Essay: Decision Making and Intelligent Decision Support Systems

Decision making is an important part of each and every situation. It involves information that is required to make a decision depending upon the characteristics. The combination of Artificial Intelligence and decision support systems is intelligent decision support systems. Sustainable decision making is long-term planning, which means the decision taken will have a long-term effect. This paper describes four challenges faced in CEMEX during decision making, the types of Intelligent Decision Support Systems, the general principles of sustainable decision making with an example, and a case study of the implementation of a decision support system in an industry.

Introduction

Company Background

CEMEX is an international building corporation and major manufacturer of cement, ready-mixed concrete, and aggregates. In the United Kingdom, they also provide other building materials such as asphalt, railway sleepers, concrete block solutions, and roof tiles. The company would earn more than £1 billion from its sales per year and has a supply network with over 500 centers to ensure that its products are accessible to local customers in the UK. CEMEX has aimed to make a better future and to match financial success with a strong dedication to sustainable progress (Shrivastava, 1995).

Danish engineer Kjeld Olaf Anker Ammentorp was the inspiration, the one who had experience of working with ready-mix concrete in Copenhagen. Ammentorp decided to use ready-made concrete, which is made in a centralized production point rather than making a roughly heterogeneous mix of cement, gravel, and water on building sites. He brought hybrid trucks from Denmark to carry concrete in rolling drums to agitate their content. It was a revolutionary invention in this industry.

• Vision: A financially sustainable business regarding a positive connection to people and the environment.
• Mission: CEMEX’s mission is to provide for the building needs of its customers worldwide and make a profit for its stakeholders by becoming the world’s most successful and profitable company in this area.

Sustainability Based on CEMEX’s Claims

The company knows this fact that it needs to manage its business in advance to guarantee its positive involvement in making a more sustainable perspective, i.e., as part of a total approach within a firm governing body, and according to the British Government’s social, environmental, and economic objectives for sustainable communities. Every year, CEMEX allocates more than £30 million for sustainability-related plans in the UK (Trevino, 1986).

Decision Making at CEMEX

Decision making is deciding something that should be done in the current or future state. A decision-maker is a person or system that makes good decisions to know something related to the current state or future state and formulates a reasonable response. If the decision and response are entirely automated with a computer program, then the rules or algorithms programmed in the decision-making system must handle a wide range of sets. The system must know the decision domain. This type of system is a decision support system. If the decision is somewhere in the middle and cannot go further, then human decision making is supported and enhanced by the use of a decision support system.

Decision Making Issues at CEMEX

People have limited abilities to calculate, to memorize, and to construct mental models. The main goal of decision support systems in a company like CEMEX is to make decision-makers more analytical, less bounded, and more rational. These system tools augment human memory, perform computations, and provide mechanisms for complex phenomena. The accuracy of the analytical model is seldom, and an important feature is to solve a problem in decision support systems. Other issues must be considered in decision making.

They are:

1. Urgency of decision
2. Information availability
3. Alignment of model
4. Cognitive style of decision maker

There are two approaches to modeling decision making based on classical and naturalistic theory. The classical model focuses on decision events that are prescriptive and uses analytical techniques. Naturalistic models are based on strategies that are intuitive and consider decision making to be dynamic and evolving in the process, which describes the behavior of decision makers. The classical model suffers from a lack of quantitative, objective, and precise data, and a lack of a satisfactory framework or abstract. However, it provides an organized framework in order to structure all available information, analyzes a large amount of data, and clarifies trade-offs to different stakeholders in decision making. Naturalistic models make full use of the expertise of decision makers; this is a drawback in sustainable decision making if expertise is based on old decision-making patterns that do not consider sustainability (Vermeulen, 2009).

