Challenges and Opportunities of Managing Productivity and Performance to Increase the Profit while focusing on the Sustainability of People and Planet

In any profit-oriented organization, the prime objective is to maximize the profitability such that the business is able to continue their operations without any hindrances while having a consistent growth. In a competitive business environment, ensuring the continuous profitability of the business is not an easy task (Ahmad, 2017). In addition to this challenge, the current global business setting enables customers with a high bargaining power and hence, organizations are required to focus on customer concern areas such as social and environmental well-being in addition to the focus required on the quality of the product or the service offered (Eccles, et al., 2014). As a result, businesses are required to focus on the triple-bottom-line sustainability to ensure the sustainable growth of the business.

Operations Management

For an organization to achieve high profits, the organization needs to focus on cutting down their costs while ensuring the increase of their sales and income. The process followed in efficiently and effectively managing the achievement of profits is known as Operations Management (OM) (Ahmad, 2017). Heizer et al. (2020) has defined OM as a set of cumulative tasks that generate value for the company by converting inputs into desired outputs by means of successfully managing the stakeholders involved, processes and standardizations followed. Over the time, with the changes in the business world the approach and the focus of OM has changed from a cost focused approach to a quality focused approach to a customization approach and to a globalization approach. In the globalization era of OM i.e. since 2005 up to now, apart from the focus on productivity and profits, OM is also focused on green supply chains, transnational organizations, sustainability in the value chain, corporate ethics etc. (Heizer , et al., 2020).

Triple Bottom Line Sustainability

The concept of Sustainability came into play with the Brundtland Report (1987) and continued as a topic of importance due to the increased awareness and pressure build-up by the world community as an issue of concern (The World Commission on Environment and Development, 1987). Ever since the term ‘Sustainability’ has been given different definitions. Hart and Milsten (2003) has defined sustainability as the requirement of utilizing the existing social and environmental resources to satisfy the requirements of the current generation without compromising the availability of the said resources for the use of future generations.

The Triple-Bottom-Line (TBL) concept was first coined in 1997 by Elkington (1997) as a concept that expands sustainability beyond the original environmental considerations into a concept which encompasses profit, people and planet considerations.

Relationship between Operations Management, TBL Sustainability, Productivity and Performance Evaluation

With the increased awareness on the TBL sustainability concept, businesses are facing an emerging pressure to ensure the TBL sustainability within their value chains (Ambec & Lanoie, 2008; Seuring & Müller, 2008). Hence, sustainable operations management came into play by incorporating TBL concepts in to the existing business processes to ensure the sustainability of the business (Kleindorfer, et al., 2004).

To achieve sustainability, organizations need to identify the current performance status measured in terms of productivity of the business processes. Productivity can simply be defined as the ratio between the outputs and inputs and needs to be evaluated periodically to identify lagging bottlenecks and to implement corrective measures (Krugman, 1994). For organization focused on achieving the TBL sustainability, the performance needs to be evaluated based on the TBL considerations (Goel, 2010). The balance scorecard is a strategic performance measurement tool which focuses on learning and growth, business process, customer perspective and financial information and provides feedbacks based on historical performance data to assist in better decision making (Kaplan & David, 1996).

With the globalization of businesses the complexity of the value chains has increased hindering the traceability and thus questioning the process of monitoring value chain’s conformity with sustainability indices and performance parameters (Project Provenance Ltd, 2015). Technology comes into play at this point by enabling organizations to measure the performance with reliable data inputted in means of IoT and traceability enabled through technologies such as Blockchain and data analysis enabled with big data tools (Schoenherr & Speier-Pero, 2015; Arunachalam, et al., 2018)

Challenges and Opportunities of Managing TBL Sustainability

Businesses have ventured out of their home country to capitalize on the low cost and high quality sourcing options available outside. This has enabled them the opportunity of getting high quality products at lower prices thereby getting a cost advantage and a high bargaining power over suppliers (Kotabe & Murray, 2004). However, this also resulted in a certain set of challenges such as high lead times, delays in deliveries due to external factors like weather conditions, logistical considerations etc. (Ballou, et al., 2000) When sustainability is linked in to this scenario, the challenges escalates as the cost of sustainable raw materials are considerably higher due to high production costs, quality and research costs etc. Also, sustainability requires different certifications that conforms the organic nature, social and environmental well-being of the product which are additional costs and without proof of which today’s customers are not willing to pay the premium price for the sustainable product. To overcome such issues technologies such as Blockchain which enables traceability within end-to-end value chain and creative marketing concepts which emphasize on the sustainable nature of the product can be utilized (Seuring & Müller, 2008).

