How Supply Chain Management Enable Greener World
Transcript of How Supply Chain Management Enable Greener World
-
7/31/2019 How Supply Chain Management Enable Greener World
1/27
Copyright E2open, Inc. 2010
Thoughts on Carbon as the New Muda
-
7/31/2019 How Supply Chain Management Enable Greener World
2/27
Copyright E2open, Inc. 2010
Agenda
Framing the Challenge
The Green Context of Supply Chain Operations
How New SCM Practices Can Enable the Green Trend
1
2
3
2
Framing a Comprehensive Green SCM Strategy4
-
7/31/2019 How Supply Chain Management Enable Greener World
3/27
Copyright E2open, Inc. 2010
The Need for a Paradigm ShiftAnd Why It Has NotTaken Place Yet!
The Imperative The Reality
The
Question /
Dilemma
Can Green & Lean Co-Exist?
Tell Me How Youll Measure Me, I Will Tell
You How I Will Behave!The Interpretation
3
-
7/31/2019 How Supply Chain Management Enable Greener World
4/27
Copyright E2open, Inc. 2010
Why is Supply Chain Management a Good Starting Point?
Source http://www.eia.doe.gov/emeu/aer/pdf/aer.pdf
60%
4
http://www.eia.doe.gov/emeu/aer/pdf/aer.pdfhttp://www.eia.doe.gov/emeu/aer/pdf/aer.pdf -
7/31/2019 How Supply Chain Management Enable Greener World
5/27
Copyright E2open, Inc. 2010
and yet, the Green SCM Revolution Remains Elusive
Fortune 500 22# of Fortune 500
companies that haveinitiated some Green
SCM strategy
# of Fortune 500companies that haveapproached this withtheir trading partners
0
JANUARY 2010
5
-
7/31/2019 How Supply Chain Management Enable Greener World
6/27
Copyright E2open, Inc. 2010
Achieving this Paradigm ShiftRequires a Perception Change of CO2 as a Decision Variable
Defects Inventory Waiting Excess Motion
Over Production Over Processing Transportation
CO2 / GHG
1 2 3 4
5 6 7 8
Carbon in the Business Environment Needs to be De-Mystified
Introducing Carbon as the 8th Muda
6
-
7/31/2019 How Supply Chain Management Enable Greener World
7/27 Copyright E2open, Inc. 2010
There Are Some Good Signs
7
-
7/31/2019 How Supply Chain Management Enable Greener World
8/27 Copyright E2open, Inc. 2010
Agenda
Framing the Challenge
The Green Context of Supply Chain Operations
How New SCM Practices Can Enable the Green Trend
1
2
3
8
Framing a Comprehensive Green SCM Strategy4
-
7/31/2019 How Supply Chain Management Enable Greener World
9/27 Copyright E2open, Inc. 2010
Where is the Carbon in the Supply Chain?
9
Everywhere! Supply Chain activities create significant carbonemissions, making supply chain an important focus for clients
seeking to reduce their carbon footprint
Suppliers &
Manufacturers
Customers &Channels
Design for the
Environment
Carbon footprint
thinking throughout
product lifecycle
design
How can the total
network be
optimized
considering service,
cost, green
tradeoffs
What CO2 impact is
there from various
inventory concepts
& planning
methodologies
How can we best
measure a suppliers
carbon impact
(product, packaging,
upstream logistics)
and ultimately
compliance with
carbon reduction
requirement?
How should we
evaluate carbonoffsets?
What operations
strategy (facility
location, operating
model) provides the
best trade-off
between cost,
service, carbon?
Is there a role for
sustainable factory /
facility mgmt?
What distribution
network strategy
(facility locations,
sizes, transport
modes) provides the
best tradeoff of cost,
service and carbon?
How can packaging
be reduced and
recycled?
How can field service
operations reduce
carbon footprint
with better routing
and parts inventory
tracking?
