A keynote address at: The 10th Cyberspace 2008: Cyber Security, Cyber Crime and Cyber Law The 9th

International Conference on Information Management and New Technologies

The future of Supply chain Management: Interplay between the Digital and the Green Agenda
Professor SC Lenny Koh
Logistics and Supply Chain Management (LSCM) Research Group Supply Chain Management and Information Systems (SCMIS) Consortium

Digitalisation vs. Environmentalisation
• Digitalisation
• ERP and ERPII • RFID • Technology

• Environmentalisation
• • • • • • • Paperless Electricity/energy Transportation CO2 emission Carbon footprint 3Rs Renewable

Carbon Heat map (IBM) .

A wider agenda… .

000 years Source: Australian Government. Bureau of Meteorology. 2008 .Estimated global mean temperature over the past 100.

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Development of climate models over the last 25 years Source: Australian Government. Bureau of Meteorology. 2008 .

Bureau of Meteorology.Source: Australian Government. 2008 .

to analyse. • It is investing considerable resources.C. • It is very concerned that its objective of limiting the maximum increase in global mean temperature to a 2 degree centigrade warming by mid-century will be breached by the energy growth in the developing world and in North America. through regulation and policy related investment in research and development.W.... Wright. Source: Feickert.L. through bilateral arrangements. mitigate and reduce GHG’s in developing countries. 2008 .Impact • The European Union is very active in pursuing its own climate change policy responses. D. S. P. Koh.

“I am an admirer of the vision and determination that has been demonstrated in Sheffield to take this issue on. 7th February 2007 .” Al Gore discussing climate change at the University of Sheffield. People from all walks of life have made this community stand out in the United Kingdom and among the communities throughout the world.

Globalisation… .

Tseng. A. C..Forward and reverse SCs Divergent flows Raw material suppliers Parts or components suppliers Remanufacturing Product manufacturers Distribution channels End users Recycling Repair Reuse End-of-life products Forward supply chain Reverse supply chain Interfaces between downstream flows and upstream material flows Landfill Convergent flows Source: Koh..C.L.S. S.. Gunasekaran. 2008 .

2. Apple: Digital SC – Sensing demand and changing their SC 2. Truncating BTO and shifting to MTS and contract manufacturing (Back to the future) 3. 6. Apple Nokia Dell P&G IBM Wal-Mart Toyota Cisco Systems Samsung Electronics Anheuser-Busch 1. 7. Wal-Mart turning back from RFID. Toyota: lean system. waste minimisation. 10. 9.Top 10 SC leaders 1. 8. 2008 . instead focusing on greening their SC Sources: AMR Research Supply Chain Top 25. The end of mass customisation? – Dell’s model. 4. TPS 4. 5. 3.

• For consumer goods makers. 40-60% of carbon footprint resides upstream in the supply chain—from raw materials. For retailers. and packaging to the energy consumed in manufacturing processes. high-tech players. the figure can be 80% or more. transport. 2008 . Source: McKinsey Study.Reality check • Most companies green supply chain strategies are rhetoric and outpacing real action. and other manufacturers. • Fewer than 25% say their companies always or frequently take climate change into consideration in making supply chain decisions. • Only 21% thought the opportunities for new product/market far outweighed the risks.

• Process life cycle inventory databases as crucial sources of secondary data for life cycle assessment are far from complete. 2008 . Source: Stockholm Environment Institute. • They suffer from severe truncation error arising from the need to limit the study system to make process based studies feasible. Evidence shows that the cutoff criteria used in life cycle studies rarely leads to comparable systems.Insufficient comparable basis • Traditional process life cycle assessment and supply chain analysis have some serious limitations.

S. Source: Koh. • Developing a holistic view of the environmental impact of full supply chains could both improve the effectiveness of green investment and establish eco-partnerships in trade across international boundaries. and Wright. e. P. 2007).Fragmentation • The deployment of efforts such as clean energy technology tends to be compartmentalised – focusing on specific segments of supply chains.C.L. 2008 . • The value of such an approach was recently demonstrated by the Oxford Institute for Energy Studies with respect to strawberries: although intuitively it might seem that it is environmentally inappropriate to fly in strawberries from Kenya.g. transport. in fact it is not (Muller.W.

