THE GREEN SUPPLY CHAIN: AN OVERVIEW
Wal-Mart, “Sustainability 360” On February 1, 2007, Wal-Mart President and CEO Lee Scott unveiled “Sustainability 360” - a company-wide emphasis on sustainability extending beyond Wal-Mart's direct environmental footprint to engage associates, suppliers, communities and customers. “Sustainability 360 takes in our entire company - our customer base, our supplier base, our associates, the products on our shelves, the communities we serve,” said Scott. 1 In March, Wal-Mart shared early results from its Packaging Scorecard for suppliers that evaluates the “green quotient” of product packaging based a number of attributes, such as greenhouse gas emissions related to production, materials used, product to packaging ratio, cube utilization (transportation), recycled content usage, innovation, the amount of renewable energy used to manufacture the packaging, and the recovery value of the raw materials and emissions related to transportation of the packaging materials. The information will be shared with consumers and impact vendor selection starting in 2008. 2 This effort is aligned with an initiative to reduce overall packaging by 5 percent, expected to prevent millions of pounds of trash from reaching landfills and save 667,000 metric tons of carbon dioxide from entering the atmosphere. 3 Furthermore, Wal-Mart announced in September that it will begin asking its suppliers in seven categories (DVDs, toothpaste, soap, milk, beer, vacuum cleaners and soda) to measure their carbon footprint and find ways to reduce it. It will work with the Carbon Disclosure Project, a nonprofit group of 315 institutional investors that control $41 trillion in assets, to collect data on greenhouse gas emissions, emissions reduction targets and strategies for dealing with climate change for its suppliers in those product categories. 4
Benefits of Green Supply Chains In addition to the instant positive publicity, there are four other broad categories of benefits to an organization to be realized from greening the supply chain besides obvious decreased environmental impact. They are decreased operating costs, increased customer service and sales, opportunities for innovation, and regulatory risk mitigation.
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“Sustainability 360” Unveiled (http://www.walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=691) SCDigest Editorial Staff, The Green Supply Chain: Wal-Mart Releases Packaging Scorecard Data, Plans for Electronics Suppliers (Supply Chain Digest, March 14, 2007) 3 Wal-Mart Pledges Packaging Reduction (http://www.walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=677) 4 Ylan Q. Mui, Wal-Mart Aims To Enlist Suppliers In Green Mission (Washington Post Staff Writer Tuesday, September 25, 2007; Page D02) 2
Holden Lee Fall Semester Q1 2007 GBUS 806: Sustainable Innovation & Entrepreneurship
The most immediate benefits are reduced operations costs. Already Wal-Mart’s Sustainability 360 has achieved some success. Supply Chain Management Inc. (SCM), WalMart's third-party logistics service provider (3PL) in Canada, has changed the way it ships products to 10 stores in Nova Scotia and Prince Edward Island. By shifting from road to rail, the company has reduced carbon emissions by 2,600 tons. In addition, the 3PL converted 20 truck generators to electric power, saving about 10,000 gallons of fuel. These two measures combined are expected to yield more than $2 million in annual cost savings. Also, the adoption of plastic crates instead of cardboard shipping crates is expected to save $4.5 million and reduce waste by more than 1,400 tons per year. 5 Increased innovation is another benefit. For example, customer demands for environmental performance expand the opportunities for ingenuity from suppliers. Hardigg Industries was a plastics molding company with excess capacity. It partnered with Clearvue Plastics to create plastic pellets with 50% recycled content, which it thought was impossible at the time. Later, it was able to change its rotomolding technology to allow for the use of 100% recycled resins. Through the use of recycled materials, it was able to lower cost, establish a competitive advantage within its homogenous industry, and increase customer satisfaction. 6 Moreover, green supply chains lead to improved customer satisfaction and higher sales. Through product recovery programs, Dell has strengthened its brand reputation for customer satisfaction and corporate citizenship while increasing sales. For the Center for Computational Research at the University of Buffalo, SUNY, Dell Asset Recovery Services (ARS) designed a customized solution that quickly recovered 2,300 servers, making four pickups with 60 racks each, utilizing 79 custom-made pallets. “That solves two problems for us: it helps get rid of the old equipment in a cost-effective way, and it allows us to get new, faster equipment that is under warranty,” said Tom Furlani, Director at the Center for Computational Research, SUNY. In addition to secure destruction of hard drive data, Dell ARS maintains a zero landfill policy – meaning that all equipment that is unable to be resold is broken down into component parts and re-distributed back into the primary materials manufacturing market. 7 Green supply chains mitigate regulatory burdens and litigation risk. With the increasing severity of environmental regulations from different regions of the world and the global scale of today’s supply chains for even simple products (e.g. cloth from Latin America, cut and assembled in China, shirt sold in Europe), green supply chains plays a critical role in the operations strategy of multinational organizations. Noncompliance has ramifications that are becoming more painful for corporations. For example, during the 2001 Christmas season, Dutch customs agents stopped entry of nearly 1.3 million Sony PlayStation game machines, because cables in the consoles contained levels of cadmium considered unsafe under recent changes to
5
DC Velocity Staff, Wal-Mart's “green” campaign pays off in Canada (http://www.dcvelocity.com/news/?article_id=1338, October 2007) 6 Paul H. Farrow, Richard R. Johnson, Andrea L. Larson, Entrepreneurship, Innovation, and sustainability Strategies at Walden Paddlers, Inc. (INTERFACES 30: 3 May-June 2000 pp 215-225) 7 Dell.com, Customer Case Studies: University of Buffalo, Center for Computational Research (http://www.dell.com/content/topics/global.aspx/casestudies/casestudies_category?c=us&cs=555&l=en&s=biz&~pa ge=a&~tab=2, November 2006)
Dutch law. 8 While Sony disputed with its Taiwanese cable supplier over the root cause, the seizure delayed the sale of $160 million worth of consoles and incurred costs for replacements parts, storage, and repacking the goods.
Supply Chain Management First, let us briefly discuss supply chain management to establish a baseline for comparison. Although the concept of supply chain is intuitive, its definition and scope are somewhat fluid. The basic idea assumes that different entities within the process takes raw materials at the beginning of the supply chain and transforms them into a product at the end of the supply chain (see Exhibit 1). As a simple example, a logging company cuts down trees, and then ships the wood to a processing facility. The facility cuts the wood into standard sizes, creating lumber. After the lumber is sorted and stored, it travels to a distribution facility. There, it is sold to Home Depot. A local carpenter buys the lumber, and then applies his skills to create furniture. It is then sold at a neighborhood furniture store to the general public. While the term “supply chain” implies a linear relationship among its participants (e.g. from A to B to C and so on), it is more accurate to say it is a network of individuals or organizations that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and distribution of these finished products to customers. 9 Thus, supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain as efficiently as possible. It includes the acquisition, storage, and movement of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption. Strategically, SCM addresses fundamental, longer-term business decisions such as vertical integration, make-or-buy, and information technology infrastructure. Tactically, day-to-day SCM activities involve purchasing criteria, delivery schedules, inventory considerations, and logistics. 10
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Adam Aston, Andy Reinhardt, Rachel Tiplady, Europe's Push for Less-Toxic Tech (BusinessWeek, August 9, 2005) 9 The dictionary of sustainable management, supply chain (http://www.sustainabilitydictionary.com/s/supply_chain.php) 10 Supply chain management (http://en.wikipedia.org/wiki/Supply_chain_management). Volumes of text and academic research are dedicated to this topic. The lists provided are meant to be illustrative, and it is by no means exhaustive.
