Amin Chaabane

ABSTRACT

With the continuous effort to tackle environmental impacts at various levels of supply chain networks, regulators have introduced a spectrum of environmental regulations. For example, Take-back legislations implemented in different countries stress on the responsibility of manufacturers to collect and recycle used products at the end of their life. Moreover, market-based mechanisms have the potential to play an important role to address climate change and reduce carbon emissions. Three instruments have been introduced, International Emissions Trading (IET), Joint Implementation (JI) and the Clean Development Mechanism (CDM), in the Kyoto Protocol to help countries meet their targets and effectively created the carbon market that put a price on carbon emissions. As a result, supply chain mangers face complex trade-offs in dealing with environmental regulations and optimizing supply chain efficiencies.
 

While the Life Cycle Assessment principles (LCA) has been successfully applied to design new products and processes that reduce environmental damage (global warming, ozone depletion, acidification, toxicity, etc.), limited work has been conducted on the development of decision making models for planning the supply chain that integrate both LCA and supply chain management principles (Seuring and Muller, 2008). In addition, few studies have addressed the impact of integrating external control mechanisms (environmental regulations, take-back legislation, GHG emissions reduction, carbon taxes, carbon markets, etc.) on sustainable supply chain management practices. For instance, Nagurney et al. (2006) is one of the first studies that addresses carbon taxes in the electric power supply chains (Nagurney et al., 2006). Subramanian et al. (2008) propose an approach to integrate environmental consideration within a managerial decision making framework (Subramanian et al., 2008). A non-linear mathematical programming model is introduced that allows the incorporation of traditional operations planning considerations (capacity, production and inventory) with environmental considerations (design, production, and end-of-life). Decisions on the number of carbon credits purchased and sold in different periods are added under the limitation of carbon emissions. Ramudhin et al. (2008) are the first to propose a carbon market sensitive strategic planning model for sustainable supply chain network design. They show that considerations of internal and external control mechanisms are of great importance to decision makers when designing sustainable supply chains (Ramudhin et al., 2008).
 

This article addresses the design and planning of sustainable supply chains in the presence of two basic environmental regulations that impose product recycling and carbon emissions reduction.  The planning task is mathematically formulated as a multi-objective mixed-integer nonlinear program that simultaneously accounts for the maximization of the net present value, the minimization of the environmental impact, achieve a good service level and maintains good quality for products. The environmental performance is measured through the carbon emissions which incorporates the LCA principles at the decision process. The capabilities of the model and solution procedure are illustrated through a case study for which the set of Pareto optimal and efficient solutions that trade-off environmental impact, profit, service and quality are calculated. These solutions provide valuable insights into the planning problem of supply chains and guide the decision maker towards the adoption of more sustainable alternatives while optimizing supply chain efficiencies.