The Sustainable Supply Chain

Dr Richard Farr

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The Sustainable Supply Chain

The Sustainable Supply Chain:Learning Outcomes

Understand how business operations have an effect upon communities, workers and natural systems.Identify some of the major threats facing supply chains (and people) in the 21st century.Discover why recycling isn’t the answer.See how creative solutions can improve the competitive performance of a business while also addressing the ‘green’ agenda.

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The Sustainable Supply Chain:Contents

What is Sustainability?Deep Greens, Pale Greens and Greys“Being Green” – a short sustainability gameWhat are the major challenges?How green is a ripe banana?Why recycling isn’t workingMeet (and defeat) the Monstrous HybridWhat to do next

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What does “sustainable” mean to you? 4

What is Sustainability?

“Meeting the needs of the present without compromising the ability of future generations to meet their own needs”

– Report of the World Council on Economic Development, 1987

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What is Sustainability?

Elkington’s (1994) accounting framework, called the Triple Bottom Line goes beyond the traditional measures of profit, return on investment and shareholder value to include environmental and social dimensions.

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Tree-huggingis not necessary

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A little more than acentury ago, in Australia…

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Carbon FootprintCarbon dioxide is just one ‘greenhouse gas’, but it provides a useful basis for comparison: CO2eEverything in the supply chain has carbon consequences: sourcing of raw materials, processing, manufacture, transportation, the use phase, and the eventual end-of-life.

Manufacturing Transportation Product use Recycling Facilities 14

Carbon Footprint ExampleSvanes and Aronsson (2013) showed that the carbon footprint of bananas is 1.37 kg CO2 per kilogram banana. Fertiliser, transport, refrigeration, ripening, waste treatment… everything was considered,up to the point of retail.

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Finally, some progress…the Paris Agreement

The United Nations Framework Convention on Climate Change aims to hold the increase in global average temperatures to “well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels, recognising that this would significantly reduce the risks and impacts of climate change”193 UNFCCC countries have signed the treaty.“Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”What does this mean for supply chains?

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Impact of the Paris Agreement Canada’s federal government has agreed to reduce greenhouse gas emissions to 30% below 2005 levels.The Canadian Prime Minister has proposed a price on CO2 emissions of $10 per tonne in 2018, rising $10 per year until it reaches $50 per tonne in 2022.How much carbon is involved? Effect upon the supply chain includes:

Inbound transportationInventoryOccupancy costs in the warehouseOutbound transportation/distribution

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Sustainable MotivationsEven if you don’t want to do anything about unfair social or environmental issues, somebody further along in the supply chain might insist.Some businesses won’t consider a supplier if they haven’t done a ‘carbon audit’.Is your company still paying for thingsthat get poured away, or sent up thechimney?Can you make ‘green’ performanceprofitable?Companies that do ‘green’ things canuse them in marketing activity. 1

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Heat scrap steel to its melting point, at 1370°CTo do this, most foundries use 500 to 800 KWh of energy per tonneUsing grid electricity, at 0.4453 kg CO2e per KWh (DEFRA, 2012)Which means 223 – 356 kg CO2e emitted to melt a tonne of steelAdditional energy usage to shape the material into a new, useful product

Recycling Steel…

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Component Reuse

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Can you promote reuse?Reuse is better than recycling.Try to specify and orderproducts that have an ‘extralife’ when their first use ends.

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Organic“nutrients”

Technical“nutrients”

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Most disposablecups are hybrids

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Imagine…

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Social

Environmental

Economic

Sustainable

Lasting Solutions Addressthe Triple Bottom Line

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Concluding RemarksWhat you spend money on determines how ‘green’ you are – not just as a citizen, but as a business, or a whole supply chain.The problems are already here, today – but with honesty and creativity they can be tackled.Perhaps the ‘Operating Manual for Spaceship Earth’ is still being written – and the next chapter is yours. 2

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Thank youand best wishes

Want more?Further material from Richard Farr on Capacify, the Sustainable Supply Chain bloghttp://capacify.wordpress.com

On Twitter: @Capacified30

ReferencesAnon (1912) Coal Consumption Affecting Climate, Braidwood Dispatch and Mining Journal, Wednesday 17 July 1912, page 4Berners-Lee, M. (2010) How Bad are Bananas?: The Carbon Footprint of Everything, London: Profile BooksDEFRA (2012) Greenhouse Gas Conversion Factors for Company Reporting, available from: https://www.gov.uk/government/publications/2012-greenhouse-gas-conversion-factors-for-company-reportingElkington, J. (1994), Towards the sustainable corporation: win-win-win business strategies for sustainable development, California Management Review, Vol. 36 #2

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References (continued)Fuller, R.B. (2008) Operating Manual for Spaceship Earth, Baden: Lars Muller PublishersMcDonough, W. and Braungart, M. (2009) Cradle to cradle: remaking the way we make things, London: VintageSvanes, E. and Aronsson, A.K.S. (2013) Carbon footprint of a Cavendish banana supply chain, International Journal of Life Cycle Assessment, 18, pp. 1450–1464

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Up next: people, planet, profit:a short sustainability game

A Short Game:People, Planet, Profit

The class represent the management of a clothing retail business.Four scenarios will be presented, and you must decide what to do in each case.You will earn (and lose) points in three categories: people, planet and profit.

Positive Negative

Peop

lePl

anet

Profi

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