A 2009 World Economic Forum publication declared, “Human activity generates annual

greenhouse gas emissions of around 50,000 mega-tonnes CO2 (Carbon Dioxide emission). We
estimate that 2,800 mega- tonnes or 5.5 per cent of the total are contributed by the logistics and
transport sector.”1

The executive summary stated, “Significant movement is expected towards reduced supply chain
carbon intensity. This will create both opportunities and risks for logistics and transport firms,
with changes in supply and demand driven by regulation of carbon emissions, higher and more
volatile fuel prices and evolving consumer and client demand. The sector can play an influential
role in decarbonization, both in its own operations and through broader supply chain optimization.
This provides direct benefits through reduced costs, managed risks and business growth.” 2

It concluded with several recommendations for supply chain stakeholders. Among the six
recommendations for logistics and transport providers was to “switch (transport) modes where
possible.” For shippers and buyers, it was recommended to “plan to allow slower and better
optimized transport.” Finally, policy makers were also invited to “reflect the cost of carbon in
energy tariffs; support carbon measurement and labeling standards and build open carbon trading
systems.”

COMPANY INFORMATION

After reading the report, Yee Hwai, a member of the solutions team at DHL Supply Chain,
recognized the very findings he had uncovered in a recent simulation analysis, undertaken as part
of the Go Green environmental protection program initiated by parent firm, Deutsche Post DHL.
As the thought leader on sustainability in the industry, Deutsche Post DHL recognized there were
clear opportunities to begin resolving the carbon emission problems faced by many of its
customers. DHL even stated on its website, “We recognize environmental protection as our
responsibility as well as a business opportunity.”Deutsche Post DHL was the first logistics
company to set a quantified carbon efficiency goal — to improve its CO2 efficiency across global
operations by 30 per cent compared to the 2007 baseline.
THE PROBLEM

The simulation exercise Hwai undertook pertained to a consumer electronics company (CEC).
Prominent among its line of products were 32” and 42” LCD TV sets (LCD32” and LCD42”).
Production of the LCD TV sets was subcontracted to various original design manufacturers
(ODMs) located in China and Taiwan. The responsibility of DHL Supply Chain was to ship the
LCD TV sets from the ODMs to the distribution centre (DC) located in Shanghai. In the latest
contract, the CEC had allocated a budget of CNY 3 billion (Chinese renminbi) for the production
and shipping of 920,000 units of LCD42” and 530,000 units of LCD32” TV sets to its DC. Hwai
had worked with the CEC to configure the optimal supply chain that would fulfill this order within
the CNY 3 billion budget while satisfying various constraints pertaining to economy of scale,
production capacity, supplier risk management and service level requirements on the shipping
front. At that point, this optimization exercise did not consider the volume of CO2 emissions.The
CEC had a list of seven ODMs to which it could subcontract the production of LCD TV sets
according to their availability and prices. ODM1 and ODM2 were the only companies that could
produce both LCD32” and LCD42”. The remaining five ODMs produced LCD42” exclusively.
Their unit production costs are listed in the data sheet (see Exhibit 1). To engender economies of
scale in the production, the CEC guaranteed a minimum order of 200,000 to any selected ODMs.
Also, to mitigate dependency risk on any ODM, the maximum order for either LCD32” or
LCD42” was capped at 600,000 units. ODM1 and ODM2 had high production capacities and, if
chosen, they each had the ability to produce 600,000 units of LCD32”, as well as 600,000 units of
LCD42”.
 Several transportation modes were available to ship the TV sets from the ODMs to the DC:
regular air, air express, road, road LTL (less than truckload), road network, rail and water. The
distances from the ODMs to the DC and the various shipping rates are tabulated in the data sheet.
ODM5 was located near the DC, restricting shipping to road, road LTL and road network. ODM6
was located in Taiwan and shipping could only be conducted via air or water. Across shipping
modes, the rates of carbon emission (see data sheet in Exhibit 1) varied greatly from as high as
1.44 (regular air or air express) to 0.007 (water) kilogram (kg) per ton shipped per kilometer (km)
travelled. Each LCD32” weighed about 16.5 kgs and each LCD42” weighed about 22
kgs.Shipping times varied from two days (via air express) to 10 days (via water). Based on
historical information on shipping times and customer order cycle times, the CEC decided that to
maintain satisfactory inventory levels, DHL Supply Chain had to ship a minimum number of 32”
and 42” LCD TV sets, according to the criteria listed at the bottom of the data sheet below (see
Exhibit 1). There was no constraint on shipments via water.In the simulation exercise, Hwai
assumed a likely consequence of government legislation to reduce the emission of CO2 would
appear in the form of a tax incentive. He also anticipated the brand value of the LCD TV sets
could rise as a result of customer awareness. Hwai estimated these factors could translate into a 10
per cent increase in the budget for this specific supply chain. He was eager to find out the
potential reduction in CO2 emission made possible through a potential CNY 3.3 billion budget for
manufacturing and shipping the TVs from the ODMs to the DC.

