Tag: life cycle analysis (LCA)

OM in the News: Score One for Hydrogen

Fuel-cell-powered warehouse forklifts gaining on electric

Ever since a Swiss inventor named François Isaac de Rivaz built the first hydrogen-powered automobile in 1808, inventors and futurists have pinned their dreams and fortunes on the clean technology that converts water to energy. But hydrogen never caught on as a fuel, mainly because of its relatively high costs.

“Now, thanks to the thriving warehouse networks of online and big-box retailers, hydrogen has found a place inside growing fleets of forklifts,” reports Businessweek (Aug. 7, 2017). The numbers work out: Although a forklift outfitted with a hydrogen fuel-cell pack costs up to $58,000 — about twice as much as one with a standard lead-acid battery — hydrogen models are 10% cheaper over the 10-year life span of an average forklift. That’s because they can be charged in minutes instead of hours, eliminating the labor cost of charging batteries, freeing up warehouse space and keeping goods flowing around the clock.

Fewer than 3% of the 600,000 forklifts used in U.S. warehouses run on hydrogen, but that number is growing. Amazon recently agreed to try out the technology in forklift fleets at 10 of its warehouses. And last month, Wal-Mart matched Amazon’s $600 million deal, committing to double, to 58, the number of its warehouses that use forklifts running on hydrogen cells.

Fuel-cell companies are also pushing beyond forklifts, using hydrogen to power buses, delivery trucks and drone aircraft. In each of those markets, the vehicles return to a central depot for refueling, eliminating the need for a sprawling network of hydrogen stations.

If you are covering Supplement 5, Sustainability in the Supply Chain, this is a perfect real life example to illustrate Life Cycle Ownership (see Example S2).

Classroom discussion questions:

  1. How can the operations manager decide which forklift is the best choice?
  2. What are the advantages and disadvantages of hydrogen-powered vehicles?

 

OM in the News: Life Cycle Assessment (LCA) and Sustainability

lca“In the last 20 years, life-cycle assessment (LCA) has grown from an academic exercise to an accepted decision making tool for sustainability management,” writes MIT Sloan Management Review (Sept. 22, 2015). As we note in Supplement 5 (Sustainability in the Supply Chain), a large number of companies, from UPS to Frito-Lay to Coke, employ LCAs in their sustainability work, often at substantial expense. At its roots, LCA is a method to quantify total sustainability impacts — like resource use and environmental damage — over the entire life of a product, from “cradle to grave.” While there is value in the basic exercise, the real utility of LCA is in comparing one product’s sustainability impacts with another’s. These comparisons can be made with existing products, or they can be made with future drawing board innovations.

Companies perform an LCA on existing products to assess baseline environmental performance. An LCA product profile will highlight “eco-hotspots” in the lifecycle, which are where the bulk of environmental impact occurs. At Siemens, an LCA of lighting found that the majority of environmental impact came from the use phase in customer’s homes and spurred the company to improve lamp efficiency. Alternatively, LCAs identify hotspots in manufacturing processes, as in the microchip industry, where LCA fingered toxic solvents in chip production as a major impact and led to cleaner substitutes like lemon juice.

When used as a product development tool, LCA can evaluate the environmental implication of design choices at each step of the development. Product modifications, such as new material choices, can be screened not just for immediate environmental impacts but impacts further down the life cycle — say, in the customer use phase or end-of-life. Levi Strauss used this approach when developing its Dockers WellThread line of clothing; through careful design choices it improved manufacturing, use, and end-of-life performance of its clothing. Improving LCA performance may also mean rethinking sourcing decisions. SC Johnson, for example, uses screening approaches to identify toxic materials in the inputs it purchases from suppliers and works to find more environmentally responsible substitutes.

Classroom discussion questions:

  1. Why is LCA now being frequently used as an operations tool?
  2. Provide an example of how a company you are aware of could use LCA to improve its product line.