green supply chain management-a case of sugar_rupesh kumar_op008[1]

7/31/2019 Green Supply Chain Management-A Case of Sugar_Rupesh Kumar_OP008[1]

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ISBN - 978-93-81583-46-3

National Conference on Emerging Challenges for Sustainable Business 2012

1697

Green Supply Chain Management: A Case of

Sugar Industry in India

Rupesh Kumar1, Vishnu Nath

2, Dr. Rajat Agrawal

3, Dr.Vinay Sharma

4

1Research Scholar,

2Research Scholar,

3Assistant Professor,

4Assistant Professor

1Department of Management Studies, Indian Institute of Technology Roorkee,

Roorkee2Uttarakhand Technical University, Dehradun

3,4Dept. of Management Studies, Indian Institute of Technology Roorkee, Roorkee

[email protected], [email protected]


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Green Supply Chain Management: A Case of Sugar Industry in India


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Green Supply Chain Management: A Case of

Sugar Industry in India

Abstract

Purpose:To study seeks to enumerate how Green Supply chain management (GSCM) is

being implemented in sugar industry in India.

Design:

The present study is an empirical one. A survey was conducted in 30 sugar mills

in Uttar Pradesh, India and responses on various issues were collected via a

questionnaire.

Findings:

The concept of GSCM has been observed as a recent and novel management

principle. Different authors have studied green practices in supply chainmanagement in different types of industries in different part of world. Qinghua

Zhu et al., (2010) studied GSCM in large sized Japanese manufacturingcompanies. Rao (2002) has discussed GSCM in entire South East Asia.Similarly, the present paper studies GSCM of sugar industry in India. Overall it

was revealed that the sugar industry is a tightly knit green supply chain that

procures and consumes all its inputs without generating wastes. The by-products

so obtained are such as inputs for other industries and for the energy requirementsof the sugar industry itself.

Managerial Implications:

The findings will help in understanding how sugar industry has adopted andfunctioned under Green Supply Chain management and what problems and their

solutions are being pursued by the sugar industry to make Green Supply Chain

more efficient.Limitations: The present study was limited to only 30 sugar mills of Uttar

Pradesh state. A larger sample should be taken in future related studies to get amore generalized view of this problem.

Keywords: Green Supply Chain, Sugar Industry, Waste Management, Green

Energy, Sustainability.

1. IntroductionEnvironmental sustainability is one of the burning issues of current times. Earlier

corporate environmental management has focused on managing internalenvironmental problems. Now attention is increasingly shifting towards themanagement of a corporations impacts outside the boundaries of the firm, into

the management of upstream and downstream activities i.e. the whole supply

chain system (Hu and Hsu, 2010).Green Supply Chain Management (GSCM) has emerged as an important new

approach for enterprises to achieve profit, efficiency and market share objectives

by reducing environmental risk and impact (van Hoek, 1999; Hu and Hsu, 2010).


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Service (BMI, 2009) and it also explains Indias fifteenth position in sugarexporting nations list. In March 2009, the sugar consumption was 22.5 million

tonnes from the total supply of sugar was 35557.86 thousand tonnes which is the

highest during the last ten years (CMIE, 2010d: e). According to the USDAForeign Agricultural Service, sugar production will increase by 27 per cent with

an aggregate volume of 24.7 million tonnes of sugarcane production- Indiasmarketing year (MY) 2010/11 (October-September). The total sugar exportedfrom India was 3331997 tonnes (worth Rs 444874.3 lakh) and the total import in

India was 386095 tonnes (worth Rs 58310.86 lakh) in March 2009 (CMIE, 2010f:

g). Due to the large domestic consumption of sugar in the country, the export

figures have not been significant.