Challenges for Sustainability

There are challenges faced by CEMEX, such as if a project has a lack of information to predict decisions, if the number of related factors is large, or if the problems cannot be solved with familiar solutions. There are four types of unique challenges faced by CEMEX:

1. Uncertainty: Uncertainty arises if the knowledge base lacks information to explain the current state or predict future states. CEMEX experiences uncertainty if it misses the required information to predict rules that are required to make decisions. It doesn’t mean uncertainty if it has complex or vague relationships. It is not necessary to happen only for large range sets; it can also happen when the set is well defined, simple, or small.
   • Uncertainty can be reduced by gathering more information about the knowledge or by increasing the ability to predict the decision. It can also be tolerated by replacing estimated facts with missing knowledge, with some sort of confidence and reliability.
2. Complexity: Complexity occurs when the knowledge base has a large number of parts that interact in a complex manner. It is also represented as numerous and different elements like variables, issues, etc., and complexity in their relationship. This doesn’t mean that the complex situations are vague or unpredictable, but rather increases complexity in solving problems, even though they can be solved easily.
   • Complexity varies in different situations. For example, for the same complex situation, CEMEX can solve it in an easy way, and others may solve it in a complex way, depending upon their expertise. Complexity can be reduced by improving the processing capacity of the information, by breaking up the things into smaller parts, and then integrating the differentiated elements.
3. Ambiguity: Ambiguity arises when one is unable to interpret the information or unable to explain or make any sense of the information. It happens when a message cannot activate the information, or a message cannot interpret the information in the knowledge base.
   • Ambiguity can be reduced by reconstructing the message or by gathering meaningful knowledge that can be interpreted. It cannot be done by gathering more facts. It requires explanation.
4. Equivocality: Equivocality means several interpretations of the same information. It may be unambiguous individually, but collectively they may be in conflict.
   • It can be resolved by cycles of interpretation or interactive discussions.

Enhancing Value Creation

CEMEX wants to provide innovative and high-tech products and solutions that our resource-limited world needs to make a profitable as well as growing economy with a low-carbon footprint. By meeting the construction sector requirements to follow more sustainable operations, it assumes to create durable competitive benefits (Berry, 1998).

Manage the Footprint

CEMEX attempts to lower the environmental side effects of its construction operations. These effects are carefully recognized and surveyed to continuously reduce them to the lowest degree which is executable both economically and practically. There is also a firm plan to reduce carbon waste, which could in turn reduce the company’s operational environmental side effects.

Engage Stakeholders

CEMEX keeps an effective and long-term relationship with major stakeholders to meet the critical needs and concerns of communities. CEMEX, with its highly devoted and experienced staff, closely cooperates with a wide range of institutions, which allows the company to use all its abilities to generate social advantages that play a role in strengthening local environments.

Measurement and Assessment

To test their materials, they employed an independent institution, Vivian Partnership Ltd. This assessment included collecting people’s opinions (including communities, customers, suppliers, employees, and nongovernmental institutions) on CEMEX UK’s sustainable development practices and observing the outlooks of key stakeholders. Following a quantitative online investigation of 500 representatives, which resulted in a 14% response rate, two qualitative workshops were held, one for employees and one for external stakeholders, each of which was attended by around 20 volunteers from the sample.

Key Assessment Findings

1. The Sustainable Development issue has received much attention, though its full scope is not acceptable, as it primarily focuses on environmental matters.
2. Understanding CEMEX UK’S report was seen as easy.
3. Readers used this report to get certain and time-oriented information, even though not as a general outlook.
4. Regarding the fact that long-term goals have to be involved, there was an urge for more local data.
5. There was a preference for a more concise reporting system with better accessibility to the main data.
6. Major issues were the reduction of pollution, carbon dioxide, climate change, resource and energy saving, and site restoration.
7. Regarding the importance of health and safety and the supply chain according to CEMEX, external stakeholders put low priority on these topics.

Governance

CEMEX practices the highest measures of corporate governance. The UK higher management team meets weekly and makes daily decisions in alignment with UK rules and regulations. This team reports to the CEMEX Northern Europe President, Ignacio Madridejos, who is a member of the Executive Committee led by CEMEX’s Chairman and Chief Executive Officer, Lorenzo Zambrano.

Ethical issues are seen as critical to the company’s success. Therefore, employees are required to act in accordance with CEMEX’s Code of Ethics, which provides guidelines for behavior to deal with conflicts of interest, confidentiality, employee relations, the environment, external stakeholders, legal and financial compliance, company property, and workplace health & safety (Brouthers, 1998).

Stockholders

The key point in this company is that if stakeholders prosper, the company itself will flourish. This perspective provides an advantage for the company, making it a choice for its stakeholders:

• Company’s People: CEMEX tends to be the employer of choice in its markets.
• Company’s World: They claim that they are a good global citizen.

