Green supply chain management involves integrating sustainable practices into the supply chain process and incorporating the principle of reduce, reuse, recycle, reclaim and degradable. The goal of a green supply chain is to reduce environmental degradation caused by industry, such as pollution, deforestation, ozone depletion, and global warming.
Green supply chain practices are now essential for a business’s success. Consequently, an increasing number of businesses are becoming aware of the environmental impact of their operations. In order to reduce their negative impact on the environment, businesses are turning towards making their supply chain management more green and sustainable.
Green Supply Chain Management Practices
1. Green Material Sourcing
Green material sourcing refers to procuring materials and components that possess eco-friendly qualities such as reusability, recyclability, and the absence of hazardous chemicals. Increasing environmental concerns have prompted businesses to reconsider their current sourcing and purchasing strategies and their impact on environmental sustainability. To reduce the negative environmental impact at the beginning of the supply chain, a growing number of businesses have turned to green material sourcing.
2. Green Manufacturing
Green manufacturing emphasises using renewable resources, reducing pollution, lowering waste generation and minimising carbon emissions at the manufacturing stage. The most critical aspect of green manufacturing is reducing energy consumption. Everything in a factory, from equipment and lighting to heating and cooling, requires significant energy output. Renewable energy sources like hydropower, wind energy, solar energy, and biofuels are excellent alternatives to fossil fuels, thereby reducing gas emissions.
Remanufacturing is one of the methods to practise green manufacturing. It is the process of taking products that have reached the end of their product life cycle, disassembling them, and remanufacturing them into new products. This allows businesses to recycle their products, extends the product’s life cycle, reduces the cost of raw materials, and reduces waste generation.
3. Green Packaging
Green packaging, also known as sustainable packaging, employs materials and manufacturing techniques to reduce energy consumption and packaging waste. Using biodegradable and recyclable materials in green packaging lowers waste production and contributes to a reduced carbon footprint. Green packaging is highly adaptable and, when manufactured properly, can withstand any condition and be used for various industries.
4. Green Warehousing
Green warehousing is the practice of implementing changes that reduce energy consumption, utilise renewable energy sources and materials, and decrease the amount of non-recyclable waste generated during warehouse operations. Warehouses can be made environmentally friendly by automating warehouse processes, employing efficient storage techniques, and effectively using natural resources available within the warehouse, like lighting and ventilation.
5. Green Product Design
Green product design, also known as design for environment, design for eco-efficiency, or sustainable product design, is a proactive business strategy that addresses environmental issues early in the product development process. Green product design minimises the adverse environmental impacts of the product throughout the product’s life cycle. The green design of products encourages the reuse, recycling, and remanufacturing of the product, which not only improves the environmental performance of businesses but also allows them to reduce the cost of the product for consumers.
6. Green Logistics
Green logistics refers to the techniques and practises used in the transportation and logistics industry to promote sustainability, reduce carbon emissions, and develop environmentally friendly solutions to industrial challenges. Green logistics can be applied to various industrial processes, including inbound and outbound logistics, reverse logistics for returns, and last-mile delivery.
Transportation is currently the leading contributor to increased global warming, health risks, greenhouse gas emissions, and it significantly impacts a company’s carbon footprint. Transportation must be environmentally friendly for a supply chain to be sustainable. Businesses can reduce the environmental impact of transportation through route optimisation, fuel management, real-time tracking, and by relocating warehouses closer to customers.
Benefits of Green Supply Chain Management
1. Reduces Environmental Impact
The primary advantage of a Green Supply Chain is that it reduces the negative environmental impact of companies. Through green supply chain practices, businesses are able to reduce their greenhouse gas emissions and waste production. Green supply chain management also enables companies to recycle products that would otherwise end up in landfills or waterways, thus reducing pollution. With the aid of GSCM, businesses are able to produce biodegradable, high-quality products, thereby reducing their carbon footprint and contributing to environmental health.
2. Cost Reduction
There is a widespread misconception that reducing a business’s environmental impact is expensive. In reality, enhancing the sustainability of your supply chain will reduce costs by reducing waste and increasing the efficiency of your warehouses, vehicles, and machinery. A green supply chain reduces the cost of procurement and raw materials by incorporating recycled materials into the manufacturing and production process. During the implementation of green initiatives, companies prioritise the reduction of greenhouse gas emissions, which results in the shortening of trips from the warehouse to the destination and the reducing the size of shipments. As a result, vehicles consume less fuel and endure less wear and tear, thereby increasing vehicle efficiency and reducing the cost of transportation.
3. Brand Reputation
Implementing and communicating actionable steps to enhance green supply chain management increases brand credibility and gives businesses a competitive edge in the market. Consumers are also willing to pay a fortune for products produced by companies that implement sustainable practices. Becoming an eco-conscious business attracts positive attention from new customers and is in line with what modern customers are seeking.
4. Risk Mitigation
Improving sustainability requires conducting risk assessments of the various processes within your supply chain. Companies must identify risks and potential scenarios that could harm or negatively affect people, the environment, or the company’s finances and implement effective control measures to mitigate these risks Therefore, supply chain sustainability is directly related to how you mitigate risks across the various risk management domains.
5. New Business Opportunities
A growing awareness of environmental and social issues has led to an increase in the number of people who choose to support and collaborate with businesses that have made their supply chains as sustainable as possible. By prioritising sustainability, companies can increase their business opportunities by appealing to environmentally aware customers and clients. Green supply chain management can set a company apart from the competition and result in more sales or employment opportunities and partnership opportunities, thereby boosting your company’s profitability.
As environmental activism increases and an increasing number of individuals adopt a zero-waste sustainable lifestyle, green supply chain management will soon become the norm. Creating a sustainable supply chain is now much more straightforward than it was in the past due to the availability of modern technology and the willingness of many companies to collaborate with businesses that prioritise the environment.