greening the supply chain - final

8/3/2019 Greening the Supply Chain - Final

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Greening the Supply ChainGroup 9-B

Rahul Agarwal B10101

Rajdeep Choudhuri B10103Riddhi Mazumdar B10104

Sahil Ahuja B10105


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Definition

GSCM includes integrating environment thinking into supply chain

management, including product design, material sourcing and selection,

manufacturing processes, delivery of the final product to the consumers,

and end-of-life management of the product after its useful life. Srivastara, 2007

Green supply refers to the way in which innovations in supply chain

management and industrial purchasing may be considered in the context

of the environmentGreen, et al (1998)

The practice of monitoring and improving environmental performance

in the supply chain Godfrey, et al (1998)


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Definition

Takeaways:

Range of author focus on green supply chain management

Variation in the purpose of green supply chains

Reactive monitoring of general environmental management

programs Proactive practices, e.g.: incorporating innovations

Reasons?

Foundational elements are relatively new areas of study andpractice

Corporate environmental management

Supply chain management


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Definition

In summary:

Adding the green component to supply chain management involvesaddressing the influence and relationships of supply chainmanagement to the natural environment.

GSCM = Green purchasing + Green manufacturing/materialsmanagement+ Green Distribution / marketing + Reverse logistics.


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Development of GSCM

The quality revolution in the late 1980s and the supply chainrevolution in the early 1990s have sparked businesses to becomeenvironmentally conscious

Since the early 1990s, manufacturers have been faced with pressure to

address Environmental Management (EM) in their supply chains Global market demands and governmental pressures are pushing

businesses to become more sustainable

Companies are starting to view GSC as a strategic analysis tool.


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Green Supply Chain Framework


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GSCM Principles

RawMaterialExtraction

TransportManufacture

Transport Retail/ConsumerUse

Transport DisposalDesignConcept

Typical Supply Chain Scope

Designing the supply chain concurrently with the product is asupply chain managementbest practice.

Environmental Life Cycle:The Product Life Cycle Is The Basis Of Green Supply ChainManagement.


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Environmental Life Cycle:The environmental impacts of each LC stage are examined forreduction.


TransportManufacture

Transport

Retail/ConsumerUse

Transport Disposal

AirWaterWaste

Air AirWaterWaste

Air AirWaterWaste

Air AirWaterWaste

Impacts

WaterEnergyInputs WaterEnergy

DesignConcept

Energy Energy Energy

GSCM Principles


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Green supply chain best practices focus on the business resultsfirst:

Align green supply chain goals with business goals

Evaluate the supply chain as a single life cycle system

Use green supply chain analysis as a catalyst for innovation

Focus on source reduction to reduce waste

GSCM Best Practices


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System View of Environmental Life Cycle:Evaluating the supply chain as a system leads to life cycleoptimization.

RawMaterial

Extraction

Transport Manufacture TransportRetail/Consumer

Use

Transport Disposal

Product $WasteOutputs:

Raw MaterialInputs: Energy

DesignConcept

$

Maximize the good

outputs.

Minimize the bad

inputs and outputs.

GSCM Best Practices


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Green supply chain management is a driver for processimprovements

In general, pollution and waste represent incomplete, ineffective, or inefficient useof raw material.

Green supply chain analysis provides an opportunity to review processes, materials,and operational concepts.

As with continuous improvement programs, green supply chain analysis targets:

Wasted material

Wasted energy or effort

Under-utilized resources

Source: Green and Competitive, Proter and van der Linfde, HBR, Sept.-Oct. 1995, Environmental Supply ChainManagement, Carter and Narasimhan, CAPS Research, 1998

Identify the wastestreams

Measure or identifythe opportunity costof the waste

Create innovation vs.treatment bias towardwaste reduction

Green Process Improvement Approach

GSCM Best Practices


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Focusing on source reduction programs drives higher valueimprovements

Waste Reduction Opportunities in the Life Cycle


Transport Manufacture Transport Retail/ConsumerUse

Transport DisposalDesignConcept

Reduce Reuse/Recycle DisposeControlTechnology

Low

HighPotential for life cyclecost savings

Cumulative lifecycle costs

GSCM Best Practices


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Green supply chain efforts need to rise above the cost centerview

Green supply chain projects need to be clearly defined in terms of the businessvalue to the organization.

Clear value will gain senior management support.

Clear value will help secure buy-in from other organizations

Environmental programs are viewed as business cost centers.

Environmental, safety, and health (ESH) resources are often scarce in anorganization.

ESH offices are targeted early during cost cutting programs.

