Sustainability and the Green Supply Chain - Essay Example

? Sustainability and the Green Supply Chain Contents Contents 2 Introduction 3 Discussion 4 Conclusion 12 References 13 Introduction The concepts of sustainability and green supply chain have evolved as critical factors in running a business in the present world where environmental factors are being enormous importance by the companies as well as the communities. More and more businesses are implementing conscious business practices aimed at protecting the earth environment. The major international businesses are integrating environmental practices into their corporate strategic practices and their business processes. In light of the concern for environmental safety, businesses are giving increasing importance to take environmental friendly initiatives in their operations. There are a number of driving forces for the companies to implement green supply chain in their business practices. The implementation of green supply chain and other environment friendly practices not only add to the corporate social responsibility portfolio of the company but also enhance sustainability and competitive advantage in the changing global scenario. The major international businesses have successfully implemented business practices such as eco-efficiency, cleaner production systems and an effective environmental management system in their processes. The major drivers influencing the use of environmental friendly processes are regulatory compliances, risk management, increasing efficiency and market expectations. The use of a supply chain environmental management (SCEM) starts from identifying suppliers pertaining to the environmental performances and conducting the business in the proper manner to maintain adherence with the regulatory requirements. The implementation of the green supply chain management plays the most important role in ensuring that all the environmental concerns are addressed along with maximizing the efficiency and sustainability of the business. The green supply chain is adopted by businesses to decrease the environmental risks and increase the profits and market share for the business. In the recent few years it has been clearly observed that the businesses which are able to minimize the ecological impacts of their production processes and which have implemented the concepts of recycling wastage and environmental management have been able to expand their business and also displace the players who have not maintained an efficient environmental performance in their processes. Discussion Sustainable and green supply chain management has emerged as necessary approaches for the businesses to remain environmentally sustainable as well as maintain their competitive advantage. The implementation of a green supply chain management in a business benefits the business in a number of ways the most critical being achieving sustainability (Florida, 1996, pp.80-105). The use of a green supply chain management system is a complex process starting with the identification of key processes, adherence to the environmental laws, assessing the benefits to the environment and the society, designing an efficient performance measurement system, evaluating alternatives for suppliers, vendors and distributors and implementing procedures for improvement (Beamon, 1999, pp.332-342). The different environmental management practices adopted by a business have a significant effect on the operation as well as the performance of the business (Erasmus, 2000, pp.28-33). The evaluation of the environmental approaches taken up by organizations has shown significant relationship between the environmental management system and the performance of the business (Roberts, 1983, p.654-674). There are two contrasting theories on the relationship between the ecological practices and the performance of the business. According to Klassen and McLaughlin, environmental management has a positive effect on the performance of the business and the implementation of a proper environmental management system can increase the competitive opportunities for the business (Klassen & McLaughlin, 1996, pp.1119-1214). This theory also supports the fact that the inter linkage between effective suppliers and the business increases the performance of the business and that the development of environmental technologies increase the performance level of the business. Another theory suggests that the implementation of environment conscious practices in the operations can increase the cost of the operations and may result in decreasing the productivity of the industry. This theory also suggests that the cost may increase due to the expenses for externalities like expenses done to prevent pollution from the manufacturing process (Szwilski, 2000, pp.183-192). Three major capabilities can be derived from using the green supply chain in the business: The capabilities of the business to influence their stakeholders increases, the capabilities for continuous innovation increase due to the implementation of new operational and technological innovations and the capability for higher order learning increase due to the evaluation of ways to improve the existing procedures (Walton & Handfield, 1998, pp.2-11). The Coca Cola Company is the largest beverage company in the world with an impressive product portfolio of 14 successful brands including Diet coke, Georgia, Fanta, Del Valle, Sprite and so on. The company has developed the largest distribution system of beverages throughout the globe. The company is one of the major international businesses which have implemented the green supply chain effectively in its operations which has created credibility and a global sustainability strategy for the company (Hamel, 2011, pp.63-75). Coca Cola has successfully integrated sustainability in its business processes by adopting efficient environmental benefit strategies in the company. The company has reshaped its manufacturing processes and its supply chain processes to address several environmental concerns like carbon footprint, usage of material, water and energy consumption. The company follows a stringent environmental risk management process in which the social and environmental risk factors are considered as a major area of focus. The company has started implementing strategies to reach the goal of reducing carbon footprint in the operations more than 15% in the coming 20 years. The company has implemented the green supply chain management in its distribution channels by installing energy management machineries to increase the energy efficiency of the distribution processes. The company has also taken up the processes of recycling wastage and has introduced the sustainable packaging system. The company has a centralized recycling process in which the products which are damaged or expired are brought back to the company through reverse logistics and sold to the industry recyclers. The company also uses hybrid trucks in its logistics