The Life Cycle Management Navigator Responsible Supply Chain Management Training Session 15

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The Life Cycle Management NavigatorResponsible
Supply Chain Management Training Session 15
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Responsible Supply Chain ManagementWhat is it?
What?

• Responsible supply chain management is the
  integration of social and environmental aspects
  into the supply chain.

Information exchange and cooperation along the
supply chain ...
... are great social, environmental, and
economic opportunities!
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Responsible Supply Chain ManagementWhat is a
Supply Chain?
What?
A supply chain comprises procurement,
operations, and logistics from raw materials
acquistions to customer satisfaction.

• The key elements of the supply chain are
• 1. Actors
• 2. Flows of
• material
• information
• money

Source Adopted from Ganeshan and Harrison
UNEP, 2007, Life Cycle Management
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Responsible Supply Chain ManagementBusiness is a
Team Game!
What?
Value
Customer 2
Customer 1
Flow of information
Operation
Supplier 1
Flow of goods (and money!)
Supplier 2
time
Source Adopted from Alan Powell
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Responsible Supply Chain ManagementInteraction
with Internal and External Stakeholders
What?
Source UNEP, 2007, Life Cycle Management - A
Business Guide to Sustainability
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Responsible Supply Chain ManagementWhat are the
key decisions?
What?

• For the operating company SCM involves
• supplier decisions
• purchasing decisions
• material management decisions
• production scheduling decisions
• inventory decisions
• transportation decisions
• customer service.

Needed is information and cooperation!

Source CESMB
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Responsible Supply Chain ManagementWhat are the
Main Functions involved?
Where?
Customer
Production
Procurement
Marketing/Sales
Material handlingProcess schedule
Supplier selection Purchasing criteria
Customer service
Supplier
Inventory decisions Transportation decisions
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Responsible Supply Chain ManagementBenefits
Why?

• ... of making demands on suppliers
• Potential to find a good supplier
• Indentify the effect the supplier has on your
  environmental performance
• Establish a dialogue e.g. on technology exchange
• Being seen as an environmental champion
• Improve the overall business performance.
• ... of getting environmental demands from
  customer
• Identify ineffective production and distribution
  processes
• Fulfill legal demands from extended producer
  responsibility
• Better customer relationship
• New markets.

Source CESMB
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Responsible Supply Chain ManagementSteps to Go!
How?
Communicate and cooperate!
Customer 2
Customer 1
Operation
Supplier 1
Supplier 2
Take the simplest step first!
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Responsible Supply Chain ManagementGreen
Purchasing
How?
The easiest step to take is responsible
purchasing!
1. Select a product for pilot project
2. Select a key supplier
3. Foster communication with that supplier!
4. Develop a partnership!
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Responsible Supply Chain ManagementGreen
Purchasing
How?
1. Select a product for pilot project

• A product can be selected on the basis of
• Benefit to company (sales, environment,
  competitive position)
• Cost to company
• Environmental impact along the life cycle (see
  LCA)
• Interest by product chain partners

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Responsible Supply Chain ManagementGreen
Purchasing
How?
2. Select a key supplier

• The most important suppliers are often called key
  suppliers. The designation depends, for example,
  on
• Amount of deliveries
• Suppliers product quality
• Suppliers special expertise
• Suppliers delivery reliability

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Responsible Supply Chain ManagementGreen
Purchasing
How?
3. Foster communication with that supplier!
Ask for product aspects

• Product mass
• Recyclability
• Toxicity of material
• Amount of packaging
• . . .

• Take back of packaging
• Environmental reporting
• Use of EMS
• . . .

Ask for supplier behavior

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Responsible Supply Chain ManagementGreen
Purchasing
How?
4. Develop a partnership!

• joint trial projects

Establishing good partnerships will improve your
overall business performance in the long run.

• long-term alliances

... and you will win the team game.
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Responsible Supply Chain Management Sambazon and
the Açai Berry Business
Example
Sustainable Management of the Brazilian Amazon
1. Sustainable harvesting of Açai berries in the
Amazon estuary.
2. Supporting local communities and businesses
through premium prices.
3. Marketing organic Açai products to health and
fitness conscious consumers in California and US.
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Responsible Supply Chain Management Sambazon and
the Açai Berry Business
Example
Steps of the Açai Project

• create bio-socio indicators to assess the impact
  of the Açaí trade
• develop and implement sustainable Agro-Forestry
  Management outreach projects
• establish an Açaí Technical Centre aimed to
  develop and disseminate economically feasible
  technologies to recycle Açaí by-products
• Training programmes on agricultural management
  benefiting the local cooperating families

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Responsible Supply Chain Management Sambazon and
the Açai Berry Business
Example
Implications of the Açai Project

• Environmental
• Avoiding de-forestation through logging and
• mining
• Protecting biodiversity
• No use of pesticides or fertiliser
• Social
• Empowering marginalised rainforest people and
  culture
• Learning and training opportunities through the
  Sustainable Açaí Project
• Health food for US consumers
• Economic
• Secure income employment for ribeirinhos
• Increased income per hectare in comparison to
  cattle farming or logging
• Mechanism for expanding project

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Responsible Supply Chain ManagementCSR-Project
Case Study
Information and Communication Sector, China

• Identification of strategies and activities to
• improve social and environmental conditions
• meet requirements of customers thus stay in
  market

Goal
Approach

• Constructed as multi-stakeholder initiative,
  e.g. with Government, Shenzhen Electronics
  Industries Association, Global eSustainability
  Initiative
• Key elements Diagnostic assessment, Workshop,
  Summary report, Pilote project

Source UNEP, 2007, CSR in Chinas ICT Sector
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Responsible Supply Chain ManagementPurchasing of
Green Cleaning Products
Case Study
Perrigo, USA

• Medium-sized manufacturer of generic and store
  brand pharmaceuticals and personal care
  products.
• Initial problem Bad indoor air quality.
• Saving more than 35,000 annually after
  switching to green cleaning products (and
  interviewing suppliers).
• Reasons for savings
• some green cleaning products are less expensive
  than the traditional ones
• new bulk purchasing opportunities
• fewer workers compensation claims
• rising employee productivity.

Source www.epa.gov/opptintr/epp/pfs.htm
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Responsible Supply Chain ManagementIncreasing
pressure on SMEs in supply chains
Case Study
BASF, Germany
BASF is member of Responsible Care program and
expect his business partners to comply with
standards such as environmental protection,
occupational health and safety, process safety,
emergency response, etc.. SMEs represent large
percentage of business partners and BASF is
committed to work closely with them to attain
these standards.

• Special focus on 3 groups of partners (mainly
  SMEs)
• 1- Logistic partners
• Safety and Quality Assessment is conducted to
  maintain high safety
• standards for transportation of
  products.
• 2- Contractors
• Bonus system for safe working practices.
• 3- Raw material suppliers
• Rank suppliers on a safety matrix according to
  supplier and product
• risk.
• On-site visits and evaluations are conducted
• Support suppliers in achieving and maintaining
  EHS requirements

Source UNEP, Industry and Environment, Volume
26, Oct.-Dec. 2003
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Responsible Supply Chain ManagementTips for
Action!
Tips

• Be proactive - think about new business
  opportunities working with your suppliers!
• Dont start too fast - take easier steps first!
• Demonstrate supply chain performance to your
  customer, engage with second tear suppliers!