The Green Supply Chain 11 Supply Chain Digest identified “Green Supply Chain” as the number one supply chain trend of 2007. 12 Based on the flurry of announcements from numerous companies on their environmentally friendly efforts with respect to their suppliers and business partners, this assertion seems to be justified. However, the broad scope of supply chain management makes “green” supply chain more difficult to define. Still, there are two main aspects that differentiate green supply chains from traditional supply chains. Firstly, green supply chain aims to improve the environmental performance of its existing supply chain through environmental monitoring and collaboration through application of environmental technologies. Secondly, the supply chain is augmented to include reverse supply chain management that builds a closed-loop system for the products. Environmental Monitoring The elements of environmental monitoring require suppliers to adhere to certain level of environmental responsibility in core business practices of their suppliers and vendors. 13 It implies activities in the supply chain that have market-based or arm’s-length transaction characteristics. 14 Buying organizations try to minimize their involvement and resources directed to environmental management in the supply chain. They rely on some arbitrary criteria, audits, and certifications that exert pressure on upstream suppliers to improve their environmental performance. Environmental monitoring can also take the form of a supplier requirement for compliance with a ‘‘voluntary’’ (i.e. non-government or industry-specific) code of practice or public standard. For example, one prevalent approach is ISO 14001 certification that is now required by several large automotive companies of their tier-one suppliers. 15 Instead of process-based requirements, customers can choose to impose product specifications in the same way that quality specifications for parts and components are handled. A good example of product specifications would be the requirements from the Reduction of Hazardous Substances (RoHS) directive in the Europe and their many implications for North American suppliers in the electronics industry. By July 2006, all manufacturers of electronic and electrical equipment sold in Europe must comply with the EU's RoHS Directive 2002/95/ EC 11
An alternative term for green supply chain is Supply Chain Environmental Management (SCEM), a broad term that refers to a variety of approaches through which companies work with their suppliers to improve the environmental performance of the products or manufacturing processes of the supplier, customer or both. Green Business Network, The National Environmental Education & Training Foundation, Going Green Upstream, The Promise of Supplier Chain Environmental Management (Washington, DC: The National Environmental Education & Training Foundation, October 2001) 12 Dan Gilmore, Top Ten Supply Chain Trends of 2007 (Supply Chain Digest, January 4, 2007) 13 Supply Chain Management for Environmental Improvement, Why Green Your Supply Chain? (http://www.pprc.org/pubs/grnchain/intro.cfm) 14 Stephan Vachon, Green supply chain practices and the selection of environmental technologies (International Journal of Production Research, Vol. 45, Nos. 18–19, 15 September–1 October 2007, 4357–4379) 15 Ibid.
mandating the reduction of six hazardous substances: Lead (Pb), Hexavalent chromium (Cr +6), Mercury (Hg), Polybrominated biphenyl (PBB), Cadmium (Cd), Polybrominated diphenyl ether (PBDE). 16 Moreover, these rules amount to a de facto global standard, since similar efforts are underway in Asia, such as Japan's Green Procurement rules and China's Agenda 21 goals. 17 Because environmental monitoring focuses on the outcome of environmental efforts made by the suppliers in terms of gaining certification or complying with regulations, it is more likely to be viewed as a risk management tool rather than a competitive advantage or market differentiation strategy. 18 This is the approach of Wal-Mart’s Sustainability 360. Environmental Collaboration Environmental collaboration can be defined as the planning and development of environmental activities and projects that require direct involvement of an organization whether with its suppliers or with its customers to jointly develop environmental solutions.19 The most representative example would be a joint venture to create new products or find solutions to common problems. It involves investment of resources, joint planning sessions, and knowledge sharing. Unlike environmental monitoring, the results of environmental collaboration are more likely to establish stronger relationships within the supply chain, competitive advantage in the marketplace, and innovation in product or process design. Case Study: Climatex DesignTex is a leader in contract textile industry and part of the Steelcase design partnership. 20 Although initiated by curiosity, its pursuit of an environmentally friendly upholstery fabric in 1991 led to the collaboration of a textile mill, a specialty chemicals company, and a design consultancy to create a cradle-to-cradle product named Climatex, going on the market in Jun 1995 in the US and in June 1996 in Europe. 21 Rohner Textil AG, Ciba Geigy Corporation, Environmental Protection Encouragement Agency, and DesignText worked together to determine product specifications, develop fabric requirements, and identify chemicals to innovate in a relatively low-tech industry. Based on the reduced costs (regulatory, water treatment costs, and disposal costs) and tax relief for environmental investments, the environmental R&D costs showed a payback period of only five years. 22 Furthermore, there were several non-financial benefits. 23 Regulatory 16
