5 Ways To Green Your Supply Chain

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If you are thinking about ways to green your supply chain, you’re not alone. A Supply Chain Consortium survey showed that organizations of all sizes are implementing sustainability initiatives throughout the supply chain not only to achieve regulatory compliance, but also to improve brand image and customer satisfaction.

What does that mean? The most effective greening of purchasing involves thinking about your entire inbound supply chain with an overriding purpose in mind: to select and purchase goods and services that are affordable, and have the least possible environmental impact throughout the course of every phase of their lifecycle including manufacturing, shipping/transportation, use, and recycling or disposal. And, contrary to popular belief, green purchasing does not always have to mean higher costs—although sometimes it will. In fact, by greening your supply chain you can often streamline your purchasing process, reduce overall costs, and improve your environmental footprint.

There are five good supply chain strategies that can be used to reduce waste. You can start by considering strategies that reduce the physical distance between where materials are sourced and where they are used. These strategies not only help reduce travel-related emissions, but also often result in shorter times to market and lower inventory holding costs:

Buying local is an excellent greening strategy. There significant social, environmental, and economic benefits to creating local economies. At this writing, some thirty-six cities and towns—from Albuquerque to Tampa—have adopted programs to label and promote locally owned businesses. It is always worthwhile to check with your vendors about the availability of local products and materials. Buying local also provides business owners with more control over their materials and end products. As an example, one wholesale distributor of locally grown food products in Michigan tells the story of being able to deliver poultry products that are cut to customer specifications quickly and on a regular basis, something that would be impossible if he were using larger, more distant vendors. The Business Alliance for Local Living Economies (BALLE) is a good resource for finding a local business network in your area.

Nearsourcing refers to the practice of obtaining goods from lower-cost locales that are relatively nearby. In the United States, this typically means sourcing internationally from Mexico or Latin America, as opposed to Asia. But it also refers to warehousing in ways that reduce transportation. For example, in a reversal of a trend toward large distribution centers, some retailers have moved back to smaller, regional warehouses to reduce transportation costs and maintain better access to goods.

Ship to point-of-use strategies are employed in the manufacturing sector when raw materials or components are shipped directly to the point of assembly or manufacturing location, thus reducing transportation costs and the need for protective packaging. As an example, beverage companies can receive plastic bottles as unblown “test tubes” and mold them into shape on-site. The unblown bottles require far less space on a truck than blown ones and thereby can reduce the number of truckloads required to deliver bottles by as much as 90%.

Two more strategies can reduce supply chain waste:

Avoid expedited shipping and delivery whenever possible. Expediting usually involves inefficient local messenger services or overnight air freight. Generally, if you’re caught in a bind where you’re forced to use overnight air delivery or a local messenger, it’s probably because you’re not managing your schedules, the supply chain, or the production process effectively. If you’re a retailer, provide alternatives to overnight shipping. If you’re a web-based business, consider implementing self-service options or drop shipping for customers and suppliers to eliminate one step in the ordering process. If you must use a local messenger
services, opt for those that use bicycles or mass transit.

Have green procurement guidelines that dictate supply chain criteria for materials, products, packaging, systems, and logistics. This results in savings for a number of reasons—from getting better deals with suppliers and avoiding “maverick” or off-contract non-green purchasing.  Its good business to: An October 2008 Aberdeen Group analysis found that companies that leverage their spending information in purchasing save 67% more than companies that do not.

Photo by Michal Zacharzewski at sxc.hu