ISO 14000 Assessing Its Impact on Corporate Effectiveness ...

ISO 14000Assessing Its Impact on Corporate

Effectiveness and Efficiency

Steven A. MelnykRoger CalantoneRob Handfield

R.L. (Lal) TummalaGyula Vastag

Timothy HindsRobert Sroufe

Frank MontabonMichigan State University

Sime CurkovicWestern Michigan University

Contents

2 ISO 14000 Assessing Its Impact on Corporate Effectiveness and Efficiency 2

Tables, Exhibits, Charts, and Appendices .................................................................... 4Acknowledgments.......................................................................................................... 5Executive Summary....................................................................................................... 6Implications of the Study .............................................................................................. 7Design of the Study........................................................................................................ 8

Overview .................................................................................................................... 8The Large-Scale Survey.............................................................................................. 8

The Sample ............................................................................................................ 9The Case Studies........................................................................................................ 9

The Sample for the Case Studies Phase ............................................................... 9The Interview Protocol Described........................................................................ 9

Concluding Comments .............................................................................................10Chapter 1 ISO 14000, Environmentally Responsible Operationsand the Purchasing Profession: An Introduction.........................................................11

Introduction ...............................................................................................................11Objectives of the Study..............................................................................................12Approach of the Study...............................................................................................12Organization of the Report........................................................................................13

Chapter 2 Understanding ISO 14000 ..........................................................................14Overview ....................................................................................................................14What Is an Environmental Management System?...................................................14

The Development of Environmental Standards...................................................15The Forces for a More “Environmentally Conscious” System ...........................15

EMS and the Environmentally Conscious Enterprise .............................................16ISO 14000 — Positioning This New Certification Standard ..................................16Understanding the ISO 14000 Certification Standards ...........................................17Why Should Purchasing Managers Be Interested in ISO 14000?...........................19Alternatives to ISO 14000 .........................................................................................20Concluding Comments .............................................................................................21

Chapter 3 Analyzing the Survey Data:Understanding the Implications of ECM and ISO 14000 ...........................................22

Demographic Information.........................................................................................22Industrial Descriptive Information .......................................................................22Background of the Respondents ...........................................................................24

Plant Activities ...........................................................................................................28Environmental Management Systems - Findings ....................................................31

Environmental Systems — Management Options Considered ..........................34Environmental Management and Corporate Performance — The Aggregate Impact............................................................................................34

Assessing the Impact of ISO 14000 Certification on the Firm ...............................37Factors Influencing ISO 14000 Adoption ................................................................38Obstacles to ISO 14000 Certification .......................................................................40Comparing ISO 14000 and Voluntary EMS Programs ............................................41Concluding Comments .............................................................................................44

Chapter 4 Understanding the ISO 14000 Decision in Detail: Case Studies..............45Introduction ...............................................................................................................45ISO 14000 Status: Not Being Considered.................................................................46

3Center for Advanced Purchasing StudiesContents

Firm A ....................................................................................................................46Summary............................................................................................................46

Firm B.....................................................................................................................47Summary............................................................................................................48

ISO 14000 Status: Assessing Suitability....................................................................48Firm C ....................................................................................................................48

Lessons Learned ................................................................................................49Firm D....................................................................................................................49

Summary............................................................................................................50ISO 14000 Status: Planning to Implement...............................................................50

Firm E.....................................................................................................................50Summary............................................................................................................52

ISO 14000 Status: Currently Implementing.............................................................52Firm F.....................................................................................................................52

Summary............................................................................................................54Firm G....................................................................................................................54

Summary............................................................................................................56ISO 14000 Status: Successfully Implemented ..........................................................56

Firm H....................................................................................................................56Summary............................................................................................................57

Concluding Comments .............................................................................................58Chapter 5 ISO 14000 and the Purchasing Professional:Uncovering the Major Lessons......................................................................................59

Introduction ...............................................................................................................59Answering the Research Questions ..........................................................................59

What Is the Status of Environmental Management Systems in MostAmerican Plants, and How Are They Perceived by Management? ....................59What Factors Influence the Predisposition toward ISO 14000and Progress toward Achieving ISO 14000 Certification?..................................60To What Extent Do the Respondents See a Relationship between ISO 14000 Registration and Success and Improved Market or Corporate Performance? ...60How Effective Is ISO 14000 Relative to the Other Alternatives Availablefor Improving Environmental Performance?.......................................................60What Options Are Available for Firms Interested in Improving Environmental Performance, and to What Extent Are These Options in Practice? ...................60

Identifying the Lessons of ISO 14000 for the Purchasing Professional..................61Achieving ISO 14000 Certification Does Enhance Corporate Performance......61ISO 14000 Certification Is Viewed as an Internal Factory Affair .......................62View the ISO 14000 Certification Decision as a Business Decision...................62Encouraging Acceptance of ISO 14000 CertificationRequires Reducing Uncertainty ............................................................................64View ISO 14000 As a Supply Chain Issue ...........................................................64Regard ISO 14000 As an Opportunity, Not a Problem or a Constraint .............64Environmental Issues Should Be Integrated into the Three Major Activities of Every Plant and Firm..................................................65Recognize the Relationships That Exist among TQM, ISO 9000,and ISO 14000 .......................................................................................................66More Longitudinal and International Studies of ISO 14000 Impacts Are Needed .......................................................................66

Concluding Comments .............................................................................................67References.......................................................................................................................68Center for Advanced Purchasing Studies .....................................................................89

Tables, Exhibits, Charts, and Appendices

4 ISO 14000 Assessing Its Impact on Corporate Effectiveness and Efficiency

Table Design-1 Response Rates by Wave.................................................................... 9Exhibit 2-1 A Taxonomy of Various Environmental Management Systems.......17Exhibit 2-2 Intent of ISO 14000............................................................................18Table 3-1 Classification of Respondents by 2-Digit SIC Codes .......................23Table 3-2 Plant Involvement in Corporate/Manufacturing Initiatives.............24Table 3-3 Stated Positions of the Respondents .................................................25Table 3-4 Number of Years Respondents Have Been

in Their Current Positions.................................................................25Table 3-5 Respondents Classified by Functional Area .....................................25Table 3-6 Membership Traits of the Respondents.............................................26Table 3-7 Level of Involvement of Respondents

in Various Corporate/Plant Initiatives...............................................27Chart 3-1a Stage of Involvement with ISO Standards.........................................28Chart 3-1b Stage of Involvement with Quality Programs...................................29Chart 3-1c Stage of Involvement with Planning and Control Systems .............29Chart 3-1d Stage of Involvement with Voluntary Environmental Programs.....30Chart 3-1e Mean Involvement with Various Initiatives......................................30Table 3-8 Assessing the Plant’s Environmental Management System

(Mean Values).....................................................................................32Table 3-9 Environmental Management Options Considered...........................35Table 3-10 Assessing the Impact of Environmental Management Systems

on Corporate Performance ................................................................36Table 3-11 Impact on ISO 14000 Certification Progress

on Dimensions of Performance .........................................................38Table 3-12 Factors Affecting the Status

of the ISO 14000 Certification Process .............................................40Table 3-13 Major Sources of Uncertainty Regarding ISO 14000 .......................41Table 3-14 Factors Underlying the Dimensions of Uncertainty ........................42Table 3-15 Uncertainty Factors Affecting the Status of the ISO 14000

Certification Process...........................................................................42Table 3-16 Comparison of the Impact of Various Approaches on the

Impact of Environmental Management Systems andCorporate Performance (Mean Values Reported) ............................43

Table 4-1 Categorization of Firms by ISO 14000 Implementation Status ......45Appendix I Survey Instrument..............................................................................70Appendix II Interview Protocol for Case Studies ..................................................87

This report has been a major research undertaking. For the members of the research team, this report embodieshundred of hours of time, effort, and work. However, this effort could not have taken place without the activeencouragement and financial support of certain people and organizations. We would like to take this opportunity toacknowledge their contributions and recognize that this report owes its existence in large part to them.

Specifically, we would like to recognize the contribution of the following people:

• Phillip Carter, Center for Advanced Purchasing Studies (CAPS)• Mike Lythgoe, Director, Educational and Research Foundation, American Production Inventory Control Society

(APICS)• Erik Goodman, Director, Case Center, College of Engineering, Michigan State University• Robert Nason, Chairperson, Department of Marketing and Supply Chain Management, Michigan State

University

We would also like to thank the following organizations for their financial and other support:

• CAPS• American Production and Inventory Control Society (APICS)• National Science Foundation (NSF)• Manufacturing Research Consortium (MRC)• Michigan State University

To these, we acknowledge their support. They played a critical role in helping make the idea for this report a reality.Thank you again.

Steven A. MelnykRoger CalantoneRob HandfieldR.L. (Lal) TummalaTimothy HindsGyula VastagRobert SroufeFrank MontabonSime Curkovic

Acknowledgments

5Center for Advanced Purchasing Studies

Executive Summary


The following report details a two-phased researchproject in which American firms’ attitudes toward ISO14000 were analyzed, the firms’ approach to ISO 14000and environmental management systems were reviewed,and the implications of these facets of environmentallyconscious manufacturing were summarized. Somehighlights of this research include:

• Environmental management systems are essentiallymulti-dimensional and complex entities. Theyembody data collection, reporting, performancemeasurement, and tools. At present, most environ-mental management systems are implementedusing a separate, formal department that is respon-sible for this aspect of corporate performance. Theyalso tend to focus on tactical and operational prob-lems. Their stance is primarily reactive. That is, inmost firms, these systems come into play once aproblem has occurred. They are also driven byenvironmental regulations. Finally, they areinternally oriented, with relatively little attentionbeing devoted to environmental problems withinthe supply chain.

• Overall, environmental management systems arenot seen in a positive light. In general, thesesystems are negatively affecting the major strategicdimensions of performance (i.e., lead time, costs,and quality). They are also not seen as enhancingthe firm’s ability to sell its products internationally.

• The ISO 14000 certification program is relativelynew, with the result that relatively few plants werecertified (37/1,510 respondents or 2.5%). Thisnumber is low relative to other environmental pro-grams such as Industrial Voluntary Environmentalprograms (where 284 respondents noted successfulimplementation of these programs) and VoluntaryEPA programs (where 253 respondents noted suc-cessful implementation).

• Successful attainment of ISO 14000 has a large,positive impact on the perceived efficiency andeffectiveness of the environmental management sys-tem. Except for lead times, which are slightly nega-tively affected, ISO 14000 greatly improves everydimension of performance. This finding points to asituation where those firms that have attained thislevel of certification are not only more environmen-tally responsible, but also more efficient (andpotentially better suppliers).

• The progress of a plant in attaining ISO 14000 cer-tification is influenced by several factors: size,nature of ownership (foreign-owned firms are morelikely to be ISO-14000 certified), past success withQS 9000/ISO 9000, past success with TQM sys-tems, and degree to which cross-functional pro-grams and teams are used.

• Progress in attaining ISO 14000 certification is alsoinfluenced by uncertainty concerning federal regu-lations, changes in ISO 14000 standards, the costsof certification, the benefits of certification, and theimpact of the ISO 14000 standards on current envi-ronmental management systems.

• Compared with other voluntary-based programsaimed at improving environmental performance,the evidence indicates that the ISO 14000 certifica-tion process is more effective and efficient whenviewed in terms of its impact on performance.

Ultimately, the purchasing professional must examineany new development or initiative that brings with itthe possibilities of improved performance. In the case ofISO 14000, there is the opportunity that this new certifi-cation process will not only result in improved environ-mental performance but also potentially improved over-all performance. This relationship can occur if theprocess orientation that underlies ISO 14000 is indeedappropriate. That is, by changing the process, we canreduce both pollution and improve overall performance.The reason for this simultaneity is that ISO 14000encourages users to identify sources of waste. Pollution,as noted is nothing more than another form of waste. Byeliminating waste, we can save the resources consumedin the creation of that waste. As a result, costs arereduced, and performance is improved.

In other words, we are interested in finding out theextent to which “being clean (better environmentallyresponsible) leads to more green (better performance).”If it does, then by searching out suppliers that are ISO14000 certified, the purchasing professional can expectbenefits accruing to the buying organization in the formof improved costs, delivery, quality, and better environ-mental performance. If this is not the case, then ISO14000 offers little advantage and, in fact, may onlyincrease suppliers’ costs with no additional benefit. Inthis case, ISO 14000 is not a critical differentiator forthe purchasing professional faced with the task of pick-ing between two equally comparable suppliers.

Implications of the research that executive managementcan use to enhance purchasing and supply chain man-agement effectiveness include:

• The acceptance of ISO 14000 certification is slow tostart but is gaining acceptance by many foreigncountries and large OEMs.

• Foreign-owned subsidiaries tend to pursue ISO14000 certification before non-foreign-owned firms.

• There is a strong relationship between ISO 9000 (interms of process and benefits) and ISO 14000. Insome cases, the additional certification of the EMSsystem costs very little after the ISO 9000 certifica-tion is completed.

• ISO 14000 certification has a positive impact onfirm performance in terms of reduced costs andimproved quality.

• Firms are starting to consider ISO 14000 certifica-tion in their supplier evaluation processes.

• Firms not considering ISO 14000 may not or willnot see the potential benefits coming from thisstandard.

• Firms in the process of certification, or who havealready been certified, are not only improving per-formance, but are looking at previous environmen-tal issues or problems as new opportunities.

Although ISO 14000 is not yet widely deployed, weexpect this standard to become a part of the require-ments for doing business not only in the U.S., but alsoin Europe, Japan, southeast Asia, China, and LatinAmerica. Because of the growing sensitivity of the globalcommunity to the environment, purchasing must beaware of whether ISO 14000 really makes a difference. Ifit becomes a mandate for doing business, then purchas-ing must also understand its overall impact on the sup-plier community.

Implications of the Study


Overview

The major approach used in this research project is thatof a large-scale survey complemented by extensive fieldinterviews at selected plants. The reason for the surveyis to allow the research team to record the attitudes ofthe respondents toward ECM, their environmental man-agement system, and ISO 14000. The survey is alsoused to identify factors that influence these attitudesand the perceived effectiveness and efficiency of theplant environmental management systems. The surveyis appropriate in that its objective is to collect data.However, what the survey does not do is to permitdetailed understanding of decisions, perceptions, andprocesses. As a result, it was decided to complement thebreadth of the large-scale survey with the more detailedinsight provided by a set of selected case studies. Theresulting data should provide the readers with greaterinsight into the ISO 14000 decision and the factorsinfluencing this decision.

The Large-Scale Survey

The survey was developed by the research team and pre-tested by 15 respondents in a three-round process over aperiod of two months. This group represented a varietyof positions and functions within their firms in a varietyof industries. The pre-test group was asked to reviewthe survey primarily for clarity of questions and timerequired to complete the survey. The primary potentialproblem with the survey that the pre-testers pointed outwas concern over the length of the survey. The length ofthe survey is justified by the need to establish validmeasures for the concepts that were included in the sur-vey. There is very little previous work on which to baseour questions, so we decided to err on the side of lengthin order to ensure we would be able to obtain validmeasures. Also, we were aware that any research

concerning environmental issues is fraught with SociallyDesirable Response (SDR) issues. In order to mitigatethese issues, generally it is wise to include more ques-tions as a validity check.

The survey consisted of five major sections (seeAppendix I). The first section gathered informationabout the respondent, his/her position, professionalaffiliations (if any), and extent of involvement in vari-ous initiatives (such as Just-in-Time implementations orLead Time Reduction programs). The second sectionfocused on the business unit (the basic unit of analysis)and detail about it. This included product manufac-tured, extent of uncertainty facing the business unit andits personnel, and the status of various types of initia-tives (e.g., Enterprise Resources Planning, Cross-Functional Teams, and QS 9000). Section III dealt withthe perceived impact of the ISO/QS 9000 certificationprocess on the business unit and its competitive posi-tion in the market place. This section was introducedbecause it was hypothesized that there would be astrong relationship between the experiences on theISO/QS 9000 certification process and the ISO 14000certification process. In Section IV, the respondent wasasked to evaluate a series of questions pertaining to ISO14000. These questions assessed the level of knowledgeof the respondent on the ISO 14000 certificationprocess, as well as the factors affecting its implementa-tion and use. The fifth and final section gathered infor-mation about the business unit’s environmental manage-ment system, the effectiveness and efficiency of this sys-tem, and the types of options used to improve environ-mental performance. It was in this section that theresearchers would evaluate the strategic and overallimpact of environmental initiatives such as the ISO14000 certification process. At the very end of the ques-tionnaire, respondents were given some free-form spaceto describe any obstacles, potential or realized, to theirfirm’s implementing ISO 14000.

Design of the Study


The SampleThree professional associations (National Association ofPurchasing Management, American Production andInventory Control Society, and one group that wishes toremain anonymous) provided mailing lists of 5,000names each. The constituency of each of the associa-tions was different enough that only a handful of nameswas found on more than one list.

We also worked closely with a major Americanmanufacturer, who provided us with an additional list of104 managers at six of their facilities. From this list, wereceived 57 valid responses. In total, we had a mailinglist of 14,584 names, of which we received 1,510 usableresponses, for a response rate of 10.35 percent. Whilethis is lower than the 20 percent that researchers striveto achieve, we believe that the length of the surveydiscouraged some potential respondents. The overallresponse rates by wave are summarized in TableDesign-1.

The Case Studies

The purpose of the field visits was to identify ways inwhich ISO 14000 is adapted and implemented by a vari-ety of firms. This part of the research, which is qualita-tive in nature, is a perfect complement to the quantita-tive survey research. Field-based data collection meth-ods were used to ensure that the important variableswere captured during the interview process. Thesemethods also helped develop an understanding of whythese issues/variables might be important (Eisenhardt1989). A small detailed sample fit the needs of theresearch and complemented the large-scale survey. Themethod followed was similar to the grounded theorydevelopment methodology suggested by Glasser andStrauss (1967). In addition, suggestions made byEisenhardt (1989) regarding case studies, Miles andHuberman (1994) regarding qualitative data analysis,and Yin (1994) were also incorporated.

The researchers participating in this project relied

primarily on the methods of qualitative data analysisdeveloped by Miles and Huberman (1994), which con-sists of anticipatory conceptual model development andsimultaneous data collection, reduction, display, andconclusions testing. Multiple research sites were used inorder to provide a broader understanding of EMS devel-opment within firms and the reasons for firms to chooseEMS certification.

The Sample for the Case Studies PhaseThe researchers initially set out to find a set of organiza-tions that were at different stages of EMS implementa-tion and ISO 14000 certification. Firms from differentEMS stages, industries (i.e., pharmaceutical, furniture,and automotive tier-one suppliers), products, processes,and firm size were selected based on geographic prox-imity and knowledge of the researchers. Each of thefirms selected was chosen to represent a spectrum ofEMS status. The objective of this sampling approachwas to construct a sample of firms that would be diverseenough to capture the EMS attributes available acrossfirms that may be overlooked in a single industry orproduct sample, and to confirm findings from the large-scale survey.

Based on these criteria, and using the researchers’ expe-rience with different companies, a list of potential com-panies was developed. In most cases, environmental andoperations managers were contacted at the divisionallevel. An initial idea of the level of EMS understandingand implementation was determined through prelimi-nary screening over the telephone. After the initialscreening, which also assessed the willingness of thecompany to participate in the study, site visits werearranged. The interviews were conducted with man-agers responsible for the EMS strategy at each site usingthe structured interview protocols presented inAppendix II of this report.

The Interview Protocol DescribedThere are differing opinions as to the amount of priorinstrumentation required before conducting site visitsfor qualitative research (Miles and Huberman 1994).Some prior instrumentation was appropriate for this


Source of Respondents First Wave Third Wave Unknown Total

Automaker 52 5 0 57Anonymous Group 173 136 0 309NAPM 301 199 0 500APICS 435 197 0 632Unknown 0 0 12 12Total 961 537 12 1,510

Table Design-1Response Rates by Wave

conceptual model proposed in the introduction. Theinterview protocol included in Appendix II was devel-oped based on the researchers’ general understanding ofERM issues facing industry today. The protocol was pre-tested at two manufacturing facilities and then used forthe eight firms included in this study.

The researchers traveled to the respondents’ facilities tocarry out the interviews. Generally, only one or twopeople were interviewed at a time. Other personnel atthe respondents’ firms were brought in as needed. Atleast two researchers were at each interview. The discus-sion generally progressed serially through the interviewprotocol. The general context of the firm and therespondents were first discussed. These contextsinvolved the size of the firm, competitive thrusts, andkey success factors. The discussion was then turned tothe type of EMS system in place, factors influencing thedecisions surrounding EMS, and environmental perfor-mance measures. After the interview was completed, theresearchers who conducted the interview comparedtheir notes in order to make sure nothing was missedand then completed a write-up on each firm.

Analysis was done by reviewing all the write-ups. As thefirms were at different stages with regard to the decisionto pursue ISO 14000 certification, the researchers wereable to describe and categorize what separated one firmfrom another. This information was placed into a “meta-matrix” for easy visual reference. The results of this cat-egorization and the use of the meta-matrix allowed theresearchers to present the findings in Chapter 5.

Concluding Comments

This very detailed and rigorous set of research method-ologies was developed for two purposes. The first was toensure that the objectives of the research study wereachieved. The second was to guarantee that the findingspresented in this study and drawn from the varioussources were based on the data and did not reflect thebiases of the research team. Having established thestructure of the research methodology, we can now pro-ceed to examine the findings generated in the first phaseof the study — from the large-scale study.


Introduction

The 1990s have been a time of challenge and transition.In the past, the managers thought in terms of trade-offs(i.e., the paradigm of “or”). That is, you could have lowcost OR short lead times OR high quality OR high flexi-bility. You could have superior performance on any oneof these dimensions. But, you could not have expectedsuperior performance on two or more dimensions.Today, however, managers increasingly live with the par-adigm of “and.” That is, managers are now expected tosimultaneously reduce lead times (manufacturing, pur-chasing, and design), improve quality, reduce costs,AND enhance flexibility.

This has also become a period when more and moremanagers are expected to become increasingly environ-mentally conscious. Being environmentally responsibleis no longer viewed as something that is primarily donefor publicity sake. It is now viewed increasingly as arequirement of doing business. For the manufacturingmanager, this has meant re-examining their productsand processes with an eye toward the reduction or elim-ination (if possible) of any resulting waste streams. Forthe purchasing profession, the corresponding challengehas been to identify suppliers who can provide environ-mentally responsible goods and services without sacri-ficing cost, quality, flexibility, or lead time. It has alsomeant identifying and evaluating any initiative that isconsistent with these new expanded objectives. Onesuch initiative is that of the ISO 14000 environmentalstandard.

Formally adopted in 1996 by the InternationalStandards Organization, ISO 14000 represents a newstandard and approach to improved environmental per-formance. There are several features that make this newstandard noteworthy. First, this standard builds on thesuccess provided by the quality standard, ISO 9000, and

its variants, such as QS 9000 (as found in the automo-tive industry). Second, ISO 14000 is an internationalstandard. As a result, it is hoped that this standard willreplace the numerous and often conflicting standardsfound in various countries across the world. Third, ISO14000 shifts attention from the outcome (reduced pol-lution) to processes. Finally, the extent to which thefirm is able to successfully adhere to these new require-ments must be evaluated by an impartial third-partyassessor.

Finally, because it is a new standard and approach, theintroduction of ISO 14000 has raised a number ofquestions:

• Will ISO 14000 generate the same degree of accep-tance as ISO 9000?

• Are the benefits offered by ISO 14000 certificationsufficient to offset the costs incurred in meeting therequirements of this new standard?

• Is there a relationship between environmental andcorporate performance?

• Should managers wait until others have undergoneISO 14000 certification before proceeding or untilcustomers demand it?

• What is current state of ISO 14000 acceptance inAmerican industry?

• Is ISO 14000 the most effective and efficientapproach to improving environmentalperformance?

• What factors significantly influence the decision topursue ISO 14000 certification?

This study will examine these and other relatedquestions.

Chapter 1ISO 14000, Environmentally

Responsible Operations and thePurchasing Profession: An Introduction


Organization of the Report

The report is organized into five chapters and twoappendices. Chapter 2 provides an overview of ISO14000. It reviews some of the major issues presentwhen studying ISO 14000. In a sense, the informationprovided in this chapter sets up the research study byidentifying many of the major issues examined in thisstudy. In Chapter 3, we summarize the researchmethodology. Chapter 4 presents the major findingsobtained from a study of the survey data. Chapter 5 pre-sents the case studies and summarizes the major lessonsobtained from a study of these cases. In this final chap-ter, we address the question of “Why should the pur-chasing professional be interested in ISO 14000?”Appendix A contains a copy of the survey instrumentdeveloped for this study as well as copies of the variouscover letters used to encourage the respondents to par-ticipate in the study. Appendix B presents the surveyinterview protocol.


Overview

This report is about ISO 14000, its rate of acceptance,and its effect on various dimensions of performance.Before we turn to the data, it is first necessary that weunderstand what ISO 14000 is, its origins, and the rea-sons that managers, more specifically purchasing man-agers, should be interested in this new certification stan-dard. These issues form the major objectives of thischapter. Since ISO 14000 focuses on the corporateEnvironmental Management System (EMS), the chapterwill begin by exploring the concept of an EMS.

What Is an Environmental Management System?

As pointed out by Tibor and Feldman (1996), the ISO14000 standards describe the traits of an effective envi-ronmental management system. The EMS is the formalcorporate management system that is responsible for themanagement, organization, measurement, and improve-ment of environmental performance within the enter-prise. Underlying this definition is the implicit assump-tion of a positive correlation between environmental andcorporate performance.

As a formal management system, the EMS is chargedwith a number of important responsibilities, namely to:

• Create an environmental policy.• Set appropriate objectives and targets.• Help design and implement a program aimed at

achieving these objectives.• Monitor and measure the effectiveness of these

programs.• Monitor and measure the effectiveness of general

environmental management activities within thefirm.

• Ensure that the activities of the firm are, at aminimum, compliant with the relevant environ-mental regulations (be it at a local, state, federal, orinternational level).

• Summarize and communicate environmental activi-ties to others located either within the firm or with-out (e.g., stockholders, local community, and envi-ronmental agencies).

• Help influence critical activities, such asproduct/process design and production scheduling,so that environmental concerns and issues are dulyconsidered.

• Create corporate awareness of the need for environ-mental awareness and of the potential advantagesoffered by becoming more environmentallyresponsible.

• Identify and introduce appropriate tools intended toimprove environmental performance or reducepollution, and to educate users in their use.

• Help identify and correct potential environmentallyrelated problems.

• Review the corporate activities with an eye towardimproving them and environmental performance.

EMS embodies a more comprehensive systems approachto what is typically found in disaggregate form in thecurrent Environmental, Health and Safety (EHS) func-tions of many firms. EMS is not an entirely new conceptor system. In many cases, the infrastructure of an EMSis already in place. What is needed for an existing sys-tem to become an EMS is the integration of the systemcapabilities with environmental metrics (performancemeasures) and goals.

The emergence of the EMS can be traced to two majorfactors. The first involves the development of environ-mental standards. The second is due to the variousfocuses encouraging a more “environmentally responsi-ble” perspective.

Chapter 2Understanding ISO 14000


The Development of Environmental StandardsFor those not familiar with the evolution of EMS, manyof the components of EMS are found in the develop-ment of different standards in the last six years. MasaakiImai (1986) states “there can be no improvement wherethere are no standards.” Thus, the world’s first standardfor EMS, British Standard (BS) 7750 was developed andpublished by the British Standards Institute in 1992.The BS 7750 standard was the model for the ISO 14000series of standards for EMS developed by theInternational Organization for Standardization (ISO). BS7750 is also the basis for the European Union’s Eco-Management and Audit Scheme (EMAS).

