Assignment Sample Sustainable Supply Chains
Introduction
In the developing era, environmental concerns are increasing rapidly and every organisation is its great contributor. Sustainability is becoming the most essential concern for every organisation and every industry is contributing to it so they can reduce their carbon footprint. Every organisation adopts sustainable operation so they can stay market competitive and create long-term value (Ozbekler and Ozturkoglu, 2020). Many organisations are bringing innovation in diverse operations like reducing the use of paper packaging, adopting e-vehicles, reducing waste, adopting renewable energy sources, and many more. Sustainability helps the company in increasing their financial stability and it also enhances the good health of the planet. Every company is making strategic decisions after monitoring external factors and make changes accordingly.
Furthermore, with constant fluctuations in consumer demands and changing future requirements, the organisation must adopt changes by bringing innovation so they can stay market competitive. The political and legal rules and regulations are also described as driving force that pushes the organisation to adopt sustainability in their business operations (Cioca et. al. 2019). Based on the case study analysis it can be seen that Electronix PLC is a new start-up company producing the electric vehicle. The company adopted the concept of EV by observing the success of a company like Tesla. Electronic Pegasus 4S was their first product and it was all set to launch in 2022 as it was delayed because of a global crisis. The car is built entirely on the concept of sustainability and environmental consciousness.
The report aims at analysing the sustainability and environmental operations that can be adopted by the automotive industry so they can reduce their carbon footprint. Electronix PLC is the company chosen for the report and their sustainability operations are described. Other than that, the supply chain sustainability of the company will be discussed by comparing it with the Tesla Company as they make a great profit from producing e-vehicles (Chudy and Mazurek, 2019). The environmental, social, and economic impact of sustainability on both the organisation will be compared and analysed. After that, their lifecycle stage along with their impact on the environment is elaborated. It is being followed by the comparison section in which sustainability operations will be discussed with Tesla. In the last section, recommendations are made for reducing carbon footprint, enhancing sustainability, and impact on its triple bottom line.
Analysis of supply chain management
The increasing trend of carbon-neutral and zero-emission vehicles represents the significant importance of sustainability in the automotive industry. It can be seen that in the entire supply chain of the automotive industry various operations affect the environment (Nassar et. al. 2019). Looking at the supply chain scenario, it can be declared that their manufacturing process utilises a huge amount of energy and the parts used are also harmful to the environment. In today’s developing world, different plastics are used for decreasing the weight of vehicles, and the decomposition of plastic takes millions of years that is harmful to the planet and people.
Furthermore, it is the responsibility of car manufacturers and suppliers to evaluate the sustainability of their value chains and products. There can be observed as radical upheaval in the automotive industry and the demand for e-vehicles is increasing that helps in reducing the use of natural resources like fossil fuels and petroleum (Schöggl et. al. 2017). Before making any decisions, the automotive industry must analyse every small issue the company faces. Looking at the growing concerns about environmental degradation, climate change, and sustainability it becomes essential for an organisation to adopt sustainable operations. The organisation can use the concept of Triple Bottom Line (TBL) to enhance their decisions related to sustainability.
Triple Bottom line (TBL) describes those implementing environmental, economic, and social impacts that can affect the company rather than using economics and profit as a driving force. It consists of three factors people, planet, and profit, and every aspect has its essentiality. People describe the way an organisation uses to manage their employees to enhance their work efficiency (Elkington, 2018). On the other hand, planet refers to the environmental footprint that an organisation leaves on the environment because of its business operations. It includes all the actions like the waste generated by them that can be harmful to the planet. Other than that, the usage of electricity for manufacturing and store purposes also affects the environment. The company must adopt changes as per these issues and address them sustainably.
Moreover, the company needs to adopt innovation to address the issues of resource depletion. In this growing era, the life of fossil fuels is coming to an end and for this purpose; they need to adopt some changes so this challenge can be addressed (Ahmed and Sarkar, 2019). Profit means increasing the profitability of the organisation through these operations. Nowadays, every organisation is increasing their amount of recycled materials that can be used during their production process.
Electronix Plc has started a business of electric vehicles after monitoring the success of Tesla and other automotive industries. They first developed Electronix Pegasus 4S and it is ready to launch in 2022. The car is built based on sustainability and adopts fully electrical functions. Other than that, the company uses innovative material of the UK named Plastica that is produced from 95% post-consumer waste. Rather than using leather seats, the company utilises Vegan Ultra leather that enhances their environmental commitment. Developing e-vehicles helps the company in meeting the triple bottom line appropriately.
