1. UNEP/SETAC Life-Cycle Initiative
Life Cycle Management Capability Maturity Model (LCM-CMM)
Building Capacity for
Sustainable Value Chains
International Life Cycle Partnership
To bring science-based life cycle approaches into practice worldwide

2. Developing an improvement plan
The LCM CMM approach is presented as an objective analytical method to identify improvement projects that are are tailored to the needs of the organization- both near term performance targets and the longer- term organizational systems and structures for sustained performance. There are structured analyses to help the LCM champion understand how various projects that reduce the company’s environmental impact or advance sustainability objectives can contribute to company strategic goals in order to effectively advocate for these projects with management. However, the final selection of improvement projects is strongly influenced by the social and political factors that exist within any organization. Near- term business pressures will often drive the final project selection, but the key to sustained success is to use each project to incrementally build the components of a cohesive management system. Not every project will deliver significant environmental benefits, but by focusing on capabilities – problem- solving and decision- making skills – every project can build organizational capacity for more effective LCM practice in future projects. The key is to embed the practice of establishing dual goals for every project- hard, quantitative performance gains and softer, qualitative organizational learning objectives.

3. GUIDELINES Business context & priorities
Maturity level determines scope
Need for new procedure or methodology
Need for standardization/ integration
Maturity assessment helps target improvements to key areas
Processes that deviate from average maturity identify gaps & strengths
No company has complete freedom to act as it pleases– it must respond to market forces, the competitive context of its industry, public pressure, regulations, etc. While the capability framework is designed to satisfy the long term organizational development needs, it is critical that the leadership does not lose focus on achieving near term performance targets set by customers and investors. The objective is to design the improvement projects necessary to meet these performance targets in such a way as to gradually develop the systems and structures necessary for higher levels of organizational maturity.
Questions to consider:
Does the maturity assessment suggest need for developing new procedures, tools to fill a gap?
Does the organization need to standardize and refine a procedure or tool developed in one area/ project?
Do people have access to the information, training, resources, etc needed to implement improvement projects?
Does the assessment reveal a process significantly more mature or significantly less mature than most processes?
How do these needs line up with the near tern business pressures- customer demands, competitive forces, strategic goals, etc.?

4. INTERPRETING RESULTS
Review of the Textco results presented previously indicates the organization has a reasonably well- established quality system in place. Material and energy flows are mapped to support their focus on cost control. Environmental aspects, however, are not effectively integrated despite some forward- looking projects- eco- labeling and carbon footprint analysis. These are being pushed down from above by executive mandates, and are being treated more as compliance requirements than opportunities for learning. There is little support for employees in terms of training and development programs or supporting infrastructure.
These considerations suggest that the most appropriate improvement projects would be process improvement efforts to better integrate environmental and quality management. The maturity of the quality system implies the company has the capability to run effective process improvement projects or Kaizen events. Thus, the projects would be customized to develop the elements of an ISO management system equivalent. Projects should also address the identified deficiencies in supporting infrastructure. The following objectives would be relevant for the organizational development efforts:
• Data systems to support carbon footprint and eco- label initiatives,
• Training needs assessment for employees in area of life cycle management,
• Review of work instructions to improve integration of environmental management tasks, and/ or
• Quantify environmental impacts of processes to establish baseline for proactive facility/ company improvement goals,

