8.2.2: Roadmap for green supply chain management (GrSCM)
Greening the supply is more than just looking at negative environmental impacts along each stage of production of a good or service. It starts with green design, and uses product life cycle analysis to consider all aspects of the supply chain from the extraction of raw materials, to the various manufacturing stages of the product, as well as its distribution patterns across the globe. At the end of the supply chain comes product recovery and reintegration into the chain. Green design functions as the core around which most green strategies and green supply chains are developed.
In implementing a green or sustainable supply chain, companies must consider several planning techniques, including the life cycle and how this is engineered, as well as demand and supply panning. Companies need to consider how they procure their materials, the various partnerships they’ve developed to do so, and how suppliers can be incentivized and trained. Finally, companies must consider the logistics such as transporting, storing, and packaging the entire production the good or service, and how to manage its footprint. The figure below shows the elements and processes within a green supply chain.
The vision of ‘sustainable supply chains’ is to do more with less: to ensure that growth, competitiveness, innovation and industrial leadership does not take place at the cost of environmental sustainability in supply chains. The roadmap below visualizes operational practices and parameters, contributory green strategy elements, and theoretical principles of logistics and supply chain management which serve as key mechanisms in: reducing dependence on non-renewable energy resources (i.e. oil), minimizing emission of greenhouse gasses, advancing re-use of products and materials, optimizing transport and logistic flows, and transforming supply chains towards a low-carbon economy. In “greening the supply chain” the organization can seek to balance both financial and ecological benefits.
Focus box: The value of impacts
Many companies do not have a full understanding of the (negative environmental) impacts of their supply chain. An initial step to “greening the supply chain” starts with developing a systematic understanding of the processes and impacts of the supply chain. By mapping the supply chain, companies can identify the most biggest environmental challenges they face, and prioritize efforts with suppliers and logistics providers to address these effectively.
Using this approach, CH2M HILL established a supply chain sustainability strategy for evaluation and procurement of materials, complete with procedures, tools, communications, training and reporting metrics. Since 2010, CH2M HILL has identified suppliers with strategic or preferred status based on volume and business impact. Suppliers are classified into four groups of environmental performance, with each incorporating specific key performance indicators (KPIs). Tier 1 and Tier 2 suppliers are required to provide information about their sustainability programs and demonstrate continuous improvement. CH2M HILL’s direct procurement department then began incorporating sustainability into the design, procurement and construction of projects by promoting the selection of suppliers and subcontractors that value sustainability.