ESH offices have difficulty articulating their business value. The inability to articulate the value of green supply chain effort in business

terms lowers their profile.

Many executives have misconceptions of how green supply chain efforts willimpact their operations.

Without a clear business value proposition, it is difficult to get executive

support for projects.

GSCM Best Practices


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Use tools such as GreenSCOR to help define and analyze GSCproblems: GreenSCOR is a modification of theSCOR modelthat includesenvironmental elements.

SCOR Model

Environmental

Management

GreenSCOR Model

GreenSCOR modifies theexistingSCOR structure toinclude environmentalprocesses, metrics, and bestpractices. GreenSCOR maintains the

integrity of the currentSCORmodelby adding to the existingelements.

Supply Chain OperationsReference (SCOR) has 3 pillars- Process Modelling- Performance Measurement- Best Practices

GSCM Best Practices


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Phases in Normal Supply Chain

Plan Buy Make Move Sell

GSCM Model

This phaseinvolves whichproduct to makeand whether itwould be

stocked, MTO,ETO?

Buying materialby differentsupply chainstakeholders tomake the

product

Making of theproduct

Moving theproduct usingthe distributionnetworks,storehouses,

warehouses

Selling the finalproduct to theend customer


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GSCM Success Stories

General Motors reduced disposal costs by $12 million byestablishing a reusable container program with their suppliers.

Commonwealth Edison: Produced $50 million in financial benefitsfrom managing materials and equipment with a life-cyclemanagement approach.

The Dutch flower industry greened its production to increasethroughput. Fertilizer in the water is recycled through the system to

reduce waste. Producers were able to increase output per space andreduce costs

USPS worked with direct mail vendors to reduce supply chain costand waste. Estimated savings were $500 Million (1997)


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GSCM Success Stories

Texas Instruments: Saves $8 million each year by reducing itstransit packaging budget for its semiconductor business throughsource reduction, recycling, and use of reusable packaging systems(20% annual savings).

In early 1990s Xerox launched a new initiative to take back usedcopiers as a source of material for new machines. As a result 70-90% (by weight) of machines were reused. This helped saving 144million pounds annually

Pepsi-Cola: Saved $44 million by switching from corrugated toreusable plastic shipping containers for one liter and 20-ouncebottles, conserving 196 million pounds of corrugated material.

Dow Corning: Saved $2.3 million by using reconditioned steeldrums in 1995. Also conserved 7.8 million pounds of steel.


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GSCM Pioneers

California based Toyota Material Handling has been named as oneof the 25 Inaugural Green Supply Chain Partners by InboundLogistics magazine. Toyota has been the number one selling lifttruck supplier in the U.S. since 2002.

3M which is known for innovation is among the leaders for usingenvironment friendly measures in Supply chain

Wal-Martsaves millions of dollars annually by using green

initiatives in its supply chain


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Sustainability of Resources

GSCM helps in proper and effective utilization of availableproductive resources of organizations

Green input resources for environmental friendly production

process to produce desired outputs

Increased efficiency

Effective management of suppliers leads to reducedtransaction costs, recycling and re-use of raw materials

Wastage reduction results in reduced handling expenses,lower raw material costs and fines

Benefits


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Benefits

InnovationUse of cleaner technologies, process innovation, and wastereduction often results in technologically advanced andenvironment friendly products competitive advantage

Improved product qualitySupply chain partnerships help maintain relationshipsbetween buyers and suppliers leading to increased control overproduct quality

Brand ImageGood environmental performance enhances the brand image ofa company among all the stakeholders


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StandardsBusiness CaseDevelopment

Communication Implementation

Challenges


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Challenges

Standards

Conformity to several standards like EPA, Greenhouse Gas Reporting,Climate Change Interpretive Guidance are required

Regulatory requirements and reporting standards vary acrossnations

Identifying the emissions and other sustainability metrics to bereported --whether to an outside organization, governmental body orshareholders is a major challenge

Business Case Development

Developing a strong business case depends on finding the rightproblems

Capturing the appropriate data for the same is difficult - varyingregulatory requirements

In many cases immediate benefits are not reaped and negatively

impacts the profitability of the organizations


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Communication

Organizations have to develop a communication strategy early inGreen Supply Chain planning process

Stakeholder engagement is dependent on clear communication of thebenefits across the supply chain

Implementation

Redesigning the processes ,products, disassembly lines planning andset up, waste collection and recycling modelling involves highinvestment upfront

Difficulty in identifying the standards to be followed across thesupply chain

Trade-off between green requirements and lean practices

Challenges

greening the supply chain - final

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