Study of green supply chain management and operation strategic
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  • 1. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – INTERNATIONAL JOURNAL OF MANAGEMENT (IJM) 6510(Online), Volume 3, Issue 3, September- December (2012)ISSN 0976 – 6367(Print)ISSN 0976 – 6375(Online)Volume 3, Issue 3, September- December (2012), pp. 235-245 IJM© IAEME: ©IAEMEJournal Impact Factor (2012): 3.5420 (Calculated by GISI) STUDY OF GREEN SUPPLY CHAIN MANAGEMENT AND OPERATION STRATEGIC IN MANUFACTURING INDUSTRY Ajay Verma *, Dr. Anshul Gangele ** *[Research Scholar] Department of Mechanical Engineering, Suresh Gyan Vihar University, Jaipur (Raj.) 302025 E-mail: **Institute of Technology & Management, Gwalior (M.P.) 474001 E-mail: ABSTRACT This is an exploratory research study that aims at serving as a primer on key concepts related to the development, status, practices and other constructs of green supply chain management (GSCM). It involves adopting an environmentally-conscious mindset in conducting company level, strategic, tactical and operational processes and is closely related to the broader concept of sustainability. Since the field still in its developing stage, an extensive literature review was done on the discipline and underlying topics that are nurturing this emerging academic and practice field. Supply chain management, sustainability and environmental operational initiatives. Several concrete approaches used in investigation GSCM initiatives are introduce as well as the role of organizational factors in the adoption of environmental innovations, based on a survey. The study advanced the proposition that organizational capabilities matter significantly in the adoption of GSCM practices and reveals importance background information pertaining the new posture on the relationship among supply chain management, social responsibility and environmental consciousness. A key implication is that companies have to embrace the importance of working collaboratively with their partners to improve the social responsibility performance of the supply chain, causing a "green multiplier effect" throughout the supply chain. The study also concludes that there is a clear research need to establish the potential link among GSCM initiatives, competitiveness and economic performance, to provide a stimulus for companies to green their supply chains. Keywords: Green Supply Chain Management, Environmental Operational Initiatives, Sustainability. 235
  • 2. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –6510(Online), Volume 3, Issue 3, September- December (2012)1. INTRODUCTION One of the biggest challenges for companies in the 21st century is the growing needfor integrating environmentally sound choices into supply chain and logistics practices. Whilethe past three decades have seen businesses come under increasing scrutiny from stakeholderson numerous environmental issues, these factors are becoming secondary, as green supplychain management (GSCM) initiatives are being perceived as sound practices that canimprove competitiveness, environmental performances and robust partner’s relations. [11]GSCM is closely related to the broader concept of sustainability and involves adopting anenvironmentally-conscious mindset in conducting numerous company level (strategic,tactical and operational) processes and the development of sound strategies aroundenvironmental impact issues. [17,50] Approaches like green purchasing and manufacturing,eco-labeling and reverse-logistics are only a small sample of terms frequently used byenvironmental conscious stakeholders. [54, 2, 48] Environmental and economic advantages of the entire supply are hard to implementeffectively without the serious commitment of key supply chain partners. The centralassumption of most GSCM initiatives is that investments in greening can be resource saving,minimize waste, and improve productivity, promoting efficiency and synergy amongcompany partners. Due to the on-going development of green technologies, regulations andclimate stabilization agreements, sharing green experiences and current knowledge betweenmanufacturing companies and their supply chain partners has become a necessity. [35, 1,]This creates a special synergy and it is expected that will improve the corporate image,competitive advantage and marketing exposure. [10] Accordingly, green initiatives whichinvolve key partners will not only have a positive impact on the environment and yieldincreased efficiencies, but certainly create enhance competitive advantages in environmentalinnovations and operations for all partners. [37, 33]2. LITERATURE REVIEW Until the early 1970s, most researchers coincide that SCM is both an emerging fieldof practice and an academic domain. [9] This rationale provided the foundation to improveupon the more limited conventional view that a supply chain is a linear aggregation of self-regulating and somehow interconnected processes, as showed in Figure 1. At the beginningof the 1980s, researchers and practitioners started to characterized different SCM processesas logistics, purchasing, customer relationship management, industrial relationship marketing,service management, etc., but still lacked a sound holistic theory of the field. Suppliers (Physical Manufacturer Distribution System Supply, Material (Manufacturing (Physical Distribution of Management or Planning and Control) Outbound Logistics) Inbound Logistics) Reverse Logistics Figure 1: Supply-Production-Distribution (Linear) System 236
