miller implemented a comprehensive integration of sustainable design and environmental
99 management into day-to-day operations. On its path towards sustainable business, designing products with consideration for their sustainability impact remains a central corporate strategy (Herman Miller, 2005). Herman Miller has received many awards and recognition of various kinds from external organizations although it does not advocate for the environment merely to win awards. The company has been the only American home and office furniture manufacturer listed on the Dow Jones Sustainability Index (DJSI) since 1999 (Herman Miller, September 20, 2004). DJSI is an international stock portfolio that evaluates corporate performance sustainability using (see Appendix for details). The EPA's Pacific Southwest office honored Herman Miller with its seventh annual Environmental Awards because it was acknowledged for its ongoing work to minimize the environmental impact of its fabrics, materials, and finishes while maximizing product quality (Herman Miller, May 05, 2005). Environmental Building News magazine's GreenSpec Product Directory named Herman Miller's Mirra chair among its Top 10 picks for best new "green" products (Herman Miller, November 13, 2004). Herman Millers history of almost one century is full of stories and experiences relevant to product development as well as environmental efforts. The case study presented here only focuses on issues about its recent sustainable business centered corporate integration of product design and environmental management, which had a substantial impact on its changes in corporate culture, business processes, and therefore, business decisions.
100 Interviews with personnel in Herman Miller in early 2004 were the primary information source for this case study because written information on its design for environment program was scarce. Company brochures and other documents were also used when applicable. The case study discovered the interaction between the corporate EMS organization, sustainable design group, and product project teams at Herman Miller through comprehensively describing the integration management process adopted by the Mirra project. The core question of the case study was focused on the successes and problems experienced in Herman Miller when integrating sustainable product design practice with corporate environmental management systems particularly ISO 14001-certified EMSstowards building sustainable business? Under the umbrella of the main question, detailed analysis was conducted by addressing several overarching themes below: Design Strategy and Sustainability Leadership Design Integration and Organizational Leadership Management Systems and Techniques Design Leadership in Sustainability
6.1 Company Background With sales in more than 40 countries around the world, Herman Miller is a leading provider of office furniture systems, seating, storage solutions, freestanding furniture, casegoods, and related services such as office layout
design and furniture asset management. Its world headquarters are located in Zeeland, Michigan. Founded in 1923, the company is one of the oldest and most respected names in American manufacturing. Its net sales of $262,000 in 1923 grew to $25 million in 1970, the year the company went public. Herman Miller is today the second largest office furniture company, with customers and locations around the world. In fiscal year 2004, Herman Miller ended with net sales of $1.34 billion and generated $42.3 million in net earnings, compared to $23.3 million in fiscal 2003a significant 81.5 percent increase. This performance was explained by the companys continuous efforts to reduce operating expenses although raw material prices continued to rise during the past year (Herman Miller, 2004). Herman Millers corporate innovation strategy has continually contributed to its marketing image as a distinctive and highly regarded company since the 1960s. Herman Miller transformed the office furniture industry with the worlds first open-plan office systems and invented the concept of ergonomic design for office seating in 1976 with the introduction of the Ergon chair, followed by the Equa chair in 1984. In 1994, the company launched the groundbreaking Aeron chair. With the successful introduction of innovative Mirra task chair in 2004, Herman Miller extended its lead in the seating category. The company has been recognized as a design leader in the office furniture industry and many of its designs are in the permanent collections at major museums including New Yorks Museum of Modern Art, the Whitney Museum and the Smithsonian Institution.
102 Fortune magazine ranked Herman Miller as the Most Admired firm in furniture industry in the past fiscal year for the 16th time in 18 yearsand gave it the fourth highest innovation score among all companies surveyed (Herman Miller, 2004). Today, Herman Millers core business goes beyond furniture; the company now provides workplace solutions to customers worldwide through the research, design, manufacture, and sale of office furniture products. As one of the leaders in high-performance office furniture, the company sets its sights on the longneglected and potentially lucrative mid-price segment of the market representing half of all work chairs sold worldwide. People and the designers of the company are concerned with sustainability issues such as humanity, equality, and the environment they work in. They continually offer customers products to deliver the corporate core value and belief: innovation, design, operational excellence, smart application of technology, and social responsibility (Herman Miller, 2005).
6.2 U.S. Office Furniture Industry and Sustainable Business 6.2.1 Market Analysis According to 1997 Economic Census data (U.S. Census Bureau, 2001), the production of office furniture exceeded US$ 21 billion, accounting for more than one third of the total production of the furniture industry in the United States. The segment boasted over 4,000 establishments and employed about 173,000 workers (76% involved in production).
103 Table 6.1 U.S. Office FurnitureBreakdown of Production by Product Type Product type Seating Desks Storage Files Tables Systems Other 2004 26.5% 11.0% 7.9% 14.1% 7.2% 29.4% 3.9% 2003 26.6% 11.0% 8.0% 13.5% 6.8% 30.5% 3.5% 2002 25.8% 11.7% 7.4% 13.1% 7.2% 32.1% 2.8% 2001 25.2% 11.5% 6.0% 12.6% 7.1% 33.7% 3.9% 2000 24.9% 11.9% 4.9% 12.4% 6.4% 36.6% 3.0%
Source: BIFMA (The Business and Institutional Furniture Manufacturers Association), 2005
Office furniture (including fixtures) manufacturing is comprised of companies primarily engaged in manufacturing office furniture and/or office and store fixtures (NAICS, 2002), such as chairs, desks, bookcases, cabinets, partitions and counter units, showcases, and modular furniture systems. Suppliers of parts, frames, components and fixtures are also included in this sector. Systems and seating are the most commonly manufactured product type (Table 6.1). In 2004 seating constituted over 27% of the U.S. supply of office furniture and has continuously increased its percentage in the past five years, while systems claimed the top one share of 29% (BIFMA, 2005). The demand for office furniture comes mainly from sectors where there are a high percentage of non-manual workers (particularly services and public administration). Customers of this industry include a wide range of private sector clients and all levels of the public sector in the United States and many foreign
104
countries. Almost any business requiring office furniture is a potential customer of this industry (Five Winds International, 2003). More than 60% of office furniture sales pass through the contract channel (AKTRIN Research Institute & CSIL, 2000). In some cases manufacturers do not have direct contact with the customers. A range of intermediaries such as retailers, wholesale agents, architects, industrial and interior designers often specify and recommend particular brands, product lines, finishes and configurations to meet the customers needs. It should be pointed out that the home office market grew rapidly in recent years. Consequently producers sell via distributors of office products or deal directly with the large office centers or chains fulfilling the ever more frequent demand from consumers for economical products. All of these make customer values more important and tangible for product design and development in the segment.
Table 6.2 U.S. Office Furniture Industry Growth Year 2004 2003 2002 2001 2000
Source: BIFMA, 2005
Production (% change) 5.1% (4.3%) (19.0%) (17.4%) 8.5%
Consumption (% change) 5.4% (2.5%) (16.4%) (17.0%) 9.5%
In general, the office furniture industry is intimately linked to the business cycle of its customers (Five Winds International, 2003). Economic success or
105 downturn in the industry is contingent on the status of its customers overall financial performance. When times are good and businesses grow, the acquisition of furniture, interiors and new office spaces becomes more important. The opposite pattern occurs in a downturn. Following three consecutive years of decline (Table 6.2), the industry posted positive shipment gains in fiscal year 2004 (BIFMA, 2005). However, furniture manufacturers profit did not rise by as much as the increased shipments would suggest. Major increase in prices of raw materials (such as lumber, polymers and steel) negatively affected profits in a significantly way. An economic consulting organization, Global Insight, released the latest industry forecast in 2005 and the furniture industry is expected to continue its growth with an average rate of 9% over the next 18 months, primarily due to service sector employment growth and increasing investment in new office building construction (BIFMA, 2005). Actually, BIFMAs data confirmed that American office furniture manufacturers shipments increased 17% in the first quarter as compared to the first quarter of 2004, exceeding earlier expectation. The optimistic expectation provides an opportunity and possibility for companies in the industry to revise the development of their business and pursue new agenda.
6.2.2 Sustainable Imperatives Office furniture and panel systems are made with any one or a variety of
106 materials including metal, wood and wood based products, plastic, fabric and various composite materials (e.g. gypsum board). As a result of the different materials that may be used in manufacture, various environmental issues may be raised, such as resource utilization, pollution, and worker health and safety. Waste generated as a result of manufacture and disposal of these products can be minimized through reuse, remanufacture, and recycling. One of the major environmental issues in the office furniture industry is Volatile Organic Compounds (VOCs), which are typical indoor air pollutants and can trigger a number of human health related problems. Several materials and chemicals used in the manufacture of office furniture are potential sources of VOCs (Five Winds International, 2003). Office furniture may emit VOCs for some time after manufacture and installation adversely affecting indoor air quality and worker health. In efforts to limit the levels of pollutants emitted from commercial furniture, numerous government agencies including the U.S. EPA have established acceptable emissions criteria that must be met before the state or agency will purchase the furniture (EPA, 1995). To meet these criteria, office furniture companies have to redesign their products by using materials with lowVOC content or free of VOCs. Recyclability of materials is another key issue identified by manufacturers and customers in the industry. Due to the increased cost of raw materials and waste management, many office furniture manufacturers realized that adopting recyclable and recycled materials can be a win-win strategy to both
107 manufacturers and customers in terms of economic, environmental, and social benefits. As a stronger sense of responsibility is building in the commercial office furniture industry, some leading companies in this sector are committed to promoting sustainability issue in their business practices based on sound economics, environmental protection, and social responsibility. These goals are accomplished by fostering partnerships between manufacturers, suppliers, end users, and the science community; providing stakeholders with education and training in the concepts of sustainable design; and developing meaningful tools and performance metrics for quantifying and assessing environmental improvement.
6.3 Herman Millers Environmental Legacy and New Challenges 6.3.1 Being a Good Corporate Steward of the Environment D. J. DePree As early as the foundation of Herman Miller in 1953, DePree declared the company will be a good corporate neighbor by being a good steward of the environment. Since that time, Herman Miller has for more than 50 years looked for ways to coexist successfully with the natural environment. During that time, concern for the environment has become part and parcel of corporate life in this company, from its core value and culture to its product designs and daily operations.
108 From reducing, reusing, and recycling to building award-winning green facilities, Herman Miller has defined what it means for a company to be environmentally responsible (Herman Miller, 2002). Developing broadened understanding of environmental issues and comprehensive approach, the company implemented various environmental initiatives that were supported by senior leaders and improved by its long-standing tradition of employee involvement.
6.3.2 On Spaceship Earth, There Are No Passengers, Only Crew Buckminster Fuller In 1996, Mike Volkema, the new business leader of Herman Miller, Inc., declared that "living with integrity and respecting the environment" stands as one of five core values of this company (Herman Miller, 1998). Further in 2000, Herman Miller publicly announced its mission: to become a sustainable business and integrate sustainability issues into operations. The new business agenda represents a natural result of Herman Millers effort to develop strategic solutions towards both short-term and long-term challenges faced by all players in the office furniture industry: The major economic factors that influence the sector includes corporate profitability, white-collar employment, new office construction starts, and office space vacancy rates. After experiencing several years of economic recession and three continuous years industrial shrinking, the
109 U.S. office furniture sector began to show signs of recovery and saw improvement in a majority of the economic indicators above for the industry. However, there are still many factors adding to global economic uncertainty in the post-9.11 era and the slow recovery of the sector cannot offset the impact of competitive pressure from domestic and global opponents (Herman Miller, 2004). New strategy must be developed and integrated into existing corporate practice towards the long-term business success. To continuously develop and maintain a competitive advantage, innovation and product differentiation should be identified to limit the impact of negative pricing pressure. New product design and development can play a critical role and become an integral part of the total strategy. Maintaining efficiencies and cost savings are fundamental to improved capability to keep manufacturing lean and to deliver healthy profitability and cash flow in the midst of an even more challenging business environment. Rising material costs continue to be an area of concern in the industry. For a company like Herman Miller, whose manufacturing operations are largely assembly-based, strategic initiatives must be implemented to limit fixed production costs, source component parts from strategic suppliers, minimize inventory, and consequently, increase
110 the variable nature of cost structure and retain management control over the whole business processes. Customer loyalty, employee passion, shareholder confidence, and partner/supplier consolidation are also important factors to promote new business practices. Corporate strategy should be identified to focus on enhancing the value offered to all stakeholders as well as being economic success. Herman Miller has an excellent tradition in environmental stewardship and social responsibility. Today, the company continues to demonstrate leadership in introducing a new generation of earth-friendly fabrics and materials and setting environmental goals as a key metric of business success. Consequently sustainable imperative via transferring corporate culture and legacy to business strategy and practice becomes a natural result. Sustainable business also becomes an innovation driver and competitive priority. Herman Miller is on a journey to become a sustainable enterprise because both its leaders and employees believe that sustainable strategy makes good business sense. Similar to all the aforementioned opportunities that they met in the office furniture industry, however, challenges always come together to force a comprehensive business plan. This was the case at Herman Miller; consequently, a broad and inclusive approach to sustainability was adopted by the company. More than 400 of its employee-owners were involved with the
111 EQATaimed at assuring leadership in such areas as indoor air quality, transportation and packaging, and energy reduction in the facilities and the manufacturing operations (Herman Miller, 2005). A few problems still remained and they involved corporate strategy and goals, organizational issues, management and technology, that Herman Miller had to overcome to transfer its sustainability mission into competitive advantage.
6.4 Product Design at Herman Miller Herman Miller is a name synonymous with the best-design practice in commercial office and residential furniture. The company has believed that design can solve significant user-centered problems and creative thinking can benefit the world. Aside from having produced icons of modern furniture, Herman Miller has revolutionized office systems and furniture in the workplace. Borrowing the design paradigm of the Bauhaus, Herman Miller has developed its belief in design as a way to solve significant problems for customers. Among the design giants named above, George Nelson identified Herman Miller's design philosophy 60 years ago, which are still soul of its design policy today: What you make is important; Design is an integral part of the business; The product must be honest; You decide what you will make; and
112 There is a market for good design (Herman Miller, 2005). Today, it is widely recognized that integrating environmental aspects into product design and development can be an effective strategic resolution to environmental problems. Control of product and process design is one mechanism for seeking cost-effective environmental management. Available estimates range between 70 percent and 80 percent of the product life-cycle costs that are determined during the designing process. So changes in design can cost-effectively leverage effects, both upstream and downstream (Office of Technical Assessment, 1992; Kainz, Moeser, and Simpson, 1995). Designing environmentally friendly products is not a new issue for Herman Miller. Company leaders realized that they are expected by regulators, consumers, environmental advocate group, and industry associations to develop products keeping social and environmental responsibility in mind. Sustainable design provides a method for meeting these demands. Long-time experience and practice leaves no doubt at Herman Miller that implementing sustainable design can provide a number of benefits to them: Improved profitability; Improved environmental performance; Improved shareholder and community relationship; Reduced costs and time-to-market; Improved market position; Reduced regulatory concerns; and
113 Increased innovation opportunities. However, Herman Miller has also experienced that it is not easy to be sustainable. Major concerns continue to exist and include a lack of clear vision and goals, organizational, management and technical resources, design tools and information supports, and environmental expertise and well-matched awareness. Environmentally conscious design can sometimes only be a characteristic of product development rather than a company strategy. To avoid the limited effect of traditional discrete design efforts and to spread sustainable innovation, Herman Miller needed to develop more comprehensive management architecture to make sure that their sustainability effort could have a substantial positive impact on the full range of business operations.
6.5 ISO14001 EMSs at Herman Miller 6.5.1 Vision and Policy For many years, people in the corporate Environmental Affairs Department and other functions had been considering IS014001-certified EMSs. There were several reasons for this. First among them was to continually show Herman Millers commitment to environmental protection. There were business reasons as well: to increase sales and to decrease cost. The former was essentially market-driven. Some of their customers were familiar with EMS and they had incorporated EMSs into their systems. Consequently, they expected their suppliers like Herman Miller to do the same. In other words, customers expected
114 them to be registered to ISO14001. Some sales were tentative pending their certification efforts. Another business reason was just to help them drive Herman Millers operations improvement in the environmental area through a continuous improvement approach. And that was set up as both the requirement and the result of certification. Implementing a third-party certified corporate-level ISO14001 EMS was a core strategy for Herman Miller. As required by ISO14001 certification, Herman Miller published its first version of an environmental policy statement, which was approved by the Board of Directors in 2002 (Table 6.3). Obviously, Herman Millers top management recognized the critical role that product design can play in companys sustainable business. The policy not only emphasizes that designing products, processes and buildings for the environment is one of the major sustainable efforts at Herman Miller but also makes a clear commitment to pay attention to the entire life cycle of their products. It is worth noting that, in 2003, Herman Miller made a revision of the policy by adding reduce, reuse and recycle the materials used in our products and processes as the second sustainable business goal. Together, the policy actually provides a general instruction on using product design as a strategic solution towards sustainability goal at Herman Miller. Since that time, all Herman Miller manufacturing sites have been under ISO14001 audits and 80% of Herman Miller's manufacturing facilities have so far earned certification to ISO14001 EMS (Herman Miller, 2005). Herman Millers
115 Table 6.3 Herman Millers Environmental Policy (Herman Miller, 2005)
Herman Miller's Environmental Policy Statement At Herman Miller respecting the environment is more than good business practiceit is the right thing to do. We believe that continued economic growth and environmental protection are inextricably linkedthat the quality of life depends on meeting human needs without destroying the environment on which all life depends. As business leaders we are committed to develop sustainable business practices that meet the needs of the present without compromising the welfare of future generations. Sustainability demands that we pay attention to the entire life cycle of our products. We will develop strategies that enable us to move toward sustainability while enhancing the value offered to customers. We will measure and monitor progress toward our environmental goals as a key metric of our business success. On the journey toward sustainable business practices, through continuous improvement, we will: Go beyond compliance with environmental regulations and other requirements; Reduce, reuse and recycle the materials used in our products and processes; Pursue prevention of pollution and elimination of waste of any kind; Implement technologies to efficiently use energy resources; Design our products, processes, and buildings for the environment; and Promote environmental knowledge and awareness.
* 2003 revision
116 environmental management efforts are not solely aimed at its environmental performance but also focused on a management mechanism to address broad sustainability issues. Herman Miller envisions a world of economic abundance and ecological balance. To achieve this vision the company builds sustainability into every aspect of its business, developing and sharing its knowledge with others inside and outside the office furniture industry. Herman Miller aims to create great places to work for customers, exceptional returns for shareholders, and a sustainable, prosperous world for future generations.
6.5.2 Herman Miller's EQAT At the company level, Herman Miller has a central environmental organization, called EQAT, which is responsible for controlling and monitoring the whole corporate EMS and all environment related activities. Founded in 1989, the EQAT was created to handle the task of setting the corporate environmental direction and priorities, and measuring results. The EQAT consists of a cross functional steering committee of Herman Miller employees (Figure 6.1). The EQAT's team-based approach reflects Herman Millers culture of participative management. The EQAT is also responsible to create and update Herman Miller's environmental policy and goals. The team has continually expanded its goals to make Herman Miller a sustainable business. The EQAT established several
117
Communications _
Packaging/
X*
Design for Cnvlronmant
transportation
Im tti deduction
Environmental Affaire
Indoor Air
Green Buildings
Environmonlal Low Impact Process ,
Figure 6.1 Environmental management organizations at Herman Miller (Herman Miller, 2005)
support teams to carry out specific tasks. They include: Environmental Affairs Team, responsible for regulatory compliance, as well as coordinating and assisting other company-wide environmental initiatives. Design for the Environment (DfE) Team, responsible for developing environmentally sensitive design standards for new and existing Herman Miller products. ISO14001 Team, responsible for administering corporate environmental management systems that are certified by an external registrar;
118 Communications Team, responsible for communicating Herman Millers environmental needs, initiatives, and performance to both internal and external audiences. Environmental Low Impact Processing (ELIP) group, comprised of a series of teams, one at each corporate site, with responsibility for reducing the impact of manufacturing and office waste in their designated area. Indoor Air Team, created to monitor and improve the off-gassing of Herman Miller products. Energy Reduction Team, committed to reducing the amount of energy necessary to produce Herman Miller products. Packaging/Transportation Team, committed to finding ways to reduce the amount of packaging needed for both incoming and outgoing products. Green Buildings Team, focused on the environmentally sound construction and maintenance of Herman Miller's corporate facilities (Herman Miller, 2005).
6.5.3 Environmental Goal-Setting and Product Design Involvement The selection of objectives and targets can be called the heart of Herman Millers EMS. The EQAT team is responsible for conducting comprehensive reviews of all company operations and establishing a goal-setting process that directs their
119 sustainable efforts. The objectives and targets are consistent with the corporate environmental policy. As mentioned earlier, Herman Millers environmental policy is a statement by its top management of the companys intentions and principles in relation to its overall environmental performance. All six basic sets of goals provide a framework for action and for setting environmental objectives and targets. The objectives and targets not only follow logically from the policy and goals, but also indicate a required coordination between Environmental Affairs and other units within the EQAT. The coordination focuses on how to implement and achieve these goals in this case product design (Table 6.4).
Table 6.4
Herman Millers Environmental Goal-Setting Related to Product Design (Herman Miller, 2002)
Objectives Energy reduction
Targets 3%
Product Design Improve energy efficiency Reduce materials that require high energy-consumption during production Recycle packaging materials * Use reusable packaging Increase recycling efforts Design for disassembly Shift from solvent-based to powder and water-based technology Eliminate hazardous materials Integrate evaluation results into early design phase
Transportation reduction Solid waste reduction Air emissions reduction
5% 8% 3%
Hazardous waste reduction Required life-cycle analysis for all new products
10% 100%
120 6.6 Corporate Integration of Design and Environmental Managementthe Mirra Task Chair Project Work seating is perhaps the most complex element in office furniture, and it has become an important part of Herman Millers business. The company has scored many successes over the years by encouraging the latest in ergonomic thinking, materials research, environmental design, anthropometric data, musculo-skeletal research, engineering and manufacturing expertise (Herman Miller, 2003). The list is extensive. Furthermore, the design of a truly innovative work chair doesnt happen overnight. It is dependent on how talented designers and engineers at Herman Miller can blend the existing reality with a vision of how things should be. With every new chair, Herman Millers knowledge, experience, and expectations go up. In the case of the Mirra chair, Herman Miller and their customers are pleased to have a moderately-priced, high-performance work chair.
6.6.1 Design Strategy and Sustainability Leadership Continuously delivering customer value through design and innovation is the soul of Herman Millers business strategy. To meet the challenges of implicit to sustainable business, the company is engaged in building a comprehensive management system that integrates product design and corporate environmental management through its EQAT team. The Mirra task chair project was the first sustainable product design project that was implemented using the sustainable
121 design protocol through collaborative efforts within the EQAT units at Herman Miller.
Figure 6.2 The Mirra task chair (Herman Miller, 2005)
Although the detailed sales data was not yet available at the time of this research, the Mirra has achieved an immediate market success with the positive response from consumers and major media. The chair's next-generation innovations all work together in a fresh-looking chair that's easy to use. As mentioned before, Environmental Building News magazine's GreenSpec Product Directory named the Mirra chair among its Top 10 picks for best new "green" products (Herman Miller, November 13, 2004). With the successful introduction
122 of the Mirra task chair, Herman Miller extended its lead in the seating category of U.S. office furniture industry.
Figure 6.3 Herman Millers task chairs: Ergon, Equa, and Aeron (Herman Miller, 2005)
Target Market and the Major Competitive Thrust Before the Mirra chair, Herman Miller had produced a number of popular task chairs like the Ergon chair, the Equa chair, and the Aeron chair. Starting in 1976, the company introduced the Ergon chair as well as ergonomics to the U.S. office seating market. The Ergon chair was followed, in 1984, by the Equa chair which further fortified Herman Millers image in the market high-performance, adjustable, long-term task chair for everyone. By the early of 1990s, the pioneering ergonomic design of the Aeron chair made Herman Miller a leader in seating design of next-generation breakthrough (Herman Miller, 2005). Ever since, Herman Miller has been looking at replacing and upgrading these chairs because of changes in the market. In 1998, projects for new products were planned, including the development of new work chairs.
123 Consequently, the Mirra chair was commissioned by the project team and was to be the next mid-price task chair at Herman Miller. Task chairs are designed for people who are primarily at their workstation, working most of the day. The Mirra chairs target market is task chairs of high quality and performance, at mid-level pricing, and that most anyone could use at work. From the price standpoint, the Mirra is slightly higher priced than the Ergon and the Equa but slightly less than the Aeron. The price is justified because of its performance. The major competitive thrust in the target market was identified as product design. The Mirra chair was developed to provide competitive advantages by focusing on ergonomics, aesthetics, and sustainability. Incorporating EMS and sustainability management, designers and marketing representatives from the EQAT worked together to consider all significant sustainability aspects of the chair. The challenge of sustainable design, however, was not just a single target like 100 percent recyclability; they had to incorporate ergonomics and visual aesthetics in a chair that would remain in that mid-price range.
Corporate Core Values and Sustainable Business Policy In 1996, Volkema announced that sustainable business should be the new strategic goal of Herman Miller. He further advanced five core values to guide the companys actions: Making a meaningful contribution to their customers;
124 Responding to change through design and innovation; Living with integrity and respecting the environment; Creating economic value for investors and employee-owners; and Cultivating community, participation, and people development (Herman Miller, 1998). These core values not only reflect how Herman Millers corporate leaders understand sustainability but they also represent the management policy for doing business in an increasingly competitive environment. Furthermore, these core values imply a core strategy of the company: to insure the triple bottom line benefits through customer-centered sustainable design and innovation.
Design Integration Policy: Sustainability Principles Great design leads to new insight, understanding, and innovation. As mentioned in its corporate environmental policy, Herman Miller believes that sustainable business refers to practices that meet the needs of the present without compromising the welfare of future generations. New design strategy must enable Herman Miller to move toward sustainability while enhancing the value offered to customers. McDonough Braungart Design Chemistry (MBDC), a product and industrial process design firm led by leading-edge environmental designers and thinkers Bill McDonough and Michael Braungart, supports the DfE team at Herman Miller in its mission. The MBDC Cradle-to-Cradle Design Protocol adopted by Herman
125 Miller goes beyond regulatory compliance and thoroughly evaluates new product designs in three key areas. Such was the case for the Mirra project. The three key areas are: Material Chemistry and Safety of Inputs: What chemicals are in the materials specified, and are they the safest available? * Disassembly: Can products be taken apart at the end of their useful life in order to recycle their materials? Recyclability: Do the materials contain recycled content, and more importantly, can the materials be recycled at the end of the product's useful life? (Herman Miller, 2005)
Commitment to sustainable design is at the very top of the corporate hierarchy. Herman Millers top management has a full commitment to product design that addresses environmental and sustainability issues. Its actually part of the corporate DNA of the company. DePree believed that Herman Miller should be a good corporate citizen for the environment. Leading the company to the new era, Volkema confirmed that design and sustainability remained Herman Millers corporate core values. Everyone inside the companyfrom Volkema down to the people in the EQAT teams and those on the shop floorshare a passion that is just as high as that found in operations management. It is infused throughout the
126 whole organization. Consequently, environmental and sustainability issues became natural part of the design strategy for the Mirra project.
Sustainable Design Drivers Design leads to Herman Millers innovation and development. Design for Environment (DfE) Herman Millers own term about sustainable design plays a core role in meeting sustainability challenges. Because its a design-based company, Herman Miller understands that their designs signal their intentions, says McDonough. As its understanding of environmental issues has broadened, DfE was chosen and integrated into the corporate environmental management efforts to become a comprehensive approach to the environment (Herman Miller,
2002 ).
Sustainable design and innovation is also a natural extension of Herman Millers environmental legacy. The environmentally friendly culture has influenced every part of the company. For example, the manager of the Mirra project delayed the release of the chair because a replacement for its PVC arm pads could not be found. This was not an easy decision; furthermore, it was an expensive one. There was also a premium to pay for a new material. But it was felt that it was Herman Millers responsibility to factor in all of those conditions as part of its concern for environmental issues. By adopting the sustainable design principles, the DfE team came up with a new material and structural design that
127 helped them meet the requirements of cost, environmental performance, ergonomics, and aesthetics. Environmentally friendly design is also a requirement from design stakeholders including end-customers. For example, nuns representing the treasurer of the Sisters of Mercy, who were the shareholders of Herman Miller, visited the company and asked, Whats your policy on eliminating PVC from your new products? There were other stakeholders concerned about the sustainable design issues from academia, government, NGO, suppliers, community, and employees. Some global legislative initiatives also exerted pressure on the company and the Mirra chair project. The REACH (Registration, Evaluation and Authorization of Chemicals) proposala European initiative to ascertain that manufacturers qualify the human health and environmental impacts of the production of large volumes of chemicalswas a good example. Today, companies cannot release chemicals to the marketplace before a full evaluation. Prior to REACH, chemical products were deemed safe unless proven otherwise. The REACH proposal reverses the process; it requires that chemical manufacturers quantify the chemical composition of their products before placing them on the marketplace. The proposal was issued to apply to the European market, but many European chemical companies that are potential suppliers of Herman Miller typically play in the global marketplace. Their products environmental performance has a substantial impact on the upstream impacts of
128 Herman Miller products from a product lifecycle perspective. Since Herman Miller was to adopt a proactive environmental management and design strategy, REACH was an appropriate proposal to observe.
6.6.2 Design Integration and Organizational Leadership Integrated Organizational Structure Environmental organizations at corporate and Seating Division levels. The EQAT is the steering committee of Herman Millers environmental teams. It is composed of a cross section of people from all the other sub-teams. These environmental technology-oriented sub-teams are organized to concentrate on different environmental aspects. Among the nine sub-teams, the Environmental Affairs department is the actual core team and serves as the hub to coordinate and assist company-wide environmental initiatives. The manager of the department is also in charge of the entire EQAT and everyone working for the corporate EMSs participates in the department. Although the ISO14001 team was finally separated as an independent sub-team due to the requirements of continuous registration and routine maintenance, it laid out the management structure and continually provided comprehensive guidance and assistance for Herman Millers sustainable business operations. The DfE experts at Herman Miller met with the EQAT steering committee quarterly. They were also involved with other sub-teams such as the low impact, energy, and indoor air quality teams. All DfE members had to be product experts
because their major task was to work with different product project teams. All sub-teams forwarded product-related information to them. For example, they worked closely with the ELIP group for the environmental low impact process. There was a project in the plan they advanced to replace a solvent-based adhesive with a water-based adhesive. As a result, they were invited to join the ELIP group to evaluate those new materials to make sure that the group was truly making better environmental decision.
CEO
CFO
COO
CDO
Sales
DfE
Figure 6.4 The EMS and DfE integration management at Herman Miller
The EQAT manager is in charge of the EQAT steering committee and holds committee meetings regularly. He reports to the Senior Operations Manager of Herman Miller (Figure 6.4). Frequently, the EQAT manager acts as an environmental liaison that customers approach to address their environmental concerns. He also works as a product expert to join different product project
130 teams. The DfE experts sometimes fill in for him at certain events. However, the DfE experts dont report to the EQAT manager. They belong in the product development department and make close connection between corporate product development and the EQAT. In addition to the comprehensive corporate-level EMS, Herman Miller implemented site-level EMSs at its product divisions such as the Seating Division. The Seating Division housed several important product lines including the Mirra line. Since the major product development activities of the Mirra project located in Seating Division, the integration management was basically involved in the representative from the site EMS, the DfE team, and the Mirra team.
Point Manager (Seating Division) EQAT-ISO14001 Team Site Lead Administration Functional Group Functional Group Functional Group
Figure 6.5 The EMS organizational chart of the Seating Division
A Site Lead was appointed to be in charge of the EMS at the Seating Division (Figure 6.5). The Site Lead reported to both the Point Manager of the division and the corporate-level ISO14001 team at the EQAT. Besides the administrative for the divisions environmental management, there were three functional group teams. Each of the teams had a program addressing one
131 specific environmental issue within the plant. Because the chair would be manufactured on site, the Mirra team needed to work with these functional groups to find what were the common significant environmental aspects that both of them were interested in. In fact, identifying all significant aspects of the site including the products was a key requirement of implementing the ISO14001 EMS at the Seating Division.
The business project team for the Mirra. In 1998, Herman Miller organized a typical business team for the Mirra project. It was called a core team and was a primary business team including members from all related functions such as D&D (Design and Development addressing engineering, purchasing, and cost issues), Operations, Marketing, Finance, and Supply Chain Management (Figure 6.6). For each one of these except Finance there was a sub-team working on its responsibilities. It is worth noting that the project manager also led the D&D sub-team. The integrated organizational structure was more likely to promote design leadership while making reasonable decisions with support from the cross functional team. As an expert in seating technology, the project manager worked with the engineers and designers (some industrial design jobs were done by a contract German design company) through the whole design process. While each sub team focused on the issues relevant to its function area, they met together as the core team who was responsible for developing the design and marketing plan
132 and assessing the conceptual and detailed design. It was the responsibility of the core team to make sure that the project was profitable.
Project Manager EQAT
ISQ14001 EMS (Seating Division)
DfE Team
Design and Development
Operations
Finance Supply Chain Sustainable Design
Figure 6.6 The organizational chart of the Mirra project
Co-operation between the DfE team and the Mirras design team. The DfE team was formed with several environmental experts having diverse focuses on business operations. The DfE manager was from the new product development and marketing department. With a background in supply chain management and finance, the manager was responsible for assistance on business processing of environmental and design integration. The technical specialist in the DfE team was a chemical engineer. Having eight years of working experience in polymer industry, he focused on the technical side of the
