how supply chain management enable greener world

7/31/2019 How Supply Chain Management Enable Greener World

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Copyright E2open, Inc. 2010

Thoughts on Carbon as the New Muda


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Agenda

Framing the Challenge

The Green Context of Supply Chain Operations

How New SCM Practices Can Enable the Green Trend

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Framing a Comprehensive Green SCM Strategy4


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The Need for a Paradigm ShiftAnd Why It Has NotTaken Place Yet!

The Imperative The Reality

The

Question /

Dilemma

Can Green & Lean Co-Exist?

Tell Me How Youll Measure Me, I Will Tell

You How I Will Behave!The Interpretation

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Why is Supply Chain Management a Good Starting Point?

Source http://www.eia.doe.gov/emeu/aer/pdf/aer.pdf

60%

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http://www.eia.doe.gov/emeu/aer/pdf/aer.pdfhttp://www.eia.doe.gov/emeu/aer/pdf/aer.pdf


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and yet, the Green SCM Revolution Remains Elusive

Fortune 500 22# of Fortune 500

companies that haveinitiated some Green

SCM strategy

# of Fortune 500companies that haveapproached this withtheir trading partners

0

JANUARY 2010

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Achieving this Paradigm ShiftRequires a Perception Change of CO2 as a Decision Variable

Defects Inventory Waiting Excess Motion

Over Production Over Processing Transportation

CO2 / GHG

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Carbon in the Business Environment Needs to be De-Mystified

Introducing Carbon as the 8th Muda

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7/27 Copyright E2open, Inc. 2010

There Are Some Good Signs

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Agenda




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Framing a Comprehensive Green SCM Strategy4



Where is the Carbon in the Supply Chain?

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Everywhere! Supply Chain activities create significant carbonemissions, making supply chain an important focus for clients

seeking to reduce their carbon footprint

Suppliers &

Manufacturers

Customers &Channels

Design for the

Environment

Carbon footprint

thinking throughout

product lifecycle

design

How can the total

network be

optimized

considering service,

cost, green

tradeoffs

What CO2 impact is

there from various

inventory concepts

& planning

methodologies

How can we best

measure a suppliers

carbon impact

(product, packaging,

upstream logistics)

and ultimately

compliance with

carbon reduction

requirement?

How should we

evaluate carbonoffsets?

What operations

strategy (facility

location, operating

model) provides the

best trade-off

between cost,

service, carbon?

Is there a role for

sustainable factory /

facility mgmt?

What distribution

network strategy

(facility locations,

sizes, transport

modes) provides the

best tradeoff of cost,

service and carbon?

How can packaging

be reduced and

recycled?

How can field service

operations reduce

carbon footprint

with better routing

and parts inventory

tracking?

Feedback loop to

engineering to

reduce impact

Various strategies to

reduce impactthroughout lifecycle

Flows: Product, Process, Information, Cash

SC Strategy Procurement LogisticsIntegrated Ops Integrated Ops

Plan Source Make DeliverDesignService &

End-of-Life

Asset Management

Finance

Sustainable facilities management: Green building & renewable energy; carbon footprint asset management; Asset utilization(Real-time data on energy usage; Carbon dashboard)

Paperwork Reduction; Environmental Cost Accounting; Environmental Tax Benefits Tracking

PLM



Carbon Distribution ModelCarbon Analysis needs to be seen from a total Product Lifecycle View

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Design &Sourcing

InboundLogistics

InternalOperations

OutboundLogistics

Serviceand Use

Time

SCM Carbon Distribution ModelPhased Product Lifecycle View

Our goal can be

formulated rather simply:

Lower the Outer Edge



On the Need to Embed CO2 as a New Operational Variable

Exhibit 1 Procurement Strategy Scenario

Volume

DistanceCarbon Impact

Unit Cost

Mexico

China

As-Is

To-Be

New Green Value Equation =

Actual Cost (Production + Transportation) + Corresponding Carbon Cost

ABC, Inc

Classic Value Equation =Least Production Cost despitethe Transportation Cost

ABC

ABC

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Exhibit 2 BOM and Routing in a CO2-Constrained SC

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Exhibit 3 Planning Noise & GHG Responsibility

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A Value Chain Network View

PrevailingView

Our View

Leverage +

What is a fabless company Carbon Footprint?What is its environmental responsibility?


