Green Supply Chain

Vivian Cheung
Feb 3rd 2012

As the public becomes more and more concern about the sustainability of our planet, consumers are asking more and more questions about the products they are purchasing. Despite of the public’s focus on the environment, benefits of reducing a company’s carbon footprint is the least of the concerns of most companies. Most
of them are unaware of the linkage between environmental performance and financial gain. Little do they know, their companies can find cost savings by reducing the environmental impact of their business’ supply chain, from purchasing, planning, and managing the use of materials to shipping and distributing final products. Some companies have already ridden the green supply chain wave to make their contribution in reducing carbon footprint.
In 2008, Burton, world’s leading snowboard company, automated its B2B e-commerce transactions with customers. By doing so, the company not only reduced its paper usage significantly, but also decreased its cost for postage, paper and envelopes.[1] Companies such as General Electric (GE), Toyota Motors, American Airlines cargo, Maersk Line have started using environmental accounting - a process that evaluates the effectiveness of environmental activities from the perspective of cost. In particular, General Electric has a program called "Ecomagination" where they are focused on growing their revenue stream from environmentally friendly products to the tune of 20 billion dollars by 2010. [2] General Motors has also reduced disposal costs by 12 million dollars by establishing a reusable container program with suppliers. Other high profile companies such as Wal-Mart and Apple have also made attempts to reduce the environmental damage caused by not only their companies, but also their suppliers in US and overseas.[3]
Another more recent attempt would be from IKEA, who announced in the beginning of this year to use cardboard pallets to replace for wooden pallets for shipment of their products. A major environmental issue with wooden pallets is that they are vulnerable to insects’ attacks. A wooden pallet needs to be fumigated before it is shipped across national borders, and the chemicals cause ecological
problems when the wood is recycled into paper. Cardboard pallets do not have the same problem. The company has developed a new way to fold cardboard in the manner that would provide the same strength as wooden pallet. Cardboard pallets weights only 10 % weight of the wooden pallet, which will save the company $193 million a year in transportation expenses. The cardboard pallet will be discarded after single use and recycled in the same manner as wrapping paper, protective cardboard corners and such packing material used with IKEA products.[4]
The popular belief has led us thinking that being environmentally friendly will increase expenditure. However, there are lots of companies out there that have proved to us it is possible to improve both financial and environmental performance. So, to all the supply chain executives out there, do not hesitate to think green, because you are out of excuses.



References
[1] "Introduction to the Green Supply Chain." Supply Chain Management.
Web. 03 Feb. 2012.
<http://logistics.about.com/od/greensupplychain/a/green_intro.htm>.

[2] "Best Practices." Green Supply Chain. Web. 03 Feb. 2012.
<http://greensupplychain.com/best_practices.html>.

[3] Gupta, Deepak. "Green Supply Chain: Is Going Green a
Cost-conscious Decision?" Management Comes Alive ! Web. 3 Feb. 2012.
<http://www.som.iitb.ac.in/live/greensupplychain.html>.

[4] "IKEA Swaps Wooden Shipping Pallets for Cardboard Ones to save
Money." Ecofriend - Promoting Eco Friendly Lifestyle to save the
Environment. Web. 03 Feb. 2012.
<http://www.ecofriend.com/ikea-swaps-wooden-shipping-pallets-cardboard-save-money.html>.