Camila Berge 10/05/2019 Pages:

Diego Goñe
Fernando Portal
Felipe Salas

UNIVERSIDAD ESAN

Course: Supply Chain Management

Section: S-007
Professor: Choy Pun Augusto Carlos

Members:
- Camilla Berge
- Diego Goñe
- Fernando Portal
- Felipe Salas
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Fernando Portal
Felipe Salas

Green Supply Chains and Reverse

Logistics in Peru - ECOCEANUM

In this case study we have decided to work with Ecoceanum, which is a peruvian company
focusing on low waste and plastic free products. The company was created by marine
biologists who care about the care and preservation of the environment and its ecosystems.
Their vision is to encourage other people to join the change and be more eco friendly, by using
less plastic products. They have an online store where they sell eco friendly products with the
intention to reduce the use of plastic, and especially one-use plastic. Metal straws, bamboo
toothbrushes, everlasting razors and tote bags are some of the products they are selling. The
company give a part of their profit to social and environmental projects.In addition to their
online store, they also use social media to make people aware of the impact of using plastic.
In the next part we will discuss their sustainability drivers and measures they use.

2. Sustainability Problem and Solution

Sustainability has been increasingly important in the 21st century. Sustainable development
has been defined as “development that meets the needs of the present without compromising
the ability of future generations to meet their own needs” by the Brundtland Report from 1987
(Del desarrollo sostenible según Brundtland a la sostenibilidad como biomimesis, Roberto
Gómez de Segura). Fully developed green supply chains consider sustainability for every
participant and for every step from design, to manufacture, distribution, storage, use and end
of life such as disposal or recycling (PP Slide 4). There are three reasons to the increasing
focus on sustainability. The first category is focusing on sustainability reduces risks and
improve financial performance of the supply chain. Second, it is an customer attractive factor,
and the third reason is that it is making the world more sustainable. Ecoceanum are focusing
on the second one-attracting customers who value sustainability with their ece friendly online
store, but also the third one by making the world more sustainable with their products and also
the awareness of sustainability they give through their social media accounts.
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Some of the most common metrics used to measure sustainability are energy consumption,
water consumption, greenhouse gas emissions and waste generation. But different industries
use different standards. Ecoceanum is focusing on the last one, minimizing waste generation.
Commented [1]: Add image-text

Life cycle assessment is the stages from a products creation to the end of life. For all the
products that Ecoceanum sells in their store, it is important that the whole process focus on
sustainable and eco friendly solutions. It is not just the end product that can end up as garbage,
that is important too, but they have to think of the whole process that includes consumption of
energy, water, greenhouse gas emissions and waste generation through the whole cycle.

All the steps in the figure needs to be part of the sustainability strategy for a company. A
company needs to think about the sustainability in these six sustainability drivers: facilities,
inventory, transportation, information, sourcing and pricing. The first one is facilities, where a
company can save energy-consumption by using power-saving lights, recycle and reduce
heat, which are some examples. The only example we know for sure that Ecoceanum does,
is that the waste are being recycled. Further driver is the inventory that focus on the products
life cycle, as described above. Transportation is always an important issue. All the products
need to be transported from where they are manufactured in the first step in to supply chain,
to the storing of Ecoceanum. We will discuss the supply chain in the next session. The point
is that both the fuel used for all this transportation, and product packing for transportation also
need to be considered to make a total sustainable company. The next driver is about
information, and the use of common standards across the supply chain. Ecoceanum is a little
company which does not have any information about this on their site. The second last driver
is sourcing. Ecoceanum has selected their suppliers with care to fit in their overall goal as a
eco friendly and sustainable company. Therefore they can not have suppliers that are doing
the opposite. Finally, the last driver is pricing. They are depending on lower production cost to
be able to sell their products at a price which the consumers can afford. If their product are
too expensive, then the consumers buy cheaper plastic products instead. For example are
they reducing production costs of the bamboo toothbrush by producing them in China, which
also is the number one producer of sustainable bamboo.

