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How to be Lean and Sustainable

A startup perspective

Written by M. Terzic, F. Pitzalis

Paper category

Master Thesis

Subject

Business Administration>Supply Chain & Logistics

Year

2017

Abstract

Master Thesis: Corporate Sustainability In the past 20 years, companies have been struggling to deal with social issues, and the pressure for organizations to pay more attention to environmental impacts and the consequences of the services and products they provide has been increasing (Kleindorfer et al., 2005 ). According to Gimenez et al. (2012) The term sustainability is composed of three elements: environmental, financial and social responsibility, while improving each element is equally important. Kleindorfer et al. (2005) pointed out that the relationship between environment, finance and social responsibility, known as the company’s triple bottom line, has always been one of the main symptoms that promotes companies to incorporate corporate sustainable development into their strategies. Therefore, the challenge for companies is to integrate health, safety, and environmental issues with their business processes, zero-waste supply chain, and environmental product design (Kleindorfer et al., 2005). According to Epstein (2008), sustainable performance is the most important criterion when it comes to improving the company's corporate sustainability. Further Epstein (2008) proposes a framework that shows how companies can develop sustainable business models. The corporate sustainability model (Figure 2) outlines the performance drivers of corporate sustainability, the impact of managerial behavior on performance, and how these behaviors affect corporate social, financial, and environmental performance. It also describes how sustainability performance drivers and the consequences of management decisions affect various stakeholders (Epstein, 2008). According to Epstein (2008), the main inputs of the model are; the broader environment (geography and regulation), internal environment (strategy, mission, structure), human and financial resources, and business environment (products, customers, and industry sectors). These inputs have a direct impact on the company's processes and leaders' decisions about improving sustainability. The output will be the result of the leader's actions, business processes and strategies, directly affecting shareholders and their decisions. These outputs will show the company's sustainability performance, positive or negative, and the reaction of stakeholders, resulting in long-term company financial performance results (Epstein, 2008). Although there is growing interest in the topic of corporate social responsibility (CSR) in research, there is no precise definition. 2.3.1 Implementing corporate sustainable development Many organizations have realized the importance of cooperating with corporate social responsibility (CSR). Corporate social responsibility is related to sustainability, governance, globalization, ethics, finance, leadership, business tools and communities (Hohnen, 2007). According to Hohnen (2007), there is no unique method for adopting and implementing CSR in a company, because every company has different characteristics that influence the view of social responsibility. As Lin-Hi and Muller (2013) said, some companies implement CSR by improving the welfare of stakeholders, some companies implement CSR through voluntary activities, and some companies may focus on sustainable development as a core business strategy. Implement. The trade-offs between financial and social or environmental performance should be dealt with, as trade-offs change due to changes in shareholder needs (Epstein, 2008). At some times, shareholders may want organizations to pay more attention to financial aspects through short-term profits, while at other times, shareholders may want organizations to focus on environmental and social performance (Epstein, 2008; Goel 2010). 2.4 Lean Management Lean concept was developed by Toyota in Japan, focusing on continuous improvement work, the main goal is to reduce waste (Liker, 2004). The name of the Toyota Method is also called Toyota Production System-TPS (Liker, 2004). TPS can also be linked with concepts such as the JIT (Just-in-Time) system and the LM (Lean Management) system. It represents the sum of specific and unique management methods with a specific business culture (Parkes, 2015). Lean management (LM) is a philosophy derived from lean manufacturing. It has been widely used in different types of organizations as a way of thinking or management practice (Dennis, 2002). The main drivers that drive companies to adopt lean are the need to reduce operating costs, improve business performance, and shorten customer order cycle times (Myerson, 2012). The focus of LM is to “slim down” the company by identifying and eliminating waste, while having the best output quality (Jakonis, 2012). LM is a concept adopted by different industry organizations, as a result of which has made great progress in market competition (Martinez-Jurado and Moyano-Fuentes, 2014; Parkes, 2015). Lean management has been widely used in different types of organizations as a way of thinking or management practice (Dennis, 2002). Read Less