Feedback loop to
engineering to
reduce impact
Various strategies to
reduce impactthroughout lifecycle
Flows: Product, Process, Information, Cash
SC Strategy Procurement LogisticsIntegrated Ops Integrated Ops
Plan Source Make DeliverDesignService &
End-of-Life
Asset Management
Finance
Sustainable facilities management: Green building & renewable energy; carbon footprint asset management; Asset utilization(Real-time data on energy usage; Carbon dashboard)
Paperwork Reduction; Environmental Cost Accounting; Environmental Tax Benefits Tracking
PLM
-
7/31/2019 How Supply Chain Management Enable Greener World
10/27 Copyright E2open, Inc. 2010
Carbon Distribution ModelCarbon Analysis needs to be seen from a total Product Lifecycle View
10
Design &Sourcing
InboundLogistics
InternalOperations
OutboundLogistics
Serviceand Use
Time
SCM Carbon Distribution ModelPhased Product Lifecycle View
Our goal can be
formulated rather simply:
Lower the Outer Edge
-
7/31/2019 How Supply Chain Management Enable Greener World
11/27 Copyright E2open, Inc. 2010
On the Need to Embed CO2 as a New Operational Variable
Exhibit 1 Procurement Strategy Scenario
Volume
DistanceCarbon Impact
Unit Cost
Mexico
China
As-Is
To-Be
New Green Value Equation =
Actual Cost (Production + Transportation) + Corresponding Carbon Cost
ABC, Inc
Classic Value Equation =Least Production Cost despitethe Transportation Cost
ABC
ABC
11
-
7/31/2019 How Supply Chain Management Enable Greener World
12/27 Copyright E2open, Inc. 2010
On the Need to Embed CO2 as a New Operational Variable
Exhibit 2 BOM and Routing in a CO2-Constrained SC
12
-
7/31/2019 How Supply Chain Management Enable Greener World
13/27
Copyright E2open, Inc. 2010
On the Need to Embed CO2 as a New Operational Variable
Exhibit 3 Planning Noise & GHG Responsibility
13
A Value Chain Network View
PrevailingView
Our View
Leverage +
What is a fabless company Carbon Footprint?What is its environmental responsibility?
-
7/31/2019 How Supply Chain Management Enable Greener World
14/27
Copyright E2open, Inc. 2010
Noise in the Supply Chain is Neither Lean nor GreenThe Carbon Reverse Bullwhip Effect
Extended Supply Chain View
EndCustomers
Suppliers RetailersPlants
Caron
Buildup
Process
Classic
Bullwhip
Effect
True CustomerDemand
Inventory
Produced
Amount of
Inventory
Inefficiencies
Carbon
Produced
Amount of
Carbon
Inefficiencies
14
-
7/31/2019 How Supply Chain Management Enable Greener World
15/27
Copyright E2open, Inc. 2010
The 3 Primary Supply Chain Variablestaken from a Green Perspective
15
John D.C. LittleInstitute Professor
IInventory
LLead-Time
TThroughput
Suppliers
Customers
Lead Time
TRaw Materials
Component
SuppliersEMS Partners
OEMs / Brand
Owners Warehouse(s)
Retailers
Your Company
Cost and Environmental concerns are likely to create a trend for supply chain collapsing / localization
Incentives need to be put in place to encourage creation of local and sustainable supply chain networks
Observations
-
7/31/2019 How Supply Chain Management Enable Greener World
16/27
Copyright E2open, Inc. 2010
Observation # 1
Local and Regional Models need to be
encouraged (less carbon footprint and less
inventory as a result of reduced lead
times)
Local
Model
Regional
Model
Global
Model
Which Leads Us to Some Interesting Observations
CCX
ECX
AP
OCE
Observation # 2
Proliferation of CO2 trading platforms will
delay properly tackling the problem Carbon trading should be approached as a
global commodity
16
-
7/31/2019 How Supply Chain Management Enable Greener World
17/27
Copyright E2open, Inc. 2010
Agenda
Framing the Challenge
The Green Context of Supply Chain Operations
How New SCM Practices Can Enable the Green Trend
1
2
3
17
Framing a Comprehensive Green SCM Strategy
4
-
7/31/2019 How Supply Chain Management Enable Greener World
18/27
Copyright E2open, Inc. 2010
A Green Supply Chain Requires a Holistic ViewSome Emerging Best Practices
