1 gscm 2april 07 web

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GSCM ± Spring 2007 ± Session 1 ± April 3

Perspective and goal of industrial ecology

Most environmental impacts are caused by the

material transformation processes of the economy.

To make good environmental decisions it is necessary to identify and assessall relevant environmental impacts of all relevant transformation processes.

Process

Economicoutputs

Environmentalinterventions

Economicinputs

Naturalresources

1)

2)

Impact assessment Product life cycle




Industrial and consumer activities are process-based but agent-drivenOne production and consumption system consists of many agents

Environmental impact is based on whole system performance (life cycle perspective)Agents, however, usually base their decisions on criteria other than environmental(e.g. economic performance ), which are applied to smaller sub-systems

Environmental Economic or Other Performance

Perspective

Whole System

Individual Agents(Sub-System)

Driver

Objective

Industrial Ecology needs to have some idea who the actors in the industrial ecologyare, and what motivates their actions.

(Tim Jackson & Roland Clift, 1998, JIE, Vol. 2 No. 1)

Limitations of IELimitations of IEThe Problem of Agency in Industrial Ecology:The Problem of Agency in Industrial Ecology:




Limitations of IELimitations of IEO ne Life Cycle, many ActorsO ne Life Cycle, many Actors ± ± Environmental O bjective, Economic Driver Environmental O bjective, Economic Driver

End-of-lifeproductdisposal

Productdemand

& use

Rawmaterials

mining

Primarymaterials

production

Component

manufacture

Finalproduct

assembly

Productsale anddelivery

Componentre-

processing

Productre-

processing

Materialsre-

processing

Eol productcollection

& inspection

Arcelor (steel

company)

Xerox

Inter Steel(steel broker)

Take-backentrepreneur

Nokia

Life Cycle Management- Objective: High environmental performance of the product system- Boundaries: Product Life CycleEconomic agent- Objective: High financial performance of the business- Boundaries: Financial boundaries of the business




End-of-lifephone

disposal

Phonedemand

& use

Primarymaterials

production

Componentsmanufacture

Finalphone

assembly

Componentreuse

Phonerefurbishment

Metalsrecycling

End-of-lifephone

collection

Metalsmarket

Cell phone takeCell phone take- -back entrepreneur back entrepreneur

Inspection&

sorting

Componentmarket




Two challenges of industrial ecology

1) How to coordinate the agents?

2) How to generate double dividends, or win-win scenarios

2nd tier supplier

1 st tier supplier Manufacturer Customer

Economicperformanceof agent

Environmentallife cycle

performance

Supply Chain Management

Green Supply Chain Management




Traditional definition of a supply chainTraditional definition of a supply chain

[«] a network of facilities that procure raw materials, transform them into intermediary goods and then final products, and deliver the products to customers through adistribution system.

Lee H, Billington C (1995) The Evolution of Supply-Chain Management Models and Practice at Hewlett-Packard, Interfaces 25

(5), pp 2- 3, Sept/Oct 1995

[«] a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers.

Ganeshan R, Harrison T P (1995) An Introduction to Supply Chain Management, Penn State University

[«] the total chain of exchange from original source of raw material, through thevarious firms involved in extracting and processing raw materials, manufacturing,assembling, distributing and retailing to ultimate end customers.

Saunders M J (1997) Strategic Purchasing and Supply Chain Management, Pitman, London

Rawmaterials

mining

Primarymaterials

production

Component

manufacture

Finalproduct

assembly

Productsale and

delivery




Definition of supply chain management (SCM)Definition of supply chain management (SCM)

Productassembly

Materialproduction

Componentmanufacture

Mining, drillingand harvesting

Sale anddelivery

Planning

Sourcing

Production

Inventory

Logistics

[«] 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.

Harland C M (199 ) Supply chain management: relationships, chains and networks, British Academy of Management 7(Special Issue), pp S 3-S80

SCM has two dimensions:Coordinating the various business activities within a supply chain agentCoordinating the business activities between various supply chain agents

SCM is about integrating supply chain activities and agents.Systems theory: Optimizing system components or sub-systems in isolation rarely

optimizes the system as a whole.




Measuring supply chain performance / efficiencyMeasuring supply chain performance / efficiency

Processes:

costs

Inputs:

costs

Outputs:

revenues

SCM is regarded as part of production and operations management,which in turn is part of management science.Management science is typically guided by profit-maximization.

(see e.g. Tirole J (1988) The Theory of Industrial Organization, MIT Press, Cambridge, MA)

Many different variables are used to measure SC performance,but they are all related to profitabilityThe ultimate aim of traditional SCM is therefore to increase revenuesand / or reduce costsIn SCM the structures and patterns of product demand are typically taken as a given

Supply chain performance is therefore typically related to profits:

profits = revenues - costs




Supply chain improvementsSupply chain improvements

Supply chain improvements are changes in the organization, managementor physical structure of supply chains which increase expected profits:

Supply chain costs: product design, research & developmentpurchasingproductioninventory

handlingwarehousingtransportationetc.

( expected profits = ( (expected revenues ± expected costs) > 0

Revenues: 7 (price x quantity) for all final products

Concepts and tools to improve supply chain performance include:Lean production or just in time (JIT) (e.g. Toyota), build to order vs. build to stock,outsourcing vs. vertical integration (e.g. Flextronics), postponement, concurrent design,enterprise resource planning (ERP), electronic data interchange (EDI), etc.




Claim: Many winClaim: Many win- -win opportunitieswin opportunities




GSCM uses a life cycle perspectiveGSCM uses a life cycle perspective




GSCM even seems to use LCA«GSCM even seems to use LCA«

1 gscm 2april 07 web

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