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Sustainability in Operations

Briony Boydell
Business Operations and Systems
Management
Ecological footprints
To supply the average person’s basic needs in the United
States, it takes 12.2 acres of land.
• In the Netherlands it takes 8 acres, and in India it takes 1
acre.
Calculated this way;
• The Dutch ecological footprint covers 15 times the area of
the Netherlands.
• India’s ecological footprint is 1.35 of its area.
• Most dramatically, if the entire world lived like North
Americans, it would take three planet earths to support the
present world population.
World population growth

Population density. Data from the G-Econ project gecon.yale.edu


Waste Statistics
About one per cent of all material that originates at the top
of the supply chain serving the United States remains in use
six months after sale of the products containing it
(Hawken et al 1999)
Operations Has a role to play…..
In design,
manufacture,
location,
recycling,
disposal…..
Aims of the Lecture

1. Understand the importance of sustainability in a supply


chain
2. Discuss the challenge to sustainability posed by the
tragedy of the commons
3. Describe key metrics that can be used to measure
sustainability for a supply chain
4. Identify opportunities for improved sustainability in
various supply chain drivers
What is Sustainability?
• The term sustainability is used to include;
– environmental management,
– closed-loop supply chains,
– a broad perspective on triple-bottom-line thinking,
integrating;
• profit,
• people, (social responsibility)
• and the planet (environmental responsibility)
into the culture, strategy, and operations of companies.
• “development that meets the needs of the present without
compromising the ability of future generations to meet
their own needs.”
Characteristics of Sustainability

Wheelan et al (2015)
The Role of Sustainability in a Supply Chain

• The health and survival of every supply chain and


every individual depends on the health of the
surrounding world
• Expand the goal of a supply chain to others that
may be affected by supply chain decision
• Factors driving focus on sustainability
1. Reducing risk and improving the financial
performance of the supply chain
2. Attracting customers who value sustainability
3. Making the world more sustainable
Key Metrics for Sustainability for Operations

There are four key categories for measure;


1. Energy consumption
2. Water consumption
3. Greenhouse gas emissions
4. Waste generation

• Challenges with scope


• Absolute or relative measures of performance
Process management

• Process technology includes the efficiency and


maintenance of machinery.
• Regularly maintaining machines helps reduce fuel
consumption and emissions from poorly managed
facilities.

• Innovations can help by reconfiguring processes to use


alternate sources of energy such as bio fuels, solar power
etc.
Location of Facilities

• The location selection of an operation should consider;


– Environmental impact of location
– Development of suppliers in environmental practice
– Reducing transport-related energy
• The impact of a facility can be significant - in July
2014authorities withdrew consent for the Hindustan Coca-
Cola Beverages plant in the state of Uttar Pradesh, where
ground-water levels have been critical for more than a
decade
Transportation

• Transportation
– Lower transportation costs also tends to reduce emissions and
waste
– Product design a significant role in reducing transportation cost
and emissions
– Reducing packaging and allowing greater density during
transportation
Capacity Management

• Capacity that is wasted can equal;


– overuse of machinery
This can result in machines burning fuel when not
required, heating and lighting in use when not required.
– over production – can mean, particularly with
perishable goods, product that is scrapped or thrown
away.
Inventory

• Inventory
– Raw materials, work in process, finished goods and inventory
sitting in typical landfill
– Life cycle assessment (LCA) can be used to assess a product’s
environmental impacts
– Goal is to reduce harmful inventory and unlock the unused value in
products when they are discarded
• Inventory planning and control – Energy management of
replenishment transportation, obsolescence and wastage
Lean and JIT, TQM and other buzz words

• Planning and control; including MRP, JIT and project


planning and control are all about waste reduction and
transport pollution of frequent JIT supply

• Quality planning and control and TQM – Scrap and


wastage of materials, waste in energy consumption.

• All these policies reduce what is thrown away and makes


the RIGHT amount not more.
LCA

• Life Cycle Assessment


(LCA) is a tool that can be
used to assess
• the environmental impacts
of a product, process or
service from design to
disposal
• i.e. across its entire
lifecycle, a so called cradle
to grave approach.
LCA

Can be expensive & difficult:


– Typically needs large quantities of data

– Some info is not available

– Judging merits and demerits can be very difficult


However many companies do now use LCA in one form or
another.
Closed Loop Supply Chains

• Supply chain planning and control – Minimising energy


consumption in distribution, recyclability of transportation
consumables
• Supply chains cause significant harm to the environment
when their output ends up in a landfill
• Improve sustainability by designing products that can be
reused and recycled
• Must be supported by a supply chain that ensures recycling
• Economic interests of all the parties must be understood
and aligned for the activities to be performed
Sourcing Products and selecting suppliers

• Sourcing
– Majority of energy and water use and waste and
emissions occurs in extended supply chain outside
the enterprise
– Extended supply chain and work with their
suppliers to improve performance
– Verifying and tracking supplier performance on
sustainability is a major challenge
Design is the KEY

• Design for Environment


The DFE approach is straight
forward:
systematically examine a
product from
cradle to grave and then
introduce
changes to improve its overall
environmental performance.
BMW's Z1 Roadster
• plastic side panels come apart like
the halves of a walnut shell - designed
for disassembly.
• glue or solder in bumpers should be replaced with
fasteners so that the bumpers can come apart more easily
and the materials can be recycled.
• changing instrument panels - were made of an assortment
of synthetics glued together. Now uses polyurethane, foam,
and rubber so the panel can be recycled.
• The portion of a car recycled is 80%
by weight and BMW is aiming for 95%.
Remanufacturing / Dematerialisation
Companies are now aiming to give products multiple
lifecycles through remanufacturing.
ie: (re)build products from ‘second-hand’ components.
These are of the same quality as ‘new’ products

Dematerialisation
Western societies have not encouraged serviceability and
longevity – we prefer a ‘replacement strategy.’
Resource productivity is low and Resource usage is high
ISO 1400

• The ISO 1400 standard. It has a three-section


environmental management system which covers initial
planning, implementation and objective assessment
ISO 1400 makes a number of specific requirements:

• a commitment by top-level management to environmental


management
• the development and communication of an environmental
policy;
• the establishment of relevant and legal and regulatory
requirements
• the setting of environmental objectives and targets
• the establishment and updating of a specific environmental
programme, or programmes, geared to achieving the
objectives and targets
Conclusion
• Operations has a responsibility to;
– the implementation of supporting systems such as
training, operational control and emergency planning
– regular monitoring and measurement of all operational
activities
– a full audit procedure to review the working and
suitability of the system

Read Chapter 3 Social Environmental and Economic


Performance