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Chapter from: "Sustainable Operations and Closed-Loop Supply Chains"
Published by: Business Expert Press
Originally published in: 2012
Revision date: 28-Feb-2013

Abstract

This chapter is excerpted from ‘Sustainable Operations and Closed-Loop Supply Chains'. This book is targeted to MBA students, executive MBA students, and middle to upper level managers in general (especially in executive programs). The book can be viewed as firm's journey towards sustainability, starting from zero. A firm that wants to be sustainable considers the triple bottom line when making decisions: it considers economic (profit), environmental (planet), and social (people) impacts when making decisions. By focusing on the triple bottom line (3Ps), the firm ensures a steady supply of inputs such as raw materials and labor. The first step towards sustainability is aimed at reducing waste in operations, with the help of such tools as lean and six-sigma (chapter 3). The firm then performs a life cycle assessment (LCA) for each of its main products and processes. LCA is a methodology designed to assess the environmental impact (such as energy consumption and toxicity) of a product or process through its life cycle: raw material extraction, transportation, manufacturing, packaging and distribution, use by consumers, and end-of-life. With a better understanding of the major impacts, the firm then implements actions that reduce its environmental impact (which in many cases also improves the economic bottom line), that is, the firm aims to be eco-efficient. Examples here include 3R (reduce, reuse, recycle) initiatives, implementing an ISO 14000-certified environmental management system, reducing the firm's carbon footprint through energy sourcing from renewable sources, and green buildings, such as LEED-certified buildings (chapter 4). The final step in the journey towards sustainability is to close the loop. To close the loop, the firm starts by designing efficient packaging, designing products for multiple life cycles (as in design for remanufacturing), or designing products according to a Cradle-to-Cradle(R) philosophy, which ensures no use of toxic materials, ease of disassembly, and 100% uclability (chapter 5). A firm that wants to close the loop may consider a servitization model, where the firm sells a service as opposed to a product (chapter 6). The firm must design its closed-loop supply chain, which includes a logistic network to collect products post-consumer use - in some cases, mandated by take-back legislation (chapter 2); in other cases a result of its servitization model - remanufacture or recycle them, and remarket remanufactured products (chapter 7). Finally, a firm does not operate in isolation, so it should also implement sustainability in its supply chain. It is thus important to understand ecolabels, and the role of independent and credible third-party certifications (chapter 8). Finally, the book concludes with a chapter dedicated to the other P of sustainability - people, with some examples of firms that invest heavily in the social bottom line (chapter 9).

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Abstract

This chapter is excerpted from ‘Sustainable Operations and Closed-Loop Supply Chains'. This book is targeted to MBA students, executive MBA students, and middle to upper level managers in general (especially in executive programs). The book can be viewed as firm's journey towards sustainability, starting from zero. A firm that wants to be sustainable considers the triple bottom line when making decisions: it considers economic (profit), environmental (planet), and social (people) impacts when making decisions. By focusing on the triple bottom line (3Ps), the firm ensures a steady supply of inputs such as raw materials and labor. The first step towards sustainability is aimed at reducing waste in operations, with the help of such tools as lean and six-sigma (chapter 3). The firm then performs a life cycle assessment (LCA) for each of its main products and processes. LCA is a methodology designed to assess the environmental impact (such as energy consumption and toxicity) of a product or process through its life cycle: raw material extraction, transportation, manufacturing, packaging and distribution, use by consumers, and end-of-life. With a better understanding of the major impacts, the firm then implements actions that reduce its environmental impact (which in many cases also improves the economic bottom line), that is, the firm aims to be eco-efficient. Examples here include 3R (reduce, reuse, recycle) initiatives, implementing an ISO 14000-certified environmental management system, reducing the firm's carbon footprint through energy sourcing from renewable sources, and green buildings, such as LEED-certified buildings (chapter 4). The final step in the journey towards sustainability is to close the loop. To close the loop, the firm starts by designing efficient packaging, designing products for multiple life cycles (as in design for remanufacturing), or designing products according to a Cradle-to-Cradle(R) philosophy, which ensures no use of toxic materials, ease of disassembly, and 100% uclability (chapter 5). A firm that wants to close the loop may consider a servitization model, where the firm sells a service as opposed to a product (chapter 6). The firm must design its closed-loop supply chain, which includes a logistic network to collect products post-consumer use - in some cases, mandated by take-back legislation (chapter 2); in other cases a result of its servitization model - remanufacture or recycle them, and remarket remanufactured products (chapter 7). Finally, a firm does not operate in isolation, so it should also implement sustainability in its supply chain. It is thus important to understand ecolabels, and the role of independent and credible third-party certifications (chapter 8). Finally, the book concludes with a chapter dedicated to the other P of sustainability - people, with some examples of firms that invest heavily in the social bottom line (chapter 9).

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