Supply Chain optimization is a topic of increasing interest today, whether the main intention is to maximize the efficiency of one’s global supply chain system or to pro-actively make it greener. There are many changes that can be made to improve the performance of a supply chain, ranging from where materials are purchased, the types of materials purchased, how those materials get to you, how your products are distributed, and many more. An additional question on the mind of some decision makers is. Can I minimize my environmental footprint and improve my profits at the same time?
Supply chains are critical links that connect an organization’s inputs to its outputs. Some challenges in the past included lowering costs, ensuring just-in-time delivery, and shrinking transportation times. However, the increasing environmental costs of these networks and growing consumer pressure for eco-friendly products has led many organizations to look at supply chain sustainability as a new measure of profitable logistics management. For many companies, the largest opportunity for improving sustainability performances such as reducing carbon emissions, water use, and toxic chemicals is in its global supply chain. For example, up to 60% of a manufacturing company’s carbon footprint is in its supply chain, for retailers, that figure is closer to 80%.
Companies must confront the reality that their supply chains can no longer be opaque. Stakeholders demand more accountability. If we add the financial benefits of energy and resource efficiencies to this mix, a sustainable supply chain makes long term business sense and creates a competitive advantage for companies worldwide.
“Going Green” is becoming a higher priority for companies large and small, as regulatory bodies and consumers around the world push for more readily-available information on corporate carbon footprints and companies’ plans to control / reduce their carbon emissions.
Many changes you make to your supply chain could either intentionally or unintentionally make it greener, so effectively reducing the carbon footprint of the product or material at the point that it arrives at your receiving bay. Under the right circumstances, if the reduced carbon footprint results from a conscious decision you make and involves a change from ‘the way things were’, then there might be an opportunity to capture some financial value from that decision in the form of Greenhouse Gas (GHG) emission credits, even when these emission reductions occur at a facility other than yours.