Translating Green Supply Chain Practices Essay

Contents Abstract………………………………………………………………………………………………………………2 Introduction……………………………………………………………………………………………………….. 2 Importance of Green Supply Chain…………………………………………………………………………………….. 3 Political, Economic and Consumer concern………………………………………………………….. 4 Critical drivers for companies to adopt GSC…………………………………………………………. 5 The Green Network and emission Control………………………………………………………………………… 7 Implementing the Green Network……………………………………………………………………….. Voluntary Certifications………………………………………………………………………………….. 8 Life Cycle Impact Assessment…………………………………………………………………………………………. 9 Chemical Service Management………………………………………………………………………. 9 Lean Supply Chain………………………………………………………………………………………… 10 Reverse Logistics…………………………………………………………………………………………. 10 Managerial Practices in implementing GSC practices………………………………….. 11 Green Logistics Initiative in the UAE………………………………………………………………….. 11 References………………………………………………………………………………………………………. 12

Green Supply Chain: Translating Green Supply Chain Practices to Business Value Abstract This study emphasizes on the changing definition of Green Supply Chain Management from being a mere CSR or a long term sustainability activity undertaken by a company just to showcase its Environmental Obligations to a more proactive Profit-Motive driven management initiative that can boost the bottom line of the company significantly in a short term. The study identifies how the best management practices in an organization are infact indirectly aligned to the Environment friendly initiatives and vice versa.

Given the pretext, an organization can set “Green Goals” as its objective first and as a consequence can achieve higher financial growth and improved efficiency. This study offers suggestions on the various processes of implementing a green supply chain in an organization and the global trends. Introduction The threat posed to the planet on account of Global Warming has now become imminent. The amount of carbon dioxide proportion in the atmosphere has risen from around 280 parts per million before industrial revolution to almost 380 parts per million today, and its rise is accelerating.

At present 2 parts per million of Carbon Dioxide is being added to the atmosphere annually across the globe. It was found that a rise in carbon dioxide proportions to more than 450 parts per million would lead to an increase in temperature up to 2 degrees centigrade which would result in faster and irreversible melting of Greenland and Antarctic ice . This would increase the sea level by 23 feet, and have serious consequences for human habitat. [i] Without strong measures being initiated by the leadership across the globe, this cataclysm cannot be prevented.

For this to happen, large scale technological and social change driven by strong financial and political impetus is necessary. Accordingly, countries across the globe joined forces under United Nations Framework Convention on Climate Change, to sign Kyoto Protocol on February 16, 2005, which aims at reducing collective emissions by 5. 2% compared to 1990 levels from developed countries. This treaty gives exemption to the developing countries to help them catch up with the industrialized world. The Corporate world is waking to this new Socio Economic reality. The paradigm has changed.

The need for a Green supply chain has gathered momentum. The Corporate interpretation of a Green Supply Chain has evolved from being an Eco-friendly or CSR initiative to a Profit maximizing and Cost Reducing Business Opportunity. Supply Chain is traditionally defined as sequence of value addition activities of converting a raw material into a finished good. Earlier, it was seen as a Forward Logistics activity where the Supply Chain ended with the goods being consumed. Later on, reverse logistics was also included which involved the used or damaged goods being sent back to the manufacturer for reuse, recycle or remanufacture.

Simchi-Levi in their publication Designing and Managing “The Supply Chain: Concepts, Strategies & Case Studies” bring to light that that the competition in the 21stcentury is likely to be between supply chains, not individual firms. After going through this report, one can broadly define Green Supply Chain as a Product Value Chain with each stage of the supply chain focused on maximizing the value addition by minimizing the associated environmental impact of the activity. It involves Green Supply, Green Forward and Reverse Logistics, Green Manufacturing, Green Packaging and Distribution, Green Consumption and Green Recycling. ii] With the impeding threat of Climate Change and awakening of countries world over towards the need of a sustainable environment framework, Green Supply Chain has assumed utmost importance in Political as well as Business Agenda. This report focuses on Tangible and Intangible Values gained on implementing Green Supply Chain, the Current Industry Practices for its Implementation and challenges involved. Importance of Green Supply Chain Over the last decade the consciousness of Long Term Sustainability by going green has increased in the Organizations, world over, but it has yet to be translated into affirmative action.

