Life cycle thinking in small and medium enterprises: the results of research on the implementation of life cycle tools in Polish SMEs—Part 3: LCC-related aspects

Purpose

This article is the third of a series of articles presenting the results of research on the implementation of life cycle management tools in small- and medium-sized companies in Poland. The purpose of the three-part series of articles is to present the results of research on the implementation of life cycle tools in Polish small and medium enterprises (SMEs). This work is part of a project financed by the Polish Agency for Enterprise Development (PAED) which began in February 2011. It was carried out by the Wielkopolska Quality Institute—a business environment institution associated with the Polish Centre for LCA (PCLCA). The main practical objective of the project was to support SMEs in their business development, e.g. by expanding their horizons beyond the sphere of their operation and identifying new areas for the improvement and promotion of the products and services on offer. The specific objective of the analysis involving the assessment of life-cycle costs of products and services was an attempt to answer the question to determine whether the assessment carried out in accordance with the life-cycle cost (LCC) methodology is a good tool for cost management in this type of business. Part 3 describes the results of studies on the assessment of the implementation of LCC in SMEs conducted in 50 companies involved in the project.

Methods

In order to assess the effectiveness of the project and the effectiveness of the implementation of LCA and LCC, a survey was conducted of small- and medium-sized businesses where the implementation works had been fully completed. In total, 50 organisations agreed to participate in the LCC survey (while 46 in the LCA—part 2 paper), which was 71 % of all the companies where the LCA and LCC studies had been carried out within the project. The survey was conducted using individual in-depth interviews. Questions to the representatives of the companies referred both to aspects of their operating in the market (characteristics of a company, its market share, management systems, environmental policy, suppliers, clients) and the implementation of their environmental service (assessment of its effectiveness, motivation, difficulties in its implementation), as well as opinions on the potential applications of LCA in their current operations.

Results and discussion

The experience and observations of LCC experts resulting from their cooperation with the analysed organisations are largely supported by the results of the survey. The overall impression gained from the project is that the small- and medium-sized enterprises considered have a problem with accepting and understanding the life-cycle perspective, and show limited interest in taking liability for environmental and cost aspects beyond the mandatory legal standards and boundaries of their business operations. Nevertheless, the LCC analyses aroused much bigger interest among the companies than the environmental due to the fact that the cost aspects in companies undergoing normal development are seen as an important source of information about the structure of the costs generated with respect to the products or services provided. It is important to note that a very important factor encouraging businesses to join the studies was the fact that they were cost-free. Moreover, the planned introduction of a new product onto the market was the argument that often influenced the decision to implement the LCC. The survey has shown that companies rarely perform cost analyses including all stages of the life cycle of a product or service. Although the awareness of the importance of conducting economic researches for the entire life cycle of a product or service is great, it turned out to be problematic to unambiguously define the practical use of such an analysis, at least at the present stage of development of the companies surveyed.

Conclusions

The results obtained in the survey indicate that in the case of simple products, with a short life cycle, complex cost analyses may seem less useful. For more complex products or services, with long periods of use, high reliability required, and high operating costs, the analyses presented are useful tools that increase the economic efficiency of the projects implemented. It appears that from the point of view of polish SMEs, the usefulness of an LCA is seen mainly from the angle of opportunities for cost reduction (preferably in business) and increased sales (marketing). A good solution would be to conduct relatively simple, but integrated LCA/LCC analyses in SMEs so that the companies would clearly see the economic effects of the proposed environmental improvements.     

The Effect of Life Cycle Cost Information on Consumer Investment Decisions Regarding Eco-Innovation

Life cycle cost (LCC) computations are a well-established instrument for the evaluation of intertemporal choices in organizations, but they have not been widely adopted by private consumers yet. Consumer investment decisions for products and services with higher initial costs and lower operating costs are potentially subject to numerous cognitive biases, such as present-biased preferences or framing effects. This article suggests a classification for categorizing different cost profiles for eco-innovation and a conceptual model for the influence of LCC information on consumer decisions regarding eco-innovation. It derives hypotheses on the decision-making process for eco-innovation from a theoretical perspective. To verify the hypotheses, the publication reviews empirical studies evaluating the effects of LCC information on consumer investment decisions. It can be concluded that rather than finding ways to make customers pay more for environmentally sound products, the marketing challenge for eco-innovation should be reconceptualized as one of lowering customers' perceived initial cost and increasing awareness of LCC. Most existing studies report a positive effect of LCC information on the purchase likelihood of eco-innovations. Disclosing LCC information provides an important base for long-term thinking on the individual, corporate, and policy levels.     

