Green Supply Chain Management

24/09/2022 0 By indiafreenotes

The term sustainable or green supply chain refers to the idea of integrating sustainable environmental processes into the traditional supply chain. This can include processes such as supplier selection and purchasing material, product design, product manufacturing and assembling, distribution and end-of-life management. Instead of mitigating harmful impact of business and supply chain operations, green supply chain involves value addition and/or value creation through the operations of whole chain. Undeniably, reducing air, water and waste pollution is the main goal of green supply chain, while green operations also enhance firms’ performance in terms of less waste manufacturing, reuse and recycling of products, reduction in manufacturing costs, greater efficiency of assets, positive image building, and greater customer satisfaction.

Benefits of Creating a Green Supply Chain

Apart from impacting the environment positively, a green supply chain has a lot of benefits for a business:

Cost Reduction

Companies can save costs by implementing digital technologies that help in going green. IT Solutions that help in low consumption of power, substituting energy sources and recycling can create a positive impact on the financial sheets of a business.

While implementing green initiatives, businesses focus on reducing the greenhouse gas emissions which in turn leads to making shorter trips and reducing shipments. This results in lowers costs as vehicles use less fuel and suffer minimized wear and tear.

For instance, Nike changed the way it manufactured its new edition of shoes, reducing labor costs by up to 50% and reducing material usage by 20%, which resulted in 0.25% higher margins.

Sustainability of Resources

If a business has implemented green practices in its supply chain, there should be a process or policy in place in the supply chain that lets them be re-produce and recycle at the same pace at which their product is consumed.

Being Compliant

According to the second annual CDP Supply Chain Report that summarized climate change information from 710 suppliers, 6 percent of leading companies already deselect suppliers who fail to manage carbon.

According to current projections, this number is set to rise to 56 percent in the future. Whether to comply with government regulations or meet the expectations of the customers or clients, businesses are finding motivation to go green.

Digital Transformation helps in Reducing Risk

You must have heard stories about how a dangerous product slipped through the cracks and entered the supply chain. This is not just fatal for an employee but the company as a whole. When there are digital security solutions in place that ensure transparency, the chances of such incidents are very rare.

Not only such solutions protect businesses from unethical partners, it also documents and tracks all the labour involved and goods from source to destination.

Building Brand Reputation and Gaining Competitive Advantage

With information readily available online these days, having a green supply chain will help you in building your brand reputation. Businesses that develop environment-friendly and technologically advanced products would be able to build and sustain their brand image.

Customers want to buy from environmentally responsible businesses, and going green is an excellent way to let them know that your company has embraced the green revolution. According to a report, customers are willing to pay more for products that ensure green logistics practices and transparent supply chains.

Advantages of green supply chain management

Moving towards adopting a green supply chain would be suitable for your business as it

  • Minimize pollution: to minimize energy and pollution and hazardous products must not be disposed of in an open area.
  • Reduced waste: by the adoption of lean policies and improved process management, managers can eliminate waste.
  • Lower transportation cost: to reduce Greenhouse gas emissions, Singaporean companies will cut down shipments that will use fewer fuels and will minimize the tear and wear of trucks.
  • Tax benefits and rebates: Implementing solar panels and water heaters qualify for purchase price rewards and tax credits. This assistance would be provided by local municipalities, state governments, electric companies, and water districts.
  • Decreased environmental impact: Using long-lasting products, recycling paper, less electricity, reducing trash, and less water will benefit the environment and the business.
  • Improved public image: Generating positive Public Relations by promoting the environmental contribution of your organization through press releases. Including the green initiatives on ads and product packaging. It will earn you the customer attention who prefer green products.
  • Reduced utility cost: Using energy-efficient technology such as CFL/ LED bulbs, low-flow toilets and water conservation will result in cost savings.

Disadvantages of Green Supply Chain Management

Going green helps in protecting the natural system of the earth but for business, it means bearing extra prices

  • Expensive: Purchasing wind power electricity or switching to solar power can be costly for your corporation and may incur a premium price.
  • Data risk: Going completely paperless will directly risk your data Record Keeping. The system crash, theft of computers, viruses, and hacking of sensitive information can prove disastrous.
  • Increased product prices: Using green materials in your facility or production process can lead to a higher cost that is passed to the customers or have to be borne by the company’s expense.
  • Customer backlash: If consumers get aware of a company getting involved in greenwashing then it may harm its credibility. Greenwashing is the process by which the company can make a false claim of their product being environmentally friendly