Operation Management

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_______________________________________________________________ Report Information from ProQuest May 07 2014 21:32 _______________________________________________________________

07 May 2014 ProQuest

Table of contents

1. Environmental performance as an operations objective............................................................................... 1

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Document 1 of 1 Environmental performance as an operations objective Author: Jeronimo de Burgos Jimenez; Cespedes Lorente, Jose J ProQuest document link Abstract: The traditional approach of operations management has evaluated an organisation's performance based on four main areas: cost, quality, time and service. However, the necessity to introduce environmental protection measures in firms so as to achieve sustainable development has forced a redefinition of the operations function. This paper reviews the literature on operations management and environmental issues, in order to determine the role of operations in sustainability. The paper justifies the need to include environmental performance as a new dimension of operations performance. Finally, the paper analyses environmental performance as an operations objective and present certain aspects that should be taken into account when measuring it. Links: Linking Service Full text: Headnote Keywords Environment, Operations management, Sustainable development Headnote Abstract The traditional approach of operations management has evaluated an organisation's performance based on four main areas: cost, quality, time and service. However, the necessity to introduce environmental protection measures in firms so as to achieve sustainable development has forced a redefinition of the operations function. This paper reviews the literature on operations management and environmental issues, in order to determine the role of operations in sustainability. We justify the need to include environmental performance as a new dimension of operations performance. Finally, we analyse environmental performance as an operations objective and present certain aspects that should be taken into account when measuring it. Introduction The relationship between the firm and the environment is receiving increasing attention in both professional and academic literature (Starik and Marcus, 2000). The rapid degradation of the planet's ecosystems has attracted the attention of the scientific world and, at the same time, has questioned the sustainability of the current economic system. Currently, debate on climatic change and biodiversity is becoming more commonplace in the corporate world, together with concern over water, air and soil pollution (Bansal and Howard, 1997; Hoffman, 2000). Thus, the notion of sustainable development has been established in firms in order to redefine their social and environmental responsibilities (Hart, 1995; Stanwick and Stanwick, 1998; Nash, 2000). According to the World Commission on Environment and Development (1987, p. 43) sustainable development is that which "meets the needs of the present without compromising the ability of future generations to meet their own needs". In short, sustainability is achieved when resource extraction (of energy and natural resources) from the ecological system occurs within the carrying capacity of the resource base, and when waste transfer to the physical components of the ecological systems does not exceed the assimilative capacity of the particular ecosystems Jennings and Zandbergen, 1995, p. 1019). From a corporate point of view, sustainability entails fitting organisational systems into the broader social and ecological systems (Shrivastava, 1995a). Although the sustainability of economic development is a shared responsibility of, at least, business, governments and consumers (Schmidheiny, 1992; Klassen, 1993; Shrivastava, 1995b), the corporate role in slowing down the planet's environmental degradation is particularly relevant (Hawken, 1993; Shrivastava, 1995b). Firms have financial resources, technological knowledge and institutional capability, as well as international and long-term vision to find ecological solutions for environmental problems (Schmidheiny, 1992).

