Green Supply Chains

An Action Manifesto

Stuart Emmett, Vivek Sood

• Publisher: Wiley
• Year: 2010
• Print ISBN: 9780470689417
• eBook ISBN: 9780470662335
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

This book answers the following five fundamental questions:

• What are the tangible and intangible benefits of moving towards a green supply chain?
• What are the costs, both direct and indirect?
• What influence do we have over our suppliers, their suppliers and our customers that would allow us to jointly work together and move the supply chain towards a green supply chain?
• How will we communicate and measure our progress towards the green supply chain to the key stakeholders? How will we engage them?
• What barriers to green supply chains can be expected and how can these be overcome?

For all those responsible for steering supply chain decisions this book will be an invaluable asset, particularly as the 'greening of business' grows ever important.

PART 1

Introduction

1

Introduction to Green Supply Chains

Arguably, since the wide recognition of Supply Chain Management (SCM) in the late seventies, nothing in SCM has captured the imagination of the public, corporate management, and policy makers as much as the recent concept of Green Supply Chains. This is driven by a multitude of reasons which appeal to all these constituencies in different ways.

Green Supply Chain Management (GSCM) has emerged as a key approach for enterprises seeking to make their businesses environmentally sustainable. The notion of GSCM implies the insertion of environmental criteria within the decision-making context of the traditional supply chain management.

At our current place in history, Green Supply Chain Management has become a key strategic issue for organizations of all sizes and types rather than just a talking point for idealists and hobbyist do-gooders. For example, the idea of Corporate Social Responsibility (CSR) is now fully incorporated in many legal and ethical frameworks governing how organizations function within society. Society now fully expects organizations to be responsible for all direct and indirect impacts of their actions, and those of their suppliers, employees, directors, and even customers.

For the CEOs, the boards, and the senior executive teams, Green Supply Chain Management offers a systematic way to comprehensively manage their entire business in a manner that meets their CSR obligations and profitability targets.

Demographics, information explosion, and past environmental degradation are creating organizational pressures and market opportunities for more and more Green products and services. Public activism is forcing policy makers and organizations to accept that sustainability is more than just a buzzword. Key decision makers in organizations are now expected to consider the social and environmental impacts of their current activities. Indeed, the more strategic the view of environment-related CSR activities is within a supply chain, the more benefit to the organization. Environmental considerations are now key centre points of the decision-making process rather than an unpalatable afterthought to the decision.

Our Green Supply Chain Planning framework also introduces a systematic way to win in this new game of putting environmental considerations in the centre of decision making, whilst still being the most profitable.

Green Supply Chain Management will therefore fully integrate environmental considerations into traditional supply chain management. This covers all aspects of supply chain management including product design, procurement, sourcing and supplier selection, manufacturing and production processes, logistics and the delivery of the final product to the consumers, along with the end-of-life management of the product. Therefore the total or the end-to-end supply chain can be covered (for example see Part 8, Case Study 1 that shows how this has been tackled by one organization).

Green Supply Chains therefore address four interrelated areas of the supply chains: upstream, downstream, within the organization, and the connecting logistics process:

• Upstream activities of a manufacturing product organization include the Green Design, Green Procurement, and evaluation of suppliers’ environmental performance.

• Downstream activities usually comprise those activities related to the usage of the products till it is finally consumed. This includes any recovery and recycling opportunities after it has provided its utility and also the disposal and sale of excess stocks.

• Within the organization, Green Supply Chain Management includes those activities related to Green Design, Green Packaging, and Green Production.

• In logistics, activities such as just-in-time, fulfillment, lot size management, and quality management all have clear connections to environmental criteria.

As consumers have become more aware of environmental issues, such as global warming, they have now started asking questions about the products they are purchasing. Nowadays, organizations routinely face queries about how Green their manufacturing processes and supply chain are, how wide the carbon footprint is, how wasteful their packaging is, and how they will recycle.

