Product Stewardship for marketeers - European … tools for SMEs...1.2 The importance of Product...

Product Stewardship for marketeers Guidelines for a market-oriented approach

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Contents Foreword................................................................................................................... 3 1. Product Stewardship for marketeers ................................................................ 4

1.1 What is Product Stewardship? .................................................................................. 4 1.2 The importance of Product Stewardship is increasing ..................................... 5

1.3 Involvement of marketing managers in the implementation is essential.. 6 2. The general design of the toolbox..................................................................... 7 3. Selection of business segments and customers............................................. 10

3.1 Selection of business segments................................................................................ 10 3.2 Selection of customers ................................................................................................ 12

4. Customer and product analysis ....................................................................... 14 4.1 Customer analysis ........................................................................................................ 14 4.2 Product selection .......................................................................................................... 16 4.3 Product analysis.............................................................................................17

5. Actions to be taken............................................................................................ 19 6. The use of the toolbox in practice ................................................................... 21 7. Relationship with VNCI's Product Stewardship management system ..... 24 Appendix A: Explanatory notes to the selection of the segments .................. 25 Appendix B: Explanatory notes to the selection of the customers ................. 28 Appendix C: Explanatory notes to the analysis of the customers................... 30 Appendix D: Explanatory notes to the analysis of the products .................... 33 Appendix E: Summary of the information needs for the toolbox ................. 35

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Foreword This publication, ‘Product Stewardship for marketeers. Guidelines for a market-oriented approach’, is the result of the Product Oriented Environmental Care (PMZ) subsidy project, ‘Product Stewardship for marketeers, the development of guidelines for business managers’. These guidelines were developed by Triple Value Strategy Consulting pursuant to a commission awarded by VNCI. Three companies took part in the subsidy project, namely BASF Nederland, DSM and GE Plastics Europe. The guidelines contain a detailed description of the ‘Product Stewardship for marketeers’ toolbox developed by Triple Value Strategy Consulting – a system which enables marketing and business managers to integrate Product Stewardship in their core business. The toolbox is compatible with the guidelines ‘A management system for the implementation of Product Stewardship’ developed by VNCI. The toolbox may be regarded as a means to carry out the planning and implementation phases of the Product Stewardship management system in more depth. In addition to these guidelines, the ‘Product Stewardship for marketeers’ brochure is also available from VNCI. Leidschendam, July 2003

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1. Product Stewardship for marketeers 1.1 What is Product Stewardship? “Product Stewardship is the responsible management of risks and improvement of the performance of a product in the fields of safety, health and the environment during its entire life cycle. This can be achieved through a continuous process of improvement on a healthy economic basis.” Product Stewardship is comprised of the product and chain-oriented element of the international chemical industry’s Responsible Care programme. In this respect Product Stewardship distinguishes itself from internal environmental management systems, which are essentially of a process-oriented nature. Moreover, Product Stewardship adopts a different perspective: it reviews the entire life-cycle of the product chain, extending from the extraction of the raw materials and the manufacture of the semi-finished product right through to the production and use of the finished product, and its ultimate disposal. Consequently it imposes a large responsibility on those ‘outside the gates’. Companies that have successfully implemented Product Stewardship are able to improve their competitive position by profiting from one or more of the benefits attributed to Product Stewardship:

§ an increased confidence in the company by virtue of its timely and systematic identification of product risks, and the management of those risks from the perspective of the chain;

§ the improvement of the supplier-customer relationship by virtue of the timely observation and joint resolution of safety, health and environmental (SHE) problems;

§ the systematic identification and efficient accommodation of the demand for new products with an improved SHE performance;

§ the timely observation of and adequate response to new regulations; § the improvement of the company’s reputation amongst customers, the authorities,

and the general public. During the past years the Association of the Dutch Chemical Industry (VNCI) has developed a broad range of activities designed to support companies in their implementation of Product Stewardship. At the beginning of 1999 the Association published the guidelines ‘A management system for the introduction of Product Stewardship’. These guidelines offer a practical, generally-applicable and flexible system for use in the introduction of Product Stewardship. During the same period the VNCI

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also published the brochure ‘Product Stewardship, the driving force for innovation’, which is focused on business managers. During the past three years VNCI has organized a large number of seminars and workshops for its members, as a result of which more than 30% of its member companies have acquired a direct knowledge of the system developed by the Association. Since 1999 a large number of articles on the implementation of Product Stewardship have also been published in VNCI’s magazine, the NCI (now Chemie magazine). 1.2 The importance of Product Stewardship is increasing In relative terms Product Stewardship is acquiring a continually increasing importance to companies – both business units operating within major concerns with a large degree of autonomy and to independent medium-sized and smaller enterprises:

1. an increasing number of players active in end markets of relevance to the chemical industry are engaged in the development and implementation of sustainable-development policy. These policies are increasingly focusing on companies at the beginning of the chain, and consequently in the longer term they will have tangible implications for the chemical industry;

2. international, national and local authorities are introducing increasingly stringent policies with respect to sustainable development in general, and to chemical substances in particular. The product chain also plays an important role in the chemical-substances policy (European Commission White Paper ‘Strategy for a Future Chemicals Policy’);

3. environmental organizations are devoting explicit attention to the environmental and societal aspects of product chains. Campaigns which address the use of specific chemicals often focus on powerful brands at the end of product chains, and consequently on the chemical industry’s customers and end users;

4. a continually increasing number of concerns are formulating corporate targets for the implementation of Product Stewardship. Business units are often responsible for the achievement of these targets;

5. Sustainability leaders within the chemical industry are actively positioning themselves in the field of sustainable development (see box 1). Individual business units are seeking unique selling points they can use to demonstrate to their customers that they distinguish themselves from the competition. Companies the market perceives as sustainable and innovative concerns are more likely to achieve valuable cooperation with their customers.

In a more general sense the developments indicate an increasing interest in Product Stewardship, sustainable entrepreneurship and corporate social responsibility, whereby

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the focus is on the creation of an added value for the shareholders, customers, employees and other parties with an interest from an environmental, social or financial perspective.

Box 1: Sustainability leaders in end markets of relevance to the chemical industry

Many chemical companies supply products to end markets such as the automotive, food and pharmaceuticals, electronics and telecommunications sectors. An increasing number of companies active in these sectors are developing proactive sustainable-development strategies. Most of these companies have implemented an active and environmentally-oriented supplier policy, and it is expected that their requirements will become increasingly stringent in the future. Suppliers need to be aware of the nature of the requirements their customers will impose on their products; this toolbox offers them tools that will assist them in the performance of these analyses. The Dow Jones Sustainability Index Group (see www.sustainability-index.com) is one of the organizations which publishes an annual list of sustainability leaders.

1.3 Involvement of marketing managers in the implementation is essential The active involvement of the company’s marketing and business managers is essential to the successful implementation of Product Stewardship. They possess the requisite knowledge of the market and the customers, and they are in a position to initiate cooperation with strategic partners in the production chain. However, an inventory of the impediments to the implementation of Product Stewardship carried out in 2002 revealed that most marketing and business managers:

§ possess insufficient knowledge about sustainability-driven developments in the market;

§ possess a restricted insight into the added value Product Stewardship offers their company;

§ experience Product Stewardship as a complex management tool. In practice it has transpired that most marketing and business managers do not have an adequate appreciation of the specific benefits Product Stewardship offers their segment of the market and business unit. The resultant delays in the implementation may cause companies to miss opportunities that would otherwise have been available to them, result in the failure to achieve their corporate targets, and give cause to the authorities to consider the introduction of less-voluntary chain-management regulations; moreover, environmental organizations may be expected to further increase the pressure placed on the players in the end markets.

http://www.sustainability-index.com

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VNCI has observed an increased need for knowledge about Product Stewardship amongst marketing and business managers. In order to meet this need VNCI requested Triple Value Strategy Consulting to develop the toolbox ‘Product Stewardship for marketeers’. This toolbox enables marketing and business managers to integrate Product Stewardship in their core business. The toolbox is compatible with the guidelines ‘A management system for the introduction of Product Stewardship’ developed by VNCI (see Chapter 7). 2. The general design of the toolbox The toolbox ‘Product Stewardship for marketeers’ offers a structured approach to the identification of the most significant opportunities available for improvements at a product, customer and segment level. The results obtained using the toolbox are:

1. selective: in the first instance the customer and product analysis is performed for segments and customers in which sustainable development plays a significant role and is of relatively great importance to the company;

2. substantiated: the opportunities for improvement are identified on the basis of an analysis of customers and products;

3. action-oriented: the emphasis is placed on the implementation of tangible improvements that enhance the market position.

