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Ch 13 Mini-Case

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13. DOW Greenhouse Gas Emission Scenario Study

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To continue its goal to enhance global sustainability, DOW wants to study its supply chain from an environmental perspective.

Read the DOW Greenhouse Gas Emission Scenario case and answer the following questions.

DOW Greenhouse Gas Emission Scenario Study

Don Weintritt Jr., Amarendra Kumar Martin Fernandes, and Pooja Anand

An increasing number of studies in environmental research indicate that the earths atmosphere is at risk due to human activities. The research specifically points toward the increase in greenhouse gas emissions in the post-industrial revolution era and calls for a pressing need for the human society to establish a symbiotic relationship with the environment. With growing concern in the global community, it is anticipated that stringent environmental standards will be incorporated into the Federal Regulations in the next 5 to 10 years.

DOW believes that it is a major stakeholder in any changes that come about from the efforts to redress the global climate issues; therefore, it aims to contribute to slowing, stopping, and reversing the growth of its greenhouse gas (GHG) footprint as part of its commitment to the planet. To continue its goal to enhance global sustainability, DOW wants to study its supply chain from an environmental perspective.

The company wants to reevaluate its current supply chain for certain products, one of which is Gas Treated (GT) Amine. Sixteen raw materials are required for this product, two of which are supplied by DOWs raw material suppliers, and the rest are acquired internally from other DOW plants. These supplier plant locations cannot be changed based on other constraints. There is one manufacturing plant in Plaquemine, Louisiana, that manufactures a particular grade of this product. This grade can be blended with raw materials supplied by external suppliers, in different proportions, to produce a total of 28 finished products. Different customers require various grades of this product. There are two blending plants, one of which is in Pearland, TX. This site also has a drumming facility attached to it where the blended product is packed in drums to ship out to customers. The product can also be shipped via bulk carrier from this facility. Another blending site is in Calgary, AB, that supplies a group of customers in that vicinity in a bulk mode of transportation.

There are three terminal locations:

Terminal 1	Houston	TX
Terminal 2	Texas city	TX
Packaging site	Deer park	TX

Houston and Texas are bulk terminals, but the one in Deer Park is a packaging facility. Bulk mode of transportation includes tank truck, bulk vessel, Intermodal (IM) ISO, and rail tank car, while packaged mode includes drums put in containers loaded onto a rail, ship, or truck or as air freight.

Raw material suppliers can supply to blending facilities only in tank trucks. Production, blending, and drumming facilities are connected through the rail. Bulk terminals can receive the products by rail and tank truck and ship out to the customers in tank truck within North America (USA, Canada, and Mexico). Overseas customers are served in both bulk [mode of transportation usedIntermodal tank container (IM ISO) and vessel] and packed/drummed mode (mode of transportationIM 20 FT). Customers within North America that need product in drums are served by FTL (full truck load). Here is a schematic to show the complete operation:

A map represents the customers across the world for gas-treated amine. The maximum number of customers is in North America, followed by Asia, Europe, South America, and Australia. It is explicit that the gas-treating amine product has no customers in Africa. The map doesnt have any reference to Antarctica.

A map of the upper part of North America exhibits the facilities involved in the production of gas-treating amine. Terminals 1 and 2, the drumming facility, deer part packaging site, and blending plant, are located near Texas and Houston. A manufacturing plant is at Plaquemine, Louisiana. And supplier 2 is near New Orleans.

A map of North America portrays the supply chain network across the continent. The maximum supply chains are spotted in the United States. Although the network is relatively smaller in Canada, they are extensively concentrated in the southern part. A part of Mexico is covered on the map. However, it doesnt have any supply chain network.

The relative cost of transportation is currently:

MOT	Unit Cost
FTL/tank truck	$ 0.29	per pound
Rail	$ 0.12	per pound
Vessel	$ 0.09	per pound
IM ISO/IM 20 feet	$ 0.24	per pound

Optimizing DOWs supply chain network both at strategic and tactical levels is key to achieving 30 percent lower cost to serve goals by 2025. The challenge, however, is balancing multiple objectives, that is minimizing cost and GHG emissions, while maintaining or improving customer service levels for DOWs global supply chains.

DOW will meet agreed-upon service standards and translate strategic product plans into improved tactical and operational planning and execution to meet demand. Finally, the firm will design/redesign low cost-to-serve, effective, and flexible supply chains for emerging geographies. As a responsible corporate citizen, Dow continues to work toward reducing greenhouse gas (GHG) emissions by aligning its strategies and incorporating measures from product conceptualization to final consumption.

A flow chart illustrates how the amine products get delivered to the customers from the production facilities, blending facility, and terminals. The product in production facilities either reaches the customers directly through a tank truck or the blending facility through a rail. The product from the suppliers reaches the blending facility through a tank truck. Once the blending process gets over, the product will reach the terminals through a rail or a tank truck. However, a part of it gets delivered to the customers directly through a tank truck. Once the product reaches terminals, it gets distributed to customers through a tank truck, vessel, IM, or ISO.

CO₂ emission estimates associated with various modes of transportation are given below:

MOT	CO2 Emission Estimates (in grams/tonkm)
Low	Medium	High
Air	1,000	1,400	1,800
Bulk vessel/barge	10	40	60
Container vessel	40	70	100
Rail	30	50	70
Truck/IM	70	90	110

Based on the table above, DOW determined the current CO₂ emitted in transportation for each mode of transportation (MOT) used by DOWs global transportation network:

Mode of transportation	% of weight shipped	% of CO2 emissions
Truck/IM	39.05	20.21
Bulk vessel/barge	28.55	25.96
Container vessel	6.49	33.83
Rail	25.89	17.77
Air	0.03	2.23

DOW would like you to evaluate its supply chain to answer the following questions.

13a. DOWs focus on value...

1. DOWs focus on value creation through sustainability represents one of the four dimensions of supply chain design in theEERS model.

free market economy.

generalized supply chain model.

global climate regulations.

anticipatory business model.

2. How does DOWs transportation logistics directly impact environmental resources?

noise pollution

air pollution

traffic congestion

water pollution

fuel consumption

3.Compared to shipping from suppliers or to customers, how does DOW generate higher efficiency in size and length when shipping between its own facilities?

green initiatives

geographical vicinity

private carriers

intermodal tank containers

facilities connected through rail

4. According to the textbook, when did sustainability emerge as a major supply chain network design consideration?

2010

1990

2020

2000

1980

5. When making changes to reduce transportation costs and emissions, what key trade-off must DOW consider?

service performance

market competitiveness

value-adding services

revenue generation

shareholder wealth