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Supply Chain Management has always been viewed as a process of transforming the raw materials to the finished goods along with the delivery of the same to the customers traditionally. This process involves various emissions of environmental toxic substances at various stages in the product development. Living in an environmental conscious world, and foreseeing the ever increasing effects of global warming there is a need for the organizations to look at the green alternatives that could be applied to their industry thereby reducing the negative effects on the environment like pollution and wastes emitted from the production line into the nature directly or indirectly. The management decisions needed to implement the green concepts play a vital role in the way these issues are tackled from the step one of the any processes involved in the organization or along the supply chain.
This paper presents the basic view of the supply chain, the need for various companies to work together to form the supply chain followed by the introduction of the green supply chain management. The paper then concentrates on discussing the need for the companies to adopt GSCM, the implementation of GSCM at various stages involved in the product development life cycle, major factors or reasons due to which the various organizations have the need to adopt Green concepts. In addition it also presents case studies of few leading supply chain retailers. Finally, the paper ends by showing how the companies can benefit from implementing the green concept in their supply chain.
"Firms can no longer effectively compete in isolation of their suppliers and other entities in the supply chain" (Rhonda, R.L and Robert, J.V, 1999). The concept of supply chain management evolved in 1980's and has been the prime focus in both fields of academics and industry all through the past two decades with continuous developments. "The term Supply chain management is used to specify all the activities managed by an organization to produce and deliver the products to the end customers" (Hines. T, 2008) , i.e. all the stages of a product life cycle from raw material procurement to the delivery of goods to customers.
In today's world to adhere to the environmental regulations keeping in view the challenges like global warming, organizations are integrating environmental responsibility partly with supply chain management termed as Green Supply Chain Management (GSCM) in order to address the environmental concerns of the customers and to enhance their market value. "The growing importance of Green Supply Chain Management (GSCM) is driven mainly by the escalating deterioration of the environment, e.g., diminishing raw material resources, overflowing waste sites and increasing levels of pollution" (Srivatsava, 2007). In addition to the above, literature also reveals that, "governmental pressures for reduction of pollution form production material and chemical wastes and non-governmental pressures like competitors and markets are the major factors that subject company to adopt GSCM" (Cai. S et al, 2008).
"Also, with the increasing acceptance of ISO 14000 environmental standards, there is a greater role for supply chain management in the organizational environmental practice" (Sarkis. J, 2003). Once the environmental standards are blended with the organizational culture and practices, the effect of practical implementation is made easier in all respects.
"Greening the supply chain of an organization involves integrating environmental thinking into various stages of product development including product design, material sourcing and selection, manufacturing processes, delivery of the final product to the customers as well as end of life management of the product after its useful life i.e., from the cradle to the grave" (Srivastava , 2007).
The economic and environmental advantages are difficult to achieve without the active participation and commitment of the key supply chain partners. All partners forming the supply chain have equal and prominent roles in implementing the GSCM where in the partners can range from suppliers of raw materials, production organization, end users and reverse logistics.
Concept of Green implementation or Green Marketing begins with Green design (Bhat, V.N , 1994) emphasis has been made on, " the product design termed as Green design because this is the stage that determines input materials, manufacturing process, packaging, distribution and disposal methods". The first step in the evaluation of the green design involves identification of wastes generated at different stages of the product life cycle. Also, the green design focuses on the 3 R's Recycle, Reuse and Remanufacture in the product life cycle." Manufacturers can no longer continue to produce goods without beginning to take the responsibility for the way in which their products will be dealt with at the end of their lives" (Dowie. T, 1994) and evaluating the green alternatives to reduce the environmental hazards by carefully picking up right partners for the supply chain.
According to Sarkis. J (2003), "the procurement or purchasing decisions of an organization have profound effect on the green supply chain when the raw materials are recyclable, reusable or have been already recycled". Hence, the choice of suppliers becomes an important decision. "The rising demand of choosing an eco-friendly vendor for the raw materials with high environmental consciousness tends to create pressure on the suppliers to improve their environmental impact as an organizational practice" (Jabbour, A.L.S and Jabbour, C.J.C, 2009) and to achieve the ISO 14000 certifications. For instance using the organic farming to reduce the chemical fertilizers can be a proactive step in eco-friendly production.
"Production process also influences the greening of the supply chain in numerous ways" (Sarkis. J, 2003). Cleaner production process is preferred in manufacturing stages in order to conserve the raw materials reduce or eliminate the toxic materials involved and also avoid the production of wastes and emissions harmful to the environment thereby safeguarding the concept of Green.
Also, packaging of the products in an organization adopting green strategies has a prominent role. "Thanks to the innovative solutions that help in reducing the weight and thickness of packaging materials" (Testa. F and Iraldo. I, 2010). Literature also reveals that using recyclable, biodegradable materials for packaging leads to the recycling process of the packaging materials making sure that the hazardous materials do not reach the environment.
In the delivery phase of the product life cycle, Rao. P and Holt. D (2005) emphasize that, " environmental friendly transportation system also plays an important role in GSCM". As it is well known that, " transport accounts for the large proportion or share of the environmental hazards due to the fossil fuels used by vehicles, noise produced and emissions of the toxic chemicals" (Wu. H.J and Dunn. S.C, 1994). Hence taking a step to use the bio-fuels can reduce the green house gases emitted during transportation, minimizing the empty miles, maximizing operating efficiency; implementing intelligent container design can help the organization in achieving the green supply chain. For example, using the local producers can lead to reduced transportation and has lower impact on the environment with regard to the pollution created.
