Integrated Business Management Project: Ford's Green Supply Chain

This report provides an overview of green supply chain management, emphasizing its importance in reducing waste and preventing pollution. It discusses green supply chain practices, including green design (life cycle assessment and environmentally conscious design) and green operations (manufacturing/remanufacturing, reverse logistics, and waste management). The report highlights Ford's green supply chain management strategies, such as risk-based strategies, the Partnership for a Cleaner Environment (PACE) program, organizational alignment, energy treasure hunts, and transparency policies. It also outlines effective steps for a greener supply chain process, including ethical supplier selection, climate change integration, PACE implementation, distance reduction, and packaging reduction. The advantages of green supply chain management, such as economic benefits, innovation-driven competitive advantage, and improved public image, are explored, along with barriers like commitment from top management, adoption of reverse logistics, market demand, training, resistance to change, and environmental performance metrics.

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Integrated Business Management Project
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Executive summary
Supply chain management is the process of flow of products from manufacturing unit to
the end-customers. Organization also focuses on maximizing customer value and sustainability
in order to operate their supply chain management system. This assessment highlights the reason
for adopting green supply chain management which is majorly done for reducing waste in the
manufacturing process and pollution prevention. The green supply chain practices comprise of
green design that comprised life cycle assessment (LCA) and environmentally conscious design
(ECD). The report also contains green operation that focuses manufacturing and re-
manufacturing, reverse logistics and waste management. The green supply chain management
strategies emphasize on risk based strategies, efficiency based strategies, innovation based
strategies and closed loop based strategies. The report also highlights effective steps for greener
supply chain process which focuses on re-design the products, re-configure the manufacturing,
select ethical suppliers, reducing the distance of the manufacturing factories and reduces
packaging.

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Table of Contents
1.0 Introduction......................................................................................................................................4
2.0 Discussion........................................................................................................................................4
2.1 Reason for adopting green supply chain management................................................................4
2.2 Green Supply Chain Practices.....................................................................................................6
2.2.1 Green Design........................................................................................................................6
2.2.2 Green Operation....................................................................................................................7
2.3 Green Supply Chain Management Strategies taken by Ford.......................................................8
2.3.1 Risk based strategies.............................................................................................................8
2.3.2 Partnership for a Cleaner Environment (PACE) program....................................................9
2.3.3 Alignment in the organizational approaches........................................................................9
2.3.4 Energy Treasure Hunts.......................................................................................................10
2.3.5 Transparency policies.........................................................................................................11
2.4 Effective steps for greener supply chain process.......................................................................11
2.4.1 Engaging With Key Suppliers............................................................................................11
2.4.2 Integrating climate change into business strategies............................................................12
2.4.3 Implementing PACE process..............................................................................................12
2.4.4 Reducing the distance.........................................................................................................13
2.5 Advantage of Green Supply Chain Management......................................................................13
2.5.1 Economic benefits..............................................................................................................13

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2.5.2 Innovation can provide competitive advantage..................................................................13
2.5.3 Improved Public Image.......................................................................................................14
2.6 Barrier in green supply chain management...............................................................................14
2.6.1 Commitment from top management...................................................................................14
2.6.2 Adoption of reverse logistics practices...............................................................................14
2.6.3 Market demand...................................................................................................................14
2.6.4 Training and skill development program............................................................................15
2.6.5 Resistance to change and adoption of innovation...............................................................15
2.6.6 Effective Environment Performance Metrics.....................................................................15
3.0 Conclusion.....................................................................................................................................15
4.0 Reference List................................................................................................................................17

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1.0 Introduction
In normal terms, supply chain management is the process of flow of products from
manufacturing unit to the end-customers (Sanghavi et al. 2015). However, the supply chain
management does not only involved with logistics process but also with the movement and
storage of raw materials, inventory management and then delivering process from point of origin
to point of consumption (Christopher 2016). Stadtler (2015) on the other hand stated that
organization focuses on maximizing customer value and sustainability in order to operate their
supply chain management system. Greener technology in recent time plays a significant role in
order to reduce the adversity of global warming and climate change. Govindan et al. (2014)
stated that especially in the automobile industry, company need to focus on the fuel consumption
of the engine a d the technology on which the automobile is built so that it can put less negative
impact on the environment.
This business report thus, focuses the research question “what are the different aspects
where green supply chain management can be implemented?”. Thus, this report will highlight
the important aspects that Ford has already obtained in other region and can also implement in
Australia.
2.0 Discussion
2.1 Reason for adopting green supply chain management
Ross (2013) stated that in order to manufacture a good or a product, organization need to
access their resources or arrange resources. The main problem occurs when company does not
plan for the waste management obtained in every process of developing the products. Zhu, Sarkis