The toolbox is selective Most business units of larger concerns or independent companies in the chemical industry market a wide range of products, and these products are in turn used in a wide variety of applications. The toolbox is comprised of selection tools that support companies in choosing the segments and customers that are in need of a more in-depth, and consequently more labour-intensive, analysis. The toolbox offers substantiation The toolbox offers an opportunity for a more in-depth analysis of the company’s customers and segments. It provides for an assessment of the relative importance the selected customers attach to the SHE performance of their suppliers and the products they provide, as well as an estimation in any developments within the coming three to five-year period. The toolbox also provides for an assessment of the customer’s perception of the supplier’s SHE performance and those of the supplier’s major competitors. The results are used to assess whether the company is in the possession of an appropriate position for an enhancement of the relations with its customers or an expansion of its market share. In addition, an in-depth analysis is also made of those company products in need of further assessment. VNCI’s guidelines ‘A management

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system for the introduction of Product Stewardship’ contain a comprehensive explanation of the methods used to perform analyses of this nature, whereby an important role is assigned to chain analyses from an environmental perspective and to the use of multi-disciplinary teams in the identification of opportunities for improvement. The toolbox is action-oriented The use of the toolbox is intended to result in tangible actions that reinforce the company’s position in its market – a reinforcement which begins with the retention or improvement of the confidence in the company and the products it supplies amongst its customers and other stakeholders. Virtually all chemical companies devote structured attention to the control of any risks associated with the manufacture and use of chemicals. This constitutes the basis of their safety, health and environmental programmes. However, adequate procedures for risk management do not constitute a unique selling point companies can use to distinguish themselves in their market. More advanced forms of Product Stewardship offer a range of opportunities for the improvement of the company’s competitive position (see box 2). Box 2: Eco-efficiency and collaboration with customers (BASF) One example of the further elaboration of the Product Stewardship concept pertains to the use of what is referred to as the ‘eco-efficiency’ analytical tool by BASF. This was developed for the analyses of the costs and environmental impacts of comparable products from the perspective of the entire product chain. It constitutes a strategic tool that can be used to determine which product lines and processes are, or are not, in need of investments from the perspective of sustainable entrepreneurship. By the end of 2002 analyses had been performed on more than 150 products. In 50% of the instances the customers were directly involved in the analyses. On occasion the eco-efficiency analyses yielded spectacular results, such as in the case of the study of opportunities for improvements in the production of washing-machine components. This study, in which intensive cooperation between multi-disciplinary teams from BASF, Bosch and Siemens played an important role, has resulted in Bosch’s virtually complete changeover to the alternative offered by BASF. More examples are reviewed on BASF’s web site, http://www.basf.com.

http://www.basf.com

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As will be apparent from Figure 1, the toolbox is comprised of three elements:

1. selection tools: for the selection of the segments and customers of relevance to Product Stewardship;

2. customer and product analyses: for the analysis of the current and future needs of the customers, the product risks, opportunities for improvement, and potential measures that can be implemented;

3. actions: the assignment of prioritized actions to the various management disciplines.

Figure 1: Use of the toolbox

III

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Select segments for which Product Stewardship is of

relevance

Select customers within the selected segments for

whom Product Stewardship is of relevance

Select products for which a chain analysis needs to be

performed (product analysis)

c

ab

Determine opportunities and/or threats for selected customers (customer analysis)

1. Selection tools 2. Customer and product analysis 3. Actions to be taken

Prepare Product Stewardship cases for selected products, and identify opportunties for

improvement

Prioritize actions and assign them to specific

management disciplines

c

f

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3. Selection of business segments and customers The use of the selection tools results in a substantiated prioritization of the segments and customers in need of a more in-depth analysis. This prioritization is required for the most efficient possible deployment of the capacity available for Product Stewardship – a need which reflects the inability of virtually all companies to carry out in-depth analyses of the chains of a frequently large number of products and applications within a relatively short period of time. The selection of segments and customers provides for a focus on the relevant areas, in turn laying the foundations for a structured approach that ultimately results in the formulation of feasible objectives. 3.1 Selection of business segments Every company or business unit of a larger concern can make a distinction between its business segments. This segmentation is often based on end markets, geographical regions and/or product-market combinations. In practice these differences between the segments are also accompanied by differences in customers and procurement criteria, competitors, market shares, and cost structures. Examples of market segments are ‘pigments for the automobile industry’ and ‘plastics for the European consumer-electronics market’. For the purposes of the toolbox this segmentation needs to make a distinction between a minimum of 4 and a maximum of 7 market segments that in combination account for at least 70% of the sales. The selection of the segments is based on their commercial importance and the relative importance of the safety, health and environmental issues associated with those segments. Figure 2 illustrates an example based on a distinction between five segments. As will be apparent from the figure, segments II and III come into initial consideration for a more in-depth Product Stewardship analysis (segments of great commercial importance and SHE issues considered to be of high relevance). The manner in which the position of the segments in the matrix is explained below; a detailed description is given in Appendix A.

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Figure 2: Three segments need to be assigned priority for investigation

Importance of SHE• SHE impact• visibility• regulations

Commercial importance• size of the segment• growth of the segment• margin• market share

Selection tools

1

5

the size of the circle is indicativeof the size of the market

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IVV

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Commercial importance The commercial importance is determined by the size of the market segment, the annual growth, the margin that is achieved, and the relative market share. This information is either available from the business plan or known to the marketing or business managers responsible for the relevant segments. Subsequent to the normalization of the dimensions of the size of the segments (in Euros) and the percentages (growth, margin and market share) achieved, for example, by assigning each factor a score of between 1 (low) and 5 (high) the score can be totalled and divided by the number of factors to obtain an average score. The necessary data is readily available at most companies and business units; estimates can be used for any figures that are not available. Importance of safety, health and environmental issues The Marketing Manager – in collaboration with the Environmental Manager, the Product Stewardship Coordinator and, where relevant, a specialist in the applicable regulations – then makes an estimate of the relative importance of SHE issues to each segment. The design of the toolbox is based on the determination of the importance of the SHE issues on the basis of three dimensions:

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1. the safety, health and environmental impact; 2. the visibility (amongst the general public and societal organizations); 3. the intensity of the current and future regulations. These three factors are each assigned a score of between 1 (low) and 5 (high). These scores are less tangible than those awarded to the commercial importance; however, pilot trials have demonstrated that in practice representatives from the aforementioned disciplines are reasonably capable of assigning coherent scores. Moreover, it has also been shown that the method is capable of creating a distinction between the different segments, and that the approach results in a distribution along the vertical axis. 3.2 Selection of customers A distinction can be made between a number of customers in each segment. The subsequent selection of the customers is also based on their commercial importance and the relative importance that they attach to SHE issues. Figure 3 reveals that customers a and b in the (fictive) segment II come into initial consideration for a more in-depth analysis.

Figure 3: Two strategic customers in segment II attach relatively great importance to their suppliers’ SHE performance

Importance of SHE• ranking by

sustainability investors

• policy• ISO 14000

implementation• ‘green’ product

development

Commercial importance• volume of sales• growth in sales• margin• strategic importance

d

a

b

the size of the circle is indicativeof the volume of the sales

Selection tools

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Commercial importance The procedure employed to determine the commercial importance of specific customers is comparable to that used in the selection of the segments. In this instance quantitative information is required about the sales, the growth, and the margin. A qualitative factor is also included for the purposes of an indication of the strategic importance of the customers, involving an estimate of the extent to which each customer is perceived as a future winner within their sector. Importance of safety, health and environmental issues The next step is to determine the relative importance the most important customers attach to SHE issues. Since this step is intended to provide for a rapid initial estimate of the importance of SHE issues, the assessment is based on four factors:

1. incorporation in indices drawn up by sustainability investors; 2. the company’s environmental policy; 3. the extent to which management systems based on ISO 14001 have been

implemented; 4. the development of green products or product portfolios. The scores for each of these factors (1: low; 5: high) can be derived from information contained in environmental or sustainability reports, many of which are available on the Internet. The best-known sustainability index is The Dow Jones Sustainability Group Index, which is published once a year and available from www.sustainability-index.com. All the components of the list are classified according to sector and the country in which the company is based. The selection phase reviews policy, tangible actions and results at a concern level. During the past few years policies at concern level, which constitute a significant driving force for the various business units, have exhibited a shift from functional to strategic environmental management and from corporate to chain-oriented policy. However, differences are often apparent in the extent to which business units have interpreted the concern’s policy in terms of their operations. The Section on customer and product analysis contains a further explanation of the manner in which an estimate can be made of the current situation at the company’s customers. More details about the selection of customers are given in Appendix B. The results from the use of the selection tools in the above example – a fictive business unit in which a distinction can be made between five segments – indicate that in the first instance the further analyses should focus on segments II and III. Of the five customers within segment II customers a and b are eligible for a more-depth analysis.

http://www.sustainability-index.com

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4. Customer and product analysis An in-depth analysis is performed for the customers in the selected business segment. The results obtained by the use of the analytical tools yield:

§ an insight into any opportunities or threats in the selected business segments on the basis of the relative importance the customers attach to their suppliers’ SHE performance and the customers’ perception of the company’s performance in comparison with the most important competitor(s) (see § 4.1, Customer analysis);

§ a selection of products supplied to the selected customers that exhibit a relatively high SHE risk (see § 4.2, Product selection);

§ an insight into the most important SHE issues, the extent to which the company exerts control on these risks, and the potential for eco-efficiency improvements (see § 4.3, Product analysis);

§ a long list of potential measures that can be implemented to improve the customers’ perception and/or increase the SHE performance of the selected products (see § 4.4, opportunities for improvement).

