Green Supply Chain Management by Mazen Alama

1. LSCM 5043 Supply Chain Management
Sustainable / Green Supply Chain
October 2014
Think Green
Prepared by Mazen Alama

2. Contents
 Introduction
• Supply Chain Sustainability
• New thinking for future
• Introducing & developing sustainable KPIs to SC ( Walmart )
 Sustainable Supply Chain (Environmental Aspects)
• Carbon footprints management in SC
• Low Carbon Economy (LCE)
 Sustainable supply chain (Social Aspects)
• Supply Chain Social Sustainability (SCSS)
• GSCF framework
• SCSS What is next ?
 Think Green

3. • Supply Chain Sustainability
Drivers
Barriers
• New Thinking For Future
Future Supply Chain(s)
The 7 key solutions.
• Introducing & developing sustainable
KPIs to SC (Walmart Case Study)
Introduction

4. What is “Supply chain sustainability” ?
Definition (UN Global Impact ): the management of
environmental, social and economic impacts, and the
encouragement of good governance practices,
throughout the lifecycles of goods and services.
 Environmental ,social and economical issues have become more relevant in
modern industry.
 Organizations need to focus on how to make environmentally sound supply
chains.
Objective : to create protect and grow long-term
environmental, social and economic value for all stakeholders.
 In this presentation we will focus on both environmental and
social aspects of the Green Supply Chain
Supply Chain Sustainability

5. Internal Drivers :
 Reduce costs and wastes.
 Investor pressure.
 Long term returns.
 Manage economic risk.
 Law and Regulations:
- Regulations and legislations
compliance.
- Leverage government programs.
- ISO 14000 certification.
External Drivers :
 Improve quality and efficiencies.
 Employee involvement.
 Improve learning and innovations.
 Customers:
- Pressures by customers to green SC.
- Customer standards, demands and
needs.
- Marketing Pressures.
- Product differentiation.
Drivers

6. External Drivers
 Competition:
- Improve competitiveness.
- Improve performance.
 Society:
- Stakeholder encouragement.
- Publicity and public pressure.
- Reduce risk of consumer criticism.
- Pressure by environmental advocacy
groups.
 Suppliers:
- Collaborate with suppliers.
- Supply integration.
 Other drivers
- Strategy.
- Energy and Resources.
- Infrastructure and services.
- Fair trade.
- Climate.
- Human Resource.
Continue…
“ We can help our customers in becoming “greener” to satisfy
stakeholders’ requirement and reveal potential for increasing
efficiency of their supply chains.”

7. Barriers
 Cost concern.
 Lack of understanding and awareness of
integrating green into SCM.
 Reducing costs at expense of green
practices.
 Poor organizational culture and scarcity
of experiences and training .
 Lack of management commitment and
support.
 Lack of initiatives and innovations.
 Shortage of resources or infrastructure .
 Lack of legitimacy and related
laws and regulations.
 Perceived lack of government
support.
 Lack of innovation within the
supply chains.
 Poor stakeholder commitment.
 Difficulties to exchange
Information.
 Industry specific barriers.
 Lack of customer demand.
 Lack of public awareness.
External BarriersInternal Barriers

8. Sustainability is the key to future supply chain improvement
The Future Supply Chain projects should address
the sustainability challenges that will lead
companies to change their operation considering
the following sustainability parameters :
• Reduction in carbon dioxide emissions
• Reduction in energy consumption,
• Better traceability and less traffic congestion,
• Also considering the traditional measures like:
 On-shelf availability.
 Cost reduction.
 Financial performance.
“Serving Consumers in a
Sustainable Way,”
“ Regulations ,resource scarcity,
climate change, security, require new
thinking, new approaches and new
collaboration on infrastructures.“
José Luis Duran
“The future supply chain report makes a strong case for change by identifying the innovation
that currently exists in the form of new solutions, leading practices, example supply chains
and new ways to calculate the impact of the new parameters on the supply chain.”
Alan George Lafley

9. How the future SC driven by sustainability looks like ?
• The future model will be based on multi-partner
information sharing among key stakeholders.
• Collaborative warehouses where multiple
manufacturers store their products.
• Collaborative transport from the collaborative
warehouse will deliver to city hubs and to regional
consolidation centres.
• Warehouse will be reshaped to function as hubs.
• Non-urban areas will have regional consolidation.
• Final distribution to stores, pick-up points will be via
consolidated deliveries using efficient assets.
What are the probable potential impacts ?
 Reduction in transport costs per pallet.
 Reduction of handling costs per pallet.
 Reduction of lead time.
 lower CO2 emissions per pallet.
 Improved on-shelf availability.
The new way of design
should consider
sustainable parameters
like carbon dioxide
emissions reduction,
reduced energy
consumption, better
traceability and reduced
traffic congestion.

