Energy and utility management maturity model for sustainable manufacturing process

Int. J. Production Economics 146 (2013) 453–464

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Int. J. Production Economics journal homepage: www.elsevier.com/locate/ijpe

Energy and utility management maturity model for sustainable manufacturing process E.W.T Ngai a, D.C.K. Chau a, J.K.L. Poon b,n, C.K.M. To c a

Department of Management and Marketing, The Hong Kong Polytechnic University, Hong Kong, PR China Hong Kong Community College, The Hong Kong Polytechnic University, Kowloon, Hong Kong, PR China c Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Hong Kong, PR China b

a r t i c l e i n f o

abstract

Article history: Received 11 July 2012 Accepted 14 December 2012 Available online 3 January 2013

The manufacturing industry, one of the top consumers of natural resources, produces extensive carbon emissions that create the need for a sustainable manufacturing process, a topic of significant research interest. In the recent decades, the advancement of environmental technology and introduction of comprehensive environmental management systems have highlighted the intangible benefits of environmental management practices and their potential to drive organizational competitiveness. Accumulating evidence on the potential benefits of environmental protectionism has given rise to a series of environmental management practices and systems, such as energy informatics, environmental management standardization frameworks, and green supplier management and collaboration. However, existing literature lacks a clear conceptualization and a coherent theoretical framework of environmental management. In addition, no systematic framework exists for the design and implementation of environmental management practices that guide organizations in deciding on the practices or systems that they should implement given their organizational situations. Thus, this study aims to develop an energy and utility maturity framework for systematic measurement and management of natural resource consumption. Specifically, the proposed framework, energy and utility management maturity model (EUMMM), was designed based on the capability maturity model integration (CMMI). EUMMM has two major functions. First, it provides an assessment framework for analyzing the maturity level of energy and utility management in organizations. Second, it provides a progressive framework to guide organizational advancement in energy and utility management. A collaborative pilot study was conducted to validate the effectiveness, practicability, and convenience of the EUMMM. The results indicated that EUMMM successfully led the participating companies to move along the environmental management maturity path. Theoretically, this study extends the application of CMMI to the context of natural resource management and develops a progressive framework for energy and utility management maturation. Practically, this study provides a robust guideline for practitioners in analyzing and advancing energy and utility maturity levels to achieve a sustainable manufacturing process. & 2012 Elsevier B.V. All rights reserved.

Keywords: Energy and utility management maturity model Sustainable manufacturing Case study Textile manufacturing

1. Introduction Environmental performance and firm performance are two competing ends in the manufacturing process. Researchers used to believe that environmental practices used up organizational resources and distracted organizations from strengthening their competitiveness (Gadenne et al., 2008; Montabon et al., 2007; Pil and Rothenberg, 2003; Sarkis and Cordeiro, 2001; Wagner et al., 2002). However, with the advancement of environmental technology and introduction of comprehensive environmental management systems in the recent

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0925-5273/$ - see front matter & 2012 Elsevier B.V. All rights reserved. http://dx.doi.org/10.1016/j.ijpe.2012.12.018

decades, researchers have begun to realize the intangible benefits of environmental management practices and their potential in driving organizational competitiveness. With proactive environmental management practices, companies generate additional business opportunities, promote production efficiency and effectiveness, and reduce the cost of manufacturing and pollution management (Christmann, 2000; Caniato et al., 2012; Hui et al., 2001; King and Lenox, 2002; Montabon et al., 2007; Pil and Rothenberg, 2003; Wagner et al., 2002; Yang et al., 2010; Zhu et al., 2005). Accumulating evidence on the potential benefits of environmental protectionism has given rise to a series of environmental management practices and green innovations, such as energy informatics (Chen et al., 2008; Watson et al., 2010), frameworks on environmental management standardization (Corbett and Kirsch, 2001;

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Matouq, 2000; Matuszak-Flejszman, 2009; Vastag et al., 1996), and green supplier management and collaboration practices (Matuszak-Flejszman, 2009). However, existing literature lacks a clear conceptualization and a coherent theoretical framework of environmental management (Lucas, 2010). No systematic framework exists for the design and implementation of environmental management practices that guide organizations, particularly those that lack resources and expert knowledge, in deciding the environmental management practices or systems that should be implemented given their specific organizational situations. In several situations, environmental management practices are applied in an ad hoc manner. In addition, organizations seeking higher levels of environmental performance find no systematic framework for assessing the maturity levels of their existing environmental management systems and determining ways to improve progressively the manufacturing process toward environmental sustainability. A mismatch between the maturity level of environmental management and the plan of environmental management improvement may lead to the non-fulfillment of organizational targets, and consequently a low return on investment. Such a mismatch or nonreadiness may also lead to a situation wherein the potential benefits of environmental management cannot be fully realized in actual business situations. Given the increasing concerns over environmental performance for sustainable development, the expanding set of environmental management practices, and the limitations of existing benchmark environmental management frameworks, this study aims to develop a simple and easily implementable energy and utility maturity framework called energy and utility management maturity model (EUMMM) in the manufacturing sector. The framework has two major functions. First, EUMMM provides an assessment framework (with five maturity levels) for analyzing the maturity level of energy and utility resource management in organizations. Second, it provides a progressive framework (with four phases of maturation processes) to guide organizational advancement toward maturity in energy and utility resource management. This framework has been designed based on capability maturity model integration (CMMI). The proliferation of programs to improve competitiveness through continuous improvement in productivity, product quality, waste reduction, and energy efficiency has gained popularity in the past few decades. These programs require certain common capabilities; thus, consolidating these programs under one umbrella of process improvement is advantageous. CMMI, which is widely applied in process-improvement programs for quality and productivity, provides a framework of process improvement for such initiative. Thus, we have adopted the CMMI for the conceptualization of the EUMMM, in which, assessment activities provide useful feedback for continuous improvement. Our proposed framework is advantageous over existing environmental management frameworks for the following reasons. (1) It is more practical and easier to implement than existing environmental management frameworks. Existing environmental management frameworks, such as EN16001 and ISO50001, have been developed primarily for large or listed companies. These frameworks are far too complicated for organizations that lack professional and financial resources for implementation. (2) It adopts the concept of continuous improvement that enables organizations to advance their maturity of energy and utility management progressively. (3) It contains both the assessment and maturation guideline for improving energy and utility management. This study has both academic and practical contributions. Theoretically, this study extends the application of CMMI to the management of natural resources in organizations. Furthermore, this study develops a progressive framework to explain the process of energy and utility resource management advancement from one maturity stage to another, thereby helping researchers understand

how sustainable development may be achieved in organizations. Practically, the current study provides a robust guideline for practitioners in analyzing and advancing the maturity of energy and utility resource management. This paper is organized as follows. First, a review on existing environmental management frameworks is provided. Second, the CMMI model is explained as a reference framework for the development of EUMMM. Third, EUMMM is presented as a composite of assessment and progressive frameworks, and the application of the model using a collaborative practice research study is described. Finally, the conclusions and contributions of the study are provided.

