Supply Chain Sustainability

Examples of Supply Chain Sustainability in the following topics:

• Reducing Waste and Environmental Impacts

  • Reducing waste by more efficient manufacturing is a key goal of management, with supply chain sustainability seen as a key component.
  • Supply chain sustainability is a business issue affecting an organization's supply chain or logistics network in terms of environmental, risk, and waste costs.
  • Sustainability in the supply chain is increasingly seen among high-level executives as essential to delivering long-term profitability and has replaced monetary cost, value, and speed as the dominant topic of discussion among purchasing and supply professionals.
  • One of the key requirements of successful sustainable supply chains is collaboration.
  • As industry leaders continue to add in cost-cutting measures, we are likely to see this trend continue in supply chain sustainability for sustained improvement in relationship building and cost reduction.

• Special topic: supply chain management

  • Supply chain management is the business function that coordinates and manages all the activities of the supply chain, including suppliers of raw materials, components and services, transportation providers, internal departments, and information systems.
  • Exhibit 31 illustrates a supply chain for providing packaged milk to consumers.
  • In the manufacturing sector, supply chain management addresses the movement of goods through the supply chain from the supplier to the manufacturer, to wholesalers or warehouse distribution centers, to retailers and finally to the consumer.
  • The supply chain is not just a one way process that runs from raw materials to the end customer.
  • Money also tends to flow "upstream" in the supply chain so goods and service providers can be paid.

• Supply Chain Management

  • Supply chain management is the management of the network of interconnected steps involved in the provision of product and service packages.
  • Supply chain management (SCM) is the management of a network of interconnected businesses involved in the provision of product and service packages required by the end customers in a supply chain.
  • Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.
  • Cash-flow: Arranging the payment terms and methodologies for exchanging funds across entities within the supply chain.
  • Supply chain execution means managing and coordinating the movement of materials, information, and funds across the supply chain.

• Investment in Operations

  • Investment in information technology has made supply chains faster, cheaper, and more reliable.
  • Supply chain optimization applies processes and tools that ensure optimal operation of a manufacturing and distribution supply chain.
  • Supply chain managers may employ optimization such as maximizing gross margin return on inventory invested (GMROII); balancing the cost of inventory at all points in the supply chain with availability to the customer; minimizing total operating expenses (e.g., transportation, inventory, and manufacturing); and maximizing gross profit of products distributed through the supply chain.
  • Supply chain optimization addresses the general supply chain problem of delivering products to customers at low cost and high profit.
  • Supply chain optimization applies processes and tools that ensure the optimal operation of a manufacturing and distribution supply chain.

• Other factors affecting supply chain management

  • In addition to managing the bullwhip effect, supply chain managers must also contend with a variety of factors that pose on-going challenges:
  • This puts added pressure on supply chain managers to continually improve performance.
  • Globalization imposes challenges such as greater geographic dispersion among supply chain members.

• Taking it to the next level

  • Once you've examined your business from top to bottom, it's time to start searching for similar weaknesses up and down your supply chain and in the customer use stage (FIGURE 10-3).
  • (Aster, Nick, ‘ColdWater Tide: Provoking the Ah-Ha Moment at Procter & Gamble') It is one of seven sustainable products that helped the company generate more than $7 billion in sales within one year.
  • FIGURE 10-3: Map and examine the entire supply and demand picture

• Bullwhip effect

  • A major goal in supply chain management strategy is to minimize the bullwhip effect.
  • The bullwhip effect occurs when inaccurate or distorted information is passed on through the links in the supply chain.
  • As the bad information gets passed from one party to the next, the distortions worsen and cause poor ordering decisions by upstream parties in the supply chain that have little apparent link to the final end-item product demand.
  • As information gets farther from the end customer, the worse the quality of information gets as the supply chain members base their guesses on the bad guesses of their partners.
  • The results are wasteful inventory investments, poor customer service, inefficient distribution, misused manufacturing capacity, and lost revenues for all parties in the supply chain.

• Logistics

  • The term Logistics Management or Supply Chain Management is the part of Supply Chain Management that plans, implements, and controls the efficient, effective, forward, and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customer's requirements.
  • There is often confusion over the terms "supply chain" and "logistics. " It is now generally accepted that the logistics applies to activities within one company/organization involving distribution of product, whereas supply chain also encompasses manufacturing and procurement and, therefore, has a much broader focus as it involves multiple enterprises, including suppliers, manufacturers, and retailers, working together to meet a customer's need for a product or service.
  • Logistics as a business concept evolved in the 1950s due to the increasing complexity of supplying businesses with materials and shipping out products in an increasingly globalized supply chain, leading to a call for experts or supply chain logisticians.
  • The goal of logistics work is to manage the fruition of project life cycles, supply chains, and resultant efficiencies.
  • Starting in the 1990s, several companies chose to outsource the logistics aspect of supply chain management by partnering with a 3PL, third-party logistics provider.

• 10 reasons for a business to become sustainable

  • Following is a look at several market force trends that are currently impacting businesses either directly or indirectly through suppliers and supply streams and are redefining how businesses compete.
  • (Scott) Now that's sustainability!
  • Even retailers are watching over their supply chains (where most of their environmental footprint is located) in order to reduce unnecessary expenses that result from wasteful practices.
  • Energy and material price rises are bad enough, but when they're added to supply chains they create even more costs.
  • That's bad news for cleaning supply companies that choose to merely make their chemicals more environmentally friendly.

• Causes of the bullwhip effect and counteracting the bullwhip effect

  • Demand forecast updating is done individually by all members of a supply chain.
  • Rationing and gaming create distortions in the ordering information that is being received by the supply chain.
  • To improve the responsiveness, accuracy, and efficiency of the supply chain, a number of actions must be taken to combat the bullwhip effect:
  • Make real-time end-item demand information available to all members of the supply chain.
  • Information technologies such as electronic data interchange (EDI), bar codes, and scanning equipment can assist in providing all supply chain members with accurate and current demand information.