3. Supply Chain System of Indian Sugar IndustryThe complete supply chain of sugar industry starts from farmers growingsugarcane and ends at consumers using sugar in a variety of ways. There are

various supply chain partners namely cane farmers, transporters, millers, and

distributors including brokers, wholesalers, and retailers. The material flow in thesupply chain system of sugar industry is shown in Figure 1. This figure indicates

that the farmers perform various farming activities like harvesting, cultivating,

irrigating and ploughing in the production of cane and then transport to the mills.There are various government agencies have opened call centres for supporting

farmers in sugarcane production. Mostly sugar mills also help farmers in their

farming activities by providing high yield seeds, fertilizers, pesticides,

knowledge, and other relevant nutrients. But sometimes, farmers buy their seedsfrom the market. The cane societies are also highly involved in supporting the

farmers in their field work (as observed during the primary survey from sugarmills in Northern region of India).

Figure 1 show that the sugar mills produce sugar from cane in four stages such

as receiving of cane from farmers, crushing the cane, processing for sugarproduction, and finally packing of sugar according to their sizes i.e. Small,

Medium and Large. These sugars were stored in their mill godowns and then

distributed to the wholesalers as ordered by brokers or private agents. Thewholesalers store the ordered sugar for further distributing to their area retailers

and finally sell to the consumers as shown in Figure 1. Mostly consumers

(indirect customer) like levy (PDS- Public Distribution System and BPL-BelowPoverty Line), military, institutional customers (airlines, shopping malls,

railways, food companies, etc), and other countries order sugar directly from the

mills and/ or wholesalers. Near about 60% indirect customers order sugar directly

from wholesalers (Kansal, 1998).During the processing of sugar in mills, there are various types of by-products

namely mud, molasses, bagasse, and electricity are produced. The buyers of these

by-products are state governments, private factories like brick industry, farmers,cane society, paper mills, etc. The mills have different types of vendors such as

Chemicals; Engineering parts like mild steels, patching, jointing, tools, nuts, bolts,

etc; Spare parts like centrifugal, boiler, power house, mill house, pan, quad, canecarrier, etc; Miscellaneous items like cotton waste, plywood, civil, etc; Electricals;


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Instruments; Contractors who supply labours of all types like semi skilled labours;Contractors who supply both labour and material only; and Contractors who

supply material only.

Figure 1 Material flows in Supply Chain System of Sugar Industry

During the survey from sugar mills in U.P and Uttarakhand, the sugar productionprocess has been explained in detail form as shown in Figure 2. The processing of

sugarcane takes place with the help of heavily equipped machinery assembled in

the sugar mills. At the initial stage of the process, the sugarcane is lifted with the

help of crane under the supervision of supervisors or millers. The lias, cutter,chopper, and hybridizers are inbuilt under this crane. After this, the sugarcane

passes through the milling and then sent to the boilers. In boiler, the sugarcane

burns around 51 to 50 Motions bagasse or dry dusty pulp. Some of the bagasseburns in the boiler as per required by the sugar mills for using such. The

remaining or extra amount of bagasse will go further in the mill process. This

extra bagasse can be purchased by the paper plant and power plant as per use bytheir requirement. Therefore, the juice is extracted which further needs heating.


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Hence, for heating the juice, the amount of steam is required around 160 to 165tonnes per project or plant. The steam is produced with the help of boilers and

turbines. Note that, for producing the extra amount of steam, the boosting is

required with the help of turbines. This whole process cannot be operated or runwithout electricity. Generally, every sugar mills must need electricity to run the

fitted machines for extracting sugarcane to juice and juice to sugar in the sugarmills. Therefore, sugar mills have their own power plant from which theygenerates around 22 MW electricity on crushing the sugarcane. Now, after

heating the juice, the dirt from the juice gets removed. This is the cleaning process

at the primary stage where the cleaned juice and mud will get separated.

Figure 2 Sugar production process in sugar mill

Further, the cleaned juice proceeds to the evaporation section which removes

water from it. Hence, after removing the water from the cleaned juice, the millers


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dilute sulphur to it and then bleaching process takes place. After cleaning process,the cleaned juice will goes further to pine station for developing grains (Cheeni).