Some organizations have been able to convert the public’s interest in Green issues into increased profits. A number of projects within organizations have shown that there is a clear link between improved environmental performance and financial gains. Organizations that have looked to their supply chain have discovered areas where operational and environmental improvements can produce profits.

For example, General Motors was reported to reduce disposal costs by $12 million by establishing a reusable container programme with their suppliers. While the motivation for this project may have been a desire to reduce costs, GM found that the environmental cleanup that resulted was actually a very marketable message for the public and policy makers.

Numerous such projects remain deeply buried in many organizations despite their best intentions and attempts to flush them to the surface. A systematic approach is therefore very clearly required.

Similarly, cost savings can also result from reducing the environmental impact of the organization’s processes. By re-evaluating the organization’s supply chain, from purchasing, planning, and managing the flow of materials through the entire supply chain, savings are often additionally identified as a benefit of implementing Green policies.

Despite the public’s focus on the environment, benefits attributed to reducing an organization’s environmental impact are not in the forefront of many supply chain executives’ minds. It appears that many executives are still unaware that improved environmental performance means lower waste disposal, lower training costs, and often, reduced materials costs. For this reason Green Supply Chain Management is a cause for the boards and the CEOs, as well as the senior executive teams of organizations.

1.1 Benefits of Green Supply Chains

Organizations can enjoy several benefits by greening their supply chain and the following are some of the key benefits.

1.1.1 Positive Impact on Financial Performance

Despite ample evidence to the contrary, there persists a myth that going Green involves additional expense. Some of the factors responsible for persistence of this myth are inertia, the lack of a systematic approach, and an unwillingness to engage in sustained and changed thinking that is necessary to create a Green Supply Chain.

However, the most fundamental benefit of Green Supply Chains is a positive long-term net impact on the financial performance of the organization. This has been proven by both analysis and empirical evidence.

1.1.2 Sustainability of Resources

Green Supply Chains sponsor the effective utilization of all of the available productive resources of organizations. By incorporating Green Supply Chain Management thinking through their entire business decision-making process, organizations may now purchase Green input resources that will flow through an environmentally friendly production process to produce the desired Green outputs.

1.1.3 Lowered Costs/Increased Efficiency

At the core of Green Supply Chain Management is the principle of reducing waste by increasing efficiencies. Effective management of resources and suppliers can reduce production costs, promote recycling and also the reuse of raw materials. Also, the production of hazardous substances can be reduced, thereby preventing organizations from being fined as a result of violating environmental regulations.

Consequently, the relevant operational costs are reduced whilst the efficiency of using resources is improved.

1.1.4 Product Differentiation and Competitive Advantage

It helps an organization to position itself and its products as environmentally friendly in the customers’ perception. Besides attracting new profitable customers for organizations, it will give a competitive edge in the market place. It will also strengthen the brand image and reputation in the market place.

1.1.5 Adapting to Regulation and Reducing Risk

Organizations adopting Green Supply Chain practices can reduce the risk of being prosecuted for anti-environmental and unethical practices. A demonstrated effort towards creating an effective Green Supply Chain through the sustained dedication of resources, activity, measurement, and management protocol will be highly regarded in the event that any questions arise.

1.1.6 Improved Quality and Products

Organizations that produce products which are technologically advanced and environmentally friendly will find that this will enhance the brand image and brand reputation in customers’ minds.

Besides the above six benefits, there are additional advantages that can be generated by GSCM:

• effective management of suppliers;

• dissemination of technology, adv...

Table of contents

• Title Page
• Copyright Page
• Foreword
• Preface
• About this Book
• About the Authors
• PART 1 - Introduction
• PART 2 - Green Supply Chain Planning
• PART 3 - Green Procurement and Sourcing
• PART 4 - Green Supply Chain Execution
• PART 5 - Carbon Management
• PART 6 - Migration Strategy
• PART 7 - Continuous Improvement and Performance Evaluation
• PART 8
• References and Bibliography
• Index