1. Green Supply Chain Management
Overthese recentyears,organizationsare realizingthe long-termsustainablebenefitsof
employinggreensupplychainmanagement,butfirst,we mustunderstandhow greensupplychain
managementcame tobe.Greensupplychainmanagementcame fromthe original supplychain,which
isthe conversionof rawmaterialsintofinal productsandthendistributedtothe customers. The original
supplychainconsistsof differentcomponents,includingsuppliers,manufacturers,transporters,
warehouses,retailers,andcustomers.Italsocontainsall functionsinvolvedinfulfillingacustomer
request,includingproductdesign/development,marketing,operations,distribution,finance,and
customerservice.
The needfora greenerandmore sustainable supplychainscame aboutinthe early1990s,
where the maindriverhasbeenthe deteriorationof the environment,suchasdiminishingraw material
resources,overflowingwaste sites,andincreasinglevelsof pollution. Overthe yearssince,there has
beenincreasingpressure frommanydifferentforces,includinggovernmentlegislation,market
demands,andprivate sectorinitiatives. One exampleisthe Council of EnvironmentalQualityin1996,
whichisdefinedas“safe drinkingwater,healthyecosystems,safe food,toxic-free communities,safe
waste management,andthe restorationof contaminatedsites”.Nowadays,the achievementof
environmental qualityisanimportantgoal forcompaniestryingtogreentheirsupplychain.Ina
businesssense,companiesdon’tsee greeningtheirsupplychainasa cost pitfall anymore,butratheras
an avenue forhigherprofitsandbetterbusinessopportunities. Additionally,throughthe media,there is
a substantial increase inpublicattentiontothe environmentandwhatcompaniesare doingtoimprove
it.
Greeningthe supplychaincanbe achievedbyone of two strategies.The firstone isthrough
incremental changesbytakingthe traditionalsupplychainsandredesigningtheircore componentsto
ensure sustainability.The secondstrategyinvolvesradical redesignandnew conceptual elements

2. introducedinthe supplychain.Greeningthe supplychaininvolvesthe conceptof greensupplychain
management. Greensupplychainmanagementisthe processof implementingenvironmentally
thoughtful practicesintothe processesof the originalsupplychain,withthe hopesof reducinga
company’scarbonfootprintand/orreducingcosts. (Alternativedefinition: Greensupplychain
managementis a collectiveset ofprocesses, tools,andprinciplesused to incrementallyalter the
traditional supplychainsorintroduce radical redesignsto existingsupplychainsto limit
environmental damages,and… (wewill be addingmore here))
Followingthe general structure of the traditionalsupplychains,the greensupplychaincanbe
dividedintoanumberof keyelements,includinggreendesign,greenprocurement,green
manufacturing,greendistribution,greenwarehousing,andreverse logistics.Withinthese keyelements
are varioussub-elementsthatwill be explainedthoroughlyoverthe course of thispaper. Thispaperwill
alsodiscussthe majordriversof whya companywill adoptagreensupplychain,aswell asthe
outcomesof a successful greensupplychain.
GreenDesign
The firstmajor processof the greensupplychainisgreendesign, whichisthe philosophyof
applyingenvironmental designelementsintothe physical designof products,andthe environment
aroundit. Greendesignisimportantbecause itpremeditatesthe role of sustainabilityinall greensupply
chainmanagementprocesses,includingthe importantelementsof greenproductdesignandgreen
facilitiesdesign,withinthe conceptof greendesign,butalsoincludingotheraspectsof the supplychain.
The designof a product and/ora facilitycanaffectthe otheraspectsof greensupplychainmanagement.
Applyingenvironmental elementsintoacompany’sproductsiscalledgreenproductdesign(oreco-
design). Designinggreenproductscaninvolve usingmaterialsthathave beenrecycled,reusedor
remanufactured,usingenvironmentallyfriendlypackaging,orusing organiccomponents.Forexample,
McDonaldsusesenvironmentallyfriendlymaterialstomake itsdrinkingstraws,eliminating1,000,000

3. poundsof solidwaste peryear.Additionally,acompanycan designaproduct or service inorderto
promote environmentalawareness.
A companycan alsoapplyenvironmental designtotheirfacilitiesinordertoreduce waste and
pollution,efficientlyuse resources,protectthe healthof workers,andevenincrease worker
productivity. Thisiscalledgreenbuilding.Forexample,if acompanywantsto investina greenfacility,
theycan lookat usingenvironmentallyfriendlymaterialstobuildtheirfacilities.Theycanalsolookat
usingalternative energysourcestopowertheirfacility,suchassolarandwindpower. A companyalso
needstolookat howto conserve energyandpromote the use of renewable resources. A real world
example of greenbuildingdesignisthe Taipei 101. It usesdouble pane windowsthatblockout50% of
outside heatandrecycledwaterwhichmeets20-30% of the building’swaterneeds.
GreenProcurement
Greenprocurementisthe purchasingof suppliesandserviceswhicheitherhasa lessernegative
impact,or evena positive impact onthe environmentwhencomparedwithsimilarsuppliesorservices
that share the same purpose.Greenprocurementhasmanybenefits,includinglong-termcostand
energysavings,supportingthe community,andcreatingamore sustainable businessenvironment. First
thingsfirst, the companyneedsto forma procurementteamwithsufficientknowledgetodevelopan
implementationapproachtoevaluate andselectprospectingsuppliers. Thisteamistaskedwith
championingthe greenprocurementstrategyandprovidingnearandlongertermvisionandrationale
for greenprocurement. Before the companycanbegintoengage suppliers,the companyneedsto
performsome sortof marketanalysisinordertounderstandtheirexternalenvironment.The company
alsoneedstoreviewtheircurrentprocurementpolicy tobetterunderstandtheircompany’scurrent
position,andto identifyany opportunities andchallengeswithimplementinggreenprocurement.With
all that done,the companycan nowbeginto evaluate potentialsuppliersthroughcertaincriteriatobe
determinedbythe company,suchas beingISO14001 certified,orshowingareductionof fossil fuel