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Furthermore, it is possibly in their interest to spearhead the search for environmental solutions (Coddington, 1993; Welford, 1995) since, in many cases, there is a competitive advantage to be attained from environmental questions (Schmidheiny, 1992; Elkington, 1994; Porter and van der Linde, 1995; Hart, 1995). Firms can, therefore, contribute individually towards sustainable development by innovating in their products and processes in order to use raw materials more efficiently, improve their corporate or product image, reduce the risks stemming from environmental responsibility or improve working conditions. These innovations may contribute towards simultaneously achieving economic, environmental and social objectives. In this way, the socalled win-win-win situation has arisen, where there is an improvement in environmental performance, customer satisfaction, and company performance (Elkington, 1994; Florida, 1996; Maslennikova and Foley, 2000). However, in order to move towards environmental sustainability, firms need to recognise that environmental matters do not merely restrict their actions, but, rather, form part of their own strategy (Hart, 1995; Shrivastava, 1995b; Hoffman, 2000). The general debate over the relationship between the company and environmental sustainability has taken root in the field of operations management (Gupta, 1995; Inman, 1999; Angell and Klassen, 1999). There are at least two circumstances that relate environmental strategy with operations. First, it is generally accepted that the firm's main contributions to sustainable development arise from the integration of environmental requirements into industrial products and processes (Schmidheiny, 1992; Porter and van der Linde, 1995). This is because the development and implementation of environmental technologies necessarily have to take the operations area into account (Azzone and Bertele, 1994; Shrivastava, 1995a). In fact, product and process technologies make up the basic cost and ecological impact parameters, since they determine the types of raw materials used, workers' health and safety, ecological risk, materials efficiency, waste generated and disposal treatment (Sarkis, 1995). Second, there are both similarities and synergies between environmental protection improvement activities and programmes and the operations methods and techniques already in place (Corbett and Van Wassenhove, 1993b; Sarkis, 1995; Inman, 1999). Thus, programmes for keeping pollution under control, zero waste, or design for the environment may reinforce traditional operations management techniques and procedures such as statistical process control, total quality control (TQC), total quality management (TQM), or design for manufacturability (DfM). Therefore, environmental management programmes and policies should be developed taking into account and reinforcing operations strategy (Gupta, 1995). This implies widening the objectives and performance evaluation of this area in order to include environmental questions (Angell, 1993), as well as orientating the main operations decisions (Gupta and Sharma, 1996; Inman, 1999; Angell and Klassen, 1999). The main objective of this article is to contribute towards the debate on the role of the operations function in environmental sustainability. After reviewing the literature on operations management and the natural environment, we suggest a way in which to integrate environmental protection in the operations strategy so as to support corporate strategy. As in Angell's (1993) proposal, we suggest that including environmental performance as an operations objective could be the first step towards developing an environmentally sustainable strategy. In this way, operations management would support the organisation's competitive edge improving environmental performance, as well as the traditional objectives of cost, quality, time and service. Likewise, we indicate how this new objective of the operations function can be measured and how it can affect some of the main decisions of the sub-system. Finally, we establish the principal conclusions of the paper, which suggest new challenges for research into operations strategy. Environmental protection in the company and in operations management Environmental problems have been tackled from two different perspectives (Hoffman, 2000, p. 9). The traditional approach concentrates on the debate concerning the observing of environmental legislation and the firms' social responsibility. The second approach, which is related to environmental sustainability, implies that managers must accept that the firm's overall strategy and environmental questions inevitably go hand in hand.

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They must, therefore, find a way of satisfying objectives of economic competitiveness and of environmental protection at the same time. In the former approach, environmental questions are seen as a restriction, introduced by the legislator, on the firm's main objective (economic competitiveness), while, in the latter, pressure from society is what forces the firm to accept its responsibility in terms of environmental deterioration. In both cases, the company's environmental policy is guided both by legal sanctions (fines and civil or penal responsibility) and by social sanctions (protests, loss of reputation and image). The peculiarity of environmental strategy lies in the fact that it combines a social dimension with a technical dimension. The relevance of the social dimension is that the environment is a public good and all the internal and external stakeholders have some form of interest in it, though not necessarily coinciding (Henriques and Sadorsky, 1999). Technical and economic aspects are also highly relevant, since environmental protection challenges the way corporations handle material resources and produce goods and services. It has a direct effect on production processes and product development. The role of environmental decisions in the operations area must be analyzed within the general context of the firm's environmental strategy (Skinner, 1969; Wheelwright, 1984; Vickery et al., 1993). As noted above, the importance of involving operations management in environmental issues is explained by the fact that it is precisely in this function where the majority of the firm's environmental impacts arise (Gupta, 1995). The effects of production processes on the environment affect both the production of pollutants and the consumption of natural resources, which is why the business and academic communities point out that the implication of the operations sub-system in any environmental strategy is absolutely necessary (Azzone and Bertele, 1994). Furthermore, the implication of other functional areas to fully exploit a competitive advantage based on environmental issues, such as marketing, is subject to the effective improvement in the environmental impact of operations. For example, the firm must never use environmental arguments in its advertising campaigns until it has reduced the environmental impact of its products and processes; otherwise, the marketing program will be neither credible nor sustainable (Coddington, 1993). This fact has given rise to a growing quantity of studies analysing the questions related to environmental management from the point of view of operations management. In Table I we have included some of the perspectives adopted and various research works that fit into each perspective. As Table I shows, since 1993 environmental issues have burst onto the scene in the main aspects of operations management, such as operations strategy, product selection and design, quality management, technology, or supplies. The perspectives from which environmental issues are studied in operations management have been placed in separate sections in order to illustrate the wide range of ways in which the subject can be approached. This, in turn, reflects the inter-disciplinary nature and variety of approaches of operations management itself, as well as its common denominator, aimed at solving problems in product manufacture and services Jones and Lockwood, 1998). However, the interrelation existing among the main operations decisions also means that they can be considered as a whole. For example, design for the environment calls for the simultaneous consideration of aspects such as environmental technologies, ecological purchasing and supply strategy. In the same way, some of the perspectives highlighted here, such as remanufacturing, represent a new way of conceiving the whole production subsystem, according to which environmental issues influence the major decisions of the operations function: product design, variations in the processes, or in the planning of production, capacity, supply and inventories.

