The Environment and Supply ChainsMonster Conference Synthesis
Ross Glenn Hall
Mount Royal College
Thomas Homer-Dixon
Trudeau Centre for Peace and Conflict Studies
University of Toronto
June 10 2008
SUPPLY CHAINSSUPPLY CHAINS
are aboutare about
MOVING STUFFMOVING STUFF
Open human heartOpen human heartAboriginal song linesAboriginal song linesTrade routesTrade routes
““The march towards a seamless The march towards a seamless global economy is not going thatglobal economy is not going thatsmoothly.”smoothly.” Just in time Just in time Just in case Just in case
Roger GibbinsRoger Gibbins
““9 out of 10 suppliers source from 9 out of 10 suppliers source from China” China”
Jonathan GatrellJonathan Gatrell
We need to challenge theWe need to challenge theassumption that assumption that materialmaterial stuff will stuff will continue to move long distancescontinue to move long distances
““The price of oil will approachThe price of oil will approach$250 a barrel in the$250 a barrel in theforeseeable future.”foreseeable future.”
Gazprom Chief ExecutiveGazprom Chief ExecutiveAlexei Miller, June 10Alexei Miller, June 10
In a world of increasing frequency In a world of increasing frequency and severity of system crisis and and severity of system crisis and shock . . .shock . . .
the balance of economic andthe balance of economic andsocial investment should perhapssocial investment should perhapsshift away from efficiencyshift away from efficiencytowards resilience.towards resilience.
THE AGE OF NATURETHE AGE OF NATURE
The economic challenges of the 21The economic challenges of the 21stst
century will be powerfully driven bycentury will be powerfully driven bymaterial forces – demographic change,material forces – demographic change,resource scarcities, environmentalresource scarcities, environmentalstress, and technological shiftsstress, and technological shifts
OVERLOADOVERLOAD
StressStress__________________
Coping capacityCoping capacity
CONVERGENCECONVERGENCE
Stresses
Societaloverload
CLIMATECLIMATE
More rapid warming at polesMore rapid warming at polesOne reason: Ice-albedo feedbackOne reason: Ice-albedo feedback
Atmosphericwarming
Lower reflectivityof ocean surface
Melting ofice
Increased oceanabsorption of sun’s energy
radiativepositive feedback,
fast
Rising Frequency of Extreme EventsRising Frequency of Extreme Events
Severity of Event
Frequencyof event
Rising Frequency of Extreme EventsRising Frequency of Extreme Events
Severity of Event
Frequencyof event
X
Y1
Rising Frequency of Extreme EventsRising Frequency of Extreme Events
Severity of Event
Frequencyof event
X
Y1
Y2
ENERGYENERGY
Energy should be seen as theEnergy should be seen as the
Master resourceMaster resource
Two views of energy:Two views of energy:
1. Fuel1. Fuel
2. Enabler of complexity2. Enabler of complexity
Producing energy costs energyProducing energy costs energy
This principle is best understoodThis principle is best understoodthrough the concept ofthrough the concept of
Energy Return onEnergy Return onInvestment (EROI)Investment (EROI)
Producing energy costs energyProducing energy costs energy
This principle is best understoodThis principle is best understoodthrough the concept ofthrough the concept of
Energy Return onEnergy Return onInvestment (EROI)Investment (EROI)
Trajectory of Global Fossil Fuel Emissions
Raupach et al. 2007, PNAS
Recent emissions
1990 1995 2000 2005 2010
CO
2 E
mis
sion
s (G
tC y
-1)
5
6
7
8
9
10Actual emissions: CDIACActual emissions: EIA450ppm stabilisation650ppm stabilisationA1FI A1B A1T A2 B1 B2
1850 1900 1950 2000 2050 2100C
O2 E
mis
sion
s (G
tC y
-1)
0
5
10
15
20
25
30Actual emissions: CDIAC450ppm stabilisation650ppm stabilisationA1FI A1B A1T A2 B1 B2
50-year constant growth rates
to 2050
B1 1.1%,
A1B 1.7%,
A2 1.8%
A1FI 2.4%
Observed
2000-2006 3.3%
20062005
“ [We show] that to hold climate constant at a given global temperature requires near zero future carbon emissions. . . . As a consequence, any future anthropogenic emissions will commit the climate system to warming that is essentially irreversible on centennial timescales.”Matthews, H. D., and K. Caldeira (2008), “Stabilizing climate requires near-zero emissions,” Geophys. Res. Lett.
Plan Zs: Ramp-down ratesPlan Zs: Ramp-down rates
Time
Carbonemissions
Motivation: perception ofmanageable risk;Response: Conventional institutionsand technologies; democraticgovernance
Motivation: perception of catastrophic risk;Response: radical institutions andtechnologies; authoritariangovernance?
Impact, Mitigation, and AdaptationImpact, Mitigation, and Adaptation
2000 2100
Pot
entia
l Im
pact
2050
realized impact
mitigation
adaptation
Chris Milly (USGS/NOAA-GFDL, 2007)
COMPLEXITYCOMPLEXITY
Complexity has risen because ofComplexity has risen because ofadvances in information technologyadvances in information technologyand because of performanceand because of performanceimprovements at the level of systemimprovements at the level of systemunits (i.e., organizations, technologiesunits (i.e., organizations, technologiesand people)and people)
These changes produce moreThese changes produce morecomplex networks with:complex networks with:
• More nodesMore nodes
• A greater density of connectionsA greater density of connections among nodesamong nodes
• Faster movement of material,Faster movement of material, energy, and information alongenergy, and information along these connectionsthese connections
COMPLEXITYCOMPLEXITYRapid rise in complexity, because ofRapid rise in complexity, because ofenvironmental regulations, rebates, environmental regulations, rebates, competitive demands, increasing consumer competitive demands, increasing consumer power, and rapidly changing tastespower, and rapidly changing tastes ““Doing more things with more people Doing more things with more people across more tiers of interaction”across more tiers of interaction”
Jonathan GatrellJonathan Gatrell
RESILIENT people, RESILIENT people, institutionsinstitutions
and societies . . .and societies . . .
have the capability to withstandhave the capability to withstandshock without catastrophic failureshock without catastrophic failure
Loosen couplingLoosen coupling
Increase bufferingIncrease buffering
Increase redundancy Increase redundancy
Ways toincrease system resilience
CONNECTIVITYCONNECTIVITY
Material stresses are converging at theMaterial stresses are converging at thesame time the world has becomesame time the world has becomevastly more connected with far fastervastly more connected with far fastermovement of material, energy, andmovement of material, energy, andinformation along these connectionsinformation along these connections
CONNECTIVITYCONNECTIVITY
““In our competitive environment, moreIn our competitive environment, moreconnectivity is better, just need toconnectivity is better, just need tomanage risk”manage risk”
Jonathan GatrellJonathan Gatrell
Greater VulnerabilityGreater VulnerabilityAs a result of tight coupling of nodesAs a result of tight coupling of nodes
Connectivity and ResilienceConnectivity and Resilience
Connectivity
Resilience
Greater VulnerabilityGreater VulnerabilityAs a result of power-law distribution of nodesAs a result of power-law distribution of nodes
Greater VulnerabilityGreater VulnerabilityAs a result of power-law distribution of nodesAs a result of power-law distribution of nodes
Two Types of NetworkTwo Types of Network
Random Scale-free
CHANGING TRANSPORT MODESCHANGING TRANSPORT MODES
““Never thought about putting things on rail –Never thought about putting things on rail –nor did my customers – until the last sixnor did my customers – until the last sixmonths.”months.”
Jonathan GatrellJonathan Gatrell
THREE TRENDS RELEVANT TO THETHREE TRENDS RELEVANT TO THESUPPLY CHAIN MANAGEMENT:SUPPLY CHAIN MANAGEMENT:
As energy prices rise:As energy prices rise:
• People, materials, and products will travel People, materials, and products will travel lessless
• Production will move closer to Production will move closer to consumptionconsumption
• Populations will concentrate in denser Populations will concentrate in denser communitiescommunities
IMPLICATIONS:IMPLICATIONS:
• Locally produced goods will be cheaper than those Locally produced goods will be cheaper than those produced far awayproduced far away
• Stores will be smaller, embedded in communities, Stores will be smaller, embedded in communities, and within walking or biking distanceand within walking or biking distance
• Big-box retail outlets that rely on suburban Big-box retail outlets that rely on suburban consumers traveling by car will disappearconsumers traveling by car will disappear
• Conventional business models will change from Conventional business models will change from emphasizing increasing scale of production (for emphasizing increasing scale of production (for efficiency) and throughput/volume (for profit) to efficiency) and throughput/volume (for profit) to emphasizing smaller, distributed production and emphasizing smaller, distributed production and retail units.retail units.
THINGS THE BUSINESSES CAN THINGS THE BUSINESSES CAN DO NOWDO NOW
Build networks of local suppliersBuild networks of local suppliers
Plan for major long-term investment inPlan for major long-term investment in““community-scale” distribution systems community-scale” distribution systems
and storesand stores
Scan for and invest in alternative, nearScan for and invest in alternative, nearzero-carbon production methodszero-carbon production methods
The PROSPECTIVE MINDThe PROSPECTIVE MIND
is a RESILIENT mindis a RESILIENT mind
FIVE PERCEPTUAL SHIFTSFIVE PERCEPTUAL SHIFTSto Achieve the Prospective Mindto Achieve the Prospective Mind
• Systems: From MECHANICAL to Systems: From MECHANICAL to COMPLEXCOMPLEX
• Self: From CONSUMER to PROBLEMSelf: From CONSUMER to PROBLEM SOLVERSOLVER
• Values: From UTILITARIAN to MORAL Values: From UTILITARIAN to MORAL andand
EXISTENTIALEXISTENTIAL
• Knowledge: From DISCIPLINARY toKnowledge: From DISCIPLINARY to INTEGRATEDINTEGRATED
• Community: From NATIONAL, ETHNIC andCommunity: From NATIONAL, ETHNIC and CULTURAL to GLOBALCULTURAL to GLOBAL
