Tuesday, November 22, 2011

Green Supply Chain Network: How IT helps?

Patrick Penfield of the Whiteman School of Management defines Green Supply Chain Management (GSCM) as "the process of using environmentally friendly inputs and transforming these inputs into outputs that can be reclaimed and re-used at the end of their lifecycle thus, creating a sustainable supply chain.”

With increasing customer awareness and regulatory norms, organizations with greener supply chain management practices will have a competitive advantage over companies that are reluctant to embrace GSCM. Hence across industry there is a shift in the focus of GSCM programs from compliance to creating value for customers and shareholders.

There are several good examples:

  • Dell saves over $20mn annually as a result of supply chain and packaging improvements. In fact, this market leader achieved its goal of becoming carbon neutral by 2008
  • Texas Instruments saves $8mn each year by reducing its transit packaging budget for its semiconductor business through source reduction, recycling, and use of reusable packaging systems (20% annual savings)

However, implementing GSCM has never been easy. Organizations are likely to face certain challenges some of which include:

  • Lack of information about the green supply chain best practices
  • Lack of tools to optimize the supply chain with environmental management
  • Global sourcing making tracing of carbon footprint difficult
So how IT helps in enabling Green Initiatives?

Contributions of IT in GSCM can be viewed from two different perspectives, one is from hardware and one is from software.

  • From hardware perspective, IT helps to optimize hardware resources to support business by right-sizing IT infrastructure, re-architecting data processing and storage operations, leveraging shared infrastructure and adopting a lifecycle approach to the retiring of IT waste.
  • From software perspective, IT helps streaming and transforming business processes by better planning, executing, and collaborating green supply chain.
For more practices and examples, read here:

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