Quantitative Models For Sustainable Supply Chain Management

Reason for adopting green supply chain management

Discuss about the Quantitative Models for Sustainable Supply Chain Management.

In normal terms, supply chain management is the process of flow of products from manufacturing unit to the end-customers (Sanghavi et al. 2015). However, the supply chain management does not only involved with logistics process but also with the movement and storage of raw materials, inventory management and then delivering process from point of origin to point of consumption (Christopher 2016). Stadtler (2015) on the other hand stated that organization focuses on maximizing customer value and sustainability in order to operate their supply chain management system. Greener technology in recent time plays a significant role in order to reduce the adversity of global warming and climate change. Govindan et al. (2014) stated that especially in the automobile industry, company need to focus on the fuel consumption of the engine a d the technology on which the automobile is built so that it can put less negative impact on the environment. 

This business report thus, focuses the research question “what are the different aspects where green supply chain management can be implemented?”. Thus, this report will highlight the important aspects that Ford has already obtained in other region and can also implement in Australia.

Ross (2013) stated that in order to manufacture a good or a product, organization need to access their resources or arrange resources. The main problem occurs when company does not plan for the waste management obtained in every process of developing the products. Zhu, Sarkis and Lai (2012) depict that waste is generated almost in every stage of the lifecycle of the product. Waste in the manufacturing process is obtained in the supply of raw material from the supplier, distribution process, retail process, consumer process and also in the waste management process (Guang Shi et al. 2012).

Reducing waste in the manufacturing process or manage waste is one of the reasons for adopting the concept of green supply chain management process. Golicic and Smith (2013) stated that environment is related to the lifecycle of the products. Taken for instance, in the extraction process of the raw material, the environmental factor of air, water and waste is related; while, air is related in the process of transport. Sarkis (2012) furthermore portrays that the manufacturing process, retail or consumer use and disposal deploy the environmental aspects of air, water and waste. Thus, it can be said that Green Supply Chain Management (GSCM) is utilized for handling the source reduction, recycling the products, controlling the technology and disposal management. All these factors can be put into single pyramid for developing the pollution prevention hierarchy (Chen et al. 2012). Ross (2013) stated that according to this model managing only the disposal is a short term goal; however, incorporating the process of technology control, recycling and reusing and source reduction, an organization can obtain ling term goals for preventing the pollution.

Green Supply Chain Practices

Schoggl, Fritz and Baumgartner (2016) stated that green design refers to the scenario of systematic environmental consideration for designing of the products or services.  Green design comprises mainly of two processes life cycle assessment (LCA) and environmentally conscious design (ECD). Fazeni, Lindorfer and Prammer (2014) furthermore depicted that LCA is a process in which the environmental, occupational health and products related consequences are considered throughout every process lifecycle of the products development. Schoggl, Fritz and Baumgartner (2016) on the other hand stated that ECD is a study that develops the understanding regarding alignment of the environmental compatibility with the design decisions of the process.

Golghate and Pawar (2012) also stated that in order to reduce the negative impact on the environment, the automobile company need to identify the objectives and boundaries of the LCA, analyze the inventory in order to establish an alignment between the energy in the system and that of the materials use of the manufacturing process. Sharma (2013) moreover depicted that the company also need to evaluate the existing performance of the system for analyzing the impact on the environment, which will help the company to adopt solution that can help the organization to overcome the adversity.

Green operation is related to all the process and approaches related to the supply chain management. Green Jr et al. (2012) stated that green operation mainly related with three different categories of the operations- manufacturing and re-manufacturing, reverse logistics and waste management.

Manufacturing and re-manufacturing- Jacobs, Chase and Lummus (2014) highlighted that implementing green process started form the manufacturing of the products and goods. Thus, it is important to select the raw materials careful from ethical supplier, who themselves concerned abut the environment. Zhu, Sarkis and Lai (2013) also stated that the process of re-manufacturing signifies recycling- integrated manufacturing and the process of recycling signifies to the process of retrieving used and non-functional material content.

Reverse logistics- Dekker et al. (2013) stated that reverse logistic is process of planning and controlling the cost-effective flow of raw material through which new products can be formulated, in-process inventory and finished goods transportation. Dyckhoff, Lackes and Reese (2013) depicted that in order to perform the reverse logistics; the first process is to recover the used good and then sorted these products into different categories. In addition to that, products returns, re-manufacturing and re-using are three different aspects of the reverse logistics.  

