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Professor Mellie Pullman ISQA 511. Supply Chain Management & Sustainability today. Major Components of Supply Chain Management.
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Professor Mellie Pullman ISQA 511 Supply Chain Management & Sustainability today
Major Components of Supply Chain Management • SCM is primarily concerned with the efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed in the right quantities, to the right locations and at the right time. • Typical Goal: • minimize total system cost subject to satisfying service requirements. • For most effective chains: • Require involvement from all links • Require systems approach to reduce cost & improve service (Integration is the key)
Work in process Raw materials Finished goods Supplier Manufacturing plant Distribution center Retailer
Customer Customer Customer Customer Distribution center Distribution center Manufacturer Tier 1 Tier 2 Tier 3 Legend Supplier of services Supplier of materials Supply Chain Configuration
Supply Chain: The Magnitude • US companies spend over a Trillion $ in supply-related activities (or 11% of Gross Domestic Product). • Transportation 58% • Inventory 38% • Management 4% • Third party logistics services growing by 15% per year
Inbound & Outbound Logistics Strategies • Transportation • Truck • Boats • Plane • Train • Key Facilities • Ports • Warehouses
Example of Transportation Efficiencies:Buying wine on East or West coast? • Bordeaux, France • Santiago, Chile • Sydney, Australia • Napa, California • Which has the lowest emissions if purchased on the west coast? • East coast? • Chicago?
Example of Transportation Efficiencies:Buying wine on East or West coast?
East Coast (NYC) Bordeaux, France (ship) = 0.3 pounds of CO2 equivalent Santiago, Chile (ship) = 0.4 pounds Sydney, Australia (ship) = 0.9 pounds Napa, California (truck) = 4.4 pounds West Coast (CA) Chilean wines (ship) = 0.5 pounds of CO2 equivalent Californian (truck) or Australian (ship) wines = 0.6 pounds French wines (ship & truck) = 3.0 pounds Example of Transportation Efficiencies:Buying local on East or West coast? Chicago : Bordeaux (1.5) or Chile (1.6)
US Trade by Mode (2009) Imports Water dominates Exports Water but more Truck & Air Trade & Mode
GHG Emissions from Freight Transportation from 1990 to 2007 (Million Metric Tons of CO2e in US) • Dominant Mode? • Most Efficient Mode in terms of cost/load and GHG emission?
Trucks • Trucks transport 70 percent of all goods by weight in the United States and emit 75 percent of greenhouse gas (GHG) emissions from freight transportation • GHG emissions from freight trucks increased by 80 percent from 1980 to 2007 • while the amount of freight shipped in trucks measured in ton-miles has grown by over 100 percent in that same period. • Bottlenecks for trucks on America's highways caused 226 million hours of delay and cost $7.3 billion due to poor infrastructure.
Comparing the Energy Intensity Energy intensity of domestic transportation modes in the U.S. from 1980 to 2006. Source: U.S. Department of Energy, Transportation Energy Data Book. 2008. U.S. Department of Transportation, National Transportation Statistics, 2009.
Public versus Private Sector Issues • Freight transportation = complex mix of publicly and privately managed systems • Roads and rivers used by trucks and barges, respectively, are almost entirely managed by the government • Railroads are managed by the private sector. • Trucks must share the road • Freight rail companies sublease their tracks to passenger rail companies to offset maintenance costs (examples)? • Why is the Amtrak passenger train always late going between Portland and Seattle? • Why are we one of the few modern economies without a high speed passenger train on the west coast?
Policy Options to reduce GHG from freight transportation • Government support: funding research and development, providing financial assistance for environmentally friendly logistics practices such as freight containerization, and EPA's SmartWay program. • Trucks: engine standards, speed limit reduction, increasing size constraints, anti-idling policies including the electrification of rest stops, eco-driving to optimize fuel consumption, the advanced technologies such as use of hybrid electric engines or waste heat recovery, and alternative fuel support, such as support for biodiesel. • Logistics: support for a more efficient organization of supply-chain networks, including optimal location of trans-shipment points and freight consolidation and distribution centers.
Packaging & Supply Chain • Shipping Crates & Cardboard • Pallets • Product Packaging 60 time usage versus 1 Saved Walmart Canada $4.5 M, 1400 tons Of waste and 10,000 tons GHG
Pallets: Major Landfill Problem! • US uses 2 million wood pallets per year (1 million acres of forest). • Plastic • Durable & Flexible • Rot and Smell avoidance • Safer Work Environment • 100% recyclable into new pallets • Higher initial cost/multiple use
Packaging & Transportation • Bottle versus Box? • Boxes are 89% lighter than 750 ml glass bottles • Generate less than 54% less GHGe and use 20% less energy to produce than glass
Wal-Marts Packaging Scorecard • 15% GHGe per ton of production • 15% material value • 15% product/package ratio • 15% container cube utilization • 10% transportation • 10% recycled content • 10% recovery value • 5% renewable energy • 5% innovation (see www.walmartfacts.com)
Warehouse Strategies • Energy Cost per sq ft: • Non-Refrig: $1.00 • Refrig: $1.45 • Ways to reduce • Motion sensor lights • Solar power • Shelving strategies and efficient loading/unloading • IS systems for picking • Truck Idle time • Doors
Warehouse Distribution NetworksLocations & number of facilities are key
Purchasing • McDonald’s Case • Environment Issues • Social Issues
Animal Welfare http://www.aboutmcdonalds.com/mcd/csr/video/mcdonald_s_usa_animal.html McDonald’s activities led by Dr, Temple Grandin
McDonald’s Case Purchasing & Environmental Issues Free Range Egg Proposal
