Tax effective supply chain vs Green supply chain

We have different forms of supply chain design in these days. Couple of them are tax effective supply chain and green supply chains. While one focuses on the current competitive advantages, the other focuses on the long term sustainability. The question is can both of them co-exist or they do move in opposite direction. If they move in opposite directions then how to decide which is the better option or what should be taken as the governing principle for the supply chain designing. While focusing on the long term sustainability do i have to loss on the short term to the competition and get crushed. Certainly not. We need to weigh the pros and cons before one can decide on the strategy.

Green Supply chain Essentials

Sustainability is the key to the long term success of any organisation. Sustainability of the all the stakeholders or the entities in the supply chain is important starting from raw material source to rubishing or reusing the product after its life cycle. When one player bullies other and the other runs out of business for the same, then the supply chain is not sustainable. Having stated that vendor and consumer compliance is also important. Vendor compliance can be brought in through guidelines specification and appropriate sourcing where as consumer compliance depends on government laws and people customs or mindsets. It is really tough to make changes to the mindset or habitual ways of humans.

A tax effective supply chain sources, produces, distributes and markets in an tax effective way. Companies tax advantage of existances of tax heavens and there by increase their bottom line. A tax effective supply chain can vary the bottom line upto say 40 % compared to the competiton and this makes a huge difference to the success and sustainability of the organisation. The irony is countries changes laws according to circumstances and what is today a tax effective supply chain may not be same few years down the line.

Now aligning the green supply chain with the tax effective supply chain is a challenge in itself. The reasons are many

1. Tax effective supply chain need not be greener but needed for the survival of the company in the short term

2. Greener supply chain comes at a cost and hence a ditch in the bottom line in the intial years.

3. Share olders and management board may not entertian loosing short term advantages in view of proposed long term advantages.

4. And last but not least, tax effective supply chain can also be greenier if the law making bodies realise the importance of the same and ensure adequate laws are in place for the same.