A research by Mckinsey shows that though most of the Organizations have realized the importance of going green, very few of them have been able to incorporate Green Strategies into their supply chain practices. [pic] In another survey by Supply Chain Asia July/Aug 2008, 41% of the respondent thought that environmental concerns are taken into account in the majority of supply chain operations in Asia at that time while 90% of respondents thought that there has been increase in focus on Going Green in Supply Chain during the year of survey. Political, Economic and Consumer Concern The Global impetus for going Green has gathered momentum.

European Countries met at Brussels to finalize a plan to reduce greenhouse gas emission by 20% and increasing renewable energy consumption by 20% by 2020. Obama Administration plans to use the Green Initiative to create 2 million jobs in US. [iii] A Green Company is viewed more favorably as having more mature business practices and better managerial skills than its counterparts. Research showed that an estimated 75% of the consumers claimed that their purchase power was influenced by the company’s environmental reputation and that 80% would be willing to pay more for environmentally friendly goods. iv] Tesco has started the concept of “Food Miles” giving consumers a chance for an informed chance about their carbon footprints. Economic considerations also play a major role. Since export flows from Asia to Europe are quite large, the freight charges (and also emissions) for exporting goods from Asia have become considerably higher, while according to a Bayer Logistics, the European Companies can reduce their CO2 emission by 20% by increasing their losgistics cost by only 0. 5% by implementing Green Supply Chain. [v] Critical Drivers for Companies to adopt Green Supply Chain

While the Corporates have traditionally perceived Green Supply Chain as an initiative for Long Term Growth, Sustainability and return, it also has an immense potential in Short term perspective and the value can be identified from the annual financial and operational reports. The drivers for adopting Supply Chain are both at tangible and intangible level, and have shown impact of boosting the bottom line in balance sheet. The tangible and intangible values are driven by Organizations decisions with regards to Regulatory Concerns, to achieve enhanced perceptions among the stakeholders or merely to improve bottom line as shown in the fig. elow. [pic] Tangible values- These values can be quantified and measured ;Green Supply Chain offers tangible values in terms of (i)Reduction of Cost, (ii)avoiding waste (iii) enhancing Productivity and Production Practices, and (iv)Financial Incentives. i) Reduction of Cost – Since Environmental costs are not directly apparent in the balance sheet ,they are often ignored while pursuing the short term goals . But in the following Analysis it will be shown how by focusing on reducing the Environmental Cost, the Financial Costs are also reduced- Excess Inventory- the Organization incurs unnecessary financial cost in terms of inventory carrying cost while it incurs Environmental Cost by spending more Energy in storage of the inventory. If the inventory is excess raw hazardous material the Environmental costs and risks associated are even greater. • Inefficient Purchase Management- If more goods are ordered than required at a given point of time, it results in unnecessary Financial Costs in terms of Reordering, Transport and storage of goods and Environmental cost in terms of use of raw materials and energy for production which was not required at that point of time.

Also Environmental cost in terms of Transport and Processing of goods are incurred. (and hence more Emission which could have been otherwise avoided). Southern California Edison, a utility company, saved 125 tons of high-grade paper by putting employee directories and maps on the company’s intranet, thus saving $50,000 per year. [vi] PSE&G (Public Service Electric and Gas) observed that the cost to dispose of obsolete paint and other waste MRO materials was substantial.

To address this problem, PSE&G Consolidated its purchasing process for MRO materials, Decreased the number of suppliers, and Implemented a material return policy. These process changes yielded a $2 million costs savings in 1997. Additionally, the company greatly reduced its hazardous waste disposal volumes. [vii] Advanced Hazardous materials tracking system should be in place. ii) Avoiding Waste- Waste and Hazardous materials in the form of input, byproduct or output in any Industry pose additional concern of Financial and Environmental Cost.

They are signs of inefficient utilization of raw materials. Large volume of hazardous output possess problem of storage, transport and disposal thus increasing the Financial cost while the nature of the pollutant material adds to the Environmental cost. • Electroplating companies which require large area(25% of production area) for waste treatments and hence targeting reduction in storage by Green Method provides significant opportunity of improvement. [viii] If the output or the byproduct can be reused or recycled, it will save the cost of fresh order at a higher cost and thus improve financials. It will also create less strain on the environment. • Targeting Environment waste by reducing the obsolescence and waste of maintenance, repair and operating (MRO) materials through enhanced sourcing and inventory management practices will also reduce the amount written off from the balance sheet. • If the waste output is recycled and converted into a byproduct, it can be resold and thus add to the topline. Targeting Environmental waste generation will reduce the training, material handling, and other extra expenses associated with hazardous materials. iii) Enhancing Productivity and Production Practices- Targeting Unnecessary Energy consumption, emission reduction by designing the system such that it does not have any non value adding process and unwanted complexity , will leave the system with all value adding process thus increasing the efficiency. Ensuring that raw material are utilized efficiently and low waste are produced will further increase productivity.

