'Greening' The Supply Chain

By

Mr. Devkant Kala
Lecturer
Department of Management Studies
Uttaranchal Institute of Management
Dehradun
 

Business the world over is threatened by the globalization of markets, ever shortening product life-cycles, the need to lower costs, and ever increasing demands of the customer. The speed and manner in which business is conducted has radically changed. In the face of highly competitive markets, enterprises today consider supply chain management to be the key area where improvements can significantly impact the bottom line.

A Supply is understood as the quantity of goods available for use or the actual (or planned) replenishment of a product (or component). A Supply Chain is defined as a set of three or more companies (of a company, an immediate supplier and an immediate customer) directly linked by one or more of the upstream and downstream flows of products, services, finances and information from a source to a customer.

Supply Chain Management (SCM) is the systematic, strategic coordination of the traditional business functions within a particular company and across business within the supply chain, for the purposes of improving the long term performance of the individual companies and the supply chain as a whole.

Increasingly, the Supply Chain Management is becoming an important concept in modern manufacturing. It is not a business formula or a computer system, but a continuous process of shaping and reshaping inter- and intra-company performance, information technology tools, product and services, and organizational and personal excellence to exploit the ever-changing context of customer opportunities.

The primal focus of SCM is to sense consumers with excellent goods and services against minimum possible costs and response time. It means the purpose of Supply Chain Management is to improve customer value and satisfaction – that really why we are doing this.

In supply chain management following activities can be identified:-

• Integrated behaviour to incorporate customers and suppliers.
• Mutually sharing information among channel members for planning and monitoring processes.
• Mutually sharing channel risks and rewards that yield a competitive advantage.
• Cooperation among channel members is required for effective SCM.
• The same goal and the same focus of serving customers so better serving the customer needs.
• Integration of processes for synergistic effects.
• Partners to build and maintain long term relationships for competitive advantages.

Green Supply Chain Management

Green supply chain management (GSCM) has emerged as a key approach for enterprises seeking to become environmentally sustainable. The notion of Green Supply Chain Management implies the insertion of environmental decisions within the traditional concept of Supply Chain Management.

"Green Supply Chain Management is 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."

GSCM addresses the four interrelated areas of the supply chain: upstream, downstream, within the organization, and logistics.

• Upstream activities of the organization include evaluation criteria of suppliers' environmental performance.
• Downstream, usually comprises those activities related to the disposal and sale of excess stock, including recovery and recycling opportunities. 
• Within the organization, supply chain management might include involvement with "design for the environment" with suppliers.
• In logistics, activities such as just in time or quality management intertwine with environmental criteria.

Benefits of Green Supply Chain Management

Organisations can enjoy several benefits by greening their Supply chain, such as;

Sustainability Of Resources - GSCM helps in proper and effective utilisation of available productive resources of organisations. Organisations will purchase 'green' input resources for environmental friendly production process to produce desired outputs.

Lowered Costs/Increased Efficiency - Effective management of suppliers can reduce transaction costs and promote recycling and reuse of raw materials. Also, the production of waste and hazardous substances can be cut, preventing corporations from being fined as a result of violating environmental regulations. Consequently, the relevant handling and operational cost involved can be further reduced and, in the mean time, the efficiency of using resources can be enhanced.

Product Differentiation And Competitive Advantage - It helps the organisation in positioning its product differently in customer's mind.Besides attracting new profitable customers for organisation, it will give competitive edge over competitors in market place. It will strengthen the brand image and reputation in market place.

Adapting to Regulation and Reducing Risk - Organisations adopting GSCM practices can reduce the chances of being prosecuted for anti-environmental  and unethical practices.

Improved quality and products – organization will produce products which are technologically advanced and environment friendly. This will enhance the brand image and brand reputation in customers' mind.

Besides above, there are following advantages that can be generated by GSCM:-

• Positive impact on financial performance
• Effective management of Suppliers
• Dissemination of technology, advanced techniques, capital and knowledge among the chain partners.
• Transparency of the supply chain
• Large investments and risks are shared among partners in the chain.
• Better control of product safety and quality
• Increasing of sales
• Find beneficial uses for waste, and

GSCM is a relatively new green issue for the majority of Indian Corporations. Adding the "green" component to supply chain management involves addressing the influence and relationships of supply chain management to the natural environment. Green business practices that maintain and sustain good environmental quality are increasingly becoming a vital component of business organization.
 

Mr. Devkant Kala
Lecturer
Department of Management Studies
Uttaranchal Institute of Management
Dehradun
 

Source: E-mail March 28, 2008

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