Life-Cycle Assessment

Leading supply chain professionals, often working with colleagues across the enterprise, develop a data-driven understanding of the full environmental and human health cost and impact of products and services. One of the main tools for doing so is Life-Cycle Assessment (LCA). According to the U.S. Government’s General Services Administration’s Sustainable Facility tool, LCA “aims to quantify the environmental impacts that arise from material inputs and outputs, such as energy use or air emissions, over a product’s entire life cycle…typically a ‘cradle-to-grave’ approach, which begins with the gathering of raw materials from the earth to create the product and ends at the point when all materials are returned to the earth.”

LCA’s are highly complex demanding disciplinary expertise across industrial engineering, environmental engineering, environmental health and safety, supply chain, ecology and many other fields depending on the industry and location. There are benefits and challenges to doing an LCA that today’s supply chain professional should be aware of.

See case examples below of how LCA provides supply chain insights for like Levi Strauss, Nike & Dell.

Environmental Impact Assessment

An LCA can help assess the full impact of a product, but another technique is needed when evaluating capital projects, raw material sourcing, and making procurement decisions. A key tool for such decision-making is the environmental impact assessment. According to the Convention on Biological Diversity, an environmental impact assessment (EIA) is “a process of evaluating the likely environmental impacts of a proposed project or development, taking into account inter-related socio-economic, cultural and human-health impacts, both beneficial and adverse.”

EIA involves a step-by-step process to first screen projects to determine whether an EIA is necessary and if so determine socioeconomic and environmental impacts and mitigation steps.

See case examples below of how EIA provides supply chain insights into gold mining in the Amazon and phosphate mining in the United States.

Demand for gold is increasing due to the growth in electronics industry, electric vehicles, smart devices, and wireless technology. Supply chains in these industries depend on a reliable and sustainable supply. This case study demonstrates how necessary an environmental impact assessment approach is to responsible supply management.

Recent data from six Amazon countries, identified 2,312 illegal mining sites, 245 of which were large-scale operations involving removal of native forests and polluting rivers with mercury.

“The problem is worse than at any other time in history. We wanted to give visibility to the enormity of an issue that doesn’t respect borders,” one of the researchers stated in this NY Times article.

Phosphate is a $75 billion market and necessary input for modern life, feeding critical industries like fertilizers, detergents, and water treatment. Supply chain managers are challenging to source this vital feedstock in a responsible and cost-effective manner. An EIA perspective and process can help reduce or avoid the heavy environmental costs the industry can exact on our communities.

Since the late 1800s, most U.S. phosphate has come from Florida. The industry has provided much needed jobs while also exacting a cost on the landscape, on human health and on outdoor recreation, especially on the Peace River.

A phosphate mining company is eager to expand operations and concerns about contamination and fish kills are rising. For the people who relay on on the Peace River, weighing the economic benefits against the costs has become a reality of life and livelihood.

Social Impact Assessment

To accurately account for all relevant costs, risks, and opportunities for innovation in the supply chain, social impacts must also be carefully examined.

According to the the International Association of Impact Assessment, social impact assessment (SIA) is the process of “analysing, monitoring and managing the intended and unintended social consequences, both positive and negative, of planned interventions (policies, programs, plans, projects) and any social change processes invoked by those interventions. Its primary purpose is to bring about a more sustainable and equitable biophysical and human environment.”

Another important framework for social impact assessment to mention here is AccountAbility’s AA1000 Stakeholder Engagement Standard which provides guidance on mapping, evaluating and serving the needs of stakeholders.

See case examples below that illustrate how SIA provides supply chain insights sourcing lithium and sugar.