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The Evolving Green Supply Chain The Evolving Green Supply Chain


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The Evolving Green Supply Chain The Evolving Green Supply Chain

  1. 1. The Evolving Green Supply Chain The Evolving Green Supply Chain Dwayne Cole, Patrick Penfield & Scott Webster Whitman School of Management Syracuse University SURE Conference November 5,2009 November 5,2009
  2. 2. Green Supply Chain Agenda • Part 1: History & Evolution of the Supply Chain Part 1: History & Evolution of the Supply Chain – Where we are Today – Industrial Revolution – Green Supply Chain Model G S l Ch i M d l – Inputs – Transformation – Outputs O • Part 2: Implementing & Becoming Green – Sustainable Production / Consumption Practices – Becoming Green – Conclusion • Questions & Discussion Questions & Discussion
  3. 3. Turbulent Weather Patterns Droughts D ht • The World Bank reports that 80 countries now  have water shortages that threaten health and  economies while 40 percent of the world — more than 2 billion people — have no access to  clean water or sanitation  l i i
  4. 4. Population Growth Population Increase of from 6 Billion to 9 Billion by 2050 P l ti I ff 6 Billi t 9 Billi b 2050 Russia 112M ‐24% Europe 653M ‐10% Europe 653M 10% U.S. 438m +32% Asia 5.25B +42% Latin America 783M + 39% Africa 1.9 Billion +114% Source: UN 2004
  5. 5. Greenhouse Effect The T C b Di id E itt Th Top Carbon Dioxide Emitters in the World i th W ld Carbon Dioxide Trapped in the Atmosphere – Causing Temperatures to Rise – 10 Billion  10 Billi Tons Put into the atmosphere annually 1. 2. 3. 4.
  6. 6. Natural Capital ‐ Declining  p g Humankind has inherited a 3.8 billion – year  store of natural capital.   At present rates of use and degradation, there  will be little left by  will be little left by the end of the next century.    Hawken, Lovins & Lovins, Natural Capitalism
  7. 7. Industrial Revolution Flawed • Cradle to Grave Cradle to Grave – 90% of materials extracted to  make durable goods in the U.S.  become waste immediately b t i di t l – Products have “built in  obsolescence” – Products contain on average 5%  of the raw material involved in  the process of making it and  delivering it d li i it Snack Bags ‐ Have 9 layers made of seven different materials? Cradle to Cradle – McDonugh & Braumgart ‐2002
  8. 8. Environmental Pressures Customers Climate Change NGO’s Business Investors/Shareholders Natural Resources Governments
  9. 9. Green Sustainable Supply Chain Environmentally                      Environmentally                      Environmentally y y y Friendly Material Friendly Processes                   Friendly Output  Input                                    Transformation                            Output Reuse/Reduce Disposal Reclaim Process Process Process Recycled                             Reclaim/Reuse/Improve                       End of Life Reclaimed Product Reclaimed Product Reduce By Products      Reduce By‐Products Raw Material Raw Material Recyclable Material Copyright – P.Penfield 2007
  10. 10. Input ‐ Life Cycle Assessment • Design Discipline • Minimize Environmental  impact  – Products – Technologies – Materials – Processes – Industrial Systems and Activities
  11. 11. Inputs ‐ Impact Your Supply Chain • Most supply chain managers do not Most supply chain managers do not  focus on environmental concerns • We incur a multitude of costs by using  unfriendly environmental inputs – Regulatory Costs (MSDS Sheets) – Permits – Storage Costs – By‐Product Costs – Waste Disposal – Training Costs – Other Environmental Costs The Lean and Green Supply Chain – EPA 2000
  12. 12. Inputs ‐ Misallocation of Environmental Costs Regulatory  Supervisor Utility  Water  Cost C t Salaries S l i Costs/Rent C t /R t Treatment T t t Materials and  Materials and  Overhead Labor (A) Labor (B) Product A Prod ct A Product B  Prod ct B The Lean and Green Supply Chain – EPA 2000
  13. 13. Improved Allocation of Environmental Costs Supervisor Utility  Water  Regulatory  Salaries S l i Costs/Rent C t /R t Treatment T t t Cost C t Materials and  Materials and  Overhead Labor (A) Labor (B) Product A Prod ct A Product B  Prod ct B The Lean and Green Supply Chain – EPA 2000
  14. 14. Inputs ‐ Materials • Environmental Value Analysis – Reducing Cost while Increasing  Function – Focus on the Environment –RRemoving Toxic Materials i T i M t i l • Eliminating Regulations & Disposal Costs
  15. 15. Inputs ‐ Ford Motor Company • Putting Soybean based foam  cushions in the seats of 2008  Mustangs • Ford said the environmental  advantages include reduced  carbon dioxide emissions lower  b di id i i l energy use to produce the soy  foam.  • The annual worldwide market for  automotive foam is 9 billion  pounds.  pounds
  16. 16. Inputs ‐ Up cycle • Retaining high quality in a Retaining high quality in a  closed loop industrial cycle • Henry Ford practiced an Henry Ford practiced an  early form of up cycling  • He had Model A trucks  shipped in crates that  became the vehicle’s  floorboard when it  You can paint it any color, so long as it's black reached it’s destination Cradle to Cradle – McDonugh & Braumgart ‐2002
  17. 17. Inputs ‐ Use Waste as a Resource • As a system puts on more biomass As a system puts on more biomass  – More Recycling Loops to keep it from  collapsing • P d Producers • Consumers • Decomposers • No Waste Economy • Waste will either be recycled,  reused, or used as fuel. reused or used as fuel • No more garbage ‐ Commodity Biomimicry – Janine Benyus
  18. 18. Transformation‐ Energy • Fuels – Replacing Oil • Alternatives • Regional Renewable Energy Sources – Ocean Energy  – Wind – Solar – Bio Mass Bio Mass – Hydrogen • Batteries
  19. 19. Transformation ‐ Gather and Use Energy Efficiently • Coax every last Kilowatt out of fossil  fuels we are using • I th l t t In the last twenty years t – Japan’s economic activity has increased  while its energy consumption has  decreased d d • Energy Audits • Switch to Energy Efficient Machines – Switch to Energy Efficient Machines  Tax Incentives – Take Advantage • Do more with less! Biomimicry – Janine Benyus
  20. 20. Transformation ‐ Process • Process Tools – Lean • Eliminating Waste – Six Sigma • Eliminating Variation Eliminating Variation – Conservation • Using Less becoming more efficient – Environmentally Friendly Processes
  21. 21. Transformation ‐ Wal‐Mart & UPS – Improving Their Processes Improving Their Processes • Hybrid Hydrogen Trucks  • Auxiliary Power Units on Trucks • Wind skirts on trucks to reduce air  resistance • Si l Ti Single Tires vs. Dual D l • UPS – Eliminating Left Hand Turns
  22. 22. Output ‐ Diversify and Cooperate to  Fully Use the Habitat Fully Use the Habitat • Japan’s Ecofactory Initiatives – Veins • Return products so their materials can be  purified and reused • Restoration Factories Restoration Factories – Being built nationwide – Refurbish or Recycle products at end  y p of life Biomimicry – Janine Benyus
  23. 23. Output ‐ Product Life Extensions • Reduces Environmental Impact • Shell the same ‐ new software  upload • Transforms it into a new product Cradle to Cradle – McDonugh & Braumgart ‐2002 23
  24. 24. Output ‐ Design for Services • Services people desire • Customer would effectively  y purchase the services of a product  they desire , i.e. a T.V. for a defined  period of time – Ten thousand hours of viewing versus  the television itself the television itself Cradle to Cradle – McDonugh & Braumgart ‐2002
  25. 25. Case: Computers & Electronics C C t & El t i Economic Growth Or Irresponsible  p Consumptions.