10. • In-Store Logistics: in-store visibility, shelf-ready products, shopper interaction.
• Collaborative Physical Logistics: shared transport, warehouse and infrastructure.
• Reverse Logistics: product and packaging recycling, returnable assets.
• Demand Fluctuation Management: joint planning, execution and monitoring.
• Identification and Labelling.
• Efficient Assets: alternative energy, switching modes, green buildings.
• Joint Scorecard and Business Plan.
How companies can adopt new SC (The 7 Key Solutions )
Key concepts :
 Information sharing.
 Collaborative warehousing.
 Collaborative city distribution.
 Collaborative non-urban distribution.
 Establish buy-in on the vision by a group of key
stakeholders (such as leading retailers and
manufacturers, mayors of big cities).
 Check the concept’s business case with the
involvement of all key stakeholders.
 Pilot the concept (or possibly leverage and
enhance existing pilots).
 Evaluate the implementation and share learning.
Essential steps for moving to collaborative SC

11. Introducing and developing sustainable KPIs to Supply Chain
Case Study (Walmart) : Walmart is one of the companies that succeeded to improve
the sustainability of the products by creating a more transparent supply chain, accelerating
adoption of best practices, driving product innovation, and providing customers
transparency into the products they buy.
As part of sustainability index, Walmart uses a set of Key Performance Indicators (KPI)
in the form of questions to assess and track performance towards addressing the critical
sustainability issues in the following product categories :
 Laundry Detergent.
 Showering Products.
 Surface Cleaner categories.
Walmart buyers will use the scores from the KPI Questions, as the primary tool in
their purchasing decisions to help drive efficiency, risk mitigation, innovation, and
sustainable practices throughout Walmart’s supply chain.
Many companies have developed different type of KPIs in their efforts to develop
sustainable methods in their supply chain(s) .

12.  Walmart has built its KPI Question Framework to highlight the following Impact
Groups :
• Climate: i.e. greenhouse gas emissions , energy tracking.
• Human Health : pollutants that affect human health.
• Ecosystems : pollutants that affect habitats.
• Resources : inputs required to manufacture and distribute products.
• Workers : ethical labour practices.
 The score for each KPI/ question is calculated based on the weight given to that KPI
which is based on the number of Impact Groups that particular KPI references.
 From the calculated scoring, Walmart was able to evaluates its suppliers’
engagements on sustainability.
 The Sustainability Index Scoring Methodology in Walmart is based on the
environmental and social impacts of products within specific KPIs/ Question
Frameworks.
Scoring and Outcomes

13. The charts illustrate the Sustainability
Index scoring methodology (for
Walmart).
It highlights each Impact Group’s
relative scoring weight for the three
product groups.

14. Sustainable Supply Chain
(Environmental Aspects)
• Carbon Footprints Management in SC
Life Cycle Analysis LCA
Benefits and Challenges
Carbon Emission Why and How to reduce
• Low Carbon Economy (LCE)
Energy efficiency and renewable energy
Other Methods
• Emission Reduction and Business
Successful Stories
Environmental

15. Managing carbon footprints leads to Sustainable Supply Chain
Carbon Footprints = Global Warming = Climate change
Global warming is a direct result from increasing CO2 in the
atmosphere. It is recognized as one of the largest challenges
our world is facing in this century.
Stop rising the
temperature of
the Earth…
Pleaaaaaaase
Global CO2 emissions by
sector 2008
The aim of Carbon Management in supply chain
is to help companies to understand systematically
the business risks and opportunities associated
with climate change.
Carbon Footprints Management in SC
No business will be left
unaffected by the impacts
of climate change !!

