Clean Technologies and Environmental Policy

https://doi.org/10.1007/s10098-019-01692-2

ORIGINAL PAPER

Application of system dynamics modelling for a sustainable

manufacturing system of an Indian automotive component
manufacturing organisation: a case study
R. M. Thirupathi1 · S. Vinodh1 · S. Dhanasekaran2

Received: 30 July 2018 / Accepted: 4 April 2019

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Abstract
Over the last few decades, the manufacturing industry has been a major contributor to pollution and consumes a greater por-
tion of the world´s total resources. Social demands and customer pressure have forced manufacturing industries to embrace
sustainability principles. The automobile industry is the largest manufacturing sector, which is a significant contributor of
environmental pollution. However, there is a significant potential to reduce resource consumption by the automobile industry
and improve its social performance through sustainability initiatives and technologies. In order to contribute in this direction,
the case study reported in this paper was carried out. The objective of the reported study is to build a suitable system dynam-
ics model to identify areas required for sustainable improvement in an automotive component manufacturing organization.
Factors influencing sustainable initiatives were analysed by developing a model using a system dynamics approach. Suitable
performance indicators were identified and used for carrying out the analysis.
Graphical abstract
Stock and flow model of environmental impact

Extended author information available on the last page of the article

13
Vol.:(0123456789)
 R. M. Thirupathi et al.

Keywords Sustainable manufacturing · System dynamics modelling · Performance evaluation · Sustainable strategies ·
Automotive industry · Performance indicators

Introduction Subsequently, the research in which the system dynamics

modelling approach was followed were reviewed. Further,
Modern manufacturing industries consume large amounts of literature was reviewed to gather information about sustain-
non-renewable resources. In addition to that, modern manu- able performance indicators. The details of carrying out the
facturing industries generate large amounts of waste and literature review under these two domains are presented in
vent off pollutants which are often toxic in nature. These the following two subsections.
have given rise to adverse environmental phenomena such as
global warming, natural resources depletion, acid rain, and bio- Review on sustainability studies in the automotive
sphere poisoning (Haapala et al. 2013). The adverse impact of sector
these phenomena on society can be mitigated by applying the
approach called ‘sustainable development’. Sustainable devel- Various research studies involving incorporation of sus-
opment refers to the approach by which current developments tainability in automotive products have been reported in
are to be carried out without affecting the needs in the future. the literature arena. Considering a life-cycle viewpoint,
When the sustainable development approach is applied in man- these studies are classified based on automotive life-cycle
ufacturing industry, then the same is referred to as ‘sustain- phases. Many researchers have attempted to reduce envi-
able manufacturing’. Sustainable manufacturing is concerned ronmental impact by material substitution and reduction of
with minimizing environmental impacts, conserving energy, material consumption during the design stage itself. Moda-
enhancing safety and strengthening the economy. While car- resi (2015) employed a system approach to design light-
rying out environmentally friendly manufacturing practices, weight vehicles that would minimize energy consumption
the economic and social aspects of business should also be and emissions. A fundamental model was applied to rec-
considered. Hence, for assessing a company’s performance, ognize the scrap surplus problem. Many organisations that
the triple bottom line (TBL) approach is utilized. Among the incorporate a lean manufacturing system, such as Toyota’s
manufacturing industries, the automobile industry contributes production system, try to incorporate sustainable strate-
significantly towards emitting pollutants into the environment. gies to attain a competitive advantage. Nunes and Bennett
Automotive industry is considered a pillar in most countries (2010) focused on investigating green efforts made in the
due to its significant economic contributions. Various initia- automotive firms and compiled the environmental reports
tives, include using recyclable body parts, reducing mate- of selected firms. The vital environmental efforts made by
rial consumption, development of energy-efficient cars and the world’s three main car manufacturers were analysed
improving fuel efficiency, are carried out in a scattered man- and benchmarked.
ner. While carrying out these initiatives in automobile industry, In view of stringent regulations on automobile emis-
various factors need to be considered. The interactions and sions, automakers try to develop cars with higher fuel effi-
contributions are very complex to determine. This complexity ciency. Hybrid cars exhibit potential to eliminate vehicle
makes it difficult to apply sustainable manufacturing in auto- pollution. The result of the investigation presented in De
mobile industry. This difficulty is to be overcome by apply- Haan et al. (2007) indicated that the use of hybrid vehicles
ing a system dynamics modelling approach. This approach considerably reduced energy consumption. Tian and Chen
will reveal the focal areas for achieving the desired goals. (2014) emphasized the need for adopting design of disman-
In the context of these observations, while carrying out this tling and design of recyclability while designing vehicles.
case study, a system dynamics model was developed to ana- The study also indicated the difficulty in using polymers
lyse interrelationships between various factors of sustainable for fabricating dashboards. By referring to the result of
manufacturing, and determine vital indicators for measuring this investigation, green design guidelines for automotive
the performance of sustainable systems. The details of these products have been presented. These guidelines may be
activities are presented in the following sections of this paper. followed during the design process. Thirupathi and Vinodh
(2016) have found that interpretive structural modelling
(ISM) is a powerful tool to formulate structural associa-
Literature review tion among sustainable manufacturing enablers. Suresh
et al. (2016) developed an integrated approach of design
Before carrying out the case study, the literature was for environment (DFE) and design for manufacture and
reviewed to study the sustainable manufacturing activi- assembly (DFMA) for carrying out sustainable product
ties carried out in automobile manufacturing industry. design. This approach was validated by conducting a case

