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Green supply chain management

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Green supply chain management

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Green supply chain management

  1. 1. GREEN SUPPLY CHAIN MANAGEMENT Presented by – Manisha Kumari 13159 Pooja Goyal 13189 Pooja Sharma 13190 Priyanka Meena 13210 Presented to – Dr. Mona Verma
  2. 2. WHAT IS SUPPLY CHAIN MANAGEMENT?  Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer.
  3. 3. WHAT IS GREEN SUPPLY CHAIN MANAGEMENT “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".
  4. 4. BENEFITS OF GREEN SCM
  5. 5. IMPROVEMENTS BY GREEN SCM  Improves operations by employing an environmental solution  Improves Agility: Green supply chain management help mitigate risks and speed innovations  Increases Adaptability: Green supply chain analysis often leads to innovative processes and continuous improvements  Promotes Alignment: involves negotiating policies with suppliers and customers, which results in better alignment of business processes and principles.
  6. 6. SUCCESS STORIES
  7. 7. POLLUTION PREVENTION HIERARCHY
  8. 8. WHY THERE IS NEED FOR GREEN SCM?  Increasing Environmental Constraints due to Global Warming  Corporate Social Responsibility  Beneficial for Organization  Eco-friendly  Increasing Environmental awareness in stakeholders  Evolving Consumer and Client Demand  Response to increasing fuel prices
  9. 9. WHAT IS GREEN SUPPLY CHAIN MANAGEMENT?  GSCM can be defined as “integrating environmental thinking into supply chain management, including product design, material sourcing and selection, manufacturing process, delivery of the final product to the consumer as well as end-of-life management of the product after its useful life”. Question really is what is supply chain management? Green = natural environment (may = money too). GSCM = green purchasing + green manufacturing/materials management + green distribution/marketing + reverse logistics
  10. 10.  MAJOR CHALLENGES Practicing green marketing initially is a costly affair. Green SCM encourages green products/services, green technology, green power/energy; a lot of money has to be spent on R&D programs The customers may not believe in the effectiveness of firm’s green strategies. The firm therefore should ensure that they convince the customer about their green initiatives, this can be done by implementing Eco-labelling schemes offer its “approval” to “environmentally less harmless” products and have been very popular in Japan and Europe. Initially the profits will be very low since renewable and recyclable products and green technologies and more expensive. Green SCM will be successful only in long run. Many customers may not be willing to pay a higher price for green products which may affect the profitability of the company. The firms practicing Green SCM have to strive head in convincing the stakeholders and many a times there may be some who will simply may not believe and co-operate.
  11. 11.  By considering above barriers it can be concluded that the path towards green supply chain has not yet been determined by the companies.  Furthermore, in many cases the methods are partially known, are not mature enough or just not available. So, it is lack of motivation or lack of awareness from the side of the corporate leaders towards going green or choosing and implementing the appropriate green strategies for their supply chain, so that they make their business competitive in this globalised era of business.
  12. 12. AREAS TO GREEN THE SUPPLY CHAIN  Designing Of Products  Production  Material Purchase  Packaging  Warehousing  Logistics & Reverse Logistics
  13. 13. OTHER INITIATIVES  Eco labeling: Labeling that identifies products that meet certain environmental criteria  LEED (Leadership in Energy and Environmental Design): Design and Construction practices that significantly reduces or eliminate negative impact of building on environment  Green sourcing: Sustainable procurement
  14. 14. AN OVERVIEW OF GREEN SUPPLY CHAIN MANAGEMENT IN INDIA By Nimawat Dheeraj and Namdev Vishal (2012) Presented by Pooja Goyal
  15. 15. ABSTRACT  The green supply chain management (GSCM) is a powerful way to differentiate a company from its competitors and it can greatly influence the plan success. With increased awareness to corporate responsibility and the requirement to meet the terms with environmental policy, green supply chain management (GSCM) is becoming increasingly important for Indian manufacturers. Companies that have adopted GSCM practices with a focus on distribution activities have successfully improved their business and environmental performance on many levels. Today’s also some of remaining companies have not adopted green supply chain management, due to this environmental performance index (EPI) ranking of India is not good. Today’s environmental performance index (EPI) of India and the major four activities of the green supply chain management; namely green purchasing, green manufacturing, green marketing and reverse logistics are being covered throughout the paper.
