Chapter 8

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  • 1. CHAPTER 8 Delivering Value via Sustainable Supply Cycle Strategies1 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 2. CHAPTER 8: DELIVERING VALUE VIASUSTAINABLE SUPPLY CYCLE STRATEGIES A. Introduction B. Diagnosing the Elements of Sustainable Supply Cycles C. Benefits of Sustainable Supply Cycles D. Sustainable Logistics E. ISO 14000 2 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 3. A. INTRODUCTION3 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 4. A. INTRODUCTIONSTARBUCKSConsumers can buy coffee anywhere, but there is no mistaking the ambianceand aroma that surround a Starbucks. The company that revolutionized theway we buy coffee has also been working behind the scenes to ensure thatits rich coffee will continue to be available in more than 40 countries acrossthe globe for a long time. The company is committed to minimizing its impacton the planet, and it is passionate about sharing this commitment with itspartners throughout the supply chain.The Starbucks Shared Planet program is an environmental commitment thatrecognizes that conservation should occur throughout the supply chain—fromcoffee growers in Guatemala to recyclers in Seattle. On the supply side,Starbucks has worked in conjunction with Conservation International for 10years to develop Coffee and Farmer Equity (C.A.F.E.) Practices. CAFEconsists of 24 comprehensive, measurable standards designed to enablesuppliers and farmers to become sustainable sources of coffee. Growers arerequired to meet criteria for product quality, ethical accounting, socialresponsibility, and environmental leadership. The program has paid hugedividends for growers, who become able to strengthen their marketplacepositions and exercise some control over transformation of theirorganizations and operations.4 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 5. A. INTRODUCTIONSTARBUCKS1. Shared Planet program a. environmental commitment which recognizes that conservation needs to occur throughout the supply chain b. work in conjunction with Conservation International for ten years to develop Coffee and Farmer Equity (C.A.F.E.) practices5 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 6. A. INTRODUCTION1. Shared Planet program c. CAFÉ 1. 24 comprehensive, measurable standards designed to enable suppliers and farmers to become sustainable sources of coffee. d. 2008, 77% – 295 million pounds of coffee purchased from suppliers verified and approved under C.A.F.E e. Average cost of $1.49 per pound is 5% above the average price for C grade Arabica6 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 7. B. DIAGNOSING THE ELEMENTS OFSUSTAINABLE SUPPLY CYCLES 1. Supply cycles a. organizations involved in making a product available for sale b. functions performed by these organizations. 2. triple bottom line benefits associated with economic, social, and financial performance 7 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 8. B. DIAGNOSING THE ELEMENTS OFSUSTAINABLE SUPPLY CYCLES 3. Three perspectives on the delivery of value a. Channel: a set of organizations involved in the process of making a product available for consumption b. Logistics: the supply chain is a set of organizations linked directly to the flow of products and information from a source to the a consumer c. Porter: value chain is the set of primary and support activities performed by the firm to serve as sources of competitive advantage 8 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 9. B. DIAGNOSING THE ELEMENTS OFSUSTAINABLE SUPPLY CYCLES Inputs & Outputs at One Stage of the Supply Cycle Processed Inputs Products Processing Un-processed inputs By-products Iron ore Steel coils Steel manufacturing Slag Compressed Air Carbon dioxide 9 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 10. B. DIAGNOSING THE ELEMENTS OF SUSTAINABLESUPPLY CYCLES6. We refer to process of delivering value as a supply cycle due to the relationship between the environment and the product development process Iron ore Steel bicycle retailer consumer disposalWal-mart : sustainability scorecard identifies fourteen categories of products or processes with the greatest environmental impact10 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 11. C. BENEFITS OF SUSTAINABLE SUPPLYCYCLES1.Better working Conditions2.Reduced Turnover3.Improved Product Quality4.Improved Efficiency and Profitability11 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 12. C. BENEFITS OF SUSTAINABLE SUPPLYCYCLES5. Better Management of Risk6. Enhanced Brand Reputation7. Stakeholder Returns Increased12 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 13. D. SUSTAINABLE LOGISTICS1. Logistics: a. process of planning, Inventory Transportation, Carrrying allocating, and Cost, 20.4% 44.9% controlling human and financial resources dedicated to physical Administrative Costs, 4.1% distribution, manufacturing support, and purchasing operations b. reverse logistics: Order Entry/ 1. Strategies that trace Customer Service, 10.2% Warehousing, 20.4% product back from the point of consumption13 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 14. D. SUSTAINABLE LOGISTICS1. Fleet Optimization2. Energy Efficiency3. Innovative Technology a. routing and tracking computer system b. Inventory management software c. RFID (radio frequency identification) d. Global Positioning Systems (GPS)14 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 15. D. SUSTAINABLE LOGISTICS4. Packaging5. Interorganizational Relationships a. Enhance vehicle performance b. Reduce total supply cycle costs c. Enhanced Customer Service15 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 16. E. ISO 140001. environmental management systems (EMS) a. set of regulations established to achieve environmental goals2. ISO a. family of standards applied across industries to monitor and control interaction with the environment b. Two of the primary standards 1. ISO 14001: 2004 – outlines the guidelines associated with the firm’s approach to sustainability, and it provides a strategic approach to the organization’s environmental policy 2. ISO 14004:2004 – provides guidelines on the elements of an EMS, its implementation, and the principal issues involved16 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  • 17. E. ISO 140003. Benefits a. competitive advantage over other firms in a market b. lower toxic emissions c. lowered resource usage d. higher energy savings e. lowered costs of waste disposal f. provide assurance to stakeholders that the firm is committed to sustainability g. provides a strong response to customers and suppliers that place environmental demands on17 the firm ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.