Green Supply Chain Management – GSCM

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Green Supply Chain Management – GSCM

As the year 2020, started we knew nothing or expected anything like what we have seen in the past several decades. COVID 19, which has created a huge storm in everyone’s life and in every sphere of business, where people lost their lives, medical facilities were and are still being tested ( while I write this ) financial markets, consumerism & mental health are all being put under severe pressure by internal & external acts.

Isn’t it time for the organizations to have to realize that to most effectively manage the environmental burdens caused by industry and commerce, they need to look beyond just their most immediate operations and processes? Organizations need to consider their supply chain both upstream and downstream.

What are the external forces evolving for a greener environment?

Commerce and industry have gone through substantial changes over the past few decades. In the hearts of these evolutionary and revolutionary changes are political, social, technological, market, and economic forces that have caused organizations to seriously consider their impact on the natural environment.

Several forces have culminated in a much larger audience and stronger interest in greening and, broadly, sustainability.

If I need to rank the drivers then, here is the below –

1.     Science on environmental damages caused by industry has improved. In this situation, ignoring factual findings and consensus within science is hard to ignore. Climate change science, pesticides and endocrine disruptors, ozone-depleting gases, and a number of other environmental problems can be traced to practices, processes, and products from the industry.

2.     Communication is far swift & widespread than ever before. Companies can communicate with their shareholders, employees, and competitors. Consumers and communities and other stakeholders who are influenced by industrial and corporate activities can get their information faster. The advent of the Internet and minute-to-minute news and reporting have all contributed to this pervasive and incessant communication. Sharing this information has become easier than ever. Organizations seeking to limit their image and reputation risks pay close attention to this ubiquitous communication related to environmental concerns.

3.     Change which is a constant has become faster. New technologies and cultural changes have always occurred. But now, concerns that were once viewed, from an environmental perspective, as due to occur decades from now are starting to appear.

Record volatility in weather conditions, warming at historically increased and higher than ever levels, and the melting of the polar cap are all concerns that were expected to occur in the long-term future.

Industrially, globalization has become very common in commerce and industry; thus changes in one area can easily permeate the world. This includes environmental regulatory practices.

4.     Costs are higher and the impact is greater than in times past. As the world population and affluence increase, further, development means the additional anthropocentric value is at stake. Environmentally related crises and catastrophes can mean a heightened impact due to the greater number of people affected and the greater developed property values lost.

The sea- coast regions of the world have the most valuable properties. These regions are very susceptible to weather changes, sea-level change, and contamination due to vulnerable watersheds. If environmental damage is caused by an industrial environmental accident, the integrated and concentrated populations of a region can be greatly affected. Sources of livelihood could be disrupted.

In developing countries, where the growth has been at historic levels—never before has this type of economic growth occurred globally— and where regulations and industrial hygienic and environmental practices have been lax, polluted lands and rivers can cause large parts of cities to shut down.

Finally, stakeholders have a louder voice. Communities, non-governmental organizations (NGOs), and other non-fiduciary stakeholders can instantaneously broadcast their messages to the world. Given that communication and knowledge transfer has become easier and more accessible than ever before in the history of man, the same systems can prove valuable for those previously with limited voice. The major conduit of this information and messaging consists of various social media outlets. In many places in the world, news of corporate and supply chain environmental issues, accidents, disasters, and various incidents can be broadcast broadly through YouTube, Twitter, Facebook, and even LinkedIn. Blogs have also become part of the social media landscape where various stories can be written and delivered by individuals. Stakeholder websites have also become avenues for sharing reports and stories broadly.

These and a number of other forces are causing organizations to pay greater attention to greening and environmental issues, more so now than in the past when regulatory issues were the major drivers.

Environmental Concerns

The major reason for the greening of corporate supply chains is to address environmental burdens caused by industry and its operations. The environmental burdens can occur in different media such as air, water, or land and at various levels, such as global, regional, and local levels.

Global issues affect regions throughout the world. The most pervasive environmental concern centers around global warming and climate change. Increasing global temperatures have been tied to anthropogenic activities. Likewise, species decimation is considered a global problem since various species can affect local or global ecosystems. Also, the global impact on plant biodiversity can also affect the potential to find medicines and cures.