For instance, the company is providing a full guarantee on taking lithium batteries and will pay an amount of 25,000 euro. In this, the company is adopting a reverse manufacturing supply chain by sending batteries to HQ in the UK for using it as grid power storage or household services. Many products are being sourced outside the UK. The company ordered tyres and lights from France, wheels and computer components from China, wiring loom from Turkey, and many more. In this way, the company aims at sourcing the best products from different countries so they can ensure sustainability in their business operations.
Environmental impact
| Lifecycle Stage | Description | Assessment |
| Raw Materials and fabric production | The company uses plastic, a post-consumer recycled plastic waste. They uses Vegan Ultraleather and Alcantara materials. The EV uses large 100 KWh Lithium battery. | Using recycled plastic can be effective for environment as plastic takes millions of years to decompose. On the other hand, vegan ultraleader is also eco-frinedly and reduces their carbin footprint. |
| Warehousing | The manufacturer of Electronix Plc is based in the West Midlands, UK. Electronix Pegasus 4S is their first e-vehicles that was to be launched in 2020 but it is being delayed because of Covid-19. | The introduction of e-vehicle can help them in reducing the carbon footprint and enhance their business operations by adopting sustainability. |
| Manufacturing | The production process of the vehicle has been given to Prodrive Limited in Banbury, england but because of some issues they canceled that. | The production was taken in three phases by lorry to Woodall Nicollson on the Nort-west for final assembly. Their plastic panels will be manufactured in the UK. |
| Logistics and transportation | The company is transporting various raw materials from different regions like tyres from france, wheels from China, lights from france and many more. | Transportation utilises fossil fuels and it is the major reason for resource depletion. They must switch to different source to bring their products from one place to another. |
| Retail and distribution | Electronix Plc was all set to lauch their car in 2020, but due to Covid-19 the car launch was delayed. Their preorder date is allowing shareholders and pre-order were made. | Introducing e-vehicle in market is beneficial as they allow customers to switch their in sustainable operations. Increased proce of fossil fuels attracts many consumers to buy e-vehicle as it reduce environmental impacts. |
| Consumption and use | The fully electric car is providing a 400 mile range and 0-60 mph time in 2 seconds. The buy-back battery service is provided that have 100 KWh Lithium battery. | Customer can use the battery as houseold or grid power storage if the vehicle reached its servicable life. It will work on battery so they need to charge the battery after a range of 400 mile. |
| Disposal | The lithium batteries have disposable life and they can also use plastic and other materials. | Lithuim batteries can be used as grid power or household alternatives after the servicable life of car comes or the company is offering guranteed amount on returining the battery. |
Social Impact
| Lifecycle Stage | Description | Assessment |
| Raw Materials and fabric production | 95% post-consumer recycled plastic and vegan ultraleather. | Vegan ultraleather is estremely durable, stain-resistant, water resistant and suffer minimal wear. Using consumer used plastic will help them in reducing the amount thrown in landfills. |
| Warehousing | It is delayed because of Covid-19. | Pre-orders were made showing the demand of e-vehicles. |
| Manufacturing | Different raw materials are sourced from different countries and their manufacturing process are done in the UK. | It allows consumer to enhance the variety of option they can choose from and offers them great flexibility and reliability. |
| Logistics and transportation | The raw materials and fininshed products will be transported to the home coutry UK. | It will provide employment to many people. |
| Retail and distribution | The pre-orders are already made and it is highly demanded by customers. | It will allow people to use the sustainable vehicles and contributes to eco-friendly solutions. |
| Consumption and use | The Lithim battery can be reused and it gives about 400 miles running life to vehicle. | The batteries can be used by the customer for grid power and household works. |
| Disposal | The plastic used is recycled and lithium battery will also be recycled. | It will reduce the hyge amount of landfill storage. |
Economical Impact
The Triple Bottom Line concept suggests that every organisation needs to adapt business operations so they can put a positive impact on both people and the planet. Looking at this aspect, it can be seen that the company is adopting sustainability by producing e-vehicles that are highly demanded in the market. The high demand for e-vehicles is concerned with the increased rate of fossil fuels and environmental concerns. Using fuel-powered cars can be beneficial for the environment as well because it will help in reducing resource depletion. Other than that, increased fuel price will allow customers to switch from fuel-powered vehicles to electronic charged vehicles. The consumer attraction and pre-order of vehicles show that the profit rate of the organisation will be efficient.
