Supply Chain Sustainability – Important Points – Summary – Krajewski – 12th Edition

Learning Goals

The Three Elements of Supply Chain Sustainability 
 Define the three elements of supply chain sustainability.

Reverse Logistics 
Explain the reverse logistics process and its implications for supply chain design.

Energy Efficiency
Show how firms can improve the energy efficiency of their supply chains by using the nearest neighbor (NN) heuristic for logistics routes and determining the effects of freight density on freight rates.

Disaster Relief Supply Chains
Explain how supply chains can be organized and managed to support the response and recovery
operations of disaster relief efforts.

Supply Chain Ethics 
Describe the ethical issues confronting supply chain managers.

Managing Sustainable Supply Chains
Explain how a firm can manage its supply chains to ensure they are sustainable

15 SUPPLY CHAIN SUSTAINABILITY

FedEx

Achieving sustainability throughout the supply chain  requires cross-functional and inter-firm cooperation to achieve:
▪ Environmental protection—by steps to reduce  waste and use proper waste disposal methods  to reduce the pollution of the air, streams, and rivers, and to increase efforts at ecological stewardship for the protection of flora and fauna.
▪ Productivity improvement—by productivity analysis and engineering of  processes in the upstream and downstream of the supply chain to increase material conservation, to increase energy efficiency,
and to look for ways to convert waste into useful by-products.
▪ Risk minimization— take  care to ensure that the materials that go into the services, products, or processes do not pose health or safety hazards to customers.
▪ Innovation— new services, products, or technologies are to be designed and developed, to support financial, environmental, and social responsibilities while delivering business revenues.

The Three Elements of Supply Chain Sustainability 

Financial, environmental, and social responsibilities

Reverse Logistics 
Supply Chain Design for Reverse Logistics
Financial Implications

Reverse logistics  is the process of planning, implementing, and controlling the efficient, cost effective flow of products, materials, and information from the point of consumption back to the point of origin for returns, repair, remanufacture, or recycling. A supply chain that integrates forward logistics with reverse logistics is called a closed-loop supply chain. It takes care of complete chain of operations from the birth to the death of a product.

Reverse logistics operations are considerably different from the forward logistics flows, and it is several times more expensive. There have collection points to receive the used goods from the final customer and transport the goods to a returns processor,  a facility owned by the manufacturer or a supply partner.  The items are to be examined and the item  could be repaired and returned to the customer. It may be cleaned and refurbished for direct use and returned either to the distribution channel. It may be given back  to customers in case of items under  warranty. The product could be remanufactured by tearing it down and , rebuilding it with some new parts as needed, and returning it to the distribution channel. The product could be completely disassembled and the usable parts are retrieved.Other parts are sent for material recovery centers. There are two important by-products of the reverse logistics process: waste, which must be properly disposed of, and product information, which has to captured and  transmitted to the product development process so that improvements can be made to future generations of the product.

Energy Efficiency
Transportation Distance
Freight Density
Transportation Mode

Supply chains transport of  materials, parts and products  from their origination to supply chain partner factories and facilities and finally to their ultimate destination of customer homes.
Transportation consume energy and it has  negative effects on the environment. The negative effect is indirectly expressed through carbon footprint, which is the total amount of greenhouse gasses produced to support the transport operations or production operation usually expressed in equivalent tons of carbon dioxide CO2. Major contributors to carbon footprints are burning of fossil fuels, in particular oil, diesel, and gasoline used in transport vehicles.Therefore, firms have to take steps to reduce energy consumption in transport through three levers: (1) transportation distance, (2)freight density, and (3) transportation mode.

Supply chain managers can decrease the amount of energy consumed in moving materials or supplying services by reducing the distance traveled in  two ways. The first  way is locating service facilities or manufacturing plants in close proximity to customer populations to reduce the distance required to supply the service or product. The second way to improve energy efficiency involving transportation distances is route planning and optimization to find the shortest route to deliver a service or product to all the customer points.

