Sustainable Inventory Management in Hotels

Introduction

Business organizations across the world now face increasing pressure from the government, customers, and stakeholders to demonstrate corporate sustainability. Sustainability is based on the concept that the consequences of people's activity and organization's operations that meet the needs of this generation today should not negatively impact the next generation’s future needs (United Nations, 1987, p. 24). However, the term “sustainability” has been interpreted in many different ways. A survey of more than 1,500 executives and managers worldwide revealed a wide variety of sustainability definitions. Some focused only on environmental impact, while others integrated many aspects such as economic, societal, cultural, and personal implications (Bern et al., 2009). By integrating sustainability within their operations, corporations not only demonstrate their responsibility to the world and the next generations, but they can also improve financial performance (Klassen & McLaughlin, 1996), gain customer loyalty (Lee et al., 2017), establish corporate reputation (Kim et al., 2015), and increase competitiveness (Ruiz Molina et al., 2022).

Sustainability management includes formulating, implementing, and evaluating the decisions and actions related to sustainable practices for both the environment and socioeconomic system. These decisions and actions are made at the individual, organizational and societal levels (Starik & Kanashiro, 2013). Many businesses achieve a sustainability orientation by focusing on long-term goals related to the well-being of the environment, society, and economy. Using institution theory, sustainability is defined within an institution's environment, including a degree of environmental regulation, societal expectations on organization responsibility, and national business systems that vary across countries (Song, 2020).

John Elkington coined the term “Triple Bottom Line (TBL)” in 1994 (Elkington, 2004). TBL, also known as “People, Planet, Profit (PPP),” uses three indexes---social (people), environmental (planet), and economic (profit) to measure a firm's sustainability (Goel, 2010). Well-known organizations such as Shell, AT&T, Clorox, Toyota, Timberland, and Dow Chemical have used the term TBL in their annual report and other press releases (Norman & MacDonald, 2004; Dhiman, 2008). Therefore, the TBL concept is regarded in operations management as to how sustainability is implemented (Kleindorfer et al., 2005). Sustainable operations management incorporates social, environmental, and economic responsibilities into the company’s culture, strategy, and operations with the purpose of sustainable performance achievement.

In operations management, social sustainability means that an organization’s business practices should both be fair to stakeholders and engage in activities that give back to society. For example, ensuring employees and people in the surrounding community have a good quality of life, encouraging diversity in the workplace, engaging in corporate social responsibility (CSR) programs, and so forth. Environmental sustainability is related to the efficient use of energy recourses, reduction of waste and pollution, and minimizing consumption of harmful materials, and so forth. Economic sustainability refers to the business practices that concern long-term financial performance and cost-efficiency. Typically, costs in this context are operationalized as production and service costs, such as the costs of outsourced goods and services, recycling, inventory holding, etc.