Typicalsupply chain involves suppliers, manufacturer, warehouse, retailers and finallycustomers. Due to existence of superior alternatives, today customers are moredemanding, looking for wide variety of products at shortest possible deliverytime, even willing to configure the product to their specifications. This hasbrought the shift from passive acceptance of customer to active involvement inthe design and delivery of products and services. The exceptions of earliersupply chain like desired product delivered in right quantity to the rightlocation in time, damaged free and correctly invoiced are reality of today.Traditionally the focus of supply chain network is economic benefit i.e. costminimization or profit maximization.
Theconcept is changing from economic value to market value to Relevance. Increasedpressure on cost and globalization of supply chain have further complicated thesupply chain. These have brought tremendous changes in the traditional supplychain.
The supply chain has become an integral part of strategic managementwith most of the companies and even considered as competing strategy. Intoday’s environment, the concept of integrated supply chain is widely used bylarge enterprises. Still in classic supply chain, the concept of environment orTBL (Triple bottom line) is not considered. It will be pertinent to mentionhere that organizations are also looking at CSR initiatives as part of theirlarger responsibility towards society. CSR activities focuses more on businessethics, local employment and local concerns whereas green supply chainmanagement focus on environmental issues. Shell Puget was fined in US for non-complianceof environmental regulations1. This indicates that legal frameworkis tightening noose around the companies for violations in regard to environment.
There are many mo1realike examples. 2Now-a-daysmanufacturing industries are seen as culprits for damaging the environment. Thecurrent state and trend of environmental degradation (from regulatory,consumer, and moral standpoints) indicate a need for a change in manufacturingphilosophy. There must be a fundamental shift in the way production systemsoperate. There must be a move towards sustainability, achieved through vastreductions in resource use and waste generation, and a move away from one-timeuse and product disposal (Beamon, 1999).The greening of supply chain involvesthe consideration of environment. The increasing customer awareness aboutenvironment, legal framework and pressures from stakeholders (consumers,government regulatory bodies, competitors, non-profit or non-governmentorganizations, investors, employees, shareholders, etc.
) have forced theorganizations to think of Green supply chain. Thinking Green has become buzzword in today’s corporate world. In 1997, Kyoto protocol was adopted by bothdeveloped and developing countries to reduce the CO2 emission (Greenhouse gas). Theconcept of green supply chain applies to product or services through entireproduct life cycle. All products manufactured within the supply chain, and theapplied materials and substances used in the process are expected to meetenvironmental standards for design, development, distribution, use, disposal orrecycling. The comprehensive approachincludes reducing energy, water consumption and greenhouse gas emissions,increasing use of renewable energies, Enhancing appropriate waste managementand training of employees. The growing awareness about the conservation ofenvironment is partly attributed to media also.
The consumers in the developedcountries are more concerned about the environmental friendly products. Thebiggest challenge of the green supply is to integrate the suppliers andcustomers in a collaborative way. AGreen or Sustainable Supply Chain can be defined as “the process of usingenvironmentally friendly inputs and transforming these inputs through changeagents – whose byproducts can improve or be recycled within the existingenvironment. Green supply chain management can be defined as integratingenvironmental thinking into supply-chain management, including product design,material sourcing and selection, manufacturing processes, delivery of the finalproduct as well as end-of-life management of the product after its useful life.We can define green supply chain management (GSCM) as management practice whichconsiders the impact of environment in its existing supply chain, use ofresources efficiently, elimination or minimization of waste ( energy, water,air, hazardous materials) and reverse logistics. Sustainable supply chainincludes forward supply chain and closed loop supply chain including reverselogistics, remanufacturing, and product recovery.
Greensupply chain management is now-a-days a part of strategic management at boardlevel of many companies. European automotive companies like BMW Group,Volkswagen, PSA Peugeot, Ford, Volvo, Land Rover, Jaguar, Scania, Daimler andToyota have already formed the automotive working group on supply chainsustainability. They are working on common guiding principles forsustainability. There is no conclusive evidence available which states thatGSCM practices have positively impact the profitability of the organization. Thecompanies need to develop the capabilities to measure the performance of theirSustainable operations.
Theenvironmental criteria’s in SCM are increasingly becoming important forcompetitive advantage and for business performance. The main questions forresearchers and organizations are 1) which criteria’s to be measured, 2) do theorganizations have capabilities to measure, 3) to establish linkages betweenenvironmental criteria’s and business performance. Many authors have said that these environmentcriteria’s either non-existing in organizations (Hervani e al. (2005) or they are not considered in performancemeasurement (Cuthbertson and Piotrowicz (2008))1Shell Puget SoundRefinery, Anacortes, Washington, was fined $291,000 from 2006 to 2010 for violationsof the Clean Air Act making it the second most-fined violator in the Pacific Northwest.
As of 2011, itwas listed as “high priority violator” since 2008(https://en.wikipedia.org/wiki/Shell_Oil_Company).