The emergence of GSCM… .

GSCM definitions…1 Green supply chain is referred as the way in which innovations in supply chain management and industrial purchasing may be considered in the context of the environment (Green. recycling. 1996). Environmental supply chain management consists of the purchasing function’s involvement in activities that include reduction. . reuse and the substitution of materials (Narasimhan and Carter. et al. 1998) .

. developing. 2005). transporting. design. audits. training. manufacturing. summarising and reporting environmental supply chain management information to stakeholders of the firm. functional and operational procedures and processes for employee training and for monitoring. The documentation of this environmental information is primarily focused on supplier performance.GSCM definitions…2 GSCM is the inclusion of researching. GSCM is the formal system that integrates strategic. using a product. storing. 1999). waste minimisation. and disposing the product waste in supply chain management (Messelbeck and Whaley. reporting to top management and goal setting (Handfield et al.

Imbalance scenarios… .

Imbalance scenarios • Complexity and conflict • Uncertainty and investment • Antecedent and decision • Attribute and performance • Partial and discrete .

• Zhu and Sarkis (2004) identified that GSCM practices tended to have win-win relationships in terms of environmental and economic performance but that JIT programs with internal environmental management practices may cause further degradation of environmental performance and care.Complexity and conflict • Matos and Hall (2007) argued that sustainable development pressures have increased complexities and presented ambiguous challenges that many current environmental management techniques cannot adequately address. .

Uncertainty and investment…1 • Webster and Mitra (2007) examined the impacts of takeback laws and introduced the idea of competition within a manufacturer and remanufacturer framework but their quantitative model excludes the inter-organisational relationships and business uncertainty factors in greening a supply chain. . (2007) explored investment related to forward and reverse supply chains under the influence of business uncertainty and found that ongoing investment in the forward supply chain was significantly related to investment in recycling and waste management. but not to investment in reconditioning. • Kocabasoglu et al.

2004. 2006) • An uncertainty diagnostics model has been developed to evaluate the impact of material shortages. and these uncertainties do appear to be problematic when implementing a green supply chain (Baldwin et al. in line with the previous studies which have observed that uncertainty has knock-on and compound effects on supply chain performance (Koh. machine capacity shortages. 2005).Uncertainty and investment…2 • Risk propensity has been found to mediate the relationship between the external business uncertainty and investment in the forward and reverse supply chain. . Koh and Saad. labour shortages. technology uncertainty and demand uncertainty affecting energy efficiency in supply chains. and the model gives a precursor to the identification of mediating factors such as supply uncertainty. quality issues and delivery issues on supply chains performance (Koh and Saad. 2002).

The framework highlights the components and elements for GSCM and how they served as a foundation for decision framework. This finding suggests that the OEM must pay more attention to its outsourcing decision if the environmental regulations in effect specify target collection rates for individual quality groups. . enacting the importance of understanding the wider constituents for green supply chains. • Sarkis (2002) developed a strategic decision framework for GSCM. These can be inferred as the range of antecedents. (2007) modelled the optimal acquisition price of end-of-life products and the selling price of the remanufactured parts and found that OEMs would prefer a remanufacturer-driven channel under certain conditions.Antecedent and decision • Karakayali et al.

customer expectations. and environmental responsibility. an increased research body has emerged suggesting various environmental KPIs. energy conservation of a company. regulatory climate. They suggest that much of the research to date has adopted a prescriptive tone. which advises managers to consider the impact of environmental issues within a broad array of operating and performance choices and little attention has been given to environmental performance as a competitive dimension of operations. etc. strategic manufacturing initiatives. product design. • Since then. .Attribute and performance • Handfield et al. • Angell and Klassen (1999) noted that GSCM research remains in a pre-paradigmatic state. based on anecdotal evidence. for example carbon footprint of a product. These include shareholder value. (1997) suggested several attributes for green value chain practices.