5. SWOT MATRIX INTERNAL FACTORS Strength Weakness Opportunity
Screening LCA to assess potential for organic cotton
Use strengths to take advantage of opportunities
Develop procedures to support GHG, eco- labels
Overcome weaknesses by taking advantage of opportunities
Develop supply chain environmental reporting
Use strengths to avoid threats
Assess partners for green chemistry alternatives
Minimize weakness and avoid threats
Growth
Positioning – Org. Development
Opportunity
EXTERNAL FACTORS
The goal of the SWOT analysis is to overlay the assessment of external factors (opportunities and threats) with the results of the maturity assessment (internal strengths and weaknesses) to identify those areas that can best deliver business value. These areas of strategic value then help prioritize the list of potential improvement projects. Projects in each of the quadrants serve specific strategic goals- targeting growth opportunities, managing risks, or positioning the organization to best adapt to competitive pressures.
For the example case study of Textco, energy efficiency projects often offer attractive returns, and make a great place to start. These would support the carbon footprint project and could be used to develop data systems that would also help meet eco- label requirements. Because a mature management system seems to be working, it could be appropriate to create a task force to conduct a qualitative assessment of the company’s product life cycle and revise design procedures accordingly. The analysis could also inform a management review of the business case for their environmental initiatives, and perhaps explore the opportunities presented by developing an organic cotton line. The management review could lay the foundation for a more formal business development process. These kinds of projects would require more extensive cross- functional collaboration and extend over a longer time horizon, thus posing greater risks. The LCM champion will need to balance the potential benefits of the project against the challenges of implementation. Simple projects and quick successes can be an effective means to gradually build support for more challenging projects.
Positioning – Org. Development
Risk Mgmt.
Threat

6. WORKSHEET #6 – SWOT Analysis

7. CAN ENVIRONMENTAL INITIATIVES ADD TO VALUE PROPOSITION?
Costs- Do environmental drivers influence cost structure?
Customer value- Are we in a position to communicate environmental benefits?
Risk- Are we exposed or in a position to assume risk for a fee?
Resources & capabilities- Are we in a position to leverage technical strengths?
Market power- Are we in a position to exercise power to drive higher standards?
Information- Are we in a position to control the flow? Do customers want environmental data?
The LCM champion will naturally want to focus on projects that provide the most significant environmental improvements or address sustainability initiatives. To effectively sell these projects to business managers, however, it is first necessary to determine whether the company will actually be able to capture the value created by efforts to improve environmental performance. These diagnostic questions can be used to screen potential actions for the likelihood of financial payback. In some cases, there will be no financial benefit, and in fact, could be significant financial barriers to taking proactive efforts to achieve a higher level of environmental performance. Other planned or proposed improvement projects may have limited environmental benefit. However, even in these projects it may be possible to develop a capability that advances the maturity of the organization’s LCM system – e.g. process mapping, incorporating material and energy flows into financial analysis of investments, etc. The LCM champion will need to balance the focus on measurable financial benefits to enlists management support and advocacy for developing LC capabilities that enable superior environmental performance.

8. BRAINSTORM POTENTIAL PROJECTS
Offer organic product line
Boiler efficiency upgrade
Implement lean practices to increase inventory turns
Companies have only two sources of cash – revenue from customers and capital from investors. Success of any action will ultimately be measured by return on invested capital. If returns are insufficient, investors will move their money to other, more profitable ventures. If the product does not meet customer expectations, the company will lose market share. Sustainable companies must meet the expectations of its customers and investors. Potential improvement projects are evaluated against this value tree to maintain a focus on creating and capturing financial value from any environmental or sustainability initiative.
Does it open new markets or add new features that customers will value?
Does it improve efficiency of operations, thus improving margins?
Does it streamline throughput, reducing demands for working capital?
Does it mitigate risks in a way that will attract lower cost capital?
Although the environmental champion is focused on documenting performance improvements in terms of reduced impact, the business managers will valuate the projects strictly in financial terms. The environmental champion will need to use the language of business to advance any LCM or sustainability initiatives. But it is important to capture environmental benefits of all projects. The champion must demonstrate the value of applying the same measurement rigor to both financial and environmental outcomes for all projects.
See companion Worksheet #7

