58 59Business LK Sept-Oct 2015 Business LK Sept-Oct 2015

Consumers warm up to ‘green’ goods

GREEN SUPPLY CHAIN FOR A SUSTAINABLE TOMORROW

GAYANI DE ALWISshares her views on the importance of integrating environment

thinking into supply chain management from material sourcing to the end of life management of the

product after its useful life.

In 2008, the British-based retailer Marks and Spencer worked with its Sri Lankan supplier, MAS, to open one of its fi rst four ‘eco-factories’ in Sri Lanka. Designed to be carbon neu-tral, the MAS lingerie factory in Thulhiriya combines energy saving devices, renewable energy, waste reduction process-es and a healthy working environment. It is reported to be

using 40 percent less electricity than similar factories and enabled Marks and Spencer to launch the fi rst ever carbon neutral bra. Today they are known as one of the top 10 green supply chains in the world.

The American sportswear brand ‘Nike’ has also taken steps to ‘green’ its supply chain. According to Nike Company’s concepts, “Every product and partner, every decision, every gateway, every stage from concept to reclamation adds to a near infi nite ecosystem of cause and effect. To offer as much clarity into this ecosystem as possible, we’ve distilled it down to seven fundamental stages – Plan, Design, Make, Move, Sell, Use, Reuse.”

Renowned global industries and manu-factures ranging from baby care products, freight services, apparels, automobiles, medical drugs to delivery services are now taking giant steps towards ‘greening’ their supply chains.

The green supply chain concept ensures the integration of environmental thinking into supply-chain management, including product design, material sourcing and selection, manufacturing processes, deliv-ery of the fi nal product as well as the end-of-life management of the product aft er its useful life. Thus the concept of green supply chain management is now widely promoted in Sri Lanka through vari-ous fora and deliberations.

Gayani de Alwis, Vice President of Insti-tute of Supply and Materials Management

(ISMM) says, ‘green thinking will bring about a total mindset change to conserve resources from origin to point of consump-tion and beyond.’ She was addressing a seminar at the OPA recently.

“Mankind must adopt a cradle to cradle approach and feedback the byproducts. Greening will make the supply chain more sustainable and lead to cost savings and enable resource conservation,” she says. Green procurement and supply chain meth-ods are increasingly being adopted by top global fi rms and the consumers of those products are also aware of such products and demand more.

De Alwis who was the Director –Supply Chain at Unilever Sri Lanka is now into edu-cating Sri Lankan professionals as well as the consumers on benefi ts they can derive

Supply Chain

COMPANIES NEED TO DEVELOP AND IMPLEMENT GREEN PROCUREMENT POLICIES, PRACTICE TOTAL COST OF OWNERSHIP (TCO) APPROACH,

ENGAGE AND SUPPORT VENDORS TO REDUCE EMISSIONS AND IMPOSE GUIDELINES FOR USAGE OF LESS HAZARDOUS MATERIALS.

‘Green thinking will bring about a total mindset change to conserve

resources from origin to point of consumption and beyond.’

Benefits of green supply chain

SUSTAINABILITY OF NATURAL RESOURCES

LOWERED COSTS

LESS WASTE

By Chandani Jayatilleke

60 61Business LK Sept-Oct 2015 Business LK Sept-Oct 2015

Bauxite is mined in Australia.Ships to Norway for processing.

Metal ingot cured in Norway and shipped to Germany to be rolled.

Sheet metal is shipped to England punched and formed into cans. Cans are palletized,

stored, and shipped.

Bottler cleans and fills with product. Cans are packed in promotional boxes palletized

and shipped to retailer.

ence; moreover, consumers now prefer environmentally friendly products. There-fore, all these facts should be taken into consideration when designing the green ‘chain’, added De Alwis.

On the other hand consumers (when they purchase) should be able to ask ques-tions such as; Where does it come from?, How is it disposed of?, Will it last?, Can I fi x it?, and Do I really need it?. If you can get proper and responsible answers and if you are convinced that it is a product coming through a green chain and you become a part of sustainable green supply chain, she added.

In conventional supply chains,• The raw materials that are required to

manufacture the product must be extracted and sourced

• Manufacturing process entails the con-version of raw material into a fi nal product

• Once the raw material has been trans-formed into a fi nal product it must be transported to the customer for con-sumption

• Products that have been consumed are disposed of either in landfi lls or through incineration which have a negative impact of the environment

Green Supply chainOn the other hand, the green supply chain modifi es conventional supply chains in two ways. • The fi rst is an initial focus on ensuring

that each stage of the supply chain adopts environmentally-friendly pro-cesses

• Second modifi cation on the convention-al supply chain involves an entirely new reverse supply chain --- Recover – Refur-bish –Remanufacture – Recycle

Sustainable green supply chain Companies need to develop and imple-

ment green procurement policies, practice total cost of ownership (TCO) approach, engage and support vendors to reduce emis-sions and impose guidelines for usage of less hazardous materials.

Through green manufacturing process-es, the manufacturers can reduce overall costs by utilizing fewer resources (water, energy and material) and introducing renewable energy in operation.

In the process of green packaging, com-panies now use bio-gradable packaging, packaging with less materials and they also go green with transport by using rail trans-

port instead of trucks. For instance Unilever started transporting ice cream from Naples Italy to the logistics hub in Parma (700km), by taking 3,500 trucks off the roads, saving 40 million Mega-Joules of energy per year, De Alwis explains taking an example from her previous employer- Unilever.

Many people would not know, certain raw materials and packages travel thou-sands of miles around the globe, for days and weeks and months before it gets to the hand of the consumer. And within seconds aft er purchasing the product, the package produced at a high cost is thrown away. This is a classic example of the life of a fi zzy drink can.

In Sweden there are examples of trains being run with biogas derived from organic solid and liquid waste of the city dwellers. “But Sri Lanka wants to use expensive fossil fuel to take care of the city waste by trans-porting them far away. We need to rethink of innovation and see how effi ciently we could handle the garbage issue by bringing the costs down,” says De Alwis.

Green retailing is another area the com-panies should pay attention to. By 2020 renowned global retailer Zara wants to make all its stores around the globe to be eco-friendly. Retailer Walmart is in the pro-cess of introducing earth friendly product

corners in their outlets. Walmart says, for them, becoming green is more than just a marketing slogan.

“There are several barriers for green supply chain management such as custom-er preference, supplier’s adaptability to change, cost of implementing processes and not having a concrete way to measure return on investment. But what is impor-tant to keep in mind is the concept of 3R – Reduce, Reuse and Recycle.” Quoting the chairman of Unilever Paul Polman, De Alwis says – “You can do well in business by doing good things.” “Polman is a visionary leader and he is already steering Unilever towards achieving their goal of doubling the business while reducing the environmental impact by 2020,” adds De Alwis.

Understand the FOOD MILES TRAVELLED

Australia

Norway

German

Sri Lanka

UH

from becoming part of a green supply chain. She says by 2030 the world demand for food and energy will be increased by 50 percent; and water by 30 percent. The resources are already depleting therefore, it is of paramount importance that the indus-tries take immediate measures to move from linear to circular economics.

“Take stuff, make stuff and throw stuff is not the way we continue with. We need a sustainable way to continue with; we need to take stuff we throw away back to the sys-tem. It has to be a closed loop, if we are concerned about our planet and the future resources,” she says referring to the present supply chain management methods.

It is not only the industries and the links of the supply chain that should be aware of the importance of the green supply chain; but the consumers should also be made aware of these issues. Around the world shopping habits of consumers are now changing.

Although there’s more money to pur-chase, the consumers demand better products; although there is a bigger choice there’s less time to choose; although there’s more mobility consumers want conveni-

Benefits of green supply chain

INCREASED EMPLOYEE

MORALE

ETHICAL SUPPLY CHAIN CREDENTIALS

Benefits of green supply chain

REDUCING THE CONSUMPTION

OF TOXIC CHEMICALS

INCREASED EFFICIENCY OF

PROCESSES

REDUCING RISK

CRADLE TO CRADLE APPROACH

AND THEREBY MINIMIZING BY

PRODUCTS

THROUGH GREEN MANUFACTURING PROCESSES, THE MANUFACTURERS CAN REDUCE OVERALL COSTS BY UTILIZING

FEWER RESOURCES (WATER, ENERGY AND MATERIAL) AND INTRODUCING RENEWABLE ENERGY IN OPERATION.