Incorporating the Green in Supply Chain

Product Design
Meaning of Supply Chain
It is a long channel stretching from suppliers( raw materials, components) to
assemblers(finished goods), warehouse,, retail shops, and final customer. The supply chain
is the value delivery system and each firm in the chain captures only certain percentage
SCM is the oversight of materials, information,and finances, as they move in a process from
suppliers to manufacturer to wholesaler to retailer to customer.
Define Green Supply Chain Management

It is the integrating environment thinking into supply chain management, including product
design, material sourcing, and selecting, manufacturing process, delivery of the final product
to the consumers, and end of life management of the product after its useful life.
Green supply chain management= green procurement + green manufacturing/materials
management + green distribution/marketing + reverse logistics
Management Approaches to Greening
Reactive approach/ comply with legislation- A reactive green supply chain tackles
environmental issues as they arise, rather than planning ahead. Imagine a company facing
customer backlash for wasteful packaging. They scramble to find eco-friendly options, but
haven't built relationships with sustainable suppliers. This reactive approach can be slow,
costly, and lacks long-term vision for a greener future.
Proactive approach/pre-empt new legislation- In green operations, a proactive approach
goes beyond just reacting to problems. It's about strategically planning for sustainability.
Imagine a company that analyzes energy use and invests in energy-efficient equipment before
facing rising energy costs. They might also develop eco-friendly products and source
recycled materials, all while building partnerships with responsible suppliers. This proactive
approach reduces environmental impact, saves money in the long run, and positions the
company as a leader in sustainability. (99 words)
Value seeking approach- A value-seeking approach in green initiatives focuses on finding
win-win situations for both the environment and the business. It goes beyond just compliance
or cost-cutting.. Imagine a company that implements water-saving measures in production.
This reduces their environmental footprint and water bills, saving money. They can then
invest those savings in further green practices or developing eco-friendly products that attract
customers who value sustainability. This approach creates shared value for the environment
and the company's bottom line.
Procurement
Green Purchasing Trend
Production/ Manufacturing Process
Packaging
Scope and Significance

Scope

Companies efforts to incorporate GSCM leads to reduction of wastage

Which in turn leads to reduction of pollution and sustainability of natural resources

Which in turns creates a better environment and wold to live in

Hence the opportunity to slowly orient to GSCM should be the focus of the companies to world class
standards

Significance:

Eliminates the wastage

Optimum utilisation of resources

Sustaining environment

Competitive advantage

Impress customers

To make difference

Reverse logistics

Create social responsibility

Objectives
 Minimize environmental impact: This includes reducing resource consumption (energy,
water, materials), waste generation, and pollution throughout the supply chain.

 Enhance resource efficiency: Green operations strive to get the most out of resources
used in production, distribution, and product use.

 Promote sustainability: By adopting long-term practices that minimize environmental

impact, green operations contribute to a more sustainable future.

 Reduce costs: Many green initiatives can lead to cost savings through lower energy and
resource consumption, as well as reduced waste disposal fees.

 Improve brand image: Consumers are increasingly environmentally conscious. Green

operations can enhance a company's reputation and attract customers who value
sustainability.

 Comply with regulations: Environmental regulations are becoming more stringent.

Green operations help companies stay ahead of the curve and avoid fines or penalties.
Green Supply Chain Elements
Green Supply Chain Practices
Environmental collaboration with customers- In green operations, environmental
collaboration with customers is a powerful strategy where companies and their customers
work together to minimize environmental impact throughout a product's lifecycle. Here's how
it works in about 100 words:

● Joint innovation: Companies and customers can co-develop eco-friendly products

with features like reusability, energy efficiency, or use of recycled materials.
Customer feedback helps ensure the product aligns with their green preferences.
● Sustainable practices: Companies can educate customers on proper product use and
responsible disposal, encouraging practices like refilling, composting packaging, or
recycling. Customers can provide feedback on these programs and suggest
improvements.
● Transparency and accountability: Companies can share their environmental goals
and progress with customers, building trust and encouraging environmentally
conscious choices. Customers can hold companies accountable by choosing brands
with strong green practices.

