The Roundtable held its fall 2006 meeting in conjunction with the INFORMS annual meeting in Pittsburgh. Given that the meeting was held in parallel with an all-day tribute to Art Geoffrion's retirement from the Anderson School of Management at UCLA, the Roundtable sponsored one of the Geoffrion meeting sessions. It focused on "Where do we want to go in O.R. practice?" Ranga Nuggehalli, Charles Beall, Scott Ellis and Irv Lustig highlighted pertinent developments, challenges and opportunities in the world of practice, and suggested appropriate responses.

The second segment of the meeting focused on the theme of "Sustainability." "Our Common Future" (1987), a report of the United Nations Development Program's World Commission on Environment and Development, defines "sustainable development" as follows: "Sustainable development seeks to meet the needs and aspirations of the present without compromising the ability to meet those of the future."

Sustainability, as addressed in this meeting, is defined as successful business performance in terms of not only its stewardship of economic or financial capital, but also in terms of its stewardship of natural capital (the planet's natural resources) as measured by metrics like greenhouse gas generation, acidification and ozone depletion, and human capital as measured by degrees of social justice and concern for the welfare of stockholders and stakeholders. These three performance measures, when considered together, are commonly referred to as the triple bottom line. The theory of the triple bottom line is that improving performance relative to any one bottom line improves performance relative to the other two simultaneously.

O.R. and Sustainability


Jo van Nunen, professor of Quantitative Methods and Information Management at the Rotterdam School of Management at Erasmus University Rotterdam, delivered an inspiring message as to the business case for a company being sustainable and for O.R. projects that optimize production and distribution systems relative to the three-part sustainability metric. One of the major business mechanisms through which sustainability values are implemented is the closed loop supply chain, i.e., the supply chain that includes a remanufacturing step at the end of the life of a physical product, returning the product into the customer sales stream. van Nunen identified a number of examples in which European companies are using O.R. models to optimize remanufacturing and recycling supply chain segments to increase profits.

The author, a Roundtable member who consults in and teaches sustainable business at the Presidio School of Management, provided a tutorial on how to think about sustainable business relative to business as usual. He indicated that in more and more industries, companies that are able to conduct business sustainably are being viewed as having a competitive advantage. The Dow Jones Sustainability Indexes, launched in 1999, provide evidence of the fact that many of the world's global companies that have scored high in terms of their implementation of sustainable practices are also doing very well in terms of traditional measures of financial performance.

The author described the emerging field of industrial ecology (IE) and opportunities for modeling in this field, citing four IE "principles": (1) close material loops, (2) don't discard waste that has energy content, (3) eliminate materials (e.g., heavy metals) that upset the system, and (4) deliver function with fewer materials. The author described new Life Cycle Assessment tools and software with which one can quantitatively measure a product's consumption of raw materials and emissions to the environment through its manufacture, use and disposal phases, providing important feedback to the product design process. He pointed out how O.R. achievements over the past decade in green product and process development, lean and green OM, and remanufacturing and closed-loop supply chains fit under the broader sustainability umbrella. The author made the case that there is an opportunity for increased profits by finding ways to integrate environmental data into traditional model based strategic planning. The author concluded with these points: (1) finding the more sustainable and profitable approach frequently requires "thinking out of the box," (2) executing practices that will be both profitable and sustainable over the long term often requires the leadership discipline to implement strategies that are costly in the short term due to writing down existing productive assets faster, (3) shifting our product sales paradigm to a service paradigm will shift our design mindset to generate profits over a multiple life time frame,* and (4) like the Total Quality Management (TQM) and Supply Chain Management (SCM) revolutions, making sustainability a priority tends to have unanticipated benefits.

Roundtable Company Sustainability Initiatives


Four Roundtable companies reported to their colleagues as to how they are conducting sustainable business activities. Christine Fisher, director of Process, Policy and Systems, Worldwide Reverse Logistics, at Cisco Systems, described to the group how Cisco has turned environmental responsibility (saving products from going to landfills) into a direct financial benefit for Cisco. One of the primary vehicles to a more sustainable operation at Cisco has been the increasing use of life cycle management to identify opportunities for re-use of project. During FY2006, Cisco recovered and processed 4,516 tons of equipment, with only 0.9 percent sent to landfill. This program has recently become profitable. Benefits include: (1) accelerating recovery of product returns, (2) enhancing customer satisfaction, and (3) optimizing product value through a better understanding of paths to secondary markets and opportunities for internal reuse, improved spare parts management and philanthropy before recycling returned product. Fisher indicated that an allocation model has been built to assist in this area. She has been able to get buy-in for this work and elevate the program to the COO and CEO at Cisco.