133 project. Since the DfE team was organized in 2001 and the DfE concept and practice was still new to Herman Miller, top management wanted these experts together with the Mirra design team to take the initiative in integrating the sustainable design practice into the Mirra design process and to build a successful integration model for other product projects. The corporate DfE team was sent to join the core team and basically worked with product designers and engineers by communicating sustainable design principles, practice, and assessment criteria. Since Herman Miller does not have its own industrial design staff and only contracts with independent industrial designers, the Mirra chair was initially designed by a Germany design team. It came to the Mirra project with certain criteria that the Mirra chair had to meet in terms to performance, feel, and statics. It was the responsibility of Herman Millers own D&D group to work with them to engineer their design. Product designers and engineers at Herman Miller had to figure out how to manufacture, evaluate, and refine the final design. Therefore, the DfE team had to contact the outside industrial design team to make sure that sustainable design was integrated at the concept generation phase. As for working with the internal design team, it was the responsibility of the project manager to make sure that the DfE team was actively involved in the design planning and review process of the chair. The whole team had to know when they needed to pull the DfE people in. At the early stages when the project team was organized, the DfE manager was invited to talk with the whole team
134
about the DfE requirements and to increase buy-in with the Mirra core team for sustainable design. Consequently, the DfE experts were involved in at the early stages of product design. Although they would not be directly involved in day-to-day consultation with other people launching the product, they gave them advice and showed the project team how to use the material database and visual materials whenever they had any questions about sustainable design. They developed clear goals and metrics according to corporate environmental and design policies and tried to put responsibility on engineer ownership for meeting those targets.
Goal-Setting Process and Sustainable Design Objectives of the Mirra A long-term emphasis on product durability, innovation, and quality demonstrated that the company has effectively designed for the environment for decades. The focus of the Mirra project was on maintaining high standards while incorporating more environmentally sustainable materials, features, and manufacturing processes into the product design. The DfE team was responsible for developing environmentally sensitive design standards and advising the Mirra project team with the MBDC Cradle-to-Cradle Design Protocol. During the Mirra design process, the DfE team met with the designers and engineers to review the relevant design issues involved in material chemistry, disassembly, and recyclability as well as packaging and potential waste generation. The procedure of the Mirras goal-setting for design management
135 was part of the same procedure adopted by ISO14001 EMS. The detailed procedure was described in section 6.6.4. The formalized procedure also met the requirements from the corporate document for all product development projects categorized as a New Product Commercialization (NPC) program at Herman Miller. It was the document that the Mirra project team used as guideline and reference.
Developing measurable and quantitative targets to achieve objectives. The Mirras environmental goal and particular targets were a result of the DfEs leverage. It was a requirement of both DfE and EMS to identify environmental aspects and impact of products, and to rank relative significance for all environmental aspects. The design objectives and targets of the Mirra were based on the results from the process. Consistent with the Herman Millers environmental policy, the goal-setting process of the Mirra considered the customer needs, relevant legal and other requirements, significant environmental aspects, technological options, financial, operational and business requirements, and view of interested parties. The objectives included: Use the product assessment tool to assess the environmental performance; Develop yellow and better materials; Eliminate and optimize the materials currently being used; Do better job on design for disassembly;
136 Maximize the recycled content; Improve the recyclability of the specified materials; Find alternative to PVC; Come up with formaldehyde-free particle board binder; Develop right dyes; Improve finishing; and Identify best packaging materials (Herman Miller, 2003). These objectives were supposed to be quantified as operational targets. Frequently, a measurable target was developed according to the result of benchmarking existing design practices of the company. Since the Mirra project was the first one using the sustainable design protocol at Herman Miller, it was impossible to internally benchmark the best design practices for all sustainable design objectives. And there were always objectives that could not be quantifiable. The more measurable targets were preferred; however, the Mirra team did not set many quantitative standards and/or objectives for economic, environmental and social performance for the product. They just wanted to do as well as they could. Even through the DfE experts could not set a quantified target for every sustainable design objective, they set a measurable goal for the cumulative DfE score of every new product project at Herman Miller. It was a comprehensive assessment score for an entire product design. Each project team would get the
137 assessment score and compare to those of other products, keeping their effort to improve that score by 5% or higher per year. There were also other commercial and financial goals for the Mirra. The team made environmental impact part of the business decision. When they launched the new product project, they developed a detailed design plan to include the needs in terms of quality, cost, and statics and to integrate environmental considerations into that mix.
Where does the decision-making authority rest in the final design? Although it was not really clear cut, it was the project managers responsibility to make a final decision for the design of the Mirra. Besides being the leader of the project and because both customer needs and technology issues were his focuses, the project manager had the strong interpersonal and structural power to decide which decisions would be given priority and when decisions would be made. But it did not mean that somebody else in the organization could not override the project managers decision. He had his supervisor and there were people who made strategic business decision in the company and that could override his decision, although it did not happen very often. There is also a steering team for controlling new product development at Herman Miller. The director is usually the Vice President of Design Development and Product Management. If there was an issue that couldnt be solved within the
138 Mirra team it went to the steering team. That was also the mechanism in place to resolve disagreements at Herman Miller. There were also marketing management along with the DfE team to influence the decision. In general, there was more negotiation between the launch team and the DfE team. If the DfE team felt very strongly about material, emission, or any environmental issues and would like the project team to consider, and the project team said no, the DfE team would bring it to the steering team that they worked with. Then the project manager had to meet with the upper management in order to figure out a solution. To some extent, it was also a team decision that made the final decision.
6.6.3 Management Systems and Techniques LCA: Identify and Determine the Significant Environmental Impacts ISO14001 requirements. Under the requirements of ISO14001 standards, the EQAT has to identify all environmental aspects at Herman Miller. One of the key tasks of the DfE teams was to work together with other sub-team to find out all product-related environmental aspects (e.g. emissions generated, resources consumed) that could result in environmental impacts (e.g. air pollution, climate change). They also had to rank them and come up with the significant ones for further product design reference. The same process was applied to the Mirra project. Minimal
139 requirements for the significant aspects were developed as operational controls that everyone in the team should know. Setting the operational controls was usually not a problem at Herman Miller. They spent more time focusing on the significant aspects and decided which one of these they were going to work on and improve. The process was associated with some key actions similar to project management. They launched several projects to handle different environmental issues such as reducing air emission, reducing and eliminating the solvent-based adhesive, and increasing recyclable contents. The common concern about these environmental impacts was the actual link between the DfE and the EMS team.
LCA used to determine high-leverage areas o f product design and prioritized investment. A comprehensive LCA instrument was developed to study and judge the environmental impact of the Mirra design. The LCA information was the feedback from the DfE team where the environmental experts went through the analysis form that they created. It was an easy-to-use software tool with a built-in Excel spreadsheet where a checklist was. Every part in the Mirra chair was part of the checklist. The software was designed and comprised a three-phase series of analysis: The inventory analysis The impact assessment
140 The improvement assessment The DfE experts included all design-related data for the Mirra design into the analysis: what the materials were, how much each weighed, and If there was any environmental concern with a particular material that the engineers or designers had selected. For example, from the assembly and disassembly standpoint, the tilt was the part that had the largest impact on development of the chair. The second was the arm pads of the chair. Typically, a Herman Miller chair used PVC as the material for the arm pads. The DfE team set it as their goal to eliminate all PVC from the chair when the Mirra core team commissioned this project. They set this as their goal even though at that time they didnt know if there were any materials that we could use or make to replace PVC. The decision created a great deal of work in finding the correct material for the arm pads within the Mirra engineering group. They had one engineer specifically responsible for that task. In the end, they found a replacement of PVC thermoplastic polyurethanes (TPUs). The rubber-like material was more expensive than PVC but had good biocompatibility, flexural endurance, high strength and processing versatility over a wide range of applications. According the evaluation process, the EMS team of the Seating Division at the GreenHouse, a facility in Holland, Michigan that manufactures, tests, and assembles all Herman Miller brand work chairs, identified the significant environmental aspects that were also used as reference for the Mirra project: Landfill/disposal of wastes
141 Disposal of maintenance materials Solvent-based adhesive use Toluene use Aerosols use Energy consumption Recyclables (Herman Miller, 2002)
The LCA tool. Based on the MBDC cradle-to-cradle protocol and the existing solid product development system at Herman Miller, the DfE developed their own easy-to-use LCA tool. The tool was designed to integrate all important issues of corporate sustainability and EMS with the common product development process while keeping measurement against cost, performance, and customer needs. Three core components were designed as modules of the LCA tool to match the requirements of the three-phase analysis: A materials database that prioritized existing environmentally friendly materials and that spurred the development of new ones; An environmental rating tool for new products; and Disassembly guidelines and related training procedures.
Figure 6.7 illustrates the tool that the DfE experts and the Mirra team went through for the new product design. For confidentiality reasons, the real data of the Mirra chair have been replaced with those of a hypothetical Herman Miller product. The blue section is built material, showing for the Mirra chair that may
142 have 200 components that make up the product; the yellow section represents the disassembly issue; the orange section is the Material Chemistry section; and the green section is about recyclability.
Assessment Date
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An illustrative asssment for a hypothetical Herman Miller product, showing how materials are weighted and scored.
Figure 6.7 The LCA tool for the Mirra design (Herman Miller, 2004)
The Mirra design was evaluated by using the system and rated in three different areas: disassembly, material chemistry, and recyclability. In each of
143 those areas, designers used the tool to assign a series of credits related to various design factors. So, if a product could be completely disassembled down to its individual components, it received a credit of 100%. A component that could not be disassembled easily, such as a glued assembly, receives a 0% rating. For the Mirra chair, it was designed to be easily disassembled and received a score of 100. Actually, the chair could be disassembled in less than 15 minutes. That made great sense for cost-efficient production and replacement of parts in the field.
Figure 6.8 The Mirra chair is designed as 100% disassembly (Herman Miller, 2005)
The material chemistry section is about chemical analysis of all materials from the human health and environmental factors standpoint. The DfE experts used a color code system to assess those materials. Compared to the process of chemical analysis, the system used straightforward code colors: green, yellow, and red. Red materials are something hazardous they want to avoid. The DfE experts set the quantitative criteria to define a red material. If they found that
anything hit the line, it got to be red flagged, such as carcinogens. Then the DfE team would work with the product engineers to get rid of the red material from the design. Any chemical in that category will be banned. Additional human health criteria and issues are also included, such as if the material can biodegrade, if it can cause Ozone depletion, or if it is toxic to fish. At times, whether a material is a red or green is not easy to decide. For example, a red material could be PVC. Although PVC is safe to use as a product and safe for customers, the DfE experts still wanted to conduct a systematical assessment in terms of its life cycle. They found that there were certain environmental risks associated with manufacturing and disposal of this material. They felt that there should be a better option. So, the Mirra team labeled PVC as a red material. Yellow and green materials are what the DfE team recommends to use. Obviously, product project teams may want to pick the green materials as often as they can. But the yellow materials are still acceptable in terms of the DfE criteria. Typically, the DfE experts worked on a series of assessment reports with MBDC and these reports detailed the scoring process for different materials. For example, a report about factitious Nylon may describe what its function is and what its CAS Num (Chemical Abstract Service Number)1 is. Designers and
1A CAS Num is an industry standard number. Some chemicals have multiple names. The CAS number ties that chemicals structure to what that molecule looks like. So, when it comes time to track down information people can search for this number. It makes it easier to make sure that representatives from different companies are talking about the same thing. For example, vinegars chemical name is impure dilute acetic acid.
145 engineers can search the assessment reports from a database during the product design process. For each of the chemicals, if the lowest common denominator is yellow, it means most physical and chemical properties of the chemical are yellow and it falls into the yellow material category. The orange designation comes up when a chemical material has been fully categorized. As new materials were widely used at Herman Miller, the DfE team had to continuously build the materials database by using more stringent REACH criteria. The third section assessed the Mirra design to quantify its recyclability in terms of the rate of recycled or renewable contents in every material. As mentioned early, the Mirra was made of 42% recycled material. And 96% of Mirras content was specifically design for recycling or reuse (Herman Miller, 2004). Finally, the tool could average the three areas to generate a score for the product. Although the Mirra team did not show the score of their design, the DfE team indicated that it was relatively high compared to other new products and existing products that Herman Miller was going to upgrade. The DfE score for each product is used internally to benchmark the best sustainable design practice at Herman Miller. The overall goal is to continually improve each products score by finding better alternatives (e.g. less-toxic dyes, reduced-VOC particleboard) to problematic materials/components.
146 Continuous improvement is a core success factor of integration of DfE and EMS. Continuous improvement is a management strategy to enhance design evaluation and performance improvement within a generic design process. The loop process first depends on update of the evaluation tools. The DfE team was expected to evaluate 2,000 materials, so it had to create a database to store the information about every assessment result. The team cataloged about 800 materials and 300 chemicals, and the LCA tool was just a snap shot of what information in the database could be used to get a score for a product. When engineers or designers were looking for a specific material, they could go to the database and understand the impact of that material. Since the database was a core module that drove much of the LCA tool, it was a core task of the DfE team to flesh out the database based on product information provide by suppliers. Once their suppliers provided chemical information of materials used in a Herman Miller product, the DfE team evaluated them using the cradle-to-cradle principles and stored that information in the database. The DfE experts also provided feedback to the suppliers. If it was a red material or component, they worked together with the supplier to understand why it was red and find alternatives. The DfE team made full commitment to continually build the material inventory and find sustainable materials.
147 Third-party environmental certification. Herman Miller realized that pursing a thirty-party certification such as IS 0 14001-certified EMSs was not only a means to obtain management commitment and communicate independent verification of system effectiveness, but it also could enforce a formal process for independently verifying that a product met the specific requirements or criteria. After the implementation of the certified company-wide EMSs, the EQAT team developed an extended registration plan to include a series of third-party certification for their environmental efforts covering all products, services, facilities, and operations. Implementing these certification programs brought Herman Miller substantial competitive advantages. One of the successful cases was the GREENGUARD program at the company. The GREENGUARD Certification Program, supervised by the GREENGUARD Environmental Institute (GEI), is an independent, third-party testing program for low-emitting products and materials. Herman Millers office seating earned GREENGUARD Indoor Air Quality Certification for low-emitting products in 2003. The certification covered the company's award-winning Mirra, Aeron, Ergon, Equa, and many other work chairs. GREENGUARD-certified products must pass a series of rigorous emissions tests and undergo quarterly monitoring to maintain their status. In order to get their products GREENGUARD-certified, Herman Miller had to meet certain emission limits for Formaldehyde, VOC, and other chemicals (Table 6.5). The
148 EQAT team and the DfE experts took those criteria and built them into particular performance requirements for product design. There were performance requirement documents for each new product to describe various physical performance requirements. One of those requirements for new products was low emission level. In the Mirra project, the performance requirement document provided guidelines for the detailed design phase.
Table 6.5 GREENGUARD Certification Standards for Low Emitting Products for the Indoor Environment: Office Furniture (Seating)
Individual VOCs Formaldehyde 4-phenylcyclohexene Total VOCs Total aldehydes
<0.1 TLV* 0.025 ppm 0.00325 mg/m3 0.25 mg/m3 0.05 ppm
Listing of measured carcinogens and reproductive toxins as identified by California Proposition 65, the U.S. National Toxicology Program (NTP), and the International Agency on Research on Cancer (IARC) must be provided. Any pollutant regulated as a primary or secondary outdoor air pollutant must meet a concentration that will not generate an air concentration greater than that promulgated by the National Ambient Air Quality Standard (U.S. EPA, code of Federal Regulations, Title 40, Part 50). * Any pollutant not listed must produce an air concentration level no greater than 1/10 the Threshold Limit Value (TLV) industrial work place standard (Reference: American Conference of Government Industrial Hygienists, 6500 Glenway, Building D-7, Cincinnati, Ohio 45211-4438). Source: GEI, 2005
149 Linking Sustainable Design Decisions to Financial Concerns Cost is always an issue when making environmental decisions in a manufacturing company. Lack of systematic management may also lead decision makers to overlook the strategic significance and substantial benefits of their sustainability and environmental efforts. At Herman Miller, the integration management system included financial concerns as one of the important factors of their sustainable business. Generally, financial profitability is important to Herman Miller. When making design decision, the company could not simply say sustainability is a goal without addressing ROI (Return on Investment). The Mirra project team had to make trade-off decisions based on what the cost impact was for each design decision and the sustainability scores given by the DfE team. The project team could not only focus on all environmental factors because that would not lead a sustainable solution. Linking environmental decision to financial concerns was also an integrated strategy to implement ISO14001 EMS at Herman Miller. Whichever significant aspects it selected for the Mirra, the core team had to evaluate cost or financial issues just like an EMS assessment. For example, at the Mirra manufacturing site, a significant environmental aspect was identified as solid production wastes. There was a team who evaluated what the alternatives or how to get them diverted from going to a landfill such as using them for their site and road construction. Part of the work for the team was to identify what were the steps
150 that needed to be taken and then identify the associated costs with the different wastes. It was the responsibility of the EMS team to work with people in the finance department to identify those costs before they decided what to do. The integrated organization structure such as the cross functional teams used in the EQAT and each product project also provided supports to integrate financial issues into environmental and design decisions. There was a finance representative connected with each functional sub-team of the EQAT. If there was any larger expenditure, the team had to make sure to get an approval and prove that their DfE and EMS practice was compatible with other goals. For example, the energy team proposed to install solar power roof over Herman Millers headquarter in Zeeland. It was too costly to install and to maintain the products and the idea was just not feasible. However, the EQAT team did not simply undermine the idea. Instead, it used the assessment tool to compare the idea with what were considered as good business at the same time. The team showed the evaluation process and result to all employees as part of the general awareness training. The team used the case to point out the fact that the ISO14001 EMS work was very compatible with the existing production system at Herman Miller in terms of the manufacturing, quality, and financial goals. The EQAT wouldnt want to do something that was just environmentally sound and might harm the company overall. The perception that being environmentally responsible costs more had been around for number of years in American manufacturing. That might have been
151 true in the past, but Herman Miller is now reaching a critical economic production scale that could help offset the initial environmental expense. More important, from a proactive environmental accounting perspective, environmental and sustainability efforts can be treated as production cost instead of overhead. Top management and the EQAT were changing Herman Millers traditional cost theory. Herman Miller also had many customers including individual users and business clients who were environmentally centered to the point to useing and buying high-price environmentally friendly products. Furthermore, the EQATs environmental efforts cut cost of environmental liability and penalty. The ISO14001 team got programs in place such as the reduction of landfill. The less waste produced, the more cost Herman Miller saved. In the end, these environmental efforts were always financially attractive.
Monitoring Mechanism In order to determine its progress toward the established sustainable targets, the EQAT also developed its own internal monitoring mechanism. From the organizational structure perspective, the EQAT steering team sets the goals for the organization including the DfE team. However, the DfE team was specifically responsible to achieve those targets and work with the product project teams such as the Mirra team to monitor and track the application of the best environmental practice in product design. By using the LCA tool, each product project team could get a score of a product indicating how effectively they
152 implemented the DfE principles and how many green, red, and yellow materials were in a particular product. The DfE team was established to support product teams decision-making in terms of sustainable innovations. In the corporate integration management system, the EQAT was responsible for monitoring the EMS progress. The EQAT developed the environmental goals that were approved by the senior management and that were incorporated into the corporate sustainability goals. It had regular corporate management review meetings on the environmental performance of their organizations and products as well as the EMS and DfE policy, process, and tools. For example, the sole topic of one of such meetings could be corporate environmental goals for the next fiscal year because they were changed every year in order to keep continual improvement. For all the manufacturing sites at Herman Miller, the Site Leads and the general managers came together with the corporate EQAT manager and reviewed each site in terms of organization performance and each product line/project in terms of product performance.
6.6.4 Design Leadership in Sustainability Being a leading manufacturer that made a commitment to always set the design trend for its industry, Herman Miller is now pursuing the new sustainability and environmental agenda by design. At Herman Miller, design leadership for sustainability did not merely mean that the company would offer customers products representing the leading edge in environmental technology and
153 sustainable design solutions. The top management and the EQAT incorporated design strategies into the companys business strategy and integrated sustainable design into corporate management systems. Consequently, design leadership for the EQAT and the DfE team was also to communicate the vision of sustainable design throughout the entire organization and promote the best sustainable design practices as an integration enablerfor the companys new product and technology development, design and marketing process, and other relevant management and operations.
Motivating Project Teams to Adopt Sustainable Design Practices The motivation to adopt sustainable design practices was multiplex. It was driven by the needs of the internal EQAT sub-teams, external designers, customers, and suppliers. Since Herman Miller usually hires outside industrial designers for product design, the contract designers were already environmentally conscious in terms of design before coming to Herman Miller. They had a built-in desire to design a product that was environmentally conscious such as recyclability or no VOC. They could also bring the fresh vision of sustainability to the product project team they worked with. Customers and suppliers also provided motivations. According to the marketing departments analysis, Herman Millers major customers expected the company to offer environmentally friendly products. When they looked at the Mirra chair project and knew its design for sustainability and environmental
154 issues, they generally valued the design practice. The suppliers implementing EMSs and DfE practices also motivated Herman Miller to adopt the principles of environmentally preferable purchasing. The principles were actually integrated into the product assessment by the DfE team. More importantly, the EQAT members, especially the DfE team, had the desire of sustainable design. They had the responsibility to educate outside designers and other project team members with the sustainable design principles and practices. The DfE experts usually communicated them when a team began to launch a new product project. They educated the whole team with their successful story. Actually, the DfE team held many training sessions when the Mirra project was kicked off. Consequently, adopting the sustainable design principles in all projects and processes for new products will now become a common practice in the product development area at Herman Miller. In addition, motivating all employees with environmental practices such as the DfE practice was also part of the ISO14001 process. The basic design principles and design practice were identified as key elements of the EMS training plan to make sure that every employee was becoming environmentally aware. There was specific training content about how products and processes at Herman Miller could impact environment in order to make people aware that there were discharges such as water discharges from the company or the product recyclability issues that they could provide environmental solutions.
155 It was the responsibility of the design leadership to plan the product development and set environmentally friendly design as one of the requirements. Designers in the Mirra project team received fliers to help them understand that environmental impacts began with them, so the decision they made impacted how Herman Miller actually engineered the product. Most of designers were aware of the importance of the issues and tried to incorporate them into their activities. There was not a lot of selling. Many designers actually had the basic knowledge about DfE from their design experience. So, the DfE experts did not have difficulties to sell the DfE practice because they already had buy-in. They just illustrated the fact that the product could impact the environment so the designers understood that they could be the major contributors.
Mirras Design and Development Process Clearly defined mechanism linking product design process to address customers and stakeholders environmental needs. Anticipating customer needs first came from the field sales and marketing people who interacted with customers on a regular basis and interacted with engineers, designers, and other people who specified the Mirra design. So, the Mirra team always got feedback from customers through the marketing and sales organizations. There was in the system a normal communication that went on between the sales representatives, the Vice President of Product Development, and the
156 EQAT manager. Sales people sent emails to the EQAT manager who would forward relevant issues to the DfE team and then the Mirra project. They got email communication from the field sales almost every day and answered questions from customers. And they also asked questions from the sales people about customers need. Therefore, there was representation from both the environment and marketing/sales department in the Mirra team to contribute to the final design in terms of delivering customers environmental concerns and value. Although it was not written down any place, the mechanism to anticipate customers needs was clearly understood in Herman Miller. The Mirra project manager worked at design and development to directly respond to customer issues. The project manager was responsible for implementation of this project and had to develop a holistic view about issues of engineering, cost, timing, operations, etc. Therefore, the project manager was in a powerful position in terms of incorporating customer needs into the design decision. Product project teams at Herman Miller try their best to be always ahead of their customers in addressing environmental issues. When the Mirra team made the DfE plan, the designers and engineers decided to adopt the best DfE practice above and beyond environmental compliance. They felt that their customers would feel strongly about these designs. For example, the Mirra team designed all the components and materials of the product for disassembly. The designers adopted the most stringent criteria to make sure there was no hazardous waste
157 in the life cycle. As a result, they were confident that they were on the forefront. They wished to educate their customers with what was the proactive environmental management at Herman Miller and what customers needed to be concerned about. The philosophy behind their customers strategy was the demand-supply loop: sustainable products were initially developed to deliver the customers sustainable needs; the needs of the well-educated customers could also continually provide input for corporate sustainable innovations.
Figure 6.9 The Mirra's comfortable, flexible TriFlex back adapts to the sitter and lets airflow through (Herman Miller, 2005).
Social aspects o f sustainable design: ergonomics and human factors. The conceptual design of the Mirra chair was initially developed by Studio 7.5, a German design firm that Herman Miller teamed with. The industrial
158 designers of Studio 7.5 are experts at improving interaction between workers and their working environments. The Mirra chair was a product of their collective imagination, talent, and persistencealong with a willingness to break the mold in order to create a chair that set a new standard for comfort, fit, balanced ride, and visual refinement in its price range (Herman Miller, June 11, 2003). Herman Millers product designers worked with Studio 7.5 to comprehensively integrate ergonomics and human factors issues into the conceptual design of the Mirra: One of the major concepts was to make the Mirra like a second skin and a shadow of the sitter. From the TriFlex back to the AireWeave seat suspension, Mirras intuitive design substantially reduces the needs of adjustment controls. Anthropometric data from CAESAR (Civilian American and European Surface Anthropometry Resource) and other sources was used to ensure the chair fits different body shapes and sizes. Data from the studythe first full-body, 3-D surface anthropometry survey of the U.S. and Europe helped ensure the chair fits people from the 5th percentile woman to the 95th percentile man Mirra features the elastomeric seat suspension and molded polymer back that are used instead of foam and fabric. Special temperature sensors, called thermocouples, were used to evaluate upholstery options and inform textile selection (Herman Miller, June 11, 2003).
159 Connection between the outside designers and the internal project team. The designers of Studio 7.5 came up with an initial conceptual design model of the Mirra and brought it to Herman Miller for detailed design. Since the contract designers had communicated with the DfE team about the sustainable design principles, the conceptual design integrated some DfE elements such as minimizing use of materials all the while placing focus on physical and psychological functions and qualities of the chair, especially the human factors design. However, it was up to the internal Mirra project team to evaluate and engineer the contract designers design ideas into a product. Therefore, it was the responsibility of the contract design team to set up the industrial design criteria and it was the responsibility of the core team to develop detailed design and integrate more broad DfE criteria. As the Mirra team went through the process of converting Studio 7.5s design into a product, they built physical models as well as a complete digital model of the chair. The detailed design was used to tool all the individual components. Before it built any actual prototypes of the complete chair the Mirra team worked with the DfE experts and went through the detailed design and potential production process. Together they reviewed all of components being considered for the chair. In this phase, most assessments of the components and materials had been done with the DfE teams participation. The Mirra team would bring the DfE experts in as long as the design had been changed from last time
160 they were in. The Mirra team took them through the change(s) so that the DfE experts could give them suggestion about relevant sustainable solutions.
Engineering the sustainable design. Based on the initial 3-D model review, the DfE team came back to the Mirra team and advised it how the design could be changed in terms of a sustainable solution. For example, the tilt inside the chaira broad steel componentwas initially designed with some plastic parts. These plastic parts were inside a couple of stampings and were welded together. The DfE experts found that they could not get the component apart once the parts were welded together. So they suggested that the Mirra engineers revised the design so that the plastic parts were not inside the stamping once it was welded together. Then the Mirra team contacted the supplier of the tilt and said that they had to redesign the component based on the requirement from Herman Millers DfE experts. The Mirra engineers worked together the supplier to develop the solution of an improved tilt design. The tilt now can be taken apart and the plastic parts can be disassembled without having to break a part of any welds. The design contributes to both disassembly and recyclability of the Mirra.
The DfE integration. In order to make the Mirra, there were over 200 individual molecules that went into every component from the materials chemistry perspective. The DfE
161 experts had to make sure that they screened all of those chemicals against the human health environmental criteria under the protocol. They selected the best materials and as previously mentioned, the Mirra team worked with the supplier to develop a polyester-based material that met both environmental performance and cost targets.
Figure 6.10 The Mirra's total back support and balanced ride keep people comfortable for the duration (Herman Miller, 2005).
The Mirra project paid a premium in order to promote the environmental technology and sustainability integration. The designers tried to use a large volume of recycled content in this chair. Again, the tilt mechanism was a good example. The tilt was made of virgin steel. The Mirra team went back to its supplier and asked their question: Is there anyway you can use a higher amount
162 of recycled content? The supplier didnt have a solution at first, but they wanted to investigate it. The tilt supplier checked the source of their material suppliers and finally found one who could provide steel with high recycled content. Furthermore, there was no cost for Herman Miller. All the Mirra team did was simply ask the supplier if the steel could be made with a recycled content of 40-42%. The Mirra team also asked other suppliers if there were ways that they could maximize the recycled content of the materials that they supplied. As a result, the chair is 96% recyclable. Regarding the DfE consideration of design for disassembly, the back of the Mirra is an excellent example. There are only four screws that hold back and all are easily accessible. When removed, the chair back can be recovered, a feature that allowed the back to be recycled and to produce a set of LEGOs that were legally safe for small children. The structural 'Y' spine of the Mirra is yet another good example. The spine was originally designed to be an insert-molded polymer-and-steel part. When the engineer first talked with the DfE team he believed that the design could improve rigidity and support the back. The DfE experts feared, however, from a DfE standpoint, that if it could not be disassembled it would be a problem for recycling. So, the engineer had to try several alternative designs and worked with the DfE experts to review each design. The process was costly in terms of the labor cost and overheads. The engineer finally came up with a replacement with
163 a 100% nylon design, and the material could now be recycled and cost less. And the engineer actually got a patent for the Y spine design.
Economic profitability. A sustainable solution has to be profitable. The Mirra team had worked with the group of MBA students from Stanford and their goal was to develop an economic model and a software tool that could justify the cost of the project and the product. The tool was supposed to support the DfE team and the project team to make sustainable design decisions. Unfortunately, the project team was cutting budgets and the practice did not get enough information in order to have hard quantitative model, although there was qualitative results that it was able to refer from the study. In terms of product quality, however, the students research found there was no negative impact on the design of this chair. The Mirra project confirmed that the sustainable efforts were compatible with its pursuing of higher product quality. Their products have 12-years warranty. And the project team did not want to compromise that. It seemed that an environmental redesign would jeopardize the profitability of a product. Considering the above example of the Y spine, the engineer had to spend additional time to redesign the component to meet the environmental criteria. But, his time in terms of the budget of the project actually had no significant impact on the teams target. And the new material design brought
164
substantial cost savings. Therefore, the sustainable design improved the profitability of the product.
Management matrices are used to support decision-making. To optimize the design of the Mirra chair by applying the sustainable design principles, the project team utilized a few easy-to-use yet effective tools such as management matrices and checklists. These tools helped designers, engineers, and other group members make quick design trade-offs based on their sustainable design criteria. The formal analysis was called DFX, which is a generic acronym meaning Design for Environmental, Design for Manufacturing, and Design for Assembly. The DFX practice was totally based on the DfE protocol used to evaluate the Mirras life cycle sustainability. The DFX review of the Mirra design was formally performed and documented during the following three phases of a typical NPC development cycle at Herman Miller (Herman Millers internal document, 2004): Definition Phase: prior to product build;
o
Expectations: At this point in development, it is understood that a design may not be very well documented,
Inputs: Representation of the Design: Drawings Visual/Functional Prototype Kinematic Representation (if applicable)
Bill of Material DFX Indices Matrix with values identified for the current design Preliminary Process Flow Part A goes to Part B goes to Part C It is understood that a Cycle Time may not be established. Customer Product Criteria Build Objectives Performance Requirements
o
Outputs: Ideas that can be incorporated and evaluated in the P1 Build.
Refinement Phase: prior to release for tooling (production level);

