Sustainability in Supply Chain Management: Key Considerations and Benefits
Developing Sustainable
Supply Chains
Mary Margaret Rogers
Anderson School of Management
University of New Mexico
Sustainability in Supply Chain
Management
Definitions:
Supply chain management
encompasses all activities
associated with the flow and transformation of goods from
the raw materials stage through the end user, as well as the
associated information flows. (
CSCPM
)
Sustainable supply chain management
requires that
sustainability criteria be met while maintaining
competitiveness through meeting customer needs. (
Seuring
and Müller, 2008
)
Why Should Supply Chains Try to Be
Sustainable?
•
Supply chains are boundary spanning
–
Coordination across normal boundaries means
that many aspects of sustainability may be
affected
–
From initial processing of RM to consumption by
final customer
Why Should Supply Chains Try to Be
Sustainable?
•
Outsourcing
•
Watchdog groups
•
Government requirements
Why Should Supply Chains Try to Be
Sustainable?
•
Reduce cost and wastes
•
Manage risks
•
Create distinguishing (sellable) reputation
•
Reinforce shareholder value
Issues affecting sustainability
•
Product design
•
Product returns
•
Length of product life
cycle
•
Extension of product
life cycle
•
End of life disposal
•
Packaging
•
Source reduction
•
Recycling
•
Material substitution
•
Waste disposal
•
Refurbishing
•
Repair
•
Remanufacturing
Puma’s Clever Little Bag
Sustainability in Supply Chain
Management
•
Use of the triple bottom line
–
Social
•
Manage risks to organizational reputation
•
Create competitive advantage
–
Environmental
•
Regulatory issues
•
Risk of harm from usage, disposal, packaging, shipping
–
Economic
•
Sustainability can be cost efficient
•
Sustainability can enhance shareholder value
Adapted from: Carter, CR, and DS Rogers. 2008. A
framework of sustainable supply chain management:
Moving toward new theory.
International Journal of Physical
Distribution & Logistics Management 38 (5):360-387.
The Triple Bottom Line
Triple Bottom Line
Supporting Factors
Transparency and Risk
Management
•
Anticipate harm from
activities
•
Stakeholder Engagement
•
Supplier Operations
Strategy
•
Sustainability as part of
an integrated strategy
Organizational Culture
•
Deeply Ingrained
•
Organizational Citizenship
•
Values and Ethics
Sustainable Supply Chains at Walmart
November 1, 2006 Walmart introduced its
Sustainable Packaging Scorecard
Goal: Reduce packaging in supply chain by 5% by 2013
Predicted Results (Walmart U.S. only):
•
667,000 metric tons of CO
2
not emitted
•
213,000 trucks off the road annually
•
66.7 million gallons of diesel fuel saved
Sustainable Supply Chains at Walmart
The 7 R’s of Sustainable Packaging
•
Remove
•
Reduce
•
Reuse
•
Renew
•
Recycle
•
Revenue
•
Read
Sustainable Supply Chains at Walmart
“When Wal-Mart tells a supplier that it wants a
change in packaging, that supplier will change
all its packaging…Wal-Mart has the potential to
have a tremendous impact on America’s
environmental footprint.”
David Willett, spokesman for The Sierra Club
Sustainable Supply Chains at Walmart
July 16, 2009: Walmart announced it would
develop a
Sustainability Index
.
Step 1: Supplier Assessment
Step 2: Life cycle Analysis Database
Step 3: Tool for Consumer
Sustainable Supply Chains at Walmart
February 25, 2010: Walmart announced plans to
eliminate 20 million metric tons of
greenhouse gas emissions from the global
supply chain by the end of 2015.
Goal: Reduce energy use and cost for suppliers,
Walmart, and customers.
Sustainable Supply Chains at Walmart
Reverse Supply Chains
A reverse supply chain is a means of
enhancing sustainability by retrieving
products from customers.
•
Safe end-of-life disposal
•
Refurbishing
•
Reuse for spare parts
•
Value in recycling
What’s different about reverse
supply chains?
