The Integration of Green Supply Chain Management - Coca-Cola and Apple - Case Study Example

Report Regarding Supply Chain Customer’s Name Unit name: Course Name Supervisor’s name Submission date: Table of contents Executive summary…………………………………………………………3 1.0. Introduction……………………………………………………...5 2.0. Green supply chain management…………………………...6 3.0. Strategies……………………………………………………….….……6 4.0. Case studies…………………………………………………….………7 4.1. Coca-Cola………………………………………….…..…..7 4.2. Apple Incl……………………………………………....…9 5.0. Restructuring process………………………………………..….12 5.1. Possible resistance……………………………………12 6.0. Conclusion………………………………………………………..…13 7.0. Work cited…………………………………………………….……14 8.0. Appendices…………………………………………………..……15 8.1. Appendix 1……………………………………….….15 Executive summary 1.0. Introduction 1.1. Subject matter The report provides information on the supply chain. It focuses on business sustainability through the integration of green supply chain management. 2.0. Green supply chain management The report discusses the green supply chain management in business context, it analysis the context in which the supply chain builds capabilities (Kumar, Teichman and Timpernagel, 1278). It relates the capability building to performance and environmental management. 3.0. Strategies for green supply chain management The report describes the various strategies for supply chain management. The described strategies include the risk-based strategies, innovation based strategies, efficiency-based strategies and closed loop strategies. 4.0. Case studies In relation to the topic, two case studies of companies that have already started using the green supply chain management have been discussed. These include Coca-Cola Company and Apple. 5.0. Restructuring process The report found out that that there are weaknesses that can be witnessed in the process of green supply chain management, it thus discusses the capabilities that can be developed to restructure the process where there weaknesses. A general restructuring process has been provided. 6.0. Conclusion The report draws the conclusion mainly based on the two case studies. The report found that the green supply chain management has not been full integrated in the management of the two world leading companies. There is thus a call for more efforts by multinational companies and small enterprises to integrate greening in their management. 1.0. Introduction Supply chain is a network that is created within a company or among companies in handling or distribution of the company products. It involves taking a product either good or service from the supplier to the consumer (Pagell and Murphy, 147). Supply chain management involves the management of relationships with the suppliers and customers, both upstream and downstream relations in order to ensure that customers get value at a less cost. In such, the supply chain ensures that information, product, service and the necessary knowledge moves from the supplier through a network to the wholesaler and down to distribution network and eventually the product reaches the consumer (Kumar, Teichman and Timpernagel, 1279). Many supply chain managers are opting for sustainable supply chains that are environmentally friendly and those that ensure profitability. This has resulted in many companies opting to adopt the green supply chain management (GSCM). GSCM is an approach that its main aim is to ensure that there is overall efficient use of materials and that value is realised through the chain. The approach places a lot of focus on the ecological conservation and sociological aspects in the process of decision making by management (Kumar, Teichman and Timpernagel, 1281). This paper is a report on the green supply chain management and its application. This will be through case studies of two renowned companies, Coca-Cola, an acclaimed leader in the sustainability and Apple, which in recent years has embarked on a sustainability challenge. Many companies have introduced the green supply chain management that covers both the upstream and downstream supply. Examples include Coca-Cola, Apple, Starbucks Coffee, Ben and Jerry and automotive firms have adopted greening strategies. 2.0. Green supply chain management (GCSM) In a business context, a supply chain achieves performance through the building of capabilities as the time progresses or by examining the supply relationship to ensure that there is access to resources that are new (Kumar, Teichman, and Timpernagel, 1281). This can occur through coercive pressure that lead to passing responsibility or contractual clauses for suppliers or occur through collaboration in which the social capital is utilized within the good relationships in order to ensure that new competencies have been developed. In relation to performance, management of environment, the coercive pressure ensures that suppliers observe the minimum level of compliance. For instance, a lot of pressure was put on Apple to comply with sustainability business. However, the coercive force is normally limited in encouragement of new knowledge development and innovation. Collaboration on environmental performance on other hand promotes the range and complexity of possible outcomes; it requires a lot of involvement for both the customers and the suppliers in order to realize quality in the product that gets to the customer (Vachon, 4359). 3.0. Strategies for green supply chain management The strategies for GSCM chain management include: i. Risk based strategies: these strategies revolve around minimization of the risks. It involves minimal engagement between the organization and suppliers and it entails inclusion of clauses in the purchasing contracts for suppliers in order to ensure that they meet the set regulatory requirements (Vachon 4371). ii. Efficiency based strategies: these strategies are aimed at deriving environmental performance benefit that goes beyond the regulations which are set; it ensures compliance for suppliers through setting operations based efficiency targets. The benefits stem from manufacturing practices that have been proved to have secondary environmental benefits (Vachon, 1272). iii. Innovation based strategies: these strategies are very environmentally specific, they enlighten organizations against narrow purchasing policies that allow organizations to purchase from non-environmental compliance suppliers. iv. Closed loop strategies: these strategies are more collaborative and involve reverse logistics. It entails recovery of materials from consumers to use them for remanufacturing or to do recycling (Walton, Handfield and Melnyk, 9) Quality The quality of products produced by companies dictates their competiveness in the market. Through the strategies that are of relevance to the green supply chain management, companies can realize quality of their products from sourcing of materials that meet the minimal environmental requirements. Through, the green the supply chain management, the companies have achieved effectiveness in the sourcing of their raw materials, product design, transportation and inventory thus the supply chain improves quality of the companies’ products. The process structures are discussed in the case studies. 4.0. Case studies 4.1. Case study 1: Coca-Cola Coca cola is a multinational company and a leader in supply chain. In early 2002, the management of Coca-Cola Company got to know the importance of sustainability before 2002, however, it is in 2002 that the company came up with a strategy to ensure the sustainability and adherence to the green supply chain management. Sustainability report published by the company since the embarking on sustainability strategy against the indicators, show that there is progress. By examining the Coca-Cola chain, it apparent that there is positive practice in the specified areas that are aimed at reducing waste and achieve improved profitability (Kumar, Teichman and Timpernagel, 1289). The green supply management chain in Coca-Cola has been realised through various changes across it supply chain. According to Kumar, Teichman and Timpernagel (1289) These changes include: Product design: through the packaging, the company has come up with news designs that are supposed to drive efficiency and effectiveness. Suppliers and purchasing: Between 2006 and 2007, there was 28% increase in supplier audits, a 21% reduction in the water as a raw material. Packaging, 98% of their products are supplied and delivered to the end customer in bottles that can be reused or recycled. Coca-cola also has recycling plants that make it easier to recycle its plastics. Inventory management: Coca-Cola has made a lot of investment in software that increases its efficiency in the planning process and the flow of information. However, there is still wastage around the consumption and there is need to improve the inventory turnover which decreased from six in 2001 to current 4.6. Transportation: Coca-Cola Company leads in the reverse logistics that allows for the reuse and cycling of their packaging bottles. In addition, the company has developed a hybrid truck that is aimed at reducing energy consumption as they transport their products. The adoption of the green supply approach by Coca-Cola is reaping benefits across the supply chain. The company has been recording significant improvement in the reduction of the raw materials used such as water and many of their packaging bottles are being recycled (Kumar, Teichman and Timpernagel, 1290). However, in the inventory management, there are still wastages, which make the company not to realize the full benefits of the green chain supply management. Coca-Cola Company has also employed the use of reverse supply chain that helps it to create value by ensuring that the materials they use for packaging can be recycled which ensures the cost of raw materials is reduced (Kumar, Teichman and Timpernagel, 1292). The used materials before they are recycled are retrieved in an economically and an environmentally effective manner. Weaknesses in the process Despite of Coca-Cola being a global leader and having made many remarkable strides in the GSCM, there is still a lot of wastage that exists in the inventory; this has led to decrease in the inventory turn over. The wastages affect the operating efficiency and can lead to decreased profitability. To address the problem, the company should invest more in asset management in order to avoid the wastage experienced in the facility. 4.2. Case study 2: Apple Inc Apple is a global leader in the computer and electronic consumer industries. The introduction of the iPod was a significant move for Apple and it was a move that led it to the business of consumer electronics. The focus of the company is in the design and marketing of its ware both hard and soft. The manufacturing of its complements is outsourced from producers in Asia (Kumar, Teichman and Timpernagel, 1287). Through parts from contactors, the company does the final assemblage and distribution of the Apple products. In 2008, Fortune magazine rated Apple as the most admirable company in U.S; however, the company had poor reputation due to its policy on environment. In 2008, Climate Count, an organization that is involved in evaluating performance of companies in relation to climate change, rated Apple as stuck in its effort of investing into a sustainable environment. Apple has also been continually attacked by Greenpeace an NGO, for not putting in place measures that guarantee sustainable approach to business. Apple has been criticized for use of materials that are toxic in the process of production and its inability to recycle wastes (Kumar, Teichman and Timpernagel, 1288). The company responded to accusations by publishing information relating to environment, the achievements it had made, and the goals of the company in relation to the sustainability. The supply chain of Apple indicates that they are just in the initial stage of developing sustainable practice. They are effective in some practices but others have not been put in place. The following changes as outlined by (Kumar, Teichman, and Timpernagel, 1289) have been effected in Apple. i. Product design: the product line of Apple that is produces iPod has improved greatly and is almost free of the toxic components the company was accused of. The products are also being designed to ensure that they are energy efficient. The package design has also greatly improved to conform to the green supply chain management. For instance the fourth generation iPod Nano has been made to be 32% lighter and its volume is 54% less in comparison to the first generation. In addition, the energy consumption in iMacs has been reduced by 93%. This has been achieved through application of hardware efficiency from the original generation to the present generation. ii. Supplier and purchasing: to shift to green supply chain management, the company has ensured that its suppliers comply with the company’s regulations relating to environment. The compliance is normally in wastewater management, air emissions management, solid waste management, hazardous substance management, and environmental