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The Need for SMEs to Operate Green Supply Chain Management

Developing an efficient and effective supply chain is essential to the survival of any business in this highly competitive century. Selling on a global scale can be lucrative but many small and medium enterprises (SMEs) lack the resources to thrive in the global competition. However, with the rapid advancement of technology, a new door of opportunities has opened to SMEs.

To operate on a global level across borders, it requires that firms meet certain environmental standards. Products must clear customs to move across borders, therefore, firms are more aware of and responsive to environmental issues that may delay deliveries. Environmental responsibility should be viewed as an extension of quality as it has many of the same characteristics of quality improvement programs. Organizational awareness of environmental impact is directly related to four things: geographic location, governmental pressures, organizational structure, and type of service or product the firm provides.

Geographic location

Where a firm is located impacts environmental performance because some countries have more regulations than others. Though developing countries are likely to have fewer regulations than developed countries, it is a must to adhere to guidelines and maintain environmental objectives. Nongovernment organizations have less influence than governments enforcing environmental standards, but they are important because they help businesses set and meet environmental goals.

Governmental pressures

Smaller private firms that are not in the public eye have less pressure to reduce environmental impact. However, firms 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 supplier a firm is willing to use. Suppliers are pressurized by buyers to reduce impact. Customer trends and demands are another factors that pressure firms to develop green strategies. When a firm develops a green product, it generates public interest through marketing and gains a competitive advantage if customer needs are met.

Create Types of services or products

Also, the type of service or product provided impacts environmental practices, because a customer-driven firm is more likely to engage in customer approved activities (protecting the environment) than a commodity-oriented firm. The competition also works as a catalyst to reduced environmental impact. When one competitor implements environmental strategies others will respond in an effort not to be left behind, miss an opportunity, and as a way to not unintentionally give away market share by not appropriately responding.

Why most SMEs fail to adopt Green initiatives

SMEs are resistant to implementing 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 focusing on green supply chain management in SMEs acts as a deterrent, especially for SMEs with limited resources. Other reasons why SMEs may not engage in green supply chain management are:

  • Lack of environmental awareness,
  • Misconception that environmental practices cost more than it pays, and
  • The misconception that it is time-consuming to implement green initiatives.

Conclusion

With adequate training, effective research, and education, SMEs can effectively implement green programs. SMEs need to ensure that their business practices are in conformity with environmental standards. Though it is hard to successfully operate a green supply chain management without full participation, it is worth it so as to ensure the success of the business.