This all can be achieved by increased cooperation with supplier and more efficient Network Plan for flow of goods and services. Commonwealth Edison, a major electric utility company, realized $25 million in financial benefits through more effective resource utilization. [ix] iv) Financial Incentives- There are certain Financial incentives such as Clean Development Mechanism and Carbon Credits given to the Industrial units that make effort to reduce their carbon footprints below a set target.

Intangible Value : Apart from the tangibles, a company following Environment Safety and Health Practices benefits from intangibles such as – (i) Sustainable Development Identity (ii) Enhanced Supplier Perception (iii) Greater Technology initiatives (i)Sustainable Development Identity- A Company following Green Practices is known to have long term plans and agenda thus reflecting greater sense of stability and higher consumer confidence. (ii)Enhanced Supplier Perception- The suppliers have to be compliant with Environmental friendly standards and hence only few technologically skilled uppliers will approach the firm. There will no longer be Price Sensitive suppliers [x] as in conventional SCM but suppliers with a Long term relationship view. (iii)Greater Technology Initiatives- A Company building its technology on Green Standard is bound to leverage the benefit in the future as compared to those who would be late entrant in doing so. Since it is the technology of the future and very imperative for environment, it may form the part of regulation.

When Corporate Average Fuel Economy Standard was introduced in USA in 1975, all the major automobile players had to drastically rethink their strategy. The Green Network and Emission Control A green supply chain is essentially a traditional supply chain which integrate environmental concerns into organizational purchasing decision and long term relationships with suppliers with a focus on minimum energy consumption, use of renewable materials, waste reduction, and ability to recycle/reuse the end product at the end of its useful life [xi] as shown in the fig. elow . This also led emergence of 3PL(Third Party Logistics) Provider who could track and monitor reverse logistics for recycle of goods . [pic] Thus by focusing on Green Supply Chain principles, emissions in each of the above stages(shipping, manufacturing, transportation, distribution ) is minimized and energy consumed(manufacturing, transport and shipping, maintaining inventory) is reduced. At the suppliers end, use of advanced technology and optimizing production volume will result in lesser hydrocarbon, sulphur, oxide, nitrate ,etc. byproducts and wastages.

Carbon emission at each stage of transportation from supply to final distribution to consumers adds more and more heat flux to the final product. Implementing the Green Network i) Voluntary Certifications like LEED, EcoLabelling, ISO : 14000, etc. Leadership in Energy and Environmental Design (LEED) represents a national, voluntary standard for developing high-performance and sustainable buildings with minimum environmental cost through an integrated approach in all phases of construction-from procurement (use of recycled product etc. to final installation(energy efficient design). Eco-labeling is the practice of branding the environmental qualities of a product or system so that consumers can make environmentally-based decisions. The ISO 14000 family addresses various aspects of Environmental Management System(EMS) by proving guidance for development of EMS, Environmental Auditing ,Labeling, Life Cycle Assessment, etc. It is a chain effect, when one company implements Green Standards, it is bound to ensure its Suppliers and Partners also implement the same or it will not merit the certification. i) Life Cycle Impact Assessment: Gas Pollutant Emission, waste production and inefficient Energy Utilization occurs at each step of the Product Value Chain in one form or the other. According to the European Commission [xii], Life Cycle Assessment (LCA) is an internationally standardized method to evaluate the environmental burdens and resources consumed along the lifecycle of products; from the extraction of raw materials, the manufacture of goods, and their use by final consumers or for the provision of a service, recycling, energy recovery and ultimate disposal.

According to framework for LCA in the ISO 14040 series [xiii] Goal and Scope: It defines the aim and purpose of the LCA, and scopes the assessment concerning system boundaries, function and flow, the quality of data required-their means of measurement, source ,frequency, etc. ,technology and other assessment parameters. Life Cycle Inventory analysis(LCI) : It is an activity for collecting data on inputs (resources and intermediate products) and outputs (emissions, wastes) for all the processes in the product system.

