ISBN - 978-93-81583-46-3

Green Supply Chain Management: A Case of Sugar Industry in India

Rupesh Kumar1, Vishnu Nath2, Dr. Rajat Agrawal3, Dr.Vinay Sharma4 1 Research Scholar, 2Research Scholar, 3Assistant Professor, 4Assistant Professor 1 Department of Management Studies, Indian Institute of Technology Roorkee, Roorkee 2 Uttarakhand Technical University, Dehradun 3,4 Dept. of Management Studies, Indian Institute of Technology Roorkee, Roorkee 1 scholar.rupesh@gmail.com, 2reachme.nath@gmail.com

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Green Supply Chain Management: A Case of Sugar Industry in India

Green Supply Chain Management: A Case of Sugar Industry in India

Abstract Purpose: To study seeks to enumerate how Green Supply chain management (GSCM) is being implemented in sugar industry in India. Design: The present study is an empirical one. A survey was conducted in 30 sugar mills in Uttar Pradesh, India and responses on various issues were collected via a questionnaire. Findings: The concept of GSCM has been observed as a recent and novel management principle. Different authors have studied green practices in supply chain management in different types of industries in different part of world. Qinghua Zhu et al., (2010) studied GSCM in large sized Japanese manufacturing companies. Rao (2002) has discussed GSCM in entire South East Asia. Similarly, the present paper studies GSCM of sugar industry in India. Overall it was revealed that the sugar industry is a tightly knit green supply chain that procures and consumes all its inputs without generating wastes. The by-products so obtained are such as inputs for other industries and for the energy requirements of the sugar industry itself. Managerial Implications: The findings will help in understanding how sugar industry has adopted and functioned under Green Supply Chain management and what problems and their solutions are being pursued by the sugar industry to make Green Supply Chain more efficient. Limitations: The present study was limited to only 30 sugar mills of Uttar Pradesh state. A larger sample should be taken in future related studies to get a more generalized view of this problem. Keywords: Green Supply Chain, Sugar Industry, Waste Management, Green Energy, Sustainability.

