What is the Green Supply Chain?
From product design to manufacturing to logistics management to product recovery, your supply chain has a major environmental impact. And, it is not enough for your Green Supply Chain strategy to simply attempt to mitigate these effects. To be accepted and successful, it has to be seen to drive value creation throughout your company.
While the wider goal may be CO2 reduction, for any company the real benefits are usually measured in terms of better utilisation of assets, less waste production, faster times to market, greater product innovation and increased profitability.
Key to the success of any sustained Green Supply Chain initiative is how your company changes the way it works with upstream and downstream trading partners. If you take a lifecycle approach – from initial raw material extraction to eventual product disposal – then this will require a much greater degree of collaboration, transparency and integration of supply chain processes and systems between trading partners than there has previously been.
Underpinning these new working practices is intelligent supply chain management and B2B ecommerce that enables the low cost creation of global trading communities that use automation to improve their business performance while achieving significant environmental results.
Why Green Your Supply Chain?
Let’s start by discussing the top line benefits. Of course we have to comply with all the environmental regulations and legislation. For any international organisation, with breadth and pace of new regulation that can be daunting in itself. But that’s a given. It’s something we have to do if we want to continue business. The issue is how to create a flexible and adaptable supply chain that can react quickly and with a minimum of effort as the regulatory landscape changes.
Next. there’s the importance of green credentials for both customers and employees. Especially in the retail and automotive industries, consumers have become much more proactive in including green criteria within their product selection process. Greening all parts of your organisation will help drive the value in your brand – and the supply chain has its role to play in that. But, if we’re to be honest, only the enlightened few of company boards are going to OK a major supply chain programme based on top line benefits. There has to be a positive impact of the bottom line. So, take a look below at some of the rewards.
The Rewards of Sustainability
- Operational cost savings due to reduced waste
- Compliance penalty reductions – the benefits of which go straight to the bottom line
- Reduced health and safety costs
- Lower labour costs – better working conditions can increase the motivation and productivity, and reduce the absenteeism of logistics workers
- Reduced water, energy, fuel and transportation costs
- Reduced dependence on fluctuating prices of resources
- Regulatory compliance
- Enhanced reputation–engaging in sustainable behaviour can make an organisation more attractive to suppliers and customers, not to mention investors
- Increased revenue from better customer relationship – improved supply chain automation increases deal size by 3-5%
- Sustainability and B2B Outsourcing
Pursuing a reduced supply chain carbon footprint through outsourcing B2B actually helps improve your bottom line. Three primary drivers – error reduction, transportation improvements and IT optimisation come together in a mature B2B programme to both reduce costs and provide significant environmental benefits.
- Postponement Techniques Improve Supply Chain Responsiveness
Conventional wisdom holds that the best way to improve responsiveness and cost savings in the supply chain is to “go direct” and “eliminate the middleman.” However, the migration to demand driven supply networks is leading many to reconsider the use of middlemen in the supply chain.
- Reducing Supply Chain Waste with Demand Driven Strategies
Every year, billions of pounds of excess inventory are moved through the supply chain at a great expense to the manufacturers, distributors and retailers selling the goods.
- Grocery Supply Chain grows Greener with Local Foods
One of the more popular trends in the food market recently has been the consumer migration towards locally grown foods. Among the key reasons consumers are purchasing more locally grown products is the environmental benefits.
- Energy Spend Management
A study by the McKinsey Global Institute found that 10% of all energy worldwide is consumed by commercial real estate sites.