Supply Chain and Logistics Management - Case Study Example

Supply Chain and Logistics Management Table of Contents Table of Contents 2 Introduction 3 Supply Chain Management Process of Bio Fuel from Firm to Energy Consumer 4 Resources Collection 6 Transportation 7 Location of Energy Production Facilities and Distribution to the End Customers 8 Risks related to the Supply Chain and Logistics Management 8 Recommendations to Mitigate Risks against Supply Chain Interruptions and Vulnerability 12 Conclusion 15 References 17 Introduction Supply chain and logistics management is an important part of a business process. It is a total systematic process that strategically controls the arrangement from raw materials to supply of finished goods. Supply Chain management is better recognised as cross functional in nature, as it operates in various aspects of a business. The concept of supply chain management aimed at increasing competitive advantages for companies by providing values to customers’ preferences. Logistics management is significant for the development of a business process, as it creates a connection between manufactures to warehouse and suppliers to customers (Zigiaris, 2000). More specifically, supply chain management covers a major portion of a business process such as production to product development. In a business process, supply chain management plays the role of authority that control several processes centrally. By the implementation of an effective supply chain management, companies are able to cut down the excess cost of distribution and deliver products to customers within a suitable time. The smooth process of supply and distribution can be maintained by taking control over internal production, distribution, internal stocks as well as sales of the companies. Currently, the market has intensified with competition for globalisation and technological advancement (Thomas & Kopczak, 2005). In this regard, advent of technology has been playing a significant role towards the overall development of a business process. Correspondently, to build the goodwill of a company, supply chain has been identified as a key significant part. To meet the satisfaction and needs of customers, it is important for a company to implement a good product chain cycle. As per the current scenario, it has been observed that modern day customers are forcing companies to implement effective methods of sustainable supply chain. This process will improve the process of logistic. The strategic implementation of a sustainable supply chain management provides companies several advantages related to logistic department (USAID, 1998). The principal objective of the study is to develop a biofuel chain based management with the use of renewable fuel i.e. glycerol. Apart from this, the study describes about risk management strategy for a biofuel fired Combined Heat and Power (CHP) system. The system has been installed at University of Greenwich Medway campus. In this context, the study focuses on several efficiencies or strategies that are to undertaken by the university to produce required biofuel for meeting the energy requirement and minimise emission of carbon. Supply Chain Management Process of Bio Fuel from Firm to Energy Consumer Following the increase in oil price in the global market, the cost of fuel price has also increased. In addition, due to high consumption of fuel, environmental problem has also been increasing in a rapid manner. Due to the increasing level of environmental pollution, ecological balance has been disturbed accordingly. In this regard, several business sectors have decided to contribute towards sustainable development. In order to contribute towards sustainable development, several industries have implemented sustainable or green supply chain management in the logistic department. Apart from this, people are also becoming more concerned regarding environment protection. In order to protect environment and maintain ecological balance, people are identified to be using bio gas or bio energy as fuel. It has been observed that University of Greenwich has developed a project that has been focusing on providing biofuel through sustainable supply chain management. In this manner, University of Greenwich is planning to provide CHP energy to retrofitting scheme. The enhancement of renewable energy resources is considered to be one of the most innovative inventions in enhancing the fragile global energy system with its limited fossil fuel resources. Apart from this, the implementation of renewable energy emerged as a promising policy of reducing environmental impacts to a large extent by minimising carbon emission. As per the current scenario, renewable energy resources are playing a pivotal role in global environmental strategy. This strategy will be helpful in reducing greenhouse gas emission. Biofuel generated through glycerol is an effective mechanism of partially replacing the use of fossil fuels in an immense manner. In the present day context, people are identified to prefer the use of biofuel or renewable fuel for their consumption. Contextually, the term recycling has been used in a wider range for maintaining the ecological balance. Biofuel or fuel from renewable resources is gearing the process of waste management. Additionally, biofuel is an extract from bio solids, forestry, animals and several agricultural residues (Sprick & et. al., 2012). Bio mass supply chain is regarded as one of the most innovative supply chain management strategies to build a sustainable logistic structure. The structure of global market of bio mass is quite dynamic in nature. Usually, bio mass is used for producing energy especially thermal energy, which is used in several production sites. Energy producers are procuring