Green Supply chain Forms The Foundation of Corporate Social Responsibility (CSR)
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The green supply chain is a concept that’s gaining traction in the business world and beyond. It’s an approach to management that seeks to minimize waste, optimize resources, and reduce environmental impact by integrating sustainability into every step of the planning, production, distribution, and disposal processes. Companies are increasingly recognizing the importance of green supply chain management as a means of reducing their operating costs and improving their public image. Arguably, since the wide recognition of Supply Chain Management (SCM) in the late seventies, nothing in SCM has captured the imagination of the public, corporate management, and policymakers as much as the more recent concept of Green Supply Chains.
This article will provide an overview of what a green supply chain entails, and how it can be used to create economic value for businesses. We’ll look at some common practices associated with green supply chains such as minimizing packaging materials, using renewable energy sources for operations, and investing in sustainable transportation systems. We’ll also explore some potential benefits of implementing green initiatives in the supply chain process such as increased efficiency savings or improved customer loyalty.
The green supply chain is an integral part of corporate social responsibility (CSR). As a company, it is our responsibility to ensure that the products and services we provide are in line with sustainability standards. By implementing green supply chain practices, companies can reduce their negative impacts on the environment, while also reducing operating costs.
To achieve these goals, companies need to focus on minimizing waste and emissions associated with product transportation and packaging. This includes using green materials such as paper or cardboard instead of plastic for packaging; using greener modes of transport such as rail or sea shipping and utilizing renewable energy sources for powering operations. Additionally, companies should focus on improving supplier selection criteria by looking into alternative suppliers who use greener practices.
About the Author
Vivek Sood
Co-Founder
Vivek Sood: Sydney based managing director of Global Supply Chain Group, a strategy consultancy specializing in supply chains. More information on Vivek is available on www.linkedin.com/in/vivek and more information on Global Supply Chain Group is available on www.globalscgroup.com
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Part 1
Advantages of Green supply chain
By implementing green supply chain practices, companies can reduce their negative impacts on the environment while also reducing operating costs.
The following are some of the primary benefits that organizations can experience by greening their supply chain.
1.1.1: Positive impact on financial performance
There is still a misconception that turning green incurs more costs, despite abundant evidence to the contrary. Here are a few of them:
This misconception continues in part because of inertia, a lack of a systematic strategy, and a reluctance to engage in the persistent thought required to establish a green supply chain.
However, a positive long-term net impact on the organization’s financial performance is the most fundamental advantage of green supply chains. This has been demonstrated through analysis and empirical data.
1.1.2: Resource Sustainability
Green supply chains support the efficient use of all of an organization’s productive resources. Businesses can now buy green input materials to flow through environmentally friendly production processes to achieve desired outputs by applying green supply chain management concepts into their whole business decision-making process.
1.1.3: Lower Costs/More Effectiveness
The idea of decreasing waste by improving efficiency is the cornerstone of green supply chain management. Effective resource and supplier management can lower production costs, and encourage recycling, as well as the repurposing of raw materials. Additionally, by reducing the production of hazardous materials, businesses might avoid being penalized for breaking environmental laws. As a result, the necessary operational costs are decreased and resource utilization efficiency is raised.
1.1.4: Product Differentiation and Competitive Advantage
An organization benefits from presenting itself and its products to customers as environmentally friendly. Along with bringing in new lucrative clients for businesses, it will provide them a competitive edge over rivals in the marketplace. Additionally, it will improve the brand’s reputation and image in the marketplace.
1.1.6: Better products and services
Businesses that manufacture cutting-edge, environmentally friendly items will discover that this improves their brand’s perception among consumers.
Besides the above six benefits, there are additional advantages that can be generated by GSCM:
- Effective management of Suppliers
- Dissemination of technology, advanced techniques, capital, and knowledge among the chain partners
- Transparency of the supply chain
- Large investments and risks are shared among partners in the chain
- Better control of product safety and quality
- Increased sales and revenue
- Beneficial uses for waste
Part 2
Supply Chains: Traditional and Green
In a conventional supply chain, information and materials go linearly from one end to the other. There is little visibility and collaboration. Each supply chain partner has a limited understanding of, for instance, the other partners’ carbon footprint and greenhouse gas emissions. Consequently, regardless of the effects on the upstream and downstream supply chains, each stakeholder may be worried about his footprint and attempt to lessen it. End-to-end supply chain costs may receive some attention, but in most situations, they are not optimized due to information-sharing restrictions.
Green supply chains, in contrast, take the environment into account throughout every step of the supply chain, from the extraction of raw materials to the final disposition of the commodities.
Traditional Supply Chain, Figure 1.1
Green supply chains, in contrast, take the environment into account throughout every step of the supply chain, from the extraction of raw materials to the final disposition of the commodities. Each participant in the green supply chain encourages the other participants to adopt green practices and offers the required knowledge, assistance, and direction, for instance through supplier development programs or customer support. Then, operational and financial objectives are merged with environmental objectives and performance monitoring.
With this integration, the green supply chains will work to minimize waste and the environmental impact while ensuring maximum consumer happiness and healthy profits, which is something that any one firm alone would not be able to accomplish.
Among the major distinctions between green supply chains are:
- The dedication of the senior management to a culture of ongoing, collaborative innovation leads to “greener” supply chains.
- Involving every participant in the supply chain in the process of developing the product’s standards, options, and alternatives during the product-design phase
the effective application of technology to data collection, simulation, information sharing, and decision-making. - Eliminating and escaping from a traditional strategic “stage gate” sourcing approach that imposes restrictive constraints on information transmission, collecting, and analysis
the transformation of sustainability into a CSR and cost problem.
A portion of the critical differentiators of Green Stock Chains are:
- The top administration’s obligation to a culture of ceaseless and ongoing cooperative development towards “greener” supply chains.
- Permitting all of the store network accomplices a job in making determinations, and choices, and looking at options during the item configuration stage itself.
- The proficient utilization of innovation to catch information, run situations, convey data and simply decide.
- The eliminating and escaping a customary vital “stage door” obtaining mindset that makes inflexible boundaries on data spread, assortment, and examination.
- The creation of maintainability is an expense issue, as well as a CSR issue.
Part 3
Green Supply Chains and Corporate Social Responsibility (CSR)
“Corporate Social Responsibility (CSR) is the decision-making and implementation process that guides all company activities in the protection and promotion of international human rights, labor and environmental standards, and compliance with legal requirements within its operations and in its relations to the societies and communities where it operates. CSR involves a commitment to contribute to the economic, environmental and social sustainability of communities through the ongoing engagement of stakeholders, the active participation of communities impacted by company activities, and the public reporting of company policies and performance in the economic, environmental and social arenas.” says Dr. Partsch