Going green has been the topic of conversation for years now. There have been changes in energy sources, transportation, construction practices, farming practices, and more. These aren’t the only industries that can benefit from green practices. In the supply chain industry, there has been a wide focus on creating a more sustainable supply chain.
In this article, we’re going to take a deep dive into green supply chain management and how it will shape the industry in 2023 and beyond. We’ll take a look at some of the latest trends, technologies, and strategies being used or developed to help make green supply chains more efficient and profitable.
What Are The Benefits Of Green Supply Chain Management?
Before we dive into the future, let’s take a look at the benefits of implementing green supply chain management.
When companies implement sustainable practices within their supply chain, they are helping to ensure that the environment will be protected. This includes reducing energy consumption, minimizing waste, and last but not least maintaining natural resources. This all leads to a healthier planet.
Cost Reduction and Profitability
Not only is it good for the environment but it also is beneficial for companies when it comes to increasing their bottom line. Companies that are able to reduce energy costs or increase the efficiency of their supply chain by reducing waste and using eco-friendly materials, can save a lot of money.
Enhanced Company Reputation
People are not only into products these days, but they pay full attention to how companies do business. One of the aspects people pay close attention to is making sure companies follow sustainable practices. Many companies now include on their labels that they are using eco-friendly practices. This can help enhance their reputation and overall brand image, which leads to more customers buying their products in the long run.
What are the biggest trends in green supply chain management for 2023?
Now that you know the benefits of sustainable supply chain management, let’s dive into the biggest trends for 2023 and then follow that up with what we think will be the future of green supply chain management.
You may have noticed that Amazon is slowly but surely adding a lot of electric vehicles to their fleet. As Amazon takes a strong lead, it signals that green logistics is here to stay. Green logistics has emerged as a key trend in sustainable supply chain management, with the focus of integrating eco-friendly practices into the logistics process. These practices include:
- Using Energy Efficient Vehicles and Alternative Fuels
- Optimizing Delivery Routes
- Reducing Packaging Waste
- Reverse Logistics
- Intermodal Transportation
- Real-Time Tracking and Data Analysis
- Training Employees About the Importance Of Green Logistics and Sustainable Practices
Circular Supply Chains
Another trend that is gaining momentum in sustainability is circular supply chains. This is the practice of reusing returned resources and materials to create new products and services. Companies are now examining their processes and finding ways to reuse materials.
One example of this would be a company that specializes in electronic devices. They can take returned products and use the materials to build new products, creating a closed-loop system that is both profitable and sustainable. Here are a few more examples:
- A clothing company designs and sells clothing made from recycled materials, and also offers a take-back program for used clothing that can be recycled or repurposed.
- A beverage company implements a closed-loop system for its packaging, where used containers are collected, cleaned, and refilled for reuse, reducing the need for new packaging materials.
- A furniture manufacturer designs furniture for disassembly and repair, and also offers refurbishment and upcycling services for used furniture.
- A consumer electronics company implements a circular supply chain by designing products for easy repair and disassembly, collecting used devices for refurbishment or recycling, and using recycled materials in the manufacture of new devices.
- A food and beverage company implements a circular supply chain by using food waste as feed for livestock, reducing the need for additional resources such as grain and water, and also reducing greenhouse gas emissions from the food waste.
Increased Utilization Of Technology For Supply Chain Sustainability
Whether we like it or not, technology is taking over. Gone are the manual log books, inefficient transportation methods and wasteful production lines. Companies are now increasingly using technology to make their supply chains more sustainable.
With the speed at which artificial intelligence and machine learning is moving, this will probably be the fastest moving aspect of green supply chain management. Companies are now utilizing such technologies to optimize their processes and reduce their environmental footprint. Here are some ways companies are doing that:
- IoT sensors and devices that track and monitor supply chain operations in real-time, providing valuable data for analysis and decision-making.
- Big data analytics that help companies understand their supply chain operations and identify areas for improvement, such as reducing waste, minimizing energy use, and improving sustainability.
- AI and machine learning algorithms that help companies optimize their supply chain operations by predicting demand, reducing transportation and logistics costs, and improving sustainability.