Looking at the cost-effective solution, it can be seen that the company must adopt electronic vehicles for transporting and sourcing their raw materials and finished products from one country to another country as it will help them in reducing the production cost. Other than that, the company is implementing 100 KWh lithium batteries in their electronic cars that can be reused after the serviceable life of the car ends. It will be sent to HQ in the UK so it can be used as power grid systems and household services. The recycling process will help the company in earning more profit from using the batteries in different business operations.
Moreover, the company can also use power systems in the car to provide the electric charge facility. It will attract numerous customers in buying EVs as this facility will reduce the headache of charging the car at different stations (Hudedmani et. al. 2020). Some batteries take more time to charge and that is the reasons many people avoid e-vehicles for a long journey. Providing the car with a facility of getting charged using the energy from the sun can be a highly beneficial and cost-effective solution for Electronix Plc.
Benchmarking Electronix with Tesla
The inventory system and supply chain strategies used by Tesla have got a lot of attention. Their best experiences of supply chain come from the vision of Elon Musk for having a vertically integrated supply chain. On the other hand, their bad experiences come from the delay they had in their production (Santis, 2017). The company has a vertical integration supply chain and believes in doing something that nobody else does. The company operates a fully operational plant in California and the parts were manufactured in China or Mexico. Looking at this, they decide to start manufacturing their parts on-site near their plant in California.
Furthermore, Tesla has also built a giant battery factory in Nevada so they can meet their requirements of batteries implemented in their cars. The manufacturing of batteries was so critical as they were building their batteries. The major reason for manufacturing delays was because of battery issues and their battery plants have experienced some drawbacks that show there are requirements for redesigning (GS and LS, 2020). Tesla’s value chain analysis also identifies the requirement of charging their cars during travel so they have build power charging stations around the country. The production of factories in California and Nevada helped them in reducing the cost of transportation and labour charges required for moving parts from one place to another. The company aims to enhance its profit rate by reducing the cost of production.
Along with that, vertical supply chain integration at Tesla provides numerous facilities from services to hardware and software. The company has different warehouses and stores all over the world, charging stations, and on-site repair facilities. They have an operating system, self-driving programming, and infotainment systems. Other than that, as a hardware system, the company offers batteries, chassis, AI chips, and Gigafactories. Tesla’s assembling location is the United States and runs for a maximum of 335 miles (Kapustin and Rakov, 2018). Their battery size is 75-100 KWh and their battery cell is being produced in Japan. The United States is known for its battery pack assembly location. The production of cars is very complex and challenging as they have about 10,000 parts in every car.
Tesla’s supply chain is the key to their success as their supply chain primarily focuses on implementing strategies related to cost and control. Using this supply chain helps the company in reducing the cost of transportation and primarily relies on producing parts on geographical location. They believe in creating a vision that helps them in managing the supply chain nearby. The vertically integrated supply chain not only focuses on reducing the cost of production but also focuses on reducing labour costs as described above by Tesla (Ferrari et. al. 2019). Developing factories in California helps the company in reducing labour work that is required for placing one item from one place to another.
The battery used by the company in their electronic vehicles is made up of lithium-nickel-cobalt-aluminium oxide is most commonly used in the United States. It is a cathode material providing a higher capacity than LiCoO2. Even though, both batteries are charged to 4.2/4.3V NCA-based batteries. The company produces its modules and packs them at Gigafactory opened in Nevada and vehicle assembly plant in California (The Supply Chain for Electric Vehicle Batteries, 2018). The Model 3 of Tesla uses cells from its Gigafactory. On the other hand, model S and X use the cells that are manufactured in Japan by Panasonic. There is no presence of manganese in their battery.
Furthermore, Tesla utilises cylindrical small-format 18650 and 2170 battery cells from Panasonic. These battery cells are similar to laptop batteries as it helps the company in reducing the cost (Gayathri and Kumari, 2018). It can be noticed that other vehicle manufacturers have worked with suppliers so they can develop larger prismatic “automotive-grade” battery cells so they can increase reliability and reduce complexity. Tesla’s Gigafactory has started developing cells in cooperation with Panasonic so they can use them in their e-vehicles. In this way, Tesla aims at adopting strategies that can be beneficial for the company in reducing their transportation cost and enhances their profitability. The company is merging with companies so they can produce battery cells in California.
