Green Supply Chain Management Practices_Abhijeet Ghadge

Presentation Abhijeet Ghadge Department of Industrial Engineering & Management IIT Kharagpur

Contents What is Green Supply Chain Management? Green Supply Chain Management Principles Green Supply Chain Management Best Practices Implementing Best Practices Some successful cases Emerging trends Discussion

Introduction Green supply-chain management (GSCM) is gaining interest among researchers and practitioners of SCM; Driven mainly by the escalating deterioration of the environment; The applications are beneficial to the organization’s environmental and financial performance; The GSCM initiatives ranging from reactive to proactive practices implemented through various Re’s !!!! (Reduce, Re-use, Rework, Refurbish, Reclaim, Recycle, Remanufacture, Reverse logistics,etc.)

Green Supply Chain management An integrating environment thinking into supply chain management, including product design, material sourcing and selection, manufacturing processes, delivery of the final product to the consumers, and end-of-life management of the product after its useful life. (Srivastava, 2007)

Wastes in Lifecycle of Product

The product life cycle is the basis of GSCM.

The environmental impacts of each LC stage are examined for reduction.

GSCM from compliance to value creation

GSCM a strategic analysis tool.

The Drivers of GSCM External drivers: pressures from outsiders to the company to implement GSCM (government, NGOs, or consumers); Internal drivers: company’s motives to implement GSCM, (need to have efficient SCM or attract green consumers);

Green supply chain practices  Two practices of GSCM: 1. Green design: systematic environmental consideration in the product design; 2. Green operations: relate to all aspects related to the SCM operations

The Practices of GSCM – Green Design Environmentally conscious design (ECD) is aim to develop an understanding of how design decisions affect a product’s environmental compatibility; Life-cycle assessment/analysis (LCA) is a process for assessing and evaluating the environmental, occupational health and resource-related consequences of a product through all phases of its life;

The Practices of GSCM – Green Operations Three types of green operations:  1. Manufacturing and re-manufacturing;  2. Reverse logistics and network design;  3. Waste management

Green Operations – Green Manufacturing, Remanufacturing  Green manufacturing is about reducing the ecological burden by using appropriate material and technologies;  Remanufacturing is recycling-integrated manufacturing;  Recycling is performed to retrieve the material content of used and non-functioning products;

Green Operations – Reverse Logistics and Network Design  Reverse logistics (RL) as the process of planning, implementing, and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.  Collection is the first stage in the recovery process, followed by sorting of used products;  Redesigning logistics networks to accommodate product returns and remanufacturing and re-use is important to minimize the operations cost

Green Operations – Waste Management  Waste management is the reduction of hazardous waste which is generated (during production and operations) or subsequently treated, stored or disposed;  The source-reduction/pollution-prevention concept  aims to prevent the creation of waste rather than managing it after it is generated

Indentify “good” and “bad”

Focusing on source reduction programs

Strategies of Green Supply Chain Management  Risk-based Strategies Involve the inclusion of basic clauses like in purchasing contracts for suppliers to meet all relevant Environment regulatory requirements.  Efficiency-based Strategies Involves meeting operations-based efficiency targets like Quality standards  Innovation-based Strategies Involves guarantying more comprehensive product life-cycle Management considerations for consumers of their products during Design stages.  Closed-loop Strategies Involves product take-back and reverse logistics implemented in Supply chain for waste reduction.

12 steps to a ‘greener’ Supply Chain  Step 1: Redesign the product  Step 2: Reconfigure manufacturing  Step 3: Shift to green suppliers  Step 4: Shorten distances  Step 5: Alter service level agreements  Step 6: Shrink packaging

 Step 7: Plan for reverse supply chain activity  Step 8: Consolidate shipments  Step 9: Plan shorter routes  Step 10: Coordinate with partners  Step 11: Take a lifecycle view  Step 12: Start now

GSCM benefits  Economic benefits from increased efficiency. By reducing wastes, companies decrease handling expenses, fines, and even costly inputs. Supplier's savings may be passed along to buyer companies.  Competitive advantage through innovation. Efficient production is enhanced through the use of cleaner technologies, process innovation, and waste reduction. Reduction in wastes equals dollars earned.  Improved product quality. Supply chain partnerships help maintain relationships between buyers and suppliers leading to increased control over product quality.  Consistent corporate environmental goals. In an era of multi- faceted, non-vertical manufacturing, companies include supplier outreach to address corporate environmental goals.  Improved public image. Consumers, investors, and employees respond positively to companies with a reputation for good environmental performance

SOME SUCCESSFUL CASES •In early 1990s Xerox launched a new initiative to take back used copiers as a source of material for new machines. • Customers like the program because they no longer worry about machine disposal. • Xerox estimates “several hundred million” dollar savings annually. 144 million pounds diverted from landfills (2003) 70-90% (by weight) of machines reused

THE DUTCH FLOWER INDUSTRY  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 to rock wool and water instead of soil – Fertilizer in the water is recycled through the system to reduce waste. – Water based growth also reduces the risk of infestation by weeds and pests, reducing the need for chemical treatments. – The new system also greatly reduced variations in growth conditions, greatly improving the predictability of output.  Producers were able to increase output per space and further innovate to reduce costs

TEXAS INSTRUMENTS  Saves $8 million each year by reducing its transit packaging budget for its semiconductor business through:-  source reduction  recycling  use of reusable packaging systems (20% annual savings)

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.

Growing areas from GSCM Carbon footprint Management Reverse Logistics Product Lifecycle Management

carbon footprint carbon footprint is a measure of the impact our activities have on the environment, and in particular climate change. It relates to the amount of greenhouse gases produced in our day-to-day lives through burning fossil fuels for electricity, heating and transportation etc. The average carbon footprint for people in India is 1.20 tonnes of Co2.

carbon footprint Management Objective of the IBM SCM Carbon Distribution Modeler is to lower the carbon footprint across the total product lifecycle.

Reverse Logistics Reverse Logistics comprises of all activities involved in managing, processing, reducing and disposing of hazardous or non-hazardous waste from production, packaging and use of productions, through processes of reverse distribution.

Forward and Reverse Logistics Forward Logistics Manufa- Supplier Retailer Customer cturer Waste Reverse Logistics Landfill Collector Processor

Product Lifecycle Management Product lifecycle management (PLM) is the process of managing the entire lifecycle of a Product from its conception, through design and manufacture, to service and disposal. PLM has four primary areas- Product and Portfolio Management (PPM) 1. 2. Product Design (CAx) 3. Manufacturing Process Management (MPM) 4. Product Data Management (PDM)

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Green Supply Chain Management Practices_Abhijeet Ghadge

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Green Supply Chain Management Practices_Abhijeet Ghadge Presentation Transcript