Sustainability

1. Sustainability

2. Sustainability Defined • Sustainability commonly refers to the characteristic of a process or state which can be maintained at a certain level indefinitely. • Sustainability addresses how processes and operations can last longer and have less impact on ecological systems. • Non-value adding activities consume resources and therefore, over the long run are not economically sustainable. • If an activity does not add value, it should be reduced or eliminated if possible.

3. Emergence of Sustainability • Regulatory compliance requirements • Health and safety • Rising ratio of material to labor costs • Cost savings or cost avoidance • Ethical, legal and societal concerns • Opportunity to improve corporate image, community and customer relations • Anticipate and pre-empt customer demands

4. Sustainability Initiatives 3 Broad Categories of Initiatives: • Product and process life cycle considerations • Environmental stewardship • Facilities design, construction, environmental control and maintenance

5. Product and Process Life Cycle Considerations • This category of initiatives looks for ways to achieve sustainability objectives over the entire life cycle of a product or service. • It is common for this category to include look externally, beyond the boundaries of a single transformation process to the entire value chain. • Sustainability activities in this category span design, development, manufacture, as well as reverse logistical flow of items in a closed-loop value chain. • The firms implementing initiatives within this category are often more mature in terms of their sustainability programs. • Activities in this category emphasize the triple-bottom line, which promotes product design that enhances ecology and society while generating economic value. • Examples: reuse, reclamation, refurbish, remanufacturing, recycling, dematerialization, etc.

6. Environmental Stewardship • This category of initiatives looks for ways to achieve sustainability objectives given societal concerns of: global warming, resource depletion, energy and water shortages, solid waste disposal and other environmental concerns. • It is common for activities this category to be confined to a single facility (i.e., they are seldom extended to the value chain). • Initiatives in this category include industry specific voluntary programs: the Environmental Protection Agency’s 33/50 program, International Organization for Standardization (ISO) 14000 environmental management systems standards program. • Example: reliance upon renewable energy sources (e.g., biomass, solar power, wind power, etc)

7. Facilities Design, Construction, Environmental Control and Maintenance • This category of initiatives also looks for ways to achieve sustainability objectives given societal concerns of: global warming, resource depletion, energy and water shortages, solid waste disposal and other environmental concerns. • It is common for activities this category to be confined to a single facility (i.e., they are seldom extended to the value chain). • Initiatives in this category examine material use (e.g., using recycled and recyclable materials), reducing natural resource consumption thereby achieving long-term reductions in operational costs (e.g., capturing greywater), employing automatic environmental monitoring, sensing and control systems (e.g., light dimming), reduced maintenance (e.g., living roofs).

8. Development of Sustainability • Slow adoption rates (low price of resources and disposal costs) • Step-wise manner: • Process-based capabilities are instilled internally in a single set of transformation activities • Integrate and coordinate capabilities across several activities or systems within the firm • Embedding these capabilities within the routines and knowledge of the firm making them multifunctional, organizational-based capabilities • Network-based capabilities reaching outside the limits of the transformation process encompassing the value chain network

9. Sustainability History Six Historical Eras: • “Resistant adaptation” years ≈ 1970-1985, least expensive means to minimally comply with environmental legislation • “Embracing environmental issues without innovating” years ≈1985-1988 • “Reactive” organizations ≈1988-1992, “end-of-pipe” solutions for treating waste, but with little effort to prevent waste production • “Receptive” stage: the early 1990’s, environmental considerations can be a source of competitive advantage, organizational “policy entrepreneurs” focused company efforts on being more socially responsible • “Constructive” stage: mid 1990’s, due to continuing environmental pressures organizations began to adopt a “resource-productivity framework to maximize benefits attained from environmental initiatives,” companies began to look at product and process design to achieve sustainability objectives • Value chain partnerships: 2000 and beyond, world-class companies acting in a proactive manner, creating a new vision for the whole system that includes all organizational personnel as well as value chain suppliers and customers

10. Future of Sustainability • Sustainability initiatives must increasingly reflect shared value chain objectives • Corporations must not only strive to find opportunities that simultaneously lessen environmental impacts, achieve cost savings, and enhance corporate image, but also drive additional revenues