Improving the performance of the formal milk supply chain using a life cycle approach

Abstract

In Sri Lanka, approximately 54.2 percent of the entire milk available for 2015 came from the formal milk supply chain and the rest was directed informally and consumed at home. The performance of supply chains in sustainability, is always on focus of continued trade growth. Therefore, new strategies and methods are required for risk-oriented and opportunity-oriented supply chain management. The methodology for the Life Cycle Assessment (LCA) can be described as a scientific technique to systematically evaluate the resource use of the product or service during the life cycle. Because of the high degree of intensity of energy affecting the overall performance of the dairy industry, the life cycle impacts linked with energy consumption in the formal milk supply chain is a particular concern. The aim of this study was thus to increase the performance of the formal milk supply chain by employing a life - cycle approach to examine the effects of energy use in the dairy sector in Sri Lanka and to suggest a framework for evaluating the resulting impact of energy use on the environment. Accordingly, the definite objectives are to examine the use of energy in Sri Lanka's formal milk supply chain, to measure the environmental impacts during the recognized stages of the supply chain, to identify the most critical processes and to explore the resulting impacts of various alternative energy supply situations on the performance of the formal milk supply chain. The study on the key stages of Sri Lanka's formal milk supply chain directed to the development of a methodology for assessing the impact of energy consumption on the environment during the life cycle. A case study was then carried out at a large-scale dairy manufacturer in Sri Lanka in which a life cycle assessment which was based on the supply chain and energy consumption was carried out. Finally, an impact assessment was done on potential performance variations in various energy supply scenarios. The impact evaluation of the life cycle was carried out by means of the Midpoint (H) method of ReCiPe (Ver 1.11, Dec 2014) in openLCA (version 1.7.0) with the ELCD database (version 3.2, Oct 2015). The results of the research were taken into account to determine the intensity of effects on the environment at the main stages of the supply chain process and to determine the possibility to mitigate negative impacts on the environment. Finally, it was found that the dairy factory operation phase generally has the highest impact on the environment (64.0 %). Raw milk transportation phase also plays an important role being the second highest (26.3%). By comparing the different alternative energy supply scenarios, solar photovoltaic electricity generation can provide the highest environmental benefits. It was verified with the case study that the dairy sector can reduce the overall impacts approximately by 30% by replacing furnace oil with biomass for thermal energy supply. The use of solar power in milk-producing facilities and milk chilling centers to replace conventional power sources can, however, further reduce the total impact by up to 60 percent. In the long run, substituting conventional energy sources based on fossil fuel with local renewable (green) energy sources will also bring financial advantages to the country, whilst ensuring energy security and independence.