green supply chain management1
Post on 02-Jun-2018
226 Views
Preview:
TRANSCRIPT
-
8/10/2019 Green Supply Chain Management1
1/32
Best Practices in Implementing Green Supply Chains
April 5, 2005
-
8/10/2019 Green Supply Chain Management1
2/32
P A G E 2
2005 LMI
Environmental Management SystemISO 14000
-
8/10/2019 Green Supply Chain Management1
3/32
P A G E 3
2005 LMI
Supply Chain Management
-
8/10/2019 Green Supply Chain Management1
4/32
P A G E 4
2005 LMI
Green SCM integrates envi ronmentaland supply chainmanagement.
Green SCM recognizes the
disproportionate environmentalimpact of supply chain processesin an organization.
Green Supply Chain Management
EnvironmentalManagement
Supply ChainManagement
Green Supply Chain Management
-
8/10/2019 Green Supply Chain Management1
5/32
P A G E 5
2005 LMI
Contents
What is Green Supply Chain Management? Green Supply Chain Management Principles
Green Supply Chain Management Best Practices
Implementing Best Practices
Summary
-
8/10/2019 Green Supply Chain Management1
6/32
P A G E 6
2005 LMI
Green SCM leverages the role of theenvironment in SC value creation.
Green SupplyChain Programs
EmployeeSatisfaction
EnvironmentalSustainability
CommunityQuality of Life
Profitability
Asset Utilization
Service Level
Customer
Reputation
Continuity
Alliances
Technology
Supply ChainValue
StakeholderInterests
Tangible Outcomes
Intangible Value Drivers
Source: Forging New Links, GEMI, 2004
Environmental Value Drivers
-
8/10/2019 Green Supply Chain Management1
7/32
P A G E 7
2005 LMI
Commercial firms have had earlysuccess using Green SCM principles.
Texas Instruments: Saves $8million each year by reducing itstransit packaging budget for its
semiconductor business throughsource reduction, recycling, and
use of reusable packaging
systems (20% annual savings).
Pepsi-Cola: Saved $44 million byswitching from corrugated to
reusable plastic shipping
containers for one liter and 20-ounce bottles, conserving 196million pounds of corrugated
material.
Commonwealth Edison: Produced$50 million in financial benefitsfrom managing materials and
equipment with a life-cyclemanagement approach.
Dow Corning: Saved $2.3 millionby using reconditioned steel drums
in 1995. Also conserved 7.8million pounds of steel.
-
8/10/2019 Green Supply Chain Management1
8/32
P A G E 8
2005 LMI
Green Supply Chain improves operationsby employing an envi ronmental solut ion.
Improves AgilityGreen supply chain management helpmitigate risks and speed innovations.
Increases AdaptabilityGreen supply chain analysis often leadto innovative processes and continuous improvements.
Promotes AlignmentGreen supply chain management
involves negotiating policies with suppliers and customers,which results in better alignment of business processes andprinciples.
Source: The Triple-A Supply Chain, Lee, Harvard Business Review, October 2004
Environmental Supply Chain Management, Carter and Narasimhan, CAPS
Research, 1998
-
8/10/2019 Green Supply Chain Management1
9/32
P A G E 9
2005 LMI
Contents
What is Green Supply Chain Management? Green Supply Chain Management Principles
Green Supply Chain Management Best Practices
Implementing Best Practices
Summary
-
8/10/2019 Green Supply Chain Management1
10/32
P A G E 10
2005 LMI
The product life cycle is the basis ofgreen supply chain management.
Supply Chain in the Environmental Life Cycle
RawMaterial
Extraction
Transport Manufacture TransportRetail/
ConsumerUse
Transport DisposalDesignConcept
Typical Supply Chain Scope
Designing the supply chainconcurrently with the product is asupp ly chain managementbestpractice.
-
8/10/2019 Green Supply Chain Management1
11/32
P A G E 11
2005 LMI
The environmental impacts of each LCstage are examined for reduction.
Environmental Life Cycle
RawMaterial
Extraction
Transport Manufacture TransportRetail/
ConsumerUse
Transport Disposal
Air
Water
Waste
Air
Air
Water
Waste
Air
Air
Water
Waste
Air
Air
Water
Waste
Stage
Impacts
Water
EnergyInputs
Water
Energy
DesignConcept
-
8/10/2019 Green Supply Chain Management1
12/32
P A G E 12
2005 LMI
Historically, GSC management focusedon the upstream supply chain.
Manufacturer encouragessuppliers to adopt green
practices, environmentalmanagement systems, etc.
Focus is on the materialcontent and environmentalpractices of suppliers.
Typical Green Supply Chain Analysis
Manufacturer
Supplier
Supplier
Supplier
-
8/10/2019 Green Supply Chain Management1
13/32
P A G E 13
2005 LMI
Now, GSC programs are moving fromcompliance to value creation.
