Relationship of Just-In-Time and Total Quality Management Practices with Environmental

RELATIONSHIP OF JUST-IN-TIME AND TOTAL QUALITY MANAGEMENT PRACTICES WITH ENVIRONMENTAL MANAGEMENT SYSTEMS

Kevin Watson

School of Management, Marist College, Poughkeepsie, NY 12601 (845) 575-3000,

Tony Polito

School of Business, East Carolina University, Greenville, NC 27858 (252) 328-6569,

ABSTRACT

Companies are increasingly interested in capturing the benefits associated with environmental sustainability and stewardship. Improved performance of environmental sustainability processes can be sought from the employment of just-in-time and total quality management techniques. These techniques, emphasizing reduction of waste, efficient processes, and allocation of resources in the quest of cost containment, are seen by many as useful toward the improvement of manufacturing process outcomes. Accordingly, this paper seeks to introduce an environmental management system (EMS) module to the JIT/TQM structure to address whether similar synergies exist. The four constructs found in one generally accepted JIT/TQM framework -- management support, workforce management, customer focus and plant environment – are explored in terms of their application toward an EMS.

INTRODUCTION

A company’s impact on the environment is increasingly perceived to affect profitability necessitating a decision as to the strategic position a company adopts. This position may be located anywhere across a continuum ranging from regulatory compliance to adoption of an environmental sustainability strategy [13]. Though a definition of sustainability itself remains nebulous, environmental management strategies are designed to enhance long-run profitability while protecting the ecosystem [16]. That is, they are designed to typify the Corporate Self-Greenewal concept, a strategic management process that seeks to make companies simultaneously more competitive and environmentally responsible [15]. Implementation of environmental strategy can be divided into two generic strategic choices: market and process driven sustainability strategies. Market driven strategies appear to be unsustainable sources of competitive advantage due to the dynamic nature of global markets and changing consumer preferences. However, process driven strategies, as they are linked to increased efficiencies in the conversion process, could provide continued benefits to firms.

The manufacturing paradigm being implemented by most world class manufacturers is based on process improvements that result in high inventory turnover, short lead times, and simplified material flow [1]. Flynn et al. [7] reviewed two of these constructs finding that unique JIT and TQM practices, when added to a common infrastructure, provide synergistic effects on corporate throughput and quality performance. As such, it can be argued that TQM is a module that can be added to JIT in order to increase manufacturing performance. As most environmental strategies that go beyond regulatory compliance rely on waste elimination techniques that fall under the JIT/TQM construct [12], this paper seeks to introduce an environmental management system (EMS) module to the JIT/TQM structure to address whether similar synergies exist. In order to make the argument that EMS should be viewed as a module of the same construct, it is necessary to describe the relationships between traditional JIT/TQM and EMS practices.

MANAGEMENT SUPPORT

Flynn et al. [7] define management support as a necessary infrastructure component to JIT/TQM, finding that it is positively related to both throughput and quality performance.

Management’s effectiveness in administering environmental issues depends on how environmental concepts are embedded in the overall management philosophy of the company [2]. Top management support for an environmental sustainability strategy must extend beyond providing the financial resources necessary in order to implement, it also includes providing a shared vision to guide the corporation. A mission statement that clearly states an organization’s commitment to environmental sustainability decreases the likelihood that managers will exhibit dysfunctional behavior concerning the environment [10]. This is validated by Ward’s [17] assertion that companies seeking to adopt environmental strategies need to first develop new an “environmentalist” corporate culture. Environmental sustainability requires a philosophical shift in the way that corporations define and account for resources and waste [8].

WORKFORCE MANAGEMENT

Traditionally, workforce management is concerned with training, empowering, and compensating workers based on skills. Under EMS this is extended to questioning the measurement system used to evaluate worker performance, allowing managers to focus on what will truly improve throughput without creating additional waste. As in JIT, waste is defined as anything that does not add value to the product [14]. Focus on waste reduction results in two identifiable benefits. First, as there is no clearly defined difference between waste and pollutants, waste by-products can be considered potential new resources and sources of cost savings if not profits, allowing for identification of alternative uses for underutilized resources beyond the traditional means of disposal. Second, waste reduction results in a redefinition of what is considered productive. Productivity and efficiency are not synonymous, as Goldratt [9] states, "productivity is the act of bringing a company closer to its goal" while efficiencies measure activation of resources. The semantic argument between efficiency and utilization can be used to call into question accounting and compensation practices that are tied to efficiencies. This is important since measures of efficiency tend to lead to dysfunctional behavior, in that they may convey messages to company employees that may be contrary to corporate objectives.

