7-GSCM-24April-07-web

7-GSCM-24April-07-web - Using environmental (cost)...

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GSCM – Spring 2007 – Session 7 – April 24 Using environmental (cost) accounting techniques to reduce supply chain costs (and reduce environmental impact)
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GSCM – Spring 2007 – Session 7 – April 24 Economi c inputs Economic Process Economi c outputs Use phase End-of-life int i e,int i i C C C + = i E e,ext i C ? int p e,int p p C C C + = p E e,ext p C ? p i o C C C + = p i o E E E + = int use e,int use use C C C + = use E e,ext use C ? int eol e,int eol eol C C C + = eol E e,ext eol C ? Relationship between environmental impact and supply chain cost i = input p = process o = output eol = end-of-life
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GSCM – Spring 2007 – Session 7 – April 24 A hierarchy of costs Conventional Potentially hidden Contingent Image / relationship External Full cost accounting Total cost accounting EPA (2000) The lean and green supply chain
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GSCM – Spring 2007 – Session 7 – April 24 Materials tracking Purchasing Handling Storage Recovery Disposal Take-back Environmental management problems are, to a large degree, material driven. Life cycle costing EPA (2000) The lean and green supply chain
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GSCM – Spring 2007 – Session 7 – April 24 Definition of Environmental Cost: Definition of Environmental Cost: Expenditures that arise from either compulsory or voluntary activities to achieve environmental objectives (does not include external cost). Environmental cost can thus be divided into regulatory (or compliance) cost and voluntary cost . There are four types of environmental activities: There are four types of environmental activities: Prevention activities are undertaken to eliminate potential causes of adverse environmental impacts. Examples: Product and process redesign, using clean technologies Assessment activities measure and monitor potential sources of environmental damage. Examples: Measure emission levels, contamination build-up, environmental audits Control activities are designed to control and contain source of environmental impact. Examples: End-of-pipe technology like scrubbers, waste water treatment, etc. Failure activities are undertaken to remediate accidental environmental damage Examples: Industrial site clean-up, dealing with oils spills, leaks, etc. Definition and Types of Environmental Costs Definition and Types of Environmental Costs
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GSCM – Spring 2007 – Session 7 – April 24 Accounting for Environmental Costs Accounting for Environmental Costs Regulatory Regulatory Reasons Reasons (Laws) Voluntary Voluntary Reasons Reasons (Society, Culture, Customers) Environmentally Environmentally Related Activities: Related Activities: • Safe workplace • Safe handling of materials • Waste reduction • Pollution control • Product take-back • Site cleanup • Emission permits • public relations • Etc. … Purpose of Purpose of Activity Activity • Prevention • Assessment • Control • Failure Costs Costs of of Activity Activity
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7-GSCM-24April-07-web - Using environmental (cost)...

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