Framing Sustainability Innovation and Entrepreneurship

Green supply-chain management requires that sustainability criteria be considered by every participant in a supply chain at every step from design to material extraction, manufacture, processing, transportation, storage, use, and eventual disposal or recycling. A green supply-chain approach takes a broader systems view than conventional supply-chain management, which assumes basically that different entities take raw materials at the beginning of the supply chain and transform them into a product at the end of the supply chain, with environmental costs to be borne by other companies, countries, or consumers, since each link in the supply chain receives an input without asking about its origins and forgets about the output once it's out the door. In contrast, the green supply chain considers the entire pathway and internalizes some of these environmental costs to ultimately turn them into sources of value.

Green supply chains thus modify conventional supply chains in two significant ways: they increase sustainability and efficiency in the existing forward supply chain and add an entirely new reverse supply chain. A green supply chain encourages collaboration among members of the chain to understand and share sustainability performance standards, best practices, innovations, and technology while the product moves through the chain. It also seeks to reduce waste along the forward supply chain and to reduce and ideally eliminate hazardous or toxic materials, replacing them with safer ones whenever possible. Finally, through the reverse supply chain, green supply chains seek to recover materials after consumption rather than return them to the environment as waste.

Expanded reverse logistics would ultimately replace the linearity of most production methods - raw materials, processing, further conversions and modification, ultimate product, use, disposal - with a cradle-to-cradle, cyclical path or closed loop that begins with the return of used, outmoded, out of fashion, and otherwise "consumed" products. The products are either recycled and placed back into the manufacturing stream or broken down into compostable materials. The cycle is never ending as materials return in safe molecular structures to the land (taken up and used by organisms as biological nutrients) or are perpetually used within the economy as input for new products (technical nutrients). Consequently, green supply chains appear implicitly in many conceptual frameworks while drawing on various sustainability tools, such as LCA and DfE.

Companies typically funnel spent items from consumers into the reverse supply chain by either leasing their products or providing collection points or other means to recover the items once their service life has ended. Once collected, whether by the original manufacturer or a third party, the products can be inspected and sorted. Some items may return quickly to the supply chain with only minimal repair or replacement of certain components, whereas other products may need to be disassembled, remanufactured, or cannibalized for salvageable parts while the remnant is recycled or sent to a landfill or incinerator.

Concern for green supply-chain topics emerged in the 1990s as globalization and outsourcing made supply networks increasingly complex and diverse while new laws and consumer expectations demanded companies take more responsibility for their product across the product's entire life. The green supply chain responds to these complex interacting systems to reduce waste, mitigate legal and environmental risks, reduce adverse health impacts throughout the value added process, improve the reputations of companies and their products, and enable compliance with increasingly stringent regulations and societal expectations. Thus green supply chains can boost efficiency, value, and access to markets, which then boost a company's environmental, social, and economic performance.