Logistics & Supply Chain Management

LSM - 306

Master of Business Administration

LSM-306 Supply Chain Management (Logistics & Supply Chain Management)
 Logistics & Supply Chain Management

UNIT – 8 B

Master of Business Administration

LSM-306 Supply Chain Management (Logistics & Supply Chain Management)
 GITAM INSTITUTE OF INTERNATIONAL BUSIINESS Professor Dr. P.RAJASEKHARA SARMA M.B.A. IITD, Ph.D.

As the public becomes more aware of

LSM-306 Supply Chain Management
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environmental issues and global warming,

consumers will be asking more questions about
the products they are purchasing.

Companies will have to expect questions about

how green their manufacturing processes and
supply chain are, their carbon footprint and how
they recycle

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 GITAM INSTITUTE OF INTERNATIONAL BUSIINESS Professor Dr. P.RAJASEKHARA SARMA M.B.A. IITD, Ph.D.

Background

 Industrial Ecology: a systematic organizing framework for the many

LSM-306 Supply Chain Management

facets of environmental management in industrial world as a natural

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system - a part of the local ecosystems and the global biosphere ...
offers a fundamental understanding of the value of modeling the
industrial system on ecosystems to achieve sustainable environmental
performance (Lowe, 1993).
Industrial Ecosystem Boundary

Materials Extractor Materials Processor

Energy or Grower or Manufacturer
and Limited
Limited Waste
Resources

Waste Processor Consumer

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 GITAM INSTITUTE OF INTERNATIONAL BUSIINESS Professor Dr. P.RAJASEKHARA SARMA M.B.A. IITD, Ph.D.

Green Supply Chain Management

What is it?
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Lots of definitions.
Here’s one -
Management of Materials and Resources from Suppliers to
Manufacturer/Service Provider to Customer and Back, with the
Natural Environment Explicitly Considered (hopefully in a
conscientious manner).
- The Operational Instantiation of Industrial Ecosystems

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 GITAM INSTITUTE OF INTERNATIONAL BUSIINESS Professor Dr. P.RAJASEKHARA SARMA M.B.A. IITD, Ph.D.

Green SCM leverages the role of the environment

in SC value creation
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 GITAM INSTITUTE OF INTERNATIONAL BUSIINESS Professor Dr. P.RAJASEKHARA SARMA M.B.A. IITD, Ph.D.

Supply Chain Management

 Logistics, Procurement have become strategic

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 Organizations outsourcing, forming partnerships, alliances

 Product environment becoming more complex
 Time based competition requires time compression
 Managing suppliers and customer relationships necessary
 Competition shifting from company vs. company to
Supply Chain vs. Supply Chain

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 GITAM INSTITUTE OF INTERNATIONAL BUSIINESS Professor Dr. P.RAJASEKHARA SARMA M.B.A. IITD, Ph.D.

Supply Chain Management

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Supplier Organizational Customer

Suppliers Relationships Processes Relationships Customers

Continuous Improvement Loops

Supply Chain Elements

Supply Chain => Supply Cycles

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 GITAM INSTITUTE OF INTERNATIONAL BUSIINESS Professor Dr. P.RAJASEKHARA SARMA M.B.A. IITD, Ph.D.

Some Supply Chain Practices

Prequalification of suppliers
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 Require or encourage environmental criteria for approved suppliers

 Require or encourage suppliers to undertake independent environmental
certification
Environmental requirements at the purchasing phase
 Build environmental criteria into supplier contract conditions
 Incorporate Environmental Health and Safety Staff (EHS staff) on
sourcing teams
Supply base environmental performance management
 Supplier environmental questionnaires
 Supplier environmental audits and assessments

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 GITAM INSTITUTE OF INTERNATIONAL BUSIINESS Professor Dr. P.RAJASEKHARA SARMA M.B.A. IITD, Ph.D.

Some Supply Chain Practices (2)

Build environmental considerations into product design

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 Jointly develop cleaner technology with suppliers

 Conduct life cycle analysis in cooperation with suppliers
 Engage suppliers in Design For Environment (DFE) product innovation
 Coordinate minimization of environmental impact in the extended supply
chain
 Develop tools that assist in the DFE effort

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 GITAM INSTITUTE OF INTERNATIONAL BUSIINESS Professor Dr. P.RAJASEKHARA SARMA M.B.A. IITD, Ph.D.

Some Supply Chain Practices

Cooperate with suppliers to deal with end-of-pipe environmental issues

LSM-306 Supply Chain Management
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 Reduce packaging waste at the customer/supplier interface

 Reuse/recycle materials in cooperation with the supplier
 Launch reuse initiatives (including buy backs and leasing)
Reverse logistics
 Give supplier an incentive to reduce the customer’s environmental load

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 GITAM INSTITUTE OF INTERNATIONAL BUSIINESS Professor Dr. P.RAJASEKHARA SARMA M.B.A. IITD, Ph.D.

Some More Supply Chain Practices

Influence legislation to facilitate better SCEM policies

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 In cooperation with suppliers, lobby to strengthen environmental regulation

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 Lobby on behalf of SCEM initiatives

Work with industry peers to standardize requirements
 Create inter-firm procurement group to collaborate on environmental issues
 Standardize supplier questionnaires
Inform suppliers of corporate environmental concerns
 Issue statements of EHS priorities to suppliers
 Draft and distribute comprehensive SCEM policy
Promote exchange of information and ideas
 Sponsor events to facilitate discussions between customers and suppliers on
environmental issues
 Host training and mentoring programs.

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 GITAM INSTITUTE OF INTERNATIONAL BUSIINESS Professor Dr. P.RAJASEKHARA SARMA M.B.A. IITD, Ph.D.

Commercial firms have had early success using

Green SCM Principles
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 GITAM INSTITUTE OF INTERNATIONAL BUSIINESS Professor Dr. P.RAJASEKHARA SARMA M.B.A. IITD, Ph.D.

The product life cycle is the basis of green supply

chain management
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 GITAM INSTITUTE OF INTERNATIONAL BUSIINESS Professor Dr. P.RAJASEKHARA SARMA M.B.A. IITD, Ph.D.

The environmental impacts of each LC stage are

examined for reduction
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 GITAM INSTITUTE OF INTERNATIONAL BUSIINESS Professor Dr. P.RAJASEKHARA SARMA M.B.A. IITD, Ph.D.

Why Do it? (Benefits)

USAEP, 2001, USAEP, (2001), “Greening the Supply Chain”, U.S. – Asia
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Environmental Program, http://www.usaep.org/ctem/greening.htm.

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 Economic benefits from increased efficiency. By reducing wastes,

companies decrease handling expenses, fines, and even costly inputs.
Supplier's savings may be passed along to buyer companies.
 Competitive advantage through innovation. Efficient production is
enhanced through the use of cleaner technologies, process innovation,
and waste reduction. Reduction in wastes equals dollars earned.
 Improved product quality. Integration of Supply chain partners, helps
maintain relationships between buyers and suppliers leading to
increased control over product quality.

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 GITAM INSTITUTE OF INTERNATIONAL BUSIINESS Professor Dr. P.RAJASEKHARA SARMA M.B.A. IITD, Ph.D.

Why Do it? (Benefits)

 Consistent corporate environmental goals. In an era of multi-faceted,

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non-vertical manufacturing, companies include supplier outreach to

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address corporate environmental goals.

 Improved public image. Consumers, investors, and employees
respond positively to companies with a reputation for good
environmental performance.

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