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Almost all the papers included in Table I highlight the fact that the operations function plays a major role in reducing the organisation's impact on the natural environment. Therefore, environmental impact reduction should be considered, at least partially, as an issue which is the responsibility of operations management. The importance of environmental matters in operations management is synthesised in Angell and Klassen's (1999) literature review and research agenda. They revise some of the possible connections and suggest over 30 propositions between environmental protection and the main structural and infrastructural decisions of the operations function: facilities, process technology, capacity, vertical integration, suppliers, new products, workforce, quality management, and planning and control systems. Other incipient research lines analyse the connection between the operations area performance and the firm's environmental performance (Klassen and Whybark, 1999b; Hanna et al, 2000), or study the environmental problem in service operations management (Foster et al., 2000). Operations management can approach environmental sustainability via the definition of a new operations objective: environmental performance (Angell, 1993). Revising and updating operations objectives Operations competitive priorities and operations objectives In a seminal article about manufacturing strategy, Skinner (1969) uses the concept of manufacturing tasks to connect corporate strategy with that of operations. The manufacturing task list includes, among others, the production variables of cost, delivery, lead time, quality and reliability. Initially, these manufacturing tasks were considered as representative of exclusive objectives that could be chosen to support the firm's general strategy (Skinner, 1969). The need to priorise these options in order to design the operations system justified a change in terminology, so that the manufacturing tasks or competitive dimensions were also known as "competitive priorities". The operations competitive priorities "indicate areas in which manufacturing must focus if it is to provide a competitive edge to the company" (Garvin, 1993, p. 87). Wheelwright (1984) named four basic competitive priorities which, to a great extent, have influenced the terminology and the content assigned to operations objectives: cost, quality, dependability and flexibility. The degree to which these objectives are achieved would reflect the performance of the organisation's operations area. The relationships between the various operations objectives, and their content have changed over the years. In the first case, the trade-off model of the competitive priorities has been challenged. There is some evidence that supports that improvements in the operations performance areas may be mutually supportive if they are

