The 2013 IBEA, International Conference on Business, Economics, and Accounting

20 – 23 March 2013, Bangkok - Thailand

A Review of the Literature and a Framework for
Green Supply Chain Management
Sungjae Pak
Faculty of Business, Marketing and Distribution
Nakamura Gakuen University, Japan
E-mail: pak@nakamura-u.ac.jp

Abstract
There has been increasing emphasis on environment-friendly corporate activity in
recent times, and many progressive companies are embracing green supply chain
management. This paper evaluates an existing study on green supply chain
management and discusses a new topic and domain that may have a direct
influence on the green supply chain problem and the direction of future practice.
First, the definitions for green supply chain management are reviewed.
Subsequently, the practice of green supply chain management is discussed
sequentially, covering logistics, green purchasing and supplier relationships,
manufacturing and eco design, environmental management, and green marketing.
Finally, construction of the green supply chain as a system and the problem of a
result become known as an argument, and the implications to be derived from these
factors are considered.
Keywords: green supply chain management, logistics, green purchasing,
environmental management
INTRODUCTION
Green logistics is an activity that increases corporate value, considering its
influence on all processes of physical distribution, as well as the environment and traffic.
This activity leads to a reduction in resource consumption and a conversion to green
supply chain management.
Green logistics minimizes the environmental impact of all processes, from the
supply of raw material to final consumption and specifically results in recycling after use,
reuse, and disposal.
In green logistics, both the supplier and the purchaser consider the environmental
friendliness of the whole supply chain, rather than the results of the individual firm’s eco
management, since decreasing carbon discharge at the supply chain stage is more
important than the standard of an individual company. Therefore, a company adopting
green logistics must implement suitable measures at a company level. Moreover, a
company should utilize a suitable performance index for green supply chain management.

The 2013 IBEA, International Conference on Business, Economics, and Accounting
20 – 23 March 2013, Bangkok - Thailand

Both researchers and practitioners are increasingly concerned about the
execution of green supply chain management, since it results in a business model that is
not only environment-friendly but highly competitive.
Moreover, the supply chain system is part of the concept of the value chain and
has attracted attention from logistics researchers looking at strategy theory as it relates
to competitive superiority studies and supply chain management.
LITERATURE REVIEW
Definition of Green Supply Management
A number of terms are used for green supply chain management, including
environmental supply chain management and eco supply chain management, depending
on the researcher’s point of view. By many definitions, such as that of Toke et al. (2010),
the focus of the researcher on green supply chain management can cover an objective
range. In addition, not only the study but also the field of practice affects the definition.
On the other hand, a general environmental management program or a green supply
chain management approach that involves innovation for the purpose of eco
management also exists.
In general research, environment-friendly devices and facilities, as well as
management technique, are applied to supply chain management, with a view to
achieving complementary environmental and management objectives. (Lai et al., 2004)
Specifically, Narasimhan & Carter (1998) defined green supply chain management
as involving the purchase of methods that reduced the use of materials in addition to
recycling and reuse. Godfrey (1998) defined green supply chain management as company
practices that continuously monitor the environmental impact of a supply chain and
improve its results. Further, Simpson & Power (2005) considered the closed form loop of
environmental physical distribution activity, which involves reuse of materials and
products, when defining the green procurement activity between a purchaser and a
supplier from both the internal and external perspective of an organization. On the other
hand, Beamon (1999) emphasized the importance of cooperation with a company and
defined green supply chain management as utilizing the supply chain between a central
company and a cooperating company, to support the organization of eco management
know-how in the central company and the development of clean manufacturing
techniques; such cooperation supports the strengthening of competitiveness based on
environmental practices. The definition by Gilbert (2001) also makes a reference to the
process of establishing a long-term relationship with a supplier for making systematic

