Sustainable Logistics and Supply Chain Management_ Principles and Practices for Sustainable Operatio - i Sustainable Logistics and Supply Chain

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Unformatted text preview: i Sustainable Logistics and Supply Chain Management 0 ii THIS PAGE IS INTENTIONALLY LEFT BLANK iii Second edition Sustainable Logistics and Supply Chain Management Principles and practices for sustainable operations and management David B Grant, Alexander Trautrims and Chee Yew Wong iv Publisher’s note Every possible effort has been made to ensure that the information contained in this book is accurate at the time of going to press, and the publishers and authors cannot accept responsibility for any errors or omissions, however caused. No responsibility for loss or damage occasioned to any person acting, or refraining from action, as a result of the material in this publication can be accepted by the editor, the publisher or the author. First published in Great Britain and the United States in 2013 by Kogan Page Limited Second edition published 2017 Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned addresses: 2nd Floor, 45 Gee Street London EC1V 3RS United Kingdom c/o Martin P Hill Consulting 122 W 27th St, 10th Floor New York, NY 10001 USA 4737/23 Ansari Road Daryaganj New Delhi 110002 India © David B Grant, Alexander Trautrims and Chee Yew Wong, 2017 The right of David B Grant, Alexander Trautrims and Chee Yew Wong to be identified as the authors of this work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. ISBN E-ISBN 978 0 7494 7827 8 978 0 7494 7828 5 British Library Cataloguing-in-Publication Data A CIP record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Names: Grant, David B., author. | Trautrims, Alexander, author. | Wong, Chee Yew, author. Title: Sustainable logistics and supply chain management : principles and practices for sustainable operations and management / David B Grant, Alexander Trautrims and Chee Yew Wong. Description: Second Edition. | New York : Kogan Page Ltd, [2017] | Revised edition of the authors’ Sustainable logistics and supply chain management, 2015. | Includes bibliographical references and index. Identifiers: LCCN 2017001791 (print) | LCCN 2017004774 (ebook) | ISBN 9780749478278 (pbk.) | ISBN 9780749478285 (ebook) Subjects: LCSH: Business logistics. | Production management. Classification: LCC HD38.5 .G694 2017 (print) | LCC HD38.5 (ebook) | DDC 658.5–dc23 LC record available at Typeset by Integra Software Services, Pondicherry Print production managed by Jellyfish Printed and bound by CPI Group (UK) Ltd, Croydon CR0 4YY v CO N T E N T S List of figures and tables ix About the authors xi Foreword by James R Stock xiii Introduction 1 01 Logistics and supply chain management 8 David B Grant The nature of logistics and supply chain management 8 Logistics and SCM trends affecting sustainability 12 Sustainable logistics and supply chains 22 Summary 33 References 34 02 Science of sustainability  37 David B Grant Concepts of sustainability 37 Species and ecosystems 39 Energy 44 Industry 49 Food 53 Population and urban growth 57 Water 59 Summary 61 References 62 03 Freight transport  65 Alexander Trautrims Impact of freight transport 65 Transport modes 67 vi Contents Strategies to reduce environmental impact of freight transport 73 Wider aspects of sustainability in freight transport 87 Summary 88 References 89 04 Sustainable warehousing  92 Alexander Trautrims The environmental impact of warehouses 92 The roles and functions of warehouses 93 Warehouse location 95 Handling equipment 96 Assessing the impact 97 Reduction of environmental impact 101 Social dimension of sustainability in warehousing 110 Risks and vulnerability in warehousing 112 Summary 115 References 115 05 Product design, cleaner production and packaging  119 Chee Yew Wong Background 119 Product design for environmental and sustainable logistics 121 Selection of materials 123 Cleaner production 129 Packaging for the environment 139 Sustainable consumption and logistics 143 Regulatory frameworks 146 Summary 151 References 152 06 Sustainable purchasing and procurement  155 Alexander Trautrims The role of procurement in the supply chain 156 What is sustainable procurement? 