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pursued in the proper order, such as quality, dependability, cost and flexibility (Nakane, 1986; Hall, 1987). Ferdows and de Meyer (1990) proposed a cumulative model for improvement in manufacturing known as the "sand cone" model. They suggested that the order and manner in which manufacturing objectives are built can change the nature of trade-offs, and one objective is not necessarily at the expense of another. According to the sand cone model, long-term improvement is most likely when pursued in sequential fashion, beginning with quality and progressing though dependability, flexibility and, finally, cost. In the second case, increasing the competitive priorities content to cover other aspects of the operations function that might support the competitive edge has been suggested. Thus, in the 1990s, "service" was suggested as a new dimension of manufacturing performance (Chase et al., 1992; Garvin, 1993; Swink and Way, 1995). Other terms related to those of operations competitive priorities, and which have been used indistinctly, are those of manufacturing capabilities and manufacturing competence. Manufacturing capabilities reflect activities or abilities that one firm can do better than its competitors (e.g. Hayes and Pisano, 1996), and manufacturing competence reflects the degree to which manufacturing performance supports the objectives of the firm (e.g. Vickery et al., 1993). The emergence of the resource-based view of the firm has encouraged operations literature to study some internal capabilities, such as innovation, customisation and culture. In the extent to which these capabilities provide a sustainable competitive advantage, they have been considered as operations competitive priorities. The concept of operations competitive priorities has been widely criticised for three main reasons (Garvin, 1993; Corbett and Van Wassenhove, 1993a; Swink and Way, 1995; Swink and Hegarty, 1998). First, it is of an excessively integrated nature for guiding decision making. Second, it includes both external and internal measurements of performance: that is, operations ends (such as quality), and operations means to obtain these objectives (such as flexibility). Finally, it does not explicitly cover certain aspects of operations performance, such as customisation, responsiveness and innovation. The first critique may be easily solved by disaggregating each competitive priority into its multiple dimensions to define and assess each priority in greater detail (Garvin, 1993). For example, cost may be disaggregated into initial cost, operating cost, and maintenance cost. In order to solve the second problem, the external performance measures (objectives) need to be differentiated from the internal ones (means). In this paper, we will focus on operations external measures of performance (objectives), although the relevance of also studying the capabilities that can help to improve these objectives should be borne in mind. Operations objectives refer to certain attributes of the production sub-system, normally linked to a product, which allow its planning, control and performance. According to Swink and Hegarty (1998), the operations objectives should reflect the costs, quality, time-relative aspects and additional service that the operations function provides. They add a new dimension, service, to those of cost, time and quality previously defined in Corbett and Van Wassenhove (1993a, pp. 108-9)[1]. Each one of these operations objectives is multidimensional and each of its dimensions can be used strategically to gain or support a competitive advantage (Swink and Hegarty, 1998). Finally, to solve the third type of problem, the set of operations objectives chosen should correctly cover all the areas in which the operations function can support the firm in order to gain a sustainable competitive edge. Some operations capabilities, such as flexibility or innovation, are implicitly included in Swink and Hegarty's (1998) four operations objectives, since they are a means to obtaining these objectives: lower cost or lead time, improved quality or service. However, these four objectives should be extended if a new element appears via which the operations function can help towards the firm obtaining a competitive edge. In the case of environmental issues, the necessary circumstances come together to justify increasing the number of operations objectives. Defining environmental issues as an operations objective The concept of operations objectives is the usual link in a top-down approach to connecting corporate strategy and operations strategy (Skinner, 1969; Hayes and Wheelwright, 1984; Garvin, 1993). Various aspects

