Green supply chain assignment
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The document provides an overview of green supply chain management (GSCM). It discusses key activities in GSCM including green procurement, green manufacturing, green distribution, and reverse logistics. It also outlines drivers for GSCM adoption such as regulatory pressures, competitive advantages, and cost savings. Some barriers to GSCM implementation are also summarized such as resistance to change, market uncertainty, and lack of government support.
Green supply chain assignment
- 1. GREEN SUPPLY CHAIN MANAGEMENT Table of contents 1) Introduction 2) Activities of GSCM 2.1) Green Procurement 2.2) Green Manufacturing 2.3) Green distribution 2.4) Reverse Logistics 3) Developing the GSCM 4) GSCM Initiatives in recent years 5) Barriers to GSCM 6) Globalization & GSCM 7) Conclusion
- 2. Introduction The concept of “Sustainable Development” was introduced by the World Commission on Environmental Development. Environmental issues have tremendous impact on the development and operations of supply chains. Green supply chain management (GSCM) has emerged to address the environmental issues in supply chains like carbon trading, sourcing producer responsibility and eco- design, design of transportation routes to reduce carbon emission, inter- organizational quality control, green business strategy selection, and policy instruments. The transition from traditional supply chain management to green supply chain management is influenced by factors like pressure from industry & governmental policy regulation. GSCM can hence be defined as “integrating environmental thinking into supply chain management, including product design, material sourcing and selection, manufacturing process, delivery of the final product to the consumers as well as end- of-life management of the product after its useful life”. Environmental impacts should be considered cumulatively over the stages of the supply chain life cycle of a product or service to avoid shifting adverse environmental effects from one stage of the life cycle to another. Enterprises have developed a diverse set of initiatives for greening SCM, including screening suppliers for environmental performance, providing training to build supplier environmental management capacity, and developing reverse logistics systems to recover products and packaging for reuse and remanufacture. GSCM can not only generate environmental benefits, but also business benefits. Environmentally preferable characteristics include products and services that conserve energy and water, minimize generation of waste and releases of pollutants; products made from recycled materials energy from renewable resources, alternate fuel etc. Internal awareness is a key dimension for enterprises to implement environmental practices such as GSCM. Proactive companies usually have greater implementation of environmental practices beyond requirements of laws and regulations, while reactive companies only seek compliance with regulatory requirements.
- 3. A GSCM is designed to incorporate environmental considerations into decision making at each stage of an organization’s materials management and logistics functions through post consumer disposal. The challenge of GSCM is to integrate the environmental dimension into the context of supply chain manager’s decision making. Activities in GSCM The typical activities involved in a GSCM are as follows: Green Procurement Green procurement is defined as an environmental purchasing consisting of involvement in activities that include the reduction, reuse and recycling of materials in the process of purchasing. The key drivers for Green procurement are Supplier Selection: 1) Purchasing materials or parts only from “Green Partners” who satisfy green partner environmental quality standards. 2) Considering suppliers who acquire ISO14000, OHSAS18000 and/or ROHS directive. 3) select suppliers who control hazardous substances in company’s standard lists and obtain green certificate achievements Following 3Rs of procurement: Reduce, Recycle. Reuse. Green Manufacturing Green manufacturing is defined as production processes which use inputs with relatively low environmental impacts, which are highly efficient, and which generate little or no waste or pollution. This is achieved by Hazardous substance control: lead free substance usage, clean water rinsing, quality control in inputs at vendor site. Energy efficient technology: power reduction, increasing machine uptime & performance. Waste minimization: enhancing environmental consciousness through 3R activities.
- 4. Green Distribution Green distribution are consists of green packaging and green logistics. Packaging characteristics such as size, shape, and materials have an impact on distribution because of their affect on the transport characteristics of the product. This is done by Green packaging: downsizing, standardizing, encouraging & adopting returnable packaging etc. Green logistics & transportation: direct delivery to user, alternative fuel usage. Reverse Logistics Reverse logistics is the process of retrieving the product from the end consumer for the purposes of capturing value or proper disposal. This again is done by the following: Waste collection: Selecting & sorting waste parts for disassembly/recycle. Final treatment: Industrial waste disposal/treatment for detoxification. Developing the GSC Two most complex phases in the chain are “inbound logistics” which emphasizes materials, and “outbound logistics” which focuses on inventory, packaging and transporting. In these phases, trade-off between cost & profits is extremely difficult for companies to evaluate and adjust. First of all it is required to change the reactive attitude towards supply chain to a far reaching proactive attitude that is required for value creation & creating competitive advantages. The primary competitive strategies that could be acquired by the evolution from reverse logistics to green supply chain strategies are: It is a unique marketing selling point as the awareness of environmentally friendly concept is growing amongst consumers. It is used for innovating smarter products that could help reduce manufacturing or even the lead time. Due to increased savings in various phases, overall cost reduction is high Due to numerous challenges that can potentially limit success, an industry-proven framework is needed to govern and steer green initiatives. Supply chain council’s SCOR framework has incorporated GSCOR in its reference.
