How Green is the Supply Chain?

: Practice and Research

Joseph Sarkis

Graduate School of Management

Clark University
950 Main Street
Worcester, MA 01610-1477
Phone: 508/793-7659
Fax: 508/793-8822
Email: jsarkis@clarku.edu

August 1999

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 How Green is the Supply Chain?: Practice and Research

INTRODUCTION
The issue of greening supply chains is critical for the successful implementation of
industrial ecosystems and industrial ecology. In fact, Bloemhof-Ruward, et al., (1995) have
argued that waste and emissions caused by the supply chain have become the main sources of
serious environmental problems including global warming and acid rain. Organizations have a
number of reasons for implementing these green supply chain policies, from reactive regulatory
reasons, to proactive strategic and competitive advantage reasons. From an overall
environmental and organizational perspective, it is important to understand the situation and
what issues exist in this field of study.
The presentation of the state of the “debate”, practice, and research for this topic can be
carried out at many levels and in many fields. The novelty of this topic makes it difficult to truly
determine contradictory and conflicting issues that could be considered true “debates”.
Alternatively, when little is known, then everything is debatable. We will present some of the
debates that do occur, but much of this paper will focus on a review of research and practice and
some missing and loose links that need to be further investigated, evaluated or tightened. In a
way, the article serves the dual purpose of presenting the state of the art as well as the state of the
debate.
Since systems thinking perpetuates this area of thought, presenting the issues within a
systems perspective seems to be a suitable approach. That is, looking at the supply chain that is
composed of activities or elements that have outputs serving as inputs to other activities and
elements with feed back included. We shall also look at the overall system, abstracting the group
of elements to a higher level analysis.
For the purposes of this discussion, the supply chain “system” includes Purchasing and
In-bound Logistics, Production, Distribution (Outbound Logistics & Marketing), and Reverse
Logistics. Below, we shall see that other definitions exist as well. The first three categories are
part of the well-known value chain concept espoused by strategic thinkers such as Porter (1985).
The last functional element, Reverse Logistics, is one of the more recent areas of focus by supply
chain researchers. Figure 1 brings these factors together and will be described later. This
definition also brings us to one of the first points of discussion and debate faced by green supply

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chain research. Exactly, what is the green supply chain? After a brief discussion concerning the
definition of supply chain management and green supply chains, the discussion and presentation
of issues turns to our four defined areas. Some practices, research, and evolving issues are
discussed for each of them. Then, an integrative look at the whole system and common issues
will be presented. What the future may look like and some possible emerging debates will also
be presented.
DEFINITIONS
Supply Chains and Supply Chain Management
The concept of supply chains and supply chain management is a relatively recent
managerial principle. The topic and field has evolved from a number sources including
purchasing, marketing (distribution channels), logistics, and operations management. The issues
include management of inventory, customer-supplier relationships, delivery time, product
development, and purchasing, just to name a few.
A recent textbook on supply chain management (Handfield and Nichols, 1999) has
provided the following definition for a supply chain:
“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.” (pg. 2).

In this description, the supply chain is considered to be a linear process. The circular and
systemic philosophy of “ecosystem” thinking (Shrivastava, 1995) is not explicitly included.
Thus, from this textbook perspective, the integration of the full cyclical supply chain is not
considered central to its definition. Few textbooks seem to diverge from this definition. This
small example is exemplary of common wisdom among this relatively new field. Developments
in greening supply chains have yet to diffuse through the general literature. Even though this is
relatively anecdotal speculation, integration of greening supply chains into academic or
pedagogical study has yet to be fully realized. Practice in this area seems to be as sporadic and
diverse as the field of study, with green supply chains poorly and/or erratically practiced and
investigated.
Green Supply Chain Management – What is it?
“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., 1996 188).

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“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, 6).

“The practice of monitoring and improving environmental performance in the supply chain…”
(Godfrey, 1998, 244).

“The term ‘supply chain’ describes the network of suppliers, distributors and consumers. It also
includes transportation between the supplier and the consumer, as well as the final
consumer…the environmental effects of the researching developing, manufacturing, storing,
transporting, and using a product, as well as disposing of the product waste, must be considered.”
(Messelbeck and Whaley, 1999, 42).

