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Enhancing Supply Chain Management
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Categories of Tools

There are many different tools that companies use to better understand and manage the EHS aspects of their supply chain management strategies. Tools generally can be divided into the following categories:

  • Business process mapping tools are used to capture the dependencies and flows of information between business processes. Visual mapping techniques such as workflow analysis help to depict existing processes and to develop alternative, more streamlined processes.
     
  • Brainstorming tools are used to identify innovative opportunities for product development or business process improvement. For example, structured brainstorming is a key element of Six Sigma, a comprehensive approach toward eliminating waste and maximizing speed and efficiency. Six Sigma has been widely adopted by leading companies, such as 3M, Dow Chemical, DuPont, and Motorola (see case study). Many of the resulting projects have included EHS considerations.
     
  • Checklists and screening tools are used to review whether business decisions conform to company policies and guidelines. Many companies have incorporated EHS criteria, such as lists of preferred materials or points to consider, into business processes including procurement, outsourcing, and product development. For example, 3M has incorporated a life cycle management tool into their worldwide new product development process.
     
  • Quantitative decision support tools are used to evaluate and compare the costs, benefits, and risks associated with specific projects or business decisions. For example, BASF Corp. has utilized an Eco-efficiency Analysis tool to develop products and processes with a reduced environmental footprint and lower life cycle costs. The tool has been used in over 100 different BASF product applications such as asphalt microsurfacing, nylon fiber, building materials, automotive coatings, plastics, and adhesives, and the results have influenced business decisions regarding capital investments, process selection, and supply chain partnershipss.
     
  • Full cost accounting tools provide a means for measuring the true costs associated with a product or process. One example is an EPA guidebook that synthesizes best practices in improving both financial and environmental performance through materials management. Another important quantitative tool is the Total Cost Assessment (TCA) approach developed through a collaborative project involving several GEMI member companies, including Bristol-Myers Squibb, Dow Chemical, Eastman Kodak, Georgia Pacific, and Merck. This methodology seeks to quantify the full monetary impact of business decisions, including indirect EH&S-related costs, contingent liabilities, and intangibles such as public perception. For example, Dow Chemical has used TCA to supplement conventional accounting methods and influence major business expansion decisions.
     
  • Performance measurement tools are used to evaluate and track the results of improvement initiatives. A variety of resources are available for selecting EHS metrics that align with supply chain performance, and the process of environmental performance evaluation has become standardized as part of the ISO 14000 series of environmental management system standards. The types of performance indicators used in conventional EHS reports include wastes and emissions, lost-time injuries, notices of violation, and spills and releases. More recently, many companies have adopted value-oriented EHS indicators such as eco-efficiency. Supply chain EHS performance measurement is challenged by boundary issues - for example, should a company be accountable for emissions from outsourced operations? Also, expansion of EHS concerns to include social responsibility presents new challenges, since the measurement of human well-being introduces subjective and intangible factors. A popular system for combining financial, operational, and organizational process indicators is the Balanced Scorecard, which is well suited for supply chain applications.
     
  • Risk management tools are used to identify, assess, and mitigate a variety of risks to the enterprise, including business interruption and EHS liabilities. Traditional risk management has focused on insurance strategies, but modern risk management has expanded to include a broad range of proactive techniques for analyzing and controlling risks in many different arenas - markets and currency, political and social, technical innovation, project management, safety and security, and others. EHS risk management focuses specifically on threats to human health, safety, and the environment. There are a broad variety of risk management tools in use, ranging from qualitative hazard identification and screening tools to sophisticated probabilistic risk assessment.
     
  • Life cycle assessment tools provide a systematic method for identifying and quantifying the environmental burdens associated with the life cycle of a product or process. Pro-active companies usually consider the full life cycles of their products and services, including resource extraction, procurement, transportation, manufacturing, product use, service, and end-of-life disposition or asset recovery. A life cycle inventory can be used to profile the system-wide energy and material consumption and waste generation in terms of flows per functional unit. Life cycle impact assessment attempts to evaluate the actual significance of these flows in terms of human effects and ecosystem perturbations. Despite uncertainties and data quality issues, life cycle methods can be useful for relative comparisons of alternative system designs, thus supporting supply chain business decisions.
     
  • Environmental management systems are analogous to quality management systems such as ISO 9000, except that they address EHS rather than product quality. They establish a repeatable, verifiable process whereby companies can set performance objectives, measure their progress in meeting those objectives, and pursue continuous improvement. There are a variety of different frameworks in use today, ranging from company-specific systems to international standards such as ISO 14000 that require external verification. Standards bodies are exploring the potential for integrating standards for quality, environment, health and safety, and even social performance into a single system. Many companies have already developed in-house management systems that integrate EHS and sustainability considerations, often extending to relevant aspects of supply chain performance.
     
  • Responsible Care® is a global chemical industry initiative to safely handle products from inception in the research laboratory, through manufacture and distribution, to ultimate disposal, and to involve the public in decision-making processes. Born in Canada in 1987, Responsible Care has spread to 45 countries, and is administered in the U.S. by the American Chemistry Council. The program includes basic codes of management practice that cover EHS concerns in the areas of Community Awareness and Emergency Response, Distribution, Process Safety, Occupational Health and Safety, Pollution Prevention, and Product Stewardship. It also includes Supply Chain Protocols for evaluating the EHS practices of carriers, and offers partner memberships to chemical industry suppliers. Recent program enhancements include management system protocols, and a new Security Code.

     
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