Found within these various EMS standards are almostthe same set of basic elements of an effective environ-mental management system. They include: (1) creatingan environmental policy; (2) setting objectives and tar-gets; (3) implementing a program to achieve thoseobjectives; (4) monitoring and measuring its effective-ness; (5) correcting problems; and, (6) reviewing thesystem to improve it and overall environmental perfor-mance. However, while the elements are somewhatcommon, it is the special information the system cangenerate that serves to differentiate the EMS of one firmfrom that of another. Thus, many firms can have anEMS, and each of these systems can be a uniqueresource, delivering specialized information to individ-ual firms.

The Forces for a More “Environmentally Conscious” SystemWhen asking firms about the importance of the envi-ronment, we find that it is more than some will admitand less than some would hope. The proponents ofmore environmental regulation for business have gainedsupport from Porter (1991), who briefly discussed thequestion of whether strict environmental standardsmake American industry less competitive in interna-tional markets. The conflict between environmental pro-tection and economic competitiveness is said to be afalse dichotomy (Porter, 1991). Strict environmentalregulations do not inevitably hinder competitive advan-tage against foreign competition; indeed, they oftenenhance it (Rondinelli, Berry & Vastag, 1997). It is herethat we can see the paradox of the view that EMS isonly a cost to the firm. It has been claimed that firmsinvolved in proactive environmental programs can leadthe way into environmental stewardship and new regu-latory requirements (Rondinelli & Vastag, 1997).

While there are cost/benefit trade-offs associated withbeing the standard setter or being a follower, there arealso times when “best-in-practice” environmental com-panies are sought by government or the competition asa benchmark. Managers from firms such as 3M, Dow,

and AT&T have been invited to help establish interna-tional environmental standards such as ISO 14000because of their proactive track records in pollution pre-vention. Firms that are laggards in adopting new stan-dards and conforming to existing regulations will spendvaluable resources in order to stay abreast of the activedevelopment of their competitors and new governmen-tal regulations. The United States alone has passed the20,000-page threshold during 1993 and continues toadd to the number of environmentally related pages ofregulations since 1993. This increase in federal lawsdoes not even include the state and local level regula-tions that tend to compound the already complex issueof legal compliance. Those firms who choose to be reac-tive to environmental legislation and implement end-of-pipe solutions to pollution problems will consume moreresources just to comply with these new regulations. Itshould be easy to see that compliance is a minimumrequirement for competitive advantage. For those firmsthat are already exceeding regulatory compliance, theproactive investments in previous environmental initia-tives can help defend the firm against new complianceissues, costs, and competitors.

Additional evidence of the growing importance of envi-ronmental business practices is seen in theEnvironmental Protection Agency’s publishing of theCode of Environmental Management Principles (CEMP)for all Federal Agencies. The intention of this code is tomove federal agencies toward a “systems” approach toenvironmental management that will mirror private sec-tor initiatives such as EMS standards (Anonymous1997).

Examples of international government’s recognition ofenvironmental importance may also be seen inIndonesia’s recently introduced Program for PollutionControl, Evaluating, and Rating. This is a landmark ini-tiative under which polluters are assigned environmen-tal performance ratings that are announced to the pub-lic. The main objectives of the program, which wentinto effect in June 1995, are to increase compliance withenvironmental regulations, promote adoptions of cleantechnologies, create incentives for polluters tostrengthen their in-house environmental managementcapabilities, and prepare companies in Indonesia for ISO14000 certification (Wheeler & Afsah, 1996). Due inpart to governments recognizing the importance of envi-ronmental business practices, corporations now mustevaluate the appropriate corporate environmental poli-cies for their plants and supply chain partners whilebeing consistent with new international standards(Rondinelli & Vastag, 1996).

Aside from the looming environmental legislation, firmsstill have to handle the delicate issues of special interest


groups, stakeholders, customers, and communitiesaround the firm. The recent United Nations ClimateConference discussing the controlling of global warm-ing, and specifically reduction of carbon dioxide andother greenhouse gases to below 1990 levels, hasbrought growing attention to the environmental impactsof businesses in many countries. These and other forceshave provided the management of many firms with astrong impetus to develop and implement effective, for-mal EMS.

EMS and the Environmentally Conscious Enterprise

The environmental management system and ISO 14000(to be discussed in the next section) can be viewed aselements of the Environmentally Conscious Enterprise(ECE). This system can be defined as:

A corporate system that integrates product and designissues with issues of production planning and controland supply chain management in such a manner as toidentify, quantify, assess, and manage the flow of envi-ronmental waste with the goal of reducing and ulti-mately minimizing its impact on the environment, whilealso trying to maximize resource efficiency.

Associated with this definition are several importantassumptions and premises (Smith & Melnyk, 1996):

• ECE decisions are always present and are integrated(and part of) with the business process.

• The ultimate goal of ECE is waste elimination.• To be ultimately successful, ECE must be viewed as

a strategically driven decision that is evaluated bycomparing its relative costs and benefits (and mak-ing appropriate decisions based on this analysis).

• Effective ECE systems must be viewed as corporatesystems, not as manufacturing, engineering or pur-chasing decisions.

• Effective ECE systems must focus on the three Ps— Product, Process, and Packaging.

• To be ultimately successful, ECE must be integratedinto the product and process design and develop-ment system.

• To be ultimately successful, ECE must be consid-ered within the context of both the internal factory(the manufacturing system found within the fourwalls of the enterprise) and the external factory(the transformation process as it involves the sup-ply chain).

• ECE is ultimately a cross-functional undertaking.• ECE is dynamic.• ECE is primarily process as compared to outcome

(end-of-pipe) oriented.

ISO 14000 — Positioning This New Certification Standard

Before discussing the ISO 14000 Standard, it is useful toposition this standard in terms of its relationship to thevarious types of EMS that a firm can develop and imple-ment. As discussed in the preceding sections, an EMS isincreasingly being asked to fulfill a number of objec-tives. How it achieves these objectives depends on thestrategy used to develop and implement it. This strategycan be influenced by several factors.

Two dimensions are critical when evaluating this strat-egy. The first is the Corporate Position RegardingEnvironmental Performance. This dimension is essen-tially a spectrum that is anchored at one end by “StrictCompliance” and by “Environmental Leadership” at theother end. With “Strict Compliance,” the firm’s manage-ment does no more than is necessary to meet the mini-mum requirements as set down within the appropriateset of regulations. With this approach, the firm’s envi-ronmental activities are driven by changes in govern-mental regulations. As the standards set within theseregulations become more stringent, the firm improvesits performance to meet these new requirements. Oncemet, the environmental activities of the firm stop. Inother words, with “Strict Compliance,” the levels set byregulation are viewed as ceilings; there is no incentive toexceed these limits.

In contrast, under “Environmental Leadership,” thefirm’s management views the requirements containedwithin the appropriate regulations as floors. In otherwords, they represent the minimum that the firmshould do. Under this stance, the firm views improvedenvironmental performance as being critical. As a result,it strives to lead by doing more than is required by thelaw.

The second dimension is that of the Action Focus. Thisdimension describes where the focus of managementattention is when dealing with environmental problemsand issues. Like the previous dimension, this can beenvisioned as spanning a spectrum that is anchored atone end by an “End-of-Pipe” focus. With this focus,attention is directed toward the outputs of the processand the management of these problems once they havebeen created. For example, the decision to install ascrubber into a smokestack so that particulates can beremoved before they reach the open air falls into thiscategory. The other end of the spectrum is anchored bya “Process” focus. Here, management is interested inidentifying, studying, and changing the performance ofthose processes that are responsible for the observedlevel of pollution. In contrast to the “End-of-Pipe”focus, this approach seeks to eliminate the pollutionfrom being created in the first place. It is a preventive


orientation, in contrast to the corrective stance foundwhen taking an “End-of-Pipe” focus.

When these two dimensions are merged, what is createdis a 2x2 matrix that describes the various basic formsthat an EMS can take (see Exhibit 2-1). This matrixidentifies the simplest and most reactive form of EMS.This form, denoted by A in Exhibit 2-1, is observedwhen the management takes a compliance view of envi-ronmental issues and when the focus of activity is onthe management of “End-of-Pipe” problems. With thistype of system, management will only invest in environ-mental issues when forced to do so by changes in gov-ernmental regulations. When this investment does takeplace, the focus is on the management of pollution afterit has been created. With this type of system, any invest-ment in environmental initiatives results in increasedcosts. The processes causing the pollution gounchanged. To the managers in these firms, pollutioncontrol is no more than a cost of doing business.

In contrast, the most complex and effective form ofEMS is observed under conditions of EnvironmentalLeadership and a Process focus. This type of EMS,denoted by D in Exhibit 2-1, attempts to eliminate thecreation of pollution. With this type of system, the elim-ination of environmental waste (which is what pollutionis essentially) can result in reduced costs, improved effi-ciencies, and fewer problems. It is in this quadrant, itcan be argued, that we would expect to see firms thatare ISO 14000 certified.

Understanding the ISO 14000 Certification Standards

Representatives from some 50 countries around theglobe have formally adopted the international standardon environmental management systems (ISO 14000) bythe International Standard Organization in 1996. Thisstandard attempts to build on the success and experi-ence of its predecessor, the ISO 9000 standards, and itsvariants such as QS 9000 standards now being imple-mented within the automotive industry. If the ISO

14000 series of standards work as intended, they will seta higher level of expected environmental managementpractices worldwide. Additionally, these new standardsare predicted to facilitate trade and remove tradebarriers.

What is ISO 14000? The ISO 14000 standard specifiesthe structure information technology in the form of anEMS that an organization must have in place if it seeksto obtain certification of the EMS according to ISOguidelines. The ISO 14000 standards describe the basicelements of an effective EMS. These elements includecreating an environmental policy, setting objectives andtargets, implementing a program to achieve those objec-tives, monitoring and measuring its effectiveness, cor-recting problems, and reviewing the system to improveit and overall environmental performance (Tibor &Feldman, 1996).

In reviewing the ISO 14000 certification standards, wemust note one important feature of this standard: ISO14000’s EMS standards are process, not performance,standards. In other words, these standards do not tellorganizations what environmental performance theymust achieve aside from compliance with environmentalregulation. Instead, the standards describe a system thatwill help an organization to achieve its own objectivesand targets. The assumption is that better environmen-tal management will lead indirectly to better environ-mental performance (Tibor & Feldman, 1996).

To better understand the transition of the intent of ISO14000 to the actual standards, ISO 14000 encompassesstandards in the following seven general areas:

1. Environmental Management Systems2. Environmental Auditing3. Environmental Performance Evaluation4. Environmental Labeling5. Life Cycle Assessment6. Environmental Aspects of Product Standards7. Terms and Definitions


Exhibit 2-1A Taxonomy of Various Environmental Management Systems

Corporate Position Regarding Environmental Performance

Strict Compliance Environmental Leadership

Action Focus “End-of-Pipe” A

Process D

These standards are then divided into two general cate-gories as shown in Exhibit 2-2. The EMS, auditing, andperformance evaluation standards will be used to evalu-ate the firm. The EMS standards provide the frameworkfor the management system. Auditing and performanceevaluations are seen as management tools in the suc-cessful implementation of an EMS. Labeling, life cycleassessment, and environmental attributes in productstandards emphasize the evaluation and analysis ofproduct and process characteristics.

A firm can implement an EMS that is in line with one ofthe EMS standards (BS 7750, EMAS, or ISO) withoutexternal certification. External certification and registra-tion becomes a factor once there is a clear reason todemonstrate conformance to third parties. Some situa-tions where certification could become important are(Tibor & Feldman, 1996):

• A customer requires EMS certification as a condi-tion to sign a contract.

• Your organization supplies to a customer whostrongly suggests you become registered.

• A government provides benefits to registeredorganizations.

• You have a site in the European Union, where mar-ket pressure or the regulatory environment forcesyou to get registration or certification.

• A single international environmental standard canreduce the number of environmental audits con-ducted by customers, regulators, or registrars.

• You export to markets where EMS registration is ade facto requirement for entering the market.

• You expect to gain a competitive advantage throughEMS registration.

• Your major stockholders (local community, share-holders, unions, etc.) expect environmental excel-lence, and an EMS registration is the way todemonstrate it.

If one of the above applies, a firm should decidewhether to get registration for the organization as awhole or just for parts of it. If the firm is already ISO9000 certified, it makes sense to define its scope in asimilar manner (Tibor & Feldman, 1996). If the firmopts for a site registration, there is the advantage of notlosing the registration for your whole organization ifone of the sites does not comply with the requirementsof the standard. Also, the process of implementing, cer-tifying, and registering the EMS is broken down intosmaller projects that may be easier to handle.

Generally speaking, there are 10 steps involved in theISO 14000 certification process. These same steps arealso helpful in customizing your environmental man-agement system to ISO 14000 without seeking certifica-tion (Sayre, 1996).

• Step One: Understand the ISO 14000 standard, itsimpact on the organization, its requirements, anddetermine the benefits of seeking certification.


Exhibit 2-2 Intent of ISO 14000

Environmental Management

EnvironmentalManagement

Systems

Life CycleAssessment

EnvironmentalPerformanceEvaluation

EnvironmentalAuditing

EnvironmentalLabeling

EnvironmentalAspects in

ProductStandards

Organizational Evaluation Product and Process Evaluation

• Step Two: Understand the certification process, anddecide whether to commit to certification.

• Step Three: Top management support should be inplace for the Management Representative for theenvironmental management system to go forwardwith the process with team members from eachaffected area of your organization. If necessary, pro-vide any needed training on the certificationprocess.

• Step Four: With the help of the ManagementRepresentative, select the appropriate certificationorganization. Investigate the certifying organizationto see if there is a waiting list, understand theapproach to the certification process through theireyes, and understand what expectations andrequirements are involved.

• Step Five: Perform internal audits of your environ-mental management system against each element ofthe ISO 14000 standard. Perform a gap analysis,and identify strengths and weaknesses in the cur-rent system. Repeat audits where deficiencies areidentified.

• Step Six: Correct deficiencies while striving toattain full compliance with the standard. If this can-not be done immediately, develop a complianceplan to address discrepancies beyond the currentcapability to correct.

• Step Seven: Verify that you have clearly definedenvironmental management policies, objectives, tar-gets, and procedures (typically in an environmentalmanagement system manual or similar document).Validate proper regulatory commitments.

• Step Eight: Again, address and correct deficiencies.If the deficiencies cannot be fully corrected, thendocument and implement a corrective action planto resolve issues that may be beyond your currentcapability to address.

• Step Nine: Apply for certification. Set up meetingswith the certifying agent for the indoctrination ofyour organization, its activities, products, and ser-vices. Next, schedule the final audit (there may beseveral pre-audits).

• Step Ten: Expedite the final audit (say what you doand do what you say). Be prepared for the outcome(recommendation for or against certification). Startscheduling the correction of any identified discrep-ancies within 60 days and submit evidence of thecompletion of the actions taken. Finally, expedite

the final audit if there were any major discrepanciesidentified.

To date, no research has addressed whether ISO 14000will be widely used by businesses as a consensus model,or whether it should be. Instead, the literature is satu-rated with conflicting predictions and viewpointsoffered by experts. The champions of ISO 14000 suggestthat it will unify countries in their approach to environ-mental management and will eventually be looked uponmore favorably than traditional measures (Cascio,1996). It has been argued that small manufacturingfirms constitute the largest potential market for ISO14000 and that the real test of the standard can be mea-sured by adoption rates among these firms, which typi-cally need the most direction in these issues. Accordingto some authors, the development to watch is whatindustrial customers do with these standards withregard to their supply chains. Acceptance of the stan-dard will come when conformance or certificationbecomes a condition for customer requirements. Thissuggests that the predisposition of corporations to ISO14000 will mostly influence the adoption rates and ulti-mately, the success of this standard. However, noresearch to date has examined the predisposition of ISO14000 among managers of corporations.

Why Should Purchasing Managers

Be Interested in ISO 14000?

For many, the most important question surrounding thisstudy is “why we, as purchasing professionals, shouldbe studying ISO 14000?” It has been argued by manymanagers that ISO 14000 is very different as comparedto ISO 9000. For ISO 9000, there has been a realdemand from customers for this level of certification,and the benefits to firms pursuing ISO 9000 certificationhave been repeatedly demonstrated. This logic and theaccompanying flow of benefits cannot be extended toISO 14000. In spite of consultants’ reports, there hasbeen little demand from customers for ISO 14000 certi-fication. Furthermore, again in spite of what self-servinggroups and consultants have stated, there has been littledocumented evidence showing that ISO 14000 will gen-erate significant benefits. However, it is important torecognize that these arguments, as they are applied toISO 14000, are currently based on small samples, sup-position, and a great deal of hearsay.

There are some potentially strong reasons for beinginterested in ISO 14000. Because ISO 14000 is processoriented, then it should help managers improve envi-ronmental performance by changing the operation ofthe process. By changing the operation of the


appropriate, critical processes, it can be argued, theresult should be not only a more environmentallyresponsible process, but also a more efficient process.These changed processes should help the firm be moreefficient when it comes to resources such as material,energy, and the like. Ultimately, the result should belower costs, fewer problems, and a product that is easierto market both locally and internationally. All of thesetraits make the potential supplier far more attractive topotential firms and their purchasing executives.

In addition, there is the advantage offered by third-partyassessment. For a firm to be ISO 14000 certified, it mustundergo a rigorous assessment by a third-party assessor.As a result, the firm must prove to an outside, impartialthird party that it has been able to successfully meet andexceed the requirements set down within the ISO 14000certification process. It is not enough to rely on self-reported evidence. All such evidence must be ultimatelyviewed with some degree of suspicion because it is notsufficiently objective and impartial.

One of the most compelling reasons for purchasingmanagers to consider ISO 14000 certification is relatedto the concept of Total Cost of Ownership.Organizations can no longer afford to purchase fromsuppliers who are not environmentally conscious. In thelong run, these suppliers are generating waste, which isbuilt into price charged to the purchaser. Because legis-lation such as the Superfund Act mandates strict liabilityup the supply chain, a firm whose major supplier isresponsible for cleanup of a polluted landfill may finditself responsible if the supplier declares bankruptcy.Finally, purchasing organizations do not want to beassociated with suppliers who are not environmentallyresponsible, as this can provoke a strong negative reac-tion from the public.

Alternatives to ISO 14000

Before going further, it should be recognized that attain-ing ISO 14000 certification is only one way of improv-ing environmental performance. For the American man-ager, there are at least three other potentially viablealternatives to ISO 14000. These include: (1) voluntaryindustrial environmental programs; (2) voluntary gov-ernment-initiated environmental programs; and, (3) vol-untary programs where improved environmental perfor-mance is an important but secondary benefit. In study-ing and comparing these three alternative approacheswith ISO 14000, we can assess the relative effectivenessand efficiency of these various approaches.

Voluntary Industrial Environmental Programs: Thefirst approach consists of environmental programs that

are initiated and championed by firms operating in spe-cific industries. The most noteworthy example of thiscategory is the Responsible Care® program that was pio-neered by Dow Chemical and now accepted as the envi-ronmental system for the chemical industry.

Voluntary Government-Initiated EnvironmentalPrograms: In contrast to the preceding approach, thisapproach consists of programs supported by the govern-ment, specifically the Environmental Protection Agency(EPA). Examples include the Green Light® and the33/50 programs. In these cases, it is the governmentalagency, not the firm, that acts as the initiators of theseprograms.

Voluntary Programs Where Improved EnvironmentalPerformance Is a Secondary Benefit: In the previoustwo sets of programs, improved environmental perfor-mance is the desired and primary outcome of these pro-grams. In contrast, this category of alternatives focuseson another set of outcomes. For example, the programsrun by OSHA (Occupational Safety and Health Agency)focus on improving the safety of the environments inwhich the employees work. However, it can be arguedthat any action that improves safety must, by definition,focus on environmentally related activities such as pol-lution prevention and reduction.

There are several very critical differences between thesethree alternatives and the ISO 14000 standards. Thesedifferences can be best understood by referring back tothe taxonomy displayed in Figure 2-1. These three alter-natives are primarily outcome oriented. The programsestablish the desired outcome; the means by whichthese outcomes are realized is left up to the discretionand initiative of the participating firms and their man-agement. In contrast, ISO 14000 focuses attention onthe processes associated with pollution. It focuses atten-tion on the control and management of these processes.This approach is based on the implicit assumption thatpollution is a residual. That is, since pollution is theresult of various processes, it cannot be attackeddirectly. Rather, for management to reduce pollution, itmust identify and evaluate those processes responsiblefor the pollution and act on them.

Furthermore, the ISO 14000 standards require third-party, external validation. In contrast, the other threeprograms impose no such requirements.

As a result, it can be argued that the alternatives dis-cussed in this section should be more easily and cheaplyimplemented. However, the effectiveness of the out-comes has yet to be established.


Concluding Comments

As can be seen from this discussion, the ISO 14000 cer-tification standards represent a true purchasing andmanagement paradox. On one hand, it brings with itthe promise of significant potential benefits. However,these potential benefits must be weighed against thenumerous unresolved questions that surround this newstandard. Resolving these questions is critical if thisstandard is to achieve widespread acceptance and use.This task of resolving these questions forms a majorobjective of this study. Before the findings consistentwith this objective can be presented, it is first necessarythat the structure and approach of this study be pre-sented. That task forms the focus of the next chapter.


Demographic Information

Before examining the results gained from this survey asthey pertain to environmental systems, environmentalperformance, corporate performance, and ISO 14000,the demographic characteristics of the sample will bedescribed. By establishing the traits of the respondents,this study can begin to assess the extent to which theresults are generalizable.

Industrial Descriptive InformationAs previously mentioned, the survey database consistsof 1,510 responses. From the outset, there was anattempt to develop a sample that was broad-based.That is, the sample should reflect a diversity of indus-trial settings. The responses should not be drawnfrom only a few industries. One way of determiningthe extent to which this objective was realized wouldbe to evaluate the industrial settings from which therespondents were drawn. A specific question to thatend was introduced into the survey. The respondentswere asked to list the principal products produced intheir plants. These responses (open-ended) wererecoded into appropriate SIC (Standard IndustrialClassification) codes by an external panel. For thepurposes of this coding, a two-digit SIC code wasused. The resulting distribution of industries is sum-marized in Table 3-1.

As can be seen from this table, the respondents camefrom a wide range of industries. From the 40-some SICcodes, the bulk of respondents (999 respondents or66.2% of the respondents) were drawn from one of fiveSIC codes:

• Industrial & Commercial Machinery & ComputerEquipment (35): 316 respondents.

• Transportation Equipment (37): 198 respondents.

• Electronic & Other Electrical Equipment &Components Except Computer Equipment (36):179 respondents.

• Fabricated Metal Products, Except Machinery &Transportation Equipment (34): 179 respondents.

• Measuring, Analyzing, & Controlling Instruments;Photographic, Medical, & Optical Goods; Watches& Clocks (38): 127 respondents.

To an extent, it can be argued that the concentration ofthe respondents from these five sectors is consistentwith the industrial activities within the United States. Inaddition, these five industries are ones that should beinterested in ECM-oriented activities within their firms.

Other indicators of the diversity within the survey datainclude the median number of Full-Time EquivalentEmployees, a proxy for plant size (400), percentage ofsales as exports (19.7%), percent of sales as exports forthe European Community (9.7%), and the average per-centage of sales going to the end customer (or con-sumer) (24.6%). Furthermore, 729 plants (48.3%) werepublicly owned, 250 (16.6%) were foreign owned, and54 plants (3.6%) were joint ventures. In addition, therespondents were asked to indicate whether their plantswere involved in one or more of seven commonlyencountered corporate/productivity initiatives. For eachinitiative, the respondent was asked to check a box iftheir plant had been involved, either currently or in thepast, in any of these seven initiatives. These results aresummarized in Table 3-2.

Reviewing this table uncovers several interesting find-ings. First, the plants have been involved in a largenumber of initiatives. That these plants have undertakenthese various initiatives points to a situation in whichplants are increasingly looking for new ways of improv-ing efficiency and effectiveness within their facilities.Stated another way, plants are now being asked to do

Chapter 3Analyzing the Survey Data:Understanding the Implicationsof ECM and ISO 14000



Table 3-1Classification of Respondents by 2-Digit SIC Codes

SIC Description Frequency (#) Percent (%)

Agricultural Services (07) 1 0.1Mining and Quarrying of non-metallic Minerals, except Fuels (14) 2 0.1Building Construction – General Contractors & Operative Builders (15) 4 0.3Heavy Construction Other Than Building Construction — Contractors (16) 2 0.1Construction — Special Trade Contractors (17) 6 0.4Food & Kindred Products (20) 18 1.2Textile Mill Products (22 16 1.1Apparel & Other Finished Products Made from

Fabrics and Similar Materials (23) 8 0.5Lumber & Wood Products, except Furniture (24) 4 0.3Furniture & Fixtures (25) 35 2.3Paper & Allied Products (26) 27 1.8Printing, Publishing, & Allied Industries (27) 9 0.6Chemicals & Allied Products (28) 99 6.6Petroleum Refining & Related Industries (29) 18 1.2Rubber & Miscellaneous Plastic Products (30) 34 2.3Leather & Leather Products (31) 4 0.3Stone, Clay, Glass, & Concrete Products (32) 16 1.1Primary Metal Industries (33) 38 2.5Fabricated Metal Products, Except Machinery &

Transportation Equipment (34) 179 11.9Industrial & Commercial Machinery & Computer Equipment (35) 316 20.9Electronic & Other Electrical Equipment & Components

except Computer Equipment (36) 179 11.9Transportation Equipment (37) 198 13.1Measuring, Analyzing & Controlling Instruments; Photographic,

Medical & Optical Goods; Watches & Clocks (38) 127 8.4Miscellaneous Manufacturing Industries (39) 22 1.5United States Postal Service (43) 1 0.1Transportation Service (47) 2 0.1Communications (48) 2 0.1Electric, Gas, & Sanitary Services (49) 1 0.1Wholesale Trade — Durable Trades (50) 22 1.5Whole Trade — Non-durable Goods (51) 9 0.6Building Materials, Hardware, Garden Supply, & Mobile Home Dealers (52) 1 0.1Miscellaneous Retail (59) 2 0.1

Business Services (73) 27 1.8Automotive Repair, Services, & Parking (75) 1 0.1Miscellaneous Repair Services (76) 1 0.1Health Services (80) 6 0.4Educational Services (82) 4 0.3Engineering, Accounting, Research, Management, & Related Services (87) 14 0.9Services, Not Else Classified (89) 1 0.1Administration of Economic Programs (96) 1 0.1Industry Not Identified 53 3.5

more with less. To meet these demands, management isturning to new and different ways of improving opera-tions and enhancing performance on the major dimen-sions of performance.

Second, the level of acceptance among the seven initia-tives greatly varies. At the high end, we have ISO9000/QS 9000 certification, with almost three-quartersof the respondents indicating that their plants haveundertaken such certification. At the low end, there isthe development of an environmental management sys-tem. This is interesting for two reasons. The first is thatit points to the perceived low importance of environ-mental issues relative to initiatives directed at improvingquality (ISO/QS 9000, Total Quality Management),reducing waste (Just-in-Time Manufacturing), reducinglead times (Lead Time Reduction Programs), andimproving product/process quality (simultaneous engi-neering/concurrent design). One way of interpretingthis result is that the relatively low level of involvementreflects the relatively low priority assigned to this initia-tive. Given that you, as a manager, have limited funds,why invest in a program that does not generate thesame higher level of paybacks obtained from other ini-tiatives? Another way of viewing this result is to see it asindicating a low level of awareness of environmentalactivities within a plant. The data was insufficient todetermine which of these two interpretations was mostappropriate. Second, we should expect that the presenceof an environmental management system as being arequirement for the successful attainment of ISO 14000certification. After all, ISO 14000 focuses on the envi-ronmental management system and its informationmanagement system components.

