creating value with less impact: development of a lean

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CREATING VALUE WITH LESS IMPACT: DEVELOPMENT OF A LEAN-GREEN MODEL TOWARDS ECO-EFFICIENCY BASED ON LIFE CYCLE THINKING. 1

Isabela Baracat Caria , Diogo Aparecido Lopes Silva

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Universidade Federal de São Carlos (UFSCar) – campus de Sorocaba/SP, Centro de Ciências em Gestão e Tecnologia (CCGT), Departamento de Engenharia de Produção de Sorocaba (DEP-So), Isabela Caria [email protected]; [email protected]

Abstract: Lean-Green is a concept that links value aggregation with less environmental impact. This concept comes from the interest of many companies in innovating their business strategies by adding more value to their activities with the integration of environmental concerns. Lean is a customer-focused way of thinking that targets on eliminating production waste (non-valueadded activities) while delivering quality products on time and at a low cost. Green manufacturing is concerned with environmental performance of production systems by reducing environmental burdens. To create value with less impact it is possible to integrate Lean and Green approaches by studying the use of eco-efficiency as an indicator focused on delivering competitive price products, which meet human needs and reduce resource intensity as well as environmental impacts. The aim of this paper is to develop an integrated Lean-Green model for eco-efficiency monitoring in Brazilian companies based on life cycle thinking. The model starts with the application of a Lean tool, i.e., the Value Stream Mapping (VSM) of a chosen organization. In a second part, a Green perspective is adopted to calculate environmental impacts of the evaluated production system based on Life Cycle Assessment (LCA) indicators. In a third part of the Lean-Green model, an eco-efficiency indicator is calculated based on results of the VSM and LCA measurements. The expected results of the next steps of this research is to test the Lean-Green model in different manufacturing companies to check its applicability, strengths and limitations. Keywords: Lean; Green; eco-efficiency; Lean-Green model.

Introduction A scenario of fast changes and an intensely competitive environment have been forcing companies to adapt their way of working to survive innovations in the markets and thrive on the business run. According to Abreu, Alves & Moreira (2017), organizations must focus on an enduring task of providing value for their customers which is achieved by delivering products and services timely, at the right price, that are surely beneficial and do not incorporate environmental concerns. A situation like that calls for innovative models that link Lean and Green Manufacturing providing a means for the company to create more with less. Porter & Van Der Linde (1995) affirm that the adoption of environmental practices tends to generate a win-win situation not only for the environment, but also for operational performance and that the heightened resource productivity make organizations not less, but more competitive. Companies that can deliver products and services with fewer environmental impacts have the potential to capture significant competitive advantage, if there are not sacrifices in time, quality, or costs (Environmental Protection Agency – EPA, 2007). As per González-Benito & González-Benito (2005), the natural environment is at the center of the sustainability competitiveness argument for companies and the main factor taking organizations into more developed environmental practices is the stakeholders’ pressure. Mollenkopf et al (2010) also explains that with the growing concerns with pollution, climate change and use of resources, stakeholders are demanding corporate behaviors and performances that take into account sustainability. This means that a company needs to work in synergy with all the internal and external people involved in a product’s life cycle perspective. Lean-Green synergy has a lot of potential to create improvements that contribute for the company to be more competitive in the market, while grows corporate sustainability thinking (JONES, 2004). However, there are few studies focused on Lean-Green based on a life cycle perspective of products. Therefore, the main motivation of this paper is to analyze on how to integrate Life Cycle Management into a Lean-Green model towards a more eco-efficient production.

