The supply chain plays a significant role in the growth of businesses and companies, but it seriously impacts the environment. That’s why businesses and companies are considering sustainable SCM practices to have a positive impact on the environment. Environmental concerns have received significant attention in recent years. Today, we’ll discuss environmental supply chain management; its definition, benefits, how to start it for businesses, and the negative impact of SCM on the environment.
What is Environmental Supply Chain Management?
Environmental supply chain management is the process of employing environmentally sustainable practices and strategies at various stages to protect the environment at various stages of the SC network. It means complying with environmentally sustainable standards for their operations and the operations of their suppliers and vendors.
However, the environmental standards consist of dealing with the following issues;
- Water security
- Greenhouse gas emission
- Environmental degradation
People often confuse the two terms environmentally sustainable and socially sustainable practices and strategies, and they use them interchangeably. But they both are completely different, and both of them have got their own significance. For instance, if an environmentally sustainable product is suitable for the environment but it is not good for the local community people; it can’t be sustainable in the true sense.
Some of the relevant terms for environmental SCM are as follows;
A responsible supply chain outlines the radical and holistic approach to SCM, where companies proactively find and purchase products and goods in a socially, environmentally, and ethically conscious manner.
People often use the term ethically supply chain synonymously with terms like responsible SC and sustainable. The emphasis of the SC term is on dealing with the working conditions and social impacts on the SC network.
The focus of the green supply chain is complying with the environmental standards in the SC network. It comprises dealing with deforestation, greenhouse gas emission, water resource usage, pollution, and the impact of business and supplier operations on the planet.
Benefits of Environmental SCM
Some of the main benefits of environmental SCM are as follows;
Resilient Supply Chain
An environmentally sustainable supply chain would help you to develop a resilient SC network in this difficult and vulnerable time. If employees are facing issues from the negative impact of environmental degradation; then it would impact the resilience, capability, and availability of the employees that it relies on.
Global Disruption & Climate Change
The consumer market has become highly cautious about environmentally sustainable practices. Nowadays, many large-scale multinational companies have significant power to decrease the negative impact of climate change that many ordinary people can’t do. Customers support such businesses and companies that engage in healthy and sustainable practices.
For instance, noise pollution could negatively impact the health and lives of local communities and workers’ health. Environmental degradation and deforestation would compel the local communities to move to other locations, along with causing other environmental damages.
Investors & Consumers Demand
The reason environmental SCM has become significant is that the consumer market has become cautious about SC practices and strategies like gender discrimination, forced labor, and child labor. High customer awareness level makes them shop from such companies that engage in healthy and environmentally sustainable practices.
On the other hand, investors are looking to invest in such organizations that are complying with environmentally sustainable standards to secure their investment. If the SC network of the company is engaging in unsustainable practices, then it would make them invest in other companies.
How to Start Environmental SCM For Business
Some of the main steps on how to start environmental supply chain management for businesses and companies are as follows;
Mapping Supply Chain
Before launching any type of improvement, it is significant to beware of the improvement areas and challenges. You should address obvious issues, red flags, and risk factors. First of all, you should recognize the potential issues and vulnerabilities in the SC network.
It is difficult for small businesses and companies to beware of the challenges. Often it requires you to have a creative problem-solving approach. For instance, an inventory tracking system helps small businesses to beware of the acquisitions and practices of their suppliers relevant to environmental sustainability.
It is significant to discuss all the expectations and concerns relevant to the SC network. It comprises customers, employees, and suppliers. Best strategies and clearly defined values would make sure that everyone is aware of their expected role and the consequences for violating them.
You should clearly discuss your requirements, recommendations, and suggestions for the suppliers in order to develop a relationship with them. You should gather feedback and data to gain performance insight about the sustainability standards. It is significant to develop comprehensive feedback and offer constructive feedback to the suppliers.
It is significant to pay heed to suppliers and track their performance in order to know whether they’re meeting environmentally sustainable standards and practices. It offers valuable insight and drives performance to make sure that the company is taking the right steps.
Negative Impact of SCM
Some of the main negative impacts of SCM on the environment are as follows;
International Travel Through Oceans
Traveling through the ocean is one of the main methods of transporting products and goods globally; it comprises approximately 90% of the world’s trade. It is the world’s leading transportation mode and contributes significantly to pollution. According to an estimate, human activities haven’t damaged approximately 13% of the ocean, and the remaining 87% is polluted. Commercial fishing, polluted land runoff, and global trade are the main cause of environmental deterioration.
Greenhouse Gasses in Shipping
When we talk about climate change, greenhouse gases lead the discussion. According to the Mckinsey Institute, SC practices, and activities contribute approximately 80% of the greenhouse gas emission of the company. Many businesses and companies are committing to decrease their carbon impact and greenhouse gas emissions by approximately 90% from 2015 to 2050.
Conclusion: Environmental Supply Chain Management
After an in-depth study of environmental supply chain management; we have realized that environmentally sustainable SCM practices are highly significant. If you are learning about environmentally sustainable SCM strategies and processes, then you should keep in mind the abovementioned elements and steps.
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