Scm green

LSCM 5043 Supply Chain Management

Sustainable / Green Supply Chain October 2014

Think Green

Prepared by Mazen Alama

Contents Introduction

• Supply Chain Sustainability

• New thinking for future

• Introducing & developing sustainable KPIs to SC ( Walmart )

Sustainable Supply Chain (Environmental Aspects)

• Carbon footprints management in SC

• Low Carbon Economy (LCE)

Sustainable supply chain (Social Aspects)

• Supply Chain Social Sustainability (SCSS)

• GSCF framework

• SCSS What is next ?

Think Green

• Supply Chain SustainabilityDrivers

Barriers

• New Thinking For Future

Future Supply Chain(s)

The 7 key solutions.

• Introducing & developing sustainable

KPIs to SC (Walmart Case Study)

Introduction

What is “Supply chain sustainability” ?

Definition (UN Global Impact ): the management of

environmental, social and economic impacts, and the

encouragement of good governance practices,

throughout the lifecycles of goods and services.

Environmental ,social and economical issues have become more relevant in

modern industry.

Organizations need to focus on how to make environmentally sound supply

chains.

Objective : to create protect and grow long-term

environmental, social and economic value for all stakeholders.

In this presentation we will focus on both environmental and

social aspects of the Green Supply Chain

Supply Chain Sustainability

Internal Drivers :

Reduce costs and wastes.

Investor pressure.

Long term returns.

Manage economic risk.

Law and Regulations:

- Regulations and legislations

compliance.

- Leverage government programs.

- ISO 14000 certification.

External Drivers :

Improve quality and efficiencies.

Employee involvement.

Improve learning and innovations.

Customers:

- Pressures by customers to green SC.

- Customer standards, demands and

needs.

- Marketing Pressures.

- Product differentiation.

Drivers

External Drivers

Competition:

- Improve competitiveness.

- Improve performance.

Society:

- Stakeholder encouragement.

- Publicity and public pressure.

- Reduce risk of consumer criticism.

- Pressure by environmental advocacy

groups.

Suppliers:- Collaborate with suppliers.

- Supply integration.

Other drivers - Strategy.

- Energy and Resources.

- Infrastructure and services.

- Fair trade.

- Climate.

- Human Resource.

Continue…

“ We can help our customers in becoming “greener” to satisfy

stakeholders’ requirement and reveal potential for increasing

efficiency of their supply chains.”

Barriers

Cost concern.

Lack of understanding and awareness of

integrating green into SCM.

Reducing costs at expense of green

practices.

Poor organizational culture and scarcity

of experiences and training .

Lack of management commitment and

support.

Lack of initiatives and innovations.

Shortage of resources or infrastructure .

Lack of legitimacy and related

laws and regulations.

Perceived lack of government

support.

Lack of innovation within the

supply chains.

Poor stakeholder commitment.

Difficulties to exchange

Information.

Industry specific barriers.

Lack of customer demand.

Lack of public awareness.

External Barriers Internal Barriers

Sustainability is the key to future supply chain improvement

The Future Supply Chain projects should address

the sustainability challenges that will lead

companies to change their operation considering

the following sustainability parameters :

• Reduction in carbon dioxide emissions

• Reduction in energy consumption,

• Better traceability and less traffic congestion,

• Also considering the traditional measures like:

On-shelf availability.

Cost reduction.

Financial performance.

“Serving Consumers in a

Sustainable Way,”

“ Regulations ,resource scarcity,

climate change, security, require new

thinking, new approaches and new

collaboration on infrastructures.“ José Luis Duran

“The future supply chain report makes a strong case for change by identifying the innovation

that currently exists in the form of new solutions, leading practices, example supply chains

and new ways to calculate the impact of the new parameters on the supply chain.”

Alan George Lafley

How the future SC driven by sustainability looks like ?

• The future model will be based on multi-partner

information sharing among key stakeholders.

• Collaborative warehouses where multiple

manufacturers store their products.

• Collaborative transport from the collaborative

warehouse will deliver to city hubs and to regional

consolidation centres.

• Warehouse will be reshaped to function as hubs.

• Non-urban areas will have regional consolidation.

• Final distribution to stores, pick-up points will be via

consolidated deliveries using efficient assets.

