A Circular and Sustainable Biofuel Supply Chain

The United Arab Emirates (UAE) presently has a significant reliance on the oil and gas industries which generate sizable amounts of carbon dioxide and other greenhouse gas emissions. However, the UAE is also dedicated to the goal of being a global leader in sustainable development, and promoting eco-friendly products and technologies such as sustainable biofuel supply chains. Professor Yousef Abu Nahleh and a team of students under his guidance at Higher Colleges of Technology (https://hct.ac.ae/en/), are designing circular and sustainable supply chains in support of these goals.

Dr. Yousef Abu Nahleh and a team of his students (Mouza Alketbi, Safeya Saeed, Fatima Alshamsi, Nada Bushlaibi, and Afra Safar,) are focused on raising awareness among individuals and organizations about the consequences of transportation related air pollution. The UAE Vision 2021 National Goal emphasizes the need for improving air quality as part of the country’s environmental program. Members of the Sustainable Biofuel Supply Chain team are shown is the screenshot below. It was my pleasure to work with Professor Yousef and his student team on this project. The students are in the Bachelor of Industrial Engineering Technology (IET) program at the Higher Colleges of Technology (HCT) in the Sharjah Women’s Campus (SJW). They are presenting their work at the COP28 conference in Dubai this week.

Their work to design a biodiesel supply chain in Dubai represents a significant opportunity to reduce transportation related air pollution. To explore this idea they built a supply chain model and simulation to demonstrate how a biodiesel supply chain based on collection and recycling used cooking oil (UCO) can be created in the UAE. Their project will reinforce biodiesel production in the UAE, and reduce greenhouse gas emissions in the transportation sector. They propose that the biodiesel fuel produced by this supply should be used to power the fleet of school buses used by students in the UAE.

By building a well-designed reverse logistics supply chain that includes households and restaurants as sources for obtaining used cooking oil (UCO), and designating school buses as the end users of the biodiesel fuel produced, this project addresses waste management concerns, promotes the use of renewable energy sources, reduces environmental impact, and fosters a sense of environmental responsibility within UAE society. Moreover, this supply chain creates economic opportunities and local employment through the establishment of collection networks, transportation routes, and biodiesel production facilities.

UCO Collection Network

The proposed supply chain network consists of collection bins for collecting used cooking oil (UCO), Hub warehouses for storing and managing UCO inventories, and a biodiesel factory  for converting UCO into biodiesel fuel. To develop an effective UCO collection network, the first step is to find a cost-effective and sustainable approach. Based on their studies, a centralized collection system which requires little management, and has low operations and transportation costs was determined to be the best approach. Another advantage of this approach is that residents become more knowledgeable and motivated to recycle. For these reasons, we decided to choose a centralized approach.

An efficient network was designed for collecting UCO from households using public UCO recycling bins placed throughout the Dubai Emirate. The number and locations of the bins are based on information shown in the table in Figure 1.1 below. Data was used such as: cooking oil consumption rates per person; leftover oil; population density; and the capacity of recycling containers. From analysis, they estimated the total number of bins needed in the Dubai Emirate to be about 2,960 containers in order to satisfy the needs of a population estimated to be 3,355,900 people.

Figure 1.1 – UAE population density and cooking oil consumption data

Due to Dubai consisting of nine districts, the decision was made to create a hub for each district. Each hub has its own network, and the hubs are connected into one network to transport UCO easily from the district hubs to the biodiesel producers.

The Center-of-Gravity Method was used to locate the bins in each district. Based on the locations of existing facilities and the distribution of population density, this method uses a mathematical model to determine the best site for a facility. The coordinates (x, y) were based on the population density and the concentration of population in each district. The W variable was determined as the weight of the amount of cooking oil consumed in each district.

After calculation, we found the location of the new facility ( Hub ) of section one, where the UCO amount will be collected to deliver to the producer location. After that, we check the Effectiveness of the location to become a place to collect huge amounts of UCO.

Modeling the UCO Collection Network

We created a model of the supply chain that supports the collection of UCO. This model is composed of four different supply chain entities: Products; Facilities; Vehicles; and Routes. The four entities are described using a small number of attributes that define their features.

Products:  Used cooking oil (UCO) is the primary product in our supply chain. All forms of cooking oils that have been gathered for recycling fall under this category. The Product attributes contain details about this product such as name, cost, weight, and size.

Facilities: The biodiesel supply chain includes several different types of facilities. First, there are collection bins for collecting UCO in every neighborhood in Dubai. The households and restaurants in each neighborhood will dispose of their UCO in the bin nearest to them.  The bins produce different amounts of UCO daily based on the population density in their neighborhoods. Figure 1.2 shows the locations of bins in one of the neighborhoods.

Figure 1.2 – Locations of UCO recycling containers and attribute values for a UCO container

The neighborhoods correspond to the nine districts of the Emirate of Dubai, and there is one Hub warehouse in each district where UCO is delivered from the bins and stored for delivery to the biofuels factory. In the supply chain model, there is only one container in the ninth district, the district of Hatta, because there is very low population density in this district. This is shown in Figure 1.3 below.

Figure 1.3 Location of the district hubs that deliver UCO to the Biofuel Factory

The UCO is collected weekly from the Hub warehouses and delivered to the biofuel factory where the UCO undergoes a series of treatments and conversion processes to transform it into biodiesel fuel for use in vehicles with diesel engines.

Vehicles: There are 18 medium sized trucks based at the district hubs that collect the UCO product from neighborhood bins and deliver it to the hubs. There are two large trucks  at the biodiesel factory that collect UCO from the hubs and deliver it to the biofuel factory which is located in the Dubai Investment Park (DIP).

