KGA514 | Sustainable Systems | The Importance Of Systems Thinking

consists of apparel, cosmetics and jewellery. The report further shows that the consumer goods manufacturing companies cater to both the domestic market and international market (austrade.gov.au 2018). An analysis clearly shows that the manufacturing industry in Australia is experiencing growth in production which means that the sector would also demand more energy. A report by the International Energy Agency presents a serious concern regarding energy sustainability in Australia. The report clearly shows that due to Australia’s growing manufacturing industry, the energy sector is facing intense pressure. The volumes of petroleum and coal, which form a bulk of the energy requirements of the country are dwindling. These dwindling energy sources are making the manufacturing industry dependent on imports of energy sources which is increasing outflow of foreign reserves (iea.org 2018). This clearly shows that the manufacturing companies have to incur huge expenditure in acquiring energy to fuel their manufacturing operations.  This rising expenditure of acquiring energy resources eat into their profits and erodes their revenue. Thus, the manufacturing companies have to integrate their systems to streamline the processes to ensure that they utilise their fuel stocks to the optimum degree. This would lead to reduced wastage of energy and boost their sustainability in the economic perspective of systems thinking.

The system thinking can enable manufacturing organisations in Australia streamline their energy acquisition and consumption, thereby paving ways for energy security and sustainability. Lee, Bagheri and Kao (2015) point out that the systems of the manufacturing companies in general consist of several departments namely, production, research and development, purchasing, marketing, human resources department and finance departments. The apex management of these manufacturing organisations can embark upon systems thinking and integrate the operations of these systems or departments. This would enable them to obtain energy security and deal with the wicked problem of increasing energy expenditure, thus paving way for sustainability. The integration of systems can start with the marketing departments procuring orders from the clients. Castel and Church (2016) point out that the marketing departments of the manufacturing companies can obtain orders from the clients. The marketing staff can visit the clients to procure orders. Similarly, the marketing staff can obtain orders from the clients using the order procurement software packages. The departmental heads of the marketing department can then collate the orders received physically and online. They can place these orders before the apex management bodies in presence of the other departmental heads (Shi, Arthanari and Wood 2017). The apex management can then form strategies regarding the production of the finished goods according to the requirements of the customers or clients. The production departments can recognise the raw materials that would be required to manufacture the finished goods. The budgets should also outline the amount of energy that would be required to manufacture the finished goods both in terms of quantity and money. The production departments should also outline the plant and the human resources which would be deployed to manufacture the goods according the orders received. The human resource departments along with the production departments can recognise the current skills of the available human resources and point out any additional training which the staffs may require to produce the finished products according to the needs of the clients. The staffs may be also imparted additional trainings to upgrade their skills to operate the production processes more efficiently. This analysis shows that integration of these systems or departments within the manufacturing companies can enable these companies to streamline their production processes with the requirements of their clients. It is evident from this discussion that acquisition of raw material and machinery along with appropriately trained staff would enable the manufacturing firms in making their production process more efficient. The production department would as a result be able to make maximum utilisation of the available raw materials and energy sources to produce finished products as per the requirements of the clients. This would minimise wastage materials and energy sources, thus paving way for energy security within the manufacturing companies. This, it can be inferred from the discussion that thinking about the different systems and integrating them to produce finished products can enable the manufacturing gain energy sustainability.

Systems thinking can enable manufacturing firms to gain energy sustainability and reduce energy wastage which would boost their financial sustainability. The graph below that the four main energy sources which imndutrial sector of Australia consumes are coal, oil, gas and renewable sources of energy. The second graph shows that the manufacuring sector used a whopping 1114.4 petajoule energy in the 2015-16. It can be pointed out in the light of the above discussion that the present energy requirement of the manuifactirng sector is far more than the amount consumed in 2015-16 (businessinsider.com.au 2018). It can further be pointed out that the manufacturing sector in the country is highly dependent on non-renewable sources of energy namely coal and petrol. It can also be pointed out that the dwindling reserves of these resources within the domestic market and increasing dependence on imports from overseas are also only causing the prices of energy sources to increase (iea.org 2018). This means that the Australian manufacturing companies require to incur increasing expenditure to acquire these fuels. Mahmoudi et al.(2017) in points out that the manufacturing companies, especially the smaller companies often continue production of goods using outmoded plants. The management of these plants do not pay attention to integration of systems which leads to lack of coordination between departments like marketing and production. For example, the finance department often does not allocate sufficient funds to acquire appropriate plant and raw materials. The old-fashioned plants lose a lot of energy due to overheating and friction. They in addition are less efficient and produce less amount of finished goods consuming a lot of energy. The HR department in these organisations do not take initiative to train the manufacturing staff. The manufacturing staff as a result handle the fuel acquired at great costs inefficiently which ultimately leads to wastage of fuel (Milojevic, Pesic and Taranovic 2015). This analysis clearly

Figure 1. Energy consumption in Australia by type of fuel

(Source: energy.gov.au 2018)

Figure 2. Energy consumption in Australia by industry

(Source: energy.gov.au 2018)

The table below shows that around ninety seven percent firms in Australia belong to the small business category which have limited resources to integrate their systems with the clients ‘needs. They as a result waste a lot of fuel due to their using outmoded methods of product which is in turn the outcome of lack systems thinking within these organisations. However, considering the large of the small scale manufacturing firms and the impending deficiency of fuel, it cannot be refuted that system integration in these manufacturing units as well can play crucial role in Australian manufacturing sector becoming energy efficient (Li and Lin 2016). The management bodies of the small manufacturing firms can integrate their systems to encourage the different systems or departments collaborate while forming manufacturing strategies. For example, the finance department can allocate funds towards acquiring modern energy efficient plant to manufacture goods. The human resource departments in these small scale organisations can acquire new staff members or train the existing staff to operate the new energy efficient plant. This in the long run would enable the manufacturing units to utilise the available fuel more efficiently. This one would reduce their energy expenditure and reduce wastage of energy due to overheating of old-fashioned plants. Thus, systems thinking can enable the manufacturing firms in Australia gain economic leverage by saving the energy they spend on energy acquisitions.

Figure 3. Table showing number of small businesses in Australia

(Source: asbfeo.gov.au 2018)

Systems thinking can enable Australian manufacturing industry become environmentally sustainable (environmental perspective of systems thinking). The official website of the State of the Environment, Government of Australia points out that the production of the energy and consumption of energy in the manufacturing sector leads to immense pollution (soe.environment.gov.au 2018). For example, the production of automobile leads to emission of harmful chemicals and gases. Leaking of petrol from the automobile engines adds further the loss of fuel. The harmful gases, petrol and chemicals harms the environment. These manufacturing plants also release immense amount of waste products which further contributes to environmental pollution. The manufacturing companies can use systems thinking to deal with this challenge of energy sustainability. They instead of disposing their waste materials including unused fuel can recycle the same to generate more energy. The manufacturing plants can acquire efficient waste management plant which would enable them to recycle wastes. For example, the biodegradable wastes can be recycled to produce gas which the manufacturing firms can utilise to fuel their own manufacturing processes (Frazier 2014). The multinational companies can allocate funds to set up wind farms which would produce wind energy. These companies can as a result produce a part of their own energy requirements and reduce the huge expenditure they incur to buy fuel from energy producing firms. Recycling of wastes would reduce the harmful effect of the wastes. This would reduce the harmful effects wastes have on the society. Thus, systems thinking in the social perspective can enable the manufacturing units in Australia benefit the society by releasing less wastes. They in addition to utilising the energy produced by their windmills can also sell energy to smaller manufacturing firms which cannot produce their own energy. This analysis shows that systems thinking would enable the manufacturing sector in Australia gain energy security. First, these large manufacturing companies would integrate their entire manufacturing process right from strategy making to disposal of wastes. They consequently would be able to recycle their wastes to produce energy or set up wind farms to produce wind energy for their consumption, thus minimising their energy expenditure. Secondly, they can sell a portion of this energy to smaller firms, thus encouraging the latter to become more energy efficient. The final outcome of this systems thinking in manufacturing companies would be reduction of environmental pollution and attainment of higher degree of environmental sustainability.

The system thinking besides paving ways for attainment of energy sustainability in the manufacturing sector in Australia cannot be fully agreed to in spite of its benefits discussed above. According to Arnold and Wade (2015), systems thinking refers to the approach of creating solutions to business challenges by integrating systems or departments. Wang, Törngren and Onori (2015) do not contradict this opinion completely but points out a negative aspect of systems thinking. They opine that systems thinking results in integration of all the departments in the manufacturing companies which present challenges before both multinational companies and small scale manufacturing units. The first challenge which systems thinking poses before manufacturing companies is immense initial expenditure to implement it.The implementation of systems thinking in multinational companies requires use software and additional expenditure to acquire virtual conferencing systems for departmental heads to hold meetings. The multinational companies have geographically dispersed branches and have large number of departments. Thus, holding meetings with all the departmental heads is not always possible and is extremely time consuming. The requirement of involvement of departmental heads of all the departments make the decision making process less dynamic (Ricci, Rokach and Shapira 2015). Thus, though system thinking paves ways to gain energy sustainability, the immense cost of installation of setups to hold interdepartmental meetings adds to the cost of these companies. Moreover, installation of waste management plants and streamlining them with the manufacturing requires immense initial investments. As far as small manufacturing companies are concerned, installation of system thing and integration setup adds to their cost of operations. Implementation of system thinking strategies like acquisition of new plants puts strain on their limited financial resources. The second challenge which implementation of systems thinking presents before manufacturing companies is legal and technological complications. The firms often need to acquire more land to set up waste management plants which presents legal complications. Moreover, the recycling of wastes and generation of energy presents immense technological challenges before these manufacturing companies (Endsley 2017). These obstacles prevent manufacturing firms from adopting systems thinking in totality.

Conclusion:

It can be concluded that systems thinking can pave ways for the manufacturing sector in Australia to gain energy security. The manufacturing companies can achieve four benefits by implementing systems thinking process. First, they would be able to gain sustainability and energy security. The second benefit of the systems thinking is streamlining energy acquisition and consumption. The third benefit of gaining energy efficiency and reducing energy expenditures is the outcome of the previous two benefits. Finally systems thinking would enable the firms to achieve environmental sustainability and reduce their carbon footprints. However, implementation of systems thinking require holding of interdepartmental meetings. The entire system is very expensive and time consuming. Moreover, the additional requirement to put up waste recycling plants present legal and technological threats. These challenges daunt total implementation of system thinking in the manufacturing sector in Australia.

Reference:

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