waste bio mass from numerous suppliers for developing biofuel needed for heating and lighting necessary for the justification of energy production facilities. However, this process includes several complexities in its procedures. To eliminate these complexities, the authority of the University should apply effective supply chain planning and coordination within the biofuel value chain for generating energy from renewable fuel glycerol. The process of bio mass energy production includes few processes such as bio mass collection from single or several locations or several pre-treated products, after collection of waste those bio mass are stored in a location, which is to be situated in an intermediate place. Following warehousing of raw materials that waste is needed to be transported from one place to another place. In addition, the waste is processed with the aim of forming the required energy to meet the heat and lighting requirements in the area. There are several procedures of producing biofuel from bio mass. The process includes the generation of biofuel from the production process to supply process. Biofuel supply chain process has several components, which is entirely dependent on the flow of material. Components of biofuel supply chain include feedstock production, feedstock logistics, conversion or up-gradation and distribution (Sprick & et. al., 2012). Resources Collection The residues from forest products and food crops among are used for the production of biofuel. For instance, resources collected from commercial forestry and straw are used in producing biofuel. These kind of typical bio mass resources are collected from field and are needed to be collected in systematic manner. Correspondingly, bio mass is produced during the production of food products. The food producing industry, beverage industry as well as paper mill are the secondary sources of bio mass. Bio mass residues and waste are identified as the secondary or indirect resources of biofuel. In addition, bio mass residues are having several useful applications such as fertilisers, fodders, raw materials and soil conditioner. The waste treatment process in the production sites is considered to be a starting phase of developing bio energy system (Thomas & Kopczak, 2005). Location of Storage Facilities The collection of bio mass is important factor for effective supply chain management. Simultaneously, along with the resource collection method, storage of raw material is also important for the development of a sustainable supply chain management. The bio mass resources harvested over a short duration within a year are needed to be stored in a safe place. The large quantities of straw as well as short rotation woody crops are required to be stored in such a place where it spread in an even manner during requirement of raw materials. More specifically stated that the storage facilities or warehousing is needed to be located on farm or forest region where it can be easily collected and stored (Kim & et. al., 2011). Apart from this, the field biomass storage facilities are recognised to more cost effective as per several experts. However, this factor can have an impact over bio mass raw material. Due to uncontrollable moisture loss, bio mass raw material can be spoiled and in this regard, field bio mass storage facilities have been rejected by University of Greenwich. Contextually, University of Greenwich has adopted the strategy of creating intermediate storage location between fields and power plant. Though the option of selecting intermediate storage location requires higher investment and cost, but this cost factor can lower spoilage or wastage of raw materials (Rezaie & Rosen, 2012). Transportation Transportation system should be effective and requires fast services for procuring raw materials from storage location to production plant for conversion purposes. However, this facility will be a lengthy process and requires continuous contribution in the transportation system. According to several experts, University of Greenwich has adopted another strategy to reduce the transportation cost and ensure effective flow of material in the supply chain management. In this respect, University of Greenwich has adopted the scheme of establishing storage facilities near to the plant (Harvey& et. al., n.d.). Location of Energy Production Facilities and Distribution to the End Customers Production of bio fuel is recognised to be an innovative application for reducing environmental pollution. The production of Glycerol can be recognised to be an important consideration for the development of biofuel industry. As per the evaluation of its ingredient, the source of Glycerol can be identified. Fatty acid and content of methyl indicated plant oil as a prime source of bio diesel. After the production of bio diesel or bio fuel, it is provided to the end consumers through effective distribution channel. The use of glycerol has been an effective mechanism for generating required energy for heating and lighting purposes effectively. In addition, glycerol is identified as a renewable fuel, which also assist in reducing carbon emission (Slade & et. al., 2010). Risks related to the Supply Chain and Logistics Management Development of biofuel is considered to be one of the effective and promising ingredients for renewable liquid fuel. Bio mass fuel is recommended as a solution to climate change, which is a major concern in the present day context due to heavy pollution rate. Producing biofuel is easy and most preferable, as it can be easily renewed from variety of domestic resources. The production and use of bio energy fuel may help in lowering environmental impact due to pollution and carbon emission. Apart from this, the actual intention of supply