- 5. The following processes mentioned below will elaborate more on greening the supply chain. GSCM Practices GSCM has been defined as a simple green purchasing relationship between a buyer and vendor. . In other cases more extensive concepts of “close loop” supply chains are employed which consider GSCM to be an unending logistics cycle of materials and products use, reuse and management from both an inter and intra organizational perspective. External GSCM relationship factors External relationship factors in GSCM can include both upstream and downstream factors external to the organization’s operational boundaries. Upstream factors include such inbound logistics (materials management) activities as green purchasing and vendor management. Downstream factors include green outbound logistics (physical distribution) with activities such as distribution and marketing components of a product or organization’s supply chain Investment recovery Investment recovery refers to an organization’s strategic use of reverse logistics recycling, redeployment, reselling and similar techniques to derive greater value from materials and products. It seeks to turn surplus assets into revenue by selling idle assets, reducing storage space and deploying idle assets to other corporate locations to avoid purchasing additional equipment or materials. Eco design Early eco design work focused primarily on technical improvements to products and processes to mitigate environmental costs. Recognition that more substantial improvements are possible only when design factors outside of the direct control of producers, including relationships with suppliers, consumers, recyclers and governmental authorities, are included for eco-design to become an integral GSCM practice. The success of eco-design requires internal cross functional cooperation among intra-organizational units within a company as well as cooperation with outside partners throughout the supply chain.
- 6. Organizational learning Organizational learning systems can be viewed as an especially important capability within this resource based framework since, especially when coupled with an organizational emphasis on continuous improvement, they can help organizations build from more basic „complementary capabilities‟ such as those associated with ISO 9000 and TQM systems experience, for example, to more complex systems (especially in terms of higher order learning proficiencies) such as TQEM, EMS, ISO 14001 and eventually GSCM practices. GSCM practices are especially amenable to the benefits derived from learning because of their people intensive nature and their dependence upon tacit skill development. Management support & commitment Management support is a critical element of adoption and implementation of innovations in an organization, especially environmental systems. GSCM is a broad based pervasive organizational endeavour with cross functional programs. As such, it has the potential to benefit from top management support. It is not just top level managers from whom support is needed; support from mid level managers is also important to successful implementation of environmental practices. Support from middle management levels is important because environmental management is related to almost all departments in an organization, and cross departmental cooperation is important to successful practices. GSCM initiatives in recent years With increasing customer awareness & regulatory norms GSC initiatives have been undertaken by a number of organizations thereby gaining competitive advantage over others in the similar industry comparison. Dell saves over $20mn annually as a result of supply chain and packaging improvements. In fact, this market leader achieved its goal of becoming carbon neutral by 2008 Texas Instruments saves $8mn each year by reducing its transit packaging budget for its semiconductor business through source reduction, recycling, and use of reusable packaging systems (20% annual savings) Pepsi-Cola saved $44mn by switching from corrugated to reusable plastic shipping containers for one litre and 20-ounce bottles, conserving 196mn pounds of corrugated material Commonwealth Edison generated $50mn in financial benefits from managing materials and equipment by taking a lifecycle management approach to production.
- 7. Dow Corning saved $2.3mn by using reconditioned steel drums in 1995 and conserved 7.8mn pounds of steel. Barriers to GSCM The various factors impeding the growth of GSCM in organizations are: Resistance to technology advancement Technology is a kind of knowledge. An organization with rich experiences in the application and adoption of related technologies will have higher ability in technological innovation. Market competition & uncertainty The external environment in which a firm conducts its business will also influence the innovative capability as well as intention to adopt innovation. We assume that market competition and uncertainty is most important barrier to achieve GSCM. Supplier reluctance to change Strengthen relationships with suppliers result in lower inventory levels, costs and higher accuracy. Involvement of the suppliers in design process and technology affects overall performance of whole chain. Suppliers’ reluctance to change towards GSCM is due to traditional mindset and suppliers. Lack of Government support systems Government institutions are considered as barriers to development in the environmental management in the sense that institutional process for implementing GSCM are going on but very limited institutional support is given for new ideas to implement GSCM. Globalization & Greening the supply chain Companies (and any organization which conducts purchasing activities, including governments) should decide what are their real environmental goals regarding
- 8. extra organizational environmental improvement. Globalization means that suppliers will increasingly be located in other countries. Buyers will need to educate themselves about the environmental conditions, regulations and other factors in those countries. If the supplier is in a country with well enforced environmental regulations, the buyer may have some confidence that at least the supplier is not a serious polluter. Governments are the largest buyers of products and services. Thus government purchasing policies focused on environmental performance can have more direct effect than any other type of environmental pressure. Facilities with environmental management systems (EMS) certified to ISO 14001 are 40% more likely to assess their suppliers’ ‟environmental performance and 50% more likely to require that their suppliers undertake specific environmental practices”. Conclusion The present system of functioning of the industries /services is deteriorating the environment and soon a day will come when the damages done to our Earth will become irrevocable. Thus, it can be concluded that GSCM is inevitable if the Earth is to be kept green and appropriate methodology may be adopted by the industries/services to minimise the detrimental effect on the environment. The study done has provided ample reasons for GSCM to be adopted as one of the important measures towards conservation of environment. SUBMITTED BY: Shalini Tripathy: DM16141 Ankil Atul Sanghvi: DM16111 Apoorva Singhal: DM16106 Anurag Reddy: