4 Facts About Green Supply Chain Management
Brian Hoey - June 05, 2018
Discussions around the effects of climate change have been among the dominant topics of conversation in the first two decades of the 21st century. As global leaders in government and business consider what steps must be taken in order to ensure the health of our natural resources and ecosystems, businesses can almost certainly expect changes to the way that supply chains operate. Many within the worlds of manufacturing and shipping are beginning to track their carbon footprints and overall environmental impacts, but still others are unsure of the potential considerations involved. If you’re in the latter camp, we hope that these four facts will help give you a grounding in conversations around green footprint optimization.
Going green can make your business more competitive
While your knee-jerk reaction when it comes to carbon optimization may be to envision a series of costly and onerous new restrictions, early adopters of environmental policies are actually finding that they can have measurable positive ROI. By implementing sustainable or “green” practices, modern businesses can improve their reputations with potential customers for whom environmental sustainability is of great importance. While this may seem like a benefit that would be primarily applicable to B2C sales, it’s rapidly growing in importance for B2B businesses as well. To wit, sustainability initiatives have lately become a not-uncommon requirement for acquiring government and municipal contracts in some parts of the world, meaning that companies that take strides to decrease their carbon footprint will have more opportunities available to them than companies that don’t.
And it can help reduce supply chain inefficiency
Of course, the plethora of new potential business avenues is not the only way that green footprint optimization can, seemingly paradoxically, increase revenue and strengthen your overall value chain. In point of fact, many common areas of waste that contribute to over-consumption of resources also contribute to waste in the supply chain. By taking stock of things like unnecessary fuel consumption, inefficient use of warehouse space, and less-than-optimal freight and container utilization, you’re not just mapping up areas where carbon consumption can be improved, you’re also uncovering areas where your transport operations themselves are inefficient.
Another example of potential synergy between green optimization and cost savings in the supply chain is examining excess energy usage in factories and offices. By switching from standard light bulbs to high-efficiency LED bulbs in your facilities, for instance, you can reduce your carbon footprint and slash costs as the same time. While improvements like these aren’t necessarily specific to supply chain management, they are especially impactful in areas like manufacturing, shipping, and freight forwarding where space and resource utilization is relatively high to begin with.
Sustainability initiatives go hand in hand with Industry 4.0
When it comes to optimizing transport routes and container usage, supply chain managers require a high degree of visibility and considerable insight into the inner workings of their operations. In this way, Industry 4.0 systems are especially well-suited to promoting sustainability. Imagine for a second that you’re trying to understand what factors are contributing to high annual fuel costs for your fleet of vehicles: in one instance, information about fuel prices, truck models, and routing is spread out and trapped in disparate information silos, frequently inaccessible even to key stakeholders; in another instance, you use a digital interface to retrieve data from a series of connected workflows and decision making processes, accessing visible, high-quality data from diverse teams from transport managers to production planners. In which of these two scenarios are you more likely to successfully implement a corporate sustainability initiative?
If you chose the second option by a wide margin, you’re correct, and you’re also no doubt noticing that the connected, interoperable system with a high degree of visibility is exactly the sort of operational improvement that Industry 4.0 systems promote. With a smart, digitized infrastructure connecting the various touchpoints on your value chain, it’s suddenly possible to gain a much more granular view not just of traditional business metrics, but of your carbon footprint as well.
It’s the future of supply chain management
As if there weren’t enough reasons to start thinking seriously about the use of natural resources in the supply chain, it’s important to remember that, in one way or another, ongoing climate concerns are going to have a major impact on the supply chain going forward. As we’ve sketched out above, there are significant gains to be made for early adopters of green supply chain management, especially those who are already working towards full Industry 4.0 integration. Whether you get a head start on the trend or not, it’s likely that, in the future, businesses will track their emissions as closely as they track their finances. When that day comes, supply chain transparency and agility will be crucial for anyone hoping to capitalize of new and emerging areas of competitive advantage.