David Dittmann of the Business Analysis Solutions Department at Procter & Gamble (P&G) described how O.R. techniques were used over the past year to determine the optimal cost structure for distribution of P&G's "Pur" water filtration sachets in Africa, which is saving thousands of lives. Roughly $16 million was eliminated from the distribution system by using decision analysis to understand the question and options, optimization to determine the optimal cost structure, simulation to understand financial and supply network constraints, and risk analysis to plan for uncertainties. Dittman also described a number of P&G sustainable practice initiatives. These include a marketing campaign for Cold Water Tide based on customer energy savings, examples of how P&G is working to use more 100-percent recyclable packaging and efforts to improve pallet management in its warehouses. He suggested that there are O.R. opportunities to help companies be simultaneously profitable and sustainable by changing our mindset to think of sustainability as a variable as opposed to a constraint.

Irv Salmeen, manager, Infotronics & Systems, Ford Motor Company, discussed sustainable mobility from an O.R. perspective. Salmeen provided a case study of how hybrid vehicles have been developed to address the auto industry challenge of managing automobile fuel economy and CO₂ emissions. He asserted that the introduction of hybrid vehicles is a high-risk activity for both manufacturers and consumers. The risks arise because there is a short history, and we just don't know how well they will work in the long term. There are supply chain issues, especially with respect to battery technology and the drive train. Hybrid vehicles are currently relatively expensive, and many aspects of long-term reliability, durability, reparability and recyclability remain to be demonstrated. A group at Ford has built a first-stage, agent-based model to simulate the market for hybrid vehicles in order to develop a better understanding of the implications of these risk elements. One challenge in using agent-based approaches is that there are typically large variances in model outputs. It was pointed out that discrete choice models are also commonly used to better understand market niches like this.

Scott Ellis, director, Strategic Planning and Modeling at Hewlett Packard, reviewed HP's environmental sustainability initiatives. He pointed to a number of HP sustainable practices that have yielded tangible benefits:

• Design for Environment initiatives during the product design phase, enabling use of safer materials, reduced numbers of parts and higher levels of product recycling.
  
  
• Manufacturing initiatives to make the supply chain more sustainable.
  
  
• Efforts to minimize waste (e.g., failures and reprints) during customer use and improve resource efficiency.
  
  
• End-of-Life Management initiatives to provide convenient return, recycling and recovery of material.
  
  
• Application of principles of "reduce, re-use, recycle," to produce lighter, smaller and more efficient products, and facilitate convenient leasing, trade-in and recycling programs.

Ellis highlighted opportunities for O.R. to help address sustainability challenges, illustrating some of these with HP examples. Many reverse supply chain challenges lend themselves well to O.R. How should the reverse supply chain be structured in terms of number of nodes, location of nodes, definition of flows, inventory management strategy and cost? Which recycling options should be pursued? There are typically multiple alternatives, many performance dimensions and many constraints. How can one realize economies of scale? He demonstrated how applying O.R. to sustainability issues might require the analyst to think differently. The business problem is typically more difficult to identify. Determining the decisions to be optimized may be a challenge partly because the problem may encompass several decision-makers at different points in the product life cycle. There may be multiple objective functions.

Ellis concluded with some proposed guidelines for applying O.R. to sustainability problems. Check out the decision-making environment and identify project sponsors, metrics for success and the priority of operational decisions versus legislative and IT issues. Ascertain the receptivity of project owners to advanced analytics. Link environmental issues to potential for sales in order to strengthen business interest and sponsor (customer) support. Connect directly with decision-makers.

Vision, Mission and Strategy and Goals


The third segment of the meeting addressed an ongoing activity within the Roundtable. Glenn Wegryn and Mike Grant briefed the Roundtable on the Strategic Planning work recently underway by the Roundtable's Strategic Planning Team (SPT). This work was motivated by a desire to update the vision, mission, strategy and goals of the Roundtable, a consensus that the Roundtable could do more initiatives and a desire to better understand Roundtable finances.

The proposed vision is summarized as follows: The INFORMS Roundtable is the recognized premier destination for top-level leaders in O.R. practice. Member organizations thrive on their investment in the Roundtable, and their representatives benefit from peer networking and access to the best contemporary thinking on applied decision-making and how to deliver it. The Roundtable actively supports and collaborates with INFORMS toward the common goal of improving the professional health of O.R.

The proposed missions for the Roundtable include: (1) improve member organizations through superior O.R. performance, (2) help Roundtable representatives to grow professionally, (3) help the O.R. profession to thrive by nurturing its ecosystem, (4) keep the Roundtable healthy.

Wegryn introduced three initiatives which were presented to the INFORMS Board of Directors. These are: (1) creation of a periodic State-of-OR/MS Practice Report, (2) determination of what kind of education would most benefit future practitioners, and (3) revival of INFORMS continuing professional education resources.






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