Service Operations Management: The total experience SECOND EDITION

1. Service Operations Management: The total experienceSECOND EDITION Chapter Eight Sustainable Service Operations

2. Sustainability • ‘Sustainability’ in the context of service delivery systems embraces more than the physical environmental factors associated with maintaining a viable organization: • Fiscal continuity: that comprises economic viability to sustain and underpin the business during its ongoing growth and development (return on investment); (and pay a shareholder dividend) • Innovation and creativity: to bring new services and improvements to meet changing market and customers’ needs • Environmental: including social impact considerations to ensure appropriate use of energy and materials; with minimum emissions to the atmosphere.

3. Reasons for Business Failure • Growing too large too soon, causing complexity and legacy process failure • Over-extending credit/loans • Not meeting market and customer needs • Technological lag • Insufficient updating of staff skills • Poor recruitment (staff fit) • Lack of cash-flow

4. Forces at play ‘Sustainability’ describes the ability to continue a viable business – it has resilience to bounce back quickly What customers want to buy today is determined partly by what is offered to them today. To help anticipate and plan to meet future service needs, there is a requirement to develop an operational model which captures the underlying trends in market development, customers’ needs and influence of service offering on customers.

5. Fig 8.1 The changing customer over time

6. Fig 8.2 Econometric forces at play

7. The experienced customer base versus demographic changes • More first children are born to parents aged 30-35 than to those aged 20-25. More people who are well into their 50s will still be seeing their children through higher education and the employment search trauma. • People are retiring earlier, so the children may still be at home when the parents have retired. • The divorce rate remains high, as does the start-up rate for second marriages • The old live longer, so a much higher proportion of people in their 50s will have parents who are alive. • The average age of those taking out a mortgage for the first time is currently 31 years of age.

8. Carbon neutrality in service delivery The National Greenhouse and Energy Reporting System sets out how emissions are to be calculated. This process is then usually guided by the recommendations from the greenhouse gas protocol (GHGP), ISO14040, ISO14044, ISO14064, and ISO14065. Carbon neutrality refers to achieving net zero carbon emissions by balancing amount of carbon released with an equivalent amount sequestered or offset, or buying enough carbon credits to make up the difference. Other greenhouse gases regulated by the Kyoto Protocol: methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC), and sulphur hexafluoride (SF6).

9. Appendix 8A.1

10. Environment and emission considerations Environmental hazards including pollution (for example toxins and heavy metals), carbon emissions (CO2) and the use of fossil fuels and similar non-renewable energy sources, have been at the forefront of contemporary public debate throughout the western world. The burning of fossil fuels produces around 21.3 billion tonnes of CO2 per year, but it is estimated that natural processes can only absorb about half of that amount, so there is a net increase of 10.65 billion tonnes of atmospheric carbon dioxide per year.

11. Organizational Resilience Anticipatory planning is a technique that prepares an organization for possible adverse eventualities and risks, such as losing prominent customers, technical failures, key staff leaving, fire, explosion, floods, poor quality etc. • Resilience arises from a combination of organizational culture, attitudes, and processes. The resilience of an organization is a function of: • its situation awareness • management of important vulnerabilities • adaptive capacity.

12. Fig 8.3 Business Continuity Planning Lifecycle

13. Business impact analysis A function may be considered critical if the implications for stakeholders and customers of any damage are regarded as unacceptable. • Recovery Point Objective (RPO): the acceptable quality of data that may be recovered. The recovery point objective must ensure that the maximum tolerable data loss for each activity is not exceeded • Recovery Time Objective (RTO): the acceptable amount of time to restore the function. The recovery time objective must ensure that the maximum tolerable period of disruption (MTPD) for each activity is not exceeded.

14. Threat analysis Disease – pandemic threats, eg severe acute respiratory syndrome (SARS), H5N1 avian influenza, and 2009 H1N1 influenza virus. Earthquake – natural disasters could affect a key supplier. Fire – Often more damage is caused by smoke and water than the fire. The bushfires in Victoria caused extensive loss of life and damage. Flood – The most recent Queensland example (in particular Brisbane) caused extensive damage to companies and homes Cyber-attack – viruses and hacking can cause corruption of information and loss of security leading to customers’ mistrust of safety of personal data. Sabotage (insider or external threat) - Possibly caused by a disgruntled employee or customer. Hurricane, cyclone or other major storm. Utility outage – A fuel shortage caused by war or civil unrest , storms, etc Terrorism – The threat of explosive devices can slow down operations Theft - Insider or external can result in loss of vital information or materials

15. Impact Scenarios and Recovery Design • Recovery design stage: • the crisis management reporting and command structure • the location of a secondary work site (where necessary) • telecommunication architecture between primary and secondary work sites • data replication methodology between primary and secondary work sites • the application and software required at the secondary work site • the type of physical information requirements at the secondary work site.

16. Fig 8.4 Fundamentals of sustainability

17. The National Australia Bank NAB’s footprint Energy efficiency and carbon neutrality Paper Use Employee engagement NAB’s targets Responsible Finance Project Finance and the Equator Principles Environmental Products and Services Environmental Advocacy Exemplar of best practice