Life cycle costing for innovations in product chains

Abstract

The paper indicates how a few innovative actions of companies to reduce emission in the chain of products save costs of pollution control and even provide net benefits for companies in some cases. Costs and savings in the chains of products are assessed with a decision support model by comparing compliance and preventative corporate strategies regarding the far-reaching emission reduction. Ten cases are presented: tomatoes, an animal fat, a vegetable spread, a washing powder, a men's shirt, an office armchair, a kitchen block, a television set, a copier, and a car. The costs of pollution control can in several cases be avoided or reduced through focused actions in the life cycle, including changes in suppliers, adaptation of the manufacturing process and in consumers' behaviour. A distinction is made between consumption of the short-cycle and durable products. For consumption of the short-cycle products, the high compliance costs and the cost-saving innovations are usually found in the primary steps of supply (e.g. agriculture in food and mining of minerals) and in disposal (e.g. packaging). For consumption of the durable products, the high compliance costs and cost-saving innovations are mainly found in manufacturing of some components, during use of products because of electricity and fuel use and disposal of voluminous products.