Mansour Hajbagheri Erasmus Mundus Conference: Higher Education and Climate Change

1. Business and Climate Change Efforts: A Supply Chain Perspective Mansour Hajbagheri Erasmus Mundus Conference: Higher Education and Climate Change Central European University, Budapest 26-27 Feb. 2009

2. Agenda • Introduction • Why Supply Chain? • What is a Sustainable Supply Chain Management (SSCM)? • Green Sourcing Principles and Values • Corporate Practices for Green Sourcing • Conclusion • Discussion

3. Drivers of Going Green • Legislations, regulations and standards for going Green • Ethical obligations and social responsibility • Financial incentives

4. Impediments to Going Green • Lowers economic profits • Imposes unequal costs among competitors • Costs of going green will eventually be shifted to the stakeholders • Social issues are best solved by government. “Business of business is business”.

5. Gap Between Knowledge and Action

6. Why Supply Chain? • Profitability: It has the potential to create value (profit) for the business. • Criticality: Firms cannot be sustainable unless their supply chains become sustainable first. Is this a Green car?

7. Why Supply Chain? (Cont.) • Synergic nature: “Networked” vs. Individual effort

8. What is a Sustainable Supply Chain? “Management of raw materials and services from suppliers to manufacturer/service provider to customer and back with improvement of the social and environmental impacts explicitly considered”. Adapted from Sarkis [1]

9. Green Sourcing Principles & Values • Reduced disposal costs: • Recycling waste • Reusable packaging • Lower operational costs • Energy conservation • High density lighting • Best efforts to mitigate all kinds of pollution: • Air, water, land, noise, etc. • Avoid creating waste whenever possible: • Packaging – inbound and outbound • Environmentally friendly chemicals

10. Corporate Practices for Green Sourcing • Make Green part of the RFI/RFP process and filter out non-green suppliers – What % of their waste stream is recycled? – What % of their raw materials are from recycling? – What $’s have they invested in Green initiatives? • Require or encourage suppliers to undertake independent environmental certification , e.g. ISO 14000 • Build environmental criteria into supplier contract conditions • Supply base environmental performance management • Conduct life cycle analysis in cooperation with suppliers • Coordinate minimization of environmental impact in the extended supply chain

11. Corporate Practices for Green Sourcing (Cont.) • Cooperate with suppliers to deal with end-of-pipe environmental issues: • Reduce packaging waste at the customer/supplier interface • Reuse/recycle materials in cooperation with the supplier • Launch reuse initiatives (including buy backs and leasing) • Reverse logistics: • Give supplier an incentive to reduce the customer’s environmental load • Waste by-products reused by the raw material suppliers • Material ‘Life Cycle Management’

12. Conclusion • Supply Chain is the most important issue that a green business should address in its environmental efforts. • Greening the supply chain can potentially reduce costs and provide profit opportunities. • Bringing sustainable practices into supply chain is a certain trend in the future. Thus, those who start from now gain a competitive advantage.

14. References Sarkis J., Manufacturing strategy and environmental consciousness, Technovation 1995,15(2),79–97. 2. Sarkis J., A strategic decision framework for green supply chain management, Journal of Cleaner Production, 2003, 11, 397-409. 3. Institute for Supply Management (ISM) website: www.ism.ws 4. 2007 McKinsey survey of 2,192 executives on climate change: http://www.mckinseyquarterly.com/Operations/Supply_Chain_Logistics/How_companies_think_about_climate_change_A_McKinsey_Global_Survey_2099