Green Supply Chain: Balancing Sustainability and Efficiency
In recent years, there has been a growing trend towards sustainability in the business world. This is especially true in the area of supply chain management, where companies are seeking to balance the need for efficiency with the desire to reduce their environmental impact. In this article, we will explore what a green supply chain is, the benefits of going green, and 8 ways companies can develop a more sustainable supply chain.
What is a Green Supply Chain?
A green supply chain is a supply chain that is designed to minimize its environmental impact. This can involve reducing waste, using renewable energy sources, and minimizing carbon emissions. It can also involve sourcing materials and products from sustainable sources and working with suppliers who have environmentally friendly practices.
According to Science Direct, “Green Supply Chains can be seen as logistic structures that guarantee the production and distribution of products globally in an environmentally friendly manner (BarbosaPóvoa 2009). To achieve such a goal, companies must invest on the design and planning optimization of their logistic structures, while accounting for the trade-off between profits and environmental impacts. In recent years and in spite of a considerable amount of research on SC management, a new area exploring environmental issues in the SC structures and operation is now emerging. This is a result of a growing awareness for the importance of handling such issues in association with the traditional economic indicators. This trend has been motivated by several developments, being major ones the tighter governmental regulations and the changes in customers’ perception towards more environmentally conscious systems, which may eventually lead to higher product sales (Guillen Gosalbez and Grossmann 2009).”
With the pandemic, these concerns only continue to grow, and the companies taking sustainable supply chain management seriously are the ones sure to withstand the impact of these issues for the long-term.
The Sustainability and Efficiency of Going Green
Going green can have many benefits for companies. By reducing waste and emissions, companies can save money on energy and waste disposal costs. They can also enhance their reputation by demonstrating their commitment to sustainability, which can help to attract customers and investors who prioritize environmental responsibility. In addition, by working with suppliers with sustainable practices, companies can reduce the risk of supply chain disruptions caused by environmental factors.
Here are just a few of the well-documented ways that going green with your supply chain can be sustainable, efficient, and invaluable:
- Cost savings: A study by the Carbon Disclosure Project found that companies with sustainable supply chains were able to achieve cost savings of up to $1.6 billion annually. This was achieved through measures such as reducing waste, improving energy efficiency, and using renewable energy sources. By going green with their supply chain, companies can reduce their operational costs, which can lead to increased profitability and competitiveness.
- Improved reputation: A survey by Nielsen found that 66% of consumers are willing to pay more for products and services that come from companies committed to sustainability. By going green with their supply chain, companies can enhance their reputation and attract customers who prioritize environmental responsibility. This can help to build brand loyalty and increase market share.
- Reduced risk: Climate-related risks such as natural disasters, extreme weather events, and supply chain disruptions are becoming more frequent and severe. By going green with their supply chain, companies can reduce their exposure to these risks by working with suppliers who have sustainable practices and sourcing materials and products from sustainable sources. This can help to ensure continuity of supply and reduce the risk of reputational damage caused by environmental incidents.
- Regulatory compliance: Governments around the world are introducing regulations aimed at reducing carbon emissions and promoting sustainability. By going green with their supply chain, companies can ensure compliance with these regulations and avoid potential penalties and fines. This can also help to future-proof the business and ensure its long-term sustainability.
Knowing this information, it makes sense why more and more companies are turning to sustainable supply chain management and wanting easy ways to make their supply chain more eco-conscious each and every year. We at Stimulus have compiled 8 ways to create a green supply chain through modern processes below.
8 Ways to Develop a More Sustainable Supply Chain
While these aren’t the only necessities to go truly green with your supply chain, they serve as a great foundation and help to make a far more sustainable and efficient supply chain market with little struggle.
1. Reduce Waste
One of the most effective ways to develop a more sustainable supply chain is to reduce waste. This can involve implementing recycling programs, using reusable packaging, and minimizing excess inventory.
2. Use Renewable Energy
Another way to reduce the environmental impact of your supply chain is to use renewable energy sources. This can involve using solar panels or wind turbines to power your facilities, or purchasing renewable energy credits.
3. Source Sustainably
When sourcing materials and products, look for suppliers who have environmentally friendly practices. This can involve sourcing from local suppliers, using sustainably harvested materials, or choosing products that are made from recycled materials.
4. Use Green Transportation
Transportation is a major source of emissions in the supply chain. To reduce emissions, consider using more fuel-efficient vehicles, using alternative transportation modes such as rail or water, or consolidating shipments to reduce the number of trips.
5. Implement Green Packaging
Packaging is another area where companies can reduce their environmental impact. This can involve using biodegradable or compostable materials, using recycled materials, or using packaging that is designed to minimize waste.
6. Reduce Energy Consumption
To reduce your energy consumption, consider implementing energy-efficient practices such as turning off lights and equipment when not in use, using motion sensors to control lighting, or installing energy-efficient HVAC systems.
7. Work With Smaller (and local) Suppliers
Smaller (and local) suppliers often have more environmentally friendly practices than larger suppliers. By working with smaller suppliers, companies can support sustainable practices and reduce their environmental impact.
8. Use SRIP
As you begin your sustainable supply chain journey, check out our product — the Stimulus Relationship Intelligence Platform (SRIP). SRIP combines data insights, relationship-building tools, and a proprietary score to help companies make the best purchasing decisions while optimizing and growing their supplier network. By using relevant metrics and multiple data points, companies can quickly match suppliers to available contract opportunities, while also diversifying their supply chain.
In conclusion, developing a more sustainable supply chain is an important goal for companies that want to reduce their environmental impact and enhance their reputation. By implementing the strategies outlined in this article and using tools such as SRIP, companies can develop a more sustainable supply chain while also improving efficiency and reducing costs.