1. Introduction Environmental sustainability is one of the burning issues of current times. Earlier corporate environmental management has focused on managing internal environmental problems. Now attention is increasingly shifting towards the management of a corporations impacts outside the boundaries of the firm, into the management of upstream and downstream activities i.e. the whole supply chain system (Hu and Hsu, 2010). Green Supply Chain Management (GSCM) has emerged as an important new approach for enterprises to achieve profit, efficiency and market share objectives by reducing environmental risk and impact (van Hoek, 1999; Hu and Hsu, 2010).
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With a sudden rise of environmental movements, legislations and concerns during the past decade, a consensus is forming that issues of environmental pollution accompanying industrial development should be addressed together with supply chain management, thus contributing to the initiative of GSCM (Sheu et al., 2005). Legal constraints have also played their part in this process for example, the Waste Electrical and Electronic Equipment (WEEE) Directive of the European Union (EU) came into effect from August 2004, and requires that manufacturers and importers in EU countries should take back used products from consumers and ensure their environmentally sound disposal (Widmer et al., 2005). Furthermore, the Restriction of Hazardous Substance (RoHS) Directive prohibits the use of regulated hazardous substances like lead, cadmium, mercury, hexavalent chromium, PBBs and PBDEs in consumer products. A large number of multinational corporations are investing in research and development of green products, establishing standards on cutting down the use of environmentally hazardous substances, and requiring supply chain partners to provide inputs that are free from hazardous materials at all levels of the supply chain system. GSCM has been adopted by some leading companies in the world, like Dell, HP, IBM, Motorola, Sony, Panasonic, NEC, Fujitsu, and Toshiba (Zhu and Sarkis, 2006). This implies that corporations are now starting to recognize that environmental sustainability can be a source of competitive advantage (Walton et al., 1998). GSCM can also promote efficiency and synergy among business partners, helps to enhance environmental performance and reduces waste to achieve cost savings (Rao and Holt, 2005). The GSCM issue is very significant and relevant because recent studies have shown that the majority of the worlds manufacturing will be carried out in Asia within the next couple of decades (Hu and Hsu, 2010). 2. Sugar Industry in India In India, sugar industry is the second largest agro processing industry after textiles and mainly located in the rural areas. In this industry, mainly farmers and labours are highly involved in various activities like harvesting, cultivating, loadingunloading of canes and ancillary. This industry provides huge employment opportunities to skilled, semiskilled workers, and others of rural regions. Indian sugar industry contributes almost Rs 22.5 billion to the state and central government in form of tax and excise duties per year (Hemanth, 2010). In fact, this industry generates electricity for its factory work but export surplus of power to the grid. In India, the total number of registered sugar mills is 819 and number of factories running in operation is 778 as on March 2006 (CMIE, 2010a: b). The maximum numbers of sugar mills are found in Uttar Pradesh, Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Andhra Pradesh. In India, Uttar Pradesh and Maharashtra are the largest state in India where the sugar mills of government, private and public sectors are spread all over the regions of the state. The sugarcane production was 14535.1 thousand tonnes in March, 2010 from the production area of 4.2 Mha (approx.) (CMIE, 2010c). India has around 45 million farmers growing sugarcane, 600 sugar factories producing about 20 MT of sugar for 1.21 billion consumers as per year 2008-09. These figures make India largest consumer of the sugar in the world as per USDA foreign Agricultural
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Service (BMI, 2009) and it also explains Indias fifteenth position in sugar exporting nations list. In March 2009, the sugar consumption was 22.5 million tonnes from the total supply of sugar was 35557.86 thousand tonnes which is the highest during the last ten years (CMIE, 2010d: e). According to the USDA Foreign Agricultural Service, sugar production will increase by 27 per cent with an aggregate volume of 24.7 million tonnes of sugarcane production- Indias marketing year (MY) 2010/11 (October-September). The total sugar exported from India was 3331997 tonnes (worth Rs 444874.3 lakh) and the total import in India was 386095 tonnes (worth Rs 58310.86 lakh) in March 2009 (CMIE, 2010f: g). Due to the large domestic consumption of sugar in the country, the export figures have not been significant. 3. Supply Chain System of Indian Sugar Industry The complete supply chain of sugar industry starts from farmers growing sugarcane and ends at consumers using sugar in a variety of ways. There are various supply chain partners namely cane farmers, transporters, millers, and distributors including brokers, wholesalers, and retailers. The material flow in the supply chain system of sugar industry is shown in Figure 1. This figure indicates that the farmers perform various farming activities like harvesting, cultivating, irrigating and ploughing in the production of cane and then transport to the mills. There are various government agencies have opened call centres for supporting farmers in sugarcane production. Mostly sugar mills also help farmers in their farming activities by providing high yield seeds, fertilizers, pesticides, knowledge, and other relevant nutrients. But sometimes, farmers buy their seeds from the market. The cane societies are also highly involved in supporting the farmers in their field work (as observed during the primary survey from sugar mills in Northern region of India). Figure 1 show that the sugar mills produce sugar from cane in four stages such as receiving of cane from farmers, crushing the cane, processing for sugar production, and finally packing of sugar according to their sizes i.e. Small, Medium and Large. These sugars were stored in their mill godowns and then distributed to the wholesalers as ordered by brokers or private agents. The wholesalers store the ordered sugar for further distributing to their area retailers and finally sell to the consumers as shown in Figure 1. Mostly consumers (indirect customer) like levy (PDS- Public Distribution System and BPL-Below Poverty Line), military, institutional customers (airlines, shopping malls, railways, food companies, etc), and other countries order sugar directly from the mills and/ or wholesalers. Near about 60% indirect customers order sugar directly from wholesalers (Kansal, 1998). During the processing of sugar in mills, there are various types of by-products namely mud, molasses, bagasse, and electricity are produced. The buyers of these by-products are state governments, private factories like brick industry, farmers, cane society, paper mills, etc. The mills have different types of vendors such as Chemicals; Engineering parts like mild steels, patching, jointing, tools, nuts, bolts, etc; Spare parts like centrifugal, boiler, power house, mill house, pan, quad, cane carrier, etc; Miscellaneous items like cotton waste, plywood, civil, etc; Electricals;
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Green Supply Chain Management: A Case of Sugar Industry in India

Instruments; Contractors who supply labours of all types like semi skilled labours; Contractors who supply both labour and material only; and Contractors who supply material only.

