Rising Value of Green Supply Chain

Rising Value of Green Supply Chain

The pandemic era has caused massive changes in people's lives, and increased awareness is at the forefront of these changes. Although at first glance the pandemic’s impact seems to be solely related to health issues, there has also been a boost in people’s awareness of the environment.

Eco-sensitive behavior among people has been observed more frequently after the outbreak of the pandemic. Therefore, green, sustainable, carbon-neutral supply chains, eco-friendly businesses, and such values are now much more common in our daily lives.

At the same time, these terms are becoming increasingly important for businesses as well as consumers, because as the awareness of customers increases, they are becoming more selective about such values in their purchasing journey

People now care more about how green the production process of the goods they buy is, how significant their supply chain carbon footprint is, and whether the materials used are recyclable. Therefore, it seems that businesses with a sustainable environmental approach will be on the ascent in the upcoming period, and the green supply chain plays a critical role in this cycle.

Defining Green Supply Chain Management 

Green supply chain management (GSCM) integrates the traditional supply chain with sustainable environmental methods. This chain encompasses all processes from manufacturing and production to procurement, and from material selection to end-of-life management.

Green supply chain activities are generally divided into two categories:

1. Collaborating and coordinating environmental efforts with suppliers to ensure the development of greener and more environmentally friendly products

This category focuses on the supplier’s role in assisting customers in product design and solving customers' environmental concerns.

2. Suppliers' environmental performance improvement requests, such as obtaining ISO 14000 certification or achieving a performance standard

This category focuses on reducing costs and risks by managing a sustainable supply chain in a more environmentally friendly way, along with customer demand.

“Business leadership is no longer limited to financial performance but includes assuming responsibility. This responsibility extends to understanding environmental impacts and encouraging improvements within Intel’s supply chain. Doing so will help us manage risk, lower environmental impacts, and costs, and bring greater transparency.” — Todd Brady, Corporate Environmental Manager, Intel 

Green Supply Chain Management and Its Benefits

GSCM encourages value creation in supply chain organizations to reduce overall environmental impact, not simply seeking to mitigate the environmental impact of the supply chain.

First of all, it should be noted that the main goal of GSCM is generally to reduce CO2 emissions and maintain a balanced ecosystem. However, beyond that, there are many benefits it offers to businesses. Among many others, the primary benefits of GSCM can be listed as follows:

  • Better integration with suppliers
  • Lower prices
  • Less waste consumption
  • Increased profitability
  • Improved market situation
  • Making assets more efficient
  • Decrease in production costs
  • Reuse of raw materials by recycling
  • Positive added value created in the perception of customers
  • New Eco-Products market for companies 

The green supply chain also has many roles at the national level. A green supply chain is essential for governments to thrive in international competition, as it can minimize a nation's demand for industrial resources and increase efficiency in manufacturing.

Strategies for Green Supply Chain

GSCM can be applied to almost any industry. There is always a greener method for every product produced and consumed in every sector. Success depends on how you incorporate sustainable green methods in both supplier relationships and company culture. At this point, it is important to recognize trends and methods, and how to apply them.

Let's consider a few green supply chain management strategies:

Reverse Logistics

As previously mentioned, GSCM bolsters recycling. Reverse logistics systems also cover how products that have fulfilled their purpose can be reused or disposed of. This closed-loop strategy handles products that are produced and returned to the manufacturer - either because they are found to be defective or have expired. It also ensures that the most environmentally friendly decision is made in the process of turning them into waste or a new product.

Ethical Sourcing

Ethical sourcing requires that all resources used to create a product focus on animal, environmental and human health because the sustainability of the material can only be possible in this way. At the same time, sustainable materials curtail purchasing costs and carbon emissions.

Reduction of CO2 Emission

First of all, it is crucial that everyone understands the cycle associated with CO2. As temperatures increase, transpiration of vegetation in nature rises. As this reduces the moisture of the soil, along with increased torrential rains, erosion intensifies and more trees are lost. Thus, CO2 absorption is further reduced. It is critical to remember that every tree is important in reducing CO2 absorption, and every tree cut down results in further CO2 accumulation in the atmosphere.

Although this may seem like a governmental issue, we all can play a role in preventing climate change. Firstly, it is essential to avoid high and unnecessary electricity expenditures caused by air conditioning, heating, lighting, and household appliances.

Minimizing Fuel-Miles

The world is now smaller than ever before, and the need for both products and individuals to be transported over long distances has increased considerably. This leads to an increase in burning fossil fuels and contributes to greenhouse gas emissions. For this reason, minimizing the amount of fuel burned, and therefore gas emissions, through optimization in transportation is a vital focus for GSCM.

Embrace Green Logistics

Considering the negative impact of logistics on the environment, the importance of supply chain businesses adopting sustainability measures becomes even more evident. 

GSCM emphasizes the necessity of using alternative fuels and establishing relationships between local suppliers and local manufacturers. At the same time, it draws attention to the importance of improving transportation modes to minimize fuel miles. This improvement is essential for the sustainable performance of the future in all transportation models, from employee transportation to intercontinental logistics services.

In an effort to protect the environment with reduced emissions and become an eco-friendly business, innovative delivery management and route optimization software will surely have an immense impact in the upcoming era.