Environmental Aspect of Logistics Management - Report Example

Relationship between Logistics, Operations and the Environment in International Manufacturing Organizations By + Institution Date Introduction There is increased economic competition the world over and this has led man businesses to find ways of improving quality of their products while at the same time minimize their operation costs. This has led to the adoption of new policies and strategies such as the “Three Pillars” principle. This concept places emphasis on the ability of a business to be able to make decisions that enable it to be sustainable in the long term. It encompasses three aspects to its functionality and these are the social, financial and environmental dimensions (Avella, 2010). Therefore, businesses have to incorporate these aspects in their day-to-day running of the organization and this includes activities such as logistics, daily operations among other things. Logistics has numerous definitions in the corporate world. The one that is most fitting however describes logistics as the overall management as to how resources are acquired, how they are stored and how they are eventually moved to the areas where they are required for usage (Yalaoui, 2012). Logistics involves the overall process of identification of the potential suppliers, an evaluation of how effective their distribution network is and how easily accessible their distribution network is.in most cases as a cost saving measure most companies have their own logistics department as compared to outsourcing of these services. Logistics of physical materials usually entails a myriad of activities such as the production process, warehousing, transportation of the materials and even security of the materials. The term logistics was initially used within military ranks to define the acquisition and management of personnel, and the management and transportation of equipment among other aspects. Operations can be defined as the day-to-day activities that take place within the organization. It involves the business policies of a particular enterprise, the management of labour, and all activities that are aimed at maximizing the efficiency of the available resources in order to maximize the profits. At the end of the day, it is the responsibility of the business enterprise to evaluate how their activities are affecting the people around them from a social standpoint, a financial standpoint and from an environmental standpoint (Avella, 2010). Discourse Logistics and Pollution The world is changing at an ever-increasing pace and these changes have brought with them numerous challenges. One of the main challenges is that of pollution of the environment and climate change. Increase in human activities such as mining and manufacturing activities have increased the emission of greenhouse gases, which has in turn increased the levels of pollution significantly (Lee, 2009). According to the Kyoto Protocol, greenhouse gas emissions have increased by 70 per cent since the advent of the industrial revolution. This means that there has been a significant effect on the behavior of business enterprises. This is especially true when one considers the type of fuels that were used at the advent of the industrial revolution, coal. Experts stated that at the current rate of extraction then there will be no more coal available in the next 109 years to come. Further degradation of the environment has been manifested by the depletion of the sources of fuel. Estimates suggest that by the year 2065 there will be no more reserves of crude oil available. Therefore, steps are been undertaken in all aspects and areas of human life to try to arrest the situation. Businesses have not been left behind in the process with most of them being urged to engage in responsible business activities and ethical behaviours. Consumers have not been left behind either with evidence available showing that they are increasingly demanding more environmental friendly products and services and this has presented both opportunities and challenges to different organizations (Corbert, 2006). The environment is an important factor of production to many businesses around the world. It is the main source of raw materials for most business and therefore there is an ever increasing urgency to protect and maintain it for use by future generations. How businesses go about their daily activities has a very huge impact on the environment. Logistics as mentioned earlier encompasses a lot of activities including the acquisition of the raw materials. The manner in which most international manufacturing firms obtain their raw materials is instrumental on the overall effect they have on the pollution levels. For example a paper manufacturing company that is dependent on trees as a source of raw materials has to incorporate a lot of policies such as the replanting of trees that are cut down, use of production methods that minimize emissions in order to reduce pollution etc. Logistical issues such as transportation also have an overall effect on the environment. The decision on the mode of transport used in movement of the materials is a critical issue. For example the use of road transportation will result in the emissions of pollutants into the environment. Also the availability of more environmentally friendly means of transportation such as sea transport will have an overall effect on the