2. Literature review In this section, we first provide a general understanding on energy efficiency management standards to gain a brief picture on existing benchmarking frameworks, and then briefly review the academic work published on energy management research. Different international energy management standards guide enterprises in improving energy utilization performance and efficiency. First, one well-known program is the Energy Star (Environmental Protection Agency (EPA), 2003), a joint program between the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Energy. Through home and business guidelines, Energy Star protects the environment by promoting energyefficient products and practices. EPA provides a proven strategy for superior energy management with tools and resources, as well as guidelines that assist organizations in improving their energy performance step by step. Second, EN 16001 (Sustainable Energy Ireland, 2009) is the energy management system of the European standard published in 2009. It complies with ISO 14001 and is based on the plan-docheck-act cycle. EN 16001 helps organizations set up a comprehensive energy management system and continually improve their energy utilization performance, leading to lower energy costs and less greenhouse gas emissions. Third, the United Nations Industrial Development Organization (UNIDO) and the International Organization for Standardization (ISO) developed an energy management system standard in 2008 for the integration of energy efficiency into the management practices of industrial enterprises (United Nationals Industrial Development Organization (UNIDO), 2008). The standard, ISO 50001, establishes the benchmarking energy management framework for industrial plants, commercial facilities, and entire organizations. Based on the framework, enterprises can develop energy efficiency goals, plan for interventions, prioritize energy efficiency measures and investments, monitor and document energy management performance and results, and ensure continuity and constant improvement in energy efficiency. Fourth, module 4 of the Energy and Greenhouse Management Toolkit, developed by the State Government of Victoria (State Government of Victoria, 2002), provides details on the development of energy management systems. The module presents the following sequence of events for energy management: organize management resources, appoint an energy manager and create an implementation team, prepare a corporate energy management policy indicating energy reduction targets, establish an energy use monitoring and reporting system, identify energy saving opportunities through energy audit, prepare a detailed action plan based on the audit findings and budgets, implement staff awareness and training programs, implement projects, and report and review results and conduct an annual review. Other national standards for energy management systems used in Europe include DS2403 in Denmark, SS627750 in Sweden, IS 393 in Ireland, UNE-216301:2007 in Spain, and VDI 4602/1 in Germany.

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The aforementioned benchmarking energy efficiency management frameworks, especially the EN16001 and ISO50001, are complicated and require substantial resources for implementation because they have been developed primarily for large-scale organizations. Most commercial organizations, especially the SMEs, have limited resources and professional knowledge to obtain these certifications. Thus, a simple and practical framework for analyzing and continuously improving the maturity level of environmental management in organizations is needed. In this section, we briefly review the academic research publications related to energy management practices. Energy management in specific industries or countries has been analyzed in academic literature. Kannan and Boie (2003) introduced energy management in bakeries in Germany. They analyzed energy consumption in a bakery, identified energy-saving measures, and obtained 6.5% saving on total energy consumption after the implementation of energy management practices. Christoffersen et al. (2006) examined energy management practices in the Danish manufacturing industry. By telephone survey, they analyzed the energy management practices of 304 Danish industrial firms. An analytical framework covering all parameters believed to influence energy savings and energy management was used as a theoretical background for the telephone survey. In the study, the surveyed firms were categorized under three types of energy management; their energy management practices were analyzed and discussed. Gordic´ et al. (2010) studied the development of the energy management system of a Serbian car manufacturer to provide an implementation guideline for entrepreneurs in the metalworking industry. The current status of the company’s energy management system was first assessed using an energy management matrix. After conducting an energy audit and technological and economic feasibility studies, certain energy-saving measures were proposed, implemented, and evaluated. Although significant energy savings were achieved, not all of the proposed energy-saving measures were implemented. Vijayaraghavan and Dornfeld (2010) developed a software-based approach that can support decision making across multiple temporal levels of manufacturing analysis using temporal decision scales for automated energy reasoning. They further introduced a framework based on event stream processing to analyze the energy consumption and operational data of machines and other manufacturing equipment. Duflou et al. (2011) provided an overview of the current shortcomings of life cycle assessment studies in terms of the coverage of production steps, developed a methodology for analyzing manufacturing unit processes, and described initial case studies conducted at KU Leuven to identify significant potential for improvement. Seow and Rahimifard (2011) reported a novel approach for modeling energy flows within a manufacturing system based on a ‘‘product’’ viewpoint and utilized energy consumption data at plant and process levels to provide a breakdown of energy used during production. In summary, no known academic literature provides a systematic framework for the design and implementation of environmental management practices that guide organizations in deciding which practices or systems they should implement given their organizational situations.