Let us look at an example of a product that Ecoceanum sells. To start with the material
extraction the Bamboo Toothbrush is a product made out of bamboo. For this material to be
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sustainable and eco friendly, Ecoceanum use bamboo which do not correspond to the diet of
the pandas. Other materials on the toothbrush is the paint which is made of biodegradable
natural water color and nylon bristles. Of course all production contributes emissions, but
compared to plastic toothbrushes there is a big difference in emissions. The brushes are
produced in a factory in China, which also is the main producer of sustainable bamboo. The
manufacturing requires energy to machines, heating and more, as with all other production.
The next step in the life cycle is the package and transport. Each toothbrush is packed in a
100% biodegradable paper box. One of the most emission causing factors is the transport
from the factory in China around the world, as with
all other products. The second last step in the cycle is the use of the product. As dentists
recommend people to change their toothbrush every second to third month, we use three
months as the total life of the toothbrush. The use of the toothbrush itself does not cause any
emissions. In the end, after a three month use, the toothbrush has reached its end of life. As
the toothbrush is 100% biodegradable, it does not cause any garbage, though it takes a few
years getting biodegraded. In comparison, a plastic toothbrush will never decompose. At the
end, the cycle starts again from its beginning, since the customer has to buy a new toothbrush.

3. SUSTAINABILITY FACTORS

Environmental:
Reducing the consumption of plastic helps the environment, that is the reason why
Ecoceanum produces its products with components that are biodegradable.

Social:
The company generates greater awareness to the population about environmental pollution
due to the excessive use of plastics

Economic:
Having a polluted city generates negative consequences for the health of its citizens and this
leads to high costs for their treatment. Therefore, using biodegradable elements would reduce
treatment costs.

4. DRIVERS OF GREEN SUPPLY CHAIN MANAGEMENT

Facilities:
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The production plant is located in the center of Lima, which means that it is located in a key
district because there is connection with almost all the districts of Lima.

Inventory:
ECOCEANUM have a considerable level of inventory due to the products that they produced
do not need so much space to store. This is considered a great advantage because large
number of finished products entering a small space.

Transportation:
The products sold in the capital are distributed by using a private car of the company and if
the clients are from province, the delivery is made through private services.

Information:
The relationship with its wholesalers, retailers and customers is based on the exchange of real
information. Being a small company, does not have an ERP system but they use social
networks very well to be in constant contact.

Pricing:
The price of Ecoceanum products is defined with the use of the cost leadership strategy and
also with a "Better value", which offers a fair price with good quality.

5. SUSTAINABILITY METRICS AND PERFORMANCE

- Facility

Metrics related to prices

ECOCEANUM uses a profit margin metric for its price related metrics. They carry out a cost
leadership strategy, which makes them the market leaders. In addition, this metric will help
you to know your earnings as a percentage of your income.

- Information
Due to ECOCEANUM is in the hygiene-related products industry, they use information metrics
as the seasonal factor metric. They measure the average demand per quarter, if it is above or
below the previous years. This helps them know how well or how badly the monthly sales will
go.

Metrics related to transportation

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ECOCEANUM uses an average output transport metric. This means that they measure the
cost of each outbound delivery of their product. They make the metric by purchase order,
which facilitates differentiation instead of transporting a single product.

6.- Reverse Supply Chain Management

While the supply chain focus on the flow of goods and services all the way from the raw
materials to the finished product , the reverse supply chain management worries about what
happens after the end of life of the product. Reverse Supply Chain Management is about doing
the supply chain the other way, the activities from achieving a used product from a consumer
to either dispose of it or reuse it.

The key about the product Ecoceanum sells is that the end product should not be garbage.
Many of their products, like the razor and metal straws are more or less everlasting. Other
products like the bamboo toothbrush is 100% biodegradable and compostable, compared to
the plastic toothbrush which never decomposes as mentioned in the previous part. Therefore
their reverse supply chain do not look like the traditionals.

7.- Problems or barriers for expansion or development of the venture

● Sometimes people can not afford the price and prefer other cheaper products. For this reason
Ecoceanum do not have too much revenues.
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● Sometimes people think that quality of the products are not good or are no durable, so they do
not put attention on the importance of start using them.
● People are not informed about how the products they consume are made, by which material,
and the environmental negative impact that generate the production of them.

Sources:
https://www.limaorganica.pe/marcas-afiliadas/ecoceanum/

PowerPoint chapter 18 about Green Supply Chains

https://www.youtube.com/watch?v=OI1Pf2gMFCs
https://www.bambrushes.com/
https://hbr.org/2002/02/the-reverse-supply-chain