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Supply Chain Sustainability

Chapter 15

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What is Sustainability?

Sustainability

A characteristic of processes that are meeting humanity’s needs without harming future generations.

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Sustainability

Sustainability Challenges:

Environmental protection

Productivity improvement

Risk minimization

Innovation

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Supply Chains and Sustainability

Environmental

Responsibility

Financial

Responsibility

Social

Responsibility

Supply Chains

and

Sustainability

Figure 15.1

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The Three Elements of Supply Chain Sustainability

Financial Responsibility

Environmental Responsibility

- Reverse Logistics

- Efficiency

Social Responsibility

- Disaster Relief Supply Chains

- Ethics

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Humanitarian Logistics

The process of planning, implementing and controlling the efficient, cost-effective flow and storage of goods and materials, as well as related information, from the point of origin to the point of consumption for the purpose of alleviating the suffering of vulnerable people.

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Reverse Logistics

The process of planning, implementing and controlling the efficient, cost-effective flow of products, materials, and information from the point of consumption back to the point of origin for returns, repair, remanufacture, or recycling.

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Closed-Loop Supply Chain

A supply chain that integrates forward logistics with reverse logistics, thereby focusing on the complete chain of operations from the birth to the death of a product.

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Flows in a Closed-Loop Supply Chain

Production process

Distribution/

Retailers

Product information

New service/product development process

Recycle parts and materials

Remanufacture

Repair

Returns processor

Customers

Direct reuse

Waste disposal

Forward flow

Reverse flow

Figure 15.2

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Reverse Logistics

Financial Implications

Fee

Deposit fee

Take back (transportation)

Trade-in

Community programs (Second Harvest)

Secondary markets (Big Lots, dollar stores, etc.)

13 - 010

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Energy Efficiency

Carbon footprint

The total amount of greenhouse gasses produced to support operations, usually expressed in equivalent tons of carbon dioxide (CO2)

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Transportation Distance

Route Planning

Shortest route problem

Find the shortest distance between two cities in a network or map.

Traveling salesman problem

Find the shortest possible route that visits each city exactly once and returns to the starting city.

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Nearest Neighbor Heuristic

Steps

Start with the city that is designated as the central location. Call this city the start city. Place all other cites in an unvisited set.

Choose the city in the unvisited set that is closest to the start city. Remove that city from the unvisited set.

Repeat the procedure with the latest visited city as the start city.

Conclude when all cities have been visited, and return back to the central location.

Compute the total distance traveled along the selected route.

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Four-City Traveling Salesman Problem

Central Hub

130

100

120

Figure 15.3

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Example 15.1

Hillary and Adams, Inc. is a privately-owned firm located in Atlanta that serves as the regional distributor of natural food products for Georgia, Kentucky, North Carolina, South Carolina, and Tennessee.

Every week, a truck leaves the large distribution center in Atlanta to stock local warehouses located in Charlotte, NC, Charleston, SC, Columbia, SC, Knoxville, TN, Lexington KY, and Raleigh, NC.

The truck visits each local warehouse only once, and returns to Atlanta after all the deliveries have been completed.

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Example 15.1

From/To	Atlanta	Charleston	Charlotte	Columbia	Knoxville	Lexington	Raleigh
Atlanta	0	319	244	225	214	375	435
Charleston	319	0	209	116	373	540	279
Charlotte	244	209	0	93	231	398	169
Columbia	225	116	93	0	264	430	225
Knoxville	214	373	231	264	0	170	351
Lexington	375	540	398	430	170	0	498
Raleigh	435	279	169	225	351	498	0

The distance between any two cities in miles is given below:

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Example 15.1

John Jensen is worried about the rising fuel costs and is interested in finding a route that would minimize the distance traveled by truck.

Use the Nearest Neighbor heuristic to identify a route for the truck and compute the total distance traveled.

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Example 15.1

Step 1

Start with Atlanta and place all other cities in the unvisited set.

Charleston, Charlotte, Columbia, Knoxville, Lexington, Raleigh

Step 2

Select the closest city to Atlanta in the unvisited set, which is Knoxville.

Remove Knoxville from the unvisited set.

The partial route is now Atlanta-Knoxville which is:

214 miles

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Example 15.1

Step 3

Scan the unvisited set for the city closest to Knoxville, which is Lexington.

Remove Lexington from the unvisited set.

The partial route is now Atlanta-Knoxville-Lexington which is:

214 + 170 = 384 miles

Step 4

Repeat this procedure until all cities have been removed from the unvisited set.

