GREEN SUPPLY CHAIN MANAGEMENT

GREEN SUPPLY CHAIN MANAGEMENT
RICK EDGEMAN Shingo Institute Research Director – Utah State University – USA Professor of Management – Jon M. Huntsman School of Business – Utah State University – USA Guest Professor of Quality Management – Uppsala University – Sweden Guest Professor of Sustainability & Enterprise Performance – Aarhus University – Denmark Six Sigma Black Belt THE EMERGENCE OF GSCM

What is Green Supply Chain Management? Green Supply Chain Management Principles Green Supply Chain Management Best Practices Best Practices Summary CONTENTS

1. SENIOR MANAGEMENT BACKS ‘GREENING' THE SUPPLY CHAIN
HOW IMPORTANT IS A GREEN SUPPLY-CHAIN IN NORTH AMERICA? Greening the supply-chain usually involves people at the top. Over half of survey respondents said their senior management viewed Greening the Supply-Chain as strategically important and understood its potential to create value for the organization. To back this up, over half of respondents said there was at least one person in their organization designated as responsible for green initiatives. SURVEY BY: TOM BOWERS OF VIRESCENT CONSULTANTS. 1. SENIOR MANAGEMENT BACKS ‘GREENING' THE SUPPLY CHAIN

2. IT’S HAPPENING IN PURCHASING
HOW IMPORTANT IS A GREEN SUPPLY-CHAIN IN NORTH AMERICA? Many European countries have taken steps to reduce carbon emissions and bolster sustainability. They have set firm targets backed up by legislation; but in North America, we have very few such government imposed regulations. We were surprised to learn that over half (57%) of the purchasers who answered the survey said they were already involved in ‘greening' their organization's supply-chain; and moreover, this number is expected to reach about 75% in the future. 2. IT’S HAPPENING IN PURCHASING

3. GREEN SUPPLIERS ARE PREFERRED BUT MEASUREMENT SYSTEMS ARE LACKING
HOW IMPORTANT IS A GREEN SUPPLY-CHAIN IN NORTH AMERICA? A greener supply chain is definitely preferred but tools are lacking. Over 80% Supply-Chain professionals responding said they would favor suppliers with green business practices, but only about 25% have any sort of carbon footprint evaluation process in place. Therefore, it's hard for many Purchasers to know if they are being 'green washed' by suppliers whose claims are exaggerated. 3. GREEN SUPPLIERS ARE PREFERRED BUT MEASUREMENT SYSTEMS ARE LACKING

HOW IMPORTANT IS A GREEN SUPPLY-CHAIN IN NORTH AMERICA?
Two overarching conclusions jump out from this survey: If you are not already involved in greening your supply chains, you will likely become involved in the foreseeable future. Clearly, new tools and knowledge will be needed, especially to counter 'green washing'. Alongside traditional measures (price, service and quality) green practices, like carbon footprints, will figure more and more in supplier selection. Addendum: If you would like to learn about how to go about measuring your supply-chain carbon footprint, click the links below: To contact the author and receive full results (to all 14 questions) or to discuss the findings, WHAT DOES ALL THIS MEAN?

Most companies green supply chain strategies are rhetoric and outpacing real action. Fewer than 25% say their companies always or frequently take climate change into consideration in making supply chain decisions. Only 21% thought the opportunities for new product/market far outweighed the risks. For consumer goods makers, high-tech players, and other manufacturers, 40-60% of carbon footprint resides upstream in the supply chain—from raw materials, transport, and packaging to the energy consumed in manufacturing processes. For retailers, the figure can be 80% or more. Source: McKinsey Study, 2008 REALITY CHECK

The deployment of efforts such as clean energy technology tends to be compartmentalised – focusing on specific segments of supply chains, e.g. transport. Developing a holistic view of the environmental impact of full supply chains could both improve the effectiveness of green investment and establish eco-partnerships in trade across international boundaries. The value of such an approach was recently demonstrated by the Oxford Institute for Energy Studies with respect to strawberries: although intuitively it might seem that it is environmentally inappropriate to fly in strawberries from Kenya, in fact it is not (Muller, 2007). Source: Koh, S.C.L. and Wright, P.W, 2008 PROBLEM: FRAGMENTATION

Made in the World FRAGMENTATION OF PRODUCTION EXAMPLE: BOEING 787 DREAMLINER

FRAGMENTATION OF PRODUCTION EXAMPLE: BOEING 787 DREAMLINER

Definitions: Supply chain management encompasses all activities associated with the flow and transformation of goods from the raw materials stage through the end user, as well as the associated information flows. (CSCPM) Sustainable supply chain management requires that sustainability criteria be met while maintaining competitiveness through meeting customer needs. (Seuring and Müller, 2008) SUSTAINABLE SUPPLY CHAIN DEVELOPMENT

Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system wide costs while satisfying service level requirements. Supply Chain Management

Green supply chains refer to the way in which innovations in supply chain management and industrial purchasing may be considered in the context of the environment (Green, et al, 1996). Environmental supply chain management consists of the purchasing function’s involvement in activities that include reduction, recycling, reuse and the substitution of materials. (Narasimhan and Carter, 1998) GLOBAL SUPPLY CHAIN MANAGEMENT DEFINITIONS

Environmental Management System ISO 14000- 14001
GREEN SUPPLY CHAIN MANAGEMENT Environmental Management System ISO

GSCM is the inclusion of researching, developing, manufacturing, storing, transporting, using a product, and disposing the product waste in supply chain management. (Messelbeck and Whaley, 1999) GSCM is the formal system that integrates strategic, functional and operational procedures and processes for employee training and for monitoring, summarising and reporting environmental supply chain management information to stakeholders of the firm. The documentation of this environmental information is primarily focused on supplier performance, audits, design, waste minimisation, training, reporting to top management and goal setting. (Handfield et al, 2005). GLOBAL SUPPLY CHAIN MANAGEMENT DEFINITIONS

Green SCM Integrates Environmental and Supply Chain Management Supply Chain Management Environmental Management Green Supply Chain Management Green SCM recognizes the disproportionate environmental impact of supply chain processes in an organization.

Green SCM Leverages the Role of the Environment in SC Value Creation.
Environmental Value Drivers Tangible Outcomes Green Supply Chain Programs Profitability Supply Chain Value Asset Utilization Service Level Employee Satisfaction Customer Stakeholder Interests Environmental Sustainability Reputation ES&H Management results in tangible supply chain improvements: Profitability – by reducing the cost of compliance and potentially finding markets for process waste, the organization can improve both revenue and costs, resulting in an increase in profits. Asset utilization – by designing processes with an eye for minimizing waste, assets are used more efficiently. Service levels – Part of ES&H management is the recognition of the impacts on customer operations; by mitigating these impacts, you can improve customer satisfaction and the level of service you provide. ES&H also drives intangible improvements Customer and stakeholder relationships – many customers will prefer to source from an environmentally friendly source; in addition, proper ES&H management can lead to reduces costs and better value delivered to the customer. Brand equity and reputation – a reputation for strong environmental management can lead to an improved reputation with both customers and stakeholders. Business continuity – Mitigating environmental and safety risks will improve the continuity of operations by minimizing the risk of disruption due to non-compliance issues. Alliances – ES&H management usually involves forming alliances with outside organizations, which can translate into future business opportunities. Technology – Improving ES&H management can lead to a better understanding of processes and improve the organizations knowledge and use of management technology. Continuity Community Quality of Life Alliances Technology Source: Forging New Links, GEMI, 2004 Intangible Value Drivers GREEN SUPPLY CHAIN MANAGEMENT

Texas Instruments: Saves $8 million each year by reducing its transit packaging budget for its semiconductor business through source reduction, recycling, and use of reusable packaging systems (20% annual savings). Commonwealth Edison: Produced $50 million in financial benefits from managing materials and equipment with a life-cycle management approach. 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. Dow Corning: Saved $2.3 million by using reconditioned steel drums in Also conserved 7.8 million pounds of steel. Commercial Enterprises With Early Success Using Green SCM principles

Improves Agility — Green supply chain management help mitigate risks and speed innovations. Increases Adaptability — Green supply chain analysis often lead to innovative processes and continuous improvements. Promotes Alignment — Green supply chain management involves negotiating policies with suppliers and customers, which results in better alignment of business processes and principles. Green Supply Chains Improve Operations Through Use of Environmental Solutions

THE PRODUCT LIFE CYCLE IS THE BASIS OF GREEN SUPPLY CHAIN MANAGEMENT
SUPPLY CHAINS & THE ENVIRONMENTAL LIFE CYCLE Designing the supply chain concurrently with the product is a supply chain management best practice. Concept Design Raw Material Extraction Retail/ Consumer Use Transport Manufacture Transport Transport Disposal The life cycle approach views the impacts of a product on ES&H from the design phase through the disposal phase. This view leads to a greater understanding of the total impact of operating the system and can lead to design decisions that greatly improve long term performance and cost. Typical Supply Chain Scope THE PRODUCT LIFE CYCLE IS THE BASIS OF GREEN SUPPLY CHAIN MANAGEMENT

ENVIRONMENTAL LIFE CYCLE
Water Energy Water Energy Inputs Stage Raw Material Extraction Retail/ Consumer Use Concept Design Transport Manufacture Transport Transport Disposal Air Water Waste Air Water Waste Air Water Waste Air Water Waste Impacts Air Air Air ENVIRONMENTAL IMPACTS OF EACH LIFE CYCLE STAGE ARE EXAMINED FOR REDUCTION

HISTORICALLY, GSC MANAGEMENT FOCUSED ON THE UPSTREAM SUPPLY CHAIN
TYPICAL GREEN SUPPLY CHAIN ANALYSIS Manufacturer Supplier Manufacturer encourages suppliers to adopt green practices, environmental management systems, etc. Focus is on material content and environmental practices of suppliers. HISTORICALLY, GSC MANAGEMENT FOCUSED ON THE UPSTREAM SUPPLY CHAIN

GSC PROGRAMS ARE MOVING FROM COMPLIANCE TO VALUE CREATION
ENVIRONMENTAL, SAFETY & HEALTH BUSINESS CONTRIBUTIONS Protect the Environment Maintain Health Minimize Risk Assure Compliance Enable Growth Support Innovation Enhance Relations Raise Productivity Traditional Cost Avoidance Emerging Value Creation GSC PROGRAMS ARE MOVING FROM COMPLIANCE TO VALUE CREATION

Pollution Prevention Hierarchy Source: U.S. Environmental Protection Agency Source Reduction Recycle / Reuse Control Technology Long Term Strategic The Pollution Prevention Hierarchy gauges the value of environmental programs. Disposal Short Term Tactical COMPANIES ARE STARTING TO VIEW GSC AS A STRATEGIC ANALYSIS TOOL

PRICE WATERHOUSE COOPERS 1 2 3 4 5 BEST PRACTICES IN IMPLEMENTING GREEN SUPPLY CHAINS

BEST PRACTICES FOR SUPPLY CHAIN MANAGEMENT Understanding the makeup of the supply chain Setting a layer of metrics to assess how vendors are handling requirements Extracting the best from procurement strategies and practices Keeping an eye on inventories to identify damaged goods and other concerns Maintaining standardization to enhance productivity Scaling logistical needs to the supply chain’s use of transportation and distribution Maintaining overall transparency According to “Preparing Global Supply Chains Against Uncertainty”, a couple of tips on how best to scrutinize the supply chain include: (A) Use RFPs to manage risks: Ask suppliers to submit Requests for Proposals as a way to document and monitor distribution. (B) Watch for quality issues and delays on shipments: In addition to a reduction in quality and an increase in delays, times when suppliers begin requesting earlier payments or their staffing begins to change frequently, should also raise red flags. 1 2 3 4 5 6 7 BEST PRACTICES: KEY ELEMENTS OF GREEN SUPPLY CHAINS

Green Supply Chain Best Practices Align green supply chain goals with business goals Evaluate the supply chain as a single life cycle system Use green supply chain analysis as a catalyst for innovation Focus on source reduction to reduce waste GREEN SUPPLY CHAIN BEST PRACTICES FOCUS ON BUSINESS RESULTS FIRST

Green supply chain concepts manage environmental impacts where they occur—ideally before they occur. Best practices focus on the business, not social, value that green supply chain management creates. Align green supply chain goals with business goals Evaluate the supply chain as a single life cycle system Use environmental analysis as a catalyst for innovation Focus on source reduction to reduce waste Successful implementation requires raising the profile and perceived value of environmental projects. Articulate project value in terms of business value Create the project to work within the organizational culture Use effective tools (e.g., GreenSCOR) to enable project execution Implementing Green Supply Chain Properly Will Drive Real Business Value

SUPPLY CHAIN OPERATIONS REFERENCE MODEL (SCOR) SCOR Framework
The Supply Chain Operations Reference model (SCOR) is the world’s leading supply chain framework, linking business processes, performance metrics, practices and people skills into a unified structure. Employ the SCOR framework at your organization and: Increase the speed of system implementations Support organizational learning goals Improve inventory turns Level 1 Processes included in SCOR: Plan Source Make Deliver Return Enable Level 1 Metrics included in SCOR: Perfect order fulfillment Order fulfillment cycle time Upside supply chain flexibility Upside supply chain adaptability Downside supply chain adaptability Overall value at risk Total cost to serve Cash-to-cash cycle time Return on supply chain fixed assets Return on working capital SUPPLY CHAIN OPERATIONS REFERENCE MODEL (SCOR)

GreenSCOR Concept Environmental Management Managing the environmental impacts of operations, including compliance, emissions, and remediation Supply Chain Management Managing the flow of material from supplier to end customer, including procurement, transportation, inventory management, and production GreenSCOR Model Use tools such as GreenSCOR to help define and analyze GSC problems.

GreenSCOR Content Environmental Management SCOR Model GreenSCOR Model GreenSCOR modifies the existing SCOR structure to include environmental processes, metrics, and best practices. GreenSCOR maintains the integrity of the current SCOR model by adding to the existing elements. GreenSCOR is a modification of the SCOR model that includes environmental elements

Why is Business Part of the Solution?
GREEN SUPPLY CHAIN MANAGEMENT Business is focused on learning and change. Change can and does happen relatively quickly Business is a global institution. The challenges are fundamentally global in nature Business is the source of technological innovation. Technology is the proximate cause of environmental impact Dr. John Ehrenfeld, Director Emeritus, MIT Technology, Business and Environment Program Business is accustomed to bringing people from diverse geographical cultures and providing incentives for them to work together harmoniously. Not all but some elements of the solution to our environmental unsustainability can be addressed with technology. Why is Business Part of the Solution?

Sustainable Development for Business
GREEN SUPPLY CHAIN MANAGEMENT Sustainable development for business means “adopting business strategies and activities that meet the needs of the enterprise and its stakeholders today while protecting, sustaining, and enhancing the human and natural resources that will be needed in the future” (International Institute for Sustainable Development 1994: 4). Sustainable business has interdependent economic, environmental, and social objectives (Triple Bottom Line) Long-term viability depends on integrating all three objectives in decision-making Sustainable Development for Business

Managing an environmentally responsible enterprise: Integrating environmental sustainability into business models Environmental management systems; e.g., ISO 14001 Greening the supply chain Sustainability > Innovation & Entrepreneurship Investment decisions Change management – Fostering Sustainable Behavior Energy management Waste management Reporting: internally and externally Marketing Start…enrolling/aligning stakeholders…who are they? Areas of Opportunity

Government Consumers Environment Suppliers STAKEHOLDERS Shareholders Employees Management Local Community Stakeholders

Engaging Stakeholders
GREEN SUPPLY CHAIN MANAGEMENT While executive support is a critical key component to business success, it is not the only form of leadership present in an organization. Business sustainability leaders understand the value in leveraging their internal resources as well as their key business relationships. Whether led by a sustainability executive or traditional management, the pursuit of long-term business sustainability enables: Employees: Create incentives to lower costs, initiate process improvements, and stimulate innovation. Customers: Establish expectations that are defining products and service attributes. Suppliers: Align supply chain expectations to drive sustainable material requirements and efficiencies. Local Community: Defined framework for initiatives carried out at the local level through partnership with community groups, local businesses, and governing bodies. Investors: By comprehensive and accurate reporting; e.g., CDP, DJSI. Others? Source: Engaging Stakeholders

Integrating Sustainability into Business Models CAPABILITY & UNDERSTANDING

CAPABILITY & UNDERSTANDING

COMMITMENT

PARTNERSHIPS

Before embarking on green supply chain improvements, you need to determine the role of the environment in your business. Product Differentiation? Managing Competitors? Cost Reduction? Risk Management? Redefining Markets? When green supply chain programs are properly aligned to corporate goals, successes become leading indicators of business success. Environmental indicators on the Balanced Scorecard Greater drive for innovation Stakeholder support Source: Bringing the Environment Down to Earth, Reinhardt, HBR, July-August Environmental Supply Chain Management, Carter and Narasimhan, CAPS Research, 1998 ALIGNING GSC IMPROVEMENTS WITH BUSINESS GOALS CREATES STRATEGIC VALUE

EVALUATING THE LIFE CYCLE AS A SYSTEM LEADS TO LIFE CYCLE OPTIMIZATION
SYSTEM VIEW OF ENVIRONMENTAL LIFE CYCLE Raw Material Extraction Transport Manufacture Retail/ Consumer Use Disposal Product $ Waste Stage Outputs Raw Material Inputs Energy Design Concept Minimize the “bad” inputs and outputs. Maximize the “good” outputs. The life cycle approach views the impacts of a product on ES&H from the design phase through the disposal phase. This view leads to a greater understanding of the total impact of operating the system and can lead to design decisions that greatly improve long term performance and cost. EVALUATING THE LIFE CYCLE AS A SYSTEM LEADS TO LIFE CYCLE OPTIMIZATION

In general, pollution and waste represent incomplete, ineffective, or inefficient use of raw material. Green supply chain analysis provides an opportunity to review processes, materials, and operational concepts. As with continuous improvement programs, green supply chain analysis targets: Wasted material Wasted energy or effort Under-utilized resources Green Process Improvement Approach Identify the waste streams Measure or identify the opportunity cost of the waste Create innovation vs. treatment bias toward waste reduction Source: Green and Competitive, Proter and van der Linfde, HBR, Sept.-Oct Environmental Supply Chain Management, Carter and Narasimhan, CAPS Research, 1998 GREEN SUPPLY CHAIN MANAGEMENT DRIVES PROCESS IMPROVEMENTS

Waste Reduction Opportunities in the Life Cycle Concept Design Raw Material Extraction Retail/ Consumer Use Transport Manufacture Transport Transport Disposal Reduce Reuse/Recycle Dispose Control Technology High Potential for life cycle cost savings Cumulative life cycle costs Low FOCUSING ON SOURCE REDUCTION PROGRAMS DRIVES HIGHER VALUE IMPROVEMENT

HMMWV FUEL SUPPLY CHAIN
Army reviewed acquisition, maintenance, and fuel costs associated with conventional and hybrid HMMWV. Fuel costs included cost of supply chain. Evaluation based on military operations. Costs are break even for the two platforms Hybrid technology lowers fuel cost but has greater maintenance requirements. However, hybrid platforms can also serve as power generators in theater and can offer some operating advantages (e.g., silent operation). Hybrid HMMWV Domestic Fuel Storage Transportation Into Theater Transportation Within Theater Theater Fuel Storage Theater Fuel Distribution Source: Economics of Hybrid Electric Technology: Military Vehicles, 2002, LMI Resource Costs of Supplying Power to a Battlefield, 2004, LMI Research Institute THE ARMY EXAMINED USE OF HYBRID HMMWVs TO REDUCE THE FUEL SUPPLY CHAIN FOOTPRINT / COST

Estimated savings (USPS) = $500 Million (1997)
DIRECT MAIL SUPPLY CHAIN Direct Mailers realize higher response rates and lower operating costs Target mailings to generate less waste Ensure proper addressing Ensure changes do not affect sorting capability Post Office Direct Mailer Post Office Sorting Facility Customer Waste Target recycled content and recyclable materials Problem: Excessive direct mail waste and cost Recycle undeliverable mail Undeliverable Items Estimated savings (USPS) = $500 Million (1997) Source: Greening the Mail, 1999, LMI USPS WORKED WITH DIRECT MAIL VENDORS TO REDUCE SUPPLY CHAIN WASTE AND COST

