Sustainability with a Cost Perspective – Driving the Industry to Embrace Sustainable Thinking

Journal article, 2022

Previous research has shown that sustainable improvements need incentives to carry them through. An assumption is that it may be easier to incorporatesustainable thinking in an organization if the organization understandswhich actions it is that are having a positive effect on sustainability andon tangible costs. This paper aims to highlight the synergy effects thatoccur in the intersection between production costs, performance and sustainableimprovements and to present a possible way of modelling theseeffects. The study has used three methods of analysis: literature review, aweb survey sent to representatives in the Swedish manufacturing industry,and economic simulations using a case study. The literature review and thesurvey are used to identify important costs and incentives for sustainableimprovements. The study is limited to the production shop floor level, incorporatingonly aspects directly affecting, and affected by manufacturingoperations.This paper takes a holistic approach to sustainability drivers, cost driversin industry, and economic simulations, creating an overall insight. Fromthe literature review and the survey, intersections between sustainabilitymeasures and cost drivers could be found in the areas of site-occupancyarea/floor space, resource consumption, and efficiency. Apart from lawsand regulations, economic aspects and management attention are perceivedas the most important drivers, but also obstacles for sustainability improvements.The study aims to support industry to embrace sustainable thinking,presenting a quantitative method to visualize the synergy effects of sustainabilityand measurable improvements from production development,using performance measurements when estimating manufacturing costs.The possibility to connect manufacturing cost with environmental impact,through use of performance parameters is demonstrated in a case study;where the significant environmental and economic impact of rejections isanalyzed for the machining of steel frames