Green vs Sustainable Supply Chain Management

Often, the terms green and sustainable seem like synonyms of each other, but are most definitely not. While going green looks at only the environmental aspect of it, being sustainable is equivalent to taking into account the social, economical and environmental impact of that particular product or organisation. In this day and age, the traditional way of managing a supply chain doesn’t cut it any more.

Supply chain management plays an integral role in your company’s success. With increasing pressure from customers and activists alike, the onus falls on the organisations to run green as well as a sustainable supply chain. 

Green supply chain management (GSCM) and sustainable supply chain management (SSCM) have several overlapping elements, but they are not the same thing. To do away with any ambiguity, there are a few key features to keep in mind that set them apart.

What does Green Supply Chain Management entail?

Bringing the eco-friendly aspect of operations into a traditional supply chain is the main objective of green supply chain management. Right from product design, raw material sourcing, manufacturing processes to end-of-life product management, GSCM integrates environmental processes throughout the supply chain. This serves to mitigate the environmental impact of not only the supply chain, but also the entire organisation.

One commonly asked question is, “Can a container company possibly be green?” This is where GSCM steps in and says yes, it is possible. The eco-friendlier a supply chain becomes, the greater reach the company gets. Customers want to go into business with organisations that care about reducing their carbon footprint. With GSCM, reduction of waste generation, reuse of raw materials, less greenhouse gas emissions, all become doable goals.

The definition of Sustainable Supply Chain Management

Sustainable supply chain management is a much broader concept than that of GSCM, and takes into consideration the environmental, social and economic consequences of supply chain operations. 

A measure of sustainability is the triple bottom line, where the bottom lines are social, financial and environmental aspects and the metrics to be measured are the profits, people engagement and impact on the planet. 

Corporate pressures on organisations to assess the level of viability of vendors and customers as well as the environmental, social and economic impact of supply chains can be dealt with the help of SSCM. SSCM brings into focus the entire manufacturing process, from procuring raw materials, reusing and disposing of products, and labour practices to the organisation fulfilling its corporate social responsibility.

SSCM helps companies to answer difficult questions like where do they get their raw materials from, how are the workers being treated, are they creating jobs for their community and so on. Better late than never, companies are looking at creating supply chains of top performers with the goal of using them to create a better, more environmentally sound, and ultimately, more profitable company.

Why should the two terms not be used interchangeably?

1. Going by the previously given definitions, it is apparent that sustainability challenges the notion of going green by taking it to the next level. It has set criteria that need to be satisfied to make your business sustainable. For example, if your company reuses its raw materials, then it is following an eco-friendly method. If you are sourcing those same raw materials from businesses that contribute to global climate change, your method becomes the opposite of a sustainable method. 

2. Companies greening their processes need to be certified under the Environmental Management Systems – ISO 14001 certification. Taking care that manufacturing, packaging, internal recycling of materials and quality management satisfy environment-friendly criteria, is all that is required for GCSM.

3. A sustainable supply chain, on the other hand, mandates that economic activity take place within environmental and social thresholds or limits. According to Allen White, co-founder of Global Initiative for Sustainability Ratings, “Sustainability requires contextualization within thresholds.” To determine whether a supply chain is sufficiently sustainable, we must take into account external environmental and societal reference points.

GSCM contributes to the goal of SSCM.

An organisation that follows GSCM practices in their supply chain operations also enhances its sustainability performance. SSCM is the larger spectrum of operations, where GSCM contributes to one part. A green supply chain makes up one leg of the three-legged stool, that is the environmental, social and economic legs of a sustainable supply chain. 

GSCM and SSCM practices share a give and take relationship, with one complementing the other for a better, safer and more environment-friendly business.