Green Logistics Management

Green logistics management has emerged as a key approach for enterprises seeking to become environmentally sustainable. The notion of green logistics implies the insertion of environmental decisions within the traditional concept of logistics management.

“Greening” the logistics means integrating environment thinking into logistics activities, includ­ing product movement from raw material sources, manufacturing processes, and up to delivering the final product to the consumers, and end-of-life management of the product after its useful life. A green process improvement approach (as shown in Figure 23.1) is normally adopted. It addresses the fundamental areas of material movement in the supply chain such as upstream, downstream, and within the manufacturing.

• Procurement activities of the organization include evaluation criteria of suppliers operations, raw material handling, transportation, and packaging toward environmental performance.

• Distribution activities usually comprise of those activities related to the disposal and sale of excess stock, including recovery and recycling opportunities.
• Manufacturing activities include green production logistics causing no pollution and wastages.

Green logistics accrues the following benefits to the organization:

• Judicious utilization of assets
• Cost reduction
• Gaining competitive advantage
• Risk mitigation
• Ease in product movement

Green logistics management takes into account all suppliers in various stages of the manu­facturing process, transportation of finished goods and services, and the integration of reverse logistics. A green logistics utilizes recyclable material, streamlines distribution processes, reduces redundancies, and minimizes waste to provide cost benefits to society, people, nature, business, and economy, ensuring pollution reduction, environmental stewardship, reduced operational costs, streamlined processes, and better relationships with supply chain partners.

As shown in Figure 23.2, the organizations are adopting a variety of tools both tactical and strategic in nature with short- and long-term perspectives. With these tools in mind, the corpora­tions plan and deploy various programs to gain competitive advantage. General electric deployed an “Ecomagination” program to have revenue stream of $20 billion by 2010 from environmen­tally friendly products. This shows that they recognized the opportunity associated with saving the environment.

The US Environmental Protection Agency (EPA) published a written guideline called the “The Lean and Green Supply Chain.” It is a Practical Guide for Materials Managers and Supply Chain Managers to Reduce Costs and Improve Environmental Performance. It is a four-step decision-making process for greening the supply chain as follows:

• Step 1 is to identify environmental costs within a company’s process.
• Step 2 is to find opportunities for reducing environmental impact.
• Step 3 is to calculate the benefits of proposed alternatives.
• Step 4 is to decide, implement, and monitor solutions.

The benefit of implementing sustainable policies is that the profitability of a company can be improved and it helps to keep the environment green. Thus, toward the environmentally friendly logistics practices, the following are identified as potential areas:

1. Product design, packaging, and labeling
2. Transportation of hazardous raw material
3. Manufacturing processes for waste reduction/elimination
4. Suppliers selection
5. Waste/scrap disposal

The barrier to green logistics is packaging. Packaging poses problems of waste creation, dis­posal, and land filling leading to economic and environment burden on society. Hence, the leading corporations are going for “green packaging,” which includes methods of conceptualizing products that take into account the conservation of the environment. It also considers the product’s impact on the surroundings at all stages of its life cycle. For example, implementing green packaging techniques enables us to use recyclable or biodegradable material for packaging. Likewise, there are washing detergents that are efficient in cold water, thus, reducing the energy consumption of a washing machine.

Green packaging holds enormous promise through material quantity reduction, but what has to be kept in mind is that it is more difficult to recycle thin or light packaging (thin plastic film) than heavy packaging (glass). Hence, it is time to push eco-design further, looking more seriously at manufactur­ing, product design, and logistics. Adopting green supply chain best practices results in multiple envi­ronmental benefits. These benefits are visible across industries. These benefits include improvements in energy and waste reduction, less packaging in related activities, and decreased emissions level.

Source: Sople V.V (2013), Logistics Management, Pearson Education India; Third edition.