Lecture 9 - Green Supply

https://www.kinaxis.
com/en/blog/design-green-supply-chain 1
• What is Green Supply Chain (GSC)
https://topo.cc/future-of-supply-chain-sustainable-green-supply-chain-management/
- Operational management network takes into consideration reduce

environmental effects along the cycle of product production plants,
distribution centers, and global network of suppliers and customers.
2
• What is Green Supply Chain (GSC)
This must Include:
• Product design
• Material sourcing and selection
• Manufacturing processes
• Delivery of the final product to consumers
3
•Green Supply Chain-Overview
• Recycle • Less toxic
v
• Repair • Sustainable
• Reduce fuel • Less energy

• Avoid • Reduce
unnecessary waste
movement www.sciencedirect.com 4
• Benefits of GSCM
Plan Source Produce Store Transport Reveres logistics
Design logistics Design Optimize routes Manage product

network to be warehouses to and loads of return process
more efficient optimize use transportation
of space and
labor
productivity
Benefits
Financial Benefits: Environmental Benefits: Social Benefits:
-Increased profit -Decreased waste -Decreased community effect
- Decreased costs - Increased energy efficiency - Noise reduction
- Increased asset utilization - Decreased air pollution - Decreased traffic congestion
- improved customer - Decreased fuel consumption - Safety
service
5
• Successful Examples (GSC)
-Texas Instruments:
- Save $8 million dollars annually by reducing its transit packing
budget through using reusable packaging systems.
- Commonwealth Edition:
-Produced $50 million in financial benefits from managing materials
and equipments with life cycle management approach.
- Pepsi/Coke:
- Saved $44 million by switching from corrugated to reusable plastic
shipping containers for 1 Liter and 20 ounce bottles.
Sources: https://www.slideshare.net/sandyskadam/green-supply-chain-management-8714198 6
• Reason for GSC
 Increasing Environmental Constraints because of Global
Warming
 Social Responsibility
 Eco-friendly
 Evolving Consumer and client demand
 Response to increasing fuel prices
• Areas to Green the Supply Chain
Designing of Products
Production Operation
Material Purchase
Packing
Warehousing
Logistics and Reverse Logistics
• GSC Schematic:
Raw Materials : Production: Packaging:
Reduce foils sourcing Cleaner manufacturing, safe Use recycled
Ethical source for labors and consumers, material
and environment
Customer Use: Storage: Transportation:

Product easy assembly Clear warehouse Truck use cleanest
and packaging is operation technology/lower
recyclable emission Travel the
most direct way
Reuse: End of Life:

Product is not disposable, No longer used, recycle
passed to family and parts
friends to reuse it.
https://www.intechopen.com/chapters/63678 9
• Designing of Products
 Environmentally friendly design approach leads

https://www.freepik.com/
* Less material usage.
* Less operations.
* Proper use of CFD tools can used
reduce the exhaust emissions
at designing level.
• Purchase
* Implementing green purchasing policies
* Technical support to sellers to reduce the emission
* Guidelines for usage of lees hazardous materials
• Production
* Establishing Economies of scale in production
* Lean manufacturing approach
* Fuel efficient tools and machines

https://www.freepik.com/p
* Selecting less carbon intensive
energy sources.
• Packaging
* Non toxic
* DEHP/PVC free
* Recyclability
* Durability/Reusability
https://earthtimes.org/green
* Less energy
* Less hazardous
• Logistics
* Optimized truck loads
* Direct shipment to the customer
* Routing of distribution
* Reverse logistics
https://www.istockphoto.com/illustrations/green-logistics
• Other Things Should Do
* Labeling that identifies products should match
environment restrictions.
* Design construction practices that eliminate the
negative effect of building on environment.
* Use green sourcing: sustainable procurement.
https://www.europarl.europa.eu/news/en/hea
• Become Carbon Neutral

What is carbon neutrality?
• EU is committing to carbon neutrality by 2050
16
Sources; ppt “Supply Risk Management Essentials“ By Megha Thakkar , Cipla Ltd.
17
• Supply Chain Management Difficulties
* Uncertainty in every supply chain

- Travel time,
- Breakdowns of machines and trucks,
- Natural catastrophe, Weather, War
- Local polities, labor issues and conditions
* Optimize significant complexity supply chain problem

