Design for Environment: Innovating to Compete

Business Context and Benefits of DfE Practices

Many firms still face challenges in the implementation of DfE practices, such as the high financial costs of the technologies involved and the complex task of integrating DfE processes into existing product design and development frameworks. Nevertheless, not only are some Canadian firms using DfE, but they are also gaining significant business benefits as a result.

Making the shift to DfE requires consideration and adoption of new approaches. Since the design process often uses advanced technologies such as computer–aided design, virtual product development, and rapid prototyping, making complex changes and adjustments to both the design process and its related technologies costly. In addition, the benefits of designing environmentally friendly products can be difficult to quantify, hindering a business' ability to justify the large investment needed. The International Organization for Standardization has a technical report (ISO/TR 14062) that provides a process model to help guide firms to integrate environmental thinking into the product design and development process.¹³

Best-in-Class Analysis

With the increasing implementation of sustainable development concepts, DfE is being put into place as part of a firm's global environmental framework that includes green supply chain management practices.^{Footnote G}

BiC firms are defined as businesses that achieve positive results in the two main environmentally specific activities: improved product environmental impact and energy efficient distribution practices. BiC firms are often leaders in their respective industries. Currently, 10 percent of Canadian manufacturers meet these criteria while gaining significant business benefits such as:

• Increased product differentiation;
• Successful compliance;
• Increased sales;
• Improved access to foreign markets;
• Increased customer retention; and
• Decreased cost.

Nearly 90 percent of BiC businesses are seeing improvements in successful compliance processes, product differentiation, foreign market access, and increased sales. In addition, these businesses are making significant gains in customer retention and cost reduction as a result of adopting such practices. Specifically, at least 40 percent of BiC firms have reported a 20–50 percent improvement in the six aforementioned business achievements, and 10 percent of BiC firms have noted an improvement of over 50 percent in product differentiation (Figure 8).

By developing designs for products free of hazardous materials, a firm can reduce the time and resources required to obtain regulatory approvals and meet existing regulations. Simultaneously, a firm can realize cost savings by reducing the use of materials that have high disposal costs.¹⁴

Furthermore, by developing environmentally friendly products, a company can strengthen its reputation of corporate responsibility, which can improve customer retention and help further differentiate a product from other market alternatives.¹³ Moreover, firms may be able to increase their market share and access new foreign and domestic markets by using DfE to add environmentally friendly features to their products. For example, as private and public organizations develop procurement guidelines for environmentally preferable products, Canadian firms with established DfE capabilities will be able to take advantage of such "green" procurement policies and increase their market share.⁸

These associated business benefits differ for each specific industry (see Annex 1 for detailed BiC sectoral analysis). For example, all Canadian BiC automotive businesses report some improvement in foreign market access and increased sales. BiC aerospace businesses are seeing the greatest gains in foreign market access, increased sales, and decreased cost. Furthermore, 80 percent of BiC aerospace businesses have reported some improvements in product differentiation, successful compliance and customer retention. All Canadian BiC industrial electronics businesses have reported gains in all six business achievements. Approximately 75 percent of BiC industrial electronics businesses have seen an improvement of 20–50 percent in successful compliance, product differentiation, customer retention, and foreign market access.

Footnotes

Footnote 7

Green supply chain management processes integrate environmentally friendly thinking into supply chain management (SCM). This includes implementing technical and innovative processes within material sourcing and selection, in the delivery of the final product to the consumers, and in end–of–life management.

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