  16. 16. RESEARCH BACKGROUND  A researcher studied green supply chain management, it includes pressure practice and performance within the Chinese automobile industry in which they observed that on increasing pressure from a variety of directions have caused the Chinese automobile supply chain manages to initiate carrying out of green supply chain management (GSCM) practices to improve both their economic and environment performance.  After that another researcher studied the green supply chain management in electronic industry. According to that, there are various approaches for implementing GSCM practices has been proposed and recognized in previous literatures according to the author, but there is yet no investigation that identified the reliability and validity of such approaches particularly in electronic industry.  After this, study on the implementation of green supply chain management in textile enterprises is also done in which the author considered the environmental influence and resource utilization efficiency in the whole supply chain and here also one problem was arise that how to execute the GSCM.  Further works on the Implementation of green supply chain management practices in electronics industry in which they aims to survey existing green activities in computer parts manufactures in Thailand to evaluate GSCM.
  17. 17. GREEN PURCHASING  Environmentally preferable purchasing (EPP) or green purchasing is process of selection and acquisition of product and services which minimise negative impact over the life cycle of manufacturing, transportation, use and recycling.
  18. 18. 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 •Can Be Reprocessed •Product labeling Environmentally Preferable PurchasingEnvironmentally Preferable Purchasing
  19. 19. GREEN PURCHASING NETWORK INDIA  GPNI is an evolving network of professionals interested and active in the general area of sustainable consumption and production- more specifically: green purchasing and public procurement. It is currently a loose informal network of professionals primarily operating as an internet based electronic forum.  The objectives of the GPNI are:  To create awareness amongst Indian industry and other stakeholders about green purchasing and procurement (GPP).  To encourage and facilitate implementation of GPP and greening supply chains (GSC) projects to enhance the competitiveness of the Indian industries.
  20. 20. GREEN MANUFACTURING  In Green manufacturing, manufacturing equipment is made to be fast, reliable, and energy efficient.  Green manufacturing can benefit your manufacturing company in many ways. Not only it will benefit the environment, but it will impact your consumer, the shareholders, and the company perception in the market.
  21. 21. LEAN MANUFACTURING  Lean manufacturing, which is simply known as Lean, because it is a competitive practice that reduces costs, improves environment and quality, and improves the bottom line. Lean manufacturing is aimed at the elimination of waste in every area of manufacturing.  Lean manufacturing is closely associated with green manufacturing as there is an overlap between the goals and drivers for both processes.
  22. 22. JIT  A key component of Lean principles is just-in-time (JIT) inventory strategy. It focuses on reducing inventory and provides material, energy, and space savings.  Purpose of JIT is reduction of cost and quality improvement.
  23. 23.  ISO 9000 AND ISO 14000: Purpose of ISO 9000 and 14000 are to recognize quality standards are followed by the companies and changes the motivation  Zero Emission Strategy: Purpose of zero emission strategy is to environmentally damaging production products are eliminated.16% of companies are actively following zero emission. 85% of companies are following reduced emission strategies.  Six Sigma: Six Sigma is another management methodology which became very popular. It supports green production by primarily eliminating defects from manufacturing processes and, hence, cutting waste. Through exercising greater care and management control minor investment defects are caught as early as possible through the process. As a result, significant savings can be made by reducing the number of defects, rework, and spending time on defective pieces.
  24. 24. COMPARISON OF LEAN MANUFACTURING WITH GREEN MANUFACTURING
  25. 25. GREEN MARKETING  Green marketing involves a commitment from the organization to deal with environmentally friendly products (i.e., products that do not harm society and the environment) and to conduct marketing activities in a way that reflects the organization’s commitment to environmental responsibility through adherence to specific controls to ensure the preservation of the natural environment.
  26. 26.  Owners’ satisfaction  Achieving security in the introduction of products and in operations management  Organization social acceptance  Sustainability of activities
  27. 27. ENVIRONMENTAL PERFORMANCE INDEX (EPI)  It measures the effectiveness of national environmental protection efforts .  EPI indicators focus on measurable outcomes such as emissions or deforestation rates rather than policy inputs, such as program budget expenditures.  India Ranks at 125 of 2012 Environmental Performance Index, which is worst rank.  CURRENT RANK – 144 (out of 178 countries)
  28. 28. CONCLUSION  Recycling of raw materials and component parts are the top green manufacturing and production focused initiatives Adoption of green practices is highest in those areas of the supply chain where there is a direct relation to cost savings and efficiency, for example in inventory reduction, recycling of raw materials.  EPI-2012 rank of India is worse, this also shows that awareness of green supply chain management and greening in India is poor, so there will be need to spread the knowledge of green supply chain management, with the help of this green supply chain management, Indian manufacturing enterprises get their cost and efficiency benefits.
