Chapter 8

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CHAPTER 8 Delivering Value via Sustainable Supply Cycle Strategies

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CHAPTER 8: DELIVERING VALUE VIA

SUSTAINABLE SUPPLY CYCLE STRATEGIES

A. Introduction

B. Diagnosing the Elements of

Sustainable Supply Cycles

C. Benefits of Sustainable Supply

Cycles

D. Sustainable Logistics

E. ISO 140002


A. INTRODUCTION

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A. INTRODUCTION

STARBUCKS

Consumers can buy coffee anywhere, but there is no mistaking the ambiance and aroma that surround a Starbucks. The company that revolutionized the way we buy coffee has also been working behind the scenes to ensure that its rich coffee will continue to be available in more than 40 countries across the globe for a long time. The company is committed to minimizing its impact on the planet, and it is passionate about sharing this commitment with its partners throughout the supply chain.

The Starbucks Shared Planet program is an environmental commitment that recognizes that conservation should occur throughout the supply chain—from coffee growers in Guatemala to recyclers in Seattle. On the supply side, Starbucks has worked in conjunction with Conservation International for 10 years to develop Coffee and Farmer Equity (C.A.F.E.) Practices. CAFE consists of 24 comprehensive, measurable standards designed to enable suppliers and farmers to become sustainable sources of coffee. Growers are required to meet criteria for product quality, ethical accounting, social responsibility, and environmental leadership. The program has paid huge dividends for growers, who become able to strengthen their marketplace positions and exercise some control over transformation of their organizations and operations.

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A. INTRODUCTION

STARBUCKS

1. Shared Planet program

a. environmental commitment

which recognizes that

conservation needs to occur

throughout the supply chain

b. work in conjunction with

Conservation International for

ten years to develop Coffee

and Farmer Equity (C.A.F.E.)

practices

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A. INTRODUCTION

1. Shared Planet program

c. CAFÉ

1. 24 comprehensive, measurable

standards designed to enable

suppliers and farmers to become

sustainable sources of coffee.

d. 2008, 77% – 295 million pounds of coffee

purchased from suppliers verified and

approved under C.A.F.E

e. Average cost of $1.49 per pound is 5%

above the average price for C grade

Arabica6


B. DIAGNOSING THE ELEMENTS OF

SUSTAINABLE SUPPLY CYCLES

1. Supply cycles

a. organizations involved in making a product

available for sale

b. functions performed by these organizations.

2. triple bottom line benefits associated with

economic, social, and financial

performance

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3. Three perspectives on the delivery of value

a. Channel: a set of organizations involved in the

process of making a product available for

consumption

b. Logistics: the supply chain is a set of

organizations linked directly to the flow of

products and information from a source to the a

consumer

c. Porter: value chain is the set of primary and

support activities performed by the firm to

serve as sources of competitive advantage8




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Processed Inputs

Un-processed inputs

Processing

Products

By-products

Inputs & Outputs at One Stage of the Supply Cycle

Iron ore

Compressed Air

Steel manufacturing

Steel coils

Slag

Carbon dioxide


B. DIAGNOSING THE ELEMENTS OF SUSTAINABLE

SUPPLY CYCLES

6. We refer to process of delivering value as a

supply cycle due to the relationship between

the environment and the product development

process

Iron ore Steel bicycle retailer consumer disposal

Wal-mart : sustainability scorecard

identifies fourteen categories of products or processes with the greatest

environmental impact

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C. BENEFITS OF SUSTAINABLE SUPPLY

CYCLES

1.Better working Conditions

2.Reduced Turnover

3.Improved Product Quality

4.Improved Efficiency and

Profitability

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C. BENEFITS OF SUSTAINABLE SUPPLY

CYCLES

5. Better Management of Risk

6. Enhanced Brand Reputation

7. Stakeholder Returns

Increased

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D. SUSTAINABLE LOGISTICS

1. Logistics:

a. process of planning,

allocating, and

controlling human and

financial resources

dedicated to physical

distribution,

manufacturing support,

and purchasing

operations

b. reverse logistics:

1. Strategies that trace

product back from

the point of

consumption

Transportation,

44.9%

Warehousing,

20.4%

Order Entry/

Customer

Service, 10.2%

Administrative

Costs, 4.1%

Inventory

Carrrying

Cost, 20.4%

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1. Fleet Optimization

2. Energy Efficiency

3. Innovative Technologya. routing and tracking computer

system

b. Inventory management software

c. RFID (radio frequency identification)

d. Global Positioning Systems (GPS)

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4. Packaging

5. Interorganizational

Relationships

a. Enhance vehicle performance

b. Reduce total supply cycle costs

c. Enhanced Customer Service

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E. ISO 14000

1. environmental management systems (EMS)

a. set of regulations established to achieve environmental goals

2. ISO

a. family of standards applied across industries to monitor and

control interaction with the environment

b. Two of the primary standards

1. ISO 14001: 2004 – outlines the guidelines associated with the firm’s

approach to sustainability, and it provides a strategic

approach to the organization’s environmental policy

2. ISO 14004:2004 – provides guidelines on the elements of an EMS, its

implementation, and the principal issues involved16


E. ISO 14000

3. Benefits

a. competitive advantage over other firms in a market

b. lower toxic emissions

c. lowered resource usage

d. higher energy savings

e. lowered costs of waste disposal

f. provide assurance to stakeholders that the firm is committed to sustainability

g. provides a strong response to customers and suppliers that place environmental demands on the firm

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Documents

Chapter 8