A third interesting result involves the relationshipbetween ISO 9000/QS 9000 certification and the imple-mentation and/or presence of a Total QualityManagement (TQM) system. Initially, the researcherspresumed that these two initiatives would be stronglyrelated. To successfully achieve ISO 9000/QS 9000 certi-fication, you had to have a TQM system in place.However, the data indicates that this is not necessarily

the case. There were 1,106 respondents who indicatedthat their plants had been involved in ISO 9000/QS9000 certification, while only 817 indicated that theirplants had been involved in TQM management — a dif-ference of 289 or 19.1 percent of the respondents. Morespecifically, when the data were further explored, it wasfound that there were only 671 respondents who indi-cated that their plants were simultaneously involved inISO 9000/QS 9000 certification and TQM. The linkagebetween TQM and ISO 9000/QS 9000 is not strongly inpractice, as it has been presented in the popular pressand the research literature.

Background of the RespondentsHaving reviewed the industries and firms from whichthe respondents came, the next step is to determine thenature of the respondents themselves. A starting point isto focus on the job titles of the respondents. As can beseen from Table 3-3, the respondents embody variety interms of their job titles. They occupy positions rangingfrom presidents and Chief Operating Officers (CEOs) tomanagers and staff. This diversity argues strongly infavor of the generalizability of the results.

The next piece of information important to this studywas the length of time that respondents had spent intheir current positions. This information is summarizedin Table 3-4. As can be seen from this table, the respon-dents, overall, are not new to their positions. On aver-age, the respondents had been in their current positionsfor about 5.4 years. As a result, we can expect that theserespondents should be familiar with their jobs and whatis happening around them.

In addition, data on the functional areas in which therespondents worked was also collected. These data aresummarized in Table 3-5. As can be expected, the twomajor areas represented in the survey data were materi-als purchasing and manufacturing. Environmental man-agement (compliance) represented a very minor part ofthe data at 48 respondents (3.2 % of the respondents).This indicates that this survey consists primarily ofusers (engineers, purchasing managers, and manufactur-


Corporate/Manufacturing Initiatives Number Percentage

Just-in-Time Manufacturing 751 49.7Simultaneous Engineering/Concurrent Design 331 21.9Environmental Management System 273 18.1ISO 9000/QS 9000 1106 73.2Total Quality Management 817 54.1Business Process Re-engineering 461 30.5Lead Time Reduction Program 689 45.6

Table 3-2Plant Involvement in Corporate/Manufacturing Initiatives


Stated Position Frequency (# Observations) Percentage (%)

Chief Executive Officer 13 0.9President 12 0.8Vice President 169 11.2Manager 718 47.5Senior Management 251 16.6Staff 317 21.0Not Listed 30 2.0Total 1,510 100.0

Table 3-3Stated Positions of the Respondents

Number of Years in Current Position Number of Respondents Percentage

Less than 1 Year 153 10.11 to 3 Years 377 25.03 to 5 Years 282 18.75 to 10 Years 318 21.1Greater than 10 Years 350 23.2Not Listed 30 2.0

Table 3-4Number of Years Respondents Have Been in Their Current Positions

Functional Area Number of Respondents Percentage

Purchasing, Materials 641 42.5Manufacturing/Production 332 22.0Quality 132 8.7Engineering 85 5.6Environmental (Compliance) 48 3.2Management 47 3.1Other 37 2.5Information Systems 33 2.2Distribution 31 2.1Safety, Security 29 1.9Inventory 16 1.1Marketing 13 0.9Consulting 12 0.8Human Resources 12 0.8Accounting 6 0.4Research and Development 3 0.2Finance 2 0.1Unknown/Not Identified 31 1.9Total 1,510 100.0

Table 3-5Respondents Classified by Functional Area

ing people) who should be better able to assess ECMand ISO 14000 as business/strategic decisions. Again,this is consistent with the objectives of this study.

The next step was to look at professional affiliations ofthe respondents. There are several reasons to be inter-ested in this trait. First, membership in a professionalsociety or organization such as APICS (AmericanProduction and Inventory Control Society) or NAPM(National Association of Purchasing Management)would indicate a manager or respondent who is inter-ested in keeping up to date on current developmentsand issues. Second, familiarity (or the lack of familiar-ity) with certain developments such as ISO 14000, busi-ness process re-engineering or ISO 9000 might be influ-enced by the respondent’s membership in a specificsociety. Some societies might be doing “better” jobs atexposing their members to certain developments. Third,some of the names were drawn from mailing lists pro-vided by several professional organizations. As a result,it is interesting to determine the extent to which there ispotential over-response from one professional societyrelative to the others. The membership information issummarized in Table 3-6. As can be seen from thistable, a respondent, if he or she did belong to a profes-sional organization, was most likely to belong to eitherAPICS or NAPM. The number of respondents whobelonged to one of the other professional organizationswas relatively small. One area where this finding wasmost surprising involved membership in ASQC(American Society for Quality Control). Given the

spread of Total Quality tools and procedures throughoutAmerican industry, a higher membership in this societywould be expected. After all, ASQC has assumed theleadership position in the dissemination of quality con-trol tools and procedures to practitioners and in theassessment of the extent to which these practitionershave gained mastery over these tools in the certificationprogram run by ASQC.

The next area of interest involves the extent to whichthe respondents have been involved in the implementa-tion of certain initiatives of interest. In examining thisissue, the research team identified a list of some 23 cor-porate actions and initiatives. Each respondent wasasked to describe their involvement using an 11-pointscale, where 0 denoted “No Involvement,” and 11denoted “Extremely Involved.” Using this scale, we cansee that the higher the mean value reported by therespondents, the more involved on average the respon-dents were. The average levels of involvement for therespondents on these 23 initiatives is summarized inTable 3-7.

This exhibit indicates that the respondents have had awide range of involvement in various corporate initia-tives. This variety is important because it emphasizesthe notion that this sample is not simply drawn frompurchasing personnel or from personnel highly familiarwith environmental issues. In reviewing this summary,we can see that their heaviest involvement has been inProduction Planning and Scheduling, Continuous


Professional Society to Which the Respondent Belongs Members Not Members

American Production and Inventory COntrol Society 689 821(45.6%) (54.4%)

American Society for Quality Control 150 1,360(9.9) (90.1)

Association for Manufacturing Excellence 35 1,475(2.3) (97.7)

Council for Logistics Management 35 1,475(2.3) (97.7)

Institute for Management Accounting 11 1,499(0.7) (99.3)

National Association of Purchasing Management 556 954(36.8) (63.2)

Society of Manufacturing Engineers 111 1,399(7.4) (92.6)

Society of Automotive Engineers 54 1,456(3.6) (96.4)

Other 201 1,309(13.3) (86.7)

Table 3-6Membership Traits of the Respondents


Table 3-7Level of Involvement of Respondents in Various Corporate/Plant Initiatives

Mean Level Number Numberof Respondents with No

Involvement Responding Involvement

1. Quality Planning, Planning, and Assurance . . . . . . . . . . . . 4.02 1,482 185(12.3%)1

2. Workplace and Employee Safety . . . . . . . . . . . . . . . . . . . . 4.60 1,487 244(16.2)

3. Product Design. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.22 1,484 432(28.6)

4. Process Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.42 1,489 273(18.1)

5. Plant Layout. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.44 1,488 464(30.7)

6. Production Planning and Scheduling . . . . . . . . . . . . . . . . . 5.34 1,490 273(35.4)

7. Environmental Planning and Management . . . . . . . . . . . . 2.87 1,485 534(35.4)

8. Certification Planning and Implementation . . . . . . . . . . . . 4.15 1,481 383(25.4)

9. Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16 1,481 359(23.8)

10. Continuous Improvement Activities . . . . . . . . . . . . . . . . . 6.75 1,493 98(6.6)

11. Continuous Improvement Planning . . . . . . . . . . . . . . . . . . 6.22 1,486 151(10.0)

12. Continuous Improvement Kaizen . . . . . . . . . . . . . . . . . . . 3.16 1,466 601(39.8)

13. Purchasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.41 1,490 131(8.7)

14. Materials Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.46 1,493 173(11.5)

15. New Product Launches . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.48 1,491 254(16.8)

16. Cost Justification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.17 1,485 143(9.5)

17. Process Redesign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.70 1,488 283(18.7)

18. Re-engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.13 1,488 355(23.5)

19. Regulatory Compliance (environmental) . . . . . . . . . . . . . . 3.29 1,482 495(32.8)

20. Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.90 1,489 272(18.0)

21. Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.27 1,488 344(22.8)

22. Warehouse Management . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04 1,489 400(26.5)

23. Legal Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.94 1,487 513(34.0)

1 The first number in this column identifies those respondents who indicated that they had no involvement in this initiative.That is, they picked the “0” value to represent their level of involvement. The number in brackets represents this number as apercentage of the total sample size of 1,510.

Improvement related programs (i.e., Activities,Planning), Purchasing, Materials Management, NewProduct Launches, and Cost Justification. To a certainextent, this pattern of involvement is not surprising forcertain activities, such as materials management, pur-chasing, and production scheduling and planning. It isimportant to remember that the mailing list used in dis-tributing the surveys was drawn from lists provided byAPICS and NAPM. The involvement in the continuousimprovement activities is also not surprising, given theincreasing importance that continuous improvement isplaying in most firms.

Next, when we compare the mean levels of involvementfor those respondents working with compliance andthose working on an environmental management sys-tem, we notice that the level of involvement in compli-ance and regulation is much higher than those forworking with an EMS system. This would seem to arguethat more people are involved correcting the pollutionproblem from a regulatory compliance than they are intrying to prevent or eliminate the problems through theimplementation and use of an EMS system.

Plant Activities

A major concern of this report was to determine the typeof activities being undertaken at the various plants andthe status of these projects. To this end, the respondentswere asked to fill in a matrix describing their plant’s levelof progress on 11 different initiatives. These initiativeswere selected because they represented approachesintended to enhance corporate and plant performance.In addition, the initiatives were selected because evi-dence was found in the literature that argued that theinitiatives either preconditioned the plant for the accep-tance or implementation of ISO 14000. This was the casefor the inclusion of QS 9000, ISO 9000, Total QualityManagement (TQM), and Cross-Functional ProductDevelopment Teams. In other cases, the initiatives wereselected because they represented possible alternatives toISO 14000. This was the case for three of the initiatives:(1) Participation in Industrial Voluntary EnvironmentalPrograms (e.g., Responsible Care); (2) Participation inVoluntary EPA Programs (e.g., 33/50, Green Light); and,(3) Participation in OSHA’s Voluntary PreventionProgram (VPP). By including these alternatives, theresearch hoped to assess the relative effectiveness andefficiency of voluntary as compared to programmatic ini-tiatives (which is what the ISO 14000 program repre-sents). Below the results are displayed by groupingtogether similar programs in each chart.


Chart 3-1aStage of Involvement with ISO Standards

QS 9000

ISO 9000

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Chart 3-1bStage of Involvement with Quality Programs

Chart 3-1cStage of Involvement with Planning and Control Systems

Total QualityManagement (TQM)

Cross-Functional ProductDevelopment Teams

Company-specificenvironmentalmanagement system

Enterprise ResourcesPlanning (ERP) system

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Chart 3-1dStage of Involvement with Voluntary Environmental Programs

Chart 3-1eMean Involvement with Various Initiatives

Participation in IndustrialVoluntary EnvironmentalPrograms (e.g.,Responsible Care)

Participation in VoluntaryEPA Programs (e.g., 33/50,Green Light)

Participation in OSHA’sVoluntary PreventionProgram (VPP)

Mean (1=NotApplicable, 7=SuccessfullyImplemented)

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450400350300250200150100500

76543210

These results point to some interesting findings. First,for some initiatives, such as ISO 9000, the results indi-cate that this is a widely accepted and widely imple-mented initiative. By this time, you have either decidedto go with ISO 9000 certification or you have decidednot to achieve this certification. If you have decided togo with ISO 9000 certification, then you have eitherachieved or you are well on your way to attaining it.

For most of the other measures, there is a strongbimodal distribution of responses. With initiatives suchas Voluntary Environmental Programs, Voluntary EPAPrograms, OSHA’s Voluntary Prevention Program, andTQM, the results show a strong grouping around one oftwo points. The first is the (0,1) axis (i.e., NotApplicable/Not Being Considered). The second point isthe (6,7) axis (i.e., Currently Implementing/SuccessfullyImplemented). Of these various initiatives, the mostinteresting result comes from TQM. This initiative haslong been emphasized as a key to continued corporatesuccess. In spite of this perspective, it is evident that alarge number of respondents are still not swayed by thevalue of TQM.

Another interesting result pertains to the acceptance andimplementation of environmental management systems.It was initially expected that nearly every firm wouldhave an environmental management system. However,as the data shows, this was not the case. Over 25 per-cent of the respondents reported that they did not seesuch a system as being appropriate to them or their cor-porate settings.

The final finding highlighted by this data points to theacceptance of ISO 14000. As we can see from the data,only 37 respondents noted that their systems were certi-fied. Of these 37, 15 came from one firm that hasinsisted that all of its plants become ISO 14000 certified.To a certain extent, this finding can be explained by thefact that this certification process is relatively new.However, despite that finding, it is interesting to notethat 50 percent of the respondents saw ISO 14000 certi-fication as something that was either not applicable ornot being considered. This points to a great lack of sup-port for this new certification process.

Environmental Management Systems - Findings

Before turning our attention to ISO 14000 and itsimpact, it would be useful to understand the state ofenvironmental management systems within the plantsof the respondents. To this end, a section was developedwithin the report. This section analyzed the environ-mental management system and its performance byidentifying 46 different dimensions. The respondents

were then asked to assess their plant’s systems using an11-point scale. In this scale, 0 represented “StronglyDisagree” while 10 represented “Strongly Agree.” Theneutral position for this scale was anchored on the 5point. The mean values for these 46 dimensions are pre-sented in Table 3-8.

These results paint an interesting picture of the environ-mental management systems found within the respon-dents’ plants. First, these systems are strong on the for-mal dimensions. That is, in most of the respondents’facilities, there is a formal environmental managementsystem in place. Within this system, there is a formalreporting linkage between environmental performanceand top management. This system is supported by for-mally documented procedures. These procedures aregenerally widely circulated and readily available.Environmental issues are also given visibility duringemployee training. In addition, top management hastaken a visible role in support of improved environmen-tal performance. Environmental performance is formallytracked and monitored.

In many cases, this environmental management systemis operational and reactive in nature. It is also tactical inthat it deals with operating problems and issues.Environmental issues have a strong influence on processdesigns, plant and equipment layouts, new equipmentacquisition, and equipment modification decisions. Theenvironmental management system is reactive in naturein that it responds to the emergence of problems whenthey occur. Furthermore, it is often primarily driven bychanges in the environmental regulations. When theseregulations change, the plant’s environmental manage-ment system also changes.

However, these systems exhibit certain shortcomings.The shortcomings reflect issues of information manage-ment, performance evaluation, and supplier evaluation.In general, these systems do not do much in trackingbest-in-class performance and in comparing their plants’performance with these “benchmarks.” Further, the per-formance measures do not often identify the qualitativeand quantitative costs associated with environmentalperformance. Environmental performance is also infre-quently considered when evaluating individual perfor-mance. These environmental measures, when collected,rarely involve the efforts of the cost accounting depart-ment (despite the fact that in most firms this depart-ment is the one most often held responsible for collect-ing and distributing performance and cost information).Finally, environmental efforts are confined to the plant.As shown by the low means recorded on those ques-tions pertaining to the supplier base, environmentalissues and performance are seldom considered duringsupplier selection, retaining, and evaluation stages.



Table 3-8Assessing the Plant’s Environmental Management System

(Mean Values)

System Trait Mean Response NumberWhen an environmental problem is identified, attention is focused on the underlying cause and corrective measures.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.83 1,420

There is a specific department within your plant that is formally responsible for environmental affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.70 1,429

When an environmental problem is identified, the major effort within your plant is on determining the underlying reasons for that problem and then attacking it 6.66 1,420

The environmental impact within your company is primarily driven by regulatory requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.55 1,413

There is a formal reporting position between those responsible for environmental affairs within your plant and one of the plant’s senior executives . . . . . . . . . . . . 6.23 1,426

New equipment has been acquired or existing equipment modified in response to external environmental problems attributable to that equipment . . . . . . . . . . 6.23 1,412

Environmental issues are considered when laying out the plant or specifying equipment for use on the plant floor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13 1,419

Your plant has an established environmental management system in place . . . . . 6.10 1,432

When an environmental problem is identified, attention is primarily focused on correcting the effects of that problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01 1,418

The environmental management system’s procedures are formally documented . 5.91 1,429Environmental issues are included in the design process . . . . . . . . . . . . . . . . . . . 5.67 1,409

Top management of your plant has taken a highly visible public position in support of improved environmental performance . . . . . . . . . . . . . . . . . . . . . . . . 5.54 1,429

Environmental performance is formally tracked and monitored within the plant 5.45 1,427

The environmental management system’s procedures are widely circulated and available to anyone who needs access.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.39 1,429

Environmental issues, policies, and procedures are included in formal plant training programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.28 1,426

Process designs and plant layouts have been modified in response to external environmental problems attributable to a specific design flaw . . . . . . . . . . . . . . . 5.23 1,414

Environmental issues influence plant location decisions (i.e., where we locate a new plant). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.23 1,403

Environmentally related information (e.g., changes in regulations, tracking of which companies have been fined and how much) is tracked and monitored on an ongoing basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12 1,429

Environmental performance, as captured by various measures, is periodically summarized. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.97 1,427

People within your plant consider your plant’s formal environmental management system highly effective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.81 1,409

People outside your plant consider your plant’s formal environmental management system highly effective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.81 1,398

Product designs have been modified in response to environmental problems attributable to a specific design flaw. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.79 1,408

Various performance goals have been developed and implemented report environmental performance on different dimensions . . . . . . . . . . . . . . . . . . . . . . 4.78 1,422


Environmental performance has been captured primarily in terms of recyclability, i.e., the amount of recycled material used in the product or the degree to which the product is recyclable . . . . . . . . . . . . . . . . . . . . . . . . . 4.76 1,415

The environmental position of your plant is given prominent visibility within annual reports and other publications distributed by your plant . . . . . . . 4.57 1,426

Those suppliers who are environmentally responsible also tend to be more cost-effective suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.43 1,401

Your plant has been very successful in creating plantwide awareness of environmental problems, costs, and opportunities. . . . . . . . . . . . . . . . . . . . . . . . 4.42 1,410

Your plant has a well-developed environmental data base for tracking and monitoring environmental issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.39 1,413

Top management of your plant considers environmental performance to be as important as reducing costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.17 1,413

The environmental achievements of your plant are given prominent visibility within annual reports or other company publications . . . . . . . . . . . . . . 4.16 1,424

Environmental issues are important today because they reflect a current marketing fad. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16 1,411

Top management of your plant considers environmental performance to be as important as improving quality.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.12 1,412

People within your plant view environmental problems as opportunities rather than as costs or constraints to be satisfied . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 1,414

Tools and procedures such as risk assessment and life-cycle analysis are incorporated into your plant’s formal environmental management system . . . . . 3.95 1,404

Environmental performance results are widely distributed within your plant . . . 3.93 1,420

Information about best-in-class environmental performance in our industry is tracked and recorded within your plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.87 1,427

Environmental practices, procedures, and systems within your plant are compared with the best-in-class on a regular basis. . . . . . . . . . . . . . . . . . . . . . . . 3.85 1,427

Environmental concerns play a significant role in supplier selection and/or retention decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.76 1,408

The performance measures identify qualitative costs associated with environmental performance and problems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.75 1,414

Performance on environmental dimensions is considered during supplier evaluations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.74 1,411

Top management in your plant considers environmental performance to be as important as reducing lead times . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.72 1,415

Cost accounting has been extensively involved in your company in capturing and reporting environmental costs. . . . . . . . . . . . . . . . . . . . . . . . . . 3.70 1,415

Environmental performance is considered during the evaluation of individual departments or areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.70 1,418

The performance measures identify the quantitative costs associated with environmental performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.69 1,421

The effectiveness of different production schedules is evaluated considering possible environmental problems created by those schedules . . . . . . . . . . . . . . . 3.04 1,402

Performance on environmental dimensions is considered during personnel evaluations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.98 1,410

In short, the environmental system is portrayed as aseparate activity, internally focused, driven by regula-tions, and reactive in nature. This picture is further sup-ported by the overall negative perceptions given by therespondents regarding the impact of environmentalactivities on the various dimensions of corporateperformance.

Environmental Systems — Management OptionsConsideredBefore turning our attention to the relationship betweenthe status of the environmental management system andcorporate performance, it is useful to examine the fre-quency with which the various ECM-related optionswere considered and used. Some of these options, how-ever, are more complex and demanding than others. Forexample, alliances are more complex than recyclingbecause of the need to develop relationships that crosscorporate, not simply departmental, boundaries. Otheroptions, such as recycling and waste separation, focuson reducing the “end-of-pipe” waste streams, while oth-ers such as product and process redesign focus attentionon preventing the pollution problem from even occur-ring. Some of these options, however, are more complexand demanding than others. For example, alliances aremore complex than recycling because of the need todevelop relationships that cross corporate, not simplydepartmental, boundaries. Other options, such as recy-cling and waste separation, focus on reducing the “end-of-pipe” waste streams, while others such as productand process redesign focus attention on eliminating thepollution problem from even occurring. To this end, theresearch team identified 16 different options. Theseoptions, along with mean responses (and numberresponding), are presented in Table 3-9. As in the otherquestions, the respondents were asked to respond usingan 11-point scale, where 0 indicated “NeverConsidered” while 10 denoted “Always Considered.”

These results portray a balanced and varied approach tothe considerations of options for improving environ-mental performance. Except for two options (“ConsumeInternally” and “Relocation”), all of the options fall intothe 4 to 6 range. This indicates that these options weresomewhat considered. Of the two options falling belowthe 4 point, “Relocation” option does bring with it someimportant negative connotations. When the NorthAmerican Free Trade Agreement (NAFTA) was initiallynegotiated, some feared that this Act would be used byAmerican firms having plants, products, or processesexperiencing high levels of pollution as a vehicle formoving these plants, products, or processes to areas

with more lax pollution standards. The results indicatethat this option is rarely considered. The other option,“Consume Internally,” represents somewhat of a mys-tery. Based on the positive experiences reported by firmssuch as firm C, which has established a highly success-ful co-generation plant2 for providing electricity, it wasexpected that this option would have received a higherscore.

Most of the remaining options focus primarily on theprocess and the operational/tactical management of thewaste. With these options, the major implicit opera-tional assumption is that the product design is fixed andthe only product-related options available are somewhatlimited to actions such as material substitution. Theoptions falling under this category include “ProcessRedesign,” “Substitution,” “Reduce,” “WasteSegregation,” and “Recycling.” They also include“Returnable Package.” This option recognizes theopportunities available to reduce waste and clutter byeliminating single-use packaging (such as cardboard) infavor of multi-use returnable packaging.

Two options currently receiving relatively low values,“Disassembly” and “Alliances,” indicates future develop-ments in this field. We can expect firms to work on sim-plifying the disassembly of products, thus facilitatingtheir recycling, rebuilding, or remanufacturing. We canalso expect that managers will turn to the supply chainand work on environmental problems in cross-func-tional teams that involve the insights and expertise ofsuppliers and customers.

Environmental Management and CorporatePerformance — The Aggregate ImpactThe relationship between environmental systems, envi-ronmental performance, and overall corporate perfor-mance is not clear. Some writers, such as Makower(1993, 1994) and Porter and Van der Linde (1995),have argued that by becoming more environmentallyresponsible, firms also uncover new sources of wasteand productivity. The result is that enhanced environ-mental responsibility results in improved corporate per-formance. Other writers, primarily Walley andWhitehead (1994), argue that this is not the case. Inmost instances, improved environmental performancecomes at the cost of reduced profitability and reducedshareholder value.

One way of evaluating the nature of this relationship isto ask the respondents to assess the impact of theirenvironmental management systems on several critical


2 This facility uses wood scrap and the such generated both within its own furniture-making processes and from those of itscompetitors as input into a thermal electrical power generating plant. This plant currently provides up to 50 percent of the elec-tricity needs of the Zeeland, Michigan plant.


Table 3-9Environmental Management Options Considered

ECM-Option Mean NumberResponse Responding

Substitution: replacing a material that can cause environmental problems with another material that is not problematic . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.02 1,428

Process Redesign: redesigning the process to eliminate any potential environmental problems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.94 1,433

Reduce: reducing the level of material and/or components (which are contributing to environmental problems) within products . . . . . . . . . . . . . . . . . 5.80 1,424

Waste Segregation: an intermediate action in which waste streams are separated out into their individual components before being recycled, reused, or consumed internally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.76 1,421

Returnable Packaging: using packaging and pallets that can be returned after they are finished being used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.71 1,428

Recycling: making more use of recycled components or making a product which is more easily/readily recycled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.46 1,429

Product Redesign: redesigning the product to eliminate any potential environmental problems (manufacturing or recycling) . . . . . . . . . . . . . . . . . . . . 4.99 1,429

Prolonging Use: reducing environmental problems by increasing the overall life of the product (e.g., engines that now last longer before having to be replaced or rebuilt) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.97 1,418

Alliances: working with either suppliers or customers to address environmental problems and/or issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.94 1,418

Rebuilding: rebuilding a product in which some of the parts or components are recovered while others are replaced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.71 1,415

Spreading Risks: shifting responsibilities for environmental problems to a third party or expert better able to deal with issues . . . . . . . . . . . . . . . . . . . . . . . 4.38 1,418

Creating a Market for Waste Products: treating waste as an input to another product that can be made and sold at a profit. . . . . . . . . . . . . . . . . . . 4.21 1,423

Remanufacturing: like rebuilding, except that none of the parts are reduced to raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02 1,411

Disassembly: redesigning the product or process so as to simplify disassembly and disposal at the end of the product’s useful life . . . . . . . . . . . . . . 4.00 1,418

Consume Internally: consuming waste internally (e.g., wood pallets used in shipping or product storage used to generate electrical power in a co-generation facility) . . . . . . . . . . . . . . . . . . . . . . 3.62 1,429

Relocation: changing the location of a process or plant to take advantage of more favorable environmental regulations and conditions. . . . . . . . . . . . . . . . 3.27 1,419

dimensions of corporate performance. To this end, asection was included that focused on this specific aspectof performance. The respondents were asked to evaluatethe impact of their environmental management systemon 14 dimensions of performance. Some of thesedimensions focused on the core strategic areas of com-petition (cost, lead time, and market position). Otherstouched on areas such as reputation and customeracceptance. Still others dealt with issues ofprocess/product design and cost/benefit assessment. Aswith many of the other questions, the respondents wereasked to assess the impact of their environmental man-agement system using an 11-point scale (0 — “StronglyDisagree;” 10 — “Strongly Agree”). The mean resultsare summarized in Table 3-10.

The results presented in this table do not give a verypositive picture of the impact of environmental manage-ment systems. In general, such systems are perceived ashaving a strong, negative impact on the major strategicdimensions of performance. That is, their presenceresults in increased lead times, higher costs, and lowerquality. In exchange, the firm’s competitive position inthe marketplace is not enhanced. In addition, such sys-tems have not improved the ability of the firm to sell itsproducts in international markets. This last finding was

surprising in that it has been argued that many interna-tional customers (especially those located in Europe andAsia) are more sensitive to environmental issues. As aresult, for these customers, improved environmentalperformance is a requirement for doing business inthese new markets.

At best, environmental systems have caused managersto explore more options when dealing with problems,especially problems involving new technologies andprocedures. These systems have also not compromisedproduct acceptance and corporate position in themarketplace.

In light of these results, the natural question that wouldemerge would focus on the issue of why any firm wouldever consider trying to attain certification in an area asstrongly environmentally oriented as is the ISO 14000certification process. As we will see in the next section,the answer is that there is evidence to indicate that suchcertification does result in some real, quantifiablebenefits.