Life Cycle costing as part of design for environment environmental business cases

Background  In developing products various requirements have to be integrated including functionality, quality, affordability as well as environmental aspects. Often conflicting requirements have to be fulfilled. Therefore, multi-dimensional decision support approaches are necessary. Methods  Here, one approach is to relate the conflicting requirements to each other. Life Cycle Costing (LCC) has the potential to support the trade-off between some environmental targets and overall affordability targets by including all monetary flows along the product life cycle (going beyond the well-known costs of ownership by integrating also long-term use and end-of-life costs). Those solutions can be identified that (a) have the highest efficiencies (where do we get most environmental improvements per Ϊ and (b) have the highest affordability for the customer along the life cycle. Furthermore, on-costs in the design phase can be justified in terms of future savings either for the customer or for the recycling of the products. These represent real business cases for environmental actions. Three types of environmental business cases can be differentiated. Results and Discussion  This paper presents various examples where LCC is integrated into product design. However, there are a number of open issues in the implementation of LCC within real product development including data availability and uncertainty (future costs/ savings), level of discounting, accounting and compensation. Various internal case studies done in the last years showed that already few changes in the costs structure can significantly affect the identi-fied future costs. Recommendation and Outlook  Uncertainties in LCC are higher than in LCA and highest when applied in the stage of product develop-ment, i.e. used to support DfE action. As a consequence, the result-ing figures can only be seen as directional. Therefore, the use of LCC in Design for Environment cannot be recommended without major restrictions in terms of guidance, experience/training. The link-age between LCC and DfE can either be established via (1) experts supporting design teams or (2) as part of a DfE tool. The DfE tool has to include detailed guidance for interpretation, and its application should be based on a solid training for DfE engineers.     

An integrated environmental and cost assessment method based on LCA and LCC for automobile interior and exterior trim design scheme optimization

Purpose

This paper provided an integrated method to evaluate environmental impact and life cycle cost (LCC) of various alternative design schemes in the early design and development stages of complex mechanical product; an optimization method of product design schemes based on life cycle assessment (LCA) and LCC is proposed as a supporting design tool to achieve optimal integration of environmental impact and cost of the design.

Methods

The applied research methods include product level deconstruction model, LCA/LCC integrated analysis model, and the product design scheme optimization method. In the life cycle environmental assessment, GaBi software and CML2001 evaluation method are used to evaluate product environmental impact. In terms of product design configuration scheme optimization, the TOPSIS method is used to optimize the design schemes generated. Taking the internal and external trim of automobile as an example, the specific implementation process of the method is illustrated.

Results and discussion

The case study indicates that, when comprehensively considering the environmental impact and cost, the composite indices of the optimal and worst schemes are 0.8667 and 0.3001, respectively; their costs are ¥164.87 and ¥179.68, respectively; and the eco points of environmental impact are 14.74 and 39.78, respectively. The cost of the two schemes are not much different, but the environmental impact of the optimal scheme is only 37.1% of the worst scheme’s; When cost is the only factor to be considered, the lowest cost design scheme is about 36.7% of the maximum scheme’s cost, and the environmental impact of the lowest cost design scheme is about 1.6 times of the maximum cost scheme’s. When environmental impact is the only factor to be considered, the least environmental impact of design scheme accounts about 31.7% of the largest; the cost of design scheme with the least environmental impact accounts for about 58.1% of the largest one’s. Integrating LCA and LCC, scientific suggestions can be provided from several perspectives.

Conclusions

By considering the environmental impact and LCC, this paper proposes a method of product design scheme optimization as a supporting design tool which could evaluate the design options of the product and identify the preferred option in the early stage of product design. It is helpful to realize the sustainability of the product. In order to improve the applicability of this method, the weighting factors of environmental impact and cost could be adjusted according to the requirements of energy saving and emission reduction of different enterprises.

     

Quantifying drivers of variability in life cycle greenhouse gas emissions of consumer products—a case study on laundry washing in Europe

Purpose

Variability in consumer behaviour can significantly influence the environmental performance of products and their associated impacts and this is typically not quantified in life cycle assessments. The goal of this paper is to demonstrate how consumer behaviour data can be used to understand and quantify the variability in the greenhouse gas emissions from domestic laundry washing across Europe.

