Developing a Sustainable Supply Chain Strategy

Developing a Sustainable Supply Management Strategy
Webinar
9/26/2019
part 1
David Millington, M.Sc.QSM, NPDP, CL6σBB, SPP℠, SPSM3®, CM®
Director of Product Development and Education

Scope of Webinar?
You Learn:
Understanding Customer | Market | Business Sustainability Requirements
Principles of developing a Supply Sustainability Strategy
Executing a Supply Sustainability Strategy
Monitoring and Institutionalizing a Supply Sustainability Strategy
Interactive Polling Questions

General Sustainability
Section 1

Sustainability
 is the capability to continuously conduct certain activities
indefinitely.
The study of sustainability is evolving and is often viewed in three
dimensions known as the Three pillars of Sustainability.
Definition of Sustainability

The Three Pillars of Sustainability
 Environmental Sustainability is:
The capability of the globe to sustain levels of pollution, nonrenewable
resource depletion, and renewable harvesting proceeding on an
indefinite continuum.
 Economic Sustainability:
The capability of an economy to indefinitely sustain definitive levels of
production
 Social Sustainability:
The ability of human systems to indefinitely operate at a definitive
level of harmony and social wellbeing. Genocide, corruption, systemic
poverty, illiteracy are examples of socially unstable systems

Value has three components:
There is a conversion or transformation of materials and
inputs from one stage to the next
All associated activities are done right the first time
Customers are willing to pay for the output or resulting
products and services
The Context of Value Creation

Limitations of Global Sustainability Management
Most Sustainability Management Programs:
1. Do not focus on managing all three of pillars of sustainability
2. Emphasis is usually on one of the pillars at the expense of the other two
Organization Economic Environmental Social
Typical NGO X
United Nations Environmental Program X
World Trade Organization X
Organization for Economic Cooperation and Development X
The United Nations (limited budget constrains impact) X X X
Sustainability Focus

Benefits of leveraging Sustainability Programs:
The Business Case for Sustainability
1. Investment Opportunities. Many organizations enhance their access to investment capital solely because they
have sustainability programs
2. Leverage of Innovation. To accomplish excellence in all three pillars of sustainability is a formidable task many
organizations like Levi’s Strauss and Ikea are leveraging innovative processes to realize excellence in economic,
environmental, and social sustainability
3. Competitive Advantage. The demand for sustainable products and services is an increasing trend and a major
requirement to realize competitive advantage
4. Engagement of Workforce. Leveraging social sustainability in the workplace in the form of flexible schedule, safe
and ergonomic workspaces, meaningful work, and effective rewards and recognition programs often results in highly
engaged, inspired employees. Approximately 85% of the workforce in the United States is not engaged in their work.
One can imagine the economic impact of this phenomena
5. Cost Reduction. Each of the three pillars of sustainability is an opportunity for cost reduction and avoidance
beyond price

Potentials for Cost Reduction?
Carbon Footprint, Manufacturing, and Logistics Sustainability:
Carbon Footprint is defined as measure of the number of tons of carbon dioxide caused by greenhouse gas
emissions produced by the activities of organizations and individuals
Manufacturing Sustainability is design, development, commercialization and production of products through cost
effective processes that minimize the utilization of resources, energy, social, and environmental impacts
Logistics Sustainability, is the design and execution of logistics networks that realize low greenhouse emissions,
restriction of unnecessary movement and storage of people and materials, with limited usage of energy, fuel, and low
social, economic, and environmental impacts

Levi’s Strauss sets aggressive programs to reduce it carbon footprint
Levi’s is leveraging Big Data Analytics to provide insight into and direction on how to proceed with its
initiatives. Through this exercise the company is:
1. Clearly Articulating and Defining sustainability issues
2. Creating Robust Hypotheses on sustainability issues and building Dynamic Analytical Models
3. Determining Root Causes of Negative Sustainability Impacts
4. Developing Robust Solution Models to remedy Negative Sustainability Impacts
5. Levi’s Executives are hyper-focused on Strategic Execution and are leveraging dynamic Execution Models to
achieve its strategic goals.

