This document discusses green supply chain management. It begins by defining supply chain management and green supply chain management. It then discusses the benefits of green SCM such as improved operations and agility. It provides examples of companies that have implemented successful green SCM initiatives. It also discusses why green SCM is needed due to issues like global warming, corporate social responsibility, and evolving consumer demand. Finally, it discusses areas that can be targeted for greening the supply chain such as product design, material sourcing, and reverse logistics.
2. WHAT IS SUPPLY CHAIN
MANAGEMENT?
Supply chain management (SCM) is the oversight of
materials, information, and finances as they move in a
process from supplier to manufacturer to wholesaler to
retailer to consumer.
3.
4. WHAT IS GREEN SUPPLY
CHAIN MANAGEMENT
“Integrating environment thinking into supply chain
management, including product design, material sourcing
and selection, manufacturing processes, delivery of the
final product to the consumers, and end-of-life
management of the product after its useful life".
6. IMPROVEMENTS BY GREEN SCM
Improves operations by employing an environmental solution
Improves Agility: Green supply chain management help mitigate
risks and speed innovations
Increases Adaptability: Green supply chain analysis often leads to
innovative processes and continuous improvements
Promotes Alignment: involves negotiating policies with suppliers and
customers, which results in better alignment of business processes
and principles.
9. WHY THERE IS NEED FOR
GREEN SCM?
Increasing Environmental Constraints due to Global Warming
Corporate Social Responsibility
Beneficial for Organization
Eco-friendly
Increasing Environmental awareness in stakeholders
Evolving Consumer and Client Demand
Response to increasing fuel prices
10. WHAT IS GREEN SUPPLY CHAIN
MANAGEMENT?
GSCM can 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 consumer as well as end-of-life management of the
product after its useful life”.
Question really is what is supply chain management? Green =
natural environment (may = money too).
GSCM = green purchasing + green manufacturing/materials
management + green distribution/marketing + reverse logistics
11. MAJOR CHALLENGES
Practicing green marketing initially is a costly affair. Green SCM
encourages green products/services, green technology, green
power/energy; a lot of money has to be spent on R&D programs
The customers may not believe in the effectiveness of firm’s
green strategies. The firm therefore should ensure that they
convince the customer about their green initiatives, this can be
done by implementing Eco-labelling schemes offer its “approval” to
“environmentally less harmless” products and have been very
popular in Japan and Europe.
Initially the profits will be very low since renewable and
recyclable products and green technologies and more expensive.
Green SCM will be successful only in long run.
Many customers may not be willing to pay a higher price for
green products which may affect the profitability of the company.
The firms practicing Green SCM have to strive head in
convincing the stakeholders and many a times there may be some
who will simply may not believe and co-operate.
12. By considering above barriers it can be concluded
that the path towards green supply chain has not
yet been determined by the companies.
Furthermore, in many cases the methods are
partially known, are not mature enough or just
not available.
So, it is lack of motivation or lack of
awareness from the side of the corporate leaders
towards going green or choosing and
implementing the appropriate green strategies
for their supply chain, so that they make their
business competitive in this globalised era of
business.
13. AREAS TO GREEN THE
SUPPLY CHAIN
Designing Of Products
Production
Material Purchase
Packaging
Warehousing
Logistics & Reverse Logistics
14.
15. OTHER INITIATIVES
Eco labeling:
Labeling that identifies products that meet certain
environmental criteria
LEED (Leadership in Energy and Environmental Design):
Design and Construction practices that significantly
reduces or eliminate negative impact of building on
environment
Green sourcing:
Sustainable procurement
16. AN OVERVIEW OF
GREEN SUPPLY CHAIN
MANAGEMENT IN
INDIA
By Nimawat Dheeraj and Namdev Vishal (2012)
Presented by Pooja Goyal
17. ABSTRACT
The green supply chain management (GSCM) is a powerful
way to differentiate a company from its competitors and it can
greatly influence the plan success. With increased awareness
to corporate responsibility and the requirement to meet the
terms with environmental policy, green supply chain
management (GSCM) is becoming increasingly important for
Indian manufacturers. Companies that have adopted GSCM
practices with a focus on distribution activities have
successfully improved their business and environmental
performance on many levels. Today’s also some of remaining
companies have not adopted green supply chain management,
due to this environmental performance index (EPI) ranking of
India is not good. Today’s environmental performance index
(EPI) of India and the major four activities of the green supply
chain management; namely green purchasing, green
manufacturing, green marketing and reverse logistics are
being covered throughout the paper.
