Wednesday, November 30, 2011

Design of Sustainable Supply Chains for Sustainable Cities

As I wrote in my previous blogpost I am very much looking forward to being in Amsterdam next week to speak at and take part in the Complex-City Workshop.

The program is now available
and support for this workshop is being provided by the Royal Netherlands Academy of Arts and Sciences (many thanks).

I will be speaking on a paper that I just completed, Design of Sustainable Supply Chains for Sustainable Cities.

I love cities and over the past few weeks have been to Boston, Paris, Miami, and New York City.

Cities, as dynamic complex networks, are the systems in which more people now live than don't and which represent the economic engines for commerce, research and development, education, health care, and even culture. They have evolved over space and time on built infrastructure from transportation networks to telecommunication and electric power networks.

At the same time, cities are the centers of resource usage from electricity and other forms of energy and fuel, to food, water, and a plethora of other products. Hence, they also are the repositories and generators of waste output and other environmental pollutants, such as carbon and other emissions, sewage, noise, etc.

The term Sustainable Cities has come into increasing use in the past two decades, with a focus of making cities more livable, with an eye not only on the present generation but towards future ones, as well. A recent World Bank report noted that the world is shrinking with cheaper air travel, large-scale commercial shipping, and expanding road networks. Today, only 10% of the globe's land area is considered to be remote, that is, more than 48 hours from a large city. Hence, our world is becoming a network of interconnected cities or a supernetwork of cities.

Urbanization is one of the most pressing and complex challenges of the 21st century, with the citizenry characterized by a growing awareness of a threat to the sustainability of the earth's natural environment, coupled with the increase in the number of people moving into and living in cities.

Supply chains consisting of suppliers, manufacturers, transportation service providers, storage facilities and distributors, as well as retailers, and consumers, serve as the backbones for the provision of goods as well as services on our modern global economy. Supply chains have revolutionized the way in which products are sourced, produced, distributed, and consumed around the globe. They may involve thousands of stakeholders from suppliers and manufacturers to hundreds of thousands of consumer demand points around the globe. Cities are supplied by a complex array of supply chains servicing an immense spectrum of economic activities from food stores and restaurants, office supplies and high tech equipment, apparel, construction materials, as well as raw materials, to name just a few. The sustainability of supply chains is, hence, a precursor to the sustainability of our cities.

According to a Business for Social Responsibility (2009) paper, it is now widely acknowledged that making significant progress on mitigating the impact of climate change depends on reducing the negative environmental impacts of supply chains through their redesign and enhanced management (see also McKinsey Quarterly (2008)).

Furthermore, as noted by Capgemini in its 2008 report: 2016: Future Supply Chain, Preserving energy and raw materials and other resources like water will become a crucial aspect in future supply chains, as costs will likely remain volatile and supplies will continue to dwindle. These conditions may well create substantial pressure on current supply chain models.

Although the importance of sustainable supply chains to the sustainability of cities is being increasingly recognized, in terms of not only the enhancement of business processes in terms of efficiency and cost reduction but also the reduction of negative environmental externalities as well as waste, there have been only limited modeling efforts that capture supply chains within a cities framework. Models of sustainable supply chains are important since they enable the evaluation (before expensive investments are actually made) as to alternative network designs, technologies, as well as sensitivities to cost and demand structures.

A feature of cities that we capture in the new sustainable supply chain network design model is the frequency of freight shipments, and other supply chain network activities, which tend to be higher in urban environments, due to the larger population density. Just think of all the stores and restaurants, to start, that need to be supplied with fresh products. By optimizing the frequencies, one may minimize not only the operational costs and replenishment costs but also the environmental damage (pollution, noise, wear and tear, etc.).

My paper, in pdf format, may be downloaded.