A key player in achieving a sustainable future

Operations management: A key player in achieving a sustainable future

Elliott, Brian

Environmental Management

The skilful application of Operations Management concepts and practices are going to be vital for the successful achievement of global sustainability. Governments agree to many things, but the delivery of obligations raises major challenges in the design of efficient and ethical work systems and products that combine functionality with minimal waste and recyclability. Set against a background of increasing globalisation, developing markets, scarcity of raw materials, European legislation on waste and the need for speedy responses to market opportunities, the future presents unlimited opportunities for Operations Managers at all levels in organisations, to make significant contributions. This article examines many of the issues and provides guidelines for the discipline in the drive for a cleaner, leaner and greener sustainable future for everyone.

Suddenly the quality of the environment is being recognised and addressed. Politicians are keen to be seen as participants at World Congresses on the subject and at least pay “lip-service” to the agreements signed. The Kyoto pact aimed to reduce emissions by major industrialised nations by an average of 5.2 percent below 1990 levels by 2012 to avoid disastrous global weather changes. What a shock then when new US President Bush declared openly that the economy of the country must come first. This set up howls of indignation from around the world, with leaders of many countries reinforcing the Kyoto message. French President Jacques Chirac, addressing the UN Commission on Human Rights in Geneva, called on all countries to implement the Kyoto accord.

“At a time of global warming and of a disturbing and unacceptable challenge to the Kyoto Protocol… of spreading deserts and an impending freshwater crisis of major proportions, how can we affirm the right to a protected and preserved environment, the right of future generations?”

International agreements concerned with the environment, conservation of resources and global warming, provide the focus for action by individuals and businesses. Within businesses, Operations Managers must surely be key players in the delivery of successful outcomes.

Pressure groups operating from a “green” agenda rapidly gained ground during the second half of the 1980s. Policies designed to protect the environment began to appear on the agenda of mainstream political parties in developed countries. Numerous politicians throughout the 1990s joined in the debate, often issuing gloomy prognostications based upon perceptions of inertia. Typical comments centred around:

* Global warming is providing a serious threat leading to significant climatic changes

* Warning signals are appearing with rapidly increasing vehicle usage and air pollution

* Waste and rubbish levels are too high

* There is a shortage of landfill sites

* Recyclability potential must be designed into products

* Wildlife species are endangered by development and growing populations

* Changes made to landscape features such as forests, hedges and farmland are affecting the quality of life both for humans an other species

* Achieving sustainable development as one of the greatest challenges to mankind

The Brundtland Report of 1987 defined sustainable development as: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. (UNWCED, 1987, p8).

The generality of the Brundtland Report definition encouraged widespread agreement on the desirability – even the necessity of sustainability. There is, however, significant disagreement on the detailed implications of the definition. It is widely accepted that sustainable development is more than just environmental management. The definition however, focuses on a desirable and essential “What” but fails to specify “Hows” that will lead to achievement “Environmental sustainability is related subsequently to the environmental functions that sustain human ways of life” (Elkins P 1994).

So within the concept of ‘sustainability’ are several linked notions:

* operations currently being undertaken will affect the future in various ways

* whatever is being done now can only be viewed as successful, if the effects do not produce negative results for future generations.

* it is essential that the means to advance in a coordinated way are provided

Taking the wider perspective, it would appear that there is an increasing need for organisations of all types to respond to the growing environmental concerns. High level managerial instigation and continual support will be necessary, with Operations Managers and their staff at all levels, playing significant roles. An Environmental Management System must take into account the stakeholders, with their conflicting interests, and aim to put in place processes that identify all significant environmental impacts. It will need to be proactive, focusing on forward thinking and action instead of reacting to command and control policies. Improved environmental protection will be achieved by using a single environmental management system across all functions of the organisation.

Social Responsibility: a widening concern

There would seem to be a growing awareness of the impact and contribution that organisations have on their community, and the larger (even global) society in which they operate. In particular, concern for environmental issues such as pollution and recycling is slowly beginning to mean more than simply a reaction to changing consumer sensibilities. Furze, D & C Gale (1996). Such awareness has led clothing manufacturers to introduce recycled plastic into their range of outdoor clothing, car makers displaying environmental awareness in the design of assembly plants, and solvent manufacturers reformulating products to minimise toxic emissions. Applying socially responsible business policies and practices, helps a company to create value for investors, customers, employees, local communities and other stakeholders. Sustained commercial success built on such principles, demonstrates a respect for ethical values, people, communities and the environment itself.