o
Expectations: The P1 Build should be the baseline design and process. The design should be feasible meeting Performance Requirements, Customer Product Criteria, and Cost Targets with minimal risk,
Inputs: P1 Product Drawings: Component Upper Level Assembly/Master Model Bill of Material
166 Process Flow Sub-Assemblies Identified Fixturing Identified In Process Quality Checks Identified Storage and Move/Transportation Identified Cycle Time DFX Indices Matrix with values identified for the current design Build Objectives Performance Requirements
o
Outputs: Ideas that can be incorporated into the Production Intent design prior to Release for Tooling (Production).
Verification Phase: after product build (verification of metrics only),

o
Expectations: The review is a verification of the ideas and assumptions generated from the previous DFX event. No event is required,
o o
Inputs: Data based on P2 build, Outputs: DFX Indices Matrix update.
The intent was to apply this rigor at appropriate stages of development ensuring sufficient time to incorporate ideas that could contribute to a robust design without additional workload and resources to develop and implement. An indices matrix was required to be completed by the Mirra project manager with
167 input from the Product Development Engineer (Table 6.6). The manager also needed to assure that the matrix resided in the projects database as a NPC Deliverable. The matrix only listed the minimum indices that must be used at the various phases of the Mirras design and development. In addition, a process flow was provided as a guide. For each component and associated connection to an adjacent component, the following questions should be asked in order to optimize the design and generate discussion for improvements (Herman Millers internal document, 2004): DFE (Design for Environment) Disassembly:
o
Can each component be disassembled by one person, under 30 seconds, using common tools?
o o
Is the component made of one material without contamination? Is the component material clearly identifiable? If not, can the component be marked by the material identification?
Toxicity:
o
Are there any toxicity issues with the materials specified? If yes, can the materials change?
Recyclability and Recycled/Renewable content:

o
Do the materials contain recycled/renewable content? If not, can they?
Are the materials specified recyclable? If not, can they be?
168
DFX Indices Matrix: (Project Name)

Indices Number of Components Cycle Time Definition Total number of components. (Stitching, staples, adhesive, etc. count as (1)-) Total amount of time to assemble all components (Actual or Relative) Total material & processing costs. #1 #2 #3 Date Units Del. Phase Ref, Phase Ver. Phase
OFMA
No.
Sec. $
Piece Cost Error Proofing
Tooling Cost
Capital Costs
Ergonomics
Ratio of number of component interfaces that cannot be assembled incorrectly vs. total number of components Ratio Total costs for fabrication tooling, including molds, weld fixtures, gages, etc. S Total cost of equipment, machines, buildings, etc that is unique to this product. $ Ratio of number of components with low assembly forces, adequate assy. clearance, low handling weight, vs. total number of components. Ratio Percent by weight of total number of reversible connections per DFE Protocol (Disassembly w /o material contamination, common tools, less then 30 sec.) Percent by weight of materials determined to be free of toxicity issues per DFE Protocol.
DFE
Disassembly
Toxicity
Recycled Content Percent by weight of recycled material per DFE Protocol. Percent by weight o f material Recyclability that can be recycled per DFE Protocol. No. of 1" & "2 " Idea Total number of ideas generated during the DFX event with a ran kin f of V or %
DFX Process
"2".
No, Implemented Total number of "1* and 2" ranked ideas implemented.
No. No.
Table 6.6 The DFX Indices Matrix for the Mirra Project (Source: Herman Millers internal document, 2004)
169 DFMA (Design for Manufacturing/Assembly) Number of Components:

o o
Can fastener be eliminated? Can a fastening feature incorporated on the component replace a separate fastener? (i.e. Snap Fit)
Can this component be eliminated or combined with another?
Cycle Time:
o
Easy access for fastening or attaching of parts
Piece Cost:
o
Can the movement/routing of this component from fabrication to assembly be reduced?
Are there alternatives to the specified materials that are more economical?
Error Proofing:
o
Can the component be assembled incorrectly due to orientation? If so, can the component be designed so orientation doesnt matter (i.e. Round vs. Square)? If not, can features be added so that assembly can happen in only one orientation?
If the possibility of assembling incorrectly cannot be eliminated through component design, then can error prevention or detection be built into the assembly equipment/fixturing? Note this requirement in the process flow.
170 Tooling Costs:

o
Can tooling requirements be reduced or eliminated utilizing existing components or combining tooling (i.e. Family molds), etc?
Is special tooling or secondary operations required? If so, can they be eliminated?
Capital Costs:
o
Is the most economical process/tooling specified versus component volume forecasts?
Ergonomics:
o
Is the human force required to assemble these components relatively low?
o o
Is there adequate clearance for hands and/or tools to assemble? Is the component weight low enough to avoid human injury in handling during manufacturing?
Other Dimensional:
o
Will the assembly of this component, compromise any Build Objectives?
What are the datums for this component? Identify in coordination with mating component(s) and assembly.
Can the components be assembled with minimal finesse?
171 Table 6.7 The Idea Tracking Sheet (Source: Herman Millers internal document, 2004)
Idea # Idea or Activity Description Rank (1, 2, or 3)* Responsible Person Idea Status* Notes: If idea is not implemented, list why.
Idea Ranking System Explanation: Ideas are to be ranked relative to this program only. 1- We think we can and should do this now. 2- We man be able to do this, but it will take some development. 3- This idea cannot be used for this program. (Explain why.) # Idea Status System Definitions: Implemented-This idea is planned for final production. Rejected-This idea was evaluated and dropped. (Explain why.) Working-This idea is in the process of being evaluated. No Work Done-This idea has not yet been evaluated. If the list and follow up activities result in requiring additional development time and/or resources, then a review with the Core Team for prioritization is required.
Can the specified fabrication process support the required tolerances?
Service:
o
Is component likely to be a service part? If yes, can it be easily accessed?
Are special or non-common tools required for disassembly? If yes, can it be changed to utilize common tools?
172
o
For field assembled components, will alignment be difficult and/or will it require more than one person? Can assembly aid features be added if necessary?
Quality:
o
Has the component an aesthetic function? If so, will the fabrication process, transportation means, or the assembly process cause any defects? If so, how can the chance of defects be eliminated?
Are there any known issues with current similar components being produced?
An idea tracking sheet was used to document and manage the follow up activities that were generated from the event (Table 6.7). The sheet and the associated follow up was the responsibility of the New Product Operations Engineer.
Communication and Knowledge Management Building communication network. There is a specific Communications team (see Section 6.5.2) in the EQAT responsible for facilitating communications between corporate sustainability and environmental efforts and other business operations including new product design and development at Herman Miller. The Mirra project team was also in the communication network under the DfE and EMS integration management system.
173 The EQAT manager and a representative of the ISO14001 EMS team are also the members of the Communications team. They have intranet at Herman Miller as the basic internal communication channel. For public information, there is an environmental website hosted by the corporate website where the Communications team has articles, documents, policies, structure, events, awards, and all the related information posted and updated. One of the Communications team members also joined the DfE team. Through building the communication network, the EQAT effectively integrated sustainable product design and development into the corporate environmental management. On intranet, the EQAT has an environmental website where anyone within the company can go out and see its work: how the sub-teams are doing on their goals around air emission, hazardous waste, solid waste, energy, etc. People can look at their goals and see what their progress is to that and see the progress since 2000. A new green brochure is given to Herman Millers potential customers, sales people, and dealerships across the country. It has a great deal of facts about Herman Millers environmental work.
Managing information and knowledge involved in environmental management and design. The DfE team was in charge of managing sustainable design knowledge at Herman Miller. If there were any design issues that came up concerning environmental issues, those were communicated to the DfE experts. In terms of
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all the information that was involved in the launch of the Mirra chair, the core team used the Lotus Notes-based NPC database. All of the information on the project was also housed in the Lotus Notes database and all of the team members could access it there. From the review standpoint, the project manager would make sure that the DfE experts were actively involved in assessing the project all the way through the design process. If they had any concerns, they could go to the project manager. The DfE experts also served as the environmental information resource. When they came on, they got questions from the project team about whether something was environmentally sustainable or to figure out which option might be better, or even found professional associations if they had problems that they did not know how to solve. Both the Mirra project manager and the DfE team were responsible for the diffusion of sustainable design practices across the product development team. The entire core team was committed to the integration of environmental considerations into the Mirra design. The DfE experts wanted to educate each designer on the concept, because in the end, it wanted the cradle-to-cradle protocol to give them a great sustainability story. The core team felt that the early involvement of the DfE team was probably the highest priority. By making the MBDC cradle-to-cradle protocol the requirement for new products such as the Mirra, the DfE team can assist every new product team with a specific environmental goal and process that the project team can use. The goal and
175 process were developed basically by integrating with both the corporate-level and the site-level EMSs and the protocol was used by all new product projects. The DfE experts thus acted as consultants to each product development team.
Documentation. Documentation and its control are important elements of integration management towards the continual environmental improvement at Herman Miller. The EQAT established and maintained information in both paper and electronic form to support product design and environmental knowledge management. There are four levels of documents for ISO14001 EMS: the corporate environmental policy is Level One; procedure is Level Two; sites specifics and work instructions are Level Three; forms and labels are Level Four. Relying on EtQ Inc., a company with expertise in quality and environmental management software, the EQAT developed their own solutions to manage the entire document control system. What was formerly a paper-based system, cumbersome and slow, is now efficient and instantaneous. There is a process to regularly review the companys sustainable design and environmental management activities and process. And all the important elements of the process must be documented. For the Mirra project, the review and documentation had been an ongoing part of the teams routine. Once the chair was launched into production, however, the environmental review of the
176 product was the domain for the DfE experts. They continually assess all Herman Millers products. The DfE teams document is included in both the NPC documentation system and the environmental management documents. There are procedures and processes that the DfE members have to take and use. The document describes steps to take and even to be improved. They do have criteria to follow. One of the major objectives of the documentation in the integration management system is to atomize the design for product by finding principles for design for manufacturing and assembly and design for environment (Herman Miller, 2003).
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177 Obviously, with a company like Herman Miller with thousands of employees, many manufacturing sites, large volumes of product data and supplier information, the capability to manage the information in a manual fashion is nearly impossible. The challenge for Herman Miller was to find and implement a means by which consistent and best sustainable design practices could be shared and continuously improved. The EtQ Solutions package is tailor made for this need (Figure 6.11). The messaging and workflow aspects of the program enable easy and efficient revisions to be shared, influenced, bought into, and ultimately deployed throughout a diverse and geographically divided organization. The flexibility of the software to be manipulated and configured to meet their specific needs without custom programming is extremely useful and cost effective. Internally, both the EQAT and the Mirra team can access the Lotus-based EtQ solutions application. Both ISO14001 EMS and IS09000, ISO14001s counterpart standard series in quality management systems, use the EtQ software. Since many Herman Miller employees were familiar with the software for quality management application, their knowledge about the software could be easily transferred to the application in environmental management. The DfE team has all of its documentation in that system and it tracks all revisions and changes. It also requires reviews of the documents. Using EtQs Web-based version of Solutions has also opened the door to all Herman Miller suppliers and, potentially, all Herman Miller customers. They can
178 choose which entities with whom to share their document control system or certain parts of their system, thereby speeding communication and adding to their knowledge base at a minimal cost. By implementing EtQ Solutions, Herman Miller employees have created an ever-expanding knowledge base.
Integrating Suppliers into the Design and Management System Including suppliers in the Mirra design team and process. Herman Millers sustainable integration system actively incorporates its supply chain management process. From the organizational and technological perspectives, both the EQAT team and the product project teams (like the Mirra team) developed effective methods to communicate with Herman Millers suppliers. To the Mirra project, in terms of the parts that Herman Miller bought from its suppliers, it was the core teams responsibility what materials were used. In other words, the Mirra team needed to tell the suppliers what materials to use to make the parts and components of the Mirra chairs. The team did that collaboratively and all the major suppliers were on the Mirras product design and engineering team. The DfE experts met every week so that the suppliers knew what the requirements were. They were working directly with the Mirra engineers to figure out a design solution in terms of the requirements. One effective way to involve the suppliers in the design process was to help the suppliers develop the specifications that the Mirra team designed into its
179 products. For example, the Mirra team needed certain parts and it went to the supplier to buy them. The DfE experts were specifying components from the supplier that were recyclable, had recycled contents, did not use hazardous or other unacceptable materials, etc. Of course, they had to explain the reasons for those decisions and those specifications to suppliers. Consequently, suppliers understood that the Mirra project had some goals pertaining to sustainable design and there were certain things they could do and certain things that they could not do. The products that they had and they sold to Herman Miller of course affected the products life cycle performance.
Collaborative work to assess and select suppliers. If suppliers didnt participate and provide the necessary information about their products, components, and materials, they were not able to get new business from the Mirra project. Herman Miller would put them aside and work with another company providing the same type of materials. The DfE team left the cost issue there and tried to separate and isolate themselves from the business decision. Herman Miller had complete corporate buy-in to the sustainable design principles so their supply chain management people knew they could not source material through a supplier not providing information. This process was in place and in fact, the Mirra project had excluded two suppliers because they didnt want to provide information. But after two years of not
180 receiving new business from Herman Miller, they said that they wanted to participate. Clearly, this approach was working. The DfE experts worked with each product project team to select suppliers based on the environmental objectives. In particular, when they looked at an assessment, the DfE experts went out to meet either tier one, tier two, or even tier five suppliers. They asked them for MSDS (Material Safety Data Sheets)1 and to make green decisions because the DfE team really wanted to know what the content was. Often suppliers were hesitant to give them the detailed information. The DfE experts had to talk with suppliers about what they had done and they needed the information to evaluate this material from a human health environmental standpoint. Usually, the DfE experts asked for the components CAS Num and what the function of the chemical is relevant to the material and their relevant percentages. They also asked for information such as the percentage of the component that was recycled content, if it was post-industrial or post-consumer content, if the component was composed of renewable resources, and if the component was able to be recycled in the future. Frequently, suppliers only gave the DfE team the MSDS, the minimum required by law. But thats far from enough in terms of the requirement of sustainable design for the Mirra. The DfE team had to advise these suppliers the cradle-to-cradle protocol that the Mirra project was using and that the team was
1A Material Safety Data Sheet (MSDS) is a written document that provides product users and emergency personnel with information and procedures needed for handling and working with chemicals.
181 going above and beyond the requirements of the law. The DfE team also emphasized that Herman Miller used a hazard identification system that can positively identify everything in a product. The DfE experts knew which chemicals were unacceptable and which chemicals were in a certain material. They could be confident in terms of the assessment when their customers asked them if a particular chemical was in there. The DfE experts wanted to be at their bottom line here: they wanted to control what materials returned to the customers because Herman Miller had a proactive environmental strategy and the company felt responsible for the products which it was putting out in the marketplace. This is exactly the commitment of the take-back policy that is currently a good environmental regulation case in the European Union but has never been raised in the U.S..
Comprehensive Training Plan to Support Leadership Changing course for sustainable business definitely meant significant changes to Herman Miller despite its a long history of environmental efforts. When companies go through this type of organizational change, they have to rely on some training supports. The DfE team spent its first year doing a lot of training, providing the Mirra team with hand-on exercises where some of their engineers took apart simple chairs and went through the product assessment tool sheet. And the DfE experts really addressed a holistic approach, not just design for assembly, manufacturability, serviceability, but also design for disassembly. In
182 addition, the DfE experts were training 300 people internally, walking them through a presentation similar to what they were doing for the Mirra project. The DfE team also packed it up and took it to Herman Millers suppliers, stating the company was doing more and more critical improvements for environment. The team had found five to ten major development partners among their suppliers together with them for making training plans of the same type of exercise.
Offering regular training/educational programs raising environmental awareness. Everyone at Herman Miller went to the ISO14001 EMS training in order to become aware of Herman Millers environmental policy and sustainability actions. The EMS team tried to give all employees the key points of the policy so employees knew what Herman Miller was attempting to do and what the policy stated. The ISO14001 team and the DfE team determined the significant environmental aspects in a cross functional team. Both of them had looked at all these basic aspects, how often they occur and how bad they are for the environment. Then the teams wrote them down and came up with the most significant ones. That is what the ISO14001 team listed on the GreenCard about the significant aspects. It was easy to carry and to remember. Each IS 0 14001-certified site also had its own training. The Seating Division where the Mirra project was located developed a training program. The EMS and DfE awareness were the core training contents. There were kiosks everywhere
183 and the Seating EMS team made sure the information was out there all the time. Department meetings always got a printout showing what their numbers and scores were. There was consistent information being sent out. Every employee could look at the task board on the two end walls of the building and get updated results.
6.7 Case Study Findings and Discussion The Mirra projects success and Herman Millers continuous progress towards its sustainable agenda imply that to achieve sustainable competitive advantages, sustainability and environmental issues have to become a corporate core commitment. Herman Millers EMS and DfE teams were fortunate to have the sustainable strategy and practice adopted with support from both top management and every employee. Some companies tried to implement the same methodology; they were driving the changes from middle management, but it was difficult to get justification and buy-in. Herman Millers experience confirmed that the cradle-to-cradle design principles could be incorporated into the existing product launch process and the Mirras experience illustrated that the corporate integration management of sustainable product design and environmental management practice could bring a company substantial triple bottom-line benefits. Fortunately, the Mirra team and DfE experts had a strong partnership with the suppliers that they trusted. Furthermore, the EQAT and the
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corporate DfE teams had the management metrics so that they could focus on key issues step by step to make sustainable design become possible.
6.7.1 Sustainability Integration Leadership Organizational Leadership Proactive design-oriented sustainable business policy. Herman Millers integration management experience confirms that the proactive policy accounts for the positive integration initiations. Herman Millers core business values described in the Blueprint for Corporate Community were the philosophical foundation of the corporate environmental policy. Consequently, the core goal of Herman Millers environmental policy was to serve the corporate goalsustainable business via a customer-centered design leadership. Herman Millers success first relied on its success in policy-making and goal-setting because the environmental policy and goals: Matched the existing business process and operations; Were measurable and monitored in formalized procedures; Promoted design leadership that was a key business advantage of Herman Miller; Made a clear commitment of sustainable business practices for competitive advantages; and
185 Highlighted continuous improvement through proactive environmental management, product innovation and technology advancement, and knowledge management.
Organizational structure of EMS and DfE integration management is Important. The integration organization structure (Figure 6.4, Figure 6.5, and Figure 6.6) provided a cross-functional network to incorporate different levels of management and build effective connection between the corporate EMSs and Product Design and Development at Herman Miller. The network structure strengthened the relationship between product project teams and corporate environmental management and the key connection was achieved through the DfE team. It was common for a large company like Herman Miller that many parallel product lines were developed during the same period. People were assigned to a group of either seating or other product development projects. There were product development designers and engineers who basically resided at the GreenHouse. They worked with people from the management team at the Seating Division. The division also had a group of product development managers for different product lines. During the implementation of ISO14001 EMS, they were all involved and participated in what was called functional group and they were expected to communicate the EMS and DfE requirements to their
team members. The EQAT had separate groups that dealt with different environmental issues. Every group was designed to complete its own tasks and the steering committee would provide inputs. The DfE experts at Herman Miller focused more on front work than design work. After something was designed, they worked with the product development managers of different projects. So, when Mirra was being developed, the DfE team did initial work with designers and suppliers. The engineers in the team became more involved in the functionality of the chair and the manufacturing process designs. Much of the design happened with the DfE team and the contracted designers long before it got to the core team of the Mirra project. The core team paid more attention to the functionality and production of the product.
Design Leadership plus Environmental Leadership To be a leader in sustainable business practices, Herman Miller believes that management must make strategic alignment with corporate business targets. Design leadership and environmental leadership have become part of the corporate culture. Therefore, design leads key innovation towards sustainable business not only in Herman Millers product lines but also in its organizations and processes. Product designers and engineers routinely incorporate environmental goals into their problem statements, ensuring that the resulting products follow the best environmental thinking of the time. The ongoing efforts and success become organizational learning sources for educating its
187 employees, suppliers, and customers. A comprehensive buying of sustainable business along the corporate value chain and supply chain can continuously improve Herman Millers bottom line. Economic and social success will finally promote its environmental efforts and corporate sustainable development. Working with the MBDC, the DfE experts have developed their own cradleto-cradle principles to direct the sustainable design practice at Herman Miller. All the new designs and existing products are scrutinized for their material chemistry, recyclability, ease of disassembly, and other important sustainable design factors such ergonomics. The Mirra experience indicates that companies dont have to be deterred from pursuing sustainable design because of the assumption that it will cost them more money. Sustainable solutions should be self-explanatory in terms of profitability. In addition, an effective integration can offset the product cost by eliminating other operation costs such as environmental compliance and liability. A short-term economic success does not necessarily mean a sustainable one, but a holistic view of the triple bottom line success and actions can. Herman Millers DfE team is responsible for the promotion of sustainable design practices through the whole company. The DfE experts joined all product projects from the very early stages of the design process through educating the contracted designers and internal product designers and engineers as well as evaluating designs from concept and prototype. The fundamental philosophy
188 behind their successful experience is to keep searching for a suitable and viable path to sustainability in terms of their own industrial environment and business reasons. The sustainable solutions have been applied to the Mirra design in the following ways: They redesigned the tilt structure to facilitate the removal of plastic components. They modified the design of the rear limit of the seat mechanism to avoid permanently swaging a plastic component onto the structure. They changed the cable jacket on the seat controls from PVC to nylon. They designed the chair for ergonomic manufacturability which, in this case, also led to a simple disassembly process. The structural Y spine was originally conceived to be an insert-molded, plastic and steel part which would not have met the disassembly criteria for DfE. The engineer, challenged by this new design constraint, developed a less costly and more elegant design solution, which has been patented. The chair effectively uses steel, a 100% recyclable material, throughout the design. The DfE team worked with the stamping supplier and supply management to maximize the recycled content in the steel. Mirra is 96% recyclable following the end of its useful life.
189 Mirras manufacturing operation uses offsetting green energy (Herman Miller, 2005).
Corporate Culture Two keywords of Herman Millers corporate culture are Design and Environment. This culture has fostered a design and environmental legacy through the companys business practice over a long history. Now, people realize its true value because the culture begins and continues to support Herman Millers new businesssustainability by design that means great changes such as innovation and reengineering. Actually, Herman Millers corporate culture helped the company overcome many organizational barriers that are common to other companies when implementing management integration of DfE and EMS practice. By definition, culture is defined differently by different people. Companies cannot legislate culture. However, management can set an example. But organizations are often a collection of behaviors, values, and perhaps leaders. Thats not unusual. Herman Milers management team had written and provided employees certain rules delivered by its Blueprint for Corporate Community, a corporate document that articulated what the majority of the employees believed. It takes time to foster corporate culture. Once its there, however, no single person in the company can change the culture.
190 Corporate culture made a positive impact on the implementation of management integration of DfE and ISO14001 EMS at Herman Miller. One of the most significant impacts was motivation to adopt environmental practices. Some people came to Herman Miller motivated. Some people became motivated based on what they saw around them. While they were at Herman Miller, others became motivated by something that occurred outside work, such as something they learned or saw in terms of the environment. Everyone brought to the organization a personal belief of what was the right thing to do. When Herman Miller had some success or some achievements in an environment area, the success attracted other people who were also environmentally conscious. The scenario can build over time. Herman Miller has a long history of environmental concerns, dating from the time of its founder. If at this point, Herman Miller had a new CEO who declared that the company was not going to show a concern for the environment any more, it would not have worked. The organization would not have permitted it. Because the culture was already in place, it would not have been a good fit.
6.7.2 Advantages and Benefits as the Result of the Implementation of DfE and ISO14001 EMS Integration To implement an ISO14001 EMS, a company has to develop a standardized and formalized management system and a process to improve its environmental performance. Consequently, the biggest advantage of integrating product design
191 management and EMS at Herman Miller was the development of the effective integration organizational structure and formalized design and management process. The well-established sustainable business architecture and infrastructure provided both instructions and controls on why and how it integrated sustainability into its design practices. Its easier to have things done in a certain way when people understand. For Herman Miller, there was something worth aiming for and they achieved it. Moreover, it is easier to get people to be concerned about the business because there is a clear goal. And once the company was ISO14001 certified, Herman Miller realized that work that first seemed redundant provided a process that was of value. Employees appreciated this direction. Employees understood that throwing waste in the closest container was not the best option. Engineers realized that PVC may not be a good choice of materials. And they started to take pride in understanding that the EQAT team moved the process forward. ISO14001 EMS usually focuses on process. It doesnt lay out specific product criteria. In that respect, there is usually no direct link. However, EMS and DfE need to identify significant environmental aspects and in terms of that, environmental impacts of products should be an integral part of the impacts of the whole organization and process. The Mirra chair was designed with environmental principles that were totally compatible with and supported the EMS process. If there is no unacceptable material designed into the product, there is no unacceptable material to be dealt with by environmental
192 management. In that respect, good product design leads to a process whereby facilities do not have a waste stream. This is one of the primary ways that EMS and DfE are linked at Herman Miller. If they are building a product like a chair or a systems product for a table, there must be low emissions in the office environment much like there has to be low emissions in the manufacturing area. As a result, employees at Herman Miller are exposed to lower amounts of chemicals, and good design that finds its way to market is equally good for Herman Millers customers. Through the ISO14001 EMSs implementation, training was one of the certification requirements, but it actually also supported the DfE education for relevant employees at Herman Miller. There were discussions about intranet, email communication, direct training, new employee orientation, and environmental initiatives. As part of ISO14001 implementation, the EMS awareness training applied to all employees. There were many direct internal and external training opportunities and conferences addressing environmental design issues. Training materials developed by the DfE team was available on PowerPoint. The EMS Site Leads, people who were responsible for implementing ISO14001 system in their facilities, conducted training sessions with the work team leaders and supervisors. The supervisors were responsible for bringing their team together and going through the EMS and DfE training materials with them, a process also required by ISO14001 standards.
193 For the Mirra project, there are some obvious business and marketing advantages with a product that their sales force can talk about. Particularly, they talked about the environmental assessment that the DfE experts had developed. As a result, their customers seemed to value that type of information. The Mirra was also getting a lot of good publicity with McDonough and Braungarts sustainable principles by focusing their environmental sessions. It was highlighted as the DfE role model. All of these features provided competitive advantages for Herman Miller and its products. The positive impacts of the good DfE decisions were not necessarily obvious during the development of the product. But it was the Mirra project managers responsibility to make sure the core team was heading in the appropriate direction during that development. One of keys to the Mirras success was that the Mirra team and the DfE team had been balanced in the way they operated. It was part of the launch process, and the launch team needed to address DfE as part of the regular process. If the DfE team and the sustainable design principles were not integrated into the design management of the Mirra project, it probably would not have been successful. Fortunately, the firm believed that the project needed to embed the DfE process within the process of launching of the product. The core team wanted to educate designers on the DfE concept at the very beginning, because in the end, the team wanted to have a great sustainability story. From this point of view, the early involvement of the DfE team is probably the highest priority.
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Tools development was also important for Herman Millers integration management of the DfE and EMSs. Both the DfE team and the EMS organization specified the assessment tools to identify significant environmental aspects and evaluate product design for the Mirra project. They had to customize the tools and management techniques in order to share the design and management information. The Mirra team followed the well-established NPC model, providing detailed integration instructions on how they defined new product development process that matched the PDCA (Plan-Do-Check-Act) model of ISO14001 EMS. One of the internal documents the core team was required to have in different design stages were the management and assessment tools. The DfE experts came up with a database of materials relevant to the Mirra chair. Based on the database, they also adopted the LCA assessment framework in order to obtain quantitative evaluation results. These management tools were used to not only evaluate the final prototype but also to provide design inputs at the design planning and conceptual design phases.
6.7.3 Challenges and Lessons from Integration Management Philosophically, people involved in the DfE and EMS integration system believed that there were not major barriers to the sustainable integration practices at Herman Miller. That said, there was an awareness of certain organizational problems and some groups of people or individuals who did not
195 want to do something environmentally sound. However, that was not really a barrier to the environmental teams. There were extensive challenges to the Mirra core team and the DfE experts because the integration management was new to the EQAT team and new product projects. For example, many product development teams had different goals in addition to environmental goals. Manufacturing facilities also had more to do than the mere implementation of a certified EMS. There was nothing easy in the implementation of ISO14001 and the cradle-to-cradle sustainable protocol. People at Herman Miller believed that improving the environment was the right thing to do, but it did not mean that specific things the environmental people were doing would be agreed by everybody. In other words, it is the right thing to do but it may not be the right way to do it. Eliminating waste and landfill was the right thing to do, but there were many ways to do it. They had to pick a few, work on those, and get resources applied. They had the company leadership to support sustainable innovations and they also had to identify innovation opportunities, such as customer needs, legal requirements, and available technology. All of these forced them to find an appropriate way to implement the design integration fitting their existing operations. Communication was identified as an important factor of the successful integration in the Mirra project. But it took significant time to develop the network and tools for effective communication. For example, if the Mirra core team had
196 questions or concerns about the environmental information that the DfE team communicated to them, they would sit down together and try to work it out. The tilt was a case in point. The DfE team was concerned about having plastic parts that were imbedded inside the welded stamping assembly. Its necessary to include suppliers when considering sustainable design. And it was also a challenge to build an efficient procedure to have suppliers involved in the design integration process. Herman Miller is an assembling operation-based business. Because the company does not do any injection molding and does not produce any of the components, it buys all the parts from suppliers and then assembles them. Consequently, Herman Miller has to work with its suppliers to figure out win-win resolutions for sustainable design. As described in the Mirra case, the recycling issue of the tilt part and the PVC issue of the arm pads skin were closely related to the project teams collaborative efforts with their suppliers. According to the DfE teams criteria, these materials had a large impact on the environmental score for the chair. The DfE team made the Mirra manager aware that if the suppliers could use more recyclable and safer materials, it would greatly help the environmental score of the chair. The Mirra team and the DfE experts had to work with the suppliers to find alternative materials that would not have a negative impact on the environmental performance of the chair. One of the lessons learned by the Mirra project was that integration management for sustainable design had to get buy-in from top management and
197 every relevant employee. During the launch process of the Mirra, there were several meetings between senior management, the DfE team, the design group, and marketing/sales personnel to review the product design and process. These conversations were identified as an important step to make sure that the significant environmental issues inside and outside the company were included in the design plan, although these meetings did not happen as formally as what the DfE team expected. For teaching from top-down, the EQAT had training programs for the awareness and environmental aspects of the company including its organizations and products. The core training principle was that employees should be motivated. Formalization of the integration process was also an important lesson. The EMS and DfE teams had to make very clear plans for every procedure and organizations and individuals who were responsible to implement and control the procedures so that everything had its place. That meant that they could track information and check online to know any progress towards the design and management targets. Tool integration was an effort to facilitate the formalization of procedures. It was helpful that they had that assessment sheet from the DfE experts where they listed all the materials and whether they were recyclable or not. It was not always easy to figure out what it was that they had on their hands: what part number it was, which part it was, was it recyclable or not. One of the challenges for the DfE experts was to manage the environmental data and information involved in all the parts and components of the chair. A lot of these
