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THE DRIVERS OF GREEN SUPPLY CHAIN


MANAGEMENT: A THEORETICAL FRAMEWORK

Article · December 2015

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Volume 4, Number 4, October – December’ 2015
ISSN (Print):2319-9032, (Online):2319-9040
PEZZOTTAITE JOURNALS SJIF (2012): 3.562, SJIF (2013): 5.074, SJIF (2014): 5.857

THE DRIVERS OF GREEN SUPPLY CHAIN MANAGEMENT:


A THEORETICAL FRAMEWORK
Rudolph L. Boy1 Dr. Gangappa Kuruba2

ABSTRACT

Society faces a major challenge in the coming years in limiting damage to the environment. To prevent long term, irreversible
damage to our planet, companies are pressed to take on their part through green supply chain management, while
environmental science determines how best to address the long-term issues. Now that companies are beginning to step up
their environmental programmes, they are looking for ways to incorporate a green policy throughout the various stages of the
Supply Chain. The objective is to create a Green Supply Chain, which is defined as a Supply Chain that seeks to minimise the
environmental footprint of a product or a service. This study critically reviews the extant literature and thereby proposing a
theoretical framework that companies can use to guide their green supply chain operations.

KEYWORDS

Green Supply Chain Management, Environment, Inductive Research etc.

PURPOSE

The purpose of this paper is to deduct from the literature the drivers behind green supply chain management in companies around
the world by constructively critiquie the literature providing explanations for specific green supply-chain and logistics related
dynamic phenomena.

RESEARCH PROBLEM

Green supply chain management is relatively a new phenomenon that some researchers use the term interchangeably with
sustainable supply chain (Lee & Kim, 2011, Lee, 2009). The research problem identified in the extant literature is that companies
engage in a tick the box exercise as a barometer for gauging their effects on the environment reacting to environmental laws
(Handfield & Lawson, 2007; Handfield et al., 2005; Vachon, 2007). To understand this problem, a constructive critical review on
their behavior is taken.

RESEARCH QUESTION

What is the driving force for some companies to embark on greening their processes (green supply chain implementation).

METHODOLOGY

This inductive research reviews the literature on green supply chain management from 1994 to 2013. Therefore, this amount of
articles can give an adequate indication of the operations of the field under study. Since this is an inductive approach, rather than a
fully comprehensive one coupled with epistemological fallibility (Bhaskar 1998), the objective should not be to argue that the
results and conclusions are the ontological reality, but possibly to give a good indication.

INDUCTIVE REASONING

Inductive reasoning is moving from specific observations to broader generalizations and theories. This is sometimes called a
“bottom up” approach. It allows researchers’ to start with specific observations and measures, where patterns and regularities will
be detected, tentative hypotheses formulated and explored, and finally some general theories and conclusions developed.
In inductive argument, the idea is to establish or increase the chances of the argument in its conclusion. The premises in inductive
reasoning are intended only to be so strong that, there is an unlikely chance of the conclusion to be false. The strength of inductive
reasoning is a matter of degree unlike deductive arguments, which have a standard term for either it, is a successful or not
successful argument.

Sayer argument is that induction is ineffective to predict the social world because the social world is an open system consisting of
agents who are more or less self-reflexive, which may cause qualitative differences across space and time. We agree with this, we

1
Lecturer, Department of Management, Faculty of Business, University of Botswana, Botswana, rudolph.boy@mopipi.ub.bw
2
Sr. Lecturer. Department of Management, Faculty of Business, University of Botswana, Botswana, kurubag@mopipi.ub.bw

International Journal of Logistics & Supply Chain Management Perspectives © Pezzottaite Journals.
Volume 4, Number 4, October – December’ 2015
ISSN (Print):2319-9032, (Online):2319-9040
PEZZOTTAITE JOURNALS SJIF (2012): 3.562, SJIF (2013): 5.074, SJIF (2014): 5.857

are not attempting to create such a theory; we are only looking at underlying causal mechanisms that drive companies to embark
on green supply chain management. The hope with this inductive research is not to show what will likely to happen in the future,
only to see if agency has or has not been discussed to a great degree.

