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Why Green Supply Chain makes sound business sense

7th July 2015 | Mark Millar

In this article, Mark Millar discusses the key drivers that are pressuring businesses to reduce their carbon footprint

Why Green Supply Chain makes sound business sense

Whilst there is no unanimous agreement about the impact of global warming on climate change, health and pollution, there is no doubt that environmental issues such as carbon footprint and fuel utilisation are topics on every boardroom agenda. As significant consumers of fuel, supply chain operations will most certainly be closely scrutinised and monitored as a source of potential efficiencies and savings.

The primary driver for taking action towards tangible savings is of course the cost of fuel, but there are many other macro influences that are putting increasing pressure on businesses to take whatever steps they can to reduce their carbon footprint.

Increasingly stringent government regulations are providing a raft of stick and carrot initiatives to motivate companies to pursue green agendas by reducing their use of fossil fuels, improving recycling to avoid waste and generally acting as more responsible corporate citizens. 

When placing tenders and requests for quotation, companies are now paying greater attention to the green credentials of potential suppliers, and in more and more countries local and central government purchasing bodies are routinely setting green performance standards for their service providers.

Consumers too are becoming increasingly aware of the role that manufacturers, distributors and retailers play in helping to reduce emissions, with abundant evidence that purchasing decisions are influenced by the perceived environmental performance of the corporation. 

Most importantly, more efficient use of fuel resources reduces oil consumption, which of course brings down costs and improves the bottom line.

The issue has become even more critical as the globalisation of modern supply chain ecosystems has led to complex elongated logistics networks, which in turn involve more frequent and longer distance journeys that consume vast amounts of fuel and generate carbon emissions whilst enabling international trade flows.

So what steps can logistics and supply chain executives take to make their supply chain more environmentally responsible?

The first vital step is to develop, communicate and implement a corporate Sustainable Supply Chain strategy, with clearly defined targets, actions and responsibilities. This will involve operating, managing and monitoring every function - seeking to use less fuel resources, to use energy more efficiently and to operate the supply chain in such a way that the environmental impact and carbon footprint are reduced to a minimum. Green supply chain management must become a core business strategy if it is to compete for attention amongst the many other pressing issues facing the business. 

As the majority of international businesses are developing sustainability initiatives and striving to reduce costs and emissions with more fuel efficient operations, having a dedicated and comprehensive green supply chain strategy has become a strategic imperative for companies wishing to compete and succeed in the global marketplace.

Globally recognised certifications such as the International Standards Organisation (ISO), Global Reporting Initiative (GRI) and ISO 14001 demonstrate that a business takes its environmental responsibilities seriously. Such international accreditations provide high levels of assurance to clients who prefer to work with vendors that meet their environmental expectations.

Want more strategic insight on attaining a green supply chain? Tune in for Mark Millar’s next article on green supply chains where he discusses in further detail the key steps logistics and supply chain executives can take to make their supply chain more environmentally responsible.

For real world insight on realising sustainable supply chains read Mark Millar’s book, Global Supply Chain Ecosystems, in which Mark discusses the most pressing challenges in 21st century supply chains and advises how to develop strategies for competitive advantage in a complex connected world.   

Logistics, Operations & Supply Chain Management

Kogan Page publishes groundbreaking books on logistics and transport, operations, supply chain management, and procurement. Our authors are leading thinkers in the field, sharing their insights from academia and industry. Follow us on Twitter @KPLogistics.

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