Improved resource utilization is necessary, as the marginal cost of resources that are utilized faster then their ability to regenerate will rise exponentially until it becomes economically unfeasible to produce products that contain these resources. In order to extend the feasible life of these resources sustainability argues for a reduced rate of consumption that limits their use to the rate of regeneration adjusted for technological changes over time. The key concept for operations in environmental theory is entropy. The job of manufacturing/production is to turn low entropy resources into high entropy goods. Entropy in this context can be defined as the decay time or useful life of a resource or good. To have sustained environmentally sensitive growth, the manufacturing/purchasing decision must be postponed for as long as possible in order to reduce societal opportunity costs associated with entropy. In order to allow this delay, worker input must be adapted to improve technology, processes, and product in order to reduce lead times through efficient operations, increased quality control, and improved inventory management.

CUSTOMER FOCUS

To develop comprehensive environmental policies, organizations must consider two primary factors related to changing societal values: the current political climate and overall consumer attitude toward the environment [3]. Corporations that do not move toward “environmentally friendly” strategies may be faced with decreased market access, declining market share and profit potential. This is due to the fact that the consumer’s purchasing decisions have increasingly become a referendum on a firm’s environmental policy.

“Green” consumers have placed pressure on legislative bodies to increase regulation and enforcement of environmental policies. The United States federal government has reacted to this public demand with thousands of federal rules and regulations that are accompanied by numerous state and local environmental laws. These regulations impose a fixed cost upon businesses, increasing the cost of production [6]. Government regulation of product and process standards can stimulate research and development of new environmentally friendly technology, which can result in competitive advantage when those regulations anticipate international standards [18]. As such, environmentally sensitive manufactures may be able to use legislation proactively, allowing them to build a competitive advantage based on their ability to be technically innovative. As stated by Cairncross [4], “companies that spot what society wants have an opportunity for innovation... Once they have done so, government is likely to raise standards... When this happens, the innovative company acquires a protected market, hedged in by environmental standards that it can meet, but its competitors cannot.”

PLANT ENVIRONMENT

The focus of EMS on plant environment is: redesigning pollution controls, waste disposal, and waste treatment; using recycled material; redesigning products; recycling production scraps; redesigning facilities; and using renewable energy sources [16]. The benefits from these improvements result from elimination of emissions, effluent, and wastes, which do not add value to the product, but do increase product costs due to the costs related to their disposal [2]. In addition, process redesign strategies reduce social costs that are not recognized by traditional accounting measures. This argument is based on the assumption that waste reduction programs improve the efficiency of the production process, which in turn, reduce the cost of production [17]. This is similar to Crosby’s [5] assertion that not only is quality free; it is a potential profit center. In an environmental sustainability strategy, JIT practices act to eliminate the need for end-of-the-pipe treatment or disposal of waste through proactive elimination of its potential sources [11]. While waste reduction/quality improvement programs have large initial outlays associated with them, the reduction of waste, rework, and exposure to legal liability provide an above average rate of return on the investment. As such, environmental policy in the JIT framework can reduce costs in the present and avoid ecological problems in the future.

CONCLUSIONS

JIT/TQM emphasis on waste reduction, efficient processes, and allocation of resources in the quest of cost containment hold promise for the introduction of voluntary environmentally sound manufacturing. As discussed above, there appears to be a clear relationship between required components of JIT/TQM and EMS. However, EMS goes a step beyond traditional practice, in that manufacturing processes are changed not only to improve the financial performance of the firm, but also to improve its environmental performance. Synergy is created between JIT and EMS as the environmental awareness of a firm grows. This synergy leads to new thought processes and innovative concepts that add value to the firm by fully utilizing and redefining resources.

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