Environmental Engineering Reference
In-Depth Information
quantity, but also has to control working practices,
resources consumption, emissions, and the flow of
hazardous materials. Thus, operations managers
are directly concerned with environmental issues
in their operational responsibilities and play a
critical role in developing management systems
that affect environmental performance (Angell
and Klassen, 1999; Gupta and Sharma, 1996).
Environmental Operations Management
(EOM) is a concept of integrating environmental
management principles into the operations man-
agement process for the conversion of resources
into usable products. Due to EOM principles,
instead of looking at environmental management
as a “cost”, companies can use EOM as an op-
portunity to improve their position by eliminating
waste, removing non-value added materials and
equipment, and reducing both short-term cost and
long-term liability. The company will be able to
plan and design products that do not create toxic
wastes or require environmentally hazardous
processes - from the introduction of the product
to its final disposition. A long-term competitive
advantage can be obtained by setting EOM prin-
ciples to the production process. In order to create
an environmental operations strategy, the opera-
tions management team is constrained by criteria
such as: dependability, efficiency, flexibility and
quality. The quality of the environmental attributes
of the products is important criteria for consumers
willing to buy. The dependability of a company
is affected by the use of hazardous materials and
processes. Accidents involving the shipment,
transfer, and use of hazardous materials often result
in temporary shutdowns of manufacturing plants.
In addition, the capital investment needed to pro-
cess and dispose hazardous materials is often high
and affects the dependability. The flexibility of the
company is limited by the materials and processes
necessary for the production and by the types and
quantities of hazardous materials discharged into
the environment. Efficiency can be achieved by
finding less expensive and less environmentally
hazardous materials and processes to manufacture
the desired products (Gupta and Sharma, 1996).
As mentioned before, one major barrier to the
adoption of environmental management systems
is that companies often do not know the envi-
ronmental costs of operating their business and
therefore do not know the financial benefits that
can be obtained by reducing their environmental
impacts. Until only a few decades ago, there
was a belief that any investment in improved
environmental performance would contribute to
increased costs, which will finally reduce profits.
Previously, environmental costs were generally
defined as costs dealing with environmental laws,
regulations, and taxes. Firms have tended not
to measure environmental costs because man-
agement accounting systems have focused on
clearly identifiable costs but not on the costs and
benefits of alternative actions. In 1991, Porter
put forward a new standpoint to the interaction
between profitability and pollution prevention
(Porter, 1991). This interaction has increased the
theoretical and practical interest in the possibility
that profitability and pollution reduction were not
conflicting goals. According to Porter, pollution
was simply a diminishing value in the production
and was an indication of problems in products
and/or processes. Therefore, contrary to previous
opinions, reducing or eliminating pollution would
not weaken but strengthen corporate competi-
tiveness. After Porter's study, a radical change
has come in management's views on pollution
reduction and better environmental management.
Companies became aware of the important role
that environmental costs play in the calculation
of total costs of production. It is now recognized
that the true environmental costs includes: costs
of resources, waste treatment and disposal costs,
the cost of poor environmental reputation, and
the cost of paying an environmental risk pre-
mium. With this point of view, environmental
costs are transferred from overall (or indirect)
costs to direct costs. As a result, the calculation
