Perspective and goal of industrial ecology

1
Perspective and goal of industrial ecology
Most environmental impacts are caused by the
material transformation processes of the economy.
1)
Economic outputs
Economicinputs
Process
Environmental interventions
Naturalresources
To make good environmental decisions it is
necessary to identify and assess all relevant
environmental impacts of all relevant
transformation processes.
2)
Impact assessment
Product life cycle
2
Limitations of IE The Problem of Agency in
Industrial Ecology
Industrial Ecology needs to have some idea who
the actors in the industrial ecologyare, and
what motivates their actions.
(Tim Jackson Roland Clift, 1998, JIE, Vol. 2
No. 1)

• Industrial and consumer activities are
  process-based but agent-driven
• One production and consumption system consists
  of many agents
• Environmental impact is based on whole system
  performance (life cycle perspective)
• Agents, however, usually base their decisions on
  criteria other than environmental (e.g.
  economic performance), which are applied to
  smaller sub-systems

Perspective
Objective
Whole System
Individual Agents (Sub-System)
Driver
Environmental
Economic or Other
Performance
3
Limitations of IEOne Life Cycle, many Actors
Environmental Objective, Economic Driver
Raw materials mining
Primary materials production
Component manufacture
Final product assembly
Product sale and delivery
Product demand use
Component re- processing
Product re- processing
Materials re- processing
End-of-life product disposal
Eol product collection inspection

• Life Cycle Management - Objective High
  environmental performance of the product system
  - Boundaries Product Life Cycle
• Economic agent
• - Objective High financial performance
  of the business
• - Boundaries Financial boundaries of the
  business

4
Cell phone take-back entrepreneur
Phonedemand use
End-of-life phone disposal
Primary materialsproduction
Componentsmanufacture
Final phoneassembly
Phone refurbishment
Component reuse
End-of-life phone collection
Inspection sorting
Component market
Metalsmarket
Metals recycling
5
Economic performance of the three supply loops -
Costs and revenues (in ) -
Cost
Cost
Cost
Revenue
Revenue
Revenue

Recycling
Cannibalisation
Refurbishment
Bren School
6
Environmental performance of the three supply
loops - Avoided energy burdens (in MJ) -
100 displacement of new phones
50 displacement 50 expansion
New handset
Recycling
Refurbishment
MJ
Cannibalisation
7
Two challenges of industrial ecology
1) How to coordinate the agents?
2nd tier supplier
1st tiersupplier
Manufacturer
Customer
Supply Chain Management
2) How to generate double dividends, or win-win
scenarios
Environmentallife cycle performance
Economic performance of agent
Green Supply Chain Management
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Traditional definition of a supply chain
Raw materials mining
Primary materials production
Component manufacture
Final product assembly
Product sale and delivery
a network of facilities that procure raw
materials, transform them into intermediary goods
and then final products, and deliver the products
to customers through a distribution system. Lee
H, Billington C (1995) The Evolution of
Supply-Chain Management Models and Practice at
Hewlett-Packard, Interfaces 25 (5), pp 42-63,
Sept/Oct 1995   a network of facilities and
distribution options that performs the functions
of procurement of materials, transformation of
these materials into intermediate and finished
products, and the distribution of these finished
products to customers. Ganeshan R, Harrison T P
(1995) An Introduction to Supply Chain
Management, Penn State University   the
total chain of exchange from original source of
raw material, through the various firms involved
in extracting and processing raw materials,
manufacturing, assembling, distributing and
retailing to ultimate end customers. Saunders M
J (1997) Strategic Purchasing and Supply Chain
Management, Pitman, London
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Definition of supply chain management (SCM)

• managing business activities and
  relationships
• internally within an organization,
• with immediate suppliers,
• with first- and second-tier suppliers and
  customers along the supply chain, and
• with the entire supply chain.
• Harland C M (1996) Supply chain management
  relationships, chains and networks, British
  Academy of Management 7
• (Special Issue), pp S63-S80
• SCM has two dimensions
• Coordinating the various business activities
  within a supply chain agent
• Coordinating the business activities between
  various supply chain agents
• SCM is about integrating supply chain activities
  and agents.
• Systems theory Optimizing system
  components or sub-systems in isolation rarely
  optimizes the system as a whole.

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Measuring supply chain performance / efficiency
Inputscosts
Outputs revenues
Processescosts
SCM is regarded as part of production and
operations management, which in turn is part of
management science. Management science is
typically guided by profit-maximization. (see
e.g. Tirole J (1988) The Theory of Industrial
Organization, MIT Press, Cambridge, MA)
Supply chain performance is therefore typically
related to profits profits revenues - costs

• Many different variables are used to measure SC
  performance, but they are all related to
  profitability
• The ultimate aim of traditional SCM is therefore
  to increase revenues and / or reduce costs
• In SCM the structures and patterns of product
  demand are typically taken as a given

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Supply chain improvements
Supply chain improvements are changes in the
organization, management or physical structure
of supply chains which increase expected profits
? expected profits ?(expected revenues
expected costs) gt 0
Supply chain costs

• product design, research development
• purchasing
• production
• inventory
• handling
• warehousing
• transportation
• etc.

Revenues
? (price x quantity) for all final products
Concepts and tools to improve supply chain
performance include Lean production or just in
time (JIT) (e.g. Toyota), build to order vs.
build to stock, outsourcing vs. vertical
integration (e.g. Flextronics), postponement,
concurrent design, enterprise resource planning
(ERP), electronic data interchange (EDI), etc.
12
Enter Green Supply Chain Management
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Claim Many win-win opportunities
14
GSCM uses a life cycle perspective
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GSCM even seems to use LCA
16
Challenges and Limitations of IEWhen is a
proposed action win-win?