Traditionally, supply chain leaders had one clear objective: keep operations running at minimum costs. However, the past few years have upended this notion. With the growing demand for businesses to demonstrate their commitment to mitigating the impacts of climate change, your supply chain is likely under pressure to establish and execute net-zero agendas.
But how do you build a resilient supply chain amid these seemingly diverse goals? How do you mitigate environmental performance? First, you want to recognize that green supply chain management can complement operational efficiency instead of compromising it.
What Is Green Supply Chain Management?
A green supply chain is a supply chain model that integrates environmentally sustainable principles at every stage. It focuses on reducing environmental impact while maintaining efficiency and profitability through practices such as:
- Eco-friendly sourcing
- Energy-efficient manufacturing
- Waste reduction
- Sustainable logistics
- End-of-life management
Key Objectives of Green Supply Chain
Supply chains account for approximately 60% of global carbon emissions. As such, governments, investors, and consumers are taking initiatives to ensure businesses adopt green practices. In response, companies are integrating sustainability into their supply chains.
But beyond compliance and public perception, a green supply chain has several other key objectives:
Waste Reduction
Ninety-one percent of material resources end up in landfills or as pollutants instead of going back into the production cycle. This high waste rate occurs because most organizations adopt the linear economy — the “take-make-dispose” approach. As a result, waste has become a major culprit in climate change.
A green supply chain reduces waste by implementing sustainable practices at every stage of operations such as:
- Adopting lean manufacturing to reduce material waste, improve resource efficiency, and eliminate defects that lead to discarded products.
- Using reusable or minimal packaging to cut down on unnecessary waste.
- Streamlining inventory and production with demand to avoid overproduction and reduce expired or unused stock.
Carbon Footprint Minimization
Nearly all supply chain operations have an environmental footprint. Sustainable supply chain management helps minimize your company’s carbon footprint by reducing greenhouse gas emissions as much as possible. For instance, 70% of all business emissions come from activities outside a company’s direct operations. So, working with third parties that have low carbon emissions can significantly reduce your environmental impact.
Internally, a green supply chain ensures energy-efficient manufacturing, green transportation, and eco-friendly packaging to reduce emissions from production practices.
Resource-Efficient Management
The green supply chain also maximizes the use of raw materials, water, and energy to conserve natural resources through strategies aimed at:
- Improving energy efficiency
- Conserving water
- Optimizing processes
- Managing product life-cycle
While these approaches contribute to sustainability, they also help your company cut costs while maintaining efficiency.
4 Benefits of Green Supply Chain Management for Business
Traditional business wisdom has long viewed supply chain sustainability solutions as a trade-off between operating profitably and acting ethically. However, with growing regulatory pressure and rising consumer consciousness, companies are realizing that a green supply chain offers both financial and environmental advantages.
Cost Saving
Successful companies consider sustainability a strategic advantage that drives both commercial and operational gains. By taking the right approach to sustainability, your company can uncover cost-saving opportunities, find ways to use resources more efficiently, and reduce packaging costs.
You may also find new ways to increase profit on sustainable products.
Improved Brand Image
Despite inflationary concerns, consumers are willing to pay more for products sourced or produced through ethical and sustainable supply chains. This trend highlights that sustainable supply chain practices position your company for positive publicity and open doors for partnerships with other sustainable brands.
Reduced Environmental Impact
Beyond the business advantage, a green supply chain allows your company to promote sustainability as the climate crisis intensifies and environmental consciousness rises. It’s difficult for consumers to address climate issues if their favorite companies rack up 80% of the carbon emissions before products even leave the supply chain.
Adopting green practices and responsible sourcing make your company more environmentally conscious and fulfilling social responsibility.
Increased Energy Efficiency
Green supply chain management encourages energy-saving practices that lower energy costs and reduce carbon footprints, such as:
- Adoption of energy-efficient technology in production and manufacturing processes to lower equipment-running costs.
- Use of renewable energy to reduce dependency on fossil fuels.
- Minimization of transportation energy costs through fuel-efficient vehicles and route optimization.
- Implementation of energy-efficient warehouse and storage systems to save overhead costs.
With these energy-efficient practices, your company can create more sustainable and financially viable operations that position your company for long-term success in an increasingly eco-conscious market.
4 Sustainable Supply Chain Practices
Regardless of your industry, you can make several internal shifts to improve supply chain sustainability.
Green Purchasing
The suppliers you buy materials from significantly affect your company’s overall sustainability. As such, your first step should be to set sustainability standards that your suppliers should meet. Commit to sourcing materials from suppliers that use environmentally friendly materials, energy-efficient processes, and ethically sourced resources to reduce indirect emissions.
Sustainable Shipping
For many companies, shipping and logistics activities represent the largest source of emissions. Reducing transportation emissions can go a long way toward cutting a company’s carbon footprint.
To transform your supply chain, shorten your delivery route, partner with logistics providers that offer eco-friendly options, and use fuel-efficient vehicles. You can also consolidate shipments to minimize carbon emissions.
Eco-Friendly Packaging
Sustainable packaging is one of the most impactful environmentally sustainable solutions you can easily switch to. Use recyclable, biodegradable, or reusable packaging materials to minimize waste and reduce reliance on single-use plastics.
Green Production
While incorporating green practices in production can be challenging, reducing energy consumption is a good starting point. Map out your production process to identify areas of energy waste. Go a step further and adopt cleaner technology to minimize waste and lessen the environmental impact of your production process.
Start Building Your Green Supply Chain Strategy
As the demand for sustainable products and services — as well as people’s interest in fighting climate change — grows, companies are increasingly looking to create green supply chains. However, many businesses may not know where to start. And some efforts might appear disingenuous if not approached correctly.
At Surgere, we can help you with green supply chain management through our IoT-based solutions and data-driven insights. Our real-time tracking and data analytics provide actionable insights to optimize routes and manage fleets to reduce your fuel consumption.
You can also use our returnable and multi-use containers to reduce reliance on single-use packaging and minimize waste. Contact us today to learn how we can help you integrate green practices into your supply chain.
