Green Supply Chain

Management
Lecture 19
• Green Supply Chain Management,
• ‘7Rs’ of green Supply Chain Management,
• Recycling and green Supply Chain Management.
The notion of GSCM implies the insertion of environmental criteria within
the decision-making context of the traditional supply chain management.

Green Supply Chain Management has become a key strategic issue for
organizations of all sizes and types rather than just a talking point for
idealists and hobbyist do-gooders.

For example, the idea of Corporate Social Responsibility (CSR) is now fully
incorporated in many legal and ethical frameworks governing how
organizations function within society.
 Necessity comes from
• Past environmental degradation
• Market opportunities for more and more Green products and services
• Public activism to accept sustainability
• Social and environmental impacts of their current activities

• GSCM would comprise of every stage i.e. product design,

procurement, sourcing and supplier selection, manufacturing and
production processes, logistics and the delivery of the final product to
the consumers, along with the end-of-life management of the product.
Interrelated areas of Green supply chains:
• Upstream activities of a manufacturing product organization include
evaluation of suppliers’ environmental performance, Green Procurement,
and Green Design.
• Downstream activities : activities related to the usage of the products till it is
finally consumed.
• recovery and recycling opportunities
• disposal and sale of excess stocks.
• Within the organization activities: Green Design, Green Packaging, and
Green Production.
• In logistics, activities such as just-in-time, fulfillment, lot size management,
and quality management all have clear connections to environmental
criteria.
 Benefits of GSC
• Positive Impact on Financial Performance with systematic approach
• Sustainability of Resources with effective decision-making
• Lowered Costs/Increased Efficiency
(Reducing waste i.e. reduce production costs, promote recycling and reuse of
raw materials)
• Product Differentiation and Competitive Advantage with environmentally
friendly products
• Adapting to Regulation and Reducing Risk
(dedication of resources, activity, measurement, and management protocol)
• Improved Quality and Products
(technologically advanced and environmentally friendly)
 How to achieve the benefits?
Activities Benefits
Recognizing processes to reduce emission of greenhouse gases Environmental
Benefits

Identify organizational profitability from green projects Technological

Benefits

Procurement costs from more efficient energy and materials Economical Benefits
use; compliance and disposal costs from decreased waste
generation and use of hazardous materials

Impetus for innovation, organizational learning, and change Regulatory Benefits

Sales for environmentally preferable products; clean working Social Benefits
environment; occupational health and safety
 Traditional & Green Supply chains
• carbon footprint and
• greenhouse gas emission of the other partners.
• own footprint
• reduce

• Environmental effects of all processes of supply chain from extraction of raw materials to
final disposal of goods.
• Motivate each player to go Green and provide necessary information, support, and guidance
• through suppliers’ development programs or customer support.
• Environment objectives and performance measurement are then integrated with financial
and operational objectives.

• Achievements: minimized waste, minimized environmental impact while assuring

maximized consumer satisfaction, and healthy profits.
Traditional supply chain
Green Supply Chain
Some key differentiators of Green Supply Chains
• Top management commitment - culture of continuous improvement
and collaborative innovation towards “Greener” supply chains.
• Allowing all of the supply chain partners a role in creating specifications,
options, and examining alternatives during the product design phase
itself.
• The efficient use of technology to capture data, run scenarios,
communicate information, and to make decisions.
• The removing and getting out of a traditional strategic “stage gate”
sourcing mentality that creates rigid parameters on information
dissemination, collection, and analysis.
• Making sustainability a cost issue, as well as a CSR issue.
Green Supply Chains and Corporate Social Responsibility (CSR)

• Company activities in the

• protection and promotion of international human rights,
• labor and environmental standards and
• compliance with legal requirements within its operations and
• in its relations to the societies and communities.

