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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 14 - Preliminary Assessment - Part 5

OVERVIEW
Objective of this Session To learn a methodology for prioritising improvement opportunities and reporting the outcome of the preliminary assessment
The following topics will be covered in this session
Prioritisation - Introduction
Prioritisation - Method
Prioritisation Table
Preliminary Assessment Report - Introduction
Preliminary Assessment Report - Report Structure

Prioritisation - Introduction

Element 5 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.

Definition

Prioritisation, in the context of cleaner production, is the process of deciding which inputs and unit process inefficiencies offer the best opportunities for benefiting the business by reducing waste.

Rationale

In the prioritisation step, employ the usage maps to choose which wastes and unit processes to work on in the detailed study. In making this choice, select those wastes and unit processes which offer the greatest opportunity to improve business profitability and long term sustainability.

Focus on Major Costs

To get the greatest gains, cleaner production should focus on the greatest costs. A 2% reduction on a $10,000 cost will save a business four times as much as a 10% reduction on a $500 cost.

Example

As an example, let us assume that the preliminary assessment of a business established that electricity bills represented 18% of the business' costs and photocopy paper represented 1% of costs. If the electricity costs can be reduced by one tenth, then the savings to the business will be greater than if the use of photocopy paper was eliminated altogether.

Possible Student Concern

A note here to allay possible concerns. By this stage, teams may not yet have identified any specific opportunities for improvement. It is not the purpose of the preliminary assessment to identify specific opportunities so teams shouldn't be concerned - identification of improvement opportunities and options for change is the purpose of the detailed study.

Prioritisation - Method

Simple Method Used

Because the quantitative data in the usage diagrams is often incomplete and contains some estimates and guesswork, a rigorous prioritisation methodology is not justified. The method given below is simple and the outcome can be refined or changed during the detailed study.

Choice of Inputs and Waste for Detailed Study

To keep the detailed study to a manageable size, about three inputs and up to three wastes may be chosen for detailed study. Often, the inputs and waste that cost the business the most money will be chosen. However, the following factors may also be taken into account in the final decision:

If the business is particularly keen to reduce a particular waste, then it might be given a higher priority.

A high cost input or waste should not be disregarded just because no opportunities have yet been recognised for improvement.

Prioritisation Table

Function

The prioritisation table is a very simple method of ranking business inputs and wastes according to their cost to the business.

Example

The example below demonstrates the use of a prioritisation table. The high-cost elements are identified as opportunities for improvement, because small reductions made in their usage will have a greater financial return than even large reductions made in low cost areas.

Cost element Quantity (per year) Cost ($/year) Rank
Water 15,000 kL $100 8
Raw material A 20,000 kg $20,000 2
Raw material B 10,000 kg $40,000 1
Raw material C 8,000 kg $800 7
Electricity 150,000 kWhr $15,000 3
Gas 150,000 MJ $1,800 6
Diesel 10,000 L $5,000 4
Waste removal 4,200 kg $3,000 5

Figure 14.1: Prioritisation table for preliminary assessment

Preliminary Assessment Report - Introduction

Element 6 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 preliminary assessment report sets out the information and data collected in the preliminary assessment, along with the process characterisation outcomes (flow diagrams etc.). This report is then used to plan the detailed study. While some actions may come from the preliminary assessment report, the main purpose of the report is to set out areas warranting further study.

Criteria for Marking Student Reports

You will be marked on the quality of information contained in the report and clarity of presentation. You will not gain marks for fancy presentation and graphics - hand-drawn diagrams are quite acceptable (providing they are neat and easily understood).

Preliminary Assessment Report - Report Structure

Need for Report Structure

It is essential for the success of the detailed study that the information in the preliminary assessment report be presented in a way that is clear and concise. Recommendations should be based on the data available.

Report Source of all Data

When writing the preliminary assessment report, include the source of all data. This can be done conveniently as footnotes, which are easily inserted in all the main word processing packages.

Report Structure

A structure for the preliminary assessment report is shown below, and is discussed in the following paragraphs. It closely resembles the elements of the preliminary assessment method. Students are free to expand sections and add new sections as required.

Preliminary Assessment Report Structure

  1. Executive Summary
  2. Introduction
  3. Business Description
  4. Annual Usage and Wastage
  5. Process Characterisation
  6. Prioritisation

Section 1 - Executive Summary

The executive summary provides a brief summary (one page is usually sufficient) of the main features of the report. The purpose, scope and major outcomes of the assessment (aspects of business identified for detailed study) should be stated.

Section 2 - Introduction

The introduction gives an outline of the project, the business, the methodology and the report structure.

Section 3 - Business Description

A general business description is necessary to provide the context of the assessment.

Section 4 - Annual Usage and Wastage

The annual usage and wastage data is presented in tabular and graphic form. (Remember to footnote the source of all data).

Section 5 - Process Characterisation

The input/output diagrams and usage maps are presented and pertinent information is extracted and explained. (Remember to footnote the source of data where applicable).

Section 6 - Prioritisation

The choice of business inputs and waste outputs for detailed study is explained and justified.