Welcome! Title Date

1. Sustainable Supply Chains Welcome! Title Date Mark Ferguson 404-894-4330 Mark.ferguson@mgt.gatech.edu

3. Perspective What do I need to know about environmental issues to make my business more successful?

4. Agenda

5. Traditional Supply Chain Ecosystem Use Distribution Production Material

6. So What is a Green Supply Chain?

7. Problems with Traditional Supply Chain Practices – The Electronics Industry • In the U.S. alone, 40 million PCs become obsolete every year • According to the UN, 50 million tones of e-waste is discarded globally every year • Only 20% of this is recycled, the rest ends up in landfills • Of the 20% recycled, 80% is shipped to developing countries

8. An e-waste recycling facility in Texas

9. Exporting of e-waste

10. 1901 King Camp Gillete Who is to Blame?

11. Closed-Loop Supply Chain Ecosystem Reuse Refurbish Remanufacturing Recycling

12. Tragedy of the Commons • Hardin, Science (1968) - http://dieoff.org/page95.htm • Herdsmen grazing cattle on common pasture • Entire benefit of adding one animal goes to owner • Disbenefit of overgrazing (plant destruction, soil erosion) caused by adding one more animal is shared by all • Each herdsman adds one more, then one more, …. • Conclusion: Freedom in a commons brings ruin to all.

13. Tragedy of the Commons • The commons as the food basket • Water, fisheries, timber, etc • The commons as the cesspool • Sewage, waste, CO2 emissions, etc. "So that's where it all goes! Well, I'd like to thank you fellows for bringing this to my attention."

14. Tragedy of the Commons • The cost of the externality is a function of the system state • There are strong nonlinearities in system dynamics carrying capacity consumption - - - time

15. Tragedy of the Commons • The cost of the externality is a function of the system state • The cost of the externality is a function of the system state • There are strong nonlinearities in system dynamics carrying capacity diminishes consumption - - - time

16. The Atlantic cod stocks off the east coast of Newfoundland collapsed in 1992, forcing the closure of the fishery Cost ~$2 billion in income support and retraining Depleted stocks may not recover even if harvesting is significantly reduced or eliminated entirely Newfoundland cod stocks

17. Can We Learn From Past Mistakes?

18. Research on CLSCs Closed Loop Supply Chains: New Developments To Improve The Sustainability Of Business Practices Published April 2010 by Mark E. Ferguson Gilvan C. Souza

19. Table of Contents PART I: STRATEGIC CONSIDERATIONS 2. Strategic Issues in Closed-Loop Supply Chains with Remanufacturing MARK FERGUSON 3. Environmental Legislation on Product Take-Back and Recovery ATALAY ATASU AND LUK N. VAN WASSENHOVE 4. Product Design Issues BERT BRAS

20. Table of Contents PART II: TACTICAL CONSIDERATIONS 5. Designing the Reverse Logistics Network NECATI ARAS, TAMER BOYACI, AND VEDAT VERTER 6. Product Acquisition, Grading, and Disposition Decisions MORITZ FLEISCHMANN, MICHAEL R. GALBRETH, AND GEORGE TAGARAS 7. Production Planning and Control for Remanufacturing GILVAN C. SOUZA 8. The Market for Remanufactured Products: Empirical Findings RAVI SUBRAMANIAN

21. Table of Contents III: INDUSTRY CHARACTERISTICS AND CASE STUDIES 9. Examples of Existing Profitable Practices in Product Take-Back and Recovery MARK FERGUSON, GILVAN C. SOUZA, AND L. BERIL TOKTAY 10. Reuse and Recycling in the Motion Picture Industry CHARLES J. CORBETT 11. Reverse Supply Chain in Hospitals: Lessons from Three Case Studies in Montreal RAJESH K. TYAGI, STEPHAN VACHON, SYLVAIN LANDRY, AND MARTIN BEAULIEU

22. Table of Contents PART IV: INTERDISCIPLINARY RESEARCH ON CLOSED-LOOP SUPPLY CHAINS 12. Interdisciplinarity in Closed-Loop Supply Chain Management Research VISHAL AGRAWAL AND L. BERIL TOKTAY 13. Empirical Studies in Closed-Loop Supply Chains: Can We Source a Greener Mousetrap? STEPHAN VACHON AND ROBERT D. KLASSEN 14. Conclusion and Future Research Directions MARK FERGUSON AND GILVAN C. SOUZA

23. Company Examples of How Sustainable Resource Use can be Achieved?

24. What’s Coca-Cola doing? Planet People Profitability

25. Sustainability Overview

26. SustainabilityLean And Green

27. Sustainability Lean And Green Water Stewardship

28. Extreme Scarcity <500 Scarcity 500-1,000 Stress 1,000-1,700 Adequate 1,700-4,000 Abundant 4,000-10,000 Surplus >10,000 Ocean/ Inland Water No Data m3/person/year Groundwater Depletion 2003 data Source: The Coca-Cola Company