Forward Supply Chain
Reverse Supply Chain
•
Planning:
–
Forecasts
•
Location:
–
One to many transportation
•
Costs:
–
Well-defined
–
Focus on product ordering
costs
•
Visibility
–
High priority
•
Planning:
–
Reactive
•
Location:
–
Many to one transportation
•
Costs:
–
Not easily defined
–
Additional costs not easily
justified
•
Visibility
–
Low priority
Benefits of Reverse Supply Chains
•
Economic
–
Maintain product value—reuse
–
Continuous improvement
•
Ethical
–
Customer safety
–
Customer satisfaction
•
Environmental
–
Protect and safeguard sustainability
•
Legal
–
Global rules and regulations (WEEE Act)
Reverse Supply Chain Challenges
•
Operational
–
Information and process flow
–
Roles
–
Product
•
Financial
–
Costs
•
Technological
–
Information technology systems
Until recently, sustainability efforts have been centered around the consumer. Consumers made the choice of where and how to buy, whether or not to recycle, and how to go about recycling packaging and products at the end of their life cycle.
However, consumers are increasingly focusing on whether the products purchased are sustainable and if retailers and their suppliers behave in environmentally responsible ways.
Thus, businesses throughout the supply chain are increasingly dealing with an environment in which consumers will hold them responsible for sustainability efforts and outcomes.
Listed below are the articles used in developing this presentation.
Blanchard, D. 2009. Moving ahead by mastering the reverse supply chain. Industry Week: May 27.
Carter, Craig R., and Dale S. Rogers. 2008. A framework of sustainable supply chain management: moving toward new theory. International Journal of Physical Distribution & Logistics Management 38 (5):360-387.
Fleischmann, M., van Nunen, J., Grave, B., & Gapp, R. 2005. Reverse logistics--capturing value in the extended supply chain. Supply Chain Management on Demand, 167-186.
Linton, Jonathan D., Robert Klassen, and Vaidyanathan Jayaraman. 2007. Sustainable supply chains: An introduction. Journal of Operations Management 25 (6):1075-1082.
Rogers, Dale. Sustainability is Free—The Case for Sustainable Supply Chain Management http://www.sustainable-supplychain.com/Sustainability_is_Free___The_Case_for_Sustaina.pdf.
Seuring, Stefan, and Martin Müller. 2008. From a literature review to a conceptual framework for sustainable supply chain management. Journal of Cleaner Production 16 (15):1699-1710.
Stock, JR, SL Boyer, and T Harmon. 2010. Research opportunities in supply chain management. Journal of the Academy of Marketing Science 38 (1):32-41.
Tibben-Lembke, R. S., & Rogers, D. S. (2002). Differences between forward and reverse logistics in a retail environment. Supply Chain Management: An International Journal, 7(5), pp.271 - 282.
Tsoulfas, G. T., Pappis, C. P., & Minner, S. 2002. An environmental analysis of the reverse supply chain of SLI batteries. Resources, Conservation and Recycling 36, 135-154.
Wallace, Janelle. 2009. Building integrity into your supply chain, Keeping Good Companies, September. 502-505.
Additional information about Walmart’s Product Index can be found at http://walmartstores.com/sustainability/9125.aspx.
Additional information about Walmart’s Sustainability Index can be found at http://walmartstores.com/sustainability/9292.aspx. This page also includes PDF links showing additional detail about the sustainability Index.
Additional information about Walmart’s efforts to reduce greenhouse gas emissions (GHG) can be found at http://walmartstores.com/ViewResource.aspx?id=2311. You’ll need to download the fact sheet to see the details.
Sustainable supply chain management is crucial for meeting sustainability criteria while staying competitive and addressing customer needs. It encompasses activities from raw materials to end-users, impacting aspects like product design, recycling, risk management, and shareholder value. By promoting sustainability, companies can reduce costs, manage risks, enhance reputation, and reinforce shareholder value, creating a competitive advantage and promoting environmental and social responsibility.