What are the probable potential impacts ? Reduction in transport costs per pallet.

Reduction of handling costs per pallet.

Reduction of lead time.

lower CO2 emissions per pallet.

Improved on-shelf availability.

The new way of design

should consider

sustainable parameters

like carbon dioxide

emissions reduction,

reduced energy

consumption, better

traceability and reduced

traffic congestion.

• In-Store Logistics: in-store visibility, shelf-ready products, shopper interaction.

• Collaborative Physical Logistics: shared transport, warehouse and infrastructure.

• Reverse Logistics: product and packaging recycling, returnable assets.

• Demand Fluctuation Management: joint planning, execution and monitoring.

• Identification and Labelling.

• Efficient Assets: alternative energy, switching modes, green buildings.

• Joint Scorecard and Business Plan.

How companies can adopt new SC (The 7 Key Solutions )

Key concepts :

Information sharing.

Collaborative warehousing.

Collaborative city distribution.

Collaborative non-urban distribution.

Establish buy-in on the vision by a group of key

stakeholders (such as leading retailers and

manufacturers, mayors of big cities).

Check the concept’s business case with the

involvement of all key stakeholders.

Pilot the concept (or possibly leverage and

enhance existing pilots).

Evaluate the implementation and share learning.

Essential steps for moving to collaborative SC

Introducing and developing sustainable KPIs to Supply Chain

Case Study (Walmart) : Walmart is one of the companies that succeeded to improve

the sustainability of the products by creating a more transparent supply chain, accelerating

adoption of best practices, driving product innovation, and providing customers

transparency into the products they buy.

As part of sustainability index, Walmart uses a set of Key Performance Indicators (KPI)

in the form of questions to assess and track performance towards addressing the critical

sustainability issues in the following product categories :

Laundry Detergent.

Showering Products.

Surface Cleaner categories.

Walmart buyers will use the scores from the KPI Questions, as the primary tool in

their purchasing decisions to help drive efficiency, risk mitigation, innovation, and

sustainable practices throughout Walmart’s supply chain.

Many companies have developed different type of KPIs in their efforts to develop

sustainable methods in their supply chain(s) .

Walmart has built its KPI Question Framework to highlight the following Impact

Groups :

• Climate: i.e. greenhouse gas emissions , energy tracking.

• Human Health : pollutants that affect human health.

• Ecosystems : pollutants that affect habitats.

• Resources : inputs required to manufacture and distribute products.

• Workers : ethical labour practices.

The score for each KPI/ question is calculated based on the weight given to that KPI

which is based on the number of Impact Groups that particular KPI references.

From the calculated scoring, Walmart was able to evaluates its suppliers’

engagements on sustainability.

The Sustainability Index Scoring Methodology in Walmart is based on the

environmental and social impacts of products within specific KPIs/ Question

Frameworks.

Scoring and Outcomes

The charts illustrate the Sustainability

Index scoring methodology (for

Walmart).

It highlights each Impact Group’s

relative scoring weight for the three

product groups.

Sustainable Supply Chain (Environmental Aspects)

• Carbon Footprints Management in SC

Life Cycle Analysis LCA

Benefits and Challenges

Carbon Emission Why and How to reduce

• Low Carbon Economy (LCE)Energy efficiency and renewable energy

Other Methods

• Emission Reduction and Business

Successful Stories

Environmental

Managing carbon footprints leads to Sustainable Supply ChainCarbon Footprints = Global Warming = Climate change

Global warming is a direct result from increasing CO2 in the

atmosphere. It is recognized as one of the largest challenges

our world is facing in this century.

Stop rising the

temperature of

the Earth…

Pleaaaaaaase

Global CO2 emissions by

sector 2008

The aim of Carbon Management in supply chain

is to help companies to understand systematically

the business risks and opportunities associated

with climate change.

Carbon Footprints Management in SC

No business will be left

unaffected by the impacts

of climate change !!

The carbon footprint of a product is the carbon dioxide emitted across the

supply chain for a single unit of that product.

Supply chain approach can be used to find new ways of reducing carbon

emissions the same way it can be used to deliver financial benefits.

