Many companies will use the Triple Bottom Line approach of sustainability to evaluate performance as well as create value. It includes a social, environmental and financial approach to business.
The leadership team refers to those with higher authority in a company, including managers, supervisors and CEO’s. The managers in each department are given authority regarding operational decisions and their performance, which cannot be evaluated without financial, social and environmental accounts. In order to make profound judgements and targets for RTXM, the leadership team can use the balance sheet and/or income statement of the financial report to compare performance records, set budgets and monitor and control expenditure patters to ensure the company is maximizing profit. The social and environmental accounts provide RTXM with an overview on productivity, wastage, health and safety, as well as many other aspects.
Employees have substantial financial and time investments in the company and their main concerns are job security and safety. By proving employees with financial information such as an income statement, they can be sure RTXM is incurring substantial funds to pay their employees. The companies social statement can provide them with information on employee’s health and safety, training and education, and workplace practices within the company. This can help employees ensure that the company promotes work/life balance and is concerned for employees wellbeing.
Customers are mainly concerned with low price and high quality. The number of customer complaints sent to RTXM have tripled in regards product quality and experience. Social and environmental reports provide consumers with information on treatment of employees, materials, environmental compliance and level of interaction with the community. Financial accounts, in particular the income statement, can provide customers with the financial information to ensure they are getting the low price they require.
Suppliers need to be sure that RTXM is reliable and can make timely payments with the funds to settle their debts. The balance sheet in the financial report provides information and a company’s current liabilities as well as revenue so suppliers can be sure payments will be made.
Government requires information in regards RTXM’s earnings to ensure they are paying the correct tax and GST on a regular basis. The RTXM’s taxable income can be found in the company’s income statement of the financial accounts. As RTXM’s total income grows, the § revenue the government receives through taxation. Also, if the government has access to the staff wage information, they can be sure RTXM is complying to their obligations.
The Balanced Scorecard looks are for perspectives of performance: financial, customer, business processes, and innovation and learning. While traditional financial measures report on what happened last period with no relation to how the company can improve, the balanced scorecard provides an overall view of performance in the company, with both financial and non-financial measures.
R.S. Kaplan and D.P. Norton (1995) describe the balanced scorecard as a “comprehensive framework that translates a company’s strategic objectives into a coherent set of performance measures”. This management system can motivate improvements in critical areas such as product, customer and process.
The financial perspective can be measured in many different ways, the most important being the company’s profit margin ratio. With this, RTXM’s financial health and long-term visibility can be measured. If a company is not profitable, it will eventually become insolvent or may require liquidation. The profit margin ratio measures a firm’s profitability against the number of sales generated. The greater RTXM’s ratio, the stronger it is. It can also be used to measure the company’s ability to manage expenses. A high expenditure relative to revenue can indicate the company is struggling to keep low costs and is an indication that costs need to be under better control.
One of the main objectives of a business is to deliver value to its customers. Customer satisfaction is a main driver for future sales, and is the foremost measure of how products supplied by RTXM meets are surpass customers’ expectations. It provides the managers with a metric on how they can improve their business when it comes to price, product quality and experience instore and online.
The number of orders without disruption is a very important factor when looking at internal business processes. It measures the performance and productivity of an organisation. Disturbance in orders can lead to a longer wait time and an unsuccessful shopping experience. The fewer disruptions in a consumers shopping experience can lead to greater satisfaction as well as an increase in sales and an increase in productivity in RTXM workplace.
By monitoring the training efforts of new employees, the company managers can measure how well the employees developed the required competencies, if they are transferred to the workplace, and the impact of these competencies in workplace performance. Valuing the learning and innovation through evaluating the training of new employees, managers can decide whether the objectives of the learning experience were met and how it will improve the company’s performance.
Super Cheap has several financial and social benefits, though the costs of this company goes against the values of RTXM. Super Cheap offers competitive prices with a quick delivery on a large product range. Although the supplier can provide job opportunities in the country of Bangladesh, the labour conditions are a major issue with child labour, long hours, low wages and health and safety hazards. A few thousand liters of water are consumed by Super Cheap and then polluted into the local river with a large negative impact on the community. In this instance, because there is customer awareness on the companies CSR, I would advise going against Super Cheap because certain costs outweigh the benefits. If the company was to hire Super Cheap as a supplier, they would honor their promise of a low price but go against their consideration of sustainability agenda.
The managers of RTXM feel that Green Fashion, on the other hand, aligns with similar values and ethically sources their materials while promoting a work life balance. Although this company takes into account sustainability, profits would be sacrificed as Green Fashion can’t provide products from a limited range as quickly or as cheaply as Super Cheap can.
D. Turker and C. Altuntas (2012) discussed a change in focus on corporate social responsibility to the supply chain due to imposed pressures from consumers and competitors.
As a long term strategy, companies should adapt to changing consumer preferences and attitudes towards sustainability. In order to better the company’s strategic development, the CEO should hire Green Fashion as their supplier.
Companies that demonstrate a commitment to various causes important to consumers and the community, can improve their public image by publicizing their efforts. However, if RTXM decides to go against their published sustainability goals, it will be unethical. They may find the company profile is now viewed negatively and is less desirable. Customers may be happy to buy a product at a slightly higher price if it means that the company is supporting safe and desirable practices.
The life cycle analysis can address social and environmental impacts generated across the life sequence of a good or service. Each phase creates different impacts on where improvements can be made or benefits can be maximized.
Sustainability is considered a vital issue in the clothing manufacturing industry because of large proportion of emissions from fabric production. The manufacturing process could be arguably the most detrimental stage of the product life cycle for shirts. In this stage, there are large amounts of pollution into the environment, resulting from high electricity usage and the dyes that are used while attempting to make the material more attractive. To minimize this effect, manufacturers would need to enhance the recycling of energy and which can include the installation of solar panels to their company and other energy-saving provisions. However, the manufacturing industry also can provide lots of jobs to locals. In order to keep up with emerging trends, such as automation, and maximize this benefit, employers need to be able to provide training to their employees to boost their skill levels and knowledge of the process.
The International Journal of Life Cycle Assessment completed a study to “reveal that clothes reuse can significantly help reduce the environmental burden of clothing”. This is due to the reduced need for the manufacturing of new clothes. If companies produce higher quality t-shirts for similar pricing, it can last longer and be more durable, maximizing this effect without decreasing sales.
A determent of most t-shirts is that when washing the good after use, the colours can run or bleed into the water. Once the water is drained, the dyes, along with the chemicals used for washing, is then directed into the environment, polluting the water.
Consumers can minimize this effect through washing shirts in cold water which will reduce the probability of colour transferring and held the product last longer.
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