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Presentation Transcript
Developing Sustainable Supply Chains Mary Margaret Rogers Anderson School of Management University of New Mexico
Sustainability in Supply Chain Management Definitions: Supply chain management encompasses all activities associated with the flow and transformation of goods from the raw materials stage through the end user, as well as the associated information flows. (CSCPM) Sustainable supply chain management requires that sustainability criteria be met while maintaining competitiveness through meeting customer needs. (Seuring and M ller, 2008)
Why Should Supply Chains Try to Be Sustainable? Supply chains are boundary spanning Coordination across normal boundaries means that many aspects of sustainability may be affected From initial processing of RM to consumption by final customer
Why Should Supply Chains Try to Be Sustainable? Outsourcing Watchdog groups Government requirements
Why Should Supply Chains Try to Be Sustainable? Reduce cost and wastes Manage risks Create distinguishing (sellable) reputation Reinforce shareholder value
Issues affecting sustainability Product design Product returns Length of product life cycle Extension of product life cycle End of life disposal Packaging Source reduction Recycling Material substitution Waste disposal Refurbishing Repair Remanufacturing
Sustainability in Supply Chain Management Use of the triple bottom line Social Manage risks to organizational reputation Create competitive advantage Environmental Regulatory issues Risk of harm from usage, disposal, packaging, shipping Economic Sustainability can be cost efficient Sustainability can enhance shareholder value
The Triple Bottom Line Good? Social Performance Environmental Performance Sustainability Best Better Better Economic Performance Adapted from: Carter, CR, and DS Rogers. 2008. A framework of sustainable supply chain management: Moving toward new theory. International Journal of Physical Distribution & Logistics Management 38 (5):360-387.
Triple Bottom Line Supporting Factors Transparency and Risk Management Anticipate harm from activities Stakeholder Engagement Supplier Operations Organizational Culture Deeply Ingrained Organizational Citizenship Values and Ethics Strategy Sustainability as part of an integrated strategy
Sustainable Supply Chains at Walmart November 1, 2006 Walmart introduced its Sustainable Packaging Scorecard Goal: Reduce packaging in supply chain by 5% by 2013 Predicted Results (Walmart U.S. only): 667,000 metric tons of CO2 not emitted 213,000 trucks off the road annually 66.7 million gallons of diesel fuel saved
Sustainable Supply Chains at Walmart The 7 R s of Sustainable Packaging Remove Reduce Reuse Renew Recycle Revenue Read
Sustainable Supply Chains at Walmart When Wal-Mart tells a supplier that it wants a change in packaging, that supplier will change all its packaging Wal-Mart has the potential to have a tremendous impact on America s environmental footprint. David Willett, spokesman for The Sierra Club
Sustainable Supply Chains at Walmart July 16, 2009: Walmart announced it would develop a Sustainability Index. Step 1: Supplier Assessment Step 2: Life cycle Analysis Database Step 3: Tool for Consumer
Sustainable Supply Chains at Walmart February 25, 2010: Walmart announced plans to eliminate 20 million metric tons of greenhouse gas emissions from the global supply chain by the end of 2015. Goal: Reduce energy use and cost for suppliers, Walmart, and customers.
Reverse Supply Chains A reverse supply chain is a means of enhancing sustainability by retrieving products from customers. Safe end-of-life disposal Refurbishing Reuse for spare parts Value in recycling
Whats different about reverse supply chains? Forward Supply Chain Reverse Supply Chain Planning: Forecasts Location: One to many transportation Costs: Well-defined Focus on product ordering costs Visibility High priority Planning: Reactive Location: Many to one transportation Costs: Not easily defined Additional costs not easily justified Visibility Low priority
Benefits of Reverse Supply Chains Economic Maintain product value reuse Continuous improvement Ethical Customer safety Customer satisfaction Environmental Protect and safeguard sustainability Legal Global rules and regulations (WEEE Act)
Reverse Supply Chain Challenges Operational Information and process flow Roles Product Financial Costs Technological Information technology systems
