Green Supply Chain

management

Prepared By:-
Group 6
Green Supply Chain
Agenda of Presentation
Introduction to Green Supply chain

Need for Green SCM

Traditional SCM v/s Green SCM

Green Supply Chain Practices

Benefits of GSCM

Implementation of GSCM in an industry

Parameters to evaluate GSCM

Best Practices Case Study 1 : Walmart

Case Study 2 : HP

Case Study 3 : SAB Miller

Case Study 4 : L&T

 Green Supply Chain
“Integrating environment thinking into supply
chain management, including product design,
material sourcing and selection, manufacturing
processes, delivery of the final product to the
consumers, and end-of-life management of the
product after its useful life".

Green Supply Chain is a term used to describe a supply

chain oriented for improved performance in measures of
Green Supply Chain Best Practices
sustainability, cost reduction, emission reduction through •• Align
the measure of the carbon footprint, and other metrics. The Aligngreen
greensupply
supplychain
chaingoals
goalswith
withbusiness
business
goals
goals
understanding of Green Supply Chains is driven by a
change in perception from socially responsible behavior as •• Evaluate
Evaluatethe
thesupply
supplychain
chainas
asaasingle
singlelife
lifecycle
cycle
a cost center, to an understanding of how socially and system
system
environmentally friendly practices can become value
•• Use
Usegreen
greensupply
supplychain
chainanalysis
analysisasasaacatalyst
catalystfor
for
adding activities for a company.
innovation
innovation
•• Focus
Focuson
onsource
sourcereduction
reductiontotoreduce
reducewaste
waste
 Green Supply Chain Management

Plan P1 Plan Supply Chain

P2 Plan Source P3 Plan Make P4 Plan Deliver P5 Plan Returns

Source Make Deliver

S1 Source Stocked Products M1 Make-to-Stock D1 Deliver Stocked Products

Suppliers

ers
S2 Source MTO Products D2 Deliver MTO Products
M2 Make-to-Order

Custom
S3 Source ETO Products M3 Engineer-to-Order D3 Deliver ETO Products

Supply Chain
Return Return Management
Source Deliver
Environmental
Management Enable

Green Supply Chain Management

 Green Supply Chain Management
• Green Supply Chain Management (GSCM) is defined as "the process of using environmentally friendly inputs
and transforming these inputs into outputs that can be reclaimed and re-used at the end of their lifecycle thus,
creating a sustainable supply chain”.
• GSCM = Green purchasing + Green manufacturing/materials management + Green Distribution /
marketing + Reverse logistics.

From cost compliance to value creation

 Why there is need of GSCM

Increasing Environmental Constraints due to Global Warming

Corporate Social Responsibility

Beneficial for Organization

Eco-friendly

Increasing Environmental awareness in stakeholders

Cost and Efficiency pressure

Evolving Consumer and Client Demand

Response to increasing fuel prices

Environmental impact of supply chain
Traditional Supply Chain v/s Green Supply Chain

Traditional Supply Chain

Green Supply Chain
 Traditional v/s Green SCM
In a traditional supply chain, the flow of materials and information is linear and from one end to the other. There is a limited
collaboration and visibility. Each supply chain partner has limited information regarding, for example, the carbon footprint
and greenhouse gas emission of the other partners. Hence, each player may be concerned about his own footprint and may try
to reduce this, irrespective of the impact on upstream and downstream supply chain.

There may be some focus on end-to-end supply chain costs but due to limitations of information sharing, the costs are far from
optimized in most cases.

In contrast, Green Supply Chain consider the environmental effects of all processes of supply chain from the extraction of raw
materials to the final disposal of goods. Within the Green Supply Chain, each player motivates other players to go Green and
provides the necessary information, support, and guidance, for example, through supplier’s development programs or customer
support. Environment objectives and performance measurement are then integrated with financial and operational objectives.

