Back in the 1990’s there was a popular term being used called “industrial ecology (IE)”. Basically, IE is defined as a “systematic organizing framework for the many facets of environmental management. The industrial world was viewed as a natural system – a part of the local ecosystems and the global biosphere. IE offers a fundamental understanding of the value of modeling the industrial system on ecosystems to achieve sustainable environmental performance (Lowe, 1993). The IE ecosystem boundary included the raw materials grower or extractor, the materials processor or industrial manufacturer, the waste processer, and of course the consumer. The “value chain” of product manufacturing and the handing off of raw materials to manufacturer, and finished goods to consumer (i.e. the supply chain) can be viewed much the same way as IE.
An industrial ecology (ecosystem) has been defined to exist on three levels, each characterized by the amount of recycling or reuse of material that is within the system (or the system’s “openness”). The second level is characterized by some factor of energy and material is reused within the system, and seems to be the most applicable model for actual systems. It is within these industrial ecosystems models that green supply chains will play a critical and practical role. http://bit.ly/b9Irc4.
IE is not without its critics however. Author John Ehrenfeld produced an article from American Behavioral Scientist entitled, Industrial Ecology: Paradigm or Normal Science (Ehrenfeld, John. (2000). Industrial Ecology: Paradigm or Normal Science? American Behavioral Scientist. 44(2): 229-244, 2000). that calls into question a possible paradox between the terams “industrial” and “ecology” and that both terms have value in both concept and practice. From Ehrenfelds perspective, “It is not an either/or, but rather a both/and” proposition. In a recent Triple Pundit article, Ehrenfeld states four principles that define industrial design in the context of a sustainable business:
1. closed material loops,
2. energy used in a thermodynamically efficient manner,
3. maintenance of balance of the system’s metabolism and elimination of materials that upset the system,
4. and dematerialized processes & products; delivering function with fewer materials.
Green supply chains operate on the premise that material flows and wastes generated are viewed, designed and managed in a way that “dematerializes” products, promotes optimal resource conservation, recycling and reuse. The focus of a green supply chain then is entirely on managing material content in a systematic and collaborative way, so that all participants up and down the value chain benefit. Of course its entirely possible that the cost of closing material loops may in some cases exceed the benefits. So practitioners need to realistically weigh the cost-benefit of IE approaches in making design and manufacturing decisions
From a supply chain perspective, raw material price volatility (sharp rises, and sudden falls, in the price of raw materials) have been plaguing the global marketplace. In particular, energy, metals and commodities used as ingredients in manufactured goods and consumer products – have escalated since 2005. Much of this volatility has been fueled by rapid growth in Asian markets and traditional supply and demand constraints.
IE based systems then and the new 21st century green supply chain “networks” then can be based on three key areas, each designed toward materials resource optimization, advance clean technology and demand response:
- Technical:Engineering perspective with technological innovation; Business System and Networks
- Shared services, transportation, and facilities
- Community-Business Interactions: Symbiotic networks and collaborative services; 3 Es: Economy, Environment, Equity
According to a study on IE and risk analysis by Paul Kleindorfer of the Wharton School of Management http://bit.ly/a9QugQ, “in the industrial ecology framework, each company has a special role as steward of the environment and ecosystem within which it operates…this role of product stewardship and environmental waste and risk management [encompasses] suppliers and customers just as “extended value chain analysis” encompasses suppliers and customers in the traditional supply chain improvement process.”
So green supply chain management and IE are in essence systems based operational process management practices, each designed first to manage an organizations and its stakeholders environmental footprint (materials and waste flows) and second, to be used as a risk management tool.
There are a wide variety of best practices and tools to leverage upstream and downstream value chain opportunities with principles of sustainability in mind. Applying IE based thinking is but one of many useful steps for organizations that want to improve their resource productivity, reduce risk and enhance business competitiveness. The whole systems perspective that IE emphasizes offers a window for organizations to add value and reduce costs both within their own four walls but up and down the supply chain as well.