Green Supply Chain Management
Implementing Green Supply Chain Management leads to environmental benefits.
The incorporation of environmental concerns into (Supply Chain Management) SCM literature, gives rise to the term “Green supply chain management” (GSCM). GSCM refers to the integration of environmental issues in all functions of the supply chain.
What is Green Supply Chain Management?
Green Supply Chain Management is systemic, strategic coordination of the traditional business functions and the tactics across business functions within a particular company and businesses within the supply chain, for improvement in the long-term performance of the individual companies and the supply chain as a whole.
GSCM is the integration of eco-friendly methods into the conventional supply chain to lower waste and carbon footprints and increase efficiency.
It’s a business that might transform its traditional supply chain into a green one by including the “environment” factor in all stages of the supply chain starting from product development to manufacturing to distribution to end customers. This can be done either by digital transformation or by just creating relevant policies.
Today artificial intelligence, digitization, robotics, and other such technological advancements are helping toward green supply chain management.
Let us understand how important it is for the businesses and environment.
Importance of Green Supply Chain Management
A sustainable supply chain is important for the development of the environment. Cutting back on carbon emissions and conserving natural resources is a concern for everyone. However, these are just a few of the reasons why companies choose to “go green.”
87% of consumers around the world believe that businesses require to help improve the environment.
Apart from the environmental benefits, green supply chain management can offer below benefits as follows;
Reduced Waste
Billions of tons of food are wasted in the supply chain every time. By creating efforts to decrease waste through improved process management and the adoption of lean policies, managers can decline costly losses that reduce their TCOB.
Lower Transportation Costs
Companies try to bring down the weight of shipments and also creating trips shorter when they’re trying to lower their greenhouse gas emissions. This would result in lower transportation costs, as trips use less fuel and transportation suffer minimized wear and tear.
Enhanced Reputation
87% of consumers around the world trust that businesses need to help improve the environment. Such belief factors into buying decisions and could hurt companies that don’t attain sustainable practices. It also affects even businesses that don’t sell directly to consumers, as businesses searching to reduce their environmental impact would look into their vendors’ policies on sustainable business practices.
The importance of Green Supply Chain Management would lead to some Social Benefits too;
- GSCM lowers community impact
- Competitive advantages can be viewed in GSCM
- GSCM helps to reduce noise pollution.
- Achievement of Traffic congestion avoidance can be done through GSCM.
- Overall, health, safety, and security measures are acclaimed.
Objectives of Green Supply Chain Management
To understand the objectives of GSCM, three reasons can fulfill the discussion;
Convergence of economical and environmental interests
More than 65% of the companies interviewed declare that they are ready to initiate environmental actions despite their low present profitability, provided they make value in the medium term.
Companies now look at the convergence of economic and environmental interests for their supply chain.
Mostly 70% trust the green supply chain as a true economic lever and a source of quick measurable profits. For the other 47% of the companies, the return on investment is reached almost three years.
Environmental commitment planned for the long haul.
Companies that select to implement a green supply chain invest and commit to it for the long haul, for example, 75% of companies already measure their carbon footprint calculate it at least yearly.
Green actions also look to be able to weather the storm made by the recent economic crisis. Two-thirds (66%) of companies declare that the crisis didn’t make a breaking effect on planned and ongoing environmental initiatives. They accelerated most of them.
Ecology as a performance indicator for the supply chain
To assess environmental actions in the supply chain management, companies should introduce green key indicators and metrics. Key performance indicators, like the share of recycled packaging material, or the share of trucks far better than Euro-class 4, are considered. The measure of performance is necessary to achieve the trust of executive committees and to meet regulations.
Many European companies have adopted this approach in their corporate relationships. Scandinavian companies led the way, as 80% of them already use ‘green criteria’ as environmentally friendly.
Final Note
From the above, it is clear that through green supply chain management it is possible to reduce waste, use energy efficiently and save cost. The manufacturing process and other operations are streamlined with a sustainable supply chain. People value those companies which are turning green and hence, green supply chain management is the best option to enhance the image of the business.
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