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Journal of Cleaner Production 7 (1999) 351–358 www.elsevier.com/locate/jclepro Applications of a corporate synergy system to promote cleaner production in small and medium enterprises Shen-yann Chiu a,* , Jerry H. Huang a , Chih-Sen Lin a , Yi-hua Tang b , Wen-huei Chen b , Shen-Chia Su b a Industrial Development Bureau, Ministry of Economic Affairs, 41–2 Sinyi Road, 6F, Section 3, Taipei, Taiwan b Foundation of Taiwan Industry Service, Taipei, Taiwan Received 12 January 1998; received in revised form 11 April 1999; accepted 20 April 1999 Abstract A Corporate Synergy System (CSS) is a management mechanism through which a group of manufacturing companies work together to achieve certain production or management goals. Established among firms in supply chains, a CSS usually consists of a central firm and its satellite manufacturing suppliers. The system is being adopted in Taiwan as the key mechanism for promoting cleaner production (CP) in small and medium enterprises. In this paper, the background and concept of CSS-CP are presented first, followed by a brief description of Taiwan’s CSS-CP program thus far. Finally, observations and suggestions are provided to conclude the paper. 1999 Elsevier Science Ltd. All rights reserved. Keywords: Cleaner production promotion; Corporate synergy systems; Small and medium enterprises 1. Background As with many developing Asian economies, Taiwan has a large segment of industrial production that comes from small- and medium-sized firms. Among approxi- mately 95,000 firms in Taiwan, more than 96 percent are SMEs—those with a capital investment of less than US$1.5 million, total assets less than US$4.5 million, or, employees less than 200. These firms together generate about 50 percent of the gross production of the entire business enterprises in Taiwan. Although small on a per- facility basis, the gross amount of wastes from SMEs is substantial. Moreover, as many of the SMEs are scat- tered in commercial and residential areas, the environ- mental and health impact of these firms on the public at large is especially severe. Small and medium-sized enterprises are limited in their capabilities to do well in environmental perform- ance. These firms in general have little financial, techni- cal, and manpower capability to implement adequate * Corresponding author. Tel.: + 886-2-2708-1579; fax: + 886-2- 2708-1204. E-mail address: [email protected] (S. Chiu) 0959-6526/99/$ - see front matter. 1999 Elsevier Science Ltd. All rights reserved. PII:S0959-6526(99)00151-1 environmental measures. Furthermore, the public at large exerts substantially less pressure on SMEs than on large firms in the environmental, health and safety issues. As a consequence, SMEs are comparatively less active in environmental programs. To attract SMEs to practice CP measures to improve their environmental performance, the corporate synergy systems have been used for several years. 2. What is a Corporate Synergy System? A Corporate Synergy System is a management mech- anism that involves forming partnerships among busi- ness organizations to achieve specific goals. Usually established within supply chains, CSSs are initiated under the leadership of large companies, where the up- stream suppliers and down-stream buyers in the chains are organized to work together to achieve certain goals common to member organizations. The CSS approach has been actively promoted by the Government in Tai- wan for many years to enhance cooperation among busi- nesses to meet the needs of the country’s economical development. Under the funding support of the Industrial Development Bureau (IDB) of the Ministry of Economic

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Page 1: Applications of a corporate synergy system to promote cleaner production in small and medium enterprises

Journal of Cleaner Production 7 (1999) 351–358www.elsevier.com/locate/jclepro

Applications of a corporate synergy system to promote cleanerproduction in small and medium enterprises

Shen-yann Chiua,*, Jerry H. Huanga, Chih-Sen Lina, Yi-hua Tangb,Wen-huei Chenb, Shen-Chia Sub

a Industrial Development Bureau, Ministry of Economic Affairs, 41–2 Sinyi Road, 6F, Section 3, Taipei, Taiwanb Foundation of Taiwan Industry Service, Taipei, Taiwan

Received 12 January 1998; received in revised form 11 April 1999; accepted 20 April 1999

Abstract

A Corporate Synergy System (CSS) is a management mechanism through which a group of manufacturing companies worktogether to achieve certain production or management goals. Established among firms in supply chains, a CSS usually consists ofa central firm and its satellite manufacturing suppliers. The system is being adopted in Taiwan as the key mechanism for promotingcleaner production (CP) in small and medium enterprises. In this paper, the background and concept of CSS-CP are presented first,followed by a brief description of Taiwan’s CSS-CP program thus far. Finally, observations and suggestions are provided to concludethe paper. 1999 Elsevier Science Ltd. All rights reserved.