Methods

Data from a pan-European consumer survey of product usage and washing habits was combined with internal company data on product format greenhouse gas (GHG) footprints and in-home measurement of energy consumption of laundry washing as well as literature data to determine the GHG footprint of laundry washing. The variability associated with four laundry detergent product formats and four wash temperature settings in washing machines were quantified on a per wash cycle basis across 23 European countries. The variability in GHG emissions associated with country electricity grid mixes was also taken into account. Monte Carlo methods were used to convert the variability in the input parameters into variability of the life cycle GHG emissions. Rank correlation analysis was used to quantify the importance of the different sources of variability.

Results and discussion

Both inter-country differences in background electricity mix as well as intra-country variation in consumer behaviour are important for determining the variability in life cycle GHG emissions of laundry detergents. The average GHG emissions related to the laundry washing process in the 23 European countries in 2014 was estimated to be 5?×?10² g CO_2?eq/wash cycle, but varied by a factor of 6.5 between countries. Intra-country variability is between a factor of 3.5 and 5.0 (90% interval). For countries with a mainly fossil-based electricity system, the dominant source of variability in GHG emissions results from consumer choices in the use of washing machines. For countries with a relatively low-carbon electricity mix, variability in life cycle GHG emissions is mainly determined by laundry product-related parameters.

Conclusions

The combination of rich data sources enabled the quantification of the variability in the life cycle GHG emissions of laundry washing which is driven by a variety of consumer choices, manufacturer choices and infrastructural differences of countries. The improved understanding of the variability needs to be balanced against the cost and challenges of assessing of consumer habits.

     

Hybrid LCC of Appliances with Different Energy Efficiency (10 pp)

Goal, Scope and Background This paper is concerned with a life cycle assessment (LCA) and life cycle costing (LCC) by the use of the waste input-output (WIO) quantity- and price model of air conditioners with different energy efficiency at the use phase (high-end, low-end and average models) that were available in Japan as of winter 2002. The functional unit is an air conditioner of the 2.5kW type that is used for 10 years, and then subjected to an end-of-life (EoL) process that is consistent with the Japanese law on the recycling of appliances. Methods This is the first simultaneous application of the WIO methodology to an LCA and LCC over the entire life-cycle of a product including the use phase, and represents a methodological extension (in the sense of considering the use phase) and integration (in the sense of a simultaneous application) of previous studies by us (Kondo and Nakamura, Int. J. LCA, 2004, Nakamura and Kondo, Ecol. Econ., 2005, in press). The main body of data is provided by the WIO table for the year 2000, an update of the previous table for 1995 that was used in the above WIO studies. Compared with the WIO table for 1995 that consisted of only about 80 industry sectors, the current one consists of about 400 industry sectors, and includes air conditioner as a separate sector. The data on the purchase price and efficiency of air conditioners indicate wide variations: the cheapest one (the low-end model) costs half of the most expensive one (the high-end model), but its efficiency is about half of the latter. Results and Discussion When the cost in the use and EoL phases is included, the low-end model becomes the most expensive one, and the high-end model with the highest purchase cost the least expensive. This reversal of the relative cost levels is attributed to the difference in the efficiency in the use phase. A sensitivity analysis indicates that a reduction of the electricity price in the use phase by about 40% does not alter the significant superiority of the high-end model over the low-end model. In spite of the largest amount of input in the production phase, the high-end model performs the best in terms of both global warming potential (GWP) and landfill, while the low-end model performs the worst. The use phase generates the largest amount of waste for landfill across the three models, the largest component of which is flyash generated from coal firing power plants. A possible internalization of externality in the form of carbon tax was found to work in favor of the high-end model. The cost advantage of the high-end model, however, is sensitive to the rate of discounting of future costs: discounting at 15% diminishes its advantage over the low-end model. Recommendation and Perspective The results indicate the effectiveness of the pricing based on the life cycle cost for achieving sustainability, that is, for promoting the shift of the demand away from appliances with low environmental performance to the one with higher environmental performance. Acceptance by society of pricing based on life cycle costing would require, among other things, an economy-wide standardization of the LCC concept (in a manner analogous to ISO-LCA) that can be used complementary to ISO-LCA.     