  29. 29. CURRENT RANK - 2016
  30. 30. CASE STUDY
  31. 31. WALMART “GOING GREEN” • Initial strategy of walmart was to target low-income families in rural areas by offering significantly lower costs. • Walton’s mission was truly realized through the use of technology in distribution and supply chain logistics, which allowed Wal-Mart the opportunity to cut costs and lower prices for end users. • Scott’s business model to strengthen supply chain management processes by “going green” was a strategic decision that positively impacted Wal-Mart’s growth, distribution techniques, and corporate identity.
  32. 32.  Lee Scott took control of Wal-Mart in 2000 with a newly adopted strategy of making logistical processes more economically friendly. “Green” logistics, at its core, means implementing a system that can independently monitor overseas suppliers to make sure they meet social and environmental standards.  Lee Scott saw the two goals as intertwined: “being a good steward of the environment and being profitable are not mutually exclusive.  The company did earn some goodwill among environmentalists as the first major retailer to speak out in favour of the environment. When vendors claimed they had made environmental improvements to products, Wal- Mart began promoting the products with green-coloured shelf tags.  The company sold as many as 300 products with green tags at one point. By the early 1990s, the green tag program disappeared altogether, and environmental issues slipped off of the Wal-Mart’s list of strategic priorities.
  33. 33. The three goals were just an introduction to Mr. Scott’s speech. He also discussed the following goals:  Increase fuel efficiency in Wal-Mart’s truck fleet by 25 percent over three years and doubling it within 10 years 2. Reduce greenhouse gases by 20 percent in 7 years 3. Reduce energy use at stores by 30 percent in 7 years 4. Cut solid waste from U.S. stores and Sam’s Clubs by 25 percent in three years. 5. 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 6. 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.
  34. 34.  As Wal-Mart attempts to scale up networks and improve upon “green” initiatives, the company faces three possible obstacles: 1. Increased Costs 2. A Sub-Optimal Product Assortment 3. Criticism of Factory Labour Conditions.
  35. 35. CONCLUSION  In this case study we have outlined the requirements needed to become a sustainable business, the reason why this initiative is different than others previously attempted by Wal-Mart, goals presented by management, the new value networks, and risks Wal-Mart needs to address.  Wal-Mart critics argue that the steady dose of these initiatives is an effort to deflect attention from its work- place policies and its financial performance. They need to continue to invest in its environmental policies as well as address the issues facing their workforce in order to prove these initiatives are not just a public relations stunt.
  36. 36.  If Wal-Mart proves that it is serious about reducing environmental impact and devoted to investing in green initiatives, critics will have to unclench their fists for a round of applause.
  37. 37. CASE STUDY 2
  38. 38.  A green SCM story  “The Greening of Wal-Mart : by Erica L. Plambeck and Lyn Denend”. Stanford Case study  Analysis of the case on SCM Review
  39. 39. THE STORY October 2005, Wal-Mart CEO Lee Scott committed the company to three ambitious goals: •To be supplied 100 percent by renewable energy •To create zero waste and to sell products that sustain Wal-Mart's resources and the environment. •To meet those goals, Wal-Mart would seek to transform its supply chain, in cooperation with suppliers and environmental non-profit organizations.
  40. 40. SIGNIFICANT INITIATIVES Hired Blu Skye Sustainability Consulting to help identify the categories of Wal- Mart's products and processes that had the greatest environmental impact. Wal-Mart/Blu Skye team multiplied sales data with environmental impact factors from the Union of Concerned Scientists, and identified 14 focal areas, bundled into three broad categories: •renewable energy •zero waste and •sustainable products.
  41. 41. For each focal area, an executive sponsor and a network captain took charge of building a sustainable value network of Wal- Mart employees and representatives from government, academia, environmental nonprofits, suppliers, and other stakeholders. The goal was to reduce environmental impacts and derive profit from that positive change. Network captains were typically senior managers from Sam's Club or Wal-Mart who were considered to be among the company's top performers.
