What is a green supply chain? The role of applying green supply chains

In the face of the strong global trend of transition to a green economy, the application of green supply chain is not only an environmental strategy but also an important link that is a decisive factor in the production and business activities of businesses today. Green supply chains not only help minimize negative impacts on the environment, but also bring great benefits to the economy and society. So,  what is a green supply chain and what is its role for businesses? This article will provide a comprehensive look at this concept and the benefits of adopting a green supply chain.

1. What is a green supply chain?

Green Supply Chain is a supply chain system that works effectively in protecting the environment and making optimal use of ecological resources. Green supply chain management incorporates environmental factors into every stage of supply chain management, including product design, raw material sourcing and selection, manufacturing, distribution, and end-of-life management of products after use.

Green supply chain management is associated with activities such as green design, green operation, green procurement, and green logistics. Companies adopt this model to minimize their negative impact on the environment through pollution reduction, resource conservation, and waste recycling.

Green supply chain plays an important role and is associated with many popular activities such as:

• Regarding green procurement: This is the selection of products and services that have little impact on human health and the living environment. For example, instead of buying single-use products, businesses can buy energy-efficient and reusable products. Businesses applying green procurement will prioritize choosing recycled materials and reducing waste in the procurement process.
• Regarding green production: Enterprises produce environmentally friendly products, especially products used in renewable energy systems and clean technology equipment. Typically, Toyota develops engines that reduce CO2 emissions to reduce air pollution. Companies can reduce pollution and waste by minimizing the use of essential resources, recycling and reusing materials that are considered waste.
• About recycling programs: BMW has implemented solid waste recycling programs and water conservation initiatives, which have helped reduce the need for landfills and save 9.5 million gallons of water per year. This not only helps to minimize the environmental impact, but also saves costs for the business.

2. Benefits of green supply chains

The application of the green supply chain plays an important role in “greening” the supply chain, improving the competitiveness and sustainable development of businesses. This model brings many positive benefits such as:

2.1. Environmentally friendly

Green supply chain management helps reduce CO2 emissions effectively by reducing the use of non-renewable energy, limiting deforestation, conserving resources, and implementing methods of reduction, reuse, and recycling. Compliance with environmental laws and efficient use of resources also helps reduce pollution and maintain clean air.

2.2. Protection of human health

Applying green supply chains also contributes to protecting public health by using green transportation, reducing greenhouse gas emissions and pollutants. Advanced technology helps limit negative impacts on the environment.

2.3. Optimize costs and improve supply chain quality

The application of a green supply chain not only benefits the environment, but also helps businesses optimize costs and improve production and transportation efficiency. Combining orders, choosing reasonable routes, and minimizing the number of empty trucks saves fuel and transportation costs, while reducing traffic congestion and traffic pollution.

2.4. Reduction of industrial waste

Green supply chains also support the efficient use of ecological resources by using recyclable, biodegradable packaging, or pallet packaging. Reducing packaging waste and recycling old products helps create a competitive advantage, increase flexibility, and strengthen relationships with partners.

3. Examples of IKEA’s green supply chain model

3.1. About IKEA

IKEA, the world’s leading furniture group, is a clear testament to its success in integrating environmental factors into its supply chain. With a deep awareness of the importance of the environment and green standards according to ESG (Environmental, Social, and Governance), IKEA has taken drastic actions towards sustainability goals.

3.2. IKEA’s Green Supply Chain

IKEA has made strong commitments, set environmental goals with partners and suppliers, constantly improve and adapt flexibly, specifically such as

Strong commitment to sustainability

Since 2018, IKEA has set a goal to become a “fully recycled” company by using 100% renewable energy sources in its operations. They are also committed to reducing greenhouse gas emissions into the environment, as shown by pioneering steps in sustainable development.

Cooperation with suppliers and partners

IKEA has developed Sustainable Supplier and Partner Guidelines for suppliers and partners, to promote compliance with environmental standards in the supply chain. They evaluate and support suppliers to ensure products meet sustainability standards, thereby enhancing environmental protection efficiency throughout the supply chain.

Continuous Improvement

IKEA regularly conducts environmental assessments and implements continuous improvement measures. They consider and apply new technologies, conduct research and evaluate the impact of products and activities to minimize environmental impact.

