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Green Supply Chain Management

GREEN” POWER TO THE SUPPLY CHAIN
S. Khiewnavawongsa, Purdue University
E. K. Schmidt, Purdue University
EXTENDED ABSTRACT
It has been increasing in consciousness of the environment in the last few decades. More people are
aware of the world’s environmental problems such as global warming, toxic substance usage, and
decreasing in non-replenish resources. The Government has released campaigns to promote this
problem to people. Several organizations responded to this by applying green principles to their
company, such as using environmental friendly raw material, reducing the usage of petroleum power,
and using the recycle papers for packaging. The green principles were expanded to many departments
within organization, including supply chain. Green supply chain management (GSCM) was emerging
in the last few years. This idea covers every stage in manufacturing from the first to the last stage of
life cycle, i.e. from product design to recycle. Not only manufacturing, but GSCM can also be used to
other business sectors such as government, education and services.
The purpose of this paper was to describe the impact of green to the supply chain management. It
started with the importance of GSCM to the company in different levels or what factors that influence
the company to adopt the GSCM. These factors can be categorized by different drives such as
government, whole market, industry, competitors, and within the company. Since GSCM can be
applied to various areas within the company, this paper also discussed the implementation of GSCM to
several areas. Furthermore, some examples of GSCM application were demonstrated to support the
concept.
INTRODUCTION
One definition of green supply chain management (GSCM) is from (Srivastara, 2007). His study
collected and classified previous literatures relating to green supply chain management. He defined
GSCM as integrating environment thinking into supply chain management, including product design,
material sourcing and selection, manufacturing processes, delivery of the final product to the
consumers, and end-of-life management of the product after its useful life.
According to this definition, GSCM relates to a wide-range of production from product design to
recycle or destroy, or from cradle to grave. This principal is similar to lifecycle of product. Product
lifecycle is an idea that products pass through a cycle of life, similar to human, birth, maturity, death.
The product lifecycle provides a degree of structure to the life of products and thereby provides
direction for the diverse functional efforts required to produce and deliver product/service
offerings (Birou, Fawcett, & Magnon, 1998). Many studies addressed product lifecycle along with
supply chain or GSCM, for example, (Stonebraker & Liao, 2006) discussed that the stage of lifecycle
variables is associated with the various dimensions of supply chain integration.
Since GSCM normally involved the inverse of the product flow, reverse logistics are automatically
included in the study. There were numerous researches about this. (Sheu, Chou, & Hu, 2005)
proposed a linear multi-objective programming model optimizing the operations of both integrated
logistics and used product reverse logistics in green supply chain. Results from their study showed that
the proposed model improved net profits by 21.1%. In terms of both government and non-government
organizations in the U.S., they were aware of the environmental changes, especially from gas price. In
(Trunick, 2006) article, he discussed why the logistics companies should be more concerned on the
GSCM. He described some regulations released by either federal or local organizations such as U.S.
Department of Transportation (DOT) or California Air Resources Board (CARB), that affects to the
logistics and how they
According to (Boks & Stevels, 2007), they categorized “green” into 3 types depended on the different
perceptions of the environment among different stakeholders involved: scientific green, government
green, and customer green. In scientific green, life cycle assessment (LCA) was used to determine the
environmental impact of products, processes, and systems. However, it concerned only the emissions,
not other aspects. In government green, several factors were involved such as population density,
geographical position, and the availability of energy sources. These factors affected the government
agenda to maintain or improve quality of life. For customer green, the perceptions of green were
strongly linked to emotions that were directly impacted to people, especially health and safety, than
resources or emissions.
Although GSCM was introduced not too long ago, there have been a number of studies about it. These
studies were differently in detail. There are a few papers that collect studies, categorize them and
conclude the trend of research. An example of a paper related to previous GSCM studies is
(Kleindorfer, Singhal, & Van Wassenhove, 2005). They collected research from the first 50 issues
published in The Production and Operations Management Society (POMS) and found that there were
substantial number of research related to sustainability, including integrating environmental,
environmental management, green-product design, and closed-loop supply chains. Another example is
(Srivastara, 2007), he gathered numerous article and study related to the green and sustainability
supply chain, and classified based on problems context into 3 types: importance of GSCM, green
design, and green operation. He also classified based on methodology into 3 types: empirical studies
and mathematical modeling.