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and Lai (2012) depict that waste is generated almost in every stage of the lifecycle of the
product. Waste in the manufacturing process is obtained in the supply of raw material from the
supplier, distribution process, retail process, consumer process and also in the waste management
process (Guang Shi et al. 2012).
Image 1: Waste in the lifecycle of the products
(Source: Guang Shi et al. 2012)
Reducing waste in the manufacturing process or manage waste is one of the reasons for
adopting the concept of green supply chain management process. Golicic and Smith (2013)
stated that environment is related to the lifecycle of the products. Taken for instance, in the
extraction process of the raw material, the environmental factor of air, water and waste is related;
while, air is related in the process of transport. Sarkis (2012) furthermore portrays that the
manufacturing process, retail or consumer use and disposal deploy the environmental aspects of
air, water and waste. Thus, it can be said that Green Supply Chain Management (GSCM) is
utilized for handling the source reduction, recycling the products, controlling the technology and

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disposal management. All these factors can be put into single pyramid for developing the
pollution prevention hierarchy (Chen et al. 2012). Ross (2013) stated that according to this
model managing only the disposal is a short term goal; however, incorporating the process of
technology control, recycling and reusing and source reduction, an organization can obtain ling
term goals for preventing the pollution.
Image 2: Pollution Prevention Hierarchy
(Source: Chen et al. 2012)
2.2 Green Supply Chain Practices
2.2.1 Green Design
Schoggl, Fritz and Baumgartner (2016) stated that green design refers to the scenario of
systematic environmental consideration for designing of the products or services. Green design
comprises mainly of two processes life cycle assessment (LCA) and environmentally conscious
design (ECD). Fazeni, Lindorfer and Prammer (2014) furthermore depicted that LCA is a
process in which the environmental, occupational health and products related consequences are
considered throughout every process lifecycle of the products development. Schoggl, Fritz and

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Baumgartner (2016) on the other hand stated that ECD is a study that develops the understanding
regarding alignment of the environmental compatibility with the design decisions of the process.
Image 3: Life cycle analysis
(Source: Schoggl, Fritz and Baumgartner 2016)
Golghate and Pawar (2012) also stated that in order to reduce the negative impact on the
environment, the automobile company need to identify the objectives and boundaries of the
LCA, analyze the inventory in order to establish an alignment between the energy in the system
and that of the materials use of the manufacturing process. Sharma (2013) moreover depicted
that the company also need to evaluate the existing performance of the system for analyzing the
impact on the environment, which will help the company to adopt solution that can help the
organization to overcome the adversity.
2.2.2 Green Operation
Green operation is related to all the process and approaches related to the supply chain
management. Green Jr et al. (2012) stated that green operation mainly related with three different
categories of the operations- manufacturing and re-manufacturing, reverse logistics and waste
management.
Manufacturing and re-manufacturing- Jacobs, Chase and Lummus (2014) highlighted that
implementing green process started form the manufacturing of the products and goods. Thus, it is

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important to select the raw materials careful from ethical supplier, who themselves concerned
abut the environment. Zhu, Sarkis and Lai (2013) also stated that the process of re-manufacturing
signifies recycling- integrated manufacturing and the process of recycling signifies to the process
of retrieving used and non-functional material content.
Reverse logistics- Dekker et al. (2013) stated that reverse logistic is process of planning and
controlling the cost-effective flow of raw material through which new products can be
formulated, in-process inventory and finished goods transportation. Dyckhoff, Lackes and Reese
(2013) depicted that in order to perform the reverse logistics; the first process is to recover the
used good and then sorted these products into different categories. In addition to that, products
returns, re-manufacturing and re-using are three different aspects of the reverse logistics.
Waste management- According to Brandenburg et al. (2014), reduction of the hazardous waste
during the production and operation while treating the products, storing the same and disposal of
the products is the part of the waste management. The prime reason for adopting waste
management is reduction in resource use and prevention of the pollution. Monczka et al. (2015)
also stated that effective planning is better prior manufacturing of goods rather than utilizing the
waste after waste has been created.
2.3 Green Supply Chain Management Strategies taken by Ford
2.3.1 Risk based strategies
Dyckhoff, Lackes and Reese (2013) depict that in risk based strategies, an organization
emphasizes on basic clauses comprising purchasing contracts and environment regulatory
requirements in order to meet supplier requirement. Taken for instance, in USA, Federal
Register (FR) is the registered bodies to propose the rule and regulations for emissions from
vehicles and engines that formulated GHG emissions standards for the automobile companies

