Greening the Supply Chain

By: Santanu Tripathy
Submitted: 2007-01-17 15:05:13
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The most important driver for making any supply chain decision (forward or reverse) is the consumer. Due to the future environmental threats like global warming, ozone layer depletion, increasing water and air pollution, it has become evident that the consumer nowadays are becoming more and more concerned about the environmental compatibility of the products they buy, use or discard after their use. This change in the customer attitude resulted in environmental awareness throughout the chain. Firms are investing time and money in creating an environmentally friendly supply chain, and this trend leads to increasing popularity of reverse supply chain.

The term Supply chain refers to mutual understanding of buyer companies as well as their suppliers to critical processes and environmental performance from their manufacturing partners and vendors. When a company imposes environmental conditions on the products and processes of its suppliers, it is called Greening the Supply Chain (GSC). The use of GSC techniques provides the tools for consistent environmental performance for corporations operating in various countries. Because in present scenario companies are trying to outsource most of their operations and looking to setup manufacturing units all over the world to reduce the labor and logistics costs. The GSC consists of the interaction between buyers and sellers for recycling, reuse and the substitution of materials. By greening the supply chain, companies are trying to incorporate strong environmental performance into the supply chains and also to get maximum benefits for organizations and suppliers.

Some of the benefits of GSC are:

1. Competitive Advantage through Increasing Innovation: Efficient production is enhanced through the use of better technologies, process innovation, and waste reduction. Reduction in wastes can be considered as reduction in revenue loss.

2. Economic Benefits from Increased Efficiency: By reducing wastes, companies decrease handling expenses, fines, and even costly inputs.

3. Improved Product Quality: The well-matched relationship between the various players or entities of the whole chain leads to improve the product quality.

4. Improved Public Image: Consumers, investors, and employees respond positively to companies with a reputation for good environmental performance. A good reputation in the market sometimes becomes very important for the company in the long run.

But achieving greening in the supply chain is not an easier task for the organizations. There are certain issues which are involved in accomplishment of this task. The attitude of the whole organization from top to bottom, including each and every employee has to change and accept the fact that this is for betterment of companies operation and image. Not only internally within the organization, but, externally throughout the value chain and all the suppliers should also develop the same attitude. This is in itself is a challenging task.

Due to imposed restrictions, regulations and extra documentation the employees, suppliers or distributors may sometimes feel the greening act to be a waste of time. Thus, obtaining their total commitment is a challenging and complicated task. Another issue the greening movement is that the guidelines and requirements tend to change and vary, especially across different states and various countries in case of outsourcing. Each company must manage themselves, and because of this, companies find it challenging to execute these guidelines with no set requirements. As the primary goal of any organization or a firm is to earn profits, creating a synergetic effort for increasing profits as well as greening the supply chain becomes a hard and ongoing task.

Article source: Expert Articles