BENEFITS OF GSCM
Speaking of greening the supply chain, one might think only banning toxic chemical substance usages
or reducing emission or waste to the environment. However, it is much more than just a mere reducing
usage and pollution. Consequently, the benefits are not limited only less toxic consuming or less
waste. The GSCM principle can be applied to all departments in the organization. The effects of
GSCM expand to all area, both tangibly and intangibly.
Some studies mentioned benefits of adopting GSCM, such as (Stevels, 2002). He demonstrated the
benefits of GSCM to different roles of supply chain including environment and society in terms of
different categories: material, immaterial, and emotion. For material, GSCM helps lower
environmental load for environment, lower cost prices for supplier, lower cost for producer, lower cost
of ownership for customer, and less consumption of resources for society. In terms of immaterial,
GSCM helps overcoming prejudice and cynicism for environment, less rejects for supplier, easier to
manufacture for producer, convenience and fun for customer, and better compliance for society. For
emotion, GSCM helps motivation of stakeholder for environment, better image for supplier and
producer, feel good and quality of life for customer, and make industry on the right track for society.
He also provided examples of company that were successfully adopted GSCM.
In (Duber-Smith, 2005), he identified ten reasons that the company should adopt the green: target
marketing, sustainability of resources, lowered costs/increased efficiency, product differentiation and
competitive advantage, competitive and supply chain pressures, adapting to regulation and reducing
risk, brand reputation, return on investment, employee morale, and the ethical imperative.
WHAT DRIVE COMPANY TO ADOPT GSCM
Government
In the United States, there are a large number of government agencies controlling guide line, regulation
and law. Some agencies are federal by the government while some manage only in the local area.
These agencies and organizations are responsible for either similar or different issues such as pollution,
product material, and chemical waste. Different industries may be controlled by different regulation
depended on the industry characteristics and resources needed. One example of the government
agency is Environmental Protection Agency. Environmental Protection Agency (EPA) is a government
organization established to protect human health and the environment. One of their responsibilities is
to develop and enforce regulations that implement environmental laws enacted by Congress (U.S.
Environmental Protection Agency, 2007). EPA was a main agency referred in most study related to
environment.
An example of environmental guide line is ISO 1400 series. ISO 14000 was formally adopted in 1996
by the International Organization for Standardization (ISO). It represents a new standard and approach
to improved environmental performance (Montabon, Melnyk, Sroufe, & Calantone, 2000). Results
from their study showed that the ISO 14000 series can positively impact both performance of the
environmental management system and overall corporate performance. It ensures that the company is
well organized in the environmental field. However, ISO 14000certification is no guarantee that such
improvements are really delivered (Stevels, 2002)
For companies dealing with company in Europe, they got a huge impact from a new regulation
released last year. The Restriction of Hazardous Substances (RoHS) limits the amount of lead and five
other substances that may be contained in products sold to Europe after July 1, 2006 (Jorgensen,
2005). Not only manufacturers who produce products, but suppliers, distributors or even customers do
get great impact from this new regulation. One example of changes was that suppliers need to assign
new part numbers to all lead free components.
Market and Competitor
In today’s business world, the competitive among company is very high. To make customer impress,
the company needs to make themselves standing out from others. Being environmental friendly is one
way to differentiate them from the competitors. Furthermore, when competitors already adopted
GSCM, the company gets a pressure instead. Therefore, it is a good idea to implement GSCM no
matter the competitors have adopted it or not. Not only competitors, but do customers affect to the
company’s decision to adopt the GSCM. In many cases, customers were the one who require special
treatment or special products. Therefore, the company needs to make changes to make them satisfy
and stay with them. Some papers studied about the relationship between applying GSCM with
customer’s requirement such as (Simpson, Power, & Samson, 2007). In this study, they explored the
moderating impact of relationship between a customer and its suppliers and effectiveness of customer’s
environmental performance requirements.