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(Epa.gov 2018). Thus, in USA, the company needs to follow regulation like Clean Air Act,
Energy Policy and Conservation Act and Energy Independence and Security Act (EISA)
(Epa.gov 2018). Similarly in UK, the automobile companies need to adhere air pollution laws
like Environment Act 1995, Clean Air Act 1993, Environmental Protection Act 1990, Public
Health (Ireland) Act 1878 and Pollution Prevention and Control Act 1999 (Hse.gov 2018). In
Australia, there are rules like Motor Vehicle Standards Act 1989, Protection of the Environment
Operations Act 1997 and Protection of the Environment Operations (Noise Control) Regulation
2017 that the vehicle manufactured need to follow (Epa.nsw.gov 2018).
2.3.2 Partnership for a Cleaner Environment (PACE) program
In order to maintain a cleaner environment, Ford’s program for cleaner environment aims
for reducing the environmental footprint in supply chain management system (Ford.com, 2018).
The concerned program also targets more than 1,100 suppliers over 40 countries (Ford.com,
2018). The primary focus of this PACE program is to conserve water and energy but in recent
times, in order to diminish the carbon footprint, the program also aimed for reducing waste,
carbon emission by 500,000 metric tons by 2022 (Ford.com, 2018). Moreover, the commitment
towards the environmental sustainability makes the company Ford, World’s Most Ethical
Companies eight year in a row by the report of Ethisphere Institute (Ford.com, 2018).
2.3.3 Alignment in the organizational approaches
Brindley (2017) stated that in order to obtain effectiveness in the organizational policies
and approaches to attain the greener business moves, it is important that all the associated
stakeholders should adopt similar goals and then provides towards the organizational objectives.
In case of Ford, PACE offers best practices and allows suppliers to keep a track and achieve
sustainability goals (Ford.com, 2018). They have the provision of sharing their environmental

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progress report and suggest best practices for attaining the green supply chain management
system. Ford estimated that this alignment of all the stakeholder’s organizational approaches
resulted in saving of 550 million gallons of water by 2021, which is able to fill 837 Olympic
swimming pools (Ford.com, 2018). All the stakeholders are provided with PACE toolkit which
comprises of more than 350 leading practices concerning the saving of energy, water, air
emissions and waste (Ford.com, 2018). The staffs are also provide with training in the
sustainability and the statistics shows that 3,302 suppliers are provided with effective suitability
training which was 3,156 and 2,948 in the year 2015 and 2014 (Ford.com, 2018).
Image 4: Supplier Sites Trained for managing sustainability
(Source: Ford.com, 2018)
2.3.4 Energy Treasure Hunts
Ford has initiated the program for saving the energy which emphasizes on the saving of
the required in the entire process of supply chain management system. One such initiative is
using LED bulbs with incandescent light bulbs (Ford.com, 2018). Ford has also incorporate T-8
LED lighting in place of metal halide lights in order to install closed circuit cooling systems
(Ford.com, 2018).

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2.3.5 Transparency policies
Ford targets beauty, household and healthcare cleaning good supply chains through this
policy from hazardous chemicals by the year 2020 (). This policy focuses on the chemical
management strategy that is implemented for reducing the chemicals like Nonylphenol
Ethoxylates (NPEs) after two to three years and also completely stop using chemical products
like flame retardants and perfluorinated chemicals in textile products by the 2022 (). In addition
to that, Ford have also taken initiative for investing $5 million dollars in green chemistry so that
transparency for its chemically-made products can be obtained by 2020 (Ford.com, 2018). Ford
also shows every report on the website and present all the 10 tiers of suppliers and sub-suppliers,
who are working together to improve quality, lowers the cost and make progress to obtain
sustainability goals (Ford.com, 2018).
2.4 Effective steps for greener supply chain process
2.4.1 Engaging With Key Suppliers
Ford has developed Aligned Business Framework (ABF) that helps all the stakeholders to
improve quality, promote innovation, encourage common approaches and explore operational
synergies (Ford.com, 2018). Ford verifies that the code of conduct of the organization and their
suppliers aligned with that of the stakeholders (). These stakeholders are also provided with
effective training on the procedures through which the code of conduct can be obtained. Ford has
105 ABF suppliers and 78 production ABF suppliers in which 74% are production suppliers and
100% have aligned codes of conduct with policy letter 24 (Ford.com, 2018).