Keywords:Cleaner production promotion; Corporate synergy systems; Small and medium enterprises

1. Background

As with many developing Asian economies, Taiwanhas a large segment of industrial production that comesfrom small- and medium-sized firms. Among approxi-mately 95,000 firms in Taiwan, more than 96 percentare SMEs—those with a capital investment of less thanUS$1.5 million, total assets less than US$4.5 million, or,employees less than 200. These firms together generateabout 50 percent of the gross production of the entirebusiness enterprises in Taiwan. Although small on a per-facility basis, the gross amount of wastes from SMEs issubstantial. Moreover, as many of the SMEs are scat-tered in commercial and residential areas, the environ-mental and health impact of these firms on the public atlarge is especially severe.

Small and medium-sized enterprises are limited intheir capabilities to do well in environmental perform-ance. These firms in general have little financial, techni-cal, and manpower capability to implement adequate

* Corresponding author. Tel.:+886-2-2708-1579; fax:+886-2-2708-1204.E-mail address:[email protected] (S. Chiu)

0959-6526/99/$ - see front matter. 1999 Elsevier Science Ltd. All rights reserved.PII: S0959-6526 (99)00151-1

environmental measures. Furthermore, the public atlarge exerts substantially less pressure on SMEs than onlarge firms in the environmental, health and safetyissues. As a consequence, SMEs are comparatively lessactive in environmental programs. To attract SMEs topractice CP measures to improve their environmentalperformance, the corporate synergy systems have beenused for several years.

2. What is a Corporate Synergy System?

A Corporate Synergy System is a management mech-anism that involves forming partnerships among busi-ness organizations to achieve specific goals. Usuallyestablished within supply chains, CSSs are initiatedunder the leadership of large companies, where the up-stream suppliers and down-stream buyers in the chainsare organized to work together to achieve certain goalscommon to member organizations. The CSS approachhas been actively promoted by the Government in Tai-wan for many years to enhance cooperation among busi-nesses to meet the needs of the country’s economicaldevelopment. Under the funding support of the IndustrialDevelopment Bureau (IDB) of the Ministry of Economic

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Affairs (MOEA), the Corporate Synergy Development(CSD) Center, a non-profit organization, was establishedin 1984 to coordinate CSS promotion efforts. Thus far,more than 100 CSSs have been organized in manufactur-ing industries that produce one-third of Taiwan’s totalindustrial output. The main objective of these CSSs hasbeen to assist each participating firm to enhance theirproductivity, technological capability and managementefficiency.

In any CSS, central firms play a key role in initiation,organization and maintenance of the system. Many largecompanies take up the role of central firms in a CSSbecause of a desire to improve their position in competi-tive markets. The globalization of economic activitiesand ensuing fierce international competition mean thatcompanies must improve the quality of their product andpublic image while simultaneously containing their costof production. To accomplish this, they must take greatcare in selecting their suppliers. Thus, under the leader-ship of large companies, supply chains are becomingmore integrated in terms of decision making and plan-ning with greater exchange of information among chainmembers. In addition to cost containment and qualityassurance, many large firms have begun to work withupstream suppliers and downstream buyers to reducetheir environmental responsibilities.