Green supply chain projects need to be clearly defined in terms of the business value to the organization. Clear value will gain senior management support. Clear value will help secure buy-in from other organizations Environmental programs are viewed as business cost centers. Environmental, safety, and health (ESH) resources are often scarce in an organization. ESH offices are targeted early during cost cutting programs. ESH offices have difficulty articulating their business value. The inability to articulate the value of green supply chain effort in business terms lowers their profile. Many executives have misconceptions of how green supply chain efforts will impact their operations. Without a clear business value proposition, it is difficult to get executive support for projects. GREEN SUPPLY CHAIN EFFORTS MUST ADOPT A COST CENTER VIEW

Many businesses have internal hurdles that must be overcome for any improvement effort. Inconsistency in supply chain operations (by unit, region, product, etc.) Business viewed through existing operations—resistance to change Focus on short term goals and short term results Limited partnership experience—especially in the environmental office. To be successful, the project manager needs to understand the organization and plan for the applicable hurdles. Develop communication/evangelization plan. Build a project team with broad functional representation. Clearly articulate project business value. Use outside experts where in-house expertise doesn’t exist. CONSIDER THE EXISTING BUSINESS MODEL WHEN PLANNIG GSC PROJECTS

By going green, best-in-class companies have managed to reduce*: Transportation and logistics costs by 2% Energy costs by 6% Operation and facilities costs by 2% Supply costs by 2% However, many practitioners leap into the green agenda without a clear understanding of the impact of the green initiatives from a full supply chain perspective. *Source: Aberdeen Group – A Harte-Hanks Company (2008) Building a green supply chain, March, pp. 1-29 BUSINESS BENEFITS

Supply chains are boundary spanning Coordination across normal boundaries means that many aspects of sustainability may be affected From initial processing of raw materials to consumption by final customer WHY SHOULD SUPPLY CHAINS TRY TO BE SUSTAINABLE?

Outsourcing Watchdog groups Government requirements WHY SHOULD SUPPLY CHAINS TRY TO BE SUSTAINABLE?

Reduce cost and wastes Manage risks Create distinguishing (sellable) reputation Reinforce shareholder value WHY SHOULD SUPPLY CHAINS TRY TO BE SUSTAINABLE?

Product design Product returns Length of product life cycle Extension of product life cycle End of life disposal Packaging Source reduction Recycling Material substitution Waste disposal Refurbishing Repair Remanufacturing ISSUES AFFECTING SUSTAINABILITY

GOOD? BETTER BEST BETTER TRIPLE BOTTOM LINE

Use of the Triple Bottom Line SOCIAL Manage risks to organizational reputation Create competitive advantage ENVIRONMENTAL Regulatory issues Risk of harm from usage, disposal, packaging, shipping ECONOMIC Sustainability can be cost efficient Sustainability can enhance shareholder value SUSTAINABILITY IN SUPPLY CHAIN MANGEMENT

TRANSPARENCY & RISK MANAGEMENT Anticipate harm from activities Stakeholder Engagement ORGANIZATIONAL CULTURE Supplier Operations Deeply Ingrained Organizational Citizenship Values and Ethics STRATEGY Sustainability as part of an integrated strategy TRIPLE BOTTOM LINE SUPPORTING FACTORS

A reverse supply chain is a means of enhancing sustainability by retrieving products from customers. Safe end-of-life disposal Refurbishing Reuse for spare parts Value in recycling REVERSE SUPPLY CHAINS

Source: Koh, S.C.L., Gunasekaran, A., Tseng, C.S., 2008 FORWARD AND REVERSE SUPPLY CHAINS

FORWARD SUPPLY CHAIN REVERSE SUPPLY CHAIN REVERSE SUPPLY CHAINS

Forward Supply Chain Reverse Supply Chain PLANNING Forecasts LOCATION One to many transportation COSTS Well-defined Focus on product ordering costs VISIBILITY High priority PLANNING Reactive LOCATION Many to one transportation COSTS Not easily defined Additional costs not easily justified VISIBILITY Low priority WHAT IS DIFFERENT ABOUT REVERSE SUPPLY CHAINS?