- Reduce internal costs,
- Reduce uncertainty
Sources; ppt “Supply Risk Management Essentials“ By Megha Thakkar , Cipla Ltd. 18
• Supply Chain Risk Management
* Risk Management is process of determining or assessing

risk and then developing approach to manage the risk.
* Strategies can include:

- Transfer the risk to another party,
- Mitigate or avoid the Risk,
- Share the risk channel,
• Historically Problematic
* 1997:Boeing,
lost $2.6 billion due to supplier parts shortages
* 1999: Vipnet,
GSM portal launch delayed 1 year due to supplier issues.
* 2006:Airbus’s A380
super-jumbo delivery to customers almost 2 years late.
* 2006:PlayStation 3,
delay gives opportunity to rivals (Microsoft's Xbox 360 and
Nintendo’s Wii)
• Business Outlook
Company’s Environment
Suppliers’ Environment Customers’ Environment
Suppliers Company Customers
• Supply Chain Risk and Risk Management Strategies
Revenue Demand Supply Network design for

management agility
(Demand Risk) (Supplier/Logistics
Contract Management Risk)
Customer (Compliance Risk)
Social Responsibility
Rationalization
Sales and Operations (Brand Risk)
(Profitability Risk)
Planning
Hedging strategies
(Cost Risk)
Supplier development
(Capacity Risk)
Intellectual property
management (IP Risk)
Product
• Terminology
• Threat
• Vulnerability
• Accident
• Risk
• Consequences
• Threat Classification
• Natural hazards
• Anthropogenic (Man-Made) threats
• Technological or Accidental threats
• Natural Hazards
* Supply chain disruption due to Natural Disasters:
- Tornadoes - Earthquakes - Hurricanes -
Tsunamis, ,,,,,,
-For example, 2016, Kumamoto earthquake, Japan

Significant disruptions forced the automotive industry to
suspend production.
25
• Man-Made
* Supply Chain Disruptions due to Man-Made :

- Fire - product defects - cyber attacks - labor and civil unrest
- terrorism - utility failure.
• More frequent disruptors of supply chains,
However, They have a lower severity than natural
catastrophes.
 For example, 2016,

- Samsung Note cell-phone battery RECALL,
- Problems in a battery supplier’s supply chain
26
• Technological or Accidental Threats
* Supply Chain Disruptions due to Man-Made :

- System reliability problems - Data theft and manipulation -
Persistent unauthorized access within network,,,,
 Data theft,
- Passwords, Software code, Algorithms, Processes or
program,,,,,,
27
• Anatomy of an Incident
Hazard Event Deviation Effect Mishap
Controlled Parameter Consequence

Conditions Excursion
Initialing Un-controlled
Action Condition
• Reason for managing the Risk
• Future Impact
• Combination of Severity and Likelihood
• Un-wanted (Insurance)
• Risk Assessment
• It is a systematic process for managing information to
support a risk decision that is taken during a risk
management process
RISK PERCEPTION RISK ANALYSIS RISK MANAGEMENT
30
Sources: https://www.jokejive.com/topic/risk+management
• Assessment Process
1. Identification
- What might go wrong
- Must clearly define the risk in question
2. Analysis
- What is the likelihood?
- How bad would it be?
3. Evaluation
- What are the levels of risk?
- Defined in advance
• Risk Reduction
* By apply the risk reduction measurements.
- New risk, could be introduced into system
- The effect of existing risk might be increased,
- Revisit the risk assessment to defined and evaluate any
potential change in risk,
• Risk Control
- Risk Control: Process involves decision making to
decrease and /or accept risks.
The main goal of risk control:

- Reduce the risk to an acceptable level,
- Risk control effort should be proportional to the significance of
the risk,
- Understanding the optimal level of risk control , Cost-benefit
analysis
33
• Risk Acceptance
- Risk Acceptance: is a decision to accept risks.
Acceptance the risk: residual risk can be passive decision,

in which residual risks are not specified.
34
• Risk Review
- Review to take into account new knowledge and

experience
- Tools and Techniques for Risk Review :
- Ishikawa Model,
- SCOR Model,
- Failure Mode Effects Analysis (FMEA)
35
• Failure Mode Effects Analysis (FMEA)
- This comprised to three factors:
1. The likelihood of Occurrence
2. The likelihood of Detection of failure
3. Severity of failure
36
• Risk Score
It is a set of consistent rules (or weights) that assign a numerical value to

each risk factor that reflect our estimation of underlying risk.
Risk Priority Number = O x S x D

