15th Panhellenic Logistics Conference & 1st Southeast European Congress on Supply Chain Management Establishing a sustainable supply chain at the FHL Kiriakidis Group Benjamin Karatzoglou
Nikolaos Kyvranoglou
Abstract : An Introduction to Green Logistics
Logistics is the integrated management of activities required to move products through the supply chain. On a Life-Cycle approach, the supply chain of a typical product extends from a raw material source, through the production and distribution system, to the point of consumption (from cradle to grave) and, through the use of reverse logistics, ‘from cradle to cradle’. The logistical activities comprise freight transport, storage, inventory management, materials handling and all the related information processing.
Abstract : An Introduction to Green Logistics ď Ž
The main objective of logistics is to co-ordinate these activities in a way that meets customer requirements at a minimum cost. As concern for the environment and community rises companies must take more account of the external costs of logistical activities associated mainly with climate change, air pollution, noise, packaging waste dumping, soil degradation, vibration and accidents.
Abstract : An Introduction to Green Logistics ď Ž
The introduction of sustainable development in the corporate agenda has shifted the emphasis from managing the interests of stockholders to handling those of stakeholders while the term ‘cost’ has been expanded to include nonmonetary terms. Companies are urged to adjust their resources in order to reduce externalities and achieve a sustainable balance between economic, environmental and social objectives.
Abstract : An Introduction to Green Logistics
This urge becomes particularly critical for vertically integrated companies which must align and control their sustainability footprint along the various phases of their operations (value chain) and also for companies active in the international arena where nations become more and more aware of ‘green’ issues and austere legislation is consistently being introduced and applied. Green logistics was developed as the corporate answer to these changes, aiming at the reduction of environmental and other negative operating impacts
Abstract : An Introduction to Green Logistics ď Ž
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The activities utilized in this effort involve redesigning sourcing and distribution systems, implementing environmental management systems such as the ISO14000 series, and managing reverse logistics to eliminate inefficiencies, unnecessary freight movements and dumping of packaging Top management is expected to express its commitment to this continuous improvement procedure by introducing:
Abstract : An Introduction to Green Logistics ď Ž
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a monitoring system to anticipate changes in the variables and parameters of managing sustainable operations. a performance measurement system consistently gauging critical strategic & operational measures. an auditing process to provide feedback and promptly identify required corrective action and areas for improvement.
Establishing a sustainable supply chain at the FHL Kiriakidis Group
The “FHL Manufacturing and Trading Co.– I.Kiriakidis Marbles and Granites S.A.” company (hereafter FHL) is a vertically integrated corporation, active since 1991 in quarrying, elaboration and trading of marbles and granites. FHL has been enlisted in the Athens Stock Exchange Market since 1998; the corporate annual sales for year 2010 amounted to €53mln and its before-taxes profit to €3.7mln. The company owns its own quarries, production facilities and warehouses. FHL established the offspring company “Marmodom” on 2004 with the aim to produce and trade various supportive construction materials such as adhesives, glues and dry mortars, exploiting as raw material the previously dumped marble dust.
Establishing a sustainable supply chain at the FHL Kiriakidis Group
FHL is considered the “Global Leader of White Marbles” a type of rare heavily demanded marble worldwide. 50percent of the global production of white marbles takes place in Macedonia, Greece where five large quarries owned by our company operate. Approximately 200.000 tons are extracted annually in the form of marble blocks; 80.000 tons are directly loaded on the containers and shipped ‘as are’ while the rest 120.000 tons are transported by trucks to our warehouses for further elaboration. The main port used for the containers departure is that of Thessaloniki, lying 180 km away from our facilities. FHL has a very strong export orientation with international sales providing over 90percent of its annual turnover. China, Japan, Taiwan, India, UAE, Saudi Arabia, Brazil, Tunis, and USA are our most important destinations in which more than five thousand 20 ft3 containers are exported annually.
Establishing a sustainable supply chain at the FHL Kiriakidis Group ď Ž
Apart from marble blocks FHL produces slabs and tiles. 350 tons of blocks are daily transferred to our warehouses from the quarries to be used as raw materials for these products. Through the production line the blocks are trimmed and cut into slabs meeting pre-specified dimensions or special order demands.