9. WORKSHEET #7 – Capturing Value

10. PROJECT SELECTION Organizational Realities
Impact – Environmental and Financial
Alignment with corporate strategy & goals
Opportunity / Available resources
Organizational development
Build competency in critical skills
Facilitate cross- functional integration
Promote collaborations with external organizations
Project Sponsor
Go/ No Go Decision
The LCM CMM approach has been presented as a very structured method to identify the most promising projects. Actual project selection is much messier and driven by strategic priorities of the business as well as organizational politics and personal agendas. Results of the capability assessment can help gauge the organization’s readiness for change and the appropriate scope for the project. But it is also important to remember any company is a social organization. There are many human factors that will play into the selection of improvement projects that get funded. Selection of a specific project will also necessarily consider the organizational realities:
Timing- There is a window of opportunity for many projects that will determine when it is actually feasible- budget cycles, new product launch schedule, previously scheduled process upgrade or maintenance, etc.
Project sponsors- The sustainability champion will naturally want to pursue the project with the greatest social & environmental impact, but it will often be preferable to tackle a project with a willing sponsor that is committed to making the effort a success.
Thus, selection of a specific project will be informed by the strategic thinking but often driven by opportunistic factors. A supportive project sponsor that has the authority to provide the necessary resources for a successful project is an absolute. The project should not proceed unless the necessary resources and people will be made available.

11. IMPROVEMENT PLAN Meet near term quantitative performance targets
ID#
Project Description
Performance Improvement Target
Organizational Development Objective 1
Upgrade steam boiler system, insulate pipes
15% reduction in energy use; < 4 yr. payback
Define procedure for GHG accounting 2
Install heat recovery on continuous wash line, monitor water use
20 % reduction in energy use; < 3 yr payback
Develop formal energy mgmt program 3
Screening LCA of organic cotton
5% increase in margin; improve market share by 5%
Draft eco- design guidelines for product engineering standards;
Assess training needs
Assess business oppty for organic product line
These hypothetical examples obviously imply some assumptions about the Textco case study. In a real case, the specific projects would depend on what manufacturing & utility processes are in the facility, what are the key cost/ quality drivers for the business, what specific requirements are being imposed by the customer & so on.
The value of this approach is that each project has a two- fold purpose. The ongoing success of the company depends on meeting its commitments. The near term performance targets will drive the selection of a specific project. Building capability for sustainable performance is achieved by the secondary objective for organizational development. These objectives are designed to capture and institutionalize the learning achieved in each project.
Most companies will have some process for continual improvement, capital appropriations, etc. The LCM CMM champion will want to tap into these processes to identify and evaluate projects that have been planned by business management. Selecting improvement projects will be a combination of adding environmental objectives to an already planned improvement project, or alternatively promoting new projects that promise business relevant improvements.
Meet near term quantitative performance targets
Balanced with longer term organizational learning – more reliance on process measures
Delayed impact on effectiveness!
See companion Worksheet #8

12. WORKSHEET #8 – Potential Projects

13. ACTION LEARNING WORKSHOP
Hosted by business manager
Facilitated by LCM champion
Active learning
Feedback from work outcome
Accelerated implementation S W O T
Once a project has been selected, a challenge for the LCM champion is determining exactly what needs to be done & how the project should be implemented in detail to build LCM capabilities. Action- learning projects are an effective method to accelerate implementation. Key to the success of an action- learning project is that the results are measured in hard business terms. The new methods and tools must be perceived as adding real value to the workers – quantified work outcomes. There is some experimentation necessary to adapt LCM principles to the specific needs of the company, and to the specifics of the selected project. Just – in – time training is facilitated by the champion to ensure the workers have the resources and capability to achieve desired results. But, the project must be viewed as ‘real’ work, and not as a training class.
There are two basic flavors for the action learning project. One is similar to a process improvement Kaizen that may be familiar to operations personnel. The second is similar to a design for X workshop that may be familiar to product and process design teams. Again, it is important to understand existing improvement processes within the company. It is probably most effective to align efforts and adapt methods to fit these processes, rather than trying to impose a new and different process. The action – learning format should be adapted to fit within existing improvement processes to avoid defensive reactions. The maturity assessment can help guide the LCM CMM in determining which methods the organization is “ready” to accept.
OPPTY
ANALYSIS
CONCEPT
DETAILED
DESIGN
VALIDATE
LIFE CYCLE
MGMT
DELIVER
ACTIONABLE TASKS