With this integration, the Green Supply Chains then will strive to achieve what any individual organization on its own could not
possibly achieve: minimized waste, minimized environmental impact while assuring maximized consumer satisfaction, and
healthy profits.
Green Purchasing
Steps to implement green purchasing

• Implementing Green purchasing policies

• Technical support to vendors to reduce the emissions
• Guidelines for usage of less hazardous materials

Materials Matter:
•Mercury-free
•Non-toxic (or minimize toxicity)
•PVC or DEHP free
•Recyclability
•Recycled Content (post-consumer)
•Hazardous Waste Considerations
•Minimal Packaging
•Take-Back Programs
•Durable or Reusable
•Energy Efficient
Green Manufacturing
 Green Manufacturing

Approaches to achieving sustainable

manufacturing, or at a minimum, green
manufacturing:-

• Use less material and energy

• Substitute input materials: non-toxic for toxic,
renewable for non-renewable
• Reduce unwanted outputs: cleaner production,
industrial symbiosis
• Convert outputs to inputs: recycling and all its
variants, and
• Changed structures of ownership and production:
product service systems and supply chain
structure
 Benefits of Green Manufacturing
Tangible Outcomes

Profitability
Profitability
Green
GreenSupply
SupplyChain
Chain
Programs
Programs
Asset
AssetUtilization
Utilization
Supply
SupplyChain
ChainValue
Value
Service
ServiceLevel
Level

Employee
EmployeeSatisfaction
Satisfaction

Customer
Customer
Stakeholder Environmental
Environmental
Interests Sustainability
Sustainability Reputation
Reputation

Continuity
Continuity
Community
CommunityQuality
Qualityof
ofLife
Life
Alliances
Alliances

Technology
Technology

Intangible Value Drivers

 Benefits of Green Manufacturing

• Insurance companies are actually giving better rates to manufacturing companies that are taking steps to go green.
• The government is even offering tax breaks for manufacturers that have gone green.
Impact on
environment

• Wind and solar energy can save your company thousands of dollars and it is a very simple way to go green. The reality is
that if you can save money on energy, your product costs can go down and your customers will not need to pay as much.
• In addition you can always maintain the same costs and turn a great profit on your products, helping out your
Reduction in cost
of manufacturing shareholders.

• New manufacturing plants that are opening with renewable energy sources are offering many more jobs to their
communities, giving them a larger respect in their market.
Betterment of • Studies show that manufacturing companies that have gone green are expected to employ almost 70 percent of the new
community at jobs in the future; the runner-up is jobs in information technology.
large
Reverse Logistics
 Reverse Logistics

"Reverse logistics activities give

companies a full green supply chain;
they not only go to market with a
Companies that combine the
green product, but they also have a
"reduce, reuse, recycle" mantra with
way to get it out of the field that does
the supply chain wisdom of
not include a landfill," he says. "And,
managing costs and stamping out
if a company can market a
inefficiencies are developing reverse
refurbished product that is just as
supply chains that help the Earth,
good as a new one, it can cut
the customer, and the bottom line.
manufacturing costs while
promoting a green image through
selling refurbished goods."

Eg. Samsung Case

Benefits of Green SCM
Implementing GSCM
 Implementing GSCM
Identifying
goals,
metrics and
new
technologies
Committing to
Licensing
environmentall
environment
y sustainable
innovations
products

Providing
network Restructuri
partner
Implementing ng the buyer
assistance to GSCM role
suppliers

Certifying
Consolidatin
environmental
g direct
ly sustainable
suppliers
products

Cutting out
the
middleman
Industry approach towards implementing Green Supply Chain
Industry approach towards implementing Green Supply Chain
Green
sourcing &
procureme
nt focused Green
Timeline initiatives production
for s&
Implement manufactu
ing Green ring
Initiatives focused
initiatives

Criteria for Green

selection a warehousin
vendor to Industry g&
support approach distribution
your Green focused
initiatives initiatives

Use of
electronic
tools to Green
support transportat
company – ion focused
wide Green Collaboratio initiatives
SCM n with
initiatives suppliers
and/or
customers
on Green
 Parameters to evaluate GSCM

Performance Performance measure

measure (measured over product and process life cycle, except where indicated)
classification
Resource use Total energy consumed
Total material consumed (e.g. water, timber, steel, etc.)

