Sustainability, Operations and Supply Chain Management in Manufacturing and Service Industries

Tourism is a huge and dynamic industry that is comprised of a wide variety of service businesses that reflect the same dynamics and priorities that a manufacturer would have for operations planning (OP) and supply chain management (SCM). One such service business is the cruise ship sector in which vacationers travel via these types of vessels to various destinations.

While manufacturers produce tangible products and wastes, service companies also produce waste, but their products are intangible. For example, the product that a personal trainer might produce is a healthier client. Operations Managers (OM) in both industries share similar interests in eliminating waste and delivering quality products.

The two main intangible products that the vacationer (end user) buys, and a cruise ship company “manufactures” and delivers, are pleasure and relaxation – the total experience that allows vacationers to “suspend” their everyday reality for a period of time and immerse themselves in pleasurable experiences. The mission of the cruise ship industry is to deliver this experience to them in a way that surpasses their customers’ expectations, and it depends a great deal on the manufacturing industry to make this possible.

Comparable Dynamics and Priorities in Manufacturing and Service

The movement and connection of goods and services from the point of origin, or the original source, to the end user is referred to as “the supply chain”. Supply Chain Management is a part of the Operations Management that involves the effective management of many inter-firm processes such as:

  • Supplier/Vendor relationship management
  • Order Processing
  • Information Systems management
  • Sourcing and Procurement
  • Production Scheduling
  • Inventory Management
  • Warehousing and Distribution
  • Customer Services
  • Environmentally sustainable practices

Just as in the manufacturing industry, in the cruise ship industry it takes the coordination of a variety of resources – financial, material and human – working together to manage these processes in order to achieve organizational goals.

Operations Management involves the management of all the activities that produce an output (a product). In operations management a multitude of processes must be managed in order to produce and distribute products and services. Policies must be formulated; daily operations must be managed, and so must the use of human and material resources. OM also demands the effective utilization of technology and communications systems to allow for timely ordering and delivery of materials and products, and the servicing of customers and stakeholders.

Policies in both the manufacturing and service industry sectors might include social and environmental impact considerations such as the use of resources and the disposal of wastes. Religious, cultural, political and legal issues such as human rights, use of child labor, wage and hours; human resource impact issues such as age, gender and other forms of discrimination must also be considered.

In a manufacturing situation these considerations would impact the goods and services that the cruise industry might use. Some of these goods include foods, linens, toiletries, furnishings, packaging, electronics, fuel, etc. All of these products are outputs of a manufacturing process that a cruise ship might use and all of these products impact the environment from the original source to the end-user.

Organizations in both industries need to develop a sustainability mind-set and identify where waste being generated in their companies and along their supply chains; the reason why and when, at what stage it is being produced.

So, for example, the OM of a cruise line that is socially and environmentally conscious, and who wants to improve their SCM and incorporate a closed-loop method of operation in her organization, might be considerate of the inputs that a manufacturing company utilizes in its production process and in the processes that it utilizes to convert the raw materials into products; the timely deliverance of those products; the quality of customer service after the product is delivered, and the impact that disposal of these products have on the environment.

Likewise, manufacturing companies (whose products the cruise lines use) also wishing to do the same might, in turn, be considerate of the inputs that their suppliers utilize in their operations. As mentioned before, these inputs include – but are not limited to – various impact considerations previously mentioned.

This backward view of the supply chain links the end user of the services of the cruise ship to the beginning of the supply chain – and that includes all the companies that, working backward, might make up the chain to the original source. An original source might be cotton growers and the policies they have in place that might affect the methods that they use to grow, harvest and supply the converters of the cotton.

Questions that an Operations Managers might ask, for example, are:

· Ate the cotton growers using harmful, earth polluting chemicals in growing the cotton?

· Is child labor being used in harvesting?

· Are working conditions safe, and are wage and hours legal and fair?

· Are materials being delivered on time – and if not, what are the reasons that are preventing this?

These questions impact the management of the supply chain and organizations can gain or lose competitive advantage if they do not consider such questions because, in the case of a cruise ship, for example, an enlightened vacationer might hardly be impressed that the soft cotton sheets that she uses on the cruise line were made from cotton picked by children who live in slums and who earn mere pennies a day for back-breaking labor – and are denied an education because of these poor labor practices.

These types of considerations and decisions faced by a cruise line Operations Manager will affect his or her own company’s financial bottom line and will also affect the operations management of their down-line suppliers, as it also would in manufacturing. One can easily see that the considerations and activities of Operations Managers in service industries easily affect supply chain management in their organizations.

Maintaining a Competitive Advantage

Today’s consumers are more sophisticated and keenly aware of the global impact that their actions have on the environment and many consumers already take actions to reduce their “carbon footprint”, that is the contribution to the environmental impact of human beings and their activities upon the planet.

