Total Quality

Environment
Management

Second semester 2016 - 2017

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Eco-Environment (ecological)

(1)
two things made very clear: our natural resources are finite, and if we consume those
limited resources there is (2)no replacement for them anywhere nearby. The environment we
depend on for our lives and survival is limited, and in crisis. This crisis is further worsened
by the (3)huge growths on the populations and economies of India and China booming and it
is urgent to take measures to make life on Earth sustainable. The figure below is a popular
model to understand sustainability as a process involving the interaction of the economy,
society, and environment.

Figure 1. Sustainability Model

Source: Kane, G. (2010).The three secrets of green business: unlocking competitive advantage in a low carbon
economy. UK, London: Earthscan. P.5

In order to produce development and successfully deal with the crisis, we have to apply the
principles of Sustainable, which is best defined as a development that meets the needs of
the present generation without compromising the ability of future generations to meet their
own needs. This is achieved if social and economic development are regarded as a
sustainable process, as explained below:

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1. Inter-generational equity: the development process aims to minimize any negative
impacts on future generations resulting from the development activity or process.

2. Intra-generational equity: the development process aims to minimize tendencies and

behaviors resulting in extreme variations, current or in the future, in the distribution of
wealth and prosperity within a nation or across nations. within one generation

Sustainable development can be best achieved through the concept of total quality
management (TQM). Kaikaku and Kaizen suggest two different views on how to achieve
economical sustainability.

Kaikaku proposes the introduction of big radical changes that align a whole system
to deliver quality products, doing the right thing while
Kaizen proposes the concept of continual, incremental improvements within a
system to squeeze the best performance out of it. doing things right

for example, big radical changes such as sustainable product development, adopting cleaner
manufacturing processes or shifting from a product to a service, should be complemented
with basic waste minimization and energy efficiency techniques). Applying such measures
would be the first step of a long way down the road to sustainability.

(3) As a result of the fast growth of human population and industry, the whole world is
currently facing many challenges to the environment, among which the one causing most
concern is the phenomenon of Global Warming .

Since the 1990s, many government, industry, and nonprofit entities have tried to set and
create comprehensive, voluntary environmental and social standards conducive to the
creation of green, eco-friendly business environment. Those standards targeted products,
facilities, and company operations and covered a wide range of policies, practices, and
performances, including issues such as energy efficiency, controlling climate change,
business ethics, community investment.

2. What is environmental economics?

The increasing interest in the environment and economics and their mutual relation led to the
birth of a new discipline namely, ecological economics, field of study that addresses the

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relationships between eco-systems and economic systems in the broadest sense. or
Environmental economics is a discipline which addresses the mutual relation between the
economy and environment and how they impact each other, as well as the correct methods of
regulating economic activity in order to balance competing environmental, economic, and
social goals. Environmental economics employs the discipline of economic analysis to guide
the creation of policies that promote economic sustainability and tackle environmental
problems such as pollution. Corporations and industrial entities should adapt to the present
systems and integrate environmental responsibility within their overall management process
of their businesses. This should lead to increased environmental performance and long-term
profitability.

Inter-linkages between the economy and the environment

Economy is classified into two sectors: production and consumption. The production sector
extracts from the environment the raw materials, such as energy resources (coal, gas, etc.).
Therefore, the environment has two roles; it is a supplier of resources and a sink or receptor for
waste products. These wastes may result directly from production or from consumption.

The relationship between environmental quality and economic development is explained by

the environmental Kuznets Curve (EKC). The EKC is a hypothesized relationship between
various indicators of environmental degradation and income per capita
. In the early stages of economic growth, degradation and pollution increase, but beyond
some level of income per capita the trend reverses, so that at high-income levels economic
growth leads to environmental improvement. This implies that the environmental impact
indicator is an inverted U-shaped function of income per capita. An example of an estimated
EKC is shown in Figure 2.

Figure 2. The relationship between pollution level and income growth

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 Coefficient of
Environment Degradation
Per capita GNP

Source: Jhingan, M. & Sharma, C. (2007). Environmental economics: theory, management and
policy. Vrinda publications LTD. p. 150

Suggestions for an ethical approach to environmental economics:

- Since climate change is, partially, the result of burning fossil fuel, a strategy should be
developed for controlling climate change (i.e., shifting away from carbon based economy
to solar-hydrogen economy).
- Humans must attempt to control the birth rate and control their population in order to
reduce pollution.
- Humans must modify their life styles and the global economy accordingly in such a way
as to promote sustainability and preserve the environment.

