Tag: sustainablity

OM in the News: Using Blockchain to Trace Your Clothes

Labor exploitation, like environmental degradation, is baked into fashion supply chains around the world, writes The Financial Times (March 13, 2021). One contributory factor underlying these issues is a lack of traceability: most brands work with so many layers of middlemen that they don’t actually know who is sewing their garments, much less who’s dyeing the fabric or picking the cotton. Researchers at the Transparency Index (which ranks clothing brands based on how much they know and disclose about their own supply chains), say companies have a “total lack of knowledge about where the components of their products are being made, and at what cost to people and the environment”.

Hence a more technological approach to trace apparel supply chains: block-chain. U.K.-based Fibretrace is offering something unprecedented: a way to store supply chain information within the very fibres of a garment.

Here’s how it works: a bioluminescent ceramic pigment as fine as dust is added to the fibres at the beginning of the supply chain (for cotton, it’s added in the ginning stage, when the cotton fibres are separated from their seeds; for synthetics, it’s added at the fibre production stage). Each batch of pigment is created according to a unique “recipe”, which acts almost like a serial code.

Then, at each stop in the supply chain — dyeing, weaving or sewing — the fibre is scanned and that facility then adds new information about what they did to the fibre to a secure blockchain. The pigment is so safe for humans that it’s classified as an “edible product.” The cost: roughly 3 cents for a T-shirt.

Although being able to track a supply chain doesn’t necessarily ensure it will be free of forced labor or manufacturing practices that are bad for the planet, traceability is a very useful first step.

Classroom discussion questions:

  1. Describe how blockchain works in general, and in this industry in particular. (Hint: see page 453 in your Heizer/Render/Munson text)
  2. What other tools do brand name garment firms have to control supply chain sourcing ethics?

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OM in the News: The Megaship Capacity Disaster

In 2006, the Emma Maersk left her shipyard. The length of 4 soccer fields, Emma was far larger and more expensive than any container ship ever before. She was a bet on globalization: By transporting a container more cheaply than any other vessel afloat, she and her 6 sister ships were expected to stimulate even faster growth in international trade, lowering the cost of moving goods through the supply chains that had reshaped the global economy. But the opposite occurred. Emma and the even larger ships that followed in her wake became a nightmare.

Container ships are the workhorses of globalization. Operating on regular schedules— an identical vessel departs Shanghai every Wednesday, stops in Singapore 9 days later and arrives in Antwerp 5 weeks hence, with tight connections to barges and freight trains—intermodal container transport gave manufacturers and retailers the confidence to plan tightly organized long-distance supply chains. Emma and her sisters’ size was expected to give shipping an immense cost advantage. Maersk forecast in 2006 that the demand for container shipping would double by 2016.

The container ship Emma Maersk in Hamburg

But the boom never occurred. Instead, international trade collapsed in 2008-09, and when it picked up again, its growth was far weaker than before. By the early 2010s, there simply weren’t enough container loads to fill all the new capacity, wiping out the cost advantages of larger vessels. And discharging and reloading megaships took longer as well, with more boxes to put off and on, while giant shoreside cranes needed to reach a greater distance to pick up a container. Thousands more boxes multiplied by more handling time per box added days to a port call. Delays were legion.

Once, container ships would have been able to make up those delays en route. But to save fuel and reduce greenhouse gas emissions, vessels must now travel at 17-18 knots instead of 24-25 previously, adding several days to a long ocean voyage. By 2018, 30% of the ships leaving China departed late.

“With proper accounting,” concludes The Wall Street Journal (Oct. 24-25, 2020), “the globalization of manufacturers’ supply chains no longer seems such a bargain.”

Classroom discussion questions:

  1. How would the land side of international logistics be impacted by this issue?
  2. What capacity strategy best fits shipping companies now? (Hint: see Figure S7.6 in your Heizer/Render/Munson text)

OM in the News: Hershey Goes Sustainable

hersheyIt’s almost Valentine’s Day, the time of year that truly tests logistics and supply chain management at jewelry,  flower, gift shops, and restaurants. But few companies will be challenging their suppliers as seriously as Hershey, writes Food Logistics (Feb. 6, 2013). Just recently, the company announced its intention to use cocoa beans from Rainforest Alliance Certified farms in 100% of its products by 2020, in an effort to promote sustainable, ecologically-sound farming practices and safe conditions for workers and families.

While testing its supply chain, Hershey is trying to improve the quality of its products as it expands business into China, India and Brazil, which are rapidly developing a middle class consumer base.  “We can deliver chocolate to many people around the world that haven’t had it before and create the demand for the cocoa farmers. But the only way those cocoa farmers are going to be able to meet that demand is they’ve got to become better,” says Hershey’s VP of global commodities.

Hershey has been procuring cocoa beans from West Africa for over 50 years and  70% of the world’s cocoa currently comes from West and Central Africa. (There are 800,000 cocoa farmers across the Ivory Coast). In recent years, there has been a noticeable shift toward more environmentally- and socially-conscious sourcing.  Mobile technology usage in West Africa has greatly increased in the last 2-3 years, which is a great tool for farmers to access proper farming practices and also connects farmers with vital information about child labor and safety. The International Cocoa Institute is further creating community-based programming in 550 West African communities. Hershey projects over the next two years it will enroll 100,000 of those farmers to help develop a sustainable supply of cocoa for the world.

“We know it’s very feasible to increase farmer productivity by 50 percent,” says Hershey, “as long as farmers: (1) have access to fertilizers and pesticides; (2) are educated on how to apply them safely; (3) modernize their harvesting methodologies; and (4)  have access to modern information on farming practices.”

Discussion questions:

1. Why is it difficult to create sustainable cocoa operations?

2. Discuss the OM issues involved.