business decision. With regard to the aspect of supply chain management most of the business have begun to focus on the reduction of waste in their processes for sustainable development. Sustainability and Green Logistics Sustainable development has its origins from the ecological school of thought however; in some literature, sustainable development also has some economic aspect to it. This has led to the development of a new approach strategy known as green supply chain strategy. It is strategies like this that give rise to concepts such as Green Logistics. Green logistics can be defined as strategies in supply chain management that aim at reducing the environmental footprint of the distribution processes. This approach is mainly concerned with the reduction of pollution on the environment and focuses on need to use various tools in order to improve the processes of packaging and transportation and waste management(Ryan,2013).These tools include effective waste management practices, reduction of emission levels by firms, adopting more efficient production techniques amon others. A key concept under the green logistics framework is the use of targets in order to achieve a balance between utilization of resources and the requirements of these resources. These targets are set in line with the environmental policy that is to be adopted by the firm. For example a policy to reduce emissions may lead a firm to set the target of reducing its pollution levels by 20%. Green logistics states that businesses should aim at maximising the benefits of development through the minimisation of the logistical costs (Lee, 2009). Costs in this context mostly incorporate cash costs (Klassen, 2006). In most cases the business adopt such measures because of the fact that apart from making their products to be more appealing to the environmental friendly consumer, it is also a cost saving measure on the part of the company and therefore becomes a win-win situation for the parties involved. The aspect of packaging impacts the environment directly and has been the subject of much debate over the years. The use of non-degradable packing materials such as polythene bags has had profound effect on the environment. In most nations the use of such material was outlawed and discourage through measures such as the imposition of huge taxes on their manufacturers. The use of more environmental friendly packages has been encourage through the use of incentives to the manufactures of such materials and also tax cuts for businesses that employ such policies (White,2009). There has also been emphasis placed on the use of reusable packaging materials in order to reduce the need for manufacturing additional units. In the transportation aspect businesses have tried to employ the use of alternative sources of fuel rather than the use of fossil fuels. This has resulted in the use of innovative measures such as use of fuel that has been derived from different sources such as molasses, vegetables and other materials. Operations and Pollution The operations activities of the business also affect the environment in one way or another. There is also the push to use more efficient ways of transportation such as the use of railways transport and sea transport reducing the use of road transport that usually results in the highest levels of pollution. The manufacturing systems have to adopt one way or another to the ever occurring changes and the different sustainability requirements (Slack,2002). These changes have involved the shifting of production process from a mass –production oriented process that placed emphasis on the accumulation of a lot of inventory to the use of a leaner production process that places emphasis on non-accumulation of inventory (Lee, 2009). The use of such new methods of production has led to the reduction of wastages as the materials are delivered when required by the business enterprise. This is a major cost saving measure.(Rudberg,2003) There is a huge relationship between operations and environmental management. This especially true when making the connection between lean operations in terms of supply chain management and environmental management. There has been empirical evidence that firms, which adopt policies that promote environmental friendliness, have performed much better in the stock market (Corbett, 2006). It is important to have a grasp of the relationship that exists between the strategy of the firm, its financial performance and the management of the environment. The structures and composition of firms have changed over the years. This has led most firms all over the world to move from private companies and towards the limited liability-type of structuring. This has forced managers to strike a balance between achieving economic goals of the firm and those of the shareholders.Therfore, the complex relations between the different stakeholders involved in the business forces the management to not only focus on economic issues that relates to the firm but also on social issues. These social issues include well-being of the employees, sources of raw materials and environmental sustenance. The adoption of environmental management policies by a firm can increase profitability through exposing of the firm to new market opportunities, competitive product differentiation and cost reduction through measures such as waste reduction and improvement of processes (Corbett, 2006). Challenges to the adoption of Environmental-friendly policies The mitigation of the negative effects on the environment using policy changes is admirable. However, this approach is not without its share of challenges. Among the challenges is the lack of resources.