Life cycle considerations of the flue gas desulphurization system at a lignite-fired power plant in Thailand

Goal, Scope and Background  The Flue Gas Desulphurization (FGD) system has been installed at the biggest lignite-fired power generation plant in Thailand to reduce the large amount of SO₂ emission. In order to understand the costs and benefits, both in ecological and economic terms, the lignite-fired plant was studied both before and after the installation of the FGD system. The focus of this study is to consider not only the Life Cycle Assessment (LCA) outcome but also the Life Cycle Costing (LCC) factors. The results can provide valuable information when selecting appropriate technologies to minimize the negative impact that lignite-fired power plants have on the environment. Methods  The Life Cycle Assessment - Numerical Eco-load Total Standardization (LCA-NETS) system was used to evaluate the impact on the environment of both the lignite-fired plant and the FGD system. Life Cycle Costing (LCC) was used to provide a comparison between alternative before and after installation of FGD. LCC, a powerful analytical tool, examines the total cost, in net present value terms, of a FGD system over its entire service lifetime. Results and Discussion  The results of the study are shown in the eco-load values over the entire life cycle of the lignite-fired plant. Comparative models of the power plant, before and after the installation of the FGD system, are evaluated using the LCA-NETS system. The results indicate that the installation of the FGD system can reduce the acidification problem associated with lignite-fired plants by approximately 97%. The LCC estimation shows the major costs of the FGD system: capital investment, operating and maintenance, and miscellaneous costs. The LCC provides the decision-making information when considering the cost of the FGD system in terms of protecting the environment. Conclusion and Outlook  LCA is an important decision-making tool for environmental policies, especially with regard to the selection of pollution control equipment for lignite-fired plants. Green coal technologies and strategies to reduce the negative impact on the environment are essential to produce more environmentally-friendly power plants with a sustainable future.     

Integrated Life Cycle Assessment and Life Cycle Cost Model for Comparing Plug‐in versus Wireless Charging for an Electric Bus System

An integrated life cycle assessment and life cycle cost (LCC) model was developed to compare the life cycle performance of plug‐in charging versus wireless charging for an electric bus system. The model was based on a bus system simulation using existing transit bus routes in the Ann Arbor–Ypsilanti metro area in Michigan. The objective is to evaluate the LCCs for an all‐electric bus system utilizing either plug‐in or wireless charging and also compare these costs to both conventional pure diesel and hybrid bus systems. Despite a higher initial infrastructure investment for off‐board wireless chargers deployed across the service region, the wireless charging bus system has the lowest LCC of US$0.99 per bus‐kilometer among the four systems and has the potential to reduce use‐phase carbon emissions attributable to the lightweighting benefits of on‐board battery downsizing compared to plug‐in charging. Further uncertainty analysis and sensitivity analysis indicate that the unit price of battery pack and day or night electricity price are key parameters in differentiating the LCCs between plug‐in and wireless charging. Additionally, scenario analyses on battery recycling, carbon emission pricing, and discount rates were conducted to further analyze and compare their respective life cycle performance.     

Effects of Using Heterogeneous Prices on the Allocation of Impacts from Electricity Use: A Mixed‐Unit Input‐Output Approach

Economic input‐output life cycle assessment (IO‐LCA) models allow for quick estimation of economy‐wide greenhouse gas (GHG) emissions associated with goods and services. IO‐LCA models are usually built using economic accounts and differ from most process‐based models in their use of economic transactions, rather than physical flows, as the drivers of supply‐chain GHG emissions. GHG emissions estimates associated with input supply chains are influenced by the price paid by consumers when the relative prices between individual consumers are different. We investigate the significance of the allocation of GHG emissions based on monetary versus physical units by carrying out a case study of the U.S. electricity sector. We create parallel monetary and mixed‐unit IO‐LCA models using the 2007 Benchmark Accounts of the U.S. economy and sector specific prices for different end users of electricity. This approach is well suited for electricity generation because electricity consumption contributes a significant share of emissions for most processes, and the range of prices paid by electricity consumers allows us to explore the effects of price on allocation of emissions. We find that, in general, monetary input‐output models assign fewer emissions per kilowatt to electricity used by industrial sectors than to electricity used by households and service sectors, attributable to the relatively higher prices paid by households and service sectors. This fact introduces a challenging question of what is the best basis for allocating the emissions from electricity generation given the different uses of electricity by consumers and the wide variability of electricity pricing.     

Analysis of the link between a definition of sustainability and the life cycle methodologies

Purpose

It has been claimed that in order to assess the sustainability of products, a combination of the results from a life cycle assessment (LCA), social life cycle assessment (SLCA) and life cycle costing (LCC) is needed. Despite the frequent reference to this claim in the literature, very little explicit analysis of the claim has been made. The purpose of this article is to analyse this claim.

Methods

An interpretation of the goals of sustainability, as outlined in the report Our Common Future (WCED 1987), which is the basis for most literature on sustainability assessment in the LCA community, is presented and detailed to a level enabling an analysis of the relation to the impact categories at midpoint level considered in life cycle (LC) methodologies.