Regional problems impact regional areas. For example, acid rain is a major issue in many developing countries due to increased manufacturing. Regional issues relate to the acidification of lakes and waterways, which may impact many water species and communities that depend on those water supplies.

Local problems are those that may impact municipal areas instead of whole regions. For example, pesticides and herbicides may affect local waterways and agricultural regions. Herbicides may cause less diversity and more sensitivity among the plants in a region due to a decrease in biodiversity. Pesticides with endocrine disruptors can impact human health and fertility in local areas.

Industry and its supply chains have been major contributors to these sources of anthropogenic environmental burdens. But industry and supply chains are needed to supply the demands of our increasing populations. The balance of economics with the environmental and social influences of organizations and their supply chains is a challenge for both organizations and governments.

Green Supply Chain Management from linear Supply Chains to Closing the Loop via Circular Economies.

The traditional supply chain management description by several academics and professors implies a linear relationship with flows up and down the supply chain.

As environmental issues and sustainability become more integrated, the supply chain will need to become more circular and nonlinear, where loops may not necessarily return to the beginning of a supply chain but can occur anywhere within the supply chain.

The return aspect has been recognized as an important dimension within the SCOR model, although extending the life of the product and greening aspects were not the major goals in the introduction of the return activities. These major activities were initially concerned with warranty and service returns.

To “close the loop” of the supply chain, major elements of reverse supply chains and reverse logistics need to be integrated into the standard linear definition of the supply chain. The activities may also relate to various greening concepts, such as recycling, remanufacturing, reclamation, reuse, and reduction, which are listed in the figure in the order of least to greatest environmental burden.

The forward supply chain begins with product and process design. Procurement focuses on the upstream supply chain.

Both raw material (non-recycled material) and virgin material (material that appears in its most fundamental form) are acquired for production purposes.

Production may contain fabrication and/or assembly operations and activities. Finally, come distribution activities to the customers for consumption. These are the traditional linear activities of the supply chain.

The return activities, managed by reverse logistics functions, then flow back into various stages of the forward supply chain. Reuse, remanufacture, and recycle activities may occur at different stages.

Typically, the later the stage at which the flow of returned products and materials occurs back to the forward supply chain, the less energy that is expended, the fewer operations that occur, and the less environmental burden that results.

Other elements of this model include energy usage, waste generation, and reduction of materials and waste throughout the supply chain activities. This flow may be for one or multiple organizations.

Corporate Environmental Management

Understanding some of the major greening activities of green supply chains requires understanding some of the major internal corporate environmental practices that have evolved over the past couple of decades.

Traditional corporate environmental management activities would include filing environmental reports, acquiring environmental information that is required by law, and complying with environmental regulations. These activities are typically reactive activities inasmuch as they are required by law.

But, in order to not only meet regulatory policy but possibly to gain a competitive advantage, a number of practices, tools, and technologies have been utilized by organizations. Four major corporate environmental elements include environmental management systems (such as ISO 14000 systems), life cycle analysis (LCA), and eco-design (also known as design for the environment).

1.   Environmental Management Systems (ISO 14001)

Environmental management systems (EMS) can be defined in many ways. EMSs can range from relatively informal systems managed operationally by a standalone single computer to more involved programs, such as the best known EMS standards, the ISO 14001 certified EMS. The ISO 14000 series of standards includes elements of organization evaluation and product/process evaluation. These standards include descriptions of EMS, environmental performance evaluation, and environmental auditing. Product and process standards help to define LCA, environmental labeling, and environmental factors in product standards. The only standard that may be registered or certified is the ISO 14001 (environmental management system) standard. The remaining elements are only guidelines available to organizations.

The substantive requirements of ISO 14001 document and include Environmental Policy, Planning, Implementation and Operation, Checking and Corrective Action, and Management Review. The ISO 14001 EMS requirements embody the PDCA (plan-do-check-act) cycle of continuous improvement. In the PDCA cycle, an organization plans a change aimed at improvement (plan), implements the change (do), evaluates the results (check), and finally institutionalizes the change (act). The comprehensiveness of these systems incorporates many traditional corporate environmental activities and more proactive, competitively  

Oriented activities, including LCA and eco-design, which we briefly introduce.