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Lean, Green and eco-efficiency As stated in the influential publication “The Machine that Changed the World” by Womack, Jones & Roos (1992), post Second World War, Eiji Toyoda and Taiichi Ohno, from Japanese Toyota, were the pioneers in the concept of Lean Manufacturing, also named Toyota Production System (TPS). The Lean Manufacturing states that fewer resources would be required for delivering the right products at the right time possible, by eliminating all types of wastes, therefore, requiring less human effort, fewer inventories and facilities space (ABREU, ALVES & MOREIRA, 2017). Lean Production or Lean Manufacturing refer to a customer-focused business model and a collection of methods that focuses on the elimination of waste (non-value added activity) while delivering quality products on time and at a low cost (EPA, 2007). Wastes can be considered all of activities that do not add value to the products and they are classified in seven categories: 1) overproduction; 2) over processing; 3) transportation; 4) defects; 5) motion; 6) inventory and 7) waiting. After a while, an extra waste was identified: waste of human talent. Lean Manufacturing offers distinct tools to help identifying each of the seven aforementioned types of waste. One of the most prominent Lean tools is the Value Stream Mapping (VSM). According to Womack & Jones (2003), the VSM is mapping all actions (value added or non-value added) that leads a product from raw material to consumers. Womack and Jones (2011) also define that the relevant actions to be mapped consist in two streams: (a) from the client to the suppliers and (b) from raw material to the client. Together both of the streams constitute a closed cycle of supply and demand. Pampanelli, Found & Bernardes (2014) affirm that a VSM is the process of direct observation of information and material streams according to their occurrences, summing them up visually and glimpsing a future state with a better performance. In order words, the VSM tool allows to check and to eliminate the non-value added activities in a production system. However, Lean Manufacturing does not address environmental performance of production systems (Jones, 2004), as its goal is on eliminating only non-value added activities. Thus, in recent years a new production strategy has emerged – the Green Manufacturing (GM). According to Silva, Silva & Ometto (2016) the United States and China are the most prolific countries when referring to scientific publications in GM topics. In contrast, Brazil still has a small contribution of researches in the field. Most of the GM studies still give more attention to the monitoring and evaluating of energy consumption in manufacturing processes, GM impacts in costs of manufacturing processes, application of GM in machining processes and for selection of more environmental benign manufacturing technologies and key performance indicators. As reported by Verma & Sharma (2016), GM aims to minimize environmental waste and pollution. Environmental waste is an unnecessary or excess use of resources or a substance released to the air, water, or soil that could harm human health or the natural environment. Since the last decade, the number of GM studies has been increasing and special attention is given to the use of Life Cycle Management tools, such as the Life Cycle Assessment (LCA) (SILVA, SILVA & OMETTO, 2016). LCA subsidizes GM by evaluating environmental impacts in a production system. LCA quantifies the environmental impacts of a product, process or service through its entire life cycle, starting from extraction of material and energy used in the production process, to product use and its final end-of-life (BANAWI & BILEC, 2014). On the other hand, it is also important to integrate GM topics in production planning and control issues. Based on that, “Lean-Green” solutions have increased recently. Azevedo et al (2012) and Mollenkopf et al (2010) stand out the lack of established researches connecting green, lean and global issues altogether. Cherrafi et al (2016) agrees that literature still fails on simulating, optimizing, and valuating the performance indicators of a manufacturing systems based on a Lean-Green approach. The integrative Lean-Green approach eliminates non-value added activities, at the same time reduces environment impacts, and risks (DUARTE, 2017). Naturally, Lean practices seem more likely to deploy into Green outcomes, though the other way around can also occur (SALVADOR, PIEKARSKI & FRANCISCO, 2017). The Lean and Environment Toolkit proposed by EPA (2007) lists six benefits of integrating Lean with environmental issues:

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 Reduce costs  Improve process flow and reduce lead times  Lower regulatory non-compliance risk  Meet customer expectations  Improve environmental quality  Improve employee morale and commitment The Business Council for Sustainable Development (BCSD) defined eco-efficiency as: “The delivery of competitively priced goods and services that satisfy human needs and bring quality of life, while progressively reducing ecological impact and resource intensity throughout the life cycle, to a level at least in line with the Earth’s estimated carrying capacity” (BCSD, 1993). This concept was introduced in the 1990s and it can be used to start integrating Lean with Green towards an ecoefficient manufacture of products, to aggregate value and to minimize environmental impacts (ABREU, ALVES & MOREIRA, 2017). Hence, eco-efficiency means to create more value with less impact, and this paper aims to develop a Lean-Green model for eco-efficiency monitoring based on VSM and LCA tools.