Table 3-10Assessing the Impact of Environmental Management Systems on Corporate Performance

Mean Value Number

Not adversely affected the position of your company in the marketplace . . . . . . 6.57 1,401

Not compromised the product’s acceptability from the customer’s perspective . . 6.29 1,398

Caused your company to investigate alternative technologies and procedures. . . 5.49 1,398

Helped enhance the reputation of your company. . . . . . . . . . . . . . . . . . . . . . . . . 4.81 1,404

Significantly reduced waste within the production process . . . . . . . . . . . . . . . . . 4.67 1,401

Placed reasonable demands on the information system and on data requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.23 1,395

Had benefits that have definitely outweighed any costs incurred. . . . . . . . . . . . . 4.18 1,392

Significantly reduced waste within the equipment selection process . . . . . . . . . . 3.94 1,389

Improved its chances of successfully selling its products in international markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.67 1,387

Helped your company design/develop better products. . . . . . . . . . . . . . . . . . . . . 3.59 1,401

Significantly improve its position in the marketplace. . . . . . . . . . . . . . . . . . . . . . 3.46 1,398

Significantly reduced overall costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.32 1,400

Significantly improve product quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.26 1,401

Significantly reduce lead times . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.71 1,402

Assessing the Impact of ISO 14000 Certification

on the Firm

The major intent of this study was twofold. The firstobjective was to assess the attitudes of managers to thenewly introduced ISO 14000 certification standards.The second was to determine what effect, if any, thesenew standards have had on the firms and their perfor-mance. With respect to the first issue, we can see thatmany managers harbor critical concerns about theirenvironmental management systems and the impact ofthese systems on corporate performance. With respectto the second issue, the data showed a far more com-plex and, ultimately, far more interesting and satisfyinganswer. To uncover the nature of this response, it is firstnecessary that we ask a simple but important question— “What effect does the stage of ISO 14000 certifica-tion have on corporate performance?”

To address this question, it is important that to note thatevery respondent could describe the level of ISO 14000certification in terms of one of seven levels:

1. Not Applicable2. Not Being Considered3. Future Consideration4. Assessing Suitability5. Planning to Implement6. Currently Implementing7. Successfully Implemented

One way of examining the effect of level of progress interms of certification is to examine the mean responsesgiven by the respondents in each of these seven levelsfor the 14 dimensions of performance. This is done inTable 3-11.

In reviewing the data contained in this table, severalimportant results can be readily identified. Noting that 5denotes a neutral position, the first result is that there isa strong positive relationship between the stage of ISO14000 certification and the effectiveness of the environ-mental management system. In other words, the closerthat you get to attaining ISO 14000 certification, thegreater the positive impact that the environmental man-agement system has on the overall performance of thefirm. The only exception to this relationship involves

the relationship between the environmental system andlead times. For this relationship, environmental man-agement systems are seen as having a slightly negativeimpact on lead times. Further, for those respondentsthat had achieved ISO 14000 certification, the result wasa slight but positive impact on costs and quality. Thisresult runs counter to the perception that improvedenvironmental performance comes at the cost ofincreased lead times (some support for this), decreasedquality, and increased overall cost. In addition, this posi-tive relationship is statistically significant.3

Second, we can see that for those respondents workingin plants that have successfully achieved ISO 14000 cer-tification, other important benefits are obtained. First,these respondents noted that, by attaining this level ofcertification, the waste within the production systemwas significantly reduced. In addition, these plants wereable to enhance their position and reputation within themarketplace. Overall, the respondents agreed that thebenefits did outweigh the costs. Finally, these variousbenefits did not require the expenditure of extraresources or effort in terms of the information systemand the data requirements.

In short, these findings are important to the purchasingmanager. By dealing with plants that are well on theway to attaining ISO 14000 certification, purchasingmanagers can expect to be dealing with plants that aremore efficient and more competitive. Except for theincreased lead times, the attainment of ISO 14000 certi-fication has made these plants into better suppliers.

These findings raise two other related issues. The firstpertains to the decision to pursue ISO 14000 certifica-tion. That is, if there is a real benefit to being ISO 14000certified, then what factors influence this decision. Thesecond focuses on assessing the effectiveness of ISO14000 certification relative to the other programs avail-able (specifically, industry voluntary environmental pro-grams such as Responsible Care® or the governmentalvoluntary environmental programs such as Green Light®

or 33/50). These two issues will be assessed in the fol-lowing sections.


3 To assess the extent to which the stage of ISO 14000 certification had a significant impact on the various dimensions of per-formance, one-way Analysis of Variance tests were run. In these tests, the dependent variable consisted of one of the 16 dimen-sions of performance, while the independent variable was the stage of ISO 14000 certification. The independent variable con-sisted of 7 levels. For each of the 16 ANOVAs, the stage of ISO 14000 certification was found to have a statistically significantimpact on performance. In assessing significance, an a=0.05 level was used.

based. Finally, both ISO 9000 and QS 9000 requireexternal auditing and assessment before certifica-tion can be conferred. These traits are very much inevidence in the ISO 14000 certification process. Inaddition, it has been argued that past experiencewith these two quality-based certification processespositively prepares a firm to plan for and attain ISO14000 certification. As a result, two variables,Status of ISO 9000 certification (ISO9000) andStatus of QS 9000 certification (QS9000) areincluded in the model as independent variables.Like the status of ISO 14000 certification, the mea-sures in each of these variables are drawn from aseven-point scale, where 1 denotes “NotApplicable,” and 7 denotes “SuccessfullyImplemented.” The initial expectation is that ISO14000 status should be positively influenced by thestatus of the plant in terms of either ISO 9000 orQS 9000 certification.

• Past Experience with Total Quality Management:The press has stated that environmentally consciousmanufacturing is no less than an extension of TotalQuality Management. The transition between thesetwo approaches is made by broadening the defini-tion of Quality and Waste to include environmentalproblems and pollution. In addition, many of thesame tools used by TQM systems are used in ECMsystems. As a result, a variable, TQM, representingthe status of TQM implementation, is included.This variable uses the same seven-point scale asdescribed for the preceding variables, ISO9000 andQS9000. The initial expectation is that TQM shouldsignificant affect ISO 14000 certification status.

• Current Status of Cross-Functional Programs:Ultimately, to be certified on the ISO 14000 stan-dards, the plant’s personnel must be able to worktogether. Many of the problems uncovered duringthe process of attaining ISO 14000 certification can-not be addressed by one function area or groupworking in isolation. As a result, it is expected thatsuccess in implementing cross-functional programsshould have a significant influence on the plant’sprogress and status in attaining ISO 14000 certifica-tion. To this end, a variable representing the extentto which the plant had successfully implementedcross-functional programs was included. This vari-able used the same seven-point scale as the preced-ing three variables.

• Full-time Employee Equivalents: This variable,which reports the number of employees in terms offull-time equivalents, is a proxy for corporate size.It is included because some researchers have argued

that ISO 14000 certification is primarily pursued bylarger firms. That is, the larger the firm, the morelikely it is to attempt and to achieve ISO 14000 cer-tification. This variable is reported using integervalues.

• End Sales: This variable captures the percentage oftotal sales made by the plant that go directly to theend consumer, as compared to another industrialcustomer. It has been argued that the more a plantor firm sells directly to the end consumer, thegreater the probability of it being interested inattaining ISO 14000 certification. The reason is thatend consumers are more interested in the environ-mental activities of the supplier. Achieving ISO14000 certification for such firms offers a methodof differentiating their products and their corporateimage from that of their competitors.

• Public/Foreign/Private/Joint: These four variablesdescribe the status of the plant or the firm. For eachvariable, a 0/1 rating is used. In this rating, 0 isassigned if the condition is not true; 1 otherwise.For example, a plant that is a joint venture wouldreceive a value of 1 for Joint.

• Exports/Exports to the European Union: Thesetwo variables measure different aspects of exportsales. The first variable captures the percentage oftotal sales made by the plant/firm that consist ofexports. The second variable measures the percent-age of total sales made by the plant/firm that con-sists of exports destined to the European Union.Both variables are based on the view that ISO14000 certification is most desirable internationallyoverall, and in the European Union, specifically. Asthe percentage of sales going to exports increase,the firm is increasingly likely to seek ISO 14000certification. Such certification is seen as a vehiclefor responding to the “stricter” environmentalrequirements found in foreign markets and as amarketing means of appealing to the demands ofthe “foreign” consumer.

These variables were used to develop an ordinal logisticregression model.5 The results of this model are summa-rized in Table 3-12. Given our interest primarily in maineffects, it was decided to evaluate the results of theanalysis only in term so the main effects; interactionswere ignored. As we can see from the results found inthis table, only six of the 12 independent variables werefound to have a statistically significant impact on theISO 14000 certification status of the firm/plant.These results are interesting for several reasons. First,they do provide support for the critical role played by


5 An ordinal logistic regression is a statistical procedure similar to an ordinal linear regression, with one major difference: in aregular regression, the dependent variable is continuous, while in an ordinal logistic regression, the dependent variable is cate-gorical or ordinal.

firm size (as represented by FTE). In addition, they pro-vide support for the relationship between ISO 9000 cer-tification, QS 9000 certification, TQM implementation,and cross-functional programs, on one hand, and theprogress of the plant/firm in achieving ISO 14000 certi-fication. It can be argued that these various programsact to pre-condition the firm and its systems to theintroduction, acceptance, and progress on ISO 14000.

The only unexpected finding involved the role of for-eign ownership. The results argue that a firm/plant thatis foreign owned is more likely to be either interested inor actively pursuing ISO 14000 certification. It could beargued that ISO 14000 acts to level the environmentalrequirements present in the home market and present inthe American market. This premise needs to be evalu-ated in future studies.

Obstacles to ISO 14000 Certification

The next question examined within this study focusedon the issue of identifying those factors that could act asan obstacle to ISO 14000 certification. Attention wasfocused on the various potential sources of uncertainty.Uncertainty was flagged on the assumption that thehigher the uncertainty, the less likely a firm or plant wasto pursue ISO 14000 certification.

In the study, 11 potential sources of uncertainty wereidentified:

• Uncertainty due to potential changes in environ-mental regulations at the federal level.

• Uncertainty due to potential changes in environ-mental regulations at the state/provincial level.

• Uncertainty due to potential changes in environ-mental regulations at the local/community level.

• Uncertainty due to potential changes in environ-mental regulations at the international level.

• Uncertainty due to potential changes in the stan-dards and procedures underlying ISO 14000.

• Uncertainty due to the costs associated with obtain-ing ISO 14000 certification.

• Uncertainty due to benefits resulting from ISO14000 certification.

• Uncertainty due to changes needed to current envi-ronmental management system to accommodateISO 14000 certification.

• Uncertainty due to the reaction of major suppliersto ISO 14000 certification.

• Uncertainty due to the reaction of major investorsto ISO 14000 certification.

• Uncertainty over the extent to which public disclo-sure of environmental infractions will be required.

For all 11 dimensions, an 11-point scale was used insoliciting responses. This scale was anchored at 0, whichrepresented “Highly Uncertain” at one end, and at 10,representing “Well Known” at the other end of the scale.

The first step in understanding the role of uncertainty isto describe it in statistical terms. This was done by gen-erating the mean levels of perceived uncertainty for eachof the 11 dimensions. These results are presented inTable 3-13. As is evident from this table, the level ofuncertainty is very high on all of the 11 dimensions,with the average level of uncertainty being 3.13 (rela-tively higher). The reported uncertainty was highest forinvestors’ reaction (remember, with this scale, the lowerthe reported value, the higher the level of perceiveduncertainty) with a mean value of 2.66 and lowest forchanges in local laws with a mean of 3.54.


Table 3-12Factors Affecting the Status of the ISO 14000 Certification Process

Source Number of StatisticallyLevels Significant?

Full-time employee equivalents 1 YesForeign ownership 1 YesPast experience with QS 9000 6 YesPast experience with ISO 9000 6 YesPast experience with Total Quality Management 6 YesCurrent Status of Cross-Functional Programs 6 YesEnd Sales 1 NoPublic Ownership 1 NoPrivate Ownership 1 NoJoint Venture 1 NoExports 1 NoExports to the European Union 1 No

These 11 sources of uncertainty do not describe 11 sep-arate distinct areas. These sources can be broken downinto two distinct factors (as summarized in Table 3-14).The first set consisted of sources primarily related to thegovernment and its action. In contrast, the second setfocused on issues pertaining to the implementation andattainment of ISO 14000 certification. The factors fallinginto the second set represent ones that organizationssuch as NAPM, NIST (National Institute of Standardsand Technology), and APICS (American Production andInventory Control Society) can influence through theireducational and media efforts.

These results, while interesting, do not help us addressthe critical question of whether or not these sources ofuncertainty significantly affect a plant’s progress inachieving ISO 14000 certification. To address this ques-tion, an ordinal logistic regression, similar to the onepresented in Table 3-12, was formulated where thedependent variable was again the progress in ISO 14000certification. The 11 different dimensions of uncertaintywere the independent variables. The results for thisanalysis are summarized in Table 3-15.

The results contained in Table 3-15 indicate that theprogress in attaining ISO 14000 certification is signifi-cantly affected by five types of uncertainty. Two of thesefive sources are governmentally related. One of thesedimensions, federal regulations, can be viewed asreflecting the potential impact of such governmentalagencies as the EPA. The remaining three factors areareas where additional information could be very help-ful in reducing the uncertainty (and thus encouragingmore interest in the ISO 14000 certification process).

Of potential interest are the three sources of uncertainty(impact on suppliers, investors’ reactions, and potentialdisclosures). These have no significant impact on theprogress on ISO 14000 certification. These results pointto a situation where the ISO 14000 certification decisionis primarily internal in focus. This decision is made forinternal reasons; how this decision affects other stake-holders is not really considered.

Comparing ISO 14000 and Voluntary EMS Programs

As previously discussed in Chapter Two, ISO 14000 isonly one of the various programs and approaches avail-able to a manager interested in enhancing the environ-mental performance of the plant. Other programsinclude industry-specific voluntary programs. The bestexample of this type of program is Responsible Care®in the chemical industry. This program was initiallyspearheaded by Dow Chemical. This program hasattracted a great deal of attention because it showed tomany outside the industry (including those in the gov-ernment) that it was possible for industry to developand implement pollution prevention and managementprograms that are extremely effective and cost efficient.Another alternative available to the manager is to partic-ipate in one of the voluntary pollution prevention andmanagement programs initiated by government. Onesuch program is the 33/50 program developed by theEPA (these programs were discussed in greater detail inChapter 2 of this report).

There are several important differences between theseapproaches. The ISO 14000 certification approach is


Table 3-13Major Sources of Uncertainty Regarding ISO 14000

Uncertainty Due to: Mean Level No. Respondents

Local Regulations 3.54 1,343Potential Changes in ISO 14000 Standards 3.51 1,340State/Provincial Regulations 3.49 1,344Federal Regulations 3.33 1,343Costs of Certification 3.15 1,341Changes on Current Environmental Management System 3.14 1,344International Regulations 3.11 1,337Benefits of ISO 14000 Certification 2.88 1,349Potential Disclosure 2.88 1,345Impact on Suppliers 2.74 1,348Investors’ Reaction 2.66 1,344Average Level of Uncertainty 3.13

6 This analysis was carried out using the Factor Analysis feature of SPSS for Windows V8.0 (with varimax, non-orthogonalrotation).

more process oriented. It requires that the participantsidentify and manage the various critical processes asso-ciated with environmental performance and targeted bythis certification process. In addition, it requires that theenvironmental management system be audited and eval-uated by a third party (typically an outside auditor orcertification group). This means that the plant mustprove it has met or exceeded all of the requirements setdown by ISO 14000 certification process. In contrast,the voluntary programs, while interested in the sameoutcomes (e.g., reduced pollution), are voluntary innature. In addition, they are more interested in the out-comes (reduced pollution and waste), rather than theprocesses. Finally, they do not require outside certifica-tion. Effectiveness is assessed in terms of the data pro-vided by the participating firms.

One method of comparing the effectiveness andefficiency of these three competing approaches is tocompare the impact of environmental activities on thevarious aspects of corporation and systems for thosefirms that have or are implementing these threeapproaches. That is, for each of the three approaches,only those firms that are currently implementing or thathave completed the approaches are selected (i.e., wherethe values for status of “Participation in IndustrialVoluntary Environmental Programs,” “Participation inVoluntary EPA Programs,” and “ISO 14000” are either 6(currently implementing) or 7 (successfully imple-mented). The results are summarized in Table 3-16.

As can be seen from the above data, of the threeapproaches, ISO 14000 certification is far more effective.


Uncertainty Due to the Government

• Uncertainty due to potential changes in environ-mental regulations at the federal level.

• Uncertainty due to potential changes in environ-mental regulations at the state/provincial level.

• Uncertainty due to potential changes in environ-mental regulations at the local/community level.

• Uncertainty due to potential changes in environ-mental regulations at the international level.

Uncertainty Due to Implementation Concerns

• Uncertainty due to potential changes in the stan-dards and procedures underlying ISO 14000.

• Uncertainty due to the costs associated with obtain-ing ISO 14000 certification.

• Uncertainty due to benefits resulting from ISO14000 certification.

• Uncertainty due to changes needed to current envi-ronmental management system to accommodateISO 14000 certification.

• Uncertainty due to the reaction of major suppliersto ISO 14000 certification.

• Uncertainty due to the reaction of major investorsto ISO 14000 certification.

• Uncertainty over the extent to which public disclo-sure of environmental infractions will be required.

Table 3-14Factors Underlying the Dimensions of Uncertainty

Table 3-15Uncertainty Factors Affecting the Status of the ISO 14000 Certification Process

Source Number of StatisticallyLevels Significant?

Federal Regulations 10 YesPotential Changes in ISO 14000 Standards 10 YesCosts of Certification 10 YesBenefits of ISO 14000 Certification 10 YesChanges on Current Environmental Management System 10 YesState/Provincial Regulations 10 NoLocal Regulations 10 NoInternational Regulations 10 NoImpact on Suppliers 10 NoInvestors’ Reaction 10 NoPotential Disclosure 10 No

In every case and for every dimension of performance,the mean responses for ISO 14000 are higher than thosereported for the other two approaches. The differencesbetween the two voluntary program approaches are notthat great. What these results point to is that plantsactively pursuing ISO 14000 certification seem to dobetter on the various dimensions of performance. Thereason for this improved performance is to bedetermined. However, as pointed out previously, twopossible explanations can be identified. The first is that

ISO 14000 is process oriented, rather than output based.As a result, when pursuing this form of certification,firms are more likely to change the underlyingprocesses. These changes result in more efficientprocesses, less waste, and less pollution. An alternativeexplanation lies in the requirements found in ISO 14000for outside certification. Plants pursuing this form ofcertification must demonstrate to a third party that theyhave met the various requirements of ISO 14000. As aresult, these plants are more likely to take this approach


7 The first value is the mean response value, while the second is the number of respondents for which this mean is based.

Table 3-16Comparison of the Impact of Various Approaches on the Impact of Environmental

Management Systems and Corporate Performance(Mean Values Reported)

Environmental management systems with your plant have: Industrial Voluntary ISO 14000Voluntary EPA

Environmental ProgramsPrograms

Not adversely affected the position of your company in the 7.37 7.34 7.86marketplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (447) (378) (116)

Not compromised the product’s acceptability from the 7.28 7.31 7.74customer’s perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (446) (376) (116)

Helped enhance the reputation of your company . . . . . . . . . . 6.52 6.53 7.60(448) (380) (117)

Caused your company to investigate alternative technologies 6.92 6.83 7.06and procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (446) (377) (116)

Significantly reduced waste within the production process . . . 6.01 5.89 6.87(446) (378) (116)

Improved its chances of successfully selling its products 4.86 4.86 6.40in international markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (442) (373) (114)

Had benefits that have definitely outweighed any costs 5.42 5.43 5.97incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (443) (377) (116)

Placed reasonable demands on the information system and 5.36 5.37 5.73on data requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (444) (377) (116)

Significantly reduced waste within the equipment 5.09 5.12 5.51selection process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (442) (374) (116)

Significantly improved its position in the marketplace . . . . . . 4.74 4.75 5.46(444) (377) (116)

Helped your company design/develop better products. . . . . . . 4.84 4.76 5.38(448) (379) (116)

Significantly reduced overall costs . . . . . . . . . . . . . . . . . . . . . . 4.33 4.24 5.05(446)7 (378) (116)

Significantly improved product quality . . . . . . . . . . . . . . . . . . 4.38 4.21 4.58(447) (378) (116)

Significantly reduced lead times . . . . . . . . . . . . . . . . . . . . . . . . 3.52 3.43 3.94(446) (378) (116)

“more seriously.” The current data cannot be used todetermine the reasons for this improved level of perfor-mance. The real reasons can be found in one or both ofthese factors. However, it is difficult to overlook themajor finding — pursuing ISO 14000 is more effectiverather than pursuing the voluntary options.

Concluding Comments

With a sample of 1,510 respondents, this study wasfaced with an “embarrassment of riches.” That is, theresearchers were presented with a great deal of informa-tion. This report represents an attempt to identify thecritical findings from this large database. In reviewingthis chapter and its findings, the following major pointswere flagged as important:

• The respondents in this study came from a varietyof industries and were in a variety of managerialpositions. They also had familiarity with their posi-tion, being in the current position for an average of5.4 years. They also had been involved in a widerange of corporate initiatives, including ContinuousImprovement, new Product Launches and Re-engi-neering.

• The plants represented in this study have workedwith numerous initiatives. The initiative most fre-quently pursued was that of ISO 9000/QS 9000 cer-tification; the initiative least often pursued was thatof implementing an environmental managementsystem.

• Environmental management systems are essentiallymulti-dimensional and complex entities. Theyembody data collection, reporting, performancemeasurement, and tools. They can affect corporatereputation; they can influence product and processdesign and the manner in which problems are iden-tified and resolved. At present, most environmentalmanagement systems are implemented using a sep-arate, formal department. They also tend to focuson tactical and operational problems. Their stanceis primarily reactive. That is, in most firms, thesesystems come into play once a problem hasoccurred. They are also driven by environmentalregulations. Finally, they are internally oriented,with relatively little attention being devoted to envi-ronmental problems within the supply chain.

• Enhanced environmental management can beattained through a variety of actions. The respon-dents regularly considered most of these options.

• Overall, environmental management systems arenot seen in a positive light. In general, these sys-tems are seen has having a strong negative impacton the major strategic dimensions of performance(i.e., lead time, costs, and quality) and not

enhancing the firm’s competitive position in themarketplace. They are also not seen as improvingthe firm’s ability to sell its products internationally.These results are influenced by the progress of theplant in attaining ISO 14000 certification.

• The ISO 14000 certification program is relativelynew. As a result, there are relatively few plants thathave attained this certification. Out of the 1,510respondents, only 37 (2.5%) have attained this levelof certification. This number is low relative to otherenvironmental programs, such as IndustrialVoluntary Environmental programs (where 284respondents noted that they successfully imple-mented these programs) and Voluntary EPA pro-grams (where 253 respondents noted successfulimplementation).

• Successful attainment of ISO 14000 does have alarge, positive impact on the perceived efficiencyand effectiveness of the environmental managementsystem. Except for lead times, which are slightlynegatively affected, ISO 14000 greatly improvesevery dimension of performance. This findingpoints to a situation where those firms that haveattained this level of certification are not only moreenvironmentally responsible, but also more efficient(and potentially better suppliers).

• The progress of a plant in attaining ISO 14000 cer-tification is influenced by several factors. It isaffected by size (the larger the firm, the moreprogress it is likely to have made), nature of owner-ship (foreign-owned firms are more likely to pursueand attain ISO 14000 certification), past successwith QS 9000 and ISO 9000 certification, past suc-cess with the implementation of TQM systems, anddegree to which cross-functional programs andteams are used.

• Progress in attaining ISO 14000 certification is alsoinfluenced by uncertainty concerning federal regu-lations, changes in ISO 14000 standards, the costsof certification, the benefits of certification, and theimpact of the ISO 14000 standards on current envi-ronmental management systems.

• Compared with other voluntary based programsaimed at improving environmental performance,the evidence indicates that the ISO 14000 certifica-tion process is more effective and efficient whenviewed in terms of its impact on performance.

In short, the data seems to indicate that, with ISO14000 certification, plants can be both clean (moreenvironmentally responsible) and green (more efficient).These are important findings for the purchasing man-ager. These findings are explored in greater detail inChapter 6 of this report.


Introduction

The role of this chapter is to enhance quantitative find-ings obtained from a large-scale survey through adding“thick” description of events, motivations, and valuesbehind the ISO 14000 decisions that were somewhatsimplistically summarized as numbers in the survey.Using qualitative case studies (in addition to a quantita-tive survey) serves the purposes of a data triangulation(through adding a different data source) and a method-ological triangulation (through relying on both qualita-tive and quantitative methods). The combination ofqualitative and quantitative methods in a mixedmethodology is a new development in the field of oper-ations management, and this report is probably one thefirst ones using this approach.

We selected eight companies representing differentstages of the ISO 14000 development process. Table 4-1summarizes the status of the ISO 14000 developmentand the names of the firms we visited.

In addition to representing different stages of ISO 14000development, the selection of the firms was based onindustrial affiliation (these firms represented a variety of

industries: pharmaceutical, furniture, and automotivetier-one and tier-two suppliers), geographic proximity,level of contact, and the firm’s response to the large-scale survey.

The purpose of the field visits was to identify the moti-vations for ISO 14000 adoption at different stages ofimplementation by a variety of firms. Additionally, thisresearch wanted to substantiate the findings from thelarge-scale survey. The research questions we wanted toexplore going into the field research included

• What are the driving forces of ISO 14000implementation?

• What are the benefits of certification?• How can we better understand the ISO 14000

decision-making process?

In most cases, environmental and operations managerswere contacted at the divisional level. An initial idea ofthe level of EMS understanding and implementationwas determined through preliminary screening over thetelephone. Next, site visits and follow-up phone callswere used to collect data on the eight companiesreported within this chapter.

Chapter 4Understanding the ISO 14000

Decision in Detail: Case Studies


Table 4-1Categorization of Firms by ISO 14000 Implementation Status

Status of ISO 14000 Development Firms VisitedNot Being Considered Firm A: Automotive Casting Facility

Firm B: Metal Fastener ManufacturerAssessing Suitability Firm C: Office Furniture Manufacturer

Firm D: Pharmaceutical CompanyPlanning to Implement Firm E: Automotive Glass AssemblyCurrently Implementing Firm F: Breaking Systems Manufacturer

Firm G: Automotive GlassSuccessfully Implemented Firm H: Engine Parts Manufacturer

After the initial screening, which also assessed the will-ingness of the company to participate in the study, sitevisits were arranged. The interviews were conductedwith managers responsible for the EMS strategy at eachsite using the structured interview protocols presentedin Appendix B. The list below shows the title of themanager we interviewed at each company and the num-ber of years they have spent in this position:

• Firm A: Environmental Engineer (7 years);• Firm B: Operations Manager (4 years);• Firm C: Corporate Environmental Manager (6

years);• Firm D: Manager “Leader” Environment and Safety

(16 years);• Firm E: Manager of Technical Services “Quality and

Environmental” (13 years);• Firm F: Manager, Health, Safety, & Environmental

Quality (1 year);• Firm G: Corporate Manager of Safety and

Environmental Strategies (26 years) and theOperations Management Manager for the nearestfacility (2 years);

• Firm H: Manager of Environmental Systems (5years; 25 years in environmental management).

ISO 14000 Status: Not Being Considered

Firm AWill Not Pursue Certification Unless It Is Mandated byCustomersThis privately owned firm employs 250 people withonly three people in the environmental division. Thisfirm does not export its product and, therefore, does notconduct business in Europe. This firm produces smallto medium castings ranging from 50 to 60 pounds ofgray iron castings for automotive, refrigeration, andhydraulics markets. The major competitive thrustsinvolve labor and raw materials. The key success factorstypically involve quality and delivery.