When implementing sustainability within a business, it requires initial investments for revamping business processes to include sustainability considerations, for procuring high quality sustainable raw materials, for technologies such as Blockchain, IoT etc. for tracing and evaluating sustainable performance. These results in higher costs in comparison to non-sustainability oriented business and also requires longer lead times to get desired outcomes from such implementations. Hence, clashes occur between short-term financial objectives and long-term financial objectives since short-term objectives need to be compromised for such implementation (George , 2019). Also, it should be noted that in organization’s where the employee performance evaluations are linked with short-term goals the tendency is higher for the employees to focus on the short-term goals such that their performance ratings are higher instead of focusing on the long term goals of sustainability (George , 2019). Hence, it should be noted that to encourage the employees towards sustainability their performance evaluations need to be linked with the sustainability measures in concern (Sajjad, et al., 2015).

When considering the environmental sustainability aspects, organizations are faced with the challenges of minimizing their carbon footprint, water usage, product wastage and energy output measures in means of electricity usage, heat generation etc. (Kleindorfer , et al., 2005). To overcome these challenges organizations like Unilever, Nestle etc. have implemented strategies such as green energy generation using factory bi-products, usage of recyclable and organic packaging materials, usage of plant based biodegradable raw materials in production, establishing carbon neutral operational sites etc. (Unilever, 2021; Nestle, 2021). Though global giants like the said companies have the capacity to implement such measures within their values chains, many of the other organizations have financial, technological, knowledge and skills limitations in implementing eco-friendly operations and requires partnering with the government or other sustainable institutions (Sebastian, et al., 2014).

In the aspect of people, organizations are required to focus on both internal and external stakeholders. With the increased customer pressure organizations are required to ensure social sustainability up to the supplier level to ensure the conformity of the suppliers for child labour laws, human rights violations, fair and safe work conditions (Saberi, et al., 2019). Due to the globalized network of suppliers, organization are facing the challenge of lack of traceability and the difficulty in conducting such supplier audits and communicating the same to the customer base. Hence, high cost technologies like Blockchain needs to be implemented which points back to the clash of short-term and long-term financial targets (Seuring & Müller, 2008). In the rapidly changing business environment, employees are required to upskill and reskill to become sustainable in their careers and organizations are required to provide employee with learning and growth opportunities to retain the employees with the firm (Smith, 2012). Also, while auditing the social aspects of the suppliers, organizations also needs to implement and strictly follow fair work policies that prevent gender discrimination and work places harassments. Corporates can gain a competitive advantage in recruitment by marketing the sustainability concerns of the organization and thereby attracting talented and like-minded individuals to the organization for sustainable work relationships (SHRM Foundation, 2012).

Many of the cutting edge technologies such as IoT, Big data analytics, Blockchain etc. can be utilized in achieving sustainability by means of accurate forecasting of customer demands to minimize wastages, enabling traceability within the value chain, in identifying energy and resource wastage bottlenecks, in implementing reusable technologies etc. (Schoenherr & Speier-Pero, 2015; Arunachalam, et al., 2018) However, many of the organization face issues in such implementations due to high initial investment required, unavailability of technological know-how, unavailability of skilled-human resources etc. (Arunachalam, et al., 2018).

Despite the availability of concepts and tools for ensuring the TBL sustainability, it should be noted that the commitment from the top leadership and linking performance evaluations to sustainability are mandatory for driving stakeholders towards TBL sustainability (Robinson & Malhotra, 2005; Sajjad, et al., 2015). The availability of government laws and regulations on sustainability also drives the business towards sustainable implementations (Brewer & Speh , 2001). However, it needs to be noted that these laws and regulations needs to be reachable to organizations of any capacity such that they are motivated towards sustainability (Wittstruck & Teuteberg, 2012).

Conclusion

It can be concluded that achieving TBL sustainability is a challenge for a business of any caliber but with right leadership and commitment from the employee base the task is not as draining as it seems.

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