CEMEX has recognized seven priorities according to the objectives above:

1. Contributions to sustainable construction
2. Low-income housing and infrastructure
3. Enhance our carbon strategy
4. Encourage excellence in environmental and biodiversity management
5. Give high priority to health & safety
6. Strengthen local communities
7. Foster partnerships with key stakeholders

CEMEX UK is also working on sector targets across its product categories. For instance, regarding cement, sector plan targets have been agreed upon with the Environment Agency. They have also signed up to the Sustainable Concrete Forum (SCF), which mandates continual improvement, measurement, and reporting of performance data for their products (Cakar, 2010).

Intelligent Decision Support Systems

Decision support systems are a knowledge base or information system that supports and participates in the decision-making process. The combination of knowledge reasoning techniques of Artificial Intelligence (AI) and functions of decision support systems is Intelligent Decision Support Systems (Carter, 2008).

Group Decision Support System (GDSS)

GDSS is collective or group decision making. It is a combination of computer techniques, communication techniques, reasoning techniques, decision support techniques, and different models for decision making.

It has three levels of decision:

• At the first level, the aim is to improve the decision-making process by improving the information exchange between members. It also tries to eliminate communication obstacles such as unanimous opinions and ballots collection equipment.
• At the second level, it provides structural techniques in order to recognize the dynamics and processes of the system. It also provides techniques for judgment methods and for choosing analytical models for the decision process. This process is usually done face-to-face between decision makers (Azzone, 1997).
• At the third level, the above two techniques are combined, and computers are employed to inspire and communication methods are instructed, including expert consultation and intelligent rules.

Distributive Decision Support System

This is not only for individual decision-makers or a single decision-making activity by CEMEX, but also for decision making for CEMEX as a different entity at the same time. Distributive decision making is the information distributed among CEMEX and making decisions for CEMEX. It supports multi-level decision making and provides support for the CEMEX group.

Intelligent, Interactive, and Integrated Decision Support System

In the current environment, if we use only a single information or knowledge base, it is difficult to satisfy the activity. So, it is a combination or integration of different techniques such as computer techniques, Artificial intelligence, operational research, and technology projects, etc. (Bansal, 2005).

• Instructiveness: The main part of DSS is human-machine interaction. DSS should have stronger interactive ability in order to help with environmental binding and to help the decision-maker solve problems.
• Intelligence: To solve problems, we need to make use of Artificial Intelligence techniques, technology projects, etc.

Intelligent DSS Based on Knowledge Base

It is a combination of Data mining, Web mining, Knowledge Acquisition System, and reasoning machine. Data mining represents knowledge data discovery. Web mining includes user access to log mining, text mining, and web structure mining. KAS is used to acquire knowledge of domain experts by induction. Reasoning Machine is used when IDSS goes through reasoning (Collins, 2007).

General Principles of Sustainable Decision Making by CEMEX

Decision making involves environmental, political, ethical, economic, social, and other factors. In addition to these, it considers cost, quantity, and quality of service, and also requires a combination of qualitative and quantitative, subjective and objective, imprecise and precise data. Most decisions involve a number of individuals or groups, each one having conflicting or different interests.

Decision making at CEMEX can be divided into different areas, such as policy formulation, technologies and processes, project-based decisions, and responses (i.e., reactive or proactive) to problems or incidents such as oil spills. An important aspect of sustainable decision making is policy decision making on reasonable responses to variations in system variables (Miles, 2009).

Leading in Sustainable Construction

During 2010, CEMEX UK was one of the first companies to receive certification of the Building Research Establishment Framework Standard for the Responsible Sourcing of Construction Products (BES 6001) for its products.

In 2010, it opened a new rail route from Neath in South Wales to the CEMEX railhead at Sturton, near Leeds in West Yorkshire, to make all products available through rail or water throughout the CEMEX network. This resulted in a 5% increase in rail freight for the year. In addition, there are planned new rail roads, such as from Neath to railheads at Washwood Heath in Birmingham, and Bletchley near Milton Keynes.

In 2010, the Aggregates division surpassed the industrial water and waste standards set by the Sustainable Concrete Forum via recycling facilities and waste reduction.

