MMPO-003

Operations Management
School of Management Studies

BLOCK 1
OPERATIONS MANAGEMENT – AN OVERVIEW 7
BLOCK 2
DESIGNING OPERATIONS 51
BLOCK 3
MANAGING OPERATIONS 97
BLOCK 4
ISSUES IN OPERATIONS MANAGEMENT 205
COURSE DESIGN AND PREPARATION TEAM
Prof. K. Ravi Sankar Prof. R. Paneerselvam*
Director, Professor (Retd.),
School of Management Studies, School of Management Studies,
IGNOU, New Delhi Pondicherry University,
Pondicherry

Prof. B. Rajasekhar* Prof. T. Nambirajan

School of Management Studies, School of Management Studies,
University of Hyderabad, Pondicherry University,
Hyderabad Pondicherry

Prof. Rajesh Kumar Singh Dr. Deep Shree

Professor of Operations Management Delhi School of Management,
MDI, Gurugram Delhi Technological University,
Haryana New Delhi

Dr. N.V.S. Raju* Dr. R. Somasundaram*

Professor & HOD Professor, Kongu Engineering College,
Dept. of Mechanical Engineering Perundurai, Erode
JNTUH College of Engineering, Tamilnadu - 638060
Hyderabad
Course Coordinator and Editor
Dr. Subrahmanyam A* Dr. Venkataiah Chittipaka
Associate Professor Associate Professor
GITAM School of Business, School of Management Studies
GITAM (Deemed to be University), IGNOU, New Delhi
Visakhapatnam, A.P – 530045
Acknowledgement: The persons marked with (*) were the original contributors, and the profiles are as
they were on the initial print date.

PRINT PRODUCTION
Mr. Tilak Raj
Assistant Registrar
MPDD, IGNOU, New Delhi

May 2023
© Indira Gandhi National Open University, 2023
ISBN:
All rights reserved. No part of this work may be reproduced in any form, by mimeograph or any other
means, without permission in writing from the Indira Gandhi National Open University.
Further information on the Indira Gandhi National Open University courses may be obtained from the
University’s Office at Maidan Garhi, New Delhi – 110 068
Printed and published on behalf of the Indira Gandhi National Open University, New Delhi, by the
Registrar, MPDD, IGNOU.
Laser typeset by Tessa Media & Computers, C-206, A.F.E-II, Jamia Nagar, New Delhi -110025
 Content
BLOCK 1 OPERATIONS MANAGEMENT – AN OVERVIEW 7

Unit 1 Operations Management: An Introduction 9

Unit 2 Operations Strategy 22
Unit 3 Sustainable Operations 29

BLOCK 2 DESIGNING OPERATIONS 51

Unit 4 Process & Capacity Analysis 53

Unit 5 Design of Manufacturing goods and Services 67
Unit 6 Computerized layout design Algorithms 83

BLOCK 3 MANAGING OPERATIONS 97

Unit 7 Demand Forecasting 99

Unit 8 Inventory Planning & Control 124
Unit 9 Aggregate Production Planning 148
Unit 10 Materials Requirement Planning 164
Unit 11 Sequencing & Scheduling 184

BLOCK 4 ISSUES IN OPERATIONS MANAGEMENT 205

Unit 12 Six Sigma Quality Control 207

Unit 13 Managing Lean Operations 264
Unit 14 Reliability & Maintenance Management 310
Unit 15 Emerging trends/technologies in operations 367
COURSE INTRODUCTION

Dear Learners,

Welcome to the course MMPO-003 Operations Management (OM).

Operations is a fascinating management area that can significantly impact
productivity and the quality of our lives. This course provides a practical and
realistic introduction to the field of operations. Even if you plan on
something other than a career in operations, understanding the role of
operations in an organisation can still benefit you since you'll likely work
with people in that area. Additionally, this course will show you how OM
affects society and your life. This course consists of four blocks spread over
15 units.
Block 1 is on Operations Management – An Overview consists of three
units. This Unit 1, Operations Management: An Introduction, discusses
the scope, significance, and importance of studying operations management.
It also focuses on productivity and operations managers' ethics and social
responsibility. This Unit 2 Operations Strategy focuses on understanding
the basic concept of operations strategy and the steps in formulating an
operations strategy etc. Finally, this Unit 3, Sustainable Operations, covers
the topics of sustainable operations, the triple bottom line (TBL), and their
significance. It also explores reverse logistics, the circular economy, and the
framework of a closed-loop supply chain network. Additionally, it
emphasises the importance of decarbonisation and the current state of
decarbonisation in building operations.

Block 2, Designing Operations, consists of three units. In Unit 4, Process &

Capacity Analysis, we delve into capacity and process analysis, examining
specific matters about capacity and performance. Furthermore, we evaluate
how alterations affect the capacity plan and implement pre-emptive actions to
enhance performance when financially feasible. Unit 5, Design of
Manufacturing Goods and Services, teaches you how to manage costs
better and improve product quality. Additionally, it guides how to reduce
manufacturability issues, resulting in faster and more cost-effective product
manufacturing. Finally, unit 6, Computerized layout design Algorithms,
aims to help you grasp the significance of space management to optimise the
movement of goods and provide a secure and comfortable workplace.
Furthermore, we aim to enhance the organisation's production capacity using
computerised layout design algorithms.

Block 3, Managing Operations, consists of five units. This Unit 7, Demand

Forecasting, covers the importance of forecasting and explores both
Qualitative and Quantitative Forecasting Techniques and their applications in
business and society. Further, this unit includes various examples to help you
understand the techniques better. It highlights the importance of applying
different approaches to different functional areas of business. Unit 8,
Inventory Planning & Control, deals with independent demand inventory
systems. The unit discusses the basic concepts of the inventory system. It
elaborates on different models of inventory management and its
sensitiveness. This unit examines the basic inventory model, EOQ with finite
replacement model, backlogging and bulk discount, etc. The unit emphasises
the model with uncertain demand for a single period and multiple periods.

Unit 9, Aggregate Production Planning, highlighted different steps in

aggregate planning and its managerial importance. The issues like workforce
adjustment, vacation schedules, subcontracting and backlogs etc., are
discussed. In Unit 10, Materials Requirement Planning, you will learn
about the significance and historical background of MRP. You will gain an
understanding of the MRP planning exercise and its logical components. This
includes information about the inputs and outputs of MRP, such as Bill of
Materials (BoM), inventory records, and other MRP calculations. Unit 11 is
on Sequencing & Scheduling. In this unit, we will explore the significance
and function of sequencing and planning in operations management.
Additionally, you will have the opportunity to acquire hands-on experience
with different scheduling and sequencing techniques for Mass, Batch, and
Job shop production systems.
Block 4 Issues in Operations Management consist of four units. Unit 12,
Six Sigma Quality Control, deals with statistical quality control, its goals,
and the variables and attribute charts contributing to the variation. It explores
using control charts, statistical process control, and the seven tools of SQC to
enhance the quality of outputs. The unit also covers the history and evolution
of Six Sigma, its connection to process capability, and the Sigma Level.
Additionally, it discusses the Six Sigma problem-solving process (DMAIC)
and the hierarchy and participants involved in Six Sigma. In this Unit 13,
Managing Lean Operations, you will learn about the concept and meaning
of lean operations and the history and evolution of the Toyota Production
System. The course also covers the relationship between Just in Time and
Lean operations, lean inventory management, scheduling, and quality control.
Unit 14, Reliability & Maintenance Management, provides clear
information on maintenance methods, policies, and strategies. It also explains
the step-by-step procedures for maintaining and establishing a maintenance
strategy. Finally, unit 15, Emerging trends/technologies in operations,
will cover various emerging technologies, including Industry 4.0, Big Data,
cloud computing, cyber-physical systems, Artificial Intelligence, Machine
Learning, Industrial Internet of Things, Block Chain Technology, and
Augmented/Virtual Reality (AR/VR).

All the best!

Course Coordinator and Editor
Dr. Venkataiah Chittipaka
Associate Professor
School of Management Studies
IGNOU, New Delhi – 110068
SUGGESTED READINGS
1. B. Mahadevan, 2016, Operations Management theory and practice, 3rd
Edition, Pearson Education.
2. Heizer Jay, Barry Render, Chuck Munson & Amit Sachan 2017,
Operations Management – Sustainability & Supply Chain Management,
Pearson, 12th Edition.
3. Lee J. Krajewski, Larry P. Ritzman, Manoj K. Malhotra & Samir K.
Srivastava 2016, Operations Management – Processes and Supply
Chains, 11th Edition, Pearson.
4. Collier/Evans/Ganguly: OM: A South – Asian Perspective, 3rd Edition,
Cengage Learning India Pvt. Ltd.
5. Gaither Normal & Frazier, 2011, “Operations Management”, 9th Edition,
Cengage Learning India Pvt. Ltd.
6. Stevenson J. William, 2010, Operations Management, 9th Edition, TMH.
7. Scott T. Young, 2009, Essentials of Operations Management, SAGE
Publications India Pvt. Ltd.
8. Kanishka Bedi, 2009, Production and Operations Management, Oxford
University Press.
9. Jack R. Meredith, Scott M. Shafer, 2008, Operations Management for
MBAs, 3rd Edition, John Wiley & Sons.
10. Arun Kumar and N. Meenakshi, 2014, Operations Management,
Cengage Learning.
11. Everett. Adam, Jr. and Ronald J. Elbert, 2003, Production and
Operations Management Concepts, Models and Behaviour, 5th Edition,
PHI.
12. Edward M. Knod and Richard J. Schonberger, 2001, Operations
Management meeting customers’ demands, McGraw hill international,
7th Edition.
13. Steve Brown, Richard Lamming, John Bessant and Peter Jones, 2005,
Strategic Operations Management, 2nd Edition, ButterWorth-Heinemann
an Imprint of Elsevier.
14. Kenneth K. Boyer, Rohit Verma, 2011, Operations Management:
Strategy, Global Supply Chain, and Service Operations, First India
Edition, Cengage Learning.
15. Amole Gore, Roberto Panizzolo, 2012, Operations Management, First
Impression, Cengage Learning India Pvt. Ltd.
16. Robert Johnston, Graham Clark, 2005, Service Operations Management:
Improving Service Delivery, Second Edition, Pearson Education
17. Richard Metters, Kathryn King-Metters, Madeleine Pullman, Steve
Walton, 2009, Service Operations Management, Third Indian Reprint,
Cengage Learning India Pvt. Ltd.
18. Klassen D Robert and Menor J. Larry, 2006, “Cases in Operations
Management”, Sage Publications.
 BLOCK 1
OPERATIONS MANAGEMENT –
AN OVERVIEW
 Operations
UNIT 1 OPERATIONS MANAGEMENT: AN Management:
An Overview
OVERVIEW

