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What's a green supply chain?
Updated: Jan 26, 2022
And why you need to find new, eco-friendly suppliers.
Reading Time: 3 min
Definition
Green Supply Chain Management integrates eco-friendly aspects into conventional supply-chain practices, in order to make each activity of the value chain: designing, industrial process, purchasing process, transportation, final product delivery, and end-of-life product management, to become environmentally suitable. The term 'Green supply chain management' (GSCM) refers to the concept of integrating sustainable environmental processes into the traditional supply chain.
Green vs. Traditional Chains
There are some fundamental differences between the Traditional/Conventional Supply Chain and the Green/Sustainable one.
First, the objectives and values of conventional chains are based mainly on economics, whereas green chains also take ecological issues into account.
A traditional supply chain may include companies and activities whose processes often produce harmful effects on the environment, waste, hazardous materials, non-renewable energy consumption. Green supply chain management involves practices which integrate environmental and sustainable criteria, into organizational purchasing decision and relationships with suppliers.
To Green/Sustainable Supply Chains, the ecological requirements are considered key criteria for products and productions, as well as the entire value-adding process, resulting in low ecological impacts during production, while still assuring its economic sustainability by staying competitive and profitable.
Supplier selection: A matter of careful evaluation
Conventional chains have a large number of conventional materials and suppliers; which allows for quick selection and change of suppliers, mainly based on the price criteria. In green chains, sustainability is an essential part of the supplier selection criteria, as well as the price. A careful supplier evaluation is required when these elements are taken into account.
The selection of suppliers with sustainable value leads to long-term oriented relationships. The reason for this is that green chains have an intrinsic limitation in terms of speed and flexibility in price, due to the complexity of switching suppliers. However, as new green-oriented platforms emerge, there is hope to overcome this issue.
Green policies and regulations
Worldwide organizations can put pressures on suppliers to use more environmentally friendly materials and processes. The United Nations Environment Assembly, the world’s highest-level decision-making body on the environment, established the heart of the 2030 Agenda on Sustainable Development.
The UN Environment Programme has focused on sustainable consumption and production policies, in order to decoupling economic growth from environmental degradation, increasing resource efficiency and promoting sustainable lifestyles. One of the main objectives of the programme is applying life cycle thinking. This is about increasing the sustainable management of resources and achieving resource efficiency along both, production and consumption phases of the lifecycle, including resource extraction, the intermediate inputs production, distribution, marketing, use, waste disposal and re-use of products and services.
In addition, it is a fact today, that many states are adopting environmental regulations, which apply to all activities and processes in the supply chain.
Another element of high interest is the end consumer, who is becoming more environmentally conscious, preferring to purchase eco-friendly products, and commercial firms that have adopted green concepts.
Green Chains. Benefits for all
There is a great number of benefits that come from implementing a green supply chain:
Environmental impact
One of the main advantages that highlights the importance of green logistics is the impact that the activity itself has on the environment. The impact that sustainable supply chains have on the immediate environment and on the planet as a whole is less, which is a benefit for everyone.
Corporate commitment
Companies that adopt this type of eco-friendly logistics are seen as responsible companies with a strong social and environmental commitment. In other words, companies obtain an added value, allowing them to position themselves above their competitors.
Consumer preference
This type of eco-friendly logistics adds value for consumers, especially those who are more aware of the ecological cause. Companies obtain a better perception and business positioning by the public and consumers and develop a capacity to attract new customers thanks to the social and environmental commitment of the companies.
Economic savings
It leads to economic savings in logistics activity by re-engineering processes and making them more efficient.
Tax exemptions
Due to the importance that global organizations give on the care of the environment, and that many countries have adopted environmental regulations, exemptions are also established on products with environmental value, thanks to the practice of sustainable activities in the supply chain.
It’s time to change. We can help
In the words of the Executive Director of the United Nations Environment Programme, Inger Andersen:
“... We are in the midst of three planetary crises – the climate crisis, the nature crisis, and the pollution and waste crisis. Fuelled by unsustainable consumption and production, the three crises are destroying the natural systems that allow our economies to thrive. In this decade that will define how we live on the planet, we need to crowd in people and action like never before...” |
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References
UN ORGANIZATION. Sustainable Development Goals. https://www.un.org/sustainabledevelopment
The Coastal Business Journal Spring 2009: Volume 8, N° 1.
Green Procurement: Good Environmental. March 2003. Stories for North Americans. Commission for Environmental Cooperation of North America. Five Winds International.