Furthermore, looking at the supply chain of Electronix Plc, it can be observed that the company sources their raw materials from different countries and production process takes place at Banbury. The company was itself influenced by the development if e-vehicles at Tesla and Simon Jones decide to enter the potential market for high-end luxury vehicles. Their warehousing and stores are located in West Midlands, UK and their launching of Electronix Pegasus was being delayed to 2022 because of Covid-19. The company has manufactured a fully electric car and providing great facilities to their consumer. The primary aim of the company for choosing this industry is the raising customer demands for buying e-vehicles. In today’s developing era, environmental concerns are also developing and it becomes necessary to solve these issues adequately. Fuel powered cars are responsible for utilising fossil fuels that has come to an end so it is necessary to find an adequate substitution of cars.
It can be seen that innovation in e-vehicles can be highly profitable and every company manufacturing e-vehicles must bring change constantly. The increased prices of fuel show that customers will switch to e-vehicles easily if they get great facilities similar to fuel-powered vehicles. Looking at their raw materials, Electronix Plc sources them from different places. They source their tyres and lights from France, driver assistance systems from Germany, wheels, screens, and computer components from China, Interior sear coverings from the USA, carpets from either Italy or UK, Alcantara trim from Italy, and wiring loom from Turkey.
Looking at the buy-back system is provided by Electronix Plc for their 100kWh battery. In this plan, if any upgraded part is being provided or the vehicle reached its end life of service then the battery is used for grid power system and household services. In this process, Electronix will pay 25,000 euro for the battery and it is the resale value offered. These batteries will be resent to HQ in the UK so they can go through this process. Other than that, the company aims at using Plastica as it is produced from 95% post-consumer plastic waste and it helps in reducing the negative impact of plastic on the environment. Rather than using leather seats, they use Ultra fabrics manufactured from vegan Ultraleather and contributes to their environmental commitment. Their car gives about a 400-mile range and 0-60 mph time of 2.8 seconds.
Furthermore, it can be seen that contract manufacturing with Prodrive cannot continue, they are using MagnaSteyr in Austria will deliver the product. It has been noticed that their plastics panels are not that robust in testing and they can crack at low temperatures. Looking at the benchmarking it can be declared that Tesla’s supply chain is effective as they continuously focus on reducing their cost of transportation by increasing in-house production. Tesla constantly develops Gigafactories in California and Nevada and produces batteries in their factories. On the other hand, Electronix Plc sources every raw material from diverse regions and that increases their transportation cost and in this, the produced car will be very costly. Customers won’t buy costly cars from a new company as they have to establish their brand loyalty and reputation.
Moreover, Tesla offers a buyback program for their Model S after three years if the car is brought through the loan financial plans of Tesla. In this program, they offer 50% of the base purchase price and 43% of the value-added for the other options in the vehicle (Venticinque et. al. 2019). Other than that, Tesla offers 375 miles run and Electronix offers 400 miles run. These are some differences between the programs of both the companies.
Application of sustainable methods and procedures
Waste hierarchy
The waste hierarchy consists of five features that include reducing, reuse, recycling, energy recovery, and landfilling. Looking to reduce waste, the company must not use plastic packaging and use the materials adequately so the waste generated from the manufacturing process can be reduced (Pires and Martinho, 2019). The raw materials that are left in the previous production must be used in the future manufacturing process to reduce waste. The second point focuses on reusing the products like Electronix is using 95% of post-consumer plastic waste that helps them in reusing while reducing the waste. Other than that, the company can also reuse seats, batteries, power grids, tyres, and many more to reduce the amount of pollution these products have on the planet.
Furthermore, the products that are kept for reusing need to go through the recycling process so they can be used effectively. In this entire process, energy recovery can be done and companies must start using renewable energy sources so they can reduce the use of consumed energy (Wiesmeth, 2020). In the last point of landfilling, reducing waste will help the company in reducing the amount of waste thrown in landfills.
Conclusion
It has been concluded from the report that sustainability in the automotive industry is very crucial for the growth of any organisation. Every company is focusing on adopting changes and innovation that helps them in reducing their carbon footprint. It includes reducing the amount of waste generated, reusing the waste after recycling, and many more. The automotive industry is aiming at manufacturing e-vehicles that used electronic power like batteries, power grid systems for running. The report focuses on analysing the supply chain of Electronix Plc in comparison with Tesla. They have recently developed their first e-vehicle that is fully sustainable and runs for 400 miles straight. On the other hand, the company also aims at using Plastica, produced from 95% of post-consumer plastic waste, and instead of using leather seats they use Vegan Ultraleather. In this way, they enhance their sustainability and environmental commitment.
