Implementation of Green Supply Chain Practices for Efficiency in Various Industries

In an era of increasing environmental awareness, companies across sectors are faced with the challenge of implementing effective sustainability practices. Green supply chain are key to achieving this goal, with innovative technologies and strategies playing a central role. This article explores various aspects of implementing sustainability in the supply chain, from the University of Indonesia’s research on Green Supply Chain Management (GSCM) for MSMEs, to practices and technologies in the construction sector, as well as case studies of major companies such as Apple Inc. and Coca-Cola. We will also discuss how RFID technology can be implemented to support sustainability, offering insights into how strategies and innovations can reduce environmental impact while improving operational efficiency.

Integrating Green Supply Chain for Indonesian MSMEs

The Indonesian government is committed to helping the MSME industry consider environmental factors as part of its global responsibility. This is in line with the ratification of Article 5 of the Paris Agreement, which encourages countries to reduce emissions based on sustainability principles. With the ratification of this agreement, the Indonesian government targets to reduce emissions by 29-41% by 2030 from all industrial sectors, including the MSME sector. To achieve this target, the government plans to implement a more progressive emissions reduction scheme, which includes carbon trading and levies on carbon emissions. It will regulate the types of goods and activities subject to the tax, the applicable tax rate, as well as the calculation, payment and reporting of the tax in a forthcoming Government Regulation.

Sectors that deal with green materials used by MSMEs, such as coal-fired power plants, mining products, paper, plastics, electronics, and metals, will be most affected by this regulation. Given that MSMEs account for 58 percent of the national GDP (Rizvi et al., 2020), this sector is one of the most affected by the regulation. Therefore, MSME owners and associations need to encourage the business sector to adopt green supply chain management and adjust their strategies in response to the carbon tax that directly puts a price on greenhouse gas emissions.

Green Supply Chain Management Practices in Indonesia

Research conducted by the University of Indonesia shows that Green Supply Chain Management (GSCM) practices have a positive and significant relationship with environmental performance and operating costs for MSMEs in the food and beverage industry in Indonesia. These GSCM practices include the use of recycling systems, purchasing green products, and environmental criteria in supplier selection. Despite the low level of ecocentricity in the supply chain, the relationship between GSCM practices and environmental performance and operating costs remained positive and significant. However, these relationships were not moderated by supply chain traceability, even with high levels of traceability.

In this case, MSMEs in the food and beverage industry in Indonesia feel the direct impact of implementing GSCM practices on their environmental performance. These practices, such as consolidating freight forwarding and implementing a leasing system, help reduce the environmental impact of the design, production, and distribution processes. In addition, GSCM practices can also improve operating cost performance, by reducing production costs and increasing labor productivity.

Sustainable Practices in Various Industry Sectors

In an effort to reduce environmental impacts and improve operational efficiency, various industries have adopted innovative sustainability practices.

Construction Sector

In the construction sector, the use of recycled content materials such as construction demolition waste can reduce waste and save procurement costs. The latest technologies in construction equipment, such as hybrid engines and prefabricated components, not only improve fuel efficiency and reduce costs, but also improve work safety by reducing direct contact with hazardous materials. The use of prefabricated components can reduce greenhouse gas emissions by 8.06% and save costs by 6%, while reducing environmental impact and improving worker safety.

Tech Sector

Apple Inc. has made significant strides in its sustainability efforts since being criticized by environmental organizations. The company has successfully removed toxic materials from product lines such as iPods and laptops, and designed more environmentally friendly packaging. For example, the packaging of the fourth-generation iPod Nano weighs 32% less and is 54% smaller in volume than the previous generation, while energy use on the iMac is reduced by 93% from the first generation to the latest. Apple also implements an environmental code of conduct for its suppliers and conducts regular audits, although the 2010 compliance report revealed three violations in hazardous waste management. This data shows Apple’s progress in integrating green practices into their operations, although there are still challenges to overcome.

Food and Beverage Sector

Coca-Cola has also demonstrated a strong commitment to sustainability through various data-driven initiatives. Since 2002, Coca-Cola has reduced water consumption per liter of product by 21% and energy per liter of product by 19%. They redesigned packaging to improve efficiency and reduce waste, with 98% of their products packaged in bottles that can be recycled or reused. The company has also developed six plastic recycling plants in the US. Despite a decline in inventory turnover ratio from 6 in 2001 to 4.6 in 2007, indicating significant potential waste, Coca-Cola continues to invest in technology to improve efficiency. The decline in their Return on Equity (ROE) after 2002 was due to large acquisitions that increased debt, but their efforts in sustainability show potential long-term benefits.

Use of Technology in Green Supply Chain

Technology and innovation play a key role in driving sustainability and efficiency in various industry sectors. The use of air conditioning systems with low global warming potential refrigerants or water-cooled chiller systems can reduce carbon emissions and overall energy consumption in buildings, as well as provide economic benefits by reducing energy costs. Smart air conditioning systems that use automatic temperature control have also been shown to reduce energy consumption by up to 16% while improving user comfort. In addition, the replacement of conventional lighting systems with LEDs can reduce energy consumption by up to 10%, offering better energy efficiency and reduced operational costs.

The implementation of RFID in a green supply chain requires active involvement from top management to ensure success. As described in Case’s book on “Socially Responsible Purchasing,” company executives should work with supply chain managers to establish rules for interaction with suppliers, implement sustainability statements, and decide whether green criteria should be included in supplier certifications. In addition, decisions regarding the launch of a “supplier code of conduct” that supports sustainability practices should also be considered. Developing a detailed plan to pursue a sustainable supply chain with support from top-level executives or cross-functional teams is also important. This ensures continuity in sustainability efforts and utilizes various supply chain management tools such as supplier codes of conduct and supplier scorecards.

In addition, to optimize the use of RFID in business processes, managers should identify business process issues that can benefit from RFID implementation. The focus of RFID implementation should be on promoting green supply chains, reducing costs, and improving production performance. It is also important to address IT-related issues that may arise, such as setting up new enterprise systems to manage the increased data flow. Providing web services for data access allows suppliers to access information without accessing the company’s internal database, making data management and system integration easier.

In an effort to drive sustainability in the logistics industry, the implementation of Green Supply Chain is becoming increasingly important. TransTRACK, as a pioneer in fleet management technology, is not only committed to sustainability practices, but is also actively implementing systems that support such goals. One of TransTRACK’s key innovations is the use of RFID Cards in E-Seal, which increases transparency and security in shipping while reducing environmental impact through operational efficiency.

In addition to the E-Seal, TransTRACK also introduces various other features that support sustainability, such as the Vehicle Maintenance System (VMS) that minimizes the carbon footprint through efficient and well-scheduled fleet maintenance. The advanced tracking system and ADAS (Advanced Driver Assistance Systems) technology implemented also contribute to reduced fuel consumption and improved safety. With this approach, TransTRACK not only improves operational efficiency but also contributes to global efforts to create a greener and more sustainable supply chain.