3. Theoretical background Having a clear picture of the ultimate goal and a method to gauge progress along the way is helpful in improving the environmental performance of manufacturing companies. Environmental management practices form an integral part of the manufacturing process nowadays. Although they do not have a significant influence on the success or failure of manufacturing functions, they determine the courses of action and the consequent resource utilization effectiveness. Environmental management practices

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address the way to organize and act to manufacture the product for sustainable development. The notion of environmental management leads to the concept of the evolutionary improvement of the manufacturing process. According to capability maturity models (CMMs), the degree of process effectiveness and efficiency reflects the capability of organizations to execute processes successfully, thereby indicating the maturity of organizational practices (Kanera and Karnia, 2004). Therefore, CMMs serve as a good reference framework for the development of EUMMM. 3.1. Capability Maturity Models CMMs identify several levels of ‘‘maturity,’’ ranging from low to high, and each maturity level specifies the behavior exhibited by organizations. The CMM framework describes the maturity of organizations according to five levels (‘‘initial,’’ ‘‘repeatable,’’ ‘‘defined,’’ ‘‘managed,’’ and ‘‘optimizing’’) and determines these levels based on key ‘‘process area’’ performance (Jokela et al., 2006). Organizations must satisfy key process area goals specified at each level to move along the maturity path. The CMM framework is widely applied in process improvement programs for quality and productivity. One of the best-known derivative maturity models is CMM for software engineering. Such a framework has resulted in a significant impact on the practice of software engineering, and has helped to improve software quality, lower costs, and reduce the likelihood of high severity defects (Harter et al., 2011, 2000; Krishnan et al., 2000). CMM integration (CMMI) is an extension of CMM composed of a collection of the best practices in the areas of product and service development; service establishment, management, and delivery; and product and service acquisition. CMMI provides guidance for continuous organizational improvement by integrating inter-organizational functions, setting process improvement goals and priorities, providing guidelines for quality processes, and establishing a reference point for appraising current processes (Mani et al., 2010). Capabilities or process areas at lower maturity levels provide the foundation for higher levels. CMMI has two different representations of maturity, namely, staged representation and continuous representation. In staged representation, maturity levels provide an order for approaching the highest level of process maturity. This representation focuses on the set of best practices that organizations can use to move along the maturity path. Staged representation includes five maturity levels, similar as those included in CMMs. Each level is measured by the achievement of goals corresponding to a predefined set of process areas. Table 1 presents the characteristics of each level in staged CMMI representation. Meanwhile, continuous CMMI representation uses six capability levels (‘‘incomplete,’’ ‘‘performed,’’ ‘‘managed,’’ ‘‘defined,’’ ‘‘quantitatively managed,’’ and ‘‘optimizing’’) to measure process improvement; each level corresponds to generic goals and a set of practices. Capability levels focus on enhancing the ability of organizations to perform, control, and improve their performance in specific process areas, such as process management, project management, and engineering and support. Capability levels enable organizations to track, evaluate, and demonstrate organizational improvement within process areas. Both maturity and capability levels target process improvement. The major difference between the two CMMI representations concerns how they are applied. Staged representation is a more appropriate reference framework for EUMMM because it provides a highly generic measurement of the maturity of environmental management practices as a whole and not according to the maturity level of each specific process area. In staged representation, organizations reach a certain maturity level by effectively performing on each process area. Organizations are thus expected to spend approximately the same amount of attention and effort on different areas of environmental management, leading to a balanced level of process effectiveness in

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Table 1 Staged representation of CMMI and the characteristics of each level (CMMI Product Team, 2002). Maturity Level

Characteristics

Process Area

1. Initial

Not Applicable  Processes are usually ad hoc and chaotic  Success in these organizations depends on the competence and heroics of the people in the organization and not on the use of proven processes

 Organizations often produce products and services that work; however, they frequently exceed the budget and schedule of their projects 2. Managed

 The projects of the organization have ensured that requirements are managed and that processes are planned,    

performed, measured, and controlled When practices are in place, projects are performed and managed according to their documented plans The status of the work products and the delivery of services are visible to management at defined points Commitments are established among relevant stakeholders and are revised as needed Work products are reviewed with stakeholders and are controlled. The work products and services satisfy their specified requirements, standards, and objectives

 Requirements Management

 Project Planning  Project Monitoring and Control

 Supplier Agreement Management

 Measurement and Analysis

 Process and Product Quality Assurance

 Configuration Management 3. Defined

 Processes are well characterized and understood, and are described in standards, procedures, tools, and methods  The organization’s set of standard processes is used to establish consistency across the organization. Projects 

establish their defined processes by tailoring the organization’s set of standard processes according to tailoring guidelines The organization’s management establishes process objectives based on the organization’s set of standard processes and ensures that these objectives are appropriately addressed

 Requirements             

4. Quantitatively Managed

 Quantitative objectives for quality and process performance are established and used as criteria in managing

 

5. Optimizing

processes. Quantitative objectives are based on the needs of the customer, end users, organization, and process implementers. Quality and process performance are understood in statistical terms and are managed throughout the life of the processes Detailed measures of process performance are collected and statistically analyzed. Special causes of process variation are identified and, where appropriate, the sources of special causes are corrected to prevent future occurrences Quality and process performance measures are incorporated into the organization’s measurement repository to support fact-based decision making in the future

 Continually improving process performance through both incremental and innovative technological

 

improvements. Quantitative process-improvement objectives for the organization are established, continually revised to reflect changing business objectives, and used as criteria in managing process improvement. The effects of deployed process improvements are measured and evaluated against the quantitative processimprovement objectives Improvements are selected based on a quantitative understanding of their expected contribution to achieving the organization’s process-improvement objectives versus the cost and impact to the organization. The performance of the organization’s processes is continually improved Improvement of the processes is inherently part of everybody’s role, resulting in a cycle of continual improvement

different aspects of environmental management. On the contrary, in continuous representation, maturity in different areas of environmental management is analyzed separately. Maturity in a specific area of environmental management does not necessarily lead to satisfactory environmental performance; it may even result in a misperception of the effectiveness of environmental management

Development Technical Solution Product Integration Verification Validation Organizational Process Focus Organizational Process Definition Organizational Training Integrated Project Management for IPPD Risk Management Integrated Teaming Integrated Supplier Management Decision Analysis and Resolution Organizational Environment for Integration

 Organizational Process Performance

 Quantitative Project Management

 Organizational Innovation and Deployment

 Causal Analysis and Resolution

practices. Sustainable manufacturing processes require collective success in the areas of manufacturing planning, control and monitoring, performance measurement and analysis, and employee capability, among others. Therefore, staged representation is used as a reference framework for EUMMM to achieve balanced effectiveness in different specific areas of environmental management.

