There was a time when the focus of the CPG and manufacturing companies was to have a lean supply chain and projects such as six sigma, kaizen etc were omnipresent in the industry. Every company had strategic agenda to have least possible inventory, minimized wastage and optimization of bottlenecks. Some of the companies even included suppliers to the lean value chain initiatives with a vision of enabling better quality and decreased overall prices for material.
Now that most of the major CPG companies have imbibed lean principles, the focus is changing towards Green Supply Chain Management (GSCM). And green does not mean just revitalized packaging and changing the looks of the organization logos, but it deals with overhauling whole supply chain with the objective of reducing environmental impact. Companies are devising strategies to help minimize the impact throughout the value chain- from design to manufacturing through disposal & recycling of waste / products. Some of these initiatives also address the niche market segment consisting of customers who are highly concerned about the changing environment and amount of harmful / non-biodegradable materials in the products.
Whatever the reason is for CPG companies to enable green supply chain, the final outcome is a sustainable supply chain and ultimate effect is reduced costs and increased revenues in long run. Most of the initiatives are managed in 3 basic steps- Direction by executive body, execution by management and control & monitor by all involved parties.
Some of the green examples in manufacturing locations include:
- Reducing energy utilization via energy saving lighting units, eliminating compressed air leaks, use of solar power
- Water savings via installation of rain water collection tanks
- Reducing waste and Reusing the material / byproducts (Plastic, oils, paper) wherever possible
Some of the CPG companies have saved several $100Ks in cost saving while reducing the environmental impact.
3. Greener Transportation & Delivery
Transportation and Delivery has one of the biggest impacts on Environment in whole supply chain. In effect the supply chain is movement of goods across suppliers to manufacturers to retailers and to customers. And this all leaves a big carbon footprint on the environment.
Some of the common initiatives in this area are optimizing routes of the vehicles to save fuel and also maximizing the load on vehicle to enable higher delivery per fuel unit consumed. While most of the companies have stopped at the above initiatives, some innovative companies are further gaining grounds in reducing environmental impact by finding new ways in this area. One such way is to make delivery or conduct transportation during past peak times. This leads to lower fuel consumption and faster delivery. While this obviously can be applied to roadways transportation, but the maximum result of this can be achieved when applied to ocean carriers. Docking / undocking, Loading / unloading time reduces significantly thereby reducing carbon emission and fuel usage.
4. Evolve Marketing and Promotion to Imbibe Green Principals:Though this area does not have many options for going green, several CPG have reduced use of paper on catalogs and door to door advertisement / promotional notifications and have moved towards web based platform for similar activities. Also E-mail is being leveraged as a way to manage the growth of catalogue circulation.
5. Green Performance Indicators (GPIs)
I had heard from my boss that managing without monitoring results in failure, and thus while going green, several CPG companies forget to monitor environment performance. A few of the companies have established set of metrics which I have renamed here as GPIs. These can be varied depending on the type of the company, but most of the companies can relate and rely on these:
Energy Based GPIs:
- Total energy consumption per employee
- Total CO2 Emission
Material Based GPIs:- Total Waste generation (in metric tons)
- Hazardous waste generation
- Waste Disposition (Hazardous & Non Hazardous)
Water Based GPI:
- Water consumed
- Water recycled
While above initiatives are driven towards sustainable environment, they also lead to less wastage and cost savings envisioned by lean supply chain concepts. Thus going green and becoming eco friendly provides an added incentive for CPG firms. And did I say that green was any different than lean?
Now that most of the major CPG companies have imbibed lean principles, the focus is changing towards Green Supply Chain Management (GSCM). And green does not mean just revitalized packaging and changing the looks of the organization logos, but it deals with overhauling whole supply chain with the objective of reducing environmental impact. Companies are devising strategies to help minimize the impact throughout the value chain- from design to manufacturing through disposal & recycling of waste / products. Some of these initiatives also address the niche market segment consisting of customers who are highly concerned about the changing environment and amount of harmful / non-biodegradable materials in the products.
Whatever the reason is for CPG companies to enable green supply chain, the final outcome is a sustainable supply chain and ultimate effect is reduced costs and increased revenues in long run. Most of the initiatives are managed in 3 basic steps- Direction by executive body, execution by management and control & monitor by all involved parties.
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| GSCM (Green Supply Chain Management) Framework |
Below is an elaboration of how above framework is being enabled at major CPG companies:
1. Product Design with End Considerations:
In order to achieve green supply chain, CPG companies are looking at the initial stage of the product life cycle- Design. Most of the companies have started designing products considering packaging and shipping costs. Also various attributes of the products are being considered for recycling opportunities.
Reducing paper consumption while ensuring product's perfect condition is sure a challenge for all CPG companies but can result in significant cost savings considering that wrapping and packaging consists of 10-15% of end product cost (for some of the CPG companies).
2. Manufacture with eco-efficiencies
Manufacturing is one of the areas which can contribute a lot towards sustainability and thus initiatives in this domain can be most effective for an eco-considering CPG company. For instance, in many CPG Manufacturing plants the focus is on 3REs - Reduce, Recycle and Reuse.
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| 3 REs Framework for Go-Green |
- Reducing energy utilization via energy saving lighting units, eliminating compressed air leaks, use of solar power
- Water savings via installation of rain water collection tanks
- Reducing waste and Reusing the material / byproducts (Plastic, oils, paper) wherever possible
Some of the CPG companies have saved several $100Ks in cost saving while reducing the environmental impact.
3. Greener Transportation & Delivery
Transportation and Delivery has one of the biggest impacts on Environment in whole supply chain. In effect the supply chain is movement of goods across suppliers to manufacturers to retailers and to customers. And this all leaves a big carbon footprint on the environment.
Some of the common initiatives in this area are optimizing routes of the vehicles to save fuel and also maximizing the load on vehicle to enable higher delivery per fuel unit consumed. While most of the companies have stopped at the above initiatives, some innovative companies are further gaining grounds in reducing environmental impact by finding new ways in this area. One such way is to make delivery or conduct transportation during past peak times. This leads to lower fuel consumption and faster delivery. While this obviously can be applied to roadways transportation, but the maximum result of this can be achieved when applied to ocean carriers. Docking / undocking, Loading / unloading time reduces significantly thereby reducing carbon emission and fuel usage.
4. Evolve Marketing and Promotion to Imbibe Green Principals:Though this area does not have many options for going green, several CPG have reduced use of paper on catalogs and door to door advertisement / promotional notifications and have moved towards web based platform for similar activities. Also E-mail is being leveraged as a way to manage the growth of catalogue circulation.
5. Green Performance Indicators (GPIs)
I had heard from my boss that managing without monitoring results in failure, and thus while going green, several CPG companies forget to monitor environment performance. A few of the companies have established set of metrics which I have renamed here as GPIs. These can be varied depending on the type of the company, but most of the companies can relate and rely on these:
Energy Based GPIs:
- Total energy consumption per employee
- Total CO2 Emission
Material Based GPIs:- Total Waste generation (in metric tons)
- Hazardous waste generation
- Waste Disposition (Hazardous & Non Hazardous)
Water Based GPI:
- Water consumed
- Water recycled
While above initiatives are driven towards sustainable environment, they also lead to less wastage and cost savings envisioned by lean supply chain concepts. Thus going green and becoming eco friendly provides an added incentive for CPG firms. And did I say that green was any different than lean?
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1 comments:
Very nice blog... This blog clearly shows the importance of CPG delivery. Thanks for sharing.
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