Iakovou Vlachos Achillas Anastasiadis ICSC 2012
Iakovou Vlachos Achillas Anastasiadis ICSC 2012
Iakovou Vlachos Achillas Anastasiadis ICSC 2012
Abstract
The agrifood sector is one of the most significant economic and political areas within
the European Union, with significant implications for sustainability such as the
fulfillment of human needs, the support of employment and economic growth, and its
impact on the natural environment. Growing environmental, social and ethical
concerns and increased awareness of the impacts of the agrifood sector have led to
increased pressure by all involved supply chain stakeholders, while at the same time
the European Union has undertaken a number of relevant regulatory interventions.
This paper aims to present a methodological framework for the design of green
supply chains for the agrifood sector. The framework aims towards the optimization
of the agrifood supply chain design, planning and operations through the
implementation of appropriate green supply chain management and logistics
principles. More specifically, focus is put on the minimization of the environmental
burden and the maximization of supply chain sustainability of the agrifood supply
chain.
1. Introduction
The agrifood industry is a sector of significant economic and political
significance. It is one of the most regulated and protected sectors in the EU,
with significant implications for sustainability such as the fulfillment of human
needs, the support of employment and economic growth, and its impact on
the natural environment. According to the European Commission, the food
and drink sector made up of about 310,000 companies which provide jobs to
more than 4 million people (European Commission, 2012), while contributing
to 20-30% of all environmental impacts in EU (Bakas, 2010). Growing
environmental, social and ethical concerns and increased awareness of the
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for energy recovery and nutrient recycling, to mitigate climate change and
eutrophication which are currently unexploited (Kahiluoto et al., 2011). To that
end, biomass emerges as a promising option, mainly due to its potential
worldwide availability, its conversion efficiency and its ability to be produced
and consumed on a CO2-neutral basis. Biomass is a versatile energy source,
generating not only electricity but also heat, while it can be further used to
produce biofuels (Verigna, 2006). Iakovou et al. (2010) provide a critical
synthesis of the state-of-the-art literature on waste biomass supply chain
management. Agrifood biomass is usually free of toxic contaminants and is
determined spatially and temporally by the respective local/regional profile of
the pertinent activities. It is well documented that 31% of the greenhouse-gas
emissions and more than 50% of eutrophication are related to food chains,
thus highlighting the need to intervene in the agrifood supply chain to
ameliorate its impact on the environment (CEC, 2006). In order to promote the
“green” character of the agrifood supply chain sector and elaborate agrifood
biomass operations on large scale, the application of appropriately designed
innovative policies and systems is necessary (Negro et al., 2007).
Additionally, the recent post 2009 recession period has further
underlined the need to turn the business focus, across the world, not only to
profitability, but to sustainability as well. Today, one of the key priorities in
corporate strategic design for an organization is to emerge as socially
responsible and sustainable through environment protection. Companies are
structuring their sustainability reports disclosing their strategy to address the
growing concerns of environmental degradation and global warming. Today,
80% of the global Fortune 250 companies release their annual sustainability
report, up from 37% in 2005 (Singh, 2010). As a focal part of sustainability
initiatives, green supply chain management has emerged as a key strategy
that can provide competitive advantage with significant gains for the
company’s bottom line. In designing green supply chains the intent is to adopt
comprehensively and across business boundaries, best practices right from
product conception to the end-of-life recycling stage. Under this context,
green initiatives relate to tangible and intangible corporate benefits.
Sustainability reports of many companies indicate that the greening of their
supply chains has helped them to reduce their operating cost with increased
sustainability of their business.
The result of a recent survey conducted by McKinsey documents that
green supply chain management is one of the top two strategic priorities for
global corporations (McKinsey, 2011). The benefits of going green are
substantial. A green supply chain can not only reduce an organization’s
carbon footprint but also lead to reduced costs, improved reputation with
customers, investors and other stakeholders, thus leading to a competitive
edge in the market and therefore increased profitability.
The importance of linking research to sustainable development is
strongly acknowledged, and the framework for doing so at the EU level has
been setup reciprocally in the EU renewed Sustainable Development Strategy
and in the Seventh Framework Programme. This is further reaffirmed in most
recent EU R&D policy documents; the Communication on "A Strategic
European Framework for International Science and Technology Cooperation"
and the Communication on "Toward Joint Programming in Research: Working
together to tackle common challenges more effectively”. Furthermore, the
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ERA vision 2020 (within the Ljubljana process) calls for the European
Research Area to focus on society’s needs and ambitions towards sustainable
development. The three Key Thrusts identified by ETP Food for Life Strategic
Research Agenda 2007-2020 (SRA) meet all of the criteria required to
stimulate innovation, creating new markets and meet important social and
environmental goals. These Thrusts are:
• Improving health, well-being and longevity.
• Building consumer trust in the food chain.
• Supporting sustainable and ethical production.
According to the third Key Thrust, food chains should operate in a
manner that exploits and optimizes the synergies among environmental
protection, social fairness and economic growth. This will further ensure that
the consumers’ needs for transparency and for affordable food of high quality
and diversity are fully met. Progress in this area is expected to have
significant benefits for the industry in terms of reduced uses of resources,
increased efficiency and improved governance.
In July 2008, the European Commission adopted action plans for the
Sustainable Consumption and Production (SCP) and a Sustainable Industrial
Policy (SIP). The plans followed a 2005 Commission communication on a
thematic strategy for the sustainable use of natural resources, which calls for
sectorial initiatives to be launched together with economic operators. A
European Retail Forum and Retailers' Environmental Action Programme
(REAP) were launched in 2008 to promote voluntary action to reduce the
environmental footprint of the retail sector and its supply chain, to promote
more sustainable products, and to support consumers buying “green”. In May
2009, the EU sustainable food chain roundtable was launched seeking to
develop a methodology for assessing the environmental footprint of individual
foods and drinks by 2011. The roundtable brings together farmers and
suppliers, food and drink producers, packaging firms and consumer
organizations to develop environmental assessment methodologies for
products and means for effective consumer communication, and to report on
improvements.