198 parts had materials that were difficult to identify. They had to frequently visit suppliers and solicit the relevant information. They also needed to analyze and combine all the data and information and add them to the material database. The process was time consuming, demanding, very complex, and costly.
CHAPTER 7 INTEGRATION MANAGEMENT MODELS
Both corporate sustainable design management and ISO14001 EMS have common targets on a companys environmental and marketing strategies. These common drivers form the business foundation of corporate integration management of sustainable design and EMS. By way of integration, sustainable design can deliver a customer-centered philosophy to enable ISO14001 to be an integral part of corporate sustainable business, and similarly, ISO14001 can provide sustainable design the idea of formalized management system to have a strategic vision of design leadership in corporate value chain management. The objective of this dissertation research was to discover the leading edge in corporate sustainable business practice through management integration of sustainable design and EMS. Together, the Herman Miller case study and the preliminary evaluation and benchmark survey studies presented the core issues of concerns in sustainable design and EMS integration practices of American manufacturing companies. These empirical studies revealed management implications for integration theory and advanced design and management models for implementing sustainable design and EMS integration towards sustainable corporate America.
7.1 Management Implications Integration Theory Sustainability is a significant issue in American manufacturing today. Once an
200 arcane term used in agricultural and ecological research, "sustainable" has become the label of strategic choice that corporate executives use to describe their businesses. Sustainable design and proactive environmental management are among the most frequently referred sustainable solutions. However, embracing a sustainable agenda exposes companies to such a new mission accompanied with a totally different business paradigm from the traditional one that they face great challenges in order to reduce risk of failure of new sustainable product and organizational goals. While some firms adopted a more passive response to their ecological, public and legal obligations, leading companies realized the importance of sustainability and environmental management efforts, in both breadth and depth. To be successfully, companies need to develop a more holistic view of management systems that integrate sustainability issues into existing operations. Current sustainable practices in many American manufacturing firms fail for a lack of support from an effective theory of integration management frame. Best practices and successful factors that would have been foretold were frequently either overlooked or ignored. Corporate environmental managers realize that sustainable solutions mean that EMSs must take into account employees health and safety, coordination with product project teams and other social and cultural factors. For their part, new product development and marketing managers may find that a simple focus on complying with existing environmental regulations could mean that they miss both the innovation opportunities by investing in
201 sustainable technologies and the economic opportunities by reducing product costs through its business lifecycle. Sustainable design project managers may also be frustrated by the lack of support and appreciation from top management commitment, lack of organizational communication, or unavailability of tools and technology. It is unfortunately true that poor planning, poor organizational and knowledge management, poor process control and measurement, and poor technical design support are common reasons for sustainable design failures among companies. To be effective, integration management models should be created to help companies develop comprehensive understanding about the problems related to sustainable design and management practice and to identify innovation and fit-in opportunities.
7.1.1 POPT: A General Integration Management Model The research proposes a general integration management model (Figure 7.1) by classifying sustainable design management into four categories: policy integration (P), organization integration (O), process integration (P), and tool integration (T). The POPT model presents a normal integration theory that identifies basic integration management elements and their relative importance between and among each other. The theory asserts that a typical integration management should be a comprehensive one by incorporating a companys policy, organizational structure, operational process, and relevant tools, technology and management techniques into the integration practice.
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/ Policy \ Integration
Organization Integration
Process
Integration
Tool Integration
Figure 7.1 The POPT integration hierarchy model
Furthermore, a priority for each integration management element commonly exists among American manufacturers practice and this according to the relative importance between them. For example, the establishment of an integrated policy always has a priority over integration of tools and management techniques. Therefore, the integration management model arranges the elements in a hierarchy. It should be noted that the hierarchy structure does not necessarily indicate the order of time to implement these integration management elements. Particularly, process integration and tool integration frequently synchronize to maximize integration efficiency.
203 The POPT model is initially developed to describe common elements of integration management of corporate SPD and EMS efforts. However, it could be applied to various corporate integration management practices to manage organizational change and innovation. Integration of sustainable design and corporate environmental management system is still a novel business practice. Sustainable product development is distinguished from traditional product development activities in that it requires systematic changes involved in corporate core values and policy, relevant operations and technology support, as well as design initiatives and product innovation.
7.1.2 Extended POPT Value Chain Model Sustainable design management is intended to enhance a companys competitive advantage by creating sustainable values via products and services it provides to its customers. Combining the general POPT model with an adapted Porters value chain model, an extended POPT model can be developed to help integration management analyze the value-added process of corporate sustainable design practice (Figure 7.2). The extended POPT value chain model separates the integration management system into a series of value-generating activities that create, deliver, and support a companys product or service. These activities can be categorized into two sections. Product design activities relate directly to value created in a product or service, while management support activities make it
204 possible for the product design activities to remain coordinated and controlled. All of these corporate activities together transfer inputs (economic capital, natural capital, and human capital) to outputs (economic efficiency, ecological conservation, and social equity) and create value accumulation over the product life cycle. This is the essence and soul of sustainable business.
P olicy Integration O rganization Integration Process integration Econom ic Capital Natural Capital
Economic Efficiency
foot integration
Raw Material* \
Extraction
Materials & \
Product
Packagm-g
Oiaeibution
Ecological Conservation
Social Equity
Figure 7.2 The extended POPT value chain model of sustainable design management
Each activity may affect how other activities are performed. For example, policy integration with a sustainable goal of zero waste requires a design plannings response, such as recycling or elimination of emission. To facilitate a corporate recycling effort, a design concept for disassembly may be generated.
205 However, customers do not receive any value unless the design produces significant benefits for them such as low price or ease of repair. It should be noted that companies should always adjust these activities to fit their existing operations and develop appropriate definition of the capital inputs and core business value of sustainability. Therefore, the cross-functional team can conduct a careful analysis of the whole process of the product or service development to identify which activities have substantial impact on a firm's core competencies. The activities can help the company pursue a competitive advantage by making the most significant contributions to sustainable value.
7.2 Integration Must Happen at the Policy Level Implementing corporate integration management of sustainable design and IS 0 14001-certified EMS must obtain support at the corporate policy level in order to receive the strongest commitment and the broadest range of sources. Establishing such an integration policy is an opportunity to set the framework around which its management will be constructed. As the survey and the Herman Miller case study showed, the policy should reflect the core values and beliefs of the business and the organizations leaders. Unless the organizations management is truly committed to the integration initiative, other priorities to which the leaders are truly committed will inevitably take precedence. Companies pursuing a sustainable business agenda will be more likely to find that their commitment to the integration initiative wont compromise other
206 business they are committed at the same time. The integration management of sustainable design and environmental management can be compatible with the objectives of sustainable business in that both of them focus on the triple bottomlineeconomic, social, and environmental benefits. Whenever business leaders are going to make commitment to an initiative, they have to evaluate it against their sustainability targets and ensure it will deliver the core business values. Consequently, they will meet fewer challenges to establish an integration policy compared to their counterparts in companies with no concern for sustainability issues. The first step in establishing an integration policy is to reach consensus on the companys core values. Many companies have Values Statements such as Herman Millers Blueprint for Corporate Community. Table 7.1 shows some examples of Value Statements from two leading American companies. The next step will depend on how well a company understands its current and potential environmental impact of both organization and products. An integration policy means that the policy must present the corporate understanding about the relationship between their products and the ecological environment and the role of product design and development from the perspective of integrated environmental management. If strategic design management and environmental concerns have historically been considered within a company (e.g., Herman Miller), the people developing the policy may have a good appreciation for how and where its
207 Table 7.1 Examples of Value Statements From Ford Motor Company1 : Our business is driven by our consumer focus, creativity, resourcefulness, and entrepreneurial spirit. We are an inspired, diverse team. We respect and value everyone's contribution. The health and safety of our people are paramount. We are a leader in environmental responsibility. Our integrity is never compromised and we make a positive contribution to society. We constantly strive to improve in everything we do. Guided by these values, we provide superior returns to our shareholders. From Procter & Gamble2 : P&G is committed to social responsibility, particularly in relation to sustainable development, or sustainability, with regard to the environment. We are always seeking ways to better integrate economic progress, social development, and environmental concerns to ensure a quality of life for future generations that is at least as good as today's. We contribute to sustainable development by providing products and services that improve consumers' lives, in terms of health, hygiene, and convenience.
Sources: 1Ford Motor Company. URL: www.ford.com/en/companv/about/overview.htm 2Procter & Gamble. URL: www.pq.com/companv/our commitment/social responsibilitv.ihtml
program or projects can affect the environment. If they have defined core values and beliefs of sustainability, they already possess the beginnings of an integration policy. If all of these have not been addressed from a companys top management level, an initial review should be used to prepare the policy development. The review may include but not is limited to the following aspects:
208 Potential impacts of companys products, processes, and services; Current companys design, technology, and management practices and the best industrial practices involved in environmental and sustainability issues; Domestic compliance requirements and global legislative framework relevant to companys core business; Opportunities for competitive advantage; Companys knowledge management and organizational learning; and Stakeholders concerns, particularly needs of customers, suppliers, shareholders, and employees.
INPUT
INTEGRATION MANAGEMENT
OUTPUT
DESIGN
PRODUCT
CONTROL
| ENVIRONMENT
Figure 7.3 The system control theory behind the integration management
Once an initial review leads to a clear articulation of the companys values and core beliefs on sustainability, the company now has a good understanding of its current position and is ready to establish its integration policy. The integration policy is usually published as the ISO14001-required environmental policy.
209 Although ISO14001 does not require a description of corporate efforts for design solutions to be incorporated in a companys environmental policy, a typical integration policy should include three basic elements: sustainability, product, and design (Figure 7.3). An integration policy should be based on corporate values and consist of corporate product strategy, environmental strategy, and design strategy. To develop a holistic view of these business strategies, the integration policy should consider the following aspects: Meet or exceed all applicable environmental, health and safety requirements and regulations and develop sustainable principles relevant to companys products, processes, and services; Understand corporate core design and technology advantages and obtain support from existing management systems and operations; Strive to create products that are safe in their intended use, conserve energy and materials and prevent pollution throughout the product life cycle including design, manufacture, use, and end-of-life management; Advocate the adoption of prudent environmental, health and safety principles and practices by contractors, vendors and suppliers; Evaluate integration management performance towards continual improvement by monitoring ongoing performance results and through periodic management reviews;
210 Communicate environmental, health and safety policies and programs to company employees and stakeholders; and Ensure that all employees are aware of their role and responsibility to fulfill and sustain integration management systems and policy.
7.3 Organization Integration Must Happen at All Management and Operations Levels To some extent, developing an integration management organization for a company usually refers to an exercise of building a cross-functional team. To successfully integrate corporate sustainable design with ISO14001 EMSs, however, a cross-functional team is not enough. Organizational integration for sustainable design and EMS must be implemented through the entire companys management and operations, both horizontally and vertically. In other words, organizational integration not only means a corporate-level cross-functional team but also a penetration into divisional level and particular product lines or projects depending on the organizational structure of a company. Although companies may have different organizational structures such as hierarchical, flat, matrix, networked, orT-form organization (Pearlson, 2001), building a corporate-level sustainable design unit is recommended in order to support the company-wide integration management for a company (Figure 7.4). The SPD unit can serve as a link between senior product design and development management, corporate environmental management, and particular
211 product lines and projects. Either corporate EHS/EMS organization or specific product projects frequently consist of cross-functional teams. Consequently, the SPD unit becomes a node to communicate and promote sustainable design principles within the corporate EMS cross-functional team as well as a bridge to connect different levels of corporate management and operations in terms of product development issues.
CEO
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Figure 7.4 A special SPD unit should be established to support corporate integration management structure
The management representative of the SPD unit is responsible for overseeing development of the corporate sustainable design principles and practice. He or she may also participate in the creation of corporate sustainability
212 and environmental strategy and policy. The small group of the SPD should be thoroughly familiar with sustainable design practice and management as well as the requirements of ISO14001 EMS. It can serve as a resource for the company as it develops its system of integrating new product development into sustainability and environmental management. The experts from the group should join all new product project teams as well as existing product lines and support product project or line managers design decision-making by sustainability motivation and education. Corporate culture, core business strategy, individual performance evaluation and compensation system are all important issues of building an integration management structure to win full management support so as to ensure companywide acceptance of the integration management. The reason for this is that an integration management system will pervade all functions of the company and affect every person. The representatives from different functions chosen for the cross-functional team do not need to be environmental experts, but they do need to be committed to, or convinced of, the potential benefits to the company and their own working environment. They also need to help their managers to fully understand what is happening, not just in his or her department but also in other areas of the company. The goal of the integration management organization is not just to promote sustainable design practice but also to identify innovation opportunity and stimulate organizational creativity. In an integration management organization
213 illustrated in Figure 7.3, either the EMS cross-functional team or the SPD unit is a relative fixed group. And since the SPD team will work with every cross functional team for a specific product project and it is frequently possible for the SPD experts to meet the same people in a project who used to work with them in a previous or another product project team. As a result, different corporate functional departments develop a strong sense of team identity and work together in the context of cross-functional team with less biases and stereotypes potentially raised from deeply rooted functional identities. Consequently, the integrated structure may significantly mitigate the negative effect of functional identities through developing whats called superordinate identity1. Furthermore, at the corporate level, either the EMS team or the SPD unit has to report to their senior management; at the product line level, each product project manager also has to report to the senior management of design and development. In the end, senior management in the integration management organization has both direct and indirect control over a specific cross-functional product development team. According to an MSI (Marketing Science Institute) research in 2001, innovativeness is positively related to the level of superordinate identity in a cross-functional product development team and monitoring of the team by senior management (Sethi, Smith & Park, 2001).
1Superordinate identity, as one of psychological characteristics of cross functional teams, refers to the extent to which members identify with their team rather than with their function and perceive a stake in the success of the team (Sethi, 2000).
214 7.4 Process Integration Design Leadership With strong supports from strategy and organizational integration, the next level of management is to implement design leadership towards process integration. Design leadership in integration management is to provide guidelines for implementing and monitoring the process that integrates sustainable design principles, sources and practices into business operations through a series of core management tasks. These tasks that to a great extent are common to manufacturing companies are presented below.
Develop a Corporate Design Protocol Although there have been various interpretations about the concept of sustainable design since sustainability was more globally accepted in the 1990s, companies in a specific manufacturing sector most likely have common understanding of definitions and key elements of sustainable design practices. This is partly because companies in the same manufacturing industry often have to meet common major environmental problems and develop common sustainable solutions. For example, significant DfE efforts in the electronic and electrical product industry could include phase-out of toxic substances like lead and mercury and maximization of energy efficiency; in the furniture industry, however, eliminating the use of solvent-based adhesives and heavy metal-based coatings and finishes may be the major focus of sustainable design.
215 It is therefore necessary to develop a corporate sustainable design protocol based on a companys core business values on sustainability and integrate it into existing product design and development strategy. The protocol should provide design guidelines and principles more relevant to the characteristics of products that the company delivers to customers and industry where its doing business. To be effective, these principles should also be adopted by all product projects at the beginning of the design process.
Leadership in Goal-Setting Process Neither corporate integration policy nor design protocol provides details instructions about final product design. Corporate SPD experts must lead each cross-functional product development team to identify sustainable design goal and objectives for a particular product project. The goal-setting process first begins with identification of elements of a companys products, processes or services that can interact with the environment. More importantly, the process should produce relevant objectives and targets by establishing measurements and performance criteria for significant economic, environmental, and social impacts of these elements. Since this is the core task of both product development and ISO14001 EMS, people from the two groups should coordinate the development of a holistic view of organizational and product impact. Sustainability is still a relatively new concept for most American manufacturing companies. Fortunately, many leading companies recognized that
216 sustainable business is far beyond traditional environmental efforts. They need to develop their own implementation and measurement framework to integrate social, environmental, economic issues to new product development and other business operations. To some extent, economic and environmental impacts of product are quantifiable and straightforward while social impacts are too broad to be defined. A feasible method is to incorporate all traditional product design considerations into the social category of sustainable design, such as quality, aesthetics, ergonomics and other functionality issues that actually touch more design elements from an ethical and social perspective. Environmental consideration can focus on material and energy consumption and their lifecycle environmental impact both locally and globally, while economic issue is usually involved in profitability. There may be some cross-table issues like safety and a good practice is to separate it into measurable variables relevant to specific environmental category (e.g. toxic release) or social category (e.g. a usability element). Opportunities of innovation should be carefully identified and evaluated to increase the level of product innovativeness. Sustainable design should always seek potential system-level solutions to deliver customers true needs although a function-level or product-level innovation can also increase the degree of their satisfaction. A system-level design will more likely lead to a comprehensive product/service solution that finally helps a company achieve competitive advantages.
217 Customer satisfaction should always have the highest priority in a sustainable design consideration. Customer need is not only an input of design and innovation but also pervades all three categorical issues and the whole process as an evaluation criterion of sustainable design and integration management. For years, manufacturers have created products in anticipation of having a market for them. Operations have traditionally been driven by sales forecasts and firms tended to stockpile inventories in case they were needed. Sustainable integration management is based on the concept that product development and production can and should be driven by real customer demand. Instead of producing what companies hope to sell, they can produce what their customer wants with shorter lead times. Instead of pushing product to market, it's pulled there through a system that's set up to quickly respond to customer demand. That is the integration management system and it goes well beyond the environmental focus. To a great extent, the integration management theory is consistent with the basic characteristics of lean manufacturing, one of best industrial practices adopted by many American manufacturing firms. Lean organizations are capable of producing high-quality products economically in lower volumes and bringing them to market faster than mass producers. Its feasible to set lean management as a goal of integration management in order to operate the most efficient and effective organization possible, with the least cost and zero waste.
218 Knowledge Management: Documentation, Communication and Training The integration management system should develop strategies for knowledge management to provide support in organizational change and knowledge sharing in a way that uniquely integrates the needs of customers with the best in knowledge management practices. Pursuing sustainable business agenda means a great change to many American manufacturing companies. Furthermore, such organizational changes have been frequently made on a more willful basis in many leading companies. To effectively manage the changes today in a dynamic organizational environment and in uncertain economic and technological market conditions, proactive organizational learning must become a core management objective to improve productivity, effectiveness and innovativeness. The integration management system should emphasize the organizational and human sides of knowledge sharing and content management, and develop a range of tools and approaches to assist in change management while meeting specific organizational objectives.
Documentation. Based on the ISO14001 EMS documentation requirements, integration management documentation can establish and maintain information that describes the core policy and elements of sustainable design management and provide direction to related documentation of other business operations such accounting, production, supply chain, marketing and sales. The potential core
219 elements include not only all policy and technical documents, manual, and forms but also procedures, tools, activities and even news in corporate and site levels. Its the responsibility of the management representative to control and review the documentation and make sure that the system is fully documented. Relevant documentation software and other IT tools should be developed to support core product and design data sharing between contract designers and in-house designers and engineers. Corporate intranet and internet are most popular media to load and disperse the information.
Communication. It is not surprising that design managers usually spend most of their time focusing on communication rather than design in many manufacturing companies. Sustainable design and integration management are such new strategies and actions that internal and external communication is most viable and efficient way to get supports and resources. Communication methods may include: Corporate performance reports such as stockholder report, environmental report, corporate citizenship or sustainability report under GRI criteria1;
1 The GRI (Global Reporting Initiative) is an international, multi-stakeholder effort to create a common framework for voluntary reporting of the economic, environmental, and social impacts of organization-level activity.
220 Department or functional meetings and other ongoing communications between SPD & EMS core teams and relevant functions/levels with respect to the integration management program; Intranet and internet web pages; Publicized internal and external communications hot lines; Employee newsletters, bronchus and area wall charts that communicate elements of integration management and sustainable design measurements; Internal and external presentations and workshops. It will be most effective to have a special communication team or representatives from corporate public relations department joined with SPD and EMS personnel in charge of internal and external communication functions for the integration management. Such communication should be multiple-aspect from both the top down and the bottom up and throughout all relevant corporate functions and levels of operations.
Training. Training of relevant internal personnel and external stakeholders (e.g. contract designers, suppliers, and clients) is integral to proper functioning of the integration management system. The training requirements present another opportunity to integrate sustainable design and management elements with existing systems. Since training is dependent on the companys activities,
221 products, and services, the integration management organization must identify training needs and maintain documented procedures. Training can be broken down into two broad classifications: Awareness training Awareness training is aimed to development of commitment. An ISO14001 EMS generally requires that all employees in a certified company or facility/site receive awareness training so as to understand the environmental policy; significant environmental impact of the companys activities, products, and services and their own activities; their roles and responsibilities in conformance with the environmental policy and procedures. So, extra training efforts are not necessary except extending training content to include sustainability and sustainable product design issues. Skills training The integration management training should pay more attention to the type training. Only some employees, particularly those in relevant operations who are involved in product life cycle like supply chain and purchasing, design, production, transportation and distribution, customer services, and accounting. Skills training is aimed to increase the level of competence regarding the skill set for their positions. Corporate SPD team should be responsible for identifying training needs and ensuring people whose work can have a specific significant impact have received
222 appropriate skills training. On the one hand, designers and engineers may need to have extended knowledge about relevant material, energy and environmental technology, LCA application skills, and sustainable design tools. On the other, purchasing people may only need to know basic sustainable purchasing criteria.
Supply Chain Integration With a broad recognition regarding the importance of supply chain in corporate sustainability and environmental management, many leading companies such as Ford, IBM and Dupont require ISO14001 EMS certification for all of their suppliers. Environmental performance data is requested as a basis for maintaining the business relationship. To some extent, it is the perception that major customers will make ISO14001 a supplier condition that is driving much of the interest in ISO14001, particularly in American manufacturing. It is worth noting that leading companies are increasingly willing to abandon some competitive concerns and come together to develop common voluntary standards for suppliers. For example, around 20 global computer companies including IBM, Apple, and HP worked in collaboration with the Pacific Industry Business Association (PIBA) to produce Computer Industry Quality Conference (CIQC) Standard 0014 on supplier environmental performance (CIQC, 1996). Design leadership in supply chain integration is involved in several proactive strategies. Integration management should work with their key suppliers to
223 improve their environmental performance to an appropriate level. This could be an increasingly sound business practice in that suppliers can regularly join the cross-functional EMS and product design teams and the purchasing criteria will become a competitive advantage rather than a threat to suppliers. Within the integration management system, the cross-functional team should develop specific supplier audits and purchasing guidelines that specify detailed material, component and product criteria based on corporate sustainable design protocol and objectives. These guidelines should include the following elements: Declared commitment to sustainability and environmental issues; Indicator of sustainable design practices such as LCA tool application, modular design and design for disassembly, recycling practices, etc; Identification and documentation of the chemical composition of material supplied; Information about compliance histories and EMS and its audit (ISO14001); Continuous improvement to process and production measured against common development sustainable design criteria.
7.5 Tool Integration and Management Techniques An increasing trend in current sustainable product/process/service design and development related problems is the need for a suite of integrated tools because of the multidisciplinary nature of these problems. Efficient solution of such
224 problems require the use of tools that control the design process and communicate with other related personnel just as different groups of people working on a project collaborate with each other. Therefore, tool integration is a key task on the technology layer of integration management. Problem solving for sustainable design requires a variety of environmental and other decision-making tools. These tools can be classified into three categories: design tools, assessment tools, and process management tools. Design tools refer to a broad range of tools and techniques for market and user understanding, product definition, brainstorming and concept generation, prototyping and modeling software, and various engineering and operations software. Assessment tools are basically material and energy database and quantitative/qualitative analytical tools that together generate environmental and ergonomic risk, impact and improvement assessment and other technical information to support and optimize design decision. Leading edge software and tools should also be developed to facilitate assessment in non-technical area such as environmental accounting, compliance and liability assessment, supply and purchasing analysis, and value analysis. Process management tools are expected to support design project and other organizational process management. They may include myriads of database and workflow software and management techniques such as
225 management matrix and metrics, scorecard and checklist, benchmarking and rating solutions, etc. Together, all of them focus on the process formalization and effectiveness of documentation, communication, training, and other relevant integration management. IS014000 family also provide a series of environmental management guidance addressing product aspects, such as IS014020 series for environmental labels and declarations, IS014040 series for life cycle assessment, and ISO14062 for design for environment. To increase management efficiency and information integrity, the integration of tools is an inevitable step as well as a fundamental approach to a comprehensive integration management system. Tool integration is involved in the identification and development of new leading edge design and management techniques and the integration and application of existing environmental decision-making tools on a cross-functional base. SPD unit may have to work closely with management technique specialists and professional software development engineers to solve complicated problems such as integration of process synthesis and integrated algorithms that combine different methods together into one. Several important issues should be considered: Always develop easy-to-use tools while strengthening tool-use training; Tool integration involved in important decisions related to design and control should be considered during the early stages of the design process.
226 Always customize tools to meet specific needs for procedures of decision-making. A successfully integrated system always develops tools to share all common information and support consistent decision. While each tool is beneficial for its intended purpose, it is important for the user to understand the capabilities and limitations of the tool, which tool is most applicable to the situation at hand, and how and when the tool should be used. Also, various tools should be used in conjunction with others to gain maximum benefit.
7.6 Integration Process Model towards Sustainable Improvement The core objective of integration management of SPD and EMS is to support corporate product development process. Based on the POPT model and the extended value chain model, the research further develops a specific integration process model to describe product design activities toward sustainable improvement (Figure 7.5). The Shewhart PDCA Cycle which is the symbolic of the essential actions required by ISO14001 EMS provides a core frame to integrate sustainable design activities into the management system. The design integration management model aims to help cross-functional design project team develop a holistic view of an integrated design environment for sustainable product design, assessment and optimization. By using the management system model, one of the major advantages is formalization of
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Sustainable Design Management
Design Planning
Generic Design Process
Testing & Evaluation
New Product Launch & Design Review