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regarding the environment, such as legislation, stakeholder pressure, economic opportunities and ethical motives have led to firms applying environmentally sustainable strategies (Bansal and Roth, 2000). In accordance with the hierarchical planning process, operations function should include environmental matters in its objectives and decisions in order to support the firm's environmental strategy. Prior studies have looked at the impact environmental management measures have on these competitive priorities (e.g. Gupta and Sharma, 1996; Klassen and Angell, 1998). This perspective identifies possible synergies between environmental protection and other operations objectives, but it also indicates that it may be necessary to carry out trade-offs between operational objectives and environmental responsiveness. For example, it is possible to obtain environmental benefits and cost reduction through ecoefficiency, while end-of- pipe solutions usually involve additional processes and cost to the products. As we have already pointed out, environmental sustainability in the firm implies recognising the existence of environmental objectives that must be met in just the same way as economic objectives. This entails widening the parameters via which the operations area can contribute towards supporting corporate strategy, introducing a new objective covering environmental questions (Angell, 1993). In order to include one dimension of performance as an operations management objective, two conditions are basically required: (1) the dimension of performance can or must be attained within the operations function; and (2) it can provide the firm with a competitive advantage. The first of these requisites has been made clear in the above literature review about how environmental protection has been included in the operations function and how this area can contribute towards said protection. For instance, Klassen (2000a) found in small machine tool and non-fashion textiles industries that investment in environmental technologies was positively related with investment in manufacturing. He also detected several links between investment in JIT and improved environmental management in the furniture industry (Klassen, 2000b). Other studies found that environmental management systems and programmes such as IS014001 need organisational development that embraces TQM principles (Corbett and Cutler, 2000; Kitazawa and Sarkis, 2000). Hart (1995) identified three inter-related strategies that may improve the firm's competitiveness based on environmental aspects: pollution prevention, product stewardship and sustainable development[2]. The first two strategies revolve around the development of new capabilities in production and operations; the first is aimed more towards processes and the second more towards products. Furthermore, Hart (1995) points out that all three environmental strategies show a certain logic: if there is no progress made in pollution prevention, a product stewardship strategy can hardly be adopted, and sustainable development requires prior proof of product stewardship competence. Therefore, the operations function cannot only help to achieve environmental protection and sustainability, but is also an essential contribution, since it provides support to the basic strategies and capabilities of environmental protection. The second requisite, to provide a competitive edge for the company, implies the analysis of the advantages that can be attributed to the improvement in environmental performance. The literature does not agree upon the effect that environmental protection has on economic results. However, this relationship becomes clearer if we differentiate between the concepts of environmental management (activities geared towards protecting the natural environment) and environmental performance (reducing the environmental damage caused by the company along with the social perception of this impact). Thus, in the relationship between environmental performance and economic result, the evidence available points clearly to a positive relationship between both magnitudes (see, for example, Cormier et al., 1993; Klassen and McLaughlin, 1996; Russo and Fouts, 1997). In any case, the literature coincides in recognising that firms can obtain several "benefits" associated with the reduction of the organisation's impact on the environment, which can help towards obtaining a competitive advantage. Among the benefits stemming from environmental performance improvement are (Guimaraes and Liska, 1995; Shrivastava, 1995a): cost reduction (efficient use of raw materials, reduction in fines, risks or

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insurance costs); quality improvement; early adoption of new regulations; benefits in management and personnel (increased employee morale and involvement, stimulated innovation); external benefits derived (improved company image, access to new markets, engaged competitiveness, improved customer loyalty, improved stakeholder communication and feedback). Environmental protection as a strategic capability is supported and reinforced by other capabilities. Innovation, for instance, which is considered to be an operations area capability, allows firms to adopt environmental capabilities such as pollution prevention and product stewardship (Hart, 1995). Operations innovations are inherently difficult to replicate, slow to diffuse, and have a dynamic component when based on continuous improvement (Hayes and Upton, 1998, pp. 17-8). Likewise, environmental capabilities have been related to the capabilities derived from the human resource system, the TQM capabilities and the development of a shared view (Hart, 1995; Hanna et al., 2000). Stakeholder interaction and high-level learning are other capabilities that provide support and, at the same time, are reinforced by the firm's environmental responsiveness (Sharma and Vredenburg, 1998). The complex interaction between resources and operations system capabilities, including environmental management, makes operations-based environmental advantages more robust and particularly suitable for supporting both the firm's competitive strategy and its environmental sustainability. In sum, the finn is faced with a new area in which the organisation has to compete and in which it must assess its performance. If it does not pay explicit attention to these questions, the firm will show a weakness that could be exploited by its competitors. Therefore, it would be desirable to add a new operations management objective: "environmental performance. This objective can be met by jointly developing both the environmental and the operations capabilities. The objective "environmental performance" should be understood as the minimisation of the negative repercussions on the natural environment that stem from the productive activities of a company and the social perception of this impact. Environmental performance cannot be considered independently from the other operations objectives, but, in fact, they may actually be mutually supportive of each other, as we noted above. In the same way, the fact that a firm concentrates more on one of the objectives does not imply that it has reached the minimum level required by its surroundings and by the competition as regards the remaining objectives. Measuring environmental performance There is a wide variety of criteria that can be used to evaluate a firm's environmental performance. Each of these approaches to measuring environmental performance has both advantages and disadvantages. Each organisation must select the measurement system which best meets the needs posed by its particular situation. Furthermore, environmental performance information increases its value when it is compared, because comparisons with other environmental information are central to its interpretation (James, 1994). Different bases can be used for this comparison, such as tracking over time, benchmarking against other businesses or best practices, as well as comparing it against an ideal (for example, zero emissions or total recycling). Corporate environmental performance can be represented by a relatively small number of dimensions (Lober, 1996). Ilinitch et al (1998) identify, differentiate, and validate four categories or dimensions: (1) internal systems measures; (2) external stakeholder relations; (3) external impacts; and (4) internal compliance. The first category refers to the organisational processes the firm has designed to improve environmental performance; for example, environmental auditing, or rewarding the best environmental initiatives. The second refers to the interaction between the firm and external agents such as the government, local community, clients, suppliers, etc. The third dimension refers to the negative externalities on the environment generated by the firm. Finally, internal compliance considers the degree to which the firm observes environmental laws or certain

