Green supply chain management (GSCM)
involves traditional supply chain management practices which integrate
environmental criteria. A green supply chain imitates nature, running in cycles
that mimic natural energy and material cycles. Moving from a linear to more of
a cyclical material and energy flow means keeping wastes within the industrial
system in order to conserve energy and prevent the dissipation of harmful
materials into the environment. In order to design a green supply chain the
entire inputs and outputs in the product life cycle need to be holistically
considered. Inputs include energy, materials, and other resources. Outputs
include products, waste, and revenues generated. Unnecessary inputs can be
eliminated and outputs can be re-used.
Companies are not in business to solve the
world’s environmental problems. Yet, managers are starting to look at
environmental problems as business issues where many can gain sustained
competitive advantage. Companies charting green supply chain strategies are
finding that both the buyer and seller can benefit through shared cost savings,
among other things. Successful strategies consider the entire life-cycle where opportunities
for improvement are noted at each stage of the product life cycle, from raw
material sourcing through manufacturing, use, and product end-of-life. The
following guidelines can help companies get ahead of the green curve and transform
GSCM into a business value driver, rather than a cost center:
Build
deeper supplier relationships - Levels of
integration must be determined and on-site raw material management must be
performed. Joint improvement activities are developed over time.
Treat suppliers as partners - Your suppliers can be transformed
into cost cutting partners if you focus your negotiations on taking costs out
of the supply chain, not the supplier. Demonstrate to your suppliers that
cutting waste and reducing resource needs per unit of production will allow
them to manufacture the same volume of product using fewer resources. The
suppliers can also be educated on how to realize new revenue streams from the
sale of recycled materials. Provide them with incentives to push these ideas
forward. The Chinese are actually very good at collecting and re-using waste in
isolated arrangements. What they lack are incentives that encourage more of
this type of behavior which benefits the system as a whole.
You should also listen to your suppliers,
for they may have ideas to share with you on how to redesign processes in ways
that deliver enormous savings. Also the Western model for strategic sourcing
sometimes needs to be adjusted to work well in China. It is oftentimes possible to
make excellent products using simple manufacturing techniques. China
uses different materials and processes, some with excellent potential for
savings. Modify processes and substitute materials. Find ways to utilize the
high availability of low cost labor resources to re-design processes which
previously produced large amounts of waste in the overall system.
Identify
Opportunities –
Cost Reduction: Look into all business areas and across the product life cycle to
identify waste reduction opportunities. Mitigate waste through materials
substitution or process modification. Gain your supplier’s support in the
formation of new business partnerships which provide incentives to reduce
waste. Encourage the use of reusable, recycled, or recyclable materials.
Product
Differentiation: Building “green” criteria into
the supplier selection process can help you differentiate your products from
the competitors.
Redefine Markets: New markets can be
redefined by converting waste into usable products.
Conduct
Risk Management – Eliminate compliance issues by
reducing waste, particularly hazardous waste. Designing for the environment is
becoming a major issue as countries enact strict recycling and reuse standards
and limit the use of harmful materials. | 
