Cost Effectiveness of Green Supply Chain Implementation Given Todays Economic

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Table of Contents

Introduction
Green Supply Chain
Cost Cutting Techniques
Effectiveness of a Green Supply Chain
Conclusion
Works Cited

Introduction

Supply chain management is the management of the network used to acquire raw materials, production, and distribution to the customers. It can be said to be the process of attaining raw materials, production, storage and supply to the end users. Every business or company has to employ a good purchasing and supply chain management if it has to succeed in its production.

Supply chain management is important in recognizing the number of suppliers that can be accessed by the company, their location, the distribution centers, management of inventory and warehousing facilities. It also helps in determining the strategy to be used in integration of information within the supply chain.

It is the work of the supply chain management to arrange the exchange of finances or the cash flow within the supply chain of the company. This paper gives a brief overview of the green supply chain, including how it has evolved and how it can be implemented.

It also highlights some of the techniques that can lead to effective implementation of a green supply chain and concludes by giving some of the benefits of this supply chain and how Nissan has been able to succeed in the implementation of the green supply chain.

Green Supply Chain

With the growth in technology, people are becoming more and more conscious of the surroundings and the need to maintain a healthy environment. More people have become aware of the environmental problems caused by human activities such as global warming.

Several firms commenced employing green principles that were extended to include the supply chain. Green supply chain emerged in the last few years and it covers every stage of production, that is, from designing of a product to the recycle stage (Wycherley 121).

Green supply chain is a practice in production that focuses on creation of value for the customers. It is the practice that considers any expenditure of resources for other goals to be inefficient and wasteful. Green supply chain emphasizes on acting from the perspective of the customers who are to consume the end products or service.

It is centered on preservation of value for the customers. It lays more emphasis on efficiency based on optimization of resources. Green means using resources that are environmental friendly and elimination of waste in production processes. Elimination of waste results in improved quality and reduced production costs.

With the green supply chain, resources used in the production process can be recycled for use in other processes. Wastes are minimized and processes become flexible and easy to change. For green supply chain to be effective and to result in efficient production, all its aspects have to be understood and embraced by the personnel responsible for its implementation.

This supply chain seeks to make the processes simple such that they can be understood easily and managed (Wycherley 125). One of the critical decision areas in an industry that can be influenced by green supply chain is in product design. Product design defines the transformation process.

Green supply chain emphasizes on optimal use of resources to avoid wastage. In product design, factors such as costs, human resource and quality have to be considered. Focusing from the customers view on value helps in eliminating unnecessary processes and utilizing the available resources for efficient results.

Cost Cutting Techniques

Green supply chain is not about jumping into solution but about going through a process of thinking in order to scrutinize, examine, and understand the processes involved in production. It is more of a try and error method where one hopes for the best. With green supply chain one can be able to ask questions and try things out.

It is not about giving the right answer but being able to ask the right question. With the right question, one is able to know which route to follow in order to get to the right answer. This assist in eliminating wastages and makes production processes easier.

To have a cost effective green supply chain management, there are certain techniques that can be put in place. First, is the just in time (JIT) principle. This principle is used in both manufacturing and non manufacturing process for the delivery of products and services. JIT principle was originally associated with Toyota managers as a problem solving mechanism to eliminate waste.

It is a supply kind of approach used in a business to perk up its production through a diminution of the inventory procedure and other correlated costs. It assists in the production of goods and services without wastage of time and resources. JIT helps businesses improve on their efficiency, quality and the profits earned.

However, the inventory strategy has some risks associated with it; one of these risks is that, if the supply is interrupted, the business can incur increased overhead cost trying to adjust with the interruption (Graham 372). Another risk is that, internal issues such as labor strike might lead to low production or a slow production process that might not be able to meet the orders from a particular firm.

If the implementation of a green supply chain is going to be cost effective, the management has to make sure that JIT principle is implemented and that it is well understood by all personnel involved.

