Green supply chain management: retail chains and consumer product goods–A Canadian perspective

This page has been archived on the Web

Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.

GSCM Practices: Drivers and Adoption

In a global economy, pressure to adopt environmental practices within distribution activities is graduallyincreasing. As a result, focus is being shifted to how Canadian retail chains, CPG manufacturers, and CPGlogistics and transportation service providers are using their supply chain activities to drive business resultswhile enhancing their impact on the environment.2 Inother words, businesses are looking to adopt GSCM practices that confer both a positive Net Present Value (NPV) and environmental benefits.

High transportation and energy cost, coupled with the need to gain competitive advantages, are the maindrivers in all three sectors, and each driver has similar importance in affecting a company's decision to implementGSCM practices (Figure 1).

Figure 1: Main drivers for implementing GSCM practices in distribution activities 1

Figure 1:  Main drivers for implementing GSCM practices in distribution activities (the link to the long description is located below the image)

The majority of Canadian retail chains, CPG manufacturers, and CPG logistics and transportation service providers consider GSCM practices to be of strategic importance to their businesses. However, fewer companies have actually implemented GSCM practices (Figure 2). For retail chains, the reluctance to adopt GSCM practices could be attributed to the higher costs associatedwith monitoring and managing GSCM practices in multiple store locations. Moreover, since the majority ofretail chains operate on a franchise ownership business model where decision making is split between thefranchisor and franchisees, obtaining support for global initiatives such as GSCM may present a more complex process.2

Figure 2: Perspectives on and use of GSCM practices in distribution activities 1

Figure 2:  Perspectives on and use of GSCM practices in distribution activities (the link to the long description is located below the image)

A larger proportion of CPG logistics and transportation service providers are implementing GSCM practices due to the fact that they own more transportation assets (compared with retail chains and CPG manufacturing firms) and thus have more options and opportunities to adopt GSCM practices (Figure 2).

Most retail chains implementing GSCM practices are doing so within their organizations. The most common practices focus on improving energy efficiency, reducing and recycling packaging, decreasing waste,and lowering GHG emissions in distribution activities. Some retail chains are initiating GSCM practices with their suppliers as well. The mandates of these retailers encourage suppliers to improve energy use, reduce GHG emissions and waste, and recycle packaging (Figure 3).

Figure 3: Main GSCM practices implemented in distribution activities 1

Figure 3:  Main GSCM practices implemented in distribution activities (the link to the long description is located below the image)

As a result of retail chain GSCM mandates, many CPG manufacturers have implemented GSCM practices with their customers. Consequently, when compared with automotive, aerospace and industrial electronics firms, close to six times more CPG manufacturers are engaging in energy efficiency, product and packaging recycling, or the reduction of GHG emissions in distribution activities with their customers (Figure 4).

Figure 4: Main GSCM practices implemented with customers in distribution activities 1

Figure 4: Main GSCM practices implemented in distribution activities (the link to the long description is located below the image)