4. consumption. Once acompanyhas evaluatedpotentialsuppliers,theychoose one andbegintoforma
collaborative relationship. Anexample of acompanytakinggreenprocurementinitiativesisWal-Mart,
whousesa MSC ecolabel onits fishproducts,whichcertifiesthirdpartiestocomplywithfisheryand
processingstandardsthroughthe supplychainfromwhenthe fishiscaughtonthe boat,to the food
that endsupon a consumer’splate.
For a companyto form andmaintaina collaborative relationshipwiththeirsupplier,theyboth
needtohave commonground by sharingGSCM policyinorderto developmutual goals. The nextthing
the companyand the supplierneedstodoisto share information,sothatthe companycan brief the
supplieronwhatneedstobe implemented,andthatthe suppliercanbrief the companyontheir
presentsituation.There needstobe jointaction,where boththe supplierandcompanycan collaborate
on goals,planningandproblemsolving.Therealsoneedtobe programsforsuppliersupport,where
suppliersneedthe relevantinformation,resources,andexpertiseinordertodeal withenvironmental
regulations.
GreenManufacturing
Greenmanufacturingisthe creationof productsby implementingenvironmental practicesand
proceduresinto all the elementsof the manufacturingprocess. Greenmanufacturingcanleadtolower
raw material costs,productionefficiencygains,reduced environmental andoccupational safety
expenses,and improvedcorporate image. There are certainpracticesthata manufacturercantake to
make the manufacturingprocessmore efficient,andtoreduce wastes. If a manufacturerdealswith
some sort of hazardousmaterialsorwastes,the manufacturercanimplementhazardoussubstance
control measuresinorderto properlydisposeof those hazardouswastes.Withthesecontrol measures,
a manufacturercan manufacture a productthat isfree of hazardousmaterial,suchas a product being
lead-free,forexample.

5. A manufacturercanalso investinenergy-efficienttechnologies,so the manufacturercanreduce
powerconsumption,increase productlifespan,increasemachine uptime, andincrease machine
performance.Also,amanufacturercaninvestintechnologiesthatuse fewerresourcestocreate the
same exactproduct.For example,a paperboardmanufacturingcompanythatpreparesproductsfor
customersinNorthAmericahas purchasedanew corrugatingmachine thatreducesthe numberof
paperneededtocorrugate boxeswhile maintainingtheirstrength.
GreenDistribution
Green distributionreferstothe logisticsonhow packagedproductsare beingsentto vendors,
warehouses,andconsumers.One of the firstelementsingreendistributionispackagingthe product.
Packagingisimportantto distributionbecause packagingcharacteristicssuchassize,shape,andweight,
can affectthe transport characteristicsof the product.If a manufacturercanfindwaysto package their
productbetter,itcan leadtoincreasedspace ina warehouse ora trailercarryingthe product,reduced
materialsusage,andreducedhandling.Greenpackagingisthe implementationof environmentally
friendlypracticesintohowaproductispackaged. A manufacturercanlookintousingenvironmentally
friendlypackagingmaterialstopackage theirproduct,use less of anexistingpackagingmaterial,oruse
recycledorreusedpackagingmaterials.A manufacturercanalsolooktostandardize certainpackaging
witha vendorforeasierhandlingandincreasedproductivity.
Anotherimportantelementin greendistributionisgreennetworkdesign,whichlooksatthe
effectsof locationdecisionsinregardstodistributioncenters andproductionfacilities.A company
needstolookat howfar theirproductionfacilitiesare fromtheirdistributioncentersandtheirdemand
points,aswell ashowaccessible theyare. If a company’sproductionfacilities,distributioncenters,and
demandpointsare all veryclose,thenitresultsinminimizedtransportationbetweenall those places,
whichleadstofeweremissions.Similartogreen networkdesign,there are companiesthatadoptthe
practice of nearshoring,whichisthe transferof businesstoanearbycountry,rather than offshoring,

