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Developing a Green Supply Chain

by 28 Dec 2011

Rob Fenn of The British Assessment Bureau, a certification body specialising in ISO management standards, describes the benefits to organisations of establishing green supply chains and outlines what’s involved.

In other recent articles on SD Scene, Defra’s Sustainable Product and Consumers team discuss the impact of product footprinting and water footprinting and beyond.

For any organisation, considering and acting on its own environmental impact is a notable achievement. However, as the concept of sustainability and Corporate Social Responsibility (CSR) has become more popular, organisations are now looking to their supply chain in order to further reduce their environmental impact.

A functioning ‘green supply chain’ extends environmental consideration to all aspects of a product or service: from material sourcing, to product design, manufacture, distribution, delivery and end-of-life disposal. Establishing a green supply chain enables an organisation to gain access to key markets, differentiate themselves from the competition, improve products, processes and quality, as well as reducing environmental risks and costs.

Why develop a Green Supply Chain?

Beyond the moral reasons for becoming greener, increasing environmental compliance requirements and supply chain cost pressures are driving the requirement for improved CSR programs within supply chain management. The reality is that becoming ‘greener’ is also cheaper. Ideas from environmentally friendly packaging to carbon-footprint reducing logistics are saving money and providing competitive advantage. Such ideas have knock-on additional benefits, from waste reduction, to less resource being spent on adhering to regulatory issues.

Market forces are also motivating even small organisations to take action, as key clients are forcing them to adopt green policies and rules of conduct in order to retain vital contracts.

With the environment regularly in the news, a bigger issue being faced by organisations is being held accountable for environmental problems created by suppliers. With the press quick to highlight involvement with environmentally unfriendly companies, can any organisation afford that type of exposure?

Product life cycle

The idea of a green supply chain is to manage environmental impacts before they occur, rather than simply where they occur. The focus is still on business value, but the concept is to align green supply chain goals with business goals.

For example, let’s take a look at direct mailings; considered by many as wasteful in many ways. If a direct mail company were to consider the life cycle of their product, they could start saving before anything is even produced. Investing time into making sure mailing lists are up-to-date and non-duplicated reduces the amount of direct mail in the first place. It also means resources are saved further down the supply chain, and ultimately, less undelivered direct mail ends up in the bin.

Ensuring better targeting of direct mail to consumers can prevent further waste and result in improved response rates, due to the improved relevance.

When it comes to production, more traditional green thinking can be applied. Improvements can be made by considering:

  • Using recycled paper;
  • Using environmentally friendly inks;
  • Using a local supplier.

Whilst many don’t operate like this, any organisation has similar elements, even if on a smaller scale. Even when it comes to service based organisations, there are many stepping stones where environmental impact can be reduced by the time the service is delivered to the customer. If each supplier in the chain does the same, the potential for reducing environmental impact is huge.

A great innovation by Xerox in the 1990s was to launch an initiative to take back old copiers from customers when it was time to replace them. This was ideal for customers, who were previously left to dispose of their own equipment and great for Xerox, as they reused or recycled elements for new copiers to save “several hundred million” and fulfilled their zero-landfill ambitions. (Source: Bringing the Environment Down to Earth, Reinhardt, HBR, July-August 1999 Environment, Health, and Safety Progress Report: 2004, Xerox Corporation)

In the UK, firms are following suit now that retailers must follow Waste Electronic and Electrical Equipment (WEEE) Regulations, either by accepting old electronic goods or at least advising customers where to recycle goods free of charge. Many retailers are choosing to turn this into competitive advantage by offering to pick up electronics equipment when installing new items in customers’ homes.

ISO 14001 certification

ISO 14001 is an environmental management standard intended to reduce environmental impact with a requirement for continuous improvement. It is internationally recognised and to join supply chains it is often a necessity as it pre-qualifies the green credentials of organisations without the need for costly environmental reviews.

Achieving certification to the standard also helps satisfy end-user expectations; with market research company Mori finding that almost 80% of consumers believe companies need to back up their ethical claims with proof.

Another recent study showed that companies certified to the standard are 40% more likely to assess their supplier’s environmental credentials, with 50% likely to require that their suppliers undertake specific environmental practices. Choosing ISO 14001 certified suppliers can help meet eco-friendly ambitions in the supply chain.

Editing environmental policy

Any organisation making the effort to source in a more sustainable way by establishing a green supply chain must also update its environmental policy to suit. It is important to ensure that everyone knows the organisation’s stance when it comes to procurement. Under a supply chain sub-heading, examples of policy areas are:

  • Creation of a ‘Green Questionnaire’ to evaluate potential suppliers;
  • Commitment to consider suppliers with green credentials (e.g. awards, schemes or ISO 14001 certification);
  • Commitment to using environmentally friendly printers (recycled paper and eco-friendly inks);
  • Insist cleaning companies use environmentally friendly cleaning products;
  • Encourage environmentally friendly communication (e.g. use of email and PDFs instead of invoice letters).

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