Why should Supply Management Professional care?
The Benefits of Levi’s Strategic Action:
1. Enhancement in Brand Equity, as consumers are becoming more eco-conscious
2. Potential Reduction in lawsuits resulting from health issues generated from excessive emissions pollution
3. Reduction in Cost of Operations, from the reduction in process waste, transportation, motion, over-processing, and
over-production
4. Reduction in fuel consumption
5. Reduction in vehicle and equipment wear and tear
6. Increase in product quality
7. Reduction in Product Cost
8. Product Leadership, the company is leveraging Design for X Parameters.
9. Thought Leadership

Only for big companies?
Some key points to note concerning Manufacturing Sustainability for SMEs:
1. Approximately 60% of SMEs globally are investing technologies that enable low carbon footprint
capabilities.
The market for sustainably built or green products and services is worth about 5 trillion dollars
(USD)
2. United Kingdom’s Carbon Trust has estimated that organizations can reduce their energy costs up to 20
to 25%
3. Over 90% of United Kingdom employees prefer eco-friendly and sustainable workspaces, according to
a survey of 5,300 respondents. This survey was conducted by the Johnson Controls Global Workplace
Solutions

Benefits of Sustainable Logistics:
1. Reduction of supply chain complexity and increased profitability.
Many organizations are accomplishing this by reducing the quantity of suppliers. A key target for
supplier quantity reduction are suppliers who score poorly on sustainability related capabilities.
The effective use of supplier selection scorecards with robust sustainability criteria will weed out
suppliers who would be able to perform to established sustainability mandates. Many organizations
realize lower Total Cost of Ownership by removing poor performing supplier from their processes. New
Balance Athletic Shoe Inc. reduced its supplier base by about 67%
2. Route optimization
The reduction of transportation and logistical movement reduces economic and environmental impacts,
increased profitability, and the ability for organizations to be better corporate citizens
3. Brand enhancement
In some industries customers are willing to pay up to 5% more for products that are produced and
delivered through sustainable supply chains
4. The way of the future
Up to 35% of logistics companies are leveraging sustainability best practices to drive their processes.

Developing a Supply Sustainability Strategy
Section 2

Supply Sustainability
The traditional mandate of the procurement function is to:
 Manage organizational spend
 Support operations
 Protect our organizations from risk
In modern times we see an increasing demand for organizations and executives to:
 Embrace Sustainability Best Practices
 Embrace Social Responsibility Best Practices
 Embrace Diversity Best Practices
It is from these lens that a new definition of Supply Sustainability has emerged.

Collaborate and Leverage Strategic Category/Commodity |
Supply Sustainability Teams
Category/Commodity | Supply Sustainability Teams:
 Ensure that efficient and effective decisions are made regarding all critical aspects of
cost, quality, delivery, reliability, service
 Ensure that effective strategies are formulated concerning diversity, social
responsibility, and sustainability issues related to the procurement of mission critical
inputs, products and services
 Team members are representative of different departments within an organization
 Strategic Category/Commodity Teams are led by Procurement Leaders

Supply Sustainability
Definition of Strategic Supply Sustainability:
Next Level Purchasing Association’s definition of Supply Sustainability is:
“A reliable, efficient, cost-effective, collaborative, responsive, agile, and socially
responsible methodology for the procurement of mission critical inputs that create
innovative value to meet customer and organizational requirements with the least
possible impact on the environment”.
Source: Next Level Purchasing Association, 2019

Be Strategic in selecting Supply Sustainability Criteria!
The Criteria of Supply Sustainability or Sustainable Procurement are:
Reliability
Efficiency
Cost-effectiveness
Collaboration
Responsiveness
Agility
Innovative value creation
Minimal environmental impact

NLPA’s Subject Matter Experts have designed a robust framework for
the realization of the above definition of Supply Sustainability.
The model is:
 Underpinned by customer | business requirements and understanding one’s organizational
landscape
 The outputs of such an understanding are the formulation of innovative and executed
strategies that are engrained in the organization DNA.
Leverage a Model for Supply Sustainability!
“A reliable, efficient, cost-effective, collaborative, responsive, agile, and socially responsible methodology for the
procurement of mission critical inputs that create innovative value to meet customer and organizational requirements
with the least possible impact on the environment”.

