Building the Green Supply Chain

Going green can drive environmental and bottom-line benefits at the same time, but it takes an organizational culture change and a long-term perspective


By Andrew K. Reese

Kai Abelkis believes that going green doesn't mean going into the red. As the environmental coordinator at Boulder Community Hospital (BCH) in Boulder, Colo., Abelkis heads a program to find ways to "reduce, reuse and recycle" goods and materials procured by the hospital's 2,675 employees. These efforts have helped save more than 50,000 trees while eliminating 61,700 pounds of pollutants and 35,000 yards of landfill materials since 1996, according to the hospital's own records.

But Abelkis says that it's not just about well-meaning efforts to help the environment. "Everyone has good intentions," he says, "and good intentions might be part of my motivation, but at the end of the day, when our program can save the hospital $600,000 a year in avoided costs or cost savings, that's not only good intentions, but also good business sense."

Abelkis is at the forefront of a movement that aims to transform the way supply chain organizations think about their potential impact on the business and the business' potential impact on the broader community. This movement offers the possibility of long-term environmental gains for the planet and long-term competitive advantages for enterprises willing to take the lead in introducing a culture of sustainability into the way that supply management operates as a function.

The Movement toward Green

Green supply chain has been getting a lot of attention over the past year, but, as a concept, it's nothing new. Joseph R. Carter and Ram Narasimhan put out a paper on "Environmental Supply Chain Management" through the Center for Advanced Purchasing Studies (CAPS) in 1998 based on a focus study of "environmental issues of relevance to supply chain management." Before even that, the International Green Purchasing Network (IGPN) was founded in Japan in 1996.

Dennis Damman, director of engineering at Schneider National, the Green Bay, Wis.-based transportation and logistics services provider, notes that companies like his have long had an interest in becoming more efficient and running more efficient equipment. But in the 24 years that he has been with Schneider National, he has seen the focus shift from internal operational issues toward more global environmental concerns. "What started out as finding the truck with the best fuel economy has migrated over the last several years to not only fuel economy, but also a focus on emission reduction," Damman says. That has led to changes in how Damman and the engineering team at Schneider National spec the company's tractor equipment, with full aerodynamic effects, fuel efficient tires and lower engine horsepower ranges, for example, with an eye to being more environmentally friendly. The company also uses driver training and incentive programs to reduce idling, resulting in Schneider National currently idling its tractors at less than half the industry average.

Regulatory authorities have driven some of this change, with transportation companies moving to meet emission mandates from the Environmental Protection Agency, non-attainment area restrictions on truck idling in metropolitan areas that have not met air quality standards, and other government regulations. Voluntary programs have promoted the shift, too. For example, the EPA launched the SmartWay program in 2004 "to address the environmental and economic challenges surrounding growth in the freight industry," and the program now encompasses more than 600 businesses interested in improving their bottom lines as well as the environment. The EPA says that its SmartWay partners have saved 600 million gallons of diesel fuel — a cost benefit of almost $2 billion — and eliminated nearly 7 million metric tons of carbon-dioxide emissions that contribute to global warming thanks to three-year commitments to upgrade their trucks. The program also has recognized specific companies for environmental leadership with its annual SmartWay Excellence Awards, which Schneider National, for example, has received for the past two years running.

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