From these four definitions we see that there is a range of author focus and purpose on
green supply chains and their management. Research or practitioner field (i.e. purchasing,
operations, marketing or logistics) also influences the definition. 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. This lack of consensus in practice and
definition of green supply chain is not surprising, since its foundational elements of corporate
environmental management and supply chain management are both relatively new areas of study
and practice. If the practice of green supply chains is novel, the theory is even more so, if true
theory even exists.
The focus of this paper, as mentioned in the introductory section, will most closely follow
the last of the four definitions, encompassing most of the customer-supplier supply chain. As
Welford et al. (1997) argue, the supply chain has both a supply side and a demand side, and both
these sides need to be managed.
Figure 1 shows a number of environmental issues as well as operations within a typical
supply chain. The primary focus in this figure is the management of materials that flow through
the supply chain and relationships among the various functions. Looking at this chain we see
that vendors (who have their own internal and external supply chains) supply the necessary
materials. The materials may include raw and virgin material, parts and components from
original manufacture, and recycled, reusable, or remanufactured materials. There are
environmental implications depending on the focus of acquisition activities at this stage. These
materials are transported from various vendors, which also may be a determinant of

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environmental impact of the product or material that is being procured. For example a recycled
material from a distant location may not be as environmentally sound as a virgin material from
closer locations. The policies for selection of vendors are a central issue for purchasers. Vendor
selection criteria and policies will be reviewed below. These materials are then stored and may
be managed under the auspices of the purchasing function. Each of the major functions will be
profoundly impacted by the design of the product and the process. This impact needs to be
managed by including the various functions and vendor(s) in the design of these processes and
products. Included in design issues will be such topics as life cycle analysis and design for the
environment concepts.
The production function is composed of assembly and fabrication. Within this area
environmental issues such as closed-loop manufacturing, total quality environmental
management (TQEM), demanufacturing, and source reduction all play some role. Even though
some of these issues also play a role in other functional areas. Outbound logistics, includes such
activities and issues as transportation determination, packaging, location analysis, and
warehousing, as well as inventory management (for finished and spare parts good items).
Marketing’s influence is clear here with customer relationships that need to be maintained, as
well as living up to green marketing developments and presentations. The “use” external activity
is the actual consumption of the product, a situation where product stewardship plays a large
role. At this stage, field servicing may occur, but from an environmental perspective the product
or materials may be disposed or return to the supply chain through the reverse logistics channel.
Within this channel, the product can be deemed to be reusable, recyclable, or remanufacturable.
The reverse logistics function may feed directly back to an organization’s internal supply chain
or to a vendor, starting the cycle again. Each major supply chain activity consumes energy and
generates some level of waste. Reduction in energy usage and waste generation are issues that
need to be addressed throughout the supply chain.
Keeping in mind the relationships presented in this figure, each of these major functions
(purchasing, production, outbound logistics, and reverse logistics) will now be discussed. At the
end of each function’s discussion, a table of example corporate practices are presented. Some of
these practices do overlap with other functional areas. Sources for these practices come from the
literature, Internet websites, and company reports. The purpose of the practices is to show the
broad and different approaches that form elements of green supply chain operations used by

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organizations from a variety of industries. The examples also support some of the conceptual
suppositions presented in the discussion.
PURCHASING AND IN-BOUND LOGISTICS
The purchasing function involves the acquisition of materials from suppliers to meet the
needs of producing the organizational product or service. Purchasing includes duties such as
vendor selection, material selection, outsourcing, negotiation, buying, delivery scheduling,
inventory and materials management, and to some extent, involvement in design. We shall
initially take an overall look at some of the issues relevant to general green purchasing. Within
general purchasing practice, we shall expand the discussion on vendor selection. The final
section will present some of the issues relevant to in-bound logistics.
General Green Purchasing Practice
The limited research in this area has focused management is practicing and how they
practice green purchasing. That is, empirical surveys have focused on what the distribution of
practices are and anecdotal articles provided examples of green purchasing practice. One of the
few studies to try to evaluate corporate purchasing practice was completed by Drumwright
(1994). In a field study of ten organizations, categorizations of organizations and purchasing
managers were completed. These categorizations provide a framework that helped explain how
organizational structure (strategy) and purchasing agent characteristics (operations) supported
environmental purchasing. One of Drumwright’s findings was that “policy entrepreneurs” were
the drivers of the firm’s environmental purchasing activities. These entrepreneurs This has been
one of the few studies that has attempted to provide an explanation of why and what
characteristics certain organizations have in practicing green purchasing. Drumwright, has
noticed the lack of research in this area and has presented a call to further develop theory and
extend this work to broader empirical analysis.
Green purchasing has a number of environmentally based initiatives that may be
incorporated into the purchasing function, these are summarized in Table 1 (Lamming et al.,
1999; Lloyd, 1994). Many are proactive measures, but some are reactive. To successfully
manage most of these initiatives a number of factors need to be included in managing the
supplier-customer relationship. These factors include long-term strategic relationships and
contracts, early involvement by the supplier and customer, building trust, incorporating linkages
amongst levels of management and functions, early involvement of suppliers in design of

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product and process, joint teams and problem solving, and a focus on “value” rather than cost
(Sarkis, 1995). How well, and which, of these factors aid in the greening of the purchasing
function and supply chain need to be evaluated. Some of these more complex relationships may
cause overshadow other criteria and goals to overshadow environmental criteria. Although, an
opportunity does exist to incