Greening the Supply Chain: Cutting Costs while Minimizing the Environmental Impact of BusinessesThe incentive for businesses to go “green” is no longer just a matter of complying with stricter environmental standards and regulations. By considering the environmental impact on the supply chain, enterprises are able to reduce their bottom-line and gain a competitive advantage in the marketplace. With the potential for cost-effective return on investment, customer and market demand for green products, and a trend toward continuous improvement in the supply chain, green initiatives are quickly becoming a top priority for businesses of all sizes. What is green supply chain management (“GSCM”)? GSCM focuses on reducing waste, energy and effort, hazardous materials, and other inefficiencies that occur during the processes throughout a product’s entire life cycle. This “cradle-to-grave” approach requires managers to collaborate with suppliers, incorporate environmental concerns into product design and manufacturing, reduce distribution and transportation emissions, and diligently plan for the return, recycle, and proper disposal of their products. With an emphasis on environmental performance throughout supply chain processes, companies can utilize the environment as a catalyst to drive innovative cost reduction solutions. Set and measure environmental goals.Before starting a green supply chain initiative, senior management and program sponsors must achieve buy-in and communicate and drive this ownership throughout the organization. Green supply chain projects must set defined goals and key metrics to measure and manage success. Furthermore, the project goals must be aligned with the company’s business goals and strategic vision. Wal-Mart, considered a market leader in “greening” its supply chain, believes that environmental leadership is critical to the company’s future growth and success as a company. Wal-Mart’s Chief Executive Officer, Lee Scott, set three lofty but sustainable goals in October 2005: “To be supplied 100 percent by renewable energy, to create zero waste, and to sell products that sustain our resources and the environment.” Enterprises will need to incorporate environmental metrics into existing or new technologies to gain visibility and gauge the progress of their environmental performance. Business intelligence and executive dashboards are beginning to have the reporting capabilities to incorporate environmental data, facilitating the ability for senior management to measure and manage key metrics and the overall success green supply chain initiatives. Benefits of greening the supply chain.Many enterprises have taken steps to reduce environmental impact and costs in their supply chains by applying GSCM methods. Xerox implemented a product “take-back” program to remanufacture and recycle copiers and printers that have reached the end of their useful lives. The company successfully diverted 11 million pounds of potential waste from landfills in 2006 and has saved $2 billion since 1991. By collaborating in a reusable container program with its suppliers, General Motors saved $12 million. Companies of all sizes are experiencing the benefits of environmental considerations in their supply chains: cost savings, international and domestic regulatory compliance and fine avoidance, and enhanced environmental profiles in the marketplace. West Monroe Partners works with companies to improve supply chain performance and minimize the environmental impact of their core processes. For more information, please contact Keith Campbell,
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
. In this issue: |
