Ethical Manufacturing Research Paper

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There are two big issues in the world: saving the planet, which includes the debate on climate change, and poverty, which includes the way we treat each other. Since the publication of Rachel Carson’s book Silent Spring in 1962, issues relating to how we use natural resources and how we abuse the planet have been rising to the top of the business agenda. Industry has developed on the premises that resources were unlimited. This was true enough at the beginning of the Industrial Revolution. With the expansion of the Asian economies, especially India and China, and a world population estimated to reach 10 billion by 2050, it is impossible to ignore the consequences of industrial development. It is now necessary to focus not on human productivity but on resource productivity.

Across the globe, consumers are now insisting that companies address these issues and make ethics and social responsibility mainstream. That means that all employees from the Board to the shop floor must recognize the part that they must play in achieving the changes such concepts demand. Ethical manufacturing is a new, broad umbrella term coined to bring together a wide range of concepts and to consider their application to operations management. This term includes consideration of sustainability, pollution issues, quality management, the search for renewables, responses to climate change, development of new materials, labor issues, as well as all of the traditional aspects of production management.

There is always change in operations management: pressure from rising customer expectations, the need to adapt to new technologies, constant innovation, and new legislation concerning treatment of workers have been key issues. In addition to these drivers, anxiety about the environment, sustainability, and resource management have all become serious concerns. The problems are not new. The difference is that the “greening” of manufacturing has become mainstream. Discussion of ethics, social responsibility, and sustainability is no mere management fashion.

If you look at the indexes of standard operations management textbooks, you will see that the number of pages devoted to ethical or socially responsible issues is very small indeed. In fact, rather than including them in the main text, the issues may just be relegated to a final research-paper. The key challenges to operations managers can be summarized as globalization, social responsibility, environmental responsibility, and new technological developments. This research-paper illustrates the interdependencies between these topics and shows why it is necessary to study ethical manufacturing as well as operations management. Synthesis is essential.

The history of the Ford Motor Company illustrates how companies have changed their attitudes and how they are embracing new priorities. Dowie (1977) reported that, although the Pinto was considered a firetrap, the Ford Motor Company paid millions in compensation rather than install a safety improvement that cost just $11. In 1977, Ford “finally incorporated a few minor alterations necessary to meet that federal standard Ford managed to hold off for eight years” (p. 47). Iacocca, then president of Ford, was quoted as saying, “Safety doesn’t sell” (p. 49).

Look on the current Ford Web site; there are numerous pages expressing concern not just for safety but also for green materials, carbon offsets, hybrid cars, eco-driving, and many others. It is especially interesting to note that Henry Ford used a number of processes that would now be considered ethical or eco-friendly including parts based on agricultural products. The reasons were different, but this reminds us that an interest in renewables and recycling has a long history.

Blood Diamond, a film released in 2007, exposed the way in which diamonds illegally mined in Africa fuelled the bitter wars on that continent. Because of campaigns by organizations such as Amnesty International, fewer “conflict diamonds” are now found in high street stores. The Kimberley Process requires exporters to certify their diamonds as conflict free.

The exploitation of workers, taking advantage of poor countries desperately in need of capital, and the destruction of the environment during the extraction of the minerals are all ethical issues that affect the way manufacturing is organized. There are many more resource issues. To what extent can companies continue to extract minerals of all kinds without consideration for future needs? The economy of China is growing exponentially, and to continue that growth, the country seeks raw materials for its manufacturing. Currently, the Chinese are buying raw materials from Africa in almost unlimited quantities. Is it possible to set international standards for mineral exploitation? These examples illustrate the issues that must now be considered as a core part of operations management.

In practical terms, operations management is about a transformation process. Resources (raw materials and information) are the inputs into a series of operations that transform those resources into products (the outputs) that the customer has ordered. Manufacturing can be studied at several levels.

Product

This research-paper does not address the ethics of producing cigarettes or guns—that is a different level of ethical debate concerning business strategy and the choice of industrial sector. Here we are looking at the way we carry out operations management and the decisions that have to be made when manufacturing products, from cars to clothes—whatever the product, choices have to be made in the design, use of materials, location of the facilities, labor hired, marketing tactics, and so on. Operations cannot be separated from business strategy, of course, and they can often contribute to new business strategies and policies because of innovation, product development, and consumer demand.

Processes

Manufacturing is divided into functional divisions. However, the transformation model comprises a number of processes that cross-functional boundaries and that may be carried out in a linear, or better still, in concurrent mode. Key areas discussed here are design, facilities management, and supply-chain management. At each stage of the model, ethical decisions have to be made. If the consumer is demanding an ethical product, this means that the whole life cycle of that product must be evaluated from an ethical point of view (generally referred to as life cycle analysis [LCA]). If a football has been made with child labor, for example, the consumer is likely to boycott the company.

