August 1996 € Volume 6 € Number 8
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 affects 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 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 live. Consider the environment as an additional perspective
from which to analyze operations and to optimize resource use. Consider
it also as a broader quality issue: quality of the production process and
quality of life for 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 should focus on its product. 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 of 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 can 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 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 is driven 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 the 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). A market-responsive producer will more likely be driven by
customer environmental sensitivities and will 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 uncharted
territory for the typical manager. 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.
Zino Vogiatzis is an independent consultant focusing on competitiveness
improvement through environmental excellence. He has an MBA in operations
management and quantitative analysis and an MS in environmental engineering.
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