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4. Energy and Utility Management Maturity Model This study uses CMMI as a reference framework for the development of EUMMM, extends it to the context of environmental management, and develops a specific set of process areas for energy and utility resource management. Similar to CMMI, EUMMM has five well-defined maturity levels that establish successive foundations for continuous monitoring and improvement in natural resource management. The maturity levels present an order for approaching the highest level of process maturity. Each maturity level represents a well-defined stage that institutionalizes new process areas for natural resource management process maturation. EUMMM describes a set of process areas tailored for energy and utility resource management to assist organizations in moving along the maturation path. Fig. 1 presents a graphical representation of EUMMM, which is composed of a staged representation of maturity and a process-based maturation framework. The characteristics of each stage in the maturation process are discussed in the following sections. 4.1. Maturity level 1: initial At maturity level 1, organizational processes are usually ad hoc and chaotic (CMMI Product Team, 2002). No procedures or policies are defined or performed. At this stage, organizations usually produce products that work, but frequently exceed the budget or schedule of their projects. In energy and utility resource management, maturity level 1 implies that organizations do not have established energy and utility resource management practices. The environmental performance of these organizations depends on the competence and self-discipline of organizational members, not on the application of environmental practices. 4.2. Maturity level 2: managed At maturity level 2, organizations ensure that requirements are managed and that processes are planned, performed, measured, and controlled. In energy and utility resource management, maturity level 2 implies that energy and utility resource management requirements, utilization processes, and monitoring, control, and measurement mechanisms are managed. In addition, environmental practices and results are visible to the management at certain points. 4.3. Maturity level 3: defined At maturity level 3, a set of standard organizational procedures and processes are defined and improved over time. These procedures and processes are used to establish consistency across the organization. In energy and utility resource management, this level implies that organizations standardize practices and procedures toward

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sustainable manufacturing processes. Moreover, these practices are consistently and proactively implemented and managed across each organization. 4.4. Maturity level 4: quantitatively managed At maturity level 4, quantitative objectives are established for quality and performance management. These measurements are incorporated into the organizational measurement repository for sustainable development. In energy and utility resource management, maturity level 4 implies that organizations efficiently and accurately perform energy and utility resource management processes, practicing standard quality and performance measurement control. Moreover, natural resource management performance data are collected, quantitatively analyzed, and evaluated against both internal and external benchmarks to identify causes of process variation. 4.5. Maturity level 5: optimized At maturity level 5, organizational processes are continually enhanced through technological improvement. Quantitative process improvement objectives are established, continually evaluated, and used as criteria to manage process improvement. In energy and utility resource management, this level implies that organizations establish quantitative environmental performance improvement objectives to address the causes of process variation. In addition, existing processes are changed to achieve environmental sustainability. The following sections discuss the maturation phases, from immature to mature energy and utility resource management. Each phase involves specific process area concerns that organizations must consider. We use the word ‘‘phase’’ instead of ‘‘level’’ for the maturation process because the maturation of energy and utility management is a progressive process. It is a continuous improvement process, wherein an organization needs to pass through different phases to obtain maturity level 5. 4.6. Four phases of the maturation process 4.6.1. Maturation phase 1: initial to managed phase—energy and utility management practice establishment At maturity level 1, organizations do not have established energy and utility management practices. Thus, organizations must establish a series of requirements, procedures, and output measurements for energy and utility resource management to move to maturity level 2, which demands that requirements be managed and processes be planned, performed, measured, and controlled. Organizations may begin by establishing a series of energy and utility resource consumption requirements for each manufacturing process that correspond to each product and identifying

Maturity Level

Initial

Managed

Defined

Quantitatively Managed

Optimized

Phase 1

Phase 2

Phase 3

Phase4

Practice Establishment

Practice Standardization

Performance Management

Continuous Improvement

Maturation Process Stage Fig. 1. Energy and utility management maturity model (EUMMM).

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inconsistencies between these requirements and the actual levels of energy and utility resource consumption. In contrast to typical product requirements that specify the minimum level of quality or functions of the output, energy and utility resource consumption requirements describe the maximum acceptable level of natural resource consumption in each process. Organizations may then develop manufacturing plans that accommodate both basic product requirements and energy and utility resource consumption requirements. These plans undergo frequent revisions as the manufacturing process progresses. Revisions must be introduced to address inaccurate estimations of energy and utility resource consumption and implement corrective actions on environmentally hostile practices. Plans should serve as the basic reference for monitoring and controlling energy and utility resource management practices in the manufacturing process. Corrective actions must be pursued when the actual process significantly deviates from the plans. In addition, the measurement and analysis process serves as a matrix for evaluating the current environmental performance of the organization. Such a matrix enables organizations to pinpoint the weakness of the environmental management practices and ensure that non-compliance issues are addressed.

4.6.2. Maturation phase 2: managed to defined phase—environmental practice standardization At maturity level 2, organizations experience the first attempt to establish a series of energy and utility resource management practices. Organizations must establish consistency by standardizing their energy and utility resource management practices as seen in procedures, tools, and methods to advance to maturity level 3. Standardized processes for energy and utility resource consumption are important. In addition, customer and stakeholder expectations must be collected and coordinated to ensure that products are environment friendly, which are then transformed into a series of product requirements. Furthermore, analysis is required to select requirements at all levels from competing alternatives. For instance, production using the minimum level of energy and utility resource consumption may not necessarily be the most efficient method of production. Organizations must achieve a balance between environmental and economic performance by analyzing and refining competing requirements. After the systematic process of requirement development, organizations must design, develop, and implement ways to meet environmental management requirements. Specific practices that potentially satisfy the set of selected requirements must be evaluated, selected, developed, and implemented. A formal evaluation process is needed to evaluate alternative ways of meeting environmental management requirements. At the end of the manufacturing process, organizations must verify whether the actual products fulfill environmental management requirements. Peer review is an important part of verification for defect removal. Peers, in this case, include organizational members who are not involved in the design of environmental management practices, such that this study can obtain objective comments regarding the extent to which the actual products fulfill the environmental practice requirements. Furthermore, each process must be documented to ensure consistent process performance across the organization. Aside from requirement development, solution development, and process verification, another important process area to achieve maturity level 3 is process improvement based on current strengths and weaknesses. Process improvement is used to meet environmental management objectives. Careful planning is required to ensure that environmental performance improvement efforts are adequately managed and implemented. Moreover, training is an important

