Operations management

1. Sustainable Operations &
Technology in Operations
Management
Module 5

2. WHAT IS THE TRIPLE BOTTOM LINE?
• The triple bottom line is a business concept that states firms should
commit to measuring their social and environmental impact—in
addition to their financial performance—rather than solely focusing
on generating profit, or the standard “bottom line.”
• In economics, the triple bottom line (TBL) maintains that companies
should commit to focusing as much on social and environmental
concerns as they do on profits.
• TBL theory posits that instead of one bottom line, there should be
three: profit, people, and the planet.
• A TBL seeks to gauge a corporation's level of commitment
to corporate social responsibility and its impact on the environment
over time.

3. WHAT IS THE TRIPLE BOTTOM LINE?
• In 1994, John Elkington—the famed British management
consultant and sustainability guru—coined the phrase "triple
bottom line" as his way of measuring performance in corporate
America. The idea was that a company can be managed in a
way that not only makes money but which also improves
people's lives and the well-being of the planet.
• TBL theory also says that if a company focuses on finances
only and does not examine how it interacts socially, it is not able
to see the whole picture and therefore cannot account for the
full cost of doing business.

4. The 3 Ps of the Triple Bottom Line
• According to TBL theory, companies
should be working simultaneously
on these three bottom lines:
• Profit: This is the traditional
measure of corporate profit—the
profit and loss (P&L) account.
• People: This measures how socially
responsible an organization has
been throughout its history.
• Planet: This measures how
environmentally responsible a firm
has been.

5. Profit
• In the context of the triple bottom line, profit can mean more than
just how much money a company makes.
• A company must ensure it earns its income in ethical, fair manners.
This includes soliciting business partners and vendors with which it
aligns philanthropically.
• It also defines how a company develops its strategy or financial
operating plan.
• For instance, profit also ties to a company's responsibility to pay its
lenders, creditors, and employees what is due to them and to have a
sense of financial responsibility for these obligations.

6. Profit
• Some users of the triple bottom line may also say profit refers to not only a
company's profit but the profit of those around the company. This
specifically refers to the community in which the business operates. This
may include:
• Ensuring the company is paying its fair share of local, state, or federal
income taxes on a timely basis
• Making sure the company is fostering economic wealth within its
community by shopping local or utilizing small businesses.
• Committing to financially investing in the community through partnerships,
developments, or corporate sponsorships.

7. People
• In the context of triple bottom line, people refers to every individual that is
in touch with a company. This includes but is not limited to:
• Employees. This means ensuring workers receive a fair wage in a safe
environment that encourages professional development.
• Vendors. This means ensuring a diverse set of suppliers are used and
prioritizing small businesses or minority-owners when appropriate.
• Customers. This means ensuring customers have fair access to products
and their feedback regarding equity or safety are considered.
• Traditionally, a company would prioritize investors or shareholders. Triple
bottom line shifts the focus to individuals potentially not financially invested
in the company but still tangentially involved with its operations. Now,
instead of attempting to create value by only increasing investor returns,
triple bottom line strives to create value by encouraging volunteerism of its
employees or support or business success of small suppliers, for example.

8. Planet
• The largest deviation from purely financial reporting relates to
reporting on environmental impacts.
• Often, a company must be forced between a lower-cost option or a
more environmentally-friendly alternative.
• A company may also choose between a less favorable alternative;
for example, eco-friendly transit will likely be slower than aircraft.
• Instead of reporting a company's positive changes to the planet, it is
often much easier to assess the impacts of the alternatives elected
by the company.
• Imagine a company that redesigned its distribution channels to
reduce its energy use; such an activity would be reported as saving
a certain amount of greenhouse gas emissions.

9. WHY IS THE TRIPLE BOTTOM LINE
IMPORTANT?
• The obvious reason to apply the triple bottom line is to have a
greater positive impact on the world. Instead of focusing on
paper profit, companies can quantifiably determine how the
business is favorably changing the world and the people it
engages with.
• Having a greater philanthropic presence may encourage
employee retention and decrease attrition. Workers may be
more likely to commit to a company if its environmental impacts
are communicated.
• In addition, favorable working conditions including competitive
wages, training, and time off to volunteer may keep employees
around; this may reduce recruiting, training, onboarding, and
general costs of new employees.

10. WHY IS THE TRIPLE BOTTOM LINE
IMPORTANT?
• A greater triple bottom line plan may also attract customers and
consciously capitalistic investors interested in prioritizing certain
non-financial metrics over financial metrics.
• Some customers may be torn between two similar products; the
deciding factor may be the ESG prioritization of the companies.
• In addition, investors may actively seek to put their money into a
company that has social and environmental plans.

11. WHY IS THE TRIPLE BOTTOM LINE
IMPORTANT?
• Last, triple bottom-line strategies may result in increased long-
term profitability. Though short-term costs may increase, a
company may become more efficient in the long run.
• Consider a company converting its fleet to electric vehicles.
Short-term, this will be a massive capital investment. In the long
term, the company may reap the benefit of lower energy costs,
less maintenance, or better equipment durability.

12. The Three Ps in Operations Management
•Without good people in the right roles,
your small business will struggle to serve
customers, dampening your potential
revenue.
•If you don’t put effective processes in place
for sales, production, billing, accounting and
customer relationship management (CRM),
your overhead costs will increase, reducing
profitability.
•And if you don’t have products or services
that meet the needs of your market, it
won’t be long before your small business is
forced to close its doors.

13. People
• Of the three “P”s, “people” are the most important.
• Without good people, good processes and good products only do so
much. Simply put, the “right” people are effective while the “wrong”
people can destroy a business.
• And what’s “right” for one business may not be for another.
• Furthermore, you can’t just look at someone’s résumé or college
transcripts and tell that he or she is the right person. Sure, you can
judge qualifications, but effectiveness is something businesses will
pick up on (or not) in person, when they interview a job candidate
interview and see how he or she interacts.

14. Process
• How well does a business develop and deliver the processes that
make it run?
• Assuming a business has hired the right people, the second element
necessary for success is having processes that make sense. Neither
should they be needlessly complicated.
• Suppose you’re in the publishing business. Your product may be
books, but the processes that go into turning outlines into drafts into
manuscripts into proof copies have an enormous bearing on how
efficient and effective creation of those books is.
• In most businesses, processes must adapt with the times, or the
business risks being left behind by competitors.

15. Product
• In many cases, a company’s product is a
tangible item: a tool, software package,
article of clothing, or food product.
• But sometimes the product is a service, such as
tax accounting, legal advice, or cleaning
services.
• A great product alone isn’t enough to make a
business successful, but it is essential,
because people simply won’t buy irrelevant or
inadequate products (or services).
• Great people and processes, combined with
relevant, quality products are ingredients for
success.

16. What is sustainability in process
design?
• Sustainability in process design is the integration of
environmental, social, and economic aspects into the design
and management of processes.
• It aims to minimize the negative impacts and maximize the
positive benefits of the processes on the natural resources,
human well-being, and organizational performance.
• Sustainability in process design is not a one-time activity, but a
continuous improvement process that requires monitoring,
evaluation, and adaptation.

17. Why is sustainability important in
process design?
Sustainability is important in process design for several reasons.
• First, it can help an organization comply with the legal and ethical
standards and expectations of its stakeholders, such as customers,
employees, regulators, investors, and communities.
• Second, it can help an organization reduce its costs and risks by saving
energy, materials, water, and waste, and by avoiding fines, penalties,
lawsuits, and reputational damage.
• Third, it can help an organization enhance its competitiveness and
innovation by creating value-added products and services, improving
customer satisfaction and loyalty, and attracting and retaining talent.