To understand why satellite firms would join a CSS,one must be aware of the basic characteristics of thesefirms. Generally, these firms are SMEs with relativelysmall staff and capitalization. They are engaged in cer-tain manufacturing activities involving relatively simpletechnologies. Their profit margins are generally smalldue to tough market competition, easily acquired techno-logies, and relatively transparent cost accounting. A keyapproach for SMEs to marketing their products isthrough an existing business network and by referenceto current buyers. In order to make some profits or justto survive, these firms must be extremely flexible to meetthe demands of their buyers. Thus, when a large com-pany wants its suppliers to participate in its CSS, thesesuppliers would generally go along with the request. Inreturn, the central firm(s) of a CSS could reward thesuppliers by providing special credit treatment, free stafftraining, and/or relaxed performance audit requirements.Eventually, through the operation of the CSS, large com-panies could use a variety of parameters, including pro-duct quality, financial strength, and environmental per-formance to rank their suppliers. The “good” supplierscould be given preference over others whilst pressure isput on poorly operating and unranked suppliers toimprove their performance. More detailed informationon the characteristics of SMEs in Taiwan can be foundin a recent paper by Syytu [1].

3. Benefits of, and obstacles to, implementation ofcleaner production

Cleaner production is defined as those technical andmanagement activities that are capable of reducing orpreventing the generation of pollutants from theirsources. These activities include in-process recyclingand conservation that reduce the use of materials andenergy, substitution of environmentally benign materialfor hazardous ones, improving process design and oper-ation to prevent pollutants from leaving the process sys-tems, and implementation of life cycle design to reducewastage and improve material utilization. Cleaner pro-duction is considered to be a double edge sword thatcould lead to a win–win situation of improving pro-duction efficiency and environmental quality. As CPgenerally involves process and product changes, regulat-ory agencies rarely set up rules that require industry toimplement CP. Rather, regulators have hoped that firmswould adopt CP measures voluntarily when they realizethe efficiency and benefit gains as a result of having gonethrough the implementation processes.

Although CP has many benefits, a number of factorsmay actually inhibit putting such a program into effect.These factors fall mainly into two categories: technicaland financial. Technical barriers work to impede theability of a company to develop, evaluate and implementCP programs. These barriers include limited awarenessof pollution management issues at the company’sdecision-making level, lack of in-house expertise on CP,and the absence of readily available CP technologies thatcan be adopted directly. In addition, attitudes towardchanging established industrial processes or practicesmay be negative, and such an attitude tends to block newways of preventing pollution. Pollutant generators maybe reluctant to take risks with new, unproved techno-logies or to compromise other business goals and prac-tices; they may also distrust alternative processes or sim-ply be uninterested in changing their habitual ways ofdoing business. The unavailability of capital for plantmodernization often becomes a significant obstacle toimplementing CP even though CP measures may lead tocost savings. Major companies may have capital toupgrade inefficient processes, but the small and mediumfirms often do not. Other obstacles for SMEs in Taiwanto implementing CP include:

O The lack of a cost accounting system to identify costsof environmental control and benefits of sourcereduction.

O A substantial portion of SMEs are currently runningwithout proper registration and licensing, resulting ina lack of authority from government to deal withenvironmental issues associated with these firms.

O A lack of aggressive enforcement of pollution controlregulations in the country; industries are thus less

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likely to invest in CP if they are allowed to disposeof wastes illegally.

O Usually consisting of a small number of staff, SMEsgenerally lack the manpower to acquire new technicaland management skills required for CP implemen-tation.

4. Cleaner production promotion program inTaiwan

Cleaner production is not a brand new concept in Tai-wan. If fact, information on technical aspects of CP tech-nologies is abundant and can be easily obtained. Themost difficult problem, however, is to design promotionprograms to effectively influence the majority of indus-trial firms, especially SMEs, to start implementing, andcontinually improve the extent of the CP implemen-tation program.

