When your supply chain goes green, so does your wallet

10/10/2017

hand reaching for dollar bills on a money tree

hand reaching for dollar bills on a money tree

Going green seems to be one of the most fashionable trends these days. It gets reflected not only in the mentality of individual consumers but also in the mentality of political, economic and financial leaders and their agendas.

In the past three to five years, the concept of sustainable and environmentally friendly “green supply chain management” (or GSCM) has experienced quite a lot of turbulence, partially because business managers never agree on its true meaning and core features.

Unfortunately, negative stereotypes existing around GSCM prevent us from recognizing a true value of “going green”. The rejection of GSCM practices often goes hand-in-hand with a well-spread myth about their negative impact on organizational performance. In addition to that, a lot of companies are not willing to spend their time and money on things like sustainability that do not produce immediate, visible and concrete results.

It’s time to challenge these and many other myths about GSCM practices. First of all, Mother Nature is begging for more environmental responsibility by threatening us with climate change and other environmental risks. Doing what we can to mitigate these risks is becoming vitally important.

Another reason for battling GSCM stereotypes is the existing empirical evidence of a positive correlation between green strategies and a corporate growth.

For example, when a company faces a decline in organizational performance, implementation of GSCM practices into its distribution activities in many cases serves as the most effective solution. So, let’s go over the most important reasons to stop being afraid of GSCM and to consider adopting it.

Gain a better marketing position

First of all, the number of corporations that would not get positive attention on the market from adopting environmentally-friendly practices is incredibly low.  This trend is explained by the human nature of a consumer.

As human beings, we all care about our own safety which starts with things like clean air, water, and soil. This gets reflected in our habit to consume responsibly and to make safe choices –  popular examples include organic coffee, paper bags, and free-range chicken eggs. Thus, the greener your supply chain management goes, the more endorsement it gets from the public, and such endorsement always leads to a better position of your business on the market.

Among the companies that get a significant competitive advantage by going green and sustainable are IKEA, Johnson and Johnson, The Hershey Company, UPS, etc.

Add profitable “green” revenue streams

It is truly baffling how many pathways for creating a surplus revenue are ignored by modern businesses. GSCM alone offers dozens of them. Let’s mention a few.

One of the most extreme investments would be developing innovative solutions to sustainability issues that prevail in your industry. At the very least, you can create a better image of your business on the market by developing such solutions. But you can also make profits from selling those to your competitors.

In fact, easy and ready-to-use tools for GSCM are always in demand, since they save companies both time and money.

Be the first one to create value for your competitors and leverage from it while conducting your primary business at the same time.

What some companies do is really amazing. For example, they come up with entirely new green-focused brands that end up bringing in millions of dollars in revenue. Such brands become responsible for supporting a ‘green’ and ‘sustainable’ image of their parent companies which might be involved in destroying the planet, polluting the air and affecting animals’ natural habitats.

However, as an honest person, I am much more attracted to an ethically conducted business. That is why I am not going to spend too much time talking about deceiving practices realized through GSCM. Instead, I will point at another method of an effective surplus revenue generation by the means of fair GSCM activities. This method lies in selling waste that your business produces. As I previously mentioned, sustainability and environmental responsibility are a huge trend at the moment. As a result, we start having more companies that produce their goods and services by utilizing recycled waste. So, you could kill two birds with one stone and help those companies to obtain raw materials, while financially benefiting from it.

Lower energy costs

Power and fuel are not endless resources. It’s not rocket science to understand that the fewer resources we have on the planet, the more costly it gets to support global supply chains. Green alternatives to mainstream power sources and fuels are, surprisingly enough, way more cost effective, if not free (e.g.: recycling your own waste, using solar energy or wind power). In fact, the ability to come up with alternatives like these is the essence of business sustainability.

Thus, going green and sustainable saves your business money; and vice versa – saving money makes your business more sustainable.

The truth of the modern economy is that we stop caring about things that keep us alive unless they contribute to the process of capital accumulation. But fortunately, many of us have come to a realization that this pattern is life-threatening. One of the advantages of GSCM practices is in its power to appeal to both environment-oriented and business-oriented managers. It can be absolutely beneficial to consider green strategies from the perspective of economic gain – a perspective that modern businesses are naturally so comfortable with.

Disclaimer: The opinions expressed in this article are those of the contributing author, and do not necessarily reflect those of the Forum for International Trade Training.

About the author

Ekaterina Grishko

Author: Ekaterina Grishko

Ekaterina Grishko is a Marketing Coordinator at Ashton College. Founded in 1998, Ashton College has become a national and international force in the field of higher education. The College has been an educational partner of FITT for over 10 years.

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