  42. 42. Engaged external organizations into the loop, to create a “sustainable value network”
  43. 43. CONCRETE STEPS 1. Identify Goals, Metrics and New technologies -- Beginning in 2008, Wal-Mart formally planned to use a system to "measure and recognize its entire supply chain based upon each company's ability to use less packaging, utilize more effective materials in packaging, and source these materials more efficiently relative to other suppliers." --The scorecard is an important enabler for Wal-Mart to achieve its public goal of reducing the packaging used by all of its suppliers by 5 percent between 2008 and 2013. -- If achieved, this five-year program is expected to generate $3.4 billion in savings. In the first month, 2,268 vendors have logged onto the packaging scorecard site and 117 products have been entered into the system. Based on “The Greening of Walmart's Supply Chain” - SCMR 2007, Dr. Erica Plambeck, Stanford University
  44. 44. 2. Certify Environmentally Sustainable products -- According to an international study released in 2006, all species of wild seafood are greatly depleted and predicted to collapse within 50 years. -- Within this ominous business environment, Wal-Mart sourced approximately $750 million in seafood in 2006, and the company's volume of seafood business is growing at roughly 25 percent a year. -- The Marine Stewardship Council (MSC), established by Unilever and the World Wildlife Fund (WWF) in 1997, has defined standards for certification as a sustainable fishery, based on the United Nations' Code of Conduct for Responsible Fishing and on input from fishermen, retailers, government, nonprofits, and other stakeholders. -- The MSC certifies third parties to audit and certify fishery and processor compliance throughout the supply chain, from "boat to plate." -- Walmart sources only MSC certified fish, lately!
  45. 45. 3.Providing Network partner assistance to suppliers Wal-Mart is able to provide suppliers with valuable knowledge and process assistance through its strong relationships with the environmental nonprofits in its networks. Eg: when the Chinese government threatened to shut down a number of textile dye houses, including one of Wal-Mart's suppliers, in order to reduce pollution in Beijing ahead of the 2008 Olympics, Wal-Mart immediately took action - put the dye house in touch with one of the NGOs in their network, which helped it formulate a more environmentally friendly process that reduced its toxic output very quickly.
  46. 46. -- However, to meet organic standards, a farm needed to remain free of non- organic pesticides or similar materials for a period of three years prior to the harvest of any organic crop. To increase and secure its supply of organic cotton, -- Wal-Mart made a five-year verbal commitment to buy organic cotton from farmers. "It gives them confidence and stability -- Wal-Mart (which became the world's largest purchaser of organic cotton in 2006) also agreed to purchase the organic cotton farmers' alternate crops.
  47. 47. 4. Committing to larger volumes of environmentally sustainable products -- By making a commitment to buy a specified quantity of each product certified as environmentally friendly, Wal-Mart gives its suppliers an incentive to develop and produce that product. -- In its textiles network, Walmart learned that, along with the cost of certification, farmers faced a near-term reduction in yields with organic cotton farming, as well as the need to diversify crops. This forced farmers to alternate the planting of cotton with legumes, vegetables, or other cover crops to rejuvenate the soil. 5.Cutting out middlemen An immediate but unanticipated benefit of MSC certification in the seafood network—and of organic cotton certification in the textile network—was full visibility of the chain of custody, and hence the opportunity to eliminate intermediaries. By simplifying its supply chain, Wal-Mart reduced the frequency of seafood stock-outs, improved the quality of the fish it was receiving, reduced paperwork and transaction costs, and reduced the costs and environmental impacts of transportation.
  48. 48. 6. Consolidating direct suppliers Over the short term, Wal-Mart has had many diverse relationships with many factories, often working with a supplier one purchase order at a time or one season at a time. Says sustainability vice president Ruben: "Right now we account for two percent of a lot of people's business, especially overseas. We know that needs to be a lot larger—maybe 50 or 60 percent." 7. Restructuring the buyer role To better manage relationships with suppliers, the textiles network implemented a major organizational change: It redesigned the role of its buyers. In the past, textiles buyers had been generalists, handling a wide variety of responsibilities (as buyers did in other product categories).
  49. 49.   Licensing environmental innovations If one factory is significantly more energy-efficient than others, it's got an advantage. If it shares that information, the competition might gain a much better understanding of its production costs and therefore its profit margins." "Information about how much energy a product consumes is not particularly sensitive."

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