Green Supply Chain Management and Other Operational Aspects to Greening

1. Green Supply Chain Management and Other Operational Aspects to Greening Joseph Sarkis

2. First • Special thanks to all who organized this event and for the Invitation.

3. Green Supply Chain Management: Theory and Practice • What is GSCM? • Why Do it? –Practice • Research – Theory • A Boundaries and Flows Framework • Theories • Modeling • Future Directions?

4. What is Supply Chain Management? • A term that gained popularity in the 1990’s. • Operations Management + Purchasing + Logistics + Marketing • Four Different Managerial Disciplines/Fields brought together. • Part of distinction derived from strategy with Porter’s ‘Value Chain’ • Porter, Michael E., Competitive Advantage: Creating and Sustaining Superior Performance (1980’s)

5. Porter’s Value Chain

6. Porter’s Value Chain • The primary value chain activities are: • Inbound Logistics: the receiving and warehousing of raw materials, and their distribution to manufacturing as they are required. • Operations: the processes of transforming inputs into finished products and services. • Outbound Logistics: the warehousing and distribution of finished goods. • Marketing & Sales: the identification of customer needs and the generation of sales. • Service: the support of customers after the products and services are sold to them. • These primary activities are supported by: • The infrastructure of the firm: organizational structure, control systems, company culture, etc. • Human resource management: employee recruiting, hiring, training, development, and compensation. • Technology development: technologies to support value-creating activities. • Procurement: purchasing inputs such as materials, supplies, and equipment.

7. Inbound Logistics Transportation Material handling Material storage Communications Testing Information systems Outbound Logistics Transportation Material handling Packaging Communications Information systems Service Testing Communications Information systems Operations Process Materials Machine tools Material handling Packaging Maintenance Testing Building design & operation Information systems Marketing & Sales Media Audio/video Communications Information systems Value Chain Activities

8. What is it? Supply Chain Management “The supply chain encompasses all activities associated with the flow and transformation of goods from raw materials (extraction), through the end user, as well as associated information flows. Material and information flow both up and down the supply chain.” Handfield and Nichols (1999)

9. Traditional Framework of Components of Strategic Supply Chain.

10. Supply Chain Management is one level of analysis. • Systems at many Levels… Industry Supply Chains Enterprises Activities

11. What is it? • Corporate Environmental Management • Meeting Environmental laws and regulations • ISO 14000 (environmental management systems) • Life Cycle Analysis • Design for the Environment • Liabilities and Safety • Waste Management • Carbon footprints

13. What is it? • Now the Greening of the Supply Chain • “Green supply refers to the way in which innovations in supply chain management and industrial purchasing may be considered in the context of the environment” (Green et al., 1996 188). • “Environmental supply chain management consists of the purchasing function’s involvement in activities that include reduction, recycling, reuse and the substitution of materials.” (Narasimhan & Carter, 1998, 6). • “The practice of monitoring and improving environmental performance in the supply chain…” (Godfrey, 1998, 244).

14. Forward and Reverse Supply Chains – Closing the ‘Loop’

15. Vendor/Supplier Management Research: Vendor Selection (3PL Logistics Providers) Vendor Competition (Game Theory) Selection Criteria Development Sustainable Supply Chain Performance and Benchmarking Scale Research on GSCM (What makes up GSCM) • Cleaner Production Research: • Environmental Management Systems (ISO 14000) and Source Reduction • Selection of Environmentally Conscious Business Practices/Technology • Substitution Policies • Environmental Performance Measurement Systems/Benchmarking • Performance of Environmental/Risk Management Policies • Environmental Process and Technology Selection and Performance (Re's/Energy Technology) • Barriers to Environmentally Conscious Manufacturing • Activity Based Environmental and Cost Management Systems Reusable, Remanufacturable, Recyclable Materials and Components Reverse Logistics Energy Energy Energy Energy Related Research: Real Options for Project Selection in GHG Trading Scheme Energy Production Efficiencies Selection of Renewable Energy Products Distribution and Logistics Research: Organizational Learning and Environmental Logistics Planning E-Logistics and the Natural Environment Design/Marketing Research: Green Consumers Process Selection Design Selection (LEED) Closed-Loop Manufacturing, Demanufacturing, Source Reduction Disposal Location Analysis, Inventory Management, Warehousing Transportation Packaging Internal Transportation, Materials Movement External Transportation Raw and Virgin Material Inventory Management Selection Fabrication Vendors Storage New Components and Parts Storage Distribution, Forward Logistics USE Waste Management Research: Management of Waste and Efficiency - Wales (SMEs industry differences and program relationships) Selection of Waste Management Approaches (DEA) Reverse Logistics Research: Demanufacturing Electronics Reverse Logistics and Sustainability Reverse Logistics Project Selection Drivers for Reverse Logistics Adoption Assembly Recycled, Reused Material and Parts Purchasing, Materials Management, Inbound Logistics Outbound Logistics Production Energy Product/Process Design Waste Waste Waste Engineering Marketing Waste

16. What are some issues? Energy Energy Energy Closed-Loop Manufacturing, Demanufacturing, Source Reduction TQEM Disposal Location Analysis, Inventory Management, Warehousing Transportation Packaging Internal Transportation External Transportation Raw and Virgin Material Customer Relationships Green Marketing Product Stewardship Inventory Management Selection Fabrication Vendors Storage New Components and Parts Storage Distribution, Forward Logistics USE Assembly Recycled, Reused Material and Parts Purchasing, Materials Management, Inbound Logistics Outbound Logistics Production Energy Product/Process Design Reusable, Remanufacturable, Recyclable Materials and Components Waste Waste Waste Engineering Marketing Reverse Logistics Waste

18. Why Do it? • Economic benefits from increased efficiency. By reducing wastes, companies decrease handling expenses, fines, and even costly inputs. Supplier's cost savings may be passed along to buyer companies. • GM reduced disposal costs by $12 million by establishing a reusable-container program with suppliers; • Commonwealth Edison saved $25 million through more-effective resource management. • Servicizing – Charging customer per service instead of by product/material. (e.g. Dupont and Ford; instead of gallons of paint – number of cars painted).