Topic 3 Eco-Advantage

What is eco-advantage?

Corporate executives are subject to demands by stakeholders to develop environmental,

social, and sustainability practices. The Report of the World Commission on Environment
and Development, also known as the Brundtland Report, offers the most commonly
accepted definition of sustainability: the development that meets the needs of the present
without compromising the ability of future generations to meet their own needs.. This
definition translated into business terms suggests sustainability is: the ability of firms to
satisfy the economic needs of shareholders (private profits) without compromising nature
and the needs of current and future generations (public benefits).

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The movement toward environmental sustainability in business has grown rapidly since
1990 in response to the changing local and global regulations, the emergence of new
compliance standards, the opportunities for positive publicity, and the increasing
expectations of customers. Eco-advantage, is a joint and equal effort to both, making
money and doing the right thing. It calls for the implementation of a pragmatic economical
approach that promotes growth without harming the environment. A similar but more
fashionable term for eco-advantage is green innovation in which the focus is the
development of environment-friendly products.. For example, reduction of waste
production and energy consumption has developed into a more system-based approach. The
problem is that implementing initiatives to reduce environmental impact is voluntary and
limited with only small penalties for not complying. Now, demand is increasing for the
adoption of a corporate social responsibility (CSR) approach which emphasizes
incorporating social aspects into business strategy and practice. Top companies achieve
success by taking into consideration requirements of both the customer and the
environmental, building product loyalty based on their concern for the environment, adding
new values and innovations and developing the reputation of a trusted eco-brand, such
companies can meet market needs and make profit. Eco-advantage is the missing link
between sustainability and being competitive.

Achieving eco-advantage

Achieving eco-advantage is a complex process with multiple stakeholders involved, so a

thorough analysis of stakeholders is crucial for understanding issues important to them,
building relationships between them, and adopting dynamic, proactive strategies for
meeting their needs. This partnership enables proactive businesses to identify the
downside issues they must address (i.e., environmental and resource costs and risks) and
come up with ideas and approaches for addressing the upside issues (i.e., revenue
generation and brand loyalty. Further, this strategy will help in developing a mindset that
considers clear objectives, targets and measures of improvement, as well as subjective
values and the opinions of customers, stakeholders, and employees.

Steps to create and implement (to achieve ) an Eco-Advantage strategy:

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1. identify and reduce environmental risks, thereby reducing liabilities, avoiding costs, and
increasing speed to market,
2. cut operational costs and improve efficiency by reducing environmental expenses
(waste, disposal fees and energy spending),
3. grow revenues by designing and marketing environmentally products that meet
customers' needs (energy efficiency, and reduced pollution).
4. create intangible value for productions (enhancing their brands, connecting with
customers on an emotional level through environmental stewardship).

Applying eco-advantage in Small and Middle firms

Changing the environmental behavior of small companies requires weakening the resistant
forces (i.e. poor eco-literacy), strengthening the driving forces (i.e. effective research), and
preferably a combination of both (a strategic response is produced). A UK survey revealed
that Small and medium enterprises impacted the environment mainly in the areas of waste
and transport, and that their response focused on managing hazardous waste, reducing waste
and packaging, and increasing recycling; as well as aiming to reduce fuel and energy
consumption, optimize distribution networks, and minimize pollution.

Strategy Framework for Environmental sustainability and corporate social responsibility:

Companies that successfully manage environmental risks lower operating costs, reduce the
cost of capital, and keep their insurance premiums under control. On the revenue side, the
benets brought about by an environmental approach are sometimes tangible (like a higher
product price or increased sales) but are largely intangible: strengthened relationships with
customers, employees, and other stakeholders. These intangibles, can have a concrete
impact on investment returns. (Loyalty of customers, employee commitment).When
evaluating risks and benefits, we can oversimplify matters and take certain to be roughly
equivalent to the short-term and less certain to the long-term. If we consider waste
reduction as an example of cost control versus risk management, it is clear here this will
lead to savings.

Figure 3. Strategy Framework for Environmental sustainability and corporate social responsibility.

