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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 10 - Preliminary Assessment - Part 1

OVERVIEW
Objective of this Session To gain an overview of the Preliminary Assessment, and an understanding of the importance of management commitment and employee awareness.
The following topics will be covered in this session
Introduction to Preliminary Assessment
Preliminary Assessment Worksheets
Management Commitment
Employee Awareness
Business Description

Introduction to Preliminary Assessment

Definition

The preliminary assessment is the collection of business information and data to identify those areas of the business where a waste-reduction program is most likely to lead to increased profitability.

Overview

The preliminary assessment is the first of two stages in the cleaner production assessment (the second stage is the detailed study). In the preliminary assessment, the business processes are identified and data is collected on the major inputs and outputs of the business. From this data, the business' major costs are identified - these will be further investigated in the detailed study.

Quantitative Exercise

The preliminary assessment is a quantitative exercise, with decisions made on the basis of data that is collected on-site, either directly or from company records.

Elements of Preliminary Assessment

A preliminary assessment comprises six elements:

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

An overview of each of these elements is given below and they will be discussed in detail in this and the following sessions. In the student projects, collection of information and data for the preliminary assessment will be guided by Preliminary Assessment Worksheets (found at the end of the manual).

Management Commitment

Management commitment is essential to the success of any business project. This is especially true of cleaner production. Cleaner production requires a long-term commitment to tracking down and eliminating waste. If that commitment isn't there, then the improvement plans developed during the cleaner production assessment will never be implemented - it will have been a waste of time and effort.

Many of the business' employees will be involved in the assessment and implementation stages of the cleaner production project. If they are informed by management of what is going on and why it is being done, they are more likely to contribute information and ideas, and work enthusiastically during implementation.

Business Description

The business description "sets the scene" for the preliminary assessment. It is simply the collation of information about the nature of the business, its main outputs (products/services), its size and its main market(s).

Annual Usage and Wastage

Data is collected on the annual quantity and purchase cost of major inputs to the business, and some waste-related costs. While only annual quantities and costs are collected at this stage, more detailed breakdowns of this data will be made in the detailed study. This information will be used in the next two elements - Process Characterisation and Prioritisation.

Process Characterisation

Process characterisation involves identification of the major processes within the business, and the development of flow diagrams, input/output diagrams and usage maps to gain a more detailed understanding of process inputs and outputs. These are powerful tools in identifying waste.

Prioritisation

Prioritisation involves identifying those business costs (inputs and waste) that offer the greatest opportunities for improving business efficiency and profitability.

Preliminary Assessment Report

A preliminary assessment report is prepared for the business client detailing the outcome of the previous four elements and presents a prioritised list of improvement opportunities.

Time Needed for Preliminary Assessment

A preliminary assessment can usually be completed in one or two full days. It basically comprises collection of available information and data from the business. Unlike the detailed study, a preliminary assessment does not usually require any investigative work beyond searching for business records or asking employees to give their best estimate of quantities and costs.

Important Note

In the project, input data is collected only on major raw materials, energy and water; output data is collected only on material waste and production quantity. This restriction is used to keep the cleaner production assessment to a manageable size.

It is important to note that in a full cleaner production assessment, this restriction is not used and all business inputs and outputs (including energy) are examined.

Preliminary Assessment Worksheets

Structure of Worksheets

The Preliminary Assessment Worksheets have been prepared to assist you in collecting business information and data for the preliminary assessment. The first two pages are used to record general business information. The next two pages are used to collect annual usage and wastage data, and the last two pages guide teams through the process characterisation.

Completing the Worksheets

The worksheets should be completed as a team exercise that includes the business representative in collecting the requisite data and completing the worksheets. When collecting information and data on business processes, the team should talk with business employees who have the best knowledge of those processes - they will frequently give the team unexpected and useful information about waste.

Make every effort to complete all sections of the worksheets. When collecting process data, you may need to be resourceful in finding or estimating some data for which records may be poor.

Use Iterative Approach

Some tables and lists in the worksheets may be difficult to complete the first time through, so complete what you can and come back to them. The best way to complete the worksheets is to cycle through them more than once because the data and information used to complete later sections in the worksheets may be used as prompts and checklists for earlier sections.

Record Source of all Data

This point will be made a number of times in this course because it is important. Make sure you record the source of all data (eg. whether the annual cost of gas was obtained from gas bills, an accounts summary, business annual report). Recording the source of data is important because it is highly likely that much of the information collected in the preliminary assessment will need to be scrutinised in the detailed study.

Management Commitment and Employee Awareness

Element 1 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.

Management Commitment

Rationale

Management commitment is essential to the success of any business project, especially long-term improvement projects. If that commitment isn't there, then employees will find it difficult to make the time for this improvement work and, because it is not necessary for the day-to-day running of the business, it will eventually fail.

What does Commitment Involve?

Commitment involves the manager vocally supporting the project and communicating that support to all employees. It involves inclusion of the project in the business plan and allocation of resources (especially employee time) to the project. Finally, it involves the manager showing ongoing interest in the work and regularly reviewing project progress.

Getting Commitment

In the project, the presentation to business management is a means of getting the initial management commitment. This is affirmed by the business manager signing the formal agreement with the educational institution.

This commitment may be maintained by keeping the business manager informed of project progress. If commitment wanes during the project (for example if the business representative on the team doesn't have time to fulfil his/her obligations to the team), then the students must discuss this with the business manager.

Employee Awareness

Rationale

Employee commitment is also vital to the overall success of the cleaner production project. The best way to get this commitment is to keep employees well-informed, right from the start, and to continually seek and value their input.

Keeping Employees Informed

Informing employees should be done at two levels.

At the first level, the business manager should demonstrate his/her support for the cleaner production project by personally telling employees about the project. If necessary, the manager should allay any fears about the project - for example, some employees may think that it is really a witch-hunt to find out who isn't doing their job properly.

At the second level, the team should spend time with employees during the project, seeking their input and ideas, and discussing the findings and ideas. It is imperative to treat all business employees with respect and acknowledge their detailed knowledge of their business.

Business Description

Element 2 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

The business description stage of the preliminary assessment involves collecting general information about the business. This information will set the context for the rest of the project.

Nature of Information Collected

The information to be collected includes:

Worksheets

The Preliminary Assessment Worksheets include prompts of all the general business information students need to collect.

Product and Service Quality

Information is collected on aspects of product or service quality that are most important to business success. The significance of this information to the preliminary assessment needs some explanation.

These quality aspects, and the associated processes, are likely to have received much attention from business management. While there may well be waste reduction opportunities associated with these processes, there may also be some sensitivity within the business to "tampering" with the processes. Teams should not avoid or disregard these processes, but should be aware of any sensitivity.

Previous Assessments and Programs

Teams should be aware of any previous waste assessments or programs aimed at waste-reduction. Any documentation associated with these assessments and programs should be examined.

Do not disregard any business processes that have previously been the subject of assessments or programs. Further improvement is always possible.