Results

The interpretation of the definition of sustainability as outlined in Our Common Future (WCED 1987) suggests that the assessment of a product's sustainability is about addressing the extent to which product life cycles affect poverty levels among the current generation, as well as changes in the level of natural, human and produced and social capital available for the future population. It is shown that the extent to which product life cycles affect poverty to some extent is covered by impact categories included in existing SLCA approaches. It is also found that the extent to which product life cycles affect natural capital is well covered by LCA, and human capital is covered by both LCA and SLCA but in different ways. Produced capital is not to any large extent considered in any of the LC methodologies. Furthermore, because of the present level of knowledge about what creates and destroys social capital, it is difficult to assess how it relates to the LC methodologies. It is also found that the LCC is only relevant in the context of a life cycle sustainability assessment (LCSA) if focusing on the monetary gains or losses for the poor. Yet, this is an aspect which is already considered in several SLCA approaches.

Conclusions

The current consensus that LCSA can be performed through combining the results from an SLCA, LCA and LCC is only partially supported in this article: The LCSA should include both an LCA and an SLCA, which should be expanded to better cover how product life cycles affect poverty and produced capital. The LCC may be included if it has as a focus to asses income gains for the poor.     

Economic modelling and indicators in life cycle sustainability assessment

Purpose

Sustainability assessment in life cycle assessment (LCA) addresses societal aspects of technologies or products to evaluate whether a technology/product helps to address important challenges faced by society or whether it causes problems to society or at least selected social groups. In this paper, we analyse how this has been, and can be addressed in the context of economic assessments. We discuss the need for systemic measures applicable in the macro-economic setting.

Methods

The modelling framework of life cycle costing (LCC) is analysed as a key component of the life cycle sustainability assessment (LCSA) framework. Supply chain analysis is applied to LCC in order to understand the relationships between societal concerns of value adding and the basic cost associated with a functional unit. Methods to link LCC as a foreground economic inventory to a background economy wide inventory such as an input–output table are shown. Other modelling frameworks designed to capture consequential effects in LCSA are discussed.

Results

LCC is a useful indicator in economic assessments, but it fails to capture the full dimension of economic sustainability. It has potential contradictions in system boundary to an environmental LCA, and includes normative judgements at the equivalent of the inventory level. Further, it has an inherent contradiction between user goals (minimisation of cost) and social goals (maximisation of value adding), and has no clear application in a consequential setting. LCC is focussed on the indicator of life cycle cost, to the exclusion of many relevant indicators that can be utilised in LCSA. As such, we propose the coverage of indicators in economic assessment to include the value adding to the economy by type of input, import dependency, indicators associated with the role of capital and labour, the innovation potential, linkages and the structural impact on economic sectors.

Conclusions

If the economic dimension of LCSA is to be equivalently addressed as the other pillars, formalisation of equivalent frameworks must be undertaken. Much can be advanced from other fields that could see LCSA to take a more central role in policy formation.     

High resolution retrieval of leaf chlorophyll content over Himalayan pine forest using Visible/IR sensors mounted on UAV and radiative transfer model

Forests play an essential role towards net primary productivity, biological cycles and provide habitat to flora & fauna. To monitor key physiological activities in forest canopies such as photosynthesis, respiration, transpiration, spatially-explicit and precise information of the biochemical (biological) variables such as Leaf Chlorophyll Content (LCC) is required. While lookup-table (LUT)-based Radiative Transfer Model (RTM) inversion against optical remote sensing imagery is regarded as a physically sound and robust approach for retrieving biochemical and biophysical variables, regularization procedures are required to offset the problem of ill-posedness. To optimize the RTM inversion of LCC over a sub-tropical pine forest plantation, in the Western Himalaya, we investigated the role of: (1) cost functions (CFs), (2) added noise, and (3) multiple finest solutions in LUT inversion. Principal CFs were evaluated belonging to three categories: information measures, M-estimates, and minimal contrast approaches. The inversion approaches were applied to a LUT produced by the coupled leaf-canopy model known as PROSAIL RTM and tested in contrast field spectral data obtained from reflectance data derived from UAV (Unmanned Aerial Vehicle) images taken over the canopies of covered pine forests. The Bhattacharyya divergence, an information measure, outperformed all other CFs in LCC inversion, with R² of 0.94, RMSE of 6.20 μg/cm² and NRMSE of 12.27% during the validation. The optimized inversion strategy was subsequently applied to a UAV-acquired multispectral image at an 8.2 cm pixel resolution for detailed landscape forest LCC mapping. The associated residuals as provided by the LUT-based inversion provided insights in the spatial consistency of the LCC map.     