Methodology To propose a Lean-Green model, it was first developed a systematic literature review as illustrated in Figure 1. The strategies used in the searches were based on scientific publications (papers and conference proceedings) available at the Google Scholar, Science Direct and Scielo databases and looking for the key-words: “Lean”, “Lean manufacturing”, “Lean thinking”, “Green manufacturing”, “Sustainable manufacturing”, “Lean and green”, “Lean-green” and “Lean and sustainability”. A second research stage comprehends the selection of the papers. According to the abstract and title of the studies, some of them were eliminated from the analyzes. In the third stage, it was investigated the main tools adopted by the remaining publications in order to properly integrate Lean with Green. Finally, step four was based on developing a Lean-Green model taking into account some recent trends in literature, such as: the use of LCA in GM studies and ecoefficiency to integrate Lean with Green. Figure 1. Steps of the systematic literature review on “Lean” and “Green” topics.

1. Search for literature publications

2. Selection of relevant papers

3. Analysis of literaure data and information

4. Development of a Lean-Green model

Results and Discussion In total, 35 papers were mapped from 1993-2017, and most of them were published since 2000’s. Most of the studies are from USA, China and European countries and 06 papers were from Brazil. All the papers were organized in an Excel spreadsheet to summarize the relevant data and information. The following categories were built on the Excel matrix: article’s title, authors, year of publication, country, publication details, type of purpose, details of the purpose, lean tools, and green tools. A filter was used on the Excel matrix to select only the papers that included the words “model”, “framework”, “literature review”, “assessment”, “toolkit” and “methodology” on the field “type of purpose”. The category “details of the purpose” gives more details of the article’s content. Finally, the “lean tools” and “green tools” make a list of the main Lean-Green tools adopted by each publication in order to highlight the most prominent in literature. From results of the Excel matrix, it is possible to see that most of the authors have combined different tools and concepts in their purposes. Some of them make it very clear which specific Lean and Green tools, but others do not make it so clear. Pampanelli, Found & Bernardes (2014), Pampanelli (2015), Ishak et al (2017), Cheung, Leong & Vichare (2017), Aguado, Alvarez & Domingo (2013), Banawi & Bilec (2014), Sidiropoulos et al (2004), Huang (2017) and Verma & Sharma (2016) have suggested to use the VSM as a Lean tool. Cheung, Leong & Vichare (2017), Banawi &

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Bilec (2014), Cluzel et al (2010) and Huang (2017) have proposed to use LCA as a Green tool. On the other hand, only Banawi & Bilec (2014) and Cheung, Leong & Vichare (2017) have proposed to combine both, VSM with LCA. Cheung, Leong & Vichare (2017) links LCA and Lean Manufacturing in a new approach to minimize negative environmental impacts of a moulded product of plastic injection. The model was implemented in a case study to prove its efficiency. It was built a cross-functional product data mapping in Lean and LCA concerning firstly the current and future state of the product and its requirements. Secondly LCA limits were illustrated through a LCA system boundary of the process. Then the current state VSM was constructed and an I/O (input and output) data for LCA was prepared for later evaluation of environmental impacts. After, Kaizen opportunities were also mapped (5S/TPM, kanban and cellular manufacturing), and the future state VSM was finally finished. Results showed that the production lead time had a reduction of 89.98%, as well as slightly reductions in process time, operators, material used (40%), energy consumption (40,97%), transportation (32,2%), climate change impacts, human toxicity impacts (40%), photochemical oxidant formation impacts (60%), terrestrial acidification and terrestrial eco-toxicity. Another relevant study performed by Banawi & Bilec (2014) also focused on integrating VSM with LCA. The aim was to improve quality and reduce environmental impacts of a construction process through a Lean–Green–Six Sigma framework structured based on DMAIC cycle. Step 1 (define and measure) regards applying first VSM and later LCA to find out if waste is generated and later quantify environmental impacts. Step 2 involves Cause & Effect Diagram and Pareto Chart to analyze and improve processes. Step 3 is about using VSM and LCA to determine the extent of waste reduction. Thus, based on the results from the literature analysis, Figure 2 shows a new lean-Green model by combining VSM with LCA and eco-efficiency. Figure 2. Lean-Green Model description.