Now that consumers are increasingly conscious of global warming, they want to know the energy efficiency of the end product, but they are also starting to ask questions about efficiencies in the actual manufacturing process. That also entails looking at the supply-chain to ensure that suppliers are manufacturing parts and sourcing materials in an ethical way. The Body Shop is a famous example of a company claiming to be ethical. They stated that their products were not tested on animals. However, they had to stop saying this, as they could not prove 100% that this was true all through the supply-chain.

Practices

At this level, we are looking at individual actions as well as labor practices and social issues. Most of these are internal to the organization, but may be influenced by regulation or standards set at national or international level. The debate concerning sweatshops and outsourcing of manufacturing is an example. Health and safety is another important area. Elliott’s (2000) list of unethical actions in operations management included

cutting corners on quality;
inaccurate documents and records;
covering up incidents;
abusing or lying about sick days;
lying to deceive customers;
putting other staff under inappropriate pressure;
misuse of company assets;
bribery;
improper links to foreign government personnel;
theft; and
political connections. (pp. 23-24)

Elliott (2000) concluded that it is the responsibility of each manager to find his or her way through the complexity of the situations they faced, which are further complicated by cultural and nationalistic behaviors. Although many authors favor a Code of Practice and definitive policies and procedures, others suggest that such codes are often ignored. Elliott considered the external pressures on operations managers and suggested that when it comes to making a decision, the manager must live with the consequences of that decision. In practice, that could mean facing legal action for unethical conduct.

Industrial Sectors

There will always be differences between industrial sectors—how you run a power plant is very different from producing widgets for a car and is different again from manufacturing foodstuffs. The generalizations in this research-paper must be adapted for any particular sector studied in detail: “We must move from a preoccupation with instant present gratification and high risk-taking for the short-term regardless of future consequences . . . to radically reducing risk to the environment by supporting only green-green ecopreneurship and sustainable economic growth” (Isaak, 1998).

This research-paper cannot do justice to every facet of the subject and is necessarily very selective. The material, therefore, is presented as interpretations of key concepts, each of which when considered in relation to operations management lead to more ethical decisions in manufacturing. There are many private and government-led initiatives and a range of tools to help measure, implement, or describe the phenomena, and some of these tools are briefly mentioned. What is not possible is to cover the different legislation and regulatory environment country by country. Such differences have a big impact on the way manufacturing companies around the world carry out operations management. A book expanding the issues discussed in this research-paper is planned for later publication (Collins, 2008).

Key Concepts

Business Ethics

For many people, the term ethics is associated with corporate governance and with the issues surrounding financial reporting, executive pay, and the need for transparency in all transactions. Manufacturing companies like any other have to be concerned with such issues. A key issue in the debates about business ethics concerns the purpose of the organization. Friedman was well known for arguing that the sole purpose of an organization is to maximize profits. More generally, the conflicts of interest between different stakeholders have to be judged by the values and standards of the society in which they take place.

Business ethics has been defined as the following:

The application of ordinary human ethical values or principles in the conduct of business. . . . Business ethics is no different from other branches of applied ethics, such as medical . . . social . . . or sexual ethics, which all submit various fields of human behaviour to ethical and moral analysis and evaluation. (McEwan, 2001, p. 7)

It has been suggested that the concept “lacks workability” as there is no internationally agreed standard. Lewis (1985) helpfully set out the 10 most common concepts used in business ethics:

Rules, standards, or codes governing individual behavior at work
Moral principles developed in the course of a lifetime
What is right and wrong in specific work situations
Telling the truth
A belief in social responsibility
What is fair and above board
Honesty
The Golden Rule
Sets of values
What is in accord with one’s religious beliefs

An introductory discussion of the theories was well set out by Harrison, Newholm, and Shaw (2005). They linked the discussion to two strands of moral philosophy: either theories that privilege the right (consequentialist dealing with the outcomes of actions) or those that privilege the good (deontological or duty based). The problem with these theories is that they seem far removed from the way everyday issues and the way people behave. At a conference organized by Ethical Corporation in March 2007, many speakers discussed the need to communicate the issues in plain language. They also stressed the need to avoid negative, preaching messages. Change will not be achieved by telling people to stop doing something (e.g., using too much energy). It is essential to understand their aspirations and the way in which consumption is linked with their self-identity and, then, to find ways to draw them into taking actions that made them feel good. Ben & Jerry’s, the ice-cream maker, wants to engage young people in the campaign against greenhouse gases (GHGs). The aim of the company is to introduce carbon neutral ice cream from April 2007. This will include a full LCA including the cows, growing cane, vanilla, energy, refrigeration, retail use, and disposal. They calculated the company’s carbon footprint and realized that, to convince people, they must reduce this within the company first and that it must be linked to a sustainable dairy model. This is a process, not a one-off project, and the aim is to reduce the footprint every year. How do they communicate this to consumers? They practice what they preach and use advertising and clever slogans to spell out the message: “Take it from a couple of ice cream makers, if it’s melted it’s ruined.”