4.1 Customer analysis This element of the toolbox is used for a more in-depth review of the importance the company’s customers attach to their suppliers’ SHE performance and the products they supply. The element also assesses the customers’ perception of the SHE performance of the company and its most important competitor(s). These estimates are made on the basis of the available knowledge about the customers, and ideally make use of the information contained in customer surveys. The results are displayed in a threats-opportunities graph (see Figure 4). A distinction can be made between three main zones in this graph:

1. The importance attached to SHE increases, the company exhibits a good SHE performance. There are opportunities for a further improvement of the relationship with the customer, and for the expansion of the market share;

2. The importance attached to SHE increases, the company exhibits a less adequate SHE performance. The (long-term) threat of a loss of market share, or confrontation with the relatively high costs incurred in complying with new SHE requirements;

3. The importance attached to SHE is not increasing. Restricted opportunities and threats. Customers in zone 1 (customer a) and zone 2 (customer b) will need to receive most attention during the later steps.

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SHE performance

Importance of SHE as a procurement criterion

Low, no increase

Does not meet expectations/

worse than the competition

Figure 4: The probability of gaining/losing market share with respect to customer a and b

Does not meet expectations/better than the

competition

Low, increase

High, no increase

High, increase

The size of the circle is indicative of the turnover

Meets expectations/


Meets expectations/

better than the competition

Potential loss of market share

-> further analysis(zone 2)

Minor opportunities

or threats(zone 3)

Enhancement of the rela-tionship with the customer /

increase in market share feasible (zone 1)

a

b

c

d

Customer and product analysis

As noted earlier, the position of a specific customer in the threats-opportunities graph is determined by:

1. the relative importance the customer attaches to the supplier’s SHE performance and the products that are supplied (high or low);

2. the expected change in the importance the customer attaches to the supplier’s SHE performance and the products that are supplied (an increasing or decreasing trend);

3. the perception of the supplier’s SHE performance (the company meets/does not meet the expectations);

4. the perception of the SHE performance of the most important competitor(s) (the company exhibits a better/poorer performance).

An estimation is made for each of these factors for the selected customers. Figure 4 can be completed using the knowledge jointly possessed by the Marketing Manager, Environmental Manager and/or Product Stewardship Coordinator; customer surveys, when available can be used to obtain this information. Any changes (trends) can be derived from the customer profile; this contains a summary of the customer’s corporate policy – one of the most important driving forces for operations at business-unit level,

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and focused on the suppliers’ (SHE-oriented) policy. Appendix C contains further details. 4.2 Product selection The information presented in Figure 4 can be used to determine any customer-oriented measures that need to be implemented. The results from the analyses that have now been completed provide an insight into the importance attached to the suppliers’ SHE performance and the perception of the company’s SHE performance. For example, the fictive customer a in Figure 4 attaches relatively great importance to its suppliers’ SHE performance; in addition, the company meets the customers’ SHE expectations – and in fact the customer considers the company’s SHE performance to be better than that of its most important competitor. In principle the company is in a position to further improve the relationship with its customer; however, an even more interesting approach would be to review opportunities available for collaboration designed to achieve a further joint reduction of any SHE risks associated with the product, or to identify opportunities for an improvement of the eco-efficiency1. It is recommended that prior to and in preparation for the contacts with the customer an assessment is made of the products of greatest relevance from a Product Stewardship perspective. So as to achieve the necessary focus it is recommended that the further selection is based on the eight to ten most important products. In analogy with the selection of the segments and customers, the selection of the products for further analysis is made on the basis of their commercial importance and their associated SHE risks as perceived throughout the entire product chain. Figure 5 reveals that three products are in need of a more in-depth analysis. Appendix D explains how the position of the products in Figure 5 is determined.

1 Please refer to the BASF example in box 2. VNCI has a large number of examples of this nature.

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Product risk/improvement potential

Relative product share

Figure 5: Three products are in need of a Product Stewardshipproject

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4.3 Product analysis For the sake of completeness the following section briefly reviews the most important phases in VNCI’s system for Product Stewardship projects, whereby project analysis plays a major role. A detailed description of the effective performance of Product Stewardship projects is given in the relevant VNCI guidelines. The performance of product analyses in Product Stewardship projects Six steps are involved in the performance of product analyses for Product Stewardship projects:

1. the briefing of the multi-disciplinary project team (see box 3) by the Business Manager, whereby a presentation can be given of the initial results from the selection of the segments and the customers as well as the analyses of the customers and the products;

2. the acquisition of an insight into the product chain, i.e. the most important links in the product chain – extending from the raw material to the end of the product’s life;

3. the performance of an analysis of the chain: the acquisition of an insight into the SHE risks associated with the major flows of materials and the links in the chain exhibiting

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a relatively high energy and water consumption, relatively high emissions to the water, atmosphere and soil, or large amounts of waste;

4. the identification of opportunities for improvement in the chain: options for improvements are identified during one or two workshops organized with the multi-disciplinary team;

5. an analysis of the opportunities for improvement: the aforementioned options are assessed in terms of the resultant improvement in SHE performance, the expected market value of each improvement, the economic feasibility (the payback period) and the organizational feasibility (i.e. the extent to which the implementation of the improvement in collaboration with the partners in the chain is a feasible proposition);

6. the preparations for the decision-making on the implementation of the opportunities for improvement.

Box 3: Composition of the multi-disciplinary teams The multi-disciplinary teams are comprised of representatives from the following disciplines: • Marketing and Sales • Research & Development • Purchasing • Safety, Health and Environmental issues • Production • Logistics

On the completion of the aforementioned six steps an insight will have been acquired into the most important SHE risks and opportunities for improvement as viewed from the perspective of the chain. In most instances the major product risks will already be known. However, it should be realized that the risks involved in the other links in the chain, in particular further along the chain (application, use, and the end of the product’s life), are often less visible and consequently more difficult to control – and this, whilst the risks associated with the product are often largely determined by the materials selected at the beginning of the chain. Consequently the assessment of the risks associated with a specific product will need to focus on the beginning and the end of the chain. Once an insight has been acquired into the chain it may be decided to reconvene the multi-disciplinary team for an identification of the potential SHE improvements. This identification, carried out on the basis of the purpose fulfilled by the end product, entails a search for potential improvements in the energy, water and material consumption, the emissions, waste, and recycling. In principle a potential for improvement may be available in every link in the chain, i.e. with respect to the suppliers, transport, production, the customers, the finished product, or the end of the product’s useful life.

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This review provides for the preparation of a long list containing the most interesting potential SHE improvements. Section 5 also cites a number of examples of specific customer-oriented activities. 5. Actions to be taken The actions to be taken focus on the improvement of the value of the product to the customer; they also need to make a favourable contribution to the company’s operating results, and to be feasible from both a technical and an organizational perspective. Consequently the actions specified in the long list will need to be prioritized on the basis of the aforementioned criteria, and they will also need to be assigned to the various management disciplines listed in Figure 6. In the first instance the actions to be taken pertain solely to the selected customer-product combination. However, it is highly likely that they will subsequently also be applicable to other products, customers, or market segments. Figure 6 lists a number of examples of actions that can be taken: 1. the decision-making on the initiation of further Product Stewardship projects; 2. the acquisition of an increased insight into the customer’s expectations (by means

such as customer surveys); 3. the initiation of collaboration with strategic partners in the chain designed to achieve

SHE improvements; 4. the analysis of the SHE issues of relevance to the product portfolio; 5. the follow-up steps required for tangible product or process-oriented opportunities

for improvement on the basis of completed Product Stewardship projects; 6. the active communication of the (favourable) SHE performance of the products

supplied by the company. Figure 6 also indicates the management disciplines that need to be actively involved in the implementation of the specified actions. In this fictive example priority has been assigned to actions 3, 5 and 6.

