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Business Sustainability: A cleaner production approach to small business management

Student Manual

Environment Australia
October 2000
ISBN 0642547149


Business Sustainability: Session 11 - Preliminary Assessment - Part 2

OVERVIEW
Objective of this Session To learn a methodology for collecting data on annual usage and wastage, and to identify business processes.
The following topics will be covered in this session
Annual Usage and Wastage - Introduction
Annual Usage and Wastage - Data Collection
Process Characterisation - Introduction
Process Characterisation - Identify Business Processes

Annual Usage and Wastage - Introduction

Element 3 of Preliminary Assessment

Preliminary assessment elements:

  1. Management commitment and employee awareness;
  2. Business description;
  3. Annual usage and wastage;
  4. Process characterisation;
  5. Prioritisation;
  6. Preliminary assessment report;

Rationale

Data is collected on the major inputs and material waste outputs of the business and aggregated into annual figures. This data forms the basis of later work on process characterisation and prioritisation, and the subsequent detailed study.

What Data is Collected

You will be guided in this data collection by the Preliminary Assessment Worksheets. Data will be collected on:

Note that the same 12-month period should be used for each set of data.

Production Data

Production data (quantity of goods and services produced) is used as the basis of many of the calculations used in the cleaner production assessment.

The first step is identifying the basic unit of production for the business. The unit of production is the measure of output of the business. For example, a bakery may measure production in loaves (or kg) of bread baked, a galvanising business in tonnes of steel galvanised, and a commercial laundry in number of garments cleaned.

For a mixed business with several production outputs, it may be necessary to use dollars of turnover as the unit of production. For a service business, hours of chargeable time or dollars invoiced may be the most appropriate unit of production.

The second step is to establish how many units of production were produced in the 12-month period.

Data Accuracy

When collecting data for the preliminary assessment, students should try to include, for example, all the electricity payments, all the water bills, all the major raw material purchases etc. They shouldn't be concerned about possible inaccuracies at this stage - a 10% error, for instance, is unlikely to affect the outcome of the preliminary assessment. (These inaccuracies will be rectified in the detailed study).

Annual Usage and Wastage - Data Collection

Method of Collecting Data

The following notes - the What, Where and How of data collection - may be useful. In each case, the annual data should relate to the same 12-month period.

What to Collect?

Inputs:

Production:

Wastage:

Other data such as reject and rework levels are collected at a later stage of the cleaner production assessment.

Where to Find the Data?

Inputs:

Production:

Wastage:

Note that reliable data on wastes may be difficult to obtain because records are likely to be poor. Collect whatever quantitative data is available, and estimates can be used to approximate other costs - these estimates, and the assumptions used in the estimation, must be carefully noted.

How to Collect the Data?

The required data may be provided by the business representative on the team or by another employee, or you may be given access to the relevant records and invited to collect your own data. The last alternative is probably the best because you can examine the records (preferably the original bills and invoices) to ensure the data is complete and doesn't include unrelated costs.

Collect Data in Most Convenient Form

Collect and record data in whatever form and time-basis is available. For example, quarterly electricity usage data and bimonthly gas usage can be collected. Raw materials may not be purchased at regular intervals, so yearly totals obtained from purchase records may be most appropriate and convenient.

Record annual totals in the Preliminary Assessment Worksheets. Although only annual aggregated data is required at this stage, more detailed data should be recorded and will be used in the detailed study.

"Otherwise-useable" Material in Waste

"Otherwise-useable" material is that component of waste that, if it were able to be physically separated from the waste, could be reused. Examples of "otherwise-useable" waste are the ingredients in waste dough from a bakery, or unused acid in spent-acid waste.

Record Source of all Data

You should record the source of all data. This is important because it is highly likely that much of the information collected in the preliminary assessment will be further scrutinised in the detailed study.

Class Activity

Objective: to give an awareness of the cost of waste to an organisation.

In Session 2, we likened the total cost of waste to an iceberg, a small fraction visible, and the bulk of the cost hidden from view. Apply the iceberg model to wastage of solvent and paint in a spray-paint shop to identify the types and quantities of wastes which are likely to occur. Suggest how waste quantities might be measured or estimated.

Full Cost of Waste not Estimated in Projects

The full cost of wastes is not estimated in the projects because of the time constraints. Instead, disposal costs and the value of otherwise-useable raw materials is used as a simple cost of waste.

Process Characterisation - Introduction

Element 4 of Preliminary Assessment

Preliminary assessment elements:

  1. Management commitment and employee awareness;
  2. Business description;
  3. Annual usage and wastage;
  4. Process characterisation;
  5. Prioritisation;
  6. Preliminary assessment report.

Definitions

Process characterisation is a structured description of the process, comprehensive enough to give a good understanding of what is happening, and yet simple enough to be a useful tool for a range of investigations about the process.

In the context of this course, the word process is used to refer to any series of activities that together produce a business outcome or product. For example, a process in manufacturing might be to produce a light fitting and, in commerce, preparing an invoice for a customer. Milking a herd of cows is a process in the farming industry.

A unit process is one step in a business process. A unit process usually has one core activity, eg. connecting the wiring in manufacturing a light fitting, printing an invoice, or cleaning the udder after milking a cow.

Rationale

Process characterisation comprises building up a "picture" of the business processes and unit processes, designating the main inputs and outputs for each unit process, and assigning quantities and costs to each unit process input and output.

The output of process characterisation is a comprehensive quantitative model of the business processes that will be used to identify quantities and costs of wastes associated with each process.

Comparing Apples with Apples

When quantities are assigned to process inputs and outputs later in the cleaner production assessment, they may be expressed per unit of time. For example, waste may be expressed as kg/day. However, if production levels vary (eg. the plant is not operating for 3 hours), then comparison of daily waste data for that day will be misleading.

For this reason, it is better to express inputs and waste in terms of units of production (eg. kg of waste per tonne of product manufactured). Using this as the basis for reporting means that if the production level changes, then input and waste data can still be compared.

Method for Process Characterisation

The following method is used for process characterisation:

  1. Identify all business processes that consume significant quantities of raw materials, energy or water;
  2. Construct a flow diagram for each process showing unit processes;
  3. Construct input/output diagrams showing all inputs and outputs for each unit process; and
  4. Construct usage maps showing a breakdown of the quantities and costs of each input and waste output.

Each of these steps is described in detail below.

Process Characterisation - Identify Business Processes

Rationale

The first step in process characterisation is identifying all business processes that consume significant quantities of raw materials, energy or water. Once identified, these processes will be further examined in the latter stages of process characterisation.

How to Identify Business Processes

The following actions can be used to identify all significant business processes: