“Without action, the overall costs of climate change will be equivalent to losing at least 5% of global GDP each year, now and forever…the benefits of strong, early action far outweigh the costs of not acting,” warned British economist Lord Stern of the effects of climate change on the world economy in the 2006 Stern Review on the Economics of Climate Change.
For most organisations, responding to climate change begins with the supply chain, the core of every organisation’s environmental footprint, TechPro Personnel tells SmartProcurement.
Implementing Green Supply Chain Management (GSCM) – defined by Srivastava as ‘integrating environmental thinking into supply chain management, including product design, material sourcing and selection, manufacturing processes, delivery of the final product as well as end-of-life management of the product after its useful life’ – has been proven to reduce impact on the environment, while positively affecting business performance.
Yet, while most organisations acknowledge that doing nothing is no longer an option, many have yet to start implementing GSCM measures. Deloitte Canada found that 80% of respondents to their Supply Chain study defined GSCM as a corporate strategic priority – but 75% indicated that measures had either not yet started or had not moved beyond regulatory compliance.
How is GSCM being adopted in South Africa?
There are many examples of South African companies effectively ‘greening’ the supply chain – as the annual Green Supply Chain Awards show. Now in their fifth year, the Awards are a joint initiative between the Chartered Institute of Logistics and Transport: South Africa (CILTSA), the Consumer Goods Council of South Africa (CGCSA) and Supply Chain Today magazine.
The award winners show that South African supply chains are leading the way: from Rainbow Farms (winner of the ‘Best Project: R1-million to R10-million’ category) who converted incandescent lighting in 36 facilities to LED systems, reducing electricity consumption by 117 000 kWh per month, to TFD Network Africa (winner of the ‘Best Project over R10-million’ category) who launched ‘Driving the Green Movement’, a project that addresses energy efficiency, water management, waste management and carbon emission reduction.
Barloworld Logistics, Ellerine Holdings and Growthpoint Properties together used green building technologies to convert a disused foundry into a state-of-the-art warehouse for green distribution, earning a ‘Highly Commended’ mention.
South African products also shine, with ECO2Fleet (a web-based reporting service, developed by Standard Bank that measures the carbon footprint of a vehicle fleet to reduce costs) and to DHL (with their aerodynamic teardrop trailer that reduces wind resistance at speed) both winners in the ‘Best Product’ category.
What challenges face companies looking to green their supply chains?
Common challenges face companies looking to implement GSCM, says John Wilkerson, an American Supply Chain Specialist:
- Standards – There are many individual standards (the JSE’s SRI Index, Kyoto Protocol, ISO), but no single global standard that can easily be applied.
- Awareness – A lack of executive-level awareness hampers GSCM implementation.
- Business case development – Limited capital/resources and increasing legislation make the case for GSCM harder to sell.
Another key challenge, according to Barloworld Logistics’ supplychainforesight 2013 Report, is a shortage of Supply Chain skills – or the ‘human link’ in the chain.
The Report found that lack of skills is viewed as one of the top five constraints to South African supply chains and the single biggest constraint to competitiveness.
And the benefits?
Apart from reduced environmental impact, the Deloitte survey found that other benefits of GSCM include:
- Cost savings – The initial costs of implementation are offset by long-term savings on energy, transport and other costs.
- Competitive advantage – ‘Early adopters’ of GSCM gain the competitive edge.
- Corporate image – Improved internal branding and external recognition.
- Product and service innovation – An emphasis on reduction, efficiency and costs can spill over into other areas of business, stimulating product and service innovation.
- Deeper customer and supplier relationships – The result from working together towards sustainability.
- Listing on sustainability indices – Like the JSE’s SRI.
Environmental sustainability and the business benefits that can be gained from GSCM make it an imperative – which is important, given that, in a 2013 interview with the World Economic Forum, Lord Stern said: ‘Looking back, I underestimated the risks.’
Do you believe that GSCM is important? TechPro would like to hear your thoughts… Join their discussion on LinkedIn. info@tech-pro.co.za
