10 minute read
I grew up in a time when people didn’t think that often about being eco-friendly or being green. After all, the first Earth Day event took place in the U.S. in 1970. That event was very small compared to the world-wide event planned for April 22, 2022.
A common definition of “green” is the quality of not being harmful to the environment or depleting natural resources, and thereby supporting long-term ecosystem balance. I care about the environment and do what I can to minimize my impact because, living in Arizona, I benefit from being surrounded by some of Mother Earth’s finest scenery.
Younger generations who have grown up with the consequences of global warming—such as polar ice cap melting, polluted oceans, dying coral reefs, and more—have a much sharper focus on what it means to be eco-friendly. Our kids and grandkids regularly discuss the topic of sustainability and being eco-friendly in K-12 education. The Millennial generation, which makes up an ever-growing percentage of the workforce, has a strong desire to not only make a valuable contribution at work but also to society including in the area of protecting the Earth. There is growing awareness of the need for sustainability.
These days, that is especially true when it comes to the supply chain.
Defining green supply chain management
Given the impact of the global supply chain on our environment and resources, it is even more critical for supply chain professionals to strategize and take action to minimize the environmental impact of our industry.
So what is a “Green Supply Chain”? Green supply chain management can be defined as integrating environmental thinking into supply chain management, including product design, material sourcing and selection, manufacturing processes, delivery of the final product as well as end-of-life management of the product. A green supply chain is circular, meaning it encourages a Make-Use-Return-Reuse cycle to minimize both waste and the demand for additional raw material consumption.
For CSCOs, the circular economy is a great opportunity to improve raw material resilience and decouple material consumption from financial growth. Sarah Watt, VP Analyst, Gartner Supply Chain
There are many opportunities for supply chain professionals to influence how green their supply chain operates. In fact, almost every supply chain decision made in an effort to reduce costs has a beneficial side effect of also greening the supply chain. For example:
- Optimizing a distribution network may reduce logistics costs and improve customer service but in most cases, doing so also reduces carbon emissions through fewer transportation miles and/or less inventory holding facilities.
- Scenario planning enables a company to find the most efficient and effective solution to unexpected events ensuring a high-level of customer service while minimizing costs. Often the least cost scenario is also the best one from an environmental standpoint.
- Real-time visibility and dynamic collaboration with supply ecosystem partners eliminates lag time for all partners to sense, analyze and respond to opportunities and disruptions enabling better planning, more efficient operations, and less waste. Real-time visibility and dynamic collaboration helps to minimize the Bullwhip Effect where relatively small changes in demand by consumers can produce a whip-like effect on the demand signal for the upstream supply chain.
Meeting consumer demands for sustainability
Adopting green supply chain practices is important to a growing portion of the population and can positively affect brand awareness and market share. There is growing evidence that brands that can demonstrate eco-friendly supply chain management can charge more for their products. However, there is also a growing understanding by consumers of the importance of the upstream supply ecosystem when considering whether a product is produced and distributed in an environmentally sustainable manner.
…Top ESG performers enjoy faster growth and higher valuations than other players in their sectors, by a margin of 10 to 20 percent in each case. Strong ESG credentials drive down costs by 5 to 10 percent, as these companies focus on operational efficiency and waste reduction. McKinsey, 'Buying into a more sustainable value chain'
Reducing environmental impact through supply chain visibility
According to the Carbon Disclosure Project, a company’s supply chain emissions (included in Scope 3) are on average 5.5 times more than emissions from its direct operations (Scope 1 and 2). Thus, the most impactful place to start is to focus on initiatives that will improve supply ecosystem visibility and collaboration. Your ability to improve supply ecosystem visibility and collaboration is greatly enhanced if you utilize a Multi-Enterprise Supply Chain Business Network (MESCBN) Platform like that offered by Nulogy.
Gartner defines MESCBNs as cohesive technology platforms that support a community of trading partners that need to coordinate and execute on business processes that extend across multiple enterprises. They consider MESCBNs to be foundational technology for more mature organizations, implemented to coordinate, automate and transform an organization’s extended supply chain within the overall business ecosystem they operate. Gartner has recognized Nulogy as the ONLY notable MESCBN solution provider for the Contract Manufacturing and Co-packing Industry in its 2021 Magic Quadrant for MESCBNs Report.
The ongoing journey of supply chain sustainability
As with other supply chain-related initiatives, transitioning to a greener supply ecosystem is a journey, not a destination. Supply chain professionals should measure and communicate not only the economic but also the ecological impact of their supply chain improvement efforts. On Earth Day and every other day of the year, supply chain management professionals should be able to proudly stand up and proclaim that what they do helps make Mother Earth a bit more green.
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