Sustainable Supply Chains

1. Introduction

The organizations make strategic decisions about the types and extents of their corporate sustainability policy. In addition to the social and environment benefits, organizations that combine the sustainability into the decision-making process can gain a significant financial benefit and attract investor interest, which is key to long-term profits. Environmental sustainability can be achieved in many ways, such as reducing waste generation and creating alternative routes in the production process to improve water and energy efficiency. Investments in renewable energy by building their own solar or wind farms to reduce the consumption of fossil fuels and reduce carbon emissions are also gaining momentum among large corporations (Barbosa-Póvoa et al. 2018). The purpose of this report is to make a more sustainable life cycle for products from Electronix Automotive PLC. Electronix is a UK based startup Electric Vehicle (EV) manufacturer in the West Midlands. In 2015, it was formed by serial entrepreneur, who considered the success of organizations, such as Tesla decided that there is a potential market for the high-end luxury vehicles made in the UK to compete with existing automotive OEM and startups, such as Lucid and Tesla. Their Electronix Pegasus 4S in their first products will be the first product and will launch on the Q1 2022 (delayed due to the COVID19).

The purpose of this report is to evaluate and analyze the sustainable performance of Electronix Automotive’ supply chain. Through implementing the concepts of the triple bottom line, the supply chain of Electronix is examined as well as the social, economic, and environment impacts are evaluated. The analysis highlights important areas of CO2 emissions and waste management that needs improvement from the organization. In addition, Benchmarking analysis is conducted using Lucid Motors, then focuses on how to address sustainability issues as an example for Electronix Automotive. Finally, it was proposed to use the waste hierarchy as a way to solve the problems of waste management and to take the initial steps to improve environmental and social sustainability.

2. Analysis of the supply chain management

Sustainable production will be built on a strong economic basis in future. ACES processes (“Automated, Connected, Efficient, Safe & Sustainable”) that reduce adverse environmental impacts, while preserving natural resources and energy, all at once has long-term benefits to the future of Automotive business by making value determinedly driven by product Stewardship. Also, ACES needs to be coordinated with sustainable research and development product development strategies. The automotive industry is a major industrial and economic power in the world, producing more than 55 million vehicles a year and accounting for about half of the world’s oil consumption. Manufacturing every vehicle consumes enough water and energy before hitting the road and the associated CO2 emissions as well as environmental impact is significant. In order to achieve sustainable production in the automotive industry, it is necessary to know what should be provided. The Sustainable Automotive Production Network adapts sustainable product design to an economically sustainable manufacturing process, reducing environmental impact and saving planetary life for future production. Sustainable organization often enjoy greater brand loyalty and market opportunities due to initiatives in product management support (Koberg and Longoni, 2019).

At the present time they need to have more agencies to demonstrate and report sustainable strategies. One of the most widely discussed approaches to sustainable literature is the concept of the three-bottle line, which outlines three key areas when examining business decisions and their potential implications. The three main areas are environment, economy and society (see in Figure 1), which Saberi et al. (2019) argues that “inevitably intertwined” which means that a business must be able to have a wide range of activities to improve and sustain its business.

Fig 1: The triple bottom line

The sustainability performance analysis of Electronix Automotive will be tested by studying its sustainability through the triple bottom line; looking at the environmental, social and economic impact of business supply.

2.1 Environmental Impact of Electonix CO2 emission and waste

Based on the available data, the environmental impact for Electronix is analyzed by looking at CO2 emissions, energy and waste. The table below outlines the major activities that contribute to a company’s carbon footprint. CO2 emissions for each activity / supplier appear annually to highlight higher regions and compare them with other business areas.

If viewed in this way, it is surprising that the highest annual emission area is the factory and storage area if the energy used in electricity and natural gas is converted to the level of CO2. The table shows that some components cover long distances for the company, resulting in the supply of external products and the collection of internal materials resulting in emissions separated by CO2 with outbound delivery being the higher of the two. It highlights the significant differences in CO2 emissions between road transport and sea transport. Another finding is that the wrong item was shipped or the item was missing from the package, resulting in significant emissions, especially the fault of the company. Additionally, the emission from the reverse logistic is more than half of the emissions in this way it brings to lights area that must be considered for improvement and efficiency. In addition to fuel consumption and CO2 emissions, other elements of the environment are waste generated by organization. It is not clear how much waste the company produces but it is highlighted that there is unnecessary waste in the manufacturing process, especially waste that fails to inspect the product. This is not only the result of material waste, but also the production of hazardous waste due to the nature of the product. Another area that needs to be considered in terms of waste is in the packaging of products that are now usually made from cardboard and polystyrene boxes and these materials are not made from recyclable materials. The company also has no process for packaging. Electronix Automotive needs to look at the materials used for packaging and what they will look like after use (Dubey et al. 2017).