As in many developed and developing economies,both government and industry in Taiwan are activelyinvolved in promoting CP. The role of governmentagencies in promoting CP is to provide incentives thathelp overcome technical and financial barriers to CP.These incentives can be divided into two categories:technical and economic assistance mechanisms, andregulatory enforcement mechanisms. Governmentagencies that provide technical and financial incentivesto industrial development are contributing to promotingCP by performing research and development of newtechnologies, providing technical assistance and dissemi-nating relevant information. Regulatory enforcementagencies are promoting CP by imposing stringent butflexible technical and environmental requirements toencourage businesses to operate responsibly bydeveloping products and manufacturing methods thatreduce or eliminate pollutants at their source.

In Taiwan, the official program to provide technicalassistance and financial incentives to promote CP startedin 1989 when an executive order by the Premier Execu-tive Yuan declared that industrial waste minimization(IWM) should be adopted as a key approach to the sol-ution of the environmental problems. Following thisexecutive order, MOEA and Environmental ProtectionAdministration together established the Joint WasteReduction Task Force (JWRTF) that is delegated withoverall responsibility for promoting IWM in the country.The first task accomplished by the JWRTF was to for-mulate and implement the first 5-year plan (from 1991to 1995) to promote IWM in Taiwan. The second 5-yearplan to promote IWM is now being implemented. Spe-cific elements in the IWM program include the follow-ing:

4.1. Public awareness promotion

JWRTF produced booklets, posters, newsletters, tech-nical manuals and videos to educate industry and thegeneral public about IWM. The most welcomed form ofawareness promotion was by presenting awards toorganizations with outstanding achievements in IWM.As of 1995, a total of 50 firms, 47 individuals and 17organizations have received such awards [2].

4.2. Training and education

To help industry implement IWM, sector-based train-ing courses were provided for technical staff anddecision-makers in industry. Between 1990 and 1995,256 IWM training courses were offered in the country,benefiting more than 22,000 participants [2].

4.3. Information exchange

General information on the nature and benefits ofIWM technologies, and case examples that illustratetechnical feasibility are necessary for user communities.Two computer data systems have been established. Oneof these systems contains technical information and casestudies of IWM techniques. The other data system isdesigned for use by industries to locate individuals cap-able of providing specific expertise; it collects humanresource information pertinent to individuals’ expertise,capabilities, and experience. Besides these two data sys-tems, an industrial waste exchange information base hasbeen in operation since 1987. This system has facilitatednearly 200 cases of waste exchange between the wastegenerators and users.

4.4. Technical assistance

Contracted by JWRTF, China Technical Consultants,Inc. (CTCI) and Foundation of Taiwan Industrial Ser-vices (FTIS) provide technical assistance at no cost toindustry. Each year, a number of firms are selected bythese non-profit organizations for in-depth technicalassistance. In the last eight years, more than 100 firmsin 30 industrial sectors received in-depth technical assist-ance; hundreds of additional firms received general con-sultations.

4.5. Technology research, development anddemonstration

Under this program element, special attention hasbeen given to developing specific technologies anddetailed case studies demonstrating which IWM techno-logies suit domestic conditions. From 1989 to 1995,MOEA sponsored nearly 80 RD&D projects gearedtoward IWM technologies [2]. The Industrial Tech-

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nology Research Institute (ITRI) performs a majority ofthese projects. Annual budget allocated by MOEA forR&D of IWM technologies is in the range of US$10million.

4.6. Financial incentives

Under the sponsorship of IDB, several commercialbanks are helping firms implement IWM projects by pro-viding low-interest loans. Additional financial incentivesthat are being provided by government include invest-ment tax credit, import tariff exemption, and accelerateddepreciation of IWM equipment. In 1994 and 1995,more than 1,200 applications were approved of tariffexemption for imported IWM and pollution controlequipment [2].

It has been more than 8 years since the initiation ofthe IWM program in the country. During this period,the program’s focus has switched from public awarenesspromotion, training and technology demonstration in theearly stages, to providing assistance to industries inimplementation of IWM options. Furthermore, since1995, new program elements have been added to pro-mote ISO 14000 and life cycle design. Although noquantitative information is available on the extent ofIWM application in the country, it is clear, however, thatthe IWM program has succeeded in raising awarenessin cleaner production in the country. Instead of solelydepending on end-of-pipe (EOP) treatment, thousands offirms in the country now would consider sourcereduction as a viable option for solving their environ-mental problems.

