(March 2008)
By Lerato Letsoalo and Keletsamaile William Motatsa
All businesses have some impact on the environment; they emit pollution, produce waste and use resources for power. Companies are not in business to solve the world’s environmental problems, yet managers are starting to look at environmental problems as business issues where many can gain sustained competitive advantage. It is not just about well meaning efforts to help the environment, we all have good intentions but should those good intentions and a little effort lead to significant avoided costs or cost savings, then that makes good business sense.
Years ago, the concept of environmental quality was non-existent, the concept only referred to cleaner air and cleaner water. Now, environmental quality has come to mean safe drinking water, healthy ecosystems, safe and organic food, toxic-free communities, safe waste management, restoration of contaminated sites etc.
Due to recent changing environmental requirements affecting manufacturing and operations, increasing attention is given to developing environmental management strategies for the supply chain.
What is a Green Supply Chain?
A Green Supply Chain (GSC) involves traditional supply chain management practices which integrate environmental criteria. A GSC imitates nature, running in cycles that mimic natural energy and material cycles. Moving from a linear to more of a cyclical material and energy flow means keeping wastes within the industrial system in order to conserve energy and prevent the dissipation of harmful materials into the environment. Therefore when designing a GSC all inputs and outputs in the product life cycle need to be holistically considered. Inputs include energy, materials and other resources whilst outputs include products, waste and revenues generated. Unnecessary inputs can be eliminated and outputs can be re-used. There must be a move towards sustainability, achieved through vast reduction in resource use and waste generation and a move away from one-time use and product disposal. A step in such a move is to extend the structure of the supply chain to a closed loop, including supply chain operations which are designed for end-of-life product and packaging recovery, collection and re-use.
Greening the supply chain refers to companies acquiring a certain level of environmental responsibility in the running of their businesses.
The traditional supply chain vs. the extended supply chain
1. The traditional supply chain
Supply chain has been traditionally defined as a one-way, integrated manufacturing process wherein raw materials were converted into final products and then delivered to the customer. Under this definition, supply chain includes only those activities associated with manufacturing, from raw material acquisition to final product delivery.
2. Extended Supply chain
The extended supply chain contains all the elements of the traditional supply chain, but extends the one-way chain to construct a semi-closed loop that includes product and packaging recycling, re-use and remanufacturing operations. See diagram 1.
The extended supply chain.
Adopted from: Designing the green supply chain. Benita M Beamon. 1999
Key:
Traditional supply chain
Extended supply chain
Waste/ Disposed Material
The new environmental era represents a new challenge to manufacturing and production enterprises worldwide. The challenge is to develop ways in which industrial development and environmental protection can symbiotically coexist. The first step in meeting this challenge is to re-define the basic structure of the entire supply chain, by accommodating environmental concerns associated with waste and resource use minimization.
Benefits of Green Supply Chain
There are numerous benefits that can be realized from adopting green supply chain practices; two of those benefits will be discussed. These are benefits to the environment, and benefits to the business.
Environmental benefits are straightforward, low-cost initiatives that every business can do to make a positive difference to the environment. The usual focus of these efforts is on changes within the business, but supply chain choices can have an important effect too. Put simply, what you decide to buy and whom you decide to buy from can make a difference. Making your supply chain as green as possible needn’t be a resource-intensive process. Small steps such as ensuring the use of recycled or recyclable materials, reusing materials where possible, minimization of hazardous materials, disclosing information relating to product safety, environmental and energy efficiency, minimized packaging can make a significant difference in the long-term.
There are two main types of business benefits. First, there is potential cost reduction, much environmental change boils down to increased resource efficiency, which in turn leads to improvements to the bottom line. For example, encouraging suppliers to use less packaging material will reduce their costs and they may charge a business less. The second benefit relates to customer preferences and enhancing your reputation. More and more businesses and consumers are using environmental issues as a criterion in their purchasing decisions, so progress in this area can be a plus in sales and marketing activities. Customers want to see that the businesses they work with or buy from, have considered their environmental impact all the way up and down the supply chain.
In conclusion, the movement to a GSC offers the possibility of long-term environmental gains for the planet and long-term competitive advantages for enterprises willing to take the lead in introducing a culture of sustainability into the way that supply chain management operates as a function.
Remember to... REDUCE, REUSE AND RECYCLE!!
References:
How to make your Supply chain greener. Anonymous.
Available at: www.businesslink.gov.uk.bdotg/action
What is a green Supply chain? Anonymous.
Available at: www.ieee-jp.org/section/Hiroshima/SMC/SMC-SCM-WG.html
Building the green Supply chain. Andrew K Reese. 2007.
Available at: www.sdcexec.com
Designing the green Supply chain. Benita M Beamon. 1999.
Available at: www.faculty.washington.edu/benita/paper11.pdf
www.suppy-chain.org