BUS606: Operations and Supply Chain Management

Without question, one of the most critical aspects of developing NPD with SSCM is Top Management support. Top Management involvement in sustainable NPD, which are the processes that the company's senior staff use to promote NPD activities, is essential and includes strategy development, resource allocation, financial support, and support for a common, shared information system. Top management needs to actively promote sustainability through its vision, mission statement, scope, and goals towards directing NPD decision towards sustainable products. Research supports the best practice in sustainable NPD as developing a sustainability vision and explicit strategic targets. (Unfortunately, in many industries and firms, sustainability pressures and incentives may be absent or fuzzy, and companies struggle with developing a sustainable vision). Recent research demonstrates that many companies have some level of sustainability in its strategy and vision. In today's business environment, sustainable NPD is internally-driven as external pressures and incentives are lacking in many industries. A cohesive strategy, and not merely utilizing one sustainability method, tool, or metric (such as life-cycle assessment or design for environment), is required to drive sustainable NPD. Due to the wider array of factors, it becomes more difficult to define a strategy, vision, and targets. Factors to consider include: environmental benchmarking, policy, and coordination; cross-functional coordination; top management support; and supplier involvement. As management begins to address sustainability, they should focus on what sustainability means for their business and products through defining a sustainability strategy, scope, targets, and processes first, and worry less about the metrics at the beginning.

Top management must strategically align the organization and its associated supply chains toward delivering sustainable products and services. Effective sustainable NPD requires coordination efforts with other supply chain members. To be successful, companies should follow a sustainability strategy guided by the triple bottom line and place equal importance on all 3 dimensions of sustainability in decision-making. For example, companies should adopt pro-active supply chain practices, such as learning from partners and other sources to gain knowledge regarding sustainability. In general the ability of companies to be innovative is especially important for SSCM.

With respect to environmental sustainability, top management must align green initiatives with the strategic objectives of the firm, which may be done through developing a 'green company policy' with a focus on green product innovation. The green company policy indicates the managerial commitment to sustainable NPD through its values, norms, and management practices that limit the firm's environmental impact. The existence of a green company policy has a major influence on green product innovation. Green demand and green regulations do not affect green NPD in the same manner in all firms as industry effects on green NPD implementation are strong and significant. Complex interactions between industry environment and firm specific factors exist. Corporate reputation, specifically green leadership, may compensate for low financial and customer performance of green products, and is an outcome of green strategies. A stronger feeling of identification with the organization due to green NPD may also result. A reputation of green leadership is directly related to a reputation of technology leadership as very green product innovations generally require advanced technology development. Traditional NPD literature implies that different performance outcomes should be used for radical products than incremental products, and similarly, a different set of performance outcomes should be used for green and non-green products.

With respect to social sustainability, companies are starting to recognize the need to create social values along with profit generation and environmental protection, and the concept of corporate social responsibility is growing. Social sustainability issues are difficult to incorporate into sustainable NPD, but through the corporate mission, vision, policies, and strategies that top management utilizes, upper management may positively encourage designers to consider social sustainability issues in their decision-making. Additionally, training designers in social sustainability increases their understanding of the complex issues and encourages developing socially sustainable designs and processes. Training documents that promote sustainable NPD include: corporate mission, corporate performance, corporate responsibility, sustainable product attributes (e.g. healthy), sustainable packaging, reduced waste, energy reduction, and reduction of carbon emissions. Training employees in sustainability may provide a competitive advantage over other suppliers. As an example, in 2009, Walmart's pledge to broaden its sustainability efforts to all functions within the company, to all parts of the world where it does business, and to work with suppliers (e.g. Unilever and Proctor & Gamble) and with NGO's (e.g. the China Green Foundation). Best supply chain practices require more transparency in the supply chain due to social implications of an organization within and outside of the organization. As supply chain strength increases, the supply chain may positively impact upon fair trade throughout the world.

In general, the NPD process with sustainability is generally the same as traditional NPD; however, the underlying features and mechanisms needed to address the increased complexity require specific managerial skills and coordination. Management skills to develop sustainability involve innovation and entrepreneurial skills that encourage supporting sustainability knowledge. Management needs to accept a certain amount of uncertainty in sustainability NPD, and encourage proactive capabilities through exploration, experimentation, double-loop learning, creativity, and entrepreneurship.

Top management needs to insist on product and process alignment through instilling the product vision across departments. Top management establishes processes and the power to change processes resides with them. Top management provides a strategic view of the product life cycle and oversees change management. Top management is involved in process management through establishing processes with development partners that encourage design team competence and remove process issues. Top Management needs to articulate that sustainability is critical to the company's future and important in all buyer-supplier relationships (and a 'shared focus') as well as proliferating resources to support sustainability efforts through such efforts as creating a management-level sustainability position and employee sustainability training. For example, top management's statements in training documents demonstrate upper management's support for 'protecting the earth's resources as the right thing to do'. Top management is also responsible to develop process that assist in coordinating resources toward a sustainable product design.

Top management needs to provide the financial resources in various business areas to encourage employees' knowledge in sustainability to grow, to utilize environmentally processes within the organization and supply chain, to develop stronger relationships with their suppliers and customers, and to develop and maintain an integrated, common, shared database. Similarly, top management needs to provide resources and funds to establish a common, shared database. A centralized, thorough, operating product data management system, while expensive, can reduce development costs, shorten time-to-market, improve consistency and data flexibility. Successful data management systems require time, expertise and resources, and a good development application. (It important that top management negotiates the application's capabilities and aligns it with the processes and products).

As an example of this critical recommendation, over the past 20 years, IBM, through its business operations and its products and services, demonstrates the relationship between economic performance and environmental/sustainability leadership. IBM embedded sustainability concepts in its NPD processes and its internal continuous improvement processes. IBM's best practices in sustainable process development include: development, maintenance, and integration of business and sustainability strategy; seamless execution and maintenance of operations and sustainability initiatives; develop, promote and maintain a culture of sustainability performance; and build an organization and management system to drive and execute integrated operational and sustainability goals.