Objectives
After going through this unit, you should be able to understand:
• The scope and significance of the function of operations management.
• The importance of studying operations management.
• The role of operations managers in organisations.
• The productivity and factors of production.
• The ethics and social responsibility of operations managers

Structure
1.1 Introduction
1.2 What is operations management?
1.3 Nature of operations management (OM)
1.4 Scope and Significance
1.5 System View of Operations Management
1.6 Why Should Study OM?
1.7 Role of Production and operations manager
1.8 Understanding Goods and Services
1.9 Productivity
1.10 Productivity Measurement
1.11 Productivity Variables
1.12 Customer benefits packages (CBP)
1.13 Ethics and social responsibility
1.14 Environmental Concerns of Operations
1.15 Operations Manager in India
1.16 Summary
1.17 Self-assessment Exercises
1.18 Further Readings

1.1 INTRODUCTION
Operations management involves managing the various resources, activities,
processes, and procedures related to converting inputs into outputs. Every
manager must understand the role and responsibilities of operations managers
in manufacturing and service organisations to implement operations
management practices effectively. Reducing waste and improving the quality
of products and services with better practices is crucial to sustain in the
competitive business world. The operations management practices have 9
Operations evolved over a period with significant developments. The advent of the
Management –
An Overview computer in product processes increased the efficient use of labour, material,
and equipment. Sophisticated production control techniques have been
developed to produce goods and services at a desired time and at a minimal
cost. Further, this course is more critical with globalisation and corporations
expanding their operations worldwide.

1.2 WHAT IS OPERATION MANAGEMENT?

Production involves Step by step conversion of one form of material to
another through chemical or mechanical processes i.e., creating goods and
services.

Production Management refers to planning, organizing, directing, and

controlling the activities of the production function. Production management
is the set of interrelated management activities involved in manufacturing
certain products.

Every organisation creates value by converting inputs into outputs, and these
outputs are generally two types of physical goods and services. Activities that
produce things are typically relatively visible in manufacturing organisations.
They demonstrate the production of physical goods like Tata-Motor’s
Vehicles or LG’s TVs.
Production management was formerly considered manufacturing
management only. Now after the inclusion of services into its scope, it is
broadly known as operations management.

Production implies products, i.e. manufacturing, whereas operations can

apply to products and services. Therefore, Operations have replaced the term
production.
“Good” = economic unit that is produced. It is tangible.
“Service” = economic activity that is performed. It is intangible.
Operations Management (OM) is the activities that create value in goods and
services by transforming inputs into outputs.
Some examples of Productions are:
a) Manufacturing custom-made products like, boilers with a specific
capacity, constructing flats, some structural fabrication works for
selected customers, etc.,
b) Manufacturing standardized products like cars, buses, motorcycles,
radio, television etc.,
Some examples of Services are:
a) Custom-made services like, medical facilities and clinical tests,
arranging food for parties, travel booking services etc., and
b) Standardized services like developing standard computer software,
providing standard insurance policies etc.

10
 Operations
1.3 NATURE OF OPERATION MANAGEMENT Management:
(OM) An Overview

Planning, organising, directing, and controlling are the four fundamental

tasks in traditional management. Planning serves as the foundation for future
operations by creating strategies, objectives, goals, and the rules, procedures,
and timetables for achieving them. Organising involves assembling the staff,
materials, infrastructure, equipment, information, and finance needed to carry
out planned tasks. Directing makes plans a reality by allocating precise tasks
and responsibilities to staff members, inspiring them, and coordinating their
efforts. Finally, controlling—monitoring results and taking remedial action -
is required to ensure that plans are carried out correctly or not. This also
entails using best practices and lessons learned from errors for long-term
operations improvement.

To satisfy customer demands for high-quality products and services, to create

the employees’ skills and keep them motivated, to maintain efficient
operations to ensure an adequate return on the investment, and to preserve the
environment, operations management must be effective. Operations
management is an approach that includes a number of essential tasks, such
as:

• Understanding consumer demands, assessing the satisfaction of

customers, and using that information for the organisation to create new
and better products and services that will be promoting the organisation’s
long-term plan.
• We are integrating data about consumers, products and services,
operations, staff, suppliers, charges and finance to make an appropriate
decision.
• Leveraging technology to create products, services, manufacturing
techniques, and service delivery methods that quickly and adapt to client
needs and maximise productivity;
• It is regularly evolving in response to the organisation to socio-
environmental changes while understanding from employees, competitor
companies, and consumers.

The concepts of operations management are simple. They are relatively easy,
but they do need vision and willpower to put into practice. Therefore, the
primary goal of operations management is to continuously enhance the
capacity and performance of the overall business to provide consumers with
ever-improving value.

1.4 SCOPE AND SIGNIFICANCE

If the nation’s entire economy is divided into agriculture and agriculture-
based industry, manufacturing of tangible goods and service industry, the
service sector is growing much faster. In the USA, it has already emerged as
the largest employer. During the recent recession in the USA (1989-1993),
the employment level in the manufacturing industries shrank. However, the
11
Operations number of persons working in the service sector increased, although at a
Management –
An Overview lower rate, in India also. Entrepreneurs with new, innovative and untried
ideas are entering the service sector to cater to the unmet needs of the
population.

The functional knowledge of operations management is distinct from other

functional areas of marketing, finance, human resources, information &
systems, public relations, corporate communications, legal etc. The more
basic learning has originated from it and transcended into other functional
areas. Some functional sub-areas have achieved such eminence that they are
being explored as full-fledged subjects of study, viz., quality management,
technology management, project management, purchasing and materials
management, productivity management and ergonomics, and safety and
environment management.
All the managers are involved in planning, organising and controlling, but
operations managers are directly responsible for “getting the job done”.
Operation managers act as a focal point in the relationship with other
functional departments in organisations and take the leadership to produce
products or services demanded by the customers.

The scope of operations management is vast, commencing with selecting the

plant’s location to deliver the products/services to customers. The operations
management covers such activities as

• Acquisition of land, constructing a building, procuring and installing

machinery, purchasing and storing raw materials and converting them
into a saleable product, product selection design, process selection and
planning: facilities location, facilities layout and materials handling and
capacity planning

Added to the above are other related topics of operational decisions, such as

• Quality management, maintenance management, production planning

and control (PPC), inventory control, method study, work simplification,
maintenance & replacement, cost reduction and power and other related
areas.

1.5 SYSTEM VIEW OF OPERATIONS

MANAGEMENT
There has been a sea-change in the scenario of operations management.
Manufacturing facilities producing tangible goods were far removed from the
customer, adversely impacting the customer - orientation of production
personnel. Thanks to the importance given to the customer focus, operations
managers had to re-orient their thinking and learn the true meaning of
customising their work processes. Conversion of raw materials into finished
products and delivering services to transform an unsatisfied customer into a
satisfied one has been identified as the vital link in the primary value chain of
an enterprise. Hence, operations are often defined as a value-added
transformation process. Inputs (material, machines, labour, management, and
12 capital) are transformed into outputs (goods and services).
Operations are activities through which people perform organisational Operations
Management:
transformations (input-process-output). In all organizations operations An Overview
usually involve a larger share of corporate resources. This does not mean,
however, that operations are more important than other functions, like
marketing, human resources management, finance, etc. On the contrary,
operations are best viewed as one of the essential functions of any
organisation and well-integrated into other functions of an organization.
Systems View of Operations Management is depicted in Figure1.1.

Value Added
Inputs Transformation/ Output
Land Conversion Process Goods
Labour Services
Capital
Information

Feedback

Control
Feedback Feedback

Figure 1.1: Systems View of Operations Management

Production is an organised activity, so every production system has an

objective. The system transforms the various inputs into valuable outputs.
The transformation process is performed efficiently, and the output is of more
excellent value than the sum of the inputs. The system does not operate in
isolation from the other organisation’s system. Feedback about the activities
exists, which is essential to control and improve system performance. Any
actions that do not add value are excessive and should be eliminated.

Examples of operating systems

System Inputs Conversion Output

(desired)
Hospital Patients, MDs, Nurses, Health care Healthy
Medical supplies, individual
equipment
Restaurant Hungry customers, food, Prepare good, Satisfied
chef, servers, atmosphere serve food customers
Automobile Sheet steel, engine parts, Fabrication and High quality
plant tools, equipment, workers, assembly of cars automobiles
machines
University High school grads, Transforming of Educated
teachers, books, classroom knowledge and individuals
etc skills

13
Operations
Management – 1.6 WHY SHOULD STUDY OM?
An Overview
OM is one of four primary functions of any organization, which is integrally
related to all the other business functions. One of the critical activities of any
organisation is OM, which is closely tied to all other daily operations. It is
critical to understand how the OM activity works since it affects all
companies that advertise (sell), finance (account), and produce (operate). As
a result, we research how individuals organise themselves for a successful
business.

We study OM because we’re interested in how goods and services are made.
The practical and efficient utilisation of resources is possible at the
operations department as the majority of resources in terms of raw material,
machinery, equipment, tools, and employees are in the operations
department.

We research OM to comprehend the work that operations managers do. You

can develop the skills required to be one of these managers by learning what
these managers do. This will assist you in investigating the diverse and
rewarding employment prospects in OM.

The operations department offers a significant opportunity for an

organization to improve its productivity and profitability. The OM function is
responsible for a considerable portion of the assets of most organizations, and
it is such a costly part of an organization. Nearly half of the employed people
over the world have jobs in operations.

1.7 ROLE OF PRODUCTION AND

OPERATIONS MANAGER
The Operations Function consists of all activities directly related to
producing goods or providing services. A primary function of the operations
manager is to guide the system through decision-making. Usually, an
operations manager involves two types of organisational decisions: system
design decisions and system operation decisions. The system Design
Decisions include plant capacity, facility location, facility layout, product and
service planning, process planning, technology planning, acquisition and
placement of equipment etc. These decisions are typically strategic decisions
that require long-term resource commitment and determine system operation
parameters.

Once the plant is established with a specific capacity, the operations manager
performs daily activities to produce the desired product and services. Hence
involved in various decisions like management of personnel, inventory
management and control, scheduling, project management, quality control
etc. Operations managers spend more time on system operation decisions
than any other decision area, but they still have a vital stake in system design

To do “operations Management,” you do not always require the title of

“operations Manager.” Operations management is a part of any task. Using
operations management concepts and techniques will help you accomplish
14
your goals regardless of your functional business area. When you manage Operations
Management:
financial, human resources or legal, accounting, operations, environmental, An Overview
supply chain, services, or marketing activities, you create value for your
clients and your company’s internal customers. Everyone who manages a
business process or activity should know some fundamental OM concepts.
Table 1.1 has discussed a few critical areas of operation manager and their
decisional role.

Table 1.1: Operational Areas and Decision Roles

Operational area Issues

What procedures and quantity will be needed for
Process and capacity such products?
design What tools and modern technology are required
for these processes?
Design of goods and What good or service should we offer? How
services should we design these products?
How should the quality be described? Who is in
Managing quality
responsible of quality?
How should the facility be set up? How much of
Layout strategy
a facility does our proposal require?
Where should we locate the facility? What
Location strategy criterion should we use to decide where to put
this?
How can we create a fair working environment?
Human resources
How much output can we reasonably expect fro
and job design
m our staff?
Inventory, material How much of each component do we have in
requirements planning, stock?
and JIT (just-in-time) When should we reorder?
Should we manufacture or purchase this part?
Supply chain
Who can we connect with our e-commerce
management
platform as suppliers?
Who is accountable for maintenance? When will
Maintenance
we perform maintenance?

1.8 UNDERSTANDING GOODS AND SERVICES

A comprehensive understanding of goods and services is essential to develop
and executing the best system. You can view, touch, or consume a physical
item is good. Fruits, blossoms, soap, telephones, computers, and industrial
equipment are a few examples of products. A product is considered durable if
it lasts at least three years. Some examples of stable things include furniture,
automobiles, and appliances. Nondurable goods typically have a shelf life of
fewer than three years and are known as perishable goods. Examples include
vegetables, toothpaste, and shoes. Any primary or supplementary support for
under three years is considered a service. Nondurable goods are perishable 15
Operations and typically last through processes that do not immediately result in physical
Management –
An Overview products. The non-goods element of a buyer’s (customer) and seller’s
relationship is represented by services. Resorts, law and finance firms,
aviation, hospitals, museums, and consulting companies are typical service-
based businesses.

Services and goods have many things in common. Customers who buy and
use them receive value and satisfaction. They can be personalised to a
person’s needs or standardised for the broader market. They are produced and
given to clients through a process that combines human labour and
technological advancement. Services that do not involve a lot of client
interaction, like “back office” credit card processing, can be handled in a
factory-like style. However, the “management of service-providing
organisations” differs from the “management of goods-producing
organisations”, and various demands are placed on the operations function
due to these very significant differences between commodities and services.
The following section discussed some important attributes that distinguish
the service and good.

1.9 PRODUCTIVITY
The precision with which products/services are produced can be called
production process productivity. The most common method for calculating
productivity is to compare an aggregate output through a single or aggregate
output over time.
Productivity is an indicator of how quickly someone achieves a task. We can
describe it as the pace at which a corporation or nation produces things and
services (output), typically assessed based on the quantities of inputs (labour,
capital, energy, or other resources) utilised to supply those goods and
services.

So, if you’re wondering what productivity means in terms of economics, we

may define it as a measurement of output relative to input.

Resources must be transformed into goods and services to create new

products. Production efficiency creates more value in terms of offering goods
and services. The ratio of inputs (resources, such as capital and labour) to
outputs (goods or services) is known as productivity (see below figure).
Enhancing (improving) this ‘output-to-input’ ratio is the responsibility of the
operations manager. So, enhancing efficiency entails increasing productivity.
There are two approaches to improve this: decrease inputs while maintaining
output, or increase output while keeping inputs constant. Both indicate an
increase in production. In a production system, labour, capital, and
management are the inputs in an economic sense. The high output does not
necessarily translate to increased productivity; it may mean more people are
working and high employment levels (low unemployment).

16
 Operations
1.10 PRODUCTIVITY MEASUREMENT Management:
An Overview
Productivity can be measured in a very straightforward manner. Such is the
case when work hours per tonne of a specific type of steel are used to
measure productivity. Although labour hours are a popular way to quantify
input, other metrics can also be employed, including capital (the amount of
money invested), materials (a ton of material), and energy (kilowatts of
electricity). Below are examples provide for understanding the above
discussion:
Productivity =

Example: - if units produced = 2,000 and labour-hours used is 500, then;

Productivity = = =4

However, the above example uses one resource input (i.e., labour hour),
known as single-factor productivity. Multifactor productivity considers all
inputs and offers a more comprehensive perspective on productivity (e.g.,
labour, capital, material, and energy). Total factor productivity is another
name for multifactorial productivity. The input units are combined to
determine multifactor productivity, as seen here:
Productivity =

Managers can assess their performance with the help of productivity

measurements. However, the two metrics’ outcomes may differ. Measuring
only labour will produce inaccurate results if labour productivity increases
solely due to capital investments. Multifactor productivity is generally more
effective but more challenging. The multifactor productivity metrics give
better information on the trade-offs between factors, but significant
measurement issues remain.

1.11 PRODUCTIVITY VARIABLES

Labour: A healthier, more educated, and treated better labour will increase
labour’s contribution to production. A shortened workweek might be
responsible for some of the growth. Historically, an increase in worker
quality has been credited for around 10% of the annual increase in
productivity. Three crucial factors can increase labour productivity:
• A productive workforce requires a certain level of education.
• Workforce dietary habits.
• The social costs of providing sanitation and transportation enable the
availability of labour. Countries’ productivity might be reduced by up to
20% due to illiteracy and poor diet.
Capital: Capital investment becomes increasingly expensive due to taxes and
inflation, raising the cost of capital. We can anticipate a decline in
productivity when the amount of money spent per employee falls. Utilising
labour instead of capital may minimise unemployment in the short term, but
it also reduces productivity and, as a result, wages over the long run. Capital 17
Operations investment is frequently a necessary but infrequently sufficient component in
Management –
An Overview the fight for higher productivity. The balance between labour and capital is
constantly shifting. The higher the interest rate, the more capital-intensive
projects that are “squeezed out”—or abandoned—because the possible return
on investment for a given risk has decreased. Managers modify their
investment strategies in response to variations in capital costs.
Management: Management is a production element and a resource for the
economy to boost productivity. Management must ensure that labour and
capital are employed effectively. More than half of the annual gain in
productivity is attributable to management. This enhancement encompasses
advancements made by the use of technology and knowledge. Technology
and knowledge use are essential in post-industrial society. As a result,
knowledge societies are another name for post-industrial society. Most of the
labour force has moved from manual labour to skilled and information-
processing jobs requiring continual education in knowledge societies.
Operations managers are accountable for investing in the necessary education
and training as they create organisations and workforces.

1.12 CUSTOMER BENEFITS PACKAGES (CBP)

A customer benefit package (CBP) is a properly defined combination of
tangible (goods-content) and intangible (service-content) elements that the
customer is aware of, pays for, makes use of, or experiences. In simple terms,
it is a set of products and services that have been combined in a certain way
to add value to clients and satisfy their desires and needs. The complete
product offered to the customer comprises a core product and other goods
and services.

Tuition
Reimbursement
facility
Medical Canteen
facility facility
Quality education
&
Placement opportunity

Vehicle parking Scholarship

facility opportunity

Core/primary service

peripheral service
Figure 1.2: CBP for Students Deciding on an Education Institute

These additional goods and services are called peripheral goods and services
because they provide value to the main product but are not essential.
Examples; of peripheral products and services in the cafe industry include
meals for children and providing children’s play area inside. Figure 1.2
18
presents CBP for students deciding on an education institute. Operations
Management:
An Overview
1.13 ETHICS AND SOCIAL RESPONSIBILITY
Changes and difficulties are constantly present for operations managers. The
mechanisms they use to transform resources into products and services are
intricate. Laws and values change together with the physical environment and
social climate. The opposing viewpoints of various stakeholders, including
customers, distributors, suppliers, owners, lenders, and employees, offer
several issues due to these changes. These stakeholders and different levels of
the government need to be constantly monitored, and deliberate responses are
needed.
Building effective systems while figuring out morally and socially acceptable
responses is not always straightforward. Efficiently creating and producing
high-quality, safe products is one of the numerous ethical difficulties
operations managers must face.
• Producing safe and well-quality goods in a more sustainable way
• Providing a secure work environment.
• Respecting community obligations.

While meeting the market’s needs, managers must carry out all of this
ethically and socially responsibly. Many ethical issues will be resolved if
operations managers have moral awareness and concentrate on boosting
productivity in a structure where all stakeholders have a voice. The firm
would use fewer resources, the workforce would be dedicated, the market
would be content, and the ethical climate will improve. This work highlights
several moral and socially conscientious steps operations managers can take
to address these issues successfully. Each chapter also includes an exercise
on an ethical dilemma.

1.14 ENVIRONMENTAL CONCERNS OF

OPERATIONS
In our pursuit of the insatiable thrust of “getting and begetting”, we have
damaged our environment to such an extent that we are now facing the grim
prospects of ozone layer puncture, the greenhouse effect of carbon-di-oxide
emissions leading to global warming and suffocating level of atmospheric
pollution in overpopulated cities like Delhi and Calcutta. In response to
societal concerns about the alarming rise in corruption, most countries in the
world have formulated statutes and legislated on the following types of
pollutants:
• Solid Waste
• Liquid Waste
• Atmospheric Pollution
• Noise Pollution

The government of India has also enacted the following laws: 19

Operations The Hazard Wastes (Management & Handling) Rules, 1989, framed under
Management –
An Overview the Environment Protection Act 1986 for solid wastes.
• The Water (Prevention and Control) Act of 1974, amended in 1978,
1988 etc., for liquid wastes.
• The Air (Prevention and Control of Pollution) Act of 1981 relates to air
pollution.

There is no law at the national level on noise pollution. Local civic and police
authorities are empowered to ban the use of loudspeakers. Still, the regularity
with which these bans are shunned by religious organisations and for so-
called religious festivals, in general, is very annoying.

Also, there is no legislation on population explosion, and alleviation of

poverty, nor our national planners have succeeded in combating this problem.
Perhaps, the only salvation is to seek and secure a technological solution to
the baffling problems of population explosion and poverty eradication, the
world’s two biggest polluters.

1.15 OPERATIONS MANAGER IN INDIA

Whereas there is an urgent need to transform operations management by
recruiting and positioning more and more multi-disciplinary freshers, the
scene is not encouraging. There is an overabundance of technical specialties
or graduates of the University of experience. As a result, their mindsets and
culture are deeply embedded with conventional wisdom - a deep-seated
paradigm that helps them reinforce, “this is the way things are done here”.