system with the aim of saving energy. The company has met the expectations of the shareholders including the community at large by identifying the limitation of the availability of the natural resources on earth. The company has taken huge initiatives to improve the sustainability of the global community and to implement new business approaches to address the environmental concerns. The company has identified key strategic corporate and social responsibility areas which include energy conservation, diverse culture, society well-being, sustainable packaging and recycling. The company has made an investment of around USD35 million on their green supply chain practices to effectively address the ecological concerns in their logistics and manufacturing processes. The company has incorporated major innovative technologies in its supply chain management system with a goal of conserving the natural resources. The sustainable and green supply chain of Coca Cola saves energy and other natural resources in their manufacturing processes as well as implements the use of green factors in their packaging and recycling processes. The company has taken several important steps towards the adoption of a completely green supply chain in their business. Water is the most important supply chain resource for the beverage company. But water is one of the natural resources that are facing fast depletion which has already resulted in 70% of the world population living in areas with scarce supply of water and more than a billion people deprived of safe drinking water. Coca Cola has implemented an extensive water management process in its supply chain in response to the depletion of water as a natural resource. The company has used a unique water management system having identified the potential threat of water scarcity in our planet. The technology used for the treatment of waste water is one of the most advanced techniques used in the world. The company has integrated a 4R model with its existing water management system. The 4Rs include reduce, recycle, replenish and risk management. The company has reduced the usage of water in their business operations by a significant 4% from 2011 to 2012. The company recycles 99% of the water used in their manufacturing systems back to the ecological system. The company works towards replenishing the water used from the environment by significant social activities. The factor of risk is clearly evaluated so as to ensure that the usage of water by the company’s operations does not hinder the access of water for other users. The company has established a powerful water sustainable manufacturing and distribution process in which minimal use of water is done. This water sustainable process has the objective of having a water neural effect on the local community in which the manufacturing processes are carried out. The company balances the water effect by safely replenishing the amount of water they use in their processes and beverages to the local environment. Coca cola has partnered with organizations like the World Wide Fund for Nature (WWF) and the Worldwide Responsible Accredited Production (WRAP) to enhance their activities towards benefiting the environment and the society. The company uses an innovative hydro fuelling system to move products inside their warehouses. The company has entered into an alliance with Linde, a prominent alternative fuel technology company and has started using hydrogen power as a major source of energy in their manufacturing plants. The use of hydrogen fuel has not only improved the environmental impact of the manufacturing processes but also made the supply chain process more efficient. The company earlier used plastic containers for bottling their products. But with the growing concern on environmental hazards, Coca Cola introduced a recyclable packaging system in which the bottles are made from biodegradable material like molasses and sugarcane. The company also operates the largest bottle recycling plant in the world where more than 50 million kilograms of bottles are recycled annually which results in the reduction of carbon footprints by almost 30%. The company has considerably decreased the negative impact of packaging on the environment by maximizing the use of recyclable and renewable resources in its business processes. The company aims at creating a packaging process in which the equivalent of cent percent of packaging is recovered. This has led to the development of a work culture in which diversities are valued and each employee has a say in the work of the team. This kind of workplace reflects the value of the community and provides enormous benefits for the society (Galle, 1997, pp.10-17). The company also decreased almost 3% of the total materials used for packaging and recycled almost 130,000 metric tons of packaging. The business now operates with a 90% waste recycling process with 15 facilities dedicated for this purpose. These measures taken by the company has successfully reduced the negative impact of packaging on the environment. The company has made continuous investments in green energy. The company runs a landfill gas to energy system which meets all the energy requirements of the manufacturing plant of Coca Cola in Atlanta. Coca Cola Enterprises is recognized as the third largest user of green energy in the United States. The facility is also acclaimed for its other features like conservation of energy, reducing carbon emissions, decreasing water usage and recycling raw materials. Coca Cola has been an early recognizer of the potential of carbon to take the place of a parallel currency along with money in the light of increasing environmental concerns. The authorities are likely to impose regulations on the companies to operate within a level of carbon emission and in case emission above the prescribed level is produced from the company’ supply chain process, the company has to pay for the excess emission. Coca Cola Enterprise has already identified this concern and is taking vital steps to gauge the emissions from their supply chain and decrease these emissions to the lowest possible quantity. These steps are taken by the business to take sufficient measures against potential liabilities and expenses. The on-site energy generation establishments are used by the business to reduce the greenhouse emissions and offset the increasing energy prices. The establishment of an onsite energy facility not only helps to deal with the high cost of energy but also increases the reputation of the brand. The company has been fundamentally driven by innovation that has made it possible to achieve major environmental benefits. The company was an early thinker and introduced the world’s first environmental life cycle assessment of the packaging processes (Russel, 1998, pp.117). This was followed by the introduction of plastic packaging manufactured by recycled material. The latest initiative by the company for its packaging innovations is the