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Green Supply Chain Management
Transcript of Green Supply Chain Management
What makes it green?
Supply Chain Management
Steps to be taken in Implementing GSC Projects
Green Supply Chain Management
Is the set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses and stores, so that merchandise is produced and distributed following the seven R's* of logistics, in order to minimize systemwide costs while satisfying service level requirements.
monitoring and improving environmental performance
in the supply chain" (Godfrey, 1998)
"Green supply refers to the way in which
innovation in supply chain management
and industrial purchasing may be considered
in the context of the environment
." (Green, 1996)
The concern of supply chain managers for the effects and the impact, positive or negative, of all the single activities involved in the supply chain on the environment.
“Environmental supply chain management consists of the purchasing function’s involvement in activities that include
reduction, recycling, reuse and the substitution of materials
.” (Narasimhan, R., and J.R. Carter. 1998)
It involves all the activities related to the research, procurement, conversion and logistics among with collaboration and coordination with the partners.
When we talk about green usually we refer just to the aspects related to the ecology
being green is limited to looking for product, material and processes that have a lower negative impact on the natural environment (Earth)
Based on 3 principles:
The whole approach of the supply chain management has to be able to generate income and opportunities for people to get a job.
Ability to maintain quality and reproducibility of natural resources.
Ability to create and assure welfare conditions as the combination of health, safety, instruction and justice.
CSR (Corporate Social Responsibility)
When companies feel the need to operate in order to achieve environmental and social goals.
follow ethical drivers (child labour, shift hours, etc.);
create a safe work environment;
try to assure job to people avoiding downsizing layoffs;
operate having regard for the well-being of inhabitants around the company.
CDP (Carbon Disclosure Project)
"We face an unprecedented environmental crisis. The impacts of climate change, water stress and deforestation are today affecting people’s lives [...]. National governments [...] corporations, investors and cities must also take responsibility to create the systemic change we need for an environmentally sustainable economy." (Paul Dickinson Founder and CEO)
To increase corporate transparency on environmental impact and performance;
To make environmental performance central to investment decisions;
To assist cities to reduce their climate impacts;
To support effective policy and regulation to protect the environment
Disclosing information to CDP incentives companies and cities to measure, manage and reduce their impact on the environment.
When the development involves equally all the social classes.
Economic sustainability implies the maintenance of the capital/assets. Therefore involves using the assorted assets of the company efficiently to allow it to continue functioning profitability over time.
As the company's assets it refers also to the natural resources.
When the economic development is compatible with the environmetal capabilities.
When social needs and environmental integrity are preserved.
In general, pollution and waste represent incomplete, ineffective, or inefficient use of raw material.
Green supply chain analysis provides an opportunity to review processes, materials, and operational concepts.
As with continuous improvement programs, green supply chain analysis targets:
2)Wasted energy or effort
Designing the supply chain concurrently with the product is a supply chain management best practice
Green Supply chain Management
Green supply chain management help mitigate risks and speed innovations.
Green supply chain analysis often lead to innovative processes and continuous improvements.
Green supply chain management involves negotiating policies with suppliers and customers, which results in better alignment of business processes and principles.
Green supply chain concepts manage environmental impacts where they occur—ideally before they occur.
Best practices focus on the business, not social, value that green supply chain management creates.
a) Align green supply chain goals with business goals
b) Evaluate the supply chain as a single life cycle system
c) Use environmental analysis as a catalyst for innovation
d) Focus on source reduction to reduce waste
Successful implementation requires raising the profile and perceived value of environmental projects.
a) Articulate project value in terms of business value
b) Create the project to work within the organizational culture
c) Use effective SCM tools to enable project execution
Real Business Value
Before embarking on green supply chain improvements, you need to determine the role of the environment in your business.
When green supply chain programs are properly aligned to corporate goals, successes become leading indicators of business success.
Environmental indicators on the Balanced Scorecard
Greater drive for innovation
Manufacturer encourages suppliers to adopt green practices, environmental management systems, etc.
Focus is on the material content and environmental practices of suppliers.
Align green supply chain goals with business goals
Evaluate the supply chain as a single life cycle system
Use green supply chain analysis as a catalyst for innovation
Focus on source reduction to reduce waste
Green Supply Chain Best Practices
"GSCM’s goal is to integrate manufacturing operations with environmental issues in order to reduce operating costs of the product life cycle and at the same time, reduce the generation of pollution and waste and consequent health problems."
(Beamon, 1999; Thun & Müller, 2010)
How to become Green by Supply chain
• Internal Environmental management through ISO 14001 certification and environmental goals at the factory;
• Green Shopping, including selection of suppliers based on RoHS (Restriction of Hazardous Substances Directive) and ISO certifications, and conducting frequent audits, based on, for example, the EICC (Electronic Industry Citizenship Coalition);
• Cooperation with the customer, through support for reverse logistics initiatives (using the site of the companies that have recycling programs);
• Ecodesign, involving central R & D (research and development) and partnership with client;
• Investment Recovery, with sale of materials for approved recycling company;
• Reverse logistics, with an internal area in the company for separation, reuse and proper disposal, approved recycling company hiring and existence of own collection points of the company (eg, technical assistance).
Some of GSCM practices adopted by companies are:
TOP 5 Green Supply-Chain Management (2013)
Sarvesh Prakash Rao
Are we becoming GREEN?
having Close relationship between supply chain in order to understand each other requirements. By heaving a common environmental-related goal, its easier to implement green supply chain management.
Collecting relevant data necessary to assess the progress against the defined metrics.
Metrics that are developed based upon the existing SC’s HSE relate KPI
Performance attributes of supply chain operations with environmental linkage
Anyone wants green but few of them are going to invest in it.
According to the research of BeringPoint, which drew a panel of initiatives mainly in the United States, France, England and Japan:
83% of the companies interviewed are concerned with environmental issues, but only 35% have some Green Supply Chain policy on its strategic business .
The main reasons for companies to invest in the GSC:
regulations and norms (22%);
concern for the brand image (19%);
pursuit of innovation (15%);
cost reduction (13%).
Deploying strategies like JIT (just in time) or emergency or overnight deliveries to the costumers have taken their roll on the environment. Logistics shall consider the tradeoffs between logistics optimizations, cost reduction and impact on the environment and society such as road congestion and pollution.
Reverse logistic is the backward flow of materials along the supply chain.
green procurement emphasizes waste reduction as source and set up a procedure to consider this before procuring any goods.