Earth Day is no longer simply about feeling good about Mother Earth, as the “holiday” has taken on a more practical meaning. Why shouldn’t companies take advantage of the green buzz as a means to improve business operations and reduce supply chain costs?

Earth Day gives agencies and groups a platform to inform others about their environmentally friendly initiatives. It does the same for marketers, too, who have been jumping on the green bandwagon in droves.

“This year it seems that just about everyone has found a way to attach themselves to what is fast becoming a marketing holiday that barely resembles the grassroots event founded in 1970,” notes Advertising Age.

In the weeks preceding this year’s Earth Day, marketers of all stripes have been bombarding consumers with green promotions and products designed to get the public to buy more products — some eco-friendly, some not so much.

Yet, despite the ever-present threat of greenwashing, Earth Day is no longer simply about feeling good about Mother Earth as the “holiday” has taken on a more practical meaning since the first Earth Day 38 years ago.

For the first time in the 14-year history of a recent Society of Automotive Engineers (SAE) survey, for instance, environmental issues led the list of industry challenges, topping the perennial No. 1 — cost-cutting. The survey, released this month by the SAE and DuPont, was conducted among automotive designers and engineers.

Meanwhile, industrial companies are introducing environmental initiatives for myriad reasons, often to comply with customer mandates and new regulations or to boost public opinion. Yet why shouldn’t manufacturers also take advantage of the green buzz as a means to improve business operations and reduce supply chain costs?

That’s what a report from Diamond Management & Technology Consultants, Inc. last month asks. According to the report, entitled The Case for a Green Supply Chain: Turning Mandate into Opportunity (free registration required), companies that take a holistic view of their supply chains and incorporate environmentally friendly principles at key points along the way will create opportunities to increase shareholder value.

“The idea of a green supply chain isn’t exclusively about green issues,” Darin Yug, a Diamond Partner who leads the firm’s Supply Chain practice and co-author of the report, said in a statement. “It’s also about generating efficiencies and cost containment.”

However, while green initiatives can lead to better supply chain efficiencies, the key to increasing business value is establishing a long-term green strategy that aligns with the corporate strategy. A company should continually evaluate and prioritize green investments in the supply chain based on their returns — in both financial and non-financial terms — according to the consulting firm.

“The process continues to evolve, but by acting now with the proper strategy, companies should have the ability to gain a competitive edge,” Yug said.

Diamond’s report points to Johnson & Johnson’s energy efficiency program, Nestle’s packaging material, Heineken’s fuel and electricity reduction goals and Wal-Mart’s packaging goals as green supply chains at work and the savings already accrued. It also poses key questions executives should ask before proceeding:

• Have we aligned our green supply chain goals with business goals?

• Have we evaluated how our supply chain impacts the environment and how we could use this to create value?

• Have we evaluated how collaborating with suppliers and customers could derive shared benefits through a green agenda?

• Have we created a business case to evaluate, justify, and prioritize changes that could result from a green supply chain?

• Have we assessed the full range of our adverse environmental impact, and have we chosen the least burdensome alternative?

“When prioritizing potential opportunities, it is important for companies to keep in mind that not every initiative will have a positive return on investment,” said Mark Baum, a partner at Diamond who leads the firm’s Consumer Packaged Goods practice and a co-author of the report. “Therefore, it is essential to think about all green initiatives together as a balanced portfolio, with some initiatives being done on an investment basis.”

Of course, the supply chain can be incredibly complex, and the effect of green initiatives on financial stability is too important to neglect.

But a company can generate impressive cost savings by reevaluating its supply chain — from supply to planning, from inventory management to shipping and distribution — all the while keeping the emphasis on environmental performance.

A good start would be to identify the easy battles before attacking a complete transformation of your supply chain.

Resources

Advertising Age

Diamond Management & Technology Consultants, Inc.

SAE and DuPont (via PR Newswire/CNN)