The 2013 IBEA, International Conference on Business, Economics, and Accounting
20 – 23 March 2013, Bangkok - Thailand

purchasing decisions, including those having to do with the environment in supply chain
management, and explains three approaches that deal comprehensively with the
environment, strategy, and logistics. The definition by Hervani (2005) is a concept that
combines green procurement, environmental management of manufacturing materials,
environmental circulation, marketing, and reverse logistics. Sarkis (2003) also defined
green supply chain management as a combination of the activities of an environmental
company and reverse logistics, and emphasized the latter’s importance. Johny (2009)
defined it as a process that added the green element to existing supply chain
management, and showed how a reverse supply chain, an organization, and innovative
activity reconstruct a system. This goes beyond the pursuit of efficiency to include the
pursuit of innovation in the supply chain with regard to expenses, profits, and the
environment. The above studies, hence, added a green concept to supply chain
management, so that green supply chain management includes the logistics at both ends
of the supply chain involving plural companies.
Logistics
Practicing just-in-time (JIT) logistics eliminates cost and futility with the intention
of reducing stock. If JIT is applied consistently, it can save environmental resources and,
hence, protect the environment. For example, the main methods for lessening the
quantity of stock are carrying out fewer deliveries and manufacturing less. This means
making exact predictions and producing the required amounts of stock. Of course, this
delivery approach depends on demand levels or their characteristics.
Wu & Dunn (1995) have specified other trade-offs and the many problems
inherent in inbound logistics. One is freight integration. Although this method requires
waiting for a full load of cargo and may involve a long lead time, it may benefit the
environment. Another problem is related to the mode of transport. Some transport
modes, like rail and marine, use energy less efficiently than do other modes, such as road
haulage and air. In this case, the trade-off is in terms of pliability, timing, speed, cost, and
environmental impact. The transport mode chosen affects traffic congestion and air
pollution directly and indirectly.
All industries require a means of transportation. The main problem, however, is
whether it is possible to address all the resulting environmental problems. Further, the
participation of a third party in the decision-making process and the relations between
vendor and customer are becoming more complicated. When an organization’s
environmental strategies differ, it becomes more difficult to make a decision about the
mode of transportation and freight integration.

The 2013 IBEA, International Conference on Business, Economics, and Accounting
20 – 23 March 2013, Bangkok - Thailand

One of the studies in the literature review describes the standard technique of
outbound logistics that has an impact on the green logistics function. The planning and
design of a logistics network are strategic problems that the logistics administrator is
tasked with.
Many determinations about a trade-off need to be made in the light of the
company’s market, customers, products, and physical distribution resources. Various
options, including direct billing and shipping or hub and spokes, a central warehouse or a
distributed network, multi-mode transport or a single mode, and a third party, are
considered in determining a typical logistics strategy.
Warehouse package design and delivery are two important aspects of an
outbound physical distribution and circulation system.
Wu & Dunn (1995) claim that a warehouse generates much packaging waste in a
supply chain. The use of standardized recyclable containers, an effective warehouse
layout, easy information access, and the taking of steps to reduce employment costs and
to safeguard the environment are also important.
A warehouse and classification operation system can minimize the impact of the
transit system used for delivering outbound cargo on the environment, and enable more
efficient utilization of transport capacity.
Reverse logistics builds in the returned-goods function of the material to a
forward logistics chain, parts, and a product. Carter & Ellram (1998) defined reverse
logistics by incorporating reverse distribution and the reduction of resources in an
approach that considered the environment. Their definition of reverse logistics focuses on
the distribution process with more efficient forward and backward procedures,
minimization of waste, reuse, recycling, and disposal.
Green Purchasing and Supplier Relationships
A function of purchasing is to obtain a supply of raw material from a supplier, in
order to produce an organization’s product or service.
Purchasing includes participation in the selection of a vendor, selection of
material, outsourcing, negotiation, purchase, delivery planning, stocking, materials
management, and design.
According to Carter (1998), green procurement is defined as the participation of
the purchasing department in the practical use, reuse, and conservation of resources that
occur in supply chain activity. Zsidisin & Ellram (2001) suppose that all the results