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Source:Esty, D. & Winston, A. (2006). Green to Gold: How Smart Companies Use Environmental Strategy to
Innovate, Create Value, and Build Competitive Advantage. Yale University Press, p102
2. Environment management system (EMS) and ISO

The International Organization for Standardization (ISO) is an international developer of

standards for industry. These standards are measures of the quality of the an industry
development, manufacturing, and supply processes of products and services. The ISO
standards aim to promote more efficient, safer, and cleaner practices, share technological
advances, promote good management practices, disseminate innovation, safe guard
consumers and users in general of products and services, and ultimately make life simpler
by providing solutions to common problems.

In 1991, the ISO concluded that meeting high environmental standards in the present and
future requires companies to create environmental management systems (EMS), whose
main function would be to support activities intended to protect the surrounded environment
and prevent its contamination. The process of EMS provides an understanding on how
the EMS should function in the context of system analysis, identify errors and weak spots,
formulate proposals for improving processes, and achieve the target parameters related to
the environment. An effective EMS is part of sustainable development and is defined by
SAGE as "operating activities that meet the needs of present stockholders without impairing
the ability of future generations to meet their needs. An EMS protocol uses a company's
own environmental policies and principles as a base to help companies achieve
environmental performance goals. Different ISO systems exist for different industries and

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businesses can adopt the system that better suites their practice. A common practice for
companies is to acquire one or two of the most popular ISO certificates namely, ISO 9000
series and ISO 14000 series. ISO 9000 series is related to quality management systems
which addresses customer requirements/satisfaction, adherence to regulations and strive for
continuous improvement whereas, ISO 14000 series address the impact of the companys
activities on the environment and the companies attempts to improve its performance in this
respect. Together, Jayathirtha list a number of concepts, which all these quality standards
systems, organizations must adopt as stated by):doing business as usual is unacceptable. ;
doing business without a systematic management approach is economic; providing quality
and protecting the environment are the key; doing it right the first time is crucial; listening
to customers and other stakeholders is necessary; respecting society (Jayathirtha,2001: 246).

An EMS helps organizations identify, manage, monitor, and control their environmental
issues in a holistic manner. In addition to what was mentioned earlier, there are many
reasons why an organization should take a strategic approach to improving its
environmental performance including:

demonstrate compliance with requirements,

increase leadership involvement and engagement of employees;

improve company reputation and the confidence of stakeholders through strategic communication;

achieve strategic business aims by incorporating environmental issues into business management;

provide a competitive advantage through improved efficiencies and reduced costs; and

encourage better environmental performance of suppliers by integrating them into the organizations
business systems(ISO, 2015: 3).

The ISO14001 system

The ISO 9000 and ISO 14000 standards are both concerned with the process of product
production rather than the product itself and that's why both are similar in nature. ISO
14000 uses a system which includes a set of controls such as documentation control,
management system auditing, and operational control, control of records, management
policies, audits, training, statistical techniques, and corrective/preventive actions. In

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addition to these controls, ISO 14000 includes quantified targets, established objectives,
emergency and disaster preparedness, and disclosure of environmental policy. Such a
system may provide the basis for developing a comprehensive EMS. ISO 14001 Standard
system is voluntary and it is not an EMS; rather, it provides an outline for companies and
assist them in the development of their own EMS. ISO 14001 assists companies in meeting
their environmental and economic goals and can be incorporated with other management
functions, and its aim is to assist companies by providing a guidelines in continuous
improvement of their environmental performance and at the same time complying with
applicable legislation. ISO14001 standard is generic management system meant to be
applicable to any size and type of organization, product or service, in any sector of activity.

Benefits for company implementing the ISO 14001 standard

1- Internal performance benefits (i.e., cost reductions, environmental improvements,

improved internal procedures, and improved employee morale);
2- External marketing benefits (i.e., improved corporate image, increased market share,
increased customer satisfaction, increased on-time delivery to customers); and
3- Relations (social) benefits (i.e., improved relations with communities, improved
relations with authorities).

OR according to Hillary;

1- Internal benefits include: organizational benefits (i.e., quality of management, quality

of training, working conditions and safety, quality of environmental information, legal
compliance, encouragement of innovation, improved procedures, strategic overview
of environmental responsibility); financial benefits (i.e., cost savings from material,
energy and waste reductions), and people benefits (i.e., increased employee
motivation, enhanced skills, and better company image among employees).
2- external benefits include: commercial benefits (i.e., gaining new customers /
satisfying existing customers, and developing more environmentally friendly
products); environmental benefits (i.e., improved environmental performance,
increased energy and material efficiencies, and reduced pollution);andcommunication
benefits (i.e., positive public image, better customer relationships.

