Green Supply Chain Management

A Concise Introduction

Joseph Sarkis, Yijie Dou

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351869744
• Edition: 1
• Topic: Business
• Subtopic: Operations
• Index: Business

This book gives students a thorough overview of the environmental issues that impact the supply chain and details strategic methods of addressing the political, social, technological, market, and economic concerns that have caused organizations to reconsider their impact. Readers will learn how to integrate the fields of operations management, procurement and purchasing, logistics, and marketing into a successful green supply chain, looking outward to form sustainable partnerships rather than focusing their efforts within the company.

Each chapter describes a function or dimension of green supply chains, supplemented with short vignettes to ground the theory in practice. The authors examine various industries, including electronics, food products, and manufacturing, and draw on case studies from the Americas, Europe, Asia, and Oceania, allowing students to compare and contrast domestic and international practices. Blending industry insights with the latest academic thinking, they also consider hot button topics like global–local relationships, the role of third parties, green multitier supplier management, and blockchain technology management. Conclusive chapter summaries and plenty of visual aids help readers retain the information they need to improve environmental performance within, and beyond their organizations.

Green Supply Chain Management is an excellent introduction to the topic for students and practitioners of supply chain management and environmental sustainability.

1
Basic Concepts of Green Supply Chain Management

Organizations have come to realize that to most effectively manage the environmental burdens caused by industry and commerce, they need to look beyond just their most immediate operations and processes. Organizations need to consider their supply chain both upstream and downstream. In this chapter we introduce some basic concepts and terminology for the overall adoption of corporate greening and environmental management efforts.

We begin the chapter by considering what forces are causing organizations to seriously consider greening initiatives, many of which go beyond legal and regulatory requirements. We also provide the reader with an overview of some of the environmental issues that are faced by organizations and, by extension, by society and the natural environment. The chapter then provides an overview and definition of supply chains and how they have evolved to be closed-loop inasmuch as organizations figure that materials and information flows should be circular in a green supply chain environment.

A review of internal environmental practices, barriers to greening in general, a definition of green supply chain management (GSCM), and making the business case for green supply chain management are also introduced in this chapter. This chapter lays a broader framework that is somewhat repeated by many of the latter chapters that consider the various elements of green supply chain management and its extensions. This chapter also presents a layout and outlines of topics discussed in later chapters.

External Forces for Adopting Corporate Greening

Commerce and industry have gone through substantial changes over the past few decades. Central to these evolutionary and revolutionary changes are political, social, technological, market, and economic forces that have caused organizations to seriously consider their impact on the natural environment.

A variety of forces have culminated in this greater interest in greening and, broadly, sustainability. In no particular order, the first force is that the science on environmental damages caused by industry has improved. In this situation, ignoring factual findings and consensus within science is hard to ignore. Climate change science, pesticides and endocrine disruptors, ozone-depleting gases, and a number of other environmental problems can be traced to practices, processes, and products from industry.

Second, communication is easier than ever before, and, more rapidly and readily than ever before, companies can communicate to their shareholders, employees, and competitors. Consumers and communities and other stakeholders who are influenced by industrial and corporate activities can get their information faster. The advent of the Internet and minute-to-minute news and reporting have all contributed to this pervasive and incessant communication. Sharing this information has become easier than ever. Organizations seeking to limit their image and reputation risks pay close attention to this ubiquitous communication related to environmental concerns.

Third, change is faster. New technologies and cultural changes have always occurred. But now, concerns that were once viewed, from an environmental perspective, as due to occur decades from now are starting to appear. Record volatility in weather conditions, warming at historically increased and higher than ever levels, and the melting of the polar cap are all concerns that were expected to occur in the long-term future. Industrially, globalization has become very common in commerce and industry; thus changes in one area can easily permeate the world. This includes environmental regulatory practices.

Fourth, the costs are higher and the impact is greater than in times past. As world population and affluence increase, further development means additional anthropocentric value is at stake. Environmentally related crises and catastrophes can mean heightened impact due to the greater number of people affected and the greater developed property values lost. The seacoast regions of the world have the most valuable properties. These regions are very susceptible to weather changes, sea level change, and contamination due to vulnerable watersheds. If environmental damage is caused by an industrial environmental accident, the integrated and concentrated populations of a region can be greatly affected. Sources of livelihood could be disrupted. In developing countries, where the growth has been at historic levels—never before has this type of economic growth occurred globally—and where regulations and industrial hygienic and environmental practices have been lax, polluted lands and rivers can cause large parts of cities to shut down.

Finally, stakeholders have a louder voice. Communities, nongovernmental organizations (NGOs), and other nonfiduciary stakeholders can instantaneously broadcast their messages to the world. Given that communication and knowledge transfer have become easier and more accessible than ever before in the history of man, the same systems can prove valuable for those previously with limited voice. The major conduit of this information and messaging consists of the various social media outlets. In many places in the world, news of corporate and supply chain environmental issues, accidents, disasters, and various incidents can be broadcast broadly through YouTube, Twitter, Facebook, and even LinkedIn. Blogs have also become part of the social media landscape where various stories can be written and delivered by individuals. Stakeholder websites have also become avenues for sharing reports and stories broadly.

These and a number of other forces are causing organizations to pay greater attention to greening and environmental issues, more so now than in the past when regulatory issues were the major drivers.