With suppliers- Environmental collaboration with suppliers is a key element in green

operations. It's where companies and their suppliers work together to reduce the
environmental impact throughout the supply chain. Here's a breakdown in under 100 words:

● Joint Goals: Companies set clear environmental goals (e.g., reducing waste, using
recycled materials) and work with suppliers to achieve them. This might involve
sharing best practices or jointly developing more sustainable production methods.
● Transparency: Suppliers share data on their environmental practices, allowing
companies to assess the overall supply chain impact. This transparency builds trust
and identifies areas for improvement.
● Supplier Support: Companies can offer resources to help suppliers adopt greener
practices. This might include training, financial incentives, or access to sustainable
materials.

Environmental monitoring- Environmental monitoring is a powerful tool that strengthens

green operations through collaboration. Here's how, in about 100 words:

● Data-driven decisions: Companies use environmental monitoring data (e.g., air

quality, energy consumption, water usage) to identify areas for improvement across
their operations. They can then collaborate with suppliers to address these issues, like
jointly investing in cleaner technologies or reducing resource use throughout the
supply chain.
● Performance tracking: Both companies and suppliers can monitor progress towards
shared environmental goals. This data transparency fosters accountability and allows
them to adjust strategies as needed.
● Early detection: Continuous monitoring can help identify potential environmental
issues early on. Companies can work with suppliers to implement preventative
measures, avoiding larger problems and regulatory actions.

Monitoring of suppliers- Performance Tracking: Companies assess suppliers'

environmental practices against predetermined criteria. This might include energy use,
waste generation, use of recycled materials, or adherence to environmental regulations.

● Data Collection: Companies gather data through surveys, audits, or requesting

reports from suppliers. Standardized formats ensure consistent and comparable
information.
● Continuous Improvement: Based on monitoring results, companies work with
suppliers to identify areas for improvement. This can involve collaborative action
plans, training programs, or suggesting alternative materials or processes.
● Risk Management: Regular monitoring helps identify potential environmental risks
within the supply chain, such as pollution from a supplier's facility. Proactive steps
can be taken to mitigate these risks.

Monitoring by customers- Product Lifecycle: Companies track customer behavior

throughout a product's life. This might involve monitoring recycling rates, energy
efficiency of product use, or refillable product usage.

● Feedback Mechanisms: Companies gather feedback through surveys, reviews, or

social media to understand customer preferences and challenges related to green
practices.
● Educational Initiatives: Based on monitoring results, companies can develop
educational initiatives. This could involve providing tips on proper product use,
responsible disposal methods, or highlighting eco-friendly features.
● Transparency and Incentives: Companies can be transparent about the
environmental impact of their products and offer incentives for sustainable customer
practices. This might include rewards for refilling, providing recycling options, or
offering discounts for energy-efficient product use.
Systematic Approach to Implement a Green Supply Chain
► It is a 4 steps decision making process:

► The first step is to identify the environmental costs within your process and facility

► The next step is to determine opportunity which would yield significant cost savings
and reduce environmental impact

► The third step is to calculate the benefits of your proposed alternatives

► The last step is to decide, implement, and monitor your improvement solutions
Drivers to Adopt GSCM
Challenges for SCM
GSCM Strategies
Risk based strategies- Identify Risks: The first step involves systematically identifying
potential risks that could impact your goals. This might include financial losses, project
delays, safety hazards, or reputational damage.

● Assess Risk: Each risk is then evaluated based on its likelihood of occurring and the
severity of its impact. This helps prioritize the most critical risks.
● Develop Controls: Once risks are prioritized, strategies (controls) are developed to
mitigate them. This could involve preventative measures, contingency plans, or
resource allocation to address the most significant risks.
● Monitor and Adapt: The risk landscape is constantly changing, so the strategy needs
to be monitored and adapted as needed. New risks may emerge, and the effectiveness
of existing controls needs to be evaluated.

By focusing on the most significant risks, a risk-based strategy allows for efficient allocation
of resources and helps organizations achieve their goals while minimizing potential
downsides.

