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Env.principles for Supply Chain

Env.principles for Supply Chain

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Environmental principles applicable to supplychains design and operation
Giannis T. Tsoulfas, Costas P. Pappis*
University of Piraeus, Department of Industrial Management, 80 Karaoli and Dimitriou street, 18534 Piraeus, Hellas, Greece
Received 8 November 2004; accepted 9 May 2005
Abstract
In this paper we deal with the problem of identifying environmental principles for the design and operation of supply chains. Theoperations that are included in supply chains are briefly described along with the approaches that are applied in order to improvetheir environmental performance. A background of environmental principles for achieving eco-efficiency and building of environmentally friendly organizational systems is presented and emphasis is put on the application of such principles ‘‘from cradleto grave’’. Then, environmental principles applicable to particular objects of logistics networks planning are identified andcommented upon. In addition, selective case studies from the literature, which show the applicability of the formulated principlesand their relevance to practice, are discussed. The paper concludes with some remarks regarding the benefits for companies andsocieties, in general, that occur as a result of the application of the formulated principles.
Ó
2005 Elsevier Ltd. All rights reserved.
Keywords:
Environmental management; Supply chains; Sustainable development
1. Introduction
Earth as a resource system has a limited capacity forsupporting a growing human population with anintensive exchange of materials and energy with itsenvironment[28]. Communities, governments, busi-nesses, international agencies, and non-governmentorganizations are increasingly concerned with establish-ing a means to monitor performance and to assessprogress towards sustainable development. The latter isdefined as meeting the needs of the current generationwithout compromising the ability of future generationsto meet their own needs[52]. However, it is inevitablefor humans to consume resources to fulfill their ownneeds and it is impossible for them not to extract theresources at the present time. Thus, an alternativetowards sustainable development is to consume theresources which have less potential for depletion and notto utilize easily depleted resources.Closed-loop supply chains and recovery of usedproducts, in particular, have received much attentionlately due to the above mentioned factors. Whiletraditional logistics are perceived as managing thesupply of goods and/or services from the producer tothe (end) customer[6]as well as internal logistics, andinput and output to the company, reverse logistics is theprocess of planning, implementing and controlling theefficient and effective inbound flow and storage of secondary goods and related information opposite tothe traditional supply chain (SC) direction for thepurpose of recovering value or proper disposal[16].Just as economic globalization creates opportunities andposes challenges to our ability to formulate macroeco-nomic policies, so does environmental globalization.The opportunity for business profit is an additional
* Corresponding author. Tel.:
C
30 210 4142150; fax:
C
30 2104142328.
E-mail addresses:
tsoulfas@unipi.gr(G.T. Tsoulfas),pappis@unipi.gr(C.P. Pappis).0959-6526/$ - see front matter
Ó
2005 Elsevier Ltd. All rights reserved.doi:10.1016/j.jclepro.2005.05.021
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motive for the companies. Relevant legislations indeveloped countries derive from the social demand forenvironmental protection and the perspective that themanufacturers should be made responsible for theirproducts ‘‘from cradle to grave’’ has dominated. How-ever, it can be claimed that the efforts made so far arerather limited, while nobody would argue against theneed for a global approach to the situation. Developedcountries or leader firms, mainly, have establishedenvironmental policies for product recovery. The issueof how effective these policies are is debatable.The scope of this paper is to identify systematicallyenvironmental principles for the design and operation of SC. There are though cases where the applied principles,which derive from the demand for sustainability, maylead to the improvement of the economic issue as well.
2. The management of materials’ flows from anenvironmental perspective
Every product generated, transported, used anddiscarded within the SC causes a certain impact on theenvironment. This impact is a function of the materialand energy consumed and of the wastes released in theproduct’s whole life cycle, which in turn depend uponthe type of the product and the technology used[9].Thus, it is important to examine all the proceduresrelated to materials’ flows, in order to opine regardingthe environmental performance of SC.The first stage in the SC, including the selection of materials and methods for processing, may be regardedas product design. Product design and process technol-ogy typically determine the types of pollutants emitted,solid and hazardous wastes generated, resources har-vested and energy consumed[39,45,47]. During the nextstage, the forward supply chain, the materials are firstlyprocessed till the manufacture of the product. Themanufactured items are usually packaged and thentransported to distributors. Finally, the products end infinal users
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customers. There are cases though, mainlyconcerning job shop, where the products are directlytransported from the producer to the end-user, withoutthe intermediation of a distributor. The reverse supplychain starts when the product is no longer operable orwhen the end-user decides that he will not use itanymore. Given that products are not disposed un-controllably, they are collected and transported toappropriate facilities, where a selection occurs: some of them are reprocessed and the rest are properly disposed.The reprocessed items are finally redistributed andreused. In some cases the separation occurs away fromthe reprocessing facilities.A graphical representation of the materials flow isprovided inFig. 1.Until lately, the main environmental emphasis hasbeen on the manufacturing phase and to some degree onthe disposal phase. This emphasis has given very goodresults, but at the same time the number of productsper household, energy consumption and waste haveincreased more and have caused a larger environmentalimpact. In the last few years the environmental focus hasshifted from the manufacturing processes to theproducts. Therefore, the only alternative is to shift thefocus to products and minimize the environmentalimpact in the whole life cycle[1]. Indeed, the appropriateidentification of all life-cycle stages of a product isnecessary for the establishment or optimization of environmental policies. Any activity in the SC mayhave an undesired impact on the environmental chain.And vice versa, any disturbances in the ecologicalbalance may affect production activities and social
extraction of virginmaterialscommunication withsuppliersdistributionstorageselection of materialsand processesparts productionstorageassemblydistributionrecyclingproper disposalinspectionrefurbishdisassemblyrepair direct reuseusecustomersend-of-life productsretailers
companyretailers/customerssuppliers
Fig. 1. The materials flow.