13
Application of system dynamics modelling for a sustainable manufacturing system of an Indian…

study involving an automotive component. The outcome authors analysed the interrelated variables contributing to
of conducting this case study suggested that this approach emission of ­CO2 and mitigation strategies to reduce emis-
could be beneficial in developing cost-effective and eco- sions. Zhang et al. (2013) presented a conceptual level
efficient products. Jayakrishna et al. (2016) applied an of integration of shop floor operations by system dynam-
integrated approach involving grey relational analysis ics. These authors utilized it to comprehend the cause and
(GRA) while carrying out material selection and life-cycle effect of manufacturing problems in a dynamic condition
analysis LCA) for sustainability analysis while designing between economic and environment aspects. Martinez-
an automobile product. The application of this approach Moyano and Richardson (2013) explored opinions about
facilitated identification of the material that could enable the best system dynamics modelling practices drawn from
the development of eco-efficient and cost-effective prod- a group of eminent practitioners. Three questions were
ucts. Schöggl et al. (2017) derived a new checklist which addressed pertaining to practitioners’ beliefs regarding
can be used while carrying out sustainable product design. undertaking the best system dynamics modelling method,
This checklist facilitated carrying out qualitative evalua- core initiatives needed for ideal action across different
tion along three sustainability orientations from a complete stages of the modelling process, and significant exercises
life-cycle perspective. The applicability of this checklist carried out during several stages of the modelling process.
was studied by considering automotive technologies. This Feng et al. (2013) modelled the trends of energy utili-
checklist helped in developing and improving technol- zation and carbon dioxide (­ CO2) emission occurring in
ogy from a sustainability viewpoint. Brunner et al. (2017) Beijing over a period of years using the system dynamics
illustrated life-cycle estimation and decision support in the modelling approach. The outcome of this study indicated
early product design stage. This paper presents an approach that Beijing’s total energy demand in 2030 will be 1.04
that facilitates the implementation and analysis of sustain- times more than that in 2005, and total ­CO2 emissions in
able material and technology selection during initial prod- 2030 will be 0.43 times higher. Kwakkel and Pruyt (2015)
uct design stages. Kalverkamp and Raabe (2018) studied addressed dynamic and uncertain societal changes using
the market challenges from a macro-marketing viewpoint an integrated approach of system dynamics modelling with
to understand the relation among sustainable outcomes exploratory modelling and analysis. The authors studied
and reverse channel issues. From analysis, they found that the integration of system dynamics and exploratory mod-
imperfection in the market leads to resource waste and elling using two cases. The exploratory system dynamics
environmental impact. Their studies contribute to better modelling proved to be a potential method for tackling
understanding of the remanufacturing markets of automo- extremely uncertain and dynamically complicated societal
tive firms. Saidani et al. (2018) completed an exhaustive challenges.
literature survey to find the factors influencing the circular Ighravwe and Oke (2018) have reported research in which
economy performance of the automotive sector. They high- a system dynamics (SD) model was used for enhancing
lighted the industrial challenges leading toward a circular inventory of maintenance practices. A fuzzy system dynam-
economy. Zanchi et al. (2018) aimed towards analysing the ics model was used to assess the stock level. The developed
prominent factors affecting social LCA in the automotive model has the ability to manage workforce required for car-
sector. They provided a structural approach for social LCA. rying out maintenance activity. The SD model, the technique
They further showed that the social LCA not only includes for order of preference by similarity to ideal solution (TOP-
product-related information, but also includes organiza- SIS), the fuzzy system and the weighted aggregated sum
tional behaviour. product assessment (WASPAS) method were integrated to
carry out assessment. The developed model was found to
Review of modelling using the system dynamics aid in decision making while solving management-related
approach problems.
Melnikov et al. (2018) studied the thermal regulation of
System dynamics is compatible for modelling sustain- human bodies in different conditions. Data were gathered by
able manufacturing, but few applications of it have been conducting experiments pertaining to all components and
reported in the literature arena. Kantardgi (2003) showed parameters of a two-node model. A modified model was pro-
that decision making can be made easier by system dynam- posed for skin blood flow which has capability to enhance
ics modelling. The author considered the interaction the prediction of skin temperature. Sensitivity analysis was
between the environment and industry in modelling, and performed with respect to climatic and personal conditions.
applied the model to various levels of management. Anand It was claimed that the developed model has the capabil-
et al. (2006) evaluated emission of ­CO 2 by direct and ity to measure the dynamics of thermal regulations of the
indirect means in the cement industry throughout India human body.
over 20 years using system dynamics modelling. These