Component
Suppliers
3PLs
EMS/CM/ODM
Partners
VMI Hubs
CustomersDistributors
Retailers
Supplier VMI
N-Tier ShortageManagement
N-Tier Rapid Planning
Multi-Tier Costing Supply ChainSegmentation
Command CenterCustomerSatisfaction
Supply ChainVisibility
CostReduction
InventoryReduction
Lead TimeReduction
Supply ChainVelocity
MetricsAlignment
18
-
7/31/2019 How Supply Chain Management Enable Greener World
19/27
Copyright E2open, Inc. 2010
Green Supply Chain ManagementValue of a Network Approach
BOM AnalysisTier2+
Partner Selection
Channel / Distribution
Reverse Operations
Supply Substitutable
components
Sourcing choices
Location choices
Inventory policy Safety stocks
Lot sizes
ReplenishmentVMI/VMR
Packaging Package size options
Package recyclingoptions
Corrugated box
Energy Embodied Energy
GHG Regulatory $Impact
Transportation Modes
Shipment frequency
Load consolidation
Carrier routing
Processing Manufacturing process
Quality control
Processing Repair / refurbishment
process
Shipment process
Quality control
Processing Order fulfillment
Shipment process
QC process
Organizationalmanagement process
19
-
7/31/2019 How Supply Chain Management Enable Greener World
20/27
Copyright E2open, Inc. 2010
Green Supply Chain ManagementImplementing a Network Approach
20
Provide performanceKPIs to customers
Associate compliance toOrders & Inventory
Automate ComplianceData Collection
Sustainability &SC Integration
-
7/31/2019 How Supply Chain Management Enable Greener World
21/27
Copyright E2open, Inc. 2010
Disseminating the MessageSample Supply Chain Maturity Framework
Companies in this zone have neither the supply chainreach nor the advanced planning capabilities to turnSCM into a competitive differentiator. Manycompanies from emerging markets fall in thiscategory
The Basic Quadrant
Companies in this zone have heavily invested inenterprise automation and planning solutions but yetto reap any significant benefits because of lack ofleverage or reluctance to embrace the required mind-set shift
Companies in this zone have managed to leveragetheir size or anchor position to build a multi-tierplanning model that still lacks advanced analytics to
handle complexity and provide visibility andresponsiveness
Companies in this zone clearly understand the needto reach across their supply chain spectrum tooptimize their operations leveraging advancedoptimization and business intelligence for superiorperformance
The Underachievers Quadrant
The Overachievers Quadrant
The Orchestrators Quadrant
21
-
7/31/2019 How Supply Chain Management Enable Greener World
22/27
Copyright E2open, Inc. 2010
Applying the Supply Chain Maturity FrameworkThe Tale of Two Leading Companies
Start
IdealState
Phase I
Start
IdealState
Phase I
Company A Company B
22
-
7/31/2019 How Supply Chain Management Enable Greener World
23/27
Copyright E2open, Inc. 2010
An End-to-End Supply Chain Command Centerand the potential to leverage for GHG tracking
23
-
7/31/2019 How Supply Chain Management Enable Greener World
24/27
Copyright E2open, Inc. 2010
Agenda
Framing the Challenge
The Green Context of Supply Chain Operations
How New SCM Practices Can Enable the Green Trend
1
2
3
24
Framing a Comprehensive Green SCM Strategy
4
-
7/31/2019 How Supply Chain Management Enable Greener World
25/27
Copyright E2open, Inc. 2010
12 Ideas to Make Your Supply Chain Greener
25
-
7/31/2019 How Supply Chain Management Enable Greener World
26/27
Copyright E2open, Inc. 2010
Exploring the Ideas
Redesign the product Reconfigure Manufacturing Shift to Green Suppliers
Shorten Distances Alter service-level agreements Shrink packaging
26
( )
-
7/31/2019 How Supply Chain Management Enable Greener World
27/27
C i ht E2 I 2010
Exploring the Ideas (continued)
Plan for reverse supply chain activity Consolidate shipments Plan smaller routes
Start now: define a green strategyTake a life-cycle viewCoordinate with partners
27