What does “Green” or “Sustainable” Supply Chain mean?
Sometimes it’s not enough to tell people what you do for a living by name. For some topics it takes a little extra explaining and clarification. Sustainable supply chain is one of those topics where you cannot just say “I am working on sustainable supply chain”, as this would be open to a lot of assumptions, speculation and conjecture.
The idea of sustainable or green supply chain management has been around for some time. I actually remember reading an interesting paper written in the late 90s from Joseph Carter (ASU supply chain favorite) and Ram Narasimhan (MSU operations mgmt icon) on “Environmental Supply Chain Management” that took this concept to an actual application level. During this time it seemed like environmental supply chain was certainly a nice thing to do, but when you could conquer the supply chain world with constraint based optimization, collaborative planning and forecasting, integrated service supply chains & strategic sourcing initiatives; discussions on supply chain risk and longer term environmental impact were definitely relegated to the thought leadership circuits.
What is Sustainable Supply Chain?
Now thanks to a series of unfortunate events or self-induced mega trends effecting the root fiber of business from the economic, social and environmental perspectives sustainable supply chain is emerging as just one of those processes that will be embedded into our daily thinking. Still, what is sustainable supply chain management? To come up with a common understanding of sustainable supply chain management I asked three professionals from three different perspectives what they thought Sustainable Supply Chain was to them and here are the answers they provided:
- Participant Number One: This colleague has over 20 years focused in supply chain including working as an analyst covering many companies and processes. Her answer – “Delivery of goods with the minimal amount of environmental impact – that means taking into account the entire footprint of the product from raw material until delivery to the customer… Based upon this premise, green supply chains require the ability to model and record all of the steps along the supply chain… “
- Participant Number Two: This colleague came from running Material and Procurement Solutions for a 20 plus billion contract manufacturer. His answer – “High yield, high asset utilization, minimal waste. Lean is green “
- Participant Number Three: This colleague came from a deep corporate social responsibility background working ground up on social and environmental processes. Her answer – “green supply chain refers to a value chain where goods are sourced, produced, distributed and sold in a way that minimizes their impact on the environment and eliminates wrongful and unsafe labor practices “
From these responses we move onto the inevitable question of which answer is correct or most correct? Well, as you would expect they are all correct, and these answers provide you some understanding of the power and thinking that sustainability can have across many different organizational processes. Sustainable supply chain is driving organizational change that can be seen in the following ways:
- New disciplines and information that focuses on waste reduction (energy, water, inventory, by-products, more)
- Requirements to provide greater transparency across the supply chain (supplier practices, product traceability, more)
- An emerging set of KPIs (mixing supplier spend with risk, lower energy consumption in production, less miles traveled to reduce fuel consumption, more)
So next time a colleague asks me “What is sustainable supply chain?” we will still need to talk through in some detail, but as you see it is something worth the discussion.