Green supply chain history:
The origin of Supply Chain Management can be dated back to the early 20th with Henry Ford who vertically integrates the automotive supply chain and organizational practices. The approach of “Just in time” and “supply chain management” focused on optimizing efficiency and reducing waste. But at that time, the reduction of waste was mainly due to economic reasons, not environmental.This was because waste means greater economic loss. At that time, pollution wasn’t mentioned by economics scholars, that’s why pollution caused by industries was not part of economic discussions. After recognizing the importance of pollution within the economic systems, a tax was suggested for environmental pollution caused by industries (EM Ojo). Nowadays, a lot of different factors are increasing the urgency for emerging economies to become sustainable. A great example would be today’s prominence of climate change.
Why go green?
Due to climate change, firms are rethinking their strategies to guarantee environmental initiatives to start environmental actions. Furthermore, the notion of Sustainable Supply Chain Management is often linked with social responsibility or environmental management (Ali Esfahbodi, 2016). Green Supply Chain Management emerges as a new environmental approach in Supply Chain Management and has been increasingly used by forward-thinking organizations. There are different reasons to turn to GSCM (Green Supply Chain Management) included being sustainable, profitable, and cost reduction. Customers usually say that they would rather buy products that are environmentally friendly and with a minimum of environmental impact. Business practices ought to become increasingly transparent therefore implementing green policy can generate profits, provide a positive social impact, and reduce environmental impact. Any steps taken to become greener will favor companies in visibility, credibility, and develop a leadership reputation. (Bhattacharjee, 2015).
The purpose of going green is shown in the table.
Sustainable supply chain management:
The original model of Supply Chain Management follows a linear production that hypothesizes the constant input of natural resources and an unlimited capacity to assimilate waste. Unlike the traditional supply chain, being sustainable considers the environmental impact of a product through its entire process cycle and reduces maximum environmental damages. The idea of being sustainable is done by closing the loop and including the reuse, recycle step. This will aim at reducing environmental impact from the acquisition of raw materials to the final use and disposal of the product (Ali Esfahbodi, 2016).
Based on (Ali Esfahbodi, 2016), the main activities in a typical sustainable supply chain management (SSCM) are illustrated above. When the product has a defect after its production, it is sent back to the inventory to reuse or recycle it. When the product comes to its end, it goes to the plant where the product is reused, recycled, or refurbish before heading back to the supplier.
Four fundamental practices:
Based on (Ali Esfahbodi, 2016) research, Chinese and Iranian governments have focused their fight for SSCM based on four fundamental practices: sustainable procurement, sustainable production along with sustainable distribution, and reverse logistics. These practices represent to which extend each country engages itself toward Sustainable Supply Chain Management. In addition, these initiatives are not used just taken in China and Iran but also in many other emerging economies. These innovations represent a strong commitment from through strategic environmental plans towards sustainable Supply Chain Management.
- Sustainable procurement: consists of environmentally friendly purchasing that carry reduction, reuse, and recycle. Furthermore, it is a solution to achieve a selection of products and services that reduce the negative impact of the lifecycle. The sustainable purchase becomes easier through the year with fewer barriers as customers increase their demands for environmentally friendly goods (Vishal Gupta, 2013). Ikea is a good example as it has sourced close to 50 percent of its wood from sustainable foresters and hundred percent of its cotton from farms that meet better cotton standards (Ikea, n.d.).
- Sustainable production: is the production process that uses inputs with low environmental impact, is greatly effective and provoke no waste pollution. Green production can improve the corporate image and lower the raw material cost. Companies are starting to take actions and produce materials that intend to be reliable, energy-efficient with no or lesser waste which benefits companies in many ways as it will have an impact on customers, shareholders, and the recognition of the company in the marketplace. (Vishal Gupta, 2013). Patagonia produces their wetsuits from natural rubber and parkas which are made from plastic bottles. (Cardwell, 2014).
- Sustainable distribution: Distribution of goods usually generates a lot of waste and is can damage the environment, but green distribution consists of green packaging including size, shape, and materials that have an impact on transportation of the goods. Better packaging can reduce material usage, increase space utilization in the warehouse and trailer, and lower the quantity of handling required (Vishal Gupta, 2013). It is done by Logistrap in Mexico, they reduced their space within the warehouses and container ships to transport more within the same number of trips (Logistrap, 2020).
- Reverse logistics: According to (Vishal Gupta, 2013) the concept of Reverse Logistics (RL) not only means the returns from the customers but also the management of E-waste. RL is a process where a manufacturer accepts previously shipped products from the customers point for potential recycling and/or re-manufacturing”. Kobo360 from Nigeria is a leader in the practice stated. They Pick up returns and bring them back to a warehouse or other location to be restocked, inspect and repackage returned products or parts (Kobo360, n.d.).
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