Lean & Green Supply ChainIndividual Assignment

Lean Supply Chain Management

4/1/2014

Table of Contents

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Abstract………………………………………………………………………………………………………………………………………..…3

Introduction…………………………………………………………………………………………………………………………………….3

Similarities between Lean & Green practices…………………………………………………………………………………..3

Overlap of Lean & Green Paradigms………………………………………………………………………………………………..4

Differences between Lean & Green practices………………………………………………………………………………….5

Synergy between Lean & Green practices……………………………………………………………………………………….6

Conclusion……………………………………………………………………………………………………………………………………...7

Bibliography…………………………………………………………………………………………………………………………………...8

Abstract:

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The aim of this assignment is to explore & verify link between Lean and Green supply chain management practices, to clarify whether Green & lean practices are complimentary to each other & to check if company can adopt green practices in their lean framework.

Introduction:

King and Lenox (2001) describe Green as ‘the good public spill over of Lean’ and explain these positive side-effects in the efforts towards waste reduction and the cutting back of pollution (DüesCM, 2011). Most firms practicing lean supply chain management practices have a tendency to gear towards Green practices since lean practices focus primarily on waste minimisation and efficient use of resources. However, there are areas where these cannot be merged. Lean practices considers the environment as a resource, but Green practices identifies it as a constraint to deliver goods & services resulting in a conflict between lean & environment-friendly practices.

Similarities between Lean & Green:

The primary similarity is the objective of waste elimination. There may be disparity in defining waste by the two paradigms. Whereas lean refers to the 7 wastes of manufacturing and the non-value adding activities, Green caters to environmental wastes such as inefficient use of resources or scrap production. However, even though the objectives are different, both target wastes such as excess inventory, transportation and the production of by-products.

Holding excessive inventory means additional risk to the company and detains capital (Nicholas,1998). Moreover, inventory occupies space that consumes power for lighting, heating etc., which is an environmental waste. Both Practices aim for minimizing miles travelled, using more efficient means for moving goods and improving capacity utilization through consolidation of shipments reduces energy consumption and transportation costs, while at the same time reducing carbon emissions (Jacobs, 2014). Transportation lead times are also reduced to create shorter & thus more responsive supply chains. Merging the two objectives of waste elimination by lean and green may cause even less waste in a supply chain, which is the ultimate goal of the lean & green supply chain.

Both paradigms weigh on supply chain partners, when it comes to supply chain relationship. Collaboration enables information and best practices sharing across the chain and serves the goal of an integrated supply chain (A., 1999). Green practices enhances the reach of the supply chain, overtaking traditional core activities and opening up opportunities for further collaboration for waste reduction and sharing of benefits.

Service level is the KPI that both practices share. Product manufacturing in a Green & Lean way will increase value delivery to customers.

Refer to the below diagram for similarities and differences between Lean & Green of which the most important are discussed.

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Source: (Dües CM, 2011).

Differences between Lean & Green supply chain practices:

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There is a school of thought that suggests manufacturers may have to face a future in which Lean and JIT are no longer the primary drivers of production. Minimal inventory can mean maximum transportation as raw materials and half finished goods are always on the move, being bustled from one factory to another, across countries and even continents (Cork, 2009).

Moreover, Lean & Green paradigm differ in their focus, definition of waste, product design and manufacturing strategy, the dominant cost, & some practices such as the replenishment frequency.

The Lean and Green paradigms are designed to aim different customers. Whereas the lean customer is concerned about cost & lead time reduction, the Green customer is satisfied when the products that he purchases are made using environment friendly techniques. Both paradigms can be merged and because the customer demand for environmentally friendly products is constantly increasing and because Green practices are mandated by law, companies should implement these principles sooner than later.

The practice with respect to replenishment frequency is the main conflict between the lean & Green practices. Lean environment requires working on JIT principles so that little inventory is maintained and hence the replenishment frequency of raw material or WIP inventory is high. However, frequent replenishment increases transportation resulting in CO2 emissions which is in direct contradiction to the CO2 reduction principles of Green practices (Wakeland, 2006). However, the conflict can be resolved by selecting suppliers within the same geographic area so that transportation can be minimized by sharing workloads and by optimizing the route for minimum travelled miles.