process area to ensure that the organizational participants maintain sufficient capability to implement environmental management practices or process improvement effectively and efficiently, and make those practices and process a standard working procedure and habit. Training enhances organizational capabilities in energy and utility resource management and strengthens employee commitment toward environmental management practices (Gadenne et al., 2008). Training should focus primarily on the skills required to perform organizational processes. 4.6.3. Maturation phase 3: defined to quantitatively managed phase—strategic performance management At maturity level 3, a series of standardized energy and utility management practices are established consistently across the organization. Organizations must establish quantitative objectives to manage process and environmental performance to achieve energy and utility resource management maturity level 4. For each process, detailed environmental performance data should be collected and statistically analyzed. Maturity level 4 is concerned with environmental performance management. Environmental performance relates to the wellbeing of the environment, which may be seen to benefit organizations. Performance can be assessed in terms of reduced pollution emission, reduced natural resource consumption, reduced volume of waste, and enhanced recycling (Matos and Hall, 2007; Piotrowicz and Cuthbertson, 2004). Environmental performance management requires a comprehensive mechanism for the detailed measurement of actual environmental performance data from the manufacturing process. Such mechanism includes a set of environmental performance baselines (e.g., pollutant emission levels and energy and utility consumption levels), analytical models, and a systematic data collection process. When organizations have measures, data, and analytical techniques for environmental performance management, they can determine whether energy and utility resource management practices are producing expected or unusual results. 4.6.4. Maturation phase 4: quantitatively managed to optimized phase—continuous improvement Achieving the highest level of energy and utility resource management maturity requires organizations to improve their environmental performance continuously based on a quantitative understanding of deviations from manufacturing process standards. Continuous environmental performance improvement can be attained through technological improvement (Christmann, 2000). Environmental technology can be classified into pollution prevention and control (Klassen and Whybark, 1999; Lucas, 2010). Prevention technology reduces or eliminates pollution at the source, whereas control technology ensures proper waste disposal, minimizes the release of pollutants, and corrects past environmental damage (Vachon, 2007). The continuous improvement of energy and utility resource management practices enhances the capability of organizations to achieve sustainable manufacturing process (Ngai et al., 2012). However, such achievement depends on the quantitative understanding of the objectives, current level of energy and utility resource management, and organizational ability to evaluate the proposed improvements effectively. Another means to ensure continuous improvement in environmental performance management is through causal analysis and resolution management. This process identifies the causes of defects and problems and implements preventive measures. Causal analysis and resolution management improve energy and utility resource management by preventing the inappropriate use of natural resources in the manufacturing process. However, analyzing all defects that may influence environmental performance

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is not cost effective. Organizations must select and analyze defects that can cause potentially significant setbacks in environmental performance. Table 2 presents a matrix summarizing the characteristics of the different levels of maturity, as well as process areas and maturation phases in EUMMM.

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5. Case study Collaborative practice research was used as a mode of inquiry in this study to demonstrate the application of EUMMM. Collaborative practice research allows close coordination between the

Table 2 Matrix of different maturity levels, EUMMM characteristics, process areas, and maturation phases. Maturity Level

EUMMM Characteristics

EUMMM Process Area

Maturation Phase

1. Initial

 Organizations do not have energy and utility

Not applicable

Not applicable



2. Managed

 Energy and utility resource management

 

3. Defined

resource management practices in place The energy and utility resource management performance of organizations depends on the competence and self-discipline of organizational members, not on the implementation of management practices

requirements and manufacturing process requirements are managed, controlled, and measured Results of energy and utility resource management practices are visible to management at certain points Commitment to sustainable manufacturing processes is established among relevant stakeholders and is renewed when necessary

 Organizations establish standard energy and utility 

resource management processes and procedures to achieve sustainability in the manufacturing process Energy and utility resource management practices are consistently and proactively implemented and managed across the organization

 Management of energy and utility resource   

 Energy and utility resource consumption    





4. Quantitatively managed

 Organizations go through the energy and utility



5. Optimized

resource management process efficiently and accurately, with standard quality and performance measurement controls Energy and utility resource management performance data are collected, quantitatively analyzed, and evaluated against both internal and external benchmark data to identify causes of process variation

 Quantitative environmental performance



improvement objectives are set to address the causes of process variation, and processes are changed to improve energy and utility resource management performance Continually improve energy and utility resource management performance through both incremental and innovative technological improvements

1. Energy and utility resource management practice consumption establishment Project planning should accommodate both basic product requirements and energy and utility resource requirements Project monitoring and control of energy and utility resource management practices in the manufacturing process Measurement and analysis should include a matrix for measuring energy and utility resource management performance 2. Energy and utility resource management practice requirements are developed. standardization Technical solutions to problems on energy and utility resource consumption Verification of the extent to which the manufacturing process satisfies energy and utility resource consumption requirements Organizational process improvement based on strengths and weaknesses of current organizational energy and utility resource management Organizational process definition development to ensure consistency in the implementation of energy and utility resource management practices across the organization Organizational training to maintain sufficient capability of organizational participants in implementing energy and utility resource management practices or process improvement effectively and efficiently Decision analysis and resolution acting as a formal process to evaluate alternative solutions and satisfy energy and utility resource consumption requirements

Organizational energy and utility resource utilization performance management

 Organizational innovation and innovation 

3. Strategic environmental performance management

4. Continuous improvement of deployment to improve energy and utility resource energy and utility resource management practices management performance Causal analysis and resolution for defects that negatively influence energy and utility resource management performance

