The Value Driven, Green Supply Chain
The whole world is more aware of the supply chain than they have ever been before. Pandemic-induced disruptions brought attention to the complexity of supply chains. Most people didn’t realize the impact of conditions in faraway places on the products they buy.
Climate change brought more attention to the sustainability and environmental impact of supply chains. The combination brought worldwide scrutiny to this historically overlooked essential underpinning of the global economy.
As we face a change in the methodology of supply chain operations and the increasing demand for more sustainable practices, businesses are looking at greening the supply chain. But what exactly does that mean?
Greening the Supply Chain
The phrase, “greening the supply chain”, often refers to practices that reduce the environmental impact of each step in a supply chain. But it can also encompass health and safety, societal impacts, and quality-of-life issues.
The degree to which sustainability programs and practices could be applied in a supply chain were originally thought to be based on the complexity of operations and where astute management could enable a more hands-on approach. However, the reality is that supply chains are a collaborative effort and no one company can lay claim to a singular approach that functions effectively.
The Green Supply Chain
A greener supply chain isn’t only about environmental impact. It’s also about saving resources and money for your business. And it’s about fortifying weak links in the chain to encourage more resilience in the face of external disruption.
Consumers are demanding greater environmental responsibility from corporations. Using sustainable practices at a company headquarters is a beginning step, but suppliers and partners have to be involved and invested in the practice as well. Some industries that work in the supply chain operations are automatically inclined to increase sustainability practices through their business model. The wooden pallet industry is a prime example of an industry that incorporates productive recycling practices that are absolutely in line with sustainability principles.
Many companies fail to realize the financial impact of waste in the supply chain. These costs tend to be hidden compared to upfront savings offered by suppliers. A closer look can reveal numerous processes where cost savings are negated. Disposing of excess packaging, paying for wasted water and energy, and costly shutdowns due to poor conditions can end up costing far more than those initial savings.
Taking the time to audit and eliminate wasteful practices at each step in the supply chain can result in lower costs. More importantly, it can also result in stronger, more resilient processes.
Companies can work directly with suppliers to reduce waste, decrease environmental impact, and improve working conditions. Each of these steps forges stronger relationships between companies and suppliers.
Those relationships allow all parts of the supply chain to work toward the common goal of business having a positive impact on the community. It doesn’t matter if that community is in the United States, Bangladesh, or France. Local impact is global impact.
Complex Supply Chains and Environmental Responsibility
As mentioned previously, a challenge for companies that want to green their supply chain is that they often do not directly control key parts of the chain. Factories and producers in developed countries generally have to abide by environmental regulations.
An effort to work with suppliers to exceed local regulations benefits their workers and their communities. Those suppliers become less fragile and prone to disruption and the supply chain grows stronger.
Those suppliers are also less likely to create environmental damage. Companies that knowingly use suppliers that are harming the environment may find themselves paying for portions of costly cleanup.
This can feel like an impossible task for many businesses. Even multi-national corporations struggle with the complexity of their supply chains. There may be hundreds of steps involved in creating a single product.
Everyone wants to be environmentally responsible, but where do you start? What are some basic green supply chain practices and what are some reasonable first steps?