However, the ready-mix division could not reach its target, which was generating 5.4 kilos of waste per cubic meter of concrete produced. This division took a big step to fill the gap by stone washing of lorry drums.

Contribution to Infrastructure

In 2010, CEMEX started a new rapid-hardening, controlled-set concrete operation called Prompts. It allows contractors to strip formwork much earlier than they could with traditional concrete.

The new concrete admixture system makes it possible to accelerate strength, consequently speeding up construction times. It would be a good approach for solutions like road and rail renovation, in which using Prompts makes it possible to speed up the handover of the construction site. It is also appropriate for recasting, where structures can be remolded and stored just 12 hours after pouring.

Examples of Sustainable Decision Making

Decision making and the use of sustainable decisions are evident in water management by CEMEX. In both private and public ownership, considerations of environmental and economic effects are required.

Water management involves different types of decisions, including long-term decisions and how to manage crises like droughts and floods. To make decisions for legislation and water quality, expert systems can be used. Databases, such as those on water quality, rainfall during a period, and water demand, are important for making decisions in this area. Related databases, expert systems, and retrieval programs are developed for multi-disciplinary advice on abstraction and licensing of water. The system integrates water abstraction laws with environmental decision making and problem-solving in a program that uses expert knowledge in planning, monitoring, managing, and forecasting water resources and access to required data. The knowledge base consists of 100 rules for eight problem solvers manipulating 30 objects. It provides an expert system for district resource officers to guide them through the process of water license determination and tools to facilitate retrieving, archiving, and using that information (Porter, 1985).

Practical Considerations by CEMEX

While business traditionally seeks precision and practicality as the basis for its planning efforts, sustainable development is a concept that is not amenable to simple and universal definition. It is fluid and changes over time in response to increased information and society’s evolving priorities.

The role of business in contributing to sustainable development remains indefinite. While all business enterprises can contribute towards its attainment, the ability to make a difference varies by sector and organization size.

Executives at CEMEX consider the principal objective of business to be making money. Others recognize a broader social role. There is no consensus among business leaders as to the best balance between narrow self-interest and actions taken for the good of society.

CEMEX continually faces the need to trade off what they would ‘like’ to do and what they ‘must’ do in pursuit of financial survival. Businesses also face trade-offs when dealing with the transition to sustainable practices. For example, CEMEX, whose plant has excessive effluent discharges, might decide to replace it with a more effective treatment facility. But should the company close the existing plant during the two or three-year construction period and risk losing market share? Or should it continue to operate the polluting plant despite the cost of fines and adverse public relations? Which is the better course of action in terms of economy, social wellbeing, and the environment?

Moreover, many areas of sustainable development at CEMEX remain technically ambiguous, making it difficult to plan an effective course of action. For example, the forestry industry has had difficulty defining what constitutes sustainable forest management. Some critics believe that simply replacing trees is not enough because harvesting destroys the biodiversity of the forest. Clearly, more research will be needed to resolve such technical issues (Schaper, 2002).

From a broader perspective, however, it is clearly in the interest of business to operate within a healthy environment and economy. It is equally plain that, on a global basis, growing and sustainable economies in developing countries will provide the best opportunities for expanding markets.

At CEMEX, sustainable development and environmental stewardship are synonymous. In the short term, sound environmental performance is probably a reasonable objective for most businesses, with sustainable development as a longer-term goal. However, this can lead to confusion. In the developed world, the focus is on environmental management, while in developing countries, rapid and sustainable development is paramount.

The global economy is coming under growing pressure to pay for the restoration of damaged environments. But this economic engine is being asked to help solve other pressing problems at the same time. The challenge is to solve all of these problems in a sustainable manner, so as to generate continuing development.

Despite ambiguities about definitions, there is now widespread support for sustainable development principles within the business community. However, for that support to grow, it will be important to recognize and reward initiatives that are being taken to turn the concept into reality (Seuring, 2008).

Positive Signs of Change

William Mulligan, environmental affairs manager at CEMEX, reflects the view of many in the business community who believe that the environment is now a major issue—one which presents both challenges and opportunities.

“Over the last decade, we have seen many polls confirming the importance of the environment to Americans,” he says. “Only an irresponsible company would dismiss this trend as a passing fad or fail to recognize the need to integrate environmental considerations into every aspect of its business. Environmental excellence has to become part of strategic thinking. It is in our best economic interests to do so. In fact, whenever we are forced to change, we often find opportunities.”

This positive change in attitudes and practices is echoed by the Organization for Economic Cooperation and Development, which says: “There is now a realistic prospect of harmonizing environmental and economic considerations, and thus of gradually incorporating these objectives in policy.”

Key Areas of the Management System to Change

The two main areas of the management system that must be changed are those concerned with:

1. Greater accountability to non-traditional stakeholders.
2. Continuous improvement of reporting practices.

Developing an Effective Management Framework for Sustainable Development

Developing an effective management framework for sustainable development requires addressing both decision-making and governance. The concept of sustainable development must be integrated both into business planning and into management information and control systems. Senior management must provide reports that measure performance against these strategies.

Governance is increasingly important because of the growing accountability of the Corporation and its senior management. Information and reporting systems must support this need. Decision-making at all levels must become more responsive to the issues arising from sustainable development (Dyllick, 2002).

Sustainability and Profitability of CEMEX

A Green Sustainable Supply Chain integrates ecological factors and supply chain management principles to identify the environmental impact of an organization’s supply chain processes. CEMEX is becoming aware of the importance of this integration to enable a sustainable business strategy. Many are now seeking out solutions and guidance on how to implement a sustainable supply chain. A sustainable supply chain should not only be optimal for the organization but also optimal in terms of a limited environmental impact.

Sustainability as a Competitive Advantage

Greener supply chain management practices represent a competitive advantage in CEMEX, thanks to increasing customer awareness and regulatory norms. Across industries, there is also a shift in the focus of GSCM programs from compliance to creating value for customers and shareholders.

The implementation of Green Supply Chain initiatives has evolved from strictly a compliance issue into a means of generating value.

CEMEX is using sustainability as a competitive advantage to grow market share within their industry. A green supply chain usually pushes the organization towards an improvement in their products, processes, quality, and productivity. It can also be considered an enabler for innovative decisions and brand differentiation improvement.

CEMEX now has an Ecomagination program focused on growing their revenue stream from environmentally friendly products to around 20 billion dollars by 2011. They recognized the opportunity associated with saving the environment. Nowadays, many companies are offering customers environmentally produced power and charging a premium for that offering.

The green initiatives also help a company to maintain and enlarge their customer portfolio. Environmental concern and social responsibility are now considered important parts of a successful business strategy.

All competitors are under the same market force to change their direction and priority towards a more green initiative; therefore, efforts and investments in this area are becoming more and more important. In addition, more countries will enforce importers to import green products to their nations with tax incentives, and this will trigger the chances to do global business.

Sustainability and Supplier Management

One of the bigger issues facing CEMEX these days is the actions of suppliers. Companies today are being held accountable for environmental or social problems created by their suppliers.

CEMEX’s buying practices can impact suppliers’ ability to improve their business conduct. Pressure on cost and efficiency can force suppliers to contravene some of their own standards in order to meet their customers’ commercial requirements. But as the opposite effect, companies can use their purchasing power to help install best practices in small and medium-sized companies.

In fact, the companies that engage their suppliers around these issues constitute one of the most important drivers for spreading corporate green and sustainable principles around the world. Collaboration is the key. Many companies are performing environmental audits or implementing rules of conduct to check the actions of their suppliers.

The most successful green efforts in supply chains are based on the creation of value by sharing with suppliers and subcontractors the intelligence and know-how about environmental and emerging regulatory issues and emerging technologies. Suppliers and customers can strengthen each other’s performance, share the cost of ownership and social license to operate, and create reciprocal value. Supply chain sustainability must be driven by the originating manufacturers that rely on deep tiers of suppliers and vendors for their products.

The reported supplier human rights and environmental violations by Apple’s suppliers is an example of the challenges that suppliers face in managing or influencing these issues on the ground. Apple recently did the right thing by transparently releasing its Apple Supplier Responsibility 2011 Progress Report, which underscored just how challenging and difficult multi-tiered supply chain management can be.

CEMEX and other multinational companies have partnered to create the Academy in Guangdong Province, China. The objective of this non-profit venture is to create a better trained and capable workforce of environmental, health, and safety professionals and give them the management, implementation, and technical knowledge to be able to proactively ensure that real performance is sustainable and integrated fully into the overall business strategy and operating system of a company. Chinese regulatory agencies are also invited to participate as well. The model that CEMEX is using in China offers a positive example of collaborative innovation (Haake, 2009).

Challenges in Implementing a Green Supply Chain

Contrary to what many people might think, making business sustainability operational within a supply chain is becoming easier, not harder. There is more information available from procurement managers, environmental directors, design engineers, marketing, communication staff, and operations managers, among others—and this definitely makes a difference when a supply chain decides to go green. But there are still big challenges like the lack of information about green supply chain practices and the lack of tools to optimize the supply chain with environmental management, which makes the implementation less easy.

CEMEX, with the trend of global sourcing, is tracking the carbon footprint of finished products, which can be difficult; however, new initiatives have emerged for adopting the practice of requesting a carbon footprint from suppliers.

Barriers to global trade because of increasing environmental regulations, more restrictions on hazardous substances, a bigger emphasis on lean manufacturing, and increased supplier auditing and verification are creating the critical road toward new supply chain management expectations. The pursuit of efficiencies in supply chain management and producing products while reducing waste is a vital imperative in a recovering economy.

Shareholder value, company valuations, and possible mergers and acquisitions are affected by supply chain sustainability. This impacts cash management and liquidity. For example, carbon-intensive sectors may see an increase in the cost of capital. The World Resources Institute is working on the new supply chain and product lifecycle greenhouse gas protocols that will frame the new expectations of value chain sustainability accounting and reporting. Increased attention will be paid to conflict minerals, fair labor, and other social aspects of sustainability, the management of hazardous substances in toys and other consumer products.

It is acknowledged by all organizations that the needs of the community are as important as those of other traditional stakeholders.

CEMEX is identifying the critical supply chain partners that have the greatest product impact and collaboratively addressing the environmental and social footprint of their products through the value chain. Consumers will play a leading role in greater supply chain collaboration. Consumer awareness about sustainability demands a more CO2-friendly supply of products and services.

Conclusion

Based on the definition of sustainability science, its unique characteristics, and the unique approaches it employs to achieve its goal of a sustainability transition to sustainable development, these salient features would suit this emerging field.

Firstly, I would say that it is problem-driven, as discussed earlier, and also operates on the ad hoc principle, which is to say it has been introduced for a particular purpose.

Secondly, it is intergenerational because it aims at the current generation meeting its needs while at the same time not jeopardizing the ability of future generations to meet theirs, and it encompasses all categories of people (rich or poor, weak or strong) internationally.

Thirdly, I would describe it as a transdisciplinary field that tries to harness different academic experts from other disciplines, research scientists, stakeholders, and policymakers from local to global levels to solve current existing challenges affecting the world. Through this, it promotes interdependence and networking within different disciplines toward a common goal of sustainability.

Fourthly, sustainability science is interdisciplinary, just like Ness (2007) pointed out in his article entitled “Categorizing Assessment Tools for Sustainability,” that sustainability science basically aims to “combine work in the areas of environmental science, economics, social and development studies to better understand the complex dynamic interactions between social-ecological systems.”

Another main challenge is monitoring sub-supplier sustainability. This has become a tough task for companies with complex global supply chains. It is the responsibility of direct suppliers to ensure that their sub-suppliers acknowledge, understand, and accept the companies’ sustainable requirements. However, when a supply chain is long and complex, ensuring compliance at many thousands of sub-suppliers represents a major challenge.

The future of sustainability will inevitably include the sustainability of entire supply chains, not just direct suppliers.

However, sustainability science also promotes collective participation with dialogue, cooperation, and communication between stakeholders in society, which makes it credible, inclusive decision-making through building consensus and awareness, making it legitimate, partnership with interdependence and networking across different disciplines. It is about good local governance with transparency and accountability and creating a good lifestyle with behavior, values, and ethics. It is also about managing information and knowledge with appropriateness, timeliness, and accessibility, which makes it more salient. It is also cross-cutting because it has to deal with wicked problems that have multiple causes and impacts.