16.  The carbon footprint of a product is the carbon dioxide emitted across the
supply chain for a single unit of that product.
 Supply chain approach can be used to find new ways of reducing carbon
emissions the same way it can be used to deliver financial benefits.
 Companies are able to manage carbon emissions and increase profits at the
same time by building and then reducing the carbon footprint of their products
Managing the carbon footprints of products across the supply chain
 Managing the carbon footprint of a product means minimising the carbon
emissions required to deliver that product to the end consumer
s
There is potential to find significant emissions reduction opportunities and
large financial benefits by reducing the carbon footprint of the product

17. Example : Schematic of the supply chain of a can of cola with proportional carbon
footprint starting from raw material until disposal.
Green supply chain approach has the
potential to unlock significant emissions
reductions and large financial benefits
by reducing the carbon footprint at an
individual product level.

18. How companies can reduce carbon emissions and mitigate climate change ?
Why to reduce carbon emission in business view ? Why
Managers should think Green ?
 Lower carbon emissions come along with lower
overall logistics costs.
 Win-Win Approach for both customers and
environment.
 Achieve sustainable supply chain.
Greener is usually
Cheaper
SC Efficiency = Lower
CO2= Lower costs

19. Life-Cycle Analysis (LCA)
Carbon Life-Cycle Analysis(LCA):
The process of evaluating the
effects that a product has on the
environment over the entire period
of its life cycle…
Key Aspects of LCA:
 Identifying and quantifying the environmental loads ,the energy and raw
materials used in addition to emissions and wastes consequently released
 Assessing the potential environmental impacts of these loads.
 Assessing the opportunities of environmental improvements.

20. Carbon management in supply chain Methodology based on LCA
Step 1 : Initial analysis and engagement
• Engage the customer (specially the lead clients).
• Agree specific product supply chain(s) ,the scope and boundaries
of the study.
• Build supply chain process map and identify major raw materials.
Step 2 : Building the carbon footprint structure
• Identify key supply chain companies and contacts (make introductions).
• Collect energy and emissions data and information (focusing on energy intensive
stages across the supply chain).
• Construct a mass balance for the supply chain, (what goes in must come out) for
raw materials, waste, energy and emissions.
• Construct carbon footprints, showing emissions by process/supply chain stage.

21. Step 3 : Opportunity identification and prioritisation
• Highlight the sources of high emission and find emissions reduction
opportunities.
• Evaluate impact of opportunities on both carbon and cost.
• Plot opportunities on cost-carbon matrix to prioritise those with high carbon and
high cost-saving potential.
Step 4 : Presentation of results and implementation planning
• Identify next steps to implement change within the supply chain.
• Present carbon footprints and reduction opportunities assessment to all
supply chain stakeholders.
• Support ongoing implementation steps.

22. ChallengesBenefits
 The methodology allows the inclusion of
emissions from the product whole life-
cycle resulting better carbon savings
beyond the scope and better sustainability
in SC.
 It helps explain the existence of particular
processes and emissions sources.
 It engages new companies in the task of
reducing those emissions and associated
costs.
 It allows forward-thinking companies to
develop low-carbon products to capture
new markets and generate higher profits.
 The confidentiality of data as a key
consideration for all companies.
 The results are not necessarily
applicable to the industry as a
whole. Specific companies need
specific processes
 The opportunities are typically more
fundamental than simple energy
efficiency changes and so are likely
to be harder to implement.

23. Low-Carbon Economy (LCE)
A low-carbon economy (LCE ) is an economy based on low
carbon power sources that therefore has a minimal output
of greenhouse gas (GHG) emissions into the environment .
Why low carbon economy ?
• Avoid catastrophic climate change.
• Push towards more advanced zero-carbon economy.
• Create and maintain sustainable approaches in industry.
The transformation to a low-carbon economy will require involving all sectors of the
economy (i.e. services, agriculture, industry and transport—around practices
…..etc.) . Also by developing technologies that promoting energy efficiency.
Improving energy efficiency is the best way to reduce GHG emissions

24. Energy Efficiency and Renewable Energy can displace fossil fuels
energy ,meet the global energy demand and reduce carbon dioxide
emissions.
Energy Efficiency and Renewable Energy
to achieve LCE
Renewable Energy is the energy that comes
from natural and renewable resources such as
sunlight, wind, rain, tides, geothermal heat ...etc.
This energy is a good example of LCE.
Heat is one of many forms of "energy
wastage" that could be captured to
significantly increase useful energy
without burning more fossil fuels.

25. Other methods used to achieve LCE
 Combined heat and power (CHP) is a technology
which by allowing the more efficient use of fuel will at
least reduce carbon emissions.
 Nuclear Power and/or the proposed strategies
of Carbon Capture and Storage (CCS) have been
offered as the primary means to achieve the LCE.
 Smart Grid :solar and wind energy for base load with hydro and biogas for make
up or peak load.

26. Emission Reduction and Business
Where are the emission reduction opportunities in business?
• Change form of energy i.e. electricity to gas.
• Increase in renewable energy usage with
new infrastructure.
• Decrease waste volumes.
• Re-engineer manufacturing practices and
improve efficiency.
• Include energy / carbon criteria in
purchasing / supplier choices.
• Take energy/carbon into design criteria.
• Change product design configure and
material and change technology with
more energy efficient.
Here are some companies which have achieved LCE by adjusting their supply chain
to carbon neutral businesses.

27. Successful Stories
projects being pursued by business to reduce energy and carbon emissions.
The cost saving from these energy reduction are :
Qantas Airways Ltd
Project : to replace more than 7000
fluorescent light fixtures with 6625 energy
efficient light in 3 buildings.
Energy saving : 1434 MWh p.a.
GHG savings: 1532 t CO2-e.
Kellogg (Aust) pty Ltd
Project : to improve the energy efficiency of
cereal production through the monitoring of
energy use & performance of factory
equipment.
Energy savings 1564 MWh p.a.
GHG savings 2712 t CO2-e.

28. Sustainable supply chain
(Social Aspects)
• Supply Chain Social Sustainability (SCSS)
Framework Of Supply Chain Sustainability
• GSCF framework
8 Supply Chain Processes of GSCF Framework.
• SCSS What is next ?

29. Supply Chain Social Sustainability (SCSS)
 Social sustainability remains underdeveloped in many companies both in practice and
literature. The consequences of disregarding social sustainability can be harmful to the
company ,destructive to its customer goodwill, and even result in its demise.
Benefits of achieving social sustainability :
 Cost reduction.
 Productivity improvement.
 Sources of potential competitive advantage.
 Improved reputation.
 Innovation and differentiation.
The social dimension of
SSCM deals with aspects
that affect human safety,
welfare and community
development in the
processes of supply chain.
Social Sustainability in SC :it is the integration and achievement of
social goals in the management of supply chain processes to
improve quality of life for stakeholders and the community at large.

30. Employment Practices Community relations
Ethics
Product
responsibilities
Supply Chain
Social
Sustainability
SCSS
Framework Of Supply Chain Sustainability
Most social sustainability research's are
focusing on employment practices, ethics
and community relations, with product
responsibilities. As for corners that form
SCSS.
There are many frameworks can be used to address social sustainability in
supply chains like “GSCF framework” and the Supply Chain Operations
References (SCOR) framework.
However, SCOR method has notable limitation in this regard due to limited
scope of the “SCOR model”. (i.e. a lack of a customer-oriented interface and
research , also product development activities for example).

31. Supply Chain Processes OF The (GSCF) Framework
To address how firms integrate social supply chain processes to attain
maximum value, Global Supply Chain Forum (GSCF) researchers have
developed a framework categorizing supply chain management principles
into eight critical business processes that span an organization’s functions.
1. Customer relationship management (CRM) provides structure for
how the relationships with customers are developed and maintained.
2. Supplier relationship management (SRM) provides structure for
how relationships with suppliers are developed and maintained.
3. Customer service management (CSM) is the firm’s face to the
customer. It seeks to proactively address potential disruptions and
service failures.
4. Demand management (DM) balances demand and supply through
planning and flexible accommodation.
8 Supply Chain Processes of GSCF Framework.

32. 5. Order fulfilment (OF) includes all activities to design a SC network, plan
for the delivery , and execute logistics activities.
6. Manufacturing flow management (MFM): includes all activities necessary
to obtain, implement, and manage manufacturing flexibility and move
products through the plants.
7. Product development and commercialization : developing new products
and getting them to Market.
8. Return Management : managing all activities related to returns , reverse
and logistics.
This table illustrates
some results by using
GSCF analysis across
the social sustainability
dimensions and supply
chain processes.