Connect the last city to Atlanta to finish the route.

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Example 15.1

Step 5 - Compute the total distance traveled along the selected route

Using Nearest Neighbor

Atlanta

Knoxville

Lexington

Charlotte

Columbia

Charleston

Raleigh

Atlanta

Total distance starting with Atlanta

214 + 170+ 398 + 93 + 116 + 279 + 435 =

1,705 miles

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Example 15.1

Use the Nearest Neighbor heuristic again to see if a better solution exists:

Charleston – Columbia – Charlotte – Raleigh –

Knoxville – Lexington – Atlanta – Charleston

+ 93 + 169 + 351 + 170 + 375 + 319 =

1,593 miles

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Example 15.1

Charlotte – Columbia – Charleston – Raleigh –

Knoxville – Lexington – Atlanta – Charlotte

93 + 116 + 279 + 351 + 170 + 375 + 244 =

1628 miles

Columbia – Charlotte – Raleigh – Charleston –

Atlanta – Knoxville – Lexington – Columbia

93 + 169 + 279 + 319 + 214 + 170 + 430 =

1674 miles

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Example 15.1

Knoxville – Lexington – Atlanta – Columbia –

Charlotte – Raleigh – Charleston – Knoxville

170 + 375 + 225 + 93 + 169 + 279 + 373 =

1684 miles

Lexington – Knoxville – Atlanta – Columbia –

Charlotte – Raleigh – Charleston – Lexington

170 + 214 + 225 + 93 + 169 + 279 + 540 =

1690 miles

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Example 15.1

Raleigh – Charlotte – Columbia – Charleston –

Atlanta – Knoxville – Lexington – Raleigh

169 + 93 + 116 + 319 + 214 + 170 + 498 =

1579 miles

Of the 7 routes , the best one starts with Raleigh for a travel distance of 1579 miles.

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Application 15.1

Equipment Repair Inc. is a privately owned firm located in Monroe Kansas.

Each workday a repair vehicle is dispatched to customer locations that have requested an equipment repair.

After all repairs have been completed, the vehicle must be returned to the shop in Monroe.

For one particular day, 5 customers in 5 different cities must be visited.

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Application 15.1

The distance between any two customers in miles reported by city name is given below:

To/From	Monroe	Apex	Concord	Dover	Oxford
Monroe	-	15	30	10	20
Apex	15	-	12	22	25
Concord	30	12	-	5	26
Dover	10	22	5	-	18
Oxford	20	25	26	18	-

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Application 15.1

Use the Nearest Neighbor heuristic to identify an efficient route for the truck and compute the truck’s total distance traveled.

Start with Monroe and place all other cities in the unvisited set.

Select the closest city to Monroe in the unvisited set, which is Dover. Remove Dover from the unvisited set.

The partial route is now Monroe – Dover, which is 10 miles.

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Application 15.1

Repeat the procedure until all cities have been removed from the unvisited city set. Connect the last city to Monroe to complete the route.

Scan the unvisited set for the city closest to Dover, which is Concord.

Remove Concord from the unvisited set.

The partial route is now Monroe-Dover – Concord, which is:

10 + 5 = 15 miles.

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Application 15.1

Compute the total distance traveled along the selected route.

The route using the nearest neighbor heuristic is:

= 10 +5 + 12 + 25 + 20

= 72 miles

Dover – Concord – Apex – Oxford – Monroe

Monroe –

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Application 15.1

Concord – Dover – Monroe – Oxford – Apex

= 72 miles

Concord – Dover – Monroe – Apex – Oxford – Concord

= 81 miles

= 12 + 5 + 10 + 20 + 25

= 5 + 10 + 15 + 25 + 26

Apex –

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Application 15.1

Dover – Concord – Apex – Monroe – Oxford – Dover

= 70 miles

Dover – Concord – Apex – Monroe – Oxford

= 70 miles

= 5 + 12 + 15 + 20 + 18

= 18 + 5 + 12 + 15 + 20

Oxford –

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Application 15.1

This approach results in the following best route:

Dover – Concord – Apex – Monroe – Oxford – Dover

= 70 miles

= 5 + 12 + 15 + 20 + 18

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Freight Density

Freight rates are based on the following factors:

The freight density

The shipment’s weight

The distance the shipment is moving

The commodity’s susceptibility to damage

The value of the commodity

The commodity’s loadability and handling characteristics.