Life Cycle Impact Assessment (LCIA) : It is the phase of the LCA where inventory data on inputs and outputs are translated into indicators about the product system’s potential impacts on the environment, on human health, and on the availability of natural resources. Interpretation: It is the phase where the results of the LCI and LCIA are interpreted according to the goal of the study and where sensitivity and uncertainty analysis are performed to qualify the results and the conclusions.

Life Cycle Management policy should be made keeping the principle in mind that the Environmental Burdens in One phase of the cycle should not be shifted to other phase, thus it requires an integrated and participative approach by all the players in the supply chain. iii) Chemical Service Management: Many companies have shifted their focus fro mere procurement and purchase of Chemicals to full service Chemical Service Management. Under Chemical Service Management Programme, the companies outsource responsibilities such as chemical inventory management, distribution, raining and EHS (Environment Health and Safety) services, hazardous material gate keeping, and waste management with the sole focus of reducing the Environment Burden and the suppliers are rated accordingly. Significant Financial savings are possible by leveraging the expertise of Chemical Service Provider as the costs to manage chemicals are a significant percentage of the costs to buy these materials. In May 1999, Raytheon Company entered into partnership with a chemical management service (CMS) provider, Haas TCM .

The contract covered chemical management for all chemicals and gases including procurement, inventory, delivery, disposal, and data management. Additionally, the contract included incentives for “shared savings”, due to reduced chemical use and purchase costs and improved process efficiency. Over the first 5 years, Raytheon’s CMS program delivered an approximate 30-40% net reduction in chemical purchase and management costs, and included a payback period of less than 6 months. [xiv] v) Lean Supply Chain : The Japanese concept of Lean Management ,derived from Toyota Production System, when incorporated into the Organizations philosophy, can result in substantial Waste (Financial, Operational and Environmental) reduction. It is a Production Philosophy in which expenditure on any activity or resource that does not add value to the product (for which the customer wont pay) is considered as MUDA or waste, and Lean methodologies target the elimination of these wastes.

Lean Management targets reduction of such as Defects and Rejects, Waiting Time, Overproduction, Excess Inventory, Unnecessary Complexity (unnecessary process and motion),and Inefficient Transportation. These wastes at each stage of production can be reduced by allocating responsibility to the worker or business partner adding value to goods at that stage, and provide incentives to them for doing the same.

As such, this can be possible in a Supply Chain only when there is a strong long term relationship between the Company and its Suppliers and a high degree of communication between the two and similar Business Values. Simpson and Power [xv] indicate that recent research finds that higher pollution prevention is found in companies that utilize lean manufacturing practice. v) Reverse Logistics: Process such as Reusing, remanufacturing, and recycling not only make Green Supply Chain but are significant Top Line boosters for a company.

There are other reasons why a company may opt for reverse logistics- Increase in Landfill costs might no longer make it economically viable, or products can no longer be land filled because of environmental regulations, economics and environmental considerations are forcing firms to use more reusable packaging, totes, and other recyclable and reusable materials, or they are required by law to take back their products at the end of their useful life. While the physical characteristics of a material are maintained in reuse, remanufacturing includes some changing of parts or disassembly.

Recycling may change the characteristics of the material completely including chemical and physical traits. An organization has to decide which methods to employ depending on the product characteristics . But in order to be able to do so, the company must have a well monitored and efficient Reverse Logistics system. Mostly companies outsource this function to 3PL (3rd Party Logistics) who specialize in tracking and monitoring forward and reverse logistics system. GM reduced its disposal costs by $12 million by establishing a reusable container program with its suppliers. xvi] With close to 25,000 tons of surplus or obsolete telecommunications equipment, Bell Atlantic repaired and reused defective equipment and sold marketable equipment for a total corporate cost avoidance and revenue of $24 million. [xvii] Managerial Challenges in Implementing Green Supply Chain Practices : One of the biggest Challenges of Managers in Implementing Green Strategies has been not being able to present attractive Business Case to the Top Management. This difficulty primarily arises as Environmental Costs, unlike Financial Costs and Operational Costs are not directly apparent in the Balance Sheet.