Furthermore, the company must focus on reducing their cost of transportation by influencing Tesla as they use vertically integrated supply chain strategies. Other than that, the company also works at triple bottom line so they can enhance their responsibility for the planet, people, and profit. They need to use renewable energy sources for their business operation so they can reduce their energy consumption. In this report, it can be seen that Electronix also utilises waste hierarchy and recycle their lithium battery so it can be reused in a power grid system and households.
References
Books and Journals
Chudy, A. and Mazurek, P.A., (2019). Electromobility–the Importance of Power Quality and Environmental Sustainability. Journal of Ecological Engineering, 20(10).
Cioca, L.I., Ivascu, L., Turi, A., Artene, A. and Găman, G.A., (2019). Sustainable development model for the automotive industry. Sustainability, 11(22), p.6447.
Elkington, J., (2018). 25 years ago I coined the phrase “triple bottom line.” Here’s why it’s time to rethink it. Harvard Business Review, 25, pp.2-5.
Ferrari, P., Flammini, A., Pasetti, M., Rinaldi, S., Simoncini, F. and Sisinni, E., (2019). Testing Facility for the Characterization of the Integration of E-Vehicles into Smart Grid in Presence. Applications in Electronics Pervading Industry, Environment and Society: APPLEPIES 2018, 573, p.19.
Gayathri, S. and Kumari, D.A., (2018). Electric Vehicles–An Introduction of the Tesla for Strategy and Leadership.
GS, D. and LS, M.R., (2020). Customer perception towards tesla electric car’s innovative features. Journal of Contemporary Issues in Business and Government, 26(2), pp.521-527.
Hudedmani, M.G., Soppimath, V.M., Hubballi, S.V. and Shirur, P., (2020). Solar Energy a Promising Source for E-Vehicles. Solar Energy, 4(2).
Kapustin, A. and Rakov, V., (2018). Results of assessing СО2 emissions from e-vehicles in case of their possible switching to electricity. Transportation research procedia, 36, pp.266-273.
Nassar, S., Kandil, T., Kara, M.E. and Ghadge, A., (2019). Automotive recall risk: impact of buyer‒supplier relationship on supply chain social sustainability. International Journal of Productivity and Performance Management.
Ozbekler, T.M. and Ozturkoglu, Y., (2020). Analysing the importance of sustainability‐oriented service quality in competition environment. Business Strategy and the Environment, 29(3), pp.1504-1516.
Pires, A. and Martinho, G., (2019). Waste hierarchy index for circular economy in waste management. Waste Management, 95, pp.298-305.
Santis, A., (2017). Have E-Vehicles finally arrived? Battery assisted vehicles and future developments.
Schöggl, J.P., Baumgartner, R.J. and Hofer, D., (2017). Improving sustainability performance in early phases of product design: A checklist for sustainable product development tested in the automotive industry. Journal of Cleaner Production, 140, pp.1602-1617.
Venticinque, S., Aversa, R., Di Martino, B., Natvig, M., Jiang, S. and Sard, R.E., (2019, June). Evaluating technology innovation for e-mobility. In 2019 IEEE 28th International Conference on Enabling Technologies: Infrastructure for Collaborative Enterprises (WETICE) (pp. 76-81). IEEE.
Wiesmeth, H., (2020). Systemic Change: The Complexity of Business in a Circular Economy. Foresight and STI Governance, 14(4), p.47.
Online
Garbera. E. (2019). Waste management. [Online]. Accessed through: <https://www.fmlink.com/articles/missing-link-sustainable-reuse-recycling-building-products/>
Taylor. G. (2020). Triple Bottom Line. [Online]. Accessed through: <https://blog.chainpoint.com/blog/triple-bottom-line-measuring-social-and-environmental-kpis>
Tesla supply chain. (2019). [Online]. Accessed through: <https://fourweekmba.com/tesla-business-model/>
The Supply Chain for Electric Vehicle Batteries. (2018). [Online]. Accessed through: <https://www.usitc.gov/publications/332/journals/the_supply_chain_for_electric_vehicle_batteries.pdf>
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