Green Supply Chain Management

Climate change and sustainability – compelling issues for the 21st century

Environmental awareness is already having an influence on the purchasing behaviour of modern consumers, not just because of increased oil prices and legal regulations. According to recent research, 90 per cent of consumers are planning to buy climate-neutral products in the future. In the United Kingdom, retailers such as Tesco and Marks & Spencer already label products with identifiers such as "Airfreighted" or "148g CO2".

Companies, in particular manufacturers of consumer goods, need to decide now whether they want to be pioneers of merely meet the minimum requirements. These strategic objectives have a fundamental influence on how they go about the issue of green supply chain management (Green SCM). What's needed is the evaluation and optimization of all core internal processes in procurement, manufacturing, transportation and administration on CO2 (carbon footprint) criteria. To manage CO2 emissions, these need to be quantified in the same way as costs in firms' IT systems. That involves the management of master data, the planning of processes, documenting of the results and reporting. Is a rough approximate value for CO2 emissions at corporate level sufficient, or should they be evaluated for each individual product? In managing master data, it makes sense to have CO2 values for all procured products recorded in the ERP system. The corresponding consumption in internal processes and in transportation should be recorded in working plans in the same way as costs are accounted for. Software suppliers such as SAP AG are already working intensively on solutions.

Beyond the pure measurement of a company's carbon footprint, IT will in future be required to build a carbon footprint dimension into existing tools for network planning and transport optimization, for example, to guarantee the optimum utilization of transport capacity. But applications calling for collaboration in the exchange of data throughout the supply chain are also coming under focus. Such as the electronic exchange of updated master data on CO2 emissions when something changes in the process (production, transportation, etc.). In turn, the reporting set-up needs to be able to incorporate and illustrate this new criterion.

Companies would be well advised to address the subject. With its Green SCM Scan, J&M Management Consulting offers a method of determining the current status, quickly and efficiently, and planning how to proceed.