Companies are able to manage carbon emissions and increase profits at the

same time by building and then reducing the carbon footprint of their products

Managing the carbon footprints of products across the supply chain

Managing the carbon footprint of a product means minimising the carbon

emissions required to deliver that product to the end consumer

s

There is potential to find significant emissions reduction opportunities and

large financial benefits by reducing the carbon footprint of the product

Example : Schematic of the supply chain of a can of cola with proportional carbon

footprint starting from raw material until disposal.

Green supply chain approach has the

potential to unlock significant emissions

reductions and large financial benefits

by reducing the carbon footprint at an

individual product level.

How companies can reduce carbon emissions and mitigate climate change ?

Why to reduce carbon emission in business view ? Why

Managers should think Green ?

Lower carbon emissions come along with lower

overall logistics costs.

Win-Win Approach for both customers and

environment.

Achieve sustainable supply chain.

Greener is usually

Cheaper SC Efficiency = Lower

CO2= Lower costs

Life-Cycle Analysis (LCA)

Carbon Life-Cycle Analysis(LCA):

The process of evaluating the

effects that a product has on the

environment over the entire period

of its life cycle…

Key Aspects of LCA:

Identifying and quantifying the environmental loads ,the energy and raw

materials used in addition to emissions and wastes consequently released

Assessing the potential environmental impacts of these loads.

Assessing the opportunities of environmental improvements.

Carbon management in supply chain Methodology based on LCA

Step 1 : Initial analysis and engagement• Engage the customer (specially the lead clients).

• Agree specific product supply chain(s) ,the scope and boundaries

of the study.

• Build supply chain process map and identify major raw materials.

Step 2 : Building the carbon footprint structure

• Identify key supply chain companies and contacts (make introductions).

• Collect energy and emissions data and information (focusing on energy intensive

stages across the supply chain).

• Construct a mass balance for the supply chain, (what goes in must come out) for

raw materials, waste, energy and emissions.

• Construct carbon footprints, showing emissions by process/supply chain stage.

Step 3 : Opportunity identification and prioritisation• Highlight the sources of high emission and find emissions reduction

opportunities.

• Evaluate impact of opportunities on both carbon and cost.

• Plot opportunities on cost-carbon matrix to prioritise those with high carbon and

high cost-saving potential.

Step 4 : Presentation of results and implementation planning• Identify next steps to implement change within the supply chain.

• Present carbon footprints and reduction opportunities assessment to all

supply chain stakeholders.

• Support ongoing implementation steps.

Challenges Benefits

The methodology allows the inclusion of

emissions from the product whole life-

cycle resulting better carbon savings

beyond the scope and better sustainability

in SC.

It helps explain the existence of particular

processes and emissions sources.

It engages new companies in the task of

reducing those emissions and associated

costs.

It allows forward-thinking companies to

develop low-carbon products to capture

new markets and generate higher profits.

The confidentiality of data as a key

consideration for all companies.

The results are not necessarily

applicable to the industry as a

whole. Specific companies need

specific processes

The opportunities are typically more

fundamental than simple energy

efficiency changes and so are likely

to be harder to implement.

Low-Carbon Economy (LCE)

A low-carbon economy (LCE ) is an economy based on low

carbon power sources that therefore has a minimal output

of greenhouse gas (GHG) emissions into the environment .

Why low carbon economy ?

• Avoid catastrophic climate change.

• Push towards more advanced zero-carbon economy.

• Create and maintain sustainable approaches in industry.

The transformation to a low-carbon economy will require involving all sectors of the

economy (i.e. services, agriculture, industry and transport—around practices

…..etc.) . Also by developing technologies that promoting energy efficiency.

Improving energy efficiency is the best way to reduce GHG emissions

Energy Efficiency and Renewable Energy can displace fossil fuels

energy ,meet the global energy demand and reduce carbon dioxide

emissions.

Energy Efficiency and Renewable Energyto achieve LCE

Renewable Energy is the energy that comes

from natural and renewable resources such as

sunlight, wind, rain, tides, geothermal heat ...etc.

This energy is a good example of LCE.

Heat is one of many forms of "energy

wastage" that could be captured to

significantly increase useful energy

without burning more fossil fuels.