The 2013 IBEA, International Conference on Business, Economics, and Accounting
20 – 23 March 2013, Bangkok - Thailand

obtained in the process of producing a product and service are the results of a green
purchasing policy, after an individual firm takes the natural environment into
consideration. Further, a green purchasing policy assumes that activity will extend to the
supply chain, including the acquisition of raw material, supplier selection and evaluation,
supplier production, supply logistics, packing, practical use, reuse, and abandonment of a
product generally.
Considering the above studies, it can be said that green procurement is a
purchasing policy for production that does not damage the environment; additionally, it
improves a product, a process, and the environment-friendly nature of a company by
purchasing suitable and cost-effective technology as well as environment-friendly
materials.
The elements of green procurement are summarized as follows. Environmental
auditing of a supplier and its environmental standards and the drawing up of a recognized
supplier list, which would undergo independent accreditation. This would be followed by
development of clean technology and processes, using a common supplier.
One of the most important but more difficult groups in a supply chain is the small-
scale supplier. Research has shown that small-scale companies do not attach as much
importance to the management of an environmental problem as large companies
(Murphy, 1996). Indeed, small and medium-sized enterprises that participate in green
procurement present major barriers for producers (Sarkis, 1995). General research on
corporate earnings and environmental awareness shows that large companies tend to be
more considerate of the environment.
Research in one area, where a large number of companies were involved in
environmental activities, showed that about 1/3 of these companies monitored their
supplier (Florida, 1996).
Studies on the influence of location in environmental management, and the
network between companies, indicate that a small-scale organization acquires
environmental management know-how through certain strategies (Klassen &
McClaughlin, 1996). Therefore, it is thought that companies’ forming adjoining networks
assist small-scale organizations in becoming more effective environmental partners. For
example, a government-sponsored waste exchange program introduced technology for
supporting an eco-industrial housing complex and encouraged cooperation between
small-scale and large-scale companies. As proved by Champion (1998), small and
medium-sized enterprises can accept and participate in the principle of a green supply
chain. One recognizes the differences between large companies as compared with small

The 2013 IBEA, International Conference on Business, Economics, and Accounting
20 – 23 March 2013, Bangkok - Thailand

and medium-sized companies in this aspect. It seems that a large company’s promotion
program can effectively support the whole supply chain, which is a subject for future
discussion.
Manufacturing and Eco Design
The role of production as it affects the environment has been fully discussed in the
literature. As for the performance of a supply chain, that is mostly determined by the
production function, which function is an important responsibility of management. It
focuses on the main manufacturing principles that affect the environment. A principle
that has evolved in this area is total quality environment management. Although it is
difficult to give a concrete definition, as can be done with the concept of total quality
control, it concerns not a management philosophy but the use of hard technology, a
team, functional cooperation, and an empowered leadership. One of the most important
aspects of this subject is the participation of employees and their empowerment.
Closed loop manufacturing is one of the internal measures that can be used to improve
the environmental performance of an internal supply chain. The philosophy of zero
emission drives a closed loop manufacturing standard. Closed loop manufacturing is the
internal process of manufacturing a product with minimal environmental impact.
Supporting technology with an emphasis on closed loop manufactures is being
developed. Although this internal loop serves to reduce the flow of waste from a
production function, it requires additional energy and resources. Closed loop
manufacture promotes design on the basis of environmental cooperation, so as to ensure
zero emissions, and it encourages the practical use of appropriate technology allied to a
green supply chain.
Eco design is emphasized, since prior prevention is more important than the
control of ex-post environmental pollution. Introduction of a design technique that
minimizes the environmental impact at the time of a product’s abandonment is especially
needed because of the environmental problem caused. Environmental design embodies
design that minimizes the environmental impact by assessing the product’s life cycle from
its design phase through to its abandonment. Specifically, it is an activity that improves
the performance and quality of a product while at the same time minimizing the
environmental impact, by paying attention to its acquisition of raw material, product
conception, product development strategy, reproduction, servicing, and discarding; it also
maximizes the practical use and recycling of abandoned products. Generally, it is also
called eco design.
Environmental Management and Green Marketing

The 2013 IBEA, International Conference on Business, Economics, and Accounting
20 – 23 March 2013, Bangkok - Thailand