13
 R. M. Thirupathi et al.

Khanmohammadi et al. (2018) proposed an SD simula- implementation. The literature study showed that no suit-
tion model performing a recovery process in a hospital able structural model validated statistically is available to
after an earthquake. This model can be used to evaluate gain confidence and decision making. And no suitable SD
the impacts due to component damage and shortage of model is available to visualise the influencing levels and sen-
resources. Patient flow, treatment operation, and recovery sitivity studies. Sustainability indicators that can be applied
efforts taken were considered to minimise the impact of in real case organisations are available. Difficulties in pri-
an earthquake on hospitals. The proposed model helped oritising manufacturing strategies and usage of appropriate
administration for decision making regarding the usage of tools for the selected manufacturing philosophy of sustain-
available resources when an earthquake affects hospital able manufacturing result in delayed implementation and
resources. require suitable frameworks. There exists a need to develop
an appropriate SD model to visualise the influencing levels
Review on sustainable performance indicators and carry out sensitivity studies in a sustainable manufactur-
ing context. Also, suitable indicators to analyse the perfor-
Environmental, health and safety, and social indicators are mance of sustainable systems in three basic domains, namely
widely used by a large number of organisations. Veleva the environment, economy and society, require identification
et al. (2001) proposed a framework to evaluate the ability and analysis.
of indicators to enhance decision-making accuracy, and to
measure the progress in achieving sustainable manufac-
turing. Also, Veleva and Ellenbecker (2001) contributed Methodology
22 core indicators and an implementation method using
an 8-step model for enhancing business sustainability. The methodology followed to carry out the research is pre-
These authors suggested additional indicators to enhance sented in the following subsections.
the firm’s awareness and to estimate their progress. Kjaer-
heim (2004) described a way of achieving cleaner produc- Identification of factors influencing sustainable
tion by applying a Norwegian method, and showed ways manufacturing
to improve the method so that it can be effectively used in
developing countries. These authors argued that cleaner By referring to the resulting literature review, various fac-
production should be combined with all business develop- tors that influence sustainable manufacturing systems have
ment activities, and proposed an approach to increase the been identified. These factors are grouped under three main
speed at which cleaner production is adopted in small-sized domains, namely the environment, economy and society.
manufacturing companies. Kocmanová and Šimberová This grouping is shown in Table 1.
(2014) identified ecological, social and management indi- It is seldom possible to understand the whole system by
cators of performance. The indicators of sustainable per- studying each of these factors separately, as they are inter-
formance formed critical measurement framework in sus- connected. There exists a need to develop a model which
tainable reporting of a company. These authors conducted shows interconnection of all the factors. The system dynam-
empirical research, and the indicators were selected using ics approach was applied to such a model and to analyse the
multi-factor analysis. By referring to the results, indicators sustainable manufacturing system.
were classified into three evaluation categories as: environ-
mental, social and managerial. May et al. (2015) developed
System dynamics methodology
energy-based performance indicators. A 7-step approach
was proposed to develop key performance indicators which
A system is an integration of several entities or elements
were energy-related and customised for production. The
with specific rules. Entities or elements within the system
identified indicators enabled companies to partake in an
interact and may interdepend on each other (Gordon 1978).
effective decision-making process. Feng et al. (2017)
SD modelling is an approach to model systems with com-
developed a methodology that can be used by manufactur-
plex behaviour, and is used to analyse its performance over
ers to establish indicators for evaluating, observing and
a period of time.
improving sustainability characteristics of processes. This
SD is encapsulated with qualitative and quantitative
methodology supported a guideline, proposed for ASTM
models. A qualitative model is depicted using a feedback
International standardization. The capability of this method
loop diagram. A quantitative model is depicted using a flow
in complementing the existing sustainability indicator sets
diagram.
and evaluation approaches were discussed.
The casual loop diagram forms the fundamentals of an
Multiple influential factors having interrelationship result
SD model, and evaluates the system components and factors.
in difficulty in understand the hierarchy of sustainability

13
Application of system dynamics modelling for a sustainable manufacturing system of an Indian…

Table 1  Sustainable Environment Economy Society

manufacturing factors
Energy consumption Sales Employee satisfaction
Material consumption Turnover Employee training
CO2 emission Cost of new product Knowledge level
Total solid waste Development Customer satisfaction
Water pollution Investments in sustainability Customer turnover
Recycling Development Charitable contributions
Remanufacturing New cleaner technology Employee safety
Government pressure Acquisition Ergonomics
Product durability Investment in training Product reliability and durability
Renewable energy Environmental tax
Hazardous material waste