Product recovery Percent recyclable/re-useable materials (volume or weight) available at end of product life
•Remanufacturing Percent product volume or weight recovered and re-used
•Re-use Purity of recyclable materials recovered
•Recycling Percent recycled materials (weight or volume) used as input to manufacturing
Percent product disposed or incinerated
Fraction of packaging or containers recycled
Material recovery rate (MMR)
Core return rate (CRR)
Ratio of virgin to recycled resources
Ratio of materials recycled to materials potentially recyclable
Materials productivity: economic output per unit of material input
 Parameters to evaluate GSCM
Performance Performance measure
measure (measured over product and process life cycle, except where indicated)
classification

Product Useful product operating life

characteristics Total mass of products produced

Waste emissions and Total toxic or hazardous materials used

exposure hazard Total toxic or hazardous waste generated
Solid waste emissions
Percent product (weight or volume) disposed in landfills
Concentrations of hazardous materials in products and by-products
Estimated annual risk of adverse effects in humans and biota
Waste ratio3: the ratio of wastes to all outputs

Economic Average life-cycle cost incurred by the manufacturer

Purchase and operating cost incurred by the consumer
Average total life-cycle cost savings associated with design improvements

Economic/emissions Eco-efficiency4: adding the most value with least use of resources and the
least pollution. Generally, ``The ability to simultaneously meet cost, quality and performance goals, reduce
environmental impacts, and conserve valuable resources''
 Parameters to evaluate GSCM
Evaluation of Green Supply Chain Management using Fuzzy- ANP Balance Scorecard

Purpose of Balance Scorecard- The purpose of Balance Scorecard matrix is to keep balanced the scores of a set of
performance measures. The measures comprise short and long-term objectives, financial and non-financial measures,
lagging and leading indicators and internal and external performance perspectives

Fuzzy- ANP balance scorecard framework

Step 1-: Identify key performance indicators to measure SC

Step 2-: Group those KPI into leading and lagging

Step 3-: Design and develop green-causal relationship

Step 4 -: Formulation of pair wise comparison matrix

Step 5 -: Use of quantitative factors to assign weights

 Parameters to evaluate GSCM

The Green Causal Relationship Green Supply Chain Constructs

Green Supply Chain Constructs- Organizational commitment, Eco-design, Green supply chain processes,
social performance and sustainable performance.
Build Sub constructs under each constructs.
Parameters to evaluate GSCM
 Environmental Audit in Indian Context
Various performance Index to measure environmental impact
• LPI (Logistics Performance Index)
• EPI(Environmental Performance Index)
• Environmental Sustainability Index (ESI) 2009 for Indian States
• Green performance index (GPI) 2011

Comparing lean and green manufacturing is methodology by which companies assess the environmental
impact of supply chain
 Case Study 1: Objectives of Walmart’s Green SCM
Supply Chain

To be supplied 100 percent by renewable energy

To create zero waste

To sell products that sustain Wal-Mart’s resources and the environment

Wal-Mart’s Value Networks
 Ambitious Goals

• Reduce greenhouse gases by 20 percent in 7 years

• Reduce energy use at stores by 30 percent in 7 years
• Cut solid waste from U.S. stores and Sam’s Clubs by 25 percent in three years
• Buying diesel-electric and refrigerated trucks with a power unit that could keep cargo cold without the engine
running, saving nearly $75 million in fuel costs and eliminating an estimated 400,000 tons of CO2 pollution in one
year alone
• Making a five-year verbal commitment to buy only organically grown cotton from farmers, and to buy alternate
crops those farmers need to grow between cotton harvests. Last year, the company became the world's largest
buyer of organic cotton
• Promising by 2011 to only carry seafood certified wild by the Marine Stewardship Council, a group dedicated to
preventing the depletion of ocean life from overfishing
• Buying (and selling) 12 weeks' worth of Restrictions on Hazardous Substances (RoHS)-compliant computers from
Toshiba
 Wal-Mart’s Updated Guidelines

And by 2012, all suppliers Wal-Mart buys from directly must source 95 percent of their production from
factories that receive the highest ratings on environmental and social practices

All of Wal-Mart's direct import suppliers, plus all suppliers of private label and non-branded products, must
provide the name and location of every factory they use to make the products that they sell to Wal-Mart

Suppliers must create a plan to eliminate, by 2012, defective merchandise reaching the Wal-Mart supply chain

By 2012, suppliers must work with Wal-Mart to make a 20 percent improvement in the energy efficiency
inside the top 200 factories in China that Wal-Mart directly sources from.