Globalization has made the discussion more complex as firms that do business in different countries must come to terms with the legal and social mores in each situation. The debate has become so widespread that ethics codes of practice and frameworks for implementation are now found in most businesses. Weaver, Trevino, and Cochran (1999) suggested that many firms paid only lip service to the idea, but the growth of ethical consumerism and work of many lobby groups has driven many to take the issues more seriously. Sometimes this has been driven by fear of lawsuits, by the media scrutiny of corporate scandals that has forced companies to become more transparent, by the legislation that has increased, and by the use of the Internet to publicize bad practices that has forced big brands to protect their reputations.

Corporate Social Responsibility

Corporate social responsibility (CSR) takes a wider view than business ethics. The latter is chiefly concerned with internal affairs, but increasingly, there is a demand that rather than satisfy only the shareholders, corporations must consider all stakeholders including customers, employees, and the community as well as shareholders. Carroll (1991) suggested that CSR comprises four levels of responsibility:

Economic
Legal
Ethical
Philanthropic

More recently, the term social responsibility (SR) has become more common, demonstrating the idea that everyone, not just managers and directors, have a responsibility to take action. The European Commission takes the view that corporate social responsibility “is vital because it mirrors the core values of our society—respect for quality of life, the environment and human dignity” (see, for example, eu-ropa.eu.int/comm./employment_social/soc-dial/csr/green-paper_en.pdf). In the United States, CSR began in 1890 with the Sherman Antitrust Act. The trend continued and gained momentum in the 1960s. McEwan (2001) quoted the critique of Nader, Green, and Seligman (1977), setting out the issues arising from large corporations:

industrial pollution and toxic waste
racial and sexual discrimination
management burnout/white-collar bias
political influence of powerful corporations
invasion of employees’ privacy
deceptive information in marketing
product safety of manufactured goods
the price of technology including effects of pesticides, aerosols, and nuclear power
multinational corporation exploitation of less developed countries
increasing concentration of wealth and income in fewer hands
business crime

Harrison et al. (2005) found that about 15% of the U.K. population are “CSR activists,” by which they mean that they are tend to have higher expectations of companies in this area than the general public. However, with increasing attention paid to climate change issues (discussed later), this percentage is likely to increase faster than in previous years.

Measuring CSR is a perennial problem. Firms may set out their own performance indicators, and as there is no agreed definition of CSR, they cannot be challenged. Zerk (2006) reviewed the murkiness concerning what the responsibilities of companies are with respect to human rights and the haphazard enforcement of them. She drew attention to the problems of applying international law and the appointment of Professor John Ruggie as the United Nation’s special representative on business and human rights. She pointed out that there are already a number of procedures until existing treaties including compensation schemes. Progress could be made by learning from past mistakes.

The new International Organization for Standardization (ISO) 26000 standard is intended to give guidance on SR, although unlike other international standards, it will not include third-party certification (Roner, 2006). The ISO will help to promote “common SR terminology, and be consistent, and not in conflict with, existing documents, treaties, conventions and other ISO standards” (pp. 39-41). Roner suggested that such a standard is better than a “coalition of the willing,” as ISO has a long-standing reputation and is used to coping with a multitude of international agencies. Although this standard may be used as a “prescription” and set only minimum goals, it could help developing countries without a tradition of SR to find a way of introducing these concepts. Unfortunately, some countries claim that new regulations are a “constraint of trade,” contrary to international trade agreements.

Triple bottom-line accounting (3BL or TBL) is one tool that can be used to measure a firm’s move toward CSR. Dellaportas et al. (2005) argued that social responsibility “encourages commercial organizations to consider the effects of their operations on communities” and that “social accounting” is a component of TBL (p. 202). This is also referred to as “profit, people, and planet,” as the concept includes attention to a range of values including economic, social, and environmental reporting rather than just financial reporting.