It helps to understand relationships between factors, and sector. In each sector, important factors were identified, and
helps to provide a positive and negative feedback structure basic relationship can be represented using a causal feedback
for higher-level problems. The casual loop diagram enables model or temporal model as illustrated in the Appendix. The
users to define the system structure, i.e. variables of the sys- flow model helps to analyse each sector mathematically.
tem, causal relationships and direction in system variables. Shadowed variable represents interaction between different
After confirming a causal feedback loop, the system is mod- sectors.
elled with simulation tools.
The basic elements used in SD (Sterman 2000) are Environmental impact
described here. Stock indicates the level of system variables
at an instance based on the difference between input and Reducing environmental impact is the major objective of
output flow of an entity, such as water flow in and out of a sustainable manufacturing. A carbon footprint is developed
tank. Flow means rate of change of state variables in a given in materials processing, manufacturing, use and end-of-life
unit of time. Stock values could be found by using other stages of product life cycles. Environmental pollution gener-
stock variables, auxiliary variables and flow rates. Connec- ated in each of these stages is determined using a life-cycle
tors are typically used to connect stock and flow; in some analysis approach. Various sustainable strategies can be uti-
cases, auxiliary variables are also connected to the stock. lised to minimise environmental impact, and strategies were
Auxiliary variables could be certain parameters having con- selected based on the needs of an organisation. A stock and
stant values. Typical software used for the SD modelling flow model of environmental impact and a graphical repre-
sentation of a product carbon footprint are shown in Figs. 1
and 2, respectively.

Footprint accumulation rate = procurement stage + production stage + usage stage + disposal stage
Product carbonfoot print = INTEG(footprint accumulation rate − footprint control rate, 0.005) (1)
Footprint control rate = alternate material + energy recovery + improve machine efficiency + renewable energy usage

application include Vensim, Powersim, STELLA and iThink

Average carbon footprint = product carbon footprint∕timebox
(Tan et al. 2010).
(2)
Cost of controlling carbon footprint energy related
Sustainable manufacturing modelling using (3)
= investmenton energy efficiency∕1e + 06
the system dynamics approach
Cost of controlling carbon footprint for material
(4)
The sustainable manufacturing model was developed using = 100 ∗ alternatematerial
the SD approach in the environmental sector, learning and
growth sector, market and customer sector and financial
Alternate material = 0.5 ∗ recommendations∕4 (5)

13
 R. M. Thirupathi et al.

Fig. 1  Stock and flow model for

environmental impact

Disposal stage = 0.1

Energy recovery = 0.15 ∗ investmenton energy efficiency ∗ recommendations∕4∕1e + 06
Improve machine efficiency = (0.1 ∗ investmenton energy efficiency ∗ recommendations) ∕4∕1e + 06 (6)

Procurement stage = 0.6

Production stage = 0.1
Usage stage = 0.2
Renewable energy usage = 0.1 ∗ investmenton energy efficiency ∗ recommendations∕4∕1e + 06
Investment on energy efficiency = 1e + 06 (7)

Learning and growth Technology growth

Human resources are the greatest asset of any organisation. Product quality is a vital factor that determines the progress
Efforts to improve employee knowledge and safety skills of of a business. Product quality depends on the quality of
employees will improve their performance and involvement raw material, technology, efficiency of workers and pro-
towards enhancing organizational performance. An increas- cess quality. Selection of proper suppliers, process quality
ing knowledge level of an organisation will have positive and product diversity will have major impact on product
influence on the number of innovative ideas, and elevates quality.
the product quality and competence level of an organisa- Investment in technology and research and development
tion. Development of new technology along with innova- will improve the production rate and product quality. Tech-
tive ideas will improve customer satisfaction and, in turn, nological growth to increase the production rate and produc-
improve product sales. A stock and flow model of knowledge tion capacity will lead to reduction in production time and
level and a graphical representation of knowledge level are also increase new production flexibility.
shown in Figs. 3 and 4, respectively.

13
Application of system dynamics modelling for a sustainable manufacturing system of an Indian…

Fig. 2  Graphical representation of a product’s carbon footprint

Fig. 4  Graphical representation of knowledge level

A stock and flow model of technology growth and a

graphical representation of product and process quality are based on the requirements of sustainability. Product qual-
shown in Figs. 5 and 6, respectively. ity can be improved by investing in technology, research
and development, training and quality improvement. Top
Market and customer growth management must follow a proper methodology to imple-
ment new systems and sustain the new performance over a
Sustainable performance acts as key factor that reflects an long time.
organisation’s performance. Five elements of sustainable
improvement are environmental impact, product quality, Product sales
product quality/diversity, product attractiveness and sale
quantity/price. Management initially performs assessment Improvement of customer attractiveness/sustainable per-
and identifies areas for sustainable improvement. Subse- formance will improve sales which in turn will improve
quent to analysis of areas for improvement, they invest organisational performance.
Proper market analysis provides scope for organisational
growth, and an organisation should work towards achieving
its long-term vision and mission.
A stock and flow model of market growth and customer
growth can be inferred from Figs. 7 and 8, respectively.
Graphical representation of sales quality is shown in
below Fig. 9.
Graphical representation of customer attraction is shown
in below Fig. 10

Financial growth module

The financial growth module must be considered in eval-

uation of performance of a sustainable manufacturing
organisation.

Fig. 3  Stock and flow model of knowledge level

13
 R. M. Thirupathi et al.

Fig. 5  Stock and flow model of technology growth

Fig. 7  Stock and flow model of market and customer growth

have greater effect on product price. Higher costs of mate-

rials, wages and overhead will escalate product cost. Pro-
duction cost must be controlled because product price plays
crucial factor in the sales of a product. A stock and flow
model of financial growth and graphical representation for
operation profit are shown in Figs. 11 and 12, respectively.
Fig. 6  Graphical representation of process quality and product quality

General budget (capital)

Product cost
Control and allocation of the capital budget are very important
Cost price plays a crucial rule in sales of the product and tasks carried out in manufacturing organisations. Proposals
profit of the organisation. Production and operational costs from various sectors must be analysed, and a budget must

13
Application of system dynamics modelling for a sustainable manufacturing system of an Indian…

Fig. 8  Stock flow model of

customer growth

Fig. 9  Graphical representation of sales quality

be allocated based on organisational requirements. Proper

allocation must be done for each sector, such as a budget for
training, research and development for sustainable alterna- Fig. 10  Graphical representation of customer attraction
tives, improvement of technology, and development of new
product variety. After the consolidation of all four sectors of model of a general budget and graphical representation for
environment, finance, customer, quality growth, a complete a capital budget are shown in Figs. 13 and 14, respectively.
flow model is presented in the Appendix. Factors considered
as above in all the sectors are arranged according to area of
origin or influence vs. time domain from a practical viewpoint Sustainable performance metrics
to arrive at the stock and flow variables. This is the starting
point of making the flow model sector-wise. A stock and flow The number of manufacturing firms that demand the capa-
bility to evaluate sustainability in their products and pro-
cesses is growing at a rapid pace (Veleva et al. 2001).

13
 R. M. Thirupathi et al.

Fig. 11  Stock flow model of financial growth

Fig. 12  Graphical representation of operation profit Fig. 14  Graphical representation of capital budget

benchmark values with predefined sustainable perfor-

mance metrics.

Performance indicators should be measurable, compre-

hensive and easily understandable. Utilising sustainable
indicators should be cost-effective and manageable in a
timely manner.
With reference to prior studies of manufacturing perfor-
Fig. 13  Stock flow model of capital budget mance and sustainable manufacturing indicators, a group
of key performance indicators (KPIs) for sustainable manu-
Advantages of using performance indicators are: facturing assessment in automotive companies have been
established. KPIs have adopted the TBL of sustainability
• Sustainability documentation ­CO2 generation, resource which consists of social, environmental and economic per-
utilization, and waste generation from all initiatives in a formance factors. Indicators related to cost, flexibility and
manufacturing process were recorded and compiled for quality under manufacturing performance are induced into
sustainability performance assessment. KPIs as economic performance dimensions.
• Performance analysis The activities to improve sustain-
able performance need to be assessed against industry

13
Application of system dynamics modelling for a sustainable manufacturing system of an Indian…

Table 2  Environmental, economic and societal indicators

Index Indicator Computation Unit Reference

A Environmental indicators
A1 Mass fraction of greenhouse Total mass of ­CO2 equivalents/total mass kg/kg = 1 unit Veleva and Ellenbecker (2001)
gases of products
B Economic indicators
B1 Operating profit Gross profit – operating expenses Indian rupee (INR)
B2 Product quantity sales Number of products sold in a year Number
B3 Defect per unit Number of defective product/total number Parts per million (ppm) Krajnc and Glavic (2003)
of units produced *106
C Social indicators
C1 Customer satisfaction Customer satisfaction measured using an Percentage Krajnc and Glavic (2003)
index
C2 Employee knowledge level Number of employees at an expert level Number

