Driven by continuing emission of greenhouses and other unsustainable practices, global climate change is accelerating at an unprecedented rate, according to the IPCC. A rapidly developing country with a massive population and over-reliance on fragile monsoons and Himalayan glaciers, India is extremely vulnerable to the perils of ecological destruction.  

The importance of sustainable operations management cannot be overstated here. If you want to do business in India (or anywhere in the world for that matter), your business operations have to be in sync with the wider goals of sustainable development and Environmental Social & Governance (ESG) standards.

What are the main principles of sustainable operations management? How does it affect your ability to stay profitable? Does it have any impact on your workforce management and recruiting? In this article, we will try to find answers to all these questions and more.

What Is Sustainable Operations Management?

Sustainable Operations Management can be defined as the operations strategies, techniques, and operational policies to support both the economic and the environmental objectives and goals. It is the administrative process focused on achieving three major goals in any business:

  • Maximise profits
  • Improve efficiency
  • Accomplish organisational goals

All aspects of production, from planning to implementation and final delivery, come under the ambit of operations managers. It plays a decisive role in production capacity planning, product design, supply chain and logistics, quality control, and more.

When you add ‘sustainability’ as a central goal into this mix, you get sustainable operations management. According to the Harvard Business School, sustainability in business has to address both the impact on society and the larger environment and try to create positive outcomes in both.

What Are The Principles of Sustainable Operations Management?

Traditionally, operations management has been driven by a singular focus on profits above all other concerns. Expanding the scope to accommodate sustainability as a core goal requires considerable effort, patience, and persistent adherence to certain guiding principles.

The following principles as essential for any organisation on the road to true sustainability:

  • Commitment: Instead of paying lip-service, business leaders need to wholeheartedly buy into the idea that they have an active responsibility in promoting a sustainable future for all.
  • Ethical Decision-Making: Key organisational decisions should always factor the potential short-term and long-term impact of their consequences on the environment and society at large.
  • Stakeholder Participation: Investors, employees, consumers, and local communities are all impacted by the actions of organisations, both directly and indirectly. Stakeholder involvement is essential when weighing up various processes and new projects.
  • Performance Tracking: Sustainable decisions should be backed by hard data. Operational changes should be followed up with sustained and efficient data tracking and analysis to gauge if they are truly making a ‘difference’.

What Are Sustainability Considerations For Operations Management?

According to the Harvard Business Review, the corporate culture in many organisations are hard-wired to maintain stability, predictability, and the status-quo. These arrangements often create processes, products, and systems that are hostile to change.

Sustainable operations managers have to reconcile these differences, with a particular focus on the following aspects:

The Product/Service And Customers

To be successful, a sustainable product has to provide maximum satisfaction to the consumer while having a minimal impact on the environment. However, economies of scale can be challenging to master – adopting sustainable alternatives can increase the cost of the final product.

Take cars for example – by their very nature they are extreme polluters, responsible for nearly 30% of greenhouse gas emissions. But we are still in the early stages of switching to less polluting electric vehicles.

While waiting for the technology to become cheaper, auto manufacturers are looking at ways to mitigate the impact – through more efficient engines that adhere to the Bharat Stage Emissions Standards, the use of hybrid technologies, and greater focus on recycling.

The good news here is that consumer tastes are changing – according to a survey by Bain & Company, even in India, historically a price conservative market, over 60% of consumers are willing to pay a premium for more ‘sustainable products’.

HR And Recruiting

Any transformative project in an organisation needs the support of its workforce to be effective. Sustainability often requires change of a high magnitude. Instead of top-down edicts, managers need a more collaborative approach that focuses on employee empowerment. 

Such an approach comes with a bevy of benefits. Tried and tested project management philosophies like the TPS System rely heavily on employee participation to boost efficiency and innovation. According to the Harvard Business Review, increased employee engagement in sustainability projects is essential for organisational change. 

The World Economic Forum advocates for a ‘people-first’ approach to sustainability with a focus on diversity and inclusion, equal pay, continuous learning, and employee upskilling. These initiatives result in the following advantages:

  • They make your teams more capable of handling sustainability challenges across the organisation.
  • They help to improve employee engagement, morale, workplace culture, and talent retention.

And it is not just companies who have a desire for positive change. Individuals these days are highly concerned about the state of the environment and climate change. According to an IBM survey, sustainable operations do have the support of younger generations of workers.

Over 68% prefer working at companies that promote sustainability. More than 30% switched jobs to work at sustainable businesses, even when it meant taking a pay cut. Sustainable companies are more likely to have a positive employer branding, which makes it easier for them to attract top talent.

Sustainable Operations Management Improves Resilience

Conventional wisdom in business holds profit as the most important goal. Businesses that try to accommodate other ethical considerations cannot succeed. But that is no longer true. Sustainability is no longer an ethical choice – it is a survival necessity for human civilisation.

And the major stakeholders are already wide awake to this reality. Over $1 trillion has flown into ESG investing since 2020. According to a McKinsey Global study on ESG, companies that focus on sustainability had a 47% higher revenue growth and 36% more earnings than their peers.

Further, looking for short-term profits makes us blind to the long-term impact of catastrophic environmental damage, as eloquently explained here by the Harvard Business Review. Sustainable operations management can actually make your organisation more resilient in the long term.