Anna Maria FerrariDepartment of Sciences and Methods for Engineering, Reggio Emilia (Italy)

The economic dimension of sustainability: new perspectives from a ceramic tile manufacturing context

Davide Settembre BlundoGruppo Ceramiche Gresmalt, Sassuolo (Italy)Project Management Office Department

Fernando Enrique Garcia MuiñaDepartment of Business Administration,Madrid (Spain)

Marco CucchiGruppo Ceramiche Gresmalt, Sassuolo (Italy)Project Management Office Department

Sonia Medina SalgadoDepartment of Business Administration,Madrid (Spain)

PRESENTATION OVERVIEW

BACKGROUND

Research Objectives

SYSTEM BOUNDARY

LCC: Comprehensive

tool CONCLUSIONS

METHODOLOGY

BACKGROUND

Circular Economy (CE)

• A regenerative economic model to overcome the currents models of growth and resources consumption (Pinheiro and Jugend, 2019)

• A radical systemic change aimed at eco-design, economy of functionality, reuse, repair, remanufacturing, and industrial symbiosis (Baldassarre et al., 2019)

NEW BUSINESS MODELSCapable of capturing the value of waste in order to maintain a constant flow of value in many different supply chains in order to reduce the depletion of resources (Bressanelli et al. 2018)

Where the waste of one company becomes the raw material of another

(Singh and Ordoñez, 2016)

BACKGROUND

effective and reliable information systems that allow them to make appropriate decisions

Being able to quantify the sustainability of the various possible options in terms of environmental, financial and social acceptability.

Intended to think of new products, production and sales systems capable of integrating more agents of the value chain in the task of maintaining the reverse circulation of resources for their less deterioration (García-Muiña et al., 2018)

Intensive in the use of energy and natural resources

LCSA = LCA + LCC + S-LCAISO

1404014044

ISO 15686

Guidelines

Complexity of environmental issues and the selection dilemma between environmental versus cost effective alternatives

LCC and SLCA, versus LCA, are lacking consensus and definition and thus broad practical implementation

Beyond separate valuation

About LCSA

Productive system (unclear system boundary definition)

Cost categories (based on a linear process)

Identifying the agents (unresolved internalization approach)

About LCC

BACKGROUND

Different modes of calculation and aggregation

LCSA = LCA + LCC + S-LCA

BACKGROUND

Research objectives

LCSA

Enviromental Domain

Economic(monetary) Domain

Social Domain

LCA

E-LCC C-LCC S-LCC

S-LCA

• Risk of double counting• Diferent time horizon• Not consider other costs

(renewable, recyclable resources, recovery of waste)

• to overcome some LCC limits offering a new approach to the economicdimension of sustainability

METHODOLOGY

SystemBoundary & time horizon

Identifyngcost (scope LCC analysis)

Comprehensive

tool

• Ceramic tile manufacturing context

• Breakdown of the costs in a supply chain perspective

• Related to circular economy practices

• ISO 15686:5 (2017) guidelines

• Internal cost perspective• Full cost philosophy

RAW MATERIALS

SUPPLY

RAW MATERIALS

LOGISTIC

GLAZES SUPPLY

GLAZES LOGISTIC

GLA

ZES

GR

IND

ING

CUTTING & SQUARING

CRADLE GATE

CER

AM

IC

BO

DY

G

RIN

DIN

G

SPR

AY

DR

YIN

G

PR

ESSI

NG

TILE

S D

RY

ING

TILE

S G

LAZI

NG

TILES FIRING

TILES SORTING &

PACKING

RETAILER /INSTALLER

CUSTOMER

TILES SALES

TILES LOGISTIC

EMISSIONSWASTE

DISPOSAL

SUPPLIER

METHODOLOGY

SYSTEM BOUNDARY

To identify the input and output flows process, forwards and backwards from a circularity approach