Sustainable indicators Financial indicators

The environmental, financial and social indicators are Organizational growth is mainly measured using financial
described in the following subsections. growth. Organisations can move towards sustainability only
when they have proper financial investment. The annual
Environmental indicators growth of an organisation is to be properly monitored, and
spending budget in development such as a research and
The manufacturing sector consumes large quantities of development facility and improvement of technology must
energy and resources. Using resources in large quantity also be properly measured and monitored.
has caused various environmental problems like deple- To reduce product cost, quality cost should be minimal.
tion of resources and pollution. Energy efficiency has to be Newer technology should be acquired to reduce defec-
improved to reduce utilisation of non-renewable resources tive product production which in turn reduces product
and reduce pollution for facilitating sustainable production. cost. With the increase of global competition to stay in
Appropriate minimization in the demand for raw materials the market, organisations should provide various product
and non-renewable resources will only be fulfilled through varieties to attract customers and also deliver products
creation of disassembly technologies, recycling and remanu- in a very short time. Organisations should always look
facturing capabilities on a commercial scale, and through for innovation within a very short time. They always
product design. should look to acquire newer technologies to improve
Air emission indicators quantify the amount of emission their productivity.
of various substances into the atmosphere. Installing devices
to reduce emission of pollutants into the atmosphere requires Social indicators
high investment and maintenance. As a result, small- and
medium-sized companies would not take efforts to reduce Nowadays, measuring social indicators is becoming a cru-
emission. From the viewpoint of climate change, controlling cial factor for the development of an organisation. Customer
air emissions becomes an important factor worldwide. satisfaction must be constantly monitored while making any
Sustainable manufacturing involves producing products changes to a system. Customer complaints must be properly
with high durability using minimum resources during their gathered and analysed. Increase/decrease of customers must
life cycle. From a company’s viewpoint, materials and the be constantly monitored and various new markets must be
quality of the process and system should be taken into account analysed for development of an organisation.
while designing, producing and delivering the project. Employee satisfaction becomes an important factor in the
growth of an organisation. Accidents must be minimized,
and employee work load should be moderated. Proper

13
 R. M. Thirupathi et al.

investment must be made in employee training, so that their a format that is easier to benchmark, understand and from
involvement in an organization is developed. Organizations which to draw inferences. The proposed model is based
should also keep track of their impact on local communities, on environmental, social and financial aspects of sustain-
and their contribution to the gross domestic product (GDP) able manufacturing. Performance indicators are grouped
of the country. into various categories, and objectives of indicators are
KPIs can be classified as social, economic or environ- explained clearly. Various strategies of implementation
mental. A total of seven sub-dimensions are considered, as of sustainable manufacturing are also briefly explained.
depicted in Table 2. The research depicts a basic view to help organisations
efficiently evaluate and improve sustainability in automo-
tive industries.
Conclusions This article proposed a system dynamics modelling
framework for implementing sustainable manufacturing
Automotive industries have started realising the impor- with the aim of incorporating the major factors of sus-
tance of sustainable development. Many firms have tainability. The model has been developed with regard
recently initiated ways to track the status of products and to to automotive component manufacturing organisations.
understand processes in terms of sustainable manufactur- The derived inferences will be applicable to organisa-
ing by using suitable models. This article reports a study tions with similar working cultures. The model can be
with a focus on modelling sustainable manufacturing from improved by incorporating other important factors of
an industrial perspective considering relevant indicators environmentally sustainable supply chain factors such
suitable for automotive component manufacturing. System as inventory and supplier selection based on organisa-
dynamics modelling of sustainable manufacturing helps tional need. The proposed system dynamics model can
in making effective decisions to fulfil both short-term and be extended for application in other sectors such as aero-
long-term goals with much ease. The model enables learn- space and electronics industries.
ing the current scenario and future scenario of the system
Once a generic system model is created, it can be used
quickly with much ease, thus enabling growth of individu- Appendix
als and effective use of human resource. The model helps
to realise the consequence of implementing various strate- See Figs. 15, 16.
gies. The indicators help to reduce vast information into

