Sustainability Incentives in New Product Development - Case Study Example

1. Title Page Achieving Sustainable Operations for GHB Your full name and student ID…. Class number…. Lecturer’s name …. 2. Executive Summary 2.1 Purpose The current situation of GHB is the intention to improve sustainability of its operations by reducing electricity consumption, water use and transportation costs. The aim of this report is to research, report and recommend ways through which GHB can improve its sustainability in the three areas. 2.2 Scope of investigation The secondary sources of information will; be used during the data collection process. The information for this report has come from the following sources: Books Peer reviewed journal articles 2.3 Methodology The method(s) used to research and compile this report include secondary research. A literature search is done to identify and analyse methods of improving sustainability in the above three areas. The analysis of the data will be carried out through the use of qualitative methods. 2.4 Key findings Redesign the factory by replacing corrugated iron sheets with other building materials with insulating properties such as bricks. Water recycling Water audit to determine water requirements (quantity and quality) for various applications and consequent search for ways to reduce water use Bulk purchasing (and consequent bulk transport) of raw materials Sourcing raw materials from nearby suppliers if possible 2.5 Conclusion and recommendations Based on the available literature, GHB should conduct a critical analysis and redesign of its factory and operations in order to achieve sustainability. The problems facing the company can be solved through the use of sustainable measures. Table of Contents Table of Contents 3 3.Introduction 4 a.Background 4 b.Defining the problem 4 c.Overall purpose of the report 4 d.A definition of sustainability and a summary of the importance of sustainable practice for corporations 4 e.Overview of the reports structure 4 4.0.Findings and discussion 5 4.1. High electricity bills 5 4.1.1. Solution 5 4.1.2. Pros and cons 5 4.2. High water consumption 6 4.2.1. Solution 6 4.2.2. Pros and cons 6 4.3. Transportation costs 7 4.3.1. Solution 7 4.3.2. Pros and cons 7 5.0.Recommendations and conclusion 8 6.0.References 9 3. Introduction a. Background GHB produces snacks bars from fruits, cereals and nuts. The company has been in operation for four years now. In the effort to enhance its financial sustainability in the long term, the company’s CEO has realised the need to improve the company’s environmental sustainability. Improving environmental sustainability will positively affect financial sustainability in two ways: firstly by increasing corporate reputation and hence market coverage and secondly by reducing operating costs and hence increase in revenue (Salzmann, Ionescu-Somers & Steger 2005). b. Defining the problem The three problems facing GHB which this report seeks to address are high electricity and water consumption as well as high transportation needs, which depicting it as an environmentally irresponsible company. This has negative impacts on the public image of the company in terms of corporate social responsibility. c. Overall purpose of the report The purpose of this report is to find and recommend ways through which GHB can improve the environmental sustainability of its operations through reduction in electricity use, water consumption and transportation. d. A definition of sustainability and a summary of the importance of sustainable practice for corporations Sustainability, according to the Brundtland Commission, is realised when “elements of the society are able to meet the needs without compromising the ability of future generations to meet their own needs” (Cited in Alblas, Peters & Wortmann 2014: 514). When corporations adopt sustainable practices, they benefit from reduced costs of operations because sustainability usually comes with reduced resource use. In addition, the adoption of sustainable practices helps corporations to gain corporate reputation as social corporations especially in the wake of the need for corporate social responsibility (Klettner, Clarke & Boersma 2014). e. Overview of the reports structure List key sections/concepts to be researched and discussed in the body of your report… The following sections will be researched and consequently discussed in the body of this report: Environmental sustainability Reduction in resource utilisation: Water, Electricity and Transportation 4.0. Findings and discussion 4.1. High electricity bills 4.1.1. Solution GHB faces a problem of high electricity bill as a result of heating and cooling the premises as it is made of corrugated iron. In order to reduce the high electricity bills, the factory need to be redesigned. This can be achieved by replacing the corrugated iron sheets with thermal insulators such as bricks. The thermal insulators such as bricks have the potential of eliminating the heating and cooling needs (Miller & Spoolman 2009). This will in turn reduce the electricity consumption as it is mainly used for heating and cooling. The reduction in consumption of electricity is an important sustainability goal that can be achieved by the company through the process of redesigning the factory. The problem with the high electricity consumption can also be reduced by increasing the natural ventilation. The natural ventilation is dependent on where the doors and windows have been placed within a building. One of the common methods that are used to increase the natural ventilation is increasing the windows and vents (Miller & Spoolman 2009). More windows should therefore be fixed at the factory. This will play an important role in allowing the entry of natural light as well as the air. An improved circulation of air is important in ensuring that the building is able to cool at a fast rate and hence eliminating the need of using electricity for cooling. 4.1.2. Pros and cons The redesigning of the factory will play a huge role in solving the problem of high electricity consumption. It will also play an important role in giving the factory a new outlook. The redesigning process will also be useful in ensuring that the needs of the company are considered during the process. The risk that is associated with the current building will also be eliminated during the process. However, the main problem redesigning the factory is the high costs that will have to be incurred. New building materials will have to be purchased and factory may be forced to shut down until the process is completed. Experts will also be required for the purposes of carrying out the redesigning process and hence making it more expensive. Increasing the natural ventilation will play an important role in terms of reducing heating and cooling need of the building. However, this may not solve the problem completely. The building will still remain in the same state. During winter, electricity will still be required for the purposes of heating the building (Miller & Spoolman 2009). Increasing the natural ventilation will only solve part of the problem faced by the company. The electricity bills will still be high during winter and hence impacting negatively on sustainability. 