Environmental Concerns

The major reason for the greening of corporate supply chains is to address environmental burdens caused by industry and its operations. The environmental burdens can occur in different media such as air, water, or land and at various levels, such as global, regional, and local levels. A brief listing of the litany of environmental issues is shown in Table 1.1.

Global issues affect regions throughout the world. The most pervasive environmental concern centers around global warming and climate change. Increasing global temperatures have been tied to anthropogenic activities. Likewise, species decimation is considered a global problem since various species can affect local or global ecosystems. Also, the global impact on plant biodiversity can also affect the potential to find medicines and cures.

Table 1.1 Brief listing of the litany of environmental issues

Global Problems

Global warming/climate change—warmest years on record

Ozone depletion

Species decimation

Regional Problems

Deforestation

Acid rain

Water pollution—rivers, lakes

Local Problems

Pesticides—hazardous materials

Waste disposal

Regional problems impact regional areas. For example, acid rain is a major issue in many developing countries due to increased manufacturing. Regional issues relate to the acidification of lakes and waterways, which may impact many water species and communities that depend on those water supplies.

Local problems are those that may impact municipal areas instead of whole regions. For example, pesticides and herbicides may affect local waterways and agricultural regions. Herbicides may cause less diversity and more sensitivity among the plants in a region due to a decrease in biodiversity. Pesticides with endocrine disruptors can impact human health and fertility in local areas.

Industry and its supply chains have been major contributors to these sources of anthropogenic environmental burdens. But industry and supply chains are needed to supply the demands of our increasing populations. The balance of economics with the environmental and social influences of organizations and their supply chains is a challenge for both organizations and governments.

Supply Chains and Supply Chain Management

The evolution of supply chain management can be traced to the early industrial age with the culmination of scientific industrial practices and vertical integration. The term “supply chain management” is a relatively new business phrase that has evolved over the past three decades. The boundary and definitions of supply chain management have always been a crux of the field. Even today, the term “supply chain management” continues to evolve, with some calls for linkage and relationships to logistics and marketing requiring further clarification (Lambert and Enz, 2015).

Supply chain management gained popularity in the early 1990s, as it evolved in both the academic and the practitioner contexts. Initially, disparate functional silos and academic disciplinary fields were involved in the management of product and services demand and delivery. These fields included Operations Management, Procurement and Purchasing, Logistics, and Marketing. The disciplines and practices, although overlapping, had their own disciplinary terminologies and focuses. What the supply chain management field has attempted to accomplish is the integration of these four major fields and topics. One area that proved fundamental to this linkage is in strategy with the introduction of such terms as “value chain,” developed by Michael Porter (1985).

In the description of the value chain, Porter (1985) incorporated core or primary activities that included inbound logistics, operations, outbound logistics, marketing and sales, and service. Interestingly, he included procurement as a supporting activity. In supply chain management, it is considered a core activity. Other support activities are the organization’s infrastructure, information technology, and human resources activities. Another major difference with the basic value chain model is the interorganizational characteristics of supply chain management. That is, the focus goes beyond an individual organization and incorporates partner firms and a network of customers and suppliers.

A very broad definition that we will accept as the definition of supply chain management is as follows:

The supply chain encompasses all activities associated with the flow and transformation of goods from raw materials (extraction), through the end user, as well as associated information flows. Material and information flow both up and down the supply chain.

(Handfield and Nichols 1999, p. 2)

Supply chain organizations can take on many roles within the supply chain. For example, in a retail supply chain, some suppliers of materials may provide basic commodity and raw materials that might derive from the extractive (e.g., mining) or the agricultural (e.g., farming) industry. Other suppliers fabricate, manufacture, or further refine raw materials and goods, and there may also be manufacturers and assembling organizations that further add value to a material or product. There may also be more than one tier of these suppliers and manufacturers. Between and after these major organizations, various other intermediaries in the supply chain can include wholesalers, distributors, and retailers. There may be activities performed within an organization or left to other providers within the supply chain. Eventually, there are the ultimate customers and consumers. Sometimes these end-user customers can be organizations, and individuals can be viewed as part of the market and consumer base at the customer level.

The Supply Chain Operations Reference (SCOR) model introduces linked business processes, performance metrics, and practices. Historically, it was developed as part of the supply chain council, which is now part of the American Production and Inventory Control Society (APICS) professional organization. The score model utilizes aspects of the value chain concept and includes multiple levels of activities and performance metrics. For example, level 1 processes included in SCOR are Plan, Source, Make, Deliver, Return, and Enable. These activities may be disaggregated into many subactivities to multiple depths. These multiple levels of aggregation are common to most supply chain systemic models and are dependent on the boundaries drawn around the supply chain. We shall introduce a boundaries and multilevel perspective to supply chains within the green supply chain context later in this chapter.

Another important characteristic of the SCOR model is the inclusion of key performance metrics and indicators. The major SCOR performance measurement categories have evolved over the years but may include competencies around cost, quality, flexibility, and time. These metrics are interrelated with one another, as well as with the SCOR processes. The names of measures and metrics have evolved and can be granulized to the most basic operational activities within and between organizations. Performance measurement for the green supply chain will be discussed in various chapters later in the book as important managerial elements.

From Linear Supply Chains to Closing the Loop

The traditional supply chain management description by Handfield and Nichols (1999) implies a linear relationship with flows up and down the supply chain. As environmental issues and sustainability become more integrated, the supply chain will need to become more circular and nonlinear, where loo...