7 Green Supply Chain Analysis You Should Use Immediately

How to create a green supply chain program that works? This article will show you how to apply green supply chain best practices that you can really implement.

1. Establish Green Supply Chain Metrics
The Green supply chain program aims to measure, analyze and improve performance among various members of the supply chain. To ensure that these companies are operating in an environmentally friendly manner.

Many supply chain management initiatives start with the performance measurement. A leading consulting firm like LMI Government Consulting utilized cross industry platform, SCOR Model, to deliver a quick measurement of green performance as below,

green supply chain metrics

As you can see, these performance measurements are centered around cost, policy compliance and the amount of wastes generated from the system.

- Compliance costs, Noncompliance costs and Energy costs can be found in a standard financial statement.

- Policy compliance, such as % of correct packaging, % of supplier with EMS system, % of carriers with environmental criteria is one type of supplier evaluation criteria.

- Amount of wastes such as % of the product returned, % of product disposed against product re-manufactured, liquid waste, solid waste and recycle waste can be found in the production records.

One special type of metric is the amount of Carbon Emission. This measurement needs lots of work and will be discussed in the next topic.

2. Conduct Carbon Footprint Analysis
Carbon Footprint is the amount of greenhouse gas generated by various activities, usually expressed in kilogram or tonne. Since there are many types of greenhouse gas such as Carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O), Hydrofluorocarbons (HFCs), Perfluorocarbons (PFCs) and Sulfur hexafluoride (SF6), they are called collectively as CO2e. In order to capture the amount of CO2e emission, simplified supply chain map with analytical procedures are explained below,

green supply chain flowchart

3. Quantify Emission from Raw Material Sourcing
Energy consumption is a big source of CO2e. In order to determine the amount of CO2e released during production, you need to know how many units your suppliers produce a year (Total Output), Electricity Consumption a year and how many unit you buy from them.

green supply chain sourcing

Another piece of information you require is called the emission factor. This is the amount of CO2e released for 1 kWh of electricity consumption. Then, the basic idea to calculate CO2e emission is, energy consumption*emission factor.

4. Quantify Emission from Inbound Logistics
Each mode of transportation emits the different level of CO2e then an emission factor is different. To compute the emission from inbound logistics activities, total weight and distance should be identified. Then, total CO2e emission is the result of weight in tonnes x distance in km x emission factor / 1,000,000.

green supply chain inbound logistics

5. Quantify Emission from Manufacturing
The same logic (energy consumption*emission factor) also applies to an in-house manufacturing. Anyway, the amount of available data will be more extensive. You may want to incorporate the different sources of energy in computation which is summarized as below,

Green Supply Chain Manufacturing
6. Quantify Emission from Outbound Logistics
The same logic (weight in tonnes x distance in km x emission factor / 1,000,000) also applies to outbound logistics. Anyway, you may find that you have hundreds or even thousands of delivery destination. Then, how you can determine the distance?
The first piece of information you need is a geographic coordinate. The easiest way to get it is to use a geographic coordinate published by U.S. Census Bureau.

Green Supply Chain Geocoding

As you can see, if you know the zip code, you can get the Latitude and Longitude easily. Then, you use lat and long to compute the distance between you and your customers as below,

Green Supply Chain Distant Calculation

The benefit of this approach is that you can calculate the distance from you to every customer rapidly in excel file. Anyway, please note the distance is a straight line from one point to another. Then, the distance seems to be a bit shorter when compared with actual road contour.

7. Apply More Green Supply Chain Best Practices
- Carbon footprint analysis, even as simple as illustrated above, is useful to evaluate energy savings/green products. For example, for a manufacturer in the USA, a traditional product (locally made) may release less carbon when compared with the "green" product from China. Because, USA has higher efficiency in electricity production and fewer traveling is required. Mapping a simple supply chain and calculate carbon emission from every link will give a better picture.

- Green House Gas Protocol has established the tools in excel to calculate the carbon emission from various activities in the supply chain. Even though the extensive data input is required, they are more accurate. They are freely available to public here.

- Creating the awareness about a green program is also the challenging task. With Sourcemap, you can create a visual representation of a current supply chain on a geographic map with the emission data on the map and it's free!

- Environmental Management System is an inevitable part of initiatives. The Global Social Compliance Program has created the tools called The GSCP Reference Tools. These tools provide a solid methodology to audit Environmental Management System. You can use these tools to conduct a self assessment of your company to identify issues with the management system, energy and greenhouse gas, water, air pollution, waste management, pollution prevention, incident management, contamination, land use and nuisance. The same tools can also be applied to audit suppliers.

- For small and medium business enterprises, an environmental management program can be too complex. EMAS Toolkit for Small Organizations by European Commission will provide basic information about an environmental management system, how to implement the program and a useful case study.

- United States Environmental Protection Agency (EPA) has established a program called SmartWay. The purpose is to try to reduce carbon and air pollutant emission in the transportation sector. EPA has compiled the list called "Current Carrier Ranking and Emission Rates". As a freight shipper, what you can do is to select the carriers with lower emission.

- Sustainable Manufacturing Toolkit is another useful tool from Organization for Economic Co-operation and Development (OECD). This tool provides 7 steps to environmental excellence with key performance indicators, action steps and best practices.

- Carbon Disclosure Project provides the opportunity for every company to disclose the information about the state of green program. Registration is required, after that, you will have to answer a questionnaire. The result of a questionnaire will help you identify the area of improvement.

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