12/18/2015

GREEN SUPPLY
CHAIN MANAGEMENT
- Presented By-

Dr. Rudra Rameshwar

L.M. Thapar School of Management
Thapar University, Patiala (Punjab) India
e-mail: rrameshwar@gmail.com

PRESENTATION OVERVIEW
What is a Supply Chain Management?

SCOR Model

Why think Green SCM?

What is Greening the Supply Chain?

Green Supply Chain Principles
GSC as a strategic tool

Trends in Green SCM

Examples of cleaner technology
LEED
Global Eco-labelling Network
Environmentally Preferable Purchasing (EPP)
Carbon Footprint

Green Sourcing

Stanford Case study – “The Greening of Wal-Mart

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DEFINITION OF SUPPLY CHAIN MANAGEMENT

(SCM)
Mining, drilling Material Component Product Sale and
and harvesting production manufacture assembly delivery
Planning
Sourcing
Production
Inventory
Logistics

Supply Chain Management is about managing business activities and relationships

(1) internally within an organization,
(2) with immediate suppliers,
(3) with first- and second-tier suppliers and customers along the supply chain, and
(4) with the entire supply chain.

SCM has two dimensions:

• Coordinating the various business activities within a supply chain agent
• Coordinating the business activities between various supply chain agents

SCOR – PROCESS MODELING

Helps break down complex business processes & its
functionalities to better understanding of business.

5 Management processes in SCOR

Plan, Source, Make, Deliver & Return

SCOR deals with important factors of a business such as

Customer interaction from order entry to invoicing
All products & transactions from end to end supplies, suppliers
and equipment
Understanding demands and supplying goods
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SCOR DRIVES AN END-TO-END VIEW OF

SUPPLY CHAIN PERFORMANCE

WHY THINK GREEN ?

Why think Green ?
- Eco-efficiency saves money
- Customer demands
- Regulation ( US , Europe , the world)
- Recruiting and retaining talent
- Corporate citizen
- etc

Why now ?
- Can save cash immediately
- many firms have slack capacity
- Green economy , green collar jobs, green infrastructure

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NEED FOR GREEN….

Source : Going green - Sustainable growth strategies . PWC

2008

ASSESSING VALUE OF GREEN INITIATIVE

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ASSESSING VALUE OF GREEN INITIATIVE

Source: ATKearney Report

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KEY FINDINGS (A T KEARNEY)

WHAT IS A “GREEN” SUPPLY CHAIN?

Integrating environment thinking into supply chain management,
including
•Product design
•Material sourcing and selection
•Manufacturing processes
•Delivery of the final product to the consumers
•End-of-life management of the product after its useful life.

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Green Supply Chain Management (GSCM) is defined as "the process of

using environmentally friendly inputs and transforming these inputs into
outputs that can be reclaimed and re-used at the end of their lifecycle thus,
creating a sustainable supply chain”.

From cost compliance to value creation

GREEN SCM INTEGRATES ENVIRONMENTAL AND

SUPPLY CHAIN MANAGEMENT.

Environmental Green SCOR SCOR

Management
Model Model

•GreenSCOR modifies the existing SCOR structure to include

environmental processes, metrics, and best practices.
•GreenSCOR maintains the integrity of the current SCOR model by adding
to the existing elements.
•The GreenSCOR model enables organizations to more effectively integrate
environmental management with supply chain management.

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CAPABILITIES OF GREENSCOR
GreenSCOR incorporates industry best practices for making
the supply chain more environment friendly, such as
collaborating with partners on environmental issues, reducing
fuel and energy consumption, and minimizing and reusing
packaging materials.
Metrics to measure the effects of greening, including carbon
and the environmental footprint, emission costs per unit,
energy costs as a percent of production costs, waste produced
as a percent of production, and returned products disposed of
versus remanufactured.
Processes to address waste management, such as how to
collect and manage waste produced during production and
testing (including scrap metal and nonconforming product).

LESSENING ENVIRONMENTAL IMPACT

Through GreenSCOR, Industry can:
Reduce its environmental footprint
Reduce emissions
Ensure compliance with regional/governmental
standards
Manage remediation

At the same time, it can:

Improve supply chain management in the areas of:
Procurement
Transportation
Management of inventory
Production

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LEARNING TO THINK DIFFERENTLY

From “problems” and “risk factors”…..…..to opportunities for
efficiency and growth…from short term to long term…

Sources of Profitability
Cost reductions
Improved asset utilization•
Higher levels of customer service
Increased revenues

Focus of sustainability is to find the balance between

sound ecological decisions and profitable operations

GREEN SUPPLY CHAIN PRINCIPLES

The product life cycle is the basis of green supply

chain management.

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THE ENVIRONMENTAL IMPACTS OF EACH

LC STAGE ARE EXAMINED FOR REDUCTION.

Historically, GSC management focused on

the upstream supply chain.

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Now, GSC programs are moving from

compliance to value creation.

