Transformation into Green Supply

Chain: A Case in the Retail Industry

By Johanna Habib & Frantz
Rowe
GroupAman Kumar Sharma 1401008
Chittranjan Swain 1401027
Kaviti Keshav Kumar 1401040

Supply Chain in Retail Industry

SUPPLIER

RETAILE
WHOLE SELLER
FACTORY DISTRIBUTOR
R

Raw Materials
Finished Goods
Information Flow

TRADITIONAL Vs GREEN Supply Chain Management

Traditional Supply chain management
Supply chain management (SCM) is the oversight of materials,
information, and finances as they move in a process from supplier to
manufacturer to wholesaler to retailer to consumer.
Green supply chain management
Integrating environment thinking into supply chain management,
including
product
design,
material
sourcing
and
selection,
manufacturing processes, delivery of the final product to the
consumers, and end-of-life management of the product after its useful
life

Texas Instruments: saves 8

million dollars every year by
reducing its transit packaging
budget for its semiconductor
business through source
reduction recycling and use of
reusable packaging systems.

Pepsi/Coke: Saved $44 million

by switching from corrugated to
reusable plastic shipping
containers for 1litre and 20
ounce bottles ,conserving 196
million pounds of corrugated
material.

External
Transportati
on
Selection

Vendors

Raw and
Virgin
Material

Closed-Loop
Manufacturing,
Demanufacturing,
Source Reduction
TQEM

Internal
Transportation
Inventory
Manageme
nt

New
Compone
nts and
Parts
Recycled,
Reused
Material
and Parts

Location Analysis,
Inventory Management,
Warehousing
Transportation
Packaging

Fabrication

Stor
age

Stor
age

Disposal

Customer
Relationships
Green Marketing
Product
Distributio
Stewardship
USE

n, Forward
Logistics

Assembly

Purchasing,
Materials
Manageme
nt, Inbound
Logistics

Product/Proce
ss Design

Engineeri
ng

Energ
y

Energy

Energy

Waste

Marketin
g

Production

Waste

Outbound
Logistics

Waste

Energy

Reusable,
Remanufacturabl
e,
Recyclable
Materials and
Components
Reverse
Logistics

Waste

Green Supply Chain practices

Start at the Beginning
Product Design
Use more environmentally friendly materials
Design more efficient product
Plan in recycling of product at end of life
Consider environmental impact of product
Choice of Suppliers ( Green Purchasing /
Procurement/Environmentally Preferable Purchasing)
Review supplier environmental data
Consider supplier source of raw materials/components
Partner with suppliers to improve environmental performance
Consider energyefficient practices (green manufacturing
facilites, hybrid delivery vehicles, etc.)

Greening the Process

Manufacturing
Use more efficient processes
Institute pollution/emission controls
Plan waste management
Implement quality control
Packaging/Shipping
Use environmentally friendly/recyclable packaging
Plan for reuse of packaging materials
Ship in hybrid/efficient vehicles
Ship directly to customers

End Product
End Product
Deliver efficiently to end user
Use recyclable/reusable packaging
Deliver in hybrid/efficient delivery vehicles
Consolidate shipments
Plan for recycling/reuse of product/components at end of life
Educate customer on recycle/reuse policy

Cost savings
Efficient design saves waste
Environmentally friendly sourcing saves disposal costs
Pollution/emissions control saves cleanup costs
Compliance with environmental regulations

Green Retail strategies

Recycling = Revenue: Three FMI Members made close to

$50 million in revenue in 2006 from recycling plastics and cardboard.

Being Green = Making Green: Several major retailers are focusing on

green as the driving strategy behind new store development.

Seismic Shift in Supply Chain: Some of the largest retailers in the world are
implementing sustainable practices throughout their supply chains resulting
in major positive impacts on the bottom line, and impacts on the price and
availability of environmentally and socially preferable goods and services.

Catch of the Day for Tomorrow: A small retail chain responded to consumer
requests for more choice in sustainable seafood. They adopted Fishwise, a
sustainable seafood education and marketing program. Results were
increased customer loyalty, sales and profits and have transitioned their
product offering to almost completely sustainable seafood.

Issues in Sourcing
Environmental friendly process
Packaging
Certification
Controlling emissions
Vendor evaluation in terms of environmental performance

Issues in Transportation
Infrastructure
Outsourcing to nearest supplier
Better maintenance
Better routing and scheduling
Synergy and save on environment with shared resources

Issues in Network design

Co-location
Co-processing
Optimal location
De-centralised locations in non-capital intensive
facilities

Issues in Product design

Design for remanufacturing
Design for recycling and disposal
Design with recycled and waste materials

Issues in disposal and recycling

Redesign of network for collection and disposal
Closed-loop supply chain
Handling and storage
Transportation
Location of remanufacturing and recycling facilities
Recovery portion of materials and components
Economical network design
Many reverse networks are Informal networks

The story

October 2005, Wal-Mart CEO Lee Scott committed the company to

three ambitious goals:
To be supplied 100 percent by renewable energy
To create zero waste and to sell products that sustain Wal-Mart's
resources and the environment.
To meet those goals, Wal-Mart would seek to transform its supply
chain, in cooperation with suppliers and environmental nonprofit
organizations.

Significant Initiatives
Hired Blu Skye Sustainability Consulting to help identify the categories
of Wal-Mart's products and processes that had the greatest
environmental impact.
Wal-Mart/Blu Skye team multiplied sales data with environmental
impact factors from the Union of Concerned Scientists, and identified
14 focal areas, bundled into three broad categories:
renewable energy
zero waste and
sustainable products.
For each focal area, an executive sponsor and a network captain took
charge of building a sustainable value network of Wal-Mart employees
and representatives from government, academia, environmental
nonprofits, suppliers, and other stakeholders.
The goal was to reduce environmental impacts and derive profit from
that positive change.