158 Drivers and barriers for sustainable procurement 161 Contents Procurement frameworks 165 Sustainability labels and certifications 166 Lifecycle assessment 170 Comparing purchasing options 174 Summary 175 References 176 07 Reverse logistics and recycling  179 Chee Yew Wong Background 179 Circular economy and regulations 181 Product recovery options 186 Reverse logistics 196 Recycling 201 Summary 207 References 207 08 Risk, resilience and corporate social responsibility  211 Chee Yew Wong Background 211 Risk and resiliency in logistics and supply chains 212 Corporate social responsibility 228 Ethical framework and codes of conduct 235 Global and industrial initiatives 241 Summary 246 References 247 09 Sustainable logistics and supply chain management strategy  251 David B Grant Concepts of corporate strategy 251 Theoretical motivations underlying corporate and sustainable strategy 256 Sustainable logistics and supply chain performance measurement 261 vii viii Contents Environmental management systems 262 Lifecycle assessment 265 Assessing sustainable choices and initiatives 268 Summary 275 References 276 Index 279 ix list of fi g u res a n d ta b les Figures FIGURE 0.1 Chapter pathways in this book  4 A simplified supply chain  10 1.2 A hybrid lean and agile supply chain  18 3.1 CO2e emissions by transport mode  69 3.2 Well-to-wheels greenhouse gases emissions for future ­mid-size car  78 4.1 BREEAM weighting factors for new constructions  98 4.2 LEED weighting factors for new constructions  98 5.1 Design for environment  122 5.2 Cleaner production  130 6.1 Kraljic matrix  165 7.1 Hierarchy of waste management  183 7.2 Xerox’s closed-loop supply chain  192 7.3 Household recycling in the UK  204 8.1 Risk likelihood–impact graph  222 8.2 Risk management strategies  224 9.1 The ‘triple bottom line’  259 9.2 Application of the 10 tenets, DAPSI(W)R(M) and bow-tie techniques for environmental management  271 FIGURE 1.1 FIGURE FIGURE FIGURE FIGURE FIGURE FIGURE FIGURE FIGURE FIGURE FIGURE FIGURE FIGURE FIGURE FIGURE FIGURE TABLES TABLE 1.1 TABLE 2.1 TABLE 2.2 TABLE 2.3 TABLE 2.4 Four aspects of eco-efficiency and supply chain initiatives  30 Highest energy-consuming countries in 2015  48 Lowest energy-consuming countries in 2015  48 Comparison estimated gross domestic product (purchasing power parity) in 2015  51 World Bank logistics performance index 2016  52 x List of Figures and Tables TABLE 3.1 TABLE 5.1 TABLE 7.1 TABLE 8.1 TABLE 8.2 TABLE 9.1 TABLE 9.2 Comparison of greenhouse gas emissions by transport mode  72 List of common hazardous materials  124 Collection schemes  190 Types of logistics and supply chain risk  214 Different types of corporate responsibilities  231 Example of corporate strategy plans in logistics and SCM  253 Five key competencies for sustainability  258 xi A b o u t t h e au t h ors David B Grant is professor of logistics at Hull University Business School and professor of supply chain management and social responsibility at Hanken School of Economics, Helsinki. His recent visiting appointments include the École Supérieure du Commerce Extérieur, Paris and Universidad de los Andes, Bogotá as the Silla Corona Distinguished Visiting Professor. David obtained his PhD from Edinburgh University and his thesis, which investigated customer service, satisfaction and service quality in UK food processing logistics, received the James Cooper Memorial Cup PhD Award from the Chartered Institute of Logistics and Transport (UK). His research interests include logistics customer service, satisfaction and service quality; retail logistics; and reverse, closed-loop and sustainable logistics. David’s business experience includes retail, corporate banking, technical design and consulting, and recent applied research has investigated on-shelf availability and out-of-stocks, total loss and waste in food retailing, forecasting and obsolete inventory, service quality and fulfilment in internet retailing, and consumer logistics. David has over 200 publications in various refereed journals, books and conference proceedings and is on the editorial board of many international journals. Recent books include Logistics Management (Pearson) and Fashion Logistics (Kogan Page) with John Fernie. Alexander Trautrims, BA (Hons), MSc, PGDip, PhD, is a lecturer in supply chain and operations management at Nottingham University Business School, UK. He also holds adjunct positions at Royal Holloway – University of London, and Copenhagen Business School. His current research focuses on ethical issues and compliance in supply chains and the execution and implementation of responsible sourcing solutions in procurement. He is working closely with UK businesses and non-profit organizations on the implementation of the Modern Slavery Act and is the supply chain lead in the University of Nottingham’s research priority area for Rights and Justice. He is a member of the Council of Supply Chain Management Professionals (CSCMP), the Institute for Supply Management (ISM), the Logistics Research Network (LRN) in the UK and the German Logistics Association (BVL). xii About the Authors Chee Yew Wong is professor of supply chain management at Leeds University Business School, UK. His doctoral thesis investigated the coordination of supply chain planning across a toy supply chain in Europe. He teaches operations, logistics and supply chain management at undergraduate and postgraduate levels, and provides speeches, workshop facilitation and consulting to supply chain companies. Research interests include supply