‘When we walk away from global warming, when we don't advance and live up to our own rhetoric and standards we set a terrible message of duplicity and hypocrisy.’

– John Kerry

8.1. Introduction

A supply chain, in simple terms, is a network between the suppliers to source the materials, the producer to convert them into products and the distributors to distribute the products to customers. The network could be complex involving many activities, people, facilities, information, processes and systems. In a typical supply chain, raw materials are procured (some local and some imported) and items are produced at one or more factories, transported to warehouses for intermediate storage and then transported locally and internationally to retailers or customers. With supply chain management the flow of materials and flow of information across traditional functional boundaries is seen as a single process. These flows are depicted in a simplified model in Figure 8.1. Thanks to ease of travel, the media and the ‘world wide web’ customers have never been more informed than they are today and they know what they want. This is especially true in service industries. As a result of the heightened expectations of customers, operations managers in service sectors also have been forced to using the principles of supply chain management.

If we look at a supply chain in another way, it is made of how we grow and procure things (land and agriculture), how we make things and provide services (industry) and how we get around (transport). As shown in Table 7.1, this chapter on green supply chain will include agriculture and land and industry. The green supply chain in total accounts for 45% of greenhouse gas emissions. This chapter will analyse the challenges and opportunities in green supply chain and also the role of Green Six Sigma to accelerate and sustain the outcomes.

Environmental regulations are also changing the way in which supply chains are designed and managed. The problem is that the sheer number of rules, other influences such as changing consumer sentiment, and the complexity of global trade make it difficult for companies to decide exactly how they should respond to these pressures. Firms must also address the ethical requirements of their corporate social responsibility (CSR).

On a global scale, industrial pollution is one of the main contributors to the so-called ‘greenhouse’ effect and global warming. It is important to note that environment and safety are not just social or political issues; they are vital ingredients contributing to the performance of an organisation. In manufacturing industries, there is much scope for environment and safety. The agriculture sector appears to present a picture of green pastor but a large proportion of methane gas is emerging from the cattle and sheep farming activities. Apart from humanitarian reasons it is a truism that accidents cost money. Likewise, many businesses and organisations are facing declining reserves of natural resources, increased waste disposal costs, keener interest in their human rights records and tighter legislation.

These rising environmental pressures and social expectations can be turned to commercial advantage if a strategic approach is taken to develop a Green Thinking policy as described in the next section. Green Thinking is exactly on the same page as climate change initiatives. The strategic approach of Green Thinking entails complex longer-term considerations involving not just industry but environment protection by regulations as an important international issue. Therefore, it is inevitable that no organisation can in the long term hope to avoid legislation and regulations designed to support the spirit of Green Thinking. In fact, well-designed Green Thinking strategies can lead to sustainable business advantages.

Such a policy should be supported by a process to implement its objectives. Here Green Six Sigma can play its part and contribute its own specific role in this global challenge and opportunity. In the domain of quality and holistic processes, the specific methodology of Green Six Sigma (which, as we know, is evolved from Six Sigma methodology) could be such a process to support a Green Thinking Strategy. The aim of this chapter is to review some of the critical issues and initiatives of Green Thinking under the following headings:

• Green Thinking and Climate Change Initiatives
• Why Green Six Sigma Is Relevant to Green Supply Chain
• Green Initiatives by Manufacturers and Suppliers
• Green Initiatives by Retailers
• Green Initiatives by Consumers
• Green Initiatives by Farmers
• Green Initiatives by Government and Non-profit Organisations
• How Green Six Sigma Can Help Green Supply Chain

8.2. Green Thinking and Climate Change Initiative

The concept of Green Thinking is not new. Pearce (1992) analysed the relationship with Nature and the environmental strategies identified with the Green Movement. Elkington (1994) coined the phrase ‘triple bottom line’ as a new concept of accounting practice. The triple bottom line or TBL (and also known as ‘people, planet, profit’) captures an expanded spectrum of values and criteria for measuring organisational success: economic, environmental and social. TBL is not without its critics and it is now more aligned with corporate social responsibility (CSR). Sustainability or sustainable development was first defined by the Brundtland Commission of the United Nations (1987) as ‘the needs of the present without compromising the ability of future generations to meet their own needs’. As discussed in Chapter 2, this then led to the United Nations initiative of the UNFCCC environmental treaty addressing climate change signed by 158 states at Rio de Janeiro in 1992 and then other international and climate change initiatives.

