Green Supply Chain Management

Introduction u Background u Product Life Cycle u Supply Chain Management u Industry Practices u The Future u Conclusions

Background u Industrial Ecology: a systematic organizing framework for the many facets of environmental management..industrial world as a natural system - a part of the local ecosystems and the global biosphere... offers a fundamental understanding of the value of modeling the industrial system on ecosystems to achieve sustainable environmental performance (Lowe, 1993).

Green Supply Chain Management What is it? Lots of definitions. Here’s one - Management of Materials and Resources from Suppliers to Manufacturer/Service Provider to Customer and Back, with the Natural Environment Explicitly Considered (hopefully in a conscientious manner). The Operational Instantiation of Industrial Ecosystems

Product/Process Design Raw and Virgin Material New Components and Parts Recycled, Reused Material and Parts Vendors Selection External Transportation Stora ge Inventory Management Internal Transportation Fabrication Assembly Closed-Loop Manufacturing, Demanufacturing, Source Reduction TQEM Stora ge Distribution, Forward Logistics USE Purchasing, Materials Management, Inbound Logistics Production Outbound Logistics Disposal Reverse Logistics Waste Energy Reusable, Remanufacturable, Recyclable Materials and Components Location Analysis, Inventory Management, Warehousing Transportation Packaging Marketing Engineering Customer Relationships Green Marketing Product Stewardship Waste

Supply Chain Management u Logistics, Procurement have become strategic u Organizations outsourcing, forming partnerships, alliances u Product environment becoming more complex u Time based competition requires time compression u Managing suppliers and customer relationships necessary u Competition shifting from company vs. company to Supply Chain vs. Supply Chain

Supply Chain Management Supply Chain Elements Supply Chain  Supply Cycles

Some Supply Chain Practices Prequalification of suppliers  Require or encourage environmental criteria for approved suppliers  Require or encourage suppliers to undertake independent environmental certification Environmental requirements at the purchasing phase  Build environmental criteria into supplier contract conditions  Incorporate EHS staff on sourcing teams Supply base environmental performance management  Supplier environmental questionnaires  Supplier environmental audits and assessments

Supply Chain Practices Build environmental considerations into product design  Jointly develop cleaner technology with suppliers  Conduct life cycle analysis in cooperation with suppliers  Engage suppliers in design for environment (DFE) product innovation  Coordinate minimization of environmental impact in the extended supply chain  Develop tools that assist in the DFE effort Cooperate with suppliers to deal with end-of-pipe environmental issues  Reduce packaging waste at the customer/supplier interface  Reuse/recycle materials in cooperation with the supplier  Launch reuse initiatives (including buy backs and leasing) Reverse logistics  Give supplier an incentive to reduce the customer’s environmental load

Some More Supply Chain Practices Influence legislation to facilitate better SCEM policies  In cooperation with suppliers, lobby to strengthen environmental regulation  Lobby on behalf of SCEM initiatives Work with industry peers to standardize requirements  Create interfirm procurement group to collaborate on environmental issues  Standardize supplier questionnaires Inform suppliers of corporate environmental concerns  Issue statements of EHS priorities to suppliers  Draft and distribute comprehensive SCEM policy Promote exchange of information and ideas  Sponsor events to facilitate discussions between customers and suppliers on environmental issues u Host training and mentoring programs.

Why Do it? (Benefits) USAEP, 2001, USAEP, (2001), “Greening the Supply Chain”, U.S. – Asia Environmental Program,  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. u Improved public image. Consumers, investors, and employees respond positively to companies with a reputation for good environmental performance.