33.  Despite its importance there is still a significant
shortage of researches dedicated to social
sustainability.
 A downstream focus on social sustainability and the
aspects of supply chain management related to the
product responsibilities are fertile areas for future
research.
 Future research might consider the following valid
points :
 What drives social sustainability considerations within supply
chain processes?
 How SCSS can improve performance?
 What factors may affect SCSS evaluation? How different
cultures can affects those factors ?
SCSS. What is next ?

34. Think Green
Green thinking and green solutions are the best approaches in dealing and
handling many global challenges (i.e. Global warming , Climate changes ,
Pollution, …etc. ) and also the best approaches to deal with many industry ,
manufacturing and business issues.
By thinking green, we need to develop a business culture of caring for the
environment, society and economy . This culture should be supported by
researches , actions and initiatives of both organisations and people.
In order to achieve this vision, we need to drive our businesses by
implementing sustainability in our practices , improving resource
efficiency with focusing on waste management . Also we need to
corporate social responsibilities , develop synergies through
strategic partners and create opportunities to achieve greener
facilities , greener businesses and greener people.

35. References
Australian Sustainability ,2011 online available at :
http://blog.australiansustainability.com.au/post/13085730801/understanding-the-good-chain-sustainability-in-supply
Accessed October 2014
M. Ovul Arioglu Salmona , A. Aycim Selam and Ozalp Vayvay , 2010 , SUSTAINABLE SUPPLY CHAIN MANAGEMENT:A
LITERATURE REVIEW available online at :
http://www.academia.edu/2063643/Sustainable_Supply_Chain_Management_A_Literature_Review
Pradeepa Jayaratne . Lee Styger, Nelson Perera ,2011, Sustainable supply chain management: using the
Sri Lankan tea industry as a pilot study, University of Wollongong , available at :
http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1181&context=gsbpapers
Accessed October 2014
Sreejith Balasubramanian ,2012, A Hierarchical Framework of Barriers to Green Supply Chain Management in the
Construction Sector, , University of Wollongong / Dubai available at :
http://ccsenet.org/journal/index.php/jsd/article/viewFile/19705/13625
Accessed October 2014.
Conversation and Efficiency , 2014 Online Available at :
http://nwcommunityenergy.org/biogeo/efficiency
Accessed October 2014
Members of the LCE , 2014 Online available at :
http://noco4-px.rtrk.com.au/low-carbon-economy
Accessed October 2014

36. Robert Nicholls ,2009, Prospering and profiting in Low carbon economy, NSW Department of state and Regional development
Available online at :
http://www.slideshare.net/Robitup/ctiprosperingprofitinglowco2150509?qid=5ffb7d68-db5e-4c04-9377-
0c0dd01760dc&v=default&b=&from_search=11
Accessed October 2014
Sustainability is key to supply chain development ,2008 , Online Article available at :
http://www.logisticsmanager.com/Articles/9525/Sustainability+is+key+to+supply+chain+development.html
Accessed October 2014
Walmart Sustainability Index , 2014, Online review available at ;
http://www.renewablechoice.com/assets/media/ScoringGuideLaundryShowerCleaners.pdf
Accessed October 2014
'Sustainable Aviation O2 Roadmap ,2008 Online available at :
http://www.sustainableaviation.co.uk/wp-content/uploads/sa-road-map-final-dec-08.pdf
Accessed October 2014
Carbon Footprints in the supply chain ,2006 Online available at :
http://www.carbontrust.com/media/84932/ctc616-carbon-footprints-in-the-supply-chain.pdf
Accessed October 2014
Low-Carbon Economy , 2014 , Online Available at :
http://en.wikipedia.org/wiki/Low-carbon_economy
Accessed October 2014

37. Ha H. Ta , Monique L. Ueltschy Murfield,2013, Mapping Social Sustainability In Supply Chain Processes: A Literature Review ,
Council of Supply Chain Management Professionals Educators’ Conference 2013 Available online at :
http://cscmp.org/sites/default/files/user_uploads/academia/downloads/paper5-general-research-track.pdf
Accessed October 2014
Carter, Craig R., and Dale S. Rogers. 2008. “A Framework of Sustainable Supply Chain Management: Moving Toward New
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