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BUmgt

New bus.dev. Marketing Sales R&D Proc. Logistics SHE

Actions to be taken Figure 6: The business or marketing manager assigns the actions

to the various management disciplines

Action

1. Decision-making/ performance of ProductStewardship Reviews

2. Customer survey

3. SHE project withcustomer x

4. SHE analysis of product portfolio

5. Actions resulting fromProduct Stewardshipanalysis

x

x

þ High priority

Low priority

x x x

x

þ þ þþ þ þ

x x

þþ

þ

x

þ

6. Communications with customers þ þ

Primary responsibility

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6. The use of the toolbox in practice Sections 3 and 4 gave a detailed explanation of the use of the selection tools and the analysis of the customers and products, whereby an emphasis is placed on an explanation of the content of the procedure on the first occasion the toolbox is used within the business unit. The appendices contain a supplementary explanation of the manner used to draw up the various figures. The tests of the toolbox revealed that the success achieved by its use is determined by five factors:

1. the leadership of the manager making use of the toolbox. The project manager should preferably be a business manager with an appreciation of the commercial opportunities offered by sustainable entrepreneurship and Product Stewardship. Project managers with an SHE background will need to have a knowledge of and affinity with commercial practice if the project is to be a success;

2. a full compatibility with the business unit’s segmentation and customer approach. The pilot trials revealed that this compatibility is essential if the project is to yield results that can be used by the marketing and sales managers. Product Stewardship initiatives with a product and internal-company focus often remain on the periphery of the unit’s operations;

3. a focus on tangible actions that yield customer and commercial value. These are obtained from targeted Product Stewardship projects that are rendered fully compatible with the most important customers’ needs. The toolbox constitutes a market-oriented supplement – and not a replacement – for the existing methods used to carry out Product Stewardship projects;

4. the availability of information. Figures on the size, growth, margin and the market share are available at almost every business unit. However, the information required to estimate the importance of environmental or sustainability issues is often not complete, and the information that is available is frequently distributed amongst a number of persons in the organization. Information about customers’ sustainability strategy and the environmental component of the supplier’s policy is often not immediately available, and will need to be collated from public sources of information or direct contacts with the customers. Figure 7 and Appendix E contain a summary of the requisite information, the persons involved, and the sources of relevance;

5. the availability of sufficient capacity. On average, two days are required for the use of the selection tools. Between 2 to 5 days per customer/product portfolio is required for the analyses of the customers and the products, depending on the availability of the necessary information. The identification and prioritization of actions required for eco-efficiency improvements involves two to three 4-hour meetings. The intrinsic focus and structure offered by the toolbox provide for the effective performance of

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the various tasks, and prevent meetings from becoming bogged down in broad and general discussions yielding virtually no results of commercial interest.

Figure 7: The disciplines involved, the information required, andthe time needed for each element of the toolbox

Selection tools Customer/product analysis Actions to be taken

Marketing ManagerSHE/Environmental ManagerRegulationsResearch

Disciplinesinvolved

Marketing ManagerSHE/Environmental Manager

Broad spectrum of management disciplines

Customer surveyCustomer informationRelevant regulationsRisks associated with product

Informationrequired

Business plan for businessor market segmentCustomer informationCustomer environmentalor sustainability profile

Knowledge and expertise ofthe multi-disciplinary team

2-5 days per customer-productcombinationTime

needed

1-2 days 0.5 day per meeting1-3 meetings

The completion of the analysis of the first segment or the first phases of this market-oriented approach to Product Stewardship will automatically result in the wish to implement Product Stewardship projects for other products, customers and segments. The projects will acquire a continually sharper focus, and will require relatively less time to complete. The manner in which ‘Product Stewardship for marketeers’ can be scaled up for general application is illustrated in Figure 8.

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Figure 8: Use for other products, customers and segments

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Select segments

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Select products forcustomer x

c

ab

Perform customer analysis

Selection tools Customer/product analysis Actions to be taken

Perform Product Stewardship analysis

Prioritization and assignment of actions

c

f

More productsto analyse?

yes

no

24

7. Relationship with VNCI’s Product Stewardship management system The completion of Element 1 (selection tools) and the first two steps involved in Element 2 (customer and product analysis) of the toolbox will yield information about the segments and customers to which Product Stewardship is of relevance, the company’s positioning, and the prioritization of the investigation of the products. At this point the system links up with the existing methods for the implementation of Product Stewardship. A suitable method is given in the guidelines VNCI developed in 1999 (‘A management system for the introduction of Product Stewardship’); alternatively use can also be made of an in-house approach developed by the relevant company. The toolbox ‘Product Stewardship for marketeers’ enables the planning and implementation phases of VNCI’s management system to be carried out in more depth (see Figure 9). Until now these placed the emphasis on the decision-making of relevance to the products in need of a Product Stewardship project. On the development of the ‘Product Stewardship for marketeers’ toolbox the selection of the products can now be preceded by an assessment of the segments and the customers of relevance to Product Stewardship.

Figure 9: Product Stewardship management system

Commitment Execution Control Review

1 3 4 5 Planning

2 TToooollbbooxx

PPSS ffoorr mmaarrkkeetteeeerrss

25

Appendix A: Explanatory notes to the selection of the segments Figure 2 shows the results from the selection of the segments of relevance to Product Stewardship. This selection is based on the commercial importance of the specific segments and the relative importance of safety, health and environmental issues to these segments. The following paragraphs explain how the position of specific segments in the matrix is determined.

Figure 2: Three segments need to be assigned priority for investigation

Importance of SHE• SHE impact• visibility• regulations

Commercial importance• size of the segment• growth of the segment• margin• market share

Selection tools

1

5

the size of the circle is indicativeof the size of the market

5

II

IVV

III

I

1

Step 1: Determination of the most important segments The first step is to determine which segments are of relevance to the business unit. This segmentation is performed on the basis of markets, products and product-market combinations, whereby the assessment extends to both end and regional markets. In the event that more than nine segments are identified then a number of smaller segments will need to be grouped together into one segment. In the event that less than four segments are identified then the segments will needed to be sub-divided, for example according to region. Ultimately between four and nine segments will need to have been

26

identified. Figure 2 is based on a fictive business unit whereby a distinction has been made between five segments. Step 2: Assignment of scores to the segments Once the segments have been identified they can each be awarded a score on the basis of the two factors incorporated in the matrix, i.e. their commercial importance and their environmental susceptibility.

S u m m a ry o f th e im p o rt a n ce a n d e n v iro n m e n ta l su sce p tib il ity o f th e m o s t im p o rta n t s eg m en ts

I € ..

S e gm e n t S ize G ro wth M a rg in

.. % p .a . …

M a rke tsh a re

.. %

E n v .im p a ct

V is i-b i l ity

L e g is -la tio n

Im po r ta n ce o f th e s e gm e n ts

II € .... % p .a . … .. %

II I € .. .. % p .a . … .. %

IV € .. .. % p .a . … .. %

V € .... % p .a . … .. %

T o ta l T o ta l

E n v iro n m e n ta l s u s ce pt ib i l ity

S co re s fro m 1 (lo w ) to 5 (m a xi m um )

S e le c tio n to o l

Commercial importance of the segment The size, growth, profit margin and market share for each segment is determined in cooperation with the Marketing Manager or on the basis of the information in the business plan. The information for each variable is then normalized by dividing the values for the various segments by the largest value and multiplying the results by five. This results in values for each variable along a scale ranging from 1 to 5. The overall score is obtained from the average score for the four variables. When information about a variable is not available then an estimate can be made of the value, or a relative score in the range of 1 to 5 can be assigned to the variable.

27

Environmental susceptibility of the segment The environmental susceptibility of a sector is a measure of the extent to which the sector attaches importance to environmental issues. This score is determined on the basis of three variables, i.e. the impact, visibility, and legislation2. In cooperation with the Marketing Manager, SHE Manager and/or legal specialist each of the three variables is assigned a score on a scale from 1 to 5. The average of these individual scores is the overall score. The aforementioned calculations can be performed readily in a spreadsheet; the spreadsheet can also be used to display the results in a graph.

2 The trial projects revealed that the three variables worked well. It will be self-evident that companies can exercise their discretion as to whether they omit or add variables.

28

Appendix B: Explanatory notes to the selection of the customers Figure 3 shows the results from the selection of the customers of relevance to Product Stewardship. This selection is based on the commercial importance of the specific customers and the environmental susceptibility of those customers. The following paragraphs explain how the position of specific customers in the matrix is determined.

Figure 3: Two strategic customers in segment II attach relatively great importance to their suppliers’ SHE performance

Importance of SHE• ranking by

sustainability investors

• policy• ISO 14000

implementation• ‘green’ product

development

Commercial importance• volume of sales• growth in sales• margin• strategic importance

d

a

b

the size of the circle is indicativeof the volume of the sales

Selection tools

c

1

5

5

e

1

Commercial importance of the customer The volume of sales, growth and profit margin for each customer is determined in cooperation with the Marketing Manager or on the basis of the information in the business plan. The information for each variable is then normalized by dividing the values for the various segments by the largest value and multiplying the results from these calculations by five. This results in values for each variable along a scale ranging from 1 to 5. The next step is to use the customer’s relative competitive position to determine whether the customer is a future winner. This determination is once again awarded a score on a scale of 1 to 5. The overall score for the commercial importance is obtained from the average score for the four variables. When information about a

29

variable is not available then an estimate can be made of the value, or a relative score in the range of 1 to 5 can be assigned to the variable. Environmental susceptibility of the customer The environmental susceptibility of the customer is determined using four variables, i.e. the ranking assigned to them by sustainability investors, their environmental policy, their implementation of ISO 14000, and their development of green products. Each variable for each customer is assigned a score on a scale from 1 to 5. The average of the four variables for each customer is used to obtain the overall score. The aforementioned calculations can be performed readily in a spreadsheet; the spreadsheet can also be used to display the results in a graph.

a € ..

C u stom e r S a le s G ro wthin sa le s

P ro fitm arg in

.. % p .a. … %

Futu rew inn er

In v.R ank (1)

E n v.p olicy

IS O1 40 0 0

G re e np rod .

b € .. .. % p .a. … %

c € .. .. % p .a.

… %

d € .. .. % p .a.