14. ROLES & RESPONSIBILITIES
Function
Role
Key information
Environment, health & safety
Hazard risk assessment, regulatory requirements
Waste streams, injuries, hazards, regulatory trends, stakeholder expectations
Engineering (IPD)
Design of products & services
Concept, design requirements, tools, technical standards
Advanced Programs
Product/ technology strategy
Competitive analysis
Facilities & operations
Process capability, available services
Baseline data, takt time, costs, process capability
Finance
Business case analysis
Cost drivers, capital appropriation, value engineering
Supply management
Value chain analysis
Make vs buy, variety analysis, supplier capability
Sales & marketing
Launch strategy
Marketing trends, customer requirements, competitive data
Customer support
Aftermarket strategy
Customer feedback, warranty
Quality
Continuous improvement
Defect rates, root cause, MFA
One of the most common objectives of the life cycle practitioners is “more and better data!” This can provoke objections from managers that consider LCA time- consuming and too expensive. In an organization just starting its sustainability journey, data will often be lacking. To overcome limited data, it is critical to have skilled and experienced people on the project team. These are the people that know the company history, are familiar with the key needs and problems facing the company, and have a wealth of ideas on how to address these challenges. With an experienced cross- functional team, it is quite easy to do a qualitative life cycle assessment to support any improvement project. A core team can define the boundaries of the project, the key functional groups that should be involved, and then to identify experienced people to represent each function. Having the right people involved in the project is much more important than having more data. Businesses are driven to make decisions that are ‘good enough’ with the least amount of data and analysis.

15. PROJECT CHARTER Description of problem Improvement goal
Why important to customer, organization
Improvement goal
Integration with other initiatives, measures of success
Scope- boundaries, assumptions, constraints
Schedule & resources
Team membership
Information gaps
Reality check – Go/ No Go criteria
It is important to negotiate a clear charter with the project sponsor that provides a crisp definition of what the project will achieve and how its success will be evaluated. The charter should lay out clear boundaries, define the necessary resources, team membership, and any information gaps or potential risks for the project. There should also be very clear go/ no go criteria for what must be in place for the project to proceed. A potential danger is that the sustainability or life cycle champion is so desperate for the project to happen, that he/ she is willing to compromise on the necessary resources, people, etc. that would enable a successful project. The champion must be willing to walk away from a project that is under- resourced. No project is better than a project doomed to failure. A willingness to commit to measurable business results should help secure necessary support.

16. EVENT CHECKLIST Workshop sponsor & LCM champion endorse charter
Top level product system life cycle map completed
Priority environmental and social themes identified (external perspective)
Critical technologies and processes identified (internal perspective)
Key functional group representatives identified
EH&S technical support information gathered
Event logistics
Conference room
Computer, A-V equipment, flip charts
Food, breaks & other creature comforts
Pre-event awareness training
This is a simplified checklist to help with the logistics of an action learning event. Typically a core team will do the work to prepare for the event.

17. PROCESS IMPROVEMENT KAIZEN Typical Agenda
Day One
Goals & objectives
Training: Kaizen principles, process mapping, hazard identification
Activity: Map process(es), identify inputs & outputs, hazards
Day Two
Training: Risk assessment, root cause analysis, brainstorming
Activity- Rank & prioritize hazards, conduct root cause, brainstorm potential alternatives
Day Three
Training: Alternative selection process
Activity: Investigate alternatives, implement quick fixes
Day Four
Training: Developing alternatives, financial analysis
Activity: Complete alternatives assessment, apply cost accounting tool, project schedule
Day Five
Training: Ground rules for mgmt presentation
Activity: Complete report to mgmt, complete quick fixes, Make final presentation to mgmt
A typical process improvement Kaizen can run a full week, because many of the necessary people are located with the process being improved. Each day starts with just enough training to complete that day’s activities. Each day ends with a quick report out. Adjustments can be made to the schedule as dictated. These events will often identify some quick fixes that can be implemented during the event. Other improvement ideas my take longer, requiring some capital investment or additional analysis. At the end of the week, the team makes a management presentation of their plan for all potential improvement ideas with any budget projections and proposed schedules. Additional resources for conducting Kaizen events can be found in the literature on Six Sigma and lean manufacturing.

