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Ltd
Chapter 3

Sustainability in
Operations

Operations Management: Theory and Practice, 3e Author: B. Mahadevan

 Business Organizations
Governing Paradigms for Prosperity
The Consumption Engine Must Run

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That is the measure of prosperity, growth and
improvement for business entities
The World is a Machine
We human beings exist outside of this and need to
control and run this machine to suit our
requirement
Nature is bounty, available endlessly
Our job is to exploit it to maximize short-term ROI
requirements of running business
Operations Management: Theory and Practice, 3e Author: B. Mahadevan
 Consequences of Current Paradigm
Impact on Sustainability
Resources required for sustaining the current levels

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of consumption fast depleting
Industrial activity generates enormous amounts of
toxic industrial wastes which threaten to harm the
atmosphere
The increased level of consumption leads to greater
levels of disposal of solid wastes.
Increased consumption of natural resources also lead
to more atmospheric pollution that it may soon
threaten our health
Operations Management: Theory and Practice, 3e Author: B. Mahadevan
 Sustainability
Definitions
Development that meets the needs of the present

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without compromising the ability of future
generations to meet their needs
Economic sustainability: Ability of business organizations
to deliver products and services which fetches revenues in
excess of the cost
Environmental sustainability: Ability of organizations to
deliver products and services without compromising the
balance between natural systems and living beings
Social sustainability: Choices made by business
organizations that will enable the current and future
generations to live a healthy life.
Operations Management: Theory and Practice, 3e Author: B. Mahadevan
 Sustainability Perceptions
Transition path

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Natural
Zone of System
Natural System Constraints
Constraints Sustainability
Social
System
Demands

Business Social
Growth System Business
Aspirations Demands Growth
Aspirations

Dominant Perspective Realistic Perspective

Operations Management: Theory and Practice, 3e Author: B. Mahadevan

 Video Insight 3.1
GRIHA: Green Building Standards

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Right click on the URL below to open the hyperlink in the web browser

https://www.youtube.com/watch?v=DRO_rIkywxQ

Operations Management: Theory and Practice, 3e Author: B. Mahadevan

 Sustainable Operations Management
A Framework

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Avoidance

Reduction
Reuse
in Usage

Extended Renewable
Use Resources

Operations Management: Theory and Practice, 3e Author: B. Mahadevan

 Avoidance
Role of the NPD Process
New Product Development process makes

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importance changes in the design of the product or
service offered so that resources are not used in the
first place.
Design of a new service may ensure that paper work
is minimized by capturing data directly in digital form
(Indian Railways e-Tickets)
In the design of a public library, innovative design of
building, windows and reliefs can result in minimum
use of lights during day time as natural daylight can
be harvested very well
Operations Management: Theory and Practice, 3e Author: B. Mahadevan
 Reduction in Usage
OM Initiatives
Requires closer coordination and better planning

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among different entities in the supply chain
Logistics operations can be redesigned for fewer trips
between supply points and demand points by pooling
requirements either by origin or destination
Implementation of sensor based mechanisms to
cutoff the use of resources automatically when not
needed
Value engineering efforts in design will have the
dimension of reduction of critical resources for
manufacture, maintenance and use of scarce
resources
Operations Management: Theory and Practice, 3e Author: B. Mahadevan
 Switching to renewable sources
Changes required in OM Practices
Passive cooling systems and innovative air circulation design

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in the shop floor
Use of special material for the roof to harvest natural lighting
for the factory
Exploiting the vast area of roofing and terrace to harvest solar
energy through heating and photovoltaic systems
Greater investments in water harvesting methods
Service design with use of digital resources instead of physical
resources.
Music, travel, entertainment, publishing and education banking and
financial services to use electronic market infrastructure to replace
non-renewable resources in the chain with digital resources

Operations Management: Theory and Practice, 3e Author: B. Mahadevan

 Extended Use
New Challenges for NPD
A major departure in the design philosophy

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while new generation of products and services
are developed
The current dominant paradigm in business is to
promote throw-away culture and use it as a basis
for running the consumption engine
Designing for planned obsolescence and perceived
obsolescence assumes that the world has
unlimited resources and it will be possible to keep
tapping them endlessly.
Operations Management: Theory and Practice, 3e Author: B. Mahadevan
 Reuse of Products
Reverse Supply Chain Management
As consumption levels increase, it will be impossible to

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dispose of used and unwanted items
Steps required to take back used material and discover
economic value out of them
Governmental regulations are forcing business
organizations to take this approach to manage
operations
Product take-back laws in Germany
Emission norms all over the world
End-of-life-vehicle legislation
Reverse supply chains will be as important as forward
supply chains
Operations Management: Theory and Practice, 3e Author: B. Mahadevan
 Reverse Supply Chain
Implications for Business
What happens when we take back the used

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products?
Steps will be required to discover economic value
out of them
Dis-assembly of used products will be as important
as assembly of new products in a manufacturing
system
Remanufacturing, Refurbishing and Recycling will
become important elements in an operations
system
Operations Management: Theory and Practice, 3e Author: B. Mahadevan
 A Generic Reverse Supply Chain Framework
Raw Sales & Customer use
Manufacturing
Material Distribution & Discard

Used product

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Refurbish/ Repair/ retrieval
Remanufacture Reuse