(Shrivastava,1995). Many businesses do not have the finances of the human resources that are required in order to initiate and implement various green initiatives. This is because some of the processes such as the use of alternative sources of energy usually require an overhaul of the whole system in order to adapt to the new changes (Rudberg, 2003). This is a process that requires substantial amounts of funds that in most cases businesses do not have or are reluctant to provide due to the numerous needs that they face. Another challenge is that of lack of government support and support from other relevant authorities. The government can come up with measures that would encourage the different business to embrace green technology however most of the times this is not the case. The lack of incentives such as tax cuts; subsidies among others make the firms to be reluctant to embrace the use of the green technology and hence defeat the cause of a more environmental friendly business environment (Ryan, 2013). There is also the concern of reliability. Can the whole system be relied on by the organization without damages to their products or losses of cargo? There is also the issue of lack of the required infrastructure needed in order to implement such policies. There is also the challenge of a lack of knowledge as to how the whole concept of green technology works (Byrne,2013). There are not enough individuals out there that have adequate grasp and knowledge of the core material as regards how businesses should adopt their policies in order to ensure sustainability in the long-run. There is also the aspect of awareness by the society. The society has a very important role to play in the ensuring that businesses embrace green technology. This can be done through boycotts of the products of non-compliant companies and also through the insistence that the products that are being sold unto them have adhered to the regulatory standards.However, the lack of knowledge by many consumers on the importance of their role is an obstacle in the whole process. Linkage between Logistics, Operations and the Environment There is a direct linkage between the operations activities of the international firms and the levels of environmental degradation (Klassen, 2006). The increased environmental awareness of consumers has forced many firms to adopt new operational strategies. For example, recently information got out that the giant chocolate maker, Cadbury was using cocoa from nations that had non-existent labor laws. This meant that the farmers were being exploited and working under slave-like conditions. It also meant that there was the use of child labour.This led to international condemnation and there were numerous calls for consumers to boycott the use of Cadbury products. These prompted action from the company and they undertook corrective measures. These measures included setting up schools in the local communities, ensuring that the farmers were members of co-operatives among others. Another casing point is the case of Toyota. The company acknowledged the increase of consumers awareness into matters environmental, this contributed to the development of the Toyota Prius, and other car manufacturers worldwide are following suit. The Advantages of environmental-friendly policies In general, when firms undertake measures that ensure the minimisation of pollution levels such as minimising the emission of greenhouse gases, it is usually good for business. This is because it improves the appeal of the enterprise to the consumers who see such measures as a form of corporate social responsibility. This therefore means that the demand for their goods and services will increase translating into more sales for the companies involved (White,2009). The second issue is that these environmentally friendly measures and policies, in most cases, turn out to be a cost saving measure for the firms involved. This therefore means that apart from reducing the negative impact on the environment they also provide an alternative, cheaper means of doing business. Another advantage is that by being complaint and reducing their footprints on the environment, they also do not incur costs in penalties and pollution permits that they would have otherwise incurred had they not implemented these measures. Another advantage is that by being more mindful of the environment around them and the resources that they use allows these resources to last much longer than they otherwise would. This saves the companies involved the hassle of finding new sources of their raw materials as the ones that they already have will last much longer (Baker, 2010). Conclusion It is evident that there has been a major dilapidation of the reserves of natural resources and the environment in general. This is especially worrying when one considers the importance of the environment in the different aspects of running of a business and the operation of a business. For most businesses, the environment is the source of their raw materials and other factors of production such as labour. The environment indirectly affects that quality of labour that the firm will have access. This