Extending the Horizons: Environmental Excellence as Key to Improving Operations

Abstract

The view that adopting an environmental perspective on operations can lead to improved operations is in itself not novel; phrases such as “lean is green” are increasingly commonplace. The implication is that any operational system that has minimized inefficiencies is also more environmentally sustainable. However, in this paper we argue that the underlying mechanism is one of extending the horizons of analysis and that this applies to both theory and practice of operations management. We illustrate this through two principal areas of lean operations, where we identify how successive extensions of the prevailing research horizon in each area have led to major advances in theory and practice. First, in quality management, the initial emphasis on statistical quality control of individual operations was extended through total quality management to include a broader process encompassing customer requirements and suppliers’ operations. More recently, the environmental perspective extended the definition of customers to stakeholders and defects to any form of waste. Second, in supply chain management, the horizon first expanded from the initial focus on optimizing inventory control with a single planner to including multiple organizations with conflicting objectives and private information. The environmental perspective draws attention to aspects such as reverse flows and end-of-life product disposal, again potentially improving the performance of the overall supply chain. In both cases, these developments were initially driven by practice, where many of the benefits of adopting an environmental perspective were unexpected. Given that these unexpected side benefits seem to recur so frequently, we refer to this phenomenon as the “law of the expected unexpected side benefits.” We conclude by extrapolating from the developmental paths of total quality management and supply chain management to speculate about the future of environmental research in operations management.