Now, these grains pass through the centrifuges machine to separate the pure sugar

and molasses. Therefore, pure sugar goes to sugar weighing machines for sealingthe sugar into 50 to 100 Kg per jute bags. The sugar bags will be sent finally to

the godowns of sugar mills for storage purpose. During the processing, around30% of molasses are produced and the storage stand is used to store the molassesin the mills. The government releases the order for selling the sugar and molasses

in the market. The molasses have around 20 to 30 by-products namely shampoo,

toffees, medicines, alcohols, chemicals, etc.

4. By-products and sustainable inputs to industries1) Sugarcane as a raw material used for processing in the sugar mills to

produce sugar and other by-products.

2) Sugaris the main product which is obtained from the sugar industry and isdistributed in the market.

3)Bagasse as a by-product obtained during mill processing and used forgenerating steam and power plant projects. This by-product is easily

consumable by the brick industry as a fuel and used in making papers in

paper mills. This helps farmers and cane society to feed their cattle.

4) Mudas a by-product also obtained during mill processing and used for soilconditioner, manure, and valuable source of nutrients. This helps farmers

to provide proper nutrition to their crops.

5) Molasses as a by-product obtained during mill processing and used indistillery for making alcohols, acids, industrial chemicals, etc.

6) Poweris generated from bagasse during the mill processing which is usedin the boiler to generate steam and sold out to the state electricity boards.

7) Ethanol is produced from molasses during the mill processing. Thisalcohol is well purified again to form fuel grade ethanol which can bemixed with the petrol. This purified ethanol is used in vehicles, airlines,

etc.

8) Bio-fertilizers are obtained from the mixture of the residue product duringmill processing operation with the chemicals.

The starting material of sugar industry is cane which is an agricultural product.During the actual process of sugar production, the cane sugar is crushed to make

juice which is used for sugar making. The crushed cane husk (bagasse) is not a

waste and is further used as a fuel to fire the turbines to make electricity for the

sugar mill. This way the sugar plant prepares its own electricity from totally aharmless and natural source. This also reduces burden on electrical grids that

operate on highly unsustainable coal or fossil fuels. Further the husk obtained

from crushed sugar cane also serves as an input to the paper industry, which hasreplaced wood from tress as an input. This has saved many trees from being used

up by the paper industry. We can see that sugar industry has helped paper industry

to also become sustainable. Also the molasses obtained during sugar production isused as a starting material for making industrial spirits for which earlier wood was


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used, this has also saved many tress and has helped the environment. Excess huskobtained is also used by other industries as a fuel like in brick making industry,

which reduces their dependence on fossil fuel and wood, another major step

towards sustainability. The ethanol obtained from the molasses can be of vitalimportance as it can be blended with fossil fuels to make cleaner ethanol based

fuels which are less polluting and may provide self sufficiency to a country likeIndia in matter of fuel imports. In the end the other residues left from the processalso serve as bio fertilizers, which enrich the soil without causing the side effects

of conventional fertilizers. Thus sugar industry is itself green but also supports

other industries to also become green up to some extent.

5. Comparison of Sugar supply chain with Electronics and Automobilesupply chain

The supply chain system of sugar industry is shown in Figure 1. Here, the supplychain system of electronics and automobile industries is presented in Figure 3

which was explained in detail by Gungor and Gupta, (1999). By comparing figure

1 and 3, some useful facts are drawn on the basis of these industries activities.Table 1 shows the comparative analysis of the activities for sugar industry with

electronics and automobiles industry.

Figure3 Supply chains of Electronics and Automobiles Industries

Table 1 Comparison between Sugar Industry and Electronics/ Automobiles

IndustryACTIVITY SUGAR INDUSTRY ELECTRONICS AND

AUTOMOBILES*

Acquisition of raw

materials

Sugar cane is a naturalagricultural plant. No

other efforts are

required.

Backward integration isrequired with suppliers so

that greening of supply

chain is maintained.

Processing


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i) Energy Needs Self sufficient in asustainable manner,

electricity generationthrough baggase

obtained from crushed

sugar cane

They to depend on power

supplied by electricity grids,

which make power usingfossil fuels or nuclear

energy which is not a

sustainable source of power.ii) By-products By products obtained

are useful as starting

material for otherindustries, like baggase

is useful for paperindustry, molasses for

making spirits. No by

product needs disposalall have some use for

other industries.