Green Design

Waste management- According to Brandenburg et al. (2014), reduction of the hazardous waste during the production and operation while treating the products, storing the same and disposal of the products is the part of the waste management. The prime reason for adopting waste management is reduction in resource use and prevention of the pollution. Monczka et al. (2015) also stated that effective planning is better prior manufacturing of goods rather than utilizing the waste after waste has been created.

Dyckhoff, Lackes and Reese (2013) depict that in risk based strategies, an organization emphasizes on basic clauses comprising purchasing contracts and environment regulatory requirements in order to meet supplier requirement. Taken for instance, in USA, Federal Register (FR) is the registered bodies to propose the rule and regulations for emissions from vehicles and engines that formulated GHG emissions standards for the automobile companies (Epa.gov 2018). Thus, in USA, the company needs to follow regulation like Clean Air Act, Energy Policy and Conservation Act and Energy Independence and Security Act (EISA) (Epa.gov 2018). Similarly in UK, the automobile companies need to adhere air pollution laws like Environment Act 1995, Clean Air Act 1993, Environmental Protection Act 1990, Public Health (Ireland) Act 1878 and Pollution Prevention and Control Act 1999 (Hse.gov 2018). In Australia, there are rules like Motor Vehicle Standards Act 1989, Protection of the Environment Operations Act 1997 and Protection of the Environment Operations (Noise Control) Regulation 2017 that the vehicle manufactured need to follow (Epa.nsw.gov 2018).

In order to maintain a cleaner environment, Ford’s program for cleaner environment aims for reducing the environmental footprint in supply chain management system (Ford.com, 2018). The concerned program also targets more than 1,100 suppliers over 40 countries (Ford.com, 2018). The primary focus of this PACE program is to conserve water and energy but in recent times, in order to diminish the carbon footprint, the program also aimed for reducing waste, carbon emission by 500,000 metric tons by 2022 (Ford.com, 2018). Moreover, the commitment towards the environmental sustainability makes the company Ford, World’s Most Ethical Companies eight year in a row by the report of Ethisphere Institute (Ford.com, 2018).

Brindley (2017) stated that in order to obtain effectiveness in the organizational policies and approaches to attain the greener business moves, it is important that all the associated stakeholders should adopt similar goals and then provides towards the organizational objectives. In case of Ford, PACE offers best practices and allows suppliers to keep a track and achieve sustainability goals (Ford.com, 2018). They have the provision of sharing their environmental progress report and suggest best practices for attaining the green supply chain management system. Ford estimated that this alignment of all the stakeholder’s organizational approaches resulted in saving of 550 million gallons of water by 2021, which is able to fill 837 Olympic swimming pools (Ford.com, 2018). All the stakeholders are provided with PACE toolkit which comprises of more than 350 leading practices concerning the saving of energy, water, air emissions and waste (Ford.com, 2018). The staffs are also provide with training in the sustainability and the statistics shows that 3,302 suppliers are provided with effective suitability training which was 3,156 and 2,948 in the year 2015 and 2014 (Ford.com, 2018).

Green Operation

Ford has initiated the program for saving the energy which emphasizes on the saving of the required in the entire process of supply chain management system. One such initiative is using LED bulbs with incandescent light bulbs (Ford.com, 2018). Ford has also incorporate T-8 LED lighting in place of metal halide lights in order to install closed circuit cooling systems (Ford.com, 2018). 

Ford targets beauty, household and healthcare cleaning good supply chains through this policy from hazardous chemicals by the year 2020 (). This policy focuses on the chemical management strategy that is implemented for reducing the chemicals like Nonylphenol Ethoxylates (NPEs) after two to three years and also completely stop using chemical products like  flame retardants  and perfluorinated chemicals in textile products by the 2022 (). In addition to that, Ford have also taken initiative for investing $5 million dollars in green chemistry so that transparency for its chemically-made products can be obtained by 2020 (Ford.com, 2018). Ford also shows every report on the website and present all the 10 tiers of suppliers and sub-suppliers, who are working together to improve quality, lowers the cost and make progress to obtain sustainability goals (Ford.com, 2018). 

Ford has developed Aligned Business Framework (ABF) that helps all the stakeholders to improve quality, promote innovation, encourage common approaches and explore operational synergies (Ford.com, 2018).  Ford verifies that the code of conduct of the organization and their suppliers aligned with that of the stakeholders (). These stakeholders are also provided with effective training on the procedures through which the code of conduct can be obtained. Ford has 105 ABF suppliers and 78 production ABF suppliers in which 74% are production suppliers and 100% have aligned codes of conduct with policy letter 24 (Ford.com, 2018).