INTRODUCTION

In early environmental management frameworks, operating managers were involved only at arm’s length. Separate organizational
units had responsibility for ensuring environmental excellence in product development, process design, operations, logistics,
marketing, regulatory compliance and waste management. Today, this has changed. As in the quality revolution of the 1980s and
supply chain revolution of the 1990s, it has become clear that the best practices call for integration of environmental management
with ongoing operations. Green supply chain management (GSCM) is gaining increasing interest among researchers and
practitioners of operations and supply chain management. The growing importance of GSCM is driven mainly by the escalating
deterioration of environment, e.g. diminishing raw material resources, overflowing waste sites and increasing level of pollution.
However, it is not just about being environment friendly; it is about good business sense and higher profit.

LITERATURE REVIEW

What is Green Logistics?

Green Logistics precedes Green supply chain and hence, the business should try and establish green logistics in their operations
and then, it paves the way for green supply chain. Green or sustainable logistics is concerned with reducing environmental and
other negative impacts associated with the movement of supplies. Sustainability seeks to ensure that decisions made today do not
have an adverse impact on future generations. Green supply chains seek to reduce negative impact by redesigning sourcing,
distribution systems and managing reverse logistics so as to eliminate any inefficiency, unnecessary freight movements and
dumping of packaging.( http://Log.Logcluster.org)

Figure-1

Sources: Authors Compilation

The above figure explains various types of impact between economy, environment and Society and projects a caution towards
maintaining green logistics in order to have an integrated green supply chain throughout. In the process, logistics is quickly
gaining resonance throughout logistics and supply chain management. Donors and host nations are becoming more and more
aware of ‘green’ issues, and international legislation is being introduced and applied worldwide to all aspects of business
including humanitarian supply chains. (http://Log.Logcluster.org)

What is Green Supply Chain Management?

Even though there is no universal agreed definition for Green Supply Chain Management (GSCM) so far, embryonic and common
understandings have been theoretically considered and in operation. GSCM emphasises the concern for the environment in the
entire supply chain and needs long-term and strategic partnerships among the supply chain players. Nagel (2000) says GSCM
include the life cycle management of a product, from manufactures and consumption until the end-of-product life. Drumwright
(1994) first initiated the idea of supply chain management for environmental protection that recognised companies that introduced

International Journal of Logistics & Supply Chain Management Perspectives © Pezzottaite Journals.
Volume 4, Number 4, October – December’ 2015
ISSN (Print):2319-9032, (Online):2319-9040
PEZZOTTAITE JOURNALS SJIF (2012): 3.562, SJIF (2013): 5.074, SJIF (2014): 5.857

innovative manufacturing concepts in their operations. The Manufacturing Research Association at Michigan State University,
USA later defined Green Supply Chain Management (GSCM) as a new term (Handfield, 1996).

“Green supply refers to the way in which innovations in supply chain management and industrial purchasing may be considered in
the context of the environment” (Green et.al 1998) “Environmental supply chain management consists of the purchasing
function’s involvement in activities that include reduction, recycling, reuse and the substitution of materials.” (Narasimhan &
Carter, 1998). This study concurs with Toke et al (2010) that research or practitioner field (i.e. purchasing, operations, marketing
or logistics) also influences the definition of green supply chain. The definition of the purpose of green supply chains, which range
from reactive monitoring of general environmental management programs to more proactive practices such as the R’s of
environmental management and incorporating “innovations”, also seem to differ. The lack of consensus in practice and definition
of green supply chain is expected, since it’s a relatively new area of study and practice. If the practice of green supply chains is
new, the theory is even more so.