Company
Two drivers mentioned earlier are from external factor. Sometimes a driver is from the company
itself. Numerous studies support that adopting GSCM can reduce the cost (Duber-Smith, 2005),
(Stevels, 2002), and (Gunther, 2006). There also are other reasons such as increase efficiency,
eliminate waste and pollution, and generate brand reputation. In terms of human resources, in (Duber-
Smith, 2005), he mentioned that more sustainability enhances employee morale from some green
programs such as wellness programs, ergonomic work environment.
There are several studies about the factors or benefits that make the company apply GSCM. In
Chinese industry, (Zhu & Sarkis, The Moderating Effects of Institutional Pressures on Emergent Green
Suply Chain Practices anad Performance, 2007) developed a survey to 341 Chinese manufacturers to
examine the relationships between GSCM practice, environmental and economic performance,
incorporating 3 moderating factors market, regulatory, and competitive institutional pressures. Results
showed that they experienced increasing environmental pressure to implement GSCM practices.
Market and government pressures through regulation influenced them to improve environmental
performance. Another study of this kind of study is (Hu & Hsu, 2006). They develop a set of critical
factors of GSCM practices that could be used by managers. They surveyed in the electrical and
electronics industries in Taiwan. Results showed that there were four critical factors: supplier
management, product recycling, organization and involvement and life cycle management.
Factors and drivers to adopt GSCM in different industries were differently. In a study of (Zhu, Sarkis,
& Lai, Green Supply Chain Management Implications for "Closing The Loop", 2008), they developed
a survey to 4 industries in Chinese to evaluate their perceived GSCM practices and relate them to
closing the supply chain loop. Results showed that automobile industry lagged behind the other
industries, power generating, chemical/petroleum and electrical and electronic. They assumed that the
reason may result from a high level of complexity in the adoption of GSCM practices.
IMPLEMENTATION OF GREEN
From product lifecycle concept, the cycle starts at the designing of product. According to (Srivastara,
2007), literatures related to green design emphasize both environmentally conscious design and life
cycle assessment/analysis. In designing a product, the designing team can change the raw materials or
substances used during the manufacturing to be less toxic, more environmental friendly. Some
terminologies are related to design for green such as design for environment or EcoDesign. An
example of green product is hybrid car. Due to the increasing demand and decreasing amount of
petroleum, automobile manufacturers needed to redesign the engine that consumes no or less gas.
Hybrid car has been developing from day to day. One article about automobile design is (McAuley,
2003), he discussed the green design of automobile, which tend to change to advanced lightweight
materials and fewer materials in vehicle design. In designing a product, the manufacturing company
needs a high level of cooperation with their suppliers. An example for the research on supplier-
manufacturer cooperation in EcoDesign is (Stevels, 2002). He also presented two examples of
successful green supply agenda between manufacturer and suppliers.
In manufacturing process, the company can apply green by several methods to reduce the energy and
resource consumption. This is where reuse and recycling are referred. Several papers provided green
practices such as (Duber-Smith, 2005). He suggested some practices including reducing energy
consumption, recycle and reuse, using biodegradable and non-toxic materials, minimize harmful
emissions, and minimize or eliminate waste. In a Chinese sugar manufacturer, Guitang Group can
reduce the wastes and improve their financial performance by using waste from the upstream as raw
materials for downstream production (Zhu & Cote, Integrating Green Supply Chain into An
Embryonic Eco-Industril Development: A Case Study of the Guitang Group, 2004).
Further than design and manufacturing, other departments in an organization are involved with the
green. Purchasing could become an important agent for change regarding environmental initiatives in
the supply chain (Preuss, 2001). In (Walton, 1998) article, he conducted a qualitative study to explore
the primary areas for change to increase purchasing’s impact on environment.
As mentioned earlier, not only manufacturer, other supply chain roles got impact from GSCM also.
For a largest retailer in the U.S., Wal-Mart has an interesting story of adopting GSCM to their
organization. In October 2005, Wal-Mart CEO committed the company to 3 goals: to be supplied
100% by renewable energy; to create zero waste; and to sell products that sustain Wal-Mart’s resources
and the environment, and Wal-Mart was launching a business sustainability strategy to dramatically
reduce the company's impact on the global environment and become "the most competitive and
innovative company in the world (Plambeck, 2007). In this study, she provided 8 practices engaged
with 14 network partners.