What type of environmental system is in place? Thisfirm has a very informal system. This manager is con-sulted on a regular basis concerning environmentalissues. These issues typically involve the planning stagesfor new processes and capital budgeting. This manager’sunderstanding of ISO 14000 is general in nature.Exposure to information regarding ISO 14000 is occa-sional. This manager has reviewed the ISO 14000 seriesof standards and clauses.

Firm A has just completed ISO 9000 and does not wantISO 14000. They will not go for certification voluntarilybut will do it if the automotive industry says they haveto. This decision on ISO 14000 was arrived at through

taking into consideration their available resources. Thedecision makers are the CEO, VPs, and owners.

What factors influenced this decision? Availableresources, costs, and benefits.

Under what conditions would management changethis decision? Only if the automotive industry dictatesthat supplier must have it. Firm A just went throughISO 9000 certification. Overall, ISO 9000 is perceived asa good thing, and the process of certification was con-sidered to be good. The manager interviewed wonders“what’s next?”

What are the benefits you can see being generated bythis form of certification? Improved company image.

Costs: For this facility, it would cost about $20,000.

Risks: Heightened public awareness (both good andbad). This facility has had problems in the past andappears to still have some environmental issues.

How do you measure performance in your depart-ment/area? Within the environmental department, theyare measured by the number of complaints (public,state, and federal). The lack of complaints is a betterway to look at it. Other departments are not directlyaffected. There are some indirect effects when it comesto product substitution. While they do not formally pro-mote this approach, new products are looked at toassess feasibility. While they are assessing new productand process ideas, environmental issues may come intoplay, but no one outside the environmental departmenthas environmental performance measures.

Summary• This firm cannot see any real benefits coming from

ISO 14000 and will wait until it is mandated beforegoing ahead with certification. Much the same asthe results from Chapter 3, this category of firmstends to not have a deep understanding of ISO14000 and does not see any real benefits comingfrom certification.

• Largest factors affecting ISO certification involvethe availability of resources. The size of the firmdetermines the resources available, and Firm Aseems to have few resources available for anothercertification process. These resources are moreimportant to everyday operations and solving short-term problems.

• Exposure and knowledge of ISO 14000 is limited,and benefits are only perceived as improved com-pany image. It appears this firm has some historicalpollution image problems and thus the focus onimage.


• Environmental issues seem to be limited to newprocess design and engineering.

• Within the environmental department performanceinvolves reactive measures such as the number ofenvironmental complaints (public, state, and fed-eral). No one outside the environmental depart-ment has environmental performance measures.

• They are taking the “wait and see” approach to cer-tification but will do it if the automotive industrysays they have to.

Firm BWill Not Pursue Certification Unless It Is Mandated byCustomers

This UAW firm employs 145 people. There is no envi-ronmental staff. Firm B is publicly traded and exportsabout 12 percent of its products, with very little (lessthan 1 percent) going to Europe and less than 1 per-cent of sales going to the parts market. This facilityproduces metal fasteners and specialty automotiveparts. The target market is automotive, industrial, farmimplements, and power products. This company is aTier I and II supplier to the automotive industry. Theprimary competitive pressures in this industry areprice and international competition in the form ofimports.

Key success factors involve their ability to produce com-plicated parts that are not readily manufactured withoutexpertise. Firm B also has the ability to do secondaryoperations on primary parts.

This firm does not have an environmental system. The“system” in place is that of a ground water run-off pro-cedures, EPA and OSHA labeling and MSDS sheet avail-ability, dikes near petroleum products, and annual per-mits. While these examples of documentation and pro-cedures are attributes of a system, there is no formalsystem in place.

The staffing of the IS consists of a clerical person whohandles the IS components and acts as acoordinator/organizer for anything that can be seen asenvironmental. Contracting has a person specificallyresponsible for State and Federal permits.

What is your understanding of ISO 14000 at thistime? Firm B appears to have very little knowledge ofISO 14000. The respondent thinks it is much like QS9000 where “you say what you want to do and thenhave to do what you say.” This facility has next to noth-ing that can be considered an environmental problem.This facility does not pollute, burn anything, and is notchemically intensive in its operations. Theyreclaim/recycle all air, 100 percent of their oil (which is

disposed of at the end of the oil’s useful life cycle), andwater. Therefore, they do not see the need for a formalEMS.

If ISO 14000 becomes mandated by the Big Three(where they receive 95% of sales), they will then do it.According to this manager, the Big Three seem to betalking about ISO 14000; and, in past years, the impor-tance of environmental impact in general. No mandatehas been issued, therefore, they will not be looking intoor doing ISO 14000 certification.

How was this decision arrived at? Unless it’s mandated,there is no decision to make.

What factors influenced this decision? The customer(the Big Three) is the largest factor influencing ISO14000. MRC is taking the “wait and see” approach. Thisfacility is QS 9000 and Q1 certified. The manager inter-viewed asks “what’s next?” If the automotive industryrequires this, then this firm will go ahead and get certi-fied. Usually suppliers are given one to two years tocomply with the mandate. This manager feels the facil-ity is not an environmental problem and certificationcould be done within a year. It’s just a matter of goingthrough the audit process.

What are the benefits you can see being generated bythis form of certification? Doesn’t know of any benefits.The facility is already in compliance; they see them-selves as a good corporate citizen anyhow. The onlybenefit would be to meet the minimum requirements todo business if mandated by the automotive industry.

Costs: Audits. This consists of personnel and time toreview processes and documents.

Risks: Firm B sees itself as good enough already andrealizes the importance of the environment. Pollution isan expensive form of mismanagement that they feel isalready under control.

How do you measure performance in your depart-ment/area? Productivity: efficiency and piece per man-hour, scrap, and uptime versus available time. Firm Bdoes not track outbound wastes. They recycle the steelscrap. Outside of the scrap, this firm only has onedumpster that is taken to a landfill periodically. Thiscould be easily captured with the existing system if theyneeded to.

Summary• This firm has no real need for ISO 14000. Again,

we see that this category of firms tends to not havea deep understanding of ISO 14000 and does notsee any real benefits coming from certification.


• No mandate has been issued. Therefore, they willnot be looking into or doing ISO 14000 certifica-tion. This firm is taking the “wait and see”approach.

• The only benefit would be to meet the minimumrequirements to do business if mandated by theautomotive industry. This view of the benefits asso-ciated with ISO 14000 certification is again consis-tent with the survey results in that those firms thathave not even considered certification or assess-ment of ISO 14000 see very few benefits comingfrom the standard.

• Certification is seen as a small issue and pretty easyto obtain. They will have a couple years to do itonce certification is mandated.

• Most of the ISO 14000 stuff is perceived as anOSHA and EPA compliance issue.

• The handling of hazardous materials is somethingthey want to avoid at all costs. It is important tohave a safe and clean working environment. Theyare not sure if ISO 14000 will make the work envi-ronment any safer than it already is.

• Pollution is an expensive form of mismanagementthat they feel is already under control.

ISO 14000 Status: Assessing Suitability

Firm CEvaluating ISO 14000 Certification

This firm employs 2,500 people locally and 7,500 glob-ally. Firm C is a publicly traded company known forenvironmental awards and practices within the officefurniture industry. This firm is a manufacturer of officefurniture.

The major competitive thrusts in the office furnitureindustry are designing of new products and product dif-ferentiation. Threats to this industry involve the econ-omy. Typically, there is a five-to six-month lag in whichthere is a decrease in the amount of new buildings andoffices being built and thus a lag in demand for officefurniture. The key success factor for this firm involvesbeing a leader in design.

What type of environmental system is in place? Theenvironmental system is made of the professionals andtheir given responsibilities. At the top level, Firm C hasa corporate steering committee that sets policy. Next,teams implement the projects and policy.Communication within the network of professionals isfacilitated through the use of Lotus Notes.

Firm C is currently evaluating ISO 14000. Based on pasthistory, they believe the environmental program is

already very strong and that they need to look at wherethe benefits from ISO 14000 certification will comefrom.

How was this decision arrived at? The decision to eval-uate ISO 14000 was made by the central steering com-mittee. This involves the coming together of a group ofpeople from multiple functions.

What factors influenced this decision? Environmentalchampions such as the corporate environmental man-ager influenced the decision to implement ISO 14000.This manager is the person responsible for bringing thisissue to the committee. First, they need to assess thecosts versus the benefits. This firm already has a strongand well-established environmental model and systemthat is different from the requirements for ISO 14000.The evaluation of the current situation may uncoverreasons to change current practices. At this time, thecommittee has commissioned a study of ISO 14000.

Under what conditions would management changethis decision? The steering committee can make achange in the decision regarding certification. This com-mittee has a large amount of power within the company.This committee was commissioned by the board ofdirectors.

What are the benefits you can see being generated bythis form of certification? Marketing of their certifica-tion. Their system “process” is already good. It is aloose-knit system that does not have strict documenta-tion. If they decide to get certified for ISO 14000, it willnot be for compliance reasons. ISO certification shouldadd structure to the existing environmental and manu-facturing systems.

Costs: Training, development of the program, andauditing: “If they decide to get certified it will be anexternal certification.”

Risks: Someone else in the industry doing it and FirmC’s becoming the follower.

How do you measure performance in your depart-ment/area? They have about four “output” measures.They track “total wastes” in the form of recycling,amount sent to their energy center to generate steamand energy, landfill, and amount of sawdust sent toConsumers Energy Company to generate energy for thelocal community. At the end of October 1998, thenumber of measures is expected to double to eight ornine.

Hurdle rates for investing in projects are lower for envi-ronmental initiatives. Economic Value Added (EVA) is


often used to evaluate projects and report results of pro-jects. It was noted that there are no EVA projects that donot impact the environment.

Lessons Learned• In the last 5 years, Firm C has received seven or

eight environmental awards. So why go for ISO14000 if they are already doing so well? The execu-tive interviewed at this firm claims that they willnot seek ISO 14000 certification at this time. Theyare already ISO 14000 compliant, but they will notpursue certification because it is costly and theircustomers are not demanding it. This view is takenbecause the program itself is already considered tobe very good.

• The environmental system is made of the individualprofessionals.

• If they decide to get certified for ISO 14000, it willnot be for compliance reasons. Instead, certificationwill be based on performance improvement. TheISO certification and standards may help with doc-umentation and follow-up of projects. Here we seea better understanding of the potential benefits ofthe current EMS and the need for a cost- benefitapproach to certification.

• As we now start getting closer to ISO certificationand a better understanding of EMS in general, thegreater the impact this system has on firmperformance.

• At the time of the interview, Firm C was conduct-ing a gap analysis to determine what part of theirprocesses can be improved. ISO certification shouldadd structure to the existing environmental andmanufacturing systems if they are going to considerintegrating it into the existing system.

• An important perceived benefit of ISO 14000 is themarketing of their certification. The only perceivedrisk is the chance that someone else in the industryis already doing it. It is here that we see ISO certifi-cation transitioning from reactive to proactive innature.

• Hurdle rates for investing in projects are lower forenvironmental initiatives.

• Eco metrics is in its infancy: Economic Value Addedcould be used to develop a good Eco measure.

• One major reason for the success of firm C is thepresence of visible top management support. Therehas always been a CEO commitment to theenvironment.

Firm DThis pharmaceutical firm is publicly traded and employs6,000 people locally. Its products are sold in the EuropeanUnion and internationally. Primary products includehuman pharmaceutical, sterile product injectables, dryproducts, tablets, anti-cancer, and prostate drugs. The

target market for this firm’s products is humanpharmaceutical; basic business areas include oncology(cancer), infectious disease, anti-cancer, and diabetes.

The most important competitive thrust in this industryis the company with the first drug to market wins. Ingeneral, they compete in “trying to finding a cure tohelp advance the quality of life.” Other thrusts includeinnovation and quality. Pricing is fixed and, therefore,not a factor. Speed is a complex issue when the time tomarket takes 10 years and $15 million. Therefore, prod-uct development and reduction of cycle times becomeincreasingly important. The key success factors includeinnovation, but they believe they are getting better at allof the thrusts.

What type of environmental system is in place?Environmental Safety and Management System (ESMS).The respondent claims that “too many people separateenvironment and safety.” This firm wanted the system tocover safety, too. Their goal is to have a consistentapproach, standards, and focus efforts toward continu-ous improvement. They want to collect data for bench-marking and incremental improvement. All sites havebeen asked to implement this system; no deadline is inplace (they are starting to work on it). All sites are ISO-9000 certified; all sites will have the autonomy to go forISO 14000 certification if they deem it necessary. Thisfirm has 40 facilities worldwide; each of these facilitieswill adopt the ESMS in time.

This manager seemed to have a general understandingof ISO 14000 at the time of the interview. There is hopethat ESMS will lead naturally to ISO 14000 certificationwithin this firm. The decision to pursue ISO 14000 cer-tification will be left to each facility. This firm’s positionon ISO 14000 is that ISO 9000 is considered good forbusiness, but ISO 14000 has not captured as muchinterest.

How was this decision arrived at? With a recentmerger, there came a need to get all of the top environ-mental people together. There was a meeting of theEnvironment & Safety Council Meeting (managers fromseveral countries attended). There was a need for con-sistency and a framework they could all use. The ESMSidea came from this meeting.

What factors influenced this decision? Corporateculture of environmental responsibility and a strongcommitment to the environment are major factors inenvironmental initiatives, as well as the need for aconsistency and a standard of performance. Local facilityautonomy, (a profit center) cannot be told how to allocatetheir resources since each facility is evaluated differently.A top-level strategy for developing the new system is


easier for employees to swallow than a very detailedapproach.

Under what conditions would management changethis decision? If countries you operate in say you haveto meet certain standards. Additionally, image is a bigconcern; this firm wants to be seen as a good company.

What are the benefits you can see being generated bythis form of certification? Most important: we betterprotect the environment for future generations (sustain-able development). Improved image, preventing envi-ronmental liabilities, saving money/improve cost struc-ture, and source reduction.

Costs: Setting up the system (establishing committees,assessment, documentation). There should be no capitalinvestment needed at the larger plant level. The smallerplants may have cost considerations. The FDA can be ahuge hurdle. If firm D tries to make a manufacturingprocess of an existing drug more efficient, it may take 18to 24 months for the permitting process to be completed.

Risks: Do not see any risks, just costs.

How do you measure performance in your depart-ment/area? This is the second year for their annualEnvironmental Report. This report and the environmen-tal efforts of the firm have the endorsement of the CEO.This report also states that the ESMS will be the conduitfor the tracking and reporting of the performance mea-sures. They mostly try to look at end points or outputmeasures (e.g., total waste, energy consumption, VOClevels, hazardous materials, non-hazardous materials,water, air emissions beyond SARA reportables, and acci-dent rates).

Summary• Most important benefit of environmental efforts is

better protection of the environment for future gen-erations (sustainable development). Improvedimage, prevention of environmental liabilities, sav-ing money, improving cost structure, and sourcereduction are all benefits of certification. Again, aswe move away from firms that are not consideringISO 14000 certification, we see an increase in thetypes of perceived benefits coming fromcertification.

• Firm D has a strong understanding of EMS in gen-eral and sees this system as an opportunity forimproving firm performance.

• This respondent claims that “too many people sepa-rate environment and safety.” This firm wanted thesystem to cover safety, too. Their goal is to have aconsistent approach, standards, and efforts towardcontinuous improvement.

• All sites are ISO 9000 certified; all sites will havethe autonomy to go for ISO 14000 certification ifthey deem it necessary. There is hope that ESMSwill lead naturally to ISO 14000 certification withinthis firm. All sites have been asked to implementthis system; no deadline is in place (they are start-ing to work on it).

• Corporate culture of environmental responsibilityand a strong commitment to the environment aremajor factors in environmental initiatives.

• A facility in Belgium will be the first ISO 14000 cer-tified site. They claim this is due largely to culturalinfluences in Belgium.

• A top-level strategy to developing the new systemseems to be easier for employees to swallow than avery detailed approach.

• Firm D would change its mind and pursue certifica-tion if the countries it operates in say they have tomeet the ISO standards.

• This firm sees no risks to certification, only costs.• Environmental image is important.

ISO 14000 Status: Planning to Implement

Firm EPilot Plant for ISO 14000 Certification for North AmericanOperations

Firm E employs 300 people at this facility and is a Tier Isupplier to the automotive industry. There is one envi-ronmental manager for this facility. This manager is alsoresponsible for quality. This is a publicly traded com-pany owned by a larger company from England. Theparent company is the largest glass company in theworld. They sell to the aftermarket division within theircompany but not to the aftermarket directly. This plantdoes not have any European business, but they do havecustomers in Mexico and Venezuela. Basically, this facil-ity is involved in attaching materials to glass. This facil-ity only does assembly with no cutting, bending, or fab-rication. Their primary product is automotive glass.Their primary customers are GM and Ford, with someof their products going to other automotive OEMs inNorth America. The major competitive thrusts areglobal alignment and increasing sales. They do notunderstand their cost structure very well. The targetmarket consists of more foreign OEM business andmore business with Ford. They are looking at new pro-grams/business with current customers rather than tak-ing business away from competitors.

This facility is QS 9000 certified. The documentationand formalization of their quality system was new. Theydid not have this formalization before. This standard hasdone nothing but raise costs for them. They became cer-


tified because their customers demanded it. The certifi-cation process did not increase throughput, and scrapdowntime has not changed. This manager says it hasjust created a standardized layer of bureaucracy thatthey have to deal with.

Their key success factor is to drive costs down. Theyknow what their direct costs are. They are trying toimprove productivity: more work with less. Theyneeded QS 9001 certification in order to quote newbusiness. The workforce is not represented by aunion, and the company works hard to keep it thatway.

What type of environmental system is in place? TheirEMS uses/mirrors their QS 9000 system. The respon-dent is both the quality and environmental manager.He used his experiences from the QS 9000 certificationprocess to develop their EMS, which resembles QS9000 in structure. This manager performed a gapanalysis that allowed them to determine that this facil-ity is meeting 70 percent of the ISO 14000 require-ments. They are currently lacking the corporate envi-ronmental procedures. These procedures help integrateprocesses.

They are almost ready for ISO 14000 certification atthe plant level. However, they are not ready at the cor-porate level. Their EMS is open to the entire companyand is on-line. Information, procedures, and workinstructions on EMS issues are available to everyonevia computer database, but goals and performanceissues are not available. This database is even accessi-ble from the shop floor via a touch-screen informationsystem.

The direction for ISO 14000 certification came from theparent company in Britain. The group said that all facili-ties had to be certified by 1999. Registration pressurecame from this group, but they were ISO 14000 compli-ant at the plant level before the group stated this direc-tive. At the time of this interview, the plant was 70 per-cent compliant with ISO 14000.

Other sites in North America are only 10 percent com-pliant. Unfortunately, there is not much communicationamong plants. Eventually his plant will dictate anddirect the ISO 14000 certification process for the otherplants since they are the furthest along.

QS 9000 was used as the template for the EMS. This isnot unusual given that this manager is both the qualityand environmental manager at the plant. This is theonly plant this company owns in which the quality andenvironmental manager are one and the same person. Itwas a huge benefit in developing the plant’s EMS and

gearing up for ISO 14000 certification. They will be reg-istered for ISO 14000 by the end of 1998 if the parentoffices in North America will support them.

The environmental manager does not feel their experi-ences with ISO 14000 and QS 9000 would be different ifit were mandated or voluntary. The requirements do notchange if you approach it because you have to orbecause you want to. ISO 14000 is perceived as justanother management system that focuses on environ-mental issues rather than quality issues. This plant hasan environmental policy in place, but it is not ISO14000 compliant because this policy does not say any-thing about the community.

What is your firm’s position on ISO 14000? The U.S.-based plant will set the stage for certification for theother plants in the company. The parent company doeshave five international sites, which are certified.

How was this decision arrived at? Pressure came fromthe parent company in Europe. There is definitely apush by the European office that influences the ISO14000 decision. The parent company’s offices in NorthAmerica have offered some resistance and are notexcited about ISO 14000. QS 9000 met some resistancefrom the parent company in Europe, but the NorthAmerican offices supported it, in contrast to ISO14000.

What factors influenced this decision? They do havean environmental section in their annual report. The“European” way of thinking is to be more environmen-tally conscious. The Europeans are much more focusedon the ISO 14000 standards.

Under what conditions would management changethis decision? The paper trail and audits associated withISO 14000 certification scare American management;the audits might turn something up that shows you areunlawful. The “lawyers handle environmental issues,”and the risk of legal liability seems hard to get awayfrom. They do not have much environmental waste tocontend with because they are mostly an assemblyoperation.

What are the benefits you can see being generated bythis form of certification? The standardization and for-malization has had no impact on the environment andno incremental benefits. However, there may one day bea sales and marketing benefit associated with all this.

Costs: Registration and the certification process itself.

Risks: There are no risks other than the concern withthe paper trail associated with the ISO 14000


certification process. Parent offices in North Americastill have to develop the corporate policies and proce-dures before this plant can get certified.

Performance measures: Quarterly corporate statistics:baseline information such as number of periods, envi-ronmental costs, amount of energy (gas and electric),trash waste, hazardous waste, how much recycled, non-hazardous waste. The manager in this area has to makesure that the quality and ERM goals do not conflict. Hesays in the long-term they do not conflict and supporteach other, but in the short term they might conflictwith one another.

Summary• The “European” way of thinking is to be more envi-

ronmentally conscious. The Europeans are muchmore focused on the ISO 14000 standards. This isalso consistent with the findings in Chapter 3 inthat foreign-owned firms tend to be positivelyrelated to greater levels of ISO 14000 integration.

• The direction for ISO 14000 certification came fromthe parent company in Britain. The group said thatall facilities had to be certified by 1999.

• Eventually this plant will dictate and direct the ISO14000 certification process for the other plantssince it is the furthest along.

• Their EMS uses/mirrors their QS 9000 system. QS9000 was used as the template for the EMS. TheirEMS is open to the entire company and is on-line.Information, procedures, and work instructions onEMS issues are available to everyone via computerdatabase. This database is even accessible from theshop floor via a touch-screen information system.

• The paper trail and audits associated with ISO14000 certification scare American management. Itis feared the audits might turn something up thatshows an environmental violation. There is a men-tality that lawyers handle environmental issues. Therisk of legal liability seems hard to get away from,and this facility is very cost-focused.

• This manager has to make sure that the quality andenvironmental goals do not conflict. He says in thelong term they do not conflict and support eachother, but in the short term they might conflictwith one another.

ISO 14000 Status: Currently Implementing

Firm FPilot Plant for ISO 14000 Certification for North AmericanOperations

Firm F is a privately owned foreign subsidiary in whichthere are approximately 1,300 employees at this UAW

facility. Including the Environmental manager, there areonly four people in the environmental division. Only asmall percentage of sales are exported. Most of theirsales are to OEMs with some after-market sales. This isan EPA Superfund site, and dealing with Superfundregulations is a big project. This facility makes brakingsystems (e.g., calipers, wheel cylinders, etc.). Mostparts are for passenger cars and light-duty trucks. Theymanufacture almost everything in-house. For example,they have a foundry on-site that casts the calipers. It ismore cost effective for them to make it themselves, butthey are contemplating selling the foundry so they canfocus on their core competencies. The parent corpora-tion also makes washers, dryers, and deburring equip-ment. This corporation is managed by a foundation inGermany.

The major competitive thrusts in this industry includeQS 9000. Firm F is trying to design a standardizedbrake across several platforms. They also use several dif-ferent types of coatings on brakes, and they are trying touse only one (a product engineering issue, but there areERM issues as well). They currently plate them off-sitebecause of the environmental implications. They are try-ing to move away from powder coating because it is toolabor intensive.

The key success factors include the need to improveefficiency and quality. A hindrance to this is the fact thatthey are using equipment from the 1940s.

What type of environmental system is in place? Themanager of Health, Safety, & Environmental Quality hasthree ERM staff. This department operates in isolationfrom the rest of the company. The ERM group doeswork with the quality group to learn from their experi-ences with the QS 9000 certification process. This is aSuperfund site, and dealing with Superfund regulationsis a major project. While dealing with Superfund issuesdoes not directly impact current manufacturing, theremay have been rare instances in the past where this wasnot the case. In the past, their EMS was compliance dri-ven and not document driven.

The new system is an extension of the QS 9000 system.At this time, the EMS group is still collecting informa-tion, such as process flow analysis and costs of waste.The group started by reviewing the site’s compliancehistory and looking for current environmental prob-lems. They have used the services of consultants to per-form a gap analysis of their EMS system and processes.They were able to realize from the gap analysis thatthere are many opportunities for improvement. TheirEMS has had no impact on the execution of shop-flooractivities at this time.


This firm appears to have a good understanding of ISO14000. They will be ready for ISO 14000 certification byOctober 1998. Their corporate staff in the U.S. facilitygave this plant the go- ahead to implement the ISO14000 system, and this plant is the pilot site for NorthAmerican Operations. The corporate staff will use thisfacility to determine whether the process is cost effec-tive. The corporate staff does not want the plant to actu-ally follow through with certification because they feelthat there is no reason to (no one is demanding it).Their division wants ISO certification, but the parentcompany offices in North America have told them notto. The corporate office asks why get certified if no onedemands it? However, it would only cost them $500 todo so. The QS 9000 auditors, who certified them, saidthey could also certify them for ISO 14000.

All of the parent company’s European plants were EcoManagement- and Audit Scheme (EMAS)-certified sothey wanted to try something similar in North America.A major goal of the ERM staff is to shift ERM responsi-bility from the ERM staff to others, such as people onthe shop floor. This is one of his major challengesbecause right now all ERM issues fall on his staff.

What factors influenced the EMS decision? The factorsinfluencing the decision to pursue ISO 14000 certificationare the history of the facility (Superfund site) and the Ger-man influence of other facilities having EMAS certification.

Under what conditions would management changethis decision? Management will not formally pursueISO 14000 certification until the customer demands it.They can get certification for less than $1,000 from theirQS 9000 auditor.

What are the benefits you can see being generated bythis form of certification? The major benefits are thatthey started to analyze the process formally and in greatdetail, identifying waste streams and then prioritizingthem. The documentation has helped because theymake decisions objectively rather than on instinct. Thepush for ISO 14000 has come from Germany wheretheir EMSs are formalized and documentation driven,similar to ISO 14000.

In the beginning of the project, there was no economicapproach to the ISO 14000 certification process, but theenvironmental division is seeing economic benefits.Production volumes have been going up, but scrap rateshave been going down. By going through the EMSimplementation process, they have been able to rethinkprocesses.

The formal documentation of the ISO 14000 certifica-tion process has moved them from compliance-driven

approaches to more opportunity-driven approaches. Forthe first time, they can prioritize and objectively evalu-ate waste streams rather than go with instinct, whichcan be inaccurate. They did use QS 9000 experiencesand tools, and it helped. They are starting to look atprocesses differently. They originally had a cross-func-tional team for the ISO 14000 certification process thatwas represented mostly by quality and ERM people, butthat did not work because the quality people lost inter-est. The ERM people learned a lot about documentationand procedures. The ERM group is still building a casefor the increased importance of their function. They cannow show that the EMS group is a benefit and not acost to the organization.

The Department of Environmental Quality (DEQ) inMichigan does not formally endorse ISO 14000, butbeing certified will mean shorter time for permits fromthe DEQ, and they will be given Clean CorporateCitizen (C3) status as a result of certification. Firm Falso claims the DEQ said they would make fewer visitsafter completing ISO 14000 certification. They willcome in once every three years instead of once everyyear. ISO 14000 so far is a good public relations oppor-tunity with the EPA and the community.

Costs: Costs to date have come from the use of consul-tants and a German full-time co-op employee (mostlywork hours and time in general).