• CSR involves a commitment to contribute to the economic, environmental

and social sustainability of communities through the on-going engagement
of stakeholders, the active participation of communities impacted by
company activities and the public reporting of company policies and
performance in the economic, environmental and social arenas.
• CSR focuses on sustainable design that increases environmental and social
awareness across the supply chain.
• Sustainable design involves re-engineering of design processes to meet current
and future human needs without compromising the environment.
• The basic objectives of sustainability are to reduce consumption of non-
renewable resources, minimize waste and create healthy, productive
environments through:
• using fewer materials;
• avoiding toxic substances and choosing renewable or recyclable substances;
• designing for disassembly;
• minimizing energy use, moving to the use of renewable energy, and
extracting energy from waste in some cases;
• keeping a product or its parts or materials in productive use for their optimal
lifespan, so slowing or preventing the linear flow of materials from extraction
and processing to disposal.
 Drivers of GSC
There are five types of environmental stakeholder group who drive Green
initiatives within an organization:
1. Regulatory stakeholders: to set regulations or to convince governments
to set standards.
2. Consumers, seeking for green products.
3. Organizational stakeholders, who are directly related to an organization
and can have a direct financial impact on the organization.
4. Community groups/environmental organizations are potential lobbies,
who can mobilize public opinion in favour of, or against, an organization’s
environmental policies.
5. Media, who have the ability to influence society’s perceptions.
 Factors that drive manufacturers towards Green Design
and Green Production include:
• Legislation
• Corporate customer requirements
• Competitor standards
• Voluntary agreements
• Maximizing product understandings
Environmental drivers of suppliers include:
• Customers requirements
• Consumers
• Legislation
• Consumer organizations and NGOs
Logistics providers are implementing Green practices due to government
regulations and customer expectations and agreements.
 GSC Framework
Framework broadly divides the movement towards Green Supply Chains
into the following seven key areas of interest:
• Green Supply Chain Planning
• Green Procurement and Sourcing
• Green Supply Chain Execution
• Carbon Management
• Green Supply Chain Migration Strategy
• Green Supply Chain Continual Improvement
• Green Supply Chain Performance Evaluation.
 Circular Supply Chain
• Output from one process is utilized as the key input for a totally different
process (for example as a by-product, a residual, or the actual product).
Term Explanation
Remanufactured full manufacturing process using a combination of material that is new and from
used goods.
mobile phones remanufactured from parts of returns combined with new parts.
Reconditioned Total overhaul of the product but not full manufacturing process.
worn out or failed parts are removed and replaced with new ones and oil is
replaced then with reassembly and inspection.
Bosch recondition machines and tools and sell them for a discounted price with
warranty.
Refurbished Most of the structure of the product is untouched,
product gets its “as new” condition via cosmetic changes such as minor repairs,
new paints, cleaning, removal of stains, scratches etc.
For example, the refurbishing of furniture.
Term Explanation

Re-process process is repeated because the previous run of the process did not result in
desired outcomes; in effect this is the rerunning of a production process.

Reclaim Reclaiming the oils or fluids after a process so that these reclaimed oils or fluids
can be used elsewhere in the same process or a new process.

Repair Replacement of faulty or failed parts to make the product usable again.

Recycle Collection of used or faulty products so that they can be used again, either in the
same form or in a different form.
For example, Nike collects worn out athletic shoes at any Reuse-A-Shoe collection
centre or shoe drive event. At their recycling facilities these shoes are sorted,
shredded, and processed into three types of raw material; rubber from the
outsole, foam from the midsole, and fabric fibres from the upper, collectively called
Nike Grind. Nike Grind is then used in playgrounds, running tracks, and basketball
courts.
Reuse Use the product again with or without any alteration, e.g. packaging, totes, and
pallets
Another example reuse of the white goods was launched at Daventry District
Council in England. With this initiative the council collects broken and discarded
white goods such as washing machines, dishwashers, etc. as part of household
waste collection.
They are then checked and repaired, and distributed to low – income families
who need these items but cannot afford them.

Disposal Disposal to landfill after only non-salvageable material is left.

Disassembly Removal of parts from used products without damaging the parts.
These parts are later reused or recycled, the rest of the product being either
recycled or disposed.
 Eco-friendly products
• Gift Cards • Reusable Sandwich Wraps
• Eco Friendly Gifts
• Reusable Lunch Bags
• Reusable Bread Bags
• Reusable Snack Bags
• Bulk Food Bags
• Reusable Shopping Bags
• Reusable Produce Bags
• Backpacks
• Drink Bottles
• Side Bags New
• Drink Bottle Accessories
• Disposal Bags
• Reusable Coffee Cups
• Reusable Coffee Cup Lids • Compostable Bin Liners
https://www.onyalife.com/eco-friendly-products/
https://
timesofindia.indiatimes.com/most-searched-products/combos/21-products-for-movie-buffs-to-enjoy-your-favorite-flick-at-h
Environmentally conscious companies with
biggest potential in reducing carbon footprint.
• Procter & Gamble. (Water from the HVAC systems at Saudi Arabia location is
reused for irrigation and top off fire water tanks)
• Puma. (packaging for shoes called “The Clever Little Bag.”)
• Frito Lay. (installed biomass boiler; electric truck fleet, plant on landfill gas;
plant-based compostable SunChips bags)
• IKEA. (sustainable foresters; Better Cotton standards; 700,000 solar panels
powering)
• Home Depot. (People can find solar panels and rechargeable batteries for their
homes; places for shoppers to recycle CFL bulbs, batteries, cell phones, and
common materials like plastic, paper, and aluminum)
• Nike. (app to compare environmental footprint of different fabrics; started
using post-consumer recycled materials in their products)
https://www.qualitylogoproducts.com/blog/how-big-brands-are-going-green/
• Apple. ($1 billion deal for Solar power in California stores, offices, data
centers, and headquarters; consumers can trade in devices for gift cards or
have them recycled for free; PVC is removed from power cords and
headphones, making them safer to recycle)
• TOMS. (donating shoes; clean drinking water to impoverished; exclusive
vegan line of footwear for Whole Foods; Textile Exchange - materials to
nurture planet)
• Amazon. (solar rooftops at their distribution warehouses; wind turbines and
working directly with manufacturers to reduce waste.)
• Google. (making the search engine 100% powered by renewable energy;
“ugly” produce to make lunches for their 60,000+ employees)
• LFG - decomposition of organic material in landfills
Reuse, Reduce, and Recycle
Very important elements of sustainable product development.
• Reuse: this is an operation through which the function and value of
products or parts can continue to be used once they have been discarded
by users and taken back to collection points by recyclers, distributors, or
manufacturers.
• Reduce: decreases the consumption of material, energy, and other natural
resources and reduces emission of pollutants while producing or using
products.
• Recycle: recycles energy or material from end-of-life products.
Supply loops

