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Green Supply Chain Management in Asia-Pacific

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Environmental regulations are becoming more consistent globally, as those passed in one region have knock-on effects on supply chains in other regions. Companies across many sectors, especially those ...

Environmental regulations are becoming more consistent globally, as those passed in one region have knock-on effects on supply chains in other regions. Companies across many sectors, especially those in fast moving consumer goods and food & beverage, are under pressure to publish sustainability reports and enforce environmental standards. This GIA whitepaper outlines sustainable practices in the manufacturing and logistics industries, and the role of sustainability in the Asia-Pacific.

This presentation shows selected slides from a GIA white paper. To download the entire white paper that you are interested in, please visit http://bit.ly/GIAinsightWP

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    Green Supply Chain Management in Asia-Pacific Green Supply Chain Management in Asia-Pacific Presentation Transcript

    • Green Supply Chain Management in Asia-Pacific GIA Industry White Paper August 2009 Global Intelligence Alliance ©2009. All rights reserved. Contact: Kelvin Inn kelvin.inn@globalintelligence.com Kim Khoo kim.khoo@globalintelligence.com Web: www.globalintelligence.com Tel: Singapore (65) 6423 1681 Hong Kong (852) 2107 4299 All Rights Reserved ©2009 www.globalintelligence.com
    • Contents This contains excerpts from GIA’s “Green Supply Chain Management in Asia-Pacific” White Paper. For the free white paper, please visit www.globalintelligence.com or email info@globalintelligence.com. Executive Summary To green or not to green? Asia-Pacific’s stance on green practices Not included here Green supply chain management tools Not included here Asia-Pacific green SCM case studies Not included here This GIA Industry White Paper provides an overview of green supply chain management practices in the Asia-Pacific region. The report is provided as is, free of charge and without any warranty or guarantee. Global Intelligence Alliance rejects responsibility for errors or omissions, or for any loss or consequential loss arising as a result of decisions taken based on its contents. ©2009 Global Intelligence Alliance. All rights reserved. This report is copyright, however individual pages or portions thereof may be copied referencing “Global Intelligence Alliance” as the source. Global Intelligence Alliance (GIA) is a strategic market intelligence and advisory group. GIA was formed in 1995 when a team of market intelligence specialists, management consultants, industry analysts and technology experts came together to build a powerful suite of customized solutions ranging from outsourced market monitoring services and software, to strategic analysis and advisory. Today, we are the preferred partner for organizations seeking to understand, compete and grow in international markets. Our industry expertise and coverage of over 100 countries enables our customers to make better informed decisions worldwide. For further information please see the About Global Intelligence Alliance section at the end of this report, contact the author or visit www.globalintelligence.com Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com
    • Abbreviations and acronyms 3Rs Reduce, Reuse and Recycle – waste MOE Ministry of the Environment, Japan management strategies, in order of MNC Multi-National Corporation importance CDM Clean Development Mechanism NDRC National Development and Reform Commission , China CPG Consumer Packaged Goods NEA National Environment Agency, Singapore CSR Corporate Social Responsibility PRI Principles for Responsible Investing EPA Environmental Protection Administration, REACH Registration, Evaluation, Authorisation and Executive Yuan, Taiwan Restriction of Chemical substances (European ESG Environmental, Social & corporate Community directive 2002/95/EC) Governance – issues in responsible investing RoHS Restriction on Hazardous Substances (European Community directive 2002/95/EC) EU European Union SCM Supply Chain Management GG Guitang Group (China) SPB Seshasayee Paper & Board (India) GSC Green Supply Chain VC Venture Capital GSCM Green Supply Chain Management WEEE Waste Electrical and Electronic Equipment ICT Information and Communications (European Community directive 2002/96/EC) Technology ISO14000 Standards for an Environmental Management System (EMS) set by the “International Organization for Standardization” (ISO) LCC Low Cost Country Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com
    • Executive summary www.globalintelligence.com