Most operations facilities are in a small town, away from the residential area,
and even in large cities and industrial areas. They are usually scattered
around the fringes. Working hours are longer (48 hours work as against the
general norm of 40 flours approximately in commercial offices), commuting
time and distances are longer, and there is more regimentation.

There is a higher premium on conformance, unity, and convergence. As a

result, although there is an urgent need to change in favour of qualified
engineers with MBA degrees, the profession does not seem to attract them.
They are armed with a postgraduate qualification. In management, engineers
are joining marketing, finance, personnel, information, administrative services
etc., in large numbers. It may not be wrong to say that the top layer of
engineering graduates are seeking pastures in functional areas other than
operations management or even migrating to other countries! Creativity
suffers until and unless society can attract and retain its best human assets in
operations management.

We have two models available in the current global scenario - Japanese, who
prioritised operations management and has innovated numerous management
systems to support and sustain excellence in all other functional areas. We
have the USA Model, which constantly reinforces a marketing-oriented
approach to business. A case can be easily made in favour of a synthesis for
India as this would ensure the best of both worlds. However, in no case
20
should we copy and adopt blindly. We must derive and develop our Operations
Management:
management processes based on Indian ethos and values. An Overview

1.16 SUMMARY
The so-called production or manufacturing management has been renamed
operations management. The system study of operations management
encompasses the input-process output, where the conversion process adds
value to raw materials by changing their shape, size or weight. Industrial
managers effectively and efficiently utilise resources like men, machines, and
materials—methods, management, etc. Operations management includes a
vast and diverse array of bodies of knowledge, signifying that it is multi-
disciplinary.

1.17 SELF-ASSESSMENT EXERCISES

a) Why have we changed the name from production to operations
management?
b) Take any service organization and draw up a schematic of its overall
process of inputs and outputs.
c) Take a typical agriculture, poultry or dairy farm, and draw up the
schematics of the overall process. What are the common features?
d) “We have entered the age of technology: henceforth, everything will be
knowledge-based.” Discuss the above in the context of increasing
technology-based resources for achieving tasks.
e) Explain the complementary role of productivity and activity in
effectively utilising resources.
f) Can `space’ be construed as a resource? If so, how would you measure
its productivity?
g) What is the proactive management of environmental pollution?
h) What are the social issues involved in operations management?
i) What are the beneficial effects of industrial operations?
j) Justify that operations management is a multi-disciplinary function

1.18 FURTHER READINGS

a) T. Hill, Production7/Operations Management, Prentice Hall, London.
b) Nigel Slack, Stuart Chambers and Robert Johnson, Operations
Management, Prentice Hall, London.
c) B. Mahadevan, Operations Management - Theory and Practice, Pearson.

21
Operations
Management – UNIT 2 OPERATIONS STRATEGY
An Overview

Objectives
After going through this unit, you should be able to:
• Understand the concept of operations strategy
• Identify the steps in the process of formulating an operations strategy
• Understand different approaches to defining operations strategy
• Understand the challenges to formulating an effective operations strategy

Structure
2.1 Introduction
2.2 What is operation strategy?
2.3 The Operations Strategy Formulation process
2.4 Perspectives on operations strategy
2.5 The product/service life cycle influence on performance objectives
2.6 Effectiveness of operations strategy
2.7 Summary
2.8 Self-Assessment Exercises
2.9 References

2.1 INTRODUCTION
Organisations constantly struggle to maximise their value-creation
opportunities and benefit from the same. The profit-making potential of an
organisation is directly related to the competitive advantage it enjoys in the
market over its competitors. Therefore, every organisation needs to seek an
answer to the question: “What should the organisation do to create a
competitive advantage for itself and sustain it for a longer time?” This critical
question is addressed in developing a strategy, offering some crucial data that
aids the firm in gaining a competitive edge. By coordinating all of the
resources and operations to produce goods and services, companies can have
a good chance of success in the market.
Strategic decisions have a direct and long-term effect on an organisation’s
performance. The strategy involves more than a single decision related to the
environment, resources, customers, markets etc. So, strategy is the total
pattern of decisions and actions that influence the long-term direction of the
business. Strategic decisions enable companies to respond to market demands
most efficiently. Organisations define strategic intents and create an
overarching corporate strategy. A successful strategy frequently benefits the
company in earnings, a larger market share, and the ability to dominate its
industry.

22
 Operations Strategy
2.2 WHAT IS OPERATION STRATEGY?
Operations strategy refers to combinations of strategic decisions and actions
related to the role, objectives and activities of operations performed in an
organisation in response to the market requirement (Fig. 2.1). It involves a
pattern of crucial decisions for an organisation’s departments based on inputs
in its overall corporate strategy. In this way, it establishes a connection
between some aspects of the operations system and the company’s strategic
goals. Strategic decisions include how much capacity should be added to the
system, what kind of manufacturing technologies and processes should be
employed, what types of products should be created, and how the supply
chain should be set up. It’s crucial to recognise the critical indicators of
operational excellence when making these selections.

Strategic reconciliation

Operations
Strategy

Fig. 2.1 Operations strategy

2.3 THE OPERATIONS STRATEGY

FORMULATION PROCESS
A definite set of steps are involved in developing an effective operations
[Link] operations strategy-formulation process can also be defined in terms
of four specific steps (figure 2.2), which include:

1. It understands the market’s competitive dynamics.

2. Adopting a strategy to maintain a competitive advantage.
3. Establishing the overall company strategy by balancing the strategic
options with the organisation’s resources, limits, values, and goals.

Strategic options for

Understanding the market's sustaining competitive
competitive dynamics advantage.
Generic competitive priorities
• Cost
Firm-level strengths and Corporate strategy • Quality
weaknesses • Flexibility
• Delivery

Strategic options for Operations strategy Measures for operational

operations excellence

Figure 2.2: The Strategy Formulation Process

(Source: [Link], Operations Management)
23
Operations 4. Based on the company’s strategy, designing the operations strategy.
Management –
An Overview
Finding strategic choices for maintaining competitive advantage is the first
stage. Once these possibilities have been determined, the overall corporate
strategy can be developed based on the strengths and limitations of the
organisation. The corporate strategy is the foundation for determining the
organisation’s ideal operations plan.

Step 1: Understanding the market’s competitive dynamics.

Any strategy-making process starts with a market analysis and an
understanding its characteristics. Market dynamics point the business toward
the problems it should consider while developing its operations strategy. It
offers essential details about rivals, the types of products and services they
offer customers, customer expectations, gaps between expectations and
present offerings, and the level of competition. By analysing this data, a firm
can determine which features of its goods and services can give it a distinct
position and a competitive edge over its rivals. The positioning of Café
Coffee Day is a comparable illustration in the services industry. Their
locations are marketed as cafés that offer “affordable” luxury and aim to cater
to a demographic that includes.

Step 2: Determine Strategic Options for Establishing a Competitive

Advantage
An organisation may be able to determine the order-winning and order-
qualifying characteristics of the goods and services it provides after
conducting a competitive dynamics analysis. The “order-winning” and
“order-qualifying” characteristics give the company various options for
maintaining a competitive [Link] qualifiers are also called
competitive standards because a product not satisfying the absolute minimum
quality cannot enter the market [Link] qualities of a product that
make it more likely for a customer to make a purchase are called order
Winners. Customers are influenced to choose a company’s services or
products by order winners. An example of an order winner is:
• Image
• Fast delivery
• Reliability
• Quality

According to competition analysis, the company will succeed if it offers

high-quality products or a more excellent range of options. In some
circumstances, it might also indicate usage [Link], such an
exercise identifies numerous potential qualities for order winning. A
company can create effective operational measures of excellence with these
characteristics.

Step 3: Devise the Overall Corporate Strategy

Organisations might be unable to use all their potential strategic options
24 because they encounter limitations when using the resources. For instance,
board members or top management teams could have various preferences and Operations Strategy

viewpoints on the solutions’ attractiveness. Similarly, some strategies are not

fully exploited due to the company’s value and principle constraints.
Therefore, the next critical step is to match the strategic options for
sustaining the competitive advantage with the available resources and
constraints and develop an appropriate strategic plan that fulfils the
organisation’s objectives, considering its strengths and weaknesses. The
outcome of this exercise is the overall corporate strategy.

Step 4: Arrive at the Operations Strategy

Operational strategy is made once the corporate strategy is clear. For
instance, if a company’s overall corporate strategy is to provide inexpensive
goods, then its choices of operational strategy must be aligned with corporate
strategy. This company should develop its procurement and supply chain
strategy more cost-effectively and identify less-cost and high-quality
suppliers. Simultaneously, more attention is needed on the production
process and planning aspects because the following process could also cut the
overall cost.

2.4 PERSPECTIVES ON OPERATIONS

STRATEGY
The ideas and definitions of operations strategy vary widely amongst authors.
Four “perspectives” develop from them:

a) Operation strategy is a “top-down” representation of what the entire team

or company desires to accomplish.
b) Operations strategy is a “bottom-up” practice where strategy is built over
time by operations improvements.
c) Operations strategy encompasses converting market requirements into
operations strategy.
d) Utilising the potential of operational resources in targeted markets is an
essential component of operations strategy.
Neither of these four viewpoints comprehensively explains what operations
strategy represents. However, they give some insight into the forces that
shape the operations strategy’s content when taken as a whole.
 Top-down strategies
A huge corporation needs a plan to determine where it should be in the
global, economic, political, and social environments. This will include
choices regarding the kinds of businesses the group wants to run, the regions
of the world it wants to operate in, and so on. Such choices help to define the
corporation’s corporate strategy. Additionally, each corporate division
within the group must develop its business strategy that outlines its unique
mission and goals. This business strategy directs the company’s interactions
with its clients, markets, and rivals. Similarly, functional strategies inside an
organisation must consider each function’s role in advancing the company’s
strategic goals. Accordingly, one viewpoint on operations strategy is that it
25
Operations belongs in this hierarchy of strategies.
Management –
An Overview For example, A ‘FMCG’ company’s corporate body finds out that only a
significant market share will give sustainable profit in the long run. So, the
company’s corporate strategy stress for market-share dominance. Even the
company’s short-term goals align with achieving higher volumes of sales.
The consequence of operations strategy changing rapidly mainly through
expanding its resource (land, labour, capital).Additionally, it must build new
plants throughout its market for better distribution of products.
 ‘Bottom-up’ strategies
The “top-down” perspective offers a conventional view on how effective
plans must be put together. However, the hierarchy of the strategy’s stages
has a more complicated link between them. This hierarchical model helps
think about strategy but does not always accurately reflect how strategies are
created. When any business firm reviews its corporate strategy, they consider
experience (conditions, backgrounds, and skills they gain through previous
activity).Similarly, corporations will talk to each function inside the company
about its limitations and potential while examining its strategies, even though
they consider some ideas generated from daily functional operations.
Therefore a counterargument to the top-down perspective is that many
strategic concepts develop gradually from operational experience. Sometimes
the ongoing operational experience of offering customers goods and services
can lead businesses to make strategic decisions that they later believe are the
right ones.
 The market influence on performance objectives
The organisation’s main objective is to satisfy the market requirements;
without fulfilling the client’s needs, no firm could survive in the long run.
However, understanding the market requirements is part of the marketing
function, which is also essential for operational function. It is impossible to
ensure operations attain the proper priority among its performance objectives
without understanding what markets require (quality, speed, dependability,
flexibility, and cost).
By establishing their five performance goals, operations aim to satisfy
customers. The business might emphasise its cost performance if, for
instance, clients place a high value on inexpensive goods or services. Instead,
a customer prioritising quick delivery will make speed a crucial component
of the business, and so forth. So, competitive factors are called those factors
which define customers’ requirements. The below figure represents some of
the competitive aspects and their relationship to the operation’s performance.
 Order-winning and qualifying objectives
A handy way of determining the relative importance of competitive factors is
to distinguish between ‘order-winning’ and ‘qualifying’ factors. Order-
winning factors are those things that directly and significantly contribute to
winning a business. Customers regard them as critical reasons for purchasing
the product or service. Operational factors are not always treated as primary
competitive susses factors but as essential for customers’ consideration of
particular products. Performance below this “qualifying” level of
26
performance may prevent many clients from considering the business. Operations Strategy