… %

e € .. .. % p .a. … %

S u m m ary of th e im p ortanc e and en viron m ental sus ceptib ility of th e m os t im p ortant cus tom ers in seg m ent x

S co re s f ro m 1 ( lo w ) to 5 (m a xim um )( 1 ) E .g . D ow Jo n e s S G I, F T S E 4 G OO D o r In n o ve st ran k in g.

T h is is a q ua n tif ia b le e s t im a te o f the pr essu re s imp o se d b y so c ie ty

S elec tio n to o l

Im por tanc e of th e s e gm e n ts

Tota l To tal

E n viro nm ental su sc e pt ib i lity

30

Appendix C: Explanatory notes to the analysis of the customers Figure 4 indicates whether the company’s SHE performance offers opportunities for the improvement of the relationship with the specific customer and an increase in the market share. However, it is also possible that the company is under threat – i.e. the customer attaches great importance to safety, health and environmental issues, but the company either fails to meet these expectations or the competition exhibits a better performance.

SHE performance


Low, no increase

Does not meet expectations/


Figure 4: The probability of gaining/losing market share with respect to customer a and b

Does not meet expectations/better than the

competition

Low, increase

High, no increase

High, increase


Meets expectations/


Meets expectations/

better than the competition

Potential loss of market share

-> further analysis(zone 2)

Minor opportunities

or threats(zone 3)

Enhancement of the relationship with the

customer / increase in market share feasible

(zone 1)

a

b

c

d


The position along the horizontal axis of Figure 4 is determined by the relative importance of safety, health and environmental issues as procurement criteria. The position is also influenced by the (longer-term) trend in the importance attached to these issues (please refer to following table). The position along the vertical axis is determined by the customer’s perception of the company’s SHE performance and the customer’s perception of the SHE performance of the most important competitor(s).

31

Determination of the customers’ positions in the threat-opportunity graph

Customer a Customer b Customer c Customer d Customer e Importance of SHE

High High Low Low Low

Trend Increasing Increasing No change No change No change Customer’s perception (of the company’s SHE performance)

Favourable Favourable Favourable Favourable Favourable

Customer’s perception (of the competition’s SHE performance)

Better Worse Better Better Better

Conclusion Opportunity (zone 1)

Threat (zone 2)

Limited threat / opportunity (zone 3)



As noted in Section 4.1, preference is given to the use of customer surveys for the above estimates. A structured approach on the basis of reliable information will be conducive to the consistency of the analysis. However, in the absence of this information estimates based on the existing knowledge of the customers will suffice. The table can then be completed by the Business Manager and the SHE Manager. Trend in the importance attached to SHE/sustainability As noted earlier, the assessment of the current situation is supplemented with an estimate of the future importance attached to SHE/sustainability. It is highly likely that as yet account managers have received virtually no explicit indication of the importance customers attach to the company’s SHE performance. However, the possibility that questions of this nature are nevertheless raised at some time in the future cannot be ruled out in advance. It should be remembered that a large number of companies active in the chemical industry’s end markets are engaged in the implementation of sustainability strategies in which an important role is assigned to the chain (and consequently also to the suppliers). For this reason we recommend that a ‘sustainability profile’ be drawn up for the selected customers. A summary of this nature will enable companies to make the best possible estimate of future developments at their direct customers. An example of a profile of this form is shown in the following figure.

32

The importance customer x attaches to eco-efficiency is increasing – an example of a customer profile

Explicit reference to sustainable development; active role in imp ortant netw orks

Ambitious long-ter m target (top-3 w ithin industrial sector)

High ranking in th e relevant sustainability indices (Dow Jones, Innovest, FTSE)High-quality SHE/sustainability report and w eb siteObjec tive: all business units to carry out a chain projec t in 2004.

Active analysis of product and supplier risks.

Questions about complia nce w ith relevant regulations and implementat ion of ISO 1 4000 systems

Co mpany x has recently carried out a number of chain analyses, and has achieved eco-eff iciency improvements

Forecast:• more structured supplier analysis ; f ocus on top-10 in ktonnes or Euros• customer w ill be conf ronted w ith more stringent corporate chain targets; a proactive attitude by suppliers in this issue can support the customer in the achievement of his targets• in the shorter term a proactive attitude w ill not generate extra business; how ever the joint resolution of problems w ill s trengthen the relationship w ith the customer and may w ell result in low er costs and threats

Sus tainability profile Current supplier policy Future supplier policy

Customer sustainability profile

‘No s pecific questions have been raise d to date;nor have any form al ques tionnaires been subm itted’ (source : Account Manager)

33

Appendix D: Explanatory notes to the analysis of the products Figure 6 shows the selection of a number of products to importance to Product Stewardship. The selection is based on their relative market share and the SHE risks associated with these products. The following paragraphs explain how the position of the specific products in the matrix can be determined.

Product risk/improvement potential

Relative product share

Figure 5: Three products are in need of a Product Stewardshipproject

2

3

5


1

5

5

1

1 4

Relative product share The sales of the product to the specific customer are used as an indicator of the importance of the product; this information can be obtained from the Sales Manager, Account Manager, or Controller. The sales figures for the various products are then normalized by dividing the sales of the products by the sales of the product with the largest turnover and multiplying the results from these calculations by five. This results in values for each variable along a scale ranging from 1 to 5. The most important products are then identified by classifying all products with a score below 0.5 in the ‘others’ category – which, obviously, is a rule of thumb intended to ensure for a focus on the most important products.

34

Product risks and potential for improvement The risks confronting the products with a substantial relative market share (>0.5) is determined by a review of the entire product chain. The chain is sub-divided into the following components:

§ raw materials § semi-finished products § finished products § application § use/end of useful life The risk confronting every link in the chain is assigned a score on a scale from 1 to 5 on the basis of the existing knowledge and the estimates of the technical managers, SHE Manager, and the legal department. The overall score is obtained from the average score for the threats in each component of the chain.

P rod ucts for c us tom er x a re s elec ted o n th e b as is o f the re la tive s ales and th e r isks from the c ha in ’s p ersp ective

1

Pro du ct

2

3

4

5

6

7

O th er

. . .

R a wm ateri als

. . .

. . .

. . .

. . .

. . .

. . .

. . .

.. .

Se m i-f in.pro duc t

.. .

.. .

.. .

.. .

.. .

.. .

.. .

. . .

Fin.pro duc t

. . .

. . .

. . .

. . .

. . .

. . .

. . .

. . .

Ap pl./O E M

. . .

. . .

. . .

. . .

. . .

. . .

. . .

. . .

U se/en d of li fe

. . .

. . .

. . .

. . .

. . .

. . .

. . .

5.0

R e lativepr o du ct

sh are

4.7

2.9

2.1

1.4

0.9

0.6

...

3

To talsc ore

5

...

.. .

.. .

.. .

.. .

.. .

P ro du ct r is k

C u s to m er/ pro duc t a n aly sis

35

Appendix E: Summary of the information needs for the toolbox

Selection of segments Source of information Management discipline involved3

Identify 4-9 business segments Importance of the segment: § size § growth ratios § profit margin § market share

Susceptibility of the segment to sustainability/environmental issues: § environmental impact § visibility § legislation

Business plan for business unit or business-segment level Ditto Often no specific information is available: § an experts’ assessment is

required, on the basis of the knowledge of the company staff

§ derivation of trends from the assessment of the sustainability/environmental strategy of the (end) customers

Business managers responsible for most important segments Ditto Business Manager, SHE Manager, Product Stewardship Coordinator, legal department

3 External experts can be consulted should inadequate corporate expertise or capacity be available: sectorial associations (VNCI, CEFIC, consumer or end-market organizations) or business networks (World Business Council for Sustainable Development, European Partners for the Environment). Emerging issues can be identified by the analysis of NGO programmes or direct contacts with NGOs.

36

Selection of customers Source of information Management discipline involved 4

Identify the 5-7 largest customers for the selected segments Importance of the customer: § sales § growth in sales § profit margin § future winner

Susceptibility of the customer to sustainability/environmental issues: § policy and explicit long-

term targets for sales § ISO-14000 implementation § Product Stewardship

programme § development of green

products

Business plan/customer-account information Business plan/customer-account information Corporate environmental or sustainability report5 Note: In the absence of a (qualitative) report then an indicative overall ranking can be assigned

Business Manager or Account Manager Business Manager or Account Manager Business Manager, SHE Manager, Product Stewardship Coordinator

4 External experts can be consulted should inadequate corporate expertise or capacity be available: sectorial associations (VNCI, CEFIC, consumer or end-market organizations) or business networks (World Business Council for Sustainable Development, European Partners for the Environment). Emerging issues can be identified by the analysis of NGO programmes or direct contacts with NGOs. 5 In the event of companies listed on the stock exchange: the ranking assigned by sustainability investors can be used as an indicator.