2.2 Social Impact of Electonix CO2 emission and waste

The social dimension of sustainability considers protection and human or social aspects at every stage of the product life cycle, including human rights, labor conditions, training and communication, as well as diversity and community impact. It is clear from the case study that Electronix takes health and safety as well as have put in place the health and safety managers to maintain the safety of its staffs. They also know about the legislation related to production management and sincerely know their compliance with these rules. This is especially true in the case of production assistants and control operators, who have different roles that can create inefficiencies for the rest of the team. Besides, the organization should evaluate its system and process to provide the best benefits to staffs and the workplace environment that helps staffs to succeed (Ghadimi et al. 2019).

2.3 Economical Impact

The organization applies the concept of sustainability to address “the bottom line” in a new way. Besides, the organization recognize and influence social system and environment system and then gain competitive advantage from those impact – manufacturing new products or changing their own processes to reduce the impact and bring about financial gain. Electronix automotive has shown that it wants to change to take on environmental and social aspects and improve sustainable performance. In this regard, the ISO 14000 will help them to address environmental impact because it sets the standard for environmental management system by creating a framework to follow. By closely monitoring their own social and environmental impacts, businesses will be in a better position to address areas of concern that could lead to cost savings, increased profitability, and more efficient business practices (Yadav et al. 2020).

2.4 Summary of Electronix impact on the triple bottom line

The Triple Bottom Line (TBL) is an accounting structure that has three dimensions of performance, including social, financial, and environmental. To improve operation management at Electronix, managers need to address these three dimensions. First, there should be a change of focus on the reasonable treatment of staffs by enacting satisfactory practice. Second, Electronix needs to adopt sustainable practices and reduce its environmental impact. Such exercises can range from recycling programs to the use of sustainable materials. Third, since the largest customer demographic is willing to pay for sustainable products, companies need to align their financial lines with sustainable practice and social responsibility. The ISO 14000 standard provides Electronix with measurement for managing environmental impacts by integrating the environmental consideration into the manufacturing process. With regards to Electronix, the organization has recognized hundreds of chemicals and substances that suppliers will not use during the manufacturing process. Compliance with the ISO 14000 standard allows Electronix to follow the Triple Bottom Line framework to carefully advance the sustainability and social responsibility agenda to reduce the environmental impact of vehicle manufacturing process (Mathivathanan et al. 2018).

3. Benchmarking Electronix with Lucid Motors

Lucid Motors is identified as setting the standard in the sustainable supply chain whose goal is to create value through its resources and their relationships through a unique business model. Lucid Motors was selected for this criterion and for the organization like Electronix Automotive PLC, benchmarking will provide the best practice required to reach the goal of becoming a more sustainable company.

3.1 An SLA is a formal agreement that is jointly agreed between the service operator and the owner of the business unit. SLA covers one or more metrics with quantitative results and include management elements for reviewing and reporting. The first goal of the metric is to stimulate proper actions for suppliers. Every side of the relationship will try to optimize its action to meet the performance goal set by the metrics.

3.2 The efficient supplier base of Electronix is at fault. By depending entirely on a single supplier and using multiple platforms and vehicle, the manufacturers increase their risk. Electronix should include separate divisions in building cross-divisional working teams with its suppliers. Good relationships with suppliers can also provide the organization with many multilevel business supporters who can give them new perspectives and encourage them to build business as a goal.

3.3 Electronix can prefer to buy back outstanding stock for a variety of reasons. A buyback raises the price of a stock in the short term, reduces the remaining supply of stock from any purchase and in itself supplies more of that stock to the market.

3.4 The Department of Transportation and the Department of Business, Innovation and Skills (BIS) have implemented the EV Policy, with a bundle of initiatives set in place since 2007. It is important that the term of the car warranty is clear that the warranty only covers the defects of the car (Gopal and Thakkar, 2016).

