The increasing awareness of environmental hazards caused by products, Services and system has made organisations pay more attention to their supply chain, looking for ways to reduce the impact on the environment. Shukla et al. (2009) argues that every product manufactured, transported, used and discarded in the supply chain have an impact on the environment. Lewis and Gretsakis (2001) argue that there is need to reduce the impact of products and services on the environment due to the environmental sustainability. Hansmann and Claudia (2001) argue that tackling these effects will promote new ways to add value to products and the environment. Arif et al. (2009) stated that 'Green' is a very vague word and is more concerned with sustainability, environment, waste management, energy and others. Green Supply Chain (GSC) is not a new concept but has gained recognition over the years and dating back to the creation of the International Green Purchasing Network in 1996 (Reese, 2010).
Khiewnavawongsa and Schmidt (2009) defined Green Supply Chain Management (GSCM) as the integration of environmental concerns to supply chain management from product design to the management of the product after its useful life. Zhu and Sarkis (2004) stated that GSCM deals with green purchasing to integrated supply chain flowing from supplier to manufacturer, to customer and reverse logistics. In addition, Boks & Stevels (2007) argues that 'Green' can be categorised into three type namely scientific green, government green and customer green. The scientific green deals with emissions from products, processes and systems; while government green deals with effect of population density, geographical position and availability of energy sources in improving the quality of life and the customer green deals with health and safety. This essay will examine different factors in order to evaluate if GSC can be achieved given the global nature of the majority of networks.
Ackerman (2010) argues that companies and the society are interdependent on each other and there is need for companies to reduce their carbon footprint in order for the society not to lose their trust on them. He further argued that it is a collective responsibility for everybody to protect the environment by going green (cited in World Economic Forum, 2009). A recent survey by McKinsey & Company on 391 companies in the United Kingdom reveals that 95% of the companies acknowledge that satisfying the share holders alone is not enough and that consumers will punish companies that refuse to fulfil her public responsibilities by causing their market share to drop (Reese, 2010). This has put public pressures on companies and supply chains in meeting their social obligations; an example is Wal-Mart who disclosed that it will start measuring the energy used to manufacture products in her supply chain.
However Tiwari (2001) argues that the cost of green practices is generally high due to lack of accurate lifecycle costing models which was further reiterated by Afri et al. (2009) who stated that, due to financial constraint people tend to buy cheaper goods and services that appears to be less environmental friendly despite the awareness of the environmental hazards caused by their practices. This is common in developing countries. Also a lot of design on previous products and services did not initially take into cognisance the negative impacts on the environment and incorporating such measures into the products and services is capital intensive which will eat into organisations profit as the goal of organisations is to generate revenue for their shareholders and maximise profit.
Zhu et al. (2005) and Allen (2010) stated that China being an industrialised economy is being faced with environmental concerns due to the emergence of GSCM which has made her government to create policies to protect the environment such as the Restriction of Hazardous Substances (RoHS) which is stricter than that of the European Union. Zhu et al. (2005) further argued that China now faces the pressures of green barriers when she exports her products and that some countries cannot trade their woods because they need a certification to show that their business do not destroy their forest sustainable development. These trade barriers as a result of green practices have made supply chains integrate environmental issues into their business. In addition, Penfield (2007) argues that these barriers have made most companies to be innovative and come up with cutting edge solutions to help reduce cost and at the same time protect the environment.
The Green Supply Chain Network (2009a) stated that regulation of carbon emissions and increase in fuel prices will help in reducing the carbon emissions taking into cognisance customer and client demand.
However companies are faced with the problem of different regulatory codes on green environment used by different countries making it difficult for conformity (Allen, 2010) and Ewan (2009) argues that unless all countries collaborate and agrees on a uniform emission accounting standard the aim of reducing carbon footprint will be defeated (cited in The Green Supply Chain Network, 2009b). Similarly BBC News (2009b) reported on how some developing countries (India, China, Brazil and South Africa) tried to boycott the Climate Summit held in Copenhagen due to the 50% target for the reduction of greenhouse gasses that was set for the year 2020 as developing countries like China objected due to the financial constraint adding that every country could not go at the same pace and concession should be given to developing countries who are still battling with poverty and development. This has left most airlines and power companies in the dark as to whether it is economically beneficial to upgrade to cleaner technology (BBC News, 2009c)
Afri et al. (2009) argues that on a voluntary note it will be difficult for GSC to be achieved but through strict government regulations and laws.