In spite of these impressive results, the impact of theIWM program on SMEs has been far from satisfactory.Thus far, for example, though more than 100 firms havereceived in-depth technical assistance to implementIWM measures, less than 20 percent of these firms areSMEs. In an attempt to ratify the situation, the IndustrialDevelopment Bureau took an initiative in 1995 to adoptthe CSS mechanism to promote CP in SMEs. Theresults, as described in the balance of this paper havebeen quite impressive.

5. Approaches to implementing CSS-CP programs

To establish a CSS-CP program, the first step involvesthe commitment of large companies to becoming centralfirms. At the beginning of each fiscal year in Taiwan,IDB publishes bulletins soliciting companies to serve ascentral firms in new CSSs in the country. Large compa-nies who have had experience in implementing CP pro-grams are naturally good candidates to become centralfirms of CSSs. To qualify as a central firm, a companyshould have commitment from its top management toprovide the necessary resources to run the CSS-CP pro-

gram, and a sufficient number of its suppliers that couldpotentially join the program. Once selected, the centralfirm(s) go through the list of their suppliers and make apreliminary selection of firms who could be benefit byCP measures. A seminar is then organized to explain thebasics of CSS: what is CP, how CSS-CP works, the rolesand responsibilities of participating firms, and the pro-gram schedule. Following the seminar, satellite firms areasked to register to provide pertinent firm informationand indications of top management commitment. Thesefirms then go through a final qualification procedurebefore formally being accepted into the system.

A successful CSS-CP program relies on securing thecommitment and general consensus of top decision-mak-ers of each satellite firm to follow the methodology andschedule set by the group. The program implementationmethodology generally follows a framework with spe-cific roles properly assigned to, and performed by, thecentral firms, satellite firms, consultants, and governmentagency. The entire framework, shown in Fig. 1, involvesgovernment agencies to provide encouragement and sup-port to the program, and funding and supervision to con-sultants who assist central firms to promote the ideas andcoordinate the efforts including working group meetings,and technical assistance to plan and implement the CPprogram. The central firms could promise adequateincentives to participating satellite firms. Assisted byconsultants, they also organize a team to take charge ofoverall responsibility to conduct plant inspections, pro-cess audits, program reviews, and sometimes performtechnology demonstrations for the participating firms.

CSS-CP programs are generally carried out in theseven steps briefly described below. A more detailed

Fig. 1. Relationship among organisations involved in the CSS-CPprogram in Taiwan.

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description of a CP implementation approach can befound elsewhere [3].Step 1.Get the program started by providing training tothe staff of each participating firm. Two training coursescould be designed for different personnel. The awarenessclasses are basically for management personnel andinclude an introduction to the CP concept, benefits andbarriers, general approaches, and industrial environment,health and safety. The technical classes, designed forprocess and operation staff, would include plant auditprocedures, CP opportunity assessment methodology,and available CP measures and practices.Step 2. A CP team in each participating firm is estab-lished to take charge of the program and to coordinatethe efforts of the plant. Management leads the teamwhile the employees are required to participate throughproposing and implementing CP measures.Step 3. Plant audits are conducted for each participatingfirm to examine in detail the plant operations to deter-mine the sources of waste generation and to prioritizewaste streams.Step 4. Through numerous sources, such as literature,personal contacts, and most importantly, brainstormingof employees, potential CP options of the facilities areidentified.Step 5. For the high priority waste streams, select thebest CP options for the company and implement theseoptions.Step 6. Following the implementation of selected CPoptions, the progress of CP program on a company- andCSS-wide basis is evaluated.Step 7. Actions are taken to maintain and sustain the CPprogram of each firm and the entire CSS for continuedgrowth and expanded benefits.