Risks: From this manager’s perspective, there were norisks other than implementation failure. He was neverconcerned with the paper trail associated with ISO14000. If anything, it helped him identify opportunitiesfor improvement with priorities assigned objectively.The paper trail is not a concern because the EPA andOSHA are there all the time as it is. The continual pres-ence of the regulators is a current issue that will not beimpacted by the ISO 14000 certification process.

How do you measure performance in your depart-ment/area? No environmental metrics are used. Insteadthey tend to look at end-of-pipe or output measures ofwaste. The environmental department is pushing hardto change this because they feel it would help makethem more effective. ERM costs are not included in thedecision-making process for capital investments. Thismanager could easily incorporate ERM issues into thedecision-making process because he is getting a betteridea of what the costs will be. However, it is not a partof the mindset of the company to include these costsinto the process. Therefore, the environmental implica-tions of decisions made are not considered, whichrequires the compliance/reactive approach that sur-rounds the environmental department.


Half of this manager’s work is environmental, yet he isnot evaluated on it. By taking a “management by fact”approach, the EMS group is able to track waste levelsand have some metrics for decision making. What theyare coming to realize is that there are many hidden coststhat before were considered a cost of doing business.

Summary• The EMS system is an extension of the QS 9000

system.• The motivations influencing the decision to pursue

ISO 14000 certification are the history of the facility(Superfund site) and the German influence of otherfacilities having EMAS certification. There is astrong environmental corporate culture comingfrom Europe, and all of the parent company’sEuropean plants are Eco Management and AuditScheme (EMAS) certified, so the company wantedto try something similar in North America.

• It is not part of the mindset of the company toinclude environmental costs in the decisionprocesses, but this is changing. After capturing dataand quantitatively looking at environmental issues,the EMS group can show they are a benefit and nota cost to the organization. What they are coming torealize is that there are many hidden costs thatbefore were considered a cost of doing business.

• There are conflicts when dealing with the differ-ences and tradeoffs between European and U.S.environmental standards. ISO 14000 may helpovercome this.

• ISO 14000 certification is seen as a way of protect-ing the firm from external interruptions. Firm Fclaims the Department of Environmental Qualitywill make fewer visits after they complete ISO14000 certification.

• This is a federal Superfund site that is well knownby the community.

Firm GThis privately owned company employs 2,500 people.There is one corporate environmental manager and 10people comprising the environmental staff at this facil-ity. They also have manufacturing and sales office facili-ties in Kentucky, Arizona, Mexico, three in China, inMalaysia, and plants in Michigan, Thailand, Portugal,Scotland, Germany, and Spain. Approximately 10 per-cent of sales are in exports, and only half of 1 percent ofsales are to the replacement part market. The partsmade in the Midwestern U.S. plants typically do not goto Europe since they already have plants located in sev-eral countries there. Their products are automotive —glass, windows, mirrors, glass touch screens that yousee on the instrument panel, exterior and interior mir-rors. Their primary customers are Ford (33%), Chrysler(20%), GM (10%), and the rest are German and

Japanese North American transplants (Honda, Toyota,Nissan, and Mercedes).

The major competitive thrusts in this industry includecontinuously trying to improve quality and drive downcosts. Simplification and integration are also importantas they are trying to integrate parts for customers, suchas interior and exterior mirrors, and trim and console.

The key success factors for this firm include quality,delivery, cost, and innovative design. The company istrying to take concepts and coordinate them with therest of the vehicle. Their customers no longer providethem with detailed design specs. They are given general-purpose (black box) specifications that are not detailed.This has forced firm G to really develop their engineer-ing capabilities.

What type of environmental system is in place? Themanagers interviewed point out that this firm has a longhistory of being environmentally friendly. They are try-ing to make their suppliers greener, but this process isin the infancy stages. A part of having a long-term viablesupplier is making sure they are green. In their processof downsizing their supply base, they did actually sur-vey suppliers on environmental attributes.

Firm G was required to be QS 9000 certified by the BigThree; but it does not require QS 9000 certification fromits suppliers. However, it does encourage its suppliers toachieve QS 9000 or at least be QS 9000 compliant. FirmG realizes that many of its suppliers do not have theresources to achieve certification; therefore, it does notmandate it. They plan on offering the same type ofencouragement for ISO 14000. If they are not certified,they should be compliant.

Firm G appears to have a good understanding of EMS.EMS and safety issues are a very formal and standard-ized part of the new product development process (theycall it PMP). The customer will come to Firm G or thisfirm will go to the customer with a product idea. Then,concept development fully begins, and they enter thedesign phase. At some point, a BOM is generated, andthe product manager then submits a PMP to the corpo-rate manager of Safety and Environmental Strategy. Thismanager will examine a number of ERM issues associ-ated with the PMP (e.g., air permit requirements). Thismanager can prevent a product from going throughdevelopment if the ERM issues are severe enough. Forexample, one manager vetoed the product as it currentlystood because of the environmental implications associ-ated with dipping glass in arsenic. The product teamcame back later with an alternative dipping solutionthat was approved.


Formal ISO 14000 documentation has started with poli-cies and procedures at level one and environmentalmanagement procedures at level two. The CEO hascommitted to ISO 14000. They hope to be certified inNorth America by the end of 1999. This should not be adifficult process because they have always had a formal-ized ERM system in place. ERM has always been part oftheir culture, which was ingrained in them by thefounding father.

The CEO made a trip to Europe to visit their facilitiesthere and saw the plants there being pressured by cus-tomers to pursue ISO 14000, and then made it a corpo-rate priority. Their customers in Europe include Rover,Vauxhaull, Opel, and Volvo. These companies placedpressure on the European facilities to become ISO14000 certified.

The company has a long history of top-managementcommitment to ERM. This environmental manager hasnever been turned down for ERM project funding. Theenvironmental manager does not know what the costsof formalizing their EMS will be in dollars. Interestingly,any ERM-related investments made do not have to bejustified from a cost/benefit perspective. They are envi-ronmentally proactive and address ERM issues early onin the product development process before the launchactually occurs.

External pressures have shown no formal interest fromNorth American customers to pursue ISO 14000. Fordhas offered some verbal encouragement.

What factors influenced this decision? The ISO 14000certification process started at this facility was influ-enced by their European firms. Their plants in Europewere being pressured by customers to pursue ISO 14000certification; therefore, the CEO became inspired anddictated this for all of their facilities, making it a corpo-rate priority. The CEO made the decision. This firm hasa green culture and, therefore, they want to protect theenvironment and help the community, not hurt it.

The influence to pursue certification is customer drivenin Europe by Volvo, Rover, and Vauxhaull. In the UnitedStates, the OEMs have started to verbally question sup-pliers about ISO 14000 and green issues, but no one ismandating it yet.

Under what conditions would management changethis decision? Money or resource issues will influencemanagement to change their position on ISO certifica-tion. They already have a formalized and standardizedEMS system in place that works for them. Why bring inthe registrars just to get them certified if they are com-pliant with ISO 14000? It is costly to get registered

(they said it would cost them $13,000 times 7 sites inMichigan). Self-certification may be an option.

The managers interviewed said that the QS 9000 certifi-cation process was very costly. They estimate theprocess of preparing for certification cost them between$1-2 million. They did say that the process helpedimprove performance; therefore, it was more than just amarketing tool for them. They also said that formalizingtheir EMS and preparing for ISO 14000 certificationwere simplified because of the QS 9000 experiences.They avoided reinventing many parts of a formalizeddocumentation-driven system.

What are the benefits you can see being generated bythis form of certification? More employee awareness.Formalization of processes is perceived as good (espe-cially if knowledge is stored and distributed). What ifthe environmental manager leaves, walks out, or retires?Training people and answering people’s questions canstill be covered if the documentation is there. This doc-umentation ensures the growth potential of the com-pany because they are less of an environmental risk.Firm G stresses the importance of the benefits of for-malizing the system and creating the documentation.Certification should also help eliminate mistakes andeliminate process variation through formalization andrecord keeping.

A strict and formalized ERM procedure reduces wasteitself because it sends up red flags and identifies oppor-tunities for improvement. Improvement comes frommeasurement and identification. They have reducedvariation and product yield, and process yields haveimproved. Another benefit includes the prevention ofpollution. The records created by formalizing their EMSidentifies spikes and opportunities for improvement.Their experiences with QS 9000 helped them with ISO14000; it kept their costs down and increased their like-lihood of implementation success.

Costs: Registration, training per work instructions,travel to international facilities. They say the costs payfor themselves, but they do not have to prove it. Firm Gis fully committed to ERM. The environmental managerdoes not have to do a cost/benefit analysis; fundingrequests are always approved. They say the benefitsexceed the costs, but they do not measure the benefits.It sounds like a blind commitment.

Risks: ISO 14000 and the documentation that it createscould show noncompliance issues, but they said this abenefit because they want to know what their noncom-pliances are. The environmental manager reports to therisk manager, who reports directly to the CEO.


Firm G will not care if its competitors become ISO 14000certified. They do not imitate their competitors. However,if their customers dictate ISO 14000, they will speed upthe process and become ISO 14000 at all costs. They willnot dictate ISO 14000 certification to their suppliersbecause many of them do not have the resources, butthey will encourage ISO 14000 compliance.

How do you measure performance in your depart-ment/area? The ISO 14000 certification process bene-fited them mostly because even though they previouslyhad a formalized EMS system, they did not have docu-mented targets. Because of ISO 14000, they have startedto establish more key measures that were previouslyoverlooked. Energy consumption will be considered inthe future.

For operations management: Safety, quality, production,morale, delivery, and noncompliance are critical perfor-mance measures. For the environmental manager:Service provided to various units is the major perfor-mance metric. Most people set their own goals withsupervisors and are measured against these goals. At thecorporate level, the metrics consist of the performanceon the goals established with the supervisor, manage-ment plan, action plans, and goals.

Summary• The ISO 14000 certification process started at this

facility was influenced by their European firms.Their plants in Europe were being pressured bycustomers to pursue ISO 14000 certification. In theU.S., some automotive OEMs have only verballyquestioned suppliers about ISO 14000. This sup-ports the findings in Chapter 4 that foreign-ownedfirms positively influence the decision to obtain cer-tification.

• Formalizing their EMS and preparing for ISO14000 certification was simplified because of theQS 9000 experiences. Their experiences with QS9000 helped them with ISO 14000; it kept theircosts down. Benefits stress the importance of for-malizing processes.

• When reducing their supply base, Firm G has eval-uated suppliers on environmental dimension. Theybelieve green suppliers will be better long-term sup-pliers. This firm will not dictate ISO 14000 certifi-cation to their suppliers because many of them donot have the resources, but they will encourage ISO14000 compliance.

• Firm G benefits from having a strong corporate cul-ture. The company has a long history of top man-agement commitment to ERM.

• Documentation is important to ensure that in theabsence of a key person, they can at least find apaper trail, procedures, and policies to continue

operations. Their EMS is currently on-line for allfunctions to access.

• ERM-related investments are justified using lessrestrictive cost/benefit thresholds.

• There is a very strong commitment to the environ-ment. This commitment is so strong that theysometimes do not measure the costs or the financialbenefits.

ISO 14000 Status: Successfully Implemented

Firm HGoal — First U.S. Automotive OEM Facility to Obtain ISO14000 Certification

This firm is a publicly owned and a Tier-I automotivesupplier. This facility is owned by one of the Big Threeand has approximately 1,200 employees at this facility.There are only three people on the environmental staff.About 30 percent of sales are exports, no sales toEurope, and approximately 10 percent of sales is attrib-utable to after market replacement parts. This facility isboth ISO 9000 and QS 9000 certified. The primaryproducts include hydraulic valve lifters for GeneralMotors’ engines. The major competitive thrusts in thisindustry are to sell to all OEMs and compete for therepair parts percentage of after-market sales. Other com-petitive thrusts include price and quality. Key successfactors for meeting their competitive needs focus onteamwork. Typically, the entire workforce is involved indecisions and goals.

What type of environmental system is in place? TheEMS is patterned after the ISO 14000 standards. Theyhave completed two audits to date and will completethe third in November. Firm H plans on being ISO-14000 certified in November 1998.

Firm H appears to have a very good understanding ofISO 14000. There is an EMS system in place. This firmwas the first Michigan plant given the Clean CorporateCitizen award. The award requires: The firm must havethe policies and pollution prevention plans completed, a“clean” environmental track record and no major finesin the last three years. The firm must also communicateto the public the results of environmental efforts, andmake policies public. The EMS system helps show theirenvironmental consciousness. The environmental awardwas considered very good for public relations and posi-tive company image.

The manager of Environmental Systems is the environ-mental champion in charge of making ISO 14000 a real-ity. The decision to pursue ISO certification was theresult of a corporate push, the plant manager, and the


agreement by staff to pursue it. There appears to be thepresence of a green corporate culture.

What factors influenced this decision? They looked atthe system, recorded and determined “what will this dofor us,” and then looked at the cost savings involved.Firm H did not want to get certified just for the sake of“doing ISO.” Firm H also wanted to do it before cus-tomers asked for it (customers are not at this time).This could also be called European hedging. Finally,they want to be the first plant in North American GMoperations to get the certification.

Under what conditions would management changethis decision? Management would only change thisdecision if they found that it costs too much.

What are the benefits you can see being generated bythis form of certification? Pollution prevention, and itis believed that customers in time will demand it (espe-cially in Europe). Other benefits include the employeesand the future (sustainable development will ensurethere will be an environment for our children and theemployees). Additional benefits include better employ-ees; employee morale can increase productivity and themaking of quality parts the first time. Finally, combiningISO 9000 and ISO 14000 has helped. To do all of this,cooperation and support from top management hasbeen a key factor in getting things done.

When Firm H told their employees that hazardousmaterials were going to be eliminated or substituted,the employees told them it couldn’t be done due to alack of speed, or quality. They found that eliminatingthese materials led to a reduction in costs. They havebeen very successful in these types of projects. Themanager interviewed has been in the environmentalfield since 1973 and attributes much of their success tonever having a plant manager turn down an environ-mental project. They have an environmental culture atthis firm. They like to see environmental projects as the“right thing to do,” and it “saves money.” This managerhas been able to sell projects based on both of theseideas. Firm H sees good public image as an importantissue.

Costs: Certification.

What are the primary reasons for your firms to seekISO 14000 certification? Primarily, Firm H is lookingfor a system that works and benefits the firm financially.Additionally, this firm wants to be the first firm withinthis OEM to get certified (all of the OEM’s facilities arerequired to by 2002). Finally, there is the hedging thatEuropean customers will soon be demanding it.

How do you measure performance in your depart-ment/area? Basically, there is a team-oriented approach.There are different groups involved: product line divi-sions, lifters (the part), manufacturing services, andsupport groups such as environmental and chemicalmanagement. All groups are challenged to reduceenergy, costs, and waste. They hold monthly meetingswith plant staff and managers to give project updates.They are typically measured by meeting goals and theimportance (size, scope) of the projects under way. Anexample may be a goal of 10 percent reduction in waste.You are measured on how well you are doing in meetingthat goal in a certain area or process.

The environmental department is also part of the plantengineering function. This makes it a little easier to findopportunities to save energy. The engineers can betterdesign processes with lower energy requirements. In1997, this firm really started to push for environmentalimprovements. In 1996, they made a 29-percent reduc-tion in waste, and a 14.9-percent reduction in energy(these numbers are volume adjusted).

The plant was built in 1946 and has had no seriousenvironmental problems. Since 1993, they have elimi-nated 11 waste streams. They now only have one wastestream left to deal with.

Summary• Firm H wants a system that works and from which

they can benefit financially. They looked at the sys-tem and recorded what they have and what theyneed. Next they asked the question “what will thisdo for us?” while considering the cost savingsinvolved. They are combining their ISO 9000 andISO 14000 systems.

• They will have achieved ISO 14000 certification asof November 1998. They also plan on using thiscertification in their sales literature.

• Benefits obtained from certification not onlyinclude marketing, but also include improved qual-ity of the products and reduced costs.

• The management saw a first-mover advantage ingetting this form of certification. They wanted toget certified before customers are asking for it (cus-tomers do not at this time but believe this willbecome more important in the future).

• Top-management support is essential to successfulimplementation and certification.

• There is strong support for the belief that ISO14000 certification will help develop systems that,in turn, will lead to pollution prevention.

• Environmental awards and ISO 14000 certificationare considered important for good public relations.


Concluding Comments

After these eight cases are read, the natural concern thatemerges is that of identifying their implications for man-agers and purchasing executives. The following aresome of the most important lessons that can be gleanedfrom these cases:

• The information found within the case studies sup-ports the findings obtained from the survey data, asreported in Chapter 3. That is, we find the man-agers looking at the ISO 14000 certification stan-dards with both a sense of concern and with an eyetoward the relative costs and benefits. The first, thesense of concern, reflects management’s awarenessthat the benefits offered by ISO 14000 certificationare both too uncertain and may be sufficient to off-set the costs incurred in obtaining such certifica-tion. The second, the relative assessments of thecosts and benefits, confirms one of the majorpremises on which this report is based — managerswill not view ISO 14000 in terms of social desirabil-ity, but rather that they will see it as an economicdecision. By viewing it as an economic decision, wecan better understand their perceptions of and atti-tudes toward environmentally consciousmanufacturing.

• There are certain factors that appear to have a sig-nificant and major impact on the level of progressobserved toward ISO 14000 certification. The mostimportant of these factors include foreign owner-ship; prior success with quality certification (eitherwith ISO 9000 or QS 9000); past exposure to andsuccess with Total Quality Management (TQM) sys-tems; and, the presence of a strong cross-functionalapproach.

• The path between ISO 14000 certification and itsimpact on the effectiveness of environmental man-agement systems and the impact of these systemson corporate performance consists of two phases.In the first phase, there is the decision to pursueISO 14000 certification. The factors identified inthe preceding point seem to have their greatestimpact on this phase. In the second phase, there isimpact of the ISO 14000 certification progress onboth the performance of the environmental man-agement system and the overall performance of thefirm.

• The benefits gained by pursuing and attaining ISO14000 certification are both real and significant.They include reduced costs, improved quality,improved corporate position in the marketplace,enhanced reputation, improved design processes,enhanced ability to design and deliver “better”products, and a broadening of perspectives (thatoften manifests itself in the firm’s decision to

investigate alternative technologies). These benefitsare too important to be overlooked. They reinforcethe statement made at the end of the last chapter —namely, being clean does mean more green.

• In the preceding chapter, the results pointed to thepresence of certain distinct groupings or categoriesas they pertained to the ISO 14000-certificationdecision. These categories, in turn, were used todrive the sample selection process used in selectingthe case studies used in this chapter. The findingsdemonstrated that these categories were indeedobserved and that their behavior and decision-mak-ing processes were different. This result shouldencourage the continued use of such multi-methodresearch methodologies.

• To date, the purchasing profession has played a rel-atively minor role in the ISO 14000 certificationprocess. However, this process can and does presentthem with certain opportunities to improve bothenvironmental and strategic performance not onlywithin the firm but also within the supply chain.The cases point out the need for purchasing profes-sionals to take a more active role within the ISO14000 certification process. They must start lookingfor and exploiting previously overlooked opportu-nities. ISO 14000-certification represents a growthin opportunities.

This last point is a critical one, because the audience forthis report is the purchasing professional. However,what is needed is a more detailed examination and dis-cussion of the potential implications of ISO 14000 certi-fication for both the marketplace and the purchasingprofession. That is the major task of the next chapter.


Introduction

This study began by noting that the ISO 14000 environ-mental standards are a relatively new development intoday’s environment. As a result, it is surrounded by agreat deal of uncertainty and questions. Furthermore, itsemergence has raised a number of unresolved questions.This study was developed to shed more light on thisnew development and its impact on environmental andcorporate performance.

In this chapter, we return to the questions posed inChapter 1 and identify the key issues uncovered by thisstudy. We conclude the chapter by looking at thelessons that this study offers to the American manager,specifically the purchasing professional.

Answering the Research Questions

This study was driven by a series of research questions:

1. What is the status of environmental managementsystems in most American plants, and how are theyperceived by management?

2. What factors influence the predisposition towardISO 14000 and progress toward achieving ISO14000 certification?

3. To what extent do the respondents see a relation-ship between ISO 14000 registration and successand improved market, or corporate performance?

4. How effective is ISO 14000 relative to the otheralternatives available for improving environmentalperformance?

5. What options are available for firms interested inimproving environmental performance, and to whatextent are these options in practice?

Based on the analysis of both the survey data and theeight cases, the following responses can be made to eachof these five questions.

What Is the Status of Environmental ManagementSystems in Most American Plants, and How Are TheyPerceived by Management?

The data show that environmental management systemsare essentially multi-dimensional and complex innature. Their operations can affect various aspects ofcorporate life and corporate performance, ranging fromhow the plant deals with the government and regula-tions to how products and processes are designed andimplemented. It can also affect the process by which thevarious problems are identified and resolved.

For the most part, the respondents did not perceivethese systems in a positive light. Overall, the environ-mental management systems were seen as internally ori-ented (i.e., focused on the plant and not the suppliers),separate, tactically oriented, and primarily reactive innature. That is, these systems came into place once aproblem had been identified (typically by a violation orfine).

The operation of the environmental management sys-tems is perceived as adversely affecting the major strate-gic foundations of competition. That is, dealing withenvironmental issues tends to increase lead times,increase costs, and reduce quality. As a result, thesefindings describe a system that acts as a cost and a con-straint, rather than a benefit and an opportunity forimprovement.

Chapter 5ISO 14000 and the

Purchasing Professional: Uncovering the Major Lessons


What Factors Influence the Predisposition toward ISO14000 and Progress toward Achieving ISO 14000Certification?In this section, we will combine the answers to twoquestions, specifically questions 2 and 6.

While many factors have been cited as influencing thepredisposition toward ISO 14000 certification and thevalue of this certification, certain factors were identifiedas having a critical and significant (from a statistical per-spective) impact on predisposition and progress towardattaining this new form of certification. These factorsincluded:

• Previous experiences with Total QualityManagement;

• Past success with quality-based certificationprocesses, such as ISO 9000 or QS 9000;

• Previous experience with cross-functional teamsand management;

• Firm size;• Nature of corporate ownership (foreign-owned

plants are more likely to pursue and receive ISO14000 certification); and,

• Uncertainty concerning federal regulations, changesin ISO 14000 standards, the costs of certification,the benefits of certification, and the impact of ISO14000 certification on the current environmentalmanagement systems.

These factors describe a situation where the respondentssaw ISO 14000 as an extension of the TQM movement.They also describe a situation in which the respondentsrecognized that success with ISO 14000 requires cross-functional teams and cooperation. There seems to berecognition that succeeding with ISO 14000 requiresmore than simply introducing a new program or creat-ing a new department. Rather, ISO 14000 is an under-taking that requires the participation of multiple partiesworking together.

Predisposition toward and progress on attaining ISO14000 certification has also been influenced in a signifi-cant manner by uncertainties. These uncertainties canbe broken into two categories. The first consists ofuncertainty due to the government and regulations.The second consists of implementation concerns.While plant personnel (remember that the unit ofanalysis was the plant) can do little about the first cate-gory of uncertainty, they can address the second cate-gory. This category, to a large extent, reflects uncer-tainty attributable to the “newness” of this standard.Addressing this second category requires the collectionof data and the distribution of any results gained fromthe analysis of this data.

Finally, for many of the respondents, a primary factoraffecting their orientation toward ISO 14000 certifica-tion involved the extent to which they saw the market-place as demanding this form of certification. For most,the incentive to pursue ISO 14000 certification was lowbecause it was not seen as something that the market-place wanted and was willing to pay for.

To What Extent Do the Respondents See aRelationship between ISO 14000 Registration andSuccess and Improved Market or CorporatePerformance?The findings on this question are clear. Even though thenumber of plants having attained ISO 14000 certifica-tion is relatively small (37), the impact of this certifica-tion on corporate performance is very clear and positive.Except for lead time (which experienced a slight nega-tive impact), ISO 14000 certification positively impactedthe remaining 13 dimensions of performance. There wasa real benefit to attaining this level of certification.Furthermore, the level of benefits increased the closerthe plant got to attaining this form of certification.

How Effective Is ISO 14000 Relative to the OtherAlternatives Available for Improving EnvironmentalPerformance?In addition to ISO 14000, this study considered threeother forms of environmental initiatives. These con-sisted of environmental initiatives undertaken by indus-try (e.g., the Responsible Care® program found in thechemical industry), environmental initiatives sponsoredby the government (specifically the EPA in the UnitedStates), and initiatives related to environmental affairs.These three alternatives can be described as being moreoutcome/output oriented when compared to ISO 14000.

In comparing these alternatives to ISO 14000, the studyfound that the results reported for those plants that hadachieved ISO 14000 certification were better than thosereported for the other three alternatives under similarconditions. This finding seems to argue (for reasons tobe pointed out later in this chapter) that there is some-thing about the approach being taken in achieving ISO14000 certification that accounts for this improvementin results.

What Options Are Available for Firms Interested inImproving Environmental Performance, and to WhatExtent Are These Options in Practice?The study identified 16 different options available to theplant interested in improving environmental perfor-mance. The respondents regularly considered alloptions. It was interesting and gratifying to note that therespondents did not take advantage as frequently ofthose options that carried with them negative connota-tions. These options included the relocation of plants


and processes to areas where the environmental regula-tions were less stringent.

Identifying the Lessons of ISO 14000

for the Purchasing Professional

When taken as a whole, this study offers some impor-tant lessons for the purchasing professional. To facilitatethe presentation of these lessons, we will use a format inwhich these critical lessons will be discussed in sections.In each section, the section heading will contain the les-son, and the text body will discuss the implications. Inaddition, the text body for each section will present,where appropriate, any cautions to these findings.Finally, this section will draw on insights obtained fromdifferent sources in expanding on the various lessonsand their implications for purchasing.

Achieving ISO 14000 Certification Does EnhanceCorporate PerformanceThis study began by asking the question, “Is ISO 14000certification worth the time and effort?” While notbeing able to identify the resources devoted to the vari-ous activities required for ISO 14000 certification, thebenefits reported in this study indicate that the firms dorealize actual benefits as they move from stage to stagein the certification process. These reported benefits arehighest for those plants that have successfully beencertified.

It has been assumed that there is a real trade-off betweenbeing more environmentally responsible and corporateperformance. That is, being more environmentallyresponsible does come at a cost. The cost is one ofincreased lead time, increased cost, and decreased qual-ity. These costs are critical to the firm for the elementsthat they involve form the strategic basis on which thefirm competes (Melnyk & Denzler, 1996). However,except for lead times, this trade-off was not observed forthose plants that had achieved ISO 14000 certification.

Before accepting this finding, we must first challenge it.We must see if there are other possible explanations forthis observed result.

These results in favor of the positive impact of ISO14000 certification on overall performance could be dueto one of four factors. The first is that the plants thatwere first certified were ones that were already leadersin environmental performance. The second is that whatwe are observing is a situation where those who havepursued certification and who have invested the time,resources and effort required by this certification process

feel pressed to justify their investments. Even if the cer-tification was not successful, it would be presented assuch. No one wants to admit that they have failed (evenwhen they have). The research team tends to dismissthese two explanations based on the findings reportedin Chapter 3.

The third explanation is that the awareness of the bene-fits has taken place after the certification has been com-pleted. Up to this point, everyone is involved in gettingthe plant certified. Once it has been certified and theyhave a chance to take stock of the impact, these respon-dents found that the certification itself has created a setof important benefits for the plant.

The final explanation, and one supported by the mem-bers of the research team, is that these benefits are a nat-ural result of the approach taken by the ISO 14000 cer-tification process. As noted in Chapter 2, ISO 14000 dif-fers from the three other approaches to improved envi-ronmental performance. It focuses on the processes(rather than the outcomes), and it emphasizes a proac-tive rather than reactive mode of dealing with environ-mental problems. It is this process orientation that notonly accounts for the differences, but which is also thesource of these observed improvements.

