CHAPTER 16
Sustainable
Operations
Management—
Preparing for the
Future
McGraw-Hill/Irwin
Copyright © 2014 McGraw-Hill Higher Education. All rights reserved.
Learning Objectives
LO16-1 Explain what it means to have “sustainable”
operations
LO16-2 Describe the “triple bottom line”
LO16-3 Explain why operations managers are
focusing on environmental impacts
LO16-4 Evaluate products using life cycle waste
composition assessment
LO16-5 Discuss the approaches to social
responsibility
LO16-6 Understand the challenges of developing
and maintaining a sustainable competitive
advantage
16–2
Sustainable Operations Management:
Preparing for the Future
Sustainable
operations
management is
focused on reducing
any potentially negative
impacts of a firm’s
processes and products
on the environment and
society.
LO16-1
16–3
Sustainable Operations Management:
The Triple Bottom Line
• Triple Bottom Line
(3BL): full impact of
activities on profit,
people, and planet
• Instead of seeking only
profits, managers today
are developing balanced
sustainable strategic
visions
LO16-2
16–4
The First P: Planet
Sustainability: meeting today’s needs
without compromising the ability to meet
tomorrow’s
LO16-2
16–5
Emphasis on Environmental
Sustainability
Emphasis on environmental sustainability
is growing
• Customer expectations
• Economic factors
• Diminishing natural resources
• Increased business demand for scarce
resources
• New initiatives
• Global climate change
LO16-3
16–6
A Broader View of Waste
Life Cycle Assessment: evaluates the
cost of waste throughout product lifecycle
• Extraction
• Production
• Packaging and Transportation
• Usage
• Disposal/Recycling
LO16-4
16–7
ISO 14000 Standard for
Environmental Management Systems
ISO 14000: international standard and
certification for environmental management
• Identifying & controlling the impact of
activities, products and services
• Improving environmental performance
continuously
• Implementing a systematic approach to
setting and achieving goals
http://www.iso.org
LO16-4
16–8
Environmental Sustainability
Challenges
Tradeoffs are not always clear
Environmental impacts are always
going to be present
Managers are required to consider
complex interactions
LO16-4
16–9
The Second P: People
• Sustainable operations
management also focuses attention
on people
• The operations of a business
directly or indirectly affect:
–
–
–
–
customers,
workers,
suppliers,
investors.
• Each of these stakeholder groups
has its own needs and priorities
LO16-5
16–10
Four Key Stakeholders
Customers
Workers
Suppliers
Investors
• “Value” for
money
• Products
safety
• Privacy
protection
• Honesty and
integrity in
fulfilling
• Quick
response
• System
transparency
• Fair labor
practices
• Safe working
conditions
• Equal
opportunities
• Development
support
• Shared
values
• Development
opportunities
and support
• Shared
Success
• Consistency
and fairness
• Competitive
returns
• Sustainable
business
models
• Integrity in
reporting
• Reduction of
unreasonable
risks
LO16-5
16–11
The Third P: Profit
• Profit is equally important for
the sustainability of an
enterprise
• Business models evolve due
to:
–Changes in economic conditions:
–Changes in competitor’s actions
–Changes in income levels
–Changes in educational levels
• Value propositions are
dynamic
LO16-6
16–12
Measuring and Reporting
Sustainability
Figure 16-4 – Breakdown of criteria
assessed by the Dow Jones index.
LO16-6
16–13
Sustainable Operations
Management Summary
1. Operations managers must be concerned with
sustainability
2. Environmental sustainability is becoming
increasingly critical
3. Sustainability also addresses human issues
4. Operations managers need to manage and
adapt to cultural differences
5. Operations managers need to continually
improve or change the firm’s business model
6. Organizations and agencies are growing in their
influence in promoting sustainable practices
16–14