The CSS-CP programs in Taiwan are conducted inyearly cycles. During the period, meetings are heldperiodically in each participating firm to provide stafftraining, to assess the plant operations, to solicit partici-pation and ideas from employees, to review the progress,and to identify the obstacles and approaches to overcomeobstacles to CP implementation. In addition to separatemeetings at individual firms, meetings are organizedwhere consultants and representatives from participatingfirms are gathered to exchange ideas and assess the pro-gress of the CSS-CP program. At the end of the fiscalyear, actions are taken to assess the results of the pro-gram, and to identify additional CP measures forimplementation in next fiscal year.

The success of any CSS-CP program depends on closecollaboration among four major parties: government,consultants, central firms, and participating satellitefirms. Specific roles to be performed by these organiza-tions are listed in Table 1. While the roles of governmentagencies, and central and satellite firms have beendescribed earlier; the consulting firms are responsible ofbringing all parties together and to provide the expertise

Table 1Roles of organizations involved in the CSS-CP program

Organization Roles

Government agencies Provide encouragement and supportConsulting firms Provide staff training programs

Assist in establishing CP teamsAssist in plant auditsAssist in identification and feasibilityanalysis of CP optionsAssist firms to compile pertinent dataCall regular meetings to track progressSupply pertinent information

Central firms Top management commitment and supportPlay as a role modelCSS system audit and reviewsProvide assistance and incentives toparticipating satellite firms

Satellite firms Top management commitmentEstablish CP teamsCarry out CP implementation

needed to make the program run. Under a contract withthe Industrial Development Bureau, the Foundation ofTaiwan Industry Service (FTIS) currently serves as theconsultant to help the CSS-CP program. FTIS’s expertiseon CP has been accumulated from many projects overthe years as one of the government contractors to providetechnical assistance to industry to practice IWM andimplement environmental management systems underISO 14000.

6. CSS-CP program results

The action of employing CSS to promote CP in SMEsin Taiwan was initiated in FY 1995. TECO Electric andMachinery Co. Ltd., one of the largest electrical equip-ment manufacturers in the country, initiated the first sys-tem. Prior to initiation of CSS-CP, several of TECO’splants had implemented CP programs and realized thefinancial and environmental benefits of the concept.TECO’s top management was convinced that furthersubstantial gains could only be realized if its suppliersjoin to adopt CP measures through CSS-CP effort. Atthe first stage of CSS-CP organization, however, manyof TECO’s suppliers were either not interested or onlypassively participating in the program. It was only afterTECO’s general manager openly threatened to discon-tinue business that its suppliers began seriously to takepart in the CSS-CP program.

The TECO CSS-CP system consists of four ofTECO’s electric equipment assembly plants serving asthe central firms [4], and 12 suppliers serving as satellitefirms. An Environmental Safety Promotion Team(ESPT) was organized among all these firms to run theCSS-CP program, with technical assistance provided by

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FTIS. Table 2 lists the participating firms in TECO’sCSS-CP, including 4 central firms (A through D) and 12satellite firms (E through R). The satellite firms representsuppliers of data processing equipment, printed circuitboards, parts molding, etc. More than 60 percent of theparticipating firms are SMEs. During FY 1995, the part-icipating firms in the system implemented a total of2,119 CP options. Based on an incomplete data, theseoptions required a capital investment of US$1.8 million,and resulted in a benefit realized in FY 1995 of US$5million. The TECO CSS-CP system has been expandedto include 32 firms, and many of them have reportedgreater than 20% reduction of production costs as aresult of practicing CP measures.

Cheng-Loong Paper Manufacturing Companyorganized the second CSS-CP program in Taiwan [5].Established in July 1996 and with Cheng-Loong’sTayuan Paper Mill and Hsinchu Paper Mill as centralfirms, the CSS consists of 10 up-stream suppliers thatprovide waste paper, machinery, chemicals, energy, andtransportation services, and 3 downstream buyers whoare paper container manufacturers (see Table 3). Withgreater than 90 percent of participating firms as SMEs,the Cheng-Loong system in one year period from July1996 to June 1997 implemented 868 CP options. Theseparticipating firms invested a sum of US$991,000 in CPmeasures, resulting in a benefit of US$3.5 million inFY 1996.

