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 assess 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 studied as well as the social, economic, and environment impacts are evaluated.

The analysis highlights important areas of CO2 emissions as well as 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 means 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 studying business decisions and their potential implications. The three main parts are environment, society, and economy (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.

Sustainable Supply Chains

Fig 1: The triple bottom line

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

2.1 Environmental Impact of Electonix CO2 emission and waste

Based on the data available, the environmental impact for Electronix is analyzed by exploring the CO2 emissions, waste, and energy. The table below outlines the major activities that contribute to a carbon footprint of an organization. In addition, CO2 emissions for every supplier/activity appear annually to highlight higher regions and compare them with other business areas.

Lifecycle Stage Description Assessment
Raw Materials and fabric production Plastica, which is 95% post-consumer plastic waste, coated in a special gel coat Toxic substances are released into the soil
Warehousing 4.2 million sq. ft. of space on 320 acres of land and houses more than 2,000 employees Causes a significant amount of energy consumption because if heating, lighting, cooling and air condition
Manufacturing West Midlands

Electric saloon car

The amount of carbon emitted
Logistics and transportation MagnaSteyr in Austria Creates air pollution
Retail and distribution MagnaSteyr in Austria The risk of supply chain disruption
Consumption and use Charging treated as hazardous waste
Disposal Vehicle batteries get recycled once they reach end of life. Toxic substances are released into the soil

 

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

 

Lifecycle Stage Description Assessment
Raw Materials and fabric production Plastica, which is 95% post-consumer plastic waste, coated in a special gel coat Recycled and reused materials
Warehousing It now offers 4.2 million sq. ft. of space on 320 acres of land and houses more than 2,000 employees Easily accessible of their products
Manufacturing West Midlands

Electric saloon car

Raise living standards
Logistics and transportation MagnaSteyr in Austria connect consumer with the service of organization
Retail and distribution MagnaSteyr in Austria Meet the customer needs
Consumption and use Charging
Disposal vehicle batteries get recycled once they reach end of life. Promoted as power sources of choice for next generation

 

The social dimension of sustainability considers protection and social or human aspects at every phase of the product life cycle, with human rights, labor conditions, communication and training, 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 assistant and control operators, who have different roles that can create inefficiency for the rest of the team. Besides, an organization should assess 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

 

Lifecycle Stage Description Assessment
Raw Materials and fabric production Plastica, which is 95% post-consumer plastic waste, coated in a special gel coat Low cost of production
Warehousing It now offers 4.2 million sq. ft. of space on 320 acres of land and houses more than 2,000 employees Packing and processing.

Price stabilization

Manufacturing West Midlands

Electric saloon car

Low cost of production
Logistics and transportation MagnaSteyr in Austria Minimize transportation cost
Retail and distribution MagnaSteyr in Austria Raise prices well above the cost of equipment, labor, and distribution
Consumption and use Charging Reducing fuel cost and shifting consumption away from imported oil to more locally produced electricity source
Disposal vehicle batteries get recycled once they reach end of life. Battery of an EV constitutes up to 35% of a vehicle’s cost

 

The organization applies the sustainability concept to address “the bottom line” in a new way. Besides, the organization recognize and influence social system and environment system and then gain competitive edge from those impact – manufacturing new products or changing their own processes to reduce the impact and result in 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.

Section Our company practice Competitors best practices Benchmarking
Suppliers’ management Co-ordinate and program manage the actions defined to improve supplier performance Work with senior level stakeholder in Supply Chain and the wider enterprise for defining appropriate and effective measures of supplier performance 49%
Procurement There are four main suppliers of Electronix but it is not sure if the suppliers have any criteria. The first step is to learn more about suppliers’ sustainable practices and to determine the criteria and standard that suppliers can measure. Lucid Motors has developed an ethics business program that includes ethical audits of its supply chain. Its key approach to procurement is to make sure the right of workers which means that staffs of its suppliers are treating with esteem, working in good conditions and earning the same level of pay. Lucid Motors has made an incentive for their suppliers through a Silver/Gold/Bronze benchmarking standard from human resource, environmental and resource effectiveness management. Orders are made to the supplier who meet the highest standard with the purpose of increasing the proportion of product purchased from suppliers meeting as a minimum a Silver standard annually. 44.2%
Warehousing It does not seem that Electronix has looked into Lucid Motors have discovered the environmental impact of its warehousing part of its operation similar to Lucid. In spite of the existence of the stock management system, it will seem that there are wastage and inefficiency in relation to workers works in warehouse with stock control operative doubling as order selectors in busy time as well as deficiency of communication from the sales team with those in the warehouse. Electronix may also consider implementing an operation and sales planning system to make sure that the strategic plan has been adapted to various business functions and can achieve business objectives. System improvements will improve working condition for staffs and helps the organization in stock control reduce product wastage as well as loss of sales. Lucid Motors attempt to reduce carbon emissions and energy demand through improved maintenance, design and construction. In many of its warehouses, Lucid has swapped to low carbon design and building information modeling, which enables lean manufacture helps to minimize site waste and utilize materials in a more accurate and efficient way (Xu et al. 2019). 31.9%
Manufacturing The operation department of Electronix has determined that quality control and waste can be dealt with. The effect of the triple bottom lines of increasing production error or poor-quality control is that it creates environmental waste and wastes of human effort and time that ultimately leads to organizational loss. Electronix will benefit with the example of Lucid Motor to ensure quality control and waste management. The organization may consider implementing lean production for improving process to minimize waste and resources and also improve operational efficiency. Lucid Motors has achieved its goal of landfill from zero waste to ensure that everything is efficient and that the waste produced can be reused or reused. They have also advanced an approach through which each of the three billion products manufactured by Lucid Motors will have a positive or significant reduction in social or environmental impact using its life cycle. 22.8%
Transport and logistic Electronix has identified a direct rail supply service that could use. As rail transport makes 85% lower CO2 emissions compared to the similar to rail transport, switching to rail freight service could improve the environmental sustainability of Electronix. Lucid Motor acknowledges that 80% of its greenhouse gas emissions come from fuels used for transportation and knows that there will be no significant reduction due to the nature of the emissions that its businesses choose to compensate for (Xu et al. 2019). 21.9%
Packaging It is a prime case of the best practices that Electronix can take on cardboards. Now, packaging at Electronix is not made from recyclable materials and there are no components in place for packaging to return the organization. Also, less packaging and recyclable packaging would also minimize waste. Lucid reduced its packaging by 34% and enhanced the recyclability of its packaging by 90%. Additionally, Lucid has used more sustainable raw materials, for example plastics and recycled content, along with use sustainably sourced wood. 15.8%