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minimum rules of an environmental nature that the company has agreed to respect, such as industrial agreements, or agreements between large corporations. Following on from this classification, firms could design indicators that correspond to each of the dimensions so as to evaluate the corporation's environmental performance and any possible improvements. The first dimension, internal systems, evaluates the environmental initiatives, programmes and tools used by the firm. The main aspects are those that refer to the number of measures adopted and the degree to which their implementation has been acceptable. The environmental initiatives and programmes include both those for the whole of the firm, such as formulating an environmental plan, and those which involve the operations function to a greater extent, such as design for the environment (DfE), life cycle assessment (LCA), or total quality environmental management (TQEM). The second dimension, stakeholder relations, is a relevant component of environmental performance, insomuch as the firm can sustain a competitive edge based on environmental questions as long as public perception of the firm's activities is positive. The relevant indicators in this area could be established by using the stakeholders' opinion of the environmental effects of the firm's activities (Lober, 1996). Due to the difficulty of individually tracking the stakeholders' opinions on the firm's environmental activities, many organisations evaluate their image in the eyes of the stakeholder by keeping an overall record of when they have appeared in the media in relation with environmental matters. In this case, negative press coverage usually affects the firm's image more than positive coverage (Gilley et al., 2000). This procedure is, in fact, used by several authors to evaluate a firm's environmental performance (Klassen and McLaughlin, 1996; Gilley et al., 2000). Certain stakeholder groups can evaluate environmental performance by paying particular attention to specific criteria. For example, Miller and Szekely (1995) detected that some environmental pressure groups (such as ecologist and consumer organisations) primarily want to see a company's commitment towards reducing the cradle-to-- grave impact of its products and operations and a willingness to embrace continuous improvement. Another stakeholder group, financial agents, looks at aspects that can be quantified and measured, over time, within industry sectors, and usually use indicators such as the US Toxic Release Inventory (TRI) to compare different companies. For external impacts, the indicators used to measure this objective should evaluate a firm's contribution towards preserving or improving the environment. The state of the environment can be assessed through evaluating air, water and soil pollution (the presence of pollutant), the usage of environmental resources, and the level of noise. The firm should evaluate the extent to which it is involved in improving or worsening the situation. The main problem in evaluating this dimension of environmental performance lies in accurately quantifying the effect the firm's waste generation has on the natural environment. This is made more difficult if we consider that many of the environmental problems are globalized and the scientific knowledge needed to measure the specific contribution of a single company is still in its initial stages (Welford, 1995). As a proxy of the impact on the environment, the indicators used in this dimension quantify the pollutants generated by the firm and the consumption of resources. Thus, these indicators can refer to the quantity of various types of waste generated (applying different weights according to the toxicity), or to the intensity at which certain raw materials are used, especially non-renewable ones. More specifically, the main indicator of environmental performance used in the environmental literature refers to the generation of contaminating substances, since there are already databases that have measured this aspect, such as the TRI. For internal compliance, the indicators used could be the number of environment laws not observed, in absolute or relative terms, the number and total amount of fines imposed, or the degree to which the firm carries out a commitment that goes beyond what the law states in environmental matters (Ilinitch et al., 1998). Additionally, for those firms with a repetitive process or which have an established environmental performance standard, the incidences or deviations from this standard are also a way of measuring environmental performance. Criteria may be classified on either one of these four categories. For example, James (1994) proposed a set of

