Abstract
Converging business, sustainability, and technology is a challenge that manufacturing firms face to create value and be competitive. Energy- and raw material-intensive manufacturing industries are particularly aware of environmental issues and circular economy practices due to the large amounts of resources they use. However, manufacturing companies must also be mindful of economic sustainability in order to make their business profitable. For this, appropriate economic evaluation tools are needed, one of which is life cycle costing (LCC). LCC, when applied to the manufacturing context, is often considered as a simple extension of the life cycle assessment (LCA). This is the main limitation of LCC, as it only contributes to determining the economic value of environmental damage. This research aims to overcome this limitation, analyzing the Italian ceramic tile manufacturing sector as a case study in order to conceptually develop, through the abductive methodology, a calculation framework that extends the potential of LCC by including circularity parameters. Subsequently, the conceptual framework is empirically validated using sectoral industrial costs by configuring two scenarios (with and without circularity practices) and building a benchmark for individual firms in this industry. Finally, the research includes some considerations on the positive implications and potential of life cycle costing in an open innovation context.
Highlights
The creation of value is a challenge that every company must face in order to create opportunities for growth, gratify investors and compete effectively in the markets [1].The concept of value is very broad, ranging from the above-average attributes provided by a product or service to the consumer’s certainty of obtaining high quality through a cost–benefit analysis [2,3]
Based on the findings of the descriptive analysis outlined in the previous section, a new life cycle costing framework was developed to capture the ideas that emerged from the survey with experts
It is worthwhile considering what is implicit in a final product cost; in other words, along the full production chain relating life cycle costing (LCC) to the supply chain may help to distinguish the components of the final LCC [63]
Summary
The creation of value is a challenge that every company must face in order to create opportunities for growth, gratify investors and compete effectively in the markets [1].The concept of value is very broad, ranging from the above-average attributes provided by a product or service to the consumer’s certainty of obtaining high quality through a cost–benefit analysis [2,3]. From the firm’s perspective, it is not enough to close the financial year with accounting profits to create value because this does not always mean that the company is covering the cost of all the resources. In the value generation process, the most current approach is the integrated one, which involves an evaluation of the entire supply chain by each company participating in the business. This means that inputs and outputs are analyzed with the aim of maximizing the value/cost ratio, including by specializing the role of the company to better focus on core business with clear added value [4]. Organizations must broaden their vision from the supply chain to the value chain because key stakeholders are increasingly demanding that companies take responsibility for the social and environmental impacts generated by their operations [5]
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