Recently, green supply chain management has focused on the role of the supply chain with regard to its impact on the present natural environment as well as to the genera- tion of any future environmental change. The intent is to be able to meet our pres- ent needs without compromising the ability of future generations to meet their own needs. So, how do we green supply chains?
Green supply chain management
Focuses on the role of the supply chain with regard to its impact on the environment.
MAJOR ISSUES AFFECTING SUPPLY CHAIN MANAGEMENT • 119 A number of organizations have intro-
duced “greening” requirements for both their suppliers and distributors. These requirements can be purchasing clauses, specified supply chain goals (carbon emis- sion footprint reduction, reduced energy consumption, reduced inventory levels, reduced transportation costs, etc.), prac- tices (the use of sustainable farming, agree- ing not to use specified materials, etc.), and use or nonuse of specific technologies. Some companies develop a corporate sus- tainability plan, which is then translated into a code of conduct. This code can be shared with both suppliers and distribu- tors. Members of the supply chain are monitored for compliance. If vio lations of
the code are found, corrective action is taken with the intent of building a better sup- ply chain capability. In short, the organization is telling the members of its supply chain: “This is what you must do to be part of our supply chain. If you don’t, we fix it. If it doesn’t get fixed, we find a new member for our supply chain.” The debate cen- ters around how many organizations have that much leverage with members of their supply chain. Clearly, an organization such as Wal-Mart has considerable leverage. In fact, it uses a packaging scorecard to evaluate packaging compliance by members of its supply chain.
For supply chains doing business globally, it is important that they understand the packaging restrictions. For example, within the European Union cardboard boxes must be removed from consumption sites and recycled. As a result, U.S. automobile parts producers ship products in reusable containers rather than disposable contain- ers. Reusable packaging products are used to move, store, and distribute products within a single operation or an entire supply chain. Plastic reusable packaging, a form of reusable packaging, can be used to package anything from raw materials to finished goods. It can be used within reverse logistics to return empty containers or pallets for reuse or replenishment. Products include handheld containers, pal- lets, bulk containers, protective interiors, and custom-designed and engineered packaging.
Companies doing business globally must also focus on the final disposition of prod- ucts and packaging. The Herman Miller Company uses a design for the environment approach in new product design. To eliminate confusion as to what is a sustainable product, Herman Miller uses the McDonough Braungart Design Chemistry certifica- tion process, which is a “cradle-to-cradle” protocol for designing products in such a way that they are better for the environment. For Herman Miller, the issues centered on chemicals used and ease of disassembly of recyclable parts. It is clear that for global supply chains it will be important to be green, not only in terms of the environment but also in terms of eliminating waste and allowing the supply chain to be financially solvent.
Other organizations perform supply chain carbon footprint analysis. Consider the following simple supply chain example shown in Figure 4-5. When looking at the supply chain for potato chips, the chain begins with the farmer growing the potatoes,
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moves to the manufacturing of the chips, then their packaging, the transporting of the chips to the customer, and finally the disposal of the empty packaging. If you mapped out the carbon footprint for this supply chain, you would find that 44 percent of the carbon footprint occured at the farm, 30 percent in the manufacturing of the chips, 15 percent in the packaging process, 9 percent in transporting the chips to market, and only 2 percent in the disposal process. In this supply chain, it turns out that the farmer was overweighting the potatoes with water, since the manufacturer bought the potatoes based on weight. Because of how the potatoes were bought, they had too much water in them; this slowed down the manufacturing process, which needed to boil out excess water before processing the chips. When the manufacturer changed how potatoes were bought—based now on volume rather than on weight—the manu- facturer required only half as much time to process the chips. This saved consider- able energy and reduced the carbon footprint. Unfortunately, attention is often fixed on the disposal process, which can be a very small contributor to the overall carbon footprint. The gain in this example lies not only in reducing the footprint, but also in becoming a more efficient and effective supply chain by eliminating a waste-causing activity.
In 2007, S.C. Johnson found a “greener” way to load trucks that reduced greenhouse gases via better truckload utilization. The company created a system that combines multiple customer orders and multiple products to optimize truckload capacity usage. After the first year, S.C. Johnson reported using 2,098 fewer trucks, cut fuel usage by 168,000 gallons, and saved approximately $1.6 million. It also eliminated 1,882 tons of greenhouse gases. To achieve these results, the company focused on consistently hitting a trailer’s maximum weight. S.C. Johnson also maximized its use of “day cabs” (truck cabs with no sleeping compartments). Day cabs are 3,000 pounds lighter than a standard truck cab. This allows the company to increase the amount of product it loads into a trailer before reaching the vehicle’s maximum weight.
Potato farmer (44%) Processing (30%) Packaging (15%) Transporting (9%) Disposal (2%) FIGURE 4-5 Carbon footprint of potato chip supply chain
MAJOR ISSUES AFFECTING SUPPLY CHAIN MANAGEMENT • 121 In 2011, Cardinal Logistics Management was recognized by Inbound Logistics as
one of the Top 75 Green Supply Chain Partners. Cardinal’s green initiatives includes developing technologies that reduce fuel consumption and emissions by reducing miles and monitoring its fleet for efficient performance; testing renewable fuels; train- ing employees in proper maintenance, driving habits, and mile reduction; and pro- viding backhaul support to customers. Cardinal Logistics, headquartered in Concord, North Carolina, is a leading transportation solution provider, working with clients to optimize their supply chains.