SUSTAINABLE SUPPLY CHAINS Dr. Silvia Rossi Tafuri Senior Research Fellow – Cranfield School of Management

SUSTAINABLE SUPPLY CHAINS

• Agenda – Defining sustainability

– Logistics and carbon intensity

– The wider implications of sustainability

– Managing sustainability

– Unilever Case study

SUSTAINABLE SUPPLY CHAINS

• What is sustainability?

• Discuss within your group for 2-3 minutes and pencil down 3 concepts to share

SUSTAINABLE SUPPLY CHAINS

• What is sustainable supply chain management?

• Discuss within your group for 2-3 minutes and pencil down 3 concepts to share

SUSTAINABLE SUPPLY CHAINS

Global sourcing

No net impact

Energy use

Waste management

Carbon neutral

Eco- efficiency

Resource consumption

Food miles

Cradle to cradle

/ PLC

Biodiversity

Water footprint

Product life cycle

management

Freight Transport emissions

Reverse logistics

Producer responsibility

SUSTAINABLE SUPPLY CHAINS

What level of human activity is sustainable?

What is the Earths capacity to re-generate?

“If everyone in the world lived like the average European we would need 3 planets” (Source WWF) www.panda.org/what_we_do/how_we_work/conservation/one_planet_living/

SUSTAINABLE SUPPLY CHAINS

Sustainable business Corporate responsibility view

Environment

Shareholder

Value

Society

Supply chain sustainability view

Return Deliver Make Source

Sustainable development Macro economic view

Environment

Economy

Society

SUSTAINABLE SUPPLY CHAINS

• One million people become new mobile subscribers everyday

• Aviation now transports over 2.2 billion passengers annually in a global fleet of 23000 planes

www.enviro.aero/aviationenvironmentfactsfigures.aspx

• Food supply

’what we thought of as an abundant food supply is anything but....the global systems......will reach breaking point unless action is taken

• Chatham house

SUSTAINABLE SUPPLY CHAINS

SUSTAINABLE SUPPLY CHAINS

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Virtual Water Footprint

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Transport Carbon Intensity

Development of Greenhouse Gas emissions of

different sectors (1990 – 2010)

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Growth in freight transport follows or even exceeds GDP

Traffic volume and GDP – EU 27

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– Vehicle trip distance lengthening

– Modal switch away from train/sea to lorry and air

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Source, stuffintheair.com

Source, treehugger.com

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The complexity of managing sustainably

Vs

Organic food – is it

sustainable?

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Strategies for Sustainability

4 Strategic approaches

Risk mitigation

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SUSTAINABLE SUPPLY CHAINS

Strategies for sustainability

4 Strategic approaches

Risk mitigation

Cost minimisation

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Load optimisation / utilisation

Improved maintenance

Energy efficient tyres

10% difference

between best & worst performing

Alternative fuels

Advanced vehicle

routing & scheduling

Driver training

& behaviour

7% fuel saving

Aerodynamic design

16% more load

10% fuel saving

20% CO2 reduction

Tyre pressure

Source Make Deliver Return Design Concept Disposition

SUSTAINABLE SUPPLY CHAINS

• Heinz has saved £404,000 / year by using

lightweight can ends.

• 1,400 tonnes is the amount of steel saved

• Heinz can fit 18% more cans on each pallet

• The UK beer sector will save

millions of pound each year

by moving to lightweight

glass bottles

‘Sustainable Packaging Initiatives

Are a Viable Cost-Reduction

Solution in a Downward Economy’

www.industryweek.com/ Feb 2009

Source Make Deliver Return Design Concept Disposition

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4 Strategic approaches

Risk mitigation

Source Make Deliver Return Design Concept Disposition

Cost minimisation

Competitive advantage

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• A revolution in washing….. Ariel Gel Three years to develop

Five million trial formulations

Ariel Gel Wash at 15c

Concentrated

Lower packaging

Recyclable pack

Lower logistics costs

SUSTAINABLE SUPPLY CHAINS

4 Strategic approaches

Risk mitigation

Source Make Deliver Return Design Concept Disposition

Cost minimisation

Competitive advantage

Supply chain transformation

SUSTAINABLE SUPPLY CHAINS

• All good stuff but...... it’s not going to get us where we need to be!

http://www.home-business-planet.com/2010/09/home-business-what-makes-successful.html

UK Govt target?

Reduce greenhouse gas

emissions by at least

80% by 2050 from 1990

levels

SUSTAINABLE SUPPLY CHAINS

Last UN Global Compact Survey to CEOs

UNILEVER CASE STUDY

UNILEVER CASE STUDY

Split into 6 groups and prepare a presentation after discussing the questions provided.

Time: 45 minutes to prepare the presentation and 5 minutes to present

UNILEVER CASE STUDY

• Group 1 – What lessons can be learned from the Unilever initiative to shift its entire

supply to tea from Rainforest Alliance Certified farms?

– What are the challenges, risks and opportunities posed by the initiative?

– What did you learn from this case that can be useful for your organization?

UNILEVER CASE STUDY

• Group 2 – What are the main opportunities for Unilever in implementing this

program?

– What would you recommend to Unilever’s tea suppliers?

– What did you learn from this case that can be useful for your organization?

UNILEVER CASE STUDY

• Group 3 – What are the main challenges for Unilever in implementing this program?

– Why did Unilever decided to work with a NGO?

– What did you learn from this case that can be useful for your organization?

UNILEVER CASE STUDY

• Group 4 – What are Unilever’s main environmental practices in the tea supply chain?

– How will suppliers benefit from being involved?

– What did you learn from this case that can be useful for your organization?

UNILEVER CASE STUDY

• Group 5 – Why is Unilever interested in revitalizing Lipton’s supply chain?

– What’s the role of suppliers in the program?

– What did you learn from this case that can be useful for your organization?

UNILEVER CASE STUDY

• Group 6 - How should companies approach the selection of third-party certification

partners or “eco-label” in general?

- Can Unilever rely on the Rainforest Alliance to monitor ongoing compliance with certification over time? How exposed is Unilever if the standard for the certification is raised?

- What did you learn from this case that can be useful for your organization?

OPEN DISCUSSION – WRAP UP SESSION

• What are you going to do differently in regards to sustainability?