Can a Supply Chain be both Agile and Sustainable?

by Bernard Milian

Lean practitioners have an instinctive aversion to minimum batch sizes. The ideal is that when a consumer needs something, it should be manufactured and made available, by the unit, almost immediately. And so any batch size – full pallet, full truck, production campaign – restricts this flow.

The more frequently we can manufacture and deliver small batches, the better it is to adapt to real demand, isn’t it?

However, if we examine the operations of a supply chain in terms of its environmental impact, the notion of massification immediately appears essential. All those trucks, planes, containers, and ships that travel partly empty have a considerable carbon impact. So we need to fill containers, trucks, pallets, etc.

So, the challenge is: can we adapt to customer demand, in an agile way, while reducing the carbon footprint of our supply chains?

Several aspects of a Demand Driven model are conducive to the greening of agile supply chains… if we make it suitable.

Manufacture and transport what you need

This is the heart of the Demand Driven pull-flow model: manufacture and transport only what corresponds to actual demand. Obsolete stock that ends up in an outlet, or worse, in a landfill, is undoubtedly one of the primary sources of environmental inefficiency. The deployment of DDMRP tactics has amply demonstrated its effectiveness in this area – helping to control and reduce “blue” (Over Top of Green) flows.

Optimize transportation batches and production campaigns

Generating pallet, container, and complete truck loads is not that simple. Most ERP systems don’t offer a simple, efficient solution for this – especially when it comes to mixing different goods in the same container. By aiding the management of relative priorities and alternative units of measure, Intuiflow’s “load optimizer” makes this possible at the click of a button – ensuring that this massification is aligned with actual demand.

The same logic applies to production lead time: changeovers, energy-intensive cleaning, and material losses can be reduced with grouped planning and scheduling logic.

Decoupling to massify and bring products to the right place

When implementing a Demand Driven model, the first step is to design it. This involves taking two steps back from the current status, assessing the design of the flows, and positioning decoupling points correctly.

These decoupling points have multiple functions, including:

– Massify supplies upstream of these decoupling points. The judicious use of green zones makes it possible to control transport or production frequencies, and thus to facilitate the setting of ecologically and economically adapted batches.

– Approach goods at a stage of progress and a location that will reduce the costs and environmental impact of the final stages of the supply chain: last-mile distribution, and late variation. With well-maintained buffers, the chances of getting the right stock to the right distance within the expected lead time are maximized, and emergencies are reduced.

In terms of positioning and sizing stocks, this network design work also highlights the impact of longer lead times… and provides food for thought on shortening the distances covered by goods in our chain.

Stabilizing flows

Stabilizing flows in the supply chain is crucial for reducing the negative impacts caused by rate changes and the bullwhip effect. Fluctuations in the supply chain are often a result of planning practices, and these fluctuations have both economic and environmental costs. By adopting a pull-flow operation aided by the Demand Driven model, companies can mitigate the bullwhip effect and promote stability.

This model aligns production and inventory levels with actual demand signals, reducing the need for reactive and inefficient measures. Stabilizing flows minimizes the environmentally costly transient regimes of braking and accelerating, such as container backlogs at ports and expediting using air transport. By reducing the rate of changes and fluctuations in the supply chain, companies can achieve a more sustainable and responsive system, minimizing energy consumption, carbon emissions, and waste generation.

The Demand Driven model serves as a valuable tool to guide decisions in the right direction for greening supply chains. While it is not an ecological solution in itself, it can contribute to reducing the environmental impact by promoting stability and aligning production with actual demand. By recognizing the recurring nature of customer requirements and addressing planning practices, companies can stabilize flows and minimize the bullwhip effect.

This leads to a more sustainable supply chain, where excessive production, wasteful transportation, and resource-intensive expedited services are minimized. By implementing these practices, companies can create a more efficient and environmentally friendly supply chain that is better equipped to meet customer demands while minimizing negative ecological consequences.

Greening without greenwashing

To effectively reduce the ecological impact of a supply chain, a holistic approach is necessary. This involves considering the entire end-to-end network design and addressing various aspects that contribute to environmental degradation. It requires a combination of heuristic thinking, which involves using practical experience and judgment, and attention to detail to identify and optimize processes.

One key area of focus is transportation and energy efficiency. By implementing daily routines and operational practices that prioritize efficient use of transport and energy resources, companies can significantly reduce their carbon footprint. This may include measures such as optimizing delivery routes to minimize mileage and fuel consumption, using alternative fuels or electric vehicles, and adopting energy-efficient technologies in warehouses and distribution centers.

While the Demand Driven model itself may not be a direct ecological solution, it can play a crucial role in guiding decision-making toward more sustainable practices. The Demand Driven model emphasizes aligning production and inventory levels with actual demand signals, reducing waste, and improving overall supply chain responsiveness. By implementing this model, companies can better anticipate customer demand, optimize inventory levels, and reduce excess production and wastage, which can lead to a more efficient and environmentally friendly supply chain.

However, it is important to note that the Demand Driven model is just one piece of the puzzle. Achieving true sustainability requires a comprehensive approach that considers multiple factors such as raw material sourcing, waste management, packaging, and social responsibility. It involves engaging stakeholders across the supply chain, from suppliers to customers, and fostering collaboration and transparency to drive positive change.

In summary, “greening without greenwashing” entails genuine efforts to reduce the ecological impact of a supply chain by implementing practical and sustainable measures. It requires addressing end-to-end network design issues, optimizing transport and energy efficiency, and adopting a holistic approach beyond superficial marketing claims. The Demand Driven model can serve as a valuable tool to guide decisions toward sustainability, but it should be part of a broader strategy that encompasses various aspects of supply chain management and corporate responsibility.

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About the Author
Bernard Milian has more than 35 years of experience in developing agility within industrial and distribution supply chains. He has more than 25 years of experience in Supply Chain Management and Continuous Improvement / Lean 6 Sigma transformation. He has served as a Supply Chain Director within French subsidiaries of world class corporations, in the automotive, electronics, medical devices, furniture and metallurgy industries, B2B, B2C, manufacturing and distribution environments