Underwriters Laboratories, Inc., RoHS (RSCS Programme) (http://www.uleurope.com/en/solutions/services/rscs.php) 17 Adam Aston, Andy Reinhardt, Rachel Tiplady, Europe's Push for Less-Toxic Tech (BusinessWeek, August 9, 2005) 18 Stephan Vachon, Green supply chain practices and the selection of environmental technologies (International Journal of Production Research, Vol. 45, Nos. 18–19, 15 September–1 October 2007, 4357–4379) 19 Vachon. 20 Steelcase, Design Partnerships (http://www.steelcase.com/na/design_partnerships_ourcompany.aspx?f=18592) 21 Matthew M. Mehalik, Sustainable Network Design: A Commercial Fabric Case Study (INTERFACES 30: 3 MayJune 2000 pp 180-189). 22 Mehalik. 23 Willian McDonough, Michael Braungart, Chaper 4: Waste Equals Food (New York: North Point Press, Cradle to Cradle 2002)
paperwork was eliminated. Workers no longer needed protective masks or gloves. Incredibly, the environmental impact of the production factory actually became positive, where the effluent was now cleaner than the influent. Environmental Technologies 24 Traditionally, there has been two ways to address environmental technologies: pollution prevention and pollution control. The term ‘‘technology’’ is broadly defined to include design, equipment, and operating procedures that limit or reduce the negative impacts of products and processes on the natural environment. Moreover, “management systems” has become the latest classification of environmental technology (see Exhibit 2). Pollution prevention technologies are defined as investments that reduce or eliminate pollution at the source through initiatives such as Design for Environment (DfE). For example, Hewlett Packard employs DfE “Product Stewards” who are integrated into product design and research and development teams to identify, prioritize and recommend environmental design innovations to make products easier to disassemble and recycle, e.g. modular designs, snap-in features that eliminate the need for glues and adhesives, fewer materials, and molded-in colors and finishes instead of paint, coatings or plating. 25 Pollution control technologies are investments that ensure a proper disposal of waste, reduce the release of pollutants, or correct past environmental damages. They are often referred to as end-of-pipe technologies. Wet scrubber systems 26 and waste water treatment equipment are good examples of pollution control technologies. Contrary to the previous two structural technologies, management systems are infrastructural investments that improve environmental performance. 27 They include procedures for evaluating environmental impacts, employee training and awareness, scheduling and production planning, and inventory management. These infrastructural investments can affect both control and prevention of negative environmental effects.
24
Vachon. GreenBiz.com, HP to Eliminate Brominated Flame Retardants from Products' External Case Parts (http://www.greenbiz.com/resources/p2/news_third.cfm?NewsID=29078 Palo Alto, Calif., Nov. 2, 2005) 26 Wet scrubber – the term describes a variety of devices that use pollutants from a furnace flue gas or from other gas streams. In a wet scrubber, the polluted gas stream is brought into contact with the scrubbing liquid, by spraying it with the liquid, by forcing it through a pool of liquid, or by some other contact method, so as to remove the pollutants. (http://en.wikipedia.org/wiki/Wet_scrubber#Wet_scrubber_systems) 27 Ed Davis, GBUS 880 Operations Strategy, Darden School of Business: Structural decisions relate to tangibles such as buildings, equipment, the organization of equipment and personnel, and links among to other businesses. Infrastructural decisions relate to systems used to enhance the utilization and control of the structural resource to achieve high productivity levels. 25
Reverse Supply Chain 28 The reverse supply chain is key component of a green supply chain. It establishes a closed-loop for a product life-cycle to eliminate (or at least decrease) the amount of mass that ends up in the landfill (i.e. waste output minimization). Conversely, the demand for virgin raw materials is reduced because downstream materials re-enter the supply chain (i.e. materials input minimization). Dowlatshahi has identified five strategic factors and seven operational factors that comprise the reverse supply chain system. 29 Strategic Factors 1. Strategic costs 2. Overall quality 3. Customer service 4. Environmental concerns 30 5. Legislative concerns
Operational Factors 1. Cost/Benefit analysis 2. Transportation 3. Warehousing 4. Supply/Inventory management 5. Remanufacturing 6. Packaging
Simply defined, a reverse supply chain comprises the activities required to retrieve a used product from a customer and either dispose of it or reuse it. 31 There are five interconnected components: Product Acquisition, Reverse Logistics, Inspection and Disposition, Reconditioning, and Distribution and Sales (see Exhibit 3). Product Acquisition The beginning of the reverse supply chain is crucial to its design and success. Although some products are mandated by law to be taken back from the end-consumer, e.g. automobiles, companies must determine which products can be collected based on various factors, such as its physical properties, complexity, and residual value. Next, companies must consider how the products will be returned. The company can choose to include shipping labels to send the product by mail (e.g. printer cartridges from Hewlett Packard) or work with retailers or third party organizations to collect the products at the point-of-sale. Therefore, this involves affecting the behavior of both retailers and consumers through public relations and education efforts.
