Earlier this year, IFS North America conducted a study among manufacturing executives to find out how many of them are currently a part of a green supply chain. It turns out that about 77 percent of them were. Most of the rest expect to be a part of a green supply chain in the next few years.
So what is a green supply chain, and why are so many manufacturers finding themselves part of one? A green supply chain takes into consideration not just financial cost of goods purchased from supply chain partners, but also the environmental footprint of the traditional supply chain with raw material supply, manufacturing and distribution — directly to a customer or through channels of distribution. Also taken into account are hazardous goods, consumption of natural resources like water, discharges to the atmosphere and other environmental impacts not only during product manufacture but over the product lifecycle through disposal and recycling.
The growth of green supply chains brings real challenges to manufacturing and other industry. But I think this is tremendously good news, and I’ll tell you why.
Every day in the news, we can see dramatic pictures and statistics about new weather conditions and environmental challenges. And each of us, in our first-hand experience, notice new temperature extremes and other severe weather patterns. We all find ourselves wondering; “What is happening in the world, and how will it affect me and my family.”
That is why these survey results are so positive. Respondents included executives at more than 200 manufacturing companies with revenues of more than 100 million dollars. Overwhelmingly, they say environmental considerations are becoming more important in sourcing and purchasing decisions. They claim to either report environmental data to their customers or ask their vendors to share environmental data with them.
Another cause for optimism has to do with the drivers or reasons these companies cite for their green initiatives. The study shows regulations are not the primary reason for manufacturers to green their supply chain or document their environmental footprint. The two most frequently reported reasons for green initiatives involved a sense of social responsibility and internal management directives. Customer demand was a close third, and regulatory pressure lagged far behind. I think it is a very positive development that private sector demand from the customers and manufacturers’ own good intentions are a much more important factor than government regulations.
The Role of Technology
This focus on the green supply chain, like all sea changes and major economic shifts, brings with it real and documentable challenges. Suddenly, accounting, IT, sales and other departments are responsible for handling a new type of data … environmental impact data. The easiest way to describe the impact this has on the technology and software that underpins a modern enterprise is to share the vision we have for our own offering. We feel it is necessary to enable businesses to monitor and manage environmental aspects as an integrated perspective in their decision making and communication at all levels.