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criteria including the quantification of environmental costs, and environmental protection activities (dimension 1), the satisfaction of consumer needs (dimension 2), the evaluation of the impact on the environment as a result of the activities of the company, consumption and efficiency in the use of resources, and wastes generated (dimension 3) and risk assessment (dimension 4). James (1994) also proposed some form of standardised measure of waste generation that allows its comparison (e.g. the amount of waste generated divided by a specific indicator of the firm's activity, such as production, sales or added value) and an aggregated index, based on financial aggregation criteria or via a qualitative weighting. These criteria are not incompatible, but, rather, the more categories of environmental performance measures a company is using, the better will be the assessment of its environmental performance. From the point of view of sustainability, an organisation's environmental performance would be established by taking into account the sustainability of the relations between the firm and the natural environment. Various definitions of the concept can be used to obtain a set of standardised principles that allow the assessment of the organisation's progress towards sustainability. For example, the so-called Natural Step introduces a set of general principles for sustainability that have implications for evaluating a firm's environmental performance (Bradbury and Clair, 1999). Improving environmental performance in the company requires a systematic decrease in its economical dependence on (Nattras and Altomare, 1999): * underground metals, fuels, and other minerals; * persistent unnatural substances; * activities which encroach on productive parts of nature (e.g. long road transports); * using a large amount of resources in relation to added human value. Although the Natural Step approximation provides a useful reference guide to the search for sustainability indicators, it does not specifically define them. In sum, the indicators we have mentioned have several limitations: * each one of the proposed measures only reflects partial aspects of the firm's environmental performance, but there is no global single index summarising these indicators that has been generally accepted (Lober, 1996); * there may be a time lapse between these indicators of environmental performance and real environmental performance itself (Welford, 1995); * other areas apart from operations, such us R&D, legal or public relations may be involved in the value of these indicators. For example, R&D may stimulate product and process environmental initiatives; the legal department has a strong influence on the total amount paid in environmental fines; and public relations influence interaction with stakeholders and their opinion. However, and in spite of their limitations, these environmental performance indicators provide a close idea of how the operations function contributes towards the environmental strategy of a company. Conclusions We have reviewed the firm's environmental problem and its interrelation with the operations function. Developing environmentally sustainable strategies requires the defining of a new operations objective (environmental performance), which measures to what extent the firm contributes towards maintaining or improving the natural environment. Likewise, we have analysed this objective's characteristics, along with the various dimensions it includes. Differentiating between environmental performance and all those techniques, tools or capabilities that are related to environmental protection means that the literature on environment and operations management can be integrated so as to evaluate this function's contribution to environmental sustainability. The environmental performance objective is not incompatible with other operations objectives; on the contrary, they can even reinforce each other. Thus, the firm's environmental capabilities are the result of a complex interaction between environmental protection practices, the human resource system, and other operations