Public awareness of global environmental damage has risen steadily since technological advances made the instant satellite linkages by television a daily feature of life. In Europe many countries of the European Union share a very long coastline in relation to the total land mass. These coastal regions and adjoining seas have become environmental problem areas affecting the health of residents, marring natural beauty and impairing trade. The sea receives pollution from rivers, sewage and industrial waste directly from many centres of population along the shores plus waste that is deliberately dumped or accidentally spilled from manufacturing industry sources. Virtually every source of contamination affects the North Sea, which was once a major provider of seafood. The acid rain of atmospheric pollution, industrial contaminants, sewage, radioactive waste and tanker spillages of crude oil in the overcrowded shipping lanes, has resulted in a decimation of the deep sea fishing industry. Catches in the past decade have been greatly reduced due to overfishing, disease, malformation and fish infertility in these polluted waters. With 40% of the population of the EU living in areas which drain into the North Sea, this problem is not going to go away quickly.

Another huge European environmental problem concerns air pollution caused by fumes from factories and power stations burning fossil fuels and by the increasing number of vehicle exhausts. Atmospheric pollution is becoming a major health concern, no wonder the indignation about President Bush’s action on the Kyoto pact. The biggest producer of man-made carbon dioxide emissions, signed the Kyoto accord but it was never ratified by the US Senate. Nitrogen oxides in particular, are the cause of acid rain and the emissions of carbon dioxide from the combustion of fossil fuels (CFCs) contribute to the “greenhouse effect”. Plants that are capable of “digesting” waste have been developed and are now being used in some large city conurbations, to produce methane gas for power generation as well as liquid and solid fertilisers.

In the UK between 1986 and 1989 opinion pollsters recorded a steeply rising level of public concern about environmental problems. Within three years the percentage of citizens who believed that the Government should take positive action rose from 8% to 30%. (National Opinion Polls).

Corporate social responsibility therefore covers a wide field, and encompasses every aspect of business operations. These include the products made, the waste generated, the services provided and the relationships generated with staff, customers, suppliers and the wider community. Many companies claim to have experienced significant financial gains through display of a social conscience. Issues such as concern and care for the environment, and human rights being particularly advantageous. Allied to this there is evidence that socially responsible investment has been growing steadily over recent years.

Corporate social responsibility is the operation of a business in ways that consistently meet or exceed the ethical, legal, commercial, and public expectations that society at large, has of business. Good corporate citizenship means doing the right things at the right times for the community, consumers, the staff and the planet. Ethics are the rules of conduct, standards against which people judge what is right and wrong, good and bad.

Gaither, N & G Frazier (1999) suggest that “attitudes in US corporate boardrooms toward social responsibility are evolving from doing what companies have a legal right to do, to doing what is right”.

They see the driving factors behind this development in terms of:

* Consumer attitudes and influence

* Government regulation

* Company self-interests

Balancing the interests of all stakeholders – investors, customers, employees, business partners, local communities, the wider global society and future generations, results in better informed, albeit more complex, business decision-making. There should be an associated building of loyalty, enhanced corporate image and brand reputation leading to long term profitability. Setting the pace in green issues are retailers who are the first to feel backlash from the buying public. The “knock-on” effect is that they are placed in the front-line. of environmental consideration, and have to develop policies and employ specialists. This could encourage them to commission architects to overcome “sick building syndrome” and to improving energy efficiency. (Burall P 1996) Socially responsible business policies and practices are a vital commercial imperative.

Operations Managers can play significant roles in developing environmental and ethical policies and well designed work practices which will assist in the attainment of competitive advantage. There will inevitably be “trade-offs” and an ideal marketing exchange position will need to be established balancing quality, cost and availability.

The Role of Operations Management within Environmental Management

Operations Management has been defined as: “The planning scheduling and control of activities that transform inputs into finished goods and services.” (Bicheno, J & BBR Elliott 1997).

When looking at this definition it becomes apparent that it is impossible to undertake any activity within an organisation without affecting the overall operational aspects. The factors identifiable within the Operations Mix show its systemic nature. Change to a particular dimension affects some if not all of the others. The skill of the Operations Manager, acting as an agent for change, will be to integrate the diversity within the mix. Operations Managers, irrespective of their actual job titles, are controllers of resources. Unless the organisation grows its own crops or mine’s its own ores, all of the material and component resource inputs will come into the company from outside sources, using logistical operational systems designed and monitored by Operations Managers. Examining the factors of the operations mix shows the extensive nature of operations management responsibility for social and environmental care.

Product: the design, the materials and components used, the quality standards set and met, the economic usage of materials, waste and effluent, safety, the ultimate issue of spent product disposal. Plant: the design to incorporate safety features, the minimisation of emissions, noise, dust migration, radio-activity, the collection and handling of waste.

Place: the continent/country/region and site selected for manufacture, the position of individual processes with staff and wider community safety in mind.

Process: the choice of actual manufacturing systems, the integration of different production lines, the appropriate staff skills mix, the materials logistics flow with overall unit costs, quality, speed, flexibility and safety optimised.