Efficiency based strategies- An efficiency-based strategy prioritizes getting the most out of
resources. Think streamlining processes, reducing waste, and using technology to maximize
output while minimizing time and cost.
Innovation based strategies- An innovation-based strategy thrives on fresh ideas. It involves
constantly seeking new and improved ways to operate. Imagine a company that encourages
brainstorming sessions and invests in R&D to develop eco-friendly products or processes.
This approach can lead to cost savings, increased efficiency, and a competitive edge through
groundbreaking solution.
Closed loop strategies- Closed-loop strategies in green operations aim to create a circular system
for materials. Imagine a company that designs products for disassembly and reuse, then collects them
back from customers. These used parts are then refurbished or recycled to create new products. This
minimizes waste, reduces reliance on virgin materials, and lowers the environmental footprint
throughout the product lifecycle.

Benefits of GSCM
► Sustainability of resources

► Lowered costs

► Product differentiation and competitive advantage

► Adapting to regulation

► Reducing risk

► Improved quality and products

► Transparency in supply chain

► Dissemination of technology, advanced technique

► Increasing of sales

► Find beneficial uses for waste

Barriers of Applying GSCM
Maintaining the close relationships with their main suppliers
Obtaining a larger market share through competition with other market share
Improving product quality and reducing cost
Ensuring the sustainability of operations and reducing the environmental impacts
Financial Costs: Upfront investments in green technologies, energy efficiency upgrades, and
sustainable materials can be expensive.
Lack of Awareness: Companies might not fully understand the environmental impact of their
operations or the benefits of going green.
Management Commitment: Without strong leadership buy-in, green initiatives may not be
prioritized or adequately funded.
Short-Term Focus: Focusing solely on short-term profits can overshadow the long-term
benefits of green practices.
Technological Limitations: Certain industries may lack access to the necessary green
technologies to achieve their sustainability goals.
Supply Chain Challenges: Encouraging sustainable practices throughout the supply chain can
be complex and require collaboration with suppliers.
Consumer Behavior: If consumer demand for sustainable products is low, companies may be
hesitant to invest in green initiatives.
Regulation and Standards: Inconsistent or unclear environmental regulations can create
uncertainty and hinder progress towards green operations.
Benefits of GSCM
● Sustainability of resources

● Lowered costs

● Product differentiation and competitive advantage

● Adapting to regulation

● Reducing risk

● Improved quality and products

● Transparency in supply chain

● Dissemination of technology, advanced technique

● Increasing of sales
 ● Find beneficial uses for waste

Areas to focus in the Company due to GSCM

● Sustainable Procurement: This involves sourcing materials and services from
suppliers who prioritize environmental responsibility. Look for suppliers with strong
environmental policies, who use recycled materials, and have energy-efficient
practices.

● Green Product Design: Consider the environmental impact throughout a product's

lifecycle. Design for disassembly and recyclability, use eco-friendly materials, and
ensure energy efficiency during product use.

● Sustainable Manufacturing: Optimize production processes to minimize waste,

water, and energy consumption. Invest in energy-efficient equipment and explore
renewable energy sources.
 ● Green Logistics and Transportation: Reduce emissions and fuel usage through
route optimization, efficient packaging, and exploring alternative transportation
options like electric vehicles or rail.

● Collaboration: Partner with suppliers and customers to share best practices, develop
joint sustainability goals, and encourage transparency throughout the supply chain.

● Monitoring and Measurement: Track your environmental performance through data

collection to identify areas for improvement and measure the effectiveness of green
initiatives.

● Innovation: Continuously seek new and innovative ways to reduce environmental

impact. This could involve investing in R&D for sustainable materials, production
methods, or recycling technologies.
By focusing on these areas, companies can build a more sustainable supply chain, reducing
their environmental footprint, improving resource efficiency, and potentially gaining a
competitive edge in the marketplace.
Some Examples of Being Green
Walmart- anticipates its goal of a 5% reduction in the packaging by 2013 will reduce $3.4 bn
in direct saving and roughly $11bn in savings across the supply chain
Johnson and Johnson’s energy efficiency program resulted in an estimated $30 mn in
annualized savings over the 10 years prior to the company 2006 sustainibilty report
Nestle through a combination or packaging source reduction, reuse, recycling, and energy
recovery, saved $510 mn worldwide between 1991 and 2006
Best practices for GSCM from leading companies
Conclusion

GSCM is relatively a new green issue for majority of Indian companies

Adding the green component to supply chain management involves addressing the influence
and relatonships of scm
It become a vital component for business organization
There is a strong association of business with environment
It’s the responsibility of every business to sustain itself in a eco-friendly manner and be
environment concerned along with making profits.