Unfortunately, as argued by Norman and MacDonald (2004), it is probably

in principle impossible to find a common scale to weigh all of the social “goods” and “bads” caused by a firm.. .and we will never be able to get broad agreement for any such proposed common scale… a number of studies suggest that most [codes] are neglected by corporations and have very little impact on their culture or operations.

The issues arising from CSR are many and various. In production, if a shipment is late as the quality levels have not been achieved, should the goods be sent if the customer is demanding immediate shipment? In a research report, is the analysis influenced by the company sponsoring the study? Issues of confidentiality, use of corporate resources, whistle-blowing, discrimination, and other human resource matters are all common problems (Trevino & Nelson, 2007).

Compliance

In some companies, compliance is equated with meeting the product specification supplied by the customer. This is considered particularly important in the aerospace and other high-tech industries. Many operations managers if asked about ethics or CSR will talk about compliance as if this is a totally separate concept. It is usually managed by different personnel who are in quite separate departments and who have quite different training. Whether or not the compliance manager cooperates with the CSR manager sometimes depends on the personality of the managers and the policy of the company. Implementation of ISO 9000 (a quality management system) and ISO 14000 (an environmental management system) is taken for granted, together with the use of standards for many aspects of health and safety (OHSAS 180001), pollution regulations, and other legislation regarding manufacturing practices. A relatively new development is the implementation of SA8000. This is based on the UN Convention on Human Rights, and it measures the performance of companies in relation to labor issues. It is a factory-level management system, and it should be independently audited. There is a growing number of standards, and managers worry that these provide only a minimum benchmark and do not encourage a process of continuous improvement.

Development For Sustainability

The Brundtland Report (World Commission of Environment and Development [WCED], 1987) was a milestone in the acceptance of the notion of sustainable development, which implied “development which meets the needs of the present without compromising the ability of future generations to meet their own needs.” In the 1990s, the UN Millennium Goals (later known as the International Development Goals) further developed this aim by setting goals for poverty, education, gender, child mortality, maternal health, HIV/AIDS, environment, and global partnership. The goals drew attention to the interdependencies between achieving results in all of these areas.

Important ideological differences lead to conflicting interpretations of the term sustainability and sustainable development. This is partly because the authors of the Brundtland Report wished to encourage as many stakeholders as possible to sign up to the concept and the final wording was much influenced by political bargaining. Some emphasize the importance of growth; others focus on the implications for social change and impact on the environment implied by the term sustainable. Hence, some authors prefer the term development for sustainability.

The debate concerning the means to achieve sustainable development is well documented in the literature. Operations managers must take this into account when sourcing materials for production, and designers can contribute by minimizing the amount of materials required for a product. The four Rs—reduce, reuse, recycle, and recover— are driven by the need to minimize the waste of precious resources.

The Ecological Footprint: Industrial Ecology

To continue to live at today’s standards of living, two more planet Earths would be required to support such extravagance. As ecological systems do not coincide with national boundaries, this becomes a global not a local issue. A number of authors argue that “The premise that human society is a subsystem of the ecosphere, that human beings are embedded in nature, is so simple that it is generally overlooked or dismissed as too obvious to be relevant”(Wackernagel & Rees, 1996, p. 4). They describe ecological footprint analysis as an accounting tool. It will be impossible to persuade people to stop waste and to stop treating natural resources as limitless unless there is a method by which to demonstrate the enormous greed that is inherent in free market economies. It is a useful addition to scenario planning, and studies that are limited to a study of subsystems instead of looking at the planet as a whole will underestimate the damage.

It is important to note that the concept of the ecological footprint does not imply a denial of technological progress. However, it is unlikely that technology alone can ensure the necessary efficiencies. Allenby (2000) agreed with this point of view, claiming that technology alone would not eliminate the need for “difficult and complex political decisions.” He defined the field of industry ecology as embracing “a multidisciplinary approach to the study of industrial and economic systems and their linkages with natural systems” (pp. 163-171). He stressed the need to stop treating environmental issues as overhead. This has led to ad hoc social solutions and too much focus on local rather than global problems.

Ecover was founded with the aim of reducing its ecological footprint. Based in Belgium, Ecover produces household cleaning products and detergents. It has already spent 20 years following the tenets of the Brundtland approach and believes that it is possible to cover our own needs without compromising the needs of future generations. The company sold a phosphate-free washing powder even before phosphates were regarded as an environmental problem.

The firm works with a five-point matrix that covers price, performance, convenience, health (WHO), and sustainability. Bremans (2005) described how CSR is part of the company’s DNA, illustrated by the way in which their mission emphasizes safeness for the company, their employees, and the consumers. They do not accept compromise, but recognize that not everyone has the same commitment. By always being honest, responsible, and engaging with the public, Ecover has shown that a relatively tiny company can compete with the large multinationals in a very competitive market.

