these five basic processes, the SCOR model defines a set of hierarchical indicators which allows to capture the asis state of a process and then deriv

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1 The GreenSCOR: a critical assessment for supporting effective green supply chain management Maria Grazia Gnoni*, Alessandra Lanzilotto* *Department of Innovation Engineering, University of Salento, Via per Monteroni, 73100, Lecce Italy (mariagrazia.gnoni@unisalento.it, alessandra.lanzilotto@unisalento.it) Abstract: Measuring and comparing environmental performance of supply chains are currently an open research problem. Even if several standards are wide spreading for measuring environmental performance characterizing company internal processes, few reference models have been yet fully applied at a supply chain level. On the other hand, by focusing on supply chain process performance analysis, one reference model is the well-known SCOR Model, developed by the Supply Chain Council. The SCOR is a benchmarking model aiming to link business process, metrics, best practices and technology features into a unified structure to improve the effectiveness of supply chain management. Recently, this model has been updated by a new component, the GreenSCOR, aiming to introduce environmental performance analysis for green supply chain management. The aim of this study is to critically compare this recent model with another well-known standard, i.e. the family of ISO and in particular ISO 14001, applied worldwide to assess environmental performance of a process. Thus, even if the ISO standard has not been developed specifically for supply chains, it now represents a reference model for monitor environmental impacts of a process. The comparison aims to outline common points and differences in order to support practitioners and researchers in analyzing the most suitable approach for measuring environmental performance of a supply chain. Keywords: GreenSCOR, ISO 14001, green supply chain management, environmental performance. 1. Introduction As a lot of companies worldwide are applied from several years environmental management systems to assess and control their environmental performance, an emerging interest is now wide spreading towards green supply chain management approaches. One main purpose of green supply chain management models is measuring environmental performance of a supply chain. Although several standardized models have been defined for measuring environmental performance of a product in all its life cycle (e.g. ecological footprint, life cycle analysis), few standardized models have been defined to measure in a structured way overall environmental performance of a supply chain as a whole. Thus, the aim of this study is to critically analyze two reference models - the ISO standard and the GreenSCOR - which could be applied to measure environmental performance of a supply chain. The two models are based on different approaches: the ISO focuses to support an effective environmental management system at firm level; on the other hand, the GreenSCOR has been derived from the well-known SCOR Model applied since several years to measure performance of a supply chain. The analysis will outline positive and negative features of both models aiming to support environmental experts to design more effective performance assessment systems. The paper has been organized as follows: after a deep description of both models (see section 2 and 3), the critical comparison has proposed in section The GreenSCOR The Supply Chain Operations Reference Model (known as SCOR Model), defined by the Supply Chain Council (SCC), a global non-profit organization, provides a unique framework that links business process, metrics, best practices and technology features into a unified structure. The aim is to support standard communication among supply chain partners thus improving the effectiveness of the whole supply chain. The SCOR model has been developed to describe all business activities developed for satisfying customer demand. The model is organized in the five main processes characterizing a generic supply chain: plan, source, make, deliver and return. These processes involve all phases in a supply chain from customers interactions (e.g. order entry through paid invoice) to physical material transactions (e.g. including equipment, spare parts, bulk products, software, etc.) and market informative interactions (e.g. from aggregate demand planning to order fulfilment). By decomposing each supply chain in 256

2 these five basic processes, the SCOR model defines a set of hierarchical indicators which allows to capture the asis state of a process and then derives the desired to-be future state. SCOR levels start with the five fundamental processes which represent the Level 1. Complex supply chains are made up of multiple combinations of these basic processes (Elia et al., 2010). Next, at Level 2, processes are further decomposed into process categories depending on the specific management logic characterizing the process: Make-to-Stock, Make-to-Order and Engineering-to-Order. These process categories contain elements representing the third level in SCOR model: each process at Level 3 is decomposed in sub-activities characterizing each specific management logic; performance metrics are defined for each of them. Cost, the cost of operating the supply chain processes. This includes labour costs, material costs, management and transportation costs. A typical cost metric is cost of goods sold. Assets Management, the ability to efficiently utilize assets. Asset management strategies in a supply chain include inventory reduction and insourcing versus outsourcing. Metrics include: inventory days of supply and capacity utilization. As an attribute cannot be measured, the metrics measure the ability of supply chain to achieve these strategic attributes (Supply Chain Council, 2010). The metrics, available in all three levels of analysis, become increasingly specific as you advance from one level to the next. Recently, this hierarchical model has been updated by adding new features defined as the GreenSCOR - regarding how measuring environmental performance in a supply chain. This new model proposes a set of strategic green metrics that can be added to the traditional SCOR Model for developing an effective environmental accounting system for a supply chain. Five main key performance metrics have been introduced: they are listed in Table 1. Figure 1: SCOR levels (Supply Chain Council, 2010) The SCOR model introduces five performance attributes, grouping of metrics used to express a strategy: Reliability, the ability to perform tasks as expected. Reliability focuses on the predictability of the outcome of a process. Typical metrics for the reliability attribute include: on-time, the right quantity, the right quality. Responsiveness, the speed at which tasks are performed. The speed at which a supply chain provides products to the customer. Examples include cycle-time metrics. Agility, the ability to respond to external influences, the ability to respond to market place changes to gain or maintain competitive advantage. SCOR agility metrics include flexibility and adaptability. Metric Units Basis Carbon Air pollutant Liquid waste generated Solid waste generated % recycled waste Tons CO2 equivalent This is the unit of measure currently used for green house gas and is a measure of the climate impact from CO2 and other global warming air. Tons or kg This would include of major air pollutants (COx, NOx, SOx, Volatile Organic Compounds (VOC) and Particulate). Tons or kg This includes liquid waste that is either disposed of or released to open water or sewer systems (these are generally listed on water permits). Tons or kg The total solid waste generated by the process. Per cent The per cent of the solid waste that is recycled. Table 1: The GreenSCOR environmental metrics These metrics, considering the main environmental impacts of each industrial activity, can be measured for 257

