Demand For Green Supply Chain Increases For Biz | Clark prof. gives tips on extending your green policies down the line
PHOTO/LIVIA GERSHON
Joe Sarkis, a professor of operations and environmental management at Clark University in Worcester.
When it comes to going green, small businesses may be surprised to discover that they can do much more than just recycle and conserve in-house. Creating an eco-friendly supply chain is a major component of green business and if executed properly, it can lead to savings.
Savings At A Cost
The idea may seem overwhelming at first, but it can be manageable, according to Joe Sarkis, a professor of operations and environmental management at Clark University in Worcester.
“Ask yourself how you can save money by generating less waste and using less material, which includes all resources and energy,” he said.
But Sarkis also cautions that greening your supply chain has an upfront expense.
“It’s going to cost money,” he said, “but there are benefits, such as possible new revenue streams.”
An example of a new revenue stream for a manufacturer is creating a “green” product from used material. Another example would be within the computer industry, which years ago reused old microchips in toy manufacturing.
Beyond additional revenue, there are many benefits to restructuring your supply chain to be greener, Sarkis said, but the most enticing is reducing production costs.
“Any waste that’s generated from your operation or supply chain is money going to the dumpster,” he said. Minimizing that waste or finding alternative uses for that waste will cost you less, but he points out that doing so will require a big-picture view and scrutinizing every company that contributes to your final product or service.
Wal-Mart exercised this strategy when it purchased diesel-electric and refrigerated trucks with a power unit that keeps cargo cold without the engine running. The company saved almost $75 million in fuel costs and also eliminated an estimated 400,000 tons of carbon dioxide pollution in one year.
Improved savings aside, a greener supply chain also can lead to a better company image.
“You look good to the market overall that you are a green supplier and that you’re purchasing green,” Sarkis said. “This is where a lot of intangible factors come into play, like goodwill and company reputation.”
Take the hotel company Marriott International, for example. The company states on its web site that each year it spends about “$10 billion annually buying products and services for its 3,000 hotels around the world,” and that it “teamed up” with its vendors to introduce “greener solutions at no extra cost.” The company lists everything from partially recycled key cards to coreless toilet paper in its environmental marketing campaign.
Beyond an unfavorable company image, not greening your supply chain could cost your company in the long run given the current “green movement.”
“If you’re dirty, nobody wants you near them,” Sarkis said.
Making sure your company’s suppliers are being green can also act as an insurance policy. For example, if an automotive company has partnered with a steel supplier that is forced to shut down due to damaging environmental practices, that car company could lose business due to a tarnished reputation. Worse yet, it could be forced to close if it sees too much of a drop in production while it searches for a new steel supplier. Partnering with greener suppliers early cuts down on risk.
Smaller businesses should also consider taking advantage of international certifications requiring certain green practices to gain a competitive edge. For example, companies can earn certification through the International Organization for Standardization (ISO) for “environmental management systems.”
ISO certification is typically required for large, multinational corporations, Sarkis said, but for smaller companies, that certification would eliminate necessary audits each time they did business with a new company. And if you want to do business in Europe, that certification is mandatory.
Columbia Tech in Worcester recently became the first local electronics manufacturer to earn that certification, Sarkis said, but he also points out that the benefit of such certification is dependent on the individual industry.
“If it’s a very price-sensitive market, it may not make sense,” he said. “But if it’s a very environmentally sensitive market, it may be advantageous.”
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