6. because companiescanminimize theirtransportationemissions,while keepingsome sortof control of
theirprojects.
Companiesshouldlookatmaintainingafleetof newer-model,aerodynamic,fuelandenergy-
efficienttruckstodelivertheirproducts.Also, companiesneedtoproperlyutilizetheirfleetfor
maximumefficiencyandproductivity. A company’s fleetmuststicktoa strict deliveryschedule,adopt
packagingtechniquessothatmore productscan fitin the trucks,and regularlyrecoverusedandwasted
productsfor reuse andrecycling.A companycan alsoconsolidate multipleshipmentsintoone truckif
the shipmentsare all goingtothe same area.An example of thisis Exel LTD,a companythat operatesa
retail consolidationcenterlocatedinHeathrow Airport.Byconsolidatingtheirshipments,the company
managedto reduce the numberof cargo vehiclesvisitingthe airportby95% and increase the vehicle
loadingrate to 90%.
Anotherimportantpartof greendistributionisvehicleroutingandscheduling.A company
needstoorganize androute a fleetof trucksina way that reducestransportationcostsandimproves
the company’slevel of service. A companycaninvestina software package thatprovidesthe optimum
routesand schedulesatacertaintime of day for a deliverytruck(suchasavoidingacity centerduring
rush hour).Many companieshave takeninitiativestotryto reduce vehicle emissions,suchasWal-Mart,
whois aimingtomake itsvehicles25%more efficientinthree yearsand50% within10 years.Some
companiesofferdrivertrainingprograms,whichhave provedtoimprovefuel efficiencyby8-10%.
GreenWarehousing
Greenwarehousingisthe adoptionof practicesto minimize the environmentalimpactof
warehousingoperations.Tominimizeenvironmentalimpact,acompanycan lookat energysavings,
efficiencyof warehouseequipment,andpallethandlingpractices.Forenergysavings,acompanycan
lookto buyingfluorescentlightstosave energy equal to23%,ormaybe a companycan addclose fitting
and fastacting doorsand barriers,sothat heator air conditioningisnotwasted.

7. To make a company’swarehouse equipmentmore energyefficient,theycanlookatalternative
technologiestopowertheirforkliftsandreachtrucks.For example,acompanycan use hybridfuel and
fuel cell technologiesfortheirforklifts,andhavinganonboardgeneratorto recoverenergyusedbythe
reach trucksback onto the battery.A study reportedbyToyota Material Handlingsuggeststhat
recoveringenergyreducesbatterypowerconsumptionby15-25%.
Anothergreenmanufacturingpractice isthe handlingof pallets,andthe disposal of these
palletsisa probleminwarehouseseverywhere.12% of all lumberprocessedinthe UnitedStatesisused
for the manufacturingof palletstobe usedtocarry variousamountsof cargo. One waya manufacturer
dealtwiththisproblemisbyparticipatinginanonline MaterialsExchange Program, whichsendspallets
to whichevercompanyneedsthem.Thishasbeenestimatedtodivert60000kg of woodwaste away
fromlandfillseveryyear.
Reverse Logistics
Reverse logisticsisarguablythe mostimportantpartof greensupplychainmanagement.
Reverse logisticsisdefinedasthe processwhere amanufacturerrecoversandacceptspreviously
shippedproductsforrecycling,repairing,reusing,andremanufacturing.There are manypracticesthat
make up the processof reverse logistics.A manufacturercanrepaira product,whichis returningused
productsto a workingconditionbydisassemblingandthenreassemblingthe product.A manufacturer
can alsoeitheruse these usedproductsforrefurbishingorremanufacturing.Refurbishingisbringing
usedproductsup to a standardthat is lessthannew products,while remanufacturingisbringingused
productsup to a standardas goodas a new product.An example of acompanythat uses
remanufacturingisBMW,who usesstrictqualitystandardsforthe remanufacturingof enginesand
otherparts. These remanufacturedpartsare thenresoldat 30-50% lesscostto BMW while significantly
reducingwaste.

8. As bothrefurbishingandremanufacturingare conceptsof reverse logistics,soisthe conceptof
recycling, whichisthe reuse of usedmaterialsforthe productionof new orrefurbishedproducts.Sony
usesCD scrap fromthe productionof optimal discstoconvertthemintorecyclable polycarbonate,
whichisthenusedfor the productionof thingssuchas casings,topcovers,and cradles. Alternatively,
companiescanalsosimplyre-use theirproduct.Itinvolvestakingusefulproductsthatpeople don’t
need,andredistributingthe productstopeople whodoneedthem.The strategyof re-use eliminates
waste,conservesenergyandmaterials,andreduceswaste disposal costs.
Anotherpractice of reverse logisticsiswaste management,whichisthe managingand
monitoringof waste materials,includingcollection,transport,processing,anddisposal.There have been
a numberof directivesthathave been takenbyvariousgovernmentsinordertoreduce environmentally
harmful waste.Anexample isthe Restrictionof the Use of CertainHazardousSubstances(RoHS) in
Electrical andElectronicEquipment,whichstatesthatall electrical andelectronicequipmententering
the EuropeanUnionbe free of six toxicchemicals,includinglead.Thiswill alsoincreaseitsrecovery
recyclingandre-use,andreduce the total amountof waste disposed.