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Green Supply Chain Initiative in China

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#Supply Chain Management
The World Environment Center (WEC) is a non-profit association which assists companies in implementing sustainable development into their business strategies and activities. The WEC has conducted several “greening the supply chain projects” in recent years, in diverse countries such as Australia, Brazil, Costa-Rica, Guatemala, Mexico and Romania. The last project was implemented in China, where the association assisted Shanghai General Motors, the joint-venture between General Motors and Shanghai Automotive International Corporation, in greening its supply chain. The 2009-2010 project report is available and presents outstanding results.

Shanghai General Motors (SGM)’s first involvement in sustainable business began in 2005, when General Motors China implemented a small pilot program involving 8 suppliers to introduce the best practices of a Green Supply Chain Program. Four years later, the project has “progressed to the market scale” and as always the case when measuring in China, the numbers are striking: 125 suppliers involved, 498 local projects identified, RMB 130 million (19 million USD) of total annual cost savings with a total investment of about RMB 144 million (21 millions USD). So far, this initiative is “the most comprehensive undertaking project of its kind among all Chinese auto manufacturers”.

The project was to work directly with the 125 suppliers to “reduce the environmental impacts of their manufacturing processes by reducing water, raw material and energy consumption, generating less waste and pollution and finally increasing efficiencies, savings and competitive advantage.” The 2009-2010 project’s results are remarkable:

• Over 55,000 tons of GHG per year eliminated
• Over 1 million tons of water usage per year reduced
• Over 137,000 Kiloliters of liquid waste per year reduced
• Over 9,300 tons of solid waste per year reduced
• Over 80 million kw/hours of energy use decreased

Besides the obvious business and environmental values of the previous reductions, SGM benefited from both strategic and societal advantages: the company was able to minimize its business risks to human health and the environment, motivate better performance from its suppliers, improve cycle time, be more responsive to customer needs and build stronger relationship with them. The overall project led to a greater productivity for both the company and its suppliers: “By managing sustainable development initiatives through a business process, SGM has improved the energy and environmental performance across its supply chain, built stronger customer-supplier relationships and increased its ability to adapt to evolving governmental requirements” illustrates Dr. Terry F. Yosie, WEC’s President and CEO.

From this experience, we can infer that the key factors when successfully implementing a green supply chain are : to obtain senior management commitment, to provide direct support to suppliers, to acknowledge the wide range of suppliers competencies, to show them the economic value, and above all to work with the national culture with local people.

Regarding this last point, the report mentions the, “excellent participation by the majority of participating suppliers”, which changes the image of China referred to by international public opinion as one of the most polluted and {{LNK|corrupted countries on the planet|}}. Terry F. Yosie even adds:”Shanghai General Motors has been a leader in implementing a green supply chain focus to its business operations. The project is designed to lay a foundation for successful growth while building better business”. This statement proves that China is more and more involved in ethical business practices and on its way to a more sustainable economy.

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