3.5 In order to be sustainable, Electronix need to build knowledge and skills to address the persistent factors that affect overall growth in the long run. By raising life around the world in the safest and most responsible way, Electronix will be the leader of this movement in the future. Through its commitment to quality, uninterrupted innovation and respect for the planet, it must surpass expectations and be rewarded with a smile. They should provide products and services that are high quality, innovative, safe and incredible that meet the needs of different customers (Dubey et al. 2017).

3.6 Electronix can reduce its CO2 emission by considering and reducing the environmental impact of the product in its entire lifecycle, from material extraction and supply to end of life. It is known as “eco design”, but the organization may know the ISO/TR 14062 standard for environmental management in product design. This can be done with a combination of design considerations, material sourcing strategy, and new manufacturing techniques.

4. Application of sustainable methods and procedures

4.1 Waste hierarchy

The waste hierarchy is a tool used to evaluate processes that protect the environment in conjunction with the energy and resource consumption from the most satisfactory to least satisfactory action. The hierarchy determines the selection of the desired program on the basis of sustainability. To be sustainable, waste management cannot be solved with technical edge solutions and it requires an integrated approach.

Fig: Waste Hierarchy

This recommendation will shed light on the application of waste hierarchy on ‘Plastica’ and in places to demonstrate the practice of how waste hierarchy can be applied to Electronix. Plastica is chosen because many of products of Electronix are made from plastica.

By applying waste hierarchy to ‘Plastica’, it is clear that Electronix can enhance its the sustainable performance, especially in minimizing the negative impact to the environment and benefiting from cost saving that benefits the bottom line of the organization.

4.1 Impact on the three-bottom line

The concept of sustainable development includes three interdependent and interrelated elements: society, environment and economy. Elements of the concept of similarity with the Triple Bottom Line (TBL): people, planets and profit. The company faces pressure from various parties to work under the sustainability strategy. However, while some organizations have requested ongoing support at the strategic and operational levels, it appears that the framework used to support these activities does not adequately address environmental and social issues. It is very important to consider sustainability as part of the overall business process. The literature provides a variety of tools and report formats that allow organizations to demonstrate a commitment to sustainable reporting issues (Kusi-Sarpong et al. 2019).

Electronix Automotive PLC is characterized by human resources, high complexity, innovation, reputation, standardization, high quality products, high technology, and much more. The activities and processes of the industry are quite complex, because they are very technical. The level of innovation is higher and the standardization of processes and activities is important. The product quality is considered to be high and human resource training is done on an ongoing basis. In the automotive industry, it emphasizes cost-cutting efforts and approaches. In the case of Electronix automotive Plc, the organization is complex systems of connection, indirect and direct products and direct as well as interactions to make economic value. Because this industry has a major impact on the economy, environment, and society, it also plays an important role in sustainable development. Automotive and auto parts manufacturing organizations, like Electronix is assessed by regulatory agencies to meet environmental standards and to minimize impact on both their products and the manufacturing process. This pressure led them to use innovative business strategies and communication technologies and key information to achieve economic and environmental performance goal. Implementing sustainable development helps reduce the impact of organizations on the environment, society, and economy (Mathivathanan et al. 2018).

5. Conclusion

With sustainable attention, it has become a strategic issue not only for states, but also for companies and supply chain. Sustainability includes managing the triple bottom line and involves making decisions that address economic, social and environmental issues. This report evaluated the sustainability of the UK automotive supply chain using the triple bottom line structure to calculate the Supply chain sustainability index. The proposed index result from economic, social and environmental indicators and uses different weights for each level of stability. The weights were selected using the Delphi technique, including a panel consisting of academics and professionals from the automotive industry. This approach helps to integrate sustainability indicators with industry realities and makes index construction a more dynamic process. The automotive industry is a prime example of small steps to change and contribute to a more environmentally friendly world. Suppliers work with manufacturers to create more sustainable interiors and the importance of sustainable implementation across the supply chain is well understood by the parties involved. As a result, technological advances and improvements in the development process of natural fiber products can now replace more environmentally friendly and more expensive products with more environmentally friendly products and at the same time produce in more environmentally friendly ways. In this way, managers can use sustainability indicators to help them adapt to SC behavior and improve economic, social and environmental performance. Also, a benchmarking analysis can be performed if at each stability level a stable indicator and the best and worst performance can be identified. Although this study has been able to prove the feasibility of the approach, the case study has proposed several steps considering several organizations in different industries.

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