Figure 1, NLPA’s Model for realizing Strategic Supply Sustainability Management™

Process for deploying NLPA’s Model for realizing Strategic Supply
Sustainability™:
Assemble the Category/Commodity | Supply Sustainability Team to conduct the following process:
Step 1, Gather Customer | Market | Business – Requirements (Plan Phase)
Step 2, Conduct Environmental Scan (Plan Phase)
Step 3, Benchmark against Best in Class Supply Chain Sustainability Programs and Standards (Plan Phase)
Step 3, Develop your Corporate Strategy (Plan Phase)
Step 4, Plan / Develop Supply Sustainability Strategy (Plan Phase)
*********************************************************************************************************************************************************************************************************************************
Step 5, Execute Sustainable Procure to Pay Process (Do Phase)
Step 6, Execute Sustainable Production Processes (Do Phase)
Step 7, Execute Sustainable Logistics Processes (Do Phase)
Step 8, Measure Processes (Check Phase)
*********************************************************************************************************************************************************************************************************************************
Step 9, Anchor | Institutional Sustainability Gains & Repeat the Continuous Improvement Cycle (Act Phase)

Output /
Service Quality Characteristics Description What to Measure
Customer
Expectations Key Drivers
Importance to
Customer (1-5)
Current
Performance
(1-5) Gap (E)IPI
Easy to Operate
Ease of use of major
features
Degree of simplicity to
operate vehicle
High degree of
simplicity
Design for
Effectiveness 5 1 4 20
Low Environmental
Impact Fuel Efficiency
Fuel consumption.
Miles per Gallon
No less than 36 miles
per gallon in the city
Environmental
Impact,
Efficiency 5 1 4 20
Great Customer Service
Helpful and courteous
customer servie reps.
Number of minutes
waitng in line for
warranty service
No more than 20
minutes waiting in line
for warranty service Efficiency 5 2 3 15
Child Safety
Automatic child safety
locks
Number of child
injuries Zero injuries
Design for
Safety 5 4 1 5
Easy to Repair
Time and complexity to
repair
Number of days to
conduct general
repairs
No more than 1 day in
repair shop
Design for
Efficiency 5 4 1 5
Note: (E)IPI (Improvement Prioritization index) = Gap x Importance to External
6CylinderMidSizeSedanCar
External Customer: The Public
Gather and understand Customer Requirements
Manufacturing Example

Gather and understand Customer Requirements
Service Example
Output
/
Service Quality Characteristics Description What to Measure
Customer
Expectations Key Drivers
Importance to
Customer (1-5)
Current
Performance
(1-5) Gap (E)IPI
Accuracy of Diagnosis Accuracy of Diagnosis
% of correct
diagnosis
100% correct
diagnosis Accuracy 5 4 1 5
Wait Time
Time spent waiting for
admittance and in
between procedures
Number of minutes
elapsed between
critical procedures 30 minutes or less Service Time 5 2 3 15
Bed availability
Bed availability in
emergency department
and hospital % of availability 100% availability
Materials
Availability 5 2 3 15
Testing | report
turnaround
Timely and efficient
administration of tests
and reporting of tests
Number of minutes
elapsed between
testing and reporting 30 minutes or less
Turnaround
Time 4 4 0 0
External Customer : Patients of ABD Hospital
HospitalTreatment
Note: (E)IPI (Improvement Prioritization index) = Gap x Importance to External

Customer Requirements Matrix Process
Process for deploying a Customer Requirements Matrix:
Leverage your Category / Commodity | Sustainability Team to conduct the following steps:
Step 1: Determine the Top 3 to 7 external customer requirements.
Step 2: Create descriptions for each requirement.
Step 3: Determine what to measure or appropriate metrics.
Step 4: Determine external customer expectations.
Step 5: Determine the key drivers.
Step 6: Determine the importance of the requirements to external customers.
Step 7: Determine the current performance levels.
Step 8: Determine the current gap.
Step 9: Determine the (E)IPI.
Step 10: Prioritize requirements by largest (E)IPI to smallest.