With the above background the author has developed the 3Es model (Efficiency, Environment and Ethics) as the three dimensions of Green Thinking. As shown in Figure 8.2, each aspect includes specific attributes, e.g. Efficiency relates to Lean Thinking, Energy Saving, the Green Economy and Green Logistics. Better training, greater awareness and improved communication on green issues characterise the Green Economy of an organisation. Green logistics refer to buyer companies requiring a certain level of environmental responsibility in the core business practices of their suppliers and vendors. Ethics include issues and processes related to health and safety, fair trading, carbon footprint and CSR. The most important dimension is Environment containing pollution control, resources (including energy), conservation, climate change and biodiversity. Climate Change relates to the factors (such as CO₂ emission) causing the longer-term alterations in weather statistics. Major energy companies like BP (www.BP/sustainability) are focusing on new energy technology and low carbon energy products in alternative sources, such as wind, solar, biofuels and carbon capture and storage (CCS). The variety of life on Earth or its biological diversity is commonly referred to as ‘biodiversity’, where each species, no matter how small, has an important role to play.

The primary focus of Green Thinking is on the Environment and its sustainability while Efficiency and Ethics contribute to the quality and sustainability of Environment. Therefore, the three dimensions and their attributes are interrelated. For example, energy saving and green logistics in Efficiency are closely linked to Environment. Likewise, the pillars of fair trading and carbon footprint within Ethics are intimately related to Environment.

The concept of Green Thinking is clearly incontrovertibly linked to climate change initiatives. Therefore Green Initiatives, based on the concept of Green Thinking, also mean climate change initiatives.

8.3. Why Green Six Sigma is Relevant to Green Supply Chain

As discussed in Chapter 4, the significant bottom line results and extensive training deployment of Six Sigma and Lean Six Sigma must be sustained with additional features for securing the long-term competitive advantage of a company. If Lean Six Sigma provides agility and efficiency, then measures must be in place to develop a sustainable fitness. The process to do just that is FIT SIGMA (Basu, 2011). In addition, the control of variation from the mean in the Six Sigma process (σ) is transformed to company-wide integration via FIT SIGMA methodology (Σ). FIT SIGMA is therefore synonymous with ‘FIT Σ’. Furthermore, the philosophy of FIT Σ should ensure that it is indeed fit for all organisations – whether large or small, manufacturing or service. Green Six Sigma is the recast of FIT SIGMA adapted specifically for Green Thinking or climate change initiatives with additional processes to ensure the sustainability of the environment.

Four additional features are embedded in the FIT SIGMA philosophy to create the sustainability of processes and performance levels. These are:

• A formal senior management review process at regular intervals, similar to the Sales and Operational Planning procedure
• Periodic self-assessment with a structured checklist that is formalised by a certification or prize, similar to the EFQM award but with more emphasis on self-assessment
• A continuous learning and knowledge management scheme
• The extension of the programme across the whole business to ensure Green Thinking with the shifting of the theme from the variation control (σ) of Six Sigma to the integration of a seamless organisation (Σ)

The additional features of Green Six Sigma to ensure the sustainability of the environment are:

• A formal extension of DMAIC (Define, Measure, Analyse, Improve and Control) methodology to DMAICS (Define, Measure, Analyse, Improve, Control and Sustain)
• Inclusion of the above features of FIT SIGMA to create the sustainability of the processes and performance levels
• Additional processes to ensure the sustainability of the environment with additional processes and tools including Material Flow Account and Carbon Footprint Tool

Green Thinking can leverage the contents of Green Six Sigma to achieve the specific environmental and business goals of supply chain stakeholders. For example, the Value Stream Mapping of Lean Six Sigma (to pinpoint waste) can be adapted to create Green Value Stream Mapping (to identify carbon footprints). Likewise, ‘Voice of Environment’ can represent the growing prevalence of environmental drivers not captured in ‘Voice of Customer’.