By studying environmental problems from asystem/process perspective, managers begin to see thatpollution is the problem to be attacked. It is a “resid-ual,” a symptom, an indication that something is goingwrong somewhere in the process. In many cases, pollu-tion is the most visible but not the only indication thatwe are encountering problems. By documenting andstudying the underlying processes, managers are ablenot only to reduce pollution but also to improve otheraspects of performance. It is this process perspectivethat fosters the presence of simultaneity (reducing pol-lution while also simultaneously reducing costs andimproving quality).

As previously noted, this argument explains theobserved reductions in cost and improvements in qual-ity. It does not, however, explain the slight adverseimpact on lead times. One possible speculation aboutthis result is that it may reflect learning with the processperspective. It takes time for managers to learn how tostudy processes and how to uncover the underlyingsources of problems. It can be expected that this learn-ing process will improve in performance over time.Again, we must remember that the ISO 14000 process isrelatively new; it has only been formally accepted in late1996.

For the purchasing manager, the process perspectivefostered by the ISO 14000 environmental standards is


very important. The same approach that is used toreduce pollution can also be used to uncover the sourceof lost material productivity and waste. This approachoffers the purchasing professional two major advan-tages. The first is a better product or service (as charac-terized in terms of cost and quality). The second is thatthe firm has fewer worries about using a product or ser-vice that contributes to pollution or waste. This mayresult in fewer potential legal problems, better reputa-tion, and, ultimately, a better supplier. This again isrelated to the concept of total cost of ownership.Purchasing must for now evaluate the entire businessprocess for key suppliers. This is especially importantwhen considering relationships such as partnershipsand alliances. Purchasing must find suppliers who caneffectively manage their internal processes, includingactions such as hazmat disposal, recycling, and sourcereduction. ISO 14000 is, therefore, an excellent indica-tor that the supplier has documented formal processesand has established baseline metrics in these areas, andis more likely to control costs effectively in these areas.

ISO 14000 Certification Is Viewed as an InternalFactory Affair.In the past, we have separated manufacturing/produc-tion concerns from concerns involving suppliers andsupply chain management by differentiating betweenthe internal and external factories. The term “internalfactory” has been used to refer to the firm’s own manu-facturing system (the system found within the fourwalls of the plant). In contrast, the term “external fac-tory” has been used to refer to the supplier base. Usingthis set of terms, we can best characterize the ISO 14000certification process as an affair of the internal factory.What this means is that the implications of ISO 14000for the supply chain have been virtually overlooked.

Increasingly, purchasing managers are recognizing theinterdependencies linking the internal and external fac-tories. The ability of the internal factory to becomemore environmentally responsible while also simultane-ously improving quality and reducing cost is ultimatelydependent on the activities and processes found withinthe supply base. As we have learned from past experi-ences with TQM and Just-in-Time systems, as we elimi-nate or reduce waste and variance from within ourinternal systems, we become very sensitive to the wasteand variances coming from our supply base.

In short, it can be argued, that for the full benefits ofISO 14000 certification to be realized, we must be ableto manage and control both the internal and externalfactories. For the purchasing professional, this realiza-tion brings with it several important implications. First,the purchasing manager may now have to think interms of requiring that certain suppliers be ISO 14000

certified. Such suppliers should be able to competeeffectively with suppliers that are not ISO 14000 certi-fied (especially in light of the observations discussed inthe preceding point). In addition, such suppliers shouldhave better and more complete mastery of their owninternal processes. They should not be sources of vari-ances and waste for our internal factories. Second, thepurchasing manager must now think in terms of theentire supply chain (this point will be discussed ingreater detail later in this chapter). Third, the purchas-ing professional must think in terms of facilitating theintegration of environmental management activitiesbetween the internal and external factories.

This last point is not new. It is a restatement of a lessonthat purchasing professionals have learned from pastundertakings that involved TQM, Just-in-Time, andintegrated product design. From these endeavors, pur-chasers have learned to view suppliers not only asproviders of goods and services but also as sources ofexpertise, knowledge and problem-solving capabilities.As we have learned to draw on the expertise of our sup-pliers to help the internal factory improve quality,reduce cost and reduce lead time, we can now think ofdrawing in suppliers for the purposes of identifying andreducing pollution.

View the ISO 14000 Certification Decision As aBusiness DecisionIf there is one lesson that is repeatedly echoed by theresults of this study, it is that the decision to pursue ISO14000 certification is ultimately based on economicconsiderations. For the most part, the costs associatedwith ISO 14000 certification are relatively easy to quan-tify. They are also fairly significant. In many situations,these costs, combined with uncertainty over the exactsize and nature of the benefits to be gained by ISO14000 certification, form a barrier to the increasedacceptance and achievement of ISO 14000 certification.

To a certain extent, the firms that the researchers stud-ied that have achieved ISO 14000 certification can beregarded as either innovators or early adopters. Thesetwo categories are drawn from the model of technologi-cal adoption and diffusion first developed and proposedby Moore (1991) for the American software industry.This model, initially developed to explain product suc-cess and failure within the software industry, can bereadily adapted to explain user acceptance of a newenvironmental certification standard such as ISO 14000.

In this framework, all the potential users and adoptersof any new technology can be broken up and assignedto one of five categories: innovators, early adopters,early majority, late majority, or laggards. Innovators arethe smallest group. These users are the first to accept


and implement ECM systems. Often, the reason for thisdecision is not based on an economic analysis or justifi-cation. Rather, it is based on considerations such as thesocial desirability of the action. For the managers of onefirm, the decision to become more environmentallyresponsible was based on the view that “it was the rightthing to do.” The managers recognize that these newsystems could improve the performance of the firm.However, they were willing to proceed without first hav-ing proof of the benefits.

The second group, early adopters, was larger in number.Managers in these firms had done an analysis of the rel-ative costs and benefits. While they were aware of thebenefits, there was often no quantitative proof of theirexistence. Rather, there was an expectation (often ratherstrong) of the presence of these benefits. The managerswere willing to make the investments necessary to attainthese benefits. In other words, they were willing to takerisks.

Early majority users were willing to consider ECM.However, they were much more risk adverse. Theywanted to see verifiable, quantitative evidence of thepresence of these benefits before they would make therequired investments. They also wanted to see systemsthat did not extensively change the current systems oraffect the “way” that activities were carried out. Theseusers can be viewed as highly practical. Unless it wasshown otherwise, they initially tended to view newdevelopments such as ECM as fads. Because many ofthe fads typically do not pan out, these users tended totake a “wait and see” attitude. That is, they were willingto let others (typically the early adopters) take the risks.These early majority users would evaluate the experi-ences of the others and, if the returns were adequate,follow suit. In many cases, these users had to be pre-sented with a strong, compelling reason to change. Thiscompelling reason to change took one of three forms:

• A reduction in costs (direct or overhead);• Enabling a previously unavailable strategic capabil-

ity that provides a dramatic competitive advantagein an area of prime operational focus; or,

• Improving productivity on a well-understood criti-cal success factor.

The fourth group, the late majority, was very similar tothe early majority, except in one respect. They tended tobe less comfortable with the new innovations andchanges being proposed. As a result, they tended to bemore hesitant. They needed stronger proof of the advan-tages offered by ECM systems.

The final group, laggards, was the most resistant tochange. These firms and users tended to see no real

benefits in changing. They had to be forced to change.These compelling reasons came in the form of legal orregulatory changes. As a result, these users introducedECM-driven changes because they were forced to. Theyonly introduced the minimum level of change. For theseusers, ECM was now and will also be a constraint. Theycould never be convinced that ECM offered a com-pelling and verifiable set of benefits.

Separating these five groups was a series of gaps. For adevelopment to gain wide-scale acceptance, it had tocross each of these gaps. Of the four gaps, the most crit-ical was that one separating the early adopters from theearly majority. As defined by Moore, this was the“chasm” that most innovations failed to cross. This gapwas also noted in the companies studied. Specifically,the difference between the two groups could be bestseen in this chasm. For the early adopters, the firmswere working on the assumption that ECM was goodfor the firm. They were also willing to invest in abroader set of environmental options. Finally, they wereinterested in the active development of a wider set ofmetrics. The reason is that they wanted to identify theimpact of ECM-initiated programs and to monitor theimpact of these initiatives.

In contrast, the early majority users tended to be moreconservative in their approach. They were more inter-ested in the cost impact of any ECM-based initiative.Their metrics were more cost-based and were oftenbased on the EPA measures. They also tended to con-sider a more limited set of ECM-options. For example,they were interested in options such as recycling andreducing the use of pollution-causing material. Also,they experienced more difficulties in dealing with thevarious trade-offs inherent in the ECM decision-makingprocess. When implementing ECM-based options, theirapproach was also very conservative. They tended toimplement proven approaches and technology. Theyalso picked those options that fit well with existing pro-cedures and systems.

It is here that we saw a major problem facing the pur-chasing profession. On one hand, there are real benefitsto be gained by attaining ISO 14000 certification (espe-cially in the firm’s supplier base). However, this decisioncan now be expected to be based on economic consider-ations and evaluations. In other words, the suppliermust have a strong, compelling reason for undertakingthe process of becoming ISO 14000 certified. Since itcan be expected that most of the innovators and earlymajority adapters have now made the move to pursuethis form of certification, the type of suppliers stillpotentially interested in attaining ISO 14000 certifica-tion can be expected to belong to the “early majority”category.


If these suppliers are to make the move toward ISO14000 certification, then they need to be presented withevidence. This evidence must be quantitative, and itmust enable the supplier to effectively assess the differ-ence between the cost of pursuing this type of certifica-tion and the benefits gained from attaining it. For themost part, such information is both lacking and veryneeded.

Encouraging Acceptance of ISO 14000 CertificationRequires Reducing UncertaintyIn Chapter 3, this study showed that uncertainty was amajor obstacle to a plant’s decision either to pursue ISO14000 certification or to effectively evaluate this deci-sion. One way of encouraging greater interest in thisnew environmental certification standard is to reducethese sources of uncertainty. Those sources attributableto the government (federal, state, local, international)are ones about which the purchasing professional cando little. However, the other forms of uncertainty, withspecial emphasis on the costs of certification, the bene-fits from certification, and the type of changes to thecurrent environmental systems needed to meet the newstandards, are ones that can be influenced by the pur-chasing manager. Reducing these sources of uncertaintyrequires the collection of more data and the distributionof the results gained from the collection of such data.These data can be gained from numerous sources,including further surveys and detailed case studies.

Such information is needed before we can come to anystronger position and conclusion on this new approachto improved environmental management.

View ISO 14000 as a Supply Chain IssueAs previously noted in this chapter, current attentioninvolving ISO 14000 has treated this decision as a mat-ter for the internal factory. However, such a perspectiveis not in line with the current views and practices per-taining to the transformation process. In the past, everyfirm and plant was expected to develop and manage itsown transformation process. This process would con-tain all of the resources and skill sets needed to design,build, and deliver its products. Under this approach,suppliers were expected to act as providers of raw mate-rial or as alternative sources of capacity (i.e., outsourc-ing). We now recognize that such an approach is ulti-mately too costly and too slow. It has less relevance in amarket where customers want more and better productsdelivered faster and at lower costs. To compete in thisnew environment, firms and plants have now come torely increasingly on the skills and capabilities of thesuppliers that form the firm/plant’s supply chain. As aresult, the new transformation process is a seamlessmarriage of the capabilities and capacities of the firmwith those of its suppliers.

This change has required managers to consider theimpact of decisions made within their firms’ supplychains on their own systems’ performance (as well asthe impact of their decisions on their suppliers). Inaddition, this change has meant that managers mustconsider these impacts beyond the first-tier suppliers.Ultimately, this has meant thinking in terms of theentire supply chain.

When dealing with the ISO 14000 certification decision,it is not appropriate to view this as an internal corporatematter. This decision, if taken internally, will eventuallyaffect how suppliers are selected, managed, and evalu-ated. Friction can be increasingly expected to be reducedif an ISO 14000 certified firm also works with customersand suppliers that are somehow involved in attainingthis same type of certification. This decision can alsoaffect the types of measures used to evaluate supplierperformance. In all of these changes, we can expect tosee a greater role for the purchasing professional.

Regard ISO 14000 as an Opportunity, Not a Problemor a ConstraintAs shown in Chapter 3, there are definite costs and ben-efits associated with the decision to pursue ISO 14000certification. However, what ISO 14000 certificationforces plants to do is to recognize the real costs of pollu-tion problems. In the past, pollution problems havetended to remain largely hidden because they were typi-cally included as part of overhead. When included inoverhead, pollution lacked any visibility. It was some-thing that occurred but no one was responsible for it.With data on pollution more visible, attention andawareness can occur.

Pollution is a type of defect, an indicator (symptom)that something went wrong in the system. Managementcan respond in one of three ways to this symptom. Itcan ignore it, it can cope with it (do enough to reducethe size of the symptom), or it can eliminate it. Themost effective stance is the last elimination.

In addition, the process of attaining ISO 14000 certifica-tion forces the people involved to examine and docu-ment the various processes involved in their plants’environmental management systems. This gives themthe opportunity of identifying what is right and wrongwith these processes. It also gives them the opportunityto correct problems in these processes–problemspreviously overlooked.

In short, with ISO 14000, management now has theopportunity to understand their environmental manage-ment systems, to learn what is taking place with envi-ronmental problems and to correct the problems. ISO14000 offers a potential chance to improve.


Environmental Issues Should Be Integrated into theThree Major Activities of Every Plant and FirmFor the most part, ISO 14000 deals with the environ-mental management system. This system, while impor-tant, is primarily a support activity. In this regard, theEMS is similar to systems such as accounting, humanresource management, or facilities management. Thesesystems exist to support the activities and operations ofthe core activities, which generate the products and ser-vices in the marketplace and which generate the revenuestreams required by the firm for its growth and survival.In most firms, these core activities are found within threesystems: (1) design; (2) planning/scheduling/execution;and, (3) performance measurement/feedback.

The Design System: This system is responsible for twomajor types of design activities: (1) new product designand development; and, (2) process design and develop-ment. Both products and processes, while separate, areclosely interrelated and greatly influence each other.Both aspects must be considered to ensure that the firmhas developed and implemented effective and efficientdesigns and processes. These two design activities, whencombined, determine and shape the transformation pro-cess. They determine the types of inputs required andthe types of outputs created. Some of these outputs aredesired (e.g., cars built) while others, such as pollution,are undesired. For example, Fabrycky (1987) estimatedthat up to 85 percent of the life-cycle costs are commit-ted by the end of the preliminary design stages. Inanother study, Ulrich and Pearson (1993) found from afield research study that at least 50 percent of the costs(for a class of mature products) are design determinedand that up to 70 percent of costs are affected by manu-facturing process decisions.

The Planning/Scheduling/Execution System: The nextmajor set of activities that take place within the firmconsists of Planning, Scheduling, and Execution. Thethree terms describe the three major activities needed togo from broad-based plans that reflect corporate objec-tives to focused operational planning and, ultimately, tothe detailed execution of these plans either on the shopfloor (i.e., within the internal factory) or in our suppli-ers (i.e., within the external factory). This set of activi-ties consistently tries to balance demand against capac-ity. The demand comes not only from customers (in theform of orders, either planned or actual) but also fromstakeholders such as the government, stockholders, andtop management. The capacity discussed here is morethan simply manufacturing capacity (consisting ofequipment, tooling, and labor capacity) but alsoincludes information and environmental capacity. Thislatter capacity includes storage facilities for waste (eitherin-process or disposal) and limits on emissions (as inthe case of Volatile Organic Compound [VOC]

emissions and regulated limits placed on it by the gov-ernment). This balance between demand and capacity ismaintained by either changing the demand or alteringcapacity.

The Performance Measurement/Feedback System: Thethird major activity is that of performance measure-ment. This activity fulfills several critical needs withinthe firm. First of all, it is an important and integral ele-ment of the feedback system. It identifies what must bedone and provides users with a yardstick indicating howthey have performed on the measured dimensions. Itshows users where their performance is acceptable andwhere improvement is needed.

Second, it describes in very operational terms what thefirm and its employees must do well for the firm to suc-ceed. By measuring an activity in quantitative terms andreporting this performance back to the responsible peo-ple, we focus attention on certain things. We alsoimplicitly tell the employees what they do not reallyhave to worry about. This focusing of attention is criti-cal for it is the means by which the firm and its manage-ment communicate in very real terms the expectationsand the critical tasks of the firm. As Oliver Wight, afamous manufacturing consultant, once commentedabout the importance of performance measurement,“You get what you inspect, not what you expect.”Performance measurement can provide a mechanism forlinking and integrating the three core activities of thetypical manufacturing firm.

In many firms, ECM is typically a process that runs inparallel with these three core activities. It only interactswith these activities during periodic checks. Duringthese checks, managers from these core activities workwith managers from the EMS to make sure that theiractions have not violated an environmental constraint orrequirement. Under this approach, the EMS and anyassociated developments, such as ISO 14000, will tendto be seen as constraints or costs.

For this situation to be avoided, the EMS must becomeintegrated in some form with these core activities. Whatthis statement means for ISO 14000 is that this form ofcertification must become a corporate initiative (some-thing that is done to improve the competitive positionof the firm), rather than an environmental initiative.

In addition, by integrating ECM issues into these threeactivities, we now have a greater opportunity to closethe gap among those areas where the pollution prob-lems are identified (typically in the planning/schedul-ing/execution system), the areas where the pollutionproblems are ultimately created (typically the productand process design decisions) and those areas charged


with resolving the pollution problem (the EMS depart-ment). This gap exists for several reasons. First, there isa time gap between the moment that those design deci-sions (ultimately responsible for the pollution problem)are made and the time that these problems become evi-dent in the execution system. There is also a gapbetween those groups charged with correcting the pollu-tion on the floor (typically the EMS department) andthose groups that can eliminate the problems (typicallythe designers). Finally, there is a data gap. The activitiesthat ultimately create the pollution problems are largelyunaware of these problems because they are not giventhe data. The activities faced with the pollution prob-lems are too busy trying to correct these problems in theshort term. As a result, we have a system where every-one is correcting pollution problems, but no one isreally effectively eliminating them.

What is needed here is recognition of the need to bringtogether representatives from the areas where the pollu-tion problem is created, the areas where it is identified,and the areas charged for correcting these problems.The interaction among these three areas should con-tribute to the reduction or elimination of the pollutionproblem. ISO 14000 certification offers one mechanismfor focusing on these intersection opportunities. Thereason is that the process of attaining this certificationforces plants to collect data on pollution problems (thuscreating awareness through data). It also forces manage-ment to implement processes focused on the disposal ofthese problems. These actions create conditions thatencourage an interest in these opportunities. They alsocreate a demand for the involvement of people that canmanage the interactions among different groups (skillsoften found in the purchasing professional).

Recognize the Relationships That Exist among TQM,ISO 9000, and ISO 14000One lesson that became very evident from this studywas the strong relationship that exists among TQM, ISO9000 and ISO 14000. This relationship has been arguedin the literature pertaining to these three developments.However, for the most part, it has been presented as ahypothesized relationship. In this study, we see empiri-cal support for this relationship. Furthermore, the find-ings of this study in this respect corroborate the findingsreported by Curkovic (1998). Curkovic also used a sur-vey sample to examine the extent to which ECM sys-tems paralleled in their structure and content TQMsystems.

To a large extent, we should have expected to see sup-port for this relationship. All three developments have asimilar focus — the identification and elimination ofwaste from the processes. All three are process basedand oriented. More importantly, all three use nearly the

same sets of tools and procedures. In many cases, thesame tools that are used in TQM systems or by plantspursuing ISO 9000 certification are also found in plantsseeking ISO 14000 certification. All three developmentsencourage a continuous approach to the challenge ofwaste identification and elimination.

As a result, it can be argued that those plants that havepreviously dealt with TQM or ISO 9000 are in a betterposition to successfully attain ISO 14000 certification.The personnel in these plants have been exposed to thestructure required by ISO 14000; they understand whatis required. Further, these plants can use their TQM sys-tems and ISO 9000 certification experiences as a foun-dation on which to build their ISO 14000 certificationactivities. They are further along the learning curve rela-tive to other plants without the same background.

For the purchasing professional, the implications of thisdiscussion are fairly clear. If ISO 14000 certification isseen as being an important trait of any desirable sup-plier, then when evaluating those suppliers yet to becertified, it makes sense to focus on those suppliers thathave had successful experience with TQM and one ofthe various quality-certification standards. Such suppli-ers are more likely to accept the potential value offeredby ISO 14000. They are also better prepared to attainthis form of certification. As a result, their probabilitiesof becoming certified are relatively high, as compared tothose suppliers that lack one or more of these quality-related attributes. In the future, we realize that ISO14000 will be a requirement for doing business in thenext millennium, which will have implications forglobal supplier development. In order for suppliers tohave global support capabilities, they will need to beable to meet local regulations wherever they are doingbusiness. More and more countries are adopting ISO14000 as the international standard for doing business.Examples include the UK, Indonesia, Japan, and Korea.Purchasing must take the initiative and integrate ISO14000 into supplier evaluation and certification systemsearly, to avoid having to “react” to this change.

More Longitudinal and International Studies of ISO14000 Impacts Are NeededWhile the results reported in this report are fairlypromising, we must recognize that, in spite of the rela-tively large sample, there were very few plants that hadachieved ISO 14000 certification. Out of the sample of1,510, only 37 had been certified. This number consti-tutes a small sample. In addition, this sample is drawnfrom a specific time period (1997). As a result, thisstudy raises some interesting, yet unresolved, questions.For example, will the results of this research be sup-ported by the experiences of other plants? What willhappen to the relationship between ISO 14000


certification, perceived EMS effectiveness, and corporateperformance over time? To address these and other sim-ilar questions, more research into the experiences offirms with ISO 14000 is needed. This research can takemultiple forms (mail surveys, telephone surveys,detailed case studies). It should focus on broadening therange of firms and industries included. It should look atthe experiences of plants that have attained ISO 14000over time. By studying these experiences over time, wecan better assess the “staying” power of ISO 14000 (i.e.,the extent to which the benefits are persistent). Finally,this research should broaden the scope to include notonly American plants but also plants internationally. Bycomparing the experiences of American plants withthose plants located in countries such as Canada, Japan,South Korea, or Germany (to a name a few), we canbegin to assess the success of American managers inexploiting the capabilities and improvements potentiallyoffered by the ISO 14000 environmental standard.

There is another important advantage of carrying outmore research on this topic. As previously noted, we arenow dealing with managers that can be best describedas “early majority.” For these managers, compelling,quantitative evidence is needed. Such studies offer ameans of collecting evidence. The evidence will providea compelling reason for the plant whether to pursue ISO14000 certification. It will also provide purchasing pro-fessionals with more information with which to assessthe potential benefits and costs generated by such astandard. This information, in turn, can potentiallyinfluence such activities as supplier selection, supplierdevelopment, and supplier evaluation.

Concluding Comments

The ISO 14000 environmental standard is a relativelynew development. It deals with a dimension of corpo-rate performance that has been largely overlookedwithin most firms — enhancement of environmentalperformance. This new standard has emerged for anumber of reasons. However, underlying its emergenceis the assumption that improved environmental perfor-mance will ultimately enhance corporate performance.Being a relatively new development, it is surrounded bya number of unresolved issues and questions. Thisstudy has attempted to resolve some of these issues andquestions and to provide a greater understanding ofboth the ISO 14000 certification standard and its poten-tial impact on the firm.

What this study has found is that, while there are rela-tively few American firms that have successfullyattained ISO 14000 certification, there is evidence toindicate that this certification not only improves

environmental performance but also corporate perfor-mance. The evidence also indicates that this standarddoes outperform many of the popular alternativeapproaches available for enhancing environmental per-formance. The evidence also shows that the movementtoward ISO 14000 certification is strongest in thosefirms that have previously been certified in quality(using ISO 9000 or one of its variants, such as QS 9000)and have positive experience with TQM and cross-func-tional management. Finally, the evidence also indicatesthat, for many implementers, ISO 14000 certificationhas been something that has been applied to theirplants. The supply chain implementations of this stan-dard have not been extensively explored or exploited.

In summary, this study has reported on the early returnson the ISO 14000 environmental standard. The findingsare promising. For the purchasing professional, theyindicate that ISO 14000 certification may offer anothermeans of differentiating the “best” suppliers from therest. Given the increasing importance of the supplychain, ISO 14000 may offer the purchasing professionalanother opportunity for improving corporate perfor-mance by enhancing performance within the supplychain.

In short, this study shows that there is something morethan hype about the ISO 14000 environmental stan-dards. The early results are in and the evidence, whilenot complete, indicates that ISO 14000 certificationdoes work. It does achieve the twin objectives ofreduced pollution and improved corporate performance.


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Porter, M.E., and Van der Linde, C. (1995). “Toward aNew Concept of the Environment-CompetitiveRelationship,” Journal of Economic Perspectives, Vol.9, No. 4 (Fall), pp. 97-118.

Rondinelli, Dennis A., and Vastag, Gyula. (1996).International Environmental Standards andCorporate Policies: An Integrative Framework.California Management Review, 39, (1):106-122.

Rondinelli, Dennis A., and Vastag, Gyula. (1998).Private Investment and Environmental Protection:Alcoa-Kofem’s Strategy in Hungary. EuropeanManagement Journal, July-August.

References


Rondinelli, D. A., Berry, M. A., and Vastag, G. (1997).Strategic Programming for EnvironmentalManagement: Sonoco’s Take-Back Policy. BusinessHorizons, vol. 40, no. 3, 23-32.

Sayre, Don. (1996). Inside ISO 14000: The CompetitiveAdvantage of Environmental Management. DelrayBeach, Florida: St. Lucie Press.

Smith, R.T., and Melnyk, S.A. (1996). GreenManufacturing. Dearborn, MI: Society forManufacturing Engineering.

Tibor, Tom, with Ira Feldman. (1996). ISO 14000: AGuide to the New Environmental ManagementStandards. Burr Ridge, IL: Irwin ProfessionalPublishing.

Walley, N., and Whitehead, B. (1994). “It’s Not EasyBeing Green.” Harvard Business Review. May-June,pp. 46-52.

Wheeler, D. and Afsah, S. (1996). Going Public onPolluters: Indonesia’s New Program. Asian ExecutiveReports, 18, (9): 9.

Ulrich, K.T., and Peason, S.A. (1993). “Does ProductDesign Determine 80% of Manufacturing Cost?”MIT Sloan School Working Papers.

Yin, R.K. (1994). Case Study Research: Design andMethods. Thousand Oaks, CA: Sage Publications.



A P P E N D I XI

Dear :This letter is to request your participation in a survey regarding the acceptance of the new ISO 14000 certificationprogram being introduced both here in the United States and in the rest of the world. This is a relatively new pro-gram which attempts to build on the successful ISO 9000/QS 9000 certification programs in quality. However, sinceit is relatively new, there is a great deal of confusion surrounding it. This survey, supported by several professionalsocieties such as the National Association of Purchasing Management (NAPM), and the American Production andInventory Control Society (APICS), is intended to identify how managers such as yourself view this new certifica-tion program and to determine the degree to which this program has been accepted. Given the potential importanceof this topic and the great deal of interest being shown in it, your participation in this project would not only behelpful but also of great concern to other managers in your field. It is expected that by participating, you will gaininsight into your potential implementation of ISO 14000.

Accompanying this letter, you will find a survey. In testing this questionnaire, we have found that managers typi-cally invested less than an hour’s worth of time in completing it. However, they noted that it was a relatively enjoy-able and very informative exercise.

All individual responses will be kept strictly confidential. The responses, when used, will be reported in a summa-rized benchmarking type of report. This report will allow you to benchmark your firm by industry and against bestpractice. If you would like a copy of this report, you can fill in a request form found at the end of the survey or justattach a business card to the front cover of the questionnaire. The report will be then sent to you upon completionof the study.