Companies are starting to view GSC

as a strategic analysis tool.

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GREEN SCM LEVERAGES THE ROLE OF THE

ENVIRONMENT IN SC VALUE CREATION.
Tangible Outcomes

Green Supply Profitability

Chain
Programs Asset Utilization Supply
Chain
Service Level Value

Employee
Satisfaction
Customer
Environmental
Sustainability Reputation

Continuity
Community of
Quality of Life Alliance

Technology
Stakeholders Interest
Intangible Value
Drivers
Source: Forging New Links, GEMI, 2004

COMMERCIAL FIRMS HAVE HAD EARLY SUCCESS

USING GREEN SCM PRINCIPLES

Texas Instruments: Saves $8 million

each year by reducing its transit
packaging budget for its semiconductor
business through source reduction,
recycling, and use of reusable packaging
systems (20% annual savings).
Commonwealth Edison: Produced $50
million in financial benefits from
managing materials and equipment
with a life-cycle management approach.

Pepsi-Cola: Saved $44 million by

switching from corrugated to reusable
plastic shipping containers for one liter
and 20-ounce bottles, conserving 196
million pounds of corrugated material.
Dow Corning: Saved $2.3 million by
using reconditioned steel drums in
1995. Also conserved 7.8 million pounds of
steel..

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MORE WIN-WIN SCENARIOS

Cost savings (e.g. ARM, 3P, WRAP, SMART)
•- Reducing waste
•- Saving energy
•- Product take-back

Environmental risk management (Union Carbide, Exxon, Shell)

•- Industrial accident
•- Consumer boycott
•- Environmental lawsuit

Product differentiation (e.g. organic produce, FSC, HEVs)

•- Customer willing to pay more for environmental benefits
•- Environmental benefits are credible
•- Protection from imitators

Managing the competition (e.g. DuPont)

•- Private regulatory programs
•- Government regulation

Redefining markets (e.g. Xerox, Interface, Mobility, StattAuto)

•- Products into services
•- Product innovations

NOT EVERYONE'S AS ENTHUSIASTIC THOUGH...

Despite high profile initiatives from firms such as Wal-Mart and HP to
limit the environmental impact of their supply chains, the majority of
large firms still have no green supply chain policy in place.

Conclusion of a major new survey from management consultancy

Bearing Point found that almost two thirds of firms had taken no action
to cut the environmental impact of their supply chain.

Survey of over 600 directors at companies with turnovers in excess of

$100m found that just 35 per cent had an explicit green supply chain
strategy, although 83 per cent claimed to factor environmental factors
into decisions.

A lack of information about green supply chain best practices and

regulations was identified as the main reason for the relatively low
adoption of green supply chain policies.

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GSCM & ‘AAA’

Improves Agility—Green supply chain management help
mitigate risks and speed innovations.

Increases Adaptability—Green supply chain analysis often lead

to innovative processes and continuous improvements.

Promotes Alignment—Green supply chain management

involves negotiating policies with suppliers and customers, which
results in better alignment of business processes and principles.

Three Competitive Edges of Firms

Reducing carbon footprints
Operational Implementing cleaner technology
Excellence Green logistics
Supplier Audits

Working with suppliers Product Customer

Supplier Engagement Green building Standards
Leadership
Defining and implementing Environmentally Intimacy Standards & Eco labels
Preferable Purchasing

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How do firms stack up…

PI CI OE Industry

High M H Low Software

Industry
Microsoft

High L M High Electronics/

High Technology

Medium Low High Manufacturing

Chemical
Pharma

TRENDS IN GREEN SUPPLY CHAIN

Start at the Beginning

Product Design
– Use more environmentally friendly materials
– Design more efficient product
– Plan in recycling of product at end of life
– Consider environmental impact of product

Choice of Suppliers
– Review supplier environmental data
– Consider supplier source of raw materials/components
– Partner with suppliers to improve environmental performance
– Consider energy‐efficient practices (“green” manufacturing facilites,
hybrid delivery vehicles, etc.)

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GREENING THE PROCESS

Manufacturing
– Use more efficient processes
– Institute pollution/emission controls
– Plan waste management
– Implement quality control

Packaging/Shipping
– Use environmentally friendly/recyclable packaging
– Plan for reuse of packaging materials
– Ship in hybrid/efficient vehicles
– Ship directly to customers

END PRODUCT
End Product
– Deliver efficiently to end user
• Use recyclable/reusable packaging
• Deliver in hybrid/efficient delivery vehicles
• Consolidate shipments
– Plan for recycling/reuse of product/components at end of life
– Educate customer on recycle/reuse policy

Cost savings
– Efficient design saves waste
– Environmentally friendly sourcing saves disposal costs
– Pollution/emissions control saves cleanup costs
– Compliance with environmental regulations

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Now…IT’S ALL ABOUT.....

GREEN SUPPLY CHAIN

&
SUSTAINABILITY !!

THANK YOU!

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