Tag: greenhouse gas emissions

OM in the News: Pepsi’s Supply Chain Emissions Problems

Two years ago, the CEO of a large British food chain, Tesco, told PepsiCo and its other suppliers: “We don’t sell air — and we don’t transport air”. He then warned all suppliers that, if they did not address the problem of overpackaging, their products were at risk of being removed from Tesco’s stores.

PepsiCo listened: it began cutting down on packaging and bringing in more eco-friendly materials, such as cardboard. Now, writes Financial Times (Feb. 22, 2022), the $235 billion company is looking to exert a similar influence on its own suppliers.

Like many consumer goods companies, PepsiCo set out ambitious climate goals, saying it would cut greenhouse gas emissions throughout its value chain by at least 40% by 2030. But 92% of PepsiCo’s total emissions come from outside its own operations, so it has to persuade suppliers and customers to cut emissions amounting to 22.6 metric tons of carbon dioxide per year — equal to taking about 5 million cars off the road.

The maker of Mountain Dew, Doritos and Quaker Oats is not alone in the scale of the challenge it faces. Tesco’s other suppliers risk falling behind on their climate aims because more than half of them lack any climate targets at all, and only one in 40 have science-based targets.

PepsiCo will make changes to its transport and to the coolers used for its drinks and will also push its suppliers to switch to renewable energy. But to achieve its emissions goals, it must also look back along its supply chain and persuade farmers who produce millions of tons of commodities annually to change their own practices. When it comes to Frito-Lay chips, this is comparatively straightforward. While PepsiCo does not own potato farms, it buys the crop directly from potato farmers, so it is piloting a program to process potato peelings into low-carbon fertilizer on its supplier farms. This has the potential to reduce fertilizer emissions by 70%.

In Illinois, for example, PepsiCo is working to pay farmers for switching to greener farming methods such as no-till cultivation and cover crops, to target 20,000 acres of land. Farmers are a conservative group, however, and not prone to rapid change. But they will need to scale up rapidly if PepsiCo is to reach its goals.

Classroom discussion questions:

  1. Watch the Supplement 5 video in MyOMLab called “Green Manufacturing and Sustainability at Frito-Lay” or read the case study on page 209 of your text. What other tools is PepsiCo (the parent company) employing to help environmental concerns?
  2. Why is sustainability a major issue for operations managers?

 

OM in the News: Sustainability Goes Mainstream

Expired yogurt. Cardboard cartons. Pallets and plastic jugs. Wilted lettuce. Steel drums. Is it ecologically sound policy to send multiple trucks to transport waste products for separate recycling and diversion, when one dump truck could haul it all away? This is just one question companies face when trying to improve sustainability and in some cases reach carbon neutrality, the topic of Supplement 5.

Companies are increasingly cognizant that consumers and investors are watching their actions to reduce emissions– and realize their pledges have other positive impacts, including financial ones. Instead of sending tons of material to landfill, companies are identifying their waste streams with economic value and sending those materials to recycling facilities, writes Supply Chain Dive (July 21, 2020). Firms can calculate the carbon footprint involved with waste and landfill and see if diversion would yield additional savings.

Consumer sentiment now makes waste reduction a priority. “It’s becoming more prevalent; 30-40 years ago, nobody cared,” said one industry exec. (We recommend showing our video case study: “Green Manufacturing and Sustainability at Frito-Lay” to make this point).

In the U.S., over 30 million tons of food goes to the landfill– about 75% of total food waste, comprising 22% of municipal solid waste (MSW) landfill. Almost 7.5 million tons of food waste is converted to energy through combustion of MSW, and 2.57 million tons is composted. Materials like cardboard and plastics have resale value, and businesses are relatively disciplined about recycling these, due to the economic incentives and sustainability goals. Metal has the highest impact in recycling, given its value. It takes 75% less energy to make a steel product with recycled steel versus with virgin steel, and 95% less energy to make aluminum cans with recycled aluminum.

Companies can calculate emissions using the EPA’s Waste Reduction Model, a reporting tool for baseline and ongoing greenhouse gas emissions.