Establishing a sustainable supply chain at the FHL Kiriakidis Group ď Ž
The increasing rates of extraction, manufacturing, storing and distribution activities made gradually evident the need for a more elaborated management of these activities. The company administration realized the need to proceed in a long term reengineering process, reviewing and upgrading operations in every corporate sector, including logistics and transportation, while investing heavily on quality and sustainable development. This need was perceived as urgent because of the company characteristics, including its vertical integration, competition in the international markets, high quality expectations by its customers, and the fact that enlisted companies suffer from strong visibility with their market value fast responding to any publicly known failures.
Establishing a sustainable supply chain at the FHL Kiriakidis Group ď Ž
To this end, one of the strategic steps taken was the recent implementation of an integrated supply chain, connecting all the individual parts and departments of the company. A monitoring system will collect and provide physical and monetary information to the corporate ERP, regarding issues related to daily production results, inventory management, fuel, water and electricity consumption, time and number of material moves, handling and storing.
Establishing a sustainable supply chain at the FHL Kiriakidis Group Through the new process, each block that enters a company factory is assigned a unique serial number ID through which its elaboration is monitored and the final products extracted by each specific block identified. Relevant data are recorded electronically and allow the provision and reporting of statistics on the status and efficiency of each marble block lot, production machinery, handling and dispatching to the end customer. Expectedly, production and handling inadequacies in the above sectors will be disclosed and corrective actions undertaken.
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The pilot implementation of the initiative has been currently limited to the warehouses and the administrative offices excepting the company quarries. As soon as enough experience is acquired by the employees and the successful implementation of the system is assured, the project will be expanded to the quarries.
Establishing a sustainable supply chain at the FHL Kiriakidis Group The system employs advanced mechanical equipment which use renewable energy sources in order to achieve environmental protection and cost efficiency. Simultaneously, the project implementation unveiled opportunities for a more efficient allocation of the warehouse machinery and space. In the short time of its implementation, electricity, fuel, and water consumption have been reduced.
Establishing a sustainable supply chain at the FHL Kiriakidis Group ď Ž
Raw material movements inside the production line have become easier and faster while minor accidents and defects have lessened. The employees have assumed full accountability for providing the correct and necessary information to the system and behave more responsibly considering the measurable impact of their actions on the project success and their redemption from producing and keeping track of monthly stock reports.
Establishing a sustainable supply chain at the FHL Kiriakidis Group The whole company, and its inbound and outbound supply chains in particular, will benefit strongly from the expected multiple advances, including stronger efficiency, improved income opportunities, better customer relationships and empowerment, waste reduction and wider stakeholder approval. The current challenges for FHL entail the successful accomplishment of the whole project and the appropriate and sufficient education of the human resources to gain the maximum advantage that this investment can deliver to the company.
Establishing a sustainable supply chain at the FHL Kiriakidis Group ď Ž
Management has already required that, drawing on the reports of the system, further research take place on the optimization and upgrade of transportation and of the supply chain qualities and that financial and environmental (ecoefficiency) ratios measuring the changes be produced and included in the annual report to disclose the positive impact of the investment and the commitment of FHL to the principles of sustainable development.
Establishing a sustainable supply chain at the FHL Kiriakidis Group
Thank you 15th Panhellenic Logistics Conference & 1st Southeast European Congress on Supply Chain Management
Keywords: FHL, Green Logistics, Kyriakidis Marbles, Performance Measurement System, Supply Chain Management, Sustainability
Biographical note: Benjamin Karatzoglou (PhD, MBA) is a lecturer on Environmental Accounting, Environmental Management Systems, and Corporate Social Responsibility at the University of Macedonia, Open University of Greece, and an adjunct lecturer at the CITY Liberal Studies EXED program. He is a certified environmental auditor and his research has been published in various international books and journals and presented at over 20 international conferences. Nikos Kyvranoglou has graduated from the Panteion University (2008) holding a BSc on“Public Administration” with a major in Economics. He is the Supervisor of the Exports/Imports Department and Sales Executive – Assistant to the Sales Director at FHL Kiriakidis Group.
Suggestions on specific metrics and reporting practices for the Logistics sector can be accessed on the GRI Logistics and Transportation Sector Supplement Supplement of the Global Reporting Initiative http://www.globalreporting.org/reportingframework/sectorsupplements/logisticsandtr http://www.globalreporting.org/reportingframework/sectorsupplements/logisticsandtr ansportation