If you have any questions about the survey, please contact one of the project research assistants, Frank Montabon,Sime Curkovic, or Robert Sroufe. They can be reached by phone (517-353-6381), by fax (517-432-1112) or bye-mail ([email protected] for Frank, [email protected] for Sime, [email protected] for Robert).

Sincerely,

Roger Calantone Rob Handfield Steven A. Melnyk Lal TummalaProfessor of Professor of Professor of Professor ofMarketing Supply Chain Operations Engineering

Management Management

enc.: Letters of SupportISO 14000 Survey Questionnaire

© Michigan State University - Calantone, Handfield, Melnyk & Tummala

Appendix I:Survey Instrument


A P P E N D I X I

QUESTIONNAIREISO 14000 CERTIFICATION STUDY

General Instructions and Information

Thank you for agreeing to take part in this study of the ISO 14000 Certification system. On the questionnaireattached...

• All individual responses will be kept strictly confidential.

• Please note that we are interested in your responses to each question. There are no right or wrong answers.

• Please try to answer every question, even though you may not be 100% sure of your answer. An approximateanswer is better than no answer, since incomplete questionnaires create serious analysis problems. If appropri-ate, please seek information from colleagues who have access to more accurate information.

• Please read definitions and explanations carefully because they are critical to your ability to answer eachquestion.

If you have any questions/problems, please feel free to contact one of the project research assistants:

Thank you again.

© Michigan State University - Calantone, Handfield, Melnyk & Tummala

ISO 14000 Certification System ProjectThe Eli Broad Graduate School of ManagementMichigan State UniversityEast Lansing, Michigan

Frank MontabonDepartment of Marketing and

Supply Chain ManagementMichigan State University

(517) 353-6381FAX: (517) 432-1112

e-mail: [email protected]

Sime CurkovicDepartment of Marketing and


(517) 353-6381FAX: (517) 432-1112


Robert SroufeDepartment of Marketing and


(517) 353-6381FAX: (517) 432-1112



A P P E N D I XISECTION I — GENERAL DESCRIPTION OF POSITION OF RESPONDENT

Please read carefullyThe terms “Company” or “your company” are used throughout. These terms mean company, division, or businessunit. If you are a divisionalized or decentralized firm, with divisions or units operating fairly independently, sub-stitute “division” or “business unit” for “Company” as appropriate.In this first section, our interest is obtaining some general descriptive information about you and your positionwithin the company.

1. What is your job title? __________________________________________

2. Number of years in current position? (✔ one box only)Less than 1 Year 1-3 Years 3-5 Years 5-10 Years Greater than 10 years

3. Are you a member of... (✔ all appropriate boxes)American Production and Inventory Control Society (APICS)American Society for Quality Control (ASQC)Association for Manufacturing Excellence (AME)Council for Logistics Management (CLM)Institute for Management Accounting (IMA)National Association of Purchasing Management (NAPM)Society for Manufacturing Engineering (SME)Society of Automotive Engineering (SAE)Other - Please describe:______________________________________________________________

4. Is your company involved currently, or in the past, in the following program implementations?(✔ check all boxes that are appropriate)

Just-in-Time Manufacturing (JIT) Total Quality Management (TQM)Simultaneous Engineering/Concurrent Design Business Process Reengineering/RedesignEnvironmental Management System (EMS) Lead Time Reduction ProgramISO 9000/QS 9000 Certification


A P P E N D I X IPlease Read CarefullyFor the following questions, you are asked to indicate your response by circling a number between the anchorpoints of the zero-to-ten scales.

5. To what extent are you involved in: No Involvement Extensive Involvement

1. Quality Planning and Assurance . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

2. Workplace and Employee Safety . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

3. Product Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

4. Process Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

5. Plant Layout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

6. Production Planning and Scheduling . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

7. Environmental Planning and Management . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

8. Certification Planning and Implementation . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

9. Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

10. Continuous Improvement Activities . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

11. Continuous Improvement Planning . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

12. Continuous Improvement Kaizen . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

13. Purchasing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

14. Materials Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

15. New Product Launches . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

16. Cost Justification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

17. Process Redesign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

18. Reengineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

19. Regulatory Compliance (environmental) . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

20. Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

21. Transportation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

22. Warehouse Management . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

23. Legal Affairs and Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10


A P P E N D I XISECTION II — GENERAL COMPANY INFORMATION

The following question refer to your company. As previously noted, “company” refers to the unit in which youare located. This can be a company, division or business unit. If you are a divisionalized firm, with divisions indifferent industries and relatively autonomous, substitute “division” or “business unit” for “company” asappropriate.

1. Please list the principal products offered by your “company.” Focus on those few which account for the largestpercentage of total sales whether sold outside or for internal transfer.

_____________________________________________________________________________________________

_____________________________________________________________________________________________

______________________________________________________

2. Total annual sales of your “company”: ($000) ___________.

3. Total number of Full Time Equivalent employees: ____________

4. Your company’s export sales as a percent of total sales: ______%.What percentage of total sales are made to the European Union: ______%.

5. Your company’s consumer/end user sales as a percent of total sales ______% (where consumer sales refer tothose made directly to end users or customers, as compared to intermediate or industrial customers).

6. Is your company (✔ all that apply):

publicly traded privately owned

a foreign-owned subsidiary/transplant a joint venture

7. The industrial sector in which your company primarily operates? (✔ one box only)

automotive office systems (furniture) and fixtures

agricultural/forestry other manufacturing: _____________________

chemical and allied products pharmaceutical

computer and other electronic equipment printing and publishing

fabricated metal products transportation equipment

food and kindred products services

industry machinery and equipment primary metal industries

laboratory/medical instruments and related products

Other (please describe )

_________________________________________________________________________________


A P P E N D I X IPlease Read CarefullyBelow are questions concerning various strategic aspects of your company. Please indicate your own personalfeeling about each item by circling the number closer to your particular feeling.

How would you characterize the external situation within which your company operates?

Very safe, little threat to the survival Very risky, a false step can mean and well-being of my firm. . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10 my firm’s undoing.

Rich in investment and marketing Very stressful, exacting, hostile; opportunities. . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10 very few opportunities.

An environment that my firm can A dominant environment in which control and manipulate to its own my firm’s initiative counts for very advantage, such as a dominant firm little against the tremendous has in an industry with little competitive, political or competition and few hindrances . . . . . . 1 2 3 4 5 6 7 8 9 10 technological forces.

How rapid or intense is each of the following in your main industry?

Our firm must rarely change its Our firm must change its marketing marketing to keep with the market practices extremely frequently (e.g., and competitors . . . . . . . . . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10 semiannually).

The rate at which products/services are getting obsolete in the industry The rate of obsolescence is very is very slow . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10 high, as in some fashion goods.

Actions of competitors are quite easy Actions of competitors are to predict. . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10 unpredictable.

Demand and consumer tastes are Demand and tastes are almost fairly easy to forecast. . . . . . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10 unpredictable.

The production/service technology is not subject to very much change and The modes of production/service is well established . . . . . . . . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10 change often and in many ways.

The rate of new product/service introduction by the company relative to competitors:

Has decreased very much . . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10 Has increased very much.

The rate of change in your methods of production or rendering of services:

Rate has declined much . . . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10 Change has accelerated greatly.

Risk taking by key executives of your company in seizing and exploring “chancy” growth opportunity:

Has decreased very much . . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10 Has increased very much.


A P P E N D I XIIn dealing with its competitors, the company:

Resorts much more to a live and let live philosophy . . . . . . . . . . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10 Has become more aggressive.

Seeking of unusual, novel solutions by senior executives to problems via the use of “idea people,”brainstorming, etc.:

Has become less common . . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10 Has become much more common.

In general, the top managers of your company believe that:

Owing to the nature of the competitive Owing to the nature of the environment, it is best to explore it competitive environment, bold, wide-gradually via timid, incremental ranging acts are necessary to achievebehavior . . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10 the company’s objective.

When confronted with decision-making situations involving uncertainty, your company:Typically adopts a cautious, Typically adopts a bold aggressive, “wait and see” posture to minimize posture in order to maximize the the probability of making costly possibility of exploiting potential decisions . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10 opportunities.

Please Read CarefullyFor each program listed down the left side, please place an “X” in the cell which best describes its status in yourcompany (only one (1) “X” per row please).

WHAT IS THE STATUS OF THE FOLLOWING DEVELOPMENTS IN YOUR COMPANY?

Not Not Future Assessing Planning Currently SuccessfullyApplicable Being Consideration Suitability to Implement Implementing Implemented

QS 9000

ISO 9000

Total Quality Management (TQM)

Cross Functional Product Development Teams

Participation in Industrial Voluntary Environmental Programs (e.g., Responsible Care)

Participation in Voluntary EPA Programs (e.g., 33/50, Green Light)

Participation in OSHA’s Voluntary Prevention Program (VPP)

Company-specific environmental management system

Enterprise Resources Planning (ERP) system

Manufacturing Resource Planning (MRP II) system

ISO 14000

(Only one “X” per row please)


A P P E N D I X I


A P P E N D I XISECTION III — POSITION ON ISO/QS 9000 CERTIFICATION PROCESS

Please Read CarefullyIf your company is either actively implementing or has implemented ISO 9000/QS 9000, then fill out this section;if not, please go to Section IV.

For the following questions, you are asked to indicate your response by circling a number between the anchorpoints of the following zero-to-ten scale:

No Influence - 0 1 2 3 4 5 6 7 8 9 10 - Major Influence

1. To what extent was your decision to implement the ISO/QS 9000 certification process influenced by thefollowing factors: No Influence Major Influence

Customer Demand: required by some customers as a condition for doing business with them . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Ease of Trade: By implementing the ISO/QS standards, we could enhance our ability to sell our products internationally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Reduction in Costs: By implementing these standards, our company could identify opportunities for cost reductions in overhead and in rework. . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Reductions in Liabilities/Risk: The ISO/QS standards offer reductions by improving conditions on the shop floor . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Improving the overall quality of our products . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Anticipated reductions in inventory levels . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Anticipated reductions in lead times. . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Enhanced Reputation/Visibility in the Marketplace: The ISO/QS standards offered us a means of enhancing our reputation as a quality/leading edge producer . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Pressure from shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Credibility Through Third-Party Certification: Third-party certification ensures the credibility and substance of a commitment to quality and to the management of the processes associated with quality . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Better Process Management: Through better documentation, analysis and understanding of basic business processes . . . . . 0 1 2 3 4 5 6 7 8 9 10

Higher Quality Workforce: By exposing them to the skills and tools required by the ISO/QS certification process . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Other: Please Describe ________________________________ 0 1 2 3 4 5 6 7 8 9 10

2. To what extent has your company’s implementation of the ISO/QS 9000 certification standards affected:Negative Impact No Impact Positive Impact

Overall Product Quality 0 1 2 3 4 5 6 7 8 9 10Overall Costs 0 1 2 3 4 5 6 7 8 9 10Improved Process Management & Control 0 1 2 3 4 5 6 7 8 9 10Enhanced Marketplace Reputation 0 1 2 3 4 5 6 7 8 9 10Reductions in Lead Times 0 1 2 3 4 5 6 7 8 9 10Reductions in Inventory Level 0 1 2 3 4 5 6 7 8 9 10Improvements in the quality of the workforce 0 1 2 3 4 5 6 7 8 9 10Reductions in levels of scrap/rework 0 1 2 3 4 5 6 7 8 9 10Reductions in liabilities/risk 0 1 2 3 4 5 6 7 8 9 10Improved overall operating flexibility 0 1 2 3 4 5 6 7 8 9 10Enhanced visibility with your major customers 0 1 2 3 4 5 6 7 8 9 10


A P P E N D I X ISECTION IV — POSITION ON ISO/QS 9000 CERTIFICATION PROCESS

TO BE FILLED IN BY ALL RESPONDENTS

Please Read CarefullyFor the following statements, you are asked to indicate your response by circling a number between the anchorpoints of the zero-to-ten scales.

1. The ISO 14000 certification procedure is: Strongly Disagree Strongly Agree

Well understood by people within your company . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Demanded by the major customers. . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Consistent with Quality initiatives (e.g., TQM or ISO/QS 9000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Demanded by major stockholders. . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Demanded by the community which we reside . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

A condition for simplifying or enhancing our position in foreign markets where we want to have a presence . . . . . . 0 1 2 3 4 5 6 7 8 9 10

A factor for reducing our environmental liability/risk position 0 1 2 3 4 5 6 7 8 9 10

Consistent with reduced manufacturing costs . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Consistent with reduced lead times . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Consistent with improved product quality . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Of strategic importance to your company. . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Demanded by major environmental groups . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

A method of improving compliance with legislative and regulatory requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

A method of reducing company’s exposure to penalties (by identifying and correcting pollution problemsduring the discovery phase) . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

A result of regulatory incentives . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Consistent with the current environmental management system within our company . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

A method for effective pollution prevention and waste reduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Cost justified in light of the various costs and benefits associated with certification . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Consistent with the development of a high quality work force for your company . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Supported by major industrial organizations to which either you or your company belong . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

A vehicle for reducing environmentally related costs . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

A factor influencing product design within your company. . . 0 1 2 3 4 5 6 7 8 9 10

A factor influencing process design and plant layout within your company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

A factor influencing the management of the supply chain . . . 0 1 2 3 4 5 6 7 8 9 10

A factor influencing performance evaluation at either the personnel or area level . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

A factor affecting the selection of possible suppliers . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

A factor affecting the evaluation of current suppliers . . . . . . . 0 1 2 3 4 5 6 7 8 9 10


A P P E N D I XIPlease Read CarefullyFor the following statements, you are asked to indicate your response by circling a number between the anchorpoints of the zero-to-ten scales, using the following scale:

Highly Uncertain - 0 1 2 3 4 5 6 7 8 9 10 - Well Known

2. Please consider major sources of uncertainty in the ISO 14000 certification procedures, specifically:Highly Uncertain Well Known

Potential changes in environmental regulations at the federal governmental level are. . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Potential changes in environmental regulations at the state/provincial level are: . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Potential changes in environmental regulations at the local/community level are: . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Potential changes in environmental regulations at the international level (i.e., changes in the regulations of other countries to which your company exports) are: . . . . 0 1 2 3 4 5 6 7 8 9 10

Potential changes in the standards and procedures underlying the ISO 14000 certification procedure are: . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Costs associated with obtaining ISO 14000 certification are : . 0 1 2 3 4 5 6 7 8 9 10

Benefits resulting from obtaining ISO 14000 certification are: 0 1 2 3 4 5 6 7 8 9 10

Changes to current environmental management systems to accommodate ISO 14000 certification are: . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Reaction of major suppliers to ISO 14000 certification is: . . . 0 1 2 3 4 5 6 7 8 9 10

Reaction of major investors to ISO 14000 certification is:. . . . 0 1 2 3 4 5 6 7 8 9 10

Extent to which public disclosure of environmental infractions will be required is:. . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10


A P P E N D I X ISECTION V — INFORMATION ABOUT YOUR COMPANY’S ENVIRONMENTAL MANAGEMENT

SYSTEM AND EFFORTS:

Please Read CarefullyFor the following statements, you are asked to indicate your response by circling a number between the anchorpoints of the zero-to-ten scales, using the following scale:

Strongly Disagree - 0 1 2 3 4 5 6 7 8 9 10 - Strongly Agree

1. Your company’s environmental management system:: Strongly Disagree Strongly Agree

Your company has a “formal” environmental management system in place. . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

The environmental management system’s procedures are formally documented . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

The environmental management system’s procedures are widely circulated and available to anyone who needs access . 0 1 2 3 4 5 6 7 8 9 10

Top management has taken a highly visible public position in support of improved environmental performance. . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

There is a specific department within your company which is formally responsible for environmental affairs. . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

There is a formal reporting position between those responsible for environmental affairs within your company and one of the company’s senior executives (director level or above). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

The environmental position of your company is given prominent visibility within annual reports and other publications distributed by your company . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Environmentally-related information (e.g., changes in regulations, tracking of which companies have been fined and how much) is tracked and monitored on an on-going basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Information about best-in-class environmental performance in your industry is tracked and recorded within your company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Environmental practices, procedures and systems within your company are compared with the best-in-class on a regular basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

The environmental achievements of your company are given prominent visibility within annual reports or other company publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Environmental issues, policies and procedures are included in formal company training programs . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Environmental performance is formally tracked and monitored within the company. . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Various performance goals have been developed and implemented which report environmental performance on different dimensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Environmental performance, as captured by various measures, is periodically summarized . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Environmental performance results are widely distributed within your company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10


A P P E N D I XIYour company’s environmental management system: Strongly Disagree Strongly Agree

Performance measures quantify costs associated with environmental performance . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

The performance measures identify qualitative costs associated with environmental performance and problems. . . 0 1 2 3 4 5 6 7 8 9 10

When an environmental problem is identified, attention is primarily focused on correcting the effects of that problem . . 0 1 2 3 4 5 6 7 8 9 10

When an environmental problem is identified, attention is focused on the underlying cause and corrective measures . . . 0 1 2 3 4 5 6 7 8 9 10

When an environmental problem is identified, the major effort within your company is on determining the underlying reasons for that problem and then attacking it . . . 0 1 2 3 4 5 6 7 8 9 10

Product designs have been modified in response to environmental problems attributable to a specific design flaw . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Process designs and plant layouts have been modified in response to external environmental problems attributable to a specific design flaw . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

New equipment has been acquired or existing equipment modified in response to external environmental problems attributable to that equipment . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Environmental issues are included in the process design process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Environmental issues are considered when laying out the plant or specifying equipment for use on the plant floor . . . . 0 1 2 3 4 5 6 7 8 9 10

Environmental issues influence plant location decisions (i.e., where we locate a new plant) . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Environmental performance has been captured primarilyin terms of recyclability i.e., the amount of recycled material used in the product or the degree to which the product is recyclable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Cost accounting has been extensively involved in your company in capturing and reporting environmental costs . . . 0 1 2 3 4 5 6 7 8 9 10

Environmental performance is considered during the evaluation of individual departments or areas. . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Performance on environmental dimensions is considered during personnel evaluations . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Performance on environmental dimensions is considered during supplier evaluations. . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Environmentally responsible suppliers tend to be more cost effective suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Environmental concerns play a significant role in the supplier selection and/or retention decisions . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Your company has been very successful in creating company wide awareness of environmental problems, costs and opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

People within your company view environmental problems as opportunities rather than as costs or constraints to be satisfied . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10


A P P E N D I X IYour company’s environmental management system: Strongly Disagree Strongly Agree

Your company has a well developed environmental data base for tracking and monitoring environmental issues . . . . . 0 1 2 3 4 5 6 7 8 9 10

The effectiveness of different production schedules is evaluated considering possible environmental problems created by those schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Top management considers environmental performance as important as reducing costs . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Top management considers environmental performance as important as reducing lead times . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Top management considers environmental performance as important as improving quality. . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

People within your company consider your company’s formal environmental management system highly effective . . 0 1 2 3 4 5 6 7 8 9 10

People outside of your company consider your company’s formal environmental management system highly effective . . 0 1 2 3 4 5 6 7 8 9 10

Tools and procedures such as risk assessment and life cycle analysis are incorporated into your company’s formal environmental management system . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Environmental issues are more important today becausethey reflect a current marketing fad . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Environmental concerns within your company are primarily driven by regulatory requirements. . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

2. If your company does have a formal environmental management system in place, how long has that systembeen in place? ____________ years.

3. Environmental activities within your firm have: Strongly Disagree Strongly Agree

Significantly reduced overall costs . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Significantly reduced lead times . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Significantly improved product quality . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Significantly improved its position in the marketplace . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Helped enhance the reputation of your company . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Helped your company design/develop better products . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Significantly reduced waste within the production process. . . 0 1 2 3 4 5 6 7 8 9 10

Significantly reduced waste within the equipment selection process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Had benefits that have definitely outweighed any costs incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Improved its chances of successfully selling its products in international markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Placed reasonable demands on the information system and on data requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Caused your company to investigate alternative technologies and procedures. . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Not compromised the product’s acceptability from the customer’s perspective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Not adversely affected the position of your company in the marketplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10


A P P E N D I XIPlease Read CarefullyFor the following questions, you are asked to indicate your response by circling a number between the anchorpoints of the following zero-to-ten scale:

Never Considered - 0 1 2 3 4 5 6 7 8 9 10 - Always Considered

4. To what extent are the following options considered within your company:Never Considered Always Considered

Product redesign: redesigning the product to eliminate any potential environmental problems (manufacturing or recycling) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Process redesign: redesigning the process to eliminate any potential environmental problems . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Disassembly: redesigning the product or process so as tosimplify disassembly and disposal at the end of the product’s useful life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Substitution: replacing a material which can cause environmental problems with another material which is not problematic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Reduce: reducing the level of material and/or components (which are contributing to environmental problems) within products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Recycling: making more use of recycled components or making a product which is more easily/readily recycled . . . . . 0 1 2 3 4 5 6 7 8 9 10

Rebuilding: rebuilding a product where some of the parts or components are recovered while others are replaced . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Remanufacturing: like rebuilding, except that none of the parts are reduced to raw material . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Consume Internally: consuming waste internally (e.g., wood pallets used in shipping or product storage used to generate electrical power in a co-generation facility) . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Prolonging Use: reducing environmental problems by increasing the overall life of the product (e.g., engines which now last longer before having to be replaced or rebuilt) . . . . . 0 1 2 3 4 5 6 7 8 9 10

Returnable Packaging: Using packaging and pallets which can be returned after they are finished being used . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Spreading Risks: shifting responsibilities for environmental problems to a third party or expert better able to deal with issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Creating a market for waste products: treating waste as an input to another product which can be made and sold at a profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Waste Segregation: an intermediate action in which waste streams are separated out into their individual components before being recycled, reused or consumed internally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Relocation: changing the location of a process or plant to take advantage of more favorable environmental regulations and conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10

Alliances: working with either suppliers or customers to address environmental problems and/or issues . . . . . . . . . . 0 1 2 3 4 5 6 7 8 9 10


A P P E N D I X I5. In the box below, briefly describe the major obstacles or barriers to the development, implementation and

acceptance of ISO 14000 within your company.

Thank you very much for your time and effort in completing this questionnaire.


A P P E N D I XIPlease either fill in the information in the box below or attach your business card if you wish to receive a copyof the final report based on the summarized responses to this survey. This page can be sent in separately toauthors at the following address:

ISO 14000 Certification System ProjectRoom N333 NBC

Department of Marketing and Supply Chain ManagementThe Eli Broad Graduate School of Management

East Lansing, Michigan 48824-1122USA

I wish to receive a copy of the final report from this study. Please send to the name and address found below (please fill in address or attach your business card):

Address Block

Please staple your business card to this page

HERE


A P P E N D I X II

ISO 14000 site visit protocol

We would like to thank you for taking your time in participating in this study. As you are aware, we have seen therecent introduction of the ISO 14000 certification standard. This standard supposedly builds on the success of theISO/QS 9000 certification standards. However, this standard is mainly targeted towards the environmental manage-ment systems and processes. At present, this new standard has generated a great deal of confusion. Some firms havedecided to pursue ISO 14000 certification, while others with good environmental systems have decided not to pur-sue this certification. Our interest is to understand your company’s position on this certification standard. Pleaseunderstand that there is no right or wrong answer. Whether or not to pursue ISO 14000 certification is ultimately abusiness decision and we want to study it as such. To this end, we have a few questions that we would like to askyou. We expect that this interview should take no more than 60 minutes.

Interviewers ____________________________________Date ___________________________________Company _______________________________Respondent(s) ____________________________________________What is/are your job title(s)?1. _____________________________________________2. _________________________________________3. _________________________________________4. _________________________________________

Number of years in current position?1. _____2. _____3. _____4. _____

What are the primary products produced by your company?1.______________________________________2.______________________________________3.______________________________________

Number of employees at this facility? __________

What is your company’s export sales as a percentage of total sales?__________

What percentage of sales are made to the European Union?__________

Appendix II:Interview Protocol for Case Studies


A P P E N D I XIIWhat is your company’s consumer/end user sales as a percentage of total sales__________% (Where consumer sales refer to those made directly to end users or customers, as compared to international orindustrial customers)

Is your company:Publicly traded YES/NOPrivately owned YES/NOA foreign owned subsidiary/transplant YES/NOA joint venture YES/NO

What is the market targeted by your firm?

What are the major competitive thrusts in your industry (current, and near future)?

What are the key success factors for your firm?

What type of environmental system is in place, and what is its role in the planning and execution activities ofthe firm?

What is your understanding of ISO 14000 at this time?

What is your firm’s position on ISO 14000?

How was this decision arrived at?

What factors influenced this decision?

(Use one of the four questions depending on the company being interviewed)1. What are the primary reasons for your firms to seek ISO 14000 certification?

2. What are the primary reasons for your firm to consider ISO 14000 certification?

3. What are the primary reasons for your firm to implement an EMS and not seek ISO 14000 certification?

4. What are the primary reasons for your firm to not need an EMS, or ISO 14000?

Under what conditions would management change this decision?

What are the benefits you can see being generated by this form of certification? Costs? Risks?

How do you measure performance in your department/area?

Do you have any final comments or question for the interviewers that you would like to make before we finishthis interview?

Are there any other people in this firm you think we should talk with?Name: ____________________ Phone:____________________

Can we use your name when we introduce ourselves?

Center for Advanced Purchasing Studies


THE CENTER FOR ADVANCED PURCHASING STUDIES (CAPS) was established in November 1986 as theresult of an affiliation agreement between the College of Business at Arizona State University and the NationalAssociation of Purchasing Management. It is located at The Arizona State University Research Park, 2055 EastCentennial Circle, P.O. Box 22160, Tempe, Arizona 85285-2160 (Telephone [602] 752-2277).

The Center has three major goals to be accomplished through its research program:

to improve purchasing effectiveness and efficiency;to improve overall purchasing capability;to increase the competitiveness of U.S. companies in a global economy.

Research published includes 37 focus studies on purchasing/materials management topics ranging from purchasingorganizational relationships to CEOsí expectations of the purchasing function, as well as benchmarking reports onpurchasing performance in 26 industries.

Research under way includes: Major Changes in Purchasing/Supply Organizations; Supply Chain Management Strategies;International Purchasing and Supply Management in the United States and in Germany; and the benchmarking reportsof purchasing performance by industry.

CAPS, affiliated with two 501 (c) (3) educational organizations, is funded solely by tax-deductible contributionsfrom organizations and individuals who want to make a difference in the state of purchasing and materials manage-ment knowledge. Policy guidance is provided by the Board of Trustees consisting of:

Stewart Beall, C.P.M., Cyprus Amax Minerals CompanyPhillip L. Carter, D.B.A., CAPSEdwin S. Coyle, Jr., C.P.M., IBM CorpCarl Curry, The Quaker Oats CompanyHarold E. Fearon, Ph.D., C.P.M.Edward P. Hoffman, Eastman Kodak CompanyAndy Icken, Exxon CompanyEdith Kelly-Green, Federal ExpressRichard A. Kotler, NortelBarbara B. Lang, Fannie MaeCharles A. Lileikis, Lockheed Martin CorporationJose Mejia, Lucent TechnologiesAlex M. Munn, Coca-Cola USADave Nelson, C.P.M., Deere & Co.Paul Novak, C.P.M., NAPMLarry Penley, Ph.D., Arizona State UniversityHelmut F. Porkert, Ph.D., Atlantic Richfield CompanyAlan R. Raedels, Ph.D., C.P.M., Portland State UniversityWilliam L. Ramsey, AlliedSignal, Inc.Richard D. Rich, C.P.M., NAPMJim Scotti, Halliburton CompanyDavid Sorensen, General Mills, Inc.Louis P. Vaccarelli, BMG Entertainment N.A.Stephen Welch, SBCJoseph Yacura, American Express

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ISO 14000 Assessing Its Impact on Corporate Effectiveness ...

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