13
Application of system dynamics modelling for a sustainable manufacturing system of an Indian…

Fig. 15  Time domain diagram for sustainable manufacturing

13
 R. M. Thirupathi et al.

Fig. 16  Stock flow model for sustainable manufacturing

13
Application of system dynamics modelling for a sustainable manufacturing system of an Indian…

Learning and growth Timing = 1

Time box = INTEG(timing,0.005)
Knowledge gain = (consultants * training effect)/10,000 Average customer attraction = customer attraction/time-
Knowledge level = INTEG(knowledge gained – knowl- box
edge lost, 1) Customer attraction = INTEG(customer attraction
Knowledge lost = knowledge level * lost rate increasing – customer attraction lost,0.005)
Recommendations = knowledge level/1000 Customer attraction increasing = (effect of new product
Annual training hours = (investment in human on customer attraction + effect of product carbon footprint
resources * 2)/100 on customer attraction + effect of product quality on cus-
Training effect = f1(annual training hours) tomer attraction)/maximum ca
Lost rate = 0.2 Customer attraction lost = customer dissipation rate
Consultants = 0.2 * investment in human resources Effect of new product on customer attraction = 0.05
Investment in human resources = 1e + 06 Effect of product quality on customer attrac-
f1([(20,000, 4) − (1.5e + 06, 10)],(20,000, 4),(450,000, tion = f3(product quality)
5),(650,000, 6),(1.5e + 06,8)) f3([(50,0) – (100,2)],(50,1),(95,1.1),(97,1.2),(99.99,1.3))
Effect of product carbon footprint on customer attrac-
Technology growth tion = f5(product carbon footprint)
Customer dissipation rate = 0.02
Quality improvement = minimum quality + (process qual- f5([(1,0) – (100,2)],(1,1),(20,1.2),(30,1.22),(70,1.25),(9
ity/100) 5,1.3))
Product quality = INTEG[(quality improvement – quality Maximum ca = 2
deterioriation)/95,97]
Quality detoriation = defect rate Financial growth module
Minimum quality = 0.0004
Defect rate = 0.0008 Product cost
Process quality = INTEG((automation rate – deprecia-
tion) * 2e–09,95)
Automation rate = (investment in automation/develop- Operation profit = INTEG(revenue – cost, 0.1)
ment time) * impact on recommendation on automation Revenue = price
Depreciation = depreciation rate * process quality Tax cost = 0.3 * revenue
Automation rate = (investment in automation/develop- Net profit = tax cost/0.3 * 0.7
ment time) * impact on recommendation on automation Price = 0.1 * relative price + (cost/0.8)
Investment in automation = 1e + 06 Effect of price on customer satisfaction = 0.98
Development time = 1 Acceptable price = 500
Impact on recommendation on automa- Relative price = acceptable price * effect of price on cus-
tion = f2(recommendations) * 1 tomer satisfaction
f2([(0, 0) − (50,000, 1)], (13,460, 0.09), (3587, 0.1027), Sales and distribution cost = 50,000
(7735, 0.186), (45,739, 0.88)) Cost = production cost + operation cost + sales and distri-
Depreciation rate = 0.05 bution cost + depreciation cost
Depreciation cost = depreciation Staff no = 20
Operation cost = staff no * staff cost + training cost
Market and customer growth Staff cost = 25,000
Training cost = 25,000
Product quantity won = 100 * average customer attraction Cost per piece = material labour power cost + cost of con-
Sales quantity = INTEG(product quantity won – product trolling carbon footprint for material
quantity lost, 0.1) Material labour power cost = 320
Product quantity lost = sales quantity * customer lost frac- Production cost = (cost per piece + cost of controlling car-
tion bon footprint energy related) * (sales quantity/timebox)
Market demand effect = 0.03
Customer lost fraction = competition rivalry + market General budget (capital)
demand effect
Competition rivalry = 0.06 Capital investment rate = external loans + internal funds