4.2. High water consumption 4.2.1. Solution GHB faces a problem of high water consumption during the production process. The production of the bars requires a high amount of water and hence leading to the problem. This can be solved through water recycling. Water recycling is an important measure that is able to reduce the water consumption by between 50% and 95% (Parreno & Torres 2012). The recycling process is therefore effective in promoting sustainability. The water recycling process requires setting up a plant for recycling the water. Pumps and filters are also required in order to ensure that the recycling process is successful. Water auditing is also a measure that can be used by the company for the purposes of reducing the high consumption. Water auditing involves the process of determining how the water is used and the purposes of its use (Green 2010). During the water auditing process, all the amount of water used has to be accounted for. This plays an important role in reducing the Unaccounted-for-water which is responsible for wastage. The water usage in different applications can be identified through the water auditing process and hence ensuring that alternative media 8is used where possible. The water auditing process is useful in ensuring that water is used sparingly and hence avoiding any wastage. 4.2.2. Pros and cons The water recycling process has the potential of ensuring that the water consumption rate is reduced. Water that has already been used for some of the activities can still be re-used. This will ensure that only a small amount of water is used during the production process. A certain amount of water can be used to carry out more than one activity during the production process. The water recycling process is also important in terms of ensuring that the company has its own source of water. According to Parreno & Torres 2012, the main problem with recycling is that the water that has been recycled may not be portable and palatable. This therefore limits its use to only certain activities. In most cases, the recycled water can only be used for cleaning and washing as it cannot be consumed. Most people also have a negative perception with regards to the recycled water and hence limiting its use in the production process. The water auditing process will ensure that water is only used when needed and it will eliminate any form of wastage. However, water auditing may not fully solve the problem of high consumption as some of the activities require a constant amount of water. 4.3. Transportation costs 4.3.1. Solution GHB faces a problem in terms of high cost of transportation. The raw materials are sourced from South Australia and Darwin which is located far away leading to increased cost of transport. This problem can be solved through bulk purchase of raw materials. Purchasing the raw materials in bulk will ensure that the company is able to utilize a high capacity transport. This reduces the number of trips and hence saving the transport cost. The high capacity transport in Australia is much cheaper for the bulky goods. The company will only be required to develop the estimates of the raw materials that will be required for a specific period of time. Sourcing the raw materials locally is also a useful solution to the problem facing the company. The fruits can be bought from the local farmers in the region and hence reducing the long distance that has to be covered during the transportation process. According to Toor & Havlick, (2004), the reduction in the distance covered is useful in terms of reducing the transportation cost. The company will be able to solve the transport problem once it has identified a reliable supplier operating within the region. 4.3.2. Pros and cons Purchasing bulk raw materials will have a positive impact to the company as it will reduce the transportation cost. The company will reduce the need for frequently purchasing the raw materials in small quantities which requires a high number of road trips. The company will therefore benefit greatly from the purchase of raw materials in bulk. The purchase of raw materials in bulk may however create other problems for the company. The storage of the bulk raw materials may be difficult for the company. The company will be required to expand its storage facility or hire a warehouse for the purposes of storage. This will lead to an increase in costs for the company. According to Toor & Havlick, (2004), expansion of the storage facility is required when goods are purchased in bulk. Sourcing the raw materials from the local farmers will be much cheaper to the company. The company will not spend a lot in terms of transportation as the local farmers can deliver the raw materials to the factory. However, the company may be faced with challenges in case the local farmers are unable to meet the demand of the company. The local farmers may also lack some of the local materials that are required for the production process. 5.0. Recommendations and conclusion It is recommended that the management should re-design the factory by replacing corrugated iron sheets, which are good thermal conductors, with building materials which have insulating properties such as bricks. This will reduce energy requirement for heating during winter and cooling during summer. In order to reduce water use, it is recommended that the management should conduct water audit to determine water requirement for various applications as well as water quality requirements. This will then facilitate the implementation of water recycling strategy and/or the use of technologies which reduce or eliminate water use. In order to reduce transportation costs, it is recommended that GHB should employ the strategy of bulk purchase of raw materials to facilitate bulk transportation. If possible, GHB should consider purchasing from nearby suppliers to reduce transport distance. In conclusion, it is evident that GHB faces three major challenges. The challenges have negative impacts on the operations of the company as well as its costs. It is evident that the challenges being faced by the company has negative impacts on sustainability. It is evident that the challenges facing the company can be solved through the use of sustainable measures. The sustainable measures involve reducing the consumption of resources. The company will also be required to come up with structures that aid sustainability. It is evident that the company may be required to redesign and construct the factory using materials that promotes sustainability. 6.0. References Alblas, AA., Peters, JC. & Wortmann, H 2014, Fuzzy Sustainability Incentives in New Product Development. International Journal of Operations & Product Management, vol. 34, no. 4, pp. 513-545. Green, D 2010, Water Conservation for Small and Medium-Sized Utilities. American Water Works Association. Klettner, A., Clarke, T. & Boersma, M 2014, The Governance of Corporate Sustainability: Empirical Insights into the Development, Leadership and Implementation of Responsible Business Strategy. Journal of Business Ethics, vol. 122, pp. 145-165. Miller, GT. & Spoolman, SE 2009, Living I the Environment: Principles, Connections and Solutions (16th Ed.). Belmont, CA: Brroks/Cole Cengage Learning. Parreno, WC. & Torres, MD 2012, Quality and Safety of Frozen Vegetables. In D. Sun, Ed., Handbook of Frozen Food Processing and Packaging (2nd Ed.) (pp. 387-434). Broken Sound Parkway NW: CRC Press. Salzmann, O., Ionescu-Somers, A. & Steger, U 2005, The Business Case for Corporate Sustainability: Literature Review and Research Options. European Management Journal, vol. 23, no. 1, pp. 27-36. Toor, W. & Havlick, S 2004, Transportation and Sustainable Campus Communities: Issues, Examples, Solutions. Washington, DC: Island Press. Read More