The philosophy is not confined to the products: The factory is also designed to be environmentally friendly including a green roof. This insulation reduces heating in winter and removes the need for cooling in summer. The building is supported by renewable pine and the walls by recycled clay, coal dust, and sawdust made into bricks. Little artificial light is needed as the building faces south. Packaging is reused as many times as possible before being recycled. All ingredients are subjected to tests to ensure that they are from renewable sources and biodegradable.

As it is so successful, why has the idea not been copied? Ecover had an advantage that they set out from the start to be an ethical company. Other companies have adopted many of the ideas that Ecover use but have not had the advantage of a greenfield site and a mission and strategy that embedded the ideals from the beginning. Studies of other companies suggest that they are in the same position vis-à-vis ethical manufacturing as they were when total quality management (TQM) was first introduced. The Japanese led the quality revolution, and other countries had to follow or see companies go out of business. It was hard to implement the changes required to achieve the demands of higher quality and reliability after years of acceptable quality levels (AQLs). As with TQM, the introduction of ethical manufacturing will take years to achieve. There will be examples of excellence but only a few firms will be able to implement the totality of the concepts in the short term. Just as it takes a long time to turn a large ship around, a large multinational must spend a great deal of effort to instill good practice throughout.

Emissions Control

The earth is an irreplaceable life-support system. Management of emissions is key factor in the control of global warming, and in March 2007, the United Kingdom became the first country in the world to set legally binding targets for cutting carbon dioxide emissions. The aim is to cut emissions of gases causing global warming by 60% by 2050.

Al Gore’s An Inconvenient Truth provides a succinct summary of the main issues (also made into a film of the same title). He believed, “We have everything we need to begin solving this crisis, with the possible exception of the will to act.” There are many misconceptions about whether climate change is a reality, but the evidence from the scientists is overwhelming. However, many people assume that there will be technological fix so they do not need to worry. Others assume that the planet is big enough to absorb all of our waste and emissions. This is simply not true. The greenhouse gases are thickening the Earth’s atmosphere. The result is that a percentage of infrared radiation that normally escapes into space is trapped, which leads to global warming. Manufacturing processes should be using clean technologies to ensure that they do not contribute to the problem.

Waste Management

Waste costs. One way to persuade managers of the need to reduce waste is to analyze the cost of waste. Landfill disposal costs doubled in the United Kingdom in 2006. The cost of water and effluent disposal is estimated to rise by 18% over 5 years. On the other hand, if waste can be reduced by recycling or by recovery, sustainability targets can be achievable. The obvious wastes are energy and effluent charges: rubbish removal, the cost of the raw materials thrown away, the cost of labor in scrapped product, the cost of consumables in all products, and the cost of wasted energy. In the United Kingdom alone, including hidden costs, waste costs industry 4.5% of turnover or £15 billion annually. There is a need to address the waste management hierarchy:

Disposal
Treatment
Reuse and recycling
Reduction
Elimination

For most companies, this requires a statement of commitment to a regular a waste management process:

Assessment of current situation
Ranking of options (with costs)
Feasibility assessment
Implementation and management
Review and audit
Feedback
Improvements

A manufacturer of car axle assemblies installed an oil-water separator, ensured treatment and recycling of waste oil, reduced oil use and manual machine cleaning, and saved to the point where disposal costs were negligible. A dyehouse installed water meters to monitor use and effluent. Optimized water valves, recycling, and improved housekeeping led to cost savings of £32,000 per annum. A new regime is essential to avoid “dump, dilute, and disperse” tactics. By using key environmental performance indicators, operations managers can be persuaded to clean up as well as reduce material, energy, and water use.

Hawken, A. B. Lovins, and L. H. Lovins (1999) wrote a very important book that discusses this and more. They stated that we should see the economy in terms of four types of capital

human capital, in the form of labor and intelligence, culture and organization
financial capital, consisting of cash, investments, and monetary instruments
manufactured capital, including infrastructure, machines, tools and factories
natural capital, made up of resources, living systems, and ecosystem services. (p. 4)

They suggested that we should eliminate the very idea of waste and redesign industrial systems on “biological lines that change the nature of industrial processes and materials, enabling the constant reuse of materials in continuous closed cycles, and often the elimination of toxicity” (p. 10).