Manufacturers' facilities must certify compliance with laws and regulations where they operate as well as
rigorous social and environmental standards, set by government agencies, beginning with suppliers in China
in January 2009 and for all other Wal-Mart suppliers by 2011
Case Study 2: HP Design for Environment (DfE) Program

• Most of HP’s environmental footprint occurs in its supply chain and when customers use its

products and solutions. Together, these phases account for 94% of HP’s carbon footprint and
93% of water footprint. 
• DfE is an engineering perspective in which the environmentally related characteristics of a
product, process or facility are optimized.
• Main Focuses
• Energy Efficiency – Reduce the energy required to manufacture and use the product
• Materials Innovation – Use less material, increase recycled and recyclable content, and
use materials with lower environmental impact
• Services – Design service models to reduce environmental impacts and increase product
longevity through support (for example, Care Packs and upgrades) and new business
models
• End-of-life Options – Make responsible return and recycling easier
The Benefits of DfE Program
HP Reverse Supply Chain
HP’s Priorities
• Reuse Hardware
• remanufacture, refurbish and remarket
computer and printing equipment
• work with third-party reuse vendors to
ensure conformance with HP policies and
vendor standards
• Recycle Hardware and Supplies
• Break down products and recover
materials
• Incorporate closed loop recycling and reuse
materials in new HP products
• Work with third-party recycling vendors to
ensure conformance with HP policies and
vendor standards
• Collaborate with partners and governments
to increase access to responsible recycling
 HP’s Goals

• Goals Achieved
• Supply Chain – reduced GHG emissions intensity of first-tier manufacturing and product
transportation supplies by 20% compared to 2010
• Operations – reduced scope1 and scope2 GHG emissions from operations by 20%
compared to 2010
• Products and Solutions – reduced GHG emissions intensity in product portfolio (PCs,
Servers, Printers) by 26% compared to 2010
• New Goals Set
• Commit to 100% renewable electricity in global operations with 40% by 2020
• Achieve zero deforestation associated with HP brand paper and paper-based product
packaging by 2020
• Reduce the GHG emissions intensity of HP’s product portfolio by 25% by 2020,
compared to 2010
 Case Study 3: SABMiller Case Study
Making the supply chain green : SABMiller

• SABMiller has always been a promoter of sustainable work practices and believes that the profitability depends on healthy
communities, growing economies and the responsible use of scarce natural resources

• By working together with local communities, suppliers, governments, consumers and beyond, SABMiller has developed shared
opportunities to the benefit of all
 Case Study 4: L&T Case Study

Making the supply chain green : L&T

• It is the first company in India to start reporting about sustainability. The company, in its various initiatives
has implemented 3R principle i.e. Reduce, Recycle and Reuse

• By its green SCM practices, L&T is able to harvest more than 23 million litres of rainwater

• There is an overall reduction of 6% in water consumption and 16 campuses have witnessed zero wastewater
discharge

• In terms of infrastructure they have built energy efficient offices and extensive usage of renewable energies
like wind and solar power across its facilities

• The company uses recycled materials like fly ash, crush sand etc. as an input to its raw material requirements
 How green is your supply chain

Five fundamental questions really help to focus the discussion and crystallize action plans

1. What are the tangible and intangible benefits of moving towards a Green Supply Chain?
2. What are the costs, both direct, and indirect?
3. What influence do we have over our suppliers, their suppliers and our customers (especially the party
with the most power in the supply chain) that would allow us to jointly work together and move the
supply chain towards a green supply chain?
4. How will we communicate and measure our progress towards the green supply chain to the key
stakeholders? How will we engage them?
5. What barriers to Green Supply Chains can be expected and how can these be overcome?
 References

http://www.ijcem.org/papers72011/72011_15.pdf
http://www.isca.in/rjrs/archive/v1i6/14.ISCA-RJRS-2012-130%20Done.pdf
http://www.ijeat.org/attachments/File/V1Issue3/C0164121211.pdf
http://www.scdigest.com/gsc/NEWS/15-04-30-1.php
http://searchmanufacturingerp.techtarget.com/definition/supply-chain-management
http://sh.diva-portal.org/smash/get/diva2:656883/FULLTEXT01.pdf
green-manufacturing.blogspot.com
THANK YOU