Engaged external organizations into

the loop, to create a sustainable
value network

Concrete Steps
Based on The Greening of Walmart's Supply Chain - SCMR 2007, Dr. Erica Plambeck,
Stanford University

1. Identify Goals, Metrics and New technologies

-- Beginning in 2008, Wal-Mart formally planned to use a system to

"measure and recognize its entire supply chain based upon each
company's ability to use less packaging, utilize more effective materials
in packaging, and source these materials more efficiently relative to other
suppliers."
--The scorecard is an important enabler for Wal-Mart to achieve its public
goal of reducing the packaging used by all of its suppliers by 5 percent
between 2008 and 2013.
-- If achieved, this five-year program is expected to generate $3.4 billion
in savings. In the first month, 2,268 vendors have logged onto the
packaging scorecard site and 117 products have been entered into the

2. Certify Environmentally Sustainable products

-- According to an international study released in 2006, all species of
wild seafood are greatly depleted and predicted to collapse within 50
years.
-- Within this ominous business environment, Wal-Mart sourced
approximately $750 million in seafood in 2006, and the company's
volume of seafood business is growing at roughly 25 percent a year.
-- The Marine Stewardship Council (MSC), established by Unilever and
the World Wildlife Fund (WWF) in 1997, has defined standards for
certification as a sustainable fishery, based on the United Nations' Code
of Conduct for Responsible Fishing and on input from fishermen,
retailers, government, nonprofits, and other stakeholders.
-- The MSC certifies third parties to audit and certify fishery and
processor compliance throughout the supply chain, from "boat to
plate."

3.Providing Network partner assistance to suppliers

Wal-Mart is able to provide suppliers with valuable knowledge
and process assistance through its strong relationships with the
environmental nonprofits in its networks.
Eg: when the Chinese government threatened to shut down a
number of textile dye houses, including one of Wal-Mart's
suppliers, in order to reduce pollution in Beijing ahead of the
2008 Olympics, Wal-Mart immediately took action
- put the dye house in touch with one of the NGOs in their
network, which helped it formulate a more environmentally
friendly process that reduced its toxic output very quickly.

-- However, to meet organic standards, a farm needed to

remain free of non-organic pesticides or similar materials for a
period of three years prior to the harvest of any organic crop.
To increase and secure its supply of organic cotton,
-- Wal-Mart made a five-year verbal commitment to buy
organic cotton from farmers. "It gives them confidence and
stability
--

Wal-Mart

(which

became

the

world's

largest

purchaser of organic cotton in 2006) also agreed to

purchase the organic cotton farmers' alternate crops.

4.

Committing

to

larger

volumes

of

environmentally

sustainable products
-- By making a commitment to buy a specified quantity of each
product certified as environmentally friendly, Wal-Mart gives its
suppliers an incentive to develop and produce that product.
-- In its textiles network, Walmart learned that, along with the cost
of certification, farmers faced a near-term reduction in yields with
organic cotton farming, as well as the need to diversify crops. This
forced farmers to alternate the planting of cotton with legumes,
vegetables, or other cover crops to rejuvenate the soil.
5.Cutting out middlemen
An immediate but unanticipated benefit of MSC certification in the
seafood networkand of organic cotton certification in the textile
networkwas full visibility of the chain of custody, and hence the
opportunity to eliminate intermediaries.
By simplifying its supply chain, Wal-Mart reduced the frequency of
seafood stock-outs, improved the quality of the fish it was

6. Consolidating direct suppliers

Over the short term, Wal-Mart has had many diverse relationships
with many factories, often working with a supplier one purchase
order at a time or one season at a time.
Says sustainability vice president Ruben: "Right now we account for
two percent of a lot of people's business, especially overseas. We
know that needs to be a lot largermaybe 50 or 60 percent."
7. Restructuring the buyer role
To better manage relationships with suppliers, the textiles network
implemented a major organizational change: It redesigned the role of
its buyers.
In the past, textiles buyers had been generalists, handling a wide
variety of responsibilities (as buyers did in other product categories).

8. Licensing environmental innovations

If one factory is significantly more energy-efficient than others, it's
got an advantage. If it shares that information, the competition
might gain a much better understanding of its production costs
and therefore its profit margins." "Information about how much
energy a product consumes is not particularly sensitive."

Conclusion from the Case study

Buying diesel-electric and refrigerated trucks with a power unit that
could keep cargo cold without the engine running saving nearly
$75 million in fuel costs and eliminating an estimated
400,000 tons of CO2 pollution in one year alone.
Making a five-year verbal commitment to buy only organically
grown cotton from farmers, and to buy alternate crops those farmers
need to grow between cotton harvests. Last year, the company
became the world's largest buyer of organic cotton.
Promising by 2011 to only carry seafood certified wild by the Marine
Stewardship Council, a group dedicated to preventing the depletion
of ocean life from overfishing.
Buying (and selling) 12 weeks' worth of Restrictions on Hazardous
Substances (RoHS)-compliant computers from Toshiba.

Reference
Franois de Corbire & Johanna Habib Information
Quality for the Transformation into Green Supply
Chain: A Case in the Retail Industry European
Journal of Purchasing & Supply Management
Walmarts Sustainability Strategy (A), Stanford
University, GSB No. OIT-71A, April 2007,
http://cb.hbsp.harvard.edu/cb/web/product_detail.seam?
R=OIT71-PDF-ENG (March 39, 2011).
Carbone, V., and Moatti, V. 2008. "Greening the Supply
Chain: Preliminary Results of a Global Survey," Supply
Chain Forum: An International Journal