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Calculating Break-Even weight

To determine the break-even weight between two adjacent weight breaks we define the following variables:

x = break-even weight

A = lower weight bracket

B = next highest weight bracket

C = freight rate relative to A

D = freight rate relative to B

Break-even weight: x = (BD)/C

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Weight Breaks and Freight Class ($/cwt)

Class	< 500 (lbs)	500 (lbs)	1,000 (lbs)	2,000 (lbs)	5,000 (lbs)	10,000 (lbs)	> 20,000 (lbs)
50.00	34.40	28.32	24.25	23.04	17.58	15.74	10.47
55.00	36.94	30.50	26.12	24.82	18.93	17.41	11.58
60.00	39.59	32.69	27.99	26.60	20.29	19.08	12.69
65.00	41.94	34.64	29.66	28.18	21.49	20.27	13.48
70.00	44.64	36.86	31.56	29.99	22.88	21.94	14.59
77.50	48.10	39.72	34.01	32.32	24.65	23.85	15.86
85.00	51.90	42.86	36.70	34.87	26.60	26.24	17.45
92.50	55.89	46.15	39.52	37.56	28.64	28.38	18.87
100.00	60.27	49.77	42.61	40.50	30.89	30.77	20.46

Table 15.2

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Example 15.2

One of the products produced by Kitchen Tidy is Squeaky Kleen, a tile cleaner used by restaurants and hospitals. Squeaky Kleen comes in 5-gallon containers, each weighing 48 lbs.

Currently Kitchen Tidy ships four pallets of 25 units each week to a distribution center.

The freight classification for this commodity is 100.

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Example 15.2

In an effort to be environmental responsible, Kitchen Tidy asked their product engineers to evaluate a plan to convert Squeaky Kleen into a concentrated liquid by removing some water from the product which would allow the engineers to design a smaller container so 50 units can be loaded on each pallet.

Each container would weigh only 42 pounds.

This would reduce the freight density and the freight class to 92.5.

What would the savings in freight costs be with the new product design?

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Example 15.2

Current Product Design:

Weekly shipment =

(Number of pallets)(units per pallet)(pounds per unit)

(4) * (25) * (48) = 4,800 pounds

Break-even weight (Freight Class = 100)

(50) * (30.89) / (40.50) = 38.14 or 3,814 pounds

**The shipment qualifies for the lower freight rate**

Total weekly shipping cost

(48) * (30.89) = $1,482.72

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Example 15.2

New Product Design:

Weekly shipment =

(Number of pallets)(units per pallet)(pounds per unit)

(2) * (50) * (42) = 4,200 pounds

Break-even weight (Freight Class = 92.5)

(50) * (28.64) / (37.56) = 38.126 or 3,813 pounds

**The shipment qualifies for the lower freight rate**

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Example 15.2

New Product Design:

Total weekly shipping cost

(42) * (28.64) = $1,202.88

Savings =

$1,482 - $1,202.88 = $279.84 per week

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Application 15.2

Kayco Stamping in Ft. Worth, Texas ships sheet metal components to a switch box assembly plant in Waterford, Virginia.

Each component weights approximately 25 lbs and 50 components fit on a standard pallet.

A complete pallet ships as freight class 92.5.

Calculate the shipment cost for 3 and 13 pallets.

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Application 15.2

At 3 pallets or 150 pieces

Shipping Weight

Break-even weight (Freight Class = 92.5)

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Application 15.2

At 3 pallets or 150 pieces

Shipping Weight

(150) * (25) = 3,750 pounds

Break-even weight (Freight Class = 92.5)

(50) * (28.64) / (37.56) = 38.13 or 3,813 pounds

**The shipment does NOT qualify for the lower freight rate**

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Application 15.2

At 3 pallets or 150 pieces

Total shipping cost

The per-unit shipping charge

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Application 15.2

At 3 pallets or 150 pieces

Total shipping cost

(37.5) * (37.56) = $1,408.50

The per-unit shipping charge

$1408.50/150 = $9.39

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Application 15.2

At 13 pallets or 650 pieces

Shipping Weight

Break-even weight (Freight Class = 92.5)

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Application 15.2

At 13 pallets or 650 pieces

Shipping Weight

(650) * (25) = 16,250 pounds

Break-even weight (Freight Class = 92.5)

(200) * (18.87) / (28.38) = 132.98 or 13,298 pounds

**The shipment qualifies for the lower freight rate**

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Application 15.2

At 13 pallets or 650 pieces

Total shipping cost

The per-unit shipping charge

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Application 15.2

At 13 pallets or 650 pieces

Total shipping cost

(162.5) * (18.87) = $3,066.38

The per-unit shipping charge

$3,066.38/650 = $4.72

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Transportation Mode

Major Modes of Transportation

Air freight

Trucking

Shipping by Water

Rail

Pipeline

Airwaves / internet / cloud

Intermodal shipments

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Transportation Mode

Transportation Technology

Relative drag

Payload ratio

Propulsion systems

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Disaster Relief Supply Chains

Disaster – A serious disruption of the functioning of society causing widespread human, material, or environmental losses which exceed the ability of the affected people to cope using only its own resources.

