Lecture 19 : Sustainability and Green Supply Chain (Part-1)

[Music] good afternoon everyone welcome to uh a new topic in the uh course titled carbon accounting and sustainable designs in product life cycle management this course is offered as part of the NP Ms uh in initiative uh from I kpur and we are in the week four of this course and uh my name is Dr Deo Philip I am from I kpur and along with me Dr amep Singh obroy and Dr prel pradap Singh are teaching this course and today we are getting into a new topic A New Concept that's called sustainability sustainability and green supply chain okay so these are the two topics and because this is important important for us to we had already seen carbon Footprints and other kind of things so and there are so many questions that are coming as part of the course so we would like to address all of those in today's lecture so without further delay let us get into the next topic the supply chain right and this is a word that is used and misused and abused so there is uh many definitions and all those kind of things so let us talk about the commonly used or commonly the the popular one it's a goal oriented Network oriented network of processes of processes and Stock points okay it's a goal oriented network of processes and Stock points used to deliver used to deliver goods and services to customers and or services to customer okay so if you think about it it was origin as we discussed earlier in the class we had inputs and we had a what we call as transformation process process then we had outputs and we had the customer here okay so this journey from the transformation process to the customer where processes and Stock points this is originally what people called as the supply chain okay initially okay now then after people saw the benefit of this analysis it started coming to here also to to the then it slowly started percolating backwards okay all the way through to the input and Beyond the customer also it started percolating both directions so with that the definition got updated which was business processes process is from end user who is the end user this is also the end user from end user through original supplier original supplier that provides products services and information this is more important and information that add value value to customers and shareholders okay this definition is little bit more updated because the originally the initial definition this is the original or initial starting point definition where processes and Stock points to deliver goods and service where the delivery the delivery is happening here okay uh instead of doing this I'll just draw line like this so the delivery was of the outputs from the transformation process to the customer but when people found out that this is good so then what they started is the business process is from end user okay through the original supplier so from end user all the way to the original supplier that provides products services and information we saw yesterday that it is PLM substitutes expensive materials energy and time with cheap information we have already seen that okay so that kind of a thing so information became get uh added and instead of just delivery the focused point is adding value okay so the focus changed from delivery to adding value okay so once this happened and people started seeing the benefits of it again it became updated and things got uh modified and then now we know that this a transformation process so with respect to our course we can redefine okay so for us for this course we can redefine this like this way all activities associated with the associated with the flow and transformation of goods and services services from raw materials raw materials including funds okay to customer Plus in addition to that information flows okay so for us the input if you remember the part of the input we said man materials monies Etc so at this point the flow of flow and transformation both of these things there is flow this is the flow and here is the transformation and then it flows out again okay so the transformation of goods and services from raw materials so the goods and services are created from the raw materials which also including the funds how does the funds flow into the system to the customer the target is the customer and in addition to that how the information also flows along with it this is the major criteria or major definition of our uh our uh the for this relevant for this course so let us have an illustration okay let's look at here okay so you can see this is the environment okay so um like an example is uh you may get the raw materials from the forest from the nature from mining Okay so this is an example is mining okay this can be agriculture this is forestry Etc okay so this is all of these things we call it as The primary sector of economy okay so the primary sector of economy from there things get uh it is either Timber gets harvested or food grains get harvested or call get mined Etc from there multiple tiers of suppliers the local suppliers they these are the lowest level lowest level means closest to the location and from there they aggregate there are people tier two they are intermediaries okay and these are aggregators tier one suppliers are actually aggregators okay they are large aggregators in this case and from there they aggregate everything and they use different means of transportation Transportation okay so there are different means of transportation by rail by Road by air Airline okay using different means of transportation these aggregators um I mean aggregators through intermediaries and lowest level suppliers aggregate the necessary raw materials and here is the inputs the all the raw materials go into the they go into the warehous and some of them directly goes to the factory okay raw materials so to either Warehouse or factory okay and in the factory so this whole thing that we call okay this much portion this much portion okay of it up to here we talk about this is called as the Upstream okay then you have a fact Factory this is where your transformation process happen Okay this is where the transformation of raw materials to finished the good happens this is also known as the secondary sector of economy okay so you can see the factory they use okay you can see emissions also and here also there is emissions and energy being used so emissions like this okay and the secondary sector transforms it into finished goods okay so this is the from here onwards to the customer we call it as Downstream originally supply chain focused here the downstream was the focus of the supply chain originally how do you get it from the factory to the dist the warehouse from Warehouse to the Distribution Center okay and from Distribution Center to the stores and stores to the to the customer okay so this is the level closest to the customer okay and the customer buys it from the store okay so this portion also you can say somewhere from here can also think about as a tertiary sector tertiary sector okay and so we now know the Upstream is how we take the raw materials and other things from the environment all the way to the factory where the transformation process happens and the downstream is how the finished goods and services move from the uh Factory to the customer and you can see the information this is the information flow which is also what I mentioned uh earlier that along with the raw materials and finished goods and other things the information also flows as part of the system so how is this information works so let us understand this in the form of three subchains of the uh supply chain so the first chain I will draw it as let me draw it like this and I name this chain as the procurement chain okay some people also call this as a purchase ch ch but this is on the source okay or source of the goods and then I am making another one and this is what I call as the production or transformation process production or let's say transformation and the one is Source here the verb is make then the third one is third chain you're assuming that these are connected like a chain third one is this chain is called as let's call it as the distribution and the verb here is deliver so the product after the transformation the finished goods and service actually gets delivered to the customer through the distribution so where is the information I call This Thread that goes through this one as the this is the information so we can think about it as think about it as said so information this ties all three subchains together okay so if you look into this if you talk this is the transformation inputs that is the sourcing chain okay you have the outputs