Figure 1 Material flows in Supply Chain System of Sugar Industry During the survey from sugar mills in U.P and Uttarakhand, the sugar production process has been explained in detail form as shown in Figure 2. The processing of sugarcane takes place with the help of heavily equipped machinery assembled in the sugar mills. At the initial stage of the process, the sugarcane is lifted with the help of crane under the supervision of supervisors or millers. The lias, cutter, chopper, and hybridizers are inbuilt under this crane. After this, the sugarcane passes through the milling and then sent to the boilers. In boiler, the sugarcane burns around 51 to 50 Motions bagasse or dry dusty pulp. Some of the bagasse burns in the boiler as per required by the sugar mills for using such. The remaining or extra amount of bagasse will go further in the mill process. This extra bagasse can be purchased by the paper plant and power plant as per use by their requirement. Therefore, the juice is extracted which further needs heating.
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Green Supply Chain Management: A Case of Sugar Industry in India

Hence, for heating the juice, the amount of steam is required around 160 to 165 tonnes per project or plant. The steam is produced with the help of boilers and turbines. Note that, for producing the extra amount of steam, the boosting is required with the help of turbines. This whole process cannot be operated or run without electricity. Generally, every sugar mills must need electricity to run the fitted machines for extracting sugarcane to juice and juice to sugar in the sugar mills. Therefore, sugar mills have their own power plant from which they generates around 22 MW electricity on crushing the sugarcane. Now, after heating the juice, the dirt from the juice gets removed. This is the cleaning process at the primary stage where the cleaned juice and mud will get separated.

Figure 2 Sugar production process in sugar mill Further, the cleaned juice proceeds to the evaporation section which removes water from it. Hence, after removing the water from the cleaned juice, the millers
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dilute sulphur to it and then bleaching process takes place. After cleaning process, the cleaned juice will goes further to pine station for developing grains (Cheeni). Now, these grains pass through the centrifuges machine to separate the pure sugar and molasses. Therefore, pure sugar goes to sugar weighing machines for sealing the sugar into 50 to 100 Kg per jute bags. The sugar bags will be sent finally to the godowns of sugar mills for storage purpose. During the processing, around 30% of molasses are produced and the storage stand is used to store the molasses in the mills. The government releases the order for selling the sugar and molasses in the market. The molasses have around 20 to 30 by-products namely shampoo, toffees, medicines, alcohols, chemicals, etc. 4. By-products and sustainable inputs to industries 1) Sugarcane as a raw material used for processing in the sugar mills to produce sugar and other by-products. 2) Sugar is the main product which is obtained from the sugar industry and is distributed in the market. 3) Bagasse as a by-product obtained during mill processing and used for generating steam and power plant projects. This by-product is easily consumable by the brick industry as a fuel and used in making papers in paper mills. This helps farmers and cane society to feed their cattle. 4) Mud as a by-product also obtained during mill processing and used for soil conditioner, manure, and valuable source of nutrients. This helps farmers to provide proper nutrition to their crops. 5) Molasses as a by-product obtained during mill processing and used in distillery for making alcohols, acids, industrial chemicals, etc. 6) Power is generated from bagasse during the mill processing which is used in the boiler to generate steam and sold out to the state electricity boards. 7) Ethanol is produced from molasses during the mill processing. This alcohol is well purified again to form fuel grade ethanol which can be mixed with the petrol. This purified ethanol is used in vehicles, airlines, etc. 8) Bio-fertilizers are obtained from the mixture of the residue product during mill processing operation with the chemicals. The starting material of sugar industry is cane which is an agricultural product. During the actual process of sugar production, the cane sugar is crushed to make juice which is used for sugar making. The crushed cane husk (bagasse) is not a waste and is further used as a fuel to fire the turbines to make electricity for the sugar mill. This way the sugar plant prepares its own electricity from totally a harmless and natural source. This also reduces burden on electrical grids that operate on highly unsustainable coal or fossil fuels. Further the husk obtained from crushed sugar cane also serves as an input to the paper industry, which has replaced wood from tress as an input. This has saved many trees from being used up by the paper industry. We can see that sugar industry has helped paper industry to also become sustainable. Also the molasses obtained during sugar production is used as a starting material for making industrial spirits for which earlier wood was
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Green Supply Chain Management: A Case of Sugar Industry in India

