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 comes at the forefront of these changes. Although everything seems to be only related to health issues at first glance, there has been a boost in people’s awareness of their environment.

Eco-Sensitive behavior among people is 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.

On the other hand, these terms are becoming more and more important for businesses as well as consumers, due to the fact that as the awareness of the 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 big their supply chain carbon footprint is, or whether it is recyclable. Therefore, it seems that businesses with a sustainable environmental approach will be on the rise in the upcoming period and the green supply chain plays a huge 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 covers all processes from manufacturing and production to procurement, 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 the customer in product design and in solving customers' environmental problems.

  1. 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 the 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 only seek 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. But beyond that, there are many benefits it offers to a business. Among many others, the first benefits of GSCM that come to mind 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
  • Reusing raw materials by recycling
  • The 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 for surviving 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 here is how you incorporate sustainable green methods in both supplier relationships and company culture. At this point, it is important to know the trends, methods, and how to apply them.

Let's take a look at a few green supply chain management strategies together:

Reverse Logistics

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

Ethical Sourcing

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

Reduction of CO2 Emission

First of all, it is important that everyone becomes aware of the cycle associated with CO2. As the temperature increases, the transpiration in the vegetation in nature increases, and as this decreases the moisture of the soil - plus the decreasing rains and increased torrential rains - erosions increase and we lose more trees. Thus, the CO2 absorption is further reduced. It is important to remember that every tree is important to reduce CO2 absorption and every tree cut results in a little more CO2 accumulation in the atmosphere.

Although this may seem like a governmental issue, we all have things to do to prevent climate change. First of all, it is very important 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 also increased considerably. This means burning fossil fuels and contributing to greenhouse gas emissions. For this reason, minimizing the amount of fuel burned and therefore gas emissions through optimization in transportation is an important area for GSCM.

Embrace Green Logistics

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

GSCM emphasizes the necessity of using alternative fuels and establishing relationships between local suppliers and local manufacturers and 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.

At this point, to protect the environment with reduced emissions and to become an eco-friendly business, innovative delivery management and route optimization software will surely make a huge impact in the new era.