  • 3. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –6510(Online), Volume 3, Issue 3, September- December (2012)However, much of these researches focused on only one phase or functional area at a time,and the collective rarely were deemed as a system. Motivated by this attitude, GSCM wasmathematical conceptualized as:Green Inbound Logistics/Material Management + Green Manufacturing/Operations + Green Outbound Logistics/Marketing + Reverse LogisticsBy the middle of the 1990s, the Supply Chain Council developed and maintained a processreference system that allows companies to assess measure and improve their supply chainprocesses. The name given to this reference system was Supply Chain Operations ReferenceModel or SCOR Model (Supply Chain Council). In principle, the model attempts to mend thelinear limited conceptualization of SCM and other shortcomings. Consisting of three levels ofprocess detail and five process elements (plan, source, make, deliver and return), SCORallows companies to examine their supply chain processes and the relations among partners,suppliers and customers in an integrated and holistic way. [25,] The general SCOR Model isshown in Figure 2. Figure 2: Supply Chain Operations Reference (SCOR) Model Management ProcessesAfterward, the underpinning paradigm was to regard the SCM as a holistic, systemic andsynergetic field, and fundamental difference among distribution, logistics and SCM wereestablished, as shown in Figure 3.[12] 237
  • 4. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –6510(Online), Volume 3, Issue 3, September- December (2012) Figure 3: Conceptual Relationship among Distribution, Logistics and SCMDuring the first part of the 1990s, a fresh posture regarding the relationship among SCM, socialresponsibility and environmental consciousness began to “catch-on”. Companies embraced theimportance of working collaboratively with their supply chain partners to improve their socialresponsibility performance. [22] As companies became more social responsible (induced orvoluntarily) there was a tendency to adopt a more proactive environmental sustainability mind-set intheir supply chain initiatives. [16] At the end of the 1990’s, innovative conceptual models andimplementation methods flourished under the expression “supply chain environmental managementmodels.”Conversely, and counter intuitively, considerable research began to surface supporting the propositionthat building on the company and partners’ social responsibility dispositions can increase performanceindicators such as profitability and effectiveness, on the supply side, and customer satisfaction, on thedemand side. [36, 45]They suggested (see Figure 5) that transactional oriented companies tend to operate as independentsilos, decreasing the possibility of accomplishing environmental supply chain initiatives. Thesecompanies spend much of their supply chain management efforts and resources in limited managerialcontrol processes. Companies with a network orientation are more concern with the effectiveness ofthe entire flow that delivers their products to the end customer. They make great efforts to developsustainable supply chains and are proactive in many environmental friendly initiatives. Figure 4: Aligning Supply Chain and Environmental Orientation 238
  • 5. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –6510(Online), Volume 3, Issue 3, September- December (2012)3. RESEARCH OBJECTIVES The main objective of this study was to conduct an investigative research on the statusand direction of key issues of GSCM. Specific research objectives were: • Based on a survey-based approach, provide a preliminary account of the degree that companies capabilities matter in the adoption of GSCM practices. • Concisely explain key concepts and strategies in the domain of GSCM. In particular barriers in the implementation of GSCM practices, approaches for implementing Reverse Logistics Process, role of mentoring within GSCM, improvement methods used in the purchasing and transportation systems, the impact of SCM Risk Management on GSCM, and the adoption of voluntary Environmental International Standards affects GSCM practices.4. METHODOLOGY Prior studies using contingency and force field theories make it clear that research onGSCM as an articulate body of knowledge still in an embryonic stage. [20] For this reason, itwas conducted an exploratory research framework based on: (1) A survey-based approach (2) An extensive field and field-related literature review.The empirical, survey-based research approach used a questionnaire submitted to a limited,but representative number of companies (thirty nine) on factors associated with the adoptionof GSCM practices. The questionnaires were distributed to the responsible persons forGSCM initiatives in each company and used a five-point Likert scale. [15] Figure 5: Model for Organizational Capacity, Organizational Systems, and OutcomesFor the field-related literature review, the focus was on articles published on the underlyingtopics that are nurturing this emerging field. The literature review was classified into threecategories of research interest: environmental conditions identification, decision processdevelopment, and supply chain integration. The first research category entails identifyingconditions that prompted the adoption of environmental initiatives and fostered the issue ofsustainability as a strategic issue. Most of articles in this category were based on surveys andinterviews. The second category studied the decision choices to implement GSCM specificinitiatives. The third category pertains to SCM, where companies collaborate to integratevarious key processes and the implementation activities carried out. 239
  • 6. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –6510(Online), Volume 3, Issue 3, September- December (2012)5. RESULTS & ANALYSIS5.1. Organizational Factors Associated with the Adoption of GSCM Practices: Survey-basedResearch Approach The findings of the survey support the hypothesis that organizational capabilities mattersignificantly in the adoption of GSCM practices (see Table 1.) Based on the questionnaires,companies were classified as High-Adopters or Low-Adopters. The findings are robust, withcompanies in the High-Adopter sample scoring considerably higher in terms of several organizationalfactors important to the implementation of GSCM practices, than companies in the non-adoptersample. Table 1: Organizational Factor Scores for Sample Companies Average Factor Score Organizational Resources High-Adopters Non-Adopters Environmental Resources 4.01 1.95 Business Practices 4.51 2.05 Performance Monitoring 3.01 2.87 Overall Score 3.66 2.13From Figure 5, the Critical Ratios suggest that greening the different phases of the supply chain doeslead to an integrated green supply chain where the green inbound function of the supply chain, as wellas a green production stage leads to a green outbound phase. Even as it might be expected that thegreening of the inbound function leads to green production, the critical ratio for this link is lower thanthe required; therefore, it is acknowledge that there is still not enough evidence to establish thesignificance of this link. However, the green supply chain comprising all three phases clearly leads tosignificant values for competitiveness and economic performance. This establishes the linkagebetween the green supply chain and competitiveness for which many anecdotal examples exist, butempirically tested evidence is lacking. Figure 6: Critical Ratios of the Studied Phases of the Supply Chain 240
  • 7. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –6510(Online), Volume 3, Issue 3, September- December (2012)Based on the survey, most sample companies use performance measures for their supplychains based on ISO 14000 or a total quality management approach. In the past, mostdifficulties in their supply chains performance measures arise from non-standardized data,inadequate technological integration, discrepancy in organizational policies and lack ofagreed upon metrics. The implementation of GSCM initiatives forces them to reevaluate andinitiate corrective actions on several metrics.5.2. Results from the Literature Review The literature review revealed that the barriers to establish GSCM practices haveinternal and external sources. The main external sources are regulations, governmentcompliances, customer requirements, competitors’ dynamics, poor supplier commitment, andindustry specific barriers. The main internal barriers include cost, unawareness of their supplychains, poor expertise in GSCM approaches and lack of commitment or legitimacy. Thefollowing paragraphs, briefly discuss several approaches used by companies in their GSCMefforts. Most companies begin implementing GSCM initiatives voluntarily, putting intooperation retro-logistics programs. These include used-product acquisition, inspection anddisposition (determining whether to repair, remanufacture, use of spare parts, or recycle),remanufacturing, and remarketing. The most used approaches in this category are ValueCapturing Approach (VCA) for returned products, Business Practices for Green CorporateImage and returned product based on the Products Life Cycle. [41] Hines and Johns study the mentoring role within GSCM as an emerging concept thatpromotes a more valuable affiliation among suppliers. [27] This mentoring culture goesbeyond monitoring and evaluation, towards guiding and supporting suppliers and requires asubstantial adjustment in the attitude of the key companies in a supply chain. Specificoperational initiatives of this category include holding environmental awareness seminars forsuppliers and vendors, undertaking educational program to explain the benefits and relevanceof GSCM initiatives, setting up environmental teams to guide suppliers in their developmentof environmental programs, visiting supplier premises to provide on-site recommendationsand assisting in the set up of their environmental programs. Supplier mentoring is proactive,non-threatening, shares potential benefits, and builds teamwork. In an environmentally-friendly transportation system, essential elements of atransportation system such as type of transport, fuel sources, infrastructure, operationalpractices and organization, are considered. Underlying constructs for specific strategiesincludes: • Environment-friendly waste management • Environmental improvement of packaging • Eco-labeling • Recovery of companys end-of-life products • Providing consumers with information on environmental friendly products and production methods • Use of environmentally-friendly transportationSupply chain risks can arise from many sources and sometimes without warning. Byidentifying and quantifying risks, companies can make business decisions based on hardinformation rather than on instinct or intuition. An organization that embraces risk-adjustedsupply chain management enjoys important additional information upon which to base theirGSCM decisions. While maintaining efficient supply chain operations is profitable, it is also 241
