Research indicates that sustainability footprints can transform stakeholder perceptions of waste from being a cost center to a profit center, reduce carbon emissions by diverting waste from landfills, and stimulate innovation through the search for potential energy savings. In this excerpt, Lowellyne James discusses strategic options for SMEs to embed sustainability and highlights the role of quality management in sustainable development.
Reflecting on the major stories of the past few years floods in Australia and Brazil, Typhoon Haiyan, BP Deepwater Horizon incident, poor working conditions of garment factory workers in Bangladesh, food riots that led to the overthrow of a dictatorship in Tunisia – common themes emerge such as the environment, climate change, ethics, and human rights, which all fall under the vast umbrella of sustainability. Increasingly, governments are implementing policies and enacting legislation designed to reduce unabated carbon emissions through market mechanisms such as cap and trade schemes.1
The BP Deepwater Horizon incident crystallizes the centrality of sustainability to business strategic success. Costs to BP arising from the absence of a quality culture that incorporates “minimal loss” to the society has been a $91 billion reduction of market value between April and June 2010, over 350 lawsuits from the general public, damage to its brand image, loss of support from environmental groups with the U.S. Audubon Society who consider the oil spill to be the “largest uncontrolled science experiment” in U.S. history, shareholder dissatisfaction, and the demise of BP’s industry leadership.2
This absence of a quality culture gave rise to the following quality failures leading to the explosion aboard Deepwater Horizon:3
1. Incorrect parts: Centralizers, key equipment used in drilling operations, were received from supplier not to specification.
2. Breach of existing well design: The centralizers used in operations totaled to 6 instead of 21, a casualty of the misdirected focus on reducing the cost and not reducing the cost of quality.
3. No product verification: Incoming inspection tests were not conducted on the cement foam upon receipt from the supplier Halliburton.
4. Poor supplier management: The cement supplied by Halliburton failed in-house tests. The need to develop mutually beneficial supplier relationships is a corner stone of total quality management and quality management standards such as ISO 9001. BP’s relationship with its supply chain Transocean and Halliburton, as events have revealed, can be described as combative at best.
5. Poor process management: “Negative Pressure Test” was not dictated on the oil platform’s work plan. There was no procedure for conducting the “Negative Pressure Test.”
6. No management of change procedure: “Negative Pressure Test” was added to the work plan at the “eleventh hour”. This confusion led to the acceptance of one positive test result despite three failed negative pressure tests, a decision that sealed the fate of the crew of Deepwater Horizon.
These six quality failures resulted in the catastrophic loss of life and environmental disaster – the safety consequence –
a cost that is unquantifiable.