29. Water Stewardship • Goals & Results • ReduceImprove water use efficiency by 20% by 2012, using 2004 baseline.  Lean Management • 1.7 liters/liter of product currently. (19% improvement so far) • Tools: Dry lubes, Air rinsers,Can warmers. • Recycle: Return all water used in mfg process to a level supporting aquatic life by 2010, using stringent wastewater treatment. Closed-loop • Now, 88% percent of facilities met internal treatment standard. • Create water treatment facilities where municipal facility doesn’t exist. • ReplenishExpand support of healthy watersheds and sustainable community water partnerships, globally. • Bottlers must assess vulnerability of water source & implement water source protection plan by 2013. • Community water partnerships. Over 200 projects in 60 countries. • Water footprint  Life Cycle Assessment

30. Geospatial Analysis of Bottling Plants Many of Coca-cola’s bottling plans in Africa are located in high distress areas. waterwiki.net/.../5/.../Coke_Lunch_Presentation_Brazil_24Jun05_vermeer.ppt

31. Business’ Thirst for Water Is Unsated August 23, 2004 On World Water Day, One Billion People Still Lack a Clean Supply March 23, 2005 Water Crisis Hits Africa the Hardest April 1, 2005 India: Fluid State of Water Battles January 31, 2005 Water Scarcity: a looming crisis? December 19, 2004 Times of India Coca-Cola Leaves Chennai Thirsty April 25, 2005 Headlines to the Bottom Line -Central Coast, Australia Bottled Water Plant Runs into Opposition April 7, 2005 Nine million Chinese Face Drinking-Water Shortage April 3, 2005 waterwiki.net/.../5/.../Coke_Lunch_Presentation_Brazil_24Jun05_vermeer.ppt

32. Sustainability Lean And Green Energy Management

33. Energy Efficiency GOAL: Reduce the overall carbon footprint of the business operations by 15% by 2020, compared to 2007 baseline Reduce: Measuring carbon footprint and reduce -Calculated total Greenhouse gas emission (GHE) at all countries it operated in 2008 – has energy management system in place  Life Cycle Assessment Refuel: Transportation & Facilities / Renewable Energy -630 hybrid delivery truck in North America in 2010 -A new facility in CA is pending LEED certification -Piloting solar panels and Apollo Light Pipes in 3 facilities  LEED certification Refrigeration: Vending machines / Coolers -Placed 1.6 million units with energy management system in markets around the world (improve energy efficiency up to 35%) - Installed 39,000 of HFC (hydro-fluorocarbon) free cooler in 2009  Pollution prevention and waste reduction

34. Hybrid Electric Vehicle (HEV) ROI Model

35. Sustainability Lean And Green Packaging

36. Packaging Goals & Results • Reduce: Focus on life-cycle management and advance sustainable design efforts through an initiative known as e3, eco-efficiency, life-cycle effectiveness and eco-innovation.  Waste reduction and pollution prevention • Recover : Design packages to be recycled and invest in programs that enable their recovery.  Design for environment • Reuse:Use advance technologies to greater amounts of recycled materials.  Recycling and reuse

37. Productivity The Fuel For Growth Lightweighting

38. Sustainability Enhancing Brand Value Sustainable Packaging

39. Remanufacturing in the US Remanufacturing is a $53 B industry in the US. e.g. motor vehicle parts, office furniture, engines, tires, copiers, cell phones, heavy equipment, PCs, toner cartridges, single- use cameras 73,000 firms, 480000 direct employment. Both OEMs and third-party firms remanufacture. http://www.remancentral.com/about_reman_industry.htm

44. IBM Global Asset Recovery Solutions Some Figures: • Annual collection volume > 1M machines • 85% reutilized, refurbished, resold • Annual end-of-life + waste volume processed > 50,000t • Annual recycling volume > 18,000t • Billions $ of revenues from equipment, parts, and material sales

45. Caterpillar: Remanufacturing Division Remanufacturing Business Model: • 200 dealers keep close tab on customers • Customers get 50% discount for returning an old part • Receives about 2M old parts per year • Approximately $2B in sales in 2007 • The remanufacturing division is Caterpillar’s fastest growing division

46. Wal-Mart’s Commitment to Sustainability To be supplied 100% by renewable energy To create zero waste To sell products that sustain our resources and the environment Wal-Mart CEO Lee Scott, October 2005

47. What ARE the Sources of Business Value? • “Being a good steward of the environment and being profitable are not mutually exclusive. They are one and the same. ” Wal-Mart CEO Lee Scott, October 2005

48. Wal-Mart’s Sources of Business Value Cost reduction Assurance of supply Improved supply chain visibility → rationalization Assistance from environmental NGOs Positive press → Ability to open new stores Voice with regulators New sources of revenue Attract and motivate employees

49. Interface Carpet Recycling

50. Challenge: 95% of all carpet ends up in a landfill