Source: Forging New Links, GEMI, 2004
Traditional
CostAvoidance
Emerging
ValueCreation
Environmental, Safety, and Health Business Contributions
Protect the Environment
Maintain Health
Minimize Risk
Assure Compliance
Enable Growth
Support Innovation
Enhance Relations
Raise Productivity
-
8/10/2019 Green Supply Chain Management1
14/32
P A G E 14
2005 LMI
Companies are starting to view GSC asa strategic analysis tool.
Source Reduction
Recycle/Reuse
ControlTechnology
Disposal
Pollution Prevention Hierarchy
Strategic
Tactical
LongTerm
ShortTerm
The Pollution
PreventionHierarchy gaugesthe value ofenvironmentalprograms.
Source: U.S. Environmental Protection Agency
-
8/10/2019 Green Supply Chain Management1
15/32
P A G E 15
2005 LMI
Contents
What is Green Supply Chain Management? Green Supply Chain Management Principles
Green Supply Chain Management Best Practices
Implementing Best Practices
Summary
-
8/10/2019 Green Supply Chain Management1
16/32
P A G E 16
2005 LMI
Green supply chain best practices focuson the business results first.
Align green supply chain goals withbusiness goals
Evaluate the supply chain as a singlelife cycle system
Use green supply chain analysis as acatalyst for innovation
Focus on source reduction to reducewaste
Green Supply Chain Best Practices
-
8/10/2019 Green Supply Chain Management1
17/32
P A G E 17
2005 LMI
Aligning GSC improvements with yourbusiness goals creates strategic value.
Before embarking on green supply chain improvements, you
need to determine the role of the environment in your business. Product Differentiation?
Managing Competitors?
Cost Reduction?
Risk Management?
Redefining Markets?
When green supply chain programs are properly aligned tocorporate goals, successes become leading indicators ofbusiness success.
Environmental indicators on the Balanced Scorecard
Greater drive for innovation Stakeholder support
Source: Bringing the Environment Down to Earth, Reinhardt, HBR, July-August 1999Environmental Supply Chain Management, Carter and Narasimhan, CAPSResearch, 1998
-
8/10/2019 Green Supply Chain Management1
18/32
P A G E 18
2005 LMI
Evaluating the supply chain as a systemleads to life cycle optimization.
System View of Environmental Life Cycle
RawMaterial
Extraction
Transport Manufacture Transport Retail/ConsumerUse
Transport Disposal
Product $Waste
Stage
Outputs
Raw MaterialInputs Energy
DesignConcept
$
Maximize thegood outputs.
Minimize thebad inputs
and outputs.
-
8/10/2019 Green Supply Chain Management1
19/32
P A G E 19
2005 LMI
Green supply chain management is adriver for process improvements.
In general, pollution and waste represent incomplete, ineffective,
or inefficient use of raw material.
Green supply chain analysis provides an opportunity to reviewprocesses, materials, and operational concepts.
As with continuous improvement programs, green supply chainanalysis targets:
Wasted material
Wasted energy or effort
Under-utilized resources
Source: Green and Competitive, Proter and van der Linfde, HBR, Sept.-Oct. 1995Environmental Supply Chain Management, Carter and Narasimhan, CAPSResearch, 1998
Identify thewaste streams
Measure oridentify theopportunitycost of the
waste
Createinnovation vs.treatment biastoward waste
reduction
Green Process Improvement Approach
-
8/10/2019 Green Supply Chain Management1
20/32
P A G E 20
2005 LMI
Focusing on source reduction programsdrives higher value improvements.
Waste Reduction Opportunities in the Life Cycle
RawMaterial
Extraction
Transport Manufacture TransportRetail/
ConsumerUse
Transport DisposalDesignConcept
Reduce Reuse/Recycle DisposeControlTechnology
Low
High
Potential for lifecycle cost savings
Cumulative lifecycle costs
-
8/10/2019 Green Supply Chain Management1
21/32
P A G E 21
2005 LMI
The Army looked to using hybridHMMWVs to reduce the fuel SC footprint.
Army reviewed acquisition, maintenance, and fuel costsassociated with conventional and hybrid HMMWV.
Fuel costs included cost of supply chain.
Evaluation based on military operations.
Costs are break even for the two platforms
Hybrid technology lowers fuel cost but has greatermaintenance requirements.
However, hybrid platforms can also serve as powergenerators in theater and can offer some operatingadvantages (e.g., silent operation).
DomesticFuel Storage
TransportationInto Theater
TransportationWithin Theater
TheaterFuel Storage
Theater FuelDistribution
Hybrid HMMWV
HMMWV Fuel Supply Chain
Source: Economics of Hybrid Electric Technology: Military Vehicles, 2002, LMIResource Costs of Supplying Power to a Battlefield, 2004, LMI Research Institute
-
8/10/2019 Green Supply Chain Management1
22/32
P A G E 22
2005 LMI
USPS worked with direct mail vendorsto reduce supply chain cost and waste.