VSM

LCA

Eco-efficiency

Current and future VSM of a production line

Complete or simplified LCA for the production line

Create eco-efficiency indicators to monitor economic and environmental impacts of a production line.

Insert Lean and Green indicators Eliminate non-valueadded activities

Quantify the chosen Green indicators

The model is organized in 3 steps. Step 0 is the selection of a company in which Lean Manufacturing has already a certain level of maturity and a production line to be studied. Further, as a company may have many production lines/systems as well as dozens of products, it is primarily necessary to focus on a specific production line. For this, it could be selected production lines with improvement opportunities regarding one or more of the Lean’s seven main types of waste (waiting, moving, transport, processing, etc.). Step 1 comprehends the construction of the VSM and proposal of a new one including green indicators to monitor environmental performance to avoid or minimize wastes in the chosen production line. Typical green indicators according to EPA (2007) and Silva, Silva and Ometto (2016) are energy and materials consumption as well as impacts to climate change and resources scarcity, for example. However, the green indicators to be included in the VSM should be selected regarding the main environmental problems for the elected line (e.g., generation of solid waste, carbon emissions, toxic air releases, etc.). Step 2 is the quantification of the green indicators through LCA. In this case, it should be followed the same steps of a LCA study based on the ISO 14040 and 14044 requirements, such as: definition of goal and scope, inventory analysis, impact assessment, and interpretation. Regarding goal and scope, cradle-to-gate studies seems to be more indicated because VSM also looks at the delivery of products until the costumers. Functional unit and reference flows should be defined based on the amount of products needed in the current and future VSMs. Inventory analysis should look at VI Congresso Brasileiro Sobre Gestão do Ciclo de Vida | GCV2018 Organização: IBICT e ABCV, Cooperação: UFSCar Brasília, junho de 2018

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the materials and energy inputs/outputs for each of the mapped processes into the state and future VSMs, and background flows can be extracted from literature and LCA databases, for example. Step 3 is the creation, calculation and monitoring of eco-efficiency to enable decision making of the company towards a cleaner and more sustainable production. Eco-efficiency indicators should be established following Equation 1: 𝐸𝑐𝑜𝐸𝑓 =

𝑃𝑟𝑜𝑑𝑢𝑐𝑡 𝑣𝑎𝑙𝑢𝑒 𝐸𝑛𝑣𝑖𝑟𝑜𝑛𝑚𝑒𝑛𝑡𝑎𝑙 𝑖𝑚𝑝𝑎𝑐𝑡

(1)

In Equation 1, “product value” can be represented by number of products produced by the current or future VSM or the total production costs or revenues, while “environmental impact” is based on each of the green indicators selected for the production line. In general, there will be more than one eco-efficiency indicator as high as the number of selected green indicators. Decision making such as, which process to improve, and how much to be improved should be based on the “EcoEf” results for both the state and future VSMs. Next steps of this research are to put in practice the proposed model from Figure 2 in order to test its effectiveness in a real-life case study.

Conclusion and future work This paper has mapped 35 Lean-Green literature studies. Two of them have combined VSM with LCA and they were used as baseline for the proposal in Figure 2. However, both selected studies did not consider eco-efficiency indicators in their purposes. The new model proposed on this paper is separated in 3 steps. Step 0 is the selection of a company in which Lean Manufacturing has already a certain level of maturity. Step 1 (VSM) comprehends the adaptation of the organization’s current VSM to a new one with Green indicators too. Step 2 is the quantification of the Green indicators through LCA. Step 3 is the creation, calculation and monitoring of eco-efficiency connecting results of the VSM with the LCA to enable decision making towards a cleaner and more sustainable production. Considering the proposed model, decision making regarding value steam improvements and environmental impacts reduction should be based on eco-efficiency results. Finally, a next step of this research is the application of this model in a Brazilian company for a case study.

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