For example, the more waste one leaves behind in one’s daily activities, the larger one’s carbon foot-print. This idea has been capsulized in the term “going green”. Consumers are not only modifying their own habits in order to minimize waste and thus reduce their carbon footprints, but they are also holding corporations accountable for their impacts on the environment. This has put pressure on many corporations to go green by embracing more environmentally friendly processes in their operations.

Cruise ships are like floating cities that can generate as much as “…30,000 gallons of sewage, 250,000 gallons of kitchen, bath and laundry waste water and 10 tons of garbage — each day”. Effectively managing the inputs that create this amount of waste begins with effective management of the supply chain. Effective management of the supply chain begins with effective operations management.

Socially and environmentally conscious organizations that develop a vision and a mission articulating a clear objective to take responsibility for ensuring the sustainability of all inputs that go into their products will have a competitive advantage over those who don’t. So a cruise line, for example, that establishes a culture of “world class supply chain management” into its operational processes can gain significant competitive advantage over its competitors because “supply management directly affects the two factors which control the bottom line: total costs and sales”[2] (Burt, Dobler, Starling. 2003, p. 10).

For example, a cruise ship line that is an early entrant into World Class Supply Management practices will most likely emerge as a leader in the practice and, as such, will stand to hold “40 -60 percent of the market after competition enters the picture” (p. 11). The quality of its offerings will also improve as it utilizes the sustainable goods produced by manufacturers. Since quality usually commands premium prices, this can help firms gain market share. Today, a more informed and enlightened public demand higher quality goods and thus supports organizations that deliver quality.

Additionally, consumers are demanding more and more that corporations go green as much as possible. Building sustainability into the supply chain will improve quality and increase customer satisfaction. Organizations that do not build sustainability into their operations will find that it will cost them more (in the loss of market share) to NOT do so. By building sustainability into their practices early, both manufacturing and service organizations can expect to gain and maintain a competitive advantage.

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USDA Business and Industry Guaranteed Loan Program – Noteworthy Revisions For Community Banks

The Business and Industry (B&I) loan program administered by the United States Department of Agriculture (USDA or Agency) guarantees loans by qualified lenders to benefit rural businesses. For eligible projects, community banks can obtain an 80% guarantee for loans up to $5 million, a 70% guarantee for loans between $5 million and $10 million and a 60% guarantee for loans between $10 million and $25 million. The B&I guaranteed loan program allows lenders to expand their loan portfolio, obtain a deficiency guarantee, increase earnings by participating in the secondary market, make loans in smaller communities with traditionally lower collateral values and extend loans above their legal lending limits.

For each loan, lenders submit a detailed guarantee application to the Agency office in the state where the project is located. Approval or denial decisions generally take several weeks. Projects eligible for B&I financing include business acquisitions, commercial real estate purchases, startup costs and working capital, machinery and equipment purchases and some refinances.

On December 17, 2008, the USDA published a new interim rule pertaining to the B&I loan program in the Federal Register. Effective October 1, 2009, the new rule is designed to streamline the application, accelerate the guarantee approval process and expand the types of eligible projects. The Agency ultimately decided to abandon the new rule and instead focus on working within the existing regulatory framework to improve the B&I loan program.

Under the previous rule, the B&I loan program required lenders to compile burdensome applications and to deal with lengthy approval timelines and limited loan features. For example, a common lender complaint has been the laborious guarantee application process. For every loan under the previous regulations, B&I lenders had to submit to the local Agency all of their underwriting and loan approval documents, at least three B&I application forms, the draft loan agreement, copies of loan origination and servicing policies and procedures, and details concerning lending history, experience and their relationship with regulators. The Agency also awarded guarantees on a “priority scoring” basis, which gave loans in particularly rural areas with compelling purposes priority over otherwise eligible loans that earned a lower “score”. An approval or denial decision for lower scoring loans could take months from the application submission.

The USDA aims to reduce these drawbacks with the revised rule. The new rule attempts to streamline the original application process. Lenders must apply to participate in the guaranteed loan program by submitting background information such as descriptions of lending history and experience, policy and procedures and documentation concerning regulatory compliance (7 CFR 5001.9). Although lenders had to submit this information under the old rule, they are now permitted to submit summaries instead of copies of their policies and procedures (§5001.9(a)(1)). Once approved by the agency, lenders will no longer have to submit this background information when applying for loan guarantees (§5001.9(b)(4)). The revised rule also reduces the number of guarantee application forms (§ 5001.12(a)) and eliminates the draft loan agreement (§5001.34). In addition to simplifying the application process, the new rule endeavors to reduce the guarantee approval timeline.

Two changes aim to accelerate the guarantee approval process. The Agency has eliminated its “priority scoring” system in favor of a simpler first-come-first-serve approach (§5001.103(f)(1)). Additionally, the Agency has created a preferred lender program (PLP) (§5001.9(d)). The benefits of obtaining PLP status include a ten day approval or denial decision (§5001.11(c)), a smaller guarantee application package (§5001.12(b)) and the opportunity to obtain preferred status in more than one state with a single PLP application (§5001.9(d)(2)). In addition to streamlining the application process, the Agency has introduced some new loan features to the B&I loan program.

