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the following article first appeared in August 1996 in the Consultants Forum of The Performance Advantage, the monthly journal of APICS, the Operations Management Society. It outlines the organizing principle of our work.



It Can Be Easy Being Green
By Zino Vogiatzis

In the last few years many businesses have been trying to include the environment in their business decisions. A company impacts the environment through its operations and the operations manager has a special role to play in that regard. At the same time, operations are arguably the most important instrument in implementing a successful business strategy. Therefore it is important that the environment is considered as an area that creates a competitive advantage. Here are a few ideas for operations managers in that regard:

Define the environment in the broadest terms. The environment is much too important for business to be left to the legal department. It is where a company gets its inputs (sometimes its technology too), where it locates and operates its facilities and where its product is distributed and used. It is also where we and our children live. Consider the environment as an additional perspective to analyze operations and optimize resource use. Consider it also as a broader quality issue: quality of the production process and quality of life of a company's stakeholders. Being green means above all not being wasteful. Any type of waste will inevitably manifest itself as a physical waste or aggravate some situation involving physical wastes.

Focus initially on greening your process or your product, the ultimate target of course being the greening of both (product and process are closely related.) A manufacturing oriented company should focus on its process (service sector companies belong in this category) and a marketing oriented company on its product, to take advantage of their traditional strengths. Usually the process is the origin of most of the environmental impact of a manufacturing oriented company while the same is true for the product for a marketing oriented company. Define clearly what the environmental impact of any aspect of the process or product is, both in terms of the relevant regulations and the customer. Establish its origins and its business implications, especially its cost.

- Process: its environmental impact is local in nature and potentially more powerful. Keep in mind that every process has a unique role in the operations strategy, presents its own characteristics and management requirements for materials, planning, inventory, etc. and converts inputs to outputs in ways that generate waste in different ways. Waste generation can provide a very valuable insight to every aspect of the process (and vice versa) and lead to changes. An environmental infrastructure (people and systems) and its appropriate placement within the broader infrastructure of a company are necessary for these changes. Find out what changes will be strategic and what tactical and how they will affect and be driven by your operations assets, their strengths and their role in your operations strategy.

- Product: its environmental impact is more widespread. Keep in mind that environmental friendliness is only one aspect of a product and a product is one aspect of the marketing strategy of a company. However, a product's environmental friendliness can affect many aspects of your marketing strategy.

Determine what is driven by regulations and what by the customer. Environmental regulations can and have provided a very powerful framework and incentive for innovation and change. Consider them the absolute minimum to be done and treat them with imagination and creativity, as an instrument to create value. Consider them also as an expression of consumers' wants.

Align any environmental initiative with your business strategy, i.e., look for competitive advantage where it is usually created. In general, a low cost producer will more likely be driven by costly regulations and look primarily for incremental changes at its process (e.g., pollution prevention), while a market responsive producer will more likely be driven by customer environmental sensitivities, look at its product and look for bigger changes.

Any business can use the right mix of the above in proportions determined by its individual situation, to initiate environmentally driven changes that can improve its competitiveness (companies with employee/customer/quality driven organizational structures are better poised in that regard.) Innovation and change are never easy, especially in an area that remains an uncharted territory for the typical manager and also spells "mandates." But it can be made easier if traditional strengths are leveraged and if the environment is considered as an opportunity rather than a problem, if it is used as an additional tool for productivity improvement, for doing more with less.

 

 

 

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