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

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

3. 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

4. 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

5. 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

6. 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)

7. 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)

8. 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)

9. 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

10. 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

11. 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

12. ISO 14000
The ISO standard has a three-section environmental management system that covers initial planning, implementation and objective assessment
ISO 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

13. 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.

14. 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.