New research from the Schulich School of Business shows that companies have a greater potential to reduce more environmental waste on the production side of the product life cycle than on the consumption side, which is the opposite of most current mainstream thinking on product sustainability.
The findings are contained in the paper “Why Do Companies Need Operational Flexibility to Reduce Waste at Source?” published in the journal Sustainability. The article was written by Isik Bicer, assistant professor of operations management and information systems at Schulich; R.W. Seifert, professor of operations management at Switzerland’s International Institute for Management Development; and Yara Kayyali-Elalem, a doctoral assistant at the College of Management of Technology at the Swiss Federal Institute of Technology in Lausanne.
According to the researchers, operating strategies that rely on the localization of production are key tools when it comes to reducing waste and improving environmental sustainability at source.
“Usually, policymakers aim to develop sustainability policies to increase the product lifetime once customers start to use the products,” says Bicer. “However, the potential to reduce environmental waste at the production side is much bigger than the consumption side.”
According to the research, companies that localize production near their market bases are better able to reduce overproduction, which is a major cause of environmental waste.
“Companies should promote local sourcing to generate more accurate product demand forecasts and, by doing so, reduce supply-demand mismatches,” says Bicer.
As a result, companies have a much better likelihood of not only reducing the environmental impact of their sourcing practices, but also improving profits, he adds.