To compete in the 21st century it is necessary to develop a global supply chain strategy. Technological advances have opened up markets that were previously closed to small and medium-sized enterprises (SMEs) that otherwise lacked the resources to compete globally. Along with the ability to compete globally, SMEs need to develop capabilities to manage their environmental impact.
Operating across borders requires companies to comply with certain environmental standards. Products must clear customs to cross borders, therefore companies are more aware and receptive to environmental issues that can delay deliveries. Environmental responsibility should be seen as an extension of quality, since it has many of the same characteristics of quality improvement programs.
Organizational awareness of environmental impact is directly related to four things: geographic location, government pressures, organizational structure, and the type of service or product the company provides.
The location of a company affects environmental performance, because some countries have more regulations than others. Developing countries are likely to have fewer regulations than developed countries. Also countries that have signed treaties under the influence of the United Nations (UN) or have ratified the Kyoto Treaty must adhere to the guidelines and succeed in setting, meeting and maintaining environmental goals. Non-governmental organizations have less influence than governments in enforcing environmental regulations, but they are important because they help companies set and meet environmental goals. Public companies, such as manufacturers, are more likely to implement green strategies, especially in environmentally conscious countries.
Smaller private companies that are not in the public eye have less pressure to reduce their environmental impact. However, companies with global supply chains and outsourcing strategies are forced to monitor environmental impact to reduce risk. Environmental awareness in global supply chains also affects which suppliers a company is willing to use. Suppliers are under pressure from buyers to reduce the impact. Customer trends and demands are another factor putting pressure on companies to develop green strategies. Customer demand creates a reciprocal dynamic. This means that when a company develops a green product, it generates public interest through marketing and gains a competitive advantage if customer needs are met.
This is why the type of service or product provided impacts environmental practices, because a customer-driven company is more likely to engage in customer-approved activities (environmental protection) than a product-oriented company. basic. Competition also works as a catalyst to reduce environmental impact. When a competitor implements environmental strategies, others will respond in an effort not to be left behind, miss an opportunity, and as a way to not inadvertently give up market share by not responding appropriately.
Increasingly complex supply chains make it difficult to implement and maintain environmental stewardship, due to the increase in distributed production across multiple sites and autonomous associations. The management of green and global supply chains must be coordinated to achieve the desired effect. The entire supply chain must participate in green initiatives to gain a competitive advantage. Companies may encounter barriers to green implementation and subsequent benefits if vendors resist green initiatives.
Obstacles for SMEs adopting green initiatives
SMEs are reluctant to implement green initiatives because many lack the resources (people, money or knowledge). While much research has been done on environmental management in supply chains, little research has focused on green supply chain management in SMEs. The lack of information focused on green supply chain management in SMEs acts as a deterrent, especially for SMEs with limited resources. Additional reasons why SMEs may not participate in green supply chain management include:
• Lack of environmental awareness,
• Belief that environmental practices cost more than your country,
• Belief that it takes a long time to implement green initiatives.
Training, effective research and education are necessary to help SMEs implement green programs effectively.
In the past, SMEs were not under pressure to participate in environmental initiatives, as SMEs have little individual impact on the environment. However, SMEs that supply large organizations are now under pressure from those organizations, which are looking to green entire supply chains to meet environmental standards. Laws and large customers (such as Wal-Mart) are beginning to require smaller companies to reduce their environmental impact.
Larger companies often invest in the environmental capacity of smaller suppliers because the larger company’s environmental goal cannot be met without increasing the supplier’s environmental capacity. It is essential that supplier SMEs get involved in green initiatives, because it is difficult to achieve a green supply chain without full participation. Suppliers that do not participate in green initiatives present a risk to larger companies that pursue green initiatives.