19. Why Do it? • Revenue Generation • New sources of revenue can come from material or product that was disposed • Examples • Industrial symbiosis – waste steam, waste ash, sold to companies in an industrial park. • TerraCycle’s “Scotch Tape Brigade” has started collecting empty Scotch tape dispensers and will send them to 3M to be used as tape dispensers again

20. Why do it? • The license (right) to operate • Restriction on Hazardous Substances (RoHS) law, enacted in 2006 in the European Union; (also) South Korea, Turkey, China and Japan. • That law restricts the use of six toxic materials, including two brominated chemicals. • Apple and Sony Ericsson in particular have reformulated product lines (and their supply chains) to restrict or eliminate entirely the use of bromine and chlorine in products. • Apple now has a number of polyvinyl chloride-free (PVC) and brominated flame retardant-free (BFR) product lines, including iPhones, iPods and a number of the company's computers.

21. Why do it? • Supply Chain Resilience • You want to make sure your supplies are available • Walmart and its sustainable seafood program Need a consistent supply of seafood. Overfishing can cause scarcity. Sustainable practices can guarantee steady supply of seafood

22. Why do it? • Image and Reputation • Walmart is getting bad press because of many social issues from child labor to discrimination to improper overtime policies • Sustainability of its supply chain is core to building its socially conscious image.

24. Snapshots of GSCM Research over time • How has the field evolved? • Anecdotal evidence and getting buy-in • Studies focused on particular area (purchasing, logistics, ECM) • Integrative, broader studies of practice and management have went further with more general supply chain issues • Now study is finding out what works and what doesn’t • Now sustainability is in mix

25. Research and Theories • Organizational Research and Modeling Research Development • A framework • Some theories • Some methods to apply • Some questions that may need resolving from a research perspective

26. GSCM – Empirical Studies • What motivates GSCM? • What is being adopted? • What are implications of GSCM adoption? • Financial • Environmental • Operational • Industry differences in adoption?

27. Organizational Research • Pressures Motivators DeterminantsAntecedents • Regulations (Coercive) • Competition (Mimetic) • Customers (Normative) • GSCM Practices • Internal • External • Technological • Behavioral • Organizational • Performance Results • Economic • Operational • Environmental • Social What Characteristics Mediate or Moderate these relationships? Resources, Projects, Programs, Structures, Governance, Beliefs, Philosophies, Technology, Industry, etc.

28. Organizational and Social Research • What type of theories may be used and tested? • Institutional theory • Resource Based View theory • Resource Dependency theory • Signalling theory • Congruence theory • Agency theory • Agenda Setting theory • Social Network theory • Transaction Cost Economics • Diffusion of Innovation • Ecological Modernization • Coordination Theory • Population Ecology

29. Modeling Research • Decision Making and Planning • How do organizations make decisions and assessments to incorporate GSCM (or its elements)? • Cost-Benefit • Tangible-Intangible • Strategic-Operational • Multiple parties • Stage of development

30. Modeling Research • Designing • How do you design a GSCM network • Who should be involved, where do you draw a boundary • What factors and parameters are of importance • Business, environmental, regulatory • What practices are needed-not needed • What resources (technological, people, economic)

31. Modeling Research • Implementing • Project Management tools • Introducing practices (incremental, full, pilot)

32. Modeling Research • Maintaining and Auditing • Performance Measurement • Continuous Improvement • Sensitivity Analysis and Scenarios • Mid-Course Corrections

33. Modeling Research • What types of tools are involved? • Economic based tools (e.g. timing, pricing, optimization) • Multiattribute Decision Making • Mathematical Programming (DEA) • Decision Theory-Analysis • Game Theoretic • Systems Dynamics • LCA-Simulation – Material Flow Analysis • Rough Set theory applications

34. Boundaries Political Informational Organizational Materials Service Financial Information Waste Materials Service Financial Information Waste Proximal Legal Flows Flows Cultural Technological Economic Temporal Boundaries and Flows – Considerations of resources and constraints • Do you agree with the various boundaries and flows? • What additional ones may exist, that are not considered?

35. Boundaries and Layers of Supply Chains- Levels of Analysis Research Sub-Micro Micro Meso Macro Supra-Macro

36. Some Emergent Issues • Holistic/Systemic versus Reductionist • Role of Technology (e-commerce) • Role of Regulations and Policy (WEEE/ROHS/Trading) • Role of Resources (Transportation type) • Globalization • Risk and Security

37. Green Supply Chain • What does the future hold? • Networks • Operations theory • Linkages with Industrial Ecology • Technology • Climate Change – Carbon Footprints • Sustainability • Environmental Archaeology • New theories….???

38. Forthcoming Special Issues • EJOR – Eco-Efficient Supply Chains • IJOPM – Operations and Sustainability • Decision Sciences – Responsible Procurement • Information Systems Frontiers – Green IS/IT (December 31 deadline). • IEEE Transactions on Engineering Management – Potential “Sustainability” Department.