Exhibit:

Product Weight in Metric Ton Units to be shipped

LCD42” 0.022 920,000
LCD32” 0.0165 530,000

CO2 Emission in Kg per Ton-Km shipped1 Regular Air Air Express Road Road LTL Road-Network Rail Water
1.44 1.44 0.0613 0.0613 0.0613 0.0285 0.007

Shipping Cost per Metric Ton CNY

Product - ODM Distance TV Unit Regular Air Air Express Road Road LTL Road- Rail Water
to DC in Production Network
Kms Cost CNY

LCD42” ODM1 2508 1,983.40 64,400 70,840 6,182.40 5,216.40 4,830.00 4,250.40 3,091.20
LCD42” ODM2 1553 2,254.00 115,920 127,512 7,084.00 5,796.00 5,667.20 5,7960 2,704.80
LCD42” ODM3 1380 2,582.40 103,040 113,344 7,084.00 5,796.00 5,667.20 5,7960 3,284.40
LCD42” ODM4 2150 1,976.10 64,400 70,840 6,182.40 5,280.80 5,216.40 4,250.40 3,091.20
LCD42” ODM5 30 2,711.30 X X 9,660.00 9,016.00 8,694.00 X X
LCD42” ODM6 690 2,704.80 135,240 148,120 X X X X 3,413.20
LCD42” ODM7 686 2,125.20 103,040 112,700 7,084 5,796 5,538.40 5,860.40 2,769.20
LCD32” ODM1 2508 1,818.00 64,400 70,840 6,182.40 5,216.40 4,830 4,250.40 3,091.20
LCD32” ODM2 1553 1,996.40 115,920 127,512 7,084 5,796 5,667.20 5,796 2,704.80

Supply Chain Production and Shipping Constraints

Minimum production of LCD42” (ditto for LCD32”) at any manufacturing ODM 200,000 units
Maximum production of LCD42” at manufacturing OEM (ditto for LCD32”) at manufacturing ODM 600,000 units
Minimum number of units of LCD42” (LCD32”) to be shipped by Regular Air or Air Express 46,000 (53,000)
Minimum number of units of LCD42” (LCD32”) to be shipped by Road or Road LTL or Road Network 92,000 (79,500)
Minimum number of units of LCD42” (LCD32”) to be shipped by Rail 138,000 (79,500)

Write a case study please

Title: Greening the Supply Chain: A Case Study of DHL Supply Chain's
Environmental Optimization

Introduction

In the ever-evolving landscape of global logistics and transportation,

companies are increasingly recognizing the need to address environmental
concerns, particularly with regards to carbon emissions. DHL Supply Chain,
a subsidiary of Deutsche Post DHL Group, has taken a proactive stance in
tackling this issue. This case study explores how DHL Supply Chain, under
the leadership of Yee Hwai, embarked on an environmental optimization
journey to reduce carbon emissions while maintaining efficiency and
profitability.

Background

In 2009, the World Economic Forum published a report highlighting the

significant contribution of the logistics and transport sector to annual
greenhouse gas emissions. This revelation posed challenges and
opportunities for logistics providers like DHL Supply Chain. The report
emphasized the need for reducing supply chain carbon intensity and called
for greater sustainability in the industry. DHL recognized this and embraced
environmental protection as both a responsibility and a business
opportunity.

Setting Ambitious Goals

Deutsche Post DHL was the first logistics company to set a quantified
carbon efficiency goal, aiming to improve its CO2 efficiency across global
operations by 30% compared to the 2007 baseline. This bold commitment
laid the foundation for DHL Supply Chain's mission to reduce carbon
emissions while maintaining cost-effectiveness.

