Allocation of Factory Level Data to Declared Unit

Many factories make more than one product using the same shared resources. A single electricity bill, water meter or fuel delivery often covers everything made at the site, not one product on its own. Before you can report an environmental impact for just one product, that shared amount has to be split between the products that share it. This splitting is called allocation.

There is more than one way to allocate a shared input, for example by mass, by energy content or by economic value. Whatever method is used, the goal is always the same: end up with a value per declared unit for one product.

Mass allocation is one way to carry out this split. It shares the input in proportion to how much each product weighs, compared to the total weight made over the same period. Mass allocation is often the easiest place to start, because production weight is usually already recorded for other reasons, such as stock control or sales reporting, and it gives a simple, defensible way to reach a value per declared unit. A product that makes up 40% of the total annual output by weight is given 40% of the shared input.

The formulas

The first formula gives each product its share, as a percentage. The second applies that share to the factory level input, such as electricity, to find the part that belongs to one product. The third divides that part by how much of the product was made, which gives the value you enter against the declared unit.

In practice, you can rarely separate the electricity used by one machine from the rest of the site. Usually only one facility level electricity bill is available, covering everything made there. A steel factory is a typical case: it has one electricity bill for the whole site, and the site produces four different products, rebar, wire rod, plate and structural sections. The bill only gives a total for the whole site, not a figure for each product. This is the problem mass allocation solves.

To find the missing percentages, we need two numbers for the same year: the total electricity used by the whole site, and how much of each product was made.

The whole steel factory uses 8,000,000 kWh of electricity per year, for a total annual production of 8,000 tonnes (8,000,000 kg). Applying the formulas to Rebar, with a declared unit of 1 kg:

Mass allocation factor = 3,200,000 kg ÷ 8,000,000 kg = 40%

Allocated input to Rebar = 8,000,000 kWh × 40% = 3,200,000 kWh

Rebar's own annual production is 3,200,000 kg, so the input per declared unit is:

Input per declared unit = 3,200,000 kWh ÷ 3,200,000 kg = 1 kWh per kg

The example above works because each product already had one clear annual mass. In practice, a product name on your records sometimes covers several variants of different sizes, for example several diameters sold under one product name. In that case, first calculate a weighted average unit mass, then use that figure as the product mass in the same formula as before.

Example: the factory records "Wire rod" as one product, but it is rolled in three diameters, each with a different unit mass.

Weighted average unit mass = ((120,000 × 3) + (90,000 × 5) + (40,000 × 8)) ÷ 250,000 = 4.52 kg per unit.

Total mass for Wire rod = 4.52 kg × 250,000 units = 1,130,000 kg, or 1,130 tonnes.

Use this 1,130 tonnes as Wire rod's mass in the main allocation table, alongside the other products, then continue with the same mass allocation formula as before.

If you have any questions about applying mass allocation to your own factory data, reach out to [email protected].