CHAPTER 10 – SUSTAINABILITY AND THE SUPPLY CHAIN
Faculty of International Economic Relations
University of Economics and Law
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CONTENTS
▪ The role of sustainability in a supply chain
▪ Key pillars of sustainability
▪ Sustainability and supply chain drivers
▪ Closed-loop supply chains
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THE ROLE OF SUSTAINABILITY IN A SUPPLY CHAIN
▪ Sustainability: economic status, natural environment, fair trade,
good employment, appropriate relationships with stakeholders
▪ Why to focus on supply chain sustainability?
▪ Reducing risk and improving the financial performance of the
supply chain
▪ Community pressures and government mandates
▪ Attracting customers that value sustainability
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KEY PILLARS OF SUSTAINABILITY
▪ Economic pillar
▪ Long-term firm corporate sustainability
▪ Social pillar
▪ Workforce
▪ Customers
▪ Society
▪ Environmental pillar
▪ Environmental impacts
▪ Natural resource reduction activities
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SUSTAINABILITY AND SUPPLY CHAIN DRIVERS
Competitive Strategy
Supply Chain Strategy
Efficiency Responsiveness
Supply chain structure
Logistical Drivers
Facilities Inventory Transportation
Information Sourcing Pricing
Cross-Functional Drivers
Source: Chopra and Meindl (2016)
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FACILITIES
▪ Consume energy and water & emit waste, greenhouse gases
▪ Ten principles of eco-design for green production:
▪ Material intensity
▪ Energy intensity
▪ Controlling harmful resources
▪ Using recycled or recyclable materials
▪ Selecting reliable and robust processes
▪ Environmental functionalities
▪ Sustainable alternatives
▪ Increased environmental awareness
▪ Fine-tune performance of the production process
▪ Life cycle design
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INVENTORY
• Inventory in landfill: harmful additives, loss of materials
▪ Packaging for the environment:
▪ Using minimum packaging volume and weight
▪ Packaging design for reuse, recovery, recycling
▪ Minimizing the presence of noxious and hazardous substances in
packaging material
▪ Biodegradable packaging design
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TRANSPORTATION
▪ Fuel consumption
▪ CO2 emission, waste
▪ Product design & packaging to reduce transportation cost &
emissions
▪ Alternative fuels: biofuel, electric power
▪ Full truck loads
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GREEN PRACTICES IN TRANSPORTATION/DISTRIBUTION
▪ Preference and use of non-polluting means of transport
▪ Use of an energy efficient transportation and distribution fleet
▪ Design of efficient distribution networks
▪ Better route design
▪ Recycling of old vehicles
▪ Increase of utilization degree of trucks
▪ Designing green-sustainable distribution networks
▪ Adoption/implementation of telematics systems and technologies
▪ Use of appropriate packaging
▪ Adoption of eco-driving habits
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SOURCING – GREEN PROCUREMENT
▪ Environmentally friendly (raw) materials
▪ Social and economic aspects of procurement
▪ Only purchase products that are really needed
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INFORMATION
▪ Standards for measurement and reporting
▪ Common set of standards to improve sustainability
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PRICING
▪ Differential pricing to improve utilization of assets by
changing customer’s willingness to pay
Source: indiamart
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CLOSED-LOOP SUPPLY CHAINS
Closed-loop supply chain management is “the design,
control, and operation of a system to maximize value
creation over the entire lifecycle of a product with dynamic
recovery of value from different types and volumes of
returns over time.”
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REVERSE FLOWS IN A SUPPLY CHAIN
Source: de Koster et al. (2002)
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CHAPTER 10 – SUSTAINABILITY AND THE SUPPLY CHAIN
THANK YOU!
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