Definition of Market Requirements and Analysis:
Market analysis for procurement and supply operations must provide an assessment of price trends in
the general marketplace (as opposed to price trends between your organization and its suppliers). This information
should be used to speculate on price fluctuation. Price trend assessments can be performed on your government's
price index for each commodity, if your government publishes one.
A powerful source for capturing such an assessment is the Producers’ Price Index. This tool is published on the
United States' Federal Government’s Bureau of Labor Statistics Web site.
If you are from outside the USA, you are encouraged to research the index that your government publishes. A list of
such indices can be found at http://www.bls.gov/bls/other.htm.
Source: NLPA’s 14 Procurement Best Practices Course, 2019
Understand your Market!

Process for conducting a Market Requirements Analysis:
Leverage your Commodity/Category | Supply Sustainability Team to conduct the following questionnaire:
Market Force Areas of Impact on Supply Reliability Yes No
Barriers to Market Entry Did any regulatory changes occur that will result in more/less competition or a change in costs?
Entry to Market Did any new suppliers of these commodities enter the market?
Financial Did any suppliers of this commodity go out of business this year?
Financial Are the suppliers of this commodity profitable?
Financial Are any suppliers of this commodity likely to go out of business or file for bankruptcy?
Substitution Impact Did any substitute product or service enter the market?
Supply Reliability Are any of the products or services represented in these commodities in short supply?
Technology Disruption Did any technological changes occur that will affect the market for these commodities?
Environmental Have any significant environmental issues occurred in the market for these commodities

Conduct Environmental Scan to understand the Future Landscape
External environmental scanning involves:
 The acquisition of critical information from an organization’s External Operating Landscape (EOL)
 The assessment of trends and impacts which affect its cohesiveness, efficiency, effectiveness, and sustainability.
Process:
Leverage your Category / Commodity | Sustainability Team to conduct the following steps:
Step 1: Determine the relevant Control Point Elements.
Step 2: Research what is occurring in your space.
Step 3: Research and document significant, relevant, and emerging trends.
Step 4: Determine the impact on your organization and supply chain.
Step 5: Share results with your senior management team and key stakeholders.

External
Landscape Factors What is Currently Occurring and to what Magnitude?
Ecological Trends
1. Climate change pressures and awareness
2. The decline of proven oil reserves have created a sense of urgency
to produce cars that consume less fossil fuel
Technological Trends
1. Governmental support for technological innovation
2. The growing prominence of AI and Robotics to enable innovation
and efficiencies
3 Increasing use of mobile computing
4. Increasing use of online fulfillment services
5. Alternative fuel stations networks are in short supply
Industry Trends
1. The industry is becoming more regulated by Environmental
Protection and Safety Agencies
2. Governmental support for innovation reduces barriers to market
entry and stimulates innovation and research
Client / Customer Trends
1. Increasing demand for hybrid and
2. Moderate attitude about customer
3. Increasing eco-friendly mindset and desire to reduce carbon
footprint
1. Increasing wealth gap
2. Increasing demand for labor in to support operations in three
continents
Socio-Demographic Trends
Economic Trends
1. Growth of U.S. economy
2. High growth rate of developing markets
3. Strengthening U.S. dollar
Political Trends
1. Governmental support and grants for innovation
2. Increasing governmental effort for infrastructure in developing
countries
3. Ongoing debate and urgency around climate change, fossil fuel
usage, and reduced emission vehicles
Competitive Trends 1. The rise of Tesla innovation in the electric car space
2. Rise of Toyota in the hybrid car space
ExternalEnvironmentalScanningMatrix
Environmental Scanning Matrix, for ABC Motors

Developing a Supply Management SWOT Analysis
A SWOT Analysis at the Organizational Level is the study of an
organization’s internal strengths and weaknesses, and external
opportunities and threats.
A SWOT Analysis at the Departmental | Procurement Function
Level is the study of a Procurement Department’s internal
strengths and weaknesses, and external opportunities and
threats.