Cradle-to-Cradle

It will be extremely difficult to break the cycle of denial, but adopting the “cradle-to-cradle” concept could be a major breakthrough. This is a key component of ethical manufacturing. Instead of assuming that a product will be thrown away (the cradle-to-grave concept), it is important to design the item to avoid waste, to consider the environmental impact of the product throughout the life cycle, and to design the artifact for reuse, disassembly, or recycling.

Stahel has been described as the father of the cradle-to-cradle concept, which suggested that we move from an economy based on goods to one that involved “service and flow”—consumers would lease or rent goods rather than buy them (see, for example, Stahel, 1981). Manufacturers would then have to take responsibility for the disposal of the goods and packaging at the end of their life cycle. Stahel was followed by McDonough and Braungart (2002). Their text is worth reviewing at some length, as it demonstrates such an important change of thinking. The traditional view is that we need to limit consumption and to persuade people to be less greedy. The authors ask why we should limit fun. There is an alternative:

In the midst of a great deal of talk about reducing the human ecological footprint, we offer a different vision. What if humans designed products and systems that celebrate an abundance of human creativity, culture and productivity? That are so intelligent and safe, our species leaves an ecological footprint to delight in, not lament? . . . Nature does not have a design problem, people do. (pp. 15-16)

An example of hazardous waste is the shoes we wear. Our shoes abrade as we wear them. The leather is treated with chromium—a heavy metal used in tanning—which can lead to cancer. It is not possible to retrieve the raw materials after use, so why not design shoes made with nonharmful plastics and polymers which could be recycled into new shoes?

McDonough and Braungart (2002) pointed out that we now understand the vulnerability of nature. “But modern industries still operate according to paradigms that developed when humans had a very different sense of the world.” They stated, “[A]ccording to some accounts more than 90% of materials extracted to make durable goods in the United States become waste almost immediately.” Not only is it often cheaper to buy a new version than to repair the original, but “many products are designed with ‘built-in obsolescence’ and the product itself contains on average only 5% of the raw materials involved in the process of making and delivering it” (pp. 27-28).

McDonough and Braungart (2002) argued that we are producing crude products, which are attractive, affordable, meet regulations, perform, and last long enough to meet market expectations. Such products are not designed for human and ecological health. They pointed out, “Of the approximately eighty thousand defined chemical substances and technical mixes that are produced and used by industries today [each of which has five or more by-products], only about three thousand so far have been studied for their effects on living systems” ( p. 41). The authors said that this is not to suggest that the corporations are doing anything morally wrong. “They are the consequence of outdated and unintelligent design” ( p. 43), and most industrial processes are “unintentionally depletive.” According to an ethical manufacturing point of view, these traditional attitudes are morally wrong. A new approach is urgently needed. Look in the textbooks; the phrase “cradle-to-cradle” is rarely used. LCA and cradle-to-grave still dominate current thinking.

McDonough and Braungart (2002) suggested that being less bad is not sufficient, nor is the adoption of environmental approaches without fully understanding their effects. This could be even worse than doing nothing. They quoted Einstein to summarize the problem: “If we are to solve the problems that plague us, our thinking must evolve beyond the level we were using when we created those problems in the first place” (p. 165).

End-of-pipe solutions are not good enough. The quality movement taught us that prevention is better than waiting for problems to occur. In the same way, eco-efficiency is no better than seeking efficiency only in production processes; it only makes the old system less bad. Rather, industry should plan to release fewer toxins into the atmosphere, reduce the number of processes, substitute materials that are not dangerous, and avoid producing waste. Why not design things on the understanding that waste does not exist? Move to a radical solution and design both products and systems that will sustain the Earth.

Papanek (1995) was another devotee of this concept and suggested that everyone should ask what the impact of what they do has on both society and the environment. He claimed that our actions have led to dysfunctional societies and that designers should assert themselves to be a bridge between human needs, culture, and ecology.

Rossi, Charon, Wing, and Ewell (2006) described the way in which a furniture manufacturer incorporated the cradle-to-cradle concepts into the company in an article that drew attention to over 350 chemicals used in office buildings, furnishings, and equipment. Included in the list were dangerous substances such as phthalates, flame-retardants, and other compounds.

Rossi et al. (2006) described how the company worked with McDonough to create a tool to measure progress toward the achievement of a cradle-to-cradle manufacturing facility. This resulted in a product assessment tool—the Design for Environment [DfE]. Applying this to the development of the Mirra chair, improvements included increased recycling and the elimination of the use of PVC. The company recognized that this was a journey not a project and that the continuous improvement implicit in the concept was a progression from previous concepts within the quality movement. It also realized that it was imperative to include all of their suppliers, and over 200 were contacted to discuss the chemicals used in the components they supplied. This materials assessment is an important factor in design for reuse or recycling. Many textile companies are also working on these issues.