to the customer okay this is the delivery chain and the transformation obviously is the make chain so these are the three but uh we we just I've been only focusing on transformation because this is where we talked about and lot of the time the studies around the transformation process because that's where the maximum amount of energy is and we also had what we call as the okay it's okay feedback was like this we drew this where we said productivity was a feedback and Etc but that's part of the transformation process or the make as part of this fair enough now the traditional approach of supply chain okay how is the supply chain and because you can see that in this kind of a scenario the carbon footprint okay of uh uh this entire operation is very large in addition to the emissions there's emissions in this there is emissions Associated here Etc so and there is another emission going on with the shape it's all like that so in the traditional approach the focus always have been okay all involved parties directly or indirectly whether you are involved directly or indirectly focused on fulfilling a customer request so what is that the focus is on fulfilling a customer request that was the only focus at the time in traditionally so if you think about it one way to do this is the first function is extract or extract from the uh Earth then we have what we call as transform then what we have us procure okay then what we have is uh make oops Del deliver Okay so so the transformation also has this aspect here we uh the transformation process okay so it is a su of equal to transform plus procure plus make in make you can think about it as assemble also is one part of it so the process have different aspects so like for example you may have a raw material and you may transform the raw material to a new shape you may buy a tool bit and which will be used for the transformation and once the parts are there you will assemble it to make it into a new bigger product so the extract and deliver is the the input and output chain part of it so the main thing here is the semm was always treated as a source of competitive advantage and the reason why it was treated as a source of competitive Advantage because of what we call as the the innovative business models associated with we discussed what is a business model in the previous class so please understand that it also talked about value creation okay and also is efficiency because of these three things the Innovative innovative business models value creation and efficiency the sem was always treated as a com if you have good Supply Chain management you could always have a competitive Advantage with that in mind you can also think about Supply Chain management from a system standpoint so we can broadly it is a very messy way to look into it but let's you can we can look at it it doesn't matter to us suppliers and let us call it as organization or you can also talk it as Corporation or Corporation okay let's call it this an organization and then you have customers the suppliers to organization to customer the traditional flow of from suppliers to organization organiz transforms it to the customer okay now the suppliers okay uh they can procure things okay through two ways okay this is either domestic or import sourcing okay so the thing you can think about it is suppliers will have Main things as main functionalities we do it as functionalities it is order processing the manufact the organization has given an order they're processing the order okay then they also have the sorry Transportation okay and third one will be storage okay so these three things they have to do okay and uh the uh they will keep on having so in a place we will put it something like this okay uh they have uh uh let me put one more order processing then there is a transportation and then there is Storage they are connected but this is where the I'm going to draw a dotted line where I'm saying that it is the supplier uh organization interface the supplier may be supplying to many other organization okay they may not be supplying to just the one organization so they will have their own so this is dedicated this is of the supplier this is for the organization so they he may have a the supplier may have a large Fleet of trucks but when he dedicates a truck for the organization to deliver that product then that becomes a spot of it so if you think about it so this causes what do you call as inbound materials the inbound materials are to the factory okay and this is called as through flow or throughput you can think about it as okay other word is or throughput okay and from here it actually have what we call as outbound outbound materials it can be finished goods or waste or whatever it is okay and the customer can again be domestic or export distribution okay now in the when it comes to this uh the corporation they will have a function which is called as called as materials management based on the order processing the transportation and storage all things put together it comes to what you call as a materials management okay and that is part of the organization and and as part of the materials management there is another function that is called as inventory management that is the function of the organization okay Inventory management then there is also something called as as part of our within this we call it as physical distribution management distribution management that is for the for the factory it's a function of the factory again but how you are physically Distributing and then you have storage but this is called as work in process okay that's in the shop floor okay so then the physical distribution management from here what we have is okay the outbound from here is the outbound and from the outbound we have four things actually one is the order processing the the order is a customer you also what you call as transportation we also have what we call as customer service and the last one is Inventory management so now it is finished the goods now I have much value added now Inventory management this is all part of the physical distribution now okay and now there is the similar dto okay happens here as we drew there okay and they're exactly the same but okay so this is called as a customer organization interface this is order processing transportation customer service Inventory management so these things are of the customer or distributor okay this is for the organization so there's an interface where the things are mirrored but one is dedicated to this okay and now along with this we also have a line underneath where we say forward and reverse flow of information products and funds okay so back and forth when the customer buys things they pay the money money comes to organization organization pays the money to supplier supplier supplies the products so the in back and forth the information products and the funds travel back and forth as part of this okay all right so if you see this is a systems view of how the different systems and it also we know what the interfaces that are created as part of the system okay so now uh the with this system when we talk about it when we look at this system uh the organization or Corporation what we talk about it this has the transformation process process that does the value addition okay you create the value addition as part of the transformation process okay which is undertaken by the organization or Corporation so this is where the organization or the corporation or or or or owns the factory okay accomplished through a factory for goods okay if it is Goods physical Goods then you need c a factory okay all right so the if you look into it the it is cheaper because you can see that the associated things of managing the materials is expensive here whereas it is cheaper to move the information as we disc discussed in the pl so once you look at the system view you can see that the traditional one it was unidirectional but in the systems view it is back and forth because the forward and reverse flow of information products and funds is there how would the information the products flow back because sometimes if the customer doesn't like the product or had to be repaired or maintained then the product flows back as well along with this so this gives us a good point or a good stopping point for us to stop here before we get into what we call as the green aspects of how do we make this supply chain green or more sustainable which we can continue as the lecture for the upcoming uh the next part of this week so thank you for your patient hearing and uh we will continue in the next session the green supply chain aspect of it thank you [Music] [Music] [Music]