Further improvement of the “qualifying” level provides a more competitive

advantage. Less significant elements that are neither order-winning nor
qualifying can be added to order-qualifying and order-winning factors. They
have no discernible impact on consumers. They are essential to note since
they can be required for other actions related to the operation.

2.5 THE PRODUCT/SERVICE LIFE CYCLE

INFLUENCE ON PERFORMANCE
OBJECTIVES
The behaviour of competitors and customers can be generalised by linking
the life cycle of the business’s goods and services. Product and service life
cycles can take many forms, but they are typically represented by the sales
volume moving through the four stages of introduction, growth, maturity, and
decline. This has crucial relevance for operations management because goods
and services will need operations strategies throughout every life cycle.
Introduction stage: When a good or service is initially introduced, it probably
offers something novel in terms of performance or design, and few
companies offer the same thing. Since it is unlikely that the customer’s needs
would be fully understood, operations management must build adaptability to
deal with any changes and provide the quality to maintain product/service
performance.

Growth stage: As demand increases, rivals can enter the expanding market.
The critical concern for operations may end up being meeting demand.
Demand will be kept afloat if products are delivered quickly and consistently.
Quality standards must ensure the company maintains its market share as the
competition ages.

Maturity stage: Demand begins to stabilise. The market may have lost some
early rivals, and a few bigger businesses will likely control most of the
market. Operations will therefore be required to reduce costs to preserve
profits, enable price reductions, or both. Due to this, reliable supply, cost, and
productivity challenges will probably be the operation’s top priorities.

Decline stage: As more rivals leave the market over time, sales will
eventually plummet. Although a residual market may exist, price competition
will still rule the market unless capacity scarcity occurs. Cost continues to be
the primary goal for operations.

2.6 EFFECTIVENESS OF OPERATIONS

STRATEGY
An effective operations strategy should clarify the lines between the overall
competitive strategy and developing the organization’s operations resources.
The operations strategy should be appropriate, comprehensive, coherent,
credible and consistent over time. At a broad level, operations strategies must
also be ethical, international, creative and implemented.
27
Operations The effectiveness of the operations strategy depends on various factors.
Management –
An Overview Developing an effective operations strategy is one of the challenges of
operations departments in organizations Different success factors affect the
implementation of an operations strategy:
• Top management support
• Business-driven
• Strategy drives technology
• Change strategies are integrated
• Invest in people as well as technology
• Manage technology as well as people
• Everybody in board
• Clear, explicit objectives
• Time-framed project management
Developing an operations strategy is also a challenging task for companies.
Effective utilization of most of an organization’s resources is highly
complex. Further, operations managers may be geographically dispersed
across the globe. Hence operating in “real times” and detailed day-to-day
running of the operations is complex. In some cases, it is also challenging to
accept innovative and imaginative changes.

2.7 SUMMARY
Strategic decisions have a direct and long-term effect on an organisation’s
performance. It involves a pattern of crucial decisions for an organisation’s
departments based on inputs in its overall corporate strategy. There are four
basic steps involved in formulating the operations strategy. Operations
strategy can be developed from four perspectives: top-down, bottom-up,
market influence and based utilisation of available resources. Operations
strategy is also influenced by the life cycle of the product/services, and the
effectiveness of operations strategy depends on various factors.

2.8 SELF-ASSESSMENT EXERCISES

a) What does the term operations strategy mean? How is it different from
corporate strategy?
b) Briefly describe the strategy formulation process.
c) Describe qualifying or order-winning factors of any one brand/product.
d) Describe different approaches to defining the operations strategy.

2.9 FURTHER READINGS

a) T. Hill, Production7/Operations Management, Prentice Hall, London.
b) Nigel Slack, Stuart Chambers and Robert Johnson, Operations
Management, Prentice Hall, London.
c) B. Mahadevan, Operations Management - Theory and Practice, Pearson.
28
 Sustainable
UNIT 3 SUSTAINABLE OPERATIONS Operations

Objectives

After going through this unit, you should be able to:

• Understand and define sustainable operations.
• Understand the triple bottom line (TBL), and the importance of the triple
bottom line.
• Understand reverse logistics and the framework of a closed-loop supply
chain network.
• Understand the principles and framework of a circular economy.
• Study the importance of decarbonization and analyse the current state of
decarbonization of operations in buildings.

Structure
3.1 Introduction
3.2 Triple Bottom Line
3.2 Reverse Logistics
3.3 Circular Economy
3.4 Decarbonization of Operations
3.5 Summary
3.6 Self–Assessment Exercises
3.7 Further Readings

3.1 INTRODUCTION
The transformation of sustainable business strategy into sustainable
operations takes place through an integrated quality, environmental, and
safety management system. Key elements of this method are performance
measurements and ongoing improvement. Sustainable operations include
elements such as total quality control, sustainability, environmental
stewardship, and process safety. In order to remain competitive, operations
and production management must effectively alter their supply chain
strategies in response to changing market situations. Today's consumers, viz.,
both internal and external, are more knowledgeable about how the
environment is changing and what businesses are doing to reduce pollution.
Due to its implementation, both national and international laws must now be
followed by every organization.

Due to numerous changes in business and society over the past 20 years,
research on sustainable operations management gained momentum.
Industries and governments throughout the 1990s concentrated on resource
productivity and the need to use resources more wisely and consume less of
them.
29
Operations The focus on environmentally friendly goods and procedures, the reduction
Management –
An Overview of waste and CO2 emissions, and recycling have all reignited interest in
environmental performance.

These factors encouraged companies, service providers, and governments to

pursue sustainable operations using the following strategies. These are
presented in this unit.

a) Triple bottom line

b) Reverse logistics
c) Circular economy
d) Decarbonatization

3.2 TRIPLE BOTTOM LINE

The concept of "Triple Bottom Line" (TBL) reporting has been more popular
over the past few years in management, consulting, investing, and business
circles. According to the TBL paradigm, a company's overall performance
should be assessed in terms of its social/ethical and environmental
performance in addition to its traditional financial bottom line, which is profit
maximization.

Since corporate success is now also determined by how an organization's

actions affect society as a whole, the Triple Bottom Line principle is essential
to sustainability. The TBL is a structure.
It considers the social, economic, and environmental facets of performance.
This deviates from customary reporting frameworks since it includes
ecological (or environmental) and social indicators, for which it may be
difficult to determine the appropriate measurement techniques.
A common phrase is "the three Ps," which stand for "people (Social), planet
(Environment), and profits (Finance). Sustainability depends on the Triple
Bottom Line idea. The nested sphere model of triple bottom line is shown in
Fig.3.1 (Correia, 2019). From this figure, it is clear that each component of
the triple bottom line has effect on sustainability of operations and also one
can see the interaction effect on the same.

Fig.3.1 Nested sphere model of triple bottom line

30
The concept of TBL has been adopted over time as a guiding principle for Sustainable
Operations
many important organizations’ corporate strategy and operations. The
principle behind TBL is that it requires organizations to be accountable to all
of its stakeholders, including those who are directly impacted by the actions
of the other party or stakeholders in the company, as well as to the
organization itself.
People (Social) Dimension: The TBL's "people" component is the first and
focuses on how organizations should treat their workers and the communities
they have an impact on them in a just and beneficial manner.

A TBL company seeks to benefit from both of these constituencies without

exploiting or jeopardizing either of them. It is required to actively have
protections in place against unethical practices like hiring children and have
objective criteria in place to guarantee the distribution of value and earnings
to all employees.
Environmental (Planet) Dimension: In the second level of TBL, sustainable
environmental actions are referred to as a planet. A TBL company works to
preserve the environment and avoids doing anything that can upset the
delicate ecological balance. By strictly regulating the use of non-renewable
resources and energy, the corporation lessens its influence on the
environment. Prior to effectively and safely disposing of the trash, it employs
proactive techniques to limit manufacturing and processing waste's toxicity.
It implements methods for assessing the costs and effects of its products and
services on the environment.

Profit (Economic) Dimension: The third and final dimension of the TBL,
profit, which is determined after deducting all input costs, including the cost
of capital invested, serves as a representation of the organization's economic
value. Although the original idea of profit was to be the actual economic
advantage that the society in which the business works, success under this
dimension is commonly measured by calculating the financial gains of the
business to facilitate measuring its objective.
Adopting a triple-bottom-line strategy may appear unrealistic to some in a
society that prioritizes profit too much. But innovative businesses have
repeatedly demonstrated that it's possible to make money while doing good.
The triple bottom line does not, by definition, prioritize societal and
environmental effects over financial success. Instead, adopting sustainable
business practices has paid off for many companies financially.
Purpose-driven leaders are required to lead programmes that can spark good
change as the world's most critical issues change, but bringing about those
improvements isn't always simple. Henderson writes in Sustainable Business
Strategy, "Finding these opportunities and making them successful demands
both true boldness and grindingly hard labour".
Despite the lengthy and unpredictable path ahead, it is crucial to remain
optimistic. Individuals are where sustainability begins to take shape. Firms
can gradually come together around a shared goal and have a significant and
quantifiable impact.
31
Operations The TBL cannot be established in a conventional manner. Additionally, there
Management –
An Overview is no recognized international standard for the measurements that make up
each of the three TBL categories. This could be viewed as positive because it
allows the user to adapt the broad framework to satisfy the needs of
numerous enterprises (companies or organizations), initiatives or rules
(investment in infrastructure or educational efforts), or geographical
boundaries (a city, region or country).