An overview of emerging global trends, policy developments, challenges
and prospects for European agri-futures, point to the need for new strategic
frameworks for the planning and delivery of research. Such frameworks
should address the following challenges:
• Sustainability: Facing climate change in the knowledge-based bio-
society.
• Security: Safeguarding European food, rural, energy, biodiversity and
agri-futures.
• Knowledge: User-oriented knowledge development and exchange
strategies.
• Competitiveness: Positioning Europe in agrifood and other agricultural
lead markets.
• Policy and institutional: Facing policy-makers in synchronizing multi-
level policies.
Addressing these challenges can shift the European agrifood sector to
the knowledge-based bio-economy, while satisfying the need for the sector
(and food retailers) to remain globally competitive while addressing climate
change and sustainable development concerns, such as the maintenance of
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The interdependencies of the six thematic areas and their impact on the
six supply chain management echelons are captured in Table 1.
Table 1 Benefits for supply chains from the implementation of green practices
Transportation
Warehousing
Distribution
Production
Packaging
Industrial
Farming
Reverse logistics presents a critical area towards green supply chains for the
agrifood sector. A special focus needs to be placed on reusing agrifood
containers and recycling packaging materials or re-designing packaging to
use less material. Additionally, all the operations linked to the reuse of
products and materials in the agrifood supply chain, for example the logistics
activities of collecting and processing of products/materials and used pieces,
should be examined towards the direction of reassuring their sustainable
restoration.
3.4. Marketing
The main focus regarding this area is on market performance, pricing policies
and customers’ satisfaction in the agrifood supply process. Goals should
include inter alia pricing, relationship management (covering numerous
stakeholders such as producers, suppliers and consumers). Specific issues
that need to be tackled are:
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An area of great concern is associated with biodiversity, soil quality and water
habitats as well as the emissions due to production and logistics operations.
More specifically, the following issues need to be addressed:
• Rational use of pesticides and fertilizers.
• Rational water and energy use: Consumption and nature of raw
materials (including water) used in agrifood production and their energy
efficiency, best irrigation practices, water planning, crop management
plan.
• Life Cycle Analysis: Assessment of agrifood environmental burden
throughout products’ life cycle (from cradle to grave), applications of the
LCA methodology to food product systems and to food consumption
patterns, support of information sharing and exchange of experience
regarding environmental conscious decision-making in the agrifood
chain, provision of background for the sustainability of the agrifood
sector.
• Emissions reduction & control: Best Available Techniques, greenhouse
gas emissions mitigation strategies, economic and technical viability of
upgrading existing installations, use of low-waste technology/ less
hazardous substances, comparable processes/ facilities/ methods,
technological advances and late changes.
• Climate change adaptive management: Impacts of climate changes on
different ecosystems, consequences to agricultural production, changes
in the seasonal and annual patterns of agricultural production, extreme
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4. Concluding Remarks
The proposed framework for the optimized design of green supply chains for
the agrifood sector is expected to foster sustainable regional economic and
social development in two major axes, namely rural development and
agriculture sector. Taking into account that over 60% of the population of the
in the EU-27 resides in rural areas, which cover 90% of the EU territory, the
rural development is a vitally important policy area. Farming and forestry
remain crucial sectors for the land use and the management of natural
resources in the EU's rural areas. These sectors can be, also, considered as
well as a platform for economic diversification in rural communities. The
strengthening of rural development policy has, therefore, become an overall
EU priority. The proposed framework is focused on the development of state-
of-the-art supply chain management methodologies for increasing farmers’
income through the optimization of the farming operations and through the
reduction of the operational cost in the farm. Biomass or biofuel production
can also have a positive impact on agricultural employment and rural
development, particularly when conversion facilities are of smaller-scale and
are, also, located near crop sources in rural districts. Finally, new crops can,
also, be introduced as economically profitable alternatives to declining crops
(i.e. cotton), according to the European CAP (Common Agricultural Policy).
In respect to sustainable development, the proposed framework needs
to focus on the development of green operations that will lead to new
environmentally benign supply chain design and operations replacing less
sustainable practices. Moreover, the application of such a comprehensive
framework could result into significant reduction of CO2 emissions, helping the
EU to achieve at least a 20% reduction of greenhouse gases by 2020
compared to 1990 levels and an objective for a 30% reduction by 2020. This
may be achieved both by the additional production of others biofuels from
wastes, as well as the introduction of a novel intelligent logistics, in order to
reduce the harvest and transportation energy input. Last but not least, the
expansion of the biomass feedstock available for biofuel production can
provide adequate support towards avoidance of food/fuel competition for land
use. The proposed methodological framework will be further developed,
honed and calibrated with input from leading academic and business
stakeholders from across the EU, supported by a three year (2012-2015) FP7
REGPOT project, entitled “Innovation Capacity Building by Strengthening
Expertise and Research in the Design, Planning and Operations of Green
Agrifood Supply Chains (GREEN-AgriChains)”.
Acknowledgements
This research has received funding from the European Union’s Seventh
Framework Programme (FP7-REGPOT-2012-2013-1) under Grant
Agreement No. 316167 (Project Acronym: GREEN-AgriChains).
Moreover, the present scientific paper was partially executed in the
context of the project entitled “International Hellenic University (Operation –
Development)”, which is part of the Operational Programme “Education and
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