    • Executive summary Green SCM adoption set to rise, affecting most industries in the Asia-Pacific region Asia’s Rationale For Going Green MULTIPLE STAKEHOLDERS STRICTER EUROPEAN ENVIRONMENTAL MARKET FORCES (scarce Firms in Asia, as the major (retailers, REGULATIONS (RoHS, WEEE, REACH) have resources, bottom line sources of raw materials, customers, influenced Asian governments to pass improvement need) are components and finished consumers, similar laws that focus on process & government) are driving firms’ new focus products worldwide, are pollution prevention and product driving new focus on “green-ing” their being pressured by regulation; these force change within supply chains - MAJOR DOWNSTREAM on sustainability companies competing in the global supply manufacturing, sourcing CUSTOMERS (e.g. and corporate chain, and also affect their relationships & logistics. Walmart) to go “green”. governance in the with other organizations. market place. IMPACT on consumer IMPACT on UPSTREAM suppliers: durable & nondurable •  Chemicals, Paints, Additives, Oils •  IMPACT on all industries goods such as: •  Materials - Cement, Concrete, •  “Green” supply chain management offers an 1. Food & Beverages Ceramics, Glass, Iron & Steel, Paper, expanded way to think about cost reduction Minerals & non-ferrous Metals, Textiles 2. Consumer and profit improvement. electronics 3. Apparel IMPACT on DOWNSTREAM users: •  Cosmetics •  Electronics Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com
    • Executive summary Case studies yield some green supply chain best practices to reduce costs and increase revenues Asian examples of “green” best practices •  The Chinese sugar refinery and Indian paper firm case studies brilliantly apply the green “3Rs” principle of “Reduce, Reuse and Recycle”; with both firms diversified into related industries - sugar, paper, alcohol and cement – and utilising waste products of the other industries as raw materials or for power generation. •  Case studies also highlight the importance of building effective incentives with external parties (suppliers, competitors, customers and government) to improve the robustness of the supply chain system on all levels: local, national and international. •  The Japanese IT multinational case study illustrates the benefits of centralization, sharing infrastructure and route optimization in a local context, that can result in relatively large efficiency improvements and cost reductions. Reduce, Reuse & Recycle Establish supporting network of external 1.  Logistical centralization for economies of waste products parties motivated to ensure sustainability scale. of green supply chain 2.  Share logistical overhead with partners for cost reduction. 3.  Optimize transportation routes to further reduce costs. Raw Suppliers Customers Energy materials generation for another for plant product Government Competitors Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com
    • To green or not to green? www.globalintelligence.com
    • To green or not to green Green supply chain adoption driven by management, organizational learning, market pressures and government regulations Source: Global Intelligence Alliance research & analysis Company/management Market Government Consumers are environmentally- Scarce conscious and apply Government Drivers resources & International institutional pressure, introduction of stricter Future unstable customer pressure e.g. Principles of domestic and prices mean and competitive Responsible Investment international competitive advantage for (RPI) framework & regulations, e.g. RoHS, advantages suppliers, e.g. 2nd- Environmental, Social & WEEE and environmental Now from better tier local supplier corporate Governance guidelines such as resource use could be chosen over (ESG) criteria ISO14001 & efficiency MNC’s home supplier Insufficient Insufficient Fears of high Inconsistent government management green SCM upfront costs regulations across Asian Now commitment knowledge by and long countries increases Inhibitors and supply many SC payback compliance complexity, chain partner professionals period except where strictest support standards adopted Future Company/management Government Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com
