Going green - a Marketing gimmick, Cost saving tool or Sustainability?
Long time back, when I was managing shop-floor operations, I was asked by a senior production manager from another company "Why do you give so much importance to green in your operations, whereas it is a marketing gimmick for many?" My answer to that was it has a marketing angle, cost saving potential and is a sustainable approach. Is it true? Yes, there was a time when green initiatives always used to fall in the tail end of organizational initatives' presentations . But now it is more likely found on the initial slides of such presentations.
It is a fact that greenness of the supplychain is playing an important role in current world. It shows to the world that the organization is sustainable and responsible. However Greenness is yet to be accepted as an Order-winner, but in many of the current opportunities / bids it surely plays the role of an Order-qualifier. There are so many compelling reasons for an organization to go green, such as - Global concerns of climate change, rising energy costs, regulations which are getting stringent day by day and above all increased public awareness about the subject. It also serves as a marketing tool, though might not be the primary aim of an Organization. In a recent survey it is found that people and organizations are ready to bear a little extra cost to adhere to a green solution.
The Critics could always ask, what are the advantages an organization gets by going green? Isn't it a waste of money and resource? The answer is Going green doesn't necessarily mean going expensive. A global glass manufacturing giant was able to save a considerable amount by replacing a part of wooden box packs with re-usable iron frames. This is one of the many green success stories I have seen.
How to measure the greenness? There is no single metric to capture greenness. It is measured across various indices - carbon footprint, environmental footprint, solid, liquid and gaseous waste generated and % of waste recycled are few of the named measures.
An important question that is foremost in many minds, "is measuring greenness all enough? I feel, Greenness is only the effect, but the emphasis should be on what caused that increased greenness or less greenness.
One promising method to study/understand the causes is Environmental accounting. Environmental accounting is that type of accounting where environmental interactions are captured and accounted to the process. Here the costs like costs for water treatment, electrostatic precipitator, pollution treatment etc. which generally go as overheads in standard accounting practices are captured and accounted for. Just to elaborate - suppose there are two processes (Process1 and Process2) for producing a product A. Process 1 generates more waste water than Process 2. Everything else remains same. If the standard accounting principles are applied - Process 2 appears to be more costly than it actually is, because it has to bear some part of the overhead cost due to increased water treatment for Process1.
Similarly going forward, I see an increased need for the SCM/ ERP applications to enable environmental accounting principles for capturing environment data in similar lines with time and cost, to support a sustainable supply-chain or an enterprise.
In my subsequent blogs, I will elaborate on my take on the different measures for greening the supply chain. Do share your thoughts and comments on the prospects of going green