18. RESEARCH BACKGROUND
A researcher studied green supply chain management, it includes pressure
practice and performance within the Chinese automobile industry in which
they observed that on increasing pressure from a variety of directions have
caused the Chinese automobile supply chain manages to initiate carrying out
of green supply chain management (GSCM) practices to improve both their
economic and environment performance.
After that another researcher studied the green supply chain management in
electronic industry. According to that, there are various approaches for
implementing GSCM practices has been proposed and recognized in previous
literatures according to the author, but there is yet no investigation that
identified the reliability and validity of such approaches particularly in
electronic industry.
After this, study on the implementation of green supply chain management in
textile enterprises is also done in which the author considered the
environmental influence and resource utilization efficiency in the whole supply
chain and here also one problem was arise that how to execute the GSCM.
Further works on the Implementation of green supply chain management
practices in electronics industry in which they aims to survey existing green
activities in computer parts manufactures in Thailand to evaluate GSCM.
19. GREEN PURCHASING
Environmentally preferable purchasing (EPP) or green
purchasing is process of selection and acquisition of
product and services which minimise negative impact over
the life cycle of manufacturing, transportation, use and
recycling.
21. GREEN PURCHASING NETWORK
INDIA
GPNI is an evolving network of professionals
interested and active in the general area of
sustainable consumption and production- more
specifically: green purchasing and public
procurement. It is currently a loose informal
network of professionals primarily operating as
an internet based electronic forum.
The objectives of the GPNI are:
To create awareness amongst Indian industry and other
stakeholders about green purchasing and procurement
(GPP).
To encourage and facilitate implementation of GPP and
greening supply chains (GSC) projects to enhance the
competitiveness of the Indian industries.
22. GREEN MANUFACTURING
In Green manufacturing, manufacturing equipment is
made to be fast, reliable, and energy efficient.
Green manufacturing can benefit your manufacturing
company in many ways. Not only it will benefit the
environment, but it will impact your consumer, the
shareholders, and the company perception in the market.
23. LEAN MANUFACTURING
Lean manufacturing, which is simply known as Lean,
because it is a competitive practice that reduces costs,
improves environment and quality, and improves the
bottom line. Lean manufacturing is aimed at the
elimination of waste in every area of manufacturing.
Lean manufacturing is closely associated with green
manufacturing as there is an overlap between the goals
and drivers for both processes.
24. JIT
A key component of Lean principles is just-in-time (JIT)
inventory strategy. It focuses on reducing inventory and
provides material, energy, and space savings.
Purpose of JIT is reduction of cost and quality
improvement.
25. ISO 9000 AND ISO 14000: Purpose of ISO 9000 and 14000 are
to recognize quality standards are followed by the companies
and changes the motivation
Zero Emission Strategy: Purpose of zero emission strategy is
to environmentally damaging production products are
eliminated.16% of companies are actively following zero
emission. 85% of companies are following reduced emission
strategies.
Six Sigma: Six Sigma is another management methodology
which became very popular. It supports green production by
primarily eliminating defects from manufacturing processes
and, hence, cutting waste. Through exercising greater care
and management control minor investment defects are caught
as early as possible through the process. As a result,
significant savings can be made by reducing the number of
defects, rework, and spending time on defective pieces.
27. GREEN MARKETING
Green marketing involves a commitment from the
organization to deal with environmentally friendly
products (i.e., products that do not harm society and the
environment) and to conduct marketing activities in a way
that reflects the organization’s commitment to
environmental responsibility through adherence to specific
controls to ensure the preservation of the natural
environment.
28. Owners’ satisfaction
Achieving security in the introduction of products and in
operations management
Organization social acceptance
Sustainability of activities
29. ENVIRONMENTAL PERFORMANCE
INDEX (EPI)
It measures the effectiveness of national environmental
protection efforts .
EPI indicators focus on measurable outcomes such as
emissions or deforestation rates rather than policy inputs,
such as program budget expenditures.
India Ranks at 125 of 2012 Environmental Performance
Index, which is worst rank.
CURRENT RANK – 144 (out of 178 countries)
30. CONCLUSION
Recycling of raw materials and component parts are the
top green manufacturing and production focused initiatives
Adoption of green practices is highest in those areas of the
supply chain where there is a direct relation to cost savings
and efficiency, for example in inventory reduction,
recycling of raw materials.
EPI-2012 rank of India is worse, this also shows that
awareness of green supply chain management and
greening in India is poor, so there will be need to spread
the knowledge of green supply chain management, with
the help of this green supply chain management, Indian
manufacturing enterprises get their cost and efficiency
benefits.
34. WALMART “GOING GREEN”
• Initial strategy of walmart was to target low-income
families in rural areas by offering significantly lower costs.