is because employees cannot function at their full capacity under heavily polluted environments. The quality of the environment will also affect the quality of food that the employees have access to and will therefore determine their health levels (Kleindofer,2005). This has a bearing on the amount or remuneration that the employees will receive and hence has an effect of the overall operation costs of the particular enterprise. The increased levels of competition between firms have compounded the situation even further bringing about unhealthy competition for the limited remaining sources of raw materials (White, 2009). The behaviours of the firms that went unchecked in the past has also resulted in very high levels of pollution especially in industrialised nations such as China, Japan and the United States. These course of events has necessitated a paradigm shift as to how business behave as there is a direct correlation as to how they behave and the well-being of the environment (Clausen, 2013). The world recognised this fact and it led to the signing of the Kyoto protocol where the nations that were signatories agreed to bring down their levels of emission of the greenhouse gases. Unfortunately, it is the biggest culprits of the pollution menace that failed to adhere to such agreements. The United States and China are among the largest pollutants of the environment who failed to sign the aforementioned agreement. However, the importance of these measures have been acknowledged by businesses around the world and this has led to the changes that are being witnessed in various aspects of doing business today. These changes are seen in the change of packaging of products all over the world, a shift in the production practices of companies from mass production to just-in-time type of production among other things. It is said that being good is good for business. Therefore, as these businesses take up these environmentally friendly measures then they appear to be social members of the corporate community and therefore their appeal to the end consumer is enhanced which in most cases translates into more sales and hence additional revenue improving the bottom line. The concept of the three pillars has made businesses to have a more human face. Businesses are no longer portrayed as institutions that are only bothered by their profitability but they are also viewed as entities that have a human characteristic about them that involves caring for the wellbeing of their consumers and that of the society around them (White, 2009). This usually has the effects of galvanizing the local community around the efforts of the organization. It also allows the company to function in the area largely uninhibited by the locals and the local authorities. Overall, the actions of businesses have a huge impact on the environment and therefore it is the responsibility of the businesses in collaboration with other stakeholders to ensure that the environment is maintained, and that there are well-placed mechanisms to deal with the inevitable amounts of pollution that will occur. This will ensure that the little resources that we have will last for a little bit longer and serve the future generations (Clausen, 2013). Bibliography Avella, L. and Vazquez-Bustelo, D., (2010). "The multidimensional nature of production competence and additional evidence of its impact on business performance” International Journal of Operations & Production Management, 30(6): 548-583. Avella, L., Vazquez-Bustelo, D. and Fernadez, E., (2011). "Cumulative manufacturing capabilities: An extended model and empirical evidence” International Journal of Production Research, 49(3): 707-729. Byrne, P.J., Heavey, C & Ryan, P. 2013. “Sustainable Logistics: A Literature Review and Exploratory Study of Irish Based Manufacturing Organizations”. International Journal Of Engineering And Technology Innovation (print), 3, 3, pp78-91. Corbett, C. J. and Klassen, R. D., (2006). "Extending the Horizons: Environmental Excellence as Key to Improving Operations." Manufacturing & Service Operations Management 8(1): 5-22. Corbett, C. J. and Kleindorfer,P. R., (2003). “Environmental management and operations management: Introduction to the third special issue”. Production and Operations Management, 12(3): 287–289. Clausen, U. (2013). Efficiency and logistics. Berlin: Springer. Kleindorfer, P.R., Singhal, K. and Van Wassenhove, L.N., 2005. “Sustainable operations management,” Production & Operations Management, 14, 482-492. McKinnon, A. C. (2010). Green logistics improving the environmental sustainability of logistics. London: Kogan Page. Rushton, A., Croucher, P., & Baker, P. (2010). The handbook of logistics & distribution management (4th ed.). London: Kogan Page. Rudberg, M. and Olhager, J., (2003). "Manufacturing networks and supply chains: an operations strategy perspective." Omega 31(1): 29-39. Shrivastava, P. (1995), “Environmental Technologies and Competitive Advantage”, Strategic Management Journal, 16: 183-200 Slack, N. and M. Lewis (2002). Operations Strategy, FT Prentice Hall. Song, D. (2012). Maritime logistics contemporary issues. Bingley, U.K.: Emerald. White, L. and Lee, G.L. 2009. “Operational research and sustainable development: Tackling the social dimension”. European Journal of Operational Research. 193. 683-692. Yalaoui, Alice, and Hicham Chehade. Optimization of Logistics. London: Wiley, 2012. Print. Read More