Sustainable value chain analysis
AMPC and MLA have been involved in several pilot projects which explored the potential for using Sustainable Value Chain Analysis (SVCA) as a tool for achieving better alignment between resource allocation, environmental management and consumer value.
SVCA is the combination of two separate methodologies, Value Chain Analysis (VCA) and Life Cycle Analysis (LCA), used as a diagnostic tool for value chains.
VCA involves an assessment of the relationships between the different stakeholders which, coupled with the effective flow of information, enables the economic, and environmental, optimisation of material flows – allocating time, people and technology appropriately and with minimal impacts on the environment. Consequently, the methodology focuses on three key issues:
- The dynamics of information in the value chain from final consumption through to primary production and input suppliers and back again – how inclusive, transparent and responsive are the information flows in the chain? To what extent are stakeholders’ decisions (what to produce, when to produce, how to produce) influenced by what consumers value?
- The creation and flow of value, in the eyes of the final consumer, at each stage in the value chain – how many of the production and processing activities truly add value? How much investment is being made in these critical activities? How many are necessary but do not add value (these should be completed with minimal resource allocation)? How many are unnecessary (wasteful activities must be eliminated and resources re-allocated to drive value creation and efficiency)?
- The nature of relationships – how much trust exists between different stakeholders? What is the nature of communication within and between organisations? What evidence is there of organisational commitment? How are risks shared and the assumption of risks rewarded in the chain?
Life Cycle Analysis (LCA), often called ‘cradle to grave’ analysis, is the most comprehensive of the analytical tools available for quantifying the environmental impacts related to the production, processing, packaging, distribution, use and disposal of a product (Camilleri 2008a, Potts 2006). The focus of LCA is on the intensity of resource utilisation (e.g. energy, water) and the environmental impact of outputs (e.g. by-products, waste and emissions) at each stage of the value chain, the aim being to identify opportunities for improving resource use, reducing environmental impacts and targeting parts of the life cycle where the greatest improvements can be made.