Sustainable Supply Chain Strategies

There is a growing pressure worldwide to deliver products and services which are environmentally friendly. It may lead to the redesign of products and production processes so as to reduce waste and pollution which is a side effect of manufacturing process.

Environmental sustainability must be adopted as a strategic imperative, incorporated as a key part of the organization’s mission. The incorporation of eco-efficiency strategy into the mission refers to the development of eco-efficient processes, products and services, performance measurement encompasses the methods and indicators for eco-efficiency to assess the environmental performance and to cascade the environmental strategy within the supply chain.

Over recent decades, manufacturing organizations have shown a growing interest in managing the sustainability of their operations, supply chain, and products. With increasing concern about environmental issues from customers, suppliers, the public and governments around the world, firms have been developing a number of environmentally friendly products.

Green Manufacturing

Firms promote green innovation in the manufacturing making environmentally friendly products and reducing environmental damage. Many firms developed flexible, energy-efficient manufacturing strategies. Sustainability within a supply chain means a systematic view and control of the environmental impacts of a company’s products, services, processes and operations, sourcing of materials, manufacturing processes, logistics, delivery and disposal of end-of-life product.

In some cases, firms have simply reacted to the environmental regulations while there are also several firms that have taken a more proactive role in reducing pollution due to their production and logistics processes. For many companies the opportunity to improve economic and also environmental performances results from collaboration through along the whole supply chain. Sometimes it is necessary to reconfigure the supply chain pulling the collaboration within this structure through common standards and procedures. Some manufacturers formulate environmental plans, which are useful in case of analyzing the suppliers, manufacturing and logistics capabilities needed to achieve eco-efficiency in supply chains.

Environmental Innovation

Green innovation can help firms to increase productivity, enhance corporate reputation, develop new markets, and achieve first-mover competitive advantages. In the automobile industry, in response to progressively stricter regulations, automobile manufacturers have developed innovations for the internal combustion engine, which have increased energy efficiency and reduced emissions of greenhouse and other toxic gases.

This may be supported by the case of the Toyota Prius Hybrid, which has become a status symbol and an example for green-labeling product strategies.

Examples of further environmental innovation include the “design for disassembly initiative” of BMW, 3 M company’s Pollution Prevention Pays principle, Chevron’s Save Money and Reduce Toxics (SMART) program.

Another example is sustainable innovation process for the “Mirra” chair. The American-based furniture company Herman Miller developed a tailored “design for the environment” (DfE), a product assessment tool that measures the extent to which a product meets environmental standards and expectations, paying special attention to: material toxicity, ease of disassembly, recyclability. The 180 components of the Mirra were analyzed and rated according to how damaging they were to humans and the environment. It was a huge challenge to find fully non-toxic materials and to gain the support of numerous suppliers. During the innovation process, Herman Miller also organized some 200 face-to-face meetings with suppliers to explain what it was trying to achieve.

Another example is the jump from coal to renewable energy in China and India. In China the lack of financing for developing a local wind-turbine manufacturing industry has been overcome with favorable government policies.

More environmental supply chains are created by Toyota’s environmental requirements for suppliers of parts or materials (Greener Supplier Guidelines and Green Purchasing Guidelines) and also by better logistics systems to reduce emissions in urban areas, avoid traffic jams, etc. Toyota has also moved shipments from truck to rail and reduced the number of miles trucks run empty between shipments.

Other green supply chain initiatives related to supplier collaboration and logistics include improved packing and reusable metal shipping containers rather than disposable cardboard and wood pallets.

Reduction initiatives relate to water and energy, materials and toxic substances. The main source of environmental impact in production is usually the paint-shop, so one of the main improvements was achieved when Toyota converted its topcoat paints to a water-borne type. Reverse logistics initiatives have also promoted the collection and recycling of end-of-life parts, working with dealers and parts distributors.

Such actions may be supported by the company’s eco-design targets for dismantling and recycling. Ensuring that the final disposal and eco-efficient backward flow of end-of-life products are taken responsibly became a focus of Logistics Service Provider or LSPs.

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