Following an unprecedented growth in global competitiveness over the last few decades, companies all over the world are now taking steps to be ahead in competition — in producing world-class quality and providing excellent service. In a way, they are also doing this to be part of a new breed of world-recognized companies called the “environmentally responsible companies”. They are doing this perhaps out of a desire to comply with the ever increasing requirements of environmental regulations, to satisfy their global customers who prefer to do business only with companies having a distinct environment-friendly image, and of course, to reduce all types of waste, both hazardous and non-hazardous, to improve operating efficiency, and to mitigate the environmental impacts of their production and service activities. These initiatives are often being pursued with the objective that reduced waste would lead to a reduction in cost which, in turn, would lead to greater competitiveness (Sroufe 2006).

So, the drivers of the greening initiatives of companies are many and they are continuously trying to develop new and innovative ways to achieve more and more improvements in their environmental performance. Green Supply Chain Management or greening the supply chain is one such initiative which many companies in Asia are keen to adopt. This is in line with their urge to do something more than adopting typical measures of waste reduction, pollution control, replacing hazardous materials with environment-friendly material, and so on. These initiatives lead companies to commit themselves to ever-higher standards of environmental sustainability and even encourage all stakeholders across the supply chain to do the same. In other words, they strive to look beyond the walls of the factory to reach out and involve material suppliers, service contractors, vendors, distributors, customers, and end-users, to work together in a coordinated manner so as to reduce and eliminate any environmentally adverse impact which the company’s activities might generate. This initiative would serve to strengthen and streamline the coordination of the supply chain, which along with the greening of
it’s phases, would improve customer satisfaction and competitive advantage (Von Ahsen 2006).

Green Supply Chain and its Impact on Small and Medium Enterprises (SMEs)

The concept of greening of the supply chain is expected to play a very critical role in the greening of industry in this region in many different ways. Large companies who usually initiate this process have many suppliers and business partners who belong to the category called the Small and Medium Enterprises (SMEs). They employ a very large part of the working population in Asia, are found in densely populated areas, operate in highly competitive markets, and attain only poor profit margins. Because of their lack of awareness on environmental initiatives and also because of their funding limitations, SMEs have not really shown much interest in greening their operations. Paradoxically, according to current trends, a major part of manufacturing in Asia will take place with SMEs through the outsourcing of processes handed over to them by large corporations. If this manufacturing is to be carried out in an environment-friendly manner so as to reduce
the environmental burden created by industry, the greening of the supply chain initiative would indeed have a tremendous effect (Ciliberti, Pontrandolfo, and Scozzi 2008; Philippine Business for the Environment 2006: 13–16).

Thus, on one side, SMEs contribute significantly toward the total production of goods and services. On the flip side, they have been accused of being the biggest polluters and the source of about around 70 percent of the entire pollution in the region. Because of these environmental concerns, it is extremely critical that their operations should become environment-friendly. The greening of the supply chain initiative, that is, striving to green all the stakeholders along the supply chain, many of whom are SMEs, would be able address the greening of the SME sector in this region (Antonio 2002: 14–16; Antonio 2003: 14–16; Rao 2007).

What Constitutes a Supply Chain?

Different authors and researchers have defined “greening the supply chain” from different perspectives, driving forces, and purposes. Defining supply chain first, Sarkis (1999) refers to the supply chain as a system which includes purchasing and inbound logistics, production or internal supply chain, distribution, outbound logistics, and marketing and reverse logistics, which refers to the flow of used products back into the supply chain.

A recent definition (Handfield and Nichols 1999) goes as follows:
The supply chain encompasses all activities associated with the flow and transformation of goods from raw materials (extraction) through the end-user, as well as associated information flows. Material and information flow both up and down the supply chain.

Having considered many such definitions given by authors, in this book we focus on a definition of supply chain, which the author finds as most comprehensive. The framework of an integrated supply chain is given in Figure 1.1.

Very broadly, therefore, a supply chain for a company encompasses the following phases:

1. Inbound Logistics

Essentially, this phase is at the beginning of the supply chain and has far-reaching implications on the environmental sustainability of the entire supply chain downstream. It constitutes sourcing of raw and virgin materials, new components and parts, or recycled and reused parts. It also includes the process in which these incoming materials and associated services are sourced, and involves the people, suppliers, and other business partners who supply them. Greening this phase would involve green sourcing, green purchasing, and greening suppliers and business partners, without whose cooperation the environmental performance of the company cannot improve. The initiatives involved here include:

a) Right inputs making green purchasing a policy to significantly contribute toward environmental performance of companies.

b) Green options from packaging, choosing various supplies, choosing vendors, and a wide range of opportunities for green purchasing exist.

c) Ripple effect asking suppliers to deliver only environment-friendly products. This not only helps the environment but also increases the demand for green products (Philippine Business for Environment 2006).

2. Production or the Internal Supply Chain

In this phase we usually have fabrication and assembly where one could incorporate closed loop manufacturing, demanufacturing, and remanufacturing to achieve a reduction in waste, pollution, and air emissions through a shift to cleaner production techniques, customer focus, worker involvement, and supplier integration.

3. Distribution and Outbound Logistics

This module of the supply chain encompasses transportation, packaging design, delivery, warehousing, inventory management, and waste disposal practices. The greening of this phase would entail addressing organization–customer relationship issues such as green
marketing and product stewardship, thereby minimizing the impact on the environment at every stage of the product life cycle — starting from design and development, to manufacturing, distribution, use, and disposal.

4. Reverse Logistics

In this phase, the company deals with the collection and reprocessing of used products, the return of materials, components, and parts, and bringing them back to the supply chain, to the extent possible.

Reprinted by permission of Sage Publications India Pvt Ltd. Excerpted from Greening the Supply Chain : A Guide for Asian Managers by Purba Halady Rao Rs. 292.50: Copyright © 2008; All Rights Reserved.

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