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research team and the participating company, thereby striking a balance between relevance and rigor (Iversen et al., 2004; Mathiassen, 2002). We became active participants to improve the participating company’s energy and utility resource management performance based on EUMMM. The real-world setting provides a realistic contextual environment and prevents problems arising from oversimplified situations in experimental settings. We believe that the collaborative practice research approach is the appropriate mode of inquiry for this study. China was chosen as the contextual domain for the demonstration of EUMMM application. China is the world’s top consumer of natural resources (Abdulrahamn et al., in press). In the past decades, Chinese manufacturers prioritized economic performance over environmental protection. However, the Chinese government has recently placed environmental protection as an important issue on its agenda to control the over exploitation of resources. The Chinese government has imposed a levy and quota pricing on the consumption of natural resources, such as electricity and water (Zhu et al., 2005). In addition, the rising understanding of the economic benefits of environmental management practices, the evolution of benchmarking environmental procedures and practices, and increasing individual environmental awareness highlighted the importance of environmental sustainability in pursuing different organizational objectives (Gadenne et al., 2008; Paulraj, 2009). Under various institutional pressures, Chinese manufacturers realized the importance of environmental sustainability and planned to advance their environmental management practices to a more mature level (Zhu and Geng, 2010; Zhu and Sarkis, 2007; Zhu et al., 2005, 2007). Therefore, demonstrating EUMMM application in China’s manufacturing industry is appropriate. 5.1. Company background A Chinese textile manufacturing company was chosen for the collaborative practice research. Textile manufacturing is an energyintensive and pollution-causing industry (Rock and David, 2007). In 2004, the global textile industry consumed 50.2 million tons of oil, accounting for 1.9% of the global industrial energy use (International Energy Agency, 2007). In 2003, energy cost accounted for 5–12% of the total production cost of the textile industries of seven major textile manufacturing countries (Koc- and Kaplan, 2007). In developing countries, in which labor cost is low, energy cost can be as high as 18–25% of the total production cost (Bhurtun et al., 2006; Jakarta Post, 2011). Textile manufacturing companies are appropriate target candidates for EUMMM application because of their heavy consumption of energy resources. The participating company is an upstream textile manufacturer in China, with over 10,000 employees and several factories in Southeast Asian countries. The company invited us to conduct a pilot project in one of its factories. The top management aimed to design a series of organizational policies and procedures to enhance energy and utility consumption effectiveness, as well as develop an information system to support continuous improvements in energy and utility resource management. Thus, we formed a research team and engaged in a three-year collaborative practice research to help the company achieve a more mature energy and utility resource management. Following progressive EUMMM guidelines, we worked proactively with the top management on the design and implementation of energy and utility management practices. The experiences of the company in advancing the maturity of its energy and utility resource management were consolidated. 5.2. Assessment of energy and utility management maturity level The first step in EUMMM implementation was to assess the maturity level of the energy and utility resource management of

the participating organization. We conducted a 1-month field observation, discussed with the management team, and referenced the production plans and documentations to obtain a good understanding of the current energy and utility resource management practices. The participating organization had limited energy and utility resource management practices in place, but were not strongly enforced. For example, the organization manually recorded energy and utility consumption data in the production process, tracked energy and utility consumption data, and checked for abnormal consumption after the completion of the production process. Field observations and production records indicated that most of the energy and utility consumption data were incomplete. Energy and utility resource management performance relied on the competence and self-discipline of organizational members, not on current practices. Therefore, the participating organization was considered at maturity level 1 at the beginning of the collaborative practice research. 5.3. Maturation phase 1: energy and utility management practice establishment After understanding the energy and utility resource management practices in place and the manufacturing process of the organization, we began the design and establishment of energy and utility management practices and processes, followed by the setting of EUMMM process areas (Table 2). This phase lasted for 3 months and involved several meetings with the management team to establish and implement requirements, processes, and monitoring and control mechanisms, as well as to develop a matrix for measuring energy and utility resource management performance. First, a series of energy and utility resource consumption requirements were established for each product in each manufacturing process. Past energy and utility consumption records were consulted to arrive at a series of estimated energy and utility resource consumption requirements. Second, energy and utility resource management procedures were added to the usual manufacturing plan. Aside from efficiency, energy and utility resource consumption requirements should be considered by managers when designing the manufacturing plan. For example, turning on a machine may consume more energy than a running/idling machine. The manager should decide whether to switch off the machine or leave it idle between batches of production. An inappropriate manufacturing plan may lead to a situation where product requirements are satisfied, but not the energy and utility resource consumption requirements. Furthermore, newer machines should be prioritized over older ones when designing the manufacturing plan. The energy efficiency of older machines usually depreciates at an exponential speed. Meanwhile, daily or monthly limits on carbon and other pollutant emissions should be considered when designing the manufacturing plan to minimize fines accompanying excessive pollutant emission. Third, the monitoring and control of energy and utility resource management performance was reinforced. The management team agreed that frontline workers should record energy and utility resource consumption data four times a day. Managers should keep track of the consumption data and identify inconsistencies between the requirements and the actual amount of energy and utility resource consumption. Moreover, the manufacturing process should be modified to correct inaccurate energy and utility resource consumption estimations and check for environmentally hostile practices when the actual process significantly deviates from the plan. Lastly, a qualitative performance measurement matrix for energy and utility resource management was developed, which

