1 GSCM 2April 07 Web
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GSCM ± Spring 2007 ± Session 1 ± April 3
Perspective and goal of industrial ecology
Most environmental impacts are caused by the
material transformation processes of the economy.
To make good environmental decisions it is necessary to identify and assessall relevant environmental impacts of all relevant transformation processes.
Process
Economicoutputs
Environmentalinterventions
Economicinputs
Naturalresources
1)
2)
Impact assessment Product life cycle
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GSCM ± Spring 2007 ± Session 1 ± April 3
Industrial and consumer activities are process-based but agent-drivenOne production and consumption system consists of many agents
Environmental impact is based on whole system performance (life cycle perspective)Agents, however, usually base their decisions on criteria other than environmental(e.g. economic performance ), which are applied to smaller sub-systems
Environmental Economic or Other Performance
Perspective
Whole System
Individual Agents(Sub-System)
Driver
Objective
Industrial Ecology needs to have some idea who the actors in the industrial ecologyare, and what motivates their actions.
(Tim Jackson & Roland Clift, 1998, JIE, Vol. 2 No. 1)
Limitations of IELimitations of IEThe Problem of Agency in Industrial Ecology:The Problem of Agency in Industrial Ecology:
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GSCM ± Spring 2007 ± Session 1 ± April 3
Limitations of IELimitations of IEO ne Life Cycle, many ActorsO ne Life Cycle, many Actors ± ± Environmental O bjective, Economic Driver Environmental O bjective, Economic Driver
End-of-lifeproductdisposal
Productdemand
& use
Rawmaterials
mining
Primarymaterials
production
Component
manufacture
Finalproduct
assembly
Productsale anddelivery
Componentre-
processing
Productre-
processing
Materialsre-
processing
Eol productcollection
& inspection
Arcelor (steel
company)
Xerox
Inter Steel(steel broker)
Take-backentrepreneur
Nokia
Life Cycle Management- Objective: High environmental performance of the product system- Boundaries: Product Life CycleEconomic agent- Objective: High financial performance of the business- Boundaries: Financial boundaries of the business
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GSCM ± Spring 2007 ± Session 1 ± April 3
End-of-lifephone
disposal
Phonedemand
& use
Primarymaterials
production
Componentsmanufacture
Finalphone
assembly
Componentreuse
Phonerefurbishment
Metalsrecycling
End-of-lifephone
collection
Metalsmarket
Cell phone takeCell phone take- -back entrepreneur back entrepreneur
Inspection&
sorting
Componentmarket
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GSCM ± Spring 2007 ± Session 1 ± April 3
Two challenges of industrial ecology
1) How to coordinate the agents?
2) How to generate double dividends, or win-win scenarios
2nd tier supplier
1 st tier supplier Manufacturer Customer
Economicperformanceof agent
Environmentallife cycle
performance
Supply Chain Management
Green Supply Chain Management
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GSCM ± Spring 2007 ± Session 1 ± April 3
Traditional definition of a supply chainTraditional definition of a supply chain
[«] a network of facilities that procure raw materials, transform them into intermediary goods and then final products, and deliver the products to customers through adistribution system.
Lee H, Billington C (1995) The Evolution of Supply-Chain Management Models and Practice at Hewlett-Packard, Interfaces 25
(5), pp 2- 3, Sept/Oct 1995
[«] a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers.
Ganeshan R, Harrison T P (1995) An Introduction to Supply Chain Management, Penn State University
[«] the total chain of exchange from original source of raw material, through thevarious firms involved in extracting and processing raw materials, manufacturing,assembling, distributing and retailing to ultimate end customers.
Saunders M J (1997) Strategic Purchasing and Supply Chain Management, Pitman, London
Rawmaterials
mining
Primarymaterials
production
Component
manufacture
Finalproduct
assembly
Productsale and
delivery
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GSCM ± Spring 2007 ± Session 1 ± April 3
Definition of supply chain management (SCM)Definition of supply chain management (SCM)
Productassembly
Materialproduction
Componentmanufacture
Mining, drillingand harvesting
Sale anddelivery
Planning
Sourcing
Production
Inventory
Logistics
[«] managing business activities and relationships(1) internally within an organization,(2) with immediate suppliers,(3) with first- and second-tier suppliers and customers along the supply chain, and (4) with the entire supply chain.
Harland C M (199 ) Supply chain management: relationships, chains and networks, British Academy of Management 7(Special Issue), pp S 3-S80
SCM has two dimensions:Coordinating the various business activities within a supply chain agentCoordinating the business activities between various supply chain agents
SCM is about integrating supply chain activities and agents.Systems theory: Optimizing system components or sub-systems in isolation rarely
optimizes the system as a whole.
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GSCM ± Spring 2007 ± Session 1 ± April 3
Measuring supply chain performance / efficiencyMeasuring supply chain performance / efficiency
Processes:
costs
Inputs:
costs
Outputs:
revenues
SCM is regarded as part of production and operations management,which in turn is part of management science.Management science is typically guided by profit-maximization.
(see e.g. Tirole J (1988) The Theory of Industrial Organization, MIT Press, Cambridge, MA)
Many different variables are used to measure SC performance,but they are all related to profitabilityThe ultimate aim of traditional SCM is therefore to increase revenuesand / or reduce costsIn SCM the structures and patterns of product demand are typically taken as a given
Supply chain performance is therefore typically related to profits:
profits = revenues - costs
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GSCM ± Spring 2007 ± Session 1 ± April 3
Supply chain improvementsSupply chain improvements
Supply chain improvements are changes in the organization, managementor physical structure of supply chains which increase expected profits:
Supply chain costs: product design, research & developmentpurchasingproductioninventory
handlingwarehousingtransportationetc.
( expected profits = ( (expected revenues ± expected costs) > 0
Revenues: 7 (price x quantity) for all final products
Concepts and tools to improve supply chain performance include:Lean production or just in time (JIT) (e.g. Toyota), build to order vs. build to stock,outsourcing vs. vertical integration (e.g. Flextronics), postponement, concurrent design,enterprise resource planning (ERP), electronic data interchange (EDI), etc.
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GSCM ± Spring 2007 ± Session 1 ± April 3
Claim: Many winClaim: Many win- -win opportunitieswin opportunities
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GSCM ± Spring 2007 ± Session 1 ± April 3
GSCM uses a life cycle perspectiveGSCM uses a life cycle perspective
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GSCM ± Spring 2007 ± Session 1 ± April 3
GSCM even seems to use LCA«GSCM even seems to use LCA«
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