Check Your Progress:

Can you explain the three Ps in Triple Bottom Line (TBL)? Please provide an
explanation.
.………………………………………………………………………………..
…………………………………………………………………………………
…………………………………………………………………………………

3.3 REVERSE LOGISTICS

In an integrated approach to logistics management, a closed-loop supply
chain integrates forward and backward logistics. Fig. 3.2 (Aravendan and
Panneerselvam, 2015) depicts the closed-loop supply chains organizational
structure. Closed-loop supply chains (CLSC) deal with both forward and
reverse supply chains with a focus on reclaiming extra value by reusing the
complete product, and/or some of its subassemblies, components, and parts,
after being returned to customers. A system's design, management, and
operation are described as maximizing value generation throughout a
product's whole life cycle with dynamic value recovery from various types
and volumes of returns over time.

Fig 3.2 Framework of closed Loop Supply Chain System

(Aravendan and Panneerselvam, 2015)

32
Throughout the course of a product's life cycle, returns may happen for a Sustainable
Operations
number of different reasons.

FORWARD LOGISTICS
The movement and storage of raw materials, work-in-process inventory, and
finished commodities from the point of origin to the site of consumption are
all part of managing the flow of goods and services, as shown in Fig. 3.3
(Varunkumar, 2019).

This is further clarified as forward logistics, a discipline that deals with the
conveyance of goods via temporary partners, such as wholesalers and/or
retailers, from manufacturing centres to customers or warehouses.

Fig.3.3 Forward logistics components (Varunkumar, 2019)

REVERSE LOGISTICS
According to the Reverse Logistics Association (RLA), the ultimate goal of
reverse logistics is to optimise transportation activities after marketability,
saving money and environmental resources. A framework of the reverse
logistics is shown in Fig. 3.4. The different paths of the reverse logistics
commencing from the customer can be seen in Fig.3.4.

Fig.3.4 Framework of reverse logistics (Varunkumar, 2019)

33
Operations
Management –
Types of Product Returns in Closed-Loop Supply Chains
An Overview
The initial purchase of a product by a customer does not mark the end of a
company's supply chain operations. A business must take into account the
products that customers return or discard (both business and domestic). A
number of factors, including manufacturer returns, product recalls, warranty
returns, service returns, commercial returns, end-of-use returns, and end-of-
life returns, may contribute to the reverse flow of items. This section presents
the three primary product return types that are essentially taken into account
in the closed-loop supply chain.

Commercial or Consumer Returns: Products that have been returned

commercially or by consumers can be done so for a number of different
reasons, some of which are listed below.
i) Products manufactured having defects.
ii) Products still covered by warranties.
iii) Products that don't match the order of purchase.
iv) Unsold goods under "no questions asked" return policies at retailer
points of sale, etc.
v) The customer uses the commercial or consumer returns for a little period
of time and they are technologically up-to-date and trendy.

End-of-use returns: End-of-use returns are goods that customers send back
after using them for a considerable amount of time or if they become
outdated due to new technology advancements. In many cases, even perfectly
functional products are returned by customers who prefer to replace them
with more recent or improved models or versions. The best examples include
cell phones, other consumer goods, and fashion accessories.
End-of-life returns: Products that have been returned by customers after
reaching the end of their useful or planned life span are known as end-of-life
returns. The right amount of energy, money, and allocation to secondary
market items are needed for the proper disposal, recycling, or recovery of
these products' pieces. Examples include costly outdated long-lasting
electronic equipment, cars, and other commercial goods that are
nonfunctional, extremely expensive to fix, and not in reusable form.

Reverse Processes for Product Returns

The three methods covered in the previous section are used to process client
returns of merchandise. re-distribution, disposal, landfilling incineration,
recycling, refurbishment, remanufacturing, repair, reuse, cannibalization, and
resale are some of the options for reprocessing and disposition of product
returns. The following is a discussion of these processes.

Re-distribution: Re-distribution is the process of physically transferring

reusable goods to potential customers and markets. Activities including sales,
shipping, and storage may be included.

34
Disposal: Products that cannot be reused due to technical or financial Sustainable
Operations
constraints must be disposed of. This is true for both products with
unsatisfactory market potential due to obsolescence and products that were
rejected at the separation stage due to significant maintenance requirements.
Transportation, landfilling, and incineration processes are all possible
disposal methods.
Landfilling: The non-recoverable goods or components, which are regarded
as waste, are dumped in landfills. For some products, this choice is prohibited
in specific jurisdictions. For instance, the majority of states in the US prohibit
the disposal of hazardous waste in landfills. In some states of the United
States, including California, Maine, Massachusetts, and Minnesota, electronic
equipment is regarded as hazardous (U.S. GAO 2005).

Incineration: The amount of solid waste dumped in landfills is decreased in

part due to incineration. For instance, incineration, which is the process of
burning solid waste can cut the amount of solid waste by up to 95%. Energy
recovery, or the extraction of energy from waste, is another common
application for incinerating garbage. Therefore, it is a crucial choice in
nations and municipalities with a limited supply of land for landfills, as those
in Europe. It is an improvement over landfilling.
Recycling: Recovery of materials is implied by this choice. This disposal
choice is appealing for returns that have little to no functional use left and
whose materials can be economically and environmentally separated. Very
old electronic equipment that has reached the end of its useful life is regularly
recycled. For further material separation (such as plastic, steel, aluminum,
and precious metals) and recycling of each material type, the product is
shredded in this situation. Recycling might be the most environmentally
friendly option for end-of-use returns like outdated appliances. This is due to
the fact that producing equal new components and subassemblies requires
more energy.

Remanufacturing: Rebuilding and restoring a piece of equipment or a

musical instrument to its original performance standards is known as OEM
performance tuning. Remanufacturing, according to Hauser and Lund (2003),
is a lengthy process that includes disassembly, cleaning, repairing and
replacing parts, and reassembly in order to return worn products to "like-
new" state.
Refurbishing: It is the process of maintaining and/or renovating older or
damaged equipment to restore it to a functional or more appealing state.

Reuse is nothing more than the act of reintroducing a good, by-product, or

waste material as an input into a production process, typically without
undergoing any physical or chemical modification.

Repair: It involves putting a malfunctioning, broken, or damaged piece of

equipment back together again so that it can be used or operated. It also refers
to a procedure applied to a non-conforming product to enable it to perform
the intended function.
35
Operations Cannibalization: The detrimental effect of a company's new product on the
Management –
An Overview sales performance of its existing related items is known as cannibalization. It
describes a situation when products are returned because a new product has
largely replaced the sales and demand of an older one. Instead of increasing
the company's customer base, cannibalization happens when a new product
invades the market for the older product.

Resale: In the event that there is a vibrant secondary market for used
equipment, this choice can be appealing. For instance, IBM sells part of the
used IT equipment that it recovers from end of lease to licensed brokers who
may refurbish or resell it.

SUSTAINABLE SUPPLY CHAIN

A supply chain that fully incorporates moral behaviour and consideration for
the environment into a competitive and fruitful model is said to be
sustainable. Transparency throughout the whole supply chain is essential;
sustainability measures must cover everything from sourcing raw materials to
last-mile logistics to product returns and recycling procedures.
Twenty years ago, the terms "sustainability" and "eco-friendliness" were
virtually interchangeable. It is now a much more inclusive term. A modern
sustainable supply chain includes elements like green, transparent, and
circular supply networks.

Check your Progress:

Can you please explain the concepts of green manufacturing and reverse
logistics and how they are related?
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………

3.3 CIRCULAR ECONOMY

By reducing environmental impact and resource waste and boosting
productivity at all phases of the product economy, the circular economy
seeks to shift the paradigm in respect to the linear economy. The creation of
a circular economy is being aided by recent warnings about trash pollution
and the depletion of natural resources.
The circular economy is a framework for systems-level solutions that
address issues including pollution, waste, biodiversity loss, and climate
change.

36
 Sustainable
PRINCIPLES OF CIRCULAR ECONOMY Operations
A circular economy is based on three principles, all driven by design.
(i) Eliminate waste and pollution
(ii) Circulate products and materials
(iii) Regenerate nature

(i) Eliminate Waste and Pollution

The elimination of waste and pollution is the primary tenet of the circular
economy. Generally economy currently operates on a take-make-waste basis.
We use the Earth's resources as raw materials to create products, then we
discard the finished products as waste. Most of this garbage is lost when it is
disposed of in landfills or incinerators. Because the resources on our planet
are limited, this system cannot function over the long run. This aspect of
design will move from linear economy to circular economy. The linear
economy follows take, make, use and waste, which means that the
components and assemblies of the product will be wasted after the end-of-life
of the product. This can be made into a circular economy through the take,
make, use and reuse concept.
A product that is designed using the circular economy will not have waste
and pollution.

(ii) Circulate Products and Materials

Circulating goods and materials at their peak value is the circular economy's
second tenet. Maintaining materials in use implies using them either as a
product or, when that is no longer possible, as components or raw materials.
Nothing is wasted in this manner, and materials and goods maintain their
inherent value.
There are numerous ways to maintain the circulation of goods and resources,
and it can be useful to consider two primary cycles, viz. the technological
cycle and the biological cycle. Products go through the technological cycle,
which includes reuse, repair, remanufacturing, and recycling. Through
procedures like composting and anaerobic digestion, biodegradable materials,
etc. are recycled back into the environment as part of the biological cycle.
Technical Cycle: Maintaining and reusing things is the best approach to
maintain their worth. Consider a phone as an example. As a phone, it is
significantly more valuable than as a collection of parts and materials.
Therefore, the early steps in the technical cycle are concentrated on
maintaining items in their whole to retain the most value feasible. This could
include sharing-based economic models that allow users to access a product
rather than own it, allowing more people to use it over time. It can entail
recycling through resale. It could mean cycles of maintenance, repair, and
refurbishment.
After the end of life of a product, its components can be remanufactured. If it
is not possible to remanufacture the components, they may be divided into 37
Operations their constituent materials, which may be recycled. This will help to avoid
Management –
An Overview waste.
Biological Cycle: In the biological cycle, biodegradable materials that cannot
be recycled, such as some food leftovers, can be recycled back into the
economy. Important minerals like nitrogen, phosphorus, potassium, and
micronutrients can be used to rejuvenate the soil so that we can grow more
food or renewable materials like cotton and wood by composting or
anaerobically digesting organic waste.