Implementing Green Strategy may require initial Huge investment, but its breakeven period are short and they have good IRRs. The managers need to present proper Case Assessment of benefits of Green Supply Chain by showing IRR, NPV and EOQ Impacts. Proper Monitoring and governance of Green Supply Chain is yet again a challenge which needs a totally different outlook from the management. EHS (Environment Health and Safety) practices are seen as Cost centers and targeted first for shut down during cost cutting measures. The perception has to change from treating Green Supply Chain as Cost centers to Profit Centers.

Such kind of outlook for an organization can be preferably driven by a Top Down approach where the leadership has the will and the vision for implementing a sustainable and environment friendly Green Supply Chain. Green Logistics Initiative in UAE UAE is all poised to become leader in Green Supply Chain Initiatives; Following examples highlight how the UAE plans to achieve the same- In a survey of 800 executives across mid size and large size firms in Dubai conducted by Dubai Chamber Centre for Responsible business, it was found that 42. 5% of companies had designed products such that they consumed lesser energy/material and 63. 38% of companies were involved in sale of scrap, recycle and remanufacture. [xviii] The Masdar city in Abu Dhabi is poised to be world’s first carbon-neutral, zero-carbon, zero-waste, car-free city. It has been selected in 2009 as the headquarters of the International Renewable Energy Agency (IRENA)[xix]. UAE is emerging as a hub for LEED rated buildings – Bahrain World Trade Centre (WTC),Pacific control Headquarters, Planned Dubai Lighthouse [xx], etc iconic monuments are all designed as Green buildings. ———————- [i] McKibben, Bill. “450 Ways to Stop Global Warming. ” Foreign Policy, May/June 2007 Issue 160, 38-39. [ii] Sustainable Green Supply Chain in Globally Integrated Networks-Balan Sundarakani1, Robert de Souza2, Mark Goh2, David van Over1,Sushmera Manikandan2 and S. C. Lenny Koh [iii] Florida International University, Green Supply Chain Newsletter December 2008 [iv] Beamon – Designing the green supply chain: Logistics Information Management,1999 Volume:12 Issue: 4 [v] Green Supply Chain and Logistics, Bayer Technology Services [vi] http://www. epa. ov/epawaste/partnerships/wastewise/success/utilities. htm [vii] . U. S. Environmental Protection Agency, WasteWise Update: Extended Product Responsibility, EPA530-N-98-007, October 1998, www. epa. gov/wastewise [viii] Waste Reduction Institute for Training and Applications Research(WRITAR), Applying Environmental Accounting to Electroplating Operations: An In-Depth Analysis,May 1997, www. epa. gov/opptintr/acctg. [ix] . EPA : The Lean and Green Supply Chain-A Practical Guide for Materials Managers and Supply Chain Managers to Reduce Costs and Improve Environmental Performance x] Opportunities in green supply chain management -Johnny C. Ho, Maurice K. Shalishali,Tzu-Liang (Bill) Tseng, David S. Ang [xi] Gilbert, S. Greening supply chain: Enhancing competitiveness through green productivity. Tokyo: Asian Productivity Organization, 20 [xii] EPA Report, 2000, The Lean and Green Supply Chain: A Practical Guide for Materials Managers and Supply Chain Managers to Reduce Costs and Improve Environmental Performance, EPA 742-R-00-001. [xiii] European Commission -Joint Research Centre: Supporting Life Cycle Thinking and Assessment in Policy and Business [xiv] http://www. hemicalstrategies. org/pdf/case_studies/raytheon_case_study_full. pdf [xv] Simpson and Power, Use the supply relationship to develop lean and green suppliers , Journal: Supply Chain Management: An International Journal,2005 Volume: 10 Issue: 1 Page: 60 – 68) [xvi] EPA Report, 2000, The Lean and Green Supply Chain: A Practical Guide for Materials Managers and Supply Chain Managers to Reduce Costs and Improve Environmental Performance, EPA 742-R-00-001. [xvii] http://www. epa. gov/epawaste/partnerships/wastewise/success/telecom. htm [xviii] Green Supply Chain in Dubai- by Rettab and Ben Brik

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Green Supply Chain Essay

GREEN SUPPLY CHAIN MANAGEMENT TABLE OF CONTENTS 1. Executive Summary 2. Introduction 3. Green Supply Chain Design 4. Green Supply Chain Benefits 5. Costs And Risks Of Green Supply Chain 6. Company which are Using Green Supply Chain In Middle East 7. LIPTON REINFORCES GREEN SUPPLY CHAIN 8. MARRIOTT INTERNATIONAL USING GSC 9. CADBURY CHOCOLATE GOES GREEN WITH PURPLE 10.

