Tap into the benefits
Life Cycle Management delivers clear business benefits to complement its environmental advantages. Because LCM puts better information in front of your decision makers at all levels of the business, it can contribute to the development of clear competitive advantages. For some businesses, the realisation of even one of these advantages can lead to improved revenues, greater shareholder returns and a strengthened market position.
Explore the wealth of business value that Life Cycle Management can deliver...
Greater cost efficiencies
By adopting LCM, businesses are positioned to identify and realise cost savings through their product or service life cycle including stages of design; manufacture; distribution; sale; use; and disposal. These cost savings (and corresponding environmental benefits) can result from design or process changes that reduce material and energy consumption, emissions and wastes. Lower quantities and reduced toxicity of wastes and emissions also means less risk of fines and penalties for compliance with health and environmental regulations. Often these cost efficiencies are also gained by increasing dialogue and collaboration with your suppliers across your entire supply chain.
Success story: IXL Metal Castings is a Geelong based foundry that supports the aluminium smelter industry and other local customers. IXL Metal Castings has successfully worked with one of its major customers to maintain a competitive cost on the supply of metal castings through a number of initiatives including; collecting and recycling old castings and increasing the life of its castings through product re-engineering. Both these initiatives have introduced greater cost efficiencies for the customer, while assisting IXL in improving the efficiencies of its business (which translates into greater profitability).
Improved strategic decision making
By providing a clearer picture of product or service related inputs and outputs, LCM can create a basis for a more complete financial assessment of investment options. The implications of capital investments, operating expenses and future liabilities can be assessed together - leading to more strategic and coherent decision making across the business.
Success story: Toyota's heavy investment in new technology to produce the Prius, a hybrid car, is one example of where sound strategic decision making is helping to position the company for the future. Although there is currently limited global production and mainstream market penetration of the hybrid (but very high consumer demand in some markets), Toyota's innovation will position them as the brand and technical leader in what the company projects will be a very large, international market. Trends such as increasing oil prices and reduced security of supply, will make the hybrid cars a natural choice because of their incredible fuel efficiency and performance - not only its environmental credentials. The US market is already demonstrating this trend; sales of hybrid electric-gasoline cars in the United States surged 81 percent in 2004 from the previous year, and Toyota has been able to secure a lion's share of the market.
- See www.toyota.com and the "Trends and looking ahead" section for more information.
Better product/service design and value
LCM can trigger product improvements and enhancements that uncover greater value to the end user - for example, designing a product that consumes less energy, water or resources during its service life is both environmentally beneficial and delivers economic returns to the consumer. LCM provides the opportunity to encourage suppliers and your product designers to think outside the square and examine a product or service's characteristics and production requirements in greater depth to discover opportunities for improvements... to identify new ways of doing things that will render both economic and environmental gains.
Success story: mecu is a member owned financial cooperative that commits to enhancing its customers' financial well-being in a socially responsible way. mecu's goGreen Home Improvement Loan rewards customers with a 1 per cent discount off the standard variable loan rate for the purchase and installation of environmentally friendly features into the home including solar and wind electricity generation, greywater recycling systems, insulation and rain water tanks. Now, consumers can care for the environment without the financial sacrifice – it makes green renovations affordable.
New business opportunities and markets
LCM also opens the door to new ideas for providing the same products or services, but with reduced environmental impacts. This can open new markets and provide opportunities to clearly differentiate offerings to the market. Through adopting LCM, you are giving consideration to both the product or service's function, as well as the associated life cycle environmental impacts - the result is new business opportunities and new markets for your existing services. In some markets, life cycle information is becoming a requirement to do business. In addition, LCM assists in the development of services, techniques or technology that decreases or eliminates environmental impacts.
Success story: Interface is a carpet business selling floor-covering solutions, moving to the use of carpet tiles in preference to broadloom carpets. This translates to a more efficient means of providing floor coverings, eliminating the need to replace unworn and still serviceable areas of carpet. The carpet company simply replaces the required carpet tiles in high traffic areas, not the entire installation. Maximising the use of an asset such as carpet has both economic benefits, shared between the carpet supplier and its customer, and environmental benefits.
