Introduction
The goal of Supply chain management (SCM) is to improve the efficiency of a company’s supply chain operations. The supply chain runs from raw material suppliers at one end, right through all the intermediate processing stages, to the customer at the other (Mcmenamin 1999). The focus of SCM is on adding value and eliminating inefficiencies at each stage of a company’s supply chain. This will include the optimization of stock or inventory movements; planning for peak activity periods; and the organization of transport and distribution systems (Summers 1998). The process seeks to ensure that the right materials, supplies and personnel are in the right place at the right time (Nersesian 2000). The emphasis of SCM on adding value at each stage, has given rise to the term value chain. Supply chain emphasizes the strategic value-adding and financial role of a company’s entire logistics management process (Thierauf 2001). In recognition of the new emphasis on providing the best net value for the customers, logistics represents a key bundle of resources that can be applied successfully to this end (Bounds & Stahl 1991). The supply chain is an important part of business because through it a raw material can be transformed into a finished product, this product is then sold to clients for the company to gain profit. The supply chain management like other aspects of a business is affected by global issues such as climate change and environmental awareness. The supply chain management is constantly asked to participate and change its approach on the world issues. This paper intends to determine how to create sustainable but environmental friendly supply chain or logistics system.
Nature of sustainability in context of supply chain management
The concept of sustainability emerged in the early 1980s. Since then the ideas of a sustainable society and sustainable development have played a key role in policy statements by national governments and the United Nations. Despite this widespread attention there is still no agreed definition of the concept, and perhaps more critically, little progress towards translating the idea of sustainability into clear policy targets (Ekins 2000). A widely quoted definition of a sustainable society is one that meets the needs of the present without compromising the ability of future generations to meet their own needs (Banister 1998). The development of a coherent and systematic strategy towards a sustainable supply chain must consider not only the objectives to be pursued and an evaluation of possible policy initiatives, but also the appropriate response and role of different institutions (Doob 1995). The scope of institutions in the context of sustainability has its range from groups like national governments, local governments, private companies and individuals. If people will accept that the idea of that sustainable supply chain must address the increasing average haul then individuals could contribute by increasing the proportion of locally sourced goods. A major problem is the lack of information provided and the complexity of information that would be needed (Banister 1998). Sustainability is said to be the act of maintaining supplies for future generations. Supplies do have its own limitation; it will run out of stock eventually. Through the use of sustainability companies can make sure that there can be supplies for the present and the future. Sustainability goes with the need to have green supplies.
The nature and role of green supply chain
The extraordinary controversy over the use of genetically modified (GM) foods, crops and feed stocks has been a major focus of political debates and environmental and consumer activism (Banfield 19990. It has brought to the public’s attention not just the activities of research scientists in remote laboratories but also of the sourcing policies and marketing strategies of major retailers. Major corporations have had to be responsive to market pressures (Boone & Ganeshan 2002). What firms buy and from whom they buy it, and how environmental issues are included in these considerations, has become the subject of media attention (Fineman 2000). Green supply’ is the term people use to describe the web of actions that occur when firms put the environment on the agenda for procurement/supply chain/logistics and the responses this stimulates from the supply chain. It is reasonable to surmise that green supply will be a vital element in progress towards a sustainable economy. The concept of the incorporation of the environmental agenda into corporate procurement has now been promoted from a number of quarters for several years (Wheeler 2004).
Two main lessons have become apparent: first, there exists a huge range of options and tactics for organizations; second, very few organizations have really begun to exploit all the avenues that are available. The range of possibilities implied by green supply is difficult to enumerate due to the wide spread of different types of purchasing organization and the wide range of products and services secured; much of what follows will not apply to every organization (Campbell, Hamill & Purdie 2000). The simplest situation is procurement based on the choice of a greener product compared with a browner alternative. This is a straightforward choice (Boyer, Frohlich & Hult 2005). The selection may be made in the marketplace. In this case, the relationship between the buyer and seller may be at some distance, and there may be no interaction other than the transaction itself (Boyson, Corsi & Harrington 2004). The effects of this purchase decision can be considered as fourfold: first, there is the immediate environmental consequence that a green good will be disposed; second, there is the financial encouragement of an extra sale to the provider of the green good; third, there is the tacit message of the lost sale to the suppliers of conventional goods, which may promote product innovation; finally, there is the internal message in the organization to its employees and possibly customers that green issues are being taken seriously (De Lannoy, Devuyst & Hens 2001). Environmental awareness has created a need for supply chains and logistic systems to make use of ‘green’/environmental friendly supplies. Global issues have made companies take a look at their supplies and check whether the contents and components of their supplies are environmentally safe. This forced the need for more communication and transaction between the company and the suppliers. It forced companies to do extensive research on the supplies they use and they have. The use of greener supplies is in connivance with the goal of companies to maintain their sustainability. Green supply creates a better chance for the firm to extend the life span of supplies so that there will be enough supplies for future generations.
General implications to the management of global supply chain
Environmental consideration may be used to pre-qualify those from whom the purchaser will select. This may or may not result in a substantive environmental benefit but the supply base receives a message that environmental issues are important, and this is communicated to both successful and unsuccessful suppliers. Even without formal processes of pre-qualification, this approach to green supply allows the buyer to communicate some priorities to the vendor. Some kind of pressure is applied just by raising the issue that it is expected that potential suppliers will have an environmental policy or be pursuing the development of an environmental management system (Barrow 2005). Given possibly ambiguous signals, the supplier has to make a judgment about how serious the buyer is. Faced with this, it may be sensible for the supplier to evaluate the potential pressures which the client may face, thus weighing the relative costs of action against inaction. Purchasing behavior can influence the supply base even if environmental criteria do not become the pivotal issue in a purchasing decision. Furthermore, there is a parallel range of mechanisms which apply to existing suppliers the possibility of new work is merely translated into the prospect of keeping current business, and so on (Ebert & Ebert II 1998). The movement into green supply chain/logistics has created the need for managers to devise means to check the components of the supplies. It created the need for management change their strategies on how the logistics system/supply chain is managed. The management of supply chains now needs to know what products are green and what are dangerous to the environment.
Example of sustainable approach to supply management
One example of a company having a sustainable approach to supply management is Wal-Mart. Wal-Mart’s efficient cost structure rests on several pillars. It includes an extraordinary logistics system based on holding inventories in large warehouses, and not in the stores. Stores are for selling, not for inventories (Kennedy 2000). This improves space management, where it is most expensive. A communication system between stores, warehouses, and suppliers enables the company’s inventories to be kept to a minimum, while also facilitating identification of the best-selling products (Canals 2000). When Wal-Mart encounters problems on inventory the company tries to check its inventory systems and the management of the inventory department. As a safety control the company constantly checks for errors in its inventory system. The company makes sure that the inventory system is constantly checked for any errors or problems. Wal-Mart has recently introduced sustainability and greening into their supply chain. The company initially established its goals and technologies that they will use in making sure that they have sustainable supplies. The company has made sure that their supplies have been certified as environmentally sustainable. The company is in constant communication with suppliers and they give assistance so that the suppliers will provide environmentally sustainable supplies. The company has committed to having large amounts of sustainable green supplies. The company provides incentives to suppliers who will provide them with green supplies. The issue with the incentives to suppliers is strained relationships with some suppliers.
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