The Consumer Electronics Company (CEC) Case

To demonstrate the practical application of these sustainability objectives,

Yee Hwai and his team at DHL Supply Chain engaged in a simulation
exercise with a consumer electronics company (CEC). The CEC was tasked
with producing and shipping 920,000 units of 42" LCD TV sets and 530,000
units of 32" LCD TV sets to its distribution center (DC) in Shanghai, all
within a budget of CNY 3 billion.

Key Considerations

The optimization exercise had to consider multiple constraints, including:

1. Economy of Scale: To realize cost savings, the CEC guaranteed a

minimum order of 200,000 units to any selected Original Design
Manufacturer (ODM).
2. Production Capacity: ODM1 and ODM2 had high production
capacities, capable of producing 600,000 units of both LCD32" and
LCD42".
3. Supplier Risk Management: The CEC aimed to mitigate dependency
risk by capping the maximum order for either LCD32" or LCD42" at
600,000 units.
4. Shipping Methods: Various transportation modes, each with differing
carbon emissions rates and shipping times, were available.

Carbon Emission Considerations

In line with the commitment to reduce carbon emissions, Hwai

incorporated the following elements into the simulation:

1. Potential Government Legislation: Anticipating government

incentives to reduce CO2 emissions, Hwai factored in the likelihood of
a tax incentive.
2. Brand Value Impact: Hwai considered that enhanced sustainability
practices could result in a 10% budget increase due to heightened
brand value.

Results and Implications

The simulation exercise allowed DHL Supply Chain to optimize the supply
chain, considering not only traditional cost and efficiency factors but also
carbon emissions. By aligning the business objectives with sustainability,
they achieved the following outcomes:

1. Reduced Carbon Emissions: DHL Supply Chain successfully identified

opportunities to reduce carbon emissions in the supply chain.
 2. Improved Efficiency: The optimized supply chain still met the CEC's
budget constraints and service level requirements, demonstrating
that sustainability and profitability can coexist.
3. Prepared for Future Regulations: By factoring in potential
government incentives, DHL Supply Chain positioned itself well for
future environmental regulations.
4. Enhanced Brand Value: Embracing sustainability practices allowed
DHL Supply Chain to enhance the brand value of its services.

Conclusion

DHL Supply Chain's proactive approach to environmental optimization and

commitment to reducing carbon emissions exemplify the growing
awareness of sustainability within the logistics industry. This case study
showcases how a leading logistics company successfully integrated
environmental considerations into its supply chain operations while
achieving economic and strategic goals. As industries worldwide face the
imperative to reduce their carbon footprint, DHL Supply Chain stands as a
model for environmentally responsible business practices in the logistics
and transport sector.
Regenerate

This report provides information related to the production, transportation,

and cost details for two products, LCD42" and LCD32". The report also
highlights certain supply chain constraints. Here's a summary of the key
information:

Product Information:

 LCD42" and LCD32" are the two products listed.

 The weight of LCD42" is 0.022 metric tons, and the weight of
LCD32" is 0.0165 metric tons.
 The number of units to be shipped for each product is as follows:
 LCD42": 920,000 units
 LCD32": 530,000 units

CO2 Emission (Kg per Ton-Km shipped):

 Emission rates for various shipping methods are provided:

  Regular Air: 1.44 Kg per Ton-Km
 Air Express: 1.44 Kg per Ton-Km
 Road: 0.0613 Kg per Ton-Km
 Road LTL (Less-Than-Truckload): 0.0613 Kg per Ton-Km
 Road-Network: 0.0613 Kg per Ton-Km
 Rail: 0.0285 Kg per Ton-Km
 Water: 0.007 Kg per Ton-Km

Shipping Cost per Metric Ton (CNY):

 Shipping costs for both products to various destinations are

provided.

Supply Chain Production and Shipping Constraints:

 Minimum production of LCD42" (and LCD32") at any manufacturing

Original Design Manufacturer (ODM): 200,000 units
 Maximum production of LCD42" (and LCD32") at manufacturing
Original Equipment Manufacturer (OEM): 600,000 units
 Minimum number of units of LCD42" (and LCD32") to be shipped by
Regular Air or Air Express: 46,000 units (LCD32": 53,000 units)
 Minimum number of units of LCD42" (and LCD32") to be shipped by
Road, Road LTL, or Road Network: 92,000 units (LCD32": 79,500
units)
 Minimum number of units of LCD42" (and LCD32") to be shipped by
Rail: 138,000 units (LCD32": 79,500 units)

This information can be used to make decisions regarding the production

and transportation of LCD42" and LCD32", taking into account the
constraints and associated costs for various shipping methods.