Green supply chain management: Definition, examples and challenges

Consumers become every day more aware of green issues, pollution, global warming and the impact of non-environmental production in nature. In consequence, they will want to know more about the goods and services they pay for, and companies should answer those questions in terms of the Green Supply Chain Management processes of it.

What is GSCM?

It can be defined as the integrated environmental logic into the Supply Chain Management. It includes all the stages of the production process: design, raw material purchasing, manufacture, delivery and, after its useful life, end-of-life management of the product. Some companies have found in GSCM a very interesting opportunity to keep earning money and taking care of the planet at the same time. They have been able to call consumers’ attention to green products and services, and increasing profits thanks to it. In fact, several organizations have demonstrated the existence of a link between upgraded environmental production and positive gains. Let’s see some examples.

Examples of improved GSCM

Maersk

It is hard to believe that a container company can actually be green, after all the bad press it has all the time, but Maersk has done something that no other container company has: the reviewing of its two thousand suppliers and the signing of fifteen-hundred up to its Responsible Procurement. Four years ago, this company achieved a goal set to 2020: reducing carbon dioxide emissions by 25% for every container. Although shipping industry has been suffering from a terrible decline, this company is still up in the rankings.

Toyota

This company has been called the world’s Best Global Green Brand since 2010 by the 2013 Best Global Green Brands report. The secret? Emissions reduction, green logistics processes (Just-In-Time production, for example), among others.

Adobe Systems

This software company launched an ecological sensitive redesign of its popular software package, four years ago. In some areas, plastic is no longer used, discs are packed with 1 cardboard layer overwrap (not 3) and it is maybe the global leader company in the development of creativity software products, like Photoshop, Illustrator, Dreamweaver, Flash, Premiere and InDesign.

Challenges

Of course, there are always issues to be noticed. Especially in the value-chain of companies that go green, but don’t have a good plan that, every time, is the only answer for avoiding bankruptcy and other disasters. The challenges of GSCM are huge: the first one is the high level of uncertainty about market position. Going green is not always a warranty for better income. On the other hand, suppliers and manufacturers are always concerned about a basic risk: GSCM practices may get very expensive in comparison to other companies in the market. Not just that: what about the problems regarding to stakeholder positions? There are some exceptional cases (and sometimes I think they are becoming the general rule) in which stakeholders only care about profit improvement. Subsequently, that means avoiding all kind of costly GSCM practices. Nevertheless, governments all over the world are asking companies to get greener in order to get tax exemptions, and that is a good incentive.

Support sustainable industries_Green suply chain management_david kiger
Image courtesy of Jeremy Buckingham at Flickr.com

To optimize the supply chain of any company always means giving customers what they ask, when they need it; paying as less as possible. In the industrial world worldwide, many businessmen consider this meaning as counter intuitive to what it actually means (and how expensive it is) implementing green supply chain practices. Yet, when any supply chain is evaluated in order to reduce costs, the process frequently take the company to adopt ecological initiatives. For instance, in the shipping industry, cost reduction normally means a lower consumption of fossil fuels and the use of led lights instead of old lightbulbs.

The truth is that the more strongly environmental-friendly a supply chain goes, the more attention it drags and the better marketing it gets. When consumers are aware that any company saves the planet a huge amount of plastic tons, x tones of heavy metals in water and air, etc., they feel better when buying the products, they will talk about it and invite others to do it in social networks. People don’t want to feel responsible for destroying the planet and that company is giving them an opportunity to consume and not harm nature so badly.

To design and to implement a nature-friendly supply chain will help, in the long term, the planet, consumers and companies. Shareholders like that, and we all do. Waste is driven from it when GSCM is implemented, and when that happens, there is always a cost reduction in all processes. Of course: a plan is essential, with the wise advice of experts.

See you next time!

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