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Noise in the Supply Chain is Neither Lean nor GreenThe Carbon Reverse Bullwhip Effect

Extended Supply Chain View

EndCustomers

Suppliers RetailersPlants

Caron

Buildup

Process

Classic

Bullwhip

Effect

True CustomerDemand

Inventory

Produced

Amount of

Inventory

Inefficiencies

Carbon

Produced

Amount of

Carbon

Inefficiencies

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The 3 Primary Supply Chain Variablestaken from a Green Perspective

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John D.C. LittleInstitute Professor

IInventory

LLead-Time

TThroughput

Suppliers

Customers

Lead Time

TRaw Materials

Component

SuppliersEMS Partners

OEMs / Brand

Owners Warehouse(s)

Retailers

Your Company

Cost and Environmental concerns are likely to create a trend for supply chain collapsing / localization

Incentives need to be put in place to encourage creation of local and sustainable supply chain networks

Observations


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Observation # 1

Local and Regional Models need to be

encouraged (less carbon footprint and less

inventory as a result of reduced lead

times)

Local

Model

Regional

Model

Global

Model

Which Leads Us to Some Interesting Observations

CCX

ECX

AP

OCE

Observation # 2

Proliferation of CO2 trading platforms will

delay properly tackling the problem Carbon trading should be approached as a

global commodity

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Agenda




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Framing a Comprehensive Green SCM Strategy

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A Green Supply Chain Requires a Holistic ViewSome Emerging Best Practices

Component

Suppliers

3PLs

EMS/CM/ODM

Partners

VMI Hubs

CustomersDistributors

Retailers

Supplier VMI

N-Tier ShortageManagement

N-Tier Rapid Planning

Multi-Tier Costing Supply ChainSegmentation

Command CenterCustomerSatisfaction

Supply ChainVisibility

CostReduction

InventoryReduction

Lead TimeReduction

Supply ChainVelocity

MetricsAlignment

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Green Supply Chain ManagementValue of a Network Approach

BOM AnalysisTier2+

Partner Selection

Channel / Distribution

Reverse Operations

Supply Substitutable

components

Sourcing choices

Location choices

Inventory policy Safety stocks

Lot sizes

ReplenishmentVMI/VMR

Packaging Package size options

Package recyclingoptions

Corrugated box

Energy Embodied Energy

GHG Regulatory $Impact

Transportation Modes

Shipment frequency

Load consolidation

Carrier routing

Processing Manufacturing process

Quality control

Processing Repair / refurbishment

process

Shipment process

Quality control

Processing Order fulfillment

Shipment process

QC process

Organizationalmanagement process

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Green Supply Chain ManagementImplementing a Network Approach

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Provide performanceKPIs to customers

Associate compliance toOrders & Inventory

Automate ComplianceData Collection

Sustainability &SC Integration


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Disseminating the MessageSample Supply Chain Maturity Framework

Companies in this zone have neither the supply chainreach nor the advanced planning capabilities to turnSCM into a competitive differentiator. Manycompanies from emerging markets fall in thiscategory

The Basic Quadrant

Companies in this zone have heavily invested inenterprise automation and planning solutions but yetto reap any significant benefits because of lack ofleverage or reluctance to embrace the required mind-set shift

Companies in this zone have managed to leveragetheir size or anchor position to build a multi-tierplanning model that still lacks advanced analytics to

handle complexity and provide visibility andresponsiveness

Companies in this zone clearly understand the needto reach across their supply chain spectrum tooptimize their operations leveraging advancedoptimization and business intelligence for superiorperformance

The Underachievers Quadrant

The Overachievers Quadrant

The Orchestrators Quadrant

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Applying the Supply Chain Maturity FrameworkThe Tale of Two Leading Companies

Start

IdealState

Phase I

Start

IdealState

Phase I

Company A Company B

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An End-to-End Supply Chain Command Centerand the potential to leverage for GHG tracking

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Agenda




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Framing a Comprehensive Green SCM Strategy

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12 Ideas to Make Your Supply Chain Greener

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Exploring the Ideas

Redesign the product Reconfigure Manufacturing Shift to Green Suppliers

Shorten Distances Alter service-level agreements Shrink packaging

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C i ht E2 I 2010

Exploring the Ideas (continued)

Plan for reverse supply chain activity Consolidate shipments Plan smaller routes

Start now: define a green strategyTake a life-cycle viewCoordinate with partners

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how supply chain management enable greener world

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