Conclusion 11. References EXECUTIVE SUMMARY Green Supply Chain has become a key practice for organizations to be sustainable environmentally. A Green Supply Chain can be defined as “The process of using eco friendly inputs and transforming them to final products and delivering to the customer with minimum process stages thereby cutting down the Carbon emissions at each stage, and also the final product at the end-of-life cycle should be improved or recycled or re used within the existing environment.

This process develops products that can be reclaimed and re-used at the end of their life-cycle, thus creating a sustainable supply chain. ” The objective of this report is to discuss the Green Supply Chain Management Practice, its Advantages and Disadvantages, Major Benefits and Risks associated with it . And also Key issues in designing and implementing the practice, Which companies is/are this practice ideally suited for? Which companies may it not be suitable for? Examples of companies in UAE that are successfully using the practice including best practices.

From the report it is advised that, keeping in mind the benefits of green supply chain and it can also be easily implemented and there are more advantages than disadvantages. The organizations must adopt and implement Green Supply Chain Management practices and save the “Our Mother Earth”. 1) INTRODUCTION The need to balance both the Economic and Environmental performance has become very important to the organizations which are facing competitive, regulatory and community pressures.

With the increased stress on the environmental sustainability the organizations have to reduce the environmental impacts their products and services cause to the environment. In order to escalate their business, the companies have to re think and redesign the whole structure of their supply chain, Approaches such as cleaner production, environmental management and eco friendly systems have been implemented as Green management practices. The present scenario and trend of environmental impact and degradation indicate a need for a change in the manufacturing process.

That is, there must be a change in the production system which must strive towards environmental sustainability through vast reductions in the waste generation and resource usage and also move away from one time usage and product disposal. The initial step is to extend the traditional one way supply chain to a closed loop supply chain which is designed for end-of-life product, package recovery, collection and reuse, remanufacture or recycle.

The Green supply chain has all the elements of the traditional supply chain but it modifies the one-way supply chain to a form a closed loop supply chain which includes product and packaging recycling, re-use and remanufacture. Green supply chain has become prominent in the last few years. Green supply chain management is used to reduce environmental impact of product or service and also the carbon foot print. Green supply chain includes several steps such as Green Design, Green Procurement or Sourcing, Green Manufacturing, Green Operations and Distribution, Marketing, Logistics and also Reverse Logistics.

Green Supply Chain Design The new environmental concern brings in new challenges to the production and manufacturing industries all over the world. The difficult task is to integrate industrial development and environmental management to mutually co-exist. The initial step is re-design the basic structure of the traditional supply chain to a green supply chain which is accommodated with the environmental management which is associated with the reductions in resource utilization and waste generation.

The Traditional supply chain is the process of transforming the raw materials to the final products and delivering it to the customer. In the traditional supply chain only the production of products from raw materials and the final product distribution is only defined and environmental factors are not taken into consideration. The traditional supply chain design and modeling are only concerned with the minimization number of stages in supply chain, distribution centers, inventory levels, number of product types in the inventory, buyer-supplier relationship.

Traditional one -way supply chain with no product recovery or re-use or remanufacture facilities. DISTRIBUTION CONSUMER RETAIL MANUFACTURING SUPPLY The Extended or Green Supply Chain The main objective of the extended supply chain is to take into consideration the environmental factors and evolution of manufacturing process from traditional to integrated environmental management (EM). The different stages in environmental management are problem solving, managing for compliance, managing for assurance, managing for eco-efficiency and fully integrated.

The effective environmental management reduces costs of purchasing hazardous materials, storing waste, managing waste, stigmatization of market resistance to environmental harmful goods. RECYCLING The collection of used products, components and materials from the sources and later disassembling them and then separating and categorizing them into respective materials (plastic, glass, rubber etc. ) and processing it into recycled products. The two main concerns of recycled products is “Is there a market for the recycled material? ” and the quality of the material matters in the recycled product. REUSE

The term Re-use can be defined as collection of used materials and components to resell and distribute. Though the value of the product will be reduced from its actual value, no further process needs be done for the re-used product. REMANUFACTURING The collection of used products, components and materials from the sources and later testing and replacing the damaged and worn out parts with the new ones. In such a case the originality and functionality of the original product is retained. The unique quality of remanufacturing unlike the re use and recycling process, it does not degrade the overall value of the product.