8.4. Green Initiatives by Manufacturers and Suppliers

It is reasonable to state that manufacturing industries are major players regarding greenhouse gas emissions accounting for 21% of the total. Industries in the green supply chain must address health and safety in addition to the environment. However, when the issues relate to health and safety, whether for products or workplaces, they apply seriously to both manufacturing and service organisations. Lack of safety in the product or in the workplace will inevitably cost money. Accidents mean lost production time plus time wasting inspections by government officials. They may also incur legal costs as well as the expense of correcting the situation. It has to be cheaper to do it right the first time. One of the better known environmental standards is put forth by the International Organisation for Standardisation (ISO), known as ISO 14001. Basu and Wright (2003) have established that environmental protection relates to pollution control in two stages. Conventional restraints or ‘first generation pollution’ controls are applied to pollution in air and water and regarding noise created in the manufacturing process. Such jurisdictions are usually regulated by legislation. There is also a ‘second generation pollution’, which relates to the problems caused by the usage of certain products and chemicals over a long period. The most widespread example of such ‘second generation pollution’ is the contamination of land that permeates ground water.

The primary focus of climate change initiatives is the reduction of greenhouse gases. Therefore each major manufacturing company is expected to have a carbon neutrality strategy that is to achieve the net-zero carbon footprints by 2050 or earlier. I propose a three-step carbon management strategy as follows:

1. Develop a Total Supply Chain Emission Chart
2. Follow a Carbon Management Action Plan
3. Coordinate and share carbon management actions with key stakeholders

A typical Total Supply Chain Emission Chart is shown in Figure 8.3. This chart is the starting point of measuring and monitoring carbon footprints and initiating Carbon Management Action Plan.

A Carbon Management Action Plan should follow the following hierarchy as proposed by Watt (2012):

• Avoid
• Reduce
• Replace
• Offset

Here are some tips to follow a Carbon Management Action Plan. Avoid carbon intensive materials (e.g. steel and cement) and activities (e.g. air travel). Reduce waste and do whatever you do more efficiently (e.g. apply Green Six Sigma tools). Replace high-carbon energy sources with low carbon energy ones (e.g. substitute plastics packaging). Offset those emissions that cannot be eliminated by the above. Unfortunately, the process of offsetting is rather less straightforward. A carbon offset is used to reduce greenhouse gas emissions in order to compensate for the emissions made elsewhere. Businesses can buy carbon credits generated by projects that are cleaning up our atmosphere.

We are still left with the environmental challenge with three major materials for the industry – steel, cement and plastic. When we produce steel or cement tonnes of carbon dioxide are released, but when we make plastic around half of the carbon stays in the plastic. However, plastics can take hundreds of years to degrade. Additional research is needed specifically for these three heavily used materials beyond the scope of Green Six Sigma. The following Case Example 8.1 shows that some progress has been made in manufacturing ‘fossil-free steel’.

At this stage we can also follow the hierarchy of Avoid, Reduce, Replace and Offset. If we encourage companies to share their climate change initiatives with their key stakeholders up and down the supply chain then we are likely to get radical responses. For example, Marks & Spencer may correctly decide to work with agricultural suppliers to ensure a future supply of low carbon products, and Unilever may correctly decide to influence consumer habits to use low carbon ethically sourced products.

8.5. Green Initiatives by Retailers

Global retail giants Walmart and Carrefour, as well as other supermarkets all over the world, are responding to the pressures on packaging waste reduction and the additional environmental issues involved in the green supply chain. It is important to consider replacing all non-recyclable packaging materials as far as possible. PET, which stands for polyethylene terephthalate, is a form of polyester and is recyclable.

Recent media reports are loaded with announcements on ‘greening the supply chain’ from large retail groups. Walmart, a US company and the world's largest retailer, unveiled its packaging scorecard to major suppliers such as Proctor & Gamble, Unilever and Nestle, which was designed to cut packaging. Walmart hopes that the scheme will reduce packaging across its global supply chain by 5% by 2013.

British supermarkets have taken the initiative in becoming more environmentally aware. ASDA supermarket, a subsidiary of Walmart in the UK, claimed, as an example, that taking pizzas out of cardboard boxes saved 747 tonnes of cardboard in a year. UK supermarket Sainsbury announced in October 2006 that 500 of its own-brand goods would be presented in compostable packaging. ‘Friends of the Earth’, a non-profit organisation in the UK, gave a cautious welcome to Tesco's new environment fund of $100 million but said the supermarket giant still had a very long way to go if it was serious about greening its operations. Tesco would need to address a number of key areas if it was serious about reducing its environmental impacts. These include moving away from car-dependent stores, switching from its global supply chain, radically improving energy efficiency in its stores and cleaning up its supply chains.