18. PROCESSES AND SYSTEMS Outputs Inputs Feedback
SUPPLIERS
CUSTOMERS
Process or System
Inputs
Outputs
Feedback
What is the purpose of this process?
What are the key inputs?
What must be accomplished to go to next step?
Are there any unnecessary steps?
Where are the problems?
Process improvement projects build on existing lean or Six Sigma efforts. The goal is to simply add in environmental objectives as one more aspect of quality. It is important to use the established quality improvement tools and avoid trying to impose a new set of environmental or sustainability tools (that achieve the same purpose.) The quality professionals can be valuable allies in integrating LC or sustainability objectives into routine Kaizen events or other company process improvement programs. 13

19. DfE DESIGN CHARRETTE Typical Agenda
Day One -AM
Goals and objectives
Training: DfE principles, Product requirements, life cycle analysis, hazard identification
Activity: Map product system life cycle processes, identify & prioritize hazards
Day One - PM
Training: Risk assessment, root cause analysis, decision criteria, brainstorming
Activity- Review & validate priority hazards, rank selection criteria, brainstorm potential alternatives
Day Two- AM
Activity: Continue brainstorming, investigate any information gaps
Activity: Rank alternatives using pre- defined selection criteria
Day Two- PM
Training: Financial analysis, value proposition
Activity: Develop action plan for detailed evaluation of alternatives
Product improvement efforts are more complicated, because design teams are often scattered in different places and more difficult (and expensive) to bring together for an event. Also, product development schedules are laid out well in advance, and any sustainability initiatives will have to conform to this schedule. For these reasons, a two – day event is often more practical. The general structure is similar- each day is divided into activity “chunks’ to accomplish a specific task. Each starts with a brief training session, the team then collaborates on an activity, and then is closed out with a quick report before moving on to the next task. There will typically be more preparatory work by the core team to set up a practical design charrette. And it is particularly critical to ensure the “right” people are in attendance for a successful event. It may be necessary to conduct multiple events at different phases of the product development project. The LCM champion will need to understand the company’s product development process and when specific decisions are made. Many companies use a stage gate method, where each stage has specific tasks to be accomplished. Gate reviews then determine if the project is ready to proceed to the next stage of development. It is important to align the LCM tasks with the appropriate stages to ensure the decisions made in each stage consider the relevant environmental issues.

20. LINK PRODUCT ARCHITECTURE AND PROCESS DESIGN
Sub-sys 1
Sub-sys 3
Sub-sys 2
Product Design
Process Design
What are functional requirements?
Which performance criteria constrain process selection?
Which performance criteria dictate materials selection?
Which components or sub-systems drive cost and quality? .
Experienced people can easily compensate for a lack of data to complete a reasonable life cycle assessment of a product system. The level of analysis will be tailored to the maturity level of the organization. It is important to link social and environmental impacts back to the functional requirements of the product. There can be no compromise of the functionality to achieve sustainability objectives. This type of analysis can identify both new design features as well as process improvements. A challenge of design charrettes is that some of the improvement ideas may conflict with the charter of the product development team. For example, it may be a derivative design of an existing project & the team has been mandated to reuse certain aspects of the existing product. Ideas that conflict with the reuse goals would not be accepted. Other ideas may depend on a new technology that has not yet been fully validated for adoption in product designs. It is recommended to capture all ideas generated, even those that can not be adopted in the current project. These can be reviewed in future new product development projects.
Ideally, this type of event would be conducted very early in the project. It might be necessary to schedule a follow on event at various points in the project to further develop and implement some of the alternative concepts. 17