permits. iii. Manufacturing and warehousing (inventory) management: the company rarely handles inventory, most of the stock is in its almost 250 retail centers, and items its branch facility in Ireland. iv. Packaging: the issue of waste that comes from packaging is only addressed in the phase of design; Apple has no more information on the handling and packaging of the related waste. v. Transportation, in an effort to address the sustainability challenge of transport and to reduce car usage for the employees in US, the company has established a commuter transit programs. vi. Consumption and disposal: the company has turned to using the percentage ratio of weight recycled to set goals and to show an increasing development of getting back the electronics that have already been sold. The criticism through various organizations in the past led Apple to a more sustainable way of doing business. There is more criticism that Apple is not acting as a leader in the establishment of better environmental supply chain, but acting due to the pressure from the outside. Despite of the complexity in products of Apple and the fact that different suppliers manufacture most of parts of the products from different places that increases the risk of product recalls, Apple has put up a concerted effort to establish a well-rounded reverse supply chain. This has enhanced its capability to recall products that do not meet the standards set. Through the reverse strategy, the company can collaborate with the third party logistics to ensure that the products get back to Apple for repair or recycle (Kumar, Teichman and Timpernagel, 1289). This reverse supply chain ensures that customers are satisfied and this gives Apple a competitive advantage. Weaknesses in the process Apple has made significant strides to ensure sustainability. However, the company still has a great weakness when it comes to dealing with the issue of packaging, this issue is only addressed in the phase of design and after that, the company does not have specific measures on the packaging, and this may result to the products being packaged in materials that are not environmentally friendly. If the company is to realize full success in the shift to GSCM it needs to come up with packaging criteria that addresses the issue from the design of the product to the final phase of going to retailers and subsequently the end customer. 5.0. Restructuring the process A process that does not guarantee the required efficiency is a major set back for the chain supply, such a process calls for an overhaul of the process and restructuring (Skjolt, 258). The following steps can be used to implement the restructuring (see appendix 1, for the table on changes and timelines). 1) Assess the weaknesses in the process: at this stage, the given company need to gather the relevant information that relate to the problem at hand. 2) Identify the possible value creation opportunities, putting into consideration the relevant costs relating to environment. 3) Assess the various processes and define the expected performance specs in relation to materials and energy requirements. 4) Define the suppliers who meet the environmental specifications 5) Put in place a sourcing strategy and select best company that fit the environmental requirements. 6) Develop a process to track the progress and benefits of the set process 5.1. The possible resistance The possible resistance to the restructuring may arise from both the external and internal forces. The external forces will include the social and economic forces and technological difficulties that relate to the operations. The internal forces will include possible mismatch in the existing inventory ( Sheu, Chou, Hu, 302). 6.0. Conclusion Through the green supply chain management, cost is saved and more benefits are realised through efficiency and innovation that leads to creation of value and gives the company the competitive advantage. The green supply chain management needs to be integrated and be made part of the daily management practices. Apple has been a global leader in the computer industry but still has made few steps towards the green supply chain management. Even though Coca-Cola has been on the forefront of integrating the green supply it has not yet achieved satisfactory levels, there are wastages in the inventory. This shows that many multinational companies have a long way to go until they fully integrate the green methods in the daily practices. 7.0. References Christensen, J. A practical guide to green sourcing. Supply Chain Management Review, 2008, 12 (8), 14–21. Corbett, K. and Klassen, D. Extending the horizons: Environmental excellence as key to improving operations. Manufacturing and Service Operations Management, 2010, 8(1), 5–22. Kumar, S., Teichman, S. and Timpernagel, T.A. Green supply chain is required for profitability International. Journal of Production Research, 2012, 50 (5), 1278–1296. Sheu, J., Chou, Y., and Hu, C. An integrated logistics operational model for green- supply chain management. Logistics and Transportation Review, 2008. 41, (4), 287– 313. Skjøtt, T. Reverse logistics – the case of e-waste. Copenhagen Business School, 2008. Pagell, M., Wu, Z., and Murthy, N. The supply chain implications of recycling. Business Horizon, 2007, 50 (1). Vachon, S. Green supply chain practices and the selection of environmental technologies. International Journal of Production Research, 2007, 45 (18), 4357–4379. Walton, S., Handfield, R., and Melnyk, S. The green supply chain: integrating suppliers into environmental management processes. Journal of Supply Chain Management, 2010, 34 (2), 2–11. Zhu, Q., and Sarkis, J. The moderating effects of institutional pressures on emergent green supply chain practices and performance. International Journal of Production Research, 2007, 45(18-19). Zhu, Q., Sarkis, J., and Lai, K. Confirmation of a measurement model for green supply chain management practices implementation. International Journal of Production Economics, 2008, 111 (2), 261–273. 8.0. Appendices 8.1. Appendices 1: table on how to implement changes Process Timeline 1 Assessing the weaknesses in the process April 15th-April 19th 2 Identify the possible value creation opportunities April 21st-April 25th 3 Assess the various processes and define the expected performance specs April 26th- April 30th 4 Define the suppliers who meet the environmental specifications May 1st -May 7th 5 Putting in place sourcing strategy May 9th-May 21st 6 Develop a process to track the progress and benefits of the set process Ongoing process Read More