Operations

Chief Operating Officers (COOs) face multiple tasks, including minimising the cost of operations without compromising on quality of the product or service provided. In addition COOs may be required to manage the impact of sustainability-driven regulations (for example the Carbon Reduction Commitment, or the Landfill tax), and are responsible for maintaining and improving productivity of the workforce.

Meeting these requirements without compromising on social or environmental sustainability is a key challenge.

 

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Potential role and responsibilities

Potential responsibilities and questions for the Chief Operating Officer

Overall role: Create value for the business through process optimization and re-design, simultaneously cutting costs, reducing risks and sustainability impacts

Responsibilities

Key questions
Minimise costs whilst ensuring quality What exposure do we have to sustainability-related pressures (such as rising energy costs, carbon taxes and rising employee turnover?)
How might the quality of our products and services be affected by cost / resource challenges?
Speed, efficiency and delivery How can we drive efficiency gains through sustainability?
How can we engage our employees to improve the sustainability performance of our operations?
Manage externalities and stakeholder expectations What are our direct impacts on society and the environment from day-to-day operations?
Do we fully understand the indirect impacts of our operations?
How can we build shared value in the communities in which we operate?
Source: Accenture, 2013
Areas of opportunity

Across all sectors, many opportunities exist to transform operations, ensuring they are more responsible, sustainable and competitive in a rapidly changing world. Potential opportunities range from enabling alternative business models (such as providing products as a service); securing fully renewable and cost-effective energy sources; and improving the health and wellbeing of workers.

This section outlines the potential role of the operations function in delivering on each innovation, and provides key questions to help evaluate and test each in turn.

Innovation area

Role of the operations function

Example questions

Shared value

 

Engage employees on sustainability to develop new solutions and build loyalty

Understand how societal expectations and needs could affect operations

How can we engage our employees on sustainability to enhance productivity?

How does our health and safety performance, and employee turnover compare to the industry average?

What value could be gained from reducing sick days and retaining talent for longer?

What activities and programmes (e.g. training, well-being) would need to be in place to achieve these goals?

What could the impact / disruption to our operations be from community or workforce activism?

What leadership is required to promote continuous improvement in efficiency and quality of products and services?

More with less

Develop opportunities for investment in resource efficiency and clean technology and manage deployment

What opportunities exist in our buildings, processes and logistics to deliver efficiencies and reduce costs?

How can clean technologies improve our operational footprint and reduce costs?

Can we commit budget to redesign our processes?

What financing options are available for investment in resource efficiency and process redesign?

Circular economy

Redesign products and manufacturing processes towards a closed loop goal

 

How can we work with R&D to redesign products to work in a circular economy (longer asset lives, re-usability, design for disassembly, etc.)?

How can manufacturing be altered to use existing technical and natural capital instead of new raw materials?

What infrastructure and technology (e.g. recycling equipment) would be needed?

What is the business case?

What external partners are required to close the loop (e.g. collectors and recyclers)?

 

New consumption models

Provide support services to enable collaborative consumption (for example in payment processing, insurance, delivery, etc.)

Implement, operate and deliver leasing services

How can we change our operational processes to enable new consumption models?

What infrastructure (e.g. technology, human resources) would be required to enable collaborative consumption and sharing by customers?

What infrastructure (e.g. technology) would be required to move to a ‘product-as-a-service’ delivery model?

 

Transparency and engagement

Manage production and stock levels through improved information on supplies / suppliers (e.g. real-time and just-in-time models)

What cost efficiencies are available through better forecasting of stock and materials requirements?

How could better supply chain transparency enhance efficiency of logistics, manufacturing and warehousing?

How can we better manage recalls?

What infrastructure (e.g. technology, new processes) would be required to build a fully traceable supply chain?

Source: Accenture, 2013
Other tools and resources

Sustainability Performance Management

Data on environmental and social performance must be quantified and linked to business performance if the financial benefits of sustainability programmes are to be measured and realised.

A robust Sustainability Performance Management (SPM) capability can capture, report and analyse this information to drive business performance and inform decision making.

SPM entails the process of:

  • Defining a strategy: Developing the strategic objectives for sustainability reporting

  • Planning the process: Identifying the material performance indicators that will drive business and stakeholder value, and designing the end-to-end process and tools for measurement and management

  • Collecting and analysing data: Measure performance and value the contribution of the sustainability programme, identifying opportunities for improvement

  • Driving performance improvement: Using the data to implement targeted projects to increase business, societal and environmental benefits

  • Reporting: Communicating data internally and externally to key stakeholders, discussing their views and obtaining their feedback for the next performance cycle

SPM programmes are typically enabled by underpinning IT platforms that systematize the data collection, analysis and forecasting process.

 

Case studies

Siemens: Delivering financial performance and sustainable development

Siemens has anchored sustainability into its organisation, and takes a proactive role in contributing to sustainable development through innovation. Last year, Siemens generated €33.2 billion in revenues from the products and solutions in their Environmental Portfolio – 42% of their Group revenue, enabling their customers to cut their CO2 emissions by an estimated 332 million tonnes. The demand for green technologies is driving the company’s growth. 70% of the revenue from their Environmental portfolio is from energy-efficient products and solutions, including smart building technologies and advanced infrastructure such as combined-cycle power plants. Renewable energy technologies, smart grid applications and other green technologies contributed the remainder of the environmental revenues. Investment in R&D is core to this strategy – 5.4% of their revenues are spent on R&D, and this percentage has been steadily increasing over the last few years. Through this effort the company has demonstrated an improvement in efficiency of its products by 8% since 2010.

Siemens, Sustainability Report 2012, http://www.siemens.com/sustainability/pool/en/current-reporting/siemens-sr2012.pdf

Marks & Spencer: logistics efficiency

For many years, M&S transported clothes from their distribution centres to stores on wheeled clothing rails which allowed them to unload rapidly. At peak times of the year (such as Christmas), time and equipment constraints forced them to ‘loose load’ products on to fixed bars within each vehicle, resulting in additional workload in stores as lorries took longer to unload.

The Logistics team realised that although loose loading created additional work in stores, it significantly increased the volume of garments that could be transported on a single vehicle.

They concluded that loose loading could help reduce fuel usage and the number of vehicle journeys made to deliver clothes.

Through discussions with the Retail team in stores they also realised that delivering larger volumes in fewer deliveries could in fact help stores to plan more effectively and maintain better stock levels on the sales floor.

Working together to deliver business and environmental efficiencies, the Logistics and Retail teams successfully implemented this business-wide change, which along with other fleet management improvements, allowed M&S to reduce their clothing vehicle fleet by over 25% and delivered a 30% fuel efficiency improvement. In 2011/12, fuel efficiency delivered savings to M&S of £2.1m. As the price of oil continues to rise, this saving will increase further.

http://corporate.marksandspencer.com/documents/publications/2012/plan_a_report_2012.pdf