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 Lastly, Gavronski et al. list several groups of benefits of the 14001 standard including:

1- productivity benefits (i.e., resource usage reduction, production costs reduction);

financial benefits (i.e., opportunity to obtain investment funds from governmental
organizations);
2- market benefits (i.e., competitive advantages, positive effects on the market and with
customers,);and
3- Societal benefits (i.e., improved corporate image for society in general, improved
cooperation from environmental authorities).

Taken together, the ISO 14001 can be integrated easily into any existing ISO management
system. Like all ISO management system standards, ISO 14001 includes the need for
continual improvement of an organizations systems and approach to environmental
concerns. The standard has recently been revised, with key improvements such as the
increased prominence of environmental management within the organizations strategic
planning processes, greater input from leadership, and a stronger commitment to proactive
initiatives that boost environmental performance (ISO,2015:2). Baxter International, a
medical products company, saved $21.7 million in 1994 because of its efforts to prevent
pollution and to minimize wastes. Thus, continuous improvement of the EMS can enhance
business success.

5. The Environment and Total Quality Management (ETQM)

Companies who truly care about the environment change not only their processes and
products, but also their organization. The qualities of management and the effectiveness of
systems determine the ability of the company to do this in an effective, profitable, and
environment-friendly manner. Total quality management (TQM) ultimately aims for zero
defects. For many forward-looking organizations, they have incorporated environmental
responsibility as an aspect in their pursuit of TQM and as such, zero defects also means zero
negative impact on the environment. Competitiveness is often measured by three things:
quality, price and delivery. TQM is a system of dealing with quality at every stage of the
production process. The main elements of the TQM system in any EMS are: teamwork,
commitment, communications, organization, control and monitoring, planning and
inventory control system. A failure in any part of the TQM or EMS can lead to gaps where

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waste of resources occur and quality decline. Errors can multiply, such that problems in one
part of the organization can result from the failure to meet the requirements of another.
TQM is an approach that aims to improve the effectiveness and flexibility of business, so
that results are achieved in less time and cost, through reducing wasted effort and physical
waste by involving everyone in the improvement.

Integrating Total Quality Management Systems into Environmental Management

System: total quality environment management

TQEM is defined as an economically driven, system-wide and integrated approach for the
reduction and elimination of all waste streams associated with the design, manufacture, use
and/or disposal of products and materials. The TQEM concept, based on the theories of
Deming, Juran, and Crosby, combines the principals of Total Quality Management (TQM)
with the goals of environmental management. TQEM has emerged from integrating
environmental management system (EMS) into the total quality management (TQM).It
combines the management approaches to support the companys business and helps create a
more effective interaction between TQM and EMS such that they do not compete for
resources or priority attention.TQM and TQEM share features including: improve final
output; leadership; emphasize long-term planning over short-term; changing relationships
between companies and their stakeholders; cultural change; improved information,
communication, training, accountability; and promote continual measurement, self-asses,
and improvement. This mean that many of the tools of TQM can be adapted for TQEM.
TQEM systems are viewed as TQM systems modified to deal with environmental issues.
The no waste aim of TQEM systems is similar to the TQM goal of zero defects. TQM
focuses on waste as it applies to process inefficiencies, whereas TQEM focus on outputs
such as solid and hazardous waste. The concepts share a similar focus, and so many of the
tools, methods, and practices of TQM can be used in TQEM systems. Developing a cost
framework for TQEM begins with TQM.
TQEM consists of: Total (involves the entire organization, supply chain, and/or product life
cycle), Quality (designed to improve quality through zero defect definitions),
Environmental(strategic environmental management approach), Management (the system
managing through steps such as plan, organize and control). TQEM works both vertically,

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involving all employees at all levels from top to bottom, and horizontally, across departments,
and extends both backwards and forwards to include the support chain and the customer chain.
Among operations managers for the sustainability management movement, environmental
management has achieved a high status in their mindsets and practice.