However, In the UK given the global sourcing of agricultural products, GSC will be difficult to achieve as most agricultural products consumed are sourced globally as the environment is not conducive to grow certain agricultural products in large quantities and consumers are not willing to pay a high price for locally sourced agricultural products. Global sourcing increases the logistics miles travelled for each product which in turn increases the emission of green house gases.
Agg (2009) argues that freight transport in the United Kingdom contributes 20% of emission to the total output and by reducing the number of under-utilised vehicles, will eventually lead to reduced number of vehicles on the road, reduced fuel cost, reduced emissions, reduced driver's numbers and reduces total cost. Also Agg (2009) argues that firms have decided to go green because of the benefits associated with green. These benefits include reduced energy, reduced waste and operating cost, improve customer service and make socially responsible. In addition the Chamber of Shipping (2009) argues that domestic shipping accounts for less than 1% of United Kingdom's greenhouse gas emission and GSC can be achieved if organisations decides to harness other forms of transportation like sea and rail freight in the delivery of their products and services as modern vessels emits as little as 5grams of carbon dioxide per tonne-kilometre as compared to 50grams of carbon dioxide per tonne-kilometre for heavy trucks and 540grams per tonne-kilometre for modern plane cargo (cited in Davis, 2009).
BBC News (2009a) reported that carbon market schemes have been created in some countries where emission allocations are distributed amongst the worst emission-producing companies and these allocations if not used can be traded with other companies who exceeds their quota and such companies would pay a fine for exceeding their quota. Prentice (2009) also stated that the United States has decided to collaborate with Mexico and Canada to establish a North American Carbon Market which would help reduce compliance cost of meeting a quota of their targets by procuring credits in NAFTA marketplace (cited in The Green Supply Chain Network, 2009b). Ministry of Trade and Foreign Economic Corporation of PRC (2002) stated that Countries like Japan, USA and Sweden have established certain environmental obligations on the fabrics imported from China (cited in Zhu et al., 2005). If every country decides to enforce such strict measures to ensure sustainability of the environment, then GSCM can be achieved.
External pressures from governments, customers and local communities is driving firms in the supply chain to go green, making them focus more on the environment rather than financial success (Zhu and Sarkis, 2006). Penfield (2007) argued that many companies now carry out environmental audits on their suppliers as they are being held accountable for the environmental hazards caused by their suppliers as the press does not fail to publish the names of companies and the effect of their operations or products on the environment. However, Bergstrom et al. (2005) argues that the high cost or implementing an environmental program is the main barrier to achieving a GSC. Ofgem (2010) stated that Britain could face power shortages as customers will not be able to afford the high energy prices if they are to meet their carbon emission targets as a result of green supply chain practices (cited in BBC News, 2009d). This can also be linked to a knock-on effect from future increase in oil prices as forecasts reveal the non availability of crude oil in the future. An increase in oil price will help reduce the number of vehicles on the road and hence reduce pollution. However this could lead to an increase in price of goods and services as firms will not want to bear the burden alone and would pass on the effect of the increase in oil prices to customers.
If you can develop a sustainable supply chain think of the money that can be saved by not having to dispose of harmful by-products, reducing obsolescence, decreasing the amount of money spent on scrap and the resources spent on adhering to regulatory issues. Several companies have developed new revenue sources on the by-products they used to throw out! Many companies are using sustainability as a competitive advantage to grow market share within their industry.Â Â Penfield 2007
Van Hock and Erasmus (2000) argue that this has led to the emergence of green supply chain management (GSCM) whose focus is to lower the environmental risk caused by the supply chain. Sustainability of the environment has made most firms deal with environmental issues not for their firms alone but for their supply chain partners (Vachon and Klassesn, 2006)