- Defective supply chains are costing companies billions every year in lost revenue and create significant negative environmental impact.
- Warehouses can play an important role in mitigating the environmental impacts of logistics activities through green initiatives.
- Logistics centres being an integral part of manufacturing, the concept of green warehousing is going to be an operational norm, and should attract investment from both MNC’s and SME’s.
- MNCs having aggressive targets of reducing carbon emissions from both mobile infrastructure and immobile infrastructure in the entire supply chain, are likely to be the prime investors in this segment.
A superior logistics system is a ‘proprietary asset’ of any organization that cannot be easily duplicated. Logistics have a pivotal role to play in making the whole supply chain experience seamless. Many organizations have begun to view business logistics as an effective competitive weapon. Although winds of change are sweeping across supply chain business the industry is becoming more complex with increased globalization and has become the centre stage of discussion.
Defective supply chains are costing companies billions every year in lost revenue. At this point there is a need for optimization, automation, risk mitigation and innovation. According to reports, around 75 per cent of a company’s carbon footprint comes from transportation and logistics alone. In such a scenario, warehouses can play an important role in mitigating the environmental impacts of logistics activities through green initiatives.
The demand for quality Logistics infrastructure is being strongly felt across all industries owing to growth in the emerging economies, the future of the warehousing sector seems bright. The driving force behind the green movement is the continuous rise in fuel costs. Moreover, growing demands from global players for green supply chain processes and the need to cut down on external and wasteful costs that leave carbon footprints in environment are other major factors driving companies to go green.
Logistics centres being an integral part of manufacturing, the concept of green warehousing is going to be an operational norm, as the concept will provide the much desired qualification to engage in business with the MNC’s and SMEs. MNCs in general are going to be the prime investors in this segment and have aggressive targets of reducing carbon emissions from both mobile infrastructure and immobile infrastructure in the entire supply chain. This situation demands companies to adopt green measures. This also helps in bringing long-term benefits to these companies
Where to Start?
To facilitate the Green supply chain process, a comprehensive review of operations across the supply chain and the value proposition for implementing an advanced supply chain planning and logistics solution is required. The scope of this effort includes all supply chain processes across the following functional areas:
- Prioritize potential business capability improvements
- Outlined technology solutions required to support these improvements
- Implementation of a series of program and infrastructure upgrades
- Optimization of resources,
- Adaption of technology in different areas of warehousing,
- Automation of order to cash processes, and outsourcing
- Integration of warehousing with efficient transport & Distribution network systems.
- Waste disposals & recycles
Create a Value proposition
The environmental initiative builds the value proposition of a logistics company and sets it apart from the competitors as it reflects its commitment to the environment. The benefits of undertaking green logistics and environmental initiatives include
- Brand building for being projected as an Eco-friendly company holding corporate social responsibility
- Cost management from energy savings by reducing fuel consumption and CO2 emissions resulting in efficient and sustainable supply chain infrastructure, which creates an opportunity to earn carbon credits.
- Human well-being index results in increased productivity of employees.
Material compliance & Automation
Implementation of Green supply chain is a challenge as it involves both automation and material compliance meeting the carbon reduction. Logistics automation has virtually made inventory paperless and the use of information technology is bringing warehouse operation towards the greener side. In addition, using construction materials that possess good strength and durability proves to be of utmost importance like the precast as it reduce the CO2 emissions. It plays an important role as the warehouse structures are expected to exist and perform over long periods of time, and hence the construction materials used should be compliant to sustainable standards to bear the long-term wear & tear and reduce the cost of replacement to a large extent. For e.g the roof structures facilitating use of solar PV, usage of skylight concepts will drive reduction in costs of alternative fuels on a year-on-year basis, insulated steel panels will ensure lower consumption through the grid and eventually play a crucial role in the green technology.
Seven steps to Green implementation
- Building a road map based on corporate social responsibility
- customer acceptance and good business sense
- Looking for customer competitive advantage and USP s
- Evaluating green initiatives in terms of cost, timescale and business case
- Measuring and bench marking
- Adopting the right green practices for Eco-friendly
- Design energy-efficient construction and operations in warehouses
Today, the manufacturing industry is facing a volatile economy, intense competition and rising energy / material costs. Improving operational efficiency has become an imperative not just for margin purposes, but also for long term success. Cost reduction, quality and productivity improvement have now become key levers for gaining competitive advantage. Operational Excellence is the pursuit of conducting business in a manner that continuously improves the quality of goods and services, reduces cost, and enhances speed and flexibility to achieve competitive superiority. Green Optimization of the supply chain can significantly improve company profitability and support in achieving Operational Excellence.
The article is written by Raghu Menon for Arab Business Review
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