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Harvard Case - Shandong Linglong Tyre Co.: Greening the Supply Chain

"Shandong Linglong Tyre Co.: Greening the Supply Chain" Harvard business case study is written by Yunting Feng, Qinghua Zhu, Ning Su, Stephan Vachon. It deals with the challenges in the field of General Management. The case study is 9 page(s) long and it was first published on : Aug 21, 2022

At Fern Fort University, we recommend that Shandong Linglong Tyre Co. (LLT) adopt a comprehensive strategy to green its supply chain, focusing on environmental sustainability, corporate social responsibility, and innovation. This strategy will involve a multi-faceted approach encompassing technology and analytics, operations strategy, supply chain management, organizational change, and strategic planning.

2. Background

Shandong Linglong Tyre Co. is a leading Chinese tire manufacturer with ambitions for global expansion. The company faces increasing pressure from stakeholders and customers to adopt sustainable practices and reduce its environmental impact. The case study highlights the company's initial efforts to implement a green supply chain, including the adoption of energy-efficient technologies and the use of recycled materials. However, LLT is still struggling to achieve its sustainability goals and faces challenges in coordinating its efforts across the entire supply chain.

Main Protagonists:

  • Wang Feng: Chairman and CEO of LLT, responsible for overall strategy and decision-making.
  • Li Wei: Head of R&D, leading the development of sustainable tire technologies.
  • Zhang Jian: Head of Supply Chain Management, responsible for implementing green practices across the supply chain.

3. Analysis of the Case Study

SWOT Analysis:

Strengths:

  • Strong market position in China
  • Growing international presence
  • Commitment to innovation and technology
  • Experienced leadership team

Weaknesses:

  • Limited experience in implementing green supply chains
  • Lack of coordination across the supply chain
  • Potential for supply chain disruptions due to environmental regulations

Opportunities:

  • Growing demand for sustainable products
  • Increasing government support for green initiatives
  • Potential to differentiate itself through sustainability leadership

Threats:

  • Increased competition from other tire manufacturers
  • Rising costs of raw materials and energy
  • Potential for reputational damage from environmental incidents

Porter's Five Forces Analysis:

  • Threat of new entrants: High, due to relatively low barriers to entry in the tire industry.
  • Bargaining power of buyers: Moderate, as buyers have multiple options for tire suppliers.
  • Bargaining power of suppliers: Moderate, as LLT relies on a diverse range of suppliers for raw materials and components.
  • Threat of substitute products: Moderate, as alternative tire technologies are emerging.
  • Competitive rivalry: High, as the tire industry is highly competitive, with several major players.

Key Issues:

  • Lack of a comprehensive green supply chain strategy: LLT's efforts are fragmented and lack a clear roadmap for achieving sustainability goals.
  • Limited stakeholder engagement: LLT needs to engage with suppliers, customers, and other stakeholders to build consensus and support for its green initiatives.
  • Insufficient data and analytics: LLT lacks a robust system for tracking and measuring its environmental impact, hindering its ability to make informed decisions.
  • Organizational culture and leadership: LLT needs to foster a culture of sustainability and empower employees to champion green initiatives.

4. Recommendations

1. Develop a Comprehensive Green Supply Chain Strategy:

  • Define clear sustainability goals: Set ambitious but achievable targets for reducing environmental impact, including carbon emissions, water usage, and waste generation.
  • Conduct a thorough supply chain assessment: Identify key environmental risks and opportunities across the entire supply chain, from raw material extraction to product disposal.
  • Develop a roadmap for implementation: Outline specific actions, timelines, and resources required to achieve sustainability goals.

2. Engage Stakeholders:

  • Establish a stakeholder engagement framework: Identify key stakeholders, including suppliers, customers, employees, investors, and government agencies.
  • Communicate LLT's sustainability vision and strategy: Clearly articulate LLT's commitment to sustainability and its plans for achieving its goals.
  • Collaborate with suppliers: Engage suppliers in discussions about environmental performance, incentivize sustainable practices, and develop joint initiatives.

3. Leverage Technology and Analytics:

  • Implement a robust data management system: Track and monitor environmental performance indicators across the supply chain, including energy consumption, water usage, and waste generation.
  • Utilize AI and machine learning: Analyze data to identify areas for improvement, optimize resource allocation, and predict potential environmental impacts.
  • Adopt advanced technologies: Invest in energy-efficient equipment, renewable energy sources, and waste reduction technologies.

