Sustainable Operations & Triple Bottom Line for Business Growth
Posted in Operations & IT Articles, Total Reads: 1813
, Published on 23 March 2016
Sustainable operations are important in business growth Managers, Corporates have and are investing significant continuous effort to sustain financial, resource and development flow i.e. Triple Bottom Line. Stakeholders are pressurizing firms to take inclusive decisions considering Sustainability and Profitability. CSR, Environmental Policies, Government Regulations, Customer Satisfaction & maintaining image and reputation of the firm are some of the important enablers for sustainable Operations.
Sustainable Operations Management: -
Selection of Product Design: Various Circular Economy Frameworks namely Cradle to Cradle, Biomimicry and Industrial Ecology have gained currency and significant say in sustainable product designing. Waste Collection, Management, Disposal & recycling & reusing them are being heavily stressed upon by global MNCs as they decrease the overall input to a particular process and thereby optimizes resource usage and minimizes environmental impact. Example of Philips  can be quoted in this regard which recovers to around 40% of used lamps in Europe and recycles up to 85% for reuse. Performance & Remanufacturability are two prime parameters when finalizing a product design. Life Cycle Assessment as a tool is being heavily used now in this field. Concepts such as extended producer responsibilities, product-life extensions etc. are coming up and are influencing boardroom decisions. Packaging industries are increasingly investing efforts in recycling. Coca Cola is investing in Circular Economy Packaging. HUL is also investing money to increase the rates of recycling and recovery in packaging of their products. In beverage industries producers are shifting to reusable glass bottles and that is reducing the cost of packaging, processing of the same and its distribution by quite a lucrative margin.
Selection of Production Technology:
Cleaner Technologies targeted towards lowered toxic emissions need to be adopted. One of their primary targets should be elimination and if not possible at least reduction of by-products. A trade-off exists primarily between costs and environmental impacts which need to be carefully weighed by organizations before choosing a technology. Lowered energy and material consumption and reduced waste should be the metrics or criteria for judging viability of a technology. HP, Kyocera  are adopting closed loop manufacturing frameworks championed by Circular Economy advocates. They are increasingly investing in recycling which is ultimately leading to carbon footprint reduction by an astounding percentage of 33%. Water consumption and fuel consumption have gone down by 75% & 54% respectively which significantly reduced cost. Lower process input and conservation of resources promote sustainable growth heavily. Circular Economy framework is being used heavily in Automotive Industries.
Strategic Remanufacturing: First of all safe product disposal and recovery should be our prime consideration. Nowadays in the field of remanufacturing there is increasing concern among top management of their new product being cannibalized by their remanufactured product and adds to the woe is increased competition in this field. Hence there rises a need to incentivize a company investing significant effort in collection and recycle.
Safe & Healthy Work Environment: Employee safety and health should be a major criterion in designing sustainable Operations. This not only minimizes risk but also comforts the employees, reduces labour turn over, motivation and ultimately increased productivity.
Innovative Business Models practising sustainable Operations via Circular Economy : -
Product as Service: One prominent example of this is Vodafone’s Red-Hot Plan where one can rent a phone for a year and avail exchanging the same when a new model comes out. This gives two fold advantages i.e. (1) Easier Material Collection which leads to better closed loop manufacturing & (2) increased customer engagement and brand loyalty.
Next Life Sales: TATA Motors Assured is an example of this business model. They choose cars, rework on them and provide certificates after they pass the tests. They also provide warranty and financing options to customers. This scheme typically increases the profitability as well as the reuse-remanufacture philosophy.
Product Transformation: BMW has adopted this philosophy. It remanufactures parts up to 50% and enjoys significant cost savings. BMW is ensuring same quality performance and 2 year warranty for customers.
Product Life Extension: Product Life extension is one of the most talked about concepts of Circular Economy. Caterpillar is now focusing on Remanufacturing and is significantly investing in its flagship Reman Program.
Challenges faced during implementation of sustainable Operations: - From academic studies though it has come out that financial issues are the main barrier to successful adoption of SCM there are other identified factors that contribute to the failure.
Lack of Concern: Managers still think today that business should be only profit centred and environmental concerns, policies and regulations are unwanted extra cost which hurts the profitability of the business.
Inter-Organization resistance: Disinterest of Top Management, lack of expertise, communication gap in the organization across verticals and unaccommodating mind set of workforce is enough to fail any endeavour towards sustainable Operations. Undefined and unclear goals, Lack of Coordination and strategy are other prime reasons of implementation failure.
Absence of Production Facilities: To adopt and employ cleaner eco-friendly processes, technologies and closed loop supply chain upfront investment and updated facilities are required; absence of which significantly affects the implementation effort.
Lack of collaboration and communication with supply chain partners, absence of expertise of suppliers about product life cycle and its environmental impact, are some of the other prime reasons behind the failure.
Business Strategy: Reactive-Defensive-Accommodative-Proactive
Companies are now increasingly looking at Triple Bottom Line when designing and adopting a sustainable Operations. Closed Loop manufacturing is at the very core of sustainable operations and companies are adopting the reduce-reuse-recycle approach. Businesses are becoming proactive in their strategy of integrating their Supply Chain and sustainability. Sustainable Operations has the potential to become the source of sustained competitive advantage (VRIO Framework). Sustainable Operations practices have become and will soon become the necessity of the organizations and hence to force adoption of it, stricter government regulations and environmental policies need to be exercised. Developed economies should help developing economies to adopt green Operations via fast technology transfers, trainings and constant feedback.
This article has been authored by Anurag Das from XLRI Jamshedpur
(1) http://www.fastcoexist.com/1681904/5-business-models-that-are-driving-the-circular-economy : Accessed at 27.12.2015
(2)http://www.philips.com/about/sustainability/ourenvironmentalapproach/greeninnovation/circulareconomy.page: Accessed at 27.12.2015
(3) http://www.theguardian.com/sustainable-business/hp-kyocera-circular-economy-printing: Accessed at 27.12.2015
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