Classroom discussion questions:

  1. What does the Triple Bottom Line mean?
  2. What forces during the pandemic are working against increased sustainability efforts?

OM in the News: Saving the Planet With “Meatless Mondays?”

Without getting into the politics of global warming and sustainability, Businessweek (Sept. 30, 2019) brings up some interesting climate statistics that students may enjoy discussing. 

For example, global meat consumption has more than doubled since the 1960s, and meat production is set to double again by 2050. Americans, who enjoy their steaks and burgers, eat 3 times as much meat as the global average. Should they, and other western diners curb their appetites? Consider this: Livestock are responsible for 12% of man-made greenhouse-gas emissions, more than the entire aviation industry. (Although we should point out that airlines this year will pump 1 billion tons of carbon dioxide into the atmosphere).

Most of livestock emissions comes from just one animal: the cow. Cattle are responsible for vastly more emissions than chickens and pigs, in part because their digestive systems produce methane, a potent greenhouse gas. From a climate-change perspective, serving roast beef at dinner is like driving 100 miles in a car. But cattle don’t just produce gas; they also take up a lot of space. In Brazil, swaths of the Amazon have been cut down to make room for cattle ranches, releasing huge amounts of trapped carbon. Brazil is hardly alone: More than a quarter of the earth’s ice-free land has been set aside for grazing.

Most scientists agree that eating less meat would help to avert a worst-case climate scenario. If all the world swore off meat, it would cut global emissions by 8 gigatons a year —  the same as shutting down 2,000 coal-fired power plants.  Adopting the Mediterranean diet, which includes poultry but limits red meat, would have the same impact as driving 70 fewer miles each week. The “Meatless Mondays” movement, now active in 40 countries, commits followers to going vegetarian one day a week. The effects add up: Skipping a single quarter-pound hamburger can save more than 400 gallons of water and the energy it takes to power a smartphone for 6 months. Do it every week for a year, and the greenhouse-gas savings are equivalent to biking 1,000 miles instead of driving.

Classroom discussion questions:

  1. How many students would support a “Meatless Monday?”
  2.  Why is this an OM issue, and how can managers act to cut greenhouse gasses?

OM in the News: Airlines Fly on a Sugar High

GOL's flight uses a blend of farnesane and jet fuel
GOL’s flight uses a blend of farnesane and jet fuel

The red-and-white Boeing 737 looked like any other plane on the tarmac here at Orlando International Airport. But 2 months ago, the plane became the first commercial flight powered by a new jet fuel made from sugar cane. The passenger flight, operated by the Brazilian airline GOL, flew from Florida to São Paulo on a 10% blend of a clear liquid called farnesane mixed with regular jet fuel. And last month, Lufthansa flew a passenger plane from Frankfurt to Berlin on farnesane, which can be mixed directly with petroleum jet fuel without any changes to planes, engines or fueling equipment.

Renewable bio-jet fuels like farnesane hold the elusive promise of better energy security, reduced carbon emissions and lower fuel costs — an increasingly pressing concern as international regulators prepare to tighten regulations, reports The New York Times (Oct. 8, 2014). The global aviation industry has also set ambitious goals to reduce its greenhouse gas emissions, including slashing emissions by 50% by 2050 compared with 2005.

Airlines like United, KLM and Alaska Airlines have flown planes powered by oil made from algae, used vegetable cooking oil and plants like camelina and jatropha. In spite of initial excitement, commercial airlines have not widely adopted bio-jet fuels, mainly because of their high cost. But farnesane could be more commercially viable because it is produced in Brazil, which has a robust policy and infrastructure to promote and produce biofuels. (Brazil is the world’s largest producer of sugar cane as well as the second-largest producer of ethanol. A majority of light vehicles on the roads in Brazil can run on ethanol, which is made from domestic sugar cane.) According to rigorous testing by plane makers like Boeing, farnesane and other types of bio-jet fuel actually perform better and burn cleaner than conventional jet fuel.

Classroom discussion questions:

1.Why is this new jet fuel an OM issue?

2. What are the advantages and disadvantages of farnesane?