Greening the Supply-Chain

It is not sufficient for a company to make changes in its internal processes without insisting that similar changes are made throughout its supply-chain. An example of such efforts is the work of the U.K. retailer Marks and Spencer (M&S). Their main lines are women’s wear, menswear, lingerie, children’s wear, home furnishings, and food. They work with designers to create color and then to manage all processes concerning dyeing and finishing to produce the finished articles for sale in stores. This includes ensuring that their suppliers meet their minimum standards for worker safety, customer safety, and environmental compliance.

M&S has set up an online document that sets out the “Environmental, Chemical, and Factory Minimum Standards.” This document continually changes to keep up with both legislation and company policy. Rather than just state prescriptive practices, the company takes care to explain why they ban certain substances, to explain the legal requirements, and to give best practice information. The document is a guidebook on how to comply, and it is underpinned by company policies such as “[w]e do not place orders with companies if we do not know full production routes.” They do not do business with companies that pump untreated effluent into a river, for example, and they would take immediate action if their audit revealed suppliers carrying out such practices.

Dealing with a global supply-chain is complicated by the plethora of different regulations and legislation. Sometimes the problem is whose legislation. Chemicals that are permitted in certain levels in one country may essentially be banned in another. As companies buy supplies from some countries and sell in others, country of origin and traceability is an important issue. M&S try to have a single company standard based on legislation and a balanced view of what is practical and acceptable, but in extreme cases, they could find certain legislation inflicted on them that they feel to be nonsensical. For example, Japan does not allow any formaldehyde on children’s clothes whatsoever, despite it occurring naturally at background levels, thus requiring the omission of perforations from bags and raising suffocation issues. M&S do not trade in Japan.

China is introducing legislation that bans certain substances at retail that are not banned in industry. There are substances legal to use in China but which cannot be used in the European Union above concentrations of 0.1%; yet China is starting to bring in other rules that are tougher than those in Europe. They have set a standard for banned amines (from azo dyes) of 20 parts per million (ppm), whereas the European Union allows 30ppm. The international standards and regulations are so complex that M&S now enlists the help of experts to track changes in international regulation and legislation. For each fabric they use, M&S does a risk assessment to determine whether there is a chance of banned or controlled chemicals being present on finished products. Although they have an excellent track record for ensuring customers or workers are not exposed to chemical risks, their process looks for highest risk merchandise—they go looking for trouble. The rate of failure is satisfyingly low, but on the rare occasions that there is a failure, they act on it, not just in store but also throughout the supply-chain. Social issues are also a concern for M&S. If an auditor found machinery that is a hazard, he would insist on action to rectify it or might put the machine out of commission.

To increase customer awareness and knowledge of what they do and of the issues they believe to be important, M&S has launched a major initiative—”look behind the label”— and, in January 2007, launched a 100-point, £200 million eco-plan. This promises that by 2012 the company will

become carbon neutral;
send no waste to landfill;
extend sustainable sourcing;
set new standards in ethical trading; and
help customers and employees live a healthier lifestyle.

Commentators and lobby groups alike have welcomed this “Plan A” as setting a benchmark and an example for other companies to follow. As M&S places such stringent conditions on its suppliers, it is likely that the benefits will be global and will improve ethical manufacturing practices throughout the supply-chain, in addition to setting an example to others.

Greenwash

One reason for the skepticism that surrounds the issues discussed here is the concept of “greenwash.” Marketing and advertising mislead the public and confuse the issues. For example, car companies advertise their green credentials by claiming that they are producing green cars that aim at zero emissions. The aims are worthy but do not tally with the facts of manufacturing automobiles. However much the efficiency of the car improves—fuel efficiency, for example—most of the cars produced are gas-guzzlers. By strongly advertising the cleaner models, the manufacturers hope that the feel good factor will spread to other cars in the range. The full LCA figures for car use are not publicized.

Another claim is that consumers should buy wind turbines so that they contribute to renewable energy production. Despite the fact that in some areas there are days with no wind, retailers claim up to 30% reduction in energy needs. Only a very small minority could generate that much. According to a recent review, a company in the United Kingdom making these claims does not even sell energy-efficient light bulbs.

Some industries can make savings on a one-off basis, but as the economy grows, the savings will be neutralized. According to Monbiot (2007), everyone is guilty of greenwash unless he or she changes his or her behaviors and lifestyles; greenwash tells us what we want to hear and, therefore, is very dangerous. Green activists consistently lobby for manufacturers to change their methods of operation. However, without more education, greenwash will continue to fuel skepticism and inaction. It is essential that textbooks on operations management include these issues.