• Challenges in capturing full green supply chain mapping and analysis. Without a holistic understanding of the true impact of CO2 or green initiatives on the full supply chain. thus resulting in non-systemic view and increasing the associated risk.Partial and discrete • Full range of environmental and external impacts of the use of freight transport have been studied. . recommendations tend to be drawn based on limited analysis. for example Department for Transport (DfT). feeding into transport policy formulation and implementation. London.

customer service and post-disposal disposition of products should also be made. . transport. • Local optimisation of environmental factors is no longer adequate in addressing the enlarging issues.Full supply chains perspective • The rising interests on embedding environmental practices in operations management over the last few years have reshaped supply chain management research and practice onto a new landscape. • Considerations of the entire supply chain from energy production. consumption. sourcing. production.

The 5ecos PDSL model Eco-logistics Eco-resources Policy Leadership Green Supply Directive Chain Eco-design Standard Eco-production Eco-procurement .

Greening a SC E1 E1: Ecoresources E2: Eco-design E3: Ecoprocurement E4: Ecoproduction E5: Eco-logistics Policy Directive Standard Leadership Forward supply chain Reverse supply chain Interfaces between downstream flows and upstream material flows E1 E2 E1 E2 E1 E3 E5 PDL E1 E3 E5 PL E2 E3 E4 E5 PDSL Raw material suppliers E3 E4 E5 PDSL Parts or components suppliers Remanufacturing E3 E4 E5 PDSL Product manufacturers Divergent flows Distribution channels End users Recycling Repair Reuse End-of-life products Landfill Convergent flows .

• The need for such understanding is widely recognised at company-level (e.Driving forces for research • Current understanding of the environmental impact of supply chains is limited.g. and at government and intergovernmental level (e. • It is also evident in the move towards branding products in terms of their carbon footprint or air miles travelled to market. the European Union and China agreed at their 2005 Summit to establish a Partnership on Climate Change with a specific focus on the development and deployment of clean energy technology). . as is the availability of tools to develop and stimulate evidencebased practice and policy.g. Wal-Mart recently called a major conference of its suppliers in China in order to begin to address greening its supply chains).

and more than 82% thought green themes would play more active roles in the future. • According to Peattie and Ring (1993). 2006). more than 78% of Chief Executive Officers of the top 50 British companies considered green initiatives important for their businesses. • Melnyk et al (2003) found that firms having gone through environmental management standards (EMS) certification experience a greater impact on performance than do firms that have not. . • More companies view environmental performance as part of their basic corporate social responsibilities (Gray. 1996. 2004). 1999. Post et al. Zhu and Sarkis.Driving forces for knowledge transfer • SMEs are not technologically equipped with the latest knowledge and innovation on how to reduce carbon footprint and improve energy efficiency (Shell Springboard and vivideconomics report.

best-in-class companies have managed to reduce*: • • • • Transportation and logistics costs by 2% Energy costs by 6% Operation and facilities costs by 2% Supply costs by 2% • However. *Source: Aberdeen Group – A Harte-Hanks Company (2008) Building a green supply chain. many practitioners leap into the green agenda without a clear understanding of the impact of the green initiatives from a full supply chain perspective.Business benefits • By going green. 1-29 . March. pp.

Government and company initiatives • The European Union current and future legislation aims to integrate sustainability into business activities (European Commissions. 2008) .000 Chinese companies are expected to attend its October conference on improving the environmental performance of its supply chains (Birchall. 2007) • Wal-Mart accounts for 30% of foreign buying in China and about a 1. These Directives are not simply to limit the use of harmful substances but also to have firms recycle at 70-80% of waste material. 2007) • Examples are Directive 2002/95/EC on Restriction of the use of certain Hazardous Substances (RoHS) in electrical and electronic equipment and Directive 2002/96/EC on Waste Electrical and Electronic Equipment (WEEE). • Chinese government policy-makers such as Premier Wen have indicated that all levels of government must fully realise the seriousness and urgency of achieving energy saving and emission reduction targets (Chatham House Report.