chain management process is to increase the productivity (Thomas & Kopczak, 2005). Besides, increment of productivity also reduces the cost of distribution and management. Biofuel industry is recognised to be one of the emerging industries of the modern trend. Although, the bio fuel industry is an emerging industry, but it has several risks related to production and supply of biofuel. Generation of biofuel is highly dependent on the agricultural products that are highly associated with the risk factor. It has been observed that the level of uncertainty in supply amounts, market demands, market prices and processing technologies are major consideration in managing supply chain operations. It has been observed that these types of uncertainty are seemed to complicate the assessment of investment decision. It has been identified that major problem related to the design of supply chain and logistics management of bio fuel. The uncertainty related to the bio mass supply chain network that has an impact over the inventory of bio mass feedstock (Slade & et. al., 2010). It has been ascertained that to produce a large amount of bio mass feedstock at a desired level requires careful logistical analysis. An effective supply chain of biofuel includes different activities such as harvesting, treating, transportation, storage and deliver to the end users. The major problem of this industry is related to products availability issues. The raw materials of bio mass products are collected from agricultural fields and farming sector. Though the resources of the bio mass are easily available, but there are several issues related to the procurement of raw materials. In this context, the environmental issues are having a vital impact over the development of biofuel resources (Beesley, 2013). Although the generation and usage of biofuel is an important strategy for the betterment of environment, but resourcing of bio mass can affect the environment to a certain extent. Biofuel is derived from agricultural, forestry and environmental products. In this regard, it has been observed that agricultural products and forestry products are based on the climatic conditions to a large extent. Apart from this, frequent uses of fertilizer over crop degrade soil quality and are also affecting the quality of the crops that can be a high risk for the development new products. Additionally, price volatility of crop is recognised to have a direct impacted over the supply management of crops. It can be stated that price volatility is not an only reason of affecting the supply chain of the biofuel gas, but the demand and supply of crops are also affecting the production of bio fuel. Decrease in demand as well as supply shocks also has an impact over the development of bio mass fuel. There are several ingredients of biofuel that act as a barrier in the management of supply chain operations. One of the key ingredients of biofuel named ethanol, which is completely miscible with water, but separate gasoline mixture. Thus, ethanol is recognised to be a vital risk factor for the production biofuel (Sprick & et. al., 2012). Though the use of biofuel is highly beneficial for sustainable development of environmental condition, but it has also certain negative impacts over the environment. It can be apparently stated that the use of biofuel has several benefits relating to security of natural energy, economics as well as environment. In order to realize these positive impacts, several challenges are needed to be mitigated in a very efficient manner. It has been observed that during collection of raw materials, several kinds of losses arise, as in the supply chain of bio fuel, water and land resources are highly used (Zhou & et. al., 2014). In this regard, the use of land and water to a large extent lead to wastage. Apart from this, it has been observed that bio fuel production can be vulnerable in generation of air pollutants. In this regard, air pollution also increases the pollution level within the environment. It is also stated that due to excessive increment of air pollution, as the percentage of greenhouse gas emission has also increased (Zigiaris, 2000). Improper planting function and production process of bio fuel can have a negative impact over wildlife habitat. It is also observed that during the collection of forestry oriented raw materials, the ecological balance can be disrupted (Thomas & Kopczak, 2005). It has been observed that in order to create energy from biofuel, forest woods are considered as main resource. Paper pulping and food processing wastes are the largest contributors of biofuel development. Due to huge contribution from the bio mass resources, few problems may arise such as deforesting and many more. However, it is observed that due to forest thinning the rate of forest fire has been reduced. Though it recognised as benefit, but the major challenges is associated with the implementation of technology in production of biofuel. Improper technological implementation is recognised as key barrier for the development of supply chain management process. It has been observed that the biochemical pathway includes dealing with the variability of bio mass feedstock is noted as major challenge (Slade & et. al., 2010). The prime negativity is related to the implementation of the technology for collection of resources. Apart from this, the long term impact of collecting bio mass resources are shown over agribusiness. The removal of large number of crop residue is identified to make a bad impact over the agricultural activities. Due to the collection of large numbers of crops, they are removed or reduced significantly, which cannot promote agricultural business within the country (Sprick & et. al., 2012). Due to this factor, economic