Green Supply Chain Management

Supply chain activities often produce undesired byproducts such as CO2 by using fossil-burning fuels for transportation, emitting toxic chemicals resulting from the manufacturing process, and dumping material waste. These undesired byproducts accelerate the speed of global warming that threatens the well-being of the human population. In an effort to tackle global warming issues, supply chain professionals should pay more attention to “green” supply chain management (GSCM).

Generally, GSCM can be defined as the incorporation of environment-friendly initiatives into every aspect of supply chain activities encompassing sourcing, product design and development, manufacturing, transportation, storage, packaging, and post-sales services, including end-of-product life management. Herein, the examples of environment-friendly initiatives include the company-wide environmental guidelines/policy, compliance with environmental regulations (e.g., EPA rules) and standards (e.g., ISO 14000), supplier certification and selection based on its commitment to sustainability, use of renewable energy (e.g., sunlight, wind, rain, geothermal heat), use of bio-fuels, use of degradable or compostable packages, and environmental performance monitoring.

The successful implementation of GSCM requires the following ten steps:

• Know where you stand. Understanding your organization’s culture, supply chain processes, and consumption patterns is naturally the first step because you cannot manage what you cannot see.
• Have a performance plan. Create a set of goals and performance metrics that can be used to track progress.
• Have a single point of accountability. Have a single point of accountability that is empowered to affect change.
• Market your progress internally and externally. Be sure to communicate to all levels why environmental initiatives are being undertaken, what will be measured, and how an organization is going to get there.
• Incorporate “green” into your existing sourcing, manufacturing, and logistics processes. Factoring green priorities into your existing supply chain processes is an effective way to drive environmental initiatives and goals.
• Communicate your environmental goals and standards to your supply chain partners. By setting clear expectations to your supply chain partners during the supply chain processes and proactively monitoring compliance, you can quickly improve your sustainability performance.
• Stay up to date with environmental regulations.
• Keep up with new materials, technologies, and processes. Develop new approaches that can cost effectively address the challenges and opportunities that environmental initiatives present.
• Do the “easy stuff” first. An overhaul of your supply chain is not necessary to obtain benefits from sustainability efforts.
• Get everyone involved. To be effective, you need to involve every unit, including groups of sourcing, manufacturing, sales, marketing, logistics, and finance across the organization and the supply chain for sustainability efforts.

With these steps in mind, the following subsections will elaborate on systematic tools needed for the management of products from their “cradle to grave” and various environment-friendly initiatives essential for GSCM.