BARRIERS OF APPLYING GSCM
In (Zhu & Cote, Integrating Green Supply Chain into An Embryonic Eco-Industril Development: A
Case Study of the Guitang Group, 2004), they studied the integration of green supply in sugar
industry. They mentioned three barriers: maintaining close relationships with their main suppliers,
obtaining a larger market share through competition with other market share through competition with
other domestic sugar refineries by improving product quality and reducing costs, and ensuring the
sustainability of their operations including reducing the environmental impacts. At the same times,
there are some research studied barriers of applying GSCM from supplier’s perspective. An example
of supplier’s barrier is (Wycherley, 1999), he conducted a qualitative study on the suppliers’ barriers of
GSCM implementation for an environmental-friendly image products like the Body Shop.
SUCCESSFUL STORIES
Several studies were exploratory study about a company succeed in applying GSCM, various in
different industry such as electronics, automobile, furniture, and packaging. An example of Electronics
Company is Advanced Micro Devices. Advanced Micro Devices (AMD ) wanted to be recognized as a
sustainable organization. They wanted to better mage the risk of a potential supply chain and work
together with suppliers to identify alternative materials an equipment to minimize environmental
impacts. Moreover, they were drove by their customers, investors, and non-governmental
organization groups externally (Trowbridge, 2001). In packaging Industry, results from survey showed
that green supply chain practices were positively linked to operational performance. Also, the green
supply chain practices were affecting the allocation of resources among 3 types of environmental
technologies: pollution prevention, pollution control, and management systems (Vachon, 2003).
STATEMENT OF PROBLEM
This study is aimed to find the GSCM adopting in the U.S. manufacturer in some aspects. The
focus of the study is that the driver and factor that make the company in different industry choose to
adopt GSCM in their organization. The survey will be sent to manufacturers across the country to
different industries such as automobile, electronics, furniture, healthcare, plumbing, and textile.
Survey questions will be asked to see the perspective of the manufacturers in GSCM and what make
them apply it, as well as the future trend. Other aspects will be asked such as the collaboration with
their suppliers and customers, technology used, and how they choose the supplier.
REFERENCES
Birou, L. M., Fawcett, S. E., & Magnon, G. M. (1998). The Product Life Cycle: A Tool for Functional
Strategic Alignment. International Journal of Purchasing and Materials, 34 (2), 37-51.
Boks, C., & Stevels, A. (2007). Essential Perspectives for Design for Environment. Experiences from
The Electronics Industry. International Journal of Production Research, 45 (18-19), 4021-4039.
Duber-Smith, D. C. (2005, August). The Green Imperative. Soap, Perfumery, and Cosmetics, 78 (8),
pp. 24-26.
Gunther, M. (2006, August 7). The Green Machine. Fortune Magazine.
Hu, A. H., & Hsu, C.-W. (2006). Empirical Study in the Critical Factors of Green Supply Chain
Management (GSCM) Practice in the Taiwanese Electrical and Electronics Industries. IEEE
International Conference on management of Innovative and Technology, (pp. 853-857).
Jorgensen, B. (2005, June). The "Greening" of The Supply Chain. Electronic Business, 31 (6), pp. 29-
30.
Kleindorfer, P. R., Singhal, K., & Van Wassenhove, L. N. (2005). Sustainable Operations Management.
Production and Operations Management, 14 (4), 482-492.
McAuley, J. W. (2003). Global Sustainability and Key Needs in Future Automotive Design.
Environmental Science and Technology, 37 (23), 5414-5416.
Montabon, F., Melnyk, S. A., Sroufe, R., & Calantone, R. J. (2000). ISO 14000: Assessing Its
Perceived Impact on Corporate Performance. Journal of Supply Chain Management, 36 (2), 4-16.
Plambeck, E. L. (2007, July). The Greening of Wal-Mart's Supply Chain. Supply Chain Management
Review, 11 (5), p. 18.
Preuss, L. (2001). In Dirty Chains? Purchasing and Greener Manufacturing. Journal of Business
Ethics, 34, 345-359.
Sarkis, J. (2003). A Strategic Decision Framework for Green Supply Chain Management. Journal of
Cleaner Production, 11 (4), 397-409.
Sheu, J.-B., Chou, Y.-H., & Hu, C.-C. (2005). An Integrated Logistics Operational Model for Green-
Supply Chain Management. Transportation Research, 41, 287-313.
Simpson, D., Power, D., & Samson, D. (2007). Greening the Automotive Supply Chain: A
Relationship Perspective. International Journal of Operations and Production Management, 27 (1), 28-
48.
Srivastara, S. K. (2007). Green Supply-Chain Management: A State-of-The-Art Literature Review.
International Journal of Management Reviews, 9 (1), 53-80.
Stevels, A. (2002). Green Supply Chain Management Much More Than Questionnaires and ISO
14.001. IEEE, 96-100.
Stonebraker, P. W., & Liao, J. (2006). Supply Chain Integration: Exploring Product and Environmental
Coningencies. Supply Chain Management, 11 (1), 34-43.
Trowbridge, P. (2001). A Case Study of Green Supply-Chain Management at Advanced Micro Devices.
Greener Management International, 35, 121-135.
Trunick, P. A. (2006, June). A Green Role for Logistics. Logistics Today , 6, pp. 26, 28-29.
U.S. Environmental Protection Agency. (2007). About EPA. Retrieved December 12, 2007, from U.S.
Environmental Protection Agency: http://www.epa.gov/epahome/aboutepa.htm
Vachon, S. (2003). Green Supply Chain Practices: An Examination of Their Antecedents and
 Performance Outcomes.
Walton, S. V. (1998). The Green Supply Chain: Integrating Suppliers into Environmental Management
Processes. International Journal of Purchasing and Materials, 34 (2), 2-11.
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Strategy and the Environment, 8 (2), 120-127.
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Development: A Case Study of the Guitang Group. Journal of Cleaner Production, 12 (8-10), 1025-
1035.
Zhu, Q., & Sarkis, J. (2007). The Moderating Effects of Institutional Pressures on Emergent Green
Supply Chain Practices and Performance. International Journal of Production Research, 45 (18-19),
4333-4355.
Zhu, Q., Sarkis, J., & Lai, K.-h. (2008). Green Supply Chain Management Implications for "Closing
The Loop". Transportation Research, 44, 1-18.

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Benefits of implementing green supply chain

management techniques
Posted in February 14th, 2011 by Mark Kevin in Wholesale Distributors

Experts have recognized the serious affects on our environment due to emissions of Carbon Dioxide
and other hazardous gasses that are destroying ozone layer and causing global warming. This will
ultimately result in a biggest catastrophe and various diseases like cancer etc. Keeping in view the
environmental damages, the experts have invented eco-friendly techniques and procedures. Besides
environmental damages, the eco-friendly procedures are also very cost effective which ultimately
means to have more profits.
When eco-friendly techniques are applied in supply chain management, it becomes green supply chain
management. Actually, Green Supply Chain Management recognizes the disproportionate
environmental impact of supply chain processes in an organization. There are innumerable benefits of
implementing green supply chain management techniques. Today’s business world is full of
competition and to create an impression on customers, the wholesalers and manufacturers need to stand
out among others. Being eco-friendly is one method to differentiate ourselves from the rivals.
Green supply chain management improves agility and helps mitigate risks and speed innovations. It
also increases adaptability and often leads to innovative processes and continuous improvement in
wholesale products offered by different manufacturers. Green supply chain management promotes
alignment and involves negotiation policies with suppliers and customers, which ultimately results in
better alignment of business processes and principles.
Wholesale suppliers can use full container shipments to reduce Carbon emissions; it will also reduce
fuel consumption which is considered to be one of the major profit reducer. Reducing the dependence
of wholesalers and manufacturers on paper usage will minimize the waste material as well as also
enhance the working speed of whole organization when computers will be used with optimized
software. Entrepreneurs can also use automated compliance processes to reduce retailers’ chargeback.
They can also use green warehouse features to reduce packing waste and improve workers’
productivity. In nutshell we can say that going Green is not just a better way to sell your services or
goods. Going Green is a commitment to national and world crisis that we all face in the current
generation. Manufacturers, wholesalers, distributors and other entities in a supply chain need to play
their role to make the world a better place for living.