corporate responsibilty in operations management

7/28/2019 Corporate Responsibilty in Operations Management

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1980/1990s dramatic innovations such as Total Quality

Management (TQM), Just-In-Time (JIT), Business Process

Reengineering (BPR) and Time-based Competition (TBC) TQM continuously improving quality of

products/services

JIT reducing in process inventory and associated carryingcosts

BPR analysis and redesigning workflow and processes TBC make better use of the time to acquire competitive

advantage.

Brief History


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Evolution came to be known as process management

Emphasized the crucial importance of processes in

value creation and management.

Companies to develop technology-based andorganizational competencies competitors cannoteasily imitate.

History (cont)


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Transformation in 90s

Value chains

Outsourcing

Contracting

Supply chains

History (cont)


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OM has moved from a narrow focus on costs to an

appreciation of the customer (service, willingness topay) and to a closer scrutiny of assets.

ZARA: Supply chain is our

business model.

Supply Chain is the

Business Model


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Your $10 T-shirt has circled the globe three times, Sir.

Products being processed has to travel world multiple times

before reaching the customer. PROBLEM: Environmental footprint (extraction,

production, use and end-of-life recycling or recovery) maybe enormous and society pays for these negativeexternalities.

Ex. Scattered supply chains increased carbon emissions,risk related to poor working conditions in remote areas.

Not only tech gadgets but also flowers, shrimp or a T-shirt

BIG Problem


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It wasnt Me!

Original Equipment Manufacturer (OEM) or retailertouches the product for a very short period of time.

Today the sheer scale of these environmental andsocial impacts is so huge that they become a threat toout world (e.g. conflicts for access to scarce resources& global warming)

ANOTHER Problem


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Convergence of Social Needs

and Competitive AdvantageRoots and Branches of Sustainability

70s

TQM appeared

80s Widely reported

environmental accidents

90s Globalization

Eco-efficiency entered theradar screen

Shifted focus toEnvironment, Health, andSafety (EHS)

Protectionist quotas

Concerns about social issues in poor communities in under-developedcountries bringing accountability and reporting standards to the forefront.


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Sustainable Development

According to World Commission on Environment and

Development (1987):

Development that meet the needs of the present withoutcompromising the ability of future generations to meet

their own needs.

Triple bottom line: profit, people, and planet.

Companies are most likely to improve their performancewhen public pressure results in strong regulations.

Sustainability


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Porter (1991) argued that conflict between

environmental protection and economic

competitiveness is a false dichotomy based on anarrow view of the sources of prosperity and a staticview of competition.

Tough environmental standards can trigger

innovation. Pollutes Less, Lowers Cost and ImprovesQuality


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Corporate responsibility needs to become part of the

bloodstream of a company.

Decisions should not be taken under the profitparadigm with environmental and social concernsbeing only an afterthought.

Balance concerns for economic as well as

environmental sustainability, natural and social.

Role of Operations Management

in Sustainability Movement


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Three legged stool: An engineer will testify, a stable

stool requires three legs.

First leg, tangible top management commitmenttranslated in a clear and operational strategy.

Second leg, translation of sustainable strategy into anexecution plan.

Third leg, individuals who need to carry sustainabilityin their hearts and minds.

THIS IS WHERE SUSTAINABLE OPERATIONSMANAGEMENT COMES IN


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Quality

It is needed to be integrated in the bloodstream ofthe company.

Top management support through a clear qualitystrategy

Integrating (hard wiring) quality thinking in process

& product design Winning the hearts & minds of the people (soft-

wiring)


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Environment, Health & Safety (EHS)

Most of the companies who had firmly integratedquality in their bloodstream had very few problems

with taking EHS and its corresponding certificationon board.

They pretty much used the same philosophy, thesame systems, & the same processes & information

management techniques to ramp up for EHS.


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Environment, Health & Safety (EHS)

Going for improvement in environmental footprintgave companies another wave of cost reductions &

quality enhancements.


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Operations Management

OM is about measuring and fact-based decisionmaking.

But measuring the environmental impact of globalsupply chains remains a challenge & a goodmeasurement standards are long overdue.

Arguably, this may be where the discipline of

Operations Management may be expected to makethe largest contribution.


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Operations Management(OM)

Measurement must be CLEAR, VERIFIABLE &GENERALLY ACCEPTED.

OM can come up with reliable measurement systemsthat can be developed into standards that can beaudited.


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1. The Call of Duty

The cost of materials & energy will continue to growas the world economy expands & rapidly

industrializing countries make strong demands onthese resources.

Public pressure for EHS performance will remainstrong, leading to strengthened property rights,

additional regulations, international agreements oncontrolling negative externalities & preservingresources, & reductions in subsidies.


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Increasing awareness of triple bottom line issues

may lead consumers to select products made by

companies with a proven track record. Peoples growing antipathy to globalization is

leading to strong non-government organizationactivity regarding businesses sustainability

performance.


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If the discipline of OM does not follow the Call of

Duty, & does not fully engage in sustainability

research & teaching, it will lose its relevance and,consequently, its license to operate.


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The World is FLAT

Friendmans book (2005)

Argued convincingly that from a global competitionperspective, modern technology makes the world flat


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Strategies

Current Internal Strategies aimed at improvinginternal operations with continuous process

improvements related to sustainability.

Current External Strategies aimed at improvingextended supply chains by analyzing upstream

supply chains to make trade-offs in the choice ofmaterials & processes & pursuing closed-loop supplychains for remanufacturing & sale disposal.


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Internal Strategies include investing in capabilities to

recover pollution causing chemicals during

manufacturing, to develop substitutes for non-renewable inputs and to redesign products to reducetheir material content and their energy consumptionduring manufacturing use.

External Strategies include developing corecapabilities in product processes and supply chainsfor long-term sustainability and pursuing strategiesto facilitate it.

corporate responsibilty in operations management

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