Increasing operational efficiency Flashcards
Sustainable supply chains
- Use of independently verified certification standards such as Fairtrade, Forest Stewardship Council;
- Incorporating sustainability criteria into trade agreements;
- Supplier assessments and auditing on labour practices, environmental impacts, social impacts and human rights;
- Committing a proportion of procurement to diverse suppliers based on various categories such as ethnic group, gender, location.
What is resource efficiency?
Using the Earth’s limited resources in a sustainable manner while minimising impacts on the environment. It allows us to create more with less and to deliver greater value with less input (European Commission, 2017).
Circular economy?
Looking beyond the current “take, make and dispose” extractive industrial model, the circular economy is restorative and regenerative by design.
Relying on system-wide innovation, it aims to redefine products and services to design waste out, while minimising negative impacts. Underpinned by a transition to renewable energy sources, the circular model builds economic, natural and social capital (Ellen Mac Arthur Foundation)
Reintroduce waste into economic activity, by using the same or similar products by your organisation or providing to other organisations, then there should be no waste. e.g. all waste electronic equipment is exported to developing countries, we could start reintroducing in UK which would create jobs, extract its raw materials and use to make other things or what they were before.
Industrial ecology?
• The closed-loop or circular economy model has emerged from that of industrial ecology (also known as industrial symbiosis) in which the functioning of ecosystems has been used as an exemplar for industrial processes and systems.
e. g. Kalundborg
- by product of one company is the raw material of another company
Industrial symbiosis other example
A Dutch manufacturer of specialist biscuits has recently been able to turn a process waste into a small, but growing revenue stream.
They have secured a long term supply agreement to provide sprinkles into a well-known fast food chain, which uses them in its ice cream and smoothie based desserts.
Is the circular economy just another sustainability fad?
Unlikely.
In December 2015, the European Commission launched its Circular Economy package, which aims to stimulate Europe’s transition towards the circular economy. This provides a policy framework of targets and financial investment, providing clear signals to 2020 and beyond. Despite the uncertainty of Brexit, companies that still wish to operate in Europe or sell products there will need to comply.
The business community is also getting increasingly excited by the circular economy; it is now a firm item on the agenda of the World Economic Forum annual conference.
Philips, Dell, Desso carpets, Mud jeans, and Arup are just a few of the companies demonstrating what is possible.
Isn’t this just the waste management rebranded?
No.
It is about looking at a system as a whole and seeing how it is all connected. Waste management focuses on the final stage of a product, whereas the circular economy looks across the lifecycle and crucially includes design. It is about redesigning systems to be more efficient and effective, so that ultimately there is no ‘waste’.
Do the materials have to be made back into the same product?
Definitely not.
While re-making something back into the same product is one element, the circular economy is much broader and has a number of different levels. A key objective is to ensure materials remain circulating in the economy. Those materials might be reused, remanufactured or recycled by your own business, but they could be sold on to a different company for a totally different use.
If we don’t encourage consumers to keep buying things, wont our profits fail?
Current business models don’t take durability and longevity into account. This can be frustrating for customers and damage reputation if goods are seen to be poor quality.
Companies such as Patagonia see this new narrative as a significant customer engagement opportunity. Service packages that include repair, maintenance, and upgrades, can actually drive customer footfall and loyalty through increased contact points and a maintained relationship.
Furthermore, schemes such as leasing mean that you retain ownership of the assets. Once customers are finished with the product, you can recuperate the value of the material (which you already invested in) by reusing it or selling it on.
We can’t tackle everything at once – shouldn’t climate change be our priority?
The circular economy and climate change mitigation go hand in hand. Some of the greatest contributors to the global greenhouse gas emissions include construction, manufacturing and agriculture. The circular economy aims to find commercially viable ways of doing these things while significantly reducing the energy needed to produce.
Barriers to greener supply chain practices
Cost, legitimacy, poor supplier commitment, and regulation, green washing (Min & Galle 1997; Walker et al. 2008).
- Lack of understanding of the rewards/ cost savings
- Cost of making changes (Grimm et al, 2014)
- Lack of consensus at board level
- Misalignment of short and long-term goals (Giunipero et al, 2012)
- External economic conditions
- Lack of appropriate regulations and standards (Walker and Jones, 2012)
- Poor supplier commitment
- Industry specific barriers e.g. switching of suppliers (Rossi et al., 2013)
- Organisational culture
- Lack of legitimacy
- Lack of customer demand
What is LCA?
life cycle assessment (LCA), attempts to quantify the complete environmental impact of a product or service.
Industrial ecology conditions?
Lifset and Boons, 2011
- requires that a number of firms coordinate activities to exchange materials and energy.
coordination relies on two conditions:
- it signifies increased linkages (closing loop) or increased importance of existing linkages.
- the linkages must result in improved environmental performance of the larger system.
Benefits of CE?
- improved environmental performance
- cost and resource efficiencies
- reduces waste and costs associated with waste
- minimises reliance on raw materials and so their depletion.
- Emissions and loss of resources will thus be reduced
- aids use of eco-design
- minimises Europes high and increasing dependence on imports.
- cost savings
- increasing the competitiveness of Europe’s industry
- job opportunities.
- Governments increasingly foster waste prevention, reuse and repair.
Drawbacks of CE?
- requires fundamental changes throughout the value chain
- frictions between the existing linear system and the new approaches are bound to arise
- These may be perceived as threats by some stakeholders, but as opportunities by others.
- A transition requires a substantial expansion of the knowledge base
- strong collaboration can facilitate cartel like behaviour.
- the upfront costs of owning or managing the entire life cycle may be too high for newcomers.
- that many products are hard to disassemble or to recycle. Product designers are not waste managers and have no strong reasons to incorporate end-of-life considerations into their products
- Integrating life cycles and industries leads to complex systems that may hamper competition and leave the economy vulnerable to disruptions.
Pressures to adopt?
- Mimetic - copying other competitors
- Normative - training and education
- LEGITMACY - DiMaggio and Powell, 1983
- Stakeholders: shareholders, community groups, NGOs, media, suppliers, customers.
- Product innovation
- Strategic direction
- Short-term cost reduction
- COMPETITIVE ADVANTAGE – Giunipero et al, 2012
Examples of environmental concerns being incorporated into design
o Toyota Prius
o HP printers