Other methods used to achieve LCE

Combined heat and power (CHP) is a technology

which by allowing the more efficient use of fuel will at

least reduce carbon emissions.

Nuclear Power and/or the proposed strategies

of Carbon Capture and Storage (CCS) have been

offered as the primary means to achieve the LCE.

Smart Grid :solar and wind energy for base load with hydro and biogas for make

up or peak load.

Emission Reduction and BusinessWhere are the emission reduction opportunities in business?

• Change form of energy i.e. electricity to gas.

• Increase in renewable energy usage with

new infrastructure.

• Decrease waste volumes.

• Re-engineer manufacturing practices and

improve efficiency.

• Include energy / carbon criteria in

purchasing / supplier choices.

• Take energy/carbon into design criteria.

• Change product design configure and

material and change technology with

more energy efficient.

Here are some companies which have achieved LCE by adjusting their supply chain

to carbon neutral businesses.

Successful Stories

projects being pursued by business to reduce energy and carbon emissions.

The cost saving from these energy reduction are :

Qantas Airways LtdProject : to replace more than 7000

fluorescent light fixtures with 6625 energy

efficient light in 3 buildings.

Energy saving : 1434 MWh p.a.

GHG savings: 1532 t CO2-e.

Kellogg (Aust) pty LtdProject : to improve the energy efficiency of

cereal production through the monitoring of

energy use & performance of factory

equipment.

Energy savings 1564 MWh p.a.

GHG savings 2712 t CO2-e.

Sustainable supply chain

(Social Aspects)

• Supply Chain Social Sustainability (SCSS)Framework Of Supply Chain Sustainability

• GSCF framework 8 Supply Chain Processes of GSCF Framework.

• SCSS What is next ?

Supply Chain Social Sustainability (SCSS)

Social sustainability remains underdeveloped in many companies both in practice and

literature. The consequences of disregarding social sustainability can be harmful to the

company ,destructive to its customer goodwill, and even result in its demise.

Benefits of achieving social sustainability : Cost reduction.

Productivity improvement.

Sources of potential competitive advantage.

Improved reputation.

Innovation and differentiation.

The social dimension of

SSCM deals with aspects

that affect human safety,

welfare and community

development in the

processes of supply chain.

Social Sustainability in SC :it is the integration and achievement of

social goals in the management of supply chain processes to

improve quality of life for stakeholders and the community at large.

Employment Practices Community relations

Ethics Product

responsibilities

Supply Chain Social

Sustainability SCSS

Framework Of Supply Chain Sustainability

Most social sustainability research's are

focusing on employment practices, ethics

and community relations, with product

responsibilities. As for corners that form

SCSS.

There are many frameworks can be used to address social sustainability in

supply chains like “GSCF framework” and the Supply Chain Operations

References (SCOR) framework.

However, SCOR method has notable limitation in this regard due to limited

scope of the “SCOR model”. (i.e. a lack of a customer-oriented interface and

research , also product development activities for example).

Supply Chain Processes OF The (GSCF) Framework

To address how firms integrate social supply chain processes to attain

maximum value, Global Supply Chain Forum (GSCF) researchers have

developed a framework categorizing supply chain management principles

into eight critical business processes that span an organization’s functions.

1. Customer relationship management (CRM) provides structure for

how the relationships with customers are developed and maintained.

2. Supplier relationship management (SRM) provides structure for

how relationships with suppliers are developed and maintained.

3. Customer service management (CSM) is the firm’s face to the

customer. It seeks to proactively address potential disruptions and

service failures.

4. Demand management (DM) balances demand and supply through

planning and flexible accommodation.

8 Supply Chain Processes of GSCF Framework.

5. Order fulfilment (OF) includes all activities to design a SC network, plan

for the delivery , and execute logistics activities.

6. Manufacturing flow management (MFM): includes all activities necessary

to obtain, implement, and manage manufacturing flexibility and move

products through the plants.

7. Product development and commercialization : developing new products

and getting them to Market.

8. Return Management : managing all activities related to returns , reverse

and logistics.

This table illustrates

some results by using

GSCF analysis across

the social sustainability

dimensions and supply

chain processes.

Despite its importance there is still a significant

shortage of researches dedicated to social

sustainability.