An analysis of the differences reflects that the lean and green supply chain do not form a coherent bond yet. Nevertheless, Lean still acts as a catalyst in the implementation of Green practices.

Synthesis of Lean and Green supply chain practices:

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Green, in parts, comes as a natural extension to Lean as Lean practices are Green without the explicit intention to being Green (McCright, 2009).

The primary source of conflict between Lean and Green practices are CO2 emissions. In this area the two paradigms ceases to be merged. Hence trade-offs should be defined. One way of minimising emissions for Lean supply chains is to use efficient transport modes, such as heavy-duty trucks, & sharing them with other products & companies (Wakeland, 2006). Attempts should be made to use the policy of Reverse Logistics as much as possible. Nevertheless, correct window for implementation must be used in making the lean supply chain Green.

Figure 2: Green & Lean decision box. (Source Mason et al 200X)

Green practices have to positively influence Lean practices and deliver cost reduction and the Lean practices have to be beneficial and conducive for the implementation of green practices. However, Lean practices are difficult to implement when it comes to environmentally sensitive processes. For example, even after the implementation of lean system, Boeing achieved a 30-70 % improvement in resource productivity but processes such as painting, chemical & heat treatment & metal finishing did not achieve similar gains (Greenwood, 2004). Nevertheless, Lean efforts can be modified to yield environmental benefits. Lean principles can expose problems & green wastes, otherwise hidden by inventories and staff (Jacobs, 2014).

There are other ways to attain high Green Logistics performance, while following a JIT delivery system. Supply chain visibility and information sharing within the supply chain including transport providers is critical to achieving JIT delivery and keeping a high delivery performance. Also as manufacturers improve their forecasting accuracy, alternative modes of transportation such as water mode can be used, while practicing JIT system. For example, in Japan, DHL has tried to reduce the number of vehicle miles travelled by optimising routes relying primarily on forecasts of cargo volume and transport time and improved efficiency in collection/ delivery of cargo.

Conclusion:

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Pressures from consumer to be green, from street to improve shareholder value, from regulations to maintain quality and from Customer to provide the right product at the right cost to the right place at the right time have mandated the merger of lean principles with green practices (Friedman,2008). Lean environment catalyses the facilitation of Green implementation. The integration of Lean and Green practices will yield rich dividends to corporate and introduction of Green as the new Lean is no longer a statement that needs support.

Bibliography:

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A., C. (1999). Power, value and supply chain management. SCM: An international Journal , 167-175.

Cork, L. (2009, Feb). Can Manufacturers combine Lean with Green. Material handling & Logistics .

Dües CM, T. K. (2011). Green as the new lean: How to use lean practices . Journal of Cleaner Production .

Friedman, P. (2008, Nov). Leaning Toward Green:. Outsourced Logistics , 16-18.

Greenwood, L. &. (2004). Perfect Complements: Synergies between Lean. Environmental Quality Management , 13 (summer).

Jacobs, F. (2014). Operations & Supply chain Management, 14th Edition (14th ed.). Mcgraw-Hill/ Irwin.

McCright, B. a. (2009). Are Lean & Green programs synergistic. Retrieved 04 14, 2014, from Proceedings of the 2009 Industrial Engineering Research Conference: http://zworc.com/site/publications_assets/AreLeanAndGreenProgramsSynergistic.pdf

Nicholas, J. M. (1998). Competitive Manufacturing Management. Irwin/McGraw-Hill.

Wakeland, V. &. (2006). Is Lean Necessarily Green? Retrieved 04 14, 2014, from http://www.cleanmetrics.com/pages/ISSS06-IsLeanNecessarilyGreen.pdf: http://www.cleanmetrics.com/pages/ISSS06-IsLeanNecessarilyGreen.pdf

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