The customers today pay great attention to the environment. With that, it only makes sense that we become more and more attentive to our by-product footprints from consumption and ways of life. Rightly so, it has a direct impact on the compound heat trap, or the Greenhouse Gases (GHG) that exacerbate Climate Change. Conscious Consumerism, for that matter, or the viewpoint that the world is what we consume, is the only sustainable way going forward.
Developing a Green Supply Chain not only enhances brand loyalty and luxurious image, it generates cost saving opportunities with optimized waste management. As the IKEA Group CSO pointed out, it is an opportunity for them to replace a bill with a steady revenue stream. When an expense turns into either a saving or income, the effect is doubled. The key to going Green is becoming Lean. Thus, welcome to Lean Supply Chain. Product and service oriented businesses alike can jump on the Green bandwagon by applying the following Lean principles to 4 different Supply Chain areas:
Many companies apply complex procurement procedures based on a perception that internal requirements is, indeed, complex. Big corporations that allocate procurement units to strategic regions a lot of times procure redundant supply with the head quarters, end up with oversupply and therefore waste that adds substantial costs to manage and process. As the internet of everything lean will have you know, it doesn’t have to be that way.
Lean supply chain for that matter requires an IT infrastructure that allows real time transparency that integrates production, warehousing, inventory and logistics with procurement to handle exactly what and how much is needed, when it is needed, and where it is needed.
The priority of manufacturing is frugality, or, the quality of being able to maintain a high standard of output and, at the same time, being economical with input resources to arrive at a production process with minimal overhead, waste and footprint, and therefore, minimal marginal cost. Frugal manufacturing expands revenue margins with less input requirements, minimal underutilized resources and streamlined waste management.
Although unclear where the concept of frugal manufacturing originated, the Japanese term Mottainai first appeared around year 1247 to convey a sense of regret for waste, according to Wiki.
Mottainai is a Japanese tradition that is part of the mainstream cultural widely acknowledged today and has become an international concept. It carries connotations beyond the physical plane of wasted resources into “thought patterns that give rise to wasteful action”. It includes a “sense of gratitude mixed with shame for receiving greater favor from a superior than is properly merited by one’s station in life”. Interestingly, today, mottai is also referenced in construction, Mottai-Buru, meaning “pretentious” or “giving oneself airs” by “assuming more dignity than one truly possesses”. The old Buddhist terminology has been linked to “the Shinto idea that objects have souls” and also compared to the concept of Tsukumogami, or the “artifact spirit”, which is said to “live in old objects that have gained self-awareness and are angered if the object is thrown away wastefully”.
Warehouse standard operating procedures can be inspected for low value-adding routines, operational loopholes and inefficiencies that can easily be improved. New systems can be developed to take advantage of cost saving opportunities and optimize warehouse management. As inventory comes with overhead, the larger the stock piles the larger the maintenance bill. Areas of improvement include smaller inventories, elimination of expired items, First-In First-Out operations, and etc. Taking into account surrounding communities as well as abiding by the Reduce Reuse and Recycle motto all transpires a leaner warehouse system.
Reduce: energy frugality, utilization of suitable packaging materials with regards to packaging weight itself all affect the overall maximum shipping capacity. Reduced weight means, not only lower shipping costs, but reduced energy consumption during shipping, as well. Implementing paperless systems to reduce the use of paper which a large source of waste, facilitates easier operations that further enhances the process.
Reuse: where Recycling is the breaking down of used items to be used as raw materials to produce something new, or reprocessing, Reuse is a simple principle of using something again for the original purpose, e.g., buying a pair of used jeans for clothing purposes, or for a different function altogether, e.g., buying a pair of used jeans for interior decoration, or repurposing. Reuse saves time, money, energy, and resources. In the broader economic context, “it can make quality products available to people and organizations with limited means, while generating jobs and business activity that contribute to the economy”. Typical for warehouses are pallets made of wood or plastic where some companies have deployed returnable packaging. However, due to the high associated cost and can unpredictability with regards to retaining the material back from customers after sales, the project has not been as popular as it could be. Thus, the take home message is that controllable return systems that facilitate the process of returning items must be in place for Reuse pilots to work in using the same packaging repeated several times before being recycled.
Recycle: the recycling of raw material input within the warehouse can reduce waste. Many cases where companies should implement recycle procedures include the proper dispose of batteries, oil and chemicals. The organization workforce play a significant role in making the 3Rs a successful campaign. To do so, new standard operating procedures need to be developed for new ways to work that aid the protection of the environment and communities at large, which in turn, affects the company’s brand image.
Aside from the 3Rs, Reuse is emerging outside of manufacturing plants and warehouses as well, particularly for highly technological expensive products. When it comes to recycling requirements, one of the first products that comes to mind is car batteries, which is the most recycled product in the U.S.
Businesses looking to apply lean supply chain principles must look at the existing transporting process for areas of improved flexibility. Many companies attempt to enhance customer satisfaction only to learn that uninformed decisions led to inefficient delivery journeys that did not maximize cargo loads to the fullest capacity and resulted in unnecessary waste. One of the most important principle in transport is to maximize the utilization rate of the transport fleet. To do so, delivery capacities, destinations, itineraries and vehicle type must be carefully planned to consolidate cargoes before commencing each trip. Cargo shipping can be adjusted to minimize turnaround time and energy consumption as well as planned backhaul matching to avoid running underutilized trips. Routine vehicle check ups also minimizes costs associated with vehicle performance and energy consumption, as well.
It can be said that Green Supply Chain Lean has matching qualities to that of Lean Supply Chain, whether in terms of waste reduction, cost savings, improved workflow minimized resources, that ultimately, results in a profitable and sustainable business.
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Compiled by BLOG.SCGLogistics
References and pictures by thebalance.com, slideshare.net/poojagoyal19