Green Supply Chain which is a closed loop with waste management and also remanufacture and re-use facilities available. W RE-CYCLING W W DISTRIBUTION CONSUMER W W W MANUFACTURING SUPPLY RETAIL COLLECTION RE-MANUFACTURING W W W Waste or Disposed material. Benefits of Green Supply Chain The two major benefits of greening the supply chain are 1) Environmental benefits and 2) Business Benefits. The major benefits are, it will reduce the uncertainty by managing the environmental compliance of the product design rather than making costly improvements later in product life cycle.

The supply chain network production time and costs have to been optimized by the method of strategic network optimization principles. By applying the lean manufacturing principles to the production process, the environmental effects and manufacturing cost can be reduced. By using transportation management tools, the transportation costs along with carbon emissions can be greatly reduced. Using enterprise asset management practices the assets can be managed more efficiently while extending the life and also the energy costs are decreased .

By efficiently using the reverse logistics, and providing solutions to the damaged or faulty like repair or remanufacture or recycle. It is observed that green supply chain escalates the efficiency of the business and mutual co-operation between the partners and it again helps to minimize the resource usage and reduce the waste generation and in turn gain profits to the organization. By this way the organization can develop a competitive advantage and the organizations image and reputation is increased. ENVIRONMENTAL BENEFITS The business can make a positive change by reducing the environmental impact and by following low cost techniques.

The main aim is to bring about a change in the business and the supply chain choices that can make an important impact on the environment. ” It makes a difference from where we want to buy and from whom”. Greening supply chain is not always an intensive process but making little changes like ensuring whether our supplier is recycling or reusing wherever possible and using minimum Packaging and being sustainable. The small changes we make to our processes can make a lot of difference to the environment later. It is not a resource intensive process while making the supply chain process as green as possible.

There is no requirement to review the environmental credentials of each and every detail of operations of supplier. Using recycled or recyclable materials where possible and that their packaging is decreased and sustainable are the small steps to ensure the suppliers and can have a significant impact if they’re taken by enough businesses. BUSINESS BENEFITS The benefits to the business by environmental improvements are becoming progressively clearer. The effects of the “virtuous cycle”- the more is the business and customers who take the environmental issues seriously the more are the gains to the business.

The two main types of benefits to the business are: First, the potential cost reductions. Environmental change often leads to resource efficiency increase from the bottom line. As an example when we advise our suppliers and manufacturers to minimize packaging material used this would reduce their costs and in turn our freight and shipment charges are decreased. The second benefit is the customer choice which increases the organization image. The more is the business and customers who take the environmental issues seriously and as an criteria for their purchases.

Therefore it can lead to the progress in the marketing as well as increased sales. The customer wants to see. ” It makes a difference from where we want to buy and from whom” and if it makes any environmental impact. COSTS AND RISKS OF GREEN SUPPLY CHAIN Due to mandatory and regulatory concern required as an environmental criterion, green products cannot be purchased in the usual markets. Therefore, it is important and necessary to design and plan the supply chain right from raw material acquisition to customer delivery and product disposal at the end-of –life-cycle.

They will also need drive up costs and there is no concept for cost management within the supply chain. Traditional cost accounting and cost management techniques are mainly designed for the internal costs of the company. Therefore, these systems have to be integrated with the concept of transaction costs, yielding a supply chain costing framework on three levels: direct costs, activity-based costs and transaction costs As an example; General Motors has reduced its disposal costs by $12 million by establishing a reusable container program with their suppliers.

Perhaps General Motors may have been less interested in green issues if they were making record profits, but in an attempt to reduce costs in their supply chain, GM found that the cost reductions they identified complemented the company’s commitment to the environment. The four major risk factors in Green supply chain are : 1. Supplier management 2. Product recycling 3. Organizational involvement ; 4. Life cycle management COMPANIES WHICH USE GREEN SUPPLY CHAIN IN MIDDLE EAST

LIPTON TEA: Lipton reinforces green supply chain operations in Middle East As an initiative the company the company replaced the traditionally used wooden pallets with the slip sheets to transport its tea around the world. The practice has already been tested for a full season, with raw tea materials being distributed on the slip sheets from Assam in India to Lipton’s regional facility in Jebel Ali Free Zone, its second largest tea factory worldwide. In total, approximately 1000 TEUs of tea were received in Jebel Ali between September 2007 and May 2008.