DirectMailer
PostOffice
SortingFacility
PostOffice Customer Waste
UndeliverableItems
Direct Mail Supply Chain
Estimated savings (USPS) = $500 Million (1997)
Problem: Excessive
direct mail wasteand cost
Target mailings
to generate lesswaste
Recycleundeliverable
mail
Ensure changesdo not affectsorting capability
Ensureproperaddressing
Direct
Mailersrealizehigher
response
rates andlower
operatingcosts
Target recycledcontent andrecyclablematerials
Source: Greening the Mail, 1999, LMI
-
8/10/2019 Green Supply Chain Management1
23/32
P A G E 23
2005 LMI
The Dutch flower industry greeneditsproduction to increase throughput.
Netherlands produces 65% of the worlds cut flowers, yet has
limited land. Mass cultivation in a confined area resulted in
fertilizer, herbicide, and pesticide contamination.
To correct the problem, growing was shifted torock wool and water vs. soil.
Fertilizer in the water is recycled through thesystem to reduce waste.
Water based growth also reduces the risk ofinfestation by weeds and pests, reducing theneed for chemical treatments.
The new system also greatly reduced variations
in growth conditions, greatly improving thepredictability of output.
Producers were able to increase output per space and furtherinnovate to reduce costs (e.g., new harvesting methods).
Source: Green and Competitive, Porter and van der Linde, HBR, Sept.-Oct. 1995
-
8/10/2019 Green Supply Chain Management1
24/32
P A G E 24
2005 LMI
Xerox implemented a take-back programredefined customers expectations.
In early 1990s Xerox launched a new initiative to take back usedcopiers as a source of material for new machines.
Customers like the program because they no longer worry aboutmachine disposal.
Xerox estimates several hundred million dollar savings annually.
Source: Bringing the Environment Down to Earth, Reinhardt, HBR, July-August 1999Environment, Health, and Safety Progress Report: 2004, Xerox Corporation
Xerox Copier Take-back Program
70-90% (by weight)
of machines reused
144 million pounds
diverted from landfills
(2003)
-
8/10/2019 Green Supply Chain Management1
25/32
G l h i ff t d t i
-
8/10/2019 Green Supply Chain Management1
26/32
P A G E 26
2005 LMI
Green supply chain efforts need to riseabove 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 an organization. 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 inbusiness terms lowers their profile.
Many executives have misconceptions of how green supply chainefforts will impact their operations.
Without a clear business value proposition, it is difficult to getexecutive support for projects.
Source: Forging New Links, GEMI, 2004
C id th i ti b i d l
-
8/10/2019 Green Supply Chain Management1
27/32
P A G E 27
2005 LMI
Consider the existing business modelwhen planning GSC projects.
Many businesses have internal hurdles that must be overcome
for any improvement effort. Inconsistency in supply chain operations (by unit, region, product,
etc.)
Business viewed through existing operationsresistance to change
Focus on short term goals and short term results
Limited partnership experienceespecially in the environmentaloffice.
To be successful, the project manager needs to understand theorganization and plan for the applicable hurdles.
Develop communication/evangelization plan.
Build a project team with broad functional representation. Clearly articulate project business value.
Use outside experts where in-house expertise doesnt exist.
Source: Forging New Links, GEMI, 2004
-
8/10/2019 Green Supply Chain Management1
28/32
G SCOR i difi ti f th SCOR
-
8/10/2019 Green Supply Chain Management1
29/32
P A G E 29
2005 LMI
GreenSCOR is a modification of the SCORmodelthat includes environmental elements.
SCOR Model
EnvironmentalManagement
GreenSCOR Model
GreenSCOR modifiesthe existing SCORstructure to includeenvironmentalprocesses, metrics,and best practices.
GreenSCORmaintains the integrityof the current SCORmodelby adding tothe existing elements.
GreenSCOR Content
-
8/10/2019 Green Supply Chain Management1
30/32
P A G E 30
2005 LMI
Contents
What is Green Supply Chain Management? Green Supply Chain Management Principles
Green Supply Chain Management Best Practices
Implementing Best Practices
Summary
I l ti G l h i
-
8/10/2019 Green Supply Chain Management1
31/32
P A G E 31
2005 LMI
Implementing Green supply chainproperly will drive realbusiness value.
Green supply chain concepts manage environmental impactswhere they occurideally before they occur.
Best practices focus on the business, not social, value thatgreen supply chain management creates.
Align green supply chain goals with business goals
Evaluate the supply chain as a single life cycle system Use environmental analysis as a catalyst for innovation
Focus on source reduction to reduce waste
Successful implementation requires raising the profile andperceived value of environmental projects.
Articulate project value in terms of business value Create the project to work within the organizational culture
Use effective tools (e.g., GreenSCOR) to enable project execution
-
8/10/2019 Green Supply Chain Management1
32/32
P A G E 32
THE OPPORTUNITY TO MAKE A DIFFERENCE HAS NEVER BEEN GREATER
ACQUISITION FACILITIES & ASSET MANAGEMENT FINANCIAL MANAGEMENT
INFORMATION & TECHNOLOGY LOGISTICS ORGANIZATIONS & HUMAN CAPITAL
Taylor Wilkerson
twilkerson@lmi.org
top related