During FY 1997, two CSS-CP systems were

Table 2Results of TECO’s CSS-CP program in FY 1995a

Firm Business/product Number of CP options CP options Investment US$ Benefitb US$Code employees proposed implemented (1,000) (1,000)

A Appliances 102 40 28 3.6 54.6B Appliances 350 1,805 1,612 1,392.9 1,788.2C Electric motors 380 565 306 13.6 322.5D Electric motors 340 62 53 255.0 2,239.6E Electric equipment 850 14 1 c c

F Printed circuit boards 280 12 8 3.6 26.9G Electronics 50 6 6 c 20.0H Electronics 54 4 4 c 4.1I Packaging 44 13 13 5.4 19.8J Packaging 260 71 18 3.9 100.2K Plastic 95 8 8 c 26.1L Plastic 37 2 1 c c

M Metal processing 280 34 28 168.9 336.8N Metal processing 47 6 3 c c

O Parts fabrication 22 4 4 c 2.1P Brass tube processing 33 3 3 c 5.4Q Brass tube processing 36 17 17 2.57 42.5R Molding 50 7 6 c 7.1

SUM 3,310 2,673 2,119 1,849.5 4,993.6

a Source: adapted from [4].b Benefits realized in FY 1995.c Indicates data not available.

organized under the technical assistance of FTIS andCTCI, respectively, by SMAPO Corporation and Mac-ronix International Co. Ltd. SAMPO is one of the largestelectrical appliance and equipment manufacturers in thecountry. The SAMPO CSS-CP system consists of 14firms, 93% of these are SMEs that are suppliers of metalparts, plastic parts, PC boards, printing products andpackaging materials. The system implemented a total of789 CP options that cost about US$980,000, and resultedin an annual benefit of US$5.5 million in FY 1997 [6].

Macronix is a manufacturer that produces, amongothers, non-volatile memory IC and logic memory IC.The CSS-CP system organized by the company attracted18 firms that produce a host of goods and services rang-ing from IC fabrication, chemicals, waste treatment, con-struction, to IC packaging. These firms in FY 1997implemented a sum of 156 CP options, costingUS$537,000 and resulting in an annual benefit of US$4.5millions [7].

The positive results in previous years provide a strongincentive for furtherance of CSS-CP program in Taiwan.In FY 1998, three new CSS-CP systems were organizedunder the assistance by FTIS; these systems were createdby central firms including Acer Peripherals, Inc. (anelectronic manufacturer), Sanyang Industry (a motorcycle and automobile assembler), and Super Textile Cor-poration. Assisted by CTCI, two additional CSS-CP sys-tems have been organized under United MicroelectronicsCorporation (an IC fabricator), and Acer Incorp. (a com-

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Table 3Results of Cheng-Loong CSS-CP program in FY 1996a

Firm Business/product Number of CP options CP options Investment US$ Benefitb US$code employees proposed implemented (1,000) (1,000)

PM-1 Paper 288 210 173 397.8 1,194.5PM-2 Paper 100 98 92 22.3 521.5CE-1 Chemicals 15 21 9 24.3 89.3CE-2 Chemicals 50 66 51 130.7 414.3CE-3 Chemicals 19 22 21 30.6 85.8PC-1 Paper containers 155 45 42 10.8 151.0PC-2 Paper containers 141 455 335 60.0 291.8PC-3 Paper containers 140 44 28 32.1 134.2CG-1 Energy 37 56 37 4.3 45.6TR-1 Transportation 13 10 10 62.9 27.2WP-1 Waste paper collection 6 13 13 14.6 60.7WP-2 Waste paper collection 5 8 8 2.2 30.9WP-3 Waste paper collection 58 26 22 169.3 357.1WP-4 Waste paper collection 5 14 14 14.6 65.5ME-1 Machinery 6 13 13 14.6 98.0

SUM 1,040 1,101 868 991.1 3,567.4

a Source: adapted from [5].b Benefits realized in FY 1996.

puter manufacturer). A total of 74 satellite firms joinedthese five CSS-CP systems; more than 70% of thesefirms are SMEs.