Where O: Occurrence S: Severity D: Detection
An assessment Ability to detect

of seriousness of the failure mode
a failure as it risk before
impact the end delivered to
user. customer
37
• Risk Score
Risk Priority Number = O x S x D
Where O: Occurrence S: Severity D: Detection
Risk priority
number evaluates
the overall risk
Help to determine
focus area to help
improve overall
reliability
38
• FMEA Steps
1. Review of the process
2. Determine failure mode
3. Determine possible risk of failure mode
4. Evaluate severity of risk (s)
5. Evaluate probability of failure mode (P)
6. Evaluate the detection of the failure mode (D)
7. Calculate risk priority number (RPN)
8. Prioritize the failure modes need to mitigated
9. Decide reduce or avoid of the failure mode
10. Re-Calculate the RPNs after mitigation
39
• Risk Matrix
Severity
Low Medium High
High Risk Class One
Medium Risk Class Two
Low Risk Class Three
40
• Risk Matrix
Detection
Low Medium High
One High priority
Two Medium priority
Three Low priority
41
• Risk Severity + Probability VS Detection
X5 X1 X4 X4
Risk Severity + Probability
X4 X1 X3 X4 X4
X3 X1 X2 X3 X4 X4
X2 X1 X2 X2 X3 X4
X1 X1 X1 X1 X1 X1
Rating 1- Assured 2- High 3- Moderate 4- Difficult 5- Not detectable
42
• Risk Management – Action Plan
Level of Risk Category Action
No risk X1 No action need
Small risk X2 Training
Moderate risk X3 Cost effective/selective control
Unacceptable risk X4 Control irrespective of cost involved
Immediate change of process

Severe X5
design/control need
43
• References:
Sources: https://www.slideshare.net/sandyskadam/green-supply-chain-management-8714198
Sources; ppt “Supply Risk Management Essentials“ By Megha Thakkar , Cipla Ltd. Oct. 26, 2013
44

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https://www.kinaxis.

- Operational management network takes into consideration reduce

• Recycle • Less toxic

• Reduce fuel • Less energy

Design logistics Design Optimize routes Manage product

 Increasing Environmental Constraints because of Global

 Evolving Consumer and client demand

 Response to increasing fuel prices

Logistics and Reverse Logistics

Customer Use: Storage: Transportation:

Reuse: End of Life:

 Environmentally friendly design approach leads

* Proper use of CFD tools can used

reduce the exhaust emissions

* Implementing green purchasing policies

* Technical support to sellers to reduce the emission

* Guidelines for usage of lees hazardous materials

* Establishing Economies of scale in production

* Lean manufacturing approach

* Fuel efficient tools and machines

* Selecting less carbon intensive

* Optimized truck loads

* Direct shipment to the customer

* Labeling that identifies products should match

* Design construction practices that eliminate the

negative effect of building on environment.

* Use green sourcing: sustainable procurement.

• Become Carbon Neutral

• EU is committing to carbon neutrality by 2050

* Uncertainty in every supply chain

* Optimize significant complexity supply chain problem

* Risk Management is process of determining or assessing

* Strategies can include:

Suppliers’ Environment Customers’ Environment

Suppliers Company Customers

Revenue Demand Supply Network design for

-For example, 2016, Kumamoto earthquake, Japan

* Supply Chain Disruptions due to Man-Made :

 For example, 2016,

* Supply Chain Disruptions due to Man-Made :

Hazard Event Deviation Effect Mishap

Controlled Parameter Consequence

• Combination of Severity and Likelihood

RISK PERCEPTION RISK ANALYSIS RISK MANAGEMENT

* By apply the risk reduction measurements.

- New risk, could be introduced into system

- The effect of existing risk might be increased,

- Revisit the risk assessment to defined and evaluate any

potential change in risk,

The main goal of risk control:

- Risk Acceptance: is a decision to accept risks.

Acceptance the risk: residual risk can be passive decision,

- Review to take into account new knowledge and

- This comprised to three factors:

1. The likelihood of Occurrence

2. The likelihood of Detection of failure

It is a set of consistent rules (or weights) that assign a numerical value to

Risk Priority Number = O x S x D

An assessment Ability to detect

Risk Priority Number = O x S x D

Where O: Occurrence S: Severity D: Detection

High Risk Class One