Business Growth, Insights & Analysis, Productivity

The arrival of the green supply chain – 3 ways to get started

BY Clara Lu 8 Oct, "14

As the public becomes more concerned for the environment and issues like global warning, consumers will be asking more questions about the products they are purchasing.

Businesses will need to answer these questions and manage expectations about how green their manufacturing processes and supply chain are.

Welcome to the green supply chain

recycling-294079Businesses worldwide are starting to implement environmentally friendly supply chain practices in a number of different ways. These can include a wide variety of activities and initiatives, including streamlining logistics to minimize emissions in
transport, using packaging materials that are made of recycled or recyclable materials, auditing the utility usage at their facilities, as well as investing in energy-efficient machinery.

In fact, green business practices are so highly regarded that universities are starting to offer training and academic opportunities for students to learn about how to adopt green methods. The University of San Francisco, for instance, has lessons on green supply chain techniques (the course is conducted online, no campus attendance is required – making it a green initiative!).

Benefitting both the environment & the bottom line

Not only can green supply chain practices can lead to improved environmental conditions, but also a much stronger bottom line. Companies can also find cost savings by reducing the environmental impact of their business processes. Interestingly, there's also been increasing evidence showing a link between improved environmental performances and profits.

There's a growing realization that building a secure and sustainable supply chain not only makes good business sense, but also has the potential to bring with it a number of additional benefits. It demonstrates a company’s commitment to wider stakeholder and social interests, builds a more resilient supply chain, and stimulates innovation - thereby resulting in increased productivity and happier customers.

For example, Wal-Mart’s green supply chain initiative – which includes saving 667,000 metric tons of carbon dioxide and 66.7 million gallons of diesel fuel – is anticipated to push the company towards $14.3 billion in profits this year.

In an attempt to reduce costs in their supply chain, General Motors found that the cost reductions they identified also complemented the company’s environmental protection strategy. In the end, GM reduced disposal costs by $12 million through the establishment of a reusable container program with their suppliers.

By reassessing your company’s supply chain – from purchasing, planning, and managing the use of materials to shipping and distributing final products – implementing a green supply chain may yield considerable savings.

Ways to implement a green supply chain

Most businesses are still coming to terms with how a green supply chain can be achieved and where they can start. Here are some pointers:

1. Align your green supply chain goals with business goals

If a company has an overall goal to reduce costs, then the move to a green supply chain would be in line with the goal. For example, if a business wants to reduce its energy costs, it should start by looking at the consumption to see if a reduction can be achieved by using more energy efficient equipment.

2. Ride on the green supply chain wave to improve processes

Ride the green supply chain wave

For business owners, inertia can be a problem when it comes to changing business processes. This attitude can lead to uncorrected inefficiencies - the byproduct of which is waste and pollution. For example, ineffective processes in the US automotive industry allowed the innovative Japanese automakers to become market leaders.

Organizations that want to shift to a green supply chain should take the opportunity to review their business processes to identify if a more environmentally sound approach can help cure inefficiencies. Look out for areas where raw materials are wasted, resources are underutilized, and unnecessary energy is expended.

3. Green suppliers and material refurbishment

Look beyond the walls of your company to shortlist suppliers who have minimized their environmental impact without reducing the quality of their products or significantly raising costs. By working with partners that understand the importance of sustainability, wholesalers and retailers can further improve their credentials at every point of their supply chains.

Businesses can also look at developing successful refurbishment programs for products that have been returned or exchanged. Offering refurbished items allows businesses to increase options for their customers whilst improving the environmental impact of their products.

The main objective of a green supply chain is to find the right balance between economic and ecological concerns, and there are many ways for businesses to achieve that.

Customers expect us to be proactive in our approach, so we have an obligation to innovate as much as we can, both in making basic improvements to processes and in introducing practices that can help improve supply chains. This is just the tip of the iceberg.

References: 1 | 2

Image Credits: 1 | 2

See Also:

Risk management 101 for SMEs

5 avenues to source products for your business

Tesla created a custom-built supply chain that competes with the best, and so can you

Subscribe to our email updates

Get the latest expert advice and tools for your business

Maybe later, thanks!

Subscribe for insights into building world-class eCommerce companies