Sustainable Operations Management

(DOM403)

Dr Sandeep K. Gupta (PhD, MBA, M.Tech)

Assistant Professor, SME, SNU
Why Speed is a vital performance indicator?

Video on Noodles and Company

What is Sustainable Operations Management
 Sustainable OM [is] the set of skills and concepts that allow a
company to structure and manage its business processes to obtain
competitive returns on its capital assets without sacrificing the
legitimate needs of internal and external stakeholders and with due
regard for the impact of its operations on people and environment
(Kleindorfer et al., 2005, p. 489).

 Sustainable Operations Management is the management of the

transformational process to reduce resource consumption, pollution
and waste while benefiting employees, customers and communities
in order to reduce short‐term risks and shore‐up long‐term cash
flows (Sanders and Wood, 2015, p. 261).
 Whether Sustainability offers a win-win
preposition ???
 Although there is a debate on the existence of trade‐offs
between sustainability and economic competitiveness, a
growing number of researchers have produced evidence
that goes beyond this position, putting forward analyses
that are built on broader horizons and wider ranges of
assessment (McWilliams and Siegel, 2000; Porter and Kramer, 2002, 2006,
2011; Salzmann et al., 2005).

‘The proportion of environmental and social initiatives

which result in enhanced economic performance is
relatively large’
 A framework for the development of
Sustainable Operations Management

Source: Corbett 2009

Life Cycle based Sustainability Assessment

 Design and pre‐production, which, based on principles of

Design for Environment, are crucial in determining the
possibility of recovering value along the life cycle of a product
and, in particular, at the end of its lifetime.

 Production of the product, which can be divided into two

stages, involving the supply system, which is increasingly
relevant in an environment dominated by outsourcing choices,
and the production activity carried out by the focal company.
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 Packaging and distribution of the product, crucial in terms of
sustainability due to the impact of primary and secondary
transportation, and the possibility of minimising and reusing
packaging; also in this case, the focal company can use third‐party
logistics providers for the activities necessary to reach the final
customer, especially for consumer goods in business‐to-consumer
(B2C) systems.
 Use of the product by customers, who play an increasingly
relevant role in directing corporate choices through their
preference for products that respect environmental and social
sustainability principles, and in the development and diffusion of a
culture of accountability that is implemented through specific
actions, such as the tendency to save energy, to focus on the
reduction of waste and to separate recyclable waste and so on.
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 End‐of‐life management of a product, through
Reverse Logistics and the adoption of different recovery
options, which, if planned and managed properly, can offer
the possibility of extracting residual value, through
processes that range from high‐impact choices, such as
reuse, remanufacture and recycle processes, to
low‐potential processes like the choice to dispose the
exhausted products or send them to incineration plants.
Performance measurement & reporting systems
for Sustainability Practices
 these measures should have a double purpose:
◦ on the one hand, in accordance with feed‐back control
logics, to highlight any variance between target values and
actual ones; and
◦ on the other hand, following the principles of
feed‐forward control, to be a diagnostic tool, able not only
to express the size of the gap, but also, if possible, to
highlight the main causes behind it and, thus, to lead to the
implementation of appropriate improvement measures.
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 A reporting system that enables an in‐depth analysis of these
deviations, such as, for example, a deployment of the
energy losses or of the materials wasted in the various
phases of the production process, will make it possible to
reconsider previous choices and to implement appropriate
corrective actions.
 Development of KPIs aimed at measuring the performance
of the players involved in these processes can be
implemented with different levels of detail and reliability, for
both internal organisation units (business divisions and
departments involved) and external ones (suppliers,
subcontractors, distributors and service providers).
 Segmentation of Supply Chain Process

Source: Corbett 2009

Few Examples for Sustainable Operational Practices
 Coca Cola has spent almost 2 billion dollars since 2003 in order to
reduce water consumption in its 863 production plants, and more than
1 billion dollars for the development of water treatment systems and
recycling processes.
 Nestle, another food and beverage giant, spent 31 million euros on the
introduction of new water treatment technology in 2013. In its Spanish
factory, it managed to reduce the consumption of water per tonne of
product by 60% with an investment of 1 million euros.
 Google is experimenting with the use of sea water to cool its digital
archive in Finland and is testing the use of rainwater for another factory
in South Carolina, whereas it is using water from the sewerage network
in a US factory in Georgia.