Green Supply Chain Management – A more Sustainable Supply Chain

Since the last few decades, environmental issues have been increasing drastically and traveling faster than a forest fire, from a different country to region, then region to world-level territory, which is considered a serious cause of climate change and global warming. 

Apart from that, scarcity of natural resources, wealth, and increasing air and water pollution badly affect the fauna and flora of the earth, and human life with different diseases they cause definitely. 

Rapid industrial growth and supply chain management highly contribute to these environmental issues. 

Then what is the solution to that? 

supply chain management

You may adopt Green supply chain management to solve rapid environmental issues. 

So let’s dive into the article below to find out more about the most sustainable supply chain management which is green supply chain management. 

What is green chain supply management?

Green Supply Chain management refers to the logistic structures Or supply chain management that guarantee the production and distribution of goods throughout the world in an environmentally friendly manner by adopting a 3R solution that is Reduce, Reuse, and Recycle.

To achieve such a goal and to make their supply chain more environmentally friendly, companies should take initiative and must invest in the design and planning optimization of their logistic structures.

On the other hand, they should be accountable for the trade-off between profits and environmental impacts. 

The green supply chain management concept occurs to mitigate environmental degradation as much as possible and control air, water, and waste pollution through adopting different green practices in business operations. 

Undoubtedly, the basic ideology behind this green supply chain management concept is to enhance environmental sustainability. 

But companies are adopting this green concept as “kill two enemies with one bullet”. As this green supply chain can reduce environmental pollution as well as production costs.

It can also spur economic growth, achieve greater competitive advantage in terms of greater customer satisfaction, positive image and reputation of the brand, and helps to provide a better opportunity to export their products in pro-environmental countries. 

wooden pallets stacked on trailer

Benefits of Creating a Green Supply Chain

Apart from impacting the environment in a positive manner, a green supply chain has a lot of benefits for a business that includes the following:

Cost Reduction

Companies are implementing different digital technologies that help in going for a green supply chain management that helps in cost reduction. 

IT Solutions can perform its work with low consumption of power, substituting different energy sources that are involved in this process and recycling that can create a positive impact on the financial sheets of a business.

While implementing green supply chain initiatives, companies should focus on the reduction of greenhouse gas emissions which may turn lead to making shorter trips and reducing shipments. It may result in lowers costs as vehicles can be used that require less fuel and suffer minimized wear and tear.

Sustainability of Resources

If a company will implement green practices in its supply chain, there must be a process or policy in place in its supply chain management that lets them re-produce and recycle at the same pace at which its product is purchased.

As per the report by the second annual CDP Supply Chain which summarized climate change information from 710 suppliers, 6 percent of leading companies in the world have already deselected suppliers who fail to manage carbon emissions.

According to current future predictions, this number is set to rise to 56 percent in the future. So different businesses are now finding the motivation to add green supply chain management to their company to comply with different government regulations or to meet the expectations of their customers or clients. 

Digital Transformation helps in Risk Reduction

You must have heard some cases of how a dangerous good or product slipped through the cracks and entered the supply chain system. This is not just dangerous for an employee but the company as a whole along with the public and environment.

While there are numerous digital security solutions available these days in a place that ensure transparency, the chances of such 

dangerous incidents are very rare.

Not only do such digital solutions protect different businesses from their unethical partners, but also document and track all the labor who are involved and goods from source to destination.

Supply Chain Management

Build Brand Reputation and Gain Advantages over competitors

As information about different company are readily available online these days, having a green supply chain management will help in building your brand reputation.

Those companies that have developed environment-friendly and technologically advanced products would be able to build and sustain their brand image.

For those customers who want to buy from these environmentally responsible businesses, adopting green supply chain management is an excellent way to let them know that your business has embraced the green revolution. 

A report says that customers are willing to pay more for those products that ensure green logistics practices and a transparent supply chain management system. 

Challenges associated with Green supply chain management

Although green supply chain management has numerous benefits associated with it, there are certain challenges that come along with that. That’s why certain companies are not readily accepting such a system. 

To discuss briefly the different challenges associated with green supply chain management which are given below:

Leadership commitment

When managers and executives have full authority on their boards, it is pretty much easier for the companies to develop a unified approach to creating a green supply chain strategy. 

However, the problem arises when decision-makers of those companies disagree about what practices to adopt, arising contradictions throughout the supply chain. 

Potential challenges may occur in different issues like supply chain performance, quality control, and the overall effectiveness of green initiatives.

Technology: 

As we discussed earlier, the introduction of software applications and the advancement of technology support green supply chain management systems at various steps of the process. 

This may include warehouse management systems (WMS) that help to boost warehouse efficiency to new manufacturing technologies and requires less energy to make their products or reduce the quantities of hazardous materials which are involved in the manufacturing process. 

When employees of those companies learn and readily adopt different technology that enables such chains, organizations tend to see good results. When there are employees unable to adopt such technologies and pushback or poor adoption, it can be harder for the company to implement long-lasting changes.

Brand image and company culture: 

As we discussed earlier that going green has positive implications for any brand and its culture supports these changes. But introducing new green supply chain management throughout the supply chain tends to go smoothly. 

In addition to that, involving your human resources team in the recruitment of green supply chain experts drives positive results. 

However, it can be an overwhelming task. If the corporate culture of the company is less supportive of green initiatives, and if the demand of the company isn’t strong enough to drive change in that company, it can negatively impact its success.

Cost

Depending on the type of business and industry, developing a green supply chain management may initially seem cost prohibitive. 

Although this investment leads to long-term success and cost reduction, the expense of investing initially in those overhauling infrastructure and equipment may be daunting.  

For example, if you are adding ao photovoltaic solar panels to your green warehouse roof as a part of green supply chain management, it can help you generate alternative energy which will reduce the investment in fossil fuels and lowers the overall costs of powering your facility. However, the initial investment is very steep. 

Knowledge: 

The expertise of participants and employees stands to have a greater impact on the supply chain performance at every stage of the green supply chain management system.

To conduct green supply chain management, they need to Involve green architects, consultants, and other green supply chain experts to their company who can help companies make the best use of green resources, implement sustainable solutions, and optimize results. 

Thus not involving such experts can also reduce the overall effectiveness of your strategy.

Conclusion

As you read the article this far, you might have understood what the green supply chain management system is. 

With the above-mentioned benefits that include better efficiency & cost savings, in the longer run, such green supply chain management would become a pre-requisite for the sustainability of the business. 

*image source from Google

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