4. Foster Organizational Change:

  • Promote a culture of sustainability: Integrate sustainability principles into LLT's core values, mission statement, and employee training programs.
  • Empower employees: Encourage employee participation in green initiatives, provide training on sustainability best practices, and recognize and reward contributions.
  • Establish a dedicated sustainability team: Create a cross-functional team responsible for developing and implementing the green supply chain strategy.

5. Implement Strategic Planning:

  • Integrate sustainability into LLT's strategic planning process: Ensure that sustainability considerations are factored into all business decisions, including product development, investment, and expansion.
  • Develop a long-term sustainability vision: Define LLT's aspirational goals for environmental performance and its role in promoting sustainable development.
  • Monitor and evaluate progress: Regularly assess the effectiveness of LLT's green supply chain initiatives, identify areas for improvement, and adjust strategies as needed.

5. Basis of Recommendations

These recommendations align with LLT's core competencies in manufacturing and innovation, while also addressing the needs of external customers and internal clients who are increasingly demanding sustainable products and practices. By embracing a comprehensive green supply chain strategy, LLT can gain a competitive advantage by differentiating itself from competitors, enhancing its brand image, and attracting environmentally conscious customers.

The recommendations are based on the following assumptions:

  • LLT is committed to achieving its sustainability goals.
  • LLT has the resources and capabilities to implement the recommended changes.
  • Stakeholders are willing to collaborate and support LLT's green initiatives.
  • Technological advancements will continue to support the development of sustainable solutions.

6. Conclusion

By adopting a comprehensive green supply chain strategy, Shandong Linglong Tyre Co. can position itself as a leader in sustainability within the tire industry. This will not only reduce its environmental impact but also enhance its brand reputation, attract new customers, and create long-term value for the company.

7. Discussion

Alternatives:

  • Status quo: Continuing with current efforts, which may result in limited progress and reputational risk.
  • Outsourcing sustainability initiatives: Hiring external consultants to manage sustainability efforts, which may be expensive and lack internal buy-in.

Risks:

  • High implementation costs: Green technologies and practices can be expensive to implement.
  • Supply chain disruptions: Implementing green practices can disrupt existing supply chains and lead to delays.
  • Resistance to change: Employees and stakeholders may resist changes to existing processes and practices.

Key Assumptions:

  • LLT is committed to achieving its sustainability goals.
  • LLT has the resources and capabilities to implement the recommended changes.
  • Stakeholders are willing to collaborate and support LLT's green initiatives.
  • Technological advancements will continue to support the development of sustainable solutions.

8. Next Steps

Timeline:

  • Year 1: Develop a comprehensive green supply chain strategy, engage stakeholders, and implement data management systems.
  • Year 2: Implement key green technologies, train employees, and establish a dedicated sustainability team.
  • Year 3: Monitor and evaluate progress, refine strategies, and expand green initiatives across the supply chain.

Key Milestones:

  • Develop a clear sustainability vision and strategy.
  • Conduct a thorough supply chain assessment.
  • Implement a data management system to track environmental performance.
  • Establish a stakeholder engagement framework.
  • Develop a roadmap for implementing green technologies and practices.
  • Train employees on sustainability best practices.
  • Establish a dedicated sustainability team.
  • Regularly monitor and evaluate progress.

By taking these steps, Shandong Linglong Tyre Co. can successfully green its supply chain, achieve its sustainability goals, and become a leader in the industry.

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Case Description

Tire manufacturer Linglong initiated its green supply chain management (GSCM) program in 2018. By extending the ongoing green practices from within the organization to external supply chain partners, Linglong developed a green concept based on the entire product life cycle, which involved materials suppliers, equipment suppliers, distributors, and other stakeholders. After a one-year trial, the company saw an opportunity to mitigate the environmental risks in the supply chain and to enhance both environmental and economic performance at the supply chain level. However, the company also encountered challenges, such as the supply chain partners' limited understanding of the value of GSCM and a lack of senior leadership support among suppliers. Faced with these challenges, Linglong had to decide whether to extend its GSCM program and how to improve it.

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