RAND Makes Recommendations for Environmental Management

Basic processes in the Department of Defense (DoD)'s central logistics activities are very similar to industrial processes in the commercial sector, and-- like many innovative commercial firms -- the DoD has reacted to increasingly demanding environmental regulations by taking a proactive approach to environmental issues. The DoD has found it more difficult than most commercial firms, however, to implement these proactive policies in ways that affect decisions made throughout the department. The Office of the Deputy Under Secretary of Defense for Environmental Security recently asked RAND to study the environmental management practices of commercial firms that are widely recognized as having the best practices in order to learn lessons that could be applied to the DoD. RAND's analysis is documented in Environmental Management in Proactive Commercial Firms: Lessons for Central Logistics Activities in the Department of Defense by Frank Camm.

In the study, RAND used corporate documents and a review of the secondary trade and academic literature to examine the methods that successful proactive firms, such as Ford and IBM, have used to implement environmental management policies. Researchers learned that, to be effective, environmental management must integrate environmental concerns with the core business concerns of an organization. Effective integration is achieved when environmental concerns are no more or no less important than other concerns (for example, economic) within an organization.

In the past, the DoD has pursued its logistics goals by maintaining massive inventories, but the department has recently applied commercial sector innovations based on integrated supply chain management to speed up logistics processes, reduce inventories, and save money. Integrated supply chain management requires viewing the supply chain as a whole and understanding how policy changes affect all parts of the chain; proactive environmental management uses a completely analogous approach. As a result, integrated supply chain logic provides an effective common tool that the DoD can use to integrate environmental management with its core mission concerns.

Most commercial firms are small relative to the DoD. Efforts to induce change throughout the DoD will in all likelihood take longer than they do in any large commercial firm. To achieve significant organization-wide change, the DoD must give more attention to institutionalizing the change process than commercial firms do. RAND found that, in successful commercial firms, a formal environmental management program increases the likelihood that implementation of proactive environmental management will succeed. A "formal program" includes elements like monitoring systems that develop metrics, goals and objectives and typically includes managers whose sole responsibility is environmental policy at the corporate, business-unit and plant level.

Many proactive commercial firms use Total Quality Management (TQM)-based templates, based on ISO 14000 or Council of Great Lakes Industries methods, to implement their formal environmental management programs and to verify their approach to implementing proactive environmental management. TQM centers on identifying relevant customers and then identifying the processes an organization uses to serve those customers. The DoD could use such TQM-based methods to verify its implementation approach, particularly in the area of pollution prevention; if this approach proves effective in central logistics activities, this could help lead DoD toward an even broader acceptance of TQM.