Operations Management: An Integrated Approach, 5th Edition

THE SUSTAINABILITY LINK

Inventory management, order policies, and storage and movement of goods are all areas where significant gains in sustainability can be made for companies. Consider that modes of transportation used to move materials have significant effects on energy consumption, traffic congestion, and pollution, including noise pollution. Decisions such as sourcing locally, reducing the number of shipments, and selecting transportation modes wisely can go a long way toward meeting sustainability goals. Some companies are also measuring their cost of goods as total cost of ownership (TCO), which includes usage and disposal costs. For example, the cost of a car battery may significantly change if we include its end-of-life cost, as improper disposal can pose significant negative environmental effects. This may result in replenishment policies that are modified and reflect these additional costs.

Another area of inventory management that impacts sustainability is decisions regarding specific products sourced with a consideration of their environmental impact. Even seemingly small changes in items purchased can have a sizable impact. For example, something as simple as the purchase of a wine-bottle stopper can have substantial sustainability impact. Production of petroleum-based plastic wine bottle stoppers causes 50% more global-warming pollution than does the manufacture of natural cork stoppers. Similarly, production of metal screw caps for wine bottles produces anywhere ...