28
V. Daniel R. Guide Jr, Luk N. Van Wassenhove, The Reverse Supply Chain (Harvard Business Review, February 2002). I have organized the discussion based on the five components of the reverse supply chain as it is presented in the article. 29 Shad Dowlatshahi, Developing a Theory of Reverse Logistics (INTERFACES 30: 3 May-June 2000 pp. 143-155) I have taken the liberty to expand Dowlatshahi’s insights from reverse logistics to reverse supply chain management, because they are relevant and applicable. 30 It is interesting to note that while there is only one explicit reference to the environment among the eleven factors, it is sufficient to alter the concept of reverse supply chain into a sustainability effort. This exhibits the underlying strategic alignment of sustainable operations with new supply chain concepts outside of the traditional scope of environmentally friendly actions that have been categorized under corporate social responsibility or corporate citizenship. 31 Dowlatshahi.
Reverse Logistics Reverse logistics deals with the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. 32 In 2004, reverse logistics is estimated to have been approximately $58 billion in the U.S. alone. 33 This burdens the company with forecasting expected volume of returned products and managing capacity. Moreover, it becomes a strategic question of vertical integration whether or not to use contractor services. Third-party logistics providers assess that up to 7% of an enterprise’s gross sales are captured by return costs. 34 Inspection and Disposition The testing, sorting, and grading of returned products are labor-intensive and timeconsuming tasks. This implies that the company has developed a set of criteria by which the residual value is measured. The criteria depend on deep product knowledge, and their development would not be a trivial endeavor. If this service is outsourced, the contractor may require training to better understand the product, its components, and its disassembly. Sharing this information can raise intellectual property issues. Reconditioning 35 Reconditioning is the set of individual processes by which the product flows from the point of consumption to the various points of origin in the supply chain. It can be classified into five categories. The first three categories: repair, refurbishing, and remanufacturing, involve adding value back into the product; they differ with respect to the degree of improvement. For example, refurbish describes the process of replacing components or otherwise fixing or modifying a unit so it can be distributed again. 36 Cannibalization is simply the recovery of a restricted set of reusable parts from used products. Recycling is the reuse of materials that were part of another product or subassembly. Distribution and Sales Once a product is returned and re-enters the supply chain, it may not be able to be sold as a new product, regardless of its full functionality and performance compared to a new product, as is the case with certain Dell personal computers. In general, the company must determine the market demand for refurbished products and educate the customer to create demand, if it does not already exist. This may require significant investments in marketing and customer education. Moreover, there may be conflicts of interest with the sale of new products. On the other hand, if 32
Reverse Logistics Executive Council, What is Reverse Logistics? (http://www.rlec.org/glossary.html) Ibid. 34 Robert Malone, Reverse Side Of Logistics: The Business Of Returns (Forbes, November 3, 2005) 35 For the purposes of this section, reconditioning addresses repair, refurbish, remanufacture, cannibalize, and recycle, as shown in Exhibit 2. The categorization scheme corresponds exactly to the information provided by Reverse Logistics Executive Council, What is Reverse Logistics? (http://www.rlec.org/glossary.html) 36 Nils Rudi, David F. Pyke, Per Olav Sporsheim, Product Recovery at the Norwegian National Insurance Administration (INTERFACES 30: 3 May-June 2000 pp 166-179) 33
