Sustainable Operations Management - Case Study Example

Running Head: Sustainable Operations Management Sustainable Operations Management [Institute’s Introduction In today’s world, the success of any business is the successful running of its business operations (Lippmann, pp. 20-25, 1999). Operations Management is the backbone in this regard and can be defined as “being concerned with the management of the physical resources required for production, whether the product be a manufactured item or a service” (Metz, 1998). The role of operations management is the acquisition and proper utilization of the resources to deliver high quality goods and services to the company’s clients. Its main focus is on the efficiency and effectiveness of the processes involved in value creation for sustainable development and growth. The term sustainability aims at keeping a balance between the human needs and prevention of the ecosystems on which our future generation depends. In specific, it refers to the exploitation of resources with the orientation of technological changes and minimal environmental damage to the present as well as future needs. The adoption of sustainable development theory is at an ever growing pace with the increased awareness of eco-friendly environment and analysis has indicated that since after the introduction of UN Agenda 21 (Moore, pp. 20-28, 2008), things seem to accelerate significantly in this area. In order to compete with the global market, businesses are paying more attention towards the environmental consequences of their products or services. They have realized the importance of operations strategy to support the company’s objectives and corporate goals. This trend has transformed the nature of operations to green product design, triple bottom line reporting and close-loop supply chains (Lippmann, pp. 1-9, 1999). The involvement of operations management is present from strategic to tactical and operational levels. Its activities include “site location, layout and structure, inventory management, traffic and materials handling, equipment selection and maintenance, designing technology supply chains, etc” (Metz, 1998). In this regard, this paper will focus on the issues companies confront while developing their policies regarding sustainable development (Moore, pp. 29-33, 2008) in the area of supply chain management. Supply Chain Management The term supply chain interchangeably used as ‘demand chain’ or ‘value chain’ refers to the voluntary commitments made by the companies to manage better relations with the suppliers (Metz, 1998). It manages in three different directions: the information flow in all the departments, the funds flow and the materials flow to the concerned places. As the aim of this assignment is to identify and discuss some of the key issues faced by the companies in the development of a sustainable supply chain policy, it has been an observation that companies have realized that the value they provide to their customers in the form of a product or service is not enough to survive in this competitive world (Webb, pp. 1-5, 2000). There is a constant need to address and resolve the sustainability issues throughout the supply chain. “Some of the most popular and important approaches to SCM includes collaborative planning, outsourcing, customers-suppliers partnership and ISC (integrated supply chain) design” (OECD, 1999). In specific, there are three dimensions on the basis of which a sustainable supply chain policy is developed. Particularly, UN Agenda 21 (Moore, pp. 29-33, 2008) divided the dimensions in two categories: social and economic. However, this paper has identified environmental, social, and ethical concerns that directly affect the performance and image of the company. Environmental Issues: a) the use of natural resources b) gas emissions c) waste management concerns d) harmful substances e) energy consumption f) deforestation g) global warming h) ozone depletion i) Nuclear radiation. Social Issues: a) Role and responsibility of the company towards the social development of the community (Webb, pp. 1-5, 2000) b) Employment in developing countries c) Training and education of the employed workers. Ethical Issues: a) Industrial relations b) Labor practices c) Corruption d) Irresponsible marketing e) Bribery f) Inventory control issues Core Issues in Sustainable Supply Chain Policy No specific vision and approaches: It is an observation that in most of the companies, the clear definition of supply chain is missing (Webb, pp. 1-5, 2000). Different companies have different interpretations regarding the terminologies used in SCM (Supply chain management) and SSCM (Sustainable Supply Chain Management) (OECD, 1999). In addition, company usually confronts issues in the formulation of the long term sustainability actions, not followed by the consideration of many factors such as the industry sector, nature of the organization, stakeholder expectations, supply chain footprints etc. Well-documented policies are not developed and improper communication makes its more complicated. Lack of understanding and internal communication: Another issue towards a sustainable supply chain policy is the lack of understanding of the company as a ‘human community’ (OECD, 1999) that aims to follow a clear vision with a strong culture. In particular, owners consider companies as money making machines with no sense of commitment towards the welfare of the society. In some cases, it has been an observation that the CEOs and the top management are highly committed but the management who is responsible for the implementation of the program exhibits lack of commitment and enthusiasm. Long and Complex Supply chains: When the linkages of chain are spread globally, it makes the system more difficult to coordinate. For instance, if the bio-components are purchased from some other country, then it increases the time period, involves more resources and adds many other steps. Forced Labor and exploitation of workers: Moreover, many companies have been violating the human rights laws and practices such as the child labor abuse by Nike, the poisoning incident at the Apple factory etc. All these actions not only damage the overall reputation of the company but it greatly affects the health and safety concerns of the labor class. No recognized centers of expertise/excellence on SSCM issues: It is not possible for a company to confront the sustainability issues without the presence of skilled and innovative employees. This issue is very important and has caused a decline in the achievement of the projected goals (OECD, 1999). The employees are not able to respond to the ecological crisis. In addition, cutting-edge research and assessment of the past practices is not done by the employees that result in the contradictory effects. Non-compliance of code of conduct: Analysis (Moore, pp. 29-44, 2008) has indicated that no internal audits are done to check the company’s internal governance. The