37

Analysis of customers Source of information Management discipline involved

Importance of the environment as a procurement criterion Perception of the company and its performance in comparison with the competition

Market research In the event this is not available then use can be made of the experts’ assessment, based on the knowledge or the company staff

Business managers, responsible for most important segments

Selection of the products

Source of information Management discipline involved

Identify the 5-10 largest products for the selected customers Importance of the product: § sales in the last 12 months Product risk: § impact of regulations in each

link of the value chain

Customer-account information Customer-account information

Product Stewardship investigations. In the event that this is not available then make an estimate based on expert knowledge or the knowledge of the company staff

Business Manager or Account Manager Business Manager or Account Manager

SHE Manager, Product Stewardship Coordinator, technical, operational and legal departments

38

Colophon: Association of the Dutch Chemical Industry (VNCI), July 2003

Communications Department PO Box 443 2260 AK Leidschendam The Netherlands Telephone +31 (0)70 3378715 Fax +31 (0)70 3203903 e-mail [email protected] web site www.vnci.nl Whilst the utmost care has been taken to avoid any (printing) errors or omissions in this publication the author(s), editor(s) and publisher cannot accept any liability or responsibility for loss, of any form whatsoever, incurred either directly or indirectly as a consequence of actions and/or decisions (partly) based on the information in this publication. Copyright 2003 VNCI, Leidschendam All rights reserved. No part of this publication may be reproduced, stored in a database or retrieval system, or published, in any form or in any way, electronically, mechanically, by print, photoprint, microfilm or any other means whatsoever without prior written permission from the publisher: VNCI, PO Box 443, 2260 AK Leidschendam, the Netherlands

mailto:[email protected]

http://www.vnci.nl

Product analysis

This component carries out a more in-depth

review of the products supplied to the selected

customers. It is recommended that eight to ten of

the most important products are selected to serve

as the basis for the further analysis. An estimation

of the SHE risks for these products is made from

the perspective of the chain; this estimation is

made on the basis of the current and future

SHE risks (or potential for improvement) in the

various links of the production chain.

B

A

C

D

Minor opportunities

or threats

Low,no increase

High,no increase

Meets expectations/better than the

competition

Does not meetexpectations/ better than the competition

SHE performance



Meets expectations/worse than the

competition

Does not meetexpectations/ worsethan the competition

Low,increase

High,increase

Potential loss of market share -> further analysis

Enhancement ofthe relationship

with the customer/increase in market

share feasible

Association of the Dutch Chemical Industry

Vlietweg 16

PO Box 443

2260 AK Leidschendam

The Netherlands

Telephone +31 (0)70 337 87 87

Fax +31 (0)70 320 39 03

www.vnci.nl

May 2003

Figure 2: The probability of gaining/losing market share

in selected business segments

. . . . . . . . .

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. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

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. . . . . . . . . . . .

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. . . . . . . . . . . .

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PRODUCT STEWARDSHIP

for marketeers

BO X 2CO M PAT I B I L I T Y W I T H T H E PR O D U C T

ST E WA R D S H I P M A N A G E M E N T S Y S T E M

The completion of Element 1 (selection tools) and the

two steps involved in Element 2 (customer and product

analysis) of the toolbox will yield information about the

segments and customers to which Product Stewardship is

of relevance, the company’s positioning, and the priori-

tization of the investigation of the products.

At this point the system links up with the existing methods

for the implementation of Product Stewardship. The imple-

mentation can be done by the guidelines ‘A management

system for the introduction of Product Stewardship’ VNCI

developed in 1999, or by an in-house approach developed

by the relevant company. The toolbox offers an oppor-

tunity to elaborate on the planning and implementation

phases of the Product Stewardship management system

(see Figure 3).

. . . . . . .. . . . . . . . .

. . . . .. . . . . . . . . . .

. . . . . .. . . . . . . . . .

. . . . . . . . .. . . . . . .

.. . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

SU P P O R T B Y VNCI

VNCI promotes and encourages the implemen-

tation of Product Stewardship by means of the

provision of information, publications, presen-

tations and workshops. In addition, VNCI’s

Product Stewardship officer will be pleased to

visit you to provide information about Product

Stewardship.

This brochure is supplemented by the booklet

‘Product Stewardship for marketeers, guidelines for a

market-oriented approach’. This publication, which

is available for VNCI members only, provides a

comprehensive explanation of the principles of

the toolbox. General information about Product

Stewardship is given in the brochure ‘Product

Stewardship. A force for innovation’ and the accom-

panying guidelines ‘A management system for the

introduction of Product Stewardship’.

1 2 3 4 5Commitment Planning Execution Control Review

1 2 3 4 5

PRODUCT STEWARDSHIP FOR MARKETEERS

TOOLBOX

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. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

The execution of Product Stewardship

projects for selected product(s)

The next step involves the acquisition of an

insight into the chain for the selected product

categories, followed by an analysis of the chain.

A multi-disciplinary team then identifies options

for improvement. More detailed information

about the composition of multi-disciplinary

teams and the execution of Product Stewardship

projects is given in the guidelines ‘A management

system for the introduction of Product Stewardship’.

Element 3Actions

The requisite improvements are focused on the

increase of the value of the customer; they should

make a favourable contribution to the company’s

operational results, and they should also be feas-

ible from a technical and organizational perspec-

tive. Tangible examples of improvements include

the introduction of reusable raw materials, meas-

ures to conserve water and energy, the reduction

of emissions, the replacement of high-risk ingre-

dients by others with a lower risk, and packaging

and logistics measures. In addition, the imple-

mentation of the improvement measures needs to

be assigned to the various management discip-

lines. In the first instance these measures focus

solely on the selected customer-product combina-

tions, although usually they can also be extended

to other products, customers, or market segments.

. . . . . . . . .

. . . . . . . . .

. . . . . . . . . Element 1Select ion tools

Selection of segments

Every company or business unit within a large

business can make a distinction between seg-

ments. This segmentation is often based on end

markets, geographical regions and/or product-

market combinations. The selection of the

segments for which Product Stewardship is of

relevance is based on the commercial importance

of the segments, and on the relative importance

of SHE issues to these segments.

Selection of customers

A variety of customers can be distinguished

within each segment. The selection of the

customers is also based on the commercial

importance of the customers, and on the relative

importance the various customers attach to

SHE issues.

Element 2Customer and product analys is

Customer analysis


review of the relative importance the company’s

customer attaches to the SHE performance of their

suppliers and the products they receive. The

component also extends to an appraisal of the

customers’ assessment of the company’s SHE

performance, and of the SHE performance of the

company’s most important competitor(s). These

estimates are made on the basis of the existing

knowledge of the customer; in an ideal situation

this information is available from customer surveys.

The results are presented in a threats/opportu-

nities graph (see Figure 2). A distinction can be

made between three main zones in this graph:

1 the probability of a further enhancement of the

relationship with the customer and, where

relevant, an increase in the market share;

2 the (long-term) threat of the loss of market

share or confrontation with the relatively high

costs incurred in complying with new SHE

requirements;

3 minor opportunities and threats.


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“Product Stewardship is the responsible manage-

ment of risks and improvement of the performan-

ce of a product in the fields of safety, health and

the environment during its entire life cycle. This

can be achieved through a continuous process of

improvement on a healthy economic basis”.

As will be apparent from this definition,

Product Stewardship is comprised of the prod-

uct and chain-oriented element of the inter-

national chemical industry’s Responsible Care

programme. Both the chemical industry and

other sectors of the business community in-

creasingly regard Product Stewardship as one

of the most important elements of sustainable

entrepreneurship, an importance which is due

to the large number of benefits Product

Stewardship offers both to environmental pro-

tection and to societal and economic issues.

A successful implementation of Product

Stewardship requires the active involvement

of the company’s marketing and business

managers. They possess the requisite knowl-

edge of the market and the customers, and

they are in a position to initiate cooperation

with strategic partners in the production

chain. An adequate implementation is possible

only when they possess sufficient knowledge

about sustainability-driven developments in

the market and a thorough understanding of

the specific benefits Product Stewardship

offers their segment of the market.

In practice many marketing and business

managers do not always appreciate these

benefits, as a result of which the implemen-

tation of Product Stewardship still frequently

remains stuck in the planning phase.

Delays in the implementation can result in the

failure to make use of opportunities available

to the company; moreover in some instances

the company may not achieve its corporate

targets. Delays can also result in the authori-

ties giving consideration to the introduction

of product-oriented legislation and regula-

tions that impose a number of mandatory

requirements on the implementation of chain

management. Moreover it is possible that

environmental organizations could further

increase the pressure imposed on the players

in the end markets.

VNCI requested Triple Value Strategy

Consulting to develop the ‘Product Stewardship

for marketeers’ toolbox, a toolbox which con-

tains a number of useful tools for the intro-

duction of Product Stewardship within

marketing departments. This toolbox offers

marketing and business managers the tools

required to adopt a structured approach to

the identification of the most significant

opportunities for improvements at a product,

customer and segment level.

This brochure provides a brief summary of the

system, together with a general review of the

importance of Product Stewardship and the

benefits it offers. More detailed information is

given in the publication ‘Product Stewardship

for marketeers. Guidelines for a market-oriented

approach’, copies of which are available from

VNCI.

