Green Supply Chain in Indian Automobile Industry

Published by MBA Skool Team, Published on August 01, 2016

Supply chain management is the management of all the elements of supply chain from the input to the output stage, from raw materials to the final product. The definition is more or less the same from various organizations. Now add green to this definition and it becomes green supply chain management but the meaning is much different. Green supply chain means using green methods in procurement, manufacturing and distribution. It aims at eliminating waste at every point of the supply chain. Recently environmental issues under legislation and pressure from customers in developed nations like US, the European Union, and Japan have become an important concern for manufacturers persuading them to upgrade themselves. GSCM is a tool that provides an advantageous situation to companies and organizations; which includes achieving profit and increasing market share by reducing environmental impacts and increasing the ecological efficiency.


A Green Supply Chain can be described as the procedure of utilizing eco-friendly resources and transforming the inputs through transforming agents while simultaneously improving and recycling the byproducts within the active environment. The sustainability is maintained because of development of output that can be recycled and reused in the life cycle. The basic idea of green supply chain is to conduct all processes in the chain considering the effects on environment and taking measures to reduce these effects. Although people argue that eco friendly techniques increase the costs of production, but the overall consequence (keeping in mind the costs that result from harming the environment) will be beneficial. Earlier, most companies were focusing on decreasing unit costs. Many companies later started looking at total landed costs with the commencement of global trade. The actual thinking should be to reduce the life cycle cost instead of just the production cost.

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Nevertheless, users are becoming aware of the implementation of green in their daily lives and would want to use products that make their future generations safe. This is one of the factors why companies need to move to Green Supply Chain, especially automotive companies. But there are some recent examples where use of green techniques have actually benefitted the company. General Motors decreased disposal costs by $12 million by using a reusable container program with their suppliers. Possibly General Motors may not have been that concerned about green issues considering their high profits, however GM realized that cost reductions they recognized complemented the company’s commitment to the environment when they tried to decrease costs in the supply chain.


Automobile parts manufacturing companies have already started using multiple methods of GSCM, for example: environmental management, purchasing, marketing, distribution and eco-friendly design, all in reference to green methods. A lot of companies have created their reputation by creating environmentally friendly engines and thus beat competition. These engines are made in such a manner that they produce low emissions, consume low fuel, produce low noise but at the same time possess high dynamic functions and are reliable too.


It is the first step of supply chain and consists of purchasing of raw materials but with company of activities which reduce and reuse materials during purchase as well. It is a concept of buying products that affect the environment least. Some of the green procurement activities can be brought in use by manufacturers, like purchase materials only from suppliers who have passed green environmental quality standards and regulations for the environment-related elements, select suppliers who regulate dangerous substances and possess environmental certificates, reuse as much as possible materials like paper and plastics.


The manufacturing can be made green by implementing production processes which use resources that have low environmental impacts, which are highly efficient, and which produce little or no waste or contamination. Green manufacturing will lead to lower input resources costs, increase in production efficiency, reduction in environmental costs, and not the least, better corporate reputation. There can be many green activities that can be used by Indian manufacturers like controlling hazardous substances, washing parts with clean water instead of using chemicals and then reusing water, introducing quality control checks at various stages, reducing power consumption, improving machine performance, minimising waste and recycling of parts.


Distribution consists of packing of products, and their logistics. Distribution depends on the size and shape of products as they affect the transport features of product. Better packing, with proper loading patterns will reduce materials usage and lead to increase in proper space utilization in the warehouse. Also it will affect the extra efforts taken in handling. Activities like scaled down packaging, using eco friendly packing materials, standardising the packing size, and minimum use of materials etc. come under green techniques of distribution.

The automobile industry is world’s largest manufacturing sector, which is still increasing at a rapid rate due to increase in population and demand. Due to increasing demand of automobiles companies are being motivated to set up new plants or increase the capacities of old plants. The amplification in environmental issues have led to serious regulations and the implementation of environmental and legislative norms have resulted in accelerated requirement of GSCM in India. But there are certain barriers that hinder the application of GSCM in Indian Automobile Industry.

An efficient information and technology system is very necessary for supporting the GSCM during various levels of product life cycle. Competent information systems are needed for tracking, tracing and handling information flow related with movement of materials. Also IT systems help to keep a resourceful record of production levels and give real time instruction about what strategies should be followed to match up demand. Not only this, but application of IT reduces paper usage, ultimately leading to a greener supply chain.

Resistance to change in terms of technology is not good for industries because technology makes us more efficient especially when they are green in nature. Implementation of technology leads to innovation which further leads to productivity. If resistance to adopt technology advancement is present, it will be deteriorating the whole system and future of operations. The green supply chain cannot be completely green without advanced techniques and continuous innovations. Training and education are the major necessities for achieving successful implementation of GSCM in any enterprise. Management may persuade employees to learn green techniques and may provide appreciations for employees that perform well. They should be helped and supported if they try to learn and improve themselves in this domain. But lack of support will definitely act as a barrier.


Thus Indian automobile industry is in dire need of Green supply chain. All the major developed nations automobile manufactures like Toyota, Honda, and Volkswagen etc. have incorporated this attitude. People and organizations should overcome the fear of costs and innovation and try to adopt to green practices because it will lead to better future for us and coming generations.


This article has been submitted by Akanksha Rajput from IIM Raipur

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