Achievements

• Fully Recycled: IKEA has achieved the goal of using renewable energy sources in most of its activities, reducing the amount of greenhouse gases and toxic waste emitted into the environment, contributing to reducing the negative impact of climate change.
• Sustainable Products: IKEA actively uses recycled and sustainable materials in its products. They design and manufacture products that are environmentally friendly, minimize waste, and ensure sustainability in the manufacturing process.
• Sustainable Supply Chain Platform: IKEA has created documents to guide suppliers and partners towards sustainable sourcing, promoting compliance with environmental standards in the supply chain. They support suppliers and partners in implementing continuous improvement measures and reducing environmental impact.
• Reduce Waste and Recycling: IKEA implements innovative solutions in recycling and reusing materials such as wood and fabric, helping to minimize the impact of natural resource extraction.

With these efforts, IKEA has actively contributed to building a sustainable supply chain, contributing to the global goal of reducing greenhouse gases and protecting the environment.

4. The difference between Green Logistics and Traditional Logistics

Criteria	Green Logistics	Traditional Logistics
Goal	Environmental protection, sustainable development	Optimize costs, increase economic efficiency
Means of transport	Electric vehicles, renewable energy vehicles	Fossil fuel vehicles
Energy Usage	Renewable energy, energy saving	Fossil fuels, with a focus on economic performance
Waste Management	Reduce, reuse, recycle	Less emphasis on recycling, mainly waste treatment
Route Optimization	Based on emission reduction and energy efficiency	Based on cost and transit time
Environmental benefits	Reducing CO2 emissions, protecting natural resources	Often polluting the environment, consuming resources
Social Benefits	Protecting public health, complying with environmental laws	Less emphasis on public health and environmental regulation
Operating costs	Long-term savings through energy efficiency	Low initial cost but long-term cost due to the use of fossil fuels

5. Towards a green supply chain

To effectively integrate environmental factors into the supply chain, businesses need to pay attention to the following points:

5.1. Having commitments and approvals from all levels

Senior leaders need to be strongly committed, show innovative thinking, and invest in environmentally friendly projects. In addition, active participation from grassroots levels is necessary through employee training and promoting environmental awareness in the organization.

5.2. Cooperate with partners and suppliers who are environmentally conscious

Businesses should set sustainability standards and require partners and suppliers to comply with these standards. To ensure sustainability in the supply chain, it is necessary to conduct an audit and monitor compliance. Moreover, businesses should support and accompany partners and suppliers in implementing sustainable measures through sharing advanced technology, providing consulting and financial support.

5.3. Application of digital technology for the purpose of environmental protection in the supply chain

Digital technology offers many benefits in reducing the negative impact on the environment in the processes of production, transportation, storage, and distribution of goods.

• Optimize production and transportation processes: Digital technology allows businesses to accurately track and manage the amount of raw materials used, each step of production, as well as transportation efficiency. As a result, they can reduce the amount of waste and polluting emissions into the environment.
• Optimize storage and distribution processes: Intelligent automated systems can manage inventory, minimize waste, and maximize storage space. This helps to save energy and resources.
• Improved monitoring of environmental conditions: Intelligent  sensor systems can monitor air, water, and soil quality, helping to identify and prevent environmental incidents in a timely manner.

Integrating digital technology in the supply chain also ensures transparency and compliance with regulations on environmental protection. Environment-related data can be publicly accessed, helping communities and supervisory agencies assess and promote regulatory compliance. This is an important step forward to improve economic efficiency, protect the environment and conserve natural resources for future generations.

6. Conclusion

It can be seen that, in the context of increasing awareness of environmental protection, the application of a green supply chain is considered an inevitable trend in the production and business activities of businesses today. Hopefully, the above article can help you better understand the concept of green supply chain and the important roles and benefits it brings, thereby considering and choosing the right method to implement a green supply chain.  contributing to the sustainable development of the world.

In order for businesses to gain more new knowledge as well as update the latest trends in the manufacturing industry and supporting industries, you can register to participate in the Vietnam Manufacturing Expo, the largest exhibition of technology and manufacturing solutions in Vietnam in particular and Southeast Asia in general,  organized by RX Tradex Vietnam . This will be an opportunity for your business to access modern production technologies, participate in quality seminars to learn outstanding strategies to optimize the production line with leading experts,  as well as expanding business networks through connections with many partners and potential customers.