  • 8. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –6510(Online), Volume 3, Issue 3, September- December (2012)a very challenging continuous improvement process due to the high risk that is involved inpotential failures. The use of international standards environmental management systems may improvecompanies environmental performance. For example, an increasing number of companies arecertifying their environmental management systems by ISO 14000 series standards.Supporters of ISO 1400 claim substantial operational, managerial, and competitive benefitsfor companies that adopt the international guidelines. Following a growing interest incorporate social responsibility, the International Organization for Standardization (ISO)announced plans for development of the ISO 26000 guidance standard for socialresponsibility. Despite initial signals that ISO 26000 will be built on the intellectual andpractical infrastructure of ISO 9000 and ISO 14000, the Advisory Group on SocialResponsibility set a different direction: a guidance standard and not a specification standardagainst which conformity can be assessed.6. CONCLUSIONS This study serves as a primer on the development of GSCM as a field. Also, hasshown several concrete approaches used in implementing GSCM initiatives and examined therole of organizational factors in the adoption of environmental innovations, based on asample. The study advanced the proposition that organizational capabilities mattersignificantly in the adoption of GSCM practices. The supply chain concept grew out of therecognition that the process of transforming raw materials into final products and deliveringthose products to customers is becoming increasingly complex: Not simply a compilation oflinear processes. Changes in the environment and the understanding that there are operationaland economic advantages in “greening” the business proposition, have forwarded afundamental shift in business practices. The aforementioned results demonstrate that greeningthe supply chain, significantly lead to better competitiveness and economic performance ofthe company, gains in terms of less or minimal environmentally waste, reduced costs,compliance with regulation, reduced pollution, improved resource utilization andenhancement in economic performance. However, if GSCM practices are to be widely adopted, is necessary to demonstrate anexplicit and stronger link among their efforts of implementation, economic performance andcompetitiveness. Thus, there is a clear research need to establish the potential link betweenGSCM initiatives, competitiveness and economic performance, to provide a stimulus forcompanies to green their supply chains.7. REFERENCES 1. Andries F. Hof1, Michel G. J. den Elzen2 and Detlef P. van Vuuren2. "Environmental effectiveness and economic consequences of fragmented versus universal regimes: what can we learn from model studies?." International Environmental Agreements: Politics, Law and Economics (2009): 39-62 2. Anger, N. "Emissions trading beyond Europe: Linking schemes in a post-Kyoto world." Energy Economics (2008): 2028-2049 3. Arimura, T., N. Darnall and H. Katayama. "Is ISO 14001 a Gateway to More Advanced Voluntary Action? A Case for Green Supply Chain Management." 25 March 2009 19 June 2009 242
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  • 11. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –6510(Online), Volume 3, Issue 3, September- December (2012) 45. Shepherd, C. and H. Gunter. "Measuring supply chain: current research and future." Journal of Productivity and Performance Management (2006): 242-258 46. Simpson, W.G. and T. Kohers. "The Link between Corporate Social and Financial." Journal of Business Ethics (2002): 97-109 47. Skjoett-Larsen, T. "European logistics beyond 2000." International Journal of Physical Distribution & Logistics Management (2000): 322-387 48. Stewart, R. "Eco-Friendly Materials and Recycling on Growth Paths." Plastics Engineering (2008): 16-23 49. Storey, J., et al. "Supply chain management: theory, practice and future challenges." International Journal of Operations & Production Management (2006): 254-278 50. Van Hoek, R.I. "From reversed logistics to green supply chains." Supply Chain Management (1999): 129-134 51. Van Veen-Groot, D. and P. Nijkamp. "Globalisation, transport and the environment: new perspectives for ecological economics." Ecological Economics (1999): 331-346 52. Watson, R. "EU is urged to press for global ban on mercury." 20 2008 january. BMJ. 29 june 2009 <> 53. Wever, R., et al. "Increasing the benefits of product-level benchmarking for strategic eco-efficient decision making." Benchmarking (2007): 711-731 54. Zhu, Q. and J. Sarkis. "An inter-sectoral comparison of green supply chain management in China: drivers and practices." Journal of Cleaner Production (2006): 472-486 245