Human-related

Natural

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Humanitarian Supply Chain Operations

Prepare

Disaster

Response

Recovery

Forecasts and Early Warnings

Figure 15.4

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Managing Disaster Relief Operations

Understand that the timetable and ultimate customer for a supplier changes rapidly.

Design the supply chain to link the preparation activities to the initial response activities and the recovery activities.

Link disaster relief headquarters with operations in the field.

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Managing Disaster Relief Operations

Life Cycle of Disaster Relief

Brief needs assessment

Development of initial supply chains for flexibility

Speedy distribution of supplies to the affected regions based on forecasted needs

Increased structuring of the supply chain as time progresses: receive supplies by fixed schedule or on request

Dismantling/turning over of the supply chain to local agencies.

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Managing Disaster Relief Operations

Supply Chain Management Challenges

Design implications

Command and control

Cargo security

Donor independence

Change in work flow

Local infrastructure

High employee turnover

Poor communication

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Supply Chain Ethics

Buyer-Supplier Relationships

Identifying ethical and unethical work practices

Facility Location

Inventory Management

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Supply Chain Ethics

Buyer-Supplier Relationships

SA8000:20014

Child Labor

Forced Labor

Health and Safety

Freedom of Association and Right to Collective Bargaining

Discrimination

Discipline

Working hours

Compensation

Management Systems

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Managing Sustainable Supply Chains

Develop a sustainable supply chain framework.

Gather data on current supplier performance and use that information to screen new suppliers.

Require compliance across all business units.

Engage in active supplier management utilizing ethical means.

Provide periodic reports on the impact of supply chains on sustainability.

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Solved Problem 1

Greenstreets Recycling Inc. collects used motor oil from several collection sites around the Greater Stanford area.

In order to minimize the use, and thereby the cost of its labor, vehicle, and energy resources, the company is interested in locating the shortest route that will allow its collection vehicle to visit each collection site exactly once.

Provide an efficient route for the collection vehicle.

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Solved Problem 1

From/To	A	B	C	D	E	F
A	-	25	50	48	41	60
B	25	-	35	22	23	43
C	50	35	-	25	47	65
D	48	22	25	-	24	40
E	41	23	47	24	-	21
F	60	43	65	40	21	-

The distance between any two sites in miles is given below

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Solved Problem 1

Begin at the recycling facility (Site A) and proceed to its nearest neighbor (Site B) which is 25 miles away.

From Site B proceed to its nearest neighbor

Proceed from B to D – 22 miles

From Site D proceed to site E

24 miles

From Site E proceed to site F

21 miles

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Solved Problem 1

From Site F proceed to Site C

65 miles

From Site C return to Site A

50 miles

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Solved Problem 1

Compute the total distance traveled along the selected route

Using Nearest Neighbor

Total Distance starting at site A

25 + 22 + 24 + 21 + 65 + 50 =

207 miles

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Solved Problem 1

Use the Nearest Neighbor heuristic again to see if a better solution exists:

B – D – E – F – A – C – B

22 + 24 + 21 + 60 + 50 + 35

212 miles

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Solved Problem 1

C – D – B – E – F – A – C

25 + 22 + 23 + 21 + 60 + 50

201 miles

D – B – E – F – A – C – D

22 + 23 + 21 + 60 + 50 + 25

201 miles

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Solved Problem 1

E – F – D – B – A – C – E

21 + 40 + 22 + 25 + 50 + 47

205 miles

F – E – B – D – C – A – F

21 + 23 + 22 + 25 + 50 + 60

201 miles

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Solved Problem 1

The routes starting with C, D and F all have the same distance and sequence.

With recycling facility at A the best route:

A – F – E – B – D – C – A = 201 miles

Reverse order = same distance

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Solved Problem 2

Kayco Stamping in Ft. Worth, Texas ships

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