    • To green or not to green Green supply chain has tangible cost & efficiency advantages as well as intangible & emotional benefits Green Supply Chain Management (GSCM) Benefits Tangible Intangible Suppliers and Manufacturers Suppliers and Manufacturers •  Reduced input costs (raw materials, •  Greater ease of manufacturing (e.g. utilities, logistics) and overall less waste) and improved quality production costs (more consistent) •  Reduced waste disposal costs. •  Better operational efficiency and Customer resource usage leading to possible •  Higher levels of convenience and competitive advantages. Emotional satisfaction (e.g. detergent that •  New revenue opportunities cleans in cold water) All Supply Chain Players Customers •  Improved motivation, pride and moral about “doing good” Environment •  Lower lifecycle cost of ownership for •  Overcome cynicism over customers for society among stakeholders environmental concerns throughout supply chain (e.g.. Environment employees, shareholders, management, partners) Society •  Lower environmental load for local •  Greater care and attention to environment and ecosystem •  Improved corporate image and environmental issues in non-work branding for suppliers and context Society manufacturers •  Less consumption of finite global •  Improved customer “feel- resources good” factor and quality of life Source: Global Intelligence Alliance research & analysis Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com
    • To green or not to green More companies in every economic sector are taking the first step towards managing carbon emissions 90 Carbon Disclosure Project (CDP4) - 2006 Carbon Disclosure Project (CDP5) - 2007 Carbon Disclosure Project response rate Carbon Disclosure Project (CDP6) - 2008 80 70 Percent Responding (%) 60 50 40 30 20 10 0 Source: Carbon Disclosure Project Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com
    • To green or not to green Greener supply chains being enabled by current VC investment in green technologies for future use Venture capital investment in green energy •  According to Greentech Media, VC technologies by industry, Q3 2008 investment in green energy technologies in US, EU, Israel and Australia exceeded US$2.8 billion in Q3 2008, continuing the growth momentum from previous quarters (1Q 2008=US$998 million, 2Q 2008=US $1.3 billion). •  VC investment and interest in green energy technologies is expected to continue. •  Every niche in green technology is being explored, especially solar energy. •  Strong investment is expected to lead to commercialization and wider adoption of technology within a short time period. Source: Greentech Media, 2008 Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com
    • To green or not to green Downstream product “specifiers” have major roles to play in driving greener supply chains Product ‘Specifiers’ logistics services Transportation & CPG Automotive & Transportation ICT Pharmaceuticals Industrial Other Components Raw materials Industrial equipment manufacturer provider manufacturer ‘Other Asia’ (49%): Thailand, Taiwan, Korea, Singapore, 76 % of procurement 50 % of procurement Malaysia, Vietnam, Burma and the survey source from China survey source from Philippines India Major influencer for greener supply chains Source: Global Intelligence Alliance analyses with survey data from eyeforprocurement, 2008. •  Eyeforprocurement conducted a ‘Sourcing in Low Cost Countries Survey’ in March and April 2008. •  Sourcing practices of 200 procurement professionals, senior executives from manufacturers, retailers and 3PLs operating in various verticals in North America, Europe, Asia and Africa were surveyed. •  59% of respondents were based in North America, 23% in Europe and 13% were from Asia and Africa. Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com
    • To green or not to green As a key source for components, equipment & raw materials, Asia’s role in green supply chains is crucial Low-cost source country (% respondents) •  Asia, especially China and India, continues to be the top region for low cost sourcing. •  Components and raw materials sourcing from Asia shows strong growth, becoming prime targets for green SCM efforts. •  Green SCM requires high levels of cooperation with suppliers, implying better management of supply chains at supplier companies. •  Walmart started greening its ! ‘Other Asia’ includes Thailand, Taiwan, Korea, Singapore, Malaysia, Vietnam, Burma and the Philippines supply chain in 2005 •  First, it reorganised its internal Products / services sourced in low cost countries (% respondents) supply chain. •  Second, it put pressure on 1000s of its Chinese suppliers in 2008 to “green” their supply chains also, e.g. reducing packaging used and improving product energy efficiency. •  Regulations such as RoHS/WEEE and REACH are especially relevant for pollution control of all components and raw materials. Sources: (1) eyeforprocurement survey, 2008; (2) news articles Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com