7. Summary and conclusion

As in many other countries, small and mediumenterprises in Taiwan are slow in implementing CP.These firms are in general less capable financially andtechnically to acquire more advanced technologies toimprove their environmental performance. In an attemptto induce a change, the CSS approach was adopted bythe Government in Taiwan in 1995 to attract more SMEsto practice CP. The results thus far clearly indicate thatthe CSS approach is effective in promoting CP in SMEs.Facing the fierce competition in global markets andnewly developed international environmental require-ments, many large companies are willing to take theinitiatives to form CSSs to promote CP in their supplychains. Driven by the incentives from its buyers (or, insome cases, suppliers), many SMEs would join CSSsand learn how to practice, and realize the benefits of, CP.

CSS-CP is still in its first stage of application, how-ever. Since program inception in 1995, four systemshave been established under firms that represent manu-facturers of electrical equipment, paper products, electri-cal appliances, and integrated circuits. At the beginningstages, relatively simple CP-measures (or, “low-hangingfruits”) are being implemented. The results based on costand benefits analysis of implemented options are quitepositive, with average investment pay-off in less than 4months. The evidence that CSSs could effectively attractSMEs who would be otherwise left out of the CP pro-

motion program is most encouraging. Under the influ-ence of the IDB, five more CSS-CP programs are cur-rently being implemented involving many largecompanies in electronics, computer, textile, IC fabri-cation and motor vehicle assembly. Furthermore, theIDB has recently decided that priority of technical assist-ance under the the CP promotion program should begiven to CSSs. In other words, those firms forming CSSswould receive preferential treatment, and those applyingfor technical assistance individually would most likelyface rejection. This decision would substantially expandthe application of CSS-CP in the country. Additionally,the government is planning to promote EMS under ISO14001 and health and safety under BS 8800 throughCSSs. This initiative would undoubtedly improve thedepth of CP implementation in industry.

References

[1] Syytu DS. The unique business characteristics of Taiwan’s smalland medium enterprises: their business environment, sizes andstrategy, (in Chinese). A paper presented in Journal of CSD Center,Taipei (Taiwan), vol 115, March 1995

[2] China Technical Consultants, Inc. (CTCI). Waste MinimizationWhite Paper, ROC, (in Chinese). Prepared for Industrial Develop-ment Bureau, Ministry of Economic Affairs, ROC, July 1996.

[3] Chiu S, Peters B. Industrial Pollution Prevention. A TechnicalMemorandum published by Asian Development Bank, MetroManila (The Philippines), November 1994.

[4] TECO Electric and Machinery Co. Ltd, and Foundation of TaiwanIndustrial Service. TECO’s Corporate Synergy System for pro-motion of industrial waste minimization—a special report, (inChinese). Taipei (Taiwan), December 1996.

[5] Industrial Development Bureau (IDB), Foundation of TaiwanIndustrial Service. Cheng-Loong Tayuan Plant’s Corporate Syn-

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ergy System to promote industrial waste minimization (FinalReport Draft), (in Chinese). Taipei (Taiwan), June 1997.

[6] Industrial Development Bureau (IDB), Foundation of TaiwanIndustrial Service. SAMPO’s Corporate Synergy System to pro-mote industrial waste minimization (Final Report Draft), (inChinese). Taipei (Taiwan), June 1998.

[7] Industrial Development Bureau (IDB), China Technical Consult-ants, Inc. MACRONIX’s Corporate Synergy System to promoteindustrial waste minimization (Final Report Draft), (in Chinese).Taipei (Taiwan), June 1998.