• Walton’s mission was truly realized through the use of
technology in distribution and supply chain logistics,
which allowed Wal-Mart the opportunity to cut costs and
lower prices for end users.
• Scott’s business model to strengthen supply chain
management processes by “going green” was a strategic
decision that positively impacted Wal-Mart’s growth,
distribution techniques, and corporate identity.
35. Lee Scott took control of Wal-Mart in 2000 with a newly
adopted strategy of making logistical processes more
economically friendly. “Green” logistics, at its core, means
implementing a system that can independently monitor
overseas suppliers to make sure they meet social and
environmental standards.
Lee Scott saw the two goals as intertwined: “being a good
steward of the environment and being profitable are not
mutually exclusive.
The company did earn some goodwill among
environmentalists as the first major retailer to speak out
in favour of the environment. When vendors claimed they
had made environmental improvements to products, Wal-
Mart began promoting the products with green-coloured
shelf tags.
The company sold as many as 300 products with green tags
at one point. By the early 1990s, the green tag program
disappeared altogether, and environmental issues slipped
off of the Wal-Mart’s list of strategic priorities.
36. The three goals were just an introduction to Mr. Scott’s
speech. He also discussed the following goals:
Increase fuel efficiency in Wal-Mart’s truck fleet by 25 percent over
three years and
doubling it within 10 years
2. Reduce greenhouse gases by 20 percent in 7 years
3. Reduce energy use at stores by 30 percent in 7 years
4. Cut solid waste from U.S. stores and Sam’s Clubs by 25 percent in
three years.
5. Buying diesel-electric and refrigerated trucks with a power unit
that could keep cargo
cold without the engine running, saving nearly $75 million in fuel
costs and eliminating
an estimated 400,000 tons of CO2 pollution in one year alone
6. Making a five-year verbal commitment to buy only organically
grown cotton from
farmers, and to buy alternate crops those farmers need to grow
between cotton harvests.
Last year, the company became the world's largest buyer of organic
cotton.
37. As Wal-Mart attempts to scale up networks and improve
upon “green” initiatives, the company faces three possible
obstacles:
1. Increased Costs
2. A Sub-Optimal Product Assortment
3. Criticism of Factory Labour Conditions.
38. CONCLUSION
In this case study we have outlined the requirements
needed to become a sustainable business, the reason why
this initiative is different than others previously attempted
by Wal-Mart, goals presented by management, the new
value networks, and risks Wal-Mart needs to address.
Wal-Mart critics argue that the steady dose of these
initiatives is an effort to deflect attention from its work-
place policies and its financial performance. They need to
continue to invest in its environmental policies as well as
address the issues facing their workforce in order to prove
these initiatives are not just a public relations stunt.
39. If Wal-Mart proves that it is serious about reducing
environmental impact and devoted to investing in green
initiatives, critics will have to unclench their fists for a
round of applause.
41. A green SCM story
“The Greening of Wal-Mart : by Erica L.
Plambeck and Lyn Denend”. Stanford Case
study
Analysis of the case on SCM Review
42. THE STORY
October 2005, Wal-Mart CEO Lee Scott committed the
company to three ambitious goals:
•To be supplied 100 percent by renewable energy
•To create zero waste and to sell products that sustain
Wal-Mart's resources and the environment.
•To meet those goals, Wal-Mart would seek to
transform its supply chain, in cooperation with suppliers
and environmental non-profit organizations.
43. SIGNIFICANT
INITIATIVES
Hired Blu Skye Sustainability Consulting
to help identify the categories of Wal-
Mart's products and processes that had
the greatest environmental impact.
Wal-Mart/Blu Skye team multiplied sales
data with environmental impact factors
from the Union of Concerned Scientists,
and identified 14 focal areas, bundled
into three broad categories:
•renewable energy
•zero waste and
•sustainable products.
44. For each focal area, an executive sponsor
and a network captain took charge of
building a sustainable value network of Wal-
Mart employees and representatives from
government, academia, environmental
nonprofits, suppliers, and other
stakeholders.
The goal was to reduce environmental
impacts and derive profit from that positive
change.
Network captains were typically senior
managers from Sam's Club or Wal-Mart who
were considered to be among the company's
top performers.
46. CONCRETE STEPS
1. Identify Goals, Metrics and New technologies
-- Beginning in 2008, Wal-Mart formally planned to use a system to "measure
and recognize its entire supply chain based upon each company's ability to
use less packaging, utilize more effective materials in packaging, and source
these materials more efficiently relative to other suppliers."
