Chapter 2, Problem 2.20AE

Value chain and sustainability efforts (Learning Objective 2)

SUSTAINABILITY

Each of the following scenarios describes some cost item for organizations in recent years. For each scenario, identify which function of the value chain that cost would represent (R&D, Design, Purchasing/Producing, Marketing, Distributing, or Customer Service). Note: The companies and products used in this exercise are real companies with a strong sustainable practices commitment.

1. a. In recent years, the U.S. National Park Service approved the use of an erosion control system from GeoHay® for a roadway construction project in the Great Smoky Mountains National Park. GeoHay® erosion and sediment control products are produced from recycled carpet fibers. The cost of these erosion and sediment control products would fall into which function in the value chain?
2. b. Ford Motor Company’s Rouge Center in Dearborn, Michigan, has a “living roof” on the Dearborn Truck Plant final assembly building. It is the largest living roof in the world, encompassing 10.4 acres. The living roof is made from living grass, and its primary purpose is to collect and filter rainfall as part of a natural stormwater management system. It also provides cooler surroundings and offers a longer roof life than a traditional roof. The cost of promoting the company’s products and its sustainability efforts would fall into which function in the value chain?
3. c. Nike Products, an athletic apparel and shoe manufacturer, developed the Environmental Apparel Design Tool over a period of seven years. The Environmental Apparel Design Tool helps apparel and shoe designers to make realtime choices that decrease the environmental impact of their work. With the tool, the designers can see the potential waste resulting from their designs and the amount of environmentally preferred materials used by their designs. When designers make changes to the preliminary product design, they can see instantly the effect of those changes on waste and input usage. The $6 million investment used to develop the Environmental Apparel Design Tool would fall into which function in the value chain?
4. d. GreenShipping™ is a service that companies can use to purchase carbon offsets for the carbon generated by shipments to customers. Any shipments made with UPS. FedEx, or USPS can be tracked. The GreenShipping™ calculator uses weight, distance traveled, and mode of transport to calculate the carbon generated by that shipment. A carbon offset is then purchased so that the shipment becomes carbon neutral. The carbon offset helps to fund the development of renewable energy sources. The cost of these carbon offsets to the company making the shipment to the customer would fall into which function in the value chain?
5. e. The Red Wing Shoe Company manufactures work boots. The company has a philosophy that products should be repaired, not thrown away. After the 12-month warranty has expired on Red Wing boots, the company offers free oiling, free laces, low-cost replacement insoles, and low-cost hardware repairs. The cost of operating this shoe repair service would fall into which function in the value chain?
6. f. Nyloboard® produces decking materials made from recycled carpet. The cost of the research into how to create Nyloboard® from recycled carpet would fall into which function in the value chain?