Designing supply chains with sustainability considerations

Abstract

Increasing social awareness together with the new regulations for carbon and waste management are forcing enterprises to reconsider their supply chains with respect to economic, social and environmental objectives. Furthermore, cap and trade legislation for greenhouse gas emissions introduces a new level of complexity. This article presents a comprehensive methodology to address sustainable supply chain design problems where carbon emissions and total logistics costs, including suppliers and sub-contractors selection, technology acquisition and the choice of transportation modes, are considered in the design phase. The proposed methodology provides decision makers with a multi-objective mixed-integer linear programming model to determine the trade-off between economic and environmental considerations. This methodology is illustrated through the study of a Canadian firm operating in the steel industry which is facing a new legislation that caps carbon emissions. The results show how emission trading market can be used to reduce the carbon dioxide abatement cost.