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Effective Supplier Selection in Green Supply Chain Management (GrSCM)

November 19, 2020

 by Renaud Anjoran

Large factory surrounded by green trees and grass field

Are your business customers, or your consumers, applying pressure for more environmentally-friendly practices? As a company, you have mainly two ways to satisfy them.

  1. Making and distributing your products in a better way, and recycling them if possible. This is the topic we are exploring in this article.
  2. Designing products that themselves have a more positive impact, that are more durable, and that have other positive characteristics. This, in itself, is entirely another topic.

What is a "Green Supply Chain"?

A green supply chain is a set of production, distribution, usage, and disposal activities that has been set up in a way to minimize negative impacts (or, if possible, increase positive impacts) on the environment. “Green” doesn’t mean “sustainable” (which is often very hard to achieve, and even unrealistic in many people’s minds). “Green” usually means that efforts have been applied to cause less harm to the ecological systems around us.

And it is important to think in terms of “supply chain” rather than “just the activities we control fully”. You can probably influence, even if very indirectly, your supply chain both upstream and downstream.

Examples of Green Influences on a Supply Chain

Upstream: Fabric Dying Improvements

Let’s take an example with upstream activities. More and more apparel companies avoid very dark black colors in order to avoid using highly polluting dies (that’s within their direct control), and they also force their fabric suppliers to have the water treatment facilities necessary to avoid heavy water pollution (these tier-2 suppliers are usually thought as being outside their direct control, but such a policy is not difficult to enforce).

Downstream: Re-selling & Recycling Secondhand Products

Now, let’s take another example, with downstream activities. In a seemingly bold move, Ikea announced they would buy back used furniture, after their customers no longer need it. If furniture cannot be sold, it will be recycled (hopefully in very high proportion). This is getting closer to a “circular economy” and to “sustainability”.

To be green as a whole, a supply chain has to consider all the activities it includes. We like this document from the British Standards Institution. It captures the spirit behind the requirements of ISO 14001:2015 very well.

Diagram from British Standards Institute showing the lifecyle in ISO14001:2015

How to Plan a Green Supply Chain

We described before the way a company can plan for reducing its negative impact on the environment in Planning a Great Environmental Management System (EMS) in Your Factory.

It can take many forms. Here are a few examples:

  • Extracting or growing raw materials in a more responsible manner (e.g. using FSC certified wood products)
  • Using materials that have a lower ecological footprint (e.g. Patagonia tries to avoid conventionally grown cotton because it consumes way too much water and requires too much pesticide and herbicide)
  • Producing in a way that consumes fewer natural resources and/or releasing fewer pollutants. There are many examples of this. Our CEO wrote an article full of tips on this topic in the Eurobiz magazine a few years ago.
  • Making recycling very easy, as HP does for their ink cartridges (they supply prepaid shipping materials for empty cartridges).

4 Templates for Planning Factory Management Improvements

The 5 Typical Stages of Supplier Selection & Management

#1: Set a strategy that will support your goals

For example, if you want to have a short supply chain (requiring shorter material transportation), you need to look for suppliers relatively close to your main markets. If you want to engage one of the few manufacturers that have mastered a new technology, you have to be ready to accept less favorable terms.

ISO 14001 suggests thinking of design and development, transportation or delivery, use, end-of-life treatment and final disposal. Do not think only about material extraction and manufacturing operations. Think of the impact of activities all throughout the product lifecycle.

#2: Screen potential suppliers

When you screen potential suppliers, include at least one indicator related to environmental friendliness. Many companies require an ISO 14001 certification, but many other approaches make sense. For example, one of our clients started to request that all their suppliers get assessed by EcoVadis and get a rating, with a minimum score required. Even we had to be assessed (we got a ‘silver medal’).

#3: Closely examine their management practices

Third, you need to get into more depth when it comes to their systems and processes, and about business terms. This often includes site visits and close-up assessments. This is the right time to check their ‘green’ credentials and to make sure their systems are for real. Some 'certified' factories may not have documentation relevant to their actual activities.

#4: Maintain documentation and communication

Fourth, you need to keep documenting and communicating your requirements. Your goals may be changing, and your suppliers need to keep hearing from you.

#5: Continuously evaluate performance

Fifth, you need to keep evaluating your suppliers’ performance and their ability to satisfy your needs over time. You need to give them feedback and you need to have them work on improvement plans.

Final Words

Ensuring the environmental-friendliness of your supply chain is an ongoing effort that does not stop once you have selected the right supplier. Continuous efforts need to be made to ensure that green practices are still being employed. If you would like to learn more about Green Supply Chain Management and its management, you can reach out to our experts to discuss your situation.

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Topics: Social & Environmental Compliance, Green Supply Chain Management (GrSCM), Green Manufacturing

Renaud Anjoran

Renaud Anjoran

15 years experience in China.
Partner, China Manufacturing Consultants.
Worked with hundreds of factories in China.
Certifications: ASQ CQE & CRE; ISO 9001 & 14001 lead auditor.
Author of well-read blog, Quality Inspection Tips.

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