TIME HORIZON• To use discount rates to be applied

to cost magnitudes over time• LCC period of calculation = LCA

time horizon

RAW MATERIALS

SUPPLY

RAW MATERIALS

LOGISTIC

GLAZES SUPPLY

GLAZES LOGISTIC

CRADLE GATE

SUPPLIER

EMISSIONS

ETHODOLOGYMETHODOLOGY

GLA

ZES

GR

IND

ING

CUTTING & SQUARING

CRADLE GATE

CER

AM

IC

BO

DY

G

RIN

DIN

G

SPR

AY

DR

YIN

G

PR

ESSI

NG

TILE

S D

RY

ING

TILE

S G

LAZI

NG

TILES FIRING

EMISSIONS

DISPOSAL

METHODOLOGY

CUTTING & SQUARING

CRADLE GATE

TILES FIRING

TILES SORTING &

PACKING

WASTE

DISPOSAL

EMISSIONS

METHODOLOGY

RETAILER /INSTALLER

CUSTOMER

TILES SALES

TILES LOGISTIC

CRADLE GATE

EMISSIONS

WASTE

METHODOLOGY

WLCC

Income

Non-constructioncosts

Externalities

LCC

Production

Operation

Maintenance

End of use

Enviromental LCC

Conventional

LCC

STARTING POINT

SCOPE OF LCC ANALYSIS

• Direct consumptions related to

the life cycle of a product

• Big investment project

• Full cost method: environmental

cost if they are monetized in terms

of taxes or subsidies. Incomes

considered.

• Discount rate method

ISO 15686:5; 2017

Envi

rom

enta

l

To identify those cost savings related to a lower use or a greater recovery of resources or cost of CE investment

Any valuation of other externalitiesas a consequence of production

Not different agents from the value chain full cost method

Accounting principles not sustainability principles

Continuous production process LIMITATIONS

AGENT

PRODUCER

INSTALLER

RETAILER

CUSTOMER

ENVIROMENT

ISO (15686:5)

PRODUCTION

OPERATION

MAINTENANCE

END OF LIFE

EXTERNALITIES

EC-LCC

Conventional producer costs (research, development and design, raw materials, energy, depreciation & maintenance, quality control, labour)

Inside Circular Cost (water, energy, scrap tiles and the costof system asociated to recover this resources)

Outside Circular Cost (diference between cost and incomesfrom waste recovery and waste revaluation strategies)

Conventional costs of other agents (transport, installation& maintenace)

Externalities monetized from LCA analysis

1º SCHEME APPROACHED

EC

O-

CO

ST

For everyValueChain

ONE YEAR PERIOD

EC-L

CCW

C-L

CC

Income

Indirect Costs

Enviromental

Externalities

LCC

Production

Instalation

Maintenance

End of use

Recycle

DIS

PO

SAL

Recovery

Circular LCCEnviromental

LCC

Reuse

Reduce

2º SCHEME APPROACHED

A more comprehensive LCC tool

Disccount unresolved

Some double counting from environmental cost (taxes) & externalities

Still limited

Requirements

Value Chain Actors collaboration for

a global sustainability valuation but

it could be implemented in one

actor chain value

CONCLUSIONS

About the schemesapproached

1° scheme: circular value system of the product (not

so life cycle)

2º scheme

• Present valuation of the future costs

• Structure of the company & Legal system in which it is embedded

Same scopes for LCA & LCC

To know better the origin of the

value gains or losses avoiding, to some extent,

the double counting

Better Information System

Be able to quantify efficiency measures aimed at reducing the

burden of waste and residues

To create different decision scenarios truly focused on

sustainability

Allow more symbiotic models and fewer resource consumers

CONCLUSIONS

MANAGERIAL IMPLICATIONS

Better & reliable information to

To be comparable externally

To fulfil the real

objectives of transparency

and consistency

Business decisions regarding

Which products produce

Which CE decisions

take

How much pollutant

products are

Intangible returns Tangible returns

CONCLUSIONS

FURTHER INVESTIGATION

Uncertainty associated assessment

Futureimpact

Evolution of prices

Risk

Depth valuation of income & intangibles

Fromcompanies

From thirdparties

To Achieve more realistic Models & complete decisions bases

Thanks for your attention!

Sonia Medina Salgadosonia.medina@urjc.es