corruption and wrong practices of the company are not even questioned. The materials and procedures that are harmful to the environment are used to minimize costs and earn more money that has been identified as one of the major causes of non-sustainable practices globally. Lack of reliable information: In this fast moving world, the use of information technology is necessary to understand the business operations. It is useful in a number of ways but it poses major problems in case of disintegration with the foundational IT systems of the company. Instead of providing quality data it gives information on the basis of which wrong decisions are made. Lack of metrics: Most of the companies have no proper tools and techniques to measure the effectiveness of SSCM. Even if the tools are present, they are so complex and complicated that the results are not appropriate or lack the sense of direction (Moore, pp. 29-44, 2008). The sustainability performance is not measured from time to time which creates an imbalance between the stated policies and the actual implementation of the program. Supplier Relationship: The nature of supply relations has a great impact across economic sectors. There are different types of suppliers a company deals with such as the suppliers that provide services, suppliers that provide components etc. If the company experiences a restricted partnership attitude with these suppliers then they are not open to challenges and togetherness to find better solutions. This is a very big issue in SCM as the connection between the supplier and company cannot be ignored and holds a significant importance. No attention towards ethical and social issues: Most of the companies have identified and addressed the environmental issues such as awareness of global warming, green products and campaigns etc. There is no concern for the ethical and social matters that not only affects the lifestyle of the individuals but the entire system works on the same pattern. Lack of coordination across the business functions: This issue arises when different departments are not properly connected to one another or have differences that result in the failure of a sustainable strategy. The ongoing challenge for the companies is create a positive impact upon the supplier performance and incentives to social compliance. Inability to re-design product attributes: Companies are not able to produce environmentally preferable products while reducing the energy usage and the overall costs. The durability and toxicity of the manufactured items is not up to the mark. Many other factors (Moore, pp. 29-44, 2008) are present including packaging issues, disposal issues, renewability of the product, water and energy efficiency etc. Inconsistent industrial and social standards: This happens when there is an absence of a regulatory authority that monitors the overall activities of the company. The industrial standards don’t match with strategic goals. The companies lack the experts to make a well-defined plan of action. In some cases, the suppliers don’t adhere to the diversified principles and lifestyles of the customers. No contribution is made by the supplier for the societal needs and values. No proper Assessment: When the current optimization and statistical models are not the representatives of the current businesses, then a higher risk is involved in the supply chain management. This is observed when the company does not have the capability to leverage analytical tools in order to broaden its era of required information. Lack of involvement of the stakeholders and related teams: A SSCM policy (Saturn, pp. 7-8, 1999) also fails in situations where there is no consultation with the stakeholders including suppliers. The supply chain teams are not involved in the decision making activities. This leads to the adoption of different approaches to achieve the specified goals. Wages and Benefits: This is an important motivational factor for the employees. If the company is not paying higher wages and taking the workers for granted then this could to lead to many disruptions such as go-slow production tactics, protests and damage to the company’s resources. Visibility and Accountability: According to a survey (Saturn, pp. 7-8, 1999), ninety percent of supply chain professionals subscribe to enhance the sustainability and flexibility across the supply chain function. Out of the total, about two-third have no visibility at all the levels of supply chain. There is an immediate need of a transparent system for the verification of suppliers. Lack of leadership: This is relative to the inability of the management to incorporate the policies in the practical situations. The stated policies are rhetoric and bookish (Saturn, pp. 7-8, 1999). They are just meant to create goodwill of the organization. The leadership skills and competencies required for the sustainable development of the company are not present. Role of government: The lack of governmental involvement in environmental and social issues directly affects the company’s objectives. This is due to the direct relation with the supplier who works in compliance with the governmental rules and regulations. A World Bank study has proved that the absence of local government action is the greatest barrier towards economic and social performance. Conclusion Although the relevance of supply chain responsibility varies from company to company depending upon the business sector, it has become an important element of the corporate social responsibility. The diversification allows the company to tailor the approaches and instruments in accordance with their circumstances. The most effective way to reach a higher level of performance is to maintain long term relations with the suppliers. The existing systems should be replaced by the new SCM approach. Moreover, researches should be conducted for better understanding of a successful SSCM policy. In conclusion, the paper included efforts of the researcher to identify and discuss different issues that companies confront globally while developing their policies related to supply chain management and at the same time, in relation with the sustainable development agenda of the United Nations. References Lippmann, S. 1999. "Supply Chain Environmental Management." Corporate Environmental Strategy. Elsevier Science Inc., Volume 6, Issue 2. Metz, P. 1998. "Demystifying Supply Chain Management." Supply Chain Management Review. Retrieved on March 12, 2011: www.manufacturing.net/scl/scmr/archives/1998/04myst.htm Moore, John A. 2008. Encyclopedia of the United Nations. Infobase Publishing. OECD. 1999. "Trade Issues in the Greening of Public Purchasing." COM/TD/ENV (97)111/FINAL. Retrieved on March 12, 2011: www.oecd.org/dataoecd/17/7/39919037.pdf Saturn, U. T. 1999. "Green Supply Chain Partnership.” Business and the Environment. Vol. X, Issue 11, pp. 7-8. Webb, F. 2000. "Green Tips for Supply Chains." Environmental Business Magazine. July Issue. Read More