environmental economics and management : green scm

Green Supply Chain Management

Leonard Merari 122140085Firdaus Albarqoni 122140058Ricky Agustinus 122140126Indrawan Mulia 122131052Rama Kresandi 122131136M.Dimmitri 122140171Dharma Putra Rambe 122140161

ECONOMIC AND ENVIRONMENTAL MANAGEMENT

Overview Green Supply Chain Management1

Trends Green Supply Chain Management2

Literature Green Supply Chain Management3

Case Study : Benefit Cost Analysis GSCM4

Summary5

Content

1Economic and Environmental Management MM Trisakti – July 2015

Overview

Supply Chain Management (Council of Supply Chain Management Professionals)

Supply chain management encompasses the

planning and management of all activities involved

in sourcing and procurement, conversion, and

all logistics management activities

Economic and Environmental Management MM Trisakti – July 2015

Logistics Management(Council of Supply Chain Management Professionals)

Logistics management is that part of supply chain

management that plans, implements, and

controls the efficient, effective forward and

reverses flow and storage of goods, services and

related information between the point of origin

and the point of consumption in order to meet

customers' requirements.


Overview Source : “Performance measurement for green supply chain management”. Emerald Group Publishing Limited. Benchmarking : An International Journal, Vol. 12 No 4, 2005.

Green Supply Chain Management (GSCM)

Adding the “green” component to supply chain management involves addressing the influence and

relationships of supply chain management to the natural environment. Motivated by an environmentally-

conscious mindset, it can also stem from a competitiveness motive within organizations.

Green Supply Chain Management (GSCM) defined as :

= Green Purchasing + Green Manufacturing / Materials Management + Green Distribution / Marketing +

Reverse Logistics

Overview

Green Logistics

Green logistics consists of all activities related to the eco-efficient management of the forward and reverse flows of products and information between the point of origin and the point of consumption whose purpose is to meet or exceed customer demand

Source : Green Logistics : Global Practices and their Implementation in Emerging Markets, 2011


Trends

Decrease carbon usage across supply chain. Green purchasing practices with choose the right suppliers, Company send RFP (request for proposals) include very specific questions as a part of its selection criteria — everything from “What’s your carbon-neutral strategy?” to “We’re looking to lower our carbon footprint in transportation. What tools do you have that you can provide to us?”

Source : Greening The Supply Chain : Best Practices and Future Trends


A carbon footprint is historically defined as "the total sets of greenhouse gas emissions caused by an organization, event, product or person”

Trends


Supply chain network optimization. Company study their Supplier, DC and Outlet facilities to reduce total cost and also decrease their fuel consumptions. Key factors network optimization study :- Supplier, DC and Outlet location- Mode of Transportation- Investment of new facility

Indonesia trends :- Short sea shipping- Tol Laut- Railways (KA Logistics)- Development infrastructure for new port

Trends

Reducing paper consumptions and process automation. Implementation of technology to reducing paper and process automation.

eg : Pick/Put to light technology, Handheld / Device, RFID (Radio Frequency Indentification), GPS Tracking System


Pick / Put to light RFID Technology

Handheld / Gadget GPS Tracking System


Trends

Green Warehousing. Warehouse operation minimize carbon and energy consumption. Warehouse Key Performance Indicator.eg : Roof lighting, LED Light, Fuel cell forklift

Roff lighting

Trends

Green Packaging, sustainable packing with least or no impact on environment. Bioplastics and other biodegradable materials belong to this category.

Source : C.Ho, “Opportunities in Green Supply Chain Management”.The Coastal Business Journal. Spring 2009, Volume 8 (1)

Literature GSCM Source : Ninlawan, 2010, “The Implementation of Green Supply Chain Management Practices in Electronics Industry”.

Proceedings of the International Multiconference of Engineers, 2010.

Object research : Computer parts manufacturers in Thailand.

Output : Measure implementation GSCM practices

Methodology : - Questionnaire : In-depth interview about GSCM to measure.

- Responden : Supply chain mid level managers from 37

organizational which 86,5% are large sized company

- Questionnaire Items : GSCM practices, GSCM performance,

and GSCM pressure/driver.

Adobe Acrobat Document

Source : Ninlawan, 2010, “The Implementation of Green Supply Chain Management Practices in Electronics Industry”.

Proceedings of the International Multiconference of Engineers, 2010.

Literature GSCM

Literature GSCM

Conclusion of research :• Promote Ecodesign. Developing environmentally friendly products is cause to change in product design using 2

principles: (1) designed to extend lifetime of product, it can be improved, repair, and re-use of products such as modular

design (2) designed for recycling / design for disassembly, after end of life products that can be more recovery.

• Control hazardous substances: complying with RoHS and other regulations.

• Set rules for disposing electronics waste and consider more investment in recycle plants.

• Propagate GSCM knowledge and encourage using environmentally friendly goods and services.

• Set a direct responsible unit to take in charge of electronics waste only which will increase reverse logistics efficiently.

• Promote refurbishing and recycling through campaigns/ activities to raise reuse/recycle awareness in electronics

consumption

• Expand product lifespan by designing for disassembly or upgrading computer specification instead of buying new ones

or using computer rental services

Literature GSCM

Conclusion of research (cont…) :• Set a database unit to collect and record information About production, import/export data, and waste management (do

traceability).

• Encourage team building and train skilled labors for reverse logistics management

• Raise the applications in Extended Producer Responsibility (EPR); EPR is an environmental protection strategy based on

the "polluter pays" principle, by making the manufacturer of the product responsible for the entire life-cycle of the product

and packaging they produce

Case : Benefit Cost Analysis Modelling GSCM

Overview Pick/Put to Light System

Pick/Put to light technology reducing paper usage and

decrease number of worker on warehouse operation.

Before decide to invest on this technology, company

needs to do benefit cost analysis.

Pick / Put to light


Base Case Qty UoMNo of DC 1 DCNo of Outlet 350 OutletTotal item 3,000 ItemAverage item pick / Outlet 1,250 ItemHVS A4 30,000 Rim


Investment Qty UoMDigital Display per Unit 800,000 UnitNo of Item 3,000 ItemSupporting item 350,000,000 IDRTotal Investment 2,400,000,000 IDR


Cost Reduction Qty UoMPaper per Outlet / day 42 PcsPaper per day 14,583 PcsPaper Expense per day 875,000 IDRReduce cost - paper 26,250,000 IDRReduce worker 6 PersonCost / worker / month 4,500,000 IDRReduce cost - worker 27,000,000 Total Cost Reduction / Month 53,250,000 IDR


Benefit Cost Amount UoMInvestment (2,400,000,000) IDRMonthly Cost Reduction 53,250,000 IDRYearly Cost Reduction 639,000,000 IDRBreak Even Point 45 MonthCashflow Year-1 Year-2 Year-3 Year-4 Year-5Investment (2,400,000,000) - - - - Yearly Cost Reduction 639,000,000 639,000,000 639,000,000 639,000,000 639,000,000 Cashflow (1,761,000,000) 639,000,000 639,000,000 639,000,000 639,000,000 Accumulated Cashflow (1,761,000,000) (1,122,000,000) (483,000,000) 156,000,000 795,000,000

Interest (MARR) 11% PercentageNet Present Value 199,516,032 IDRInterest Rate of Return 16.77% Percentage

Summary

1. Green Supply Chain scope : Green Purchasing + Green Manufacturing / Materials Management + Green Distribution /

Marketing + Reverse Logistics

2. Company needs to do research regarding key trends of implementation GSCM

3. One of method to measure GSCM practices is questionnaire to survey response from supply chain practicioner

4. Case study showing result as follows :

• Break even point : 45 months

• Net Present Value : IDR 199,516,032

• Internal Rate of Return : 16,7%