Life cycle thinking in small and medium enterprises: the results of research on the implementation of life cycle tools in Polish SMEs—part 1: background and framework

Purpose

This article is the first of a series of articles presenting the results of research on the implementation of life cycle management tools in small- and medium-sized companies in Poland. This work is part of a project financed by the Polish Agency for Enterprise Development (PAED) which began in February 2011. It was carried out by the Wielkopolska Quality Institute—a business environment institution associated with the Polish Centre for Life Cycle Assessment (PCLCA). The main practical objective of the project was to support small and medium enterprises (SMEs) in their business development, e.g. by expanding their horizons beyond the sphere of their operation and identifying new areas for improvement and promotion of the products and services on offer. These publications are a voice in the discussion on the opportunities and pertinence of implementing life cycle thinking (LCT) in small- and medium-sized enterprises and an attempt to identify potential barriers arising from specific characteristics of SMEs which could hinder or even prevent the effective implementation of life cycle techniques. Part 1 presents the situation of SMEs in Poland, general objectives of the project and organisation of the survey process.

Methods

It was decided to carry out research on the effectiveness of the implementation of LCA and life cycle costing (LCC) in organisations that had received financial support for the implementation of life cycle techniques. Financial constraints, which might potentially be a reason for limited interest in LC techniques among SMEs in Poland, were taken into account. Thus, financial support provided an opportunity for the project to obtain information from a wide range of companies, not only from those companies that were particularly aware of the benefits of LC techniques or had a very good financial situation. Research based on the method of individual in-depth interviews was preceded by an analysis of literature showing the status of SMEs in Poland. Given the results, the project objectives were formulated and the ways of conducting the research were defined.

Results and discussion

The comparison of Polish SMEs with the same category of companies in the EU shows some similarities, such as the percentage of companies engaged in various businesses. The differences are expressed primarily in the financial potential, which in the case of Polish SMEs, is significantly smaller than the average in the EU. In the SME sector, there are less than half as many small businesses in Poland than in the EU. There are, however, many more microbusinesses in Poland. An evaluation of the prevalence of LCA and LCC techniques indicates that they are used by just 3 % of Polish SMEs, which is a very small proportion compared to the more than 50 % of SMEs taking any environmental measures. Information collected on specific details of Polish SMEs was used to identify the target group and develop a survey questionnaire which aimed to audit, among other things, the approach to environmental and economic analyses in the past and the approach to the LCA and/or LCC analyses that were implemented from the point of view of difficulties in their implementation and potential use of the results.

Conclusions

Part 1 of the series of articles demonstrates a marginal-scale dissemination of life cycle management techniques among Polish SMEs. Companies definitely prefer to introduce relatively simple solutions that do not require specialised knowledge or unnecessary costs, e.g. they introduce energy-saving bulbs and waste segregation. Only a small percentage of companies implement more complex activities, and most commonly, these are medium-sized companies with greater financial and human capital. So what should be done to make SMEs use life cycle techniques more frequently? Is it appropriate to make changes in the methodology and life cycle techniques as such, or should, rather, the incentive for SMEs to use LCT come from outside as a requirement of public institutions or suppliers in a supply chain? Answers to these questions are provided in the research conclusions presented in parts 2 and 3 of the series of articles.     

Why Are Product Prices in Online Markets Not Converging?

Why are product prices in online markets dispersed in spite of very small search costs? To address this question, we construct a unique dataset from a Japanese price comparison site, which records price quotes offered by e-retailers as well as customers’ clicks on products, which occur when they proceed to purchase the product. The novelty of our approach is that we seek to extract useful information on the source of price dispersion from the shape of price distributions rather than focusing merely on the standard deviation or the coefficient of variation of prices, as previous studies have done. We find that the distribution of prices retailers quote for a particular product at a particular point in time (divided by the lowest price) follows an exponential distribution, showing the presence of substantial price dispersion. For example, 20 percent of all retailers quote prices that are more than 50 percent higher than the lowest price. Next, comparing the probability that customers click on a retailer with a particular rank and the probability that retailers post prices at a particular rank, we show that both decline exponentially with price rank and that the exponents associated with the probabilities are quite close. This suggests that the reason why some retailers set prices at a level substantially higher than the lowest price is that they know that some customers will choose them even at that high price. Based on these findings, we hypothesize that price dispersion in online markets stems from heterogeneity in customers’ preferences over retailers; that is, customers choose a set of candidate retailers based on their preferences, which are heterogeneous across customers, and then pick a particular retailer among the candidates based on the price ranking.     