The literature employ diverse expressions depending on different situations such as green supply chain, green supply chain
management, environmental supply chain management, and green supply chain practices (Zhu & Sarkis, 2006; Sarkis, 2003;
Zsidisin & Siferd, 2001; Handfield et al., 2005; Vachon & Klassen, 2006). Since the centre for green management and green
innovation changed from processes to products, products life cycle have been extended and recognised. Hampson and Johnson,
(1996); Lee and Kim (2009) state that is a strategic linkage between green and environmental challenges with supply chain
management. Lamming and Hampson (1996) posits that a cooperative approach would sensitise suppliers on the environmental
impacts of the supply chain. Lee (2009) suggests that it is essential to have a close relationship between each member in a supply
chain as it quickens the creation of new opportunities for better economic and environmental performance. GSCM operations may
be divided into the stages of production, distribution and utilization. Consequently, individuals (Walton et al., 1998; Zsidisin &
Hendrick, 1998; Carter et al., 2000) can divide them into internally green manufacturing activities, green procurement, eco-design,
green retailing and green consumption.

Green Product Innovation and Environment

Lee and Kim (2011) describe green product innovation as a multi-faceted process aimed at minimising environmental impacts
while striving to protect and enhance the natural environment by conserving energy and resources. This research would add that
green product innovation needs the legal aspect integrated in the processes. Even though Lee &Kim, (2011) notes that green
innovation is recognised as one of the key factors to achieve environmental and economic success in markets, the problem arises
with regulation which companies view as limiting their production. This study concurs with Lee & Kim (2011) that to understand
green product innovation development, supplier’s involvement should become a strategic priority for academics and practitioners.
There is a strong linkage between environmental compliance and green new product developments. Lee and Kim (2011) state that
there is a strategically close relationship of environmental collaboration between suppliers and the buying company through
technological integration. Finally, involving key suppliers in green new product development for environmentally demanding
customers and markets can bring both environmental and commercial success (Lee&Kim, 2011).

The supply chain management is currently focusing on the green product innovation where corporate operations find ways to
minimise the direct and indirect environmental effects of their final product. The direct environmental effects start from inputs
that reproduce waste during distribution, processing, use or disposal. The indirect environmental effects are the ones produced by
suppliers further upstream Lee & Kim (2011). Therefore, corporations willing to decrease their environmental effects during new
product development are normally aware that they can do so only by relying on their capability to manage the more and more
complex supplier participation (Lee, 2009).

The green supply chain practices have made environmental partnership a strategic concern in the whole supply chain management
procedure concerning green new product development. This extensive justification covers the activities with suppliers and
connections with downstream customer firms in the supply chain.

Green New Product Development and Supplier Involvement

Some studies in supplier contribution in new product development have over decades based on buyer–supplier relationships (Carr
& Pearson, 1999; Halley & Nollet, 2002; van Echtelt et al., 2008; Athaide & Klink, 2009). The development of the relationship
with suppliers is a business-based relationship with long-term and collaborative association (Halley & Nollet, 2002; Athaide &
Klink, 2009). The more corporative relationship with suppliers has been brought up by changes in business environments with
paying attention on core competence, increased rivalry and indecisiveness, dispersion of the ‘just-in-time’. The shift of some
industries from end-of-pipe production to combined product innovations may motivate for green innovation and influence
strategic decisions in green sustainability. Porter and van der Linde (1995, p. 98) suggest, “Environmental legislations can trigger
innovation that may partly or more than counterbalance the costs of environmental compliance”.

International Journal of Logistics & Supply Chain Management Perspectives © Pezzottaite Journals.
Volume 4, Number 4, October – December’ 2015
ISSN (Print):2319-9032, (Online):2319-9040
PEZZOTTAITE JOURNALS SJIF (2012): 3.562, SJIF (2013): 5.074, SJIF (2014): 5.857

The fundamental and critical idea for suppliers to participate in green product development is to proffer a competitive advantage,
supporting the win–win dependability of being green and competitive. Consequently, the involvement of suppliers is important to
attain economic success in the long term especially in the early stages of product development planning and design, which cover
over 80% of the total costs of the product life cycle and control the environmental effects of products (Tischner et al., 2001).
Berchicci and Bodewes (2005) concur that some aspects are very pertinent to green product development. These are ‘design
specifications’ and ‘coordination and alignment with multifunctional product development teams internally and externally’. The
product specifications must have green qualities designed with specification integrated into products. Integrate green qualities into
a single product during the concept design process is addressed in terms of the choice of materials, energy efficiency, toxic waste,
and recycling (Chen, 2001). To introduce the green qualities into the final product requires coordination and alignment with
multifunctional product development teams working together with various departmental members and chosen suppliers. For a
green product development to be a success there should be an effective partnership between the various members of the product
development team along the chain both internally and externally.

