Achieving economic and environmental improvements in organisations through low carbon supply chain resource modelling

Research impact case study by Professor Lenny Koh

Wind Turbine

Research within Sheffield University Management School into supply chain management and carbon reduction has delivered economic and environmental impact by helping businesses reduce their carbon footprint through lower-cost resource efficiencies.

The Supply Chain Environmental Analysis Tool, SCEnAT, was developed from our research and has helped businesses worldwide change their operations to reduce C02 emissions, make cost savings of up to £250,000 per company, and improve their business performance through – in one case – winning additional contracts worth £1.75million.

The research has also been used by regional business organisations in developing and implementing growth strategies to support low carbon businesses in Yorkshire and Humber.

Underpinning research

Globally and locally, external pressures on organisations have created an imperative for combined low carbon, low-cost operational and organisational solutions. In response a team from Sheffield University Management School, run since 2005 by Professor Lenny Koh, has researched and tested theories and methodologies to develop a supply chain resource modelling system to help organisations maximise efficiency and reduce carbon footprints.

In response to user needs and working with international collaborators, the group undertook new research on green supply chain theory through the study of supply chains in Europe and Asia. They used systems theory to examine how decisions informed by a whole supply chain or an intra-organisational approach could improve performance across the supply chain, and then focused specifically on low carbon supply chain management, the impact of environmental directives on intra-organisational decisions and established the need for a comprehensive decision support system for carbon management across the supply chain.

The group advanced theory by advocating a balanced whole supply chain system approach to improve both the understanding of, and decision making for, carbon accounting across global supply chains. This applied methodologies to identify areas of greater risk and uncertainty for carbon reduction in the supply chain. Following this, the research advanced to focus on causality between system interventions and supply chains to evaluate and optimise the effectiveness of the tools that the team might develop.

In 2010 Prof Koh led a two-year research collaboration, which developed a decision support tool to help organisations identify areas of high carbon usage and select lowest-cost interventions to address them. This was the crucial point where theory was brought to practice.

The Low Carbon Supply Chain Project aimed to design a system that could integrate different techniques and methods of supply chain mapping and carbon accounting, suggesting interventions that would reduce carbon footprint whilst improving efficiency. Our team’s research developed methodologies for mapping entire supply chains; tracing each component, revealing materials and energy usage at each level, and manufacturing processes and logistical operations within and between each company – including recycling and waste management.

The Sheffield team then developed software based on the relationships identified that, using data from any supply chain, can be applied to reveal the points of highest carbon consumption and interventions that have the most cost-effective impact on the carbon footprint.

Watch Professor Koh’s SCEnAT video on iTunesU (you will need to download iTunesU)​​​​

Impact

Our research into supply chain resource modelling has had economic and environmental impact, helping businesses adapt operations to achieve carbon-reduction targets, whilst reducing costs. It has also influenced regional and national business development strategy.

Engagement with umbrella organisations to maximise the reach of research forms part of the school’s impact strategy and, as part of this, our team has worked with the Sheffield City Region Local Enterprise Partnership (LEP) and the Sheffield Chamber of Commerce and Industry, with whom they are now working on a joint project.

The major output of the Low Carbon Supply Chain Project, led by our team, was SCEnAT which launched in 2011. It has a web interface (wwww.scenat.com), making it easy and free to companies to access. Recently, the software has been extended as a demonstration Cloud computing platform, which permits remote usage and use of simulation data.

The project team has worked with a business advisory group and with regional Chambers of Commerce to disseminate the research findings and SCEnAT to a wide network of SMEs. Six companies have used the tool to date, and our team has worked with one of them (Muntons PLC) to develop a ‘spin off’ carbon calculator specifically aimed at the agricultural sector.

A key benefit for the organisations has been the ability to identify, assess and trace energy usage and carbon emissions at every step in their product’s production process. Four companies have already implemented organisational changes, such as Brocklesby, a UK-based recycling company. The company’s CEO said: “As an SME, we had not used any other decision support tools prior to SCEnAT. Using SCEnAT led us to identify transport and electricity as key ‘carbon hotspots’ in our supply chain. Consequently, we have implemented several operational changes to reduce emissions in these carbon sensitive areas of the business.”

The businesses that have used SCEnAT have benefitted from a reduction in their carbon footprint and supply chain cost savings due to interventions recommended by the model. For example, Sheffield Forgemasters’ director of operations believes that the work has helped them to introduce initiatives that have contributed to a reduction in their C02 emissions to 38 per cent below the Government’s benchmark. This is helping them to reduce green taxes which currently cost the company £1.25million per annum.

Academic collaborators

Dr Adolf Acquaye (Sheffield University Management School until 2013), Professor John Cullen (Sheffield University Management School), Professor Mehmet Demirbag (Sheffield University Management School until 2013), Dr Andrea Genovese (Sheffield University Management School), Professor David Gibbs (University of Hull), Dr Johan Kuylenstierna (University of York), Professor Panayiotis (University of Sheffield International Faculty, Greece), Dr Nasir Rana (Sheffield University Management School until 2012), Dr Victor Shi (Sheffield University Management School until 2012)

Business/Organisation involvement

Brocklesby Ltd, Muntons PLC, North East Light Alloy Company (NELA), Sheffield Chamber of Commerce and Industry, Sheffield City Region Local Enterprise Partnership (LEP), Sheffield Forgemasters International

Funding

European Union, European Regional Development Fund, Regional Development Agency (RDA)

Relevant publications:

Sevkli, M., Koh, S.C.L., Zaim, S., Demirbag, M., & Tatoglu, E. (2007). An application of data envelopment analytic hierarchy process for supplier selection: a case study of BEKO in Turkey. International Journal of Production Research, 45(9), 1973-2003.

Koh, S.C.L., Gunasekaran, A., & Tseng, C. S. (2012). Cross-tier ripple and indirect effects of directives WEEE and RoHS on Greening a supply chain. International Journal of Production Economics, 140(1), 305-317.

Ketikidis, P. H., Koh, S.C.L., Gunasekaran, A., Dimitriadis, N. and Kehajova, M. (2008) The Use of Information Systems for Logistics and Supply Chain Management in South East Europe: Current status and future direction, OMEGA, 36, pp. 592-599.

Bayraktar, E., Demirbag, M., Koh, S.C.L. Ekrem Tatoglu and Halil Zaim (2009) A causal analysis of the impact of information systems and supply chain management practices on operational performance: Evidence from manufacturing SMEs in Turkey, International Journal of Production Economics, 122(1), pp. 133-149.

Koh, S.C.L., Genovese, A., Acquaye, A.A., Barratt, P., Rana, N., Kuylenstierna, J. and Gibbs, D. (2012) Decarbonising Product Supply Chains: Design and development of an integrated evidence-based decision support system – the supply chain environmental analysis tool (SCEnAT), International Journal of Production Research, 51(7), pp. 2092-2109.

Shi, G., Koh, S.C.L., Baldwin, J., and Cucchiella, F. (2012) Natural Resource Based Green Supply Chain Management, Supply Chain Management: An International Journal, 17(1), pp.54-67.

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