 

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 environment impact of the product in its whole lifecycle, from material extraction and supply to end of life. It is called “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.

Sustainable Supply Chains

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.

Action Options Benefits
Prevention

Conduct the review on the quantity of raw materials that is utilized in the product seeing if product can be manufactured with less aluminum.

 

Paper / board waste prevention, reuse and recycling environmental benefits are related to greenhouse gas emissions, energy use as well as a resource used.

 

Reuse

It can be decided from scrap or waste material that any of these can be reused in other applications i.e., separate large pieces made of disc or label.  Separate waste materials that can be reused as packing infill for their own product or can be sold for profit (Mathivathanan et al. 2018).

Reusing waste materials to reduce environmental impact and saves costs for business.

 

Recover (create energy)

Detached materials can be set fire to generate energy

Fossil Fuel
Recycle

Sort materials for recycling, sort by grade to reduce the cost-effectiveness of recycling collection.

Recycling is better than other waste management options

 

Dispose

Any materials that can’t be recycled or reused can be compressed to minimize the volume of waste that will likewise decrease the frequency of necessary collection.

The use of waste materials to generate energy is classified as renewable energy and can offset its use.

 

Through using waste hierarchy to ‘Plastica’, it is clear that Electronix can enhance its the sustainable performance, especially in minimizing the adverse effect 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 society, economy, and environment, 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, environmental, and social 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.

Furthermore, the proposed index result from social, environmental, and economic indicators and uses varied weights for each level of stability. The weights were selected using the Delphi technique, including a panel consisting of researchers and experts from the automotive industry. Also, this approach helps to integrate sustainability indicators with industry realities and develops 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 eco-friendly product and all at once manufacture in more eco-friendly ways.

Therefore, 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.

 

 

References

Barbosa-Póvoa, A.P., da Silva, C. and Carvalho, A., 2018. Opportunities and challenges in sustainable supply chain: An operations research perspective. European Journal of Operational Research268(2), pp.399-431.

Dubey, R., Gunasekaran, A., Papadopoulos, T., Childe, S.J., Shibin, K.T. and Wamba, S.F., 2017. Sustainable supply chain management: framework and further research directions. Journal of cleaner production142, pp.1119-1130.

Ghadimi, P., Wang, C. and Lim, M.K., 2019. Sustainable supply chain modeling and analysis: Past debate, present problems and future challenges. Resources, Conservation and Recycling140, pp.72-84.

Gopal, P.R.C. and Thakkar, J., 2016. Analysing critical success factors to implement sustainable supply chain practices in Indian automobile industry: a case study. Production Planning & Control27(12), pp.1005-1018.

Koberg, E. and Longoni, A., 2019. A systematic review of sustainable supply chain management in global supply chains. Journal of cleaner production207, pp.1084-1098.

Kusi-Sarpong, S., Gupta, H. and Sarkis, J., 2019. A supply chain sustainability innovation framework and evaluation methodology. International Journal of Production Research57(7), pp.1990-2008.

Mathivathanan, D., Kannan, D. and Haq, A.N., 2018. Sustainable supply chain management practices in Indian automotive industry: A multi-stakeholder view. Resources, Conservation and Recycling128, pp.284-305.

Saberi, S., Kouhizadeh, M., Sarkis, J. and Shen, L., 2019. Blockchain technology and its relationships to sustainable supply chain management. International Journal of Production Research57(7), pp.2117-2135.

Xu, M., Cui, Y., Hu, M., Xu, X., Zhang, Z., Liang, S. and Qu, S., 2019. Supply chain sustainability risk and assessment. Journal of Cleaner Production225, pp.857-867.

Yadav, G., Luthra, S., Jakhar, S.K., Mangla, S.K. and Rai, D.P., 2020. A framework to overcome sustainable supply chain challenges through solution measures of industry 4.0 and circular economy: An automotive case. Journal of Cleaner Production254, p.120112.

 

 

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