--The scorecard is an important enabler for Wal-Mart to achieve its public goal
of reducing the packaging used by all of its suppliers by 5 percent between
2008 and 2013.
-- If achieved, this five-year program is expected to generate $3.4 billion in
savings. In the first month, 2,268 vendors have logged onto the packaging
scorecard site and 117 products have been entered into the system.
Based on “The Greening of Walmart's Supply Chain” - SCMR 2007, Dr.
Erica Plambeck, Stanford University
47. 2. Certify Environmentally Sustainable products
-- According to an international study released in 2006, all species of wild seafood
are greatly depleted and predicted to collapse within 50 years.
-- Within this ominous business environment, Wal-Mart sourced approximately
$750 million in seafood in 2006, and the company's volume of seafood business
is growing at roughly 25 percent a year.
-- The Marine Stewardship Council (MSC), established by Unilever and the World
Wildlife Fund (WWF) in 1997, has defined standards for certification as a
sustainable fishery, based on the United Nations' Code of Conduct for
Responsible Fishing and on input from fishermen, retailers, government,
nonprofits, and other stakeholders.
-- The MSC certifies third parties to audit and certify fishery and processor
compliance throughout the supply chain, from "boat to plate."
-- Walmart sources only MSC certified fish, lately!
48. 3.Providing Network partner assistance to suppliers
Wal-Mart is able to provide suppliers with valuable knowledge and process
assistance through its strong relationships with the environmental nonprofits in
its networks.
Eg: when the Chinese government threatened to shut down a number of textile
dye houses, including one of Wal-Mart's suppliers, in order to reduce pollution in
Beijing ahead of the 2008 Olympics, Wal-Mart immediately took action
- put the dye house in touch with one of the NGOs in their network, which
helped it formulate a more environmentally friendly process that reduced its
toxic output very quickly.
49. -- However, to meet organic standards, a farm needed to remain free of non-
organic pesticides or similar materials for a period of three years prior to the
harvest of any organic crop. To increase and secure its supply of organic cotton,
-- Wal-Mart made a five-year verbal commitment to buy organic cotton from
farmers. "It gives them confidence and stability
-- Wal-Mart (which became the world's largest purchaser of organic
cotton in 2006) also agreed to purchase the organic cotton farmers'
alternate crops.
50. 4. Committing to larger volumes of environmentally sustainable products
-- By making a commitment to buy a specified quantity of each product certified as
environmentally friendly, Wal-Mart gives its suppliers an incentive to develop and produce
that product.
-- In its textiles network, Walmart learned that, along with the cost of certification, farmers
faced a near-term reduction in yields with organic cotton farming, as well as the need to
diversify crops. This forced farmers to alternate the planting of cotton with legumes,
vegetables, or other cover crops to rejuvenate the soil.
5.Cutting out middlemen
An immediate but unanticipated benefit of MSC certification in the seafood network—and
of organic cotton certification in the textile network—was full visibility of the chain of
custody, and hence the opportunity to eliminate intermediaries.
By simplifying its supply chain, Wal-Mart reduced the frequency of seafood stock-outs,
improved the quality of the fish it was receiving, reduced paperwork and transaction costs,
and reduced the costs and environmental impacts of transportation.
51. 6. Consolidating direct suppliers
Over the short term, Wal-Mart has had many diverse relationships with
many factories, often working with a supplier one purchase order at a time or
one season at a time.
Says sustainability vice president Ruben: "Right now we account for two
percent of a lot of people's business, especially overseas. We know that needs
to be a lot larger—maybe 50 or 60 percent."
7. Restructuring the buyer role
To better manage relationships with suppliers, the textiles network
implemented a major organizational change: It redesigned the role of its
buyers.
In the past, textiles buyers had been generalists, handling a wide variety of
responsibilities (as buyers did in other product categories).
52. Licensing environmental innovations
If one factory is significantly more energy-efficient than others,
it's got an advantage. If it shares that information, the
competition might gain a much better understanding of its
production costs and therefore its profit margins."
"Information about how much energy a product consumes is
not particularly sensitive."
Notas do Editor
A researcher studied green supply chain management, it includes pressure practice and performance within the Chinese automobile industry in which they observed that on increasing pressure from a variety of directions have caused the Chinese automobile supply chain manages to initiate carrying out of green supply chain management (GSCM) practices to improve both their economic and environment performance.
After that another researcher studied the green supply chain management in electronic industry. According to that, there are various approaches for implementing GSCM practices has been proposed and recognized in previous literatures according to the author, but there is yet no investigation that identified the reliability and validity of such approaches particularly in electronic industry.
After this, study on the implementation of green supply chain management in textile enterprises is also done in which the author considered the environmental influence and resource utilization efficiency in the whole supply chain and here also one problem was arise that how to execute the GSCM.
Further works on the Implementation of green supply chain management practices in electronics industry in which they aims to survey existing green activities in computer parts manufactures in Thailand to evaluate GSCM.
One of the examples is the energy-efficient light bulb. These bulbs use almost half the energy as a standard light bulb and yet they still produce a good amount of light. Manufacturing companies are using this example and re-designing their machines.
After this, researchers clearly indicate that adoption of a green marketing approach achieves many benefits for organizations and may place an organization at the top of the competitive pyramid. It provides them with market leadership, especially in the context of increasing environmental awareness in the market20.
Adopting a green marketing philosophy brings an organization close to its clients, particularly those clients who have other environmental concerns besides maintaining the environment and rationalizing the use of natural resources
In this context, the study by researcher indicates a number of advantages resulting from green marketing practices, as follows:
Owners’ satisfaction: The green marketing approach is likely to open new horizons and good opportunities for organizations that practice green marketing. This, in turn, is likely to provide organizations with the ability to avoid traditional competition and to thereby achieve competitive leadership in the market, especially when they introduce environmentally friendly products and target those who had environmental trends in the market. This competitive situation will lead to more profits in addition to promoting a good reputation and meeting the owners’ needs.
Achieving security in the introduction of products and in operations management : An emphasis on producing safe and environmentally friendly goods will push organizations to raise their production efficiency to reduce the pollution level and other harmful effects caused by the production process. It may also help them to avoid legal sanctions, obligations to pay compensation to injured parties, and the revocation of the membership of environmental or consumer protection associations.
Organization social acceptance: Organizations who adopt a green marketing philosophy will gain strong support in the community because of their goal to benefit all society through their commitment to the environment. This support will help the organization to consolidate its relationships with current customers and to gain new ones in the future.
Sustainability of activities: Green organizations, which avoid legal problems and have strong support in the community, will obtain general acceptance for their goals and philosophy. This support for their operations and business activities will help them to continue to provide the market with environmentally friendly products.
Environmental Performance Index (EPI)
It measures the effectiveness of national environmental protection efforts in 132 countries. Reflecting our belief that on the-ground results are the best way to track policy effectiveness, EPI indicators focus on measurable outcomes such as emissions or deforestation rates rather than policy inputs, such as program budget expenditures. Each indicator can be linked to wellestablished policy targets. The 2012 EPI ranks 132 countries on 22 performance Indicators that capture the best worldwide environmental data available on a country scale.
India Ranks at 125 of 2012 Environmental Performance Index, which is worst rank.
The Environmental Performance Index (EPI) is a method of quantifying and numerically marking the environmental performance of a state's policies. This index was developed from the Pilot Environmental Performance Index, first published in 2002, and designed to supplement the environmental targets set forth in the United Nations Millennium Development Goals.[1]
The EPI was preceded by the Environmental Sustainability Index (ESI), published between 1999 and 2005. Both indexes were developed by Yale University (Yale Center for Environmental Law and Policy) and Columbia University (Center for International Earth Science Information Network) in collaboration with the World Economic Forum and the Joint Research Centre of the European Commission. The ESI was developed to evaluate environmental sustainability relative to the paths of other countries. Due to a shift in focus by the teams developing the ESI, the EPI uses outcome-oriented indicators, then working as a benchmark index that can be more easily used by policy makers, environmental scientists, advocates and the general public.
Cost and complexity are perceived as the biggest barriers to implementing Green SCM, which highlights the need for cost effective and easy to implement solutions. Brand building is one of the top incentives for green SCM, highlighting the importance of public perception of how companies operate. Recycling of raw materials and component parts are the top green manufacturing and production focused initiatives Adoption of green practices is highest in those areas of the supply chain where there is a direct relation to cost savings and efficiency, for example in inventory reduction, recycling of raw
materials. Almost a third of respondents are not collaborating with their extended supply chain on green practices.
Most of the Indian manufacturing small and medium enterprises like cutting and hand tools and auto parts and spare parts and industrial equipments and machinery manufacturer and various other products manufacturer are seem to be quite advanced in the implementation of green warehousing and distribution initiatives, most likely because these initiatives often also mean added efficiency. While green supply chain management shows direct cost and efficiency benefits, then why more companies have not adopted them up to now?
EPI-2012 rank of India is worst, this also shows that awareness of green supply chain management and greening in India is poor, so there will be need to spread the knowledge of green supply chain management, with the help of this green supply chain management, Indian manufacturing enterprises get their cost and efficiency benefits.