TH E I M P O R TA N C E O F PR O D U C T

ST E WA R D S H I P C O N T I N U E S T O I N C R E A S E

Product Stewardship is acquiring a continually

increasing strategic importance, both to the

business units within major companies and to

independent medium-sized and smaller enter-

prises. This growing importance is in part due

to a number of developments:

1 an increasing number of players active in end

markets relevant to the chemical industry are

engaged in the development and implemen-

tation of sustainable-development policy. These

policies are increasingly focusing on companies

at the beginning of the chain, and consequent-

ly in the longer term they will have tangible

implications for the chemical industry;

2 international, national and local authorities are

introducing increasingly stringent policies with

respect to sustainable development in general,

and to chemical substances in particular. The

product chain also plays an important role in

chemical-substances policy;

3 environmental organizations are paying

explicit attention to the environmental and

societal aspects of production chains.

Campaigns which address the use of specific

chemicals often focus on powerful brands at the

end of the production chain, and consequently

on the chemical industry’s customers and end

users;

4 a continually increasing number of companies

are formulating corporate targets for the

implementation of Product Stewardship.

Business units are often responsible for the

achievement of these targets;

5 Sustainability leaders within the chemical

industry are actively positioning themselves

in the field of sustainable development (see

box 1). Companies the market perceives as

sustainable and innovative companies are more

likely to achieve valuable cooperation with

their customers. For this reason business units

seek unique selling points they can use to

demonstrate to their customers that they distin-

guish themselves from the competition.

mental and economic benefits offered by this alter-

native were such that Bosch is now engaged in a

complete changeover to the plastic component.

PR O D U C T ST E WA R D S H I P F O R

MA R K E T E E R S : T H E S Y S T E M

The system offers marketing and business managers

the tools required for a structured approach to the

identification of the most significant opportunities

for improvements at a product, customer and seg-

ment level. Once these opportunities have been

identified they can then implement the requisite

measures within the organization. This method is

fully compatible with the guidelines ‘A management

system for the introduction of Product Stewardship’

developed by VNCI (see box 2).

The results obtained using the toolbox are:

1 selective: in the first instance the customer and

product analysis is performed for segments and

customers in which SHE issues play a signifi-

cant role and that are of relatively great

importance to the company;


TH E B E N E F I T S O F F E R E D B Y PR O D U C T

ST E WA R D S H I P A R E B E C O M I N G

I N C R E A S I N G LY A P PA R E N T

Product Stewardship offers an opportunity to

identify safety, health and environmental (SHE)

risks in good time. This enables companies to

adopt a proactive approach to the resolution of

any problems that are encountered, often in

cooperation with other players in the chain.

This in turn leads to increased mutual confidence

in the various customer-supplier relationships

within the chain, which is ultimately beneficial

to the confidence in the entire production chain.

Moreover cooperation with strategic customers

can result in interesting environmental and eco-

nomic improvements in the processes or prod-

ucts. BASF, DSM Coating Resins and GE Plastics

have already acquired experience with the

benefits offered by cooperation, experience they

gained during their participation in trial projects

carried out in the development of the ‘Product

Stewardship for marketeers’ toolbox.

The cooperation between the multi-disciplinary

BASF, Bosch and Siemens teams has, for example,

resulted in the development of a polypropylene

alternative for a washing-machine component

originally made from stainless steel. The environ-

. . . . . . . . . . .

. . . . . . . . . . .

. . . . . . . . . . .

. . . . . . . . . . .

. . . . . . . . . . .

. . . . . . . .

BO X 1SU S TA I N A B I L I T Y L E A D E R S

Many chemical companies supply products to end markets

such as the automotive, food and pharmaceuticals, electron-

ics and telecommunications sectors. An increasing number

of companies active in these sectors are developing pro-

active sustainable-development strategies.

The Dow Jones Sustainability Index Group (see www.

sustainability-index.com) is one of the organizations which

publishes an annual list of sustainability leaders. Most of

these companies have implemented an active and environ-

mentally-oriented supplier policy, and it is expected that

their requirements will become increasingly stringent

in the future. Suppliers need to be aware of the nature of

the requirements their customers will impose on their

products; the ‘Product Stewardship for marketeers’ toolbox

offers them tools that will assist them in the performance

of these analyses.

1 3


relevance

Determine opportunities and/orthreats for selected customers

(customer analysis)

Select customers within the selected segments for whom Product Stewardship is of relevance

Select products for witch achain analysis needs to be performed

(product analysis)

Prepare Product Stewardship projects for selected products, and identify

opportunities for improvement

IV

III

II

I

1Selection tools

3Actions


management disciplinesA

B

C

4

5

6

2

13

7

E

D

F

A

CB

22Customer and product analysis

. .. . . . . . .. . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. .

. .

. .

. .

. .

. . . . . . .

. . . . . . .

. . . . . . . 2 substantiated: the opportunities for improvement

are identified on the basis of an analysis of cust-

omers and products;

3 action-oriented: the emphasis is placed on the

implementation of tangible improvements that

enhance the market position.

HO W D O E S T H E T O O L B O X W O R K?

The toolbox is comprised of three elements

(see Figure 1):

1 selection tools: for the selection of the relevant

segments and customers;

2 customer and product analyses: for the analysis

of the current and future needs of the customers,

the product risks, opportunities for improvement,

and potential measures that can be implemented;

3 actions: the assignment of prioritized actions to

the various management disciplines.

A brief description of the elements is given on the

next page. A comprehensive explanation of the use

of the toolbox is given in the guidelines.

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. .

. . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

“Product Stewardship is the responsible manage-

ment of risks and improvement of the performan-

ce of a product in the fields of safety, health and

the environment during its entire life cycle. This

can be achieved through a continuous process of

improvement on a healthy economic basis”.

As will be apparent from this definition,

Product Stewardship is comprised of the prod-

uct and chain-oriented element of the inter-

national chemical industry’s Responsible Care

programme. Both the chemical industry and

other sectors of the business community in-

creasingly regard Product Stewardship as one

of the most important elements of sustainable

entrepreneurship, an importance which is due

to the large number of benefits Product

Stewardship offers both to environmental pro-

tection and to societal and economic issues.

A successful implementation of Product

Stewardship requires the active involvement

of the company’s marketing and business

managers. They possess the requisite knowl-

edge of the market and the customers, and

they are in a position to initiate cooperation

with strategic partners in the production

chain. An adequate implementation is possible

only when they possess sufficient knowledge

about sustainability-driven developments in

the market and a thorough understanding of

the specific benefits Product Stewardship

offers their segment of the market.

In practice many marketing and business

managers do not always appreciate these

benefits, as a result of which the implemen-

tation of Product Stewardship still frequently

remains stuck in the planning phase.

Delays in the implementation can result in the

failure to make use of opportunities available

to the company; moreover in some instances

the company may not achieve its corporate

targets. Delays can also result in the authori-

ties giving consideration to the introduction

of product-oriented legislation and regula-

tions that impose a number of mandatory

requirements on the implementation of chain

management. Moreover it is possible that

environmental organizations could further

increase the pressure imposed on the players

in the end markets.

VNCI requested Triple Value Strategy

Consulting to develop the ‘Product Stewardship

for marketeers’ toolbox, a toolbox which con-

tains a number of useful tools for the intro-

duction of Product Stewardship within

marketing departments. This toolbox offers

marketing and business managers the tools

required to adopt a structured approach to

the identification of the most significant

opportunities for improvements at a product,

customer and segment level.

This brochure provides a brief summary of the

system, together with a general review of the

importance of Product Stewardship and the

benefits it offers. More detailed information is

given in the publication ‘Product Stewardship

for marketeers. Guidelines for a market-oriented

approach’, copies of which are available from

VNCI.

TH E I M P O R TA N C E O F PR O D U C T

ST E WA R D S H I P C O N T I N U E S T O I N C R E A S E

Product Stewardship is acquiring a continually

increasing strategic importance, both to the

business units within major companies and to

independent medium-sized and smaller enter-

prises. This growing importance is in part due

to a number of developments:

1 an increasing number of players active in end

markets relevant to the chemical industry are

engaged in the development and implemen-

tation of sustainable-development policy. These

policies are increasingly focusing on companies

at the beginning of the chain, and consequent-

ly in the longer term they will have tangible

implications for the chemical industry;

2 international, national and local authorities are

introducing increasingly stringent policies with

respect to sustainable development in general,

and to chemical substances in particular. The

product chain also plays an important role in

chemical-substances policy;

3 environmental organizations are paying

explicit attention to the environmental and

societal aspects of production chains.

Campaigns which address the use of specific

chemicals often focus on powerful brands at the

end of the production chain, and consequently

on the chemical industry’s customers and end

users;

4 a continually increasing number of companies

are formulating corporate targets for the

implementation of Product Stewardship.

Business units are often responsible for the

achievement of these targets;

5 Sustainability leaders within the chemical

industry are actively positioning themselves

in the field of sustainable development (see

box 1). Companies the market perceives as

sustainable and innovative companies are more

likely to achieve valuable cooperation with

their customers. For this reason business units

seek unique selling points they can use to

demonstrate to their customers that they distin-

guish themselves from the competition.

mental and economic benefits offered by this alter-

native were such that Bosch is now engaged in a

complete changeover to the plastic component.

PR O D U C T ST E WA R D S H I P F O R

MA R K E T E E R S : T H E S Y S T E M

The system offers marketing and business managers

the tools required for a structured approach to the

identification of the most significant opportunities

for improvements at a product, customer and seg-

ment level. Once these opportunities have been

identified they can then implement the requisite

measures within the organization. This method is

fully compatible with the guidelines ‘A management

system for the introduction of Product Stewardship’

developed by VNCI (see box 2).

The results obtained using the toolbox are:

1 selective: in the first instance the customer and

product analysis is performed for segments and

customers in which SHE issues play a signifi-

cant role and that are of relatively great

importance to the company;


TH E B E N E F I T S O F F E R E D B Y PR O D U C T

ST E WA R D S H I P A R E B E C O M I N G

I N C R E A S I N G LY A P PA R E N T

Product Stewardship offers an opportunity to

identify safety, health and environmental (SHE)

risks in good time. This enables companies to

adopt a proactive approach to the resolution of

any problems that are encountered, often in

cooperation with other players in the chain.

This in turn leads to increased mutual confidence

in the various customer-supplier relationships

within the chain, which is ultimately beneficial

to the confidence in the entire production chain.

Moreover cooperation with strategic customers

can result in interesting environmental and eco-

nomic improvements in the processes or prod-

ucts. BASF, DSM Coating Resins and GE Plastics

have already acquired experience with the

benefits offered by cooperation, experience they

gained during their participation in trial projects

carried out in the development of the ‘Product

Stewardship for marketeers’ toolbox.

The cooperation between the multi-disciplinary

BASF, Bosch and Siemens teams has, for example,

resulted in the development of a polypropylene

alternative for a washing-machine component

originally made from stainless steel. The environ-

. . . . . . . . . . .

. . . . . . . . . . .

. . . . . . . . . . .

. . . . . . . . . . .

. . . . . . . . . . .

. . . . . . . .

BO X 1SU S TA I N A B I L I T Y L E A D E R S

Many chemical companies supply products to end markets

such as the automotive, food and pharmaceuticals, electron-

ics and telecommunications sectors. An increasing number

of companies active in these sectors are developing pro-

active sustainable-development strategies.

The Dow Jones Sustainability Index Group (see www.

sustainability-index.com) is one of the organizations which

publishes an annual list of sustainability leaders. Most of

these companies have implemented an active and environ-

mentally-oriented supplier policy, and it is expected that

their requirements will become increasingly stringent

in the future. Suppliers need to be aware of the nature of

the requirements their customers will impose on their

products; the ‘Product Stewardship for marketeers’ toolbox

offers them tools that will assist them in the performance

of these analyses.

1 3


relevance

Determine opportunities and/orthreats for selected customers

(customer analysis)

Select customers within the selected segments for whom Product Stewardship is of relevance

Select products for which a chain analysis needs to be performed

(product analysis)

Prepare Product Stewardship projects for selected products, and identify

opportunities for improvement

IV

III

II

I

1Selection tools

3Actions


management disciplinesA

B

C

4

5

6

2

13

7

E

D

F

A

CB

22Customer and product analysis

. .. . . . . . .. . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. .

. .

. .

. .

. .

. . . . . . .

. . . . . . .

. . . . . . . 2 substantiated: the opportunities for improvement

are identified on the basis of an analysis of cust-

omers and products;

3 action-oriented: the emphasis is placed on the

implementation of tangible improvements that

enhance the market position.

HO W D O E S T H E T O O L B O X W O R K?

The toolbox is comprised of three elements

(see Figure 1):

1 selection tools: for the selection of the relevant

segments and customers;

2 customer and product analyses: for the analysis

of the current and future needs of the customers,

the product risks, opportunities for improvement,

and potential measures that can be implemented;

3 actions: the assignment of prioritized actions to

the various management disciplines.

A brief description of the elements is given on the

next page. A comprehensive explanation of the use

of the toolbox is given in the guidelines.

Product analysis


review of the products supplied to the selected

customers. It is recommended that eight to ten of

the most important products are selected to serve

as the basis for the further analysis. An estimation

of the SHE risks for these products is made from

the perspective of the chain; this estimation is

made on the basis of the current and future

SHE risks (or potential for improvement) in the

various links of the production chain.

B

A

C

D

Minor opportunities

or threats

Low,no increase

High,no increase

Meets expectations/better than the

competition

Does not meetexpectations/ better than the competition

SHE performance



Meets expectations/worse than the

competition

Does not meetexpectations/ worsethan the competition

Low,increase

High,increase

Potential loss of market share -> further analysis

Enhancement ofthe relationship

with the customer/increase in market

share feasible

Association of the Dutch Chemical Industry

Vlietweg 16

PO Box 443

2260 AK Leidschendam

The Netherlands

Telephone +31 (0)70 337 87 87

Fax +31 (0)70 320 39 03

www.vnci.nl

May 2003

Figure 2: The probability of gaining/losing market share

in selected business segments

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

PRODUCT STEWARDSHIP

for marketeers

BO X 2CO M PAT I B I L I T Y W I T H T H E PR O D U C T

ST E WA R D S H I P M A N A G E M E N T S Y S T E M

The completion of Element 1 (selection tools) and the

two steps involved in Element 2 (customer and product

analysis) of the toolbox will yield information about the

segments and customers to which Product Stewardship is

of relevance, the company’s positioning, and the priori-

tization of the investigation of the products.

At this point the system links up with the existing methods

for the implementation of Product Stewardship. The imple-

mentation can be done by the guidelines ‘A management

system for the introduction of Product Stewardship’ VNCI

developed in 1999, or by an in-house approach developed

by the relevant company. The toolbox offers an oppor-

tunity to elaborate on the planning and implementation

phases of the Product Stewardship management system

(see Figure 3).

. . . . . . .. . . . . . . . .

. . . . .. . . . . . . . . . .

. . . . . .. . . . . . . . . .

. . . . . . . . .. . . . . . .

.. . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

SU P P O R T B Y VNCI

VNCI promotes and encourages the implemen-

tation of Product Stewardship by means of the

provision of information, publications, presen-

tations and workshops. In addition, VNCI’s

Product Stewardship officer will be pleased to

visit you to provide information about Product

Stewardship.

This brochure is supplemented by the booklet

‘Product Stewardship for marketeers, guidelines for a

market-oriented approach’. This publication, which

is available for VNCI members only, provides a

comprehensive explanation of the principles of

the toolbox. General information about Product

Stewardship is given in the brochure ‘Product

Stewardship. A force for innovation’ and the accom-

panying guidelines ‘A management system for the

introduction of Product Stewardship’.

1 2 3 4 5Commitment Planning Execution Control Review

1 2 3 4 5

PRODUCT STEWARDSHIP FOR MARKETEERS

TOOLBOX

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

The execution of Product Stewardship

projects for selected product(s)

The next step involves the acquisition of an

insight into the chain for the selected product

categories, followed by an analysis of the chain.

A multi-disciplinary team then identifies options

for improvement. More detailed information

about the composition of multi-disciplinary

teams and the execution of Product Stewardship

projects is given in the guidelines ‘A management

system for the introduction of Product Stewardship’.

Element 3Actions

The requisite improvements are focused on the

increase of the value of the customer; they should

make a favourable contribution to the company’s

operational results, and they should also be feas-

ible from a technical and organizational perspec-

tive. Tangible examples of improvements include

the introduction of reusable raw materials, meas-

ures to conserve water and energy, the reduction

of emissions, the replacement of high-risk ingre-

dients by others with a lower risk, and packaging

and logistics measures. In addition, the imple-

mentation of the improvement measures needs to

be assigned to the various management discip-

lines. In the first instance these measures focus

solely on the selected customer-product combina-

tions, although usually they can also be extended

to other products, customers, or market segments.

. . . . . . . . .

. . . . . . . . .

. . . . . . . . . Element 1Select ion tools

Selection of segments

Every company or business unit within a large

business can make a distinction between seg-

ments. This segmentation is often based on end

markets, geographical regions and/or product-

market combinations. The selection of the

segments for which Product Stewardship is of

relevance is based on the commercial importance

of the segments, and on the relative importance

of SHE issues to these segments.

Selection of customers

A variety of customers can be distinguished

within each segment. The selection of the

customers is also based on the commercial

importance of the customers, and on the relative

importance the various customers attach to

SHE issues.

Element 2Customer and product analys is

Customer analysis


review of the relative importance the company’s

customer attaches to the SHE performance of their

suppliers and the products they receive. The

component also extends to an appraisal of the

customers’ assessment of the company’s SHE

performance, and of the SHE performance of the

company’s most important competitor(s). These

estimates are made on the basis of the existing

knowledge of the customer; in an ideal situation

this information is available from customer surveys.

The results are presented in a threats/opportu-

nities graph (see Figure 2). A distinction can be

made between three main zones in this graph:

1 the probability of a further enhancement of the

relationship with the customer and, where

relevant, an increase in the market share;

2 the (long-term) threat of the loss of market

share or confrontation with the relatively high

costs incurred in complying with new SHE

requirements;

3 minor opportunities and threats.


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