used, this has also saved many tress and has helped the environment. Excess husk obtained is also used by other industries as a fuel like in brick making industry, which reduces their dependence on fossil fuel and wood, another major step towards sustainability. The ethanol obtained from the molasses can be of vital importance as it can be blended with fossil fuels to make cleaner ethanol based fuels which are less polluting and may provide self sufficiency to a country like India in matter of fuel imports. In the end the other residues left from the process also serve as bio fertilizers, which enrich the soil without causing the side effects of conventional fertilizers. Thus sugar industry is itself green but also supports other industries to also become green up to some extent. 5. Comparison of Sugar supply chain with Electronics and Automobile supply chain The supply chain system of sugar industry is shown in Figure 1. Here, the supply chain system of electronics and automobile industries is presented in Figure 3 which was explained in detail by Gungor and Gupta, (1999). By comparing figure 1 and 3, some useful facts are drawn on the basis of these industries activities. Table 1 shows the comparative analysis of the activities for sugar industry with electronics and automobiles industry.

Figure 3 Supply chains of Electronics and Automobiles Industries Table 1 Comparison between Sugar Industry and Electronics/ Automobiles Industry ACTIVITY SUGAR INDUSTRY ELECTRONICS AND AUTOMOBILES* Sugar cane is a natural Backward integration is Acquisition of raw agricultural plant. No required with suppliers so materials other efforts are that greening of supply required. chain is maintained. Processing
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i) Energy Needs

ii) By-products

iii) Packaging

Self sufficient in a sustainable manner, electricity generation through baggase obtained from crushed sugar cane By products obtained are useful as starting material for other industries, like baggase is useful for paper industry, molasses for making spirits. No by product needs disposal all have some use for other industries. Finished sugar is packed in gunny/jute bags.

They to depend on power supplied by electricity grids, which make power using fossil fuels or nuclear energy which is not a sustainable source of power. By products like lead solders, solvents are highly toxic, requires different process for handling and management for proper disposal.

Consumption

Since sugar is an agro based food item, no inputs are required at consumer level for its use and consumption. It serves a raw material for making other food items. Since sugar is an edible item it is fully consumed at the end user level and no residue etc is left which requires disposal.

Disposal

Packaging is done using plastics, Styron foam, which ends up in landfills or has to be collected for be recycling which further requires more resources and energy. Both automobiles and electronic items require inputs in the form of energy like petroleum and electricity respectively at consumer level, which are obtained from fossil fuels, both of which are not environmentally sustainable. Both automobiles and electronics after being used by the end user are discarded and they end up in landfills which require proper recycling and reverse supply chain activities on behalf of the companies that make them.