Firms can increase the freight density and increase transport vehicle space utilization by reducing the volume of packaging, redesigning the product to take less volume, or postponing the assembly of the product until the customer takes possession

The four major modes of transportation are (1) air freight, (2) trucking, (3) shipping by water, and (4)
rail. From an energy perspective, air freight and trucking are much less efficient than shipping or rail.
On average, railroads are three times more fuel efficient than trucks.  The EPA also considers railroads best when it comes to noxious emissions per ton-mile.

Disaster Relief Supply Chains
Organizing for Disaster Relief
Managing Disaster Relief Operations
Managerial Practice 15.1 Using Drones in Disaster Relief

Supply chain managers can link disaster relief headquarters with the operations in the field both on supply (procurement) side and distribution side. Disaster relief organizations need to use the services of  supply chain managers.

The life cycle of disaster relief supply chains has five stages: (1) Early needs assessment; (2) development of the initial supply chains for flexibility; (3) speedy distribution of the supplies
to the affected region based on forecasted needs; (4) structuring of the more stable supply chain as
time progresses and arranging supplies on a fixed schedule basis; and (5) dismantling the disaster supply chain.

In firms supplying through disaster supply chains, supply chain managers who understand the implications of the disaster relief life cycle can mitigate its effects on their firm’s operations while doing their best to support the relief agency’s goals

Supply Chain Ethics 
Buyer–Supplier Relationships
Facility Location
Inventory Management

Social Accountability International is an organization dedicated to defining and verifying the implementation of ethical workplaces in business firms. It  has compiled SA8000:2014, a  standard covering nine dimensions of ethical workforce management:

1. Child Labor: Do not employ underage workers (under 15 years of age).
2. Prohibit the use of forced or compulsory labor, including prison or debt bondage labor in the firm as well as in supply chain firms.
3. Provide a safe and healthy work environment.
4. Respect the right of employees to form and join trade unions and bargain collectively.
5. Do not allow discrimination based on race, caste, origin, religion, disability, gender, sexual orientation, union or political affiliation, or age. Take steps to see that there is no sexual harassment.
6. Disciplinary Practices: Do not use  corporal punishment, mental or physical coercion, or verbal abuse.
7. Working Hours: Do not ask or force workers to work more than 48 hours per week with at least 1 day off for every 7-day period.  Overtime time hours are to be paid as per  the collective bargaining agreement.
8. Remuneration: Pay wages for a standard work week such that they meet the legal standards and are sufficient to meet the basic need of workers and their families.
9. Management Systems Firms must go beyond simple compliance to integrate the standard into their management systems and practices.

Once certified, firms need to get recertified every three years.  Preferential treatment of sup pliers because of friendships, family ties, or investment in the supplier should be avoided. Buyers should
be candid when negotiating contracts.   Gratuities to the buyer should be limited or excluded.

Unethical activities to be avoided:
▪ Revealing confidential bids and allowing certain suppliers to rebid
▪ Making reciprocal arrangements for purchasing from each other.

Managing Sustainable Supply Chains

1. Define what “sustainability” means for the firm in clear terms and explain it to all internal and external partners in the supply chain.  SA8000:2014 can be used as a guideline for workplace issues.
2. Use the supply chain sustainability framework as a foundation and gather data on the performance of current suppliers and evaluate and do modifications in the processes as required. Use the same questionnaire to screen potential new suppliers. 
3. Require compliance to the sustainable supply chain framework across all business units and current suppliers and future suppliers.  
4. As a part of directing function of management  utilize all available ethical means to influence their 
behavior.
5. Create periodic reports on the impact the supply chain has on sustainability and take control actions as required..


Learning Goals in Review

Video Case Supply Chain Sustainability at Clif Bar & Company

PART III: MANAGING SUPPLY CHAINS – Krajewski 12 Edition Chapters

12. Supply Chain Design

13. Supply Chain Logistic Networks

14. Supply Chain Integration

15. Supply Chain Sustainability

Supply Chain Management: Chopra and Meindl’s Book Chapters – Important Points

Index to Summaries of all Chapters of Krajewski’s Book

Operations Management – Krajewski – 12th Edition – Chapter Summaries – Important Points