Effects of Green Supply Chain Management Practices on Organizational Performance: A Study on the Indian Manufacturing Industry DHAR ROHAN, BISWAS MUKESH AND ANBANANDAM RAMESH

INDIAN INSTITUTE OF TECHNOLOGY (IIT), ROORKEE

Introduction-Why Green SCM

Today, the world is moving towards greater environmental concern and awareness. The anti -environmental policies followed in the early stages of industrialization is no longer a viable option.

Modern thinking is that environment and industrialization must go hand in hand. Hence, the notion of today’s world is sustainable development, and it is an integral part of it is Green Supply Chain Management or Sustainable Supply Chain Management.

Nowadays companies’ sole aim cannot only be improvement of its performance but its policies must be environment friendly as well.

Literature Review

Green Supply Chain 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.

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.

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

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

GSCM v/s Conventional SCM

Green SCM Conventional SCM

Objective Economic & Ecological Economic

Ecological Impact Integrated approach, Low High

Costing & Pricing High Low

Speed & Flexibility Low High

Supplier Selection Criteria

Long term relation Short term relation

Consumer’s selection Criteria

Less preferable due to high pricing

More preferable due to low pricing

Research Methodology

1. Development of concepts on the effects of GSCM practices implementation on the performance of an organization

2. Development of measurement items for evaluating GSCM practices implementation and Organizational Performance

3. Data Collection

4. Model Testing Validity and reliability test of factors

CFA test for measurement models

Comparison of measurement models

SEM model

Objective

Objective –To propose a model to measure the effect Green Supply Chain Management (GSCM) on the performance of an organization.

In this study, the Indian industries have been taken under consideration, which included several large as well as small and medium industries, covering a variety of sectors, like manufactures in automobiles, steel, chemical, electronics.

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Research Methodology

Two constructs: GSCM practices and implementation

Organizational Performance, which are followed by a path analysis exhibiting the dependence of OP on GSCM implementation and practices.

We have utilized exploratory results from Zhu and Sarkis, 2004, from which we have taken the measurement items in the scale for evaluating GSCM practices, which are IEM, GP, CC, ECO and IR.

We have also included GM and EA, which are found to be significant in the Indian scenario. The construct of GSCM practices implementation as well as that of OP, in the Indian context, appears to adequately fit the data collected.

Data Collection

To collect data for the purpose of the study, a detailed questionnaire was prepared investigating about the organization profile, GSCM practices and its impacts on organizational performance.

The questionnaire was developed with an aim to bring out to light in what the factors influence the green supply chain management practice. The questionnaire comprises five questions on the profile of the respondent and 41 questions to confirm the significance of the parameters in the context of this research.

A 5-point Likert scale has been adopted for the purpose of the questionnaire. The survey for this study was done in three stages through Pilot testing, convenience sampling and random Sampling.

In pilot testing, the questionnaire prepared was verified by experts and their valuable suggestions and advice was taken to refine the same.

We conducted the survey by administering the questionnaire amongst the attendants of training workshops at a premiere academic institution as well as personally visiting and interviewing several respondents in the northern and eastern parts of India. We explained the purpose of our study to the respondents and collected 167 valuable and usable questionnaires. Convenience sampling helped us to build a framework for our study as they were well informed about the concepts of GSCM.

We followed this up by random sampling in which we mailed the questionnaire to around 1000 manufacturing companies, explaining the purpose of our study and received 134 responses, several days later. This was done to avoid potential bias from convenience sampling as well as to obtain a more generalized data. The employee size, category of respondents, annual turnover (in Cr Rs.) and sector wise distribution are shown in fig. 2, fig.3,fig.4 and fig.5 respectively

Model

Chi-square:49.87

GFI: .97

CFI: .94

Conclusion

It’s is an attempt to analyse the effect of implementation of GSCM on organizational performance and its implications on the various parameters deciding the organizational performance. This study adopted eight parameters namely IEM,GP, ECO, CC, IR, GM, GRM and EA as measurement parameters for GSCM.

Also, four parameters namely FP, BI, EV and MS have been adopted to measure the organizational performance.

We have proposed a model and we found that OP has a statistically significant relationship with the adoption of GSCM practices.

Hence, GSCM and OP are correlated and the implementation of GSCM has a positive impact on OP.

This gives the managers an insight into the relationships between GSCM and OP and leaves them with an opportunity to create a sustainable business environment and model, which can yield progressive economic benefits and can be mutually beneficial for the environment as well.

It also helps the managers to assess the effect of GSCM practices implementation on the OP and the direction in which it affects it.

Findings

Findings –The model results confirmed the validity of the proposed correlation of GSCM and Organizational Performance. The findings also show that the implementation of GSCM is positively associated with the performance of the organization