chain integration; sustainable supply chain management; reverse logistics; global value chains; service operations; and third-party logistics service. He has more than seven years’ business experience in engineering, production, logistics sourcing and supply chain management in industries such as power, beverages, food, toys, retail, grocery and manufacturing. Recent applied research has investigated collaborative forecast and planning, centralization of warehouses, implementation of ERP systems, green practices in the service and manufacturing sectors, and transfer of supply chain management knowledge to small and medium-size companies. Chee Yew Wong has authored over 80 publications in various refereed journals, books and conference proceedings and is on the editorial board of three international academic journals. He is a member of the UK Logistics Research Network (LRN) and European Operations Management Association (EurOMA). xiii Foreword In recent years, the subject of sustainability has garnered increased attention from individuals, companies and governments. Sustainability in sourcing; sustainability in manufacturing; sustainability in distribution; sustainability in marketing and sales; and sustainability in consumption and product disposition. There is not a single area of business that has not been impacted in some way by climate change, product stewardship, trying to do more with less, and improving energy consumption. The stakeholders of companies are demanding that firms employ sustainable practices in their manufacturing, supply chains, supplier relations, human resources, and other corporate responsibility efforts. For some firms, sustainability has become a requirement of doing business, whether that is in the B2B or B2C sectors. In today’s omnichannel environment, sustainability has become a key initiative that is important in a firm’s success, irrespective of whether the firm sells its products or services on the internet, through physical brick-and-mortar stores, or a combination of both options. The paradigm of the ‘Triple Bottom Line’ that includes people, planet and profits, has become the watchword of many companies worldwide. And rightfully so, inasmuch as all aspects of the triple bottom line are important, both to the present and future wellbeing of the planet, its people, and the economies of the world. Logistics and supply chain management have significant sustainability impacts on people, the planet, and profits. The authors, in the second edition of their book, provide a good overview of the subject matter relating to the various roles that logistics and supply chain management play in the physical and fiscal health of individuals, companies and governments. The authors do a good job of highlighting the importance of sustainability. The book includes coverage of the major sustainability aspects of logistics and supply chain management, including transportation, warehousing, purchasing and procurement, product design, production, and notably, reverse logistics. Writers often ignore the role of reverse logistics, including product returns processing, in discussions of sustainability. To their credit, the authors of Sustainable Logistics and Supply Chain Management: Principles and practices for sustainable operations and management include that discussion as one of the chapters of their book. xiv Foreword The book can be used in the classes at all higher education levels, including both undergraduate and graduate courses. The book should be ‘student friendly’, given the writing styles of the authors, its logistics and supply chain sustainability coverage, and inclusion of highly topical mini case studies. The authors do an effective job in relating the theoretical concepts to practice and what is actually happening ‘in the real world’. The book offers excellent insights into logistics and supply chain sustainability that will provide executives, students, and academics alike with information on how to manage, implement and control sustainability programmes, policies and procedures within companies. From a pedagogical perspective, this revised edition includes valuable supporting online materials, including PowerPoint presentations, chapter summaries, learning objectives, tips for teaching, and in-class activities. James R Stock Fulbright-Hanken Distinguished Chair in Business and Economics, Hanken School of Economics (Finland) Distinguished University Professor and Frank Harvey Endowed Professor of Marketing, University of South Florida (USA) 1 Introduction This second edition of our book discusses sustainability issues pertaining to logistics and supply chain management (SCM), and is different from other books as it takes a holistic view across the supply chain from point of origin through point of consumption and back within the reverse logistics chain. Logistics and supply chain activities permeate almost