People: the operational, administrative and service staff levels to achieve the right skills mix with a motivated, well-trained, stable and healthy staff complement.

Programmes: the schedules and plans under which operations occur. Production plans, product development plans, material requirement plans, shift work schedules and quality assurance checks.

Procedures: these are statements ‘about how jobs should be performed, and include work specification documents and procedure manuals. Often they are agreed with groups such as staff representatives, other managers, inspectors, supply chain organisations and adjacent communities.

The advantageous effect of Operations Management applications over a period of time can be evaluated using a multi-factor approach of the type designed by Professor Alan Stainer (1999) of Middlesex University. Known as Values to Stakeholders (V), it is developed to incorporate the aggregated expectations of all the major stakeholders using five dimensions;

V = C+R+E+M+S where:

Customer Satisfaction (C) is concerned with customer requirements to be consistently satisfied, including quality and price

Resource Effectiveness (R) refers to the achievement Of profitability and total productivity objectives

Employee Satisfaction (E) relates to the quality of worklife Market Effectiveness (M) relates to the attainment of targeted market share and position

Social Effectiveness (S) is associated with fulfilling the stipulated ethical and environmental dimensions.

Each element is weighted according to its perceived priority or importance by management. The organisational emphasis would be dependent upon its culture and characteristics, as well as its size and structure. The framework requires reflection upon mission and objectives. Its usefulness will depend on the fairness of the development process as perceived by stakeholders and the involvement that they have had in this. The initial determination of a current performance benchmark provides the platform for Operational Management activity.

An example of partnership between business, government and the community is illustrated by the “Going for Green” initiative in the UK. This develops social responsibility, allows ethical behaviour, saves resources, encourages recycling and makes cost savings. “Going for Green” is a charitable institution working with interested groups and parties such as local government, schools, small businesses, environmental action groups and churches. The initiative successfully raised awareness on sustainable development issues and encouraged accountability for both the local and global environment.

Allied to community involvement is the internal drive within local government departments to minimise in the usage of consumables, reduce harm to the environment and to be in partnership with the wider community as “good neighbours”. Industrial engineering staff within local government provided the following situational analysis of a routine job for consideration by Operations Managers:

Management Services Analysis of each of the locations led to improvements in layout, with several processes being upgraded, thereby reducing the quantity of waste. This speeded the procedure, saved labour costs and made a significant response to environmental management concerns.

When making a rational, realistic or equitable decision, an Operations Manager will be trying to utilise resources to economically achieve a specific outcome. This outcome has either been set by other functional areas within the company, or agreed by appropriate executives through external negotiations with customers, supply-chain organisations, government departments or the wider community.

At the simplistic level, decision-making may hinge on three factors:

* The assessment of the feasibility of achieving a successful outcome and meeting all cost, quality and time criteria.

* The desirability of a particular work experience occurring or being imposed upon individuals, or the group of staff being managed, and the likelihood of success.

* Personal preferences that may be based upon business acumen, past experiences or biases.

The first of these factors is the most objective, but the interpretation of and assessment of the quality and appropriateness of data used can be highly subjective. It is always a possibility that an Operations Manager will make a decision based upon a personal whim or upon emotion or a “gut-feeling”. It is all too easy to overlook the more remote pressures emanating from the environment, often with longer term perspectives, whilst trying to cope with delivering the current level of scheduled output. The level of complication rises as it is recognised that an individual decisionmaker is also affected by states of physical and mental health, medication, personal vices such as alcoholism, domestic stress, belief systems, societal relationships and career aspirations. There may be subtle internal forces at work also. Dominant superiors, statistical performance data, troublesome subordinates, militant labour (trade union) situations, organisational codes of ethics, financial reward systems and the culture of the organisation, may all need to be considered by Operations Managers when making decisions. Add stresses from powerful or unreasonable companies at both ends of the supply-chain, and the whole adds up to real potential complexity.

Strategies for Product and Service Development

Responsive strategy: this responds to new products developed by other individuals or companies often at considerable expense and effort. The use of techniques such as Concurrent Engineering and Reverse Engineering, permit a fast time to market for an improved version of the original product.

Traditional strategy: this is where there is no great market demand for change and innovative effort is directed towards minor product changes, which may reduce costs, simplify manufacturing, add features or improve reliability in operation. Dependent strategy: this is where a supply chain partner is innovating and this leads to a “domino-effect” within other partners. Failure to respond could lead to loss of contracts.

Designers have a key role in minimising the harm caused to the environment by a product that is no longer useful. Incentives for recycling and against dumping are likely to increase significantly. The primary concerns for the “green” designer should be the life of the product itself, and its composition to facilitate recycling. The use of Environmental Check lists during the product design stage is becoming common. Design teams are accountable to provide affirmative responses during the developmental and screening phases to questions like:

The design team will need to revisit any issues that suggest sub-optimality.