13
 R. M. Thirupathi et al.

Capital budget = INTEG(capital investment rate – invest- Kocmanová A, Šimberová I (2014) Determination of environmental,
ment spending rate,0.1) social and corporate governance indicators: framework in the
measurement of sustainable performance. J Bus Econ Manag
Internal funds = 1.5e + 06 15(5):1017–1033
External loans = 1.6e + 06 Krajnc D, Glavic P (2003) Indicators of sustainable production. Clean
Investment in automation = 1e + 06 s Technol Environ Policy 5(3–4):279–288
Investment in human resources = 1e + 06 Kwakkel JH, Pruyt E (2015) Using system dynamics for grand chal-
lenges: the ESDMA approach. Syst Res Behav Sci 32(3):358–375
Investment in energy efficiency = 1e + 06 Martinez-Moyano IJ, Richardson GP (2013) Best practices in system
Investments pending rate = investment in automa- dynamics modeling. Syst Dyn Rev 29(2):102–123
tion + investment in energy efficiency + investment in May G, Barletta I, Stahl B, Taisch M (2015) Energy management in
human resources production: a novel method to develop key performance indicators
for improving energy efficiency. Appl Energy 149:46–61
Melnikov V, Krzhizhanovskaya VV, Lees MH, Sloot PM (2018) Sys-
tem dynamics of human body thermal regulation in outdoor envi-
ronments. Build Environ 143:760–769
References Modaresi R (2015) Dynamics of aluminum use in the global passenger
car system: challenges and solutions of recycling and material
substitution
Anand S, Vrat P, Dahiya RP (2006) Application of a system dynamics Nunes B, Bennett D (2010) Green operations initiatives in the automo-
approach for assessment and mitigation of CO2 emissions from tive industry: an environmental reports analysis and benchmarking
the cement industry. J Environ Manage 79(4):383–398 study. Benchmark Int J 17(3):396–420
Brunner H, Rossbacher P, Hirz M (2017) Sustainable product develop- Saidani M, Yannou B, Leroy Y, Cluzel F (2018) Heavy vehicles on the
ment: provision of information in early automotive engineering road towards the circular economy: analysis and comparison with
phases. Tehnički glasnik 11(1–2):29–34 the automotive industry. Resour Conserv Recycl 135:108–122
De Haan P, Peters A, Scholz RW (2007) Reducing energy consump- Schöggl JP, Baumgartner RJ, Hofer D (2017) Improving sustainability
tion in road transport through hybrid vehicles: investigation of performance in early phases of product design: a checklist for
rebound effects, and possible effects of tax rebates. J Clean Prod sustainable product development tested in the automotive industry.
15(11–12):1076–1084 J Clean Prod 140:1602–1617
Feng YY, Chen SQ, Zhang LX (2013) System dynamics modeling for Sterman JD (2000) Business dynamics: systems thinking and modeling
urban energy consumption and CO2 emissions: a case study of for a complex world (19). Irwin/McGraw-Hill, Boston
Beijing, China. Ecol Model 252:44–52 Suresh P, Ramabalan S, Natarajan U (2016) Integration of DFE and
Feng SC, Kibira D, Brundage MP, Morris KC (2017) Procedure for DFMA for the sustainable development of an automotive compo-
developing key performance indicators for sustainable manufac- nent. Int J Sust Eng 9(2):107–118
turing. In: ASME 2017 international manufacturing science and Tan KS, Daud Ahmed M, Sundaram D (2010) Sustainable enterprise
engineering conference modelling and simulation in a warehousing context. Bus Process
Gordon G (1978) System simulation. Prentice-Hall.Inc, Englewood Manag J 16(5):871–886
Cliffs Thirupathi RM, Vinodh S (2016) Application of interpretive structural
Haapala KR, Zhao F, Camelio J, Sutherland JW, Skerlos SJ, Dornfeld modelling and structural equation modelling for analysis of sus-
DA, Rickli JL (2013) A review of engineering research in sustain- tainable manufacturing factors in Indian automotive component
able manufacturing. J Manuf Sci Eng 135(4):041013 sector. Int J Prod Res 54(22):6661–6682
Ighravwe DE, Oke SA (2018) Managing finished goods inventory- Tian J, Chen M (2014) Sustainable design for automotive products:
maintenance engineering interaction subject to technical manu- dismantling and recycling of end-of-life vehicles. Waste Manag
facturing information complexity employing an associated fuzzy- 34(2):458–467
system dynamics approach. Eng Appl Sci Res 45(3):158–172 Veleva V, Ellenbecker M (2001) Indicators of sustainable production:
Jayakrishna K, Vinodh S, Sanghvi VS, Deepika C (2016) Application framework and methodology. J Clean Prod 9(6):519–549
of GRA for sustainable material selection and evaluation using Veleva V, Hart M, Greiner T, Crumbley C (2001) Indicators of sustain-
LCA. J Instit Eng (India): Ser C 97(3):309–322 able production. J Clean Prod 9(5):447–452
Kalverkamp M, Raabe T (2018) Automotive remanufacturing in the Zanchi L, Delogu M, Zamagni A, Pierini M (2018) Analysis of the
circular economy in Europe: marketing system challenges. J Mac- main elements affecting social LCA applications: challenges for
romarket 38(1):112–130 the automotive sector. Int J Life Cycle Assess 23(3):519–535
Kantardgi I (2003) Dynamic modelling of environment-industry sys- Zhang H, Calvo-Amodio J, Haapala KR (2013) A systems thinking
tems. In: International conference on computational science. approach for modeling sustainable manufacturing problems in
Springer, Berlin, pp 188–194 enterprises. In: Proceedings of the international annual confer-
Khanmohammadi S, Farahmand H, Kashani H (2018) A system ence (IAC) of the American Society for Engineering Management
dynamics approach to the seismic resilience enhancement of (ASEM), Minneapolis, MI, USA, pp 3–5
hospitals. Int J Disaster Risk Reduct 31:220–233
Kjaerheim G (2004) Cleaner production and sustainability. J Clean
Publisher’s Note Springer Nature remains neutral with regard to
Prod 13:329–339
jurisdictional claims in published maps and institutional affiliations.

13
Application of system dynamics modelling for a sustainable manufacturing system of an Indian…

Affiliations

R. M. Thirupathi1 · S. Vinodh1 · S. Dhanasekaran2

1
* S. Vinodh Department of Production Engineering, National Institute
vinodh_sekar82@yahoo.com of Technology, Tiruchirappalli 620 015, India
2
R. M. Thirupathi Ashok Leyland, Chennai, India
rm.thirupathi64@gmail.com
S. Dhanasekaran
dhanasekaran.s@ashokleyland.com

13