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2.4.2 Integrating climate change into business strategies
Ford provides effective training to their suppliers and external stakeholders regarding the
reducing of carbon footprint. The statistics found that 82% of the total suppliers incorporated
climate change in their business strategy; while, 64% of the total suppliers each responds that
they have integrated water-related target and emissions reduction target (Ford.com, 2018).
2.4.3 Implementing PACE process
Ford’s PACE process comprises of five steps- creating the roadmap, collecting the data,
implementing practices, reporting reduction and sharing best practices with suppliers (Ford.com,
2018).
Image 5: Five-Step PACE Process
(Source: Ford.com, 2018)
Ford’s suppliers creating multi-year roadmaps for developing environmental performance
which is followed by recording of baseline environmental data and finding successful
approaches that can be implemented in the organizational policies. Ford then report the

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reductions in GHG, water use, waste generation, air and energy consumption and then facilitates
best practices in the existing policies (Ford.com, 2018).
2.4.4 Reducing the distance
Ford implements new platform strategy through which the company builds smaller
number of cars, which are basically their base vehicles. The maximum distance of the
manufacturing units the assemble unit to the retail outlets are 2,500 miles from the plant
(Ford.com, 2018). Ford also forecast the market demands and customer demand through
analytics and then prepares their manufacturing process so that no resources can be wasted.
Ford's supplier-management program also emphasize on risk planning like fire. Ford also utilizes
those material that are energy efficient and consumers less energy.
2.5 Advantage of Green Supply Chain Management
2.5.1 Economic benefits
One of the greatest benefits that can be attained through the implementation of the green
supply chain management is that people will prefer their products more than other companies.
Sarkis (2012) also stated that reduction in waste products results in decrease in handling expense
of the raw material.
2.5.2 Innovation can provide competitive advantage
In automobile industry, development of the electric cars is a greatest invention that runs
on the electric energy and thus saves the natural resources (Jacobs, Chase and Lummus 2014).
These automobiles technology are cleaner compared to the traditional technologies, process
innovation and reduction is waste. Monczka et al. (2015) moreover stated that adopting this
technology is time consuming but once implemented the company can attain more profitability.

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2.5.3 Improved Public Image
Dyckhoff, Lackes and Reese (2013) portrays that people now a day become more
concerned about the environmental impact of the fuel and thus prefer greener products. Thus, if a
company produces products that are efficient for the environment and its climate, consumers also
prefer to get associated with those companies. Moreover, the governing bodies and the
politicians also support the company for their good environmental performance.
2.6 Barrier in green supply chain management
2.6.1 Commitment from top management
Stadtler (2015) stated that management of an organization intends to adopt more
profitability and this is the reason most of the company does not want to adopt the green
technology. Another reason for adopting the green technology by the top management is that it
require huge investment initially which diminishes their profit revenue.
2.6.2 Adoption of reverse logistics practices
Sanghavi et al. (2015) depicted that reverse logistics aims for waste reduction and less
use of new resources but the process of utilizing the used products need more time and
investment as the used products need to be transferred into a suitable form from where it can be
utilized for next manufacturing process.
2.6.3 Market demand
It is highlighted by Ross (2013) that organization should use analytics so that the market
demand can be fulfilled. However, Schoggl, Fritz and Baumgartner (2016) argued that
sometimes, due to market share fluctuations and monetary fluctuations, the organization cannot

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forecast the demand of the market and consumer accurately which impact the productivity of the
organization negatively.
2.6.4 Training and skill development program
Waters and Rinsler (2014) stated that not all the employee and the stakeholders
associated by the company are aware of the green technology or the process through which the
green supply chain management process can be implemented. However, training designed for
this knowledge process also need time which on investment need reduces the productivity of the
process.
2.6.5 Resistance to change and adoption of innovation
Zhu, Sarkis and Lai (2012) argued that when employee found any change occurred in the
organizational process, some of them become dissatisfied; while some of them opted for
voluntary turnover as they cannot resist change. This will also hampers the production of the
employee and they are failed to utilize their knowledge base due to dissatisfaction occurred.
2.6.6 Effective Environment Performance Metrics
Lack of appropriate performance metrics is an important barrier concerning the
implementation of the green supply chain (Sarkis 2012). Waters and Rinsler (2014) stated that
effective matrices are environment-friendly products, green product procurement, proper
disposal of the products, performance measurement systems generation and reverse logistics.
3.0 Conclusion
It is found from the research that main reasons for adopting green supply chain
management are to reducing the waste in manufacturing process and pollution prevention. The
effective Green Supply Chain Practices found in this report is green design, green operation

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which furthermore comprises of three aspects- manufacturing and re-manufacturing, reverse
logistics and waste management, green supply chain management strategies which comprises of
four categories. It is also found that the green supply chain management strategies highlights risk
based strategies which focus on purchasing contracts and environment regulatory requirements,
efficiency based strategies that focuses on quality standard, innovation based strategies and lastly
closed loop based strategies that emphasizes on reverse logistics. It is also found that the green
supply chain management strategies taken by Ford are partnership for a Cleaner Environment
(PACE) program, alignment in the organizational approaches, energy treasure hunts and
transparency policies. It has been also found that the effective steps for greener supply chain
process are engaging with key suppliers, integrating climate change into business strategies,
implementing PACE process and reducing the distance.

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