Ford provides effective training to their suppliers and external stakeholders regarding the reducing of carbon footprint. The statistics found that 82% of the total suppliers incorporated climate change in their business strategy; while, 64% of the total suppliers each responds that they have integrated water-related target and emissions reduction target (Ford.com, 2018).

Ford’s PACE process comprises of five steps- creating the roadmap, collecting the data, implementing practices, reporting reduction and sharing best practices with suppliers (Ford.com, 2018). 

Ford’s suppliers creating multi-year roadmaps for developing environmental performance which is followed by recording of baseline environmental data and finding successful approaches that can be implemented in the organizational policies. Ford then report the reductions in GHG, water use, waste generation, air and energy consumption and then facilitates best practices in the existing policies (Ford.com, 2018).

Green Supply Chain Management Strategies taken by Ford

Ford implements new platform strategy through which the company builds smaller number of cars, which are basically their base vehicles. The maximum distance of the manufacturing units the assemble unit to the retail outlets are 2,500 miles from the plant (Ford.com, 2018). Ford also forecast the market demands and customer demand through analytics and then prepares their manufacturing process so that no resources can be wasted. Ford’s supplier-management program also emphasize on risk planning like fire. Ford also utilizes those material that are energy efficient and consumers less energy.

One of the greatest benefits that can be attained through the implementation of the green supply chain management is that people will prefer their products more than other companies. Sarkis (2012) also stated that reduction in waste products results in decrease in handling expense of the raw material.

In automobile industry, development of the electric cars is a greatest invention that runs on the electric energy and thus saves the natural resources (Jacobs, Chase and Lummus 2014). These automobiles technology are cleaner compared to the traditional technologies, process innovation and reduction is waste. Monczka et al. (2015) moreover stated that adopting this technology is time consuming but once implemented the company can attain more profitability.

Dyckhoff, Lackes and Reese (2013) portrays that people now a day become more concerned about the environmental impact of the fuel and thus prefer greener products. Thus, if a company produces products that are efficient for the environment and its climate, consumers also prefer to get associated with those companies. Moreover, the governing bodies and the politicians also support the company for their good environmental performance.

Stadtler (2015) stated that management of an organization intends to adopt more profitability and this is the reason most of the company does not want to adopt the green technology. Another reason for adopting the green technology by the top management is that it require huge investment initially which diminishes their profit revenue.

Sanghavi et al. (2015) depicted that reverse logistics aims for waste reduction and less use of new resources but the process of utilizing the used products need more time and investment as the used products need to be transferred into a suitable form from where it can be utilized for next manufacturing process.  

It is highlighted by Ross (2013) that organization should use analytics so that the market demand can be fulfilled. However, Schoggl, Fritz and Baumgartner (2016) argued that sometimes, due to market share fluctuations and monetary fluctuations, the organization cannot forecast the demand of the market and consumer accurately which impact the productivity of the organization negatively.

Waters and Rinsler (2014) stated that not all the employee and the stakeholders associated by the company are aware of the green technology or the process through which the green supply chain management process can be implemented. However, training designed for this knowledge process also need time which on investment need reduces the productivity of the process.

Zhu, Sarkis and Lai (2012) argued that when employee found any change occurred in the organizational process, some of them become dissatisfied; while some of them opted for voluntary turnover as they cannot resist change. This will also hampers the production of the employee and they are failed to utilize their knowledge base due to dissatisfaction occurred.

Lack of appropriate performance metrics is an important barrier concerning the implementation of the green supply chain (Sarkis 2012). Waters and Rinsler (2014) stated that effective matrices are environment-friendly products, green product procurement, proper disposal of the products, performance measurement systems generation and reverse logistics.

Conclusion

It is found from the research that main reasons for adopting green supply chain management are to reducing the waste in manufacturing process and pollution prevention. The effective Green Supply Chain Practices found in this report is green design, green operation which furthermore comprises of three aspects- manufacturing and re-manufacturing, reverse logistics and waste management, green supply chain management strategies which comprises of four categories. It is also found that the green supply chain management strategies highlights risk based strategies which focus on purchasing contracts and environment regulatory requirements, efficiency based strategies that focuses on quality standard, innovation based strategies and lastly closed loop based strategies that emphasizes on reverse logistics. It is also found that the green supply chain management strategies taken by Ford are partnership for a Cleaner Environment (PACE) program, alignment in the organizational approaches, energy treasure hunts and transparency policies. It has been also found that the effective steps for greener supply chain process are engaging with key suppliers, integrating climate change into business strategies, implementing PACE process and reducing the distance.

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