Logistics
Cannibalization
Product Product Take-back
Liquidation Network

Recycle
Reprocessing

Disposal
Landfill

Forward flow
Product Recovery Network Reverse flow

Operations Management: Theory and Practice, 3e Author: B. Mahadevan

 Reverse Supply Chain
Entities & Their Roles
Multiple entities are involved in a reverse logistics network
They have multiple goals and motivation to participate

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The customer and the regulatory agencies are important
entities in reverse logistics
In the Product Recovery Network, players have different roles
to play
The OEMs may take part in all of the product recovery activities
such as repair, refurbish, remanufacture, and recycle
Alternatively, they may contract these activities to other
players
If there are enough economic incentives, third-party agencies
may collect and recover used products and sell them to
secondary markets
On account of these, reverse supply chain planning is far more complex than the forward supply chain

Operations Management: Theory and Practice, 3e Author: B. Mahadevan

 Reverse Supply Chain
Issues & Challenges
Complexity in assessing the inflow of used products and

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the divergent spread of the end use customers
How are organizations likely to handle this?
Two streams for raw material one the new component
from the forward supply chain and the other used
component recovered from a discarded final product
How are we to handle the associated inventory control
problems?
Since there are multiple players and multiple
arrangements among these players possible, how are the
product recovery activities ultimately organized among
various entities
Operations Management: Theory and Practice, 3e Author: B. Mahadevan
 A Remanufacturing System
Schematic representation

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Returned
Products Inventory

Lm = Manfg. Lead Time

Re-manufacturing Manufacturing
Facility Facility

Lr = Remanfg. Lead Time

Finished Goods Customer
Inventory Use

Operations Management: Theory and Practice, 3e Author: B. Mahadevan

 Periodic Review Inventory Control for
Remanufacturing
Order up to level

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Sm Qm
Lr
Inventory Level

Qr
Qr Lm
Qm

Qr
Qr

R 2R Time Inventory Position

Physical Inventory
Operations Management: Theory and Practice, 3e Author: B. Mahadevan
 Design for Sustainability
Modular approach to design so that components of a product

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can be easily remanufactured or refurbished.
Use of universal components, which reduces the number of
components in a product. Fewer components would mean
quicker dis-assembly, fewer toxic substances, lesser recovery
and recycling costs.
Use of recycled material thereby improving the material
recovery and reduction in use of scarce resources
Newer assembly methods such as snap-fit assembly which will
reduce disassembly and recycling costs
Promoting recyclability by avoiding the use of coatings & paints
Choice of clean technologies for manufacture and maintenance
Operations Management: Theory and Practice, 3e Author: B. Mahadevan
 Design For Environment (DFE)
A structured set of methodologies to create products and

Copyright 2016 Pearson India Education Services Pvt. Ltd

services that are easier to recover, reuse, or recycle.
The DFE approach forces the designer to examine the
effects of a product and service on the environment and
provide for necessary changes in the design.
Will balance the manufacturing considerations with ease
of use, post-use disposal, ease of remanufacturing and
consumption of precious resources during the entire life
time of the product
Single use products (such as a camera) will be suitably
redesigned such that it is possible to remanufacture the
returned products
Operations Management: Theory and Practice, 3e Author: B. Mahadevan
 Video Insight 3.2
Grundfos Sustainability Efforts

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Right click on the URL below to open the hyperlink in the web browser

https://www.youtube.com/watch?v=tEEm6gUscgE

Operations Management: Theory and Practice, 3e Author: B. Mahadevan

 Understanding the
Creating Sustainable value of sustainability

Organizations for the

Top Management
Future Vision & Commitment

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New Investments for
creating sustainable
organizations

Strategies for meeting Reverse Logistics

regulatory requirements Product Take back &
Training and Recovery Networks
Development Clean Technology
New systems for Cradle to Grave Design
regulatory compliance & Remanufacturing/Dis-
reporting assembly Operations

Strategic Benefits
Improved competitive
advantage

Operations Management: Theory and Practice, 3e Author: B. Mahadevan

 Creating Sustainable Organizations
Challenges

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Lack of Regulatory Framework
Mind-set Inertia
Lack of Top Management Vision
Inability to see the Big Picture
Need for Substantive Investments
Benefit Notional (Not Obvious)
Crisis Yet to Blow Over!

Operations Management: Theory and Practice, 3e Author: B. Mahadevan

 Sustainability in Operations
Chapter Highlights
The economic viability of organizations may be threatened if

Copyright 2016 Pearson India Education Services Pvt. Ltd

the issue of sustainability is not factored into organizations
Sustainability pertains to development that meets the needs
of the present without compromising the ability of future
generations to meet their needs.
Sustainability will encompass three dimensions: Social,
Environmental and Economic.
Implementing a sustainable operations management system
may involve newer systems, skills, alternative philosophy
Design for environment (DFE) is a structured set of
methodologies that enable an organization create products
and services that are easier to recover, reuse, or recycle.
Operations Management: Theory and Practice, 3e Author: B. Mahadevan
 Sustainability in Operations
Chapter Highlights
Reverse logistics consists of a product take-back network and

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a product recovery network. There are several entities
involved in reverse logistics.
Remanufacturing is the process of restoring end-of-life
products (cores), components, modules, and parts to an
almost new condition in a manufacturing environment.
The remanufacturing production process could be controlled
by a periodic review, push policy of inventory control.
Despite the mounting importance of sustainability
organizations are still making scanty efforts to inculcate a
culture of sustainability.

Operations Management: Theory and Practice, 3e Author: B. Mahadevan