ECONOMIC Maintain product value—reuse Continuous improvement ETHICAL Customer safety Customer satisfaction ENVIRONMENTAL Protect and safeguard sustainability LEGAL Global rules and regulations (WEEE Act) BENEFITS OF REVERSE SUPPLY CHAINS

OPERATIONAL Information and process flow Roles Product FINANCIAL Costs TECHNOLOGICAL Information technology systems REVERSE SUPPLY CHAIN CHALLENGES

IMBALANCE SENARIOS

Complexity and conflict Uncertainty and investment Antecedent and decision Attribute and performance Partial and discrete IMBALANCE SCENARIOS

Matos and Hall (2007) argued that sustainable development pressures have increased complexities and presented ambiguous challenges that many current environmental management techniques cannot adequately address. Zhu and Sarkis (2004) identified that GSCM practices tended to have win-win relationships in terms of environmental and economic performance but that JIT programs with internal environmental management practices may cause further degradation of environmental performance and care. COMPLEXITY & CONFLICT IMBALANCE SCENARIOS: COMPLEXITY & CONFLICT

Webster and Mitra (2007) examined the impacts of take-back laws and introduced the idea of competition within a manufacturer and remanufacturer framework but their quantitative model excludes the inter-organisational relationships and business uncertainty factors in greening a supply chain. Kocabasoglu et al. (2007) explored investment related to forward and reverse supply chains under the influence of business uncertainty and found that ongoing investment in the forward supply chain was significantly related to investment in recycling and waste management, but not to investment in reconditioning. UNCERTAINTY & INVESTMENT (1) IMBALANCE SCENARIOS: UNCERTAINTY & INVESTMENT (1)

Risk propensity has been found to mediate the relationship between the external business uncertainty and investment in the forward and reverse supply chain, in line with the previous studies which have observed that uncertainty has knock-on and compound effects on supply chain performance (Koh, 2004; Koh and Saad, 2006). An uncertainty diagnostics model has been developed to evaluate the impact of material shortages, labour shortages, machine capacity shortages, quality issues and delivery issues on supply chains performance (Koh and Saad, 2002), and the model gives a precursor to the identification of mediating factors such as supply uncertainty, technology uncertainty and demand uncertainty affecting energy efficiency in supply chains, and these uncertainties do appear to be problematic when implementing a green supply chain (Baldwin et al, 2005). UNCERTAINTY & INVESTMENT (2) IMBALANCE SCENARIOS: UNCERTAINTY & INVESTMENT (2)

Karakayali et al. (2007) modelled the optimal acquisition price of end-of-life products and the selling price of the remanufactured parts and found that OEMs would prefer a remanufacturer-driven channel under certain conditions. This finding suggests that the OEM must pay more attention to its outsourcing decision if the environmental regulations in effect specify target collection rates for individual quality groups. Sarkis (2002) developed a strategic decision framework for GSCM. The framework highlights the components and elements for GSCM and how they served as a foundation for decision framework. These can be inferred as the range of antecedents, enacting the importance of understanding the wider constituents for green supply chains. ANTECEDENT & DECISION IMBALANCE SCENARIOS: ANTECEDENT & DECISION

Handfield et al. (1997) suggested several attributes for green value chain practices. These include shareholder value, regulatory climate, strategic manufacturing initiatives, product design, customer expectations, and environmental responsibility. Angell and Klassen (1999) noted that GSCM research remains in a pre-paradigmatic state. They suggest that much of the research to date has adopted a prescriptive tone, based on anecdotal evidence, which advises managers to consider the impact of environmental issues within a broad array of operating and performance choices and little attention has been given to environmental performance as a competitive dimension of operations. Since then, an increased research body has emerged suggesting various environmental KPIs, for example carbon footprint of a product, energy conservation of a company, etc. ATTRIBUTE & PERFORMANCE IMBALANCE SCENARIOS: ATTRIBUTE & PERFORMANCE

Full range of environmental and external impacts of the use of freight transport have been studied, feeding into transport policy formulation and implementation, e.g. Department for Transport (DfT), London. Challenges in capturing full green supply chain mapping and analysis. Without a holistic understanding of the true impact of CO2 or green initiatives on the full supply chain, recommendations tend to be drawn based on limited analysis, thus resulting in non-systemic view and increasing the associated risk. PARTIAL & DISCRETE IMBALANCE SCENARIOS: PARTIAL & DISCRETE

END OF SEGMENT THE EMERGENCE OF GSCM

GREEN SUPPLY CHAIN MANAGEMENT

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