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includes the number and severity of identified incidents involving the improper use of energy and utility resources and management perceptions toward the environmental awareness of organizational participants. 5.4. Maturation phase 2: standardization of energy and utility management practices In the previous phase, the participating organization established a series of basic requirements, procedures, and output measurements for energy and utility resource management. The standardization of energy and utility resource management processes is necessary to establish consistency across the organization. This phase lasted for 6 months. During the first 2 months, standard procedures to develop energy and utility resource requirements were established; environmental solutions to such requirements were also designed and evaluated. In the succeeding 4 months, training workshops were delivered, and the implementation of energy and utility resource management practices was reinforced. First, a standard process was established to develop the environmental management requirements. Major stakeholders of the organization were identified, expectations on environmental responsibilities were specified, and effects on broad organizational outcomes were analyzed. The participating organization considered employees and local communities as two major stakeholders in energy and utility resource management. Employees are concerned on how environmental management practices could reduce work-related accidents (a consequence of recording the energy and utility consumption data from the meters, which are usually installed in elevated areas, difficult to reach, or next to dangerous machines such as steamer). Meanwhile, local communities are mainly concerned on air and water pollution in their areas. We transformed these concerns into a series of environmental requirements for the manufacturing process. Requirements were selected based on those that could be satisfied given the organization’s current maturity level. We discussed with the top management and decided that before energy and utility management practices could provide solid benefits to employees, energy and water wastage must first be reduced, and then environmental awareness among employees must be increased. After requirement development, established practices in energy and utility resource management were revisited and evaluated to assess whether they satisfy environmental management requirements. The management practices were matched with expected results, and both the research and management teams agreed that the existing practices potentially satisfied most of the energy and utility resource requirements, except for the reduction in the number of work-related accidents on account of the recording of resource consumption data. However, the top management stated that the organization would not reduce employee workload in recording energy and utility consumption data before other practices could be effectively implemented. Furthermore, a monthly peer review meeting was scheduled to verify whether the manufacturing process satisfied the energy and utility resource requirements and evaluate the consistency of practices across the organization. Another important process area to achieve maturity level 3 is organizational process improvement based on the strengths and weaknesses of the organization’s current environmental management performance. The top management considered the environmental awareness of employees as unsatisfactory. Organizational participants should maintain sufficient environmental awareness and capability to implement energy and utility resource management practices or process improvement effectively. Consequently, we delivered trainings for employees and explained the links

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between employee actions, social benefits, environmental consequences, and financial performance. Trainings were conducted to enhance the capability and commitment of employees toward new energy and utility resource management practices.

5.5. Maturation phase 3: strategic environmental performance management Energy and utility management maturity level 4 can be attained by the organization by collecting and statistically analyzing quantitative performance data. Based on the organizational requirements, we selected a series of quantitative performance data to measure energy and utility resource management practices. The data included those on pollutant emissions and waste of energy and utility resources. Pollutant emission was measured by the amount of energy and utility consumption, whereas natural resource wastage was measured in terms of the number of incidents of inappropriate use.

5.6. Maturation phase 4: continuous improvement of energy and utility management practices The final maturity level for energy and utility management focuses on continuous improvement. The research team revisited the standardized process of requirements development to evaluate the energy and utility resource requirements. A technical solution was developed to improve energy and utility resource management performance continuously. The management team showed their interest in the use of a green innovation to strengthen energy and utility resource management performance and resolve environmental information uncertainty in the manufacturing process. Thus, a two-year sub-project was commenced to design and develop a green IS for performance optimization and achieve continuous performance improvement in energy and utility resource management based on the quantitative understanding of deviations in the manufacturing process. An energy and utility management support system (EUMSS) was designed and developed to help the organization capture energy and utility consumption data, and guide manufacturing decisions in the implementation of energy and utility resource management practices (Ngai et al,. 2012). Radio frequency identification (RFID) technology automatically captures energy and utility consumption data from the manufacturing process. These data, together with different data analysis and decision support modules (activity-based management, alert, and shop floor management modules), help managers to efficiently and effectively develop production plans that satisfy both product requirements and energy and utility resource requirements, identify the root causes of inappropriate consumption that significantly deviate from the production plans, and generate reports to analyze the energy and utility resource management performance. The rates of EUMSS utilization and employee commitment to comply with new environmental practices were enhanced through several workshops that introduced the system objectives and functionalities. An organization is required to improve their environmental performance continuously based on quantitative standards to achieve the highest level of energy and utility resource management maturity. The participating company began a project of green innovation for continuous environmental performance improvement. At the same time, the EUMSS made the environmental practices an integral part of the manufacturing process, resulting in a cycle of constant improvement. Thus, the participating company is going through maturity level 5 during our analysis.

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5.7. Evaluation of the proposed framework—EUMMM A series of field tests and review meetings were conducted to evaluate the effectiveness and outcomes of the proposed EUMMM. First, we compared the differences between average energy and utility consumptions before and after the implementation of the new practices in the participating organization. The average energy consumption for each product and for the entire factory was decreased by 7.4% and 6.4%, respectively. Meanwhile, the average water consumption for each product and for the entire factory was decreased by 17.9% and 15.1%, respectively. From an environmental perspective, a reduction in the average energy and utility consumption implies a reduction in carbon emissions and volume of waste. Second, energy and utility management practices, along with technological innovations, provide decision support to managers in designing production plans, monitoring and controlling the manufacturing process, and conducting measurement and analysis. These practices reduce managerial workload, while enhancing managerial work efficiency. Systematic production planning and increased environmental awareness among employees helped reduce the number of re-works and optimize energy and utility consumption. Moreover, monitoring and control procedures provide reports on the efficiency of machines and workers in each manufacturing process. With these data, managers can identify the process or production limitations that may hinder organizational performance, and subsequently, deliver corrective actions promptly. Third, monthly review meetings were held between the research and management teams to evaluate the performance impact of energy and utility management practices. According to the managers, employee awareness increased along with the maturation process of energy and utility resource management. Increased awareness can be proven by the reduced number of re-works and incidents of energy and utility wastage (such as leaving machines idle while not in production). Finally, in maturation phase 4, the participating organization used technological innovation to assist employees in the automatic collection of energy and utility consumption data. EUMSS continuously collects data, whereas data were collected only manually several times a day in the previous phases. Moreover, EUMSS helps reduce the incidents of work-related accidents because the employees had to collect meter readings from elevated and hardly accessible places in the factory.

