Greening the Supply Chain

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GREENING THE SUPPLY CHAIN Prut Phatharanon-Uthai Angela Curtis Matthew Pucci Steven Sibo


Introduction Why Go Green? Cut costs Increase efficiency Reduce hidden cost to consumer Our Presentation Measurement and Compliance Links in the Supply Chain What Drives the Green Supply Chain

Measurement and Compliance:

Measurement and Compliance

Definition of Green Supply Chain:

Definition of Green Supply Chain Procurement, production and distribution Sustainable raw materials Little or no hazardous waste Toxic wastes in the environment Source: Environmental Protection Agency, Purdue University, MIT DESIGN ASSEMBLY DISTRIBUTION DISPOSAL SCOPE

Measuring Green Supply Chain:

Measuring Green Supply Chain DO make measurements… Clearly defined Demonstrable Relevant Honest and representative CONSIDER Big picture and trade-offs CREATE a net gain No “lesser of two evils” BEWARE the Sins of Greenwashing

Green Supply Chain:

Green Supply Chain Carbon Footprinting The six GreenHouse Gas (GHG) emissions Converted to carbon dioxide equivalent (CO 2 e) Types of footprinting Organizational Product Source: Carbon Trust, UK CO 2 e CH 4 PFCs SF 6 HFCs N 2 O CO 2 translation translation translation translation translation

Direct Measurement:

Direct Measurement Carbon Footprint Timberland’s footprint label, shown at left Wal-Mart Carbon Disclosure Project Raw Materials SC Johnson Pro: Empirical Study Con: Verification Source: archives, Timberland Online, and ClimateBiz online “CDP 2009…”

Indirect Measurement:

Indirect Measurement Pro: Easy to track from current data Con: Correlation to meaningful measure Source: Compliance Network , “Supply Chain Graphic of the Week: Green Supplier Scorecards”, SCDigest


Certifications ISO 14001 Certification International standard “Truth in Advertising” Eco-Management Audit Scheme European Commission (1995) Demonstration of compliance Contrast Third Party Accreditation Mandatory public dialog Proof of continual goal improvement

Regulatory Efforts :

Regulatory Efforts Cap & Trade Regulation Kyoto Protocol’s Clean Development Mechanism (CDM) Carbon Emission Reduction (CER) credits futures market One (1) credit = One (1) metric ton of CO 2 e 2000 projects worldwide Copenhagen Talks (UN) 2008 Climate Change Act (Britain) American Clean Energy Bill (US) Seeks to set Carbon Price Stalled by debate over agricultural and industrial impact Likely to continue with cap and trade provisions Source: Carbon Trust, UK, Harper’s and Environmental Protection Agency

Links in the Supply Chain:

Links in the Supply Chain

Freight Transportation:

Freight Transportation Concerns Freight Accounts for 27% of Transportation GHG Emissions Growth of Freight Sector vs. Energy Efficiency Improvements Source: U.S. Department of Transportation Federal Highway Administration

Freight Transportation:

Freight Transportation Improved Logistics Software Minimize Empty Miles Maximize Operating Efficiency Intelligent Container Design Weight Reduction Improve Refrigeration

Freight Transportation:

Freight Transportation Bio-Fuels Biodiesel B5 (5% Biodiesel & 95% Biodiesel) B20 (20% Biodiesel & 80% Biodiesel) Modal Shift

Greening of the Warehouse:

Greening of the Warehouse

Greening of the Warehouse:

Greening of the Warehouse Reuse Pallets Plastic Totes Reusable Packaging (Consumer) Reusable Packaging (Supplier)

Greening of the Warehouse:

Greening of the Warehouse Reduce Resources Packaging Materials Biodegradable Packaging Energy Motion Detectors Solar Panels

Greening of the Warehouse:

Greening of the Warehouse Recycle Packaging Materials Hazardous Materials Batteries Chemicals Oil

What Drives the Green Supply Chain?:

What Drives the Green Supply Chain?

Current Situation Accenture Study 2009:

Current Situation Accenture Study 2009 250 Global Companies Logistics Executives 10% modeling carbon footprint 37% no idea of supply chain emissions 86% paid lip service to green SCM 38% implemented at least one green SC intiative


Walmart Sustainable Packaging Scorecard Reduce overall packing by 5% by 2013 Initiated February 2007 Officially adopted February 2008 4 Key Points 1. Materials Used 2. Material Weight 3. Material Distance 4. Packaging Efficiency

Best Buy :

Best Buy Consumer Electronics Recycling Program Began in 2001 Officially adopted March 2009 Collected over 25 million pounds Common Products Recycled Televisions (Not Digital) Desktop Computers (Outmoded) Walkmans, Eight Track Players & Ham Radios


Tesco Sustainable Consumption Insititute Spending $1 Billion over next 5 years Tackling the Carbon Footprint Issue Zero Carbon Stores Solar Power Energy Efficiency Natural Lighting Rainwater Collection Timber Wood Structure

Thought Leaders:

Thought Leaders Straight talk on GREEN – Panel Discussion 4 Logistics Gurus Brittain Ladd C. Dwight Klappich Mike Kilgore Adrian Gonzalez

What’s Next?:

What’s Next? Paperless Receipts – Via Email

What’s Next?:

What’s Next? Digital Shopping Carts

More Information:

More Information EPA’s Office of Pollution Prevention & Toxics UK’s Carbon Trust State of Green Business Carbon Disclosure Project US Department of Transportation, Federal Highway Administration Wal-Mart Tesco Best-Buy MIT: Supply Chain 2020


Epilogue MIT’s Supply Chain 2020 project Synchronicity Alien Nation Spin City