Reduce Supply Chain Excess

Supply chain excess – it costs!

Supply chain excess estimates range from $100 billion to over $1.5 trillion depending on the geographical region and various product categories. With new environmental restrictions being introduced by state and federal governments it is no longer feasible, or affordable, to procrastinate on reducing supply chain waste. While there may be some initial costs, green supply chains consume significantly less energy in manufacturing, transporting and warehousing vastly saving money in the long run.

Packaging sustainability – repackage, recycle

First, begin with examining all product designs. Where can material expenditures be reduced? Are there more energy efficient savings? What about different product packaging options?

Secondly, examine raw materials waste. Can any materials be recycled, or redesigned and be reused? With how technology has progressed a lot of waste, which was previously discarded, can now be recycled.

Reduce supply chain waste

Is there a way to efficiently decrease excess inventory? Certainly the internet and globalization have made it much easier in finding buyers for consumer products. But at the end of the day, a large volume of excess inventory indicates that the end-to-end supply chain remains largely inefficient.

It’s virtually impossible to completely eliminate all excess inventory, however, it can be substantially reduced by engaging with more efficient supply chain practices. By ensuring the best quantity of supply exists in the supply chain, while also building with quality products, a significant reduction will happen.

Implementation of waste minimizing programs have been successful in improving company products and reducing overhead costs. For example, Microsoft recently renovated their Redmond, Wash., campus with stellar energy efficient results. Through a combined effort of energy management, alarm management and fault detection, Microsoft expects to save more than $1 million per year in energy costs, with a payback of less than 18 months. In a statement released by Microsoft’s Chief Environmental Strategist:

“What we learned confirmed our hypothesis: Microsoft (and by extension, many organizations with similar real estate portfolios) don’t need to undertake capital-intensive retrofits to cut building energy costs. Instead, we saw buildings become dramatically more efficient by introducing software to harness and utilize the building systems already in use. By integrating powerful analytics that add intelligence to existing building infrastructure, our buildings got smarter, more efficient and less costly to operate.”

In all, waste reduction increases the quantity of finished goods that will pass quality green standards, while also, minimizing the waste of raw materials.

Green Supply Chain: Changing the Corporate World while Saving the Environment

Our world is currently undergoing major environmental change-researchers claim that the extreme weather occurring of late is caused by our lack of concern for the Earth. We tend to take our resources for granted considering the growing world population, resulting in resource depletion. Legislation enforcing stricter environmental regulations will soon be passed in America. The concern for environmental issues has also caught the eye of the corporate world. Companies are quickly realizing that green supply chains will help them reduce costs while helping save the environment.

Green Supply Chain: What is it, and Why use it?

A green supply chain is the process of using and transforming environmentally friendly inputs through change agents, whose byproducts can be used to improve the environment, or be recycled. Companies in the corporate world are realizing that using a green supply chain can be a competitive advantage in the marketplace; they are coming up with innovative solutions for which a green supply chain will help them save money and help the environment. For example, some companies are focusing on indirect purchases to help prevent environmental issues. Reducing the amount of cardboard used for packaging, and creating “smart packages” will help the company save money, and contribute to the environmental cause. Another way sustainability can be profitable is through the organic food craze- grocery stores charge high prices, and make a large profit off organic food that consumers are willing to pay much extra for. The green supply chain phenomenon also gives rise to a new industry- companies specializing in sustainability training and certification.

Real World Examples

The concept of the green supply chain has already spread to several Fortune 500 companies. General Motors (GM) reduced disposal costs by $12 million by establishing a reusable container program with its suppliers. PG&E has also been supporting green supply chain efforts- it gave its first Green Supply Chain award to Southwire Company. Southwire Company converted 1/3 of its cars to hybrids, thereby reducing landfill waste by 27%. It also eliminated lead activities from its products. Walmart has also begun implementing the green supply chain, and has seen an increase in profits by 7% ever since.