Eco-friendly practices
U. SANKAR
GREENING THE SUPPLY CHAIN — A Guide for Asian Managers: Purba Halady Rao; Response Books, Business books from SAGE, B1/I-1, Mohan Cooperative Industrial Area, Mathura Road, New Delhi-110044. Rs.325.
The major drivers of greening the supply chain are environmental legislations, environmental requirements of importing countries regarding product characteristics, packaging and disposal requirements, and growing environmental awareness of consumers. There is also realisation that early adoption of environmentally sustainable business practices can create not only competitive advantage and market leadership for a firm but also improve its social image.
Four phases
This book deals with four phases in a company’s supply chain. The first phase, called inbound logistics, constitutes green sourcing of raw materials, green purchasing, and greening suppliers and business partners. It considers two models of supplier management for environment — the arm’s length model and the partnership model. The author concludes that the partnership model would be appropriate in Asia. This model can promote synergy between small and medium enterprises (SMEs) and large firms.
The second phase, called production or the internal supply chain, has fabrication and assembly where one could incorporate closed loop manufacturing and remanufacturing to minimise waste and to reduce pollution through a shift to cleaner production techniques. The approaches followed are improvements of the processes to reduce the generation of wastes, improvements of the processes to comply with emissions and effluents standards, substitution of environment-friendly materials and, recycling and reuse of materials.
The third stage, called distribution and outbound logistics, entails addressing organisation customer relationship, starting from design and development, to manufacturing, distribution, use and disposal. The required activities are green marketing, environmentally friendly packaging, environmentally friendly transportation and environmentally friendly waste management concerns.
The fourth phase, called reverse logistics, refers to the collection and reprocessing of used products, the return of materials, components and parts, and bringing them back to the supply chain. The author illustrates with examples how the products collected from the customers are inspected, tested, and graded according to the physical condition, economic condition, age and the existing demand for that particular model.
Case studies
The book contains case studies of 11 companies documenting their initiatives in greening their supply chains. The activities covered include milk products, paints, domestic appliances, waste management, computer components, chemicals, petrochemicals, semi conductors, and consumer products. Some of these companies rely not only on ISO 14001 certification but also have their in-house environmental management system customised and adapted to their activities.
Each case study explains the nature of the environment problem, initiatives taken in greening the supply chain at various stages, reduction in pollution levels, reduction in wastes and the material savings. The economic and social benefits from adoption of environmental management system to the companies are reduced risk, less regulatory oversight, improved public image, increased market access and stakeholders satisfaction. This study provides support for the hypothesis of Porter and Van der Linde in Journal of Economic Perspectives in Vol. 9, 97-118 (1995) that competitive advantage rests on “the capacity for innovation and improvement that shift the constraint.” They mention two kinds of innovation offsets. Product offsets occur when environmental regulation results in not just less pollution but also creates better-performing products, safer products and lower production costs. Process offsets occur when environmental regulation not only leads to reduced pollution but also results in higher productivity, materials savings, better utilisation of products etc.
In many labour-intensive Indian industries the bulk of production takes place in SMEs. Many large firms also depend on SMEs for semi-finished products, parts and components. Partnership of large firms with SMEs will not only help in greening the inbound logistic phase but also in technological upgradation of the SMEs in creating network externalities and in decentralised development.
In the case studies, the author could have provided some estimates of costs and benefits of greening the supply chain. This information would be of immense value to environmental policy makers and industrial managers in assessing the environmental compliance costs of firms, in decisions relating to revision of environmental standards and regulations, and in articulating the view that a proactive environmental policy is beneficial to firms.
The case studies and examples given in the book highlight the social, economic and environmental benefits of greening the supply chain. The presentation is lucid and will motivate managers of companies to acquire ISO 14001 certification or similar certification and also develop in-house environmental management systems suited to their needs. This book will be useful to management students and others interested in corporate social responsibility.
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