6. Conclusion The comparison of supply chains of both sugar and electronic and automobiles industries tells us a very important thing. As pointed out by Gungor and Gupta (1999) the electronic industry has to follow many steps in order to make its production and supply chain activities environmentally sustainable. Starting from
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acquisition of material for manufacturing, electronics and automobile sector have to ensure that their suppliers also follow the same norms of environmental sustainability as theirs. During the production process the energy used is also not made in sustainable way, as most of the power used is obtained from electrical grids running on coal etc. Whereas the sugar industry produces its own power using the bagasse obtained from crushed cane. No fossil fuels are used in the production of sugar. Also during the production of electronic goods the byproducts generated are toxic in nature, these are needed to be handled and disposed off carefully. However questions have been raised many times about the proper disposal of waste generated by electronic and automobile industry, which usually ends up in landfills. The by-products of sugar industry are valuable raw materials for other industries like paper, spirits etc. Sugar industry provides baggase as a by-product which is used for making paper which has made paper industry green by removing its dependence on wood for making paper. Thus, we can see that sugar industry right from the beginning to the end is a green industry which derives its inputs from nature and provides raw material for other industries also. Thus sugar industry follows many sustainability methodologies like Environmentally Conscious Production. Packaging of sugar is done in jute bags or sacks which are re-used again and again. In case of electronics and automobiles plastics, thermo coal, Styron foam are used as a packaging material which after use ends up in landfills and requires recycling. At consumer level, automobiles and electronic items require energy inputs in form of electricity and petroleum products, both of which are derived from fossil fuels, thus use of electronic and automobiles is not environmentally sustainable. On the other hand sugar does not require any inputs from the user during its consumption and it also serves as an input for making other food items. Lastly automobiles and electronic items after use are discarded by the consumer and they end up in landfills. Although reserve supply chain systems have been implemented by some companies like Ford, GM, Dell etc, but still majority of the companies are not following such recycling programs. Thus at the end of the supply chain there comes a huge problem of proper disposal of used electronics and automobiles. Since sugar is food product it is totally consumed and leaves no residue which requires disposal. Thus from the above comparison we can conclude that sugar industry is fundamentally a Green industry, while others like automobiles and electronics require efforts on part of supply chain partners for becoming green. Although green supply chain activities are being pursued by many corporations in electronic and automobile sector, yet such practices have not become main stream. 7. References
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Green Supply Chain Management: A Case of Sugar Industry in India Beverages- Other Food Products- Sugar. (Last accessed, 2010, May 17 from IIT Roorkee, India). CMIE (2010b), Centre for Monitoring Indian Economy. Database accessed through Business Beacon. Steps for getting the number of sugar factories in operation in India: IndicatorsMinerals & Industry- Annual Salary of Industries Statistics- Number of Factories in Operation- All Industries- Manufacture of Food Products & Beverages- Other Food Products- Sugar. (Last accessed, 2010, May 17 from IIT Roorkee, India). CMIE (2010c), Centre for Monitoring Indian Economy. Database accessed through Economic Intelligence Service. Steps for getting the sugarcane production in India: Agriculture- Agriculture Output- Miscellaneous: State wise Details- SugarcaneIndia- Production. (Last accessed, 2010, May 17 from IIT Roorkee, India). CMIE (2010d), Centre for Monitoring Indian Economy. Database accessed through International Analysis Service. Steps for getting the sugar consumption in India: Sugar- Sugar Statistics- Demand Supply- Consumption. (Last accessed, 2010, May 17 from IIT Roorkee, India). CMIE (2010e), Centre for Monitoring Indian Economy. Database accessed through International Analysis Service. Steps for getting the total supply of sugar in India: Sugar- Sugar Statistics- Demand Supply- Total Supply. (Last accessed, 2010, May 17 from IIT Roorkee, India). CMIE (2010f), Centre for Monitoring Indian Economy. Database accessed through Information Technology. Steps for getting the sugar export figures from India: Principal Commodities- Exports from India- Agriculture & Allied Products- Sugar and Molasses- Sugar. (Last accessed, 2010, May 17 from IIT Roorkee, India). CMIE (2010g), Centre for Monitoring Indian Economy. Database accessed through Information Technology. Steps for getting the sugar import figures by India: Principal Commodities- Imports by India- Agriculture & Allied Products- Sugar and Molasses- Sugar. (Last accessed, 2010, May 17 from IIT Roorkee, India). Gungor, A. and Gupta, M. (1999). Issues in environmentally conscious manufacturing and product recovery: a survey. Computer and industrial engineering, Vol 36, pp. 811-853. Hemanth C.R. (2010). Organization study at sri renuka sugars. Available at: http://www.slideshare.net/hemanthcrpatna/organization-study-at-sri-renukasugars (Last accessed, 2012, May 10). Hu, A.H., and Hsu, C.W. (2010). Critical factors for implementing green supply chain management Practice: An empirical study of electrical and electronics industries in Taiwan. Management Research Review, Vol. 33 No. 6, pp. 586-608. Kansal, S. (1998). Factors determining Indian Sugar Production and its Comparative advantage, Proceedings of the Fiji/FAO 1997 Asia Pacific Sugar Conference, Available at: ftp://ftp.fao.org/docrep/fao/005/x0513e/x0513e00.pdf (Last accessed, 2012, May 7). Qinghua Zhu, Yong Geng, Tsuyoshi Fujita, and Shizuka Hashimoto. (2010). Green supply chain National Conference on Emerging Challenges for Sustainable Business 2012 1707

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