  26. 26. Consumption of Electronic Goods A Sustainability Concern A S t i bilit C Economic development or irresponsible production?
  27. 27. Consumption of Electronic Goods Quick Facts: Trends in computer & electronic consumption Q i kF t T d i t & l t i ti In the US, 67 M computers were sold in 2007  up 14.6%,  3.9 M TVs were bought for the  super bowl (2008).
  28. 28. Consumption of Electronic Goods Quick Facts: Electronic Waste Q i k F t El t i W t Growing consumption has led to critical end‐of‐life waste  management problems with deep environmental concerns 2000 ‐ 2000 ‐2007  3,028 million 1,862 1 862 million 360 million 400,000,000 400 000 000 133,000 133 000 130,000,000 130 000 000 units of electronic waste  units of computers are  cell phones retired  is scraped annually.  thrown away each day. annually. 
  29. 29. Consumption of Electronic Goods Quick Facts: Electronic Waste Q i k F t El t i W t Who should be responsible for  environmental concerns: who should collect,  environmental concerns: who should collect transport, process & finance EOL e‐waste  management? In 2005, 2.63 Million Tons of e‐waste.  87.5% (2.3 Million) trashed & only 12% of  discards are recycled discards are recycled 68 % consumer stockpile  unwanted computers.  d 300 – 500 million  end‐of‐use  electronic devices are still market. electronic devices are still market
  30. 30. Sustainable Business Practices • An increasing number of private and public sector  organizations are announcing  significant Environmental  organizations are announcing significant Environmental and Cost Saving Initiatives: – Design for Environment Design for Environment – Reverse Logistics – Zero waste initiatives – ISO 14000 ISO 14000 certifications ifi i – Environmental Accounting 
  31. 31. Buying Green Benefits of Buying Green B fit f B i G • Adopting Environmental purchasing policies not only promotes social,  economic, or environmental objective, Greening procurement promotes economic, or environmental objective, Greening procurement promotes  financial objectives.
  32. 32. Becoming Green: Overview of How To O i fH T • AIM: The aim of this presentation is to provide a basic understanding of  existing strategies for incorporating sustainable consumption practices into  existing strategies for incorporating sustainable consumption practices into materials and equipment management activities.
  33. 33. Becoming Green: Mapping, A M i Assessment, Impact Analysis: Friendly‐Products t I t A l i F i dl P d t nmentons Mapping & Assessment pplier R Suprganiz En O nal Relatial nvironzation
  34. 34. Becoming Green Mapping, Assessment, Impact Analysis: Friendly Practices M i A t I t A l i F i dl P ti Equipment & Furnishings Materials & Supplies • Computers & Business Machines • Paper • Audio Visual Equipment • Office Supplies • Lighting, HVAC, Alarms etc. • Cleaning Agents  • Carpet,  Furniture • Fluids • Communications, etc.  • Scrape materials
  35. 35. Becoming Green Mapping, Assessment, Impact Analysis: Friendly Practices M i A t I t A l i F i dl P ti tions Mapping & Assessment Organizatio Enviro O E onal ntal r Relat Suppliernmen
  36. 36. Becoming Green: Evaluation & Performance E l ti & P f Examine the environmental performance of  your  products and your suppliers. • Producer Attributes Producer Attributes • Product Attributes – Corporate philosophy – Recyclability – Environmental planning – Packaging – Environmental  – Lifecycle Management Systems – Eco‐labels – Environmental Evaluation – Impacts during use – Corporate Reporting – Energy Savings – Employee Education Employee Education
  37. 37. The Evolving Green Supply Chain Becoming Green Becoming Green • Conclusion – Environmental focus on inputs,  transformation, outputs and recycling – Audit ‐ Base line measure where you are  today – Set goals/objectives – Private and Public sector companies are  increasingly adopting Green Supply Chain  practices – Greening Supply Chain Practices Has  Economic and Environmental Benefits