Life cycle thinking in small and medium enterprises: the results of research on the implementation of life cycle tools in Polish SMEs—Part 3: LCC-related aspects

Abstract

This article is the third of a series of articles presenting the results of research on the implementation of life cycle management tools in small- and medium-sized companies in Poland. The purpose of the three-part series of articles is to present the results of research on the implementation of life cycle tools in Polish small and medium enterprises (SMEs). This work is part of a project financed by the Polish Agency for Enterprise Development (PAED) which began in February 2011. It was carried out by the Wielkopolska Quality Institute—a business environment institution associated with the Polish Centre for LCA (PCLCA). The main practical objective of the project was to support SMEs in their business development, e.g. by expanding their horizons beyond the sphere of their operation and identifying new areas for the improvement and promotion of the products and services on offer. The specific objective of the analysis involving the assessment of life-cycle costs of products and services was an attempt to answer the question to determine whether the assessment carried out in accordance with the life-cycle cost (LCC) methodology is a good tool for cost management in this type of business. Part 3 describes the results of studies on the assessment of the implementation of LCC in SMEs conducted in 50 companies involved in the project. In order to assess the effectiveness of the project and the effectiveness of the implementation of LCA and LCC, a survey was conducted of small- and medium-sized businesses where the implementation works had been fully completed. In total, 50 organisations agreed to participate in the LCC survey (while 46 in the LCA—part 2 paper), which was 71 % of all the companies where the LCA and LCC studies had been carried out within the project. The survey was conducted using individual in-depth interviews. Questions to the representatives of the companies referred both to aspects of their operating in the market (characteristics of a company, its market share, management systems, environmental policy, suppliers, clients) and the implementation of their environmental service (assessment of its effectiveness, motivation, difficulties in its implementation), as well as opinions on the potential applications of LCA in their current operations. The experience and observations of LCC experts resulting from their cooperation with the analysed organisations are largely supported by the results of the survey. The overall impression gained from the project is that the small- and medium-sized enterprises considered have a problem with accepting and understanding the life-cycle perspective, and show limited interest in taking liability for environmental and cost aspects beyond the mandatory legal standards and boundaries of their business operations. Nevertheless, the LCC analyses aroused much bigger interest among the companies than the environmental due to the fact that the cost aspects in companies undergoing normal development are seen as an important source of information about the structure of the costs generated with respect to the products or services provided. It is important to note that a very important factor encouraging businesses to join the studies was the fact that they were cost-free. Moreover, the planned introduction of a new product onto the market was the argument that often influenced the decision to implement the LCC. The survey has shown that companies rarely perform cost analyses including all stages of the life cycle of a product or service. Although the awareness of the importance of conducting economic researches for the entire life cycle of a product or service is great, it turned out to be problematic to unambiguously define the practical use of such an analysis, at least at the present stage of development of the companies surveyed. The results obtained in the survey indicate that in the case of simple products, with a short life cycle, complex cost analyses may seem less useful. For more complex products or services, with long periods of use, high reliability required, and high operating costs, the analyses presented are useful tools that increase the economic efficiency of the projects implemented. It appears that from the point of view of polish SMEs, the usefulness of an LCA is seen mainly from the angle of opportunities for cost reduction (preferably in business) and increased sales (marketing). A good solution would be to conduct relatively simple, but integrated LCA/LCC analyses in SMEs so that the companies would clearly see the economic effects of the proposed environmental improvements.