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Embrace of Sustainable Principles in Operation Management

Introduction

Exercising sustainability philosophy in managing businesses is not just the responsibilities of corporations, but it also offer tremendous opportunities to corporations to  meet new consumers’ demand, reduction of costs, enhance employee morale, and ultimately in increasing customer satisfaction and retention that would in turn enhance profitability of the corporate (Cartwright & Craig, 2006). Thus, sustainability issues are not to be taken for granted or to be delegated to a team of CSR executives; but it should be integrated into the design and management of the entire organization, that involve not only the senior or middle managers, but also the other employees working in an organization (DeBono, 2004). This paper will presented the roles and responsibilities and operation manager can play in leading and supporting the sustainability goals of his organization.

Product Design

Sustainable operational management should be started at the very first phase in the supply chain management process, such as to engage in sustainable product design before any products are being developed. Thus, it is critical for management to develop designs that minimize or eliminate the usage of environmentally harmful components, to choose modular design that enable automated detection of problems, designed for repair-ability, designed for easy replacement of the spoiled parts, designed for easy disposal, and designed for easy upgrade (Kleindorfer, Singhal & Van Wassernhove, 2005).

For example, Proctor and Gamble (P&G) has been focusing on application of innovation towards development of ‘sustainable innovation products (SIPs)’ that is designed to have minimally 10% improvement on one of the dimensions over the product lifecycle: consumption of energy, consumption of water, total usage of materials, transportation costs and usage of renewable resources in the production of that product. One of the SIPs developed is Aruel CoolClean, whereby the product enables effective washing at lower temperature. Statistically speaking, if all people in the US used that product, total domestic consumption of energy can be reduced by 3%, and can contribute to 6% greenhouse gas reduction on the US-Kyoto Commitment (White, 2009).

Sourcing & Procurement

In terms of sourcing, purchasing and procurement process, operation management play critical role in achieving the sustainability objectives set by the organization. Generally, it is critical for the operation manager to adopt a mindset on cost saving in purchasing decisions. Most of the time, operation manager should not purchase new materials or equipment if that old equipments can be re-used, or recycle. Besides, it is also critical to investigate if the usages of certain materials can be reduced (Eltayeb et. al., 2010; Goodman, 2000).

Not only that, responsible operation manager should also reduce or directly eliminate the usages of environmentally harmful materials if possible, or choose to purchase the materials from socially responsible suppliers (Pham et. al., 2008; Phusavat et. al., 2010). Not only that, operation managers should think for the long term, to purchase equipment or parts that deliver significant energy savings or costs savings in the longer run, and to choose those products with longer expected life span to avoid wastages (Goodman, 2000).

Emmet & Sood (2010) offer a framework in suggesting ‘Green Procurement’ method to be followed by operation managers, as shown in Figure 1 below. According to the authors, operation manager can evaluate procurement decision from three perspectives, namely the life cycle perspective, pollution perspective and resources efficiency perspective. Thus, operation manger should evaluate the possible environmental impacts of a product over its life cycle before purchasing decision is confirmed. Besides, operation manager should also take proactive action in prevention of pollution or wastages from the operational processes and or practices. Lastly, operation manger should choose to buy those materials, equipments or accessories that are produced using recycled materials or are simply reusable in the future.

 

Figure 1: Green Procurement

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Transformation Process

There are many ways in which the concepts of sustainability can be applied in the transformation processes in the operation of an organization. According to Emmet & Sood (2010), manager can employ several ideas as follow to enhance sustainability in the operations of the company while increasing profitability for the organization. Firstly, the company can opt to recycle, whereby through innovative processes, companies can extract useful materials or energy from used products or by-products generated from the production processes. Besides, company can choose to remanufacture to preserve resources on the earth, by restoring the used products to ‘new’ condition. This is similar to refurbishing the old products, to enhance the value of the products in the marketplace for further usages. Not only that, many of the items used in the operational processed can be repaired and reconditioned, when they wear out, for costs savings as well as environmental friendly purposes. Lastly, the many materials in the production process can be re-processed for further usages.

According to Kleindorfer, Singhal & Van Wassernhove (2005), it is critical for operation manager to adopt lean and green operations for achieving the sustainability goals set by the organization. In fact, they argued that nowadays, it is managerial imperative in the context of operation management to use the tools and concepts from lean operation to reduce operational costs while delivering benefits to the environment. Besides, it is also critical to add green metrics to the critical success factors established for assessing a company performance and processes. Effective operation manager should find many synergies between lean and green in the production flow and processes that could contribute to the bottom line of the firm while responsible for the planet.

From another perspective, it is also important for operation manager to track the material and energy flows through the operation transformation process to analyze if such process is efficient from the environmental and economic perspectives. When these data is available, then operation manager can investigate if a predefined goal in improving the efficiency of the process is achieved. For example, P&G has been tracking the energy savings data on its plants, and due to various improvement efforts, P&G had achieved 6% energy saving and 8% of CO2 reduction in its plants in 2008 (White, 2009).

Waste in P&G factories are also being re-used, re-cycled, or re-processed for sales. For examples, waste oil from cooking is re-processed into biodiesel, the paper residuals are re-used to produce roofing title, and many others. This in turn greatly enhance the profitability of the firm, as instead of paying off vendors to dispose of the wastes, the company can now sell of the resources re-cycled or re-processed from the wastes (White, 2009). The usage of waste for other purposes in the production process is also widely employed in other industry. For example, New Belgium Brewery from Colorado is re-processing its waste water to obtain methane, and the methane by-products are in turn used to generate electricity and heat for the production purposes (Kidwell & Peek, 2009).

Delivery

In the products delivery process, it is critical for operation manager to choose environmentally friendly manner to deliver value to the customers and society. Most of the decisions in this context are concerning about logistic and packaging issues. For logistic issues, it is always important to find ways to save energy and costs (Flint et. al., 2009). That applied to packaging practices as well. Unnecessary packaging materials should be avoided, and usages of materials that never add value to the consumers should be eliminated (Linton et. al., 2007). Besides, in the design of the distribution center, innovation can be applied to use recycled energy or green technologies in the operation of the distribution center.

For example, P&G has an award winning distribution center in Amiens, France, whereby the design of the distribution center is sustainable and environmentally friendly. 10% of the energy in that distribution center is provided by a wind turbine, and many others are provided by solar panels. Not only is that, the forklift trucks used in the center are also equipped with regenerative motor that can enable a total of 30% energy saving benefits for the company. Besides, natural lighting is also used in the center whenever it is possible (White, 2009).

Conclusion

Sustainable operation management is bound to become an important trend in the future. There are various roles and responsibilities burdened on operation manager to integrate the concepts of sustainability in managing daily operations of a company. This paper has presented the various suggestions and discussions on how an operation manager can lead and support the sustainability goals of an organization, for the benefits of the world as well as to increase the reputation, brand, profitability and company performance of the organization. Operation manager can contribute in the entire operational life cycle of a firm, form the design of products or services stage up to the delivery of the products or services to the end users. It is managerial imperative for the operation manager then to integrate the lean, green and sustainable thinking into its management practices for a better company, better world and better future.

 

References and Bibliography

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Kleindorfer, P. R., Singhal, K., & VanWassenhove, L. N. (2005). Sustainable Operations Management. Production and Operations Management, 14(4), 482-492.

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