(iii) Regenerate Nature

Regeneration of nature is the circular economy's third tenet. A circular
economy, as opposed to a take-make-waste linear economy, supports natural
processes and creates more space for nature to flourish. Regeneration follows
extraction. We create natural capital rather than perpetually destroying
nature. We use farming techniques that let nature regenerate soils, boost
biodiversity, and replenish the soil with biological resources.

3.3 FRAMEWORK OF CIRCULAR ECONOMY

A framework of the circular economy is shown in Fig.3.5.

Fig.3.5: Framework of circular economy

38
The components of this framework commencing from production and distribution Sustainable
Operations
are given below.
i. Extraction and import of natural resources including energy carriers
ii. Materials
a) Biological materials
b) Technical materials
iii. Eco-design
iv. Energy
v. Production and distribution
vi. Consumption and stock
vii. Waste and emission
a. Incineration
b. Landfill
viii. Recycling

i. Extraction and import of natural resources including energy carriers.

The manufacture of goods begins with the extraction of material resources,
including energy carriers. One should take enough care to locate even the point of
extraction of material resources if there are alternative production centres in
relation to the end customers such that the following measures of performance are
minimized.

• Cost of building facilities for extraction facilities and distribution

centres.
• Total logistic costs.
• Money value to neutralize the effect of emission and pollution due to
operations of such facilities.

ii. Materials
Materials are classified into biological materials and technical materials.
Innovations in sustainable bio-manufacturing are being made possible by
advances in cell-free synthetic biology, and these advancements have the potential
to change the global manufacturing paradigm in favour of more regionalized and
ecologically sound production methods.
Common materials used to produce manufactured goods include technical
materials. Examples of materials include glass, steel and other metals, plastic,
porcelain and ceramics, planks, and concrete.

iii. Eco-design
The exercise of the design of products should take enough care to ensure the
following.

• Durability, reusability, and ease of reparability of the products should be

maximized.
39
Operations • Maximizing the presence of substances that inhibit circularity
Management –
An Overview • Maximizing the energy efficiency and resource efficiency
• Maximizing the recyclable content components of the products
• Maximizing the remanufacturing and recycling features of the products.
• Minimizing impact of carbon and environmental footprints

(iv) Energy
The operations of the manufacturing/ service facilities require energy. There
are several sources. The energy sources are classified into renewable sources
and non-renewable sources.
Renewable sources of energy include solar energy, wind energy, hydropower,
tidal energy and bioenergy. Non-renewable energy sources include thermal
power, nuclear power, fuel-based power such as generators, etc.
Since the supply of power is the responsibility of the government either
through its own initiatives or through authorized private players, the
government should take steps to maximize power generation and reduce
pollution and losses.

(v) Production and Distribution

Production and distribution form the most crucial stage of the circular
economy. Production/ manufacturing combines the resources to produce an
intended product subject to different constraints imposed on resources. This
operation should be such that the unit cost of manufacture of the product is
minimized to have a competitive edge in the market. At the same time, the
company should take enough care to choose the facilities of manufacturing
such that the negative impacts on the environment like pollution, carbon
emission, etc., are minimized.
The products of the company are to be shipped to end customers through
distribution channels. In this process, the design of the distribution network
plays an important role, because the cost of shipping the products to the
customers and the cost to control pollution and emission of carbon due to the
travel of distribution vehicles, are to be minimized.

(vi) Consumption and Stock

The products that are shipped to the end customers are consumed by them and a
portion of the supply will be kept as stock to smoothen their operations in the case
of industrial customers.

(vii) Waste and emission

The products which reach their end of lives at end customers will become as waste
as well as a source of emission in the case of electronic goods.
Incineration and landfill are the two options to handle the waste. Incineration is the
process of burning waste with proper control to minimize the emission of carbon.
The landfill is the process of burying the waste of end-of-life products, such that
40 they do not pollute groundwater.
 Sustainable
(viii) Recycling Operations
The products designed with the objective of the circular economy should have the
features, viz. reuse, repair, redistribution, refurbishment and remanufacturing.
Reuse: Simply said, reuse is the recurrent usage of a good or component in its
initial configuration. Utilizing a glass milk container along the producer-customer
chain, for instance, several times (instead of using a plastic bottle).
Redistribution: Reusing something also refers to transferring materials and goods
from someone who no longer requires them to someone who can still utilise them.
Reusing products has advantages for both disadvantaged individuals and
organisations and for the conservation of precious natural resources.
Repair: The life of the products can be increased through a proper repair policy.
The system should instal repair centres to attend to minor and major faults of the
products so that the lives of those products are extended. This leads to the
minimization of waste.
Refurbish: This is the process of upgrading the quality of the used products to a
desirable level so that people use them.
Remanufacture: Remanufacturing is an industrial procedure that allows for the
rebuild and recovery of a previously sold, used, or non-functional object. The item
can be restored to "like-new" or "better-than-new" state through disassembly,
cleaning, repair, and replacement of worn out and outdated components, and will
be just as dependable as the original product. A key component of the idea of a
circular economy is remanufacturing.

INDIA’S INITIATIVES TOWARDS CIRCULAR ECONOMY

It is clear that the nation is moving swiftly in the direction of a circular
economy to counteract the drawbacks of rapid urbanisation, industrialisation,
population growth, pollution, and climate change. According to "Circular
economy in India: Rethinking growth for long-term prosperity", a paper by
the Ellen MacArthur Foundation, if India follows this course, it could result
in yearly benefits of $624 billion by 2050 and a 44% reduction in greenhouse
gas (GHG) emissions.
However, there has been a movement for policy in India to hasten the
transition to a regenerative model. The SMART Cities Mission aims to
change India's metropolitan areas by promoting economic development and
raising the standard of living for its people. This effort strives for circularity
by making waste management a crucial success factor. Some cities have
already made significant advancements in this area.
The Indian government is also developing extensive transition plans for a
circular economy, with a primary focus on 11 areas, including as municipal
solid waste and liquid waste, toxic and hazardous industrial waste, and end-
of-life vehicles. By working with the European Union (EU) to create an
India-EU Resource Efficiency and Circular Economy Partnership, India is
also creating international alliances to promote the circular economy.
41
Operations
Management –
Check Your Progress
An Overview
Could you please list the four main concepts of the circular economy?
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………

3.4 DECARBONIZATION OF OPERATIONS

The various systems that are in operation to meet human requirements, which
use oil, grease, and many other fossil fuels, produce carbon emissions. This
contaminates the atmosphere, posing a hazard to all earthly life.
Decarbonizing the various systems, such as thermal power plants, fertiliser
companies, steel companies, chemical industries, etc., is therefore necessary.

IMPORTANCE OF DECARBONIZATION
We are entering what some officials have called the "Renewables Decade,"
with an anticipated surge in the construction of solar farms and wind parks in
the coming years, as the era of combustibles like oil and gas comes to an end.
For many businesses, the ideal situation is to have "net zero" carbon
emissions, which is a situation in which the greenhouse gases produced by all
of their value chain's operations have no discernible effect on the climate.
Buildings, offices, factories, and warehouses that serve as productivity hubs
are at the top of many businesses' decarbonization priority lists. Buildings
account for about 40% of the planet's overall energy consumption and 36% of
its greenhouse gas emissions over the course of their lifetimes.

There is a lot of proof that customers are willing to spend extra on a brand or
item that shares their beliefs. The road to net zero is anything, which
decarbonizes the operations of businesses, service organizations and
buildings, etc. This is not that easy to achieve. To begin with, there is no one
method that works for all real estate portfolios for eliminating CO2
emissions. The size, ambition, and industry of a corporation all influence its
decarbonization objectives. Consumer-focused multinational corporations are
now looking into the idea of net zero after acquiring compliance carbon
offsets in the past to achieve carbon neutrality.

Climate Change
Over 81% of the world's primary energy source is still coal, oil, and natural
gas as of 2019, which leads to carbon emissions both upstream (during the
process of energy production and extraction) and downstream (during the
final consumer use of the energy). Continued reliance on energy derived from
fossil fuels makes it challenging to cut carbon emissions, especially as the
42
world's energy consumption rises. Sustainable
Operations
The pattern of the sector-wise emission of carbon dioxide around the world is
given in Fig 3.6. The pattern of ‘fuel type-wise emission of carbon dioxide
around the world is given in Fig 3.7.

Carbon emission leads to climatic change in terms of global warming. The

average global warming of 1 or 1.5 degrees Celsius will vary greatly around
the globe; many locations will warm up far more quickly. For instance, the
Arctic is warming 1-2 times more quickly than any other region of the planet.
Rising sea levels, glacier retreats, alterations in the timing of seasonal events
(plant flowering, migratory patterns), and an increase in the frequency and
severity of extreme weather events are only a few of the far-reaching
repercussions of global warming.

Fig.3.6 Pattern of the sector-wise emission of carbon dioxide around the world

Fig 3.7: Pattern of ‘fuel type-wise emission of carbon dioxide around the world
43
Operations People and wildlife are affected both directly and indirectly by these types of
Management –
An Overview impacts. The displacement of people and communities as a result of sea level
rise and extreme weather events is one of the direct repercussions. On the
other hand, there are indirect consequences that can affect economic growth,
food production, the escalation of water crises, and public health hazards.

CURRENT STATE OF DECARBONIZATION OF OPERATIONS IN

BUILDINGS
According to a survey on thought leadership conducted by Johnson Controls
and Forrester Consulting,

i. many businesses have trouble in defining their objectives or are unsure

of how to get there.
ii. The businesses most likely to reach net zero objectives and experience
growth recognise that sustainability is not only a responsibility but also
the way business will develop in the future. They will thus have a
competitive advantage, according to the study.
iii. Though the opportunities for "green" business vary from company to
company, great leadership and good partners are the two traits of the
most prosperous and sustainably engaged businesses.

Companies must set clear objectives, viz. make secure, long-term

investments, and pursue solid partnerships, if they wish to significantly
increase energy efficiency and reduce the carbon emissions of their facilities.

DECARBONIZATION PATHWAY
The decarbonization pathway consists of four basic stages as listed below.
These are shown in Fig 3.8.

Fig 3.8: Stages of carbonization pathways

44
 Stage 1: Define success. Sustainable
Operations
 Stage 2: Set targets.
 Stage 3: Deploy programs.
 Stage 4: Sustain results.

Stage 1: Define Success

This stage aims to understand the baseline of the operations based on past
performance and practice in controlling carbon emissions. This will spell out
the success stories of the effort taken by organizations to control carbon
emissions. The control of carbon emissions is a never-ending process and
hence the following stages are presented.

