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/
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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
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• 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
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• 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?