Wednesday, September 25, 2013


In the report by Capgemini, “Future Supply Chain, 2016”, light is thrown on various solutions by innovations in the physical supply chain. To support these suggestions, examples of real-world practises by companies are discussed and evaluated. Most of these real world examples are taken from the retail and manufacturing industries. Several of the examples discussed further on too, to understand how to reinvent the supply chain, encompass these industries.

Logistics and supply chain management are usually used at operational, tactical, and strategic levels in the retail, automotive, healthcare and manufacturing industries. A green supply chain is highly emphasized and also successfully implemented in retailers such as Amazon and Wal-Mart, logistic companies such as UPS and Fedex, electronics goods companies such as Apple and HP. However, the role of supply chain is not limited to any industry; rather it has relevance over almost all industries.

An increasing number of environmental factors are gaining importance as parameters for supply chain designs. Factors such as emissions, energy consumption, traffic congestion, etc all fall under the umbrella of environmental impact - an emerging issue. The relevance of such factors in the hospitality industry is significant for several reasons:
  1. Hotels have a considerable amount of local impact in terms of economy, environment, and culture.
  2. It involves the collaboration between several industries and thus has immense impact at each level.
  3. It is a unique position to advance green practises in multiple degrees, such as green buildings, sustainable purchasing decisions, large scale recycling, efficient procurement and distribution, etc.

The very nature of the hotel industry is service oriented, other product involving activities are supportive activities of the primary. The nature of any service is perishable, i.e., they must be consumed when they are ready to be served. Hence, unlike other industries with physical products, the warehousing of these services is difficult. Nevertheless, the hospitality business is following the footsteps of the consumer products industry to move to a more sustainable supply chain.

At a strategic level, the hotel business can incorporate a sustainable supply chain by focussing on the following:
  1. Lean paradigm - The ability to reduce waste by sound estimation of demand by considering all demand deviation factors (e.g. seasonality, economic conditions of environment in which it is operation etc.) to enable waste reduction.
  2. Agile Paradigm - The ability to meet the changing demands of the market in a cost effective and sustainable manner.
  3. Resilient paradigm - The ability to cope with unexpected disturbances by adopting a flexible supply base or strategic stocking of some services.
  4. Green Paradigm - Assessing whether the lean implementation also pushes cost to the point of optimal environmental performance.

Implementing a green supply chain can prove to be a competitive advantage to save costs. Creating tools such as HSP Index to evaluate and facilitate more sustainable purchasing and distribution in the industry will also be highly beneficial.


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