Sustainability, Operations and Supply Chain Management in Manufacturing and Service Industries

Tourism is a huge and dynamic industry that isvarious impact considerations previously mentioned.
comprised of a wide variety of service businessesThis backward view of the supply chain links the end
that reflect the same dynamics and priorities that auser of the services of the cruise ship to the
manufacturer would have for operations planningbeginning of the supply chain - and that includes all
(OP) and supply chain management (SCM). One suchthe companies that, working backward, might make
service business is the cruise ship sector in whichup the chain to the original source. An original source
vacationers travel via these types of vessels tomight be cotton growers and the policies they have
various destinations.in place that might affect the methods that they use
While manufacturers produce tangible products andto grow, harvest and supply the converters of the
wastes, service companies also produce waste, butcotton.
their products are intangible. For example, the productQuestions that an Operations Managers might ask,
that a personal trainer might produce is a healthierfor example, are:
client. Operations Managers (OM) in both industries· Ate the cotton growers using harmful, earth
share similar interests in eliminating waste andpolluting chemicals in growing the cotton?
delivering quality products.· Is child labor being used in harvesting?
The two main intangible products that the vacationer· Are working conditions safe, and are wage and
(end user) buys, and a cruise ship companyhours legal and fair?
"manufactures" and delivers, are pleasure and· Are materials being delivered on time - and if not,
relaxation - the total experience that allowswhat are the reasons that are preventing this?
vacationers to "suspend" their everyday reality for aThese questions impact the management of the
period of time and immerse themselves in pleasurablesupply chain and organizations can gain or lose
experiences. The mission of the cruise ship industry iscompetitive advantage if they do not consider such
to deliver this experience to them in a way thatquestions because, in the case of a cruise ship, for
surpasses their customers' expectations, and itexample, an enlightened vacationer might hardly be
depends a great deal on the manufacturing industryimpressed that the soft cotton sheets that she uses
to make this possible.on the cruise line were made from cotton picked by
Comparable Dynamics and Priorities in Manufacturingchildren who live in slums and who earn mere pennies
and Servicea day for back-breaking labor - and are denied an
The movement and connection of goods andeducation because of these poor labor practices.
services from the point of origin, or the originalThese types of considerations and decisions faced
source, to the end user is referred to as "the supplyby a cruise line Operations Manager will affect his or
chain". Supply Chain Management is a part of theher own company's financial bottom line and will also
Operations Management that involves the effectiveaffect the operations management of their down-line
management of many inter-firm processes such as:suppliers, as it also would in manufacturing. One can
- Supplier/Vendor relationship managementeasily see that the considerations and activities of
- Order ProcessingOperations Managers in service industries easily affect
- Information Systems managementsupply chain management in their organizations.
- Sourcing and ProcurementMaintaining a Competitive Advantage
- Production SchedulingToday's consumers are more sophisticated and
- Inventory Managementkeenly aware of the global impact that their actions
- Warehousing and Distributionhave on the environment and many consumers
- Customer Servicesalready take actions to reduce their "carbon
- Environmentally sustainable practicesfootprint", that is the contribution to the
Just as in the manufacturing industry, in the cruiseenvironmental impact of human beings and their
ship industry it takes the coordination of a variety ofactivities upon the planet.
resources - financial, material and human - workingFor example, the more waste one leaves behind in
together to manage these processes in order toone's daily activities, the larger one's carbon foot-print.
achieve organizational goals.This idea has been capsulized in the term "going
Operations Management involves the management ofgreen". Consumers are not only modifying their own
all the activities that produce an output (a product).habits in order to minimize waste and thus reduce
In operations management a multitude of processestheir carbon footprints, but they are also holding
must be managed in order to produce and distributecorporations accountable for their impacts on the
products and services. Policies must be formulated;environment. This has put pressure on many
daily operations must be managed, and so must thecorporations to go green by embracing more
use of human and material resources. OM alsoenvironmentally friendly processes in their operations.
demands the effective utilization of technology andCruise ships are like floating cities that can generate
communications systems to allow for timely orderingas much as "...30,000 gallons of sewage, 250,000
and delivery of materials and products, and thegallons of kitchen, bath and laundry waste water and
servicing of customers and stakeholders.10 tons of garbage -- each day". Effectively managing
Policies in both the manufacturing and service industrythe inputs that create this amount of waste begins
sectors might include social and environmental impactwith effective management of the supply chain.
considerations such as the use of resources and theEffective management of the supply chain begins
disposal of wastes. Religious, cultural, political and legalwith effective operations management.
issues such as human rights, use of child labor, wageSocially and environmentally conscious organizations
and hours; human resource impact issues such asthat develop a vision and a mission articulating a clear
age, gender and other forms of discrimination mustobjective to take responsibility for ensuring the
also be considered.sustainability of all inputs that go into their products
In a manufacturing situation these considerationswill have a competitive advantage over those who
would impact the goods and services that the cruisedon't. So a cruise line, for example, that establishes a
industry might use. Some of these goods includeculture of "world class supply chain management" into
foods, linens, toiletries, furnishings, packaging,its operational processes can gain significant
electronics, fuel, etc. All of these products arecompetitive advantage over its competitors because
outputs of a manufacturing process that a cruise ship"supply management directly affects the two factors
might use and all of these products impact thewhich control the bottom line: total costs and
environment from the original source to the end-user.sales"[2] (Burt, Dobler, Starling. 2003, p. 10).
Organizations in both industries need to develop aFor example, a cruise ship line that is an early entrant
sustainability mind-set and identify where waste beinginto World Class Supply Management practices will
generated in their companies and along their supplymost likely emerge as a leader in the practice and, as
chains; the reason why and when, at what stage it issuch, will stand to hold "40 -60 percent of the
being produced.market after competition enters the picture" (p. 11).
So, for example, the OM of a cruise line that isThe quality of its offerings will also improve as it
socially and environmentally conscious, and whoutilizes the sustainable goods produced by
wants to improve their SCM and incorporate amanufacturers. Since quality usually commands
closed-loop method of operation in her organization,premium prices, this can help firms gain market share.
might be considerate of the inputs that aToday, a more informed and enlightened public
manufacturing company utilizes in its productiondemand higher quality goods and thus supports
process and in the processes that it utilizes toorganizations that deliver quality.
convert the raw materials into products; the timelyAdditionally, consumers are demanding more and
deliverance of those products; the quality ofmore that corporations go green as much as possible.
customer service after the product is delivered, andBuilding sustainability into the supply chain will improve
the impact that disposal of these products have onquality and increase customer satisfaction.
the environment.Organizations that do not build sustainability into their
Likewise, manufacturing companies (whose productsoperations will find that it will cost them more (in the
the cruise lines use) also wishing to do the sameloss of market share) to NOT do so. By building
might, in turn, be considerate of the inputs that theirsustainability into their practices early, both
suppliers utilize in their operations. As mentionedmanufacturing and service organizations can expect
before, these inputs include - but are not limited to -to gain and maintain a competitive advantage.