Green New Product Development and Supply CM

Corporation’s response to environmental laws and regulations range from a reactive to a proactive stage. At a reaction stage,
companies comply with the regulations but do not appreciate the importance of involving environmental concerns into their value
chain processes and supply chains (Handfield & Lawson, 2007; Handfield et al., 2005; Vachon, 2007). At a proactive stage,
companies are likely inspired and influenced by environmental regulations to effectively green their supply chain management
and development of green new products (Carter & Dresner, 2001; Nawrocka, 2008). Porter and van der Linde (1995) supports the
proactive position by companies that environmental regulations and legislation will lead companies to innovate and thereby
reduce the environmental impacts at low cost.

Generally, the benefits of cooperative practices with upstream suppliers are much wider. In the contrary, collaboration with
downstream customers yields mixed outcomes (Vachon & Klassen, 2008). By reconnoitring the functioning activities due to green
partnership along the supply chain, Vachon & Klassen (2006) show that partnership with customers is positively linked to product
quality and flexibility, however partnership with suppliers is related with improved delivery actions.

DISCUSSION

This research makes use of inductive argument in making sense of the data about green supply chain management. The issue of
supply chains as to what extent this chain is green is abstracted from the existing literature of the observed phenomenon
investigated. In the abstraction phase, the causal structures and mechanisms inherent in the supply chain is abstracted from the
existing literature. For example, this phase is expected to confirm the relationship between green supply chain practices with
causal mechanisms. These causal mechanisms are evident from Lee &Kim (2011) that green innovation is a key motivator that
drives companies to develop green product innovation, Porter & van der Linde (1995, p. 98) conclude that “regulations and
legislation” are major factors behind the promotion of environmental management and green innovation by companies. Corporate
environmental management has progressed from traditional pollution control and risk management to the management of product
life-cycle and industrial ecology. Lately, corporate environmental management cover spanning activities like green procurement;
product stewardship, reverse logistics and so on (Zsidisin & Siferd, 2001; Snir, 2001; Prahinski & Kocabasoglu, 2006).

According to Vachon (2007, p. 4359), “environmental partnership is the preparation and development of environmental actions
and projects that requires direct involvement of an organization with its suppliers and customers jointly developing environmental
solutions”. The growing awareness of environmental compliance, has encouraged an increasing number of environmentally
proactive firms assimilate ‘selected’ suppliers into the new product development (NPD) (Geffen & Rothenberg, 2000; Pujari et al.,
2003). Assimilating green concerns into business strategy and the green product innovation procedure has become a strategic
opportunity for companies (Porter & Reinhardt, 2007).Collaboration between the companies on the supply chain is vital to drive
them to improve the environmental compatibility of their businesses (Ken et al., 2000). The causal mechanisms abstracted from
the extant literature from 1996 to 2012 are innovation, regulations or legislation, collaboration or environmental partnership
between companies and supply chain and strategic opportunity.

Companies’ in different countries view green supply chain management differently but the underlying understanding is the same.
In a general context, companies that are embarking on green supply chain initiatives are doing so voluntarily for their future value.
Though the causal mechanisms identified in the literature are not positively or negatively linked to the financial or economic
benefits, the research assumes that in the end companies that engage in this process will realise positive financial returns.

