Is Lean Necessarily Green?

Abstract

This paper investigates the environmental performance of lean supply chains using carbon dioxide emissions as the key performance indicator. Lean is based on the premise that compressing time reveals hidden quality problems and that their resolution leads to more efficient, cost-effective business processes. If time compression always implies lower emissions, then a leaner system is always greener as measured by emissions. If time compression does not always lead to lower emissions, then further changes to the lean system may be required in order to make it greener. We use a simulation model of a generic supply chain as well as two representative examples of supply chains to examine this. Our analysis shows that supply chain emissions are highly sensitive to the frequency and mode of delivery of goods as well as the type and amount of inventory stored at each company. Our results suggest that lean supply chains are not necessarily green, although they could turn out to be green in certain cases. The main impediment appears to be distance. While lean supply chains typically have lower emissions due to reduced inventory levels, the frequent replenishment at every point in the provision stream generally tends to increase the emissions. If a lean supply chain is located entirely within a small region, then it would almost certainly be green from an emissions perspective due to the low levels of inventory and short shipping distances. As distances increase along the supply chain, it is quite possible for lean and green to be in conflict, leading to tradeoffs as well as additional opportunities for optimization.