Is LCC relevant in a sustainability assessment?

In a recent letter to the editor, Jørgensen et al. questioned that life cycle costing (LCC) is relevant in life cycle-based sustainability assessment (LCSA). They hold the opinion that environmental and social aspects are sufficient. We argue that sustainability has three dimensions: environment, economy, and social aspects in accordance with the well-accepted “three pillar interpretation” of sustainability, although this is not verbally stated in the Brundtland report (WCED 1987). An analysis of the historical development of the term “sustainability” shows that the economic and social component have been present from the beginning and conclude that LCSA of product systems can be approximated by LCSA = (environmental) LCA + (environmental) LCC + S-LCA where S-LCA stands for social LCA. The “environmental” LCC is fully compatible with life cycle assessment (LCA), the internationally standardized (ISO 14040 + 14044) method for environmental product assessment. For LCC, a SETAC “Code of Practice” is now available and guidelines for S-LCA have been published by UNEP/SETAC. First examples for the use of these guidelines have been published. An important practical argument for using LCC from the customers’ point of view is that environmentally preferable products often have higher purchasing costs, whereas the LCC may be much lower (examples: energy saving light bulbs, low energy houses, and cars). Also, since LCC allows an assessment for different actor perspectives, the producers may try to keep the total costs from their perspective below those of a conventional product: otherwise, it will not succeed at the market, unless highly subsidized. Those are practical aspects whichfinally decide about success or failure of “sustainable” products. Whether or not an analysis using all three aspects is necessary will depend on the exact question. However, if real money flows are important in sustainability analysis of product systems, inclusion of LCC is advisable.     

Life-Cycle based methods for sustainable product development

Sustainability-a term originating from silviculture, which was adopted by UNEP as the main political goal for the future development of humankind-is also the ultimate aim of product development. It comprises three components: environment, economy and social aspects which have to be properly assessed and balanced if a new product is to be designed or an existing one is to be improved. The responsibility of the researchers involved in the assessment is to provide appropriate and reliable instruments. For the environmental part there is already an internationally standardized tool: Life Cycle Assessment (LCA). Life Cycle Costing (LCC) is the logical counterpart of LCA for the economic assessment. LCC surpasses the purely economic cost calculation by taking into account hidden costs and potentially external costs over the life cycle of the product. It is a very important point that different life-cycle based methods (including Social Life Cycle Assessment) for sustainablity assessment use the same system boundaries.     

Environmental product information (EPI) and LCA

The 41st discussion forum addressed different concepts of environmental product information (EPI). The goal was on the one hand to discuss EPI in a theoretical perspective, addressing issues on functional unit and use phase, LCIA methods, and comprehensiveness of environmental indicators. On the other hand, practical examples were presented to show the heterogeneity and challenges in the actual implementation of EPI in Europe and evaluate how far such case studies can be generalized in order to establish one type on environmental information for all types of products. The discussion started with three talks dedicated to Swiss perspectives on EPI, presenting expectations of the Swiss Federal Office for the Environment followed by the results of a Swiss feasibility study investigating a possible concept for EPI, and ending with discussing EPI from a psychological perspective. After three presentations considering different approaches developed in neighboring countries (France, Austria, and Italy) for providing life cycle assessment-based environmental information for products, six short presentations were held covering industry application and case studies. The following issues were addressed during the discussion: the real demand for EPI from the business, the integration of the use phase in the information provided, the questions and comparisons to be addressed with an EPI, the indicators to use in EPI, the effects of EPI on consumers, and the attitude of consumers regarding quantitative environmental indicators.     

Life cycle thinking in small and medium enterprises: the results of research on the implementation of life cycle tools in Polish SMEs—part 2: LCA related aspects

Purpose

This article is the second part of a series of articles presenting the results of research on the implementation of lifecycle management tools in small- and medium-sized companies in Poland. This work is part of a project financed by the Polish Agency for Enterprise Development (PAED), which began in February 2011. It was carried out by the Wielkopolska Quality Institute, a business environment institution associated with the Polish Centre for life cycle assessment (PCLCA). The main practical objective of the project was to support small and medium enterprises (SMEs) in their business development, e.g. by expanding their horizons beyond the sphere of their operation and identifying new areas for the improvement and promotion of the products and services they offer. The specific objective of the analysis on the environmental impact was an attempt to answer the question of whether environmental LCA is a good management tool for this type of business. Part 2 describes results of the evaluation of the implementation of LCA in SMEs conducted in 46 companies involved in the project.