When attempting to implement TQEM systems in organizations, management must deal

with many issues including: top management must accept and push corporate developments;
the rising costs in the short run; being environmentally responsible in the long run increases
the efficiency in a company and makes it and more competitive,; the design phase is
appropriate for considering TQEM issues because decisions made during this phase
directly impact the amount of generated waste; frameworks or guidelines to help them
properly understand TQEM and its components; the lack of appropriate measures makes it
difficult for managers to evaluate the impact of TQEM programs.

Measuring TQEM Returns from the Application of Quality Frameworks

Managers do not invest sufficiently in TQEM programs because they cannot easily assess
the impact of such programs as a result of their lack of appropriate performance measures.
Most of the cost savings produced by TQEM related investments are largely hidden or
misallocated and have a payback period of several years. Furthermore, at present, the
literature contains several proposals of conceptual frameworks for identifying the different
costs associated with waste and pollution (table 1). For operations managers responsible for
environmental performance, as well as daily production, conventional aggregated financial
information is of minimal use. Operations managers often lack the skills required to use the
tools associated with financial analysis and, therefore, find accounting systems very difficult
to use. While the direct costs easily measured, it is not easy to measure the other costs, and
since managers choose not carry out such measurements. When costs are not directly related
to the activities that generate them, operations managers in this case are dealing with
incomplete or inaccurate information for the decision-making process.

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 Table1. The TQEM cost framework
The TQEM cost framework
External failure:
costs associated with the occurrence of
environmental issues (e.g. waste) outside
the manufacturing facility
Contingent liability costs: future liability
costs
Treatment or storage in tanks,
transportation land disposal,
soil & waste removal & treatment,
groundwater removal & treatment,
natural resource damage,
corrective action,
worker illness,
economic loss,
Less tangible costs:
Lower product acceptance by consumer,
Negative corporate image,
Negative impact on sale,
Strained distributer relations
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Internal failure:
costs directly related to the occurrence of
environmental issues within the
manufacturing facility
Waste management: hauling, storage,
handling, waste fees, hauling insurance
Reporting costs: hazardous pollutant
emissions reporting,
Industrial users continued compliance
reports,
Toxic standards annual compliance report,
Injury and illness annual summary,
Fatality or hospitalization report,
Occupational injuries and illness survey
Medical surveillance costs: hazardous
waste. Medical surveillance program
Less tangible costs: strained employee/union
relations, Strained Supplier customer
relationship, Decreased productivity due to
worse employee relations, Lower worker
retention, worse relationship with regulators
Training costs: hazard training, hazardous waste
training
studies and modeling costs: emergency
and contingency plan procedures,
cost estimate for facility closure, hazard
communication program, safety and health
program, emergency response program
 The TQEM cost framework
Appraisal costs: involved in the direct Prevention costs: associated with the
appraisal of environment issues design and planning of TQEM program
Inspection and Laboratory acceptance Administration and system program
Planning (engineering work) incoming- in
Maintenance and calibration process-final inspection, Special process
planning data analysis, Procurement
planning Vendor survey,Reliability studies
Outside endorsement Measurement and control equipment
Strained distributer relations Qualification of materials
Field testing
Product engineering review
Monitoring and testing costs:
hazardous waste chemical and
physical analysis, Ground water
monitor, Hazardous pollutant testing
and monitoring pretreatment standards
monitoring, daily Toxic
Source: Curkovic,S., Sroufe, R. &Landeros, R.(2005).Measuring TQEM Returns from the Application of
Quality Frameworks. Business Strategy and the Environment Bus. Strat. Env. 17, 93106 Wiley, p.100-101

I conclude this report with a chart listing a summary of a step-by-step approach to

implement TQEM protocols which could be a guideline for businesses in their quest for
better quality.

Figure 4. A step-by-step approach to TQEM

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 commit to environmental management

establish an environmental management policy

provide environmental management leadership

train people
adopt ISO 14000 seriese of standards

empower the environmental management team (continues process

improvement, benchmarking)

develop and implement environmental management procedures and

instructions

control environmental management processes, practices and documents

maintain environmental management information and documents

measure mointor and audit the environmental management system

review and improve environmental management systems

commuincate with all stakholders

practice sustainable development

Source: Jayathirtha, R. (2001). combating environmental repercussions through TQEM and ISO 14000.
Business Strategy and the Environment Bus. Strat. Env. 10, 245250 DOI: 10.1002/, p.248

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