2.   Life Cycle Analysis

Life cycle analysis (LCA) is a systemic process used to evaluate the environmental burdens associated with a product or process. It identifies energy and materials used and the wastes or emissions released into the environment LCA is also meant to evaluate and implement opportunities to effect environmental improvements. A life cycle of a product, service, or utility may include evaluation and analysis from the inception or the design of a product until its end-of-life disposal or disassembly and beyond, such as its reassembly. LCA involves calculating and analyzing the burdens associated with the production, use, and reuse of utilities, goods, and services over their life cycle. This includes processes such as cultivation, extraction, manufacture, delivery, use, recycling, and maintenance. The closed-loop nature of materials and products has made such an analysis more complex and may incorporate product stewardship activities.

An LCA could include three separate but interrelated components: an inventory analysis, and impact analysis, and improvement analysis. Life cycle inventory analysis quantifies energy and raw materials requirements, air emissions, waterborne effluents, solid waste, and other environmental releases incurred throughout the life cycle of a product, process, or activity. The goal is to examine all the inputs and outputs in a product’s life cycle, beginning with a product’s composition, where those materials came from, where they go, and the inputs and outputs related to those component materials during their lifetime. It is also necessary to include the inputs and outputs during the product’s use. In practice, much of LCA focuses on this level of analysis.

Life cycle impact assessment is an evaluative process of assessing the effects of the environmental findings identified in the inventory component for all inputs and outputs throughout the activities of an organization or supply chain. The impact assessment normally addresses ecological and human health impacts but has expanded to include social, cultural, and economic impacts. The impacts from a process from the production and use of a product in order to benchmark impacts from competing products or processes could be compared to help manufacturers or consumers choose among options.

Life cycle improvement analysis (LCIA) is a continuous improvement process. LCIA conducts an improvement analysis to determine how the product, service, or utility influences the environment. For example, the conservation of energy or water in the manufacturing process will reduce the environmental impacts of that process. Substituting a less hazardous chemical for a more toxic one would also reduce the impact. The change is then made in the inventory analysis to recalculate its total environmental impact.

3.   Design for the Environment and Eco-Design

The term ‘design for the environment (DFE)’ or ‘eco-design’ refers to the environmental design of a product and/or a process. It focuses on reducing (preventing) the environmental effects of a product before it is produced, distributed, and used. Eco-design examines the disassembly of products at the end of life and reveals the associated cost benefits and environmental impact of revision, reuse, and recycling. Eco-design and LCA typically go together with the required appropriate information and database systems. Along with the usual design factors, DFE recognizes that environmental impacts must be considered during the new product and process design and redesign. It is defined as the systemic consideration of design performance with respect to environmental, health, and other objectives over the full product life cycle. DFE is a design process in which a product’s environmentally preferable attributes—recyclability, disassembly,

Maintainability, refurbish ability, and reusability—are treated as design objectives rather than design constraints.

DFE is the ultimate pollution prevention tool. It is at the design phase of any product where a majority of the product’s characteristics are fixed, and 80 percent of the environmental impacts may be determined at this stage. The DFE process usually entails five major steps: assess environmental impacts; research the market; run an ideas workshop (brainstorm), or ideas generation; select design strategies; design the product. The tools for DFE are quite varied and range from simple scoring approaches to techniques that include detailed databases and a broader continuous evaluation of the product and process as data is generated and gathered.

Other corporate environmental management activities that may influence organizational and inter-organizational planning include product stewardship, ecological and carbon footprinting, eco-labels, total quality environmental management, lean principles, and the so-called RE’s—Recycling, Remanufacturing, Reuse, Reclamation & Reduction.

To be continued….

One thought

  1. An Insightful article on Green SCM; In addition to the standard of ISO 14001, Energy Management System is also very much beneficial, the usage of Energy Efficient products will ensure that all the three aspects as mentioned – (Environment Mgmt, LCA and Design ) are in line and are effectively managed

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