A downstream focus on social sustainability and the

aspects of supply chain management related to the

product responsibilities are fertile areas for future

research.

Future research might consider the following valid

points :

What drives social sustainability considerations within supply

chain processes?

How SCSS can improve performance?

What factors may affect SCSS evaluation? How different

cultures can affects those factors ?

SCSS. What is next ?

Think Green

Green thinking and green solutions are the best approaches in dealing and

handling many global challenges (i.e. Global warming , Climate changes ,

Pollution, …etc. ) and also the best approaches to deal with many industry ,

manufacturing and business issues.

By thinking green, we need to develop a business culture of caring for the

environment, society and economy . This culture should be supported by

researches , actions and initiatives of both organisations and people.

In order to achieve this vision, we need to drive our businesses by

implementing sustainability in our practices , improving resource

efficiency with focusing on waste management . Also we need to

corporate social responsibilities , develop synergies through

strategic partners and create opportunities to achieve greener

facilities , greener businesses and greener people.

References

Australian Sustainability ,2011 online available at :

http://blog.australiansustainability.com.au/post/13085730801/understanding-the-good-chain-sustainability-in-supply

Accessed October 2014

M. Ovul Arioglu Salmona , A. Aycim Selam and Ozalp Vayvay , 2010 , SUSTAINABLE SUPPLY CHAIN MANAGEMENT:A

LITERATURE REVIEW available online at :

http://www.academia.edu/2063643/Sustainable_Supply_Chain_Management_A_Literature_Review

Pradeepa Jayaratne . Lee Styger, Nelson Perera ,2011, Sustainable supply chain management: using the

Sri Lankan tea industry as a pilot study, University of Wollongong , available at :

http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1181&context=gsbpapers

Accessed October 2014

Sreejith Balasubramanian ,2012, A Hierarchical Framework of Barriers to Green Supply Chain Management in the

Construction Sector, , University of Wollongong / Dubai available at :

http://ccsenet.org/journal/index.php/jsd/article/viewFile/19705/13625

Accessed October 2014.

Conversation and Efficiency , 2014 Online Available at :

http://nwcommunityenergy.org/biogeo/efficiency

Accessed October 2014

Members of the LCE , 2014 Online available at :

http://noco4-px.rtrk.com.au/low-carbon-economy

Accessed October 2014

Robert Nicholls ,2009, Prospering and profiting in Low carbon economy, NSW Department of state and Regional development

Available online at :

http://www.slideshare.net/Robitup/ctiprosperingprofitinglowco2150509?qid=5ffb7d68-db5e-4c04-9377-

0c0dd01760dc&v=default&b=&from_search=11

Accessed October 2014

Sustainability is key to supply chain development ,2008 , Online Article available at :

http://www.logisticsmanager.com/Articles/9525/Sustainability+is+key+to+supply+chain+development.html

Accessed October 2014

Walmart Sustainability Index , 2014, Online review available at ;

http://www.renewablechoice.com/assets/media/ScoringGuideLaundryShowerCleaners.pdf

Accessed October 2014

'Sustainable Aviation O2 Roadmap ,2008 Online available at :

http://www.sustainableaviation.co.uk/wp-content/uploads/sa-road-map-final-dec-08.pdf

Accessed October 2014

Carbon Footprints in the supply chain ,2006 Online available at :

http://www.carbontrust.com/media/84932/ctc616-carbon-footprints-in-the-supply-chain.pdf

Accessed October 2014

Low-Carbon Economy , 2014 , Online Available at :

http://en.wikipedia.org/wiki/Low-carbon_economy

Accessed October 2014

Ha H. Ta , Monique L. Ueltschy Murfield,2013, Mapping Social Sustainability In Supply Chain Processes: A Literature Review ,

Council of Supply Chain Management Professionals Educators’ Conference 2013 Available online at :

http://cscmp.org/sites/default/files/user_uploads/academia/downloads/paper5-general-research-track.pdf

Accessed October 2014

Carter, Craig R., and Dale S. Rogers. 2008. “A Framework of Sustainable Supply Chain Management: Moving Toward New

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Lambert, Douglas M., Sebastián J. García-Dastugue, and Keely L. Croxton. 2005. “An Evaluation of Process-Oriented Supply

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