Concluding Remarks

Ethical manufacturing is a concept that brings together social and environmental issues in operations management. It treats these concerns as part of the manufacturing system and does not separate operations from social concerns. It embraces the developments in compliance and standards but goes further than product specifications, health, and safety within the manufacturing company. It demands attention to working conditions, labor rights and trading conditions throughout the supply-chain. It cannot be separated from wider issues such as industrial ecology, climate change, and sustainability. How products are designed and manufactured has to include attention to the ecological footprint. Implementation of the cradle-to-cradle concept can reduce the amount of waste—of material resources, of energy, and of poisons allowed to pollute our environment.

Dawkins (1989) discussed the way many of us see life in terms of competition, where if one person is winning, another must lose. He illustrated the problem by demonstrating the game “Prisoners’ Dilemma” (sometimes known as the Red-Blue Game), where participants must decide whether to fight or to cooperate. The highest score is achieved when they trust each other and cooperate—a win-win situation— but if one decides to go for the maximum score, the other becomes a loser. This was discussed by Axelrod (1984), who set up a computer tournament to test the Prisoner’s Dilemma. Specialists in game theory sent in programs that Axelrod played against each other. The winner was a program called “Tit for Tat”—this always started with cooperation, and afterward, each move copied the move of the other player. His work addresses the debate concerning how cooperation emerges “in a world of egoists without central authority.” Manufacturing firms must set up partnerships and share the responsibility of creating cooperative solutions.

The argument is related to the concept of “the tragedy of the commons” (Hardin, 1968). He described the idea of a conflict between herdsmen who graze their animals on the common land. If they jointly agree the number of animals that can feed there without reducing the carrying capacity of the land, they can all survive. If at some point they decide to maximize their own gains, the overgrazing leads to destruction of the resource: the tragedy of the commons means that all are ruined.

An important theme in Hardin’s (1968) discussion is that there is no technical solution. He defined such a solution as “one that requires a change only in the techniques of the natural sciences, demanding little or nothing in the way of change in human values or ideas of morality” (pp. 1243-1248). This is extremely relevant to the study of ethical manufacturing—to counteract the body of thought that believes there is always a technical solution. The processes involved in manufacturing have both a social and an environmental impact. Yet operations managers are not usually taught ethics or CSR. The survival of our planet and progress toward eliminating social evils such as extreme poverty demand that these issues are included in the operations management syllabus.

“Business as usual” policies will inevitably increase global warming and produce a crisis for future generations. Technologies already exist that are more energy efficient, that reduce the material resources required, that design for reuse, that have greater fuel economy, that rely on renew-ables, and that eliminate waste. Just adopting the current technologies would, according to Al Gore (based on the Socolow/Pacala study), bring emissions to below 1970s levels. Thanks to international agreements, since the late 1980s, the ozone layer has begun to recover and the use of CFCs is strictly limited. An earlier success was the elimination of DDT usage.

Insistence from investors on the inclusion of CSR and sustainability reports in company annual reports has begun to change the attitude of company directors to these issues. It is no longer sufficient to issue only financial reports. Lobbyists and activist groups around the world quickly advertise any shortcomings on the Internet. Although boycotts are less frequent than in previous years, the damage to corporate reputations through scandals concerning accounting, use of child labor, pollution, and other ethical issues is so serious that no company can afford to ignore the demand for information and transparency.

Public perception is crucial. People often do not understand the concepts and are confused by the jargon. Business can and should lead the way and publicize the work that they are doing. It is good PR, apart from the good it does for the planet. Few people are aware of the research that is done in the textile sector, for instance. They make simplistic judgments such as organic is good and synthetic is bad. Operations managers should step outside their factories to help inform and educate the public, as well as their own employees. Manufacturing does not work in isolation. Both upstream and downstream in the supply-chain, decisions are made which influence the environmental impact the end product will have. Marketing is also closely linked to manufacturing and the way in which a product is marketed can help to educate the consumer. Consumers now expect more information in advertising and in labeling, and government regulation is increasing.

Manufacturing alone cannot achieve sustainability targets and carbon neutrality, nor can it cure all the social ills.

Stakeholders have to cooperate on an international scale. Some argue that unless population growth is curbed all such efforts will fail to alleviate poverty and the UN’s Millennium Goals will be missed. If, however, companies take the key concepts discussed in this research-paper seriously and follow the example of those firms that are leading the way, there is the opportunity to make a significant impact.

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