Figure 1.4 – Attribute values and location of the Biofuel factory

Routes: Each vehicle is assigned one delivery route that it follows in order to move products between facilities from bins to hubs and from hubs to biofuel factory. Vehicles that collect UCO from bins are based at the hubs, and it has a stop on its route for each bin where it picks up UCO. When these vehicles return to their hubs after traveling their routes, the amount of UCO each one picks up is added to the UCO amount on-hand at the hub where it is based.

Figure 1.5 below shows an example of the truck from Hub 3, that collects the UCO from collection bins every few days and brings it back to be stored in the warehouse of Hub 3. Also shown is information about the collection route the truck follows and the amounts of UCO it picks up at each collection bin.

Figure 1.5 – Attributes for a medium truck and the route it travels to collect UCO from bins

Simulating the UCO Collection Network

We created supply chain models that depict the UCO collection networks related to Hub 2, Hub 3, and All Hubs. These models simulate operations by running for 14+ days. The simulations for each model display the daily production quantity, quantity on hand, carbon generated, and operation cost of each bin in the networks for Hub 2 and Hub 3. Similarly, the same details are provided for the All Hubs network that delivers UCO to the biofuels factory. Figure 1.6 below shows simulation results for Hub 3, and Figure 1.7 shows simulation results for the network of All Hubs.

Figure 1.6 – Simulation results for Hub 3

Figure 1.7 – Simulation results for the network of All Hubs that deliver UCO to the Bio Factory

Simulation Results: The model of the UCO collection network was run in simulations under different conditions and assumptions about supply, demand, and prices for UCO. The amount of UCO collected at each collection bin was calculated each day. And the amounts of UCO collected from the bins and transported to the Hub warehouses was calculated, along with the UCO amounts delivered from the Hubs to the Biofuel factory. In addition, operating expenses and performance statistics were calculated each day.

Figure 1.8 below shows an example of this information. It shows the amount of UCO on-hand each day at one of the collection bins, and the daily amount delivered to the Hub 3 warehouse. Additionally, there is information about the Hub 3 vehicles and the BIO factory vehicle associated with Hub 3. It displays the running cost of the vehicles, the total carbon generated, and their destination.

Figure 1.8 – Operating data generated by supply chain simulations

Create Performance Reports from Simulation Data: We made our simulations run for 14+ days, and the simulations generated financial and performance data that were used to create a simple Profit & Loss Report plus KPIs (Key Performance Indicators). The reports measure the profit and operating efficiency of the UCO collection network. This provides an objective basis to compare different biodiesel supply chain designs. The P&L Report and KPIs help you analyze supply chain performance and spot improvement areas. Figure 1.9 below shows a P&L Report and KPIs for one of the simulations.

Figure 1.9 – All Hubs Monthly Profit & Loss Report and KPIs

Areas for Further Investigation

To further explore the design and operations scheduling of this UCO collection network, the supply chain model can be used to run simulations to find the most efficient types of vehicles, the best route schedules, and product pickup quantities. Different operating scenarios can be defined by using different assumptions about UCO supply and demand, and the related operating costs and product prices.

Different assumptions can be made about the amounts of UCO that are supplied by households and restaurants to the collection bins, and then delivered to the hubs and the biofuel factory. Different assumptions can also be made about the costs of operating the trucks and facilities in this supply chain, and about the selling price for UCO that is delivered to the biofuel factory. Simulations using these different assumptions will show the best supply chain designs in order to minimize costs and determine if the UCO recycling operation can make a profit, or at least cover its costs.

Conclusion

The United Arab Emirates (UAE) aims to become a global sustainability leader by prioritizing long-term economic growth while protecting the environment. The creation of a biodiesel supply chain that collects used cooking oil from households and restaurants will support this goal. By focusing on the collection and recycling of used cooking oil from households and restaurants, the project addresses the substantial role that they play in generating this waste and shows how they can be part of solving this problem. Improper disposal of used cooking oil can lead to environmental pollution and clogged drainage systems, causing detrimental impacts on both the local ecosystem and public health. By developing an easy-to-use system for collecting and recycling used cooking oils, the project aims to mitigate these negative effects while raising awareness about the importance and benefits of proper waste disposal.

One of the significant benefits of the biodiesel supply chain project is the production of biodiesel itself. Biodiesel is a renewable and cleaner-burning alternative to conventional diesel fuel, contributing to reduced greenhouse gas emissions and improved air quality. By utilizing used cooking oil as a feedstock for biodiesel production, the project helps in reducing the country’s reliance on fossil fuels and promotes the adoption of sustainable energy sources. This not only aligns with global efforts to combat climate change, but also positions the UAE as an innovative player in the renewable energy sector.

Furthermore, the project’s emphasis on education and awareness serves as a catalyst for behavior change among UAE society. By educating individuals about the significance of proper waste management and recycling, the project can foster a culture of environmental responsibility within communities. This, in turn, can lead to long-term sustainable practices beyond the scope of the biodiesel supply chain, impacting various aspects of waste management and environmental conservation.

Dr. Yousef Abu Nahleh is an accomplished industrial engineer with a PhD from Royal Melbourne Institute of Technology (RMIT) University in Australia. He is currently working at Higher Colleges of Technology (HCT) in the United Arab Emirates. Yousef’s research interests include operations management, quality control, and supply chain management. During his PhD studies, he conducted research in the field of industrial engineering, making significant contributions to the knowledge base of the field. (LinkedIn Profile: https://www.linkedin.com/in/yousef-abu-nahleh-ph-d-a119206b/)

[ NOTE: This blog post is excerpted from an executive insight article written by Dr. Yousef Abu Nahleh that will be published in the newest edition of my book Essentials of Supply Chain Management, 5th Edition. The publisher is Wiley, and the book will be available April 2024.]