Companies Urged to ‘Green’ Their Supply Chain

Firms should look at measures to make their supply chains “greener” not only because it is seen as 'doing the right thing' but because it is also the “right thing to do,” a new study suggests.

Management and technology consultants Diamond suggest that introducing environmentally friendly and ethical practices into the supply chain is not only good for improving a company's image: it also improves operations and reduces costs.

Diamond analysts Mark Baum and Darin Yug said that green supply chain initiatives have moved rapidly from merely compliance with environmental regulation towards a means of effecting real cost savings in areas such as energy conservation or recycling.

They quote examples from the food and beverage industry to highlight their point: Nestlé's sustainability program helped the Swiss group make packaging material savings of $510m between 1991 and 2006, while Heineken's Aware of Energy project was expected to lead to energy cost reductions of around 15 per cent by 2010.

Baum and Yug say that companies wanting to follow suit must be careful to have an integrated strategy for greening their supply chain and not merely attempt to 'patch' a solution onto an existing strategy.

"The key to extracting business value lies in establishing a long-term green strategy that is aligned with corporate strategy and approached top-down," the analysts write.

But they warn that management should not focus entirely on the business gains to be made from greener supply chains.

Read the full FoodProductionDaily.com story here.