• Models that take into a process inputs which are outputs from another
process.
• Those parts of an overall supply chain that recycle or reuse the materials,
products, or by-products from either the same supply chain or from
another supply chain.
• Every organization configures its supply chain to suit its current needs and
uses supply loops when it becomes cost effective to do so.
• Cost and service and cost and value are two high-level examples of
tradeoffs that go beyond taking cost as “single” cost views.
 Manufacturing Process Supply Loops
Examples
• By-products of one process will be
input to the next process and so on.
• Until it cannot be reused, the waste
is disposed in environmentally
friendly way.

• Industries:
• chemicals,
• fast moving consumer goods,
• petroleum products,
• pharmaceutical,
• agri-business etc.
Forward logistics supply loop structure
 Forward logistics supply loop structure
• Output from one process is then distributed either directly as an end
product, or is further repackaged, reformulated, or taken through other
value added steps, in order to make it usable to the end customers.
• A considerable amount of manufacturing is avoided by making use of an
end product from another process which is primarily aimed at a
completely different application.

• Examples: fast moving consumer goods or chemicals industry.

Forward and reverse logistics supply loop
Integrated supply loops with multi-tiered structures and
multidirectional movements of rejects from one process, that
attempts to move it, for use as an input into another process.
 Components of Supply Loops
Each supply loop will be different from others, still some elements are similar
among most supply loops:
• Circular supply chain: at least for some parts of the supply chain.
• Reverse logistics: a major decision is required to recycle or reuse at some step
in the supply chain.
• Disassembly lines: these have well developed processes and infrastructure to
facilitate disassembly and/or redeployment of by-products or end-of-life
products.
Reverse Logistics
• Movement of goods in the reverse order, from destination to origin, to enable
reprocessing, remanufacturing, repairing, reusing, recycling, disassembling, or
disposing.

• Goods: raw material, work in progress, sub-assembly, and finished goods.

• Destination: manufacturing plant for raw material, warehouses for inventory, and
consumers, retailers, or distributors of the finished goods.

• Includes the management and the sale of surplus and returned goods, equipment,
and machines (this is often called returns management)
• Returning the used, faulty, or unwanted product from the customer to the provider.
• Includes returns prevention, gate keeping, collection, disposal, and other end-of-life
concerns.
Reverse logistics
• Before sending goods away for disposal, then the following checks should be
made:
• Any usable materials that can be reclaimed will be reclaimed, e.g.
packaging, totes, and pallets. Broken totes and pallets can be refurbished
and reused many times before a time comes that they are beyond repair;
when this happens they are then disposed of.
• Any recyclable materials will be removed.
• Anything remaining will be disposed of, for example to a landfill.

Salvaging!!!!
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 Disassembly Lines
• Used to strip out usable parts, components, and/or material from products
which have reached the end of their life cycle stage and they can do this in a
systematic and cost effective manner.
• Proper sequencing and line balancing for disassembly to maximize output.
• Disassemble to order, or utilize just-in-time principles for disassembly.
• Configuration of products lead to complication in disassembly lines which
then need to be rebalanced and sequenced frequently.
• Variation in the quality of the material for disassembly.
• High variability of processing time and makes management using statistical
process control or Six Sigma very difficult.
• Disassembly may require extreme heat, force, or other destructive elements,
making it harder to configure and manage the process.