Green Supply Chain Management Analytical framework

1
Green Supply Chain Management Analytical
framework
Economic dimension
Environmental dimension
Input
Process
Output
value added
2
Industrial Ecology Perspective of Pollution
Prevention

• Pollution is caused by material flows. Pollution
  prevention is thus a material issue
• There are essentially three ways to reduce or
  prevent pollution
• Dematerialization (less material per economic
  output)
• Material substitution (different material)
• Reuse recycling (use material and value-added
  over and over)

3
Service-based contract and variable input
productivity

• Paint/door example
• Supplier paid per painted door
• Paint required to paint door is variable
• The economic incentives of supplier and customer
  are not quite aligned
• Customer Customer is indifferent with respect
  to paint use
• Supplier Use less paint per painted door

Mixed contract and variable input productivity

• Paint/door example
• Supplier paid per painted door and gallon of
  paint
• Paint required to paint door is variable
• The economic incentives of supplier and customer
  are now aligned
• Customer Use less paint per painted door
• Supplier Use less paint per painted door

4
Supplier profits
Customer profits
Supplier profits
Customer profits
Supplier profits
Customer profits
5

• Reiskin et al (2000) Reducing chemical
  throughput through servicizing
• Challenges
• Difficulty of transferring such a complex task
  as chemicals management to a supplier
• Individual and organizational resistance to
  change
• Increase in interdependency between supplier and
  customer
• May be regarded as outsourcing (including job
  losses etc.)

Summary

• Goal of servicizing Increase productivity of
  material inputs (direct or indirect)
• Obstacle Supplier usually have incentive to
  sell more (volume-based contract)
• Response Supplier contract based on service
• Danger That customer looses incentive to reduce
  material inputs
• Solution Find contracts and business models
  that align supplier and customer
  incentives in the best possible way

6
BSR (2001) Suppliers Perspectives on Greening
the Supply Chain

• Trends in GSCM
• Phase out restricted substances (e.g. lead,
  cadmium))
• Implement EMS (e.g. ISO 14001)
• Request mostly top-down (surveys, guidelines)
• Growing number of collaborative efforts
• Mismatch between environmental expectations and
  purchasing decisions
• Environmental requests flowing both ways

7
BSR (2001) Suppliers Perspectives on Greening
the Supply Chain

• Business benefits
• Cost reduction (reduced procurement, reduced
  compliance cost)
• Increased efficiency
• Positive financial returns through ISO 14001
  implementation
• Attract new business
• Increased value of product
• Some suppliers see no or negative economic
  impact

8
BSR (2001) Suppliers Perspectives on Greening
the Supply Chain

• Barriers to GSCM
• Cost of environmental requirements
• Burdensome reporting requirements
• Lack of environmental awareness/values
• Technological barriers
• Conflicting commuication

9
Michael Brown Contact DetailsMichael S. Brown,
Ph.D.Brown and Wilmanns Environmental, LLCSanta
Barbara, CA  mike_at_bw-environmental.com
Reading for Tuesday, 24 AprilUS EPA (2000) The
Lean and Green Supply Chain A Practical Guide,
EPA 742-R-00-001, Environmental Accounting
Project, US EPA(is posted on course website)
Speaker for Thursday, 26 AprilJill Dumain,
Environmental Analysis Director, Patagonia,
Ventura, CA