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capabilities such as continuous improvement and innovation. Just as with the other operations objectives, the different dimensions of a firm's environmental performance should be measured to produce a table in which corporate contribution to sustainability can be evaluated. Given that many of the environmental capabilities are derived from the operations area, it is this area that is principally responsible for attainment. In sum, the five operations objectives proposed in this article are: cost, quality, time, service and environmental performance. These five objectives allow a complete assessment of operations' contribution to the general strategy and, therefore, of operations performance. Defining an environmental performance objective should not hide the fact that sustainable development is a much wider concept. Firstly, sustainable strategies require profound structural changes in business organisations and new ethical systems to guide corporate decision-making (Shrivastava, 1995b). Identifying environmental performance improvement with a sustainability strategy may help to disguise corporate responsibility. Roome (1997, p. 46) noted: "improving environmental performance in business organizations, using notions of ecoefficiency, total quality or product and risk analysis endorses the anthropocentric, utilitarian ethical system implicit in much of orthodox business practices". Secondly, the changes should be brought about as part of a general re-organisation of the economic system. Individual organisations cannot become sustainable: individual organisations simply contribute to the large system in which sustainability may or may not be achieved Jennings and Zandbergen, 1995). However, the move towards environmental sustainability can create opportunities for firms that adequately integrate environmental questions into their strategy. In this context, establishing a strategic environmental performance priority in the operations area implies the firm's recognition of the need to go down the path of sustainability and of the opportunity for firms which spearhead this process to differentiate themselves from the competition (Maslennikova and Foley, 2000). Additionally, considering environmental performance as a new objective of operations management introduces several research issues that should be analysed in future studies. First, the analysis of the fit-model between firm's strategy and operations strategy taking into account the environmental dimension may provide valuable knowledge. It could be interesting to analyse the differences existing between the firms that define these objectives and those that do not, or that do so implicitly, in terms of external environment, organisational resources and performance, and other contingencies. Second, it is worthwhile analysing the relationships this operations objective and each of its dimensions, have with the remaining objectives in the area; along with the possible existence of a logical sequence to permanently improve said objectives in the long term. It would seem logical to include the environment objective in the first phases of product design, together with quality specifications. We can take this argument to be empirically supported if we differentiate between pollution control and pollution prevention (Hart, 1995; Russo and Fouts, 1997). The former assumes that environmental goals are incorporated after taking other objectives into account. Pollution prevention implies including environmental issues at the beginning of the planning process. Thus, Klassen and Whybark (1999b) found that pollution prevention has a positive statistically significant relationship with the operations objectives of cost, speed and flexibility. However, pollution control has a significant negative effect on cost, speed and flexibility objectives. These findings lead us to believe that environmental performance can positively influence the results of the other operations objectives as long as it is placed as a first objective together with quality (Ferdows and de Meyer, 1990) Third, more research is needed to clarify how environmentally related capabilities require certain complementary assets or capabilities for their development (Christmann, 2000), and even how they establish a network of capabilities, which influence environmental and economic performance. Finally, there is a need to study the repercussions the notion of sustainability has on the operations function in greater depth. This article has reviewed one of the elements (environmental performance), but an analysis is

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References World Commission on Environment and Development (1987), Our Common Future, Oxford University Press, New York, NY. Welford, R. (1995), "Environmental strategy and sustanaible development, The Corporate Challenge for the 21 st Century, Routledge, London and New York, NY. Wheelwright, S.C. (1984), "Manufacturing strategy: defining the missing link", Strategic Managementjournal, Vol. 5 No. 1, pp. 77-91. Zhang, H.C., Kuo, T.C. and Lu, H. (1997), "Environmentally conscious design and manufacturing: a state-of- the-art survey",journal of Manufacturing Systems, Vol. 16 No. 5, pp. 352-71. AuthorAffiliation Jeronimo de Burgos Jimenez and Jose J. Cespedes Lorente University of Almeria, Almeria, Spain Subject: Studies; Sustainable development; Strategic management; Classification: 9130: Experimental/theoretical; 1540: Pollution control Publication title: International Journal of Operations & Production Management Volume: 21 Issue: 12 Pages: 1553-1572 Number of pages: 20 Publication year: 2001 Publication date: 2001 Year: 2001 Publisher: Emerald Group Publishing, Limited Place of publication: Bradford Country of publication: United Kingdom Publication subject: Business And Economics--Management ISSN: 01443577 CODEN: IOPMDU Source type: Scholarly Journals Language of publication: English Document type: Feature ProQuest document ID: 232333630 Document URL: http://search.proquest.com/docview/232333630?accountid=35812 Copyright: Copyright MCB UP Limited (MCB) 2001 Last updated: 2010-06-10 Database: ProQuest Central

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