there is perceived quality difference with refurbished products, the product brand or company reputation may decline. Case Study: Kodak Single-Use Camera (SUC) 37 Kodak introduced the single use camera in 1987 positioned as an inexpensive product. At first, it was known to be environmentally unfriendly due to its disposable nature. However, through active participation in photofinishers and other SUC manufacturers (e.g. Fuji, Konica), Kodak transformed the product into an environmental success story. Once the consumer returns the SUC to the photofinishers to develop the pictures, the photofinishers send the SUC to one of three collection facilities around the world (63% return rate, resulting in 51.9 million SUC recycled in 1997, equivalent to 549 tractor trailer loads of SUC). They are reimbursed for the camera plus the shipping cost. Next, the cameras are shipped to a subcontractor facility where they undergo disassembly, inspection and remanufacturing. Then, the SUC are sent to one of Kodak’s three SUC manufacturing plants where components are re-used or recycled materials are used (35% post-consumer content). Kodak employed DfE to allow reuse, recycling, and disassembly of the camera and the packaging to facilitate the use of the reverse supply chain and extraction of materials. To further enhance the reverse supply chain, it partnered with key organizations to set up recycling programs, pool logistics resources, and share the financial rewards.
Issues Although there are many success stories and case studies with positive results, greening the supply chain is not without its problems. There are four broad areas that present risks to the future success of green supply chains: fierce resistance to change, lack of consensus, media perceptions, and solution myopia. The effective application of green supply chain management implies changes to a wide range of business operations and products. Thus, large companies with financial and political resources tend to resist change, especially at the outset, especially because of the large capital and infrastructural investments in the status quo. Despite industry pressures since the oil crisis of the 1973, the intense lobbying efforts by the automobile manufacturers have successfully resisted any updates to the mileage standards for 32 years. 38 Wal-Mart’s green initiative may sound the alarm bell that signals the tipping point for large enterprises. As a relative nascent concept, there is little consensus on the definition of a green supply chain. For example, standards, such as ISO 14000, usually focus on a single entity and not the supply chain. It is uncertain how much of the supply chain is required to have ISO 14000 37
Christian N. Madu, 4.1 Case Studies: Kodak Single-Use Cameras (Norwell, Massachusetts: Kluwer Academic Publishers, Handbook of Environmentally Conscious Manufacturing 2001) 38 Sholnn Freeman, Senate Passes Energy Bill (http://www.washingtonpost.com/wpdyn/content/article/2007/06/21/AR2007062101026.html, June 22, 2007)
certifications to qualify for the green supply chain label. A survey of Japanese local governments that worked toward the ISO certifications identified numerous problems such as the termination of relevant activities after obtaining approval, limitation of scope, and too much focus on documentation and data gathering for audits, rather than on actions and education. 39 The lack of standards can promote individual certification programs, such as Cradle to Cradle Certification provided by McDonough Braungart Design Chemistry, LLC (MBDC) that implies a corresponding green supply chain through product design criteria. The term "greenwashing" was originally confined to describing misleading instances of environmental advertising, but as companies’ efforts to portray themselves as environmentally virtuous have diversified and proliferated, so have charges of greenwashing. 40 A carwash that publicized its installation of solar panels on its roof is a classic example. It only produces enough electricity to run the facility’s refrigerators and lights but encourages drivers to use more water than necessary to wash their cars. 41 Greenwashing distracts people who are serious about taking care of the environment with counter-productive activities, misinforms the public, and questions the credibility of more substantial initiatives of others; everyone loses. Further affecting the credibility is the limited scope of the environmentally friendly initiatives. When Home Depot solicited its suppliers for candidates to its Eco Options marketing campaign, one manufacturer praised its plastic-handled paint brushes as nature-friendly because they were not made of wood while another promoted wood-handled paint brushes, because they were not made of plastic. 42 Lack of clear guidelines and the availability of simple marketing changes combined to create ineffective outcomes for Home Depot. Wal-Mart’s efforts may underscore how attempting to do less bad is no good. 43 For example, while improving environmental performance may slow down the rate of pollution, it does not ultimately prevent waste. Therefore, it may have the unintended, insidious consequence of a false sense of accomplishment and prevent true innovation.
Conclusions The concept of green supply chains is a complex web of internal and external forces that have converged to incorporate environmentally friendly activities to both existing and new business operations. Current macroeconomic pressures (e.g. of increasing energy prices), more stringent governmental actions, and changing consumer demands have brought green supply chains to the forefront of media attention and operations strategy. It has gained audience with large and small organizations across cultures, regions, and industries. Still, structuring the preferred combination of approaches for different contexts and system boundaries remains the
39
Cities, EMS and Everything, Problems faced in implementing the ISO 14001 (http://www.gdrc.org/uem/iso14001/info-8.html) 40 Melissa Whellams, Chris MacDonald, What is Greenwashing, and Why is it a Problem? (http://www.businessethics.ca/greenwashing/) 41 Daniel Gross, Businesses Go 'Green' and Get Positive Press (Newsweek, September 24, 2007) 42 Clifford Krauss, At Home Depot, How Green Is That Chainsaw? () 43 Deliberately worded to correspond to: Willian McDonough, Michael Braungart, Chaper 2: Why Being “Less Bad” Is No Good (New York: North Point Press, Cradle to Cradle 2002)
key challenge for planning and implementation of green supply chains.44 Continued vigilance and study of its successes and failures hold the potential for its acceptance into the mainstream business consciousness and realize the win-win scenario of improved business performance with environmental sustainability.
Other considerations Life Cycle Analysis (LCA) is inherently related to the green supply chain. Whereas this note has investigated what the green supply chain is from the viewpoint of business interactions, LCA takes the viewpoint of the product, process, or service, by 1) compiling an inventory of relevant energy and material inputs and environmental releases; 2) evaluating the potential environmental impacts associated with identified inputs and releases, and 3) interpreting the results to help you make a more informed decision. 45 The analysis helps identify the points in the supply chain that have different impacts to the environment. It can create the baseline from which to improve. Also, Product and Process designs are key considerations. Product designs determine the materials and processes by which it is made. It can also impact cost drivers that have downstream supply chain implications. Conversely process designs can influence product designs through new technology that can affect product design. It allows the proper implementation of the idea. Together, they can incorporate various “design for-“ initiatives, e.g. design-for-manufacturability, design-for-recycling, design-for-environment, and others. Although laws and regulations were not discussed in detail, they are strong motivators for green supply chains. However, minimal regulatory compliance is somewhat taken as a given. More important considerations include the timing, breadth, and depth of new laws and regulations and the differences among regions and nations. Organizations finally acknowledge the ability of green supply chains to ensure business continuity, minimize cost, and maximize profits.
44
J. Geldermann, M. Treitz and O. Rentz, Towards sustainable production networks (International Journal of Production Research, Vol. 45, Nos. 18–19, 15 September–1 October 2007, 4207–4224) 45 Environmental Protection Agency, Life-Cycle Assessment (LCA) (http://www.epa.gov/ORD/NRMRL/lcaccess/)
Exhibit 1
Raw Materials
Parts Fabrication
Modules Subassembly
Product Assembly
Distribution/ Sales
End User
Exhibit 2 3
Supplier
1
2
1.
Pollution Prevention
2.
Pollution Control
3.
Management Systems
Customer
Exhibit 3 46
Raw Materials
Parts Fabrication
Modules Subassembly
Product Assembly
Distribution/ Sales
End User
Product Acquisition Recycle
Cannibalize
Remanufacture
Refurbish
Repair
Reuse
Inspection and Disposition
Landfill
Reverse Logistics
46
Nils Rudi, David F. Pyke, Per Olav Sporsheim, Product Recovery at the Norwegian National Insurance Administration (INTERFACES 30: 3 May-June 2000 pp 166-179). The diagram is an adaptation from Figure 1 of the report on page 167.