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Significant sustainability aspects Product opportunity identification (Technology and customer/marketing -Legal end other requirements Product definltion-objectives and targets -C oncept generation Sustainability integration ~Deiai! design rototype building -Production process and marketing design Product testing -Sustainable design evaluation Supplier assessment -Market testing
S a le s tra ining
Customer support -Prodcuf performance monitoring Design integration policy, organization, process, and tools review
-Sigmfscani s n v'tra n n im ta i aspects --Legal and other requirements -O bjectives and targets -M anagement program
Structure and responsibility -O perational control -Documentation and control --Communication --Training Emergency preparedness and response
-Monitoring and measure men! Audit Records Nonconformance and corrective and preventive action
--Environmental targets and performance -E M S effectiveness -Environm ental policy
Planning
Imptem entaii on and Operation
Checking and Corrective Acs on
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Figure 7.5 The management model of sustainable design and EMS integration
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228 design integration process. Particularly, systemic corporate sustainable product development practice will replace existing discrete and ad hoc design for environment efforts that are common for American manufacturing companies. Different product or line team within a company may customize the process model in order to use appropriate design methodology and various available tools. Under the corporate integration management system, however, each team has to incorporate the basic elements of the model in order to adopt consistent measurement and assessment criteria. Furthermore, by following requirements of the model, its the responsibility of each project team to maintain design process records as an integral part of corporate knowledge management by keeping documentation, communication, training, and other procedures. Consequently, sustainable design information and best practices can be shared later to support corporate sustainable solution identification and improve organizational learning curve.
7.6.1 Preliminary Phase For manufacturing firms, new product design is essential to sustain the companys development. Sustainable product design must fit the companys strategy and expertise. Therefore, the first step of a sustainable design project is to develop a design policy and make strategic alignment between design project policy to corporate product and design policy. If there is no clear policy statement of corporate product and design, the product project should identify corporate
229 core values and business strategy so as to establish a particular design policy to deliver these values. Like corporate design integration policy illustrated in Section 7.2, the design policy for a particular product project is to provide basic principles to support decisions to design and the product portfolio. The portfolio should help to achieve top managements objectives for ROI (Return On Investment) and more extensive sustainability targets. A design policy should consider following elements to provide guidelines for next design plan phase: Obtain top management commitment to sustainable design; Make connection between corporate sustainable value and strategy and marketing strategy; Obtain top management commitment to continual improvement; Support the entire corporate product portfolio; and Provide further direction for product marketing strategy.
7.6.2 Plan The typical design activity begins with design planning. It is involved in searching, selecting, and developing new product ideas. The core planning elements, procedures, tools, and analysis results of corporate ISO14001 EMS can be integrated into the design planning process. A typical design plan for a sustainable product project may include the following activities:
230 Significant sustainability aspects. A discussion of corporate sustainability aspects starts with a definition of each of them. A products sustainability aspects can be defined as elements of a product or a service that can impact a companys triple bottom-line benefits through its life cycle. As illustrated in Section 7.4, a company should develop its own sustainable design protocol that defines its triple bottom-line benefits. The activity basically involves the identification of appropriate sustainability indicators in the economic, environmental, and social categories. The sustainability aspects of a product are those relevant to the indicators. For example, some aspects can be, We produce several types of hazardous air emission during production of this product or Running the product consumes a lot of water. Software or other tools can be used to review, weight, and rank all of these aspects to determine significance. More importantly, corporate product development management should establish and maintain a procedure for identifying them. Product opportunity identification. Sustainable design team should engage in opportunity identification stage at the start of the product development process. There are three major sources for innovation opportunities of sustainable design: customer needs, new technology, and legislative initiatives. Customer needs may represent end users and extensive market and supply requirements, while new technology and legislative initiatives reflect drivers of proactive business management
231 strategies. Design planning in this stage includes an assessment of potential opportunities so as to find best ones for the company to pursue. Definition of objectives and targets. Based on the analysis results of significant sustainability aspects and innovation opportunities, the design project team should define its objectives and measurable targets. While a sustainable innovation usually refers to a system-level solution, it relies on collective corporate design acts on product-level and function-level product improvement. Therefore, the sustainable design objectives should be feasible in terms of corporate expertise and operations capacity. Corporate marketing and finance representatives should join the team to collaboratively develop detailed marketing objectives and cost model for the product. Sustainability benchmarking analysis is a practical way to help the product project team to find best design practice and product cases in the relevant manufacturing sector.
7.6.3 Do Like ISO14001 EMS, the design integration model also defines basic activities to implement a sustainable design plan. The section presents a generic design process while Section 7.3 and 7.4 describe organizational management activities. In general, a sustainable design team still can follow the common design process and integrate sustainable objectives at the early stages. The
232 sustainability integration into a generic design process can include following activities: Concept generation. The stage is involved in a set of activities that a product design team should generate as many design ideas as possible, screen these ideas, and then determine the most feasible ideas for concept development and initial design drafts. Frequently, an identified sustainability indicator may implicate one or more potential design concepts. Brainstorming, design synectics, and other techniques and analysis tools can be used to support the concept generation process. It is worth noting that the generation of ideas frequently occurs during the stage of sustainability benchmarking analysis. This is partly because the analysis process may lead a gap identification of existing products and competing products. These gaps are truly starting points of design breakthrough and improvement. Detail design. The detailed product design refers to a technical development stage at which designers and engineers will formulate details of the components and materials to be used in the product and its energy consumption model. Many specific design targets should be considered in this stage. Information support is critical in the detail design stage so that corporate SPD experts should establish and maintain a comprehensive material and component database and supplier selection requirements.
233 Prototype building. The prototyping stage is a process to convert design concept and details into either a three-dimensional computer model or a physical and tangible product model. A product model, especially a physical model, can provide reliable simulation of a product. To be effective, a prototype should be built and operated like the final product so as to obtain accurate testing results later. For example, if designed with recycled or reused contents, the model should use the sample materials to test their mechanical and aesthetic performance. Production process and marketing design. As one of major phases of product life cycle, manufacturing is most likely associated with many significant sustainable aspects such as environmental, safety, and employee health issues and lean manufacturing implementation. The production process design aims to choose an appropriate manufacturing process and identify manufacturing control specifications. It may include determining the equipment, tooling and skills to be used, the assembly and disassembly process, and new or modified production facilities for the manufacture of the product. The marketing design stage is frequently overlooked by a design team. It should be an integral part of product market planning for the new product launch. The stage can focus on all the remaining phases of a product life cycle: packaging, distribution, customer services, and even product recycling. Sustainable design is a new concept to most consumers as
234 well as manufacturers. The core objective of the marketing design is to develop strong public buy-in for the sustainable product.
7.6.4 Check The testing and evaluation action requirements ensure that the sustainable design process embodies continual improvement. A sustainable design team should develop procedures, tools, and techniques for product testing, sustainable design evaluation, supplier assessment, and marketing testing. Product testing refers to a traditional prototype testing that basically focuses on whether or not the product will perform as designed and meet customer needs. It may include mechanical and electrical/electronic engineering design testing. Sustainable design evaluation is fundamentally involved in a life-cycle assessment (LCA) methodology. A typical LCA process consists of four stages: goal definition and scoping, inventory analysis, impact assessment, and improvement assessment. There are many commercial software tools as well as simple but effective non-software tools such as checklists developed to facilitate the LCA implementation. A design team has to choose an appropriate tool or a combination of them according to the design plan made in the early stage and customize them to measure the identified significant aspects. A typical system architecture of an integrated LCA model can include a CAD system module, a product data and related process data system module, a life cycle modeling
235 system module, and an evaluation system module (Anderl, Daum, John, and Putter, 2002). Supplier assessment can be a sub-section of the sustainable design evaluation because it is involved in a LCA analysis of certain supplied material or component that is usually a focus of the sustainable design evaluation. If suppliers are involved in multiple materials or components supply or there are extensive concerns from other corporate departments such as supply chain management and finance, the supplier assessment should be an independent section. Marketing testing can be used to obtain an immediate customer feedback and test if most customer sustainable needs are met. Once the design project team is satisfied with functional and psychological performance, the product is ready to be completed with a brand name and packaging, and put to a market test (Kotler, 2000). The market test of sustainable design should focus on consumers using behaviors and buying behaviors. Relevant information should be recorded for subsequent analysis. Meeting consumers true needs is a fundamental way to achieve the system-level sustainable design.
7.6.5 Act The phase consists of a series of activities to support new product launch and design review. Although a successful design can make a product or service to communicate in itself, sales training, customer support, and other service
236 activities are necessary to ensure that end users of the product understand the companys sustainable design efforts and obtain information about if the design fits their marketing and sustainability motivations. Correct operations and related maintenance support are also important in terms of a products life-cycle sustainable impacts. Periodical and formalized design and management review is a core step to realize continual improvement of the sustainable performance of a product and it design development process. Top management of a company should present or join the review at specified interval to ensure its continuing suitability, adequacy, and effectiveness. The review may focus on not only the design result and product performance but also the design integration policy, organization, process and tools and techniques used to facilitate the design process. The review process should ensure that necessary information is collected to allow management to carry out the further evaluation and the subsequent corrective actions. Most importantly, the review result should contribute to organizational learning of managing changes and innovations and formalize the integration process towards the future corporate sustainable product design actions.
CHAPTER 8 CONCLUSIONS AND RECOMMENDATIONS
8.1 Research Conclusions The key objective of the dissertation research is to explore the contemporary corporate integration management theory by discovering and benchmarking American manufacturing companies experience in integrating sustainable product development and ISO14001 environmental management systems. Sustainable product design is still a new concept to both academia and industry. Prior to this study, little research existed on the development of a comprehensive theoretical framework that supports the integration management process of sustainable design and corporate environmental management practice. While some studies described various sustainable solutions through developing design activities and relevant tools, none of them presented a process model of sustainable product development from a perspective of business integration management of changes and innovation. Particularly, the research contributes to the contemporary sustainable design and management theory in the following aspects: The research finds that there is substantial difference among American manufacturing sectors when evaluating a companys performance of EMS and SPD practices. There is also a critical distinction between leading companies and other American manufacturing companies in terms of their practice and performance of integrating corporate SPD
238 and EMSs. For example, leading companies usually have higher scores in the outcome assessment considering major professional environmental and design awards, peer recognitions, and various sustainability performance measures. Moreover, the management of these companies is frequently associated with proactive integration policy and strategy, cutting edge programs and initiatives, formalized product development process, and effective tools and technology supports. The research also finds that companies with superior EMS performance are more likely to have superior SPD practices. The correlation is most significant in three sectors: electrical and electronic industry (a=0.76), automotive industry (a=0.65), and furniture industry (a=0.56). The significance level is consistent to another finding that companies with superior industrial/product design practice are more likely to have superior SPD practice in most manufacturing sectors. Furthermore, 15 companies are identified for potential case studies as leading companies with superior performance in both EMS and SPD practices, including Apple Computer, Ford Motor Company, and Herman Miller. The research discovers that there is a high difference in the SPD integration levels of companies having a corporate-level SPD policy and/or having their EMSs certified or planning to certify and those having neither a design policy nor EMSs on site. Under the increasingly
239 dynamic organizational process and economic uncertainty, however, the research presents that what was a characteristic of leading companies in the 1990s is much more commonplace today. The most frequently cited five integration elements (more than two thirds respondents) from the survey research are: 1) Effective communication; 2) Customer needs; 3) Supply chain integration; 4) Management tools; and 5) Organizational leadership. Furthermore, the Herman Miller case study confirms that managing corporate sustainability innovation through integrating product design and environmental management can be an effective approach to achieving competitive advantages. The integration imperative is also explained by the major drivers: customer demand, environmental liability, marketable profits, general responsibility, and innovation opportunity. The research advances a comprehensive integration management theory and a general model that may be applied to extensive corporate management practices instead of only the product development and environmental management functions. It argues that, to be effective and comprehensive, corporate integration management of SPD with ISO14001 EMSs should include four levels of integration: 1) policy integration; 2) organization integration; 3) process integration; and 4) tool integration. The original POPT model together with an extended POPT
240 value chain model form the foundation theory to provide guidance for corporate integration management of sustainable innovation. Based on the general integration management models, the research develops a PDCA model that can be used to formalize the core elements and requirements of corporate sustainable product design and development activities. The model offers a holistic view of the process to integrate design activities with EMS implementation. In addition, identification of innovation opportunities, system-level sustainable innovation, and commitment of continual improvement are emphasized by the model. In addition, Chapter 7 provides the detailed guidance and instructions about the framework and the process to manage the corporate integration of sustainable design and ISO14001 EMSs. For companies preparing for incorporating the sustainability issue into their product development and environment management practice, design managers or environmental managers may adopt the core steps and requirements described in the guidance and integrate them into their companies existing management and operation process.
8.2 Limitations The research explores the state of the art in corporate sustainable product design and management practice in the American manufacturing sector and the
241 successes and problems experienced by the industry leaders when they tried to integrate sustainable product design practices with ISO 14001 environmental management systems. The object of this research is large manufacturing companies from the S&P 500 in America. Their sophisticated organizational structures, efficient operations models, and economic scale can be easily transferred to advantages for absorbing the substantial costs of improving their EMS and SPD performance to gain competitive advantage such as lower costs and good public and product image. But these experiences and the potential design management model can not be appropriate to Small and Medium-Sized Enterprises (SMEs). Many SMEs have few resources in management, capital, and labor and therefore may not be prepared to tackle new challenges such as environmental regulation and stakeholders concern about their environmental impact. In addition, it is recognized that each of the assessment criteria used in the evaluation phase, by themselves, would not indicate which companies and their EMSs and SPD practices were superior. Furthermore, no unique rating or scoring system can provide an absolute measure of a best EMS or SPD organization or company (Yang and Maclean, 2002). Rather, the evaluation template provides a holistic vision to integrate various representative indicators that effectively identify the EMS & SPD leaders from the vast majority of other companies and organizations.
242 The embedded single-case study does not measure and evaluate the performance of the EQAT team, the DfE team, and the Mirra project team at Herman Miller. Instead, the successful experience and challenges of the integration management in the company are objectively presented to describe the comprehensive system and process. The sustainable design protocol developed at Herman Miller may not appropriate for companies in other manufacturing sectors other than furniture industry. Furthermore, the detailed design and product data about the Mirra chair can not be presented in the dissertation because they are treated in strict commercial confidence.
8.3 Recommendations for Future Research The dissertation has advanced the first integration management theory and relevant models to integration corporate sustainable design and ISO14001 EMS practice. To continually test and develop these models, extensive case studies are recommended to present detailed integration strategies and processes adopted by companies from different manufacturing sectors. It is also suggested to continually study the integration of a broad range of tools and management techniques that may be currently used by different departments and functions within a company. Research should emphasize both management and technical aspects. Ideally, integrated software tools and other relevant information technology should be developed to support decision-making and communication.
243 While large manufacturers tend to be responsible for the major environmental impact due to a relatively large scale of production, SMEs have significant contribution to the environmental problems. In fact, SMEs are big business in the U.S. in that they account for 99.7 percent of Americas employers, contribute 47 percent of all sales, and produces 55 percent of innovations and technological inventions (Hall, 1998). Consequently, research is recommended to focus on describing the common challenges met by SMEs when integrating sustainable design and environmental management practice. Guidance on development of corporate strategy and management process should also be the significant results of this potential research.
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APPENDIX EVALUATION CRITERIA AND DATA SOURCES
255 Phase I: Outcome Indicators
EHS Awards & Recognitions 1a. World Environment Center Gold Medal <2 Points> Source: The World Environment Center (WEC), The WEC News and Press Releases (May 2000; May 2001; May 2002). Commitment to developing innovative science, technology and management systems to achieve environmental quality and sustainable economic development in a socially responsible manner; Implemented cutting-edge management practices, technologies, products and/or services that enhance quality of life. 1b. EPA Awards (Energy Star, Pesticide Environmental Stewardship, Green Chemistry, Natural Gas Star, ClimateWise, WasteWise, Partners for the Environment Program Award, Evergreen Award, Environmental Excellence Award) <6 Points> Source: The U.S. Environmental Protection Agency, http://www.epa.gov (August 2002); http://estar7.energystar.gov (August 2002); WasteWise Annual Report (September 2000; September 2001; September 2002); The Evergreen Award for Pollution Prevention (November 2000; November 2001; November 2002). Energy and Natural Resource Conservation; Pollution Control; Toxics Release Control.
256 1c. Corporate Health Achievement Award (CHAA) <6 Points> Source: The American College of Occupational and Environmental Medicine, The CHAA News Release (May 2000; May 2001; May 2002). Management and Leadership: Administration, organization, innovation and values; Healthy Company: Health education and counseling and Assistance in control of illness-related absence from job. Healthy Environment: Evaluation, inspection, and abatement of workplace hazards and education of employees in jobs where potential occupational hazards exist which may be specific to the job. 1d. Safety Achievement Awards (Green Cross for Safety Medal, NSC, AGA, SAFE, MMS, OH) <6 Points> Source: The National Safety Council, http://www.nsc.org (August 2002); http://www.lcasafe.org (August 2002); and The News Release of U.S. Department of the Interior Minerals Management Service (February 2001). Employee Safety: Five-year evaluation. Compare the 2002 total recordable incident rate (TRIR) to the four-year (1998-2001) average. An award is earned if the 2002 TRIR reflects at least 25 percent improvement over the four-year average or if the 2002 TRIR equals 0.00.
257 1e. Environmental Product Design Awards <2 Points> Source: The Industrial Designers Society of America, Innovation (Fall 2000; Fall 2001; and Fall 2002) Design for Environment strategy; Life Cycle Assessment 1f. Other Awards <2 Points> Source: The National Association for Female Executives (NAFE), Working Mother Magazine, http://www.workingmother.com (August 2002) and The Silicon Valley Toxics Coalition (SVTC), Annual Computer Report Card, 2002 The 100 Best Companies for Working Mothers: corporate culture and EHS issues; The Computer Take Back Campaign (CTBC): take-back, recycling and hazardous materials reductions and phase-outs.
Peer Recognitions 1g. By environmental, health, and safety professionals <12 Points> Companies recognized for their EHS performance Source: Center for Environmental Innovation (May 2003). Survey conducted by Richard MacLean, Project Manager for Organizations in Transition; opinion survey of 60 senior EHS professionals. See MacLean, R., Superior Environmental, Health, and Safety Performance: What Is It? Environmental Quality Management,
258 13(2), 13-20 (Winter 2003) (discussing a peer survey of what constitutes superior EHS performance, and which corporations have it). 1h. By CEOs <8 Points> The worlds most respected companies, environmentally. Source: Maitland, A., Due recognition given for effort, Financial Times (December 2002).
Classical Performance Measures for EHS 1i. Safety (OSHA Violations) <12 Points> Source: The Investor Responsibility Research Center (IRRC), The Workplace Ratings, http://www.idealswork.com (August 2002). The rating identifies those US-based companies that had Occupational Safety & Health Administration (OSHA) violations classified as "serious" during the most recently reported three-year period. A serious violation is one that risks significant harm to workerssuch as unacceptable levels of toxic airborne substances. In this study, the lower the number of violations a company has, the higher the score it earns. 1j. Environmental Performance <12 Points> Source: EPA and IRRC, The Environment Ratings, http://www.idealswork.com (August 2002).
259 If a companys toxic emissions are decreasing over the last three years and if a companys oil and chemical spills are decreasing over the last three years, it gets a higher rating. The rating compares the total dollar amount of fines levied against each company by EPA for violations of environmental statutes. If a companys fine amounts have decreased over the last three years, if gets a higher rating. 1k. Environmental Performance (Compliance Violation PenaltyCivil Penalties 1994 and 1995) <-10 Points> Source: EPA research conducted by Professor Madhu Khanna, University of Illinois at Urbana-Champaign, in 2002
Financial Results 11. S&P 100 <4 Points> Source: Bos, R., An Overview of the Standard & Poors 100 Index, Standard & Poors (2002); Weber, J., The Best Performers, Business Week (March 2002). The S&P 100 index represents almost 53% of the market capital of the S&P 500. The constituent companies are leaders in their respective industries, have actively traded equity options, and possess a very liquid share base. 1m. IW U.S. 500 <5 Points> Source: IndustryWeek U.S. 500 Manufacturing Companies. Industry Week.
260 The manufacturing companies in the IW U.S. 500 included: companies with a majority of their business in a manufacturing industry; to more accurately reflect the companies core business, only revenue number from continuing operations were used. 1n. Forbes 100/500 <3 Points> Source: The first 100 companies from the Forbes 500. The Forbes 500, Forbes (April 15, 2002) Forbes magazine has long maintained that corporate size can't be measured with just one yardstick. The Forbes 500s universe of 824 companies is a multidimensional ranking of America's largest corporations by four different standardssales, profits, assets, and market value. The companies in the Forbes Super 500 have the highest composite ranking scores for all four categories.
Composite Indicators of Performance (Indices) 1o. Dow Jones Sustainability World Indexes <6 Points> Source: The Dow Jones Sustainability World Indexes (DJSI World) Guide, Dow Jones & Company and SAM Group (April 2002) Corporate sustainability assessment consists of the following principles: Strategy: Sustainability leaders integrate long-term economic, environmental, and social aspects into their business strategies.
261 Innovation: Sustainability leaders invest in product and service innovations that focus on technologies and systems which use financial, natural, and social resources in an efficient, effective, and economic manner. Governance: Sustainability leaders implement the highest standards of corporate governance, including management quality and responsibility, organizational capabilities, and corporate culture. Shareholders, employees, and other stakeholders. 1p. FTSE4GOOD US 100 Index <6 Points> Source: The FTSE Group, Is FTSE4Good just stock market capitalism dressed in green? The Ecologist magazine (November 2001) The criteria of the FTSE4GOOD US 100 Index focus on the positive efforts of companies in three areas and are designed to be clear and achievable targets for companies to use in developing socially responsible policies and practices. Working towards environmental sustainability; developing positive relationships with stakeholders; and upholding and supporting universal human rights. 1q. Domini 400 Social Index <5 Points> Source: The Domini 400 Social Index (DSI) by KLD Research & Analytics, Inc. The responsible thing. Funds International (September 2002)
262 The Domini 400 Social Index, modeled on the S&P 500, is a socially screened, capitalization-weighted index of 400 common stocks. The Domini 400 Social Index (DSI) reflects the behavior of a portfolio of stocks in companies that a socially responsible investor might purchase; evaluation of environmental impact, citizenship, employee relations, and diversity. 1r. INNOVEST ranking system (EcoValue'21 Rating) <6 Points> Source: The Innovest Strategic Value Advisors, Inc., http://www.innovestgroup.com (August 2002). Managerial risk efficiency capacity: strategic corporate governance capability; environmental management systems strength; audit/accounting capacity; training capacity and intensity; generic environmental management protocols; industry-specific protocols. 1s. 100 Best Corporate Citizens <4 Points> Source: Klusmann, T., The 100 Best Corporate Citizens for 2000; Johansson, P., The 100 Best Corporate Citizens for 2001; and Miller, M., The 100 Best Corporate Citizens for 2002. Business EthicsCorporate Social Responsibility Report, SRI World Group, Inc. Uses a synthesis of seven measures that reflect quality of service to seven stakeholder groups: stockholders, community, minorities and women, employees, environment, non-U.S. stakeholders, and customers.
263 1t. Fortune 100 Best to Work For and Most Admired Companies <3 Points> Sources: Levering, R., & Moskowitz, M., The 100 Best Companies To Work For, Fortune (January 10, 2000); Colvin, G., Americas Most Admired Companies, Fortune (February 21, 2000); Levering, R., & Moskowitz, M., The 100 Best Companies to Work For, Fortune (January 8, 2001); Diba, A., & Munoz, L., Americas Most Admired Companies, Fortune (February 19, 2001); Levering, R., & Moskowitz, M., The Best in the Worst of Times, Fortune (February 4, 2002); Sung, J., & Tkaczyk, C., Who's On Top and Who Flopped, Fortune (March 4, 2002). The Hay Group consultancy asked 10,000 executives, directors, and securities analysts to rate the companies in their own industries based on eight criteria: innovation; financial soundness; social responsibility; quality of management; long-term investment value; employee talent; use of corporate assets; and quality of products and services.
Phase II: Input Variables
Industrial/Sector Characteristics 2a. Number of Superfund Sites <10 Points> 2b. On-Site Toxic Releases-Sales Ratio <10 Points> 2c. Off-Site Transfers-Sales Ratio <10 Points>
264 Source (2a-2c): Professor Madhu Khanna provides the data about the variables listed above. According to her research, concerns about environmental liabilities and the threat of high costs of compliance with anticipated and existing mandatory regulations have a statistically significant influence on the incentives for corporate environmental management. The most important determinants include: off-site transfers of toxic releases, on-site toxic emissions, and number of Superfund sites.
Top-Management Support 2d. Clear, Aggressive Statement of Commitment <2 Points> Source: Corporate reports from the selected companies
Phase II: Intervening Variables
Organizational Processes 2e. Best EHS organization and staffing: Peer recognitions by environmental, health, and safety professionals <12 Points> Companies recognized for their high performing EHS staffs and organizations
265 Source: Center for Environmental Innovation. Survey conducted by Richard MacLean, Project Manager for Organizations in Transition (May 2003) (see 1g above for details). 2f. Leadership (The Ron Brown Award for Corporate Leadership) <3 Points> Source: The Conference Board, Inc., http://www.ron-brown-award.org (August 2002). Fostering diversity; developing healthcare and pension benefits; creating partnerships to resolve workplace issues; promoting workplace safety and security; supporting employees through family-friendly policies; and improving employee skills and career development. 2g. Baldrige Award (Baldrige National Quality Program) <5 Points> Source: The National Institute of Standards and Technology (NIST), http://www.quality.nist.gov (August 2002) For over 10 years, many companies have used the Baldrige Award criteria as the foundation of their corporate scorecards. The seven perspectives of the Baldrige Award are: customer satisfaction; employee satisfaction; financial performance; safety/environmental/public responsibility; operational performance; product/service quality; and supplier performance.
Participation in Progressive or Cutting-Edge Trade Associations or Activities 2h. Global Environmental Management Initiative (GEMI) <2 Points> Source: GEMI, Inc., http://www.gemi.org (August 2002).
266 GEMI is a non-profit organization of leading companies dedicated to fostering environmental, health, and safety excellence worldwide through the sharing of tools and information in order for businesses to help businesses achieve environmental excellence. 2i. EPA Industry Partnerships (Project XL and National Environmental Performance Track) <10 Points> Source: EPA, Project XL Report (April 2002) and National Environmental Performance Track Program Guide (October 2001). Project XL is a national pilot program that allows state and local governments, businesses, and federal facilities to develop innovative strategies for testing better or more cost-effective ways of achieving environmental and public health protection. The National Environmental Performance Track is designed to recognize facilities that consistently meet their legal requirements and have implemented high-quality environmental management systems. 2j. OSHA Strategic Partnership Program for Worker Safety and Health (OSPP) <6 Points> Source: The Occupational Safety & Health Administration (OSHA), U.S. Department of Labor, http://www.osha.gov (August 2002). OSPP is an expansion and formalization of OSHA's substantial experience with voluntary programs.
OSHA enters into extended, voluntary, cooperative partnerships with groups of employers, employees, and employee representatives in order to encourage, assist, and recognize their efforts to eliminate serious hazards and achieve a high level of worker safety and health. 2k. Coalition for Environmentally Responsible Economies (CERES) <6 Points> Source: The U.S. Coalition for Environmentally Responsible Economies, http://www.ceres.org (August 2002). CERES is a network of over 80 companies that have committed to continuous environmental improvement by endorsing the CERES Principles, a ten-point code of environmental conduct. 21. Organization Resources Counselors (ORC) <2 Points> Source: ORC, Inc., http://www.orc-dc.com (August 2002). ORC is an international management and human resources consulting firm dedicated to advancing the art, knowledge, and practice of organizational and human relationships. ORC assists management in identifying needs, resolving issues, and achieving organizational objectives through effective use of human resources in a dynamic economic, social, and political environment. 2m. The Conference Board (TCB) <2 Points> Source: The Conference Board Inc., http://www.conference-board.org (August 2002).
268 TCB creates and disseminates knowledge about management and the marketplace to help businesses strengthen their performance and better serve society. The Townley Global Management Center for Environment, Health & Safety was established to foster and enable intellectual growth by providing small-group forums and a peer network for exchanging knowledge, practices, and strategies relating to EHS and sustainable development. Specific Cutting-Edge Programs Established 2n. ISO 14001 certified environmental management system (or EMAS/BS 7750) <12 Points> Source: The Capaccio Environmental Engineering, Inc., http://www.iso14000.com (August 2002). An ISO 14001 environmental management system is meant to develop a systematic management approach to the environmental concerns of an organization. The goal of this approach is continual improvement in environmental management. 2o. Reporting under the Global Reporting Initiative (GRI) framework <5 Points> Source: The Global Reporting Initiative, http://www.globalreporting.org (August 2002). The Global Reporting Initiative is an international, multi-stakeholder effort to create a common framework for voluntary reporting of the
269 economic, environmental, and social impacts of organization- level activity. 2p. Other significant, cutting-edge projects or alliance partnerships <3 Points> Source: Environment-Business Partnerships Set a Green Trend, The Environmental Defense (2000), and Green Century Capital Management Inc., http://www.greencentury.com (August 2002). When companies minimize their environmental risks, they also may gain a competitive advantage by reducing costs, improving quality, and gaining access to new markets. The Green Century Balanced Fund seeks out well-managed, environmentally responsible companies, many of which also make positive environmental contributions.