conditions of a country can be hampered. Besides, due to the bio mass resource collection, the nutrition value of soil has reduced gradually. In this regards, the farmers are facing several problems related to soil degradation and future cultivation. In addition, the farmers are also facing the water problem for their cultivation. It has been observed that normal people are also facing several problems such as reduction of water and global warming due to high rate of forest thinning or deforestation. Due to this technology, the ecosystem has been affected (Rezaie & Rosen, 2012). Recommendations to Mitigate Risks against Supply Chain Interruptions and Vulnerability Supply chain management process of biofuel is recognised as one of the most innovative concepts. Though it is one of the most innovative concepts, but it has several risks during the process. To mitigate these risks, the supply chain process of biofuel is needed to be more developed and advanced in nature. In this context, the manufacturer should imply few possible interventions to develop an effective and safe supply chain management. Here are few recommendations for University of Greenwich for developing an efficient supply chain and logistics management of biofuel or CHP (Kim & et. al., 2011). Initially, University of Greenwich needs to produce a plant variety by implementing genetic engineering technology. The implementation of genetic engineering technology will maximize bio mass production but it will also lower the ash level. This particular technology improves the conversion efficiency by reducing conversion cost. After generation of plant variety, the university should develop new and innovative harvesting and storage technique. This technique will be efficient to preserves the quality of bio mass before the procedures. In this regard, the university should develop techniques that should not entrain ash (Harvey& et. al., n.d.). The university reduce cost associated with cleaning of feedstock as well as increase conversion yield by conventional windrowing and bailing. It has been observed that the harvest and storage practice can have an impact on chemical composition. To minimize the effects of chemical composition and structure over the bio mass, the university should implement few techniques that reduce high moisture and contamination or degradation. The storage of bio mass will require a year round bio refinery operation as the agricultural residue system is having limited harvest window (Ghoddusi & et. al., 2012). After developing a new harvest system, the university should develop a densification system that would not have an impact on the convertibility of biofuel. Apart from this, the system will also reduce the transportation cost by adopting high capacity transport and handling the infrastructure very efficiently. For the reduction in particle size and pre-processing, bio mass will increase the bulk density of bio mass (Gebreslassie & et. al., 2012). In this regard, the university should take few steps related to the conversion process of bio mass. The university should impose vigorous conversion technologies. The conversion technology should include the ability to accept a wider range feedstock, physical characteristics as well as chemical compositions. In this regard, advanced designs related to enzyme cocktails for generating largest amount of readily fermentable sugars. This process encourages the less pre-treatment conditions as well as enables the use of greater variety of feedstock (Elbehri & et. al., 2013). Optimization of pre-treatment process assist is efficiently converting bio mass in order to minimise carbon emission. Apart from this, the process will limit the formation of degradation products that may slow down fermentation. The cost effective process is useful for the separation and recovery of desired products to develop an effective system for the generation of the bio products in larger scale. To meet up the necessary specification, up-gradation of intermediate products for final fuel is required. Following to the development of advanced design, the university should develop a system that will produce the material compatible with present available distribution and end-use-infrastructure. It has been identified that to process bio mass fuel is related to the up-gradation of existing facilities by installing pre-treatment process equipment for processing biofuel (Chung& et. al., 2010). Apart from this, University of Greenwich should look over other aspects of collection of biofuel. The product availability is recognised to be one of the major issues related to production of biofuel. It has been observed that the suppliers of bio mass are guaranteed in advanced basis. Due to the uncertainty of raw material availability, the plant should improve its planting material for increasing the yield production of bio energy. Popular species i.e. willow are the ideal woody crop used for generating bio energy (Chum & et. al., 2015). In this regard, the short rotation woody crops are needed to be used as a bio mass. Currently, to apply the system of SRWC, the university should be more concerned and effective in developing a cost effective management strategies, which will quantify the relationship between management inputs and bio fuel feedstock. This process will help the university to produce biofuel in commercial scale. This integrated feedstock production system will help to develop the deployment production (Anggara, 2008). It has been stated that quality of the raw material is important for the development of the quality finished goods. In this regard, preserving the quality of raw material is becoming a significant concern. To develop quality biofuel, the university should develop new harvest and collection