introduction of the PlantBottle packaging in 2009, which introduced the world’s first bottling with materials obtained from plants like sugarcane. The launch of this innovative bottling system demonstrated how innovations support the smaller businesses like the business involved in making the packaging materials. The small business was integrated as an important element of the international green supply chain of Coca Cola. The breakthrough innovations used in Coca Cola has also fostered the growth of many small and medium businesses by creating a symbiotic relation between the beverage giant and these supplier companies. The company has also taken a number of initiatives to benefit the social environment. The company has created a product portfolio to cater to the well-being of the consumers. The beverage giant has introduced the first ever sports drink with zero calories, named PowerAde Zero and also launched the first ever naturally sweetened beverage with very low calorie count. Sustainability is a key concern for all the international businesses in the present world (Hasan, 2012, pp.42-48). Coca Cola has successfully linked its material sustainability factors with the business processes. The company has ensured sustainability in its value chain by assessing both the sustainability and the business values, thereby inter connecting production factors like security of supply to consumption factors like nutrition. In Coca Cola, sustainability is couple with innovation to achieve high performance in both the upstream and the downstream of the supply chain. The company accounts for strong sustainability throughout the whole supply chain process starting from the agricultural aspects of farming the commodities to producing the shelf product. The company ensures sustainability initiatives taken by the suppliers as well as the distributors to integrate the sustainability factor into the whole supply chain of the business. In contrast to the other companies, which look for starting green initiatives with ways to conserve energy, Coca Cola identified its opportunity to go green in adopting a supply chain which extensively used waste reduction and recycling processes to benefit the environment (Morton, 1998, pp.89-95). The green supply chain process started with effective reduction of waste in the manufacturing processes in the Coca Cola bottling plant in Greensburg. The company slowly spread the process of recycling bottles and waste streams to their whole supply chain all across the globe. The in house recycling facility of the company now accounts for a major part of the revenue generation for the business. The company including its supply chain is a major employer for its operations across the globe. The expansion of the operations of the company has created diverse employment opportunities for the local people in different regions. The company has taken up major sustainability activities across the domains of environment, health, waste reduction and recycling processes. The alliance with the Worldwide Fund is a major driver in the sustainable strategy of the company for agricultural domain. The collaboration focuses on increasing the performance for agricultural ingredients and the conservation of the natural resources. The collaboration has promoted sustainable farming for the main resources across the supply chain thereby ensuring long term benefits for the environment. The company has also focused on increasing public awareness on the initiatives to preserve the environment. The company has successfully revolutionized their traditional supply chain by adopting a green supply chain management system in keeping with the evolution in the logistics processes influenced by the increasing environmental concerns. The company has taken up major activities as a part of its corporate social responsibility and in order to decrease any negative impact on the environment and the society. The company has taken up community initiatives in different regions of its operation with the objective of giving back to the society in which they operate. The supply chain of Coca Cola is the perfect example of an ethical and socially responsible supply chain. The green supply chain management ensures high operational performance by increasing the risk management of the processes and building a strong brand reputation among the customers. By evaluating the green supply chain management system used by Coca Cola enterprise it can be concluded that adopting a green supply chain can have considerable benefits for the operational and the environmental performance of the business. Conclusion Today, the major international businesses are competing to embrace a green supply chain management system to increase their sustainability and competitiveness in the market. Still there remain many businesses across the world, which are yet to recognize the enormous potential of the benefits of a sustainable and green supply chain management system. The companies which are far sighted in their strategies have already started integrating the green factor in their operations. The implementation of environmental benefits in the operational processes as well the products not only increases the compliance level of the organization but also ensures the trust of the consumers on the brand. To achieve a high level of sustainability, the companies are working effectively with suppliers and customers to design products and processes that do not harm the ecological system. An important part of the green supply chain process is identified as choosing the best suppliers, periodically evaluating the performance of the suppliers, assessing alternative supply methods and build strong communication with the suppliers and the distributors. The key performance measures for the environmental concerns in a green supply chain system are increasing energy efficiency, reduction of greenhouse gas emission and conservation of natural resources. The use of a green supply chain model can result in a number of benefits for the business like reduction in costs, increase in efficiency, increase in revenue, improved risk management, increased market share and brand value. References Beamon, M. 1999. Designing the green supply chain. Logistics information management. Vol. 12(4). pp. 332-342. 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Environmental Regulation and Productivity Growth. Journal of Political Economy. Vol. 91(4). pp. 654-674. Russell, E. 1998. Greener Purchasing: Opportunities and Innovations. Sheffield: Greenleaf Publishing. Szwilski, T. 2000. Using Environmental Management Systems to Systematically Improve Operational Performance and Environmental Protection. International Journal of Surface Mining, Reclamation and Environment. Vol. 14(3), pp. 183-191. Walton, S and Handfield, R. 1998. The Green Supply Chain: Integrating Suppliers into Environmental Management Process. International Journal of Purchasing and Materials Management. Vol. 34(2), pp. 2-11. Read More