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Chapter 4: GREENING THE SUPPLY

CHAIN

Garcia, Mark Reyes, Carolyn Anne


Angelo Virtucio, Zoer
Ilao, Paul Odiezzy Matthew
Definition
 Green supply chain management can be
defined as integrating environmental
thinking into supply-chain management,
including product design, material
sourcing and selection, manufacturing
processes, delivery of the final product as
well as end-of-life management of the
product after its useful life. (Hasan Ali Al-
Zu’bi)
Why there is need of
Green Supply Chain
Management?
 Increasing Environmental Constraints due to Global
Warming
 Corporate Social Responsibility
 Beneficial for Organization
 Eco-friendly
 Increasing Environmental awareness in
stakeholders
 Evolving Consumer and Client Demand
 Response to increasing fuel prices
Benefits of Green Supply Chain
1. Cleaner Materials Sourcing and Manufacturing
2. Lower Transport Emissions
3. Cleaner Warehouse Operations
4. Consolidated Movement of Goods
5. Reduction of Transit Distances
6. Reduction of Volumes and Total Mass Shipped
7. Reduction of Nodes and Legs for Transportation
8. Reuse and Recycling
The fundamental benefit of supply chain
management has positive long term net impact on
the financial performance of the organization.
Major Challenges of
Green Supply Chain
 Practicing green marketing initially is a costly affair.
 The customers may not believe in the effectiveness
of firm’s green strategies.
 Initially the profits will be very low
 Many customers may not be willing to pay a higher
price for green products
 The firms practicing Green SCM have to strive head
in convincing the stakeholders and many a times
there may be some who will simply may not believe
and co-operate.
Drivers of the Green
Supply Chain
Management
Internal Factors

 Reduce cost waste


 Investor pressure
 Long term returns.
 Manage economic risk
 Improve quality and efficiencies.
 Employee involvement.
 Improve learning and innovations
External Factors
Law and Regulations:
Regulations and legislations compliance
Leverage government programs
ISO 14000 certification

 Customer :
Standards, demands and needs.
Marketing Pressures
Product differentiation
 Competition:
Improve competitiveness
Improve performance

 Society:
Stakeholder encouragement
Publicity and public pressure
Reduce risk of consumer criticism
Pressure by environmental advocacy groups
 Suppliers:
Collaborate with suppliers
Supply integration

 Other drivers :
Strategy
Energy and Resources
Infrastructure and services
Fair trade
Climate
Human Resource
Environmental
Preferable Purchasing
Definition
 Environmentally preferable procurement
(EPP) involves purchasing products or services
that have a lesser or reduced effect on
human health and the environment when
compared with competing products or
services that serve the same purpose.
 to reduce the environmental impact of their
products by using EPP Resources to know
what environmental questions to ask and the
specifications to use.
It considers the following:

 Isthe purchase necessary;


 Materials the products are made of;
 The conditions under which they have been
made;
 Distance they have travelled;
 Product usage/consumption; and
 The method of disposal.
Environmentally
Preferable Purchasing Principles
 Opt for the highest quality you can afford, whether for
furniture, uniforms or appliances; have them repaired or
serviced when necessary—it’s generally more cost
effective than replacement and reduces waste.

 Green products are also more environmentally sound


with lower water and electricity consumption, green
manufacturing processes etc.

 Avoid products containing toxic substances. Opt for


non-harmful alternatives, including non-toxic, water-
based, hypoallergenic and biodegradable cleaning
products, zero VOC paints and chemical-free amenities.
 Choose certified organic or fair trade food and
drink products, and cotton where possible.
 Unless they are biodegradable or can be recycled,
they add to the accumulation of landfill so choose
an alternative with a useful lifespan.
 Use products with less or recycled packaging. The
trend now is to use less impressive, more humble,
environmentally friendly packaging.
Environmental
Management Systems
(EMS)
Definition
 is a set of processes and practices that
enable an organization to reduce its
environmental impacts and increase its
operating efficiency.

 The assumption is that this consistent review


and evaluation will identify opportunities for
improving and implementing the
environmental performance of the
organization.
Basic Elements of an EMS
 Reviewing the organization's environmental goals;
 Analyzing its environmental impacts and legal
requirements;
 Setting environmental objectives and targets to reduce
environmental impacts and comply with legal
requirements;
 Establishing programs to meet these objectives and
targets;
 Monitoring and measuring progress in achieving the
objectives;
 Ensuring employees' environmental awareness and
competence; and,
 Reviewing progress of the EMS and making
improvements.
Costs and Benefits of an EMS

Internal
 Staff/manager time (represents the bulk of
EMS resources expended by most
organizations)
 Other employee time

External
 Potential consulting assistance
 Outside training of personnel
Potential Benefits

 Improved environmental performance


 Enhanced compliance
 Pollution prevention
 Resource conservation
 New customers/market
 Increased efficiency/reduced costs
 Enhanced employee morale
 Enhanced image with public, regulators, lenders,
investors
 Employee awareness of environmental issues and
responsibilities