Green Supply Chain Management
GREEN SUPPLY CHAIN MANAGEMENT (GSCM)
What is Green Supply Chain Management: Green Supply Chain Management is all about delivering products and services from suppliers, manufacturers to end customers through material flow, information flow and cash flow in the context of environment. Traditional Supply Chain Management focuses on Total Quality, optimum Cost and best service which in some way contributed to environment. Today's Green Supply chain management mandates to incorporate the environmental idea in each and every stage of the product and service in a Supply Chain. Hence Supply chain managers have a great role in developing innovative environmental technologies to tackle the problems faced by the economy on environmental problems and communicate this to every stake holder in the chain. Lean Manufacturing is eliminating waste in every stage of supply chain. It focuses on producing economically and environmentally friendly quality products which meets the customer expectation. It is the best practice to be followed since it reduces inventory, saves space and energy. Hence Lean manufacturing contributes to the Green environment. EPI is to measure the effectiveness of environmental performances of a country. This measure provides the details on how close the countries can establish environmental friendly policies and procedures.
Ways to build Green Supply Chain
- Product Selection: Designing the product in such a way that it should be safe for use, creating least pollution and consumes less energy. It should not be hazardous during storage, transportation and also while disposing once it reaches end of its product life cycle. DFE (Design for Environment) is about developing products that has no negative side effect for human and environment, cost effective and environment friendly. This practice has to be implemented in product design stage.
- Process and production: Process has to be designed so that it conforms to the Green Supply Chain Management initiatives to reduce environmental negative impact. Efficient and effective production strategy to reduce energy consumption which includes reducing waste material, air and water emissions. This contributes to lean manufacturing. All possibilities have to be checked for recycling the Scrap materials.
- Business Partners selection: Selecting suppliers who have proven track records on practicing lean manufacturing and using environment friendly material. Involving vendors during product conception and design so that they can share their best practices to best align your strategy with the customer strategy on going greener supply chain. Ultimately it results in customer delight and satisfaction.
- Logistics Design: Efforts should be practiced to reduce fuel consumption. This we can achieve by setting up suppliers near to the OEMs (Original Equipment Manufacturers) and its Hubs. Less use of air freight, increased use of rail and sea transport. Logistics partners have to be included while product designs so that it improves cubic space utilization and effective fleet management. Back hauling should be practiced where the empty vehicle should be used to collect the goods from other sources once after delivering finished goods.
- Packaging Material: Replacing package materials which are eco-friendly. Fumigation certificate should be obtained for international shipments for wooden pallets and crates. Packaging material has to be designed in such a way it can be re-used and re-cycled. Packaging should be robust so that any hazardous material inside it doesn't spill over and cause environmental hazard.
- Reverse logistics Design: Materials after consuming should be effectively used for re-use, repair, recycle, remanufacture and redistribution. It calls for reusing containers and pallets, redesigning and recycling package materials etc. Reducing pollution during transportation are important activities of reverse logistics. Proper design of Reverse logistics contributes greater towards Green Supply Chain Management.
- Information Technology: A Green approach to IT has to be achieved through various automatic processes thereby reducing carbon foot prints. Paper usage has to be minimized through automatic invoice/payment processing. Using EDI for creating/transmitting orders.
- Green Building: Deploying greener practices in Design, construction and maintaining the buildings. Using energy efficient bulbs, natural lightning saves considerable energy. Water has to be recycled for day to day use. LEED certification (Leadership in Energy and Environmental design recognized by US and other countries) has to be obtained. Investment in Renewable energy sources such as solar, wind etc. are needed for sustainable green practice.
Benefits of GSCM
1. GSCM will help us to gain a competitive advantage and help us to attract new customers.
2. Increased use of resources, improved efficiency and reduced production cost.
3. It contributes greater towards improved financial performance.
4. Reduces risk by avoiding hazardous material that leads to environmental effect.
5. Improved quality of products and services gives higher customer delight and reputation.
Hence trying to deploy all the above designs in each and every stage of a supply chain will in turn creates values financially and socially to the customer. Hence we can go a step further and call the chain as a value chain. Ultimately all these practices have to be sustainable and should keep improving continuously by researching and innovating new ideas.