B&I guarantees may now be issued for additional uses and purposes. Under the previous regulations, lines of credit were ineligible. Lines of credit are now eligible when used for annual operating/business expenses, debts advanced for the current operating cycle, scheduled non-delinquent term borrower debt or closing costs (§5001.103(b)(2)(xix)). Projects involving leasehold improvements and the purchase of mixed use commercial and residential buildings are also now eligible for B&I guarantees (§5001.103(b)(2)(xviii, xx)). Another new feature removes the prohibition that interest rates change no more often than quarterly, and allows lenders to set a variable rate that adjusts as often as daily (§5001.31(a)). These new features allow lenders to obtain a valuable B&I guarantee for projects that previously were ineligible.

Although these features are now available to lenders, some revisions to the rule are less clear and useful tools have been eliminated. For example, the Agency has replaced the proposed cash equity criterion with a debt-to-tangible net worth ratio criterion (§5001.6(c)), but has failed to define this calculation other than referring to Generally Accepted Accounting Principles. Additionally, the rule eliminates the Agency’s limited authority to issue 90% guarantees. Again, the Agency ultimately decided to abandon the new rule and instead focus on working within the existing regulatory framework to improve the B&I loan program.

Look Up to The Small Business Services for A Well-Established Business In The Next Five Years

Setting up your own business, though at a very small level, always sound as an attractive initiative to those tired of routine hectic jobs. But one must be quite logical and thoughtful about implementing an effective measure before quitting his nine-to-five job with a handsome salary package. You must have a strategic planning by your side as one of your vital initial measures for a long surviving and a progressive business. Obviously, no one wants their efforts, hard-earned money, and time to be doomed and result in utter disappointment.

A wise advice to any newly emerging or about-to-drown entrepreneur is to look for the highly professional and certified small business service providers in your state for the most accurate counseling. They surely have impactful business solutions that can serve as the perfect remedy for any obstacle encountered by a budding or suffering business. These platforms are teamed up by a professional staff having years of expertise for dealing with the most crucial business problems that an organization may encounter.

Learn how they can aid you; the Small Business Services serve as an expanded resource hub for the striving business personnel.

Individual guidance

No matter in which industry you want to set up your business, the small business assistance platforms serve as the most sincere and professionally wise advisory agencies. You can trust them to openly discuss about your business ideas in the respected field of interest. They suggest the most suitable business options for you considering the various aspects and your resources like the finance that you have for initial investment and how much profit you expect to earn monthly. Therefore, your most fitted business plans would go accordingly.

Business License and resources

They help you with the essential resources required at every stage of establishing your business. You do not have to bother about your lack of resources once you are associated to any small business service provider. They also fully support their clients for attaining a legitimate license for running an authentic business in their state. Once you are a certified business license holder, you have all the legal freedom to run your business.

Dealing with Taxes

For a growing business, dealing with the fussy tax agencies is itself a big hurdle. Small Business Services enable you to survive well in that boat too. They design well planned strategies for you to get through your tax clearing. They manage the tax preparation and filing process for you so you can look more towards your business progress.

Bookkeeping

They relieve you from the burden of bookkeeping responsibilities of your business too, which is itself an enormous task. They maintain the records of your staff’s monthly income, your profits, important deals, your products’ fluctuating costs and much more.

Business Services Reviews – Why These Are an Invaluable Service

Business Services Reviews can be an important tool for you and your business. Many people fail to realize the value of quality reviews. This is a mistake as good reviews of products and services can help you decide quickly which are the best products and services for a particular niche. This can be a significant time saver that allows you to spend less time researching and instead move directly to reading the decision and buying phase.  

In addition, the best review sites will look at all top products in an industry so that you can get a complete picture of what is available. This allows you to decide which company offers the best service or product for your company. Also, it gives you peace of mind and contentment with your decision knowing you made a reasoned decision that has been supported by independent review. This is very beneficial as it helps negate the risk of buyer’s remorse and allows you to immediately get back to your business.

Whether you are the owner, executive, or purchasing agent for your company, knowing where to find good reviews should be a part of any of your buying decisions for business services. Sadly, there are too few review sites devoted to business services. This is one reason why it is important to zero in on the few that offer this great service. Also, when reviewing these review sites be sure the information they offer is comprehensive. The best review sites will offer information such as the facts, company profiles, product or service descriptions, benefits, drawbacks, customer comments and even their own personal review. This is important because it makes sure you are getting quality information that you can use and rely upon. Also, take a look at the number of products reviewed. The more products or services reviewed adds more credibility to the site as this shows they are more interested in providing you with quality review information.

Beyond these tips, you will find that some sites do deliver quality business services reviews. Once you find these sites, bookmark them and visit them periodically to help with your buying decisions for your business.