Perhaps the best example of a company devoting itself to acting upon environmental issues is the British retailer Marks and Spencer. Their website (marksandspencer.com/about) detailed the evolution of their ‘Plan A’ scheme, and M&S launched Plan A in January 2007, which listed 100 commitments that the firm aimed to achieve within a five-year timeframe. Since then, M&S have extended this commitment to encompass 180 goals that they wished to attain by 2015. Their proudly stated aspirations included ‘working with our customers and our suppliers to combat climate change, reduce waste, use sustainable raw materials, trade ethically, and help our customers to lead healthier lifestyles’ and that they have ‘the ultimate goal of becoming the world's most sustainable major retailer.’

Even the airlines, the biggest polluters with their CO₂ emissions, have joined the green bandwagon. Richard Branson committed the next 10 years of profits for Virgin – around $3 billion – to fighting global warming.

There has been stronger emphasis to introduce ethical, fair trade, organic and bio products to the consumer. The following case example of ‘Carrefour Bio Coffee’ illustrates that, by promoting unbranded 500 g/1 kg coffee in bags as ‘organic coffee to support fair trading’ in 1997, sales increased by 80% in four years.

Such is the importance of a company displaying its eco credentials that there is a growing awareness that communicating their efforts to the consumer leads to favourable publicity and an enhanced reputation of the brand. Indeed, close perusal of any paper media advertising will reveal how many companies actually seem to be using newspapers and magazines to broadcast their environmentally conscious efforts instead of boasting about their products. In today's climate, ecological issues are such a current and hot topic that firms realise that they can tap into the public consciousness and portray themselves as ‘green’, thus superseding the traditional tenets of advertising, the focus on the goods themselves. This method is used not only by supermarkets but by manufacturers of white goods or motor cars (emphasis on energy efficiency of products), petroleum firms, energy companies and so on. The reader can also examine everyday objects to see this principle in action; the covers of recently published books (which inform us of their use of paper from sustainable forests) or the packaging of almost any food or cosmetic item to see details of the sustainability of their source materials.

8.6. Green Initiatives by Consumers

Consumers have both the power and responsibility to enhance the activities and effectiveness of the green supply chain. It is the consumer who pays for the end product or service, and it is the consumer who ultimately suffers or benefits from the resultant impact on the environment. Green initiatives from consumers could be manifested in three ways:

• Make your home green
• Feedback to retailers
• Reverse supply chain

‘Make you home green’ is becoming a conscious target of many consumers. This is effected in two paths. Firstly, consumers are attempting to minimise ‘carbon emission’ by making houses and household appliances more energy efficient and also by moving towards eco-friendly transport. Secondly, encouraged by local authorities, consumers are making commendable efforts in the recycling of household wastes by the provision of green (compostable) waste, paper and glass bins for the home, use of local recycling centres, etc. The retrofitting of homes to ‘make your home green’ will be discussed further in Chapter 10.

A reverse supply chain is a process of getting goods from the customers back to the manufacturers. This is a relatively new trend in supply chain management that focuses on ‘green manufacturing’ to target recycling, recovery and remanufacturing systems. In these reverse networks, consumers bring products to a retailer or a collection centre. For example, supermarkets in Germany have a bin where customers leave used batteries. Depending on the particular product, it can be refurbished, remanufactured or recycled, making sure the physical flow is efficient. It is estimated that 63 million personal computers worldwide became obsolete during 2003 and about 10 million electric waste products are dumped per year in Japan. By 2030, the obsolete PCs from developing regions will reach 400−700 million units, far more than from developed regions at 200−300 million units. The principle of the ‘circular economy’, i.e. reuse, repair, refurbish and recycle, is appropriate for domestic appliances, minimising the use of new ones and the creation of wastes (Yu et al., 2010).

Mobile phones can be returned to the store where the new one is purchased. From there, the phones are resold and reused in other countries where the very technology that is being phased out in developed countries are being introduced. Many other products have the potential for second use, including computers, auto parts, printer cartridges, refillable containers and a host of other possibilities. In remanufacturing, reverse logistics introduces additional challenges to planning for a closed-loop supply chain. The planning, sourcing, making and delivery of the products are affected by the reverse flow of used products and materials for subsequent consumption in the manufacturing of new products. Reverse logistics play a key role as retail organisations tend to look at their reverse supply chains more closely to enhance customer satisfaction, cost/time efficiencies and supplier performance.