5.7.1. Evaluation on the practicability of the proposed framework Aside from the evaluation of the result of the EUMMM maturation process, evaluation on the practicability of the proposed

framework is also important. Feedback on the framework was obtained through interviews with project team members of the company and industrial practitioners. The participants of this study were factory managers, general managers, operations managers, senior engineers, and other executives who possessed relevant knowledge on energy and utility usage in the textile manufacturing industry. They are important actors who are responsible for this project. The information collected in the interviews enabled us to evaluate the practicability of the proposed framework. We considered each interview as a unit of analysis. The interviews were transcribed, and two researchers read the transcripts to obtain an overall picture and noting the emerging patterns from the interview data. The results of the content analysis were discussed with the interviewees to ensure that we accurately recorded their words and ideas; minor changes were made where necessary. Table 3 highlights some essential feedback from the interviews with the participants. In general, the interviewees agreed that the EUMMM is practical, simple, and easy to implement. Aside from the industry practitioners, two academic and two independent energy consultants were invited to provide their views on the proposed framework to avoid self-referential evaluation. They were asked to evaluate the framework’s practicability and ease of use to assess and promote the maturity levels of the energy and utility management of the organization (see Table 4). The two academic and two independent energy consultants had similar views as those of the industry practitioners. In general, they were satisfied with the use of EUMMM as a framework to promote the maturity of energy and utility management in organizations. Most of the interviewees agreed that the framework serves as an effective guide to monitor and improve energy and utility management in organizations. From the evaluations, the research and management teams believed that EUMMM provides a systematic and progressive maturation guideline for organizational improvement in energy and utility resource management performance. This study presented an environmental management framework, EUMMM, as a rigorous and valid guide for the systematic and progressive measurement and management of energy and utility resource utilization. EUMMM is an extension of the CMMI model. EUMMM provides a framework to assess the maturity level of the energy and utility resource management in organizations. In addition, EUMMM provides a progressive framework that guides organizational advancement along the energy and utility resource management maturity levels (initial, managed, defined, quantitatively managed, and optimized). Progression from the initial level to the optimized level requires organizations to undergo the maturation process of (1) establishing energy and

Table 3 Highlight of the findings from interviews with the executives in the company. Interviewee Interviewee Engineer) Interviewee Manager) Interviewee Manager) Interviewee Director)

Excerpts from the interview survey A (Senior B (Operations C (Factory D (Operations

Interviewee E (Engineer) Interviewee F (MIS Director) Interviewee G (Factory Director)

EUMMM establishes a culture of energy management excellence. It is a simple and easy-to-adopt framework for energy and utility management, which is what we are looking for This framework helps companies successfully address their critical energy and utility issues, as well as guides them in process improvement to manage and monitor energy and utility resource consumption It can easily characterize the maturity of energy management practices into five maturity levels, and can easily identify what level a company has reached in the assessment As part of a factory management team, I would like to introduce to my employees a simple and understandable framework of energy efficiency. Each maturity level serves as a foundation for continuous improvement and equips the company with knowledge to achieve energy efficiency This simple framework can be used by any manufacturing firm to improve the management of energy and utility resources Energy monitoring and saving is not a new idea, but this method is simple, easy to compare with the one used in previous years, and with internal and external benchmarks This framework provides information for the analysis of energy consumption in the manufacturing process. It saves time because more accurate information is readily obtained

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Table 4 Highlight of the findings from interviews with academic and energy consultants. Interviewee

Excerpts from the interview survey

Interviewee H (Asst. Professor in Operations Management) Interviewee I (Asso. Professor in MIS)

This is not new and is based on CMMI. It is a simple and easy-to-understand framework, but I think small and medium enterprises need a step-by-step guide to achieve energy efficiency This framework provides principles for managing process changes and an overview of the way organizations can improve through the five energy and resource management maturity levels The CMMI-based process improvement model helps organizations improve their ability to develop and maintain energy and utility management This framework offers enterprises an improvement path. I think companies will work well if they follow the principles and establish the goals for optimization and continuous improvement

Interviewee J (Consultant in Energy Management) Interviewee K (Consultant in Energy Management)

utility management practices, (2) standardizing energy and utility management practices, (3) strategically managing environmental performance, and (4) continuously improving energy and utility resource management practices. In one textile manufacturing company, EUMMM was used to guide successfully the assessment and advancement of energy and utility resource management practices, leading to sustainable development. This study offers significant academic and industrial contributions through a robust framework for the design and development of energy and utility resource management practices. Theoretically, this study extends the application of CMMI to the management of natural resources consumption. Although CMMI is a credible and widely accepted framework for continuous process improvement, this study was the first to extend CMMI into the context of continuous improvement in energy and utility resource management. Such extension further confirms the credibility of the CMMI in establishing the relationship between capability and maturity level in different context. Second, this study develops a progressive framework that guides organizational advancement toward energy and utility resource management. EUMMM explains the means to achieve sustainable development by assessing and following maturity levels. The application of the given framework is not limited to energy and utility resource consumption data in the manufacturing industry, but can be generalized in other natural resource management data, such as gasoline consumption in the logistics industry. Lastly, EUMMM sets an agenda for academic research by creating a framework for natural resource management. We applied the EUMMM to design and develop energy and utility management practices in a textile manufacturing company in mainland China. We are convinced that the credibility of the given framework can be enhanced with further empirical and practical validation. The current study provides a robust guideline for practitioners in the practical analysis and improvement of organizational maturity in terms of energy and utility resource management. First, this study presented a framework that makes the design and development process visible and manageable for practitioners, as well as provides a measurement scheme to help solve energy and utility resource management problems. Second, the collaborative practice research illustrates in detail the critical steps in EUMMM application. Third, EUMMM can be generalized in the consumption of other types of natural resources other than electricity, water, and steam. For example, EUMMM may guide the design and development of gasoline management practices in the logistics industry. Finally, EUMMM explains the means to achieve higher level of maturity in energy and utility resource management. The simple framework promotes and encourages the commercial implementation of energy and utility management practices to enhance global environmental sustainability. This study has certain limitations. The 36-month collaborative practice research only covers one factory. The long-term benefits of the implemented energy and utility management practices cannot be determined to date. However, the short implementation time

does not discredit EUMMM because certain benefits of the implemented management practices have already materialized. Furthermore, the actual practicability and usefulness of EUMMM was not directly evaluated. Instead, we determined the model’s effectiveness through collaborative practice research to guide the participating organization along the energy and utility maturity path. Moreover, caution should be exercised when generalizing the results of this research. Findings from the application of EUMMM on a single organization may not be generalized to different environments (Markus et al., 2002). Thus, further research is necessary to verify EUMMM effectiveness in organizations with different scales, organizational cultures, and business environments (e.g., different industries). We believe that future research can improve the proposed framework and further contribute to the field.

Acknowledgments The authors are grateful for the constructive comments of the referees on an earlier version of this paper. This research was supported in part by a grant from the RGC of the HKSAR, China (project number B-Q27D).

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