Development of Key Performance Measures for Sustainable Manufacturing in Global SMEs

Development of Key Performance Measures for Sustainable Manufacturing in Global SMEs

Sujit Singh (University of Malaya, Malaysia), Ezutah Udoncy Olugu (University of Malaya, Malaysia) and Siti Nurmaya Musa (University of Malaya, Malaysia)
DOI: 10.4018/978-1-5225-1837-2.ch044
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Abstract

Sustainable manufacturing strives to produces the goods by minimizing negative environmental impact and reducing the resource consumptions. It also strives for safety of employee and community while maintaining an affordable cost. This study focuses on the development of a set of measures and metrics for assessing sustainability performance of manufacturing SMEs. In this study, various literatures on sustainable manufacturing performance measurement, green manufacturing, traditional manufacturing performance measurement and performance measurements in manufacturing small and medium enterprises (SMEs) are reviewed. Triple Bottom Line (TBL) is considered as framework in order to establish the relevant measures in an effective and comprehensive manner. The measures for performance measurements are classified in the three aspects of TBL known as economic, environmental and social. Therefore, 6 measures with 26 indicators, 8 measures with 31 indicators and 3 measures with 23 indicators were identified for economic, environmental and social aspects respectively. To establish the importance and applicability of developed measures, a survey will be conducted among the experts from academics and industries. Using survey results, a sustainability performance measurement model will be developed and presented.
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2. Literature Review

2.1 Sustainable Manufacturing and SMEs

In recent decades, sustainable manufacturing concepts and practices have been adopted in larger companies. However, SMEs often lack the awareness, expertise, skills, finance, and human resources to incorporate the required changes for sustainability within the organization (Lee, 2009). In an empirical study, Hillary (2004) identified barriers and drivers for environmental management system for SMEs. Major barriers are lack of knowledge, training, implementation cost and transient cost. In addition, firm size and characteristics of SMEs are also recognized as barriers for sustainable practices. For SMEs, the drivers for sustainability are customers, government, local community, employees, insurers, banks and larger companies (Hillary, 2004). At present, SMEs are adopting sustainability initiatives to enhance their competitiveness due to the pressure from customers, consumers and regulatory bodies (Lee, 2009). For example, larger organizations are adopting sustainable manufacturing practices in their operations as a result of the pressure of directives such as European Union (EU) directives on Waste Electrical and Electronic Equipment (WEEE), Restriction of Hazardous Substances (RoHS), and Eco-design for Energy using products (EuP) (Lee, 2009). The ripple effect of these directives are extended to suppliers to enhance the sustainability performance of these larger manufacturing organizations (Moore & Manring, 2009).

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