Improved risk management
LCM can help businesses reduce their risk of future liabilities by assisting to minimise the environmental, health and safety problems associated with the production, use, servicing and disposal of products. It also provides a framework for anticipating future scenarios and helping businesses adapt, ahead of time, not only to manage the risk, but to capitalise on the opportunities that it presents.
Success Story: Insurance Australia Group (IAG) is Australia's leading general insurance group. IAG believes the insurance industry must be proactive in addressing human-induced climate change. Nineteen out of 20 of the major insurance events in Australia have been caused by weather-related incidents. IAG appreciates the interdependent nature of its environmental and social goals and economic sustainability, because reducing risk increases the financial viability of its organisation. To help understand and reduce its risk associated with such events, IAG invests in a wide range of research - some focused on better understanding climate change and its impacts, some used to develop adaptation and mitigation strategies.
Enhanced workplace culture
A commitment to LCM demonstrates a proactive approach to environmental management and sustainability - which is a draw card for a growing proportion of employees. Anecdotal evidence suggests that environmentally aware companies can attract and retain good quality employees. The benefit to businesses is two fold - they can secure productive employees in an increasingly competitive labour market, and reduce their costs associated with recruitment, training and discontinuity.
Success Story: Engineers take green step to city
By Tina Perinotto. Australian Financial Review, July 8, 2005.
Engineering firm Parsons Brinckerhoff has signed for two floors in the new Ernst & Young Centre in Sydney's World Square Tower, citing staff preferences for an energy efficient building and proximity to clients as key reasons for the move. The lease, worth about $2 million a year, is for six years over levels 26 and 27 and will accommodate about 300 staff moving from its premises in Rhodes. Paul Salter Associates acted for the landlord, Multiplex. According to Parsons Brinckerhoff's NSW state manager, Stuart Glenn, staff surveys revealed a keen interest in moving to a building with a good energy and environmental profile. The World Square building has been rated 41/2 stars under the Australian building greenhouse ratings system. "We have a lot of environmental scientists and environmental engineers, and that's what's come back to us, that's the motivation." Access to its clients and being part of the CBD were also cited as being important. Mr Glenn said the choice of location was part of the company's overall strategy of growing and improving morale and attracting and retaining staff. "It's a competitive market," he said. Managing director Mike Wilke said the move would bring the company closer to clients and allow it to recruit "the cream of industry professionals which is critical in a sector where demand for skilled staff is high." The US-based company, which employs about 800 people, recently won major design roles in Sydney's Lane Cove Tunnel, the Epping to Chatswood rail line, Sydney Water's NetWorks Alliance, EastLink in Melbourne, and Queensland's Dawson mine project.
Sustainable development must be economically sustainable - A View from Paul Tebo
Dr Paul Tebo, former global Vice President Safety, Health, Environment of DuPont, was responsible for driving sustainable business growth within DuPont. Dr Tebo suggests that for businesses, sustainable development must also be economically sustainable. He suggests that opportunities for sustainable behaviour in business can be classified according to whether they are economically and/or environmentally beneficial, as illustrated by the following diagram:
By deploying LCM, businesses have the opportunity to create great shareholder value (or returns on investments) by aligning with broader environmental and societal values. This "sweet spot", as Dr Tebo describes it, is reached through innovation and creativity, much of what is used when businesses think outside the square and adopt a Life Cycle Management approach across their business.
"For DuPont, sustainable growth is defined as 'creating shareholder and societal value while reducing environmental footprint... along the value chains in which we operate.' It is not the environmental or social responsibility statement for the corporation but the company's mission for the 21st century, a framework for testing all decisions and actions." Paul Tebo, former Global Vice President DuPont.
- Download article by Paul Tebo: Building Business Value Through Sustainable Growth (Adobe PDF file, 112KB).