After the end of any products usage, "reverse logistics deals with the collection to return shipments into the distribution channel, followed by disassembly and re-use of selected parts. In addition used goods could be shredded and scrapped, re-entered into the production as raw materials" (Hock, 1999). "Reverse logistics alone is not enough for any company to go green but this aspect when considered right from the development of the products design" (Lembke, 2002) can be of significant value when the product has reached its end of its life. For instance, "the world's renowned car manufacturer BMW, buys back their old cars, dissembles them, reconditions the parts and uses them into new cars" (Ritche et al, 2000). This implies that greening the supply chain involves adhering to the environmental friendly concepts right from the product design to the end of life of any product manufactured.
Above text discusses the implementation of the Green concepts in the production process now it moves on to discuss the factors influencing the organizations to adopt GSCM.
The main factors enforcing the various organizations to adopt GSCM are:
Industry competitors and
Internal factors of the company
Lee (2008) mentions that, "the role of government involvement in green supply chain management has been increasing over the past few decades As global environmental regulations shift focus from manufacturing plants to overall product life cycle, governments are becoming involved more in GSCM". The various initiatives like achieving the environmental safety certifications, offering free and timely advice along with the required technical assistance to adhere to eco-friendly product life cycle are gaining lot of importance in implementing GSCM. Approvals of the quality and environmental safety of products from the government in order to have better deals with the customers are also gaining importance and play a vital role in making sure that the organizations follow the environmental regulations necessary.
The overwhelming market demand for the green purchasing is alone one of the most important criteria that lead a company to adopt GSCM in order to meet the ever growing needs of the environmental friendly customers. In addition, looking at the literature, when the competitors in the industry are trying to grab the market share by exploiting the green concept it is imperative for any organization to focus on GSCM to enhance their customer base." Green purchasing can address issues such as reduction of waste produced, material substitution through environmental sourcing of raw materials, and waste minimization of hazardous materials" (Rao. P and Holt. D, 2005). Hence there arises a need for adopting the green supply chain in almost all organizations.
Heying. A and Sanzero. W (2009) mention that, "supply chain management has been the cornerstone of Wal-Mart's success and remains their primary competitive advantage in retail industry". The concept of Green is gaining importance in this organization from the year 2000. As said by Lee Scott , the former CEO of Wal-Mart, the company is committed to three ambitious goals:
To be supplied 100 percent by renewable energy
To create zero waste and
To sell products that sustain Wal-Mart's resource and environment.
Wal-Mart is building value added networks to go Green, the company is using the network approach to lower carbon and environmental foot print to increase profitability while increasing margins with the help of all its supply chain partners mainly the logistics. The key areas focused by Wal-mart in developing eco-friendly products are materials used, material weight, material distance and packaging efficiency.
Best buy is another leading firm dealing with the implantation of Green Supply Chain Management. This organization has adopted the consumer electronics recycling program officially in 2009 which has resulted in total savings of over 25 million pounds. The widely used products for recycling by best buy are televisions (Non - digital), desktop computers (old and outdated ones), walkmans, ham radios and so on. Recycling cell phones, batteries inkjet printers are few other important areas of green concept application. The cost savings incurred due to the recycling program is highlighted in this company's' initiatives.
Tesco, another leading supply chain retailer also has its own way of implementing Green Supply Chain Management like the zero carbon storage (involving usage of solar power, natural lighting, rain water collection, timber wood structure and so on). An initiative of over 5 billion dollars in the next 5 years is being planned to reduce the carbon footprint issue.
The Literature review also reveals that, "organizations' adopting the Green Supply Chain Management increases simultaneously the economic and environmental performance of companies" (Heying A and Sanzero. W, 2010)." Although, transforming the supply chain and production to comply to the existing environmental regulations and anticipating future regulations" (Menzel et al, 2010) can be reasonably difficult, once the green concepts are implemented it can lead to improved corporate performance.
With the current trend of increasing global warming effects, GSCM can prove to be a better approach for companies to reduce the environmental pollution at every stage of the product development as discussed in this paper. All partners in the supply chain by adhering to the ISO 14000 family of standards can improve the chances of achieving better or desired quality of products and processes and also enhance the customer, producer and supplier relationships.
In addition to the above, companies when implementing the GSCM, can create the environmental awareness among all the supply chain partners and customers too increasing the responsibility of each organization and every customer involved with the products developed. Customers too play a vital role in the GSCM cycle at the recycling stage. Only with the personal responsibility of handing over the products at the end of life to the manufacturers the process of recycling can be effectively performed.
The main purpose of this paper is to mention the overview of Green supply Chain Management Literature. It presents the different perspectives proposed by various academicians in theory each looking at the concepts from a different angle. This paper, however discusses the key areas of the GSCM emphasizing on the waste management and Greening concepts at every stage of the product development or manufacturing. Although, there exists a gap between the theoretical concepts proposed and practical implementation of the same, especially the stake holders point of view where in GSCM is seen as a concept hindering the profit generation of the company. Most managers when have a decision to be taken whether to adopt GSCM or not this view has a lot of importance, hence urging the researchers to undertake more qualitative study by undertaking quantitative and qualitative approaches. "Further research will be valuable in identifying those marketing, communication, customer-management and retailing-channel management instruments that can really make all the market actors perceive the benefits and advantages of the environmental excellence of a whole supply chain behind a "green product""(Testa. F and Iraldo. I, 2010).
With each individual and every organization realizing the impact of going green and keeping the environment safe from the environmental hazards, the world can be made a better place to live for the current and the future generations.
(Word Count: 2500 words)
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