techniques for preserving the quality of bio mass. The maintenance of feedstock quality indicates towards the result of improved conversion performance. Presently, environment protection is becoming a major concern (Beesley, 2013). In order to develop a pollution free sustainable environment, the adoption of the generation is highly required. Contextually, an increase in productivity is recognised as suitable option for sustainable environment. In this regard, developing new models as well as other analytical tools has been necessary to integrate the productivity of biofuel, economic and environmental development for predicting the social outcomes of energy production option. Simultaneously, the development of a cost effective production profile under a representative variety of growing and production logistics condition will be helpful for generating the production profile. Reduction of the transportation cost is also another strategy of cost effective high productivity. Besides, to mitigate several challenges related to the technological implementation requires better technological implementation. It is also stated that development of flexible technological solution will be a vital factor for the improvement of responsiveness by creating visibility of the materials (Biomass Research & Development, 2014). Conclusion By reviewing the study, it has been noted that supply chain management is recognised to be one of the most useful and effective strategy for the running or maintaining the business process in a smooth manner. It has been observed that intervention of new products in the business industry required high level of concern. It has been stated that University of Greenwich has to implement several new technologies that can be helpful in developing an effective supply chain management of biofuel. It has been observed that the university is needed to design for a plant that can be effective in producing biofuel as well as supplying biofuel to the end consumers in an appropriate manner. University of Greenwich has collected bio mass resources for producing new and qualified finished biofuel for consumption. During collection of bio mass resources, the university has been faced several challenges. The challenges are highly related to the collection process of bio mass resources. It has been observed that as the bio mass resources are oriented from the agricultural products, which has been a major concern for developing a sustainable supply chain. In this regard, the experts have explained several risks that are associated with the collection of agricultural products. Large number of agricultural resources emphasise on agribusiness, so that the biofuel from the agro crops are affecting the agribusiness. Moreover, there are several vital risks associated with the collection of forestry and agricultural products for the conversion of bio fuel. From the above study, it has been anticipated that though biofuel consumption is referred as eco-friendly, but its production can be harmful for the environment. It has been observed that the efficient technology and the dynamic design of supply chain and logistics can be a good strategy for the development of a safe and secure biofuel supply chain management. To build an effective and efficient supply chain management, few recommendations are provided to the university. References Anggara, R. A., 2008. Implementation of Risk Management Framework in Supply Chain: A Tale from a Bio fuel Company in Indonesia. Manchester Business School, pp. 1-31. Biomass Research & Development, 2014. Integrating the Biomass Supply Chain for Improved Efficiency. White Paper, pp. 1-14. Beesley, F., 2013. Bioenergy CHP Feasibility Study. Ecotec21 Project and Medway Council, pp. 1-29. Chum, H. & et. al., 2015. Bioenergy. Report, pp. 1-309. Chung, S. & et. al., 2010. Biofuel Supply Chain Challenge and Analysis. Engineering System Division, pp. 1-74. Elbehri, A. & et. al., 2013. Biofuels and the Sustainability Challenge: A Global Assessment of Sustainability Issues, Trends and Policies for Biofuels and Related Feed Stocks. Food and Agriculture Organization of the United Nations, pp. 1-172. Gebreslassie, B. H. & et. al., 2012. Design Under Uncertainty of Hydrocarbon Biorefinery Supply Chains: Multi Objective Stochastic Programming Models, Decomposition Algorithm, and a Comparison Between CVaR And Downside Risk. American Institute of Chemical Engineers Journal, Vol. 58, No. , pp. 2155-2179. Ghoddusi, H. & et. al., 2012. The Supply Risks and Resilience of Biofuels. Delft University of Technology, pp. 1-22. Harvey, P. J. & et. al., No Date. Glycerol Production by Halophytic Microalgae: Strategy for Producing Industrial Quantities in Saline Water. National Technical University of Athens, pp.1-6. Kim, J. & et. al., 2011. Optimal Design and Global Sensitivity Analysis of Biomass Supply Chain Networks for Biofuels under Uncertainty. Computers and Chemical Engineering 35, pp. 1738-1751. Rezaie, B. & Rosen, M. A., 2012. District Heating and Cooling: Review of Technology and Potential Enhancements. Applied Energy Vol. 93, pp.1-10. Slade, R. & et. al., 2010. Prioritizing the Best Use of Biomass Resources: Conceptualizing Trade-Offs. Working Paper, pp. 1-32. Sprick, S. & et. al., 2012. Supply Chain Management in Renewable Energy Networks. Advanced Research in Scientific Areas, pp.149 -155. Thomas, A. S. & Kopczak, L. R., 2005. From Logistics to Supply Chain Management: The Path Forward In the Humanitarian Sector. Fritz Institute, pp. 1-15. Zhou, F. & et. al., 2014. Analyzing the Impact of Intermodal-Related Risk to the Design and Management of Biofuel Supply Chain. State Study 259, pp. 1-30. Zigiaris, S., 2000. Supply Chain Management. Report Produced for the EC Funded Project, pp.1-27. Read More