The operations challenge Chapter 21 The operations challenge Source: Provided by the Sea W: FS Project, Nasa/Goddard Space Flight Center and ORBIMAGE

Five of the challenges for operations managers Globalization Corporate social responsibility Environmental responsibility Operations strategy Design Improvement Planning and control Technology Knowledge management

Operations decisions have a corporate social responsibility dimension For example … Product/service design – customer safety, recyclability of materials, energy consumption Network design – employment implications and environmental impact of location Layout of facilities – staff safety, disabled customer access Process technology – staff safety, waste and product disposal, noise pollution, fumes and emissions Job design – workplace stress, unsocial working hours Capacity planning and control – employment policies Inventory planning and control – price manipulation

Some globalization issues Decision area Some globalization issues Product/service design Transferability of product/service design Adaptation of design to fit culture and legislation Network design Location of global network of facilities Ownership and capacity change legislation Layout of facilities Cultural reaction to work organization Process technology Serviceability and maintenance of technology Skills availability Job design Cost of labour Cultural reaction to work requirements Planning and control (including MRP, JIT and project planning and control) Cultural reaction to necessity for planning Cultural reaction to need for flexibility

Some globalization issues Decision area Some globalization issues Capacity planning and control Differences in seasonality and demand patterns Legislation on part-time or temporary work contracts Legislation and cultural view of flexible working Inventory planning and control Storage conditions and climatic sensitivity Cost of capital and other storage cost differences Supply chain planning and control Real cost of transportation Differences in contractual arrangements Supplier conformance to employment standards Quality planning and control and TQM Cultural views of acceptable quality Cultural views of participation in improvement groups Safety Failure prevention and recovery Maintenance support Cultural attitude to risk Flexibility of response to failure

Corporate social responsibility ‘CSR is the business contribution to our sustainable development goals. Essentially it is about how business takes account of its economic, social and environmental impacts in the way it operates – maximising the benefits and minimising the downsides. Specifically, we see CSR as the voluntary actions that business can take, over and above compliance with minimum legal requirements, to address both its own competitive interests and the interests of wider society.’ (UK Government)

Corporate social responsibility ‘Corporate Social Responsibility … is listening and responding to the needs of a company's stakeholders. This includes the requirements of sustainable development. We believe that building good relationships with employees, suppliers and wider society is the best guarantee of long-term success. This is the backbone of our approach to CSR.’ (Marks & Spencer, retailer) ‘[Our vision is to] … enable the profitable and responsible growth of our airports. One of our six strategies to achieve that purpose is to earn the trust of our stakeholders. Corporate responsibility is about how we manage our social and environmental impacts as part of our day to day business, in order to earn that trust.’ (BAA, airport operator)

Environmental burden (EB) One way of demonstrating that operations, in a fundamental way, are at the heart of environmental management is to consider the total environmental burden (EB) created by the totality of operations activities: EB = P × A × T where P = the size of the population A = the affluence of the population (a proxy measure for consumption) T = technology (in its broadest sense, the way products and services are made and delivered, in other words operations management)

Some environmental considerations of operations management decisions Product/service design – recyclability of materials, energy consumption, waste material generation Network design – environmental impact of location, development of suppliers in environmental practice, reducing transport-related energy Layout of facilities – energy efficiency Process technology – waste and product disposal, noise pollution, fume and emission pollution, energy efficiency Job design – transportation of staff to and from work, development in environmental education Planning and control (including MRP, JIT and project planning and control) – material utilization and wastage, environmental impact of project management, transport pollution of frequent JIT supply

Some environmental considerations of operations management decisions (continued) Capacity planning and control – over-production waste of poor planning, local impact of extended operating hours Inventory planning and control – energy management of replenishment transportation, obsolescence and wastage Supply chain planning and control – minimizing energy consumption in distribution, recyclability of transportation consumables Quality planning and control and TQM – scrap and wastage of materials, waste in energy consumption Failure prevention and recovery – environmental impact of process failures, recovery to minimize impact of failures

Identifying waste minimization in packaging Reduce packaging Yes Can packaging be reduced? Yes Reuse Yes Can packaging be reused? No Recycle Yes Is packaging necessary? Eliminate unwanted packaging No Can packaging be recycled? No Minimize packaging No Source: Awe Inspiring Images/Photographers Direct

ISO 14000 The ISO 14000 standard has a three-section environmental management system that covers initial planning, implementation and objective assessment ISO 14000 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 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 workings and suitability of the system

Key Terms Test Globalization The extension of operations supply chains to cover the whole world. Environmental protection Activities and decisions in operations management that minimize the negative impact of processes, products and services on the environment. ISO 14000 An international standard that guides environmental management systems and covers initial planning, implementation and objective assessment.

Key Terms Test Disruptive technologies Technologies which in the short term cannot match the performance required by customers but may improve faster than existing technology to make that existing technology redundant. Processes An arrangement of resources that produces some mixture of products and services.