Developing a Sustainable Supply Chain Strategy

Leverage a one or two page Strategy Framework

Understand and be part of the strategy process

Prepare for Transformation and to Manage Change!

For a supply manage or supply chain system to be truly
sustainable it must be:
1.Responsive
2.Reliable
3.Agile
4.Cost effective
5.Efficient
6.Eco-friendly
Measure for Supply Sustainability Success!!!

Notes:
1.Environmental Impact, (EI.1.3) Index of Supplier Environmental
Sustainability has several sub-measures (EI.31 to E1.37)
2.This framework is an important tool for measuring the degree of success
of a Supply Sustainability Strategy
3.A critical part of planning a Supply Sustainability Strategy is an effective
metrics framework, as it sets the parameters for SMART goals

Attributes of Performance Operational Definitions Level-1 Strategic Metrics
Responsiveness The speed at which tasks are performed (RS.1.1) Order Fulfillment Cycle Time
Reliability The ability to perform tasks as required (RL.1.1) Perfect Order Fulfillment
(AG.1.1) Upside Supply Chain Flexibility
(AG.1.2) Upside Supply Chain Adaptability
(AG.1.3) Downside Supply Chain Adaptability
(AG.1.4) Overall Value at Risk
Cost-Effectiveness The cost of operating the process (CO.1.1) Total Cost to Serve
(AM.1.1) Cash-to-Cash Cycle Time
(AM.1.2) Return on Supply Chain Fixed Assets
(AM.1.3) Return on Working Capital
(EI. 1.1) Miles traveled in Supply Chain Activities
(EI. 1.2) Eco-friendly raw materials
(EI. 1.3) Index of Supplier Environmental Sustainability
* (EI. 1.31) Energy Consumption
* (EI. 1.32) Carbon Footprint
* (EI. 1.33) Water Footprint
* (EI. 1.34) Savings Levels resulting from Conservation & Improvement Efforts
* (EI1.35) Rate of Waste Reduction
* (EI1.36) Rate of Waste Recycling
* (EI1.37) Rate of Product Recycling
OperationsFinancialEnvironmental
Asset Management Efficiency The ability to efficiently utilize assets.
The ability to perform operations with the
least possible impact to the environment
Environmental Impact
Agility The ability to respond to external influences
Supply Sustainability Metrics Framework

Sales $600,000 % of Sale $750,000 % of Sale $1,350,000 % of Sale
Make Production Labor $51,235 8.5% $74,300 9.9% $125,535 9.3%
Make Raw Materials $67,125 11.2% $92,483 12.3% $159,608 11.8%
(-) Cost of Goods Sold $118,360 19.7% $166,783 22.2% $285,143 21.1%
(=) Gross Margin $481,640 80% $583,217 78% $1,064,857 78.9%
Plan Cost of Planning $8,139 1% $11,697 2% $19,836 1.5%
Enable Cost of Order Processing $18,235 3% $4,287 1% $22,522 1.7%
Source Cost of Sourcing $12,136 2% $18,236 2% $30,372 2.2%
Deliver Cost of Delivery $42,328 7% $21,568 3% $63,896 4.7%
Deliver Cost of Expedited Orders $21,456 4% $59,334 8% $80,790 6.0%
Return Cost of Returns $48,234 8% $7,219 1% $55,453 4.1%
Enable Cost of Sales Visits $3,267 1% $4,219 1% $7,486 0.6%
Billing Cost of Monthly Billing $4,246 1% $5,123 1% $9,369 0.7%
Quality Cost of Quality $11,254 2% $21,553 3% $32,807 2.4%
(-) Total Planned Cost $169,295 28% $153,236 20% $322,531 23.9%
Waste Cost of Defects $77,247 13% $41,258 6% $118,505 8.8%
Waste Cost of Over Production Waste $15,124 3% $27,356 4% $42,480 3.1%
Waste Cost of Waiting Waste $11,358 2% $17,235 2% $28,593 2.1%
Waste Cost of Neglect of Human Capital $18,237 3% $19,238 3% $37,475 2.8%
Waste Cost of Transportation Waste $22,578 4% $31,569 4% $54,147 4.0%
Waste Cost of Inventory in Excess $31,257 5% $11,235 1% $42,492 3.1%
Waste Cost of Motion Waste $24,369 4% $35,158 5% $59,527 4.4%
Waste Cost of Excess Processing $17,235 3% $27,125 4% $44,360 3.3%
(-) Total Unplanned Cost $217,405 36% $210,174 28% $427,579 31.7%
(=) Margin after Total Cost to Serve $94,940 16% $219,807 29% $314,747 23.3%
PlannedCostUnplannedCost
AdministrativeCost
$
ProductLevelServiceLevelProductLevel
8Wastes-TheHiddenFactory
Supply Chain A Supply Chain B
CombinedMake to Stock(M1) Make to Order(M2)
Total Cost to Serve Rationalization

