GREEN SUPPLY CHAIN: A STRATEGICCHALLENGE FROM PRODUCT DESIGNTO SECOND LIFE Supply Chain strategy is about aligning themanagement of all physical and information flowsbetween partners involved in making a product orservice available to customer, with corporatestrategies. In the past, Supply Chain management wasonly driven by the right balance between costoptimisation and service levels. Nowadays, a thirddimension comes into the game: the environmentalimpact of the Supply Chain. In 2008, green SupplyChain motivation was dominated by environmentalregulations. Two years later, a shift in motivation hascome, with a clear top-down path: corporate image andexecutive board decision are now more important thanregulatory constraints. Green Supply Chain is nowconsidered by a majority of companies as a long-termstrategic challenge.Two combined paths to a sustainable Supply Chainemerge; one being a continuous improvement of theenvironmental footprint of existing activities, thesecond asking the very question of product lifecyclefrom design to second-life, also expressed as "cradle-to-cradle".SUPPLY CHAIN095THE GREEN SUPPLY CHAIN MODELCONTINUOUS IMPROVEMENT OF THEENVIRONMENTAL FOOTPRINT: ACLASSICAL CHALLENGE WITH NEWTARGETSIn the recent past, due to the direct link to the endconsumer, CPG and retail companies have been at the forefront of the move. Now more and more B2B companies are starting with green or sustainable. It comes as no surprise then that our survey highlights Logistics Network & Transport optimisation as the most popular way to reduce the Supply Chain environmental footprint. Green manufacturing, aiming to reduce energy and water consumption as well as harmful emissionsand waste production, is key for most of theinterviewed companies. Every increase in energy costs drives the need for such optimisations, and the cost factor remains the key driver, along withregulatory compliance. Applying the Kaizen way of continuous improvementdoes not mean that the changes are easy to drive or notpainful, however they do not challenge the veryfoundations of the Supply Chain.?
TRANSFORMING THE WHOLE SUPPLYCHAIN FROM ITS FOUNDATIONSThe deep change in the Supply Chain environmentalfootprint can only come from a complete review of theproduct lifecycle, from its design to its second life. For instance, eco-design is a must, as 80 per cent ofthe environmental impact of a product is determinedduring its design, says German Environment Agency. Green second life and operations1is tightly linked toeco-design. In the past, recycling was conceived as anindependent matter, and the only connection it hadwith production was either the purchase or the reuse ofrecycled materials. Over the years, second lifeprogressively became a privileged matter of eco-design. Our survey shows that 78 per cent ofcompanies are now being engaged in such initiatives.On the purchasing side, two thirds of companiesadopted or plan to adopt a green policy for theirpurchases. Buyers are preferably choosing certifiedsuppliers, but there is more in the balance: companiesalso encourage suppliers who have a low raw materialconsumption, controlled emissions and pollutionlevels and components tracking. Suppliers not fulfillingthese standards are progressively excluded. However,this evolution also implies getting over the classiccustomer-supplier relationship model, and thinking096SUPPLY CHAINabout new internal and external collaborative forms.MEASURING THE ENVIRONMENTALIMPACT: A REQUIRED BASELINEEnvironmental thinking is about reducing not onlycarbon but also all other toxic and harmful emissions.Nevertheless, the global warming thread is one of themajor motivations to start green acting. Our surveyshows that 60 per cent of the interviewed companieshave not assessed the carbon footprint of their SupplyChain as yet. However, 37 per cent of those companiesintend to catch up within the next three years, whichmeans that in 2012 more than 70 per cent will havean accurate measurement. Defining a baseline by measuring an initial carbon footprint is theprerequisite for setting up realistic reduction goals. Increasingly, companies are realising that virtual, notbased on hard facts, reduction goals cause more harmthan good. Carbon footprint represents much morethan simply measuring CO2emissions of the SupplyChain operations. It identifies the actions to belaunched to control the environmental impact and optimise operational costs of an organisation.Eighty per cent of the companies who measured their carbon footprint, identified immediatelyapplicable improvement initiatives that led to concrete improvements.FROM AWARENESS TO ACTIONPhoto: Fotolia © Médiathèque AXA - Rights reserved