Case Study of the Application of a Methodology to Adopt Sustainability at SME Industries

1. Introduction

Given the emergence of Sustainability on the global agenda (WCED, 1987) and the growing demand for adaptation and its alignment with programs such as the Federal Attorney for Environmental Protection in Mexico, it has motivated companies as well as CEOs around the world to put it into practice and know its definition (Arvidsson, 2023). Sustainability in companies can be defined as “the adoption of business strategies and activities that meet the current needs of the company and its stakeholders, while protecting, maintaining and improving human and natural resources that will be needed in the future”. Regardless of the size of the company, adapting sustainability helps reduce resource use, save money and increase benefits for both society and employees [Aboelata, 2021; Ekins & Zenghelis, 2021; Le & Ikram, 2022]. Numerous scholars have highlighted the importance of sustainability management in SMEs [Cardoni, Zanin, Corazza & Paradisi, 2020; Das, Rangarajan & Dutta, 2020; Journeault, Perron & Vallières, 2021]. Incorporating sustainability into business activity improves their competitive position and also allows them to adapt to the value chain of large companies. SMEs occupy a key place in the Mexican economy, being 99.8% of the companies generating 72% of employment and 52% of GDP according to (IMCO, 2009), in turn, the manufacturing industry is the sector that contributes with a greater percentage to the GDP of Mexico with 20% hence the relevance of implementing said methodology in that sector (Statista Research Department, 2024) and in particular an SME in Chihuahua that is part of the Northern Border Region which includes the entities of: Baja California, Baja California Sur, Coahuila de Zaragoza, Chihuahua, Nuevo León, Sinaloa, Sonora and Tamaulipas (Fuentes et al., 2020).

2. Methodology

The following theoretical-methodological guide is proposed, the implementation of which firstly raises the Mission, Vision and Objective that consider sustainability (Table 1), and secondly the method Figure 1, which consists of five iterative stages, which must be carried out.

The statement of the mission, vision and objectives with a theoretical consideration is based on the need for a change of thinking, since it requires effort and commitment to adopt sustainability in areas such as: investment, training and planning to adopt operational and structural changes; in this sense, Broo (2022) states that a new way of thinking is needed, that is, a revolution in culture and thinking to adopt sustainability because there are barriers that need to be broken, therefore, the commitment of management is important, and assigning a leading human resource for environmental care; in order to carry out and follow up on the methodology, for which it is necessary to establish a multidisciplinary team made up of all essential areas or departments. The methodological design of five iterative stages shown in Figure 1 and is explained below:

• Analysis: Before developing a sustainability management system, it is essential to carry out an analysis based on the measurement instrument proposed by Zapien (2018). Without a precise analysis, successful adoption is not possible. For this reason, it is also important to collect information about the company; processes it uses, both productive and administrative, installed equipment, products it generates, raw materials, waste generated in order to understand all operations and their interrelations, consumption of resources such as water and energy (Salieiev, 2024; Zhang, Ma & Yan, 2020). At the end of the analysis, a document will be obtained with practices that are carried out and those that are not, opportunities for improvement, and it will also have a process diagram of the inputs; raw material, water, electricity and gas, among others) and the output (scrap, emissions and water waste among others (Antonopoulos, Faraca & Tonini, 2021; Enyoghasi & Badurdeen, 2021). Likewise, an analysis of its value chain and a design analysis will be generated in order to observe where an eco-design can be implemented, finally, a portfolio or analysis of the implemented technologies will be carried out (Antonacci, Del Pero, Baldanzini & Delogu, 2022; Negri, Cagno, Colicchia & Sarkis, 2021).
• Design: Taking into account the requirements of the environment, which have been extracted from the initial analysis, the design of the actions to be carried out is carried out, generating options and evaluating their technical and economic viability, this can be helped by techniques such as cause and effect diagram, dispersion diagram, FMEA, SWOT (strength, opportunities, weaknesses and threats), Pareto diagram, Decision tree, ROI (return on investment) study as mentioned by Murphy et al., 2022, Obiuto et al., 2024, Patidar et al., 2024 and Vardopoulos et al., 2021; by establishing the feasible and most convenient actions due to the impact that could be generated, we proceed to identify the person in charge of the area or department that affects the implementation of the activities in order to have an instructional design with the activities and leaders or managers who will carry out said activity. As a previous step to developing the adaptation of sustainability, training is necessary for all company employees (Bilderback, 2024), highlighting the importance of adopting sustainability and the balance it achieves between society, the environment and the economy through the minimization of negative impacts on the environment, safe products and processes for employees, communities and consumers, of course considering economic profitability, if necessary, returning to the previous step of analysis to add information.
• Development: The development phase continues, in which the plan is executed. At this stage, the leader or area assignee plays an active role in carrying out the training and corresponding activities. Likewise, the human resource assigned to environmental care must have a Gantt chart to plan and schedule tasks in order to follow up on the practices or actions to be implemented (Alves & Putnik, 2022), in order to create procedures, generating a sustainable practices management system; this must be prepared for the evaluation phase.
• Evaluation: The evaluation seeks to determine what the flaws are at the analysis, design and development level. From these, we will return to the relevant phases to continue with the process again. When the person responsible for the methodology in the company approves this stage, we will continue with the standardization stage.
• Standardization: The standardization of processes is essential for the success of any business (Nilashi et al., 2023). Rodríguez (2017) mentions that the activity in small and medium-sized companies is undervalued and that the important thing is to carry it out in a manner appropriate to their needs. Firstly, it is important that all senior employees and those in the company's supervisory area participate in the documentation of the standard method to be followed. Owen (2020) states that it is important to understand the attributes of sustainability adaptation initiatives and to identify gaps in research and practice; it is also necessary that they receive and provide their employees with adequate and continuous training (Aboramadan & Karatepe, 2021); as well as the determination of performance indicators that quantify compliance or level of performance (Neri et al., 2021 & Zapien & Valenzuela, 2024); This quantification can be based on the following indices: GWP, MIPS, LCA, Ecological Footprint or performance rates. And finally, the action guidelines, which means stating the guidelines that those involved must take into account when carrying out the activities to achieve the objective.

3. Case Study: Sustainable Management in an SME Industry

The focus of the case study was on a border city in Mexico due to the scientific contribution to the population of SME industries, and the methodological design is more appropriate due to the lack of sustainability adaptation in the industries of this city according to PROFEPA (2023) the industries certified in the voluntary clean industry program show only seventeen of these certified in the period 2022-2023.

The company in the case study is dedicated to the contract manufacturing of electrical, electronic and electromechanical products, harnesses and accessories; it is a company with around one hundred operational employees and twenty administrative employees, the number of employees increases and decreases depending on production, at the time of the study a nine-hour work shift was worked from Monday to Friday. The areas are divided into a pre-assembly or SMT area, which supplies three final assembly areas where more components are assembled and finally the final products are packaged as shown in Figure 2.

Figure 3 shows the company's organizational chart, which consists of eight departments that serve customers, including local companies established with an IMMEX presence (Manufacturing, Maquiladora and Export Services Industry), making it part of the supply chain of international and large companies.

Due to the type of service and product it offers, the company studied belongs to the value chain of an international company; they are certified in ISO 9001, which is a quality management standard to continue being part of said value chain. Despite the above, none of the clients of the company studied have required an environmental certification. Below is the implementation of the proposed research methodology:

Analysis: The process flow diagram shown in Figure 4 shows on a large scale the general operation and main manufacturing activities of the company studied.

The diagnosis of the administrative process carried out, focused on environmental protection, is not clearly established, there is no policy or procedures; there is only a folder of studies, opinions and permits that is controlled by the Human Resources department; these are shown separated by dependency requirement, which is shown in Table 2. These requirements have been presented at the request of representatives of the aforementioned dependencies in order to avoid sanctions.

The installed equipment listed in Table 3 includes productive equipment and equipment used by human resources in general within the company.

The raw materials are mostly on consignment for the transformation and delivery of the final product to its clients, excluding the solder paste, liquid or in roll form, which in liquid form contains lead. The waste generated by its production process does not even amount to one percent of what is consumed, so it is always within the materials goal. The raw material components considered as waste are collected in the waste containers and are taken to the warehouse for final disposal by the electronic components recycler, to Ecoservicios del Norte SA de CV. Neither weight nor a detailed count of materials is obtained, because the company does not require it. The waste generated by soldering by soldering iron is entered as raw material for wave soldering machines. Other waste is from material packaging, among which are: wooden, cardboard and plastic pallets, which are stored by the materialists and transported by the recycling company Yonke Fénix SA de CV, with the exception of the foam, which is returned to the supplier for reuse.

The value chain shown in Figure 5 identifies the critical activities for the operation of the business, and details the critical processes that each of them entails. The general support activities are the administration of human resources and the general administration provided by the plant manager and majority investor.

After knowing the operation and functioning of the company, the inputs, consumption, installed equipment and waste generated; the next step is the analysis of sustainable practices, detailed in Table 4, and carried out according to the measurement instrument developed.

