Home > Articles > Business & Management

The Lean Sustainable Supply Chain: Lean Sustainable Technologies

Robert Palevich discusses the major components of the Lean Green Supply Chain: external and internal.
This chapter is from the book

The supply chain is composed of all the parts of the enterprise and its associated trading partners. The Lean Green Supply Chain is made up of two major components: external and internal. There is a synergy between these two parts. The internal savings can, in some cases, be equal to the external supply chain savings. To exclude the internal improvements that supplement the productivity of the External Lean Supply Chain is to miss out on a major component of long-term sustainability.

The external side represents the suppliers and customers throughout the supply chain. Collaborative technologies and software can be used to minimize the cost of the organization and decrease the company’s carbon footprint. Forecasting procedures reduce the variation in systems processes in their connection with suppliers and customers in the external supply chain. Improving forecasting methodology through the implementation of Gamma Smoothing increases accuracy in forecasting and stimulates savings.

The typical EOQ (Economic Order Quantity) considers mere receiving and carrying costs in the warehouse. The new EOQ model moves companies beyond current warehousing needs and into the external environment. Through the incorporation of inbound and outbound freight, the EOQ model increases forecasting accuracy, leading to cost reduction throughout the external supply chain.

The internal supply chain is composed of the technologies that can be used to make the corporation and its employees more productive. Implementation leads to lowering the amount of space and resources necessary to perform the job. This represents the definition of Lean and Green sustainability. The sustainability effort needs to incorporate workflow technologies and the use of software to minimize the use of paper and other costly resources.

Putting It All Together

Now it’s time to enter customers and suppliers into the equation of collaboration. The most important consideration at this point is what is best for the entire supply chain. This can be emphasized only by involving the other suppliers and customers. What is good for one may not work for all. For example, 10% of the United States GDP (Gross Domestic Product), which was $14.26 in 2010, is involved with supply chain. Today’s companies are realizing that the competition is not with their competitors but with competing supply chains.

According to a study by consultants A.T. Kearney, inefficiencies in supply chains can waste up to 25% of a company’s operating costs. In companies with profit margins of 3% to 4%, even 5% improvements in supply chain efficiencies focusing just on material flow can double profit margins.(1) The supply chain is the greatest cost in today’s industry and consequently has the best chance for the highest return if the process can be further improved.

One measure of the ability of a company to enhance its standing among the competition is the metric called Gross Margin Return on Investment (GMROI). GMROI looks at a company’s quantitative ability to compete. GMROI is the gross margin percentage of a company multiplied by the inventory turns of that company. Turns are the term used to convey how well a company turns its inventory. Turns = while GMROI = GM × Turns. If two companies have the same gross margins, with one company’s inventory turns being 50% better than its competitor’s, the company with the higher turns is making more profit for the enterprise. For example:

  • Company A has a gross margin of 20% and has 3 inventory turns. The GMROI throughout the year on their inventory investment is an average of 3 × 20% = 60%.
  • Company B has a gross margin of 20% and has higher inventory turns of 4.5. Company B’s GMROI is 4.5 × 20% = 90%.

Company B is making 90% on its inventory investment for the year. It is also making more money on opportunity cost because company B has 50% fewer inventories held as compared to Company A. This frees up capital or expenses if loans are involved. Company B can now afford to sell at a lower cost and also sell more expensive alternatives at lower prices.

Sustainability is meeting the needs of the present generation without compromising the needs of future generations. For every $1,000 spent on Lean Technologies, there is a Green payback of approximately $426, which includes savings in the environment. The greatest Green Savings is found in the transportation highway infrastructure yearly maintenance costs. Removing the cost of the transportation infrastructure from the scenario still provides for approximately $280 savings for every $1,000 spent on Green. The payback is well worth the cost, not only in dollars but also in sustainability.

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information

To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.


Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.


If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information

Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.


This site is not directed to children under the age of 13.


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information

If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information

Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents

California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure

Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact

Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice

We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020