3 each of SCOR Level 3 and then aggregated to create Level 2 and Level 1 metrics. Considering Carbon Emissions metric, at Level 1 it becomes Total Supply Chain Carbon Footprint, i.e. the sum of the carbon equivalent associated with Level 2 processes of plan, source, make, deliver and return. Figure 2: the hierarchical structure of metrics in GreenSCOR model (at level 1) As an example, by decomposing a Level 2 metric the Source Carbon Emissions could be defined as the sum of carbon assessed for Supplier Management (defined as the overall contribution due to material planning, planning procurement staff, supplier negotiation and qualification, etc.) and Material Acquisition Management (defined as the overall contributions due to incoming material inspection, material storage, payment authorization, etc.). Figure 3: the hierarchical structure of environmental metrics in GreenSCOR model (at level 2) The Figure 4 summarizes through SWOT analysis strengths, weakness, opportunities and threats of GreenSCOR in green supply chain management. Figure 4: the proposed SWOT analysis about the GreenSCOR 3. Analysis of the ISO standard for effective green supply chain management Since several years, the interest of companies towards the application of international standards for improving their environmental performance is increasing worldwide; an emerging interest is now focusing to expand the focus not only to a single firm but to the whole supply chain. One well-known standard for measuring environmental performance of a firm is the ISO standard; increasing interest is emerging towards its application in a wider way, i.e. at the supply chain level. The acronym ISO identifies a set of international standards related to environmental management of organizations established by International Organization for Standardization (ISO). Among the rules addressed to organizations, the main is the ISO that provides standard requirements for the certification of an Environmental Management System (EMS). The proposed approach is PDCA methodology or Deming cycle (based on cycle Plan-Do- Check-Act) allowing you to structure a system where a company can develop an environmental policy, establish objectives and processes to achieve commitments set out in the policy, take the necessary action to improve its performance and demonstrate system conformity to standard requirements. Therefore the standard doesn't establish any specific criterion of environmental performance but it only presents a methodology to monitor and possibly improve the environmental aspects identified by the organization itself. Unlike the SCOR, there aren't metrics and there isn't an hierarchical structure. The processes are not classified a priori in types such as plan, source, etc. but they are analyzed exclusively in terms of environmental impacts. ISO registered facilities are more likely to formalize their commitment to achieving environmental 258

4 performance goals becoming an integral element of their operational strategies. ISO does not require facilities to assess the environmental impacts of their supply chain decisions, for this reason the link between ISO and green supply chain management has been little attention. To understand this relation, it is important to define the supply chain impacts on environment. According to Arimura et al. (2011), they derive from: inputs increasing waste during product storage, transportation, processing, use or disposal. Facilities purchasing inputs from a specific supplier also acquire waste from each supplier up the supply chain, so the purpose is to avoid inheriting environmental risks from less environmentally conscious suppliers; supplier s processes affecting environmental impacts of their products but have no direct bearing on the purchasing facility s environmental liability. Companies undertaking green supply chain management generally verify the environmental performance of their suppliers and require them to undertake measure ensuring the quality of their products and processes. Companies with certified environmental management systems show an higher tendency towards measuring supplier performance: a recent study (Arimura et al., 2011) have reported that these companies are 40% more likely to assess their suppliers performance and 50% more likely to require that their suppliers undertaken specific environmental practices. Furthermore, Nawrocka at al. (2009) have discussed how the application of the ISO standard have contributed to increase effectiveness in three key operational tasks for supporting more effective green supply chain management, such as communication between a customer and a supplier, motivation of a supplier company to comply with the requirements, and, the application of a an efficient performance control mechanism. The ISO has a facilitating role in the environmental activities between a customer and a supplier. For example, if both companies are certified according to the standard, this creates confidence and brings companies closer and thus, communication of environmental requirements will be facilitated. A closer relationship with suppliers, if one side was seen as difficult as many companies source from a large pool of suppliers, on the other side was seen as beneficial both for the successful outcomes of projects and as facilitator for environmental work. Using SWOT analysis it's possible to highlight the main benefits and disadvantages of ISO in green supply chain management (Figure 5). Figure 5: the proposed SWOT analysis about ISO ISO versus GreenSCOR: a critical assessment It has to be noted that GreenSCOR and ISO have different approaches to the management of environmental themes concerning supply chains: the main difference is that, differently from the ISO standard, the GreenSCOR has been developed specifically for a supply chain. However, a comparison between these two approaches could be effective in order to outline limits and positive features of both models for assessing the environmental footprint of a supply chain. As mentioned in Appendix A.3 of ISO (2004), even if the standard does not outline a single approach to identify environmental aspects, main impacts which have to be assessed are: into atmosphere, discharge into water bodies, discharge into soil, use of raw materials and natural resources, use of energy, emitted energy (e.g. warmth, radiation, vibration), waste and by-products. On the other hand, metrics proposed in the 10.0 version of the GreenSCOR are quite different (Supply Chain Council, 2010); they are schematized in the Table

5 Level 1 Level 2 Total supply chain carbon footprint Total supply chain environmental footprint Plan carbon Source carbon Make carbon Deliver carbon Return carbon Total supply chain air Total supply chain liquid Total supply chain solid waste % waste recycled Table 2: GreenSCOR metrics (Level 1 and Level 2) Next, by crossing the two models, several interactions could be also evaluated: Figure 6 shows the overlapping between metrics defined in the Green SCOR model and impact categories defined in the ISO standard. In order to highlight this correspondence, the intersection between the line of impact and the column of metrics is colored. Figure 6: Estimated interactions between the ISO standard and the GreenSCOR model The impact into atmosphere could be measured with total supply chain air that, as described in Table 1, includes of major air pollutants. Discharges into water bodies and discharges into soil could be linked to total supply chain liquid. The impact emitted energy could be associated to the metrics plan, source, make, deliver and return carbon because, in the definition of carbon, compare the concepts of climate impacts of CO 2 and other warming air emission and green house gas. The waste could be measured through total supply chain solid waste and % waste recycled. The impact use of energy could be considered through the from energy consumption being part of the metric plan, source, make, deliver and return carbon. It could be outlined that that SCOR metrics do not consider the consumption of natural resources. 5. Conclusions Sensitivity to environmental issues is involving more and more realities and recently, also for the supply chain, we talk about goals in terms of environmental performance. The supply chain, compared to a single company, is more complex and difficult to manage even from an environmental point of view because several companies and multiple processes, each with its own specificities, are involved. There aren't a lot of standards and models for the assessment of environmental performance and they are applicable to individual companies, few of them may be extended to supply chains and very few are those arising for supply chains. Current research is focusing on the study of new models supply chain oriented. Another issue requiring attention concerns the comparability among existing models. The aim of this study has been the comparison between two systems for assessing environmental performance: ISO 14001, created for companies, and GreenSCOR, orienting to supply chain management. The analysis shows that the environmental aspects of processes considered by the two standards are about the same. In fact, it was possible to establish a correspondence between environmental impacts proposed by ISO and SCOR metrics for the assessment of processes. The main difference is in the approach used. The ISO doesn't divide processes into categories but analyze them in terms of environmental impact proponing a system structured in such a way that the company develops an environmental policy, establishes objectives and processes to achieve commitments set out in the policy, takes the necessary action to improve its performance. Instead the GreenSCOR subdivides the processes following an hierarchical structure and, depending on the level of analysis to which you want to get off, proposes metrics for the evaluation of environmental footprint. So the GreenSCOR is, on one hand, more complex to implement and requires a good knowledge of its structure and, on the other, it's born specifically for supply chain management. Instead the ISO 14001, not being created for the supply chain, has its main difficulty in the transition from the application at individual company to the application at a network of firms linked by several relationships. References Arimura, T.H., Darnall, N., and Katayama, H. (2011). Is ISO a gateway to more advanced voluntary action? The case of green supply chain management. Journal of Environmental Economics and Management, 61,

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