Procurement Function / Warehouse Dept. Mission: Performance Metrics
1. [RS 1.1] Order Fulfillment Cycle Time (<3 days)
2. [RL 1.1] Perfect Order Fulfillment (>98%)
3. [AG 1.4] Value at Risk (80% )
4. [CO 1.1] Total Cost to Serve (20% )
5. [EI 1.1] Miles travelled in supply chain (20% )
6. [EI 1.2] Eco-friendly raw materials (100%)
7. [EI 1.3] Index of supplier environmental sustainability (4.5)
Key Initiatives to realize Procurement / Warehouse
Dept. Mission: : Performance Metrics
1. Cost of Raw Materials (<25%)
2. Eco-friendly raw materials (100%)
3. Index of supplier environmental sustainability (4.5 or >)
4. Value at Risk (80% )
5. Short ships of raw materials by suppliers (0%)
Performance Metrics
1. Defects (<2%)
2. Packing Labor Cost (<4% of Revenue)
Performance Metrics
1. Accuracy of Inventory (>98%)
2. Avg. time to Pick and Ship Order (<40 min)
3. Perfect Order Fulfillment (>98%)
4. Miles travelled in supply chain (20% )
5. Total Cost to Serve (20% )
6. ABC Stratification (A=80%, B=15%, C=5%)
7. Rec. & Ship Labor Cost (<6% of Revenue)
8. Safety (0 injuries)
Performance Metrics
1. Machine Uptime (>95%)
2. Overall Equipment Effectiveness (85%)
3. Building Code Violations (0%)
PFW4 Ensure Effective Maintenance of Warehouse Equipment and
Layout. (Trish, Facilities Manager)
PFW1 Source eco-friendly rawmaterials for the manufacture of
AXY's products. Assure no stock outs of raw materials.
(Cathy, Procurement Manager)
PFW2 Assemble orders for shipment to customers according to
plan (Steve, Packing Manager)
PFW3 Manage Receiving of rawmaterials to Shipment of finished
goods. Ensure responsive, reliable, agile logistics.
(Kevin, Receiving and Shipping Manager)
Ensure that AXY, efficiently and effectively distributes superior
products made with 100% eco-friendly rawmaterials`
Janice Miller. Director of Procurement / Warehouse Operations
Align Corporate and Supply Management Strategies

Additional Strategic
Considerations

The BIG 6 Losses in Business | Are they Sustainable?
Big Loss #1
Equipment Failure: Loss Type, Availability Loss
Big Loss #2
Setup and Adjustments: Loss Type, Availability Loss
Big Loss #3
Idling and Minor Stops: Loss Type, Performance Loss
Includes: material jams, inaccurate settings, misaligned sensors
Big Loss #4
Reduced Speed: Loss Type, Performance Loss
Big Loss #5
Process Defects: Loss Type, Quality Loss
Big Loss #6
Reduced Yield: Loss Type, Quality Loss

