Tools for Green Transport Measurement Research Work of DLQAT Lecturers: Radim Lenort, David Staš, Pavel Wicher, David Holman Summer School 2015 ŠKODA AUTO University Mladá Boleslav Czech Republic

Lecture Content Radim Lenort Relevance to Researching the Green Transport Topic Motivation to Researching the Green Transport Topic Aim of the Research Work Methodological Basis Conceptual Framework Case Study Discussion

Relevance to Researching the Green Transport Topic Environmental trends European Union adopts increasingly stricter environmental legislation. It is a potential competitive advantage. International surveys confirmed that two thirds of consumer perceptions were strongly influence by a company’s environmental policy. The largest corporations worldwide promote more sustainable business. Around the world, society is increasingly aware of how products and services impact on the environment. Commitment = závazek

Motivation to Research the Green Transport Topic Volkswagen Sustainability Report 2014 Strategic goal: By 2018, we aim to be the world’s most successful, fascinating and sustainable automotive manufacturer. Key action areas: Economy, People, Environment Environment: By 2018, our production activities become 25 percent more eco-friendly per vehicle manufactured in terms of energy, water consumption, emissions and waste (compared to 2010).

Motivation to Research the Green Transport Topic SKODA AUTO Green Future strategy Strategic goal: By 2018, our production activities become 25 percent more eco-friendly per vehicle manufactured in terms of energy, water consumption, emissions and waste (compared to 2010). Key action areas: Green Factory, Green Product, Green Retail Green Factory includes Green Transport (GT): inbound, internal, outbound Octavia G-TEC (CNG)

Aim of the Research Work The main assumption to achieve these ambitious goals is an effective green transport evaluation system, which allows not only measurement, monitoring, and evaluation of GT performance but also supporting green transport strategies in industrial companies and supply chains. However, these systems are researched from the industrial company and supply chain perspective only sporadically. Aim of the research work is to design a conceptual framework for creating the GT evaluation systems, which allow logistics personnel to measure the GT performance and to implement effectively a GT strategy in industrial companies and supply chains.

Methodological Basis Balanced Scorecard (BSC) It is a method of management that creates a link between strategy and operational activities with an emphasis on performance measurement The BSC model was first introduced in 1992 by Kaplan and Norton Why Balanced? Companies‘ owners and top management prefer financial measures, but there are other perspectives supporting long-term company success Each perspective should contain four different sections: objectives, measures, targets and initiatives

Methodological Basis Goal Criteria A A1 A2 A3 Criteria B B1 B2 B3 Multi-criteria decision making methods BSC perspectives and aims have different priority and significance for each company. Since the perspectives and aims are interdependent, a method that is able to take interdependencies among criteria into consideration must be used. Goal Criteria A A1 A2 A3 Criteria B B1 B2 B3 AHP – all criteria are independent

Methodological Basis Analytic Network Process (ANP) The main idea of the method is the pairwise comparison matrix. Criteria C1 C2 C3 Sum Priority Weight x 7 5 12 1. 77 % 1/7 1/3 0.47 3. 3 % 1/5 3 3.2 2. 20 % 0.34 10 5.33 15.67 100 % AHP – all criteria are independent Fundamental scale is used to compare criteria Intensity of Importance Definition 1 Equal importance 3 Moderate importance 5 Strong importance 7 Very strong importance 9 Absolute importance 2, 4, 6, 8 Intermediate values

Conceptual Framework The designed conceptual framework has five steps

Conceptual Framework Green effect high I. Ecological Ideal II. low 1. Selection of Green Transport Strategy Green effect high I. Ecological Ideal   II. low Ineffective Economic Costs Ideal GT strategy is generally used in companies and supply chains, which start with green politics. Economic and Ecological GT strategies are implemented when Ideal strategy is depleted. Ineffective GT strategy should not be used at all. At the same time, green initiatives within the direct responsibility of the implementers are preferred in frame of the selected main GT strategy. I. Company responsibility II. Corporate responsibility

Conceptual Framework 2. Selection of Balanced Scorecard approach Adding a fifth perspective to the BSC Developing a separate green BSC Integrating the measures throughout the four perspectives Our recommendation To develop a separate green BSC for Green transport strategy implementation (lower management level) To integrate the key green measures throughout the company BSC as a part of the company strategy implementation

Conceptual Framework Green Transport Balanced Scorecard (GTBSC) model Only green aims and measures are taken into consideration. In addition to target values there are threshold and real values. Thresholds represent minimum accepted values of the measures. Realities describe real values of the measures.

Conceptual Framework 3. Specification of Green Transport Strategy Determination of green objectives, measures, thresholds, targets and initiatives We elaborated 30 general green initiatives (best practices) and divide them into four areas Strategy – structural changes Management – planning and execution Technology – technical innovation Staff – people and their skills

Conceptual Framework The designed conceptual framework has five steps

Conceptual Framework 4. Prioritisation of Balanced Scorecard measures Assignment of weights to the four perspectives and their measures using ANP method SuperDecisions software can be used for the application of the ANP method. Measures with the highest weight should be incorporated to the existing company BSC. Ručně = manually

Conceptual Framework 5. Evaluation of Green Transport Strategy Achievement Real values of the selected measures are collected during this step Using ANP method, GT performance of the selected GT strategy can be calculated and evaluated: Comparison of the calculated performance with the overall threshold and target values, Inclusion of the calculated performance into the pre-defined categories (unacceptable, bad, good, very good, excellent performance), Analysis of the trend if the evaluation of the GT performance is carried out repeatedly. Create some scale Pod nebo nad = below or above

Case Study Green effect high I. Ecological Ideal II. low Ineffective 1. Selection of Green Transport Strategy – the Ideal GT strategy in automotive supply chain Green effect high I. Ecological Ideal   II. low Ineffective Economic Costs We took inspiration in SA, but the following used data are illustrative I. Company responsibility II. Corporate responsibility

Case Study 2. Selection of Balanced Scorecard approach – using the developed separate GTBSC model We took inspiration in SA, but the following used data are illustrative

Internal Business Processes Case Study 3. Specification of Green Transport Strategy Perspectives Objectives Measures Units Thresholds Targets Realities Initiatives Financial Transport cost saving F1: Transport costs / Produced cars EUR/ car 1% 3% 2.5% 4 - Efficient system of green transport monitoring indicators   6 - Logistics service providers with implemented green politics 14 - High transport capacity utilisation 27 - Eco-efficient motivation system for company logistics staff 29 - Green training of company logistics staff High return on investments in green projects F2: (Net project benefits / Project costs) * 100 % 20 5 Internal Business Processes Decreasing the CO2 emissions P1: CO2 emissions / Produced cars g/car 4% Learning and Growth Increasing the green knowledge L1: Green training hours / Number of logistics staff hours/ person 25% 50% 30% Increasing the green innovativeness of logistics staff L2: Number of successful green innovations / Number of logistics staff pcs/ 0% Customer Increasing the green image of transport C1: Number of positive evaluation in a survey 60 90 75 Reducing the local environmental impacts C2: Number of arriving and departing trucks / Produced cars pcs/car We took inspiration in SA, but the following used data are illustrative

Case Study 4. Prioritisation of Balanced Scorecard measures A network structure, which expresses interdependences among the green transport strategy, perspectives and measures were created Example: F1 depends on L1 - Increasing the green knowledge usually means transport cost saving

Case Study 4. Prioritisation of Balanced Scorecard measures A network structure in SuperDecisions software

Case Study 4. Prioritisation of Balanced Scorecard measures Obtained weights of all measures by means of SuperDecisions software The most significant measures are L2: Increasing the green innovativeness of logistics staff (32 %) and F1: Transport cost saving (17 %) Significance of the L2 measure is given by the fact that the successful implementation of GT strategy in long term horizon always depends on high skilled and innovative logistics staff Significance of the F1 measure corresponds to the Ideal GT strategy, which prefers such green initiatives that are related to low costs or better to cost savings

Principal change of GTS Case Study 5. Evaluation of Green Transport Strategy Achievement The present state of achieving the green objectives and GT strategy is 80%. The state can be evaluated as Very Good. Category Interval Corrections Excellent > 1.00 Unneeded Very Good 0.73 – 1.00 Small Good 0.47 – 0.73 Large Bad 0.21 – 0.47 Principal change of GTS Unacceptable < 0.21 Total change of GTS

Discussion Using the ANP method is crucial for this conceptual framework. Comparison of results using ANP and AHP (Analytic Hierarchy Process) that is not able to work with criteria interdependencies. The state would be evaluated only as Good (73 %). Measure ANP weights AHP weights F1 0.17 0.14 F2 0.06 0.28 P1 0.23 L1 0.15 0.03 L2 0.32 0.09 C1 0.00 C2 0.16 0.08

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