CHAPTER 10 – SUSTAINABILITY AND THE SUPPLY CHAIN

Faculty of International Economic Relations

University of Economics and Law

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CONTENTS

 The role of sustainability in a supply chain

 Key pillars of sustainability
 Sustainability and supply chain drivers
 Closed-loop supply chains

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THE ROLE OF SUSTAINABILITY IN A SUPPLY CHAIN

 Sustainability: economic status, natural environment, fair trade,

good employment, appropriate relationships with stakeholders
 Why to focus on supply chain sustainability?
 Reducing risk and improving the financial performance of the
supply chain
 Community pressures and government mandates
 Attracting customers that value sustainability

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KEY PILLARS OF SUSTAINABILITY

 Economic pillar
 Long-term firm corporate sustainability
 Social pillar
 Workforce
 Customers
 Society
 Environmental pillar
 Environmental impacts
 Natural resource reduction activities

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SUSTAINABILITY AND SUPPLY CHAIN DRIVERS

Competitive Strategy

Supply Chain Strategy

Efficiency Responsiveness
Supply chain structure

Logistical Drivers

Facilities Inventory Transportation

Information Sourcing Pricing

Cross-Functional Drivers

Source: Chopra and Meindl (2016)

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FACILITIES

 Consume energy and water & emit waste, greenhouse gases

 Ten principles of eco-design for green production:
 Material intensity
 Energy intensity
 Controlling harmful resources
 Using recycled or recyclable materials
 Selecting reliable and robust processes
 Environmental functionalities
 Sustainable alternatives
 Increased environmental awareness
 Fine-tune performance of the production process
 Life cycle design
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INVENTORY

• Inventory in landfill: harmful additives, loss of materials

 Packaging for the environment:
 Using minimum packaging volume and weight
 Packaging design for reuse, recovery, recycling
 Minimizing the presence of noxious and hazardous substances in
packaging material
 Biodegradable packaging design

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TRANSPORTATION

 Fuel consumption
 CO2 emission, waste
 Product design & packaging to reduce transportation cost &
emissions
 Alternative fuels: biofuel, electric power
 Full truck loads

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GREEN PRACTICES IN TRANSPORTATION/DISTRIBUTION

 Preference and use of non-polluting means of transport

 Use of an energy efficient transportation and distribution fleet
 Design of efficient distribution networks
 Better route design
 Recycling of old vehicles
 Increase of utilization degree of trucks
 Designing green-sustainable distribution networks
 Adoption/implementation of telematics systems and technologies
 Use of appropriate packaging
 Adoption of eco-driving habits

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SOURCING – GREEN PROCUREMENT

 Environmentally friendly (raw) materials

 Social and economic aspects of procurement
 Only purchase products that are really needed

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INFORMATION

 Standards for measurement and reporting

 Common set of standards to improve sustainability

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PRICING

 Differential pricing to improve utilization of assets by

changing customer’s willingness to pay

Source: indiamart

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CLOSED-LOOP SUPPLY CHAINS

Closed-loop supply chain management is “the design,

control, and operation of a system to maximize value
creation over the entire lifecycle of a product with dynamic
recovery of value from different types and volumes of
returns over time.”

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REVERSE FLOWS IN A SUPPLY CHAIN

Source: de Koster et al. (2002)

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 CHAPTER 10 – SUSTAINABILITY AND THE SUPPLY CHAIN

THANK YOU!

15 Het begint met een idee