By products like lead

solders, solvents are highly

toxic, requires differentprocess for handling and

management for properdisposal.

iii)Packaging Finished sugar is packedin gunny/jute bags. Packaging is done usingplastics, Styron foam, which

ends up in landfills or has to

be collected for be recycling

which further requires moreresources and energy.

Consumption Since sugar is an agro

based food item, no

inputs are required at

consumer level for itsuse and consumption. It

serves a raw materialfor making other fooditems.

Both automobiles and

electronic items require

inputs in the form of energy

like petroleum andelectricity respectively at

consumer level, which areobtained from fossil fuels,both of which are not

environmentally sustainable.

Disposal Since sugar is an edible

item it is fully

consumed at the enduser level and no

residue etc is left which

requires disposal.

Both automobiles and

electronics after being used

by the end user arediscarded and they end up in

landfills which require

proper recycling and reversesupply chain activities on

behalf of the companies thatmake them.

6. ConclusionThe comparison of supply chains of both sugar and electronic and automobiles

industries tells us a very important thing. As pointed out by Gungor and Gupta

(1999) the electronic industry has to follow many steps in order to make its

production and supply chain activities environmentally sustainable. Starting from


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acquisition of material for manufacturing, electronics and automobile sector haveto ensure that their suppliers also follow the same norms of environmental

sustainability as theirs. During the production process the energy used is also not

made in sustainable way, as most of the power used is obtained from electricalgrids running on coal etc. Whereas the sugar industry produces its own power

using the bagasse obtained from crushed cane. No fossil fuels are used in theproduction of sugar. Also during the production of electronic goods the by-products generated are toxic in nature, these are needed to be handled and

disposed off carefully. However questions have been raised many times about the

proper disposal of waste generated by electronic and automobile industry, which

usually ends up in landfills. The by-products of sugar industry are valuable rawmaterials for other industries like paper, spirits etc. Sugar industry provides

baggase as a by-product which is used for making paper which has made paper

industry green by removing its dependence on wood for making paper. Thus, wecan see that sugar industry right from the beginning to the end is a green industry

which derives its inputs from nature and provides raw material for other industries

also. Thus sugar industry follows many sustainability methodologies likeEnvironmentally Conscious Production. Packaging of sugar is done in jute bags or

sacks which are re-used again and again. In case of electronics and automobiles

plastics, thermo coal, Styron foam are used as a packaging material which afteruse ends up in landfills and requires recycling. At consumer level, automobiles

and electronic items require energy inputs in form of electricity and petroleum

products, both of which are derived from fossil fuels, thus use of electronic and

automobiles is not environmentally sustainable. On the other hand sugar does notrequire any inputs from the user during its consumption and it also serves as an

input for making other food items. Lastly automobiles and electronic items afteruse are discarded by the consumer and they end up in landfills. Although reserve

supply chain systems have been implemented by some companies like Ford, GM,

Dell etc, but still majority of the companies are not following such recyclingprograms. Thus at the end of the supply chain there comes a huge problem of

proper disposal of used electronics and automobiles. Since sugar is food product it

is totally consumed and leaves no residue which requires disposal. Thus from theabove comparison we can conclude that sugar industry is fundamentally a Green

industry, while others like automobiles and electronics require efforts on part of

supply chain partners for becoming green. Although green supply chain activitiesare being pursued by many corporations in electronic and automobile sector, yet

such practices have not become main stream.

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CMIE (2010a), Centre for Monitoring Indian Economy. Database accessed through

Business Beacon.Steps for getting the number of registered sugar factories in India: Indicators-

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Registered Factories- All Industries- Manufacture of Food Products &


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Beverages- Other Food Products- Sugar. (Last accessed, 2010, May 17 from IIT

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green supply chain management-a case of sugar_rupesh kumar_op008[1]

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