The demands placed upon Operations Management in materials reclamation will vary with the design complexity and the choice of materials. For example the reclaiming of plastic for recycling is complicated by ranges of dense colours and sticky adhesive labels.

A piece of legislation with widespread application throughout Europe is the “end-of-life vehicles directive”. This lays the responsibility for breaking down, recovery of materials and disposal of waste, upon the original vehicle manufacturer. With 9 million vehicles per year reaching the end of their useful lives throughout the Continent, the directive is aimed at reducing landfill waste and the subsequent pollution of water sources and soil. This shifting of the cost and effort of disposal away from the ultimate owner, who may well be the most financially impoverished person within the ownership chain, back to the manufacturer, will have a significant impact upon the design and pricing of the new vehicle.

The benefits provided by recycling products and packaging * Reduces cost

* Raises company environmental image

* Reduces landfill space needs

* Minimises waste of natural resources

In 1992, under the framework of the UK Environmental Protection Act (1990), the “Duty of Care” was implemented. This requires that waste must be controlled and disposed of correctly according to the legal requirements. An increase in landfill taxation meets the costs of controlled tipping and disposal and encourages organisations to minimise waste and to design products or purchase components that are recyclable.

The European Union Packaging and Packaging Waste Directive requires a business using more than 50 tonnes of packaging per year to provide waste control documentation. With the design of re-usable packaging, a great deal of administrative cost can be avoided. For Operations Managers, the return, storage, refurbishing and re-use of packaging provides whole sets of issues that need to be efficiently addressed. Space at the receiving end within a supply chain link is often a problem. Re-usable packaging design centres around life span, collapsibility, ergonomic features to facilitate handling and stacking, cost and protectiveness. Designers have a wider than ever choice of packaging materials and a rigorous series of destruction tests will need to be conducted within the research & development function in order to optimise the choice.

A “white goods” commodity like a domestic refrigerator, leaving an assembly line for a distribution warehouse, will need to be protected by well-designed packaging. Various types can be considered by the design team focussing on issues like: Some organisations offer financial incentives for the return of packaging. These are designed to offset the cost of dismantling, storage and loading. To surcharge the container on the invoice is fine in theory, but regular or key account customers are rarely charged for non-returned packaging. Although a substantial debt may build-up over a period of time, to attempt to invoke the charge could sour sensitive commercial relationships and involve administrative and possible legal costs.

The choice of a particular kind of packaging design is also affected by factors that can at best be minimised, but which are outside of organisational control.

The continuing challenges for Operations Managers

In order to play a responsible role in the areas of conservation, sustainability, social accountability and ethical behaviour, Operations Managers will need to develop competency in and have increasing awareness of:

* global competition and responsible trading practices and procedures * developments in environmental management policies

* best value provisioning in products and services

* socially responsible organisational behaviour

* ethical decision-making implications

* product design, life-cycles, recycling and waste

* cleaner, leaner and greener manufacturing and distribution

The opportunity is there as never before, for Operations Managers to play key roles in taking the “hats” of politicians, thinkers and executives on towards the achievement of these desirable objectives by defining the optimal “Hows”. The world is urgently looking for such skills and expertise!

Bibliography

BIcHENO, J & BBR ELLIOTT (1997) Operations Management: An active learning approach. Blackwell, Oxford.

Bu, P (1996) Product Development and the Environment. Gower Aldershot pW ELKINS P (1994) Towards Sustainable Development: concepts, methods and policy. Editors: vanden Bergh JCJM & J vander Straaten. International Society for Ecological Economics. Island Press, Washington P26

FURZE, D & C GALE (1996) ‘Interpreting Management: exploring change and complexity’ Thomson, London p226

GAITHER, N & G FRAziER (1999) Production and Operations Management 8th ed p 38 International Thomson Publishing, Cincinnati, Ohio

National Opinion Polls 1986 & 1989

STAINER, A (1999) Productivity, Performance & Paradise. Management Services vol 43 no 6 June 1999 Institute of Management Services, London

United Nations World Commission on Environment and Development (1987). Our Common Future (The Brundtland Report) Oxford: Oxford University Press.

Brian B R Elliott

Formerly of Bolton Business School, Lancashire, UK, and a Fellow of the Institute for many years, is a leading authority on Operations Management theory and practice. Educated at the Universities of Manchester & Lancaster, Brian is now an independent Management Consultant, researcher

and author. He held responsible operations and production management posts in various manufacturing industries before his academic career. He has lectured regularly as a visiting professor in Pacific Rim countries, and serves as an External Examiner for several universities, as well as for the IMS.

Email: brian.b.r.elliott@btinternet.com Web pages: http:llwww.brian.b.r.elliott.btinternet.co.uk

Copyright Institute of Management Services Jul 2001

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