In the process of developing a robust supply network across the globe, enterprises unwittingly leave behind a deep carbon footprint. Even companies that have gained some visibility to their supply chain and potential impacts are not always sure what to do next. A recent study published by CDP and Accenture (CDP & Accenture, 2014-15) reveals that policy guidance in the United States has helped equip only 50% of North American suppliers with climate risk management strategies for dealing with carbon emissions and other ecological challenges. This puts the country in the most vulnerable quadrant for climate-related risk mitigation.
Green Supply Chain Business Drivers and Benefits
Here’s what you can do to adopt a ‘Green Supply Chain Strategy.’
Commitment is the key first step towards green operations.
- Gain executive commitment and sponsorship to visibly support program goals, strategies, and execution plans.
- Identify an accountable program champion.
- Define metrics and benchmark environmental impact in areas like waste generation, energy consumption, emissions, etc.
- Set targets and devise policies that offer guidance on how to achieve targets at every level of the enterprise and across the product life cycle.
- Ensure policy compliance goal/target achievement across the extended enterprise leveraging executive support.
- Develop a green corporate culture by offering training and workshops to employees and stake holders, as well as incentives and recognition.
- Consider acquiring green certifications and performing green audits.
Supply Chain Visibility and Monitoring:
- Map your supply chain end-to-end to gain visibility to your multi-tier supplier network and sub-tier suppliers. It is impossible to implement GSCM strategies if you are not sure what your network looks like and who your suppliers are beyond your tier 1 partners.
- Consider using a third-party supplier onboarding/network mapping service to reduce the cost of implementation and ongoing updates.
- Monitor supply network for environment-related news such as chemical spills and environmental compliance breaches leveraging third-party 24/7 event monitoring and analysis services.
- Procure materials/parts from suppliers who adhere to green principals and processes (e.g. lean manufacturing) and have a strong green policy and standards.
- Deal with suppliers who acquire ISP14000, OHSAS18000, RoHS directives and behest stringent norms to control hazardous substances.
- Ensure that the material being purchased is non-toxic and recyclable.
- Perform quality checks at material inflow points.
- Implement inventory control strategies selectively to reduce stock and eliminate warehousing costs.
- Incorporate manufacturing process(es) that curb or control pollution/wastage.
- Design and redesign products to minimize production complexity, reduce energy consumption, and increase the product life span.
- Use non-toxic, lead-free materials for manufacturing.
- Incorporate lean manufacturing to better:
- Reduce defects and rework
- Control machine and process breakdowns
- Control inventory
- Reduce manufacturing space required
- Increase resource efficiencies, for both people and machine
Studies have shown that we only add value in 5% of time spent on operational activities, the remaining 95% is waste (Lean Manufacturing Tools, n.d.).
Green distribution consists of green packaging and green logistics.
- Green packaging:
- Downsize packaging to reduce material consumption.
- Use recyclable, reusable, non-toxic, and bio-degradable packaging material.
- Design warehouses to reduce energy consumption.
- Green logistics:
- Hire vehicles designed to control for carbon emissions.
- Plan the transportation route to reduce mileage.
- Plan reverse logistics to collect used products and packaging from customers to recycle/reuse.
“People 'over-produce' pollution because they are not paying for the costs of dealing with it” (Chang). Invest in green supply chain management as a step towards mitigating environment related risks.