Sustainable supply chain management

For decades now, companies have been striving to improve the level of service and the quality of products that they produce and distribute. Increasingly, companies are focusing their attention towards creating a ‘greener’ future through the implementation of sustainable supply chain management. In this rapidly evolving world, ‘going green’ is not just an environmentally friendly initiative but a necessity for businesses that wish to remain competitive. While several other methods have been tried in the past, GSCM offers several benefits that are becoming increasingly popular, especially for companies that are involved in the manufacturing, distribution and sale of goods.

The concept of sustainable production and distribution is not new. However, the methods used in the past had limited success and were often inefficient. This led to a search for better ways to improve supply chain management and to increase efficiency at the same time. Today, companies are turning to GSCM to address some of these challenges. The idea is simple enough, but the implementation requires careful planning, communication and a whole lot of experience.

One area of GSCM that has been of particular interest to companies looking to improve their manufacturing environment is the supply chain for petroleum. Today, the average company in North America uses between one and nine different suppliers to provide raw materials, machinery and services to produce finished products. To make matters worse, many of these oil companies invest heavily in the petroleum industry, so they face significant competition from suppliers who are willing to reduce their costs or even outsource some of their manufacturing needs.

The solution required by manufacturers is complex, because it involves both effective management and effective communication. Successful GSCM requires a significant amount of knowledge about the oil industry as a whole as well as specific recommendations tailored to each individual supplier. To help with this complexity, several organizations have developed standards for sustainable supply chain management, such as the Roundtable on Energy Strategies (RSE), the Roundtable on Environmental Management (REM) and the Basel II Basel Convention. These organizations maintain that there are several policy frameworks, including the reporting requirements of government agencies and the compliance requirements of various manufacturers and suppliers.

Another aspect of sustainable supply chain management is the establishment of feedback lines with suppliers. Manufacturers are constantly assessing the efficiency of their supply chains. When a new process is developed or an improvement made to an existing process, it is often recommended to check with the suppliers to see how this may affect their operations. Through this feedback line of communication, both the manufacturer and the supplier can establish a more efficient process and ensure improved profitability at the end of the day.

Another aspect of sustainable supply chain management is the use of information systems to streamline processes, increase operational efficiency and cut costs. For example, in the manufacturing industry, information technology systems such as RFID software allow manufacturers to determine their inventory levels and perform accurate inventories of products, eliminating the need for costly real-time item tracking. This enables manufacturers to better plan for product growth, produce goods in a more cost effective manner and manage their raw materials efficiently. In addition to reducing waste through greater accuracy, manufacturers also save money through economies of scale. Real time data feeds from an integrated system help to streamline the process of receiving, organizing and processing payments in a timely fashion, thus allowing suppliers to ship products more quickly.

The third aspect of sustainable supply chains is going green. Going green refers to the reduction of the impact that the supply chains has on the environment. Companies that are successful in reducing their environmental footprint will be able to attract new customers and retain their present ones. In addition to reducing waste and saving money, companies that going green will also reduce reliance on nonrenewable resources, improve energy efficiencies and generate a healthier work force by using clean energy sources.

According to the White House Council of Advisors on Energy and Environmental Policy, improving management of the supply chain will lead to significant improvements in the efficiency with which the U.S. creates, consumes and manages energy and other resources. Enhancing sustainable supply chain processes will contribute to long term prosperity by increasing the competitiveness of U.S. companies and creating jobs in millions of American communities. These benefits will be realized through greater economic growth, a reduction in greenhouse gas emissions and a healthier population.