Best Practices in Green Supply Chain Management

 Best Practices in Green Supply Chain Management

 Introduction

The trend towards developing a green supply chain is now gaining popularity but most companies are still coming to terms with how this can be achieved and where do they start. For years businesses have been concentrating on improving supply chain visibility, refining efficiency and minimizing cost. Despite the focus being moving towards a green supply chain the goals of visibility, efficiency and cost reduction do not have to be discarded. By examining the companies who have already made strives towards to a green supply chain, we can begin to see some best practices that will help others to begin their own transition.

Align Your Green Supply Chain Goals with Business Goals

Creating a green supply chain that has little to do with your business will not help your company to achieve its business objectives. For example, if a company decides to use biodegradable packaging for its products that costs 25% more than traditional packaging, this goes against the businesses goals of reducing costs. If a business has an overall goal to reduce costs then the move to a green supply chain should dovetail with the business goal. A company should look at its overall business goals and identify how a transition to a green supply chain can help achieve those goals. 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 made by using more energy efficient and greener equipment.

Use Green Supply Chain to Improve Processes

Companies do not often change their businesses processes and it is this attitude allows inefficient processes to continue unabated causing unnecessary waste and pollution. For example ineffective processes in the US automotive industry allowed the innovative Japanese automakers to become market leaders. Businesses that want to transition to a green supply chain should take the opportunity to review all their business processes to identify areas where adopting a greener outlook can actually improve their business. Companies should review each process along the supply chain to identify if a more environmentally sound approach will help cure the inefficiencies that occur. Many companies that have been through this exercise have identified processes where raw materials were wasted; resources underutilized and unnecessary energy used due to inefficient equipment.

Green Suppliers and Material Refurbishment

Companies reviewing their business processes should look beyond their factory walls. When reviewing purchasing processes the aim of any company, looking to transition to a green supply chain, should be to find suppliers who have minimized their environmental impact without reducing the quality of their product or significantly raising costs. By purchasing products from green suppliers businesses can then begin their green supply chain before any material reaches their site.

At the opposite end of the supply chain businesses should look at their return process. Many businesses have not developed a successful refurbishment program for their products that have been returned or exchanged. By offering refurbished items businesses can increase purchasing options to their customers and widen their customer base, whilst improving the environmental impact of their products.

There are many ways in which businesses can transition to a green supply chain; however it is important to realize that it is difficult to achieve results without strong focused leadership. Senior management has to lead the effort to move to a green supply chain and provide the resources for the transition. Many businesses have documented a intent or plan to implement a green supply chain, but without the necessary resources, both financial and manpower, any impact will be minimal.