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MANAGING SUSTAINABLE PRODUCT DESIGN BY INTEGRATING CORPORATE PRODUCT DEVELOPMENT PRACTICE WITH ISO14001 ENVIRONMENTAL MANAGEMENT SYSTEMS by Yilun

ARIZONA STATE UNIVERSITY December 2005

UMI N um ber: 3194990

has been approved October 2005

Director of the Program

iean, Division of Graduate Studies

To my parents, my wife, and my daughter, for their love and patience.

RESEARCH METHODOLOGY............................................................. 3.1 3.2 Scope of Research........................................................................ Research Methods........................................................................

BENCHMARK SURVEY......................................................................... 5.1 5.2 Introduction.................................................................................... Methodology................................................................................... vii

Page 76 89 91 98 100 102 107 111 113

120 183 199 199 205

210 214 223 226 237 237

CONCLUSIONS AND RECOMMENDATIONS.................................... 8.1 Research Conclusions...................................................................

Page 240 242 244 254

84 87 97 103 104 115

5.4 5.5 6.1 6.2 6.3

148 168 171 207

161 176 202

CHAPTER 2 LITERATURE REVIEW

Table 2.1 Summary o f the Major SPD Theories

System-Level Innovation Function-Level Innovation Product-Level Innovation

Environmental Needs Figure 2.2 A human-centered SPD definition

Figure 2.3 Forecast ISO14001 registration trend

HUMAN RESOURCE M AN AG F M ENT TECHNOLOGY DEVELOPMENT

MARKETING & SALES

PRIM ARY ACTIVITIES

Figure 2.4 The generic value chain model (Porter, 1985)

In itia te the strategy or plan

W hat to identify or accomplish?

Figure 2.5 A PDCA management model

CHAPTER 3 RESEARCH METHODOLOGY

Develop Management Implications

Figure 3.1 The research methodology and roadmap

S&P 500 Companies

Pre-selected 100 Companies Second-Level Selection

Figure 3.2 The roadmap of the evaluation research in Phase 1 .1

CHAPTER 4 EVALUATION RESEARCH

Phase II There are two major categories within Phase II:

51 Table 4.1 The Corporate EMS Evaluation Matrix

Corporate EMS Perform ance M easurem ent

Industrial/Sector Characteristics Top M anagem ent Support Organizational Process

Participation in progressive or cutting edge trade associations or activities

Specific cutting edge programs established

EMS Awards and Recognitions

Classical perform ance m easures for EMS Financial Results

Com posite indicators of perform ance (Indices)

15 (M aterials) 4 5 (IT) 3 2.0 % 2 0 (Industrials)

(C .D iscretionary) 3 5 (H ealth C are) 1 6.0 % 3 0 (C .S taples) 4 .0 %

Figure 4.1 Phase I Screen by Sector

Table 4.3 Final SelectionPhase II

Johnson & Johnson

Procter & Gamble

Table 4.6 The Corporate Product Design Evaluation Matrix

Corporate Design Practice Measurement (2000~2002)

Industrial and/or Product D esig n

Figure 4.2 Descriptive analyses of total award-winning products

High EMS Performance Good Design Practice .38*

CHAPTER 5 BENCHMARK SURVEY

Figure 5.1 The survey respondents by manufacturing sector

Table 5.1 Output from Factorial ANOVA with SPSS 12.0

Table 5.2 Output from Multiple Comparisons

Common Elements o f Corporate Practice on Integration of Environmental and Sustainability Issues