The next step will identify underlying structures, powers and mechanisms that will help in identifying these causalities and
explain them. The data derived from the literature has been iteratively applied on underlying structures identifying the causalities
and there is need to explain them: (i). Innovation is key to green sustainable supply chain as company’s research and design can
have a green design and green engineering in it, which will result to a green product. (ii). Corporate environmental management

International Journal of Logistics & Supply Chain Management Perspectives © Pezzottaite Journals.
Volume 4, Number 4, October – December’ 2015
ISSN (Print):2319-9032, (Online):2319-9040
PEZZOTTAITE JOURNALS SJIF (2012): 3.562, SJIF (2013): 5.074, SJIF (2014): 5.857

through collaboration is important to the good name of the company. This in-turn becomes a brand name that consumers can
associate with, which may results in customer loyalty to good brands. (iii). Collaboration on environmental partnerships and
strategic opportunity is paramount since companies competitive advantage is within their supply chains, not anymore on their
workforce or technology, but on how fast can they supply the products at the right time on the right quantities of the right quality.
This collaboration brings this strategic opportunity.

Companies that respond to the market need on time with all things being equal, out-perform their competitors. Lastly, legislation
is a way of adhering to the set rules and regulations not voluntarily, but by way of law. This is important as it acts as a guide and
some companies go beyond what the law says should be done. Some companies will publish their carbon footprint in their
financial statements; others will be innovative and limit their environmental impact beyond legislation. As illustrated in Table 1,
the regulatory level, innovation and collaboration on environmental partnerships are the driving forces behind companies greening
their supply chain.

Table-1: Context Mechanism Outcome (CMO) Configurations at Various Level

Context + Mechanism = Outcome


Innovation Company’s Research and Design (R&D) have a green design and Result to a green product.
green engineering in it. Berchicci & Bodewes (2005); Lee & Kim
(2011).
Collaboration on Companies competitive advantage is within the supply chain not Strategic opportunity brought
environmental their workforce or technology: how fast can they supply the about by collaboration and
partnerships products at the right time on the right quantities of the right loyal customers based on a
quality (Vachon & Klassen, 2008), (Halley & Nollet, 2002; good brand name of the
Athaide & Klink, 2009). company.
Legislation The Restriction of Hazardous Substances (RoHS, WEEE, and Good brand name and local
REACH compliance program forces many larger companies customers even access bigger
require their suppliers to authenticate parts and components markets for their products.
compliance to secure compliance of the final products (Porter &
van der Linde (1995, p. 98) Cusack & Perrett, 2006). Government
regulations and policies.
Sources: Authors Compilation

Discussing the Proposed Conceptual Framework: See Figure 1

The proposed framework is adapted from the 2008 Supply Chain Monitor “How mature is the Green Supply Chain?” It explains
that the concept of green supply chain covers all phases of a product life cycle, from extraction of raw materials through to design,
production and distribution phases, to the use of products by consumers and their disposal at the end of the product’s life cycle
(reconditioning, reuse, recycling). The research proposes a modification to the concept by adding a legal (regulatory) aspect to the
concept at all stages. In the literature, the mention of legislation is made with reference to ROHS but it is not precise where should
legislation be placed in framework. The literature suggests that compliance to environmental regulations is essential, but the
proposed framework places legislation at the core of design of the product, rather than regulate the product. The argument is that
once the product is finished and in the market, the only regulation that can be done is how to dispose it once it is obsolete, but the
modified framework instils legislation in all the processes throughout the supply chain. From the green supply chain point of
view, a product life cycle must be considered in its entirety, as each phase can be a source of negative impact on the environment.

The framework is briefly explained because of space and number of words allowed in the conference proceedings. The green
design is at the core of the proposed green supply chain process. The main idea is to have a product, which is green at the end of
the day. The legal/ regulatory aspect will guide from the phase of extraction from raw materials/sourcing on how much to extract,
and what means which does not impact on the environment, followed by regulations on manufacturing; here issues of carbon
emission reduction by use of clean technologies, then distribution which needs regulation of alternative forms of transport to be
used, which are environmental friendly. Then lastly, the product recovery, which may include reverse logistics / recycling, or
reusing used product. The product recovery need to be legally monitored because of its sensitivity on disposing off used material.
On the centre of this is the green design, which has an effect on each of every phase. It is an approach, which seeks to improve a
product ecological quality, by reducing its negative impact on the environment throughout its life cycle. The importance of
legal/regulation is supported by the Supply Chain Monitor (2008) report. The primary drivers of adopting an environmental
strategy are compliance with regulatory requirements and improving the company’s image. These factors are constantly quoted
regardless of country, sector or size of the company in question. The arrows are two way showing that if a product has missed
some compliance at any stage, then it can be reversed to comply before it can be passed on to another stage.