The product life cycle has to be put into consideration in the implementation of a green supply chain. Product life cycle is a model that describes the phases taken by products from the time they are launched by a company to the time they decline or die. Products have a life cycle that is similar to that of human beings.

They are born, they grow and then it reaches a time when they start declining. Just like human beings, product life cycle can not be predicted because it differs from one product to another. By understanding the product life cycle, it becomes easy to decide the material flow, technology to use, process selection, inventory required, and the capital needed.

Employees play the biggest role in production processes, their skills, knowledge and abilities should be put into consideration. This concept simply means taking inputs and producing output through some operations or processes (Graham 373).

The chain of supply to be adopted by any organization depends on the type of products that an organization specializes in, the products life cycle and the volume of process to be used to produce these products. Knowledge of the product life cycle can be a good technique to utilize the cost effectiveness of a green supply chain implementation.

Market conditions should also be taken into account when implementing the green supply chain. This is because the market influences the success of the supply chain. All decisions should be made using as much full and accurate information regarding the market as is available.

However, this does not always guarantee that the right decisions will be made. It may be necessary to change direction and alter priorities if the approach is not working as expected.

For instance, new variables may have been introduced; the consequence of the decision, once implemented, may be unacceptable; the decision simply might not achieve its intended goal, or the decision may impact detrimentally on established timeframes.

Effective use of the market conditions enhances the development of competent organizational skills, and contributes to the successful implementation of the green supply chain. On completion, tasks should be reviewed to check whether stated timelines have been met

Effectiveness of a Green Supply Chain

Green supply chain helps in cost minimization. All the unnecessary processes are avoided and the organization concentrates on only the beneficial ones. This avoids wastage and helps in utilization of resources in processes that guarantee quality and value of the products. It helps in reducing costs on inventory.

Costs on inventory includes but not limited to capital costs, loss on that capital, increased labor costs and reduction in storage space. Most of these inventories do not add value in any way to the quality of the products.

In real sense quality results from the reduction of the inventories. Green supply chain emphasizes on the elimination of processes and equipment which do not add value to the products quality (Preuss 346). It directs and supports developments which improve on costs, speed, and quality.

Nissan automobile company is in the process of making innovations to help the company achieve its environmental action plan. The purpose of this program is to see that a sustainable environment is achieved to enable vehicles and people to coexist with nature. The process of production of motor vehicles involves the use of resources that are powered by fossil fuels, for instance diesel.

Nissan Company has realized the importance of maintaining a healthy environment and it now aims at being the leader in environment conservation. This can only be achieved through the adoption of proactive measures that reduces the impact of the gases released to the environment both through its operations and the vehicles produced.

The best measure to achieve was the implementation of a green supply chain. With this supply chain, it has become easy to decide the material flow, technology to use, process selection, inventory required, and the capital needed. Nissan has introduced new vehicles called electric vehicles (EVs) which are run on a battery that does not release carbon dioxide (Nissan sustainable report 2).

Conclusion

The success of every business lies on the managing of the supply chain since it is the heart beat of the business. In purchasing items, it is good to take time and identify what the company want and by when. Choose the right products for the company in the right quantities and the right conditions and then negotiate for the best price for these goods.

All these ensure that the company produces high quality goods for production. A green supply chain helps in recognizing suppliers with the best products, monitors the internal processes, eliminates wastes and determines the strategies to be used in distribution of goods to the customers.

Works Cited

Graham, George. Exploring Supply Chain Management in the Creative Industries, Volume 10, Issue 5 of Supply Chain Management. New York: Emerald Group Publishing, 2005.

Nissan Sustainable Report. Protecting the environment Achieving; a Symbiosis of People, Vehicles and Nature. Nissan Suitability Report, 2010. Web.

Preuss, Lutz. In Dirty Chains? Purchasing and Greener Manufacturing. Journal of Business Ethics, 2001, 34, 345-359.

Wycherley, Ian. Greening Supply Chain: The Case of the Body Shop International. Business Strategy and the Environment, 1999, 8 (2), 120-127.

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