every aspect of our lives and thus their ability to impact the natural environment is of significant importance. This edition includes updated information and cases, as well as supplementary materials available at the Kogan Page website. The objective of this book is to introduce principles and practices that facilitate responsible SCM and sustainable logistics operations in a holistic manner and consider factors of logistics and SCM affecting the natural environment beyond the usual factors of road miles, fuel use and carbon dioxide (CO2) emissions that have been well discussed in freight transportation; see for example Green Logistics: Improving the environmental sustainability of logistics by McKinnon et al (2015), which is a good complement to this book. As an example of wider factors, globalization of business has meant that many products are not manufactured in national markets anymore; they are outsourced and manufactured in lesser-developed countries, particularly in Asia, and then shipped all around the world. How then does a national firm ensure sustainability in its global supply chain? Further, most seasonal fresh food such as fruit and vegetables is now available all year round due to sourcing in foreign markets or the use of sophisticated chilled storage and transport to prevent premature spoiling or ageing. So should consumer markets return to more seasonal goods to reduce the effects on the environment of continuous product availability? The development of these types of activities and factors has increased the effects that logistics and SCM have on the natural environment. Accordingly, logistics and supply chain strategies and operations are discussed in this book in the context of raising awareness of, and shifting an emphasis to, responsible, ethical and sustainable practices. It is important for firms, consumers and societies to do so and be proactive in considering these issues. Otherwise, legislation may emerge to limit the impact of logistics and SCM on the environment, which may be more draconian than these three stakeholders would desire. 2 Sustainable Logistics and Supply Chain Management For example, the UK government considered and then abandoned a scheme of personal or individual ‘carbon credits’ in 2008 (BBC News, 2008). Under the scheme, individuals would have an annual carbon dioxide (CO2) emission limit for fuel and energy use, which they could only exceed by buying credits in a secondary carbon-trading market from those who were under limit. The scheme was considered more progressive than taxation, as it would redistribute wealth from rich to poor, transparent and easy for everyone to understand, and fair, as everyone would get the same annual CO2 limit. However, the government’s initial studies found that the cost of introducing the scheme would be between £700 million and £2 billion, plus a further £1–2 billion a year to operate. There were also practical difficulties identified in deciding how to set annual limits, taking into account a person’s age, location, health and activities such as business and personal travel. From a different sustainability perspective, many members of parliament admitted that the public were likely to be opposed to the scheme, but urged the government to be courageous in going ahead with it. With a general election less than two years away, the government decided to discontinue further tax-payer-funded research on the scheme while noting that the concept of personal carbon limits and trading had not been completely abandoned. Today, individuals can calculate their own CO2 emissions or ‘carbon footprint’ through websites such as . Factors for this calculation include energy use in the home, personal and public transport including aeroplane flights, and lifestyle preferences such as in-season or organic food, packaging, recycling, and recreation. What this discussion about CO2 emission limits and carbon taxes has highlighted is that environmental issues are complex, involve elements of logistics and SCM in many facets of everyday life, and are not easy to solve. But, there is recent evidence that individual attitudes may be changing. For example, from 2010 to 2012 the percentage of US citizens who believed climate change was real increased from 57 to 70 per cent (Porter, 2012). And a study in the UK by Cardiff University in 2015 found that almost 88 per cent of respondents agree that the world’s climate is changing, while 76 per cent of respondents reported a personal experience of climate change during their lifetime. About 75 per cent supported the UK signing up to international agreements to limit CO2 emissions, with only 7 per cent opposing this idea (ESRC, 2015). Further, hundreds of residents in the English village of Ashton Hayes banded together in 2005 to reduce CO2 and other greenhouse gas emissions by using cloth...
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