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What Makes a Green Supply Chain?
What Makes a Green Supply Chain?
January 23 2009
The Green Philosophy
There has been so much hype about “green” that many organizations are adopting it, but what is “green”, really? We hear and see it everywhere—in the food we eat (green beans), during our morning routine (green contact lenses), on our way to work (green traffic lights), in our down time (green tea), and during the course of our work day (green initiatives). Green initiatives can be seen in every industry and every sector: from marketing to engineering, from infrastructure to architecture, from supply chain to technology, and more.
Green is state of mind which all organization and individuals need to think. Often organizations think of green as simply being environmentally and socially responsible products or services which do not destroy nature or our planet. So to produce a green product, do we need to use a “cradle to grave to cradle” philosophy? The answer is yes. By using this concept, a product can be designed in such a way that when it reaches its end state, it will be recycled or reprocessed to create a new product.
For the Good of Our Planet
How did we get to such a state that forces us to think this way? Are we destroying our planet by putting waste into it? Are we misusing our natural resources? The answer is yes, in both cases. We have not been very environmentally conscience in the last several decades when developing our technological products, nor have we been—as humans—responsible about the uses of our resources (water, air, and land). Our vision as humans should be to serve humanity; our mission as humans should be to save humanity. We are all responsible for the outcomes of our actions.
Achieving Our Green Goals in Manufacturing
Now that we have a vision and a mission in mind, how are we going to achieve our green goals and objectives? As manufacturers, we need to look toward changing the development, procurement, manufacturing, logistics, and distribution processes—collectively known as supply chain—to a way which is more environmentally-friendly. By doing so, we are not only helping the environment (and ultimately our planet), we’re also making our business more profitable.
Now the big question is how to create a green supply chain (GSC). By keeping the “cradle to grave to cradle” concept in mind, we can achieve this goal. Let’s take a look at product development and the supply chain to see how we can implement this concept.
Here is a broad list of suggestions—some that can be implemented right away and some will require more time and a greater investment.
We can develop more environmentally-friendly products by designing products with life cycles that virtually do not end (e.g., a product that can be recycled or reprocessed to develop another product); this will be in line with the concept of “cradle to grave to cradle”. While designing such a product, we also need to strive to use cheaper, recycled and natural raw material wherever possible.
Another important factor—which automobile and appliance manufacturers have already adopted—is designing products with energy efficiency in mind. Designing and developing products that take less energy and resources to produce will not only help to achieve the GSC goal, but also help with bottom line.
Procurement involves decisions required to fulfill our internal and external demands. So, how can we create green procurement habits? We already see some examples of green internal procurement in our work environment—typically recycling paper or even using recycled papers for printing. But is that enough to achieve the GSC goal? In my opinion, it’s a good start but we can go beyond recycling paper. For example, when purchasing furniture, stationary, printer, toner, etc., we need to pay attention to whether or not these products are environmentally friendly and are coming from environmentally friendly sources. The initiation of green has to happen at the inception of procurement cycle which targets all suppliers, i.e. equipment, construction, parts, material etc.
For external procurement, we can get close to the goal of GSC by selecting suppliers that are using green initiatives in their process and products. One area where most organizations are lacking in their green initiative is IT infrastructure. Organizations need to make sure that their IT infrastructure (servers, data center, and storage equipment) are also in line with their green initiative. Because of the impact that IT infrastructure has the environment turning towards virtualization, cloud computing, and prolonging the life of our product design by either upgrades or reengineering will help in saving the environment. Companies like Fujitsu have already started projects which focus on energy-saving IT infrastructure by helping customers to reduce CO2 emissions.
When we talk about environmentally-friendly products, most organizations tend to focus on the manufacturing process alone, which is a start because manufacturing imposes one of the highest negative impacts on our environment. But by reducing air and water pollution, waste material, scrap, and resource and energy consumption, we can help make the environment greener and contribute to the overall goal of GSC.
Adopting lean manufacturing processes is one way of getting there. When manufacturers start reducing waste at each step of the process in order to deliver the most cost effective product to the customer, the manufacturing process becomes a lean process. Additionally, improving quality of the process means we are actually reducing waste from the start of the process (raw material) to the final goods (finished product), and when a manufacturer delivers a quality product to the consumer, the result will be fewer returned goods, happier consumers, and a better brand name in the market place.
Now the question is, how do we get environmentally-friendly raw material into our process? The answer: through logistics. In essence, logistics is management of all actions necessary to move a product from the beginning to the end of supply chain, through to consumer purchasing. But logistics does not end there. There is also reverse logistics as well, which occurs when the product is returned or becomes waste.
Logistics involves freight transport, storage, inventory management, material handling, and all the information related to these activities. Every part of logistics can be made green. For example, to achieve this goal, many companies are combining operations and technology (transportation management system [TMS] tools) to decrease fuel consumption. They are combining loads, reducing miles driven, and talking with suppliers and customers to collaborate on delivery routes and product pickup sites. Some organizations are also looking at more fuel-efficient trucks and are using bio-fuels as well.
Most logistics organizations are also using the Smart Way program and are trying to move away from air transport to more environmentally friendly methods.
Some additional key initiatives which are needed to achieve our green objectives are
hybrid or electric vehicle development and usage
reduced paper and energy consumption
the use of radio frequency identification (RFID) and global positioning systems (GPS)
Any distribution center or building has a variety of products which are constantly moving in and out of the facility. Let’s take a step back for a moment and look at it from the outside in. If you look outside the building, is it standing in no man’s land or is it located centrally to customers? If an organization’s distribution center is located in the outskirts, trucks will be travelling longer routes—which will drive transportation costs higher and make a major environmental impact. If the same distribution network is created in a central location, it will drive these costs down and create a better carbon footprint for the organization.
Now, let’s take a sneak peek inside these facilities—where the majority of action takes place. Key areas for greener facility are
Layout. The whole operation of pickup and dispatch needs to be effective so that less time is spent picking and packing the product. Many distribution centers are very old, poorly laid out, and constructed in a manner which is not very efficient when trying to pick and pack. The facility should look at the frequency at which product is being moved in and out. Doing this allows the organization to figure out the most appropriate layout which will reduce number of movements, the time it takes to fill an order, and the amount of capital resources used. So one way to achieve “green” is to improve the layout of the warehouse and distribution centers. Doing this will reduce picking and packing time, which, in turn, will reduce the unnecessary movement of goods, minimize energy usage, and reduce resources used.
Lighting. Most distribution centers run more than one shift—at times running 24/7 to fulfill customer’s needs. In turn they use valuable energy, which is not only costly, but also has a huge impact on the environment. One way to minimize the impact on the environment is to use energy efficient light bulbs, have good insulation in the facility, and move towards alternate energy resources, such as solar energy. The use of motion sensors and timers for lighting in the facility is also a good initiative towards the GSC goal.
Thermostats. Having controls available for heating and cooling functions will manage energy usage throughout the facility. On a similar note, using paving materials that have lighter colors (e.g., roofing) as well as better insulated facilities, will help maintain the temperature in building.
Reduced Packaging. Reducing the amount of packaging in the shipping process will help reduce the consumption of energy and resources. Using lightweight packaging material reduces the weight of shipments; moving lightweight products around the warehouse can save energy throughout.
Reuse. If a particular type of packaging is expensive to make, it should be returned to the facility for reuse (when possible) to reduce waste and save money—for both the consumer and the company. Wooden pallets and plastic bins should be used so that they can be reused in distribution facilities.
Recycle. Any material which can be recycled in the facility will reduce waste (e.g., reusing the same material for same or different purpose). This will bring the concept of “cradle to grave to cradle” full circle.
In order to achieve a truly green supply chain—while helping to save and serve humanity—we need to make some long-term changes and become more socially responsible. The change will need to occur from the top all the way to the bottom. Businesses need to align their green supply chain goals with business objectives and use green supply chain initiatives to improve their overall business processes.
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