Policy support

We support evaluation and implementation of integrated product policies and management options for public authorities, NGOs, industry associations and individual enterprises.

Products play a key role in regulation and management aimed at reducing the total environmental impact, since very human activity – and consequently its environmental impacts – can be related to a certain need and the fulfilment of this need by material or non-material products. Product oriented policies seek to optimise the environmental performance of the total system of production, use, and disposal activities needed to provide the products.
For public environmental policy, product-orientation combine many different regulatory measures, such as economic instruments, substance bans, voluntary agreements, environmental labelling, and product design guidelines.
For individual enterprises, Integrated Product Management (IPM), also known as Life Cycle Management (LCM), is a management paradigm that takes optimisation of the product chain as its fundamental viewpoint.


Product orientation as a management paradigm

Product orientation and life cycle orientation are synonyms, since the integrated optimisation of a product must necessarily consider the entire system of production and consumption, linked through product flows, i.e., what in environmental contexts has come to be known as “the product life cycle”. While the term “product chain” is more precise and thus preferable (also because the term “life cycle” has other connotations in biology and business economics), the synonym “product life cycle” is probably now so engrained that its use is hard to avoid.

In Product Life Cycle Management (LCM), also called Integrated Product Management (IPM), the life cycle concept is expanded beyond environmental issues, notably to management of economic costs and quality.

In an organisation, which is truly product or chain-oriented, each part of the organisation has its specific role to play in relation to the overall goal of optimising the products. Chain-oriented considerations are not isolated to specific programmes, but are embedded in the very organisational structure. Co-operation and information exchange among departments is an essential part of the chain-oriented organisation searching for overall, sustainable rather than local and short-term optimisations.

IPM develops and integrates of a number of techniques, which hitherto have been developed in isolation, such as Green purchasing, Life Cycle Assessment, Green marketing, Design for Environment, Total Cost Assessment. See also the paper “LCM – a synthesis of modern management theories” for a description of the links between the IPM (LCM) concept and other management concepts and tools. Besides this, new techniques and procedures are developed for each part of the organisation, as described below.

Why implement Integrated Product Management?

By looking beyond the company gates, IPM enhances the competitiveness of the entire product chain, by optimising both economics, quality, and environmental impacts throughout the life cycle of the products. In this way, a more sustainable competitiveness is achieved, also for the individual actors in the chain.

Developing the chain-oriented organisation

Chain-oriented purchase

Due to the high number of items, which are typically purchased in a company, time seldom allows a detailed valuation of each item. It is therefore important to know which items have the largest chain impact, so the efforts can be focused there. To make sound purchase decisions, information is needed not only on the performance of different suppliers, but also on the further consequences of the purchased items in the product chain. The way the items are used in the production or in the final product may be much more relevant for the overall impacts than their upstream impacts. Trade-offs have to be made between environmental properties, quality and price as well as between upstream environmental performance and environmental performance later (downstream) in the product chain. Compared to an ordinary purchase department, the chain-oriented purchase department must have insight into the life cycle performance and life cycle costs of the different purchased items and play an active role both towards the suppliers and towards the rest of the company. The relationship to the suppliers may slowly be deepened to heighten the awareness, increase the information exchange and maybe to build alliances with especially chain-oriented suppliers.

Production with a chain perspective

The production departments play a key role in collection of data from the production itself, in generating new ideas and in carrying out improvement programmes. Often, the production departments are also responsible for the local environmental issues, including occupational health. Neighbours, local authorities and trade unions should be given information to place the local environmental problems and solutions in their life cycle perspective, so that solutions to local problems do not lead to problems elsewhere.

Chain-oriented marketing, sales, and information

Customer relations are an important part of the information flow of the chain-oriented organisation. Emphasis is on interactive communication rather than one-way advertising, as the feedback from customers is vital for adjusting both products and information to suit the needs of the customers. Understanding how the consumers make the trade-offs between the price, the environmental benefits of the product, and its other qualities, is used to delineate the space for further improvements. Understanding the trends among consumers allows for long term planning and timing of the introduction of new products.

Chain-oriented marketing and information must be fact-based, trustworthy, and contain strong elements of education and awareness-building. Customers should be brought to view themselves as another important part of the chain with their own responsibilities for the further impacts in the product chain. Simple claims, e.g. of environmental superiority, will seldom have a long-term effect compared to building a trustworthy image of a company that seriously works for continuous improvement of its products in co-operation with the other parties in the chain.

Integrated logistics

The goal of integrated logistics is to reduce the environmental, economic, and quality impacts from transport and storage. Here it is not enough to look at the external and internal supplies and deliveries of individual components and products. The transport of personnel to and from the workplace as well as the way the product finally reaches the consumer may be of as much relevance. Joint transport, reduction of the transport needs, longer planning horizons, better fits between transport means and transport need, reduced packaging and direct-delivery may be some of the options investigated. Maintenance and take-back options for the product may also be investigated as part of the product chain strategy.

Chain-oriented research and development

Many of the environmental, economic, and quality relations of a product chain can be influenced during product development, through the choice of raw materials, components, production processes, and characteristics of use, maintenance and disassembly. Thus, product development plays a central role in the chain-oriented organisation.

Life cycle oriented environmental and quality management

Chain-orientation is inherent to quality management, but the full life cycle perspective, going beyond the immediate suppliers and customers, may still need to be implemented.

For environmental management, the life cycle perspective can initially be implemented in relation to the environmental reviews, not only taking into account the direct environmental impacts but also the impacts caused by activities elsewhere, due to the raw materials purchased or due to the products sold. The life cycle oriented environmental management programme considers environmental conditions at suppliers, sub-contractors and licensees and how these are included in purchase decisions and awarding of contracts. Life cycle aspects are included in programmes to develop new activities, products and processes. The information given to consumers is expanded to contain advice on environmentally sensible use and disposal of the product.

Chain-oriented personnel and knowledge administration

No organisation is better than its parts. A chain-oriented organisation needs chain-oriented employees. The personnel administration must ensure that recruitment and education plans are directed at developing quality-conscious, environmentally responsible employees, who actively participates in the company programmes and are open towards the need of others in the chain-oriented organisation. The personnel administration should actively support and encourage individuals who take communicative, environmental and quality-improving initiatives. Read more on our page on employee participation.

Chain-oriented legal administration

As ultimately responsible for the legal relations and the design of contracts, the legal administration should investigate the possibilities for incorporating product-chain aspects into the formal relations to suppliers, sub-contractors, licensees and local authorities. In its long term planning, it should aim at reducing or sharing product liability and anticipate regulation that will affect the working of the chain-oriented organisation.

Chain-oriented financial administration

The ordinary accounting of a company does not split out the production costs on the individual products and even when using cost allocation for pricing or when budgeting for specific projects it is seldom that all costs are correctly allocated. In the product-oriented organisation, Total Cost Assessment gives a product perspective to costing, which matches that of environmental life cycle assessment. In Total Cost Assessment also indirect, hidden, and less tangible costs are included, and costs (and benefits) within a longer time horizon (10 to 15 years) are included. However, most important is the complete allocation of all costs back to the products and processes whence they arose, also known as activity-based costing. Total Cost Assessment may be introduced for valuation of specific projects but the full benefits will only be obtained if the daily accounting operates on this basis.

The indirect, hidden and less tangible costs included in a Total Cost Assessment include costs for waste storage and handling, monitoring, record keeping, reporting, training, emergency preparedness, medical surveillance, insurance, decreased lifetime of installations, property damage, loss of working days due to illness, lost productivity, time for handling community concerns, and lost market shares due to perceived environmental problems. External costs, for which the company is not presently responsible, such as the costs of preventing or compensating for general environmental damages, are not usually included in a Total Cost Assessment. If they were, this information would overlap that of environmental life cycle assessments, since these assessments are accounts of such externalities in the product chain, although usually not monetarised.

Chain-oriented strategic management

Strategic decisions have a large influence on environmental impacts. Location of a new plant, or expanding or closing of an old one, a decision on a merger, enter a new market, deploy a new process, or develop a new product, are all examples of decisions which can be taken with or without a view to the product chain impacts. The building of a chain-oriented organisation can be completely compromised if decisions at the strategic level are not justified by product chain information and communicated to the rest of the organisation in this spirit. Long term life cycle based planning and scenario techniques should be used to avoid “spur of the moment”-decisions.

Besides overseeing the development of the chain-oriented organisation within the company, the strategic management also has the responsibility to initiate and confirm co-operation with other actors in the product chain. While some companies may control important parts of their products’ life cycles and therefore may implement substantial life cycle improvements without asking the assistance of others, joint implementation with other companies in the chain usually creates an important synergy effect. Joint implementation has also come to be known under the name integrated chain management, a term coined in the Dutch national environmental policy plan of 1989. The initiative for joint implementation typically comes from an influential (large) company in the chain. Less often, co-operation is initiated by groups of small companies in a product chain or in a region. Product chains seem to be natural starting points for co-operation, since products already constitute the common ground for the economic exchange between the companies.