Methods

In order to assess the effectiveness of the project and the effectiveness of the implementation of LCA and life cycle costing (LCC), a survey was conducted of small and medium businesses where the implementation work had been fully completed. In total, 46 organisations agreed to participate in the LCA survey, which was almost 66 % of all the companies where the LCA and LCC studies had been carried out within the project. The survey was conducted using individual in-depth interviews. Questions to the representatives of the companies referred both to aspects of their functioning in the market (characteristics of a company, its market share, management systems, environmental policy, suppliers and clients) and the operation of their environmental service (assessment of its effectiveness, motivation and difficulties in its implementation), as well as opinions on the potential applications of LCA in their current operations.

Results and discussion

The experience and observations of LCA experts resulting from their cooperation with the organisations analysed are largely supported by the results of the survey. The overall impression gained from the project is that the small- and medium-sized enterprises analysed have a problem with accepting and understanding the life cycle perspective and show limited interest in taking liability for environmental aspects beyond the mandatory legal standards and boundaries of their business operations. The survey shows that the companies rarely analyse environmental aspects appearing on many different stages of the life cycle of their products. Most of them focus on their current operations while trying to meet the mandatory legal requirements relating to environmental protection. It should be noted, however, that SMEs taking part in the studies appreciate the opportunities offered by LCA, their usefulness in business practice, recognise the potential for using life cycle techniques in the future and their impact on the management process, procedure or thinking about the products they manufacture. The result of the study is the identification of four key areas relevant to SMEs which may affect their willingness to adopt the life cycle perspective and undertake environmental measures.

Conclusions

It seems that implementing LCT in small- and medium-sized enterprises requires a special approach. These are often companies with limited human resources (often just a few people) and financial resources (often operating on the verge of survival), with a weak position in a supply chain and, therefore, having various priorities in their daily operation. The researchers also encountered awareness barriers as a result of which the idea of going beyond an organisation and making an entire LCA of a product was often simply misunderstood. The studies conducted among SMEs have shown that managers' own intuition and research on customer preferences were largely conducive to improve existing or introducing new products or services, while changes were mostly introduced due to the requirements of the market, or the desire to reduce costs. It can be assumed that their non-obligatory nature also contributed to the relatively low interest in LCA initiatives and not recognising their usefulness. It seems that it would be useful to carry out relatively simple, but integrated, LCA/LCC analyses in SMEs so that the companies would clearly see the economic effect of the proposed environmental improvements. The analyses conducted lead to the conclusion that the incentive for SMEs to take measures should come from outside, e.g. as requirements for green public procurements, or as part of assessment made by suppliers in a supply chain.     

Price Comparisons on the Internet Based on Computational Intelligence

Information-intensive Web services such as price comparison sites have recently been gaining popularity. However, most users including novice shoppers have difficulty in browsing such sites because of the massive amount of information gathered and the uncertainty surrounding Web environments. Even conventional price comparison sites face various problems, which suggests the necessity of a new approach to address these problems. Therefore, for this study, an intelligent product search system was developed that enables price comparisons for online shoppers in a more effective manner. In particular, the developed system adopts linguistic price ratings based on fuzzy logic to accommodate user-defined price ranges, and personalizes product recommendations based on linguistic product clusters, which help online shoppers find desired items in a convenient manner.     

Integrating life cycle assessment (LCA) and life cycle costing (LCC) in the early phases of aircraft structural design: an elevator case study

Purpose

The main objective of this paper is to develop a model that will combine economic and environmental assessment tools to support the composite material selection of aircraft structures in the early phases of design and application of the tool for an aircraft elevator.

Methods

An integrated life cycle cost (LCC) and life cycle assessment (LCA) methodology was used as part of the sustainable design approach for the laminate stacking sequence design. The model considered is the aircraft structure made of carbon fiber reinforce plastic prepreg and processed via hand layup-autoclave process which is the preferred method for the aircraft industry. The model was applied to a cargo aircraft elevator case study by comparing six different laminate configurations and two different carbon fiber prepreg materials across aircraft’s entire life cycle.

Results and discussion

The results show, in line with other studies using different methodologies (e.g., life cycle engineering, or LCE), that the combination of LCA with LCC is a worthwhile approach for comparing the different laminate configurations in terms of cost and environmental impact to support composite laminate stacking design by providing the best trade-off between cost and environment. Elevator LCC reduces 19% by changing the material type and applying different ply orientations. Elevator LCA score reduces 53% by selecting the optimum instead of best technical solution that minimizes the displacement. Improving the structural performance does not always lead to an increase in the cost.