A design analysis was not performed, because the company receives the manufacturing requirement based on the design provided by the client. In general, what the engineers design at the plant are the test benches for continuity and voltage, and they also prepare master test tables for calibration or ensuring the operation of the test bench. The limitation of administrative resources, due to the fact that it is a medium-sized company, means that there is no resource dedicated to the sustainable approach; support to activate the next phase will be part of the human resources department.

Design: The list of suggested sustainable practices to be implemented presented in Table 5 was divided according to the approach, for a better visualization of impact, as well as to present to senior management and investors who can see the impact of sustainable adaptation. Each of these opportunities for implemented practices was directed to the personnel responsible for executing them.

Formats were developed to evaluate the viability, in the case of practices that require investment, such as changing lights, deposits, saving keys, among others, the use of an Excel database is suggested to calculate the return on investment (ROI) presented in Figure 6, which is adapted to the circumstances of use and which can be presented so that the company's investors approve the implementation.

On the other hand, a format with instructions for the SWOT diagram presented in Figure 7 was developed to support prioritization and decision-making regarding the order of practices that should be implemented.

Development: As part of the development, the human resources department will follow up on the improvement proposals. In order to follow up, a Gantt chart was developed. The proposals include: including a continuous improvement classification in the project registry, providing 6R training, standardizing material recovery processes and causes, training on computer equipment shutdown, installing a smart thermostat for switching on and off via Wi-Fi, among others; in turn, a biweekly review was established in the administrative meetings, as a first step, the establishment of environmental procedures was generated as well as training and training for the staff, on sustainability and its application in the company. Two different training sessions were held, one for administrative staff and another for operational staff, focused on the use of resources, recycling, use of printer paper, use of appliances, computer equipment shutdown, eco-design and eco-innovation among others.

Evaluation: The person responsible for the environment, which is a shared resource with human resources obligations, suggested that the approval of environmental procedures be granted by the Plant Manager, in order to generate the commitment of the company to the transition towards sustainability.

Standardization: The company, knowing the range of sustainable standard metrics, chose to adopt the carbon footprint measurement presented in Figure 8. This metric was selected in order to facilitate the presentation at staff meetings and to measure and report monthly the consumption of environmental resources and their impact on the environment. A sustainability manual was created with the guidelines for continuous training, training for staff in the care of the facilities and a report on improvements created by the Quality department.

4. Discussion and Conclusions

One of the behaviors among SMEs according to Álvarez & Orozco (2019) is that they have fewer resources to be able to make commitments on sustainable development practices in their operation. This is the case study, which does not have an environmental department or resource. The activity of this area is assigned to the Human Resources Manager who performs multiple tasks and does not have assistants or technicians who could analyze, design, develop, evaluate and standardize the practices not carried out by the company that are on the list of suggested sustainable practices classified by focus in Table 5. Despite the competitive advantages offered by the application of these sustainable practices, there is a total lack of knowledge among business owners of the productive, financial and organizational benefits of the sustainable management system in general, such is the case of our case study where the general manager and investor of the company was unaware of the term sustainability and industry 5.0 and what it involves in the organization (Lewandowska, Berniak-Woźny, & Ahmad, 2023; Martins, Branco, Melo & Machado, 2022).

By having the commitment of the entrepreneurs and making them see that sustainability in manufacturing companies must occupy a concentric place within the objectives and mission of the organization; therefore, the productivity, quality and efficiency indicators must not be disconnected from the sustainability variables; thus guaranteeing greater responsibility in each of the links in the production chain and industrial ecology (De Batista et al., 2022; Hermundsdottir & Aspelund, 2021; Majeed et al., 2021; Tseng et a;., 2021).

The most important practice that the company developed was sustainability and environmental awareness training, so that the staff knew and committed themselves together with management to transform the company's image and implement awareness and break paradigms, this by listing which actions with their collaboration will help promote environmental protection, ecological productivity, taking into account the profitability of the company and adding a sustainable adaptation model in their organization. The company decided that it was important to create an environmental procedures manual in order to obtain in the medium-term future the clean industry certification granted by the National Environmental Audit Program, to attract new clients by differentiating itself from its competition. To see sustainability as a gain and not a loss, the income from recycling materials will be allocated as a budget in favor of developing other sustainable practices.

The sustainability adaptation proposal in this research prioritizes a group of strategies to be developed as well as the metrics that are considered relevant to know the environmental impact. Subsequently, as a future plan, measurements are to be carried out to compare the scenario before and after implementing the methodology, to arrive at recommendations on technological and installation changes, taking into account the environment, to provide an environment that mitigates climate change, without leaving aside the traditional search for maximizing benefits as a guiding principle, in the face of this new social, environmental and economic paradigm. Likewise, it is intended that the sustainability evaluation be a cyclical process that has as its central objective the strengthening of the sustainability adaptation manual and the methodology used.