- Cloud-based supply chain management systems that provide a centralized platform for managing and tracking supply chain operations, reducing the need for paper-based processes and improving efficiency.
- Digital twin technology that allows companies to create virtual representations of their supply chain operations, allowing for simulations and analysis of different scenarios to optimize processes and reduce waste.
- Use of blockchain technology for traceability: Blockchain technology is being used to create more transparent and traceable supply chains. This technology allows companies to track the journey of products from the source to the end customer, ensuring that they are sourced responsibly and meet sustainability standards.
Sustainable procurement, also known as green procurement, is the process of integrating environmental, social, and governance (ESG) goals into the procurement and supply chain. It involves considering the environmental, social, and governmental factors of materials and products that an organization will acquire, along with their price and quality. The goal is to balance stakeholder requirements, profitability, and sustainability.
This process is becoming increasingly important in today’s business world, as consumers are becoming more aware of the impact of their purchasing decisions on the environment.
By reducing its carbon footprint, a business can help combat climate change and retain its customers. Moreover, sustainable procurement is a key aspect of corporate social responsibility, as it allows organizations to lead in reversing the damage done to the earth and show that they are aware of their future impacts. Green or sustainable procurement includes doing things like:
- Sourcing materials that align with the company’s environmental and also social values
- Encouraging suppliers to adopt sustainable practices
- Assessing the life cycle of products or services to minimize their environmental impact
- Reducing the use of hazardous materials
When it comes to green supply chain management, green logistics, circular supply chains, and the increased use of technology are some of the most important concepts. Another important, yet overlooked factor is green warehousing. When you think about it, everything starts and ends in a warehouse.
Warehouse operations are often the most energy-intensive part of the supply chain, due to lighting, heating, cooling, forklifts and other machinery. In order to reduce the environmental impact, warehouses must adopt green practices such as:
- Reducing energy usage by using energy-efficient lighting, temperature controls, and integrating green energy procurement
- Optimizing the space property in order to reduce costs and waste
- Using sustainable packaging materials
- Using warehouse management software to optimize processes, reduce paperwork, and streamline operations
Our Future Predictions For Green Supply Chain Management
These new changes make it exciting for where green supply chain management is headed in the future. Here’s our predictions for the future.
Increased Efficiency When It Comes To Circular Supply Chain
Right now a circular supply chain has some challenges. Companies are always trying to make their product better, which makes it difficult to maintain the same resources and materials. However, we believe that companies will become better at this process and will be able to recycle more materials and resources.
Machine Learning Will Become Infinitely Better
If you’ve paid any attention to artificial intelligence and the speed at which it’s moving right now, within the next couple years we believe machine learning will become incredibly powerful and efficient. This will help companies with tasks such as warehouse optimization, inventory management, and even traceability. This will reduce energy usage, waste, and more.
Moving Towards a Complete Electric Fleet
Although companies are adding electric vehicles to their fleet, it’s still a slow process. However, we believe that more companies will make the switch to electric fleets. This will help reduce their carbon footprint significantly.
What Are The Biggest Challenges For The Implementation Of Green Supply Chain Management?
Although these are all positive changes, change nonetheless presents challenges. Here are some of the biggest challenges for companies when adopting green supply chain management:
- Some companies struggle to adapt to the time-consuming process of changing their supply chain management
- Financial Constraints: It could be an expensive investment upfront, depending on the company
- Changes In Management: Some companies may struggle to bring everyone in the organization on board with the changes that need to be made. Skills may lack in some departments and need to be developed.
- Lack Of Direction: As the momentum grows, change is becoming more rapid. Not having an expert by your side could cause you to make costly mistakes.
Your Solution To Get On Board With Green Supply Chain Management
PLG Consulting approaches the development of a supply chain for the next generation of green energy technologies by analyzing your current operations in order to identify the most suitable solutions. We will work closely with you to define, implement and manage cost-effective green supply chain solutions that will reduce your energy usage and carbon footprint.
Our hands-on approach allows you to transition to a green energy supply chain at your own pace, so you don’t have to worry about being overwhelmed through the process.
If you’re interested in our services, go to our contact page and enter in your information now!