WEEE and RoHS Directives .

Direct and reverse influences of WEEE and RoHS on greening a SC Reuse/ Product Recycle life cycle Service Use Sale Production Product design Supply chain Directive WEEE Pressure of WEEE Su gg WEEE S ug S ugge gest stion io n ODM/OEM Brand company Tier 2 supplier ODM/OEM Brand company Brand company n tio es SCM End users Brand company Brand company ODM/OEM company (Tier 1) Component supplier (Tier 2) Brand company ODM/OEM RoH RoHS S Material supplier (Tier 3) RoHS Brand company ODM/OEM H Ro Pressure of RoHS direct influences the reverse influence of SCM Tier 2 supplier S Directive RoHS .

2007) • This applies to companies in a whole range of industry sectors.From local to global supply chains • A typical supply chain for a branded company includes Asian-based companies that serve as Original Equipment Manufacturers (OEMs) or Original Design Manufacturers (ODMs) for the branded company. • In order to deliver quality products to the branded companies. the OEMs/ODMs cannot ignore the impact caused by environmental directives and standards (Karakavali et al. . • This provides a framework to link domestic manufacturers to the international supply chains.

Conclusion • GSC = lean SC + innovation (5ecos PDSL + balanced scenarios) .

ac.Logistics and Supply Chain Management (LSCM) Research Group www.sheffield.ac.uk .uk/lscm lscm@sheffield.

International Network .

Expertise • • • • • Supply chain modelling Reverse logistics Supply chain accounting Uncertainty diagnostics Enterprise Resource Planning (ERP) implementation and operation • Operations management • Knowledge management • Sustainable development in supply chains .

Industrial Collaboration (examples) • • • • • • • • • • • • • • Advanced Manufacturing Research Centre (AMRC) Boeing Rolls-Royce Raytheon Tunewell Transformer Limited Beko. Turkey Rent-IT-systems CDC. Taiwan Halfords Entertainment UK UK Supermarkets National Health Service (NHS) Stradia SEAMS .

Supply Chain Management and Information Systems (SCMIS) Consortium www.scmis.com .

The SCMIS 2008 Website: http://www. 7-9 July 2004. in Thessaloniki.edu. Australia. PROC.ise. http://www.org The 4th International Conference on Supply Chain Management and Information Systems (SCMIS2006). 5-7 July 2006.hk/scmis2004 The 1st SCMIS2001.seerc.tw/scmis2006 The 3rd International Workshop on Supply Chain Management and Information Systems (SCMIS2005). http://www. in Hong Kong. 6-8 July 2005.scmis2008. Hong Kong. 8-10 December 2008. More than 150 participants from over 25 different countries participated and over 80 papers were presented and published in the proceedings.org The 5th International Conference on Supply Chain Management and Information Systems (SCMIS2007). Melbourne.info/scmis2005 The 2nd International Workshop on Supply Chain Management and Information Systems (SCMOS2004).edu. Greece. • • • • .polyu.International Annual SCMIS Conference Series • • The 6th International Conference on Supply Chain Management and Information Systems (SCMIS2008) will be held in Tiruchirappalli. in Taiwan. India. 9-12 December 2007. http://www.nchu. The SCMIS website: http://www.scmis2007.

Research and KT agenda • LSCM Research Group and SCMIS Consortium • Regional studies • International comparison • Joint research projects and proposals • Joint publications • Editorships • Special Interest Groups • Joint PhD supervision and examination • Collaborative research/work and links: universityindustry-government • Training and consultancy .

Contact Professor SC Lenny Koh Chair in Operations Management Director of Logistics and Supply Chain Management (LSCM) Research Group The University of Sheffield Management School 9 Mappin Street Sheffield S1 4 DT UK Tel: +44 (0)114 222 3395 Fax: +44 (0)114 222 3348 E-mail: S.C.sheffield.ac.com www.sheffield.uk www.uk/emba .scmis.ac.L.ac.uk/lscm www.Koh@sheffield.

.Thank You.

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