Best practice report: Green Supply Chain Management

July 18, 2014 by BPIR.com Limited

Survey and Research

Supply Chain Management: Green Transportation Practices

A study of the supply chain transportation practices of 44 Fortune 500 companies in the United States grouped 11 practices into three levels (see Figure 5, below) based on the reported amount of environmental sustainability demonstrated within each organisation’s supply chains.

  • Level One (acknowledgement): 43 of the 44 companies had taken initial steps to formally recognise the impact of transportation emissions.
  • Level Two (culture): 28 companies had started to build a culture to encourage reductions in greenhouse gas emissions from transportation. 25 companies had explicit goals for decreasing the impact of transportation; of these, 23 had made plans to reduce energy/fuel usage.
  • Level Three (implementation): 22 companies reported they had implemented supply chain practices to reduce greenhouse gas emissions associated with freight transportation. [6]

 

Environmental Stewardship: Green Information Technology

Australian organisations were surveyed about eco sustainability and the adoption of green information technology (IT). On a per capita basis, Australia has one of the most carbon intensive economies in the world with a high dependence on coal as a fuel source. The Australian government has enacted a 20 per cent renewable energy target by 2020, along with a “Green IT” plan. The survey received 176 usable responses from chief information officers and IT executives, who reported as follows:

  1. 85% had implemented environmentally friendly IT procurement policies; 66% measured the environmental impact of IT; and, 50% had policies to manage electronic waste.
  2. Technologies for improving the energy efficiency of IT were not widely adopted:
    • 31% had adopted server virtualisation;
    • 26% had adopted storage virtualisation; and
    • 38% had adopted storage consolidation.
  3. However, 66% had increased the use of teleconferencing and online collaboration tools in an effort to replace travel.
  4. Eco efficiency had the strongest influence on the adoption of green IT technologies, and eco effectiveness had the strongest effect on the adoption of green IT policies and practices and green technologies. [7]

CEOs Want Sustainable Business

Price Waterhouse Consultants surveyed chief executive officers (CEOs) in the United States and globally on the subject of sustainability.

  • 41% (52% for global CEOs) were concerned about rising energy costs posing a threat to growth initiatives. (Global energy demand is predicted to grow by more than 30% by 2035; this rate of growth is environmentally unsustainable).
  • 35% of CEOs in the developed market planned to increase investment in order to secure natural resources (including energy, water and raw materials) in the next three years; 52% of CEOs in emerging markets provided the same response.
  • 43% of American CEOs planned to increase their efforts to reduce the environmental impact of their organisations.
  • 50% of American CEOs planned to increase their organisation’s focus on developing a culture of ethical behaviour. Nearly one-third planned to increase their focus on non-financial reporting, giving stakeholders a better view of the company’s worth and of the value it contributed to society. [8]

Green Supply Chain Management Initiatives

According to a 2013 report from The Energy and Resources Institute in New Delhi, India, IT contributed more than 30 per cent of national e-waste, and the average life span for personal computers had dropped from 4.5 years in 1992 to two years in 2006. Out of an estimated five million personal computers in India, 1.38 million were 486s or below and required upgrading; this was expected to create substantial amounts of e-waste. According to the United States Environmental Protection Agency, more than 200 million pieces of computer-related e-waste are generated worldwide every year; however, only 18 per cent of this waste is recycled, leading to 150 million pieces of equipment going into landfills annually. [9]

Green Supply Chains: Reused, Remanufactured, and Recycled Products

Auburn University, located in Alabama, United States, undertook a survey on green reverse logistics, involving 556 respondents. The survey aimed at measuring the perceived quality of reused products, remanufactured products, and products made from recycled materials in comparison to new items. The participants in the survey believed:

  • reused or remanufactured products were of lower quality than the equivalent new products, and
  • products made with recycled materials were of similar quality to new products.

The study led to the conclusion that firms may hesitate to reuse or remanufacture products because customers are likely to believe the quality of these products inferior to new ones; this could reduce the firm’s competitiveness. Products made with recycled materials, on the other hand, were seen as being unlikely to have a negative impact on a firm’s competitiveness. [10]

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