International Conference on Production Research- America 2012 INDICATORS FORMULATION PROCESS FOR SUSTAINABLE OPERATIONS MANAGEMENT C.G. Machado*, E. Pinheiro de Lima**, S.E. Gouvea da Costa**, J.M.A.P. Cestari*, R.A. Kluska*, L.N. Hundzinski* *Industrial and Systems Engineering Graduate Program Pontifical Catholic Univeristy of Paraná – PUCPR, R. Imaculada Conceição, 1155, Curitiba, Paraná, Brazil. **Industrial and Systems Engineering Graduate Program Pontifical Catholic Univeristy of Paraná – PUCPR, R. Imaculada Conceição, 1155, Curitiba, Paraná, Brazil. Federal University of Technology – Paraná, Av. Sete de Setembro, 3165, Curitiba, Paraná, Brazil. Abstract The trend of globalization stimulated discussions concerning sustainability, creating a new context and, as a consequence, a new strategic operations vision related to the production of goods and services. Companies start to manage their processes seeking not to compromise the needs and interests of their stakeholders, adopting best practices in corporate governance and continuously assessing the impact of their operations on society and the environment in general, as well as on quality of working life in particular. This article purpose is to develop a sustainability indicators formulation process that could be applied to companies’ value chain operations, observing corporate governance best practices and the 3BL model, and taking as references a group of standards and guidelines based on the construction of socially responsible organizations, in relation to sustainable development: ISO 26000, ISO 14000, OHSAS 18000, SA 8000, ISO 9001, Global Compact and others. The methodology adopted is Cambridge’s Process Approach, in which the requirements presented by standards and guidelines set performance strategic objectives that could be converted into concrete actions that will be managed, evaluated and measured through sustainability indicators. These indicators are structured by performance measurement systems theoretical models integration, the insertion and categorization of the requirements referring to standards at the operations value chain context, and the structure of decision areas that bounds operations strategy. The validation of the formulated sustainability indicators consists of aspects regarding its consistency, accuracy, updatability and justification, together with its characteristics related to feasibility, utility and usability. Based on process application in a sustainable management innovation project, its usefulness in clarifying the standards requirements was verified. Additionally, a better view of the existent relationships between different standards, correlation between indicators, for measurement optimization and management was identified, in complement to a more direct association with the operations value chain. Therefore, the operations management based on indicators creates conditions for the continuous evaluation of the operations strategy in a sustainable development context. Keywords: operations management, performance measurement, sustainability, social responsibility, process approach. 1 INTRODUCTION When the concept of sustainable development was presented at the year of 1987 by the “Brutndtland Report” [1] as “[...] is development that meets the needs of the present without compromising the ability of future generations to meet their own needs”, not so much was known about how this concept would be incorporated into organizations’ strategies. The Triple Bottom Line [2], created in 1994, contributed to change from a theoretical sustainability to a practical one, representing an integrative model of social and environmental values to the classical economic measures, turning all these three dimensions measurable. Currently, as shown by an international survey conducted by MIT Sloan Management Review and The Boston Consulting Group [3], about 70% of the consulted organizations have already incorporated sustainability in their strategic agendas in the last six years, which demonstrates that sustainable management is still at an early development stage, searching for new models and best practices for its consolidation [4]. Accordingly to MIT [3], two-thirds of 4000 managers interviewed agree that the incorporation of sustainability principles into business model is a critical factor for competitiveness maintenance at present markets. MIT research results indicate that the movement of sustainability is on a crescent trajectory, where companies are not only seeing the need for new sustainable business practices, but seeing as well financial earning from this new management model. In this context, operations strategies are being modified. MIT study [3] indicates that a group of companies referred as "Harvesters" (31%), that did not simply stood on normal initiatives as natural resources economy and investment on new clean production technologies but that, effectively, changed their operations strategic models guided by sustainability. Porter and Kramer [4] observe that organizations must conduct their operations in a way that guarantees a good economic performance on the long run, investing on integrated environmental and social strategies that provide compliance with the variety of regulatory demands, operating licenses, business’ transparency and other demands from their stakeholders. Kleindorf et al. [5] based on the concept of sustainable development consider that the sustainable operations