Stage 2: Set Targets

This stage sets, validates, announces, and reports on public targets. Setting
targets involves defining goals and establishing a timeline to achieve them.
An example may be to set a target that involves reducing carbon emissions
by 35% by 2030. The smart factory may aim to have the following initiatives.

i. Sustainability
ii. Trust and resilient
iii. Intelligent
iv. Velocity
i. Sustainability of Operations
Sustainability of operations in terms of decarbonization may be attempted to
develop a project with a carbon-neutral, circular supply chain and at the same
time preserve the local biodiversity.
ii. Trust and Resilient
The companies aiming towards minimizing carbon emissions should opt for
multiple vendors, which will guarantee a seamless supply of raw materials
and subassemblies. This will reduce the carbon emission per unit
manufactured.

iii. Intelligent
Digital automation of the supply chain network will certainly help to reduce
carbon emissions because the vehicles will use the shortest paths for their
travels and also minimize the stayover time of the raw materials/finished
goods, which are prone to carbon emission.

iv. Velocity and efficiency

The companies should aim to have strong regional partners to make their
presence felt globally and to have reliable supply chain partners for efficient
and effective transhipment of goods.
While setting targets, companies consider Scope 1 emissions, Scope 2
emissions, and Scope 3 emissions. Among them, Scope 3 emissions are the
45
Operations most difficult to track and improve.
Management –
An Overview
• Scope 1 emissions: These emissions involve everything a company
directly controls, such as operations.
• Scope 2 emissions: Scope 2 emissions, or indirect emissions, are the
result of energy that’s consumed by operations.
• Scope 3 emissions: These emissions come from a company’s value
chain. Examples of Scope 3-generating activities include: the way goods
are transported, corporate travels of employees, peripheral organizational
activities and waste disposal. What consumers do with a product after
they buy it can also count as scope 3 emissions. For example, the
emissions associated with consumers driving the cars they bought from
an automotive company.

Stage 3: Deploy Programs

This stage includes the following initiatives.
i. Manage energy supply.
ii. Optimize resources and carbon intensity.
iii. Switch from carbon intense to low-carbon energy sources
iv. Balance emission, which cannot be reduced.
v. Engage value chain and address scope emissions.
Stage 4: Sustain Results
This stage includes the following initiatives.
i. Measure, monitor, adjust and optimize
The carbon emission should be measured and compared with a threshold
value. If it exceeds, strict and integrated actions should be taken to adjust and
optimize the carbon emission.
ii. Communicate progress
The progress made in carbon emission should be communicated to the
stakeholders, government and public, which will motivate others to join
hands in this endeavour.

Check Your Progress

Can you provide an example of decarbonization?
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
46
 Sustainable
CASE STUDY: DECARBONIZATION EFFORT IN AGRICULTURE Operations
Every year during the harvest season of its neighbouring states, Delhi, the
capital city of India, is experiencing carbon pollution. This is a result of
burning straw as soon as it is harvested, which emits smoke and carbon
dioxide over a large area surrounding the states that engage in this activity.
The farmers primarily utilise this technique to recycle the straw as manure for
their fields, but they overlook the carbon emissions that result from it. This
results in the temporary closure of elementary schools until the air quality is
safe for children to breathe.

Solution Towards Net-Zero Carbon Emission

The steps suggested to have net-zero carbon emission due to the burning of
straw are given below.

1. Cut the straw into pieces.

2. Spread the pieces of straw in the Agri-filed.
3. Fill the Agri-field with water.
4. After a few days, plough the field for two to three times.
5. Allow the field to form compost from wet straw.
6. Again, plough the field for a necessary number of runs before the
plantation of paddy.
This approach completely avoids the burning of straw immediately after
harvesting, which leads to net zero carbon emission.

3.5 SUMMARY
The triple bottom line (TBL) considers dimensions of performance are the
social, economic, and environmental measures. The three categories of the
triple bottom line are commonly known as the three "P's": people, planet, and
prosperity. The TBL's "people" component is the first and focuses on how
organisations should treat their workers and the communities they have an
impact on them in a just and beneficial manner. In the second level of TBL,
sustainable environmental actions are referred to as a planet. The third and
final dimension of the TBL, profit, which is determined after deducting all
input costs, including the cost of capital invested, represents the
organisation’s economic value.
In an integrated approach to logistics management, a closed-loop supply
chain integrates forward and backward logistics. Forward logistics is a
discipline that deals with the conveyance of goods via temporary partners,
such as wholesalers and/or retailers, from manufacturing centres to customers
or warehouses. According to the Reverse Logistics Association (RLA),
reverse logistics aims to optimise transportation activities aftermarket
activity, saving money and environmental resources. Products that have been
returned commercially by consumers can be for several different reasons.
End-of-use returns are goods that customers send back after using them for a
considerable amount of time or if they become outdated due to new
47
Operations technology advancements. The products that have been returned by
Management –
An Overview customers after reaching the end of their useful or planned life span are
known as end-of-life returns. Re-distribution is the process of physically
transferring reusable goods to potential customers and markets. The non-
recoverable goods or components, which are regarded as waste, are dumped
in landfills. The amount of solid waste dumped in landfills is decreased in
part due to incineration. Very old electronic equipment that has reached the
end of its useful life is regularly recycled.
The circular economy is a framework for systems-level solutions that
address issues including pollution, waste, biodiversity loss, and climate
change. A circular economy is based on three principles, all driven by design:
eliminate waste and pollution, circulate products and materials, and
regenerate nature. In the biological cycle, biodegradable materials that cannot
be recycled, such as some food leftovers, can be recycled back into the
economy. The manufacture of goods begins with the extraction of material
resources, including energy carriers. Innovations in sustainable biomanufacturing
are made possible by cell-free synthetic biology advances. These advancements
can change the global manufacturing paradigm favouring more regionalised and
ecologically sound production methods. Therefore, the products designed with the
objective of the circular economy should have the features, viz. reuse, repair,
redistribution, refurbishment and remanufacturing.
The various systems operating to meet human requirements, which use oil,
grease, and many other fossil fuels, produce carbon emissions. For many
businesses, the ideal situation is to have "net zero" carbon emissions, which
is a situation in which the greenhouse gases produced by all their value chain
operations have no visible effect on the climate. Buildings, offices, factories,
and warehouses that serve as productivity hubs are at the top of many
businesses' decarbonisation priority lists. Define success stage of the
decarbonisation pathway aims to understand the baseline of the operations
based on past performance and practice in controlling carbon emission.

3.6 SELF–ASSESSMENT EXERCISES

Triple bottom line:
1. Define the triple bottom line and explain its components.
2. Discuss the importance of the triple bottom line.
3. Discuss the economic measures of triple bottom line.
4. List the benefits of the economic dimension of triple bottom line.
5. Give the initiatives to improve the economic measures of the triple
bottom line.
6. Discuss the environmental measures of the triple bottom line.
7. List the benefits of the environmental dimension of triple bottom line.
8. Give the initiatives to improve the environmental measures of the triple
bottom line.
9. Discuss the social measures of triple bottom line.
48 10. List the social of the environmental dimension of triple bottom line.
11. Give the initiatives to improve the social measures of the triple bottom Sustainable
Operations
line.
12. Give the distinction between triple bottom line and environmental,
social, and governance (ESG).
13. Discuss the overall advantages and drawbacks/challenges of triple
bottom line.
14. Discuss the impact of triple bottom line on supply chain.
Reverse Logistics:
1. Give the framework of closed loop supply chain and explain its
components.
2. Give the fraemework of forward logistics and explain its components.
3. Give the fraemwork of rverse logistics and explain its components.
4. List and explain the types of products return in closed loop supply chain.
5. List and explain the reverse processes of products returns.
6. List and epxlain the decision problems of reverse logistics.
7. What is green logistiocs? What are its objectives? What are challenges
facing green logistiocs today?
8. What is lean supply chain?
9. Explain agile supply chain.
10. What is sustanable supply chain?
11. Carryout a literature review to summarize the state-of-art of reverse
logistcis globally.
Circular economy:
1. Define circular economy.
2. List and explain the principles of circular economy.
3. Give the framework of circular economy and explain its elements.
4. Discuss India’s initiatives towards circular economy.
Decarbonization:
1. Define decarbonization.
2. Discuss the importance of decarbonization.
3. Discuss the current state of decarbonization of operations in industrial
buildings.
4. Give a schematic view of decarbonization pathway and explain its steps.
5. List and explain different scope levels of emission.
6. Carryout state-of-art review of literature on decarbonization with at least
25 research articles and make summary of them.

3.7 FURTHER READINGS

Triple bottom line:
1. Bruno S Silvestre, 2016, Sustainable supply chain management: current
debate and future directions, Gestão & Produção, Vol 23, No,2, pp. 235-
249.
2. [Link]
49
Operations 3. [Link]
Management –
An Overview components-of-the-triple-bottom-line-approach/
4. [Link]
Reverse Logistics:
1. Aravindan, M. and Panneerselvam, R., 2015, Development and
Comparison of Hybrid Genetic Algorithms for Network Design Problem
in Closed Loop Supply Chain, Intelligent Information Management,
Vol.7, pp. 313-338.
2. [Link]
3. IJMET_09_12_049%20varunkumar%20and%[Link]
4. Varunkumar, S.G., Development and Comparison of Genetic
Algorithms for Vehicle Routing Problem with Simultaneous Deliveries
and Pickups in a Supply Chain Network, Ph.D. thesis, Pondicherry
University, 2019.
5. [Link]
6. [Link]
Circular Economy:
1. [Link]
introduction/overview
2. [Link]
3. [Link]
4. [Link]
give-a-push-to-circular-economy-in-india-news-226604
5. [Link]
to-a-sustainable-future/
6. [Link]
blog/embracing-the-circular-economy-new-me-and-global-
[Link]
Decarbonization:
1. [Link]
steps/openblue_netzerobuildings__8stepstodecarbonisation_whitepaper.p
df?la=en&hash=9A5B2D98016E6813B9C1B754E5A1C143106B369E
2. [Link]
pathway-sustainability-operations
3. [Link]
change/?gclid=EAIaIQobChMIttnjz4Om-
wIVTyUrCh1ClAmjEAAYBCAAEgKKV_D_BwE
4. [Link]
_Overview_of_the_Triple_Bottom_Line_and_Sustainability_Implement
ation.
5. Correia, M.S., 2019, Sustainability: An Overview of Triple Bottom Line
and Suitability Implementation, International Journal of Strategic
Planning, Vol.2, No.2, pp.29-38

50