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welfare in the long term. In this sense, the SC isconnected in both ends with the environmental chain toestablish a perpetual cyclical operation. The analysis of the cost-effectiveness of schemes for the recovery of products is difficult, however, it is useless to do sowithout looking at the whole process chain, combiningthe logistics aspects with the recovery ones[35].A set of approaches is applied in order to improve theenvironmental performance of SC.Cleaner production is the continuous application of an integrated preventive environmental strategy appliedto processes, products, practices and services to increaseeco-efficiency and reduce risks for humans and theenvironment. Cleaner technologies extract and usenatural resources more efficiently, generate productswith fewer harmful components, minimize pollutantreleases to air, water and soil during manufacturing andproduct use, and design durable goods that can bereused or recycled[36].Rather than, for example, capturing polluting substances after they have beenproduced (as with the end-of-process technologies), thegoal is not to produce the harmful substance at all, or toproduce less of it, or a less harmful one[13].Life cycle assessment (LCA) is a method in which theenergy and material consumption and different types of emissions related to a specific product are beingmeasured, analyzed and summoned over the productsentire life cycle from an environmental point of view.Two LCA approaches are most common: one is based ondetailed process model descriptions and correspondingemissions and wastes, and the other is based on economicinput/output accounts that are used to construct modelsthat describe inter-sector flows in economic terms. Thelimitationsposedbythesetwomajorapproacheshaveledto efforts to develop hybrid LCA models that wouldovercome the barriers that are set by these limitations inorder to provide answers to all decision-making groupsthatareinvolved.Hagelaaretal.[23]provide anexcellentanalysis regarding LCA in the context of SC. Accordingto their analysis, there are three types of LCA:
Compliance-oriented LCA, which concerns comply-ing to rules and regulations with the help of end-of-pipe techniques.
Process-oriented LCA, which focuses on controllingthe environmental burden caused by the productionprocess by means of production integrated measuresthat achieve both compliance with governmentalrules and regulations and a better return.
Market-oriented LCA, which focuses on the re-duction of the environmental burden caused by thedesign of the product in order to achieve competitiveadvantage.Then the company has to decide what kind of LCAfits their requirements.
3. Environmental principles applicable to logisticsnetworks planning
In the past there have been some observable effortsfrom organizations and socially minded groups aimingat formulating principles towards eco-efficiency (e.g. theCleaner Production Programme and the Valdez Princi-ples). In addition, there have been some businessinitiatives with regard to their environmental responsi-bilities (e.g. the World Business Council for SustainableDevelopment). Furthermore, Environmental Manage-ment Systems (EMS) such as ISO 14000 and EMASprovide organizations with a structured approach toplan and implement environment protection measuresand to regularly evaluate their performance andimprovement. An EMS is not prescriptive, that is, itdoes not specify how environmental targets should bemet. Rather, it requires organizations to take an activerole in examining their practices, and then determininghow their impacts should best be managed. Thisapproach encourages creative and relevant solutionsfrom the organization itself [42].Environmental sustainability is a value embraced bythe most competitive and successful companies. A firmneeds to find the right processes to internalise environ-mental issues in a way consistent with its long-terminterests. The appropriate processes are different forevery firm, and there are no ready answers as to whichprocesses are appropriate under what circumstances.Therefore, a good framework can help managers findthe appropriate processes by providing a way of structuring their thoughts[7]. Moreover, assessingenvironmental impacts for cleaner products may assistcompanies in their quest for continuous improvement byidentifying ways of maximizing profits through reducingwaste and liabilities, raising productivity and demon-strating the company’s sense of responsibility towardsits customers and the environment.The challenge facing industrial firms is to work outways allowing them to successfully incorporate envi-ronmental considerations into their overall strategy.To this purpose, in addition to applying cleaner tech-nologies, firms try to develop innovative managementpractices enabling them to meet environmental con-straints and support sustainability[9]. The coopera-tion of companies could also lead to a more effectiveapproach.As mentioned earlier in this section, an EMS is ratherdescriptive. In this paper, a prescriptive approach ispresented. The principles proposed below have beenformulated based on the literature, where they may befound either as explicit statements (prescriptions orguidelines) or in treatments of subjects relating logisticsto environment, which implicitly suggest such principles.Some of these principles may also be inferred fromcompany practice.
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