How Green Affects Supply Chain Planning

Supply chain planningSupply chain planning is all about using resources effectively and creating plans and strategies to deal with uncertainty. It is our belief that the “green” initiative has to be treated much like the introduction of new technology. It cannot be regarded as a separate program to be imposed on existing processes. Green initiatives have to be incorporated into the existing processes of a company.

The sales and operations planning (S&OP) process is normally the core tactical planning process for a business. S&OP is a business process that helps to keep demand and supply in balance. The balancing act starts by looking at the demand at a higher level of aggregation, for example, product families and groups. Generally, financial targets are developed based on the aggregated information.

An effective S&OP process provides the necessary framework for running operations efficiently and provides a framework to identify areas that need help. Although the S&OP process is at the heart of supply chain planning, all the other processes that allocate scarce resources, like production scheduling, logistics and long-term planning, have an impact on emissions. Currently, emissions are at the center of most green discussions. But green is more than that. It involves reducing waste, which, in turn, involves the efficient use of all types of resources. Supply chain planning is already focused on reducing waste in a company’s operations, so green supply chain planning is no more than an extension of planning.