2013: The Year of Sustainable Operations Management
Posted in Operations & IT Articles, Total Reads: 2086
, Published on 09 May 2014
‘Go green’ is a term we all are well versed with. From the ban on plastic bags to the constant emphasis on reduction of pollution; our generation has come a long way in being environment friendly and encouraging sustainable development. However, it is not just the individuals who are involved in making sure that the planet doesn’t perish soon, but the companies as well, who are standing up and taking a note about the environmental issues being faced by the world today. The question that faces us all today is ‘why is sustainability of growing interest?’
With the ever increasing population, there is a greater access to consumer goods. Also, the income levels are surging giving rise to new demands which are insatiable. In such a situation, striking a balance between the wants of the population and keeping the environment in mind becomes almost impossible. Thus, sustainability is the need of the hour; more so in the area of manufacturing the products and the supply chain.
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Sustainability comes from making the process “lean”. Lean philosophy is one such philosophy which emphasizes on elimination of waste. Waste is any activity which doesn’t add value and can be a burden to a company. Toyota has identified seven categories of waste which include: Overproduction, Waiting time, Transportation, Inventory, Motion, Over processing and Defectives. To eliminate waste, the Japanese developed the initial 5S which included sorting, straightening, shining, standardizing and sustaining. Later an eighth waste was defined by Womack et al. (2003); it was described as manufacturing goods or services that do not meet customer demand or specifications. A few of them have also added “unused human talent” to the original seven wastes. For example, six sigma includes the waste of Skills which means that there has been underutilization of talent and tasks have been inadequately delegated. Other additional wastes added were for example "space" which includes consuming area beyond one’s requirement.
The year 2013 saw introduction of new ways to make operations management more sustainable. 2013 was the year of perfect amalgamation of technology and sustainability to increase operational efficiency while conserving resources (such as accounting for the carbon and water use etc.) to the fullest. Operations Management (OM) has played a vital role in determining the production and distribution techniques which ascertain efficient usage of material and energy & ensure less injection of waste materials into the ecosystem through recycling.
Sustainability analytics is one such field which was intensely concentrated upon in 2013. It focuses upon collecting and evaluating data pertaining to energy and resource use, emissions, employee travel and last but not the least supply chain efficiency. However, having a 3D view of the ways to ensure analytics supports sustainability helps companies understand emerging risks, helps them keep ahead of their competitors and helps them address cost shocks. The 3D view includes getting the right data to analyze, putting the data into action and ensuring that sustainability exists for a longer period of time. For example, if we take an example of two offices located only a few kilometers apart. Office X, despite being smaller in size and having fewer employees contributes to greater energy usage and spending than office Y which is much larger in size and has many more employees as compared to office X. This was attributed to the fact that the employees of office X weren’t made much aware about the electricity consumption and hence had air conditioning turned on in cubicles even when no person was sitting in it. In such a way, the data obtained by sustainability analytics can help trigger an action i.e. making the employees of office X aware about the repercussions of unnecessary wastage of electricity and so on. This in turn can ensure long term sustainability and saving of electricity.
However, for sustainability to be achieved, OM needs to work in collaboration with other departments to ensure that the operational decisions are followed throughout and that the information reaches everybody. For eg:- To keep a check on the wastage of paper in an IT industry, the company should not only rely on OM but also on the internal IT dept. so as know how many printouts are taken out daily. Similarly, for a metro rail coming up with a new project; it should work in close coordination with the OM, climate specialists, economists, law designers etc. to come up with an eco friendly lean operations project.
The adoption of cleaner technologies is essential for a sustainable future. As people are becoming interested more and more in the way technology is contributing to the ecosystem, the contribution of OM in making sure that it keeps a check on the environment friendliness of its processes is becoming more and more necessary. For eg:- The consumer interest in supply chain has built up over the past few years. The consumer has started asking questions regarding the process and the working conditions involved in manufacturing of the product, whether there have been any environmental impacts in the production cycle and so on. Thus, OM needs to channelize the processes to make sure that its effect on the environment is negligible.
Deloitte had published an article in 2013 by the name ‘The top 10 issues mining companies may face in the coming year’ in which it talks about operational sustainability wherein mining companies are struggling to identify which of the various tracking indices they should adopt – from the Dow Jones Sustainability Index (which measures economic, environmental and social performance) to the FTSE 4 Good Index Series (which measures adherence to globally-recognized social responsibility standards). According to the article, it is high time for these companies to incorporate sustainability into their internal metrics in order to survive and ensure that they function smoothly. It also suggests the mining companies to stop looking at the lagging indicators to analyze historical safety incident data, but rather consider the causal factors to determine the same. Also, many cost cutting strategies like improving the operational model and streamlining the supply chain can actually ensure sustainability.
OM is an extremely vast area and has a lot to contribute to sustainability. Whether it is just about making use of solar power instead of coal by redesigning the process or about manufacturing vehicles running on electric chargers; OM has provided a new direction in helping the ecosystem be alive again. The future of sustainable development is quite a promising one and it would be interesting to see how sustainable OM endures and evolves over the next few years which shall determine how we transform from a ‘go green’ to a ‘going green’ planet.
This article has been authored by Deepti Sri Kocherlakota from SIBM Bangalore