8.7. Green Initiatives by Farmers

Agriculture and land is a primary link of green supply chain, and farmers are its major stakeholders, although it is unreasonable to make the farmers alone responsible for this sector. This sector, accounting for 24% of the total greenhouse emissions, covers a large range of human activities, from raising animals to growing crops and harvesting trees. With agriculture the main emission is not carbon dioxide but methane and nitrous oxide. Methane causes 28 times more warming than carbon dioxide and nitrous oxide, and though low in its share of all greenhouse gases, causes 265 times more warming. Scientists estimate that the emission from agriculture and animal farming is more than 7 billion tonnes of carbon dioxide equivalent per year. Another big challenge is deforestation and other uses of the land, which together is adding about 1.6 billion tonnes of carbon dioxide every year and destroying essential biodiversity.

The agriculture and land sectors offer more challenges but there are not many breakthrough solutions. Let us address some of these challenges. The first challenge is our food habits and the rapid growth in population. The world population has more than doubled within the last 50 years to the current level of 7.9 billion people. As people are getting richer they eat more meat and dairy products. Although there is little growth in meat consumption per person in the USA, Europe and Latin America, it is climbing rapidly in China. The supply of meat and dairy is coming from cows, sheep and pigs. The enteric fermentation in cattle is emitting methane equivalent to 4% of all greenhouse gas emissions. The excrements from farm animals also release a mix of powerful greenhouse gases – mostly nitrous oxide and some methane.

There is some progress with a compound that has to be administered to the cattle every day to reduce methane emissions by about 30%. This is not a winning area. We could try by applying the principle of the circular economy, which is to replace and reduce. There is an active ‘vegan movement’ that we should just stop raising livestock for food only. There are some successful developments of plant-based meat and lab cultivated meat. There is another way we can reduce emissions from the meat that we eat by wasting less of it. In the USA more than 40% of food is wasted. One good news is that the productivity of grain farming (e.g. rice, wheat and corn) has increased many-fold by two main factors – innovation (e.g. Borlaug's semi-dwarf wheat), mechanisation and fertilizers. However, a fertilizer is also a mixed blessing. The nitrogen from the fertilizer escapes into the air as nitrous oxide.

A large contributor (30%) of greenhouse gases in the agriculture and land sector is ‘deforestation’. For example, Brazil's forests have shrunk by at least 10% since 1990 to clear it for pastureland for cattle. When a tree is removed the stored carbon gets released into the atmosphere as carbon dioxide, while a tree in the rainforest can absorb 4 tonnes of carbon dioxide over 40 years. A popular process of carbon offsetting is the planting of trees. However, scientists have estimated that to offset the life-long emissions of one person we would need around 20 hectares worth of trees. Trees with a higher carbon absorption capacity (e.g. American Sweetgum tree, European Beech tree, Silver Maple tree, seagrass) should be preferred for new plantation.

8.8. How Green Six Sigma Can Help the Green Supply Chain

The tools, techniques and processes of Green Six Sigma can provide an effective framework to implement the initiatives in all three dimensions of Green Thinking, viz. Efficiency, Environment and Ethics.

8.9. Summary

‘The scientific evidence is now overwhelming: climate change is a serious global threat, and it demands an urgent global response,’ concludes Nicholas Stern (2006).

It should be noted that this view has been disputed, especially by fossil fuel lobbyists. However, irrespective of what we believe, the pressure is on for industry and nations to adopt a green approach to the supply chain. In this chapter we have attempted to present a balanced view of various initiatives adopted by manufacturers and suppliers, farmers, retailers and also consumers. Every stakeholder has a role and responsibility in ‘greening’ the supply chain. We have shown that there are commercial benefits in reducing wastes (e.g. excessive packaging). Large retailers like Walmart, Carrefour and Tesco are probably facing disproportionate demands from environmental pressure groups and regulatory bodies but nonetheless are displaying visible efforts to respond to these demands.

Quality as a whole can play a major role in raising the awareness of Green Thinking and sustainable developments. In this chapter, mainly the impact of Green Six Sigma and Six Sigma programmes (which are part of the quality movement) are touched upon. Learning from the proactive focus on Green Thinking in the Six Sigma programmes of leading organisations like GE and 3M, the adaptive tools and processes of Green Six Sigma could be appropriately applied by all organisations in their Green Thinking initiatives. Edward de Bono of Indigo Businesses Services (de Bono, 2016) also suggests the inclusion of ‘Green Hat’ in his concept of ‘Green Thinking Hats of Six Sigma’. In addition to following the fundamental tenets of Six Sigma the additional features of Green Six Sigma should bolster the sustainable climate change initiatives of the stakeholders of the green supply chain.