Governments have been trying to come up with a solution to climate change and increasing greenhouse gas emissions for years. However, their success has been limited. So, it is time for businesses and individuals to take the reins, and one way to do that is through implementing green practices in supply chain management.
Managers are already thinking of the future and understand how important a green supply chain is. Additionally, this can be seen by the number of companies that have already taken on this challenge with success, and in the future, more will do the same to make a greener world for everyone.
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Green supply chain management (SCM) is the management of the environmental impact of a supply chain. It assesses this impact along the supply chain of every product and process, from raw material sourcing to manufacturing, distribution, and delivery. This aims to reduce waste and pollution, conserve resources, and decrease the carbon footprint of goods and services.
Green SCM is a holistic approach that considers people, the environment, and profit. Instead of simply attempting to reduce the supply chain's carbon footprint, it also attempts to drive value creation throughout the entire supply chain to reduce the overall environmental impact.
Your business can transform its traditional supply chain into a green one by adding the environment element into each stage of the supply chain. This can be accomplished through digital transformation, which includes the use of supply chain technologies such as AI and
In addition, developing relevant policies can also make a significant difference. For instance, when delivering products to consumers, the packaging materials are often plastic, and an order could be divided into many different packages requiring a large amount of plastic. This could be solved by combining all elements into one package and using a cardboard box, thus minimizing the use of plastic.
The specific goal of green SCM, which includes green logistics, is the reduction of CO2 emissions. There are, however, additional benefits that your business and the public may appreciate.
Reduced Greenhouse Gas Emissions
Green SCM can help reduce greenhouse gas emissions by encouraging the use of green energy, green transportation, and energy-efficient manufacturing processes. Use anyLogistix to track CO2 emissions when designing your supply chain to help reduce these emissions.
Enhanced Customer Satisfaction and Loyalty
Green initiatives can often result in increased customer satisfaction. For example, a product made with sustainable practices may be viewed as more trustworthy and of higher quality. This has the potential to boost customer loyalty and repeat business.
Better Public Relations / Improved Global Reputation
Going green can also help your business’s reputation and public image. This is particularly true if you operate in a polluting industry, such as oil and gas. Green initiatives can demonstrate to the community that your business is dedicated to minimizing its environmental impact.
Consumers are increasingly interested in working with companies that are focused on environmental sustainability. As such, green SCM can help boost a company's reputation among these key stakeholders. When a company greenifies its supply chain and creates a more ethical one, it frequently sees an improvement in its reputation among consumers and other businesses.
Compliance With Environmental Regulations
Several countries have environmental legislation that businesses must follow. For example, the US Securities and Exchange Commission proposed new environmental rules that would require US companies to list their gas emissions in the same way that they disclose their financial statements.
Following legislation can be difficult for businesses, especially if they operate in numerous countries that have different regulations. Green SCM can assist businesses in meeting these requirements while minimizing their environmental impact.
There are many benefits to a green supply chain, but as always, it is easier to identify something that needs to be done than to actually do it. However, there are some important steps that can be taken that will help in developing and promoting a green SCM for your business.
Redesign the product
Simple changes to the design of a product, such as shrinking the size of the packaging, could reduce energy consumption and waste across the life cycle of the product. Furthermore, innovation or new technology may allow for the elimination of some parts entirely, thereby shortening the supply chain.
Implement green manufacturing processes
Modernizing production can restrict the use of harmful gases and toxic materials, which has a significant impact on how environmentally friendly the supply chain is. In addition, test various scenarios of inventory management and bottleneck identification to streamline the manufacturing process while reducing energy consumption.
Work with green suppliers
Green suppliers usually have higher costs than traditional suppliers, but they have a significant impact on the amount of carbon produced when bringing products to the market. By optimizing external supplier sourcing, you can make better supplier choice decisions with potential benefits that can assist in appealing to new consumer segments.
Shorten distances and create smarter routes
Streamlining travel distances can help reduce the corresponding fuel use. Changing suppliers to ones closer to major markets can significantly reduce energy use for some products.
Inefficient routes that have been established over time are often hard to change. But by changing mindsets and planning more optimal routing along with the best mode of transport, reductions in travel time and carbon can make a huge difference for your business.
Using anyLogistix software to perform a Greenfield Analysis and then supply chain network optimization can help develop the greenest route for your business.
Plan for reverse supply chain activity
Products that are returned by the customer can cause extra problems, such as high waste and increased energy costs. By using a Network Optimization experiment, your business will be able to upgrade their reverse logistics systems, reducing these problems.
Using green transportation options
Using electric-powered vehicles instead of fossil-fuel-based ones will lead to lower carbon emissions. They can also reduce your costs as they require less maintenance. In addition, as technology advances, the range between charges is also increasing, meaning less energy is used.
Technology is an important part of a supply chain, and by further harnessing its potential, more success can be achieved in reducing greenhouse gases.
Artificial intelligence, including machine learning, can provide powerful optimization capabilities for better capacity planning, improved productivity, lower costs, and more. For example, the most efficient routes to use, either on land or by sea, can be identified.
Other important components to think about when designing your supply chain include robots, drones, and automation to improve efficiency and optimize energy.
Finally, blockchain is a technology that can be useful for green SCM, as it can accurately track products and materials to their source. It can follow these products across all stages of the supply chain.
Combining these technological components with other green practices in supply chain management and then using simulation and optimization to find the most effective options for your business will ensure a greener supply chain.
The world is moving in one direction: towards a greener future, which involves lowering energy use and greenhouse gases.
Using tools such as simulation, network optimization, and transport optimization, which can directly affect your supply chain to create a greener world, is one method that each business can do by itself to achieve this future.
Creating a green supply chain is not a simple task and requires many elements to come together and work in one direction toward one goal. But, when looking at the benefits of green supply chain management, it is clear that this is the way forward.
Take a look at the white paper on supply chain digital transformation and find out if this can help you achieve success in solving the green logistics problem.