`
ProcessMeasurement
MachinesPeople
No Standard Best Practices
Spaghetti Flows
Lengthy Changeover
Limited ROI Understanding
Lack of Preventative Maintenance
Reactive Maintenance
No Pre-Op Checks on EquipmentRoperto Multitasking
For Several years the Soup Production Process
has delivered product about 40% on time or 55%
below the expectation of its Internal Customer,
the Fill Process.In additional the communication
level from the Soup Production Process to the Fill
Process, has been only about 50% effective, or
50% below the expected level. The negative
FiscalImpact has been about $850,000,
Including several hours per day per person in
unplanned man hours and downtime.
ProblemStatementLimited Process Benchmarking
Platform not designed for urgency
Limited Process Data and Study
Scheduling without Time Elements
High Failure Rate
Unbalanced Metrics
Environment
Poor Work Station Planning
Lack of Training
Spaghetti Flows
Non Scaling of Recipes
Over processing
Lack of Standardization
Machine abuse
Lack of accountability
Poor Machine design Orics
Humidity in Printers
Limited Visual Controls
Limited Cross Training
limited Line Balancing Between cells
Fear of Change
Limited Error Proofing
MAJOR CAUSE: Lack of Training for
Labor Utilization and Accountability
Lack of accountability
Materials
Lack of accountability Lack of Supplier Accountability
Poor Quality Produce
Missing Out of Stock
Lack of Procurement Accountability/ Planning
Lack of Early Warning of Out of Stock
How Sustainable is the System?
Systems Thinking and Systems Settings
Leverage
Root Cause Analysis
The formula for the said interaction is Y=f(x). The output (Y or the Products delivered to customers) is a function of Supply
Chain Input and Process Variables or the (Xs).

The 3Rs Model for Waste Management
3Rs Model stands for Reduce, Reuse, and Recycle. The framework is in
response to a dramatic rise in the production of solid waste in the United
States of America.
Notes:
 The United States comprises about 5% of the world’s but consumes
between 20 to 25% of globe’s resources
 About 95 to 99% of items purchased are discarded after 6 to 8 months
The 3Rs Model is becoming a globally used waste management technique
to address the rising impact of unchecked consumerism.

The 3Rs Model for Waste Management
Reduce:
The first and most important tactic in a Waste Management Strategy is to reduce our consumption and demand for the items we buy.
The reduction mindset can yield tremendous benefit if leveraged in multiple dimensions. This concept can be leveraged on a
household, community, and organizational levels.
Businesses can help “Reduce” by:
 Reducing their scrap rates, thereby increasing their yields from the raw materials used in their processes to produce products and
services for consumption
 Reducing their raw material requirements to produce similar or better products and services
Key reduction objectives:
 Finding innovative methods including eco-friendly substitutes to increase product and service yields
 Reducing the energy requirements to produce products and services
 Reduce Operational Waste as a waste management tactic. The assessment, root causation, and elimination of the Hidden
Factory or 8 Deadly Wastes in organizations:
Defects waste
Over-production waste
Waiting waste
Neglect of Human Capital
Transportation waste
Inventory waste
Motion waste
Excessive processing waste

Strategic Fit
Product
Attractiveness
Market
Attractiveness
Leverages Core
Competencies
Reward vs Risk
Low Cost to
Develop
Intellectual
Property Potential
Decision
Product J 5 5 5 4 5 5 5 97 Proceed
Product D 4 5 5 5 4 5 5 94 Proceed
Product K 5 5 5 4 5 4 5 94 Proceed
Product A 5 5 4 5 5 5 4 94 Proceed
Product M 5 5 5 4 5 4 4 91 Proceed
Product I 5 4 3 5 5 5 4 89 Hold
Product F 5 4 4 4 5 4 4 86 Hold
Product N 5 4 4 3 4 5 5 86 Hold
Product G 4 5 3 5 3 5 5 86 Hold
Product C 4 5 5 4 4 4 3 83 Hold
Product B 2 3 4 2 5 5 5 74 Kill
Product L 3 4 4 3 2 5 5 74 Kill
Product H 2 2 3 3 2 5 5 63 Kill
Product E 3 3 2 3 4 1 2 51 Kill
Score Ranking Decision
90 to 100 A Proceed
80 to 89 B Hold
<80 F Kill
Strategic Buckets (Rating 1 = Low 5 = High)
New
Product Score
Product Rationalization

Developing a Sustainable Supply Chain Strategy

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