Environmental and Social Issues in Supply Chain Management

- towards Sustainable Supply Chains- towards Sustainable Supply Chains

Department of Management and Marketing

Supply Chain Management, MGMT30011

Semester 1, 2015

Agenda forWeek 3

Get an overview of the Concept of Sustainability.

Understand the role of Supply Chain Management for business sustainability.

Learn practices that contribute to sustainable Supply Chain Management:Supply Chain Management:

Reverse Logistics

Procurement Policies

Environmental Efficiency

Innovation

A company is no moreA company is no moresustainable than its supply chain.

KRAUSE, VACHON & KLASSEN (2009)

Source: Krause, Vachon, & Klassen (2009): Special Topic Forum on Sustainable Supply Chain Management: Introduction and Reflections on the Role of Purchasing Management, Journal of Supply Chain Management, 45(4), p. 18-25

Environmental and Social Issues in SCM

Raw material suppliers Agriculture, mining and refining, electricity, chemicals,

labour conditions, community relations

Manufacturers Labour conditions, sourcing decisions, Chemicals,

plastics, waste

Transportation Air pollution, shipping accidents, fuel consumption

Retailers Sourcing decisions, Energy, water, paper, space etc Sourcing decisions, Energy, water, paper, space etc

Customers (assemblers or consumers) Purchasing decisions

Returned goods (obsolete, defective, part of a take back scheme)

End of life waste ( computers, cars, white goods)

Post consumer waste ( coffee cups, general rubbish, plastics etc)

TheTriple Bottom Line Approach

A management principle based on

the idea that doing business as if nature and people were properly valued actually creates stunning competitive advantage.

- Amory Lovins, Founder of the Rocky Mountain Institute

The Triple Bottom Line Approach (Elkington, 1999)

The Triple Bottom Line Approach (Elkington, 1999)

People

Equity

Community well-being

Resource use

Corporate Governance

Health & Safety

Employee aspirations

Human rights

PlanetProfit

Process management

Purchasing

Innovation

Technology

Accounting

Resource use

Emissions

Waste

Product design

Biodiversity

The Concept of Sustainability

Social Sustainability

Environmental Sustainability

Economic Sustainability

The Concept of Sustainability

Sustainable development is development that meets the needs of the present

without compromising the ability of future generations to meet their own needs.

(World Commission on Environment and Development (W CED), 1987; also called the Brundtland Commission)

Sustainable Supply Chain Strategies

Reverse Logistics

Procurement Policies

Environmental Efficiency Environmental Efficiency

Innovation

Reverse Logistics

Increasing practice because of changes in: End-of-life and packaging disposal legislation

Consumer awareness and expectations

Growing use of leasing rather than buying

Product returns, recalls and take-back schemes

End-of life or Post-Consumer Waste Retrieval:End-of life or Post-Consumer Waste Retrieval:

What problems does waste create?

Decreasing landfill space and available land for new landfills

Dumping of excess products in developing countries

Dumping of waste in rivers and on land

Represents a waste of valuable resources

Procurement Policies

Procurement is one of the most critical areas capable of generating change.

Companies can introduce:

Risk Management based on customer-driven solutions

Purchasing partnerships to create efficiencies and learning ( e.g. Sony)

Require suppliers to be compliant with ISO 14001 ( e.g. Xerox)e.g. Xerox)

If a major customer can influence process improvement why not also environmental problems?

Environmental Efficiency

Using cleaner and more efficient practices in all operations.

Resource efficiency in Logistics:

Air Pollution ( NOx, SOx, CO2) Water based transport contributes the lowest air

impact per kilometer; then Rail; then Road; then Air

Fuel Consumption Water based transport consumes the lowest intensity of

fuel per kilometre; then Rail; then Road then Air

Solutions : Optimisation based around fuel economies reduce

travel distance for finished goods, increase loads and distance and reduce speed (i.e. use water) for un-finished components

Greater use of fuel efficient technologies or alternative fuels in trucks/vehicles

Environmental Efficiency the ISO14001 Standard

ISO: International Organisation for Standardisation

Develops and publishes international standardsfor organisations

ISO standard:document that provides requirements, specifications, guidelines or document that provides requirements, specifications, guidelines or characteristics that can be used consistently to ensure that materials, products, processes and services are fit for their purpose

ISO 14001

Standard for Environmental Management Systems; States the requirements for certification and provides guidance for use

Innovation and Sustainability

Requires inter-firm collaboration and extensive information sharing with other trading partners in the supply chain.

Innovations can improve sustainability of the supply chain in the areas of:

Product development Product development

Packaging design

Configuration of transport solutions

Continuous process improvement

Case Example:

Loving Earth,

a Melbourne baseda Melbourne basedorganic and fair-trade food company

WITH SCOTT FRY, MANAGING DIRECTOR

Readings

1. Lee, H (2010): Dont tweek your supply chain: Rethink it end to end, Harvard Business Review, 88(10), 62-69

2. Handfield, R Sroufe, R and Walton,E (2005): Integrating environmental and supply chain strategies. Business Strategy and the Environment, 14, 1-19

3. Hopkins, S. (2009): What Executives Dont Get About Sustainability (and Further Notes on the Profit Motive), MIT Sloan Management Review, Profit Motive), MIT Sloan Management Review, 51(1), 34-40

MGMT30017 Global Management ConsultingMGMT30017 Global Management Consulting1 1 16 July 2015 to Berlin, Hong Kong, Singapore and Shanghai16 July 2015 to Berlin, Hong Kong, Singapore and Shanghai

APPLICATIONSAPPLICATIONS NOW OPEN UNTIL 27 MARCHNOW OPEN UNTIL 27 MARCH

INFO SESSIONS:INFO SESSIONS:

Tuesday 17 March

12 1pmPrest Theatre, Ground

Floor, FBE Building

Monday 23 March

5.15-6.15pmTheatre 3, Level 2, FBE

Building

YOU WILL BE ABLE TO: YOU WILL BE ABLE TO:

Complete an intensive team

consulting project overseas

Develop your practical

business competencies in an

international setting

Make a real contribution to a

real organisation

Apply online at http://go.unimelb.edu.au/9cnnApply online at http://go.unimelb.edu.au/9cnn

ELIGIBILITY AND SELECTION: ELIGIBILITY AND SELECTION:

BCom students who have

completed 175 points including

MGMT20001 Organisational

Behaviour

Shortlisted students will be

invited to a group interview

20 places available per city