Green supply chain management is a concrete means for achieving the eco
management aims of a company, and is also an innovation of supply chain management.
Although green supply chain management is an extension of the existing supply chain
management research from a micro viewpoint, it is also one aspect of eco management
that considers the environment from the macro viewpoint. Therefore, it can be said that
eco management certainly deserves consideration.
One researcher found environmental management to be influenced by a market
factor and a non-market factor, an internal factor and an outside factor, an internal
obstacle factor and an external obstacle factor, a negative factor and an aggressive factor.
There is also a general factor of influence. The main findings of the studies are as follows.
According to Shrivastava (2007), organizational structure and systems are internal
factors, whereas governmental regulation, social pressure, market pressures, and an
environment-related norm are shown as external factors.
Banerjee (2001) carried out a qualitative surveillance study on the factors
affecting eco management in companies in the manufacturing and service industry with
regard to environmental intention and environmental strategy.
On the other hand, relations with customers are heavily influenced by green
marketing policy. In some studies, it was discovered that the product that considered the
environmental concerns of consumers was the most important. This concern is part of the
external pressure in the whole supply chain, along with governmental regulation. Many
companies put pressure on their supplier and the supplier experiences pressure not only
from its business customer but from the end user.
DISCUSSIONS AND IMPLICATIONS
The abovementioned subjects discussed the green supply chain and its
management. The discussion centered on four main domains that can be considered the
drivers in a green supply chain. Below, on the basis of the conclusions, an argument is
presented on introducing the green supply chain as a system, the problems resulting from
doing so, and the factors considered to be important, as well as their implications.
Although a company desires a stable supply of resources, uncertainty exists and it
is difficult to predict the flow of resources correctly and ensure control. A company’s
uncertainty relates to environmental factors, which are external factors that affect
companies, such as the suppliers of a correlative industry, customers, a new company, an
alternative company, and a rival firm. The outside environment of a company is an
important variable that affects corporate activity and, as a result, only when it

The 2013 IBEA, International Conference on Business, Economics, and Accounting
20 – 23 March 2013, Bangkok - Thailand

corresponds positively to the environmental transformation of a company can positive
results be expected.
An environmental uncertainty factor relates to the degree of market change and
the accuracy of prediction. Since important information about a company or a product
cannot be known with certainty, the factor can be defined as the causal relationship
between environmental elements existing in an indefinite state. Although a company
needs significant information for decision-making, it becomes difficult because of
environmental complexity and the limitations in making predictions.
As far as the introduction and diffusion of an innovation are concerned, it is
thought that the introduction of technology in which environmental elements, such as
the degree of environmental transformation, level of competition, and heterogeneity, are
new elements would have an impact.
In a company, problems such as conflicting interests among sections, delay in
decision making, and delay of a project, may occur when a new system is being built.
However, such problems can be resolved with the continuous concern and support of a
top manager, and the effective deployment of an organization’s resources. Therefore, it
could be said that a top manager’s support is an important organizational characteristic
factor when performing green supply chain management.
A constituent’s education and training are an important element for the business
improvement of an organization and the introduction of a new process. In supply chain
management, since collaboration between the management of a number of companies is
required, the role of the intellectual worker is important. The technical approach is also
important, to heighten the capability of the company participating in a supply chain.
Moreover, the education and training of a participating company’s constituents are also
important. Practical use of knowledge resources enables an organization to improve its
organizational capability and performance, and ensures a competitive advantage.
The recognized profit is a potential profit realized when an enterprise builds a new
system and utilizes it. A company may have doubts about the benefits of executing green
supply chain management, supposing that there are few profits to be gained. On the
other hand, it may judge that the economic gains from green supply chain management
are large and will proactively implement it.
The financial gains of green supply chain management can be defined as cost
reduction, enhanced market share, and an increase in profits. By promoting environment-
friendly business activity, a company experiences gains not only on the cost side, such as

The 2013 IBEA, International Conference on Business, Economics, and Accounting
20 – 23 March 2013, Bangkok - Thailand

reduction in energy consumption and waste, but also on the reputation side in that a
possible environmental accident may be prevented. Hence, the economic and
environmental gains bring about a synergistic effect.
An environmental gain can be measured using an operation performance index, a
management performance index, and so on. Specifically, an index that measures an
organization’s environmental impact directly, such as consumption of raw material,
management of energy, and the amount of waste, and comprehensive indices that
measure the contribution to environmental management capability and the environment,
are used. By utilizing such indices, the results of efficient management of an organization
and improvement in the corporate image can be ascertained.
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