    • To green or not to green Survey of APAC countries indicates consumers are prepared to pay a higher price for going green •  According to a TNS survey of 17 countries and 13,000+ respondents, consumers are willing to pay How much more would consumers be willing to the higher price required to go green. pay for green products? •  In Japan, consumers were the most enthusiastic Willingness to pay more for eco-friendly products with 70% accepting a 5% price premium. Thailand 94% •  In Singapore 38% would pay 10% more, in Australia Malaysia 82% this was 33%, followed by 26% in Japan. Korea 81% •  Consumers most likely to think green for food, Singapore 70% with the majority believing it is 'right' or 'fair' for % consumers accepting a 5% price premium retailers to adopt choice editing, or the practice Japan 70% by which they remove unsustainable products from Australia 57% the shelves, leaving only environmentally-friendly options. Singapore 55% Thailand 49% Consumers willing to shoulder part of the cost for going green South Korea 41% Hong Kong 55% Malaysia 40% Australia 54% Hong Kong 35% Japan 50% Source: TNS Source: TNS Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com
    • Thank You for Your Attention These slides are excerpts from Contact Us the GIA White Paper: “Green Supply Chain Management in For additional information about the Asia-Pacific”. Global Intelligence Alliance and our services, please send email to info@globalintelligence.com or log on Download the entire White Paper to the GIA website for the contact information of the GIA company for Free nearest to you. The report has been published under the GIA White Paper series at www.globalintelligence.com. Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com
    • About GIA Outlook for green supply chain in Asia Pacific | Aug 2009 www.globalintelligence.com
    • GIA is a strategic market Intelligence and advisory group Global Intelligence Alliance (GIA) was formed in 1995 when a team of market intelligence specialists, management consultants, industry analysts and technology experts came together to build a powerful suite of customized solutions ranging from outsourced market monitoring services and software, to strategic analysis and advisory. Today, we are the preferred partner for organizations seeking to understand, compete and grow in international markets. Our industry expertise and coverage of over 100 countries enables our customers to make better informed decisions worldwide. Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com
    • Access local knowledge in over 100 countries GIA Group has 12 offices on 4 continents. Together with affiliated GIA Member companies, certified GIA Research Partners and consultants, GIA provides access to local knowledge in over 100 countries. All GIA Network companies adhere to GIA’s Research and Analysis Quality System as well as the SCIP Code of Ethics. Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com - page 18
    • We understand your business With a track record of supporting thousands of clients Industry Practices Automotive around the world, we bring you practical expertise in your Chemicals markets, as well as knowledge from our practices covering Construction & Property Development 11 industries and all the key business functions. Consumer & Retail Energy, Resources & Environment Financial Services Private Equity Logistics & Transportation Manufacturing & Industrial Pharmaceuticals & Healthcare Telecommunication, Technology & Media Functional Practices World Class Market Intelligence MI for Strategic Planning MI for Marketing & Sales MI for Product & Innovation Management MI for Supply Chain Management M&A and Partnering Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com
    • International Global Intelligence Alliance Group info@globalintelligence.com Baltic Region Gateway Baltic baltics@globalintelligence.com Belgium Global Intelligence Alliance Belgium belgium@globalintelligence.com Brazil Global Intelligence Alliance Latin America brazil@globalintelligence.com Canada Global Intelligence Alliance Canada canada@globalintelligence.com Central & Eastern Europe EasyLink Business Services cee@globalintelligence.com China Global Intelligence Alliance China china@globalintelligence.com Finland Global Intelligence Alliance Finland finland@globalintelligence.com France RV Conseil france@globalintelligence.com Germany Global Intelligence Alliance Germany germany@globalintelligence.com Hong Kong Global Intelligence Alliance Hong Kong hongkong@globalintelligence.com India Global Intelligence Alliance India india@globalintelligence.com Japan McRBC japan@globalintelligence.com Netherlands Global Intelligence Alliance Netherlands netherlands@globalintelligence.com Russia ALT R&C. russia@globalintelligence.com Singapore Global Intelligence Alliance Singapore singapore@globalintelligence.com South Africa Butterfly Effect Intelligence southafrica@globalintelligence.com Tunisia Tunisie RV Conseil tunisia@globalintelligence.com UK Global Intelligence Alliance UK uk@globalintelligence.com United Arab Emirates GCC Consulting uae@globalintelligence.com USA East Coast Global Intelligence Alliance USA East Coast usaeast@globalintelligence.com USA West Coast I.S.I.S. – Integrated Strategic Information Services, Inc. usawest@globalintelligence.com Green Supply Chain Management in Asia-Pacific | Aug 2009 www.globalintelligence.com