After the recent success of this initiative between India and the United Arab Emirates, they are now looking to extend the practice into other tea origin countries such as Kenya, Sri Lanka and Indonesia. ” The environmental initiative has been designed to save the amount of wood used by Lipton, while minimizing its shipping costs by achieving greater load ability per container. “It is expected that this initiative will result in ocean freight savings of approximately 10-20%. The slip sheets are thinner than the traditional wooden pallets, which will help cut down transportation and fuel costs while reducing the impact on the environment. They will also eliminate any possible risks from wood-related infestation to the tea during the shipping process. MARRIOTT INTERNATIONAL USING GREEN SUPPLY Every year, Marriott International spends about $10 billion annually buying products and services for its more than 3,200 hotels around the world. Realizing their purchasing power, they have teamed up with vendors to ntroduce “greener” solutions at no extra cost, It used methods like: “Greener key cards. Marriott has “unlocked” the door to a greener hotel stay by purchasing 24 million key cards made of 50 percent recycled material, saving 66 tons of plastic from being dumped in the landfill”. “Eco-pillows. Guests can sleep easy knowing that their pillows are “fighting” to save the planet. Marriott will begin replacing the 100,000 synthetic pillows that it purchases with those filled with material made from recycled bottles”. “Coreless toilet paper.

By the end of Q1 2010, 500 hotels will offer “coreless” toilet paper, thereby eliminating 2 million cores a year, saving about 119 trees, nearly 3 million gallons of water, and 21 tons of packaging waste annually. The new tissue is made of 20-40 percent recycled fiber” . “Earth-friendly towels. Thanks to a unique manufacturing process, the one million towels Marriott purchases in North America don’t need to be pre-washed, saving six million gallons of water’. “Recycled pens. The 47 million pens that Marriott purchases for its guest and meeting rooms in the U.

S. and Canada are made of 75% recycled material”. “Biodegradable laundry bags. In the Middle East and Europe, more than 100 hotels purchase 43 tons of biodegradable plastic bags which disintegrate in two to five years, if not recycled and reused first”. CADBURY GOES GREEN WITH PURPLE “CADBURY CHOCOLATE company has initiated Purple Goes Green in July 2007 sets a vision for their company to tackle climate change. They intend to shrink our global environmental footprint by cutting their energy use, reducing excess packaging and managing our water use”. They are setting new targets which build on the commitments we have already made in 2006. Cadbury’s environmental programme has been in place for around 15 years and corporate responsibility has always been at the heart of our business”. Their targets are: “Energy: A 50% reduction in our ‘absolute’ carbon emissions. They aim for 30% minimum of this reduction from Saving and Switching company emissions”. “Packaging: A 10% reduction in packaging and a more stretching target of 25% for seasonal and gift ranges.

They are also aiming for 60% biodegradable packaging”. “Water: All ‘water scarce’ sites will have water reduction programmes in place”. “Climate change is one of the biggest challenges we face, and Cadbury should be commended for its commitment to delivering on targets that reflect the scale of this challenge. they believe that transformation towards sustainability is only possible through deep-rooted cultural change and are delighted to see Cadbury’s champion this, not just within their own organisation but throughout their industry”. CONCLUSION

The changes in environment which lead to the public pressures and also regulatory and mandatory pressures have necessitated a fundamental change in the business pattern. These days it is no longer acceptable or even cost saving to strive for immediate results one gets out of the products. It has become very important to analyse the entire cycle of the products. It is noted that by adopting Green supply chain in an organization has been very beneficial as it reduces the costs, will enhance the organization’s image, improve the brand reputation, gain customer satisfaction and will develop a competitive advantage.

Green supply chain Management should not just be looked as a profit driver but also as a value added service to the customer and environment. Green supply chain helps to manage environmental impacts. Manufacturers and suppliers are advised to implement green supply chain in their processes and also practice environmental management systems. From the report it is advised that, keeping in mind the benefits of green supply chain, as it can also be easily implemented and there are more advantages than disadvantages. The organizations must adopt and implement Green Supply Chain Management practices and save “Our Mother Earth”.

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