International Journal of Logistics & Supply Chain Management Perspectives © Pezzottaite Journals.
Volume 4, Number 4, October – December’ 2015
ISSN (Print):2319-9032, (Online):2319-9040
PEZZOTTAITE JOURNALS SJIF (2012): 3.562, SJIF (2013): 5.074, SJIF (2014): 5.857

According to Supply Chain Monitor report (2008), the dominant driver is compliance with regulation. This observation
underscores the importance of the regulatory framework and suggests that the most environmentally active countries are also
those with the toughest ecological regulations. The tough regulatory constraints may force companies to set up a department
dedicated to environmental issues. Regulation has an effect on companies regarding green supply chain. According to Supply
Chain Observatory report (2008), 52% of the companies surveyed, feel that regulation prevents companies with an opportunity to
embark on innovation process, even though some felt that it is a constraint or their activities are greatly restricted by environment
regulation.

Regulation plays an important role in green supply chain. The green design approach in some companies is proactive (ethical),
while in others is a response to implementing the directives aimed at reducing ecological degradation. Where regulations like
Restrictions of Hazardous Substances (ROHS), Waste Electrical and Electronic Equipment (WEEE) and Registration, Evaluation,
Authorisation and Restriction of Chemicals (REACH); are enforced like in Europe, the environment is less degraded compared to
the developing world.

Figure-2: Green Supply Chain Management. Adapted from the 2008 Supply Chain Monitor
How mature is the Green Supply Chain?

Sources: Authors Compilation

RESEARCH IMPLICATION

Research has shown that legislation has implications on company’s behaviour towards the environment Supply Chain Monitor,
(2008). Developed world in contrast to the developing world, there is a huge difference in the operations of the companies in
these areas. The multinational companies of the developed world tend to neglect the negative environmental impact they have on
the areas they are operating on. This is so because in the developing world, there are no regulations like (ROHS, WEEE, and
REACH) and others like in Europe. There is still a huge gap between harmonising environmental laws in host countries especially
developing countries with international companies who operates in the developing world. Some international companies take
advantage of the weak environmental laws in the developing world and neglect the environment, thus leaving a huge carbon
footprint or not rehabilitate the environment at all. It is evident that legislation can have an impact on how the companies can treat
the environment during the operation or even rehabilitation after operations. Green supply chain is a panacea to environmental
degradation. Once the products are engineered ethically with a green element (i.e. green engineering will produce green products,
which can be recycled and disposed off without harming the environment). The environment can be saved by legislation since
companies will not want to default the laws for fear of harsh punishments from the courts of law. Even though legislation on its
own cannot make the wrong right, but with companies buying in the idea of green supply chain, treating it as a system establishing
partnerships along the chain not the traditional adversarial approach.

International Journal of Logistics & Supply Chain Management Perspectives © Pezzottaite Journals.
Volume 4, Number 4, October – December’ 2015
ISSN (Print):2319-9032, (Online):2319-9040
PEZZOTTAITE JOURNALS SJIF (2012): 3.562, SJIF (2013): 5.074, SJIF (2014): 5.857

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International Journal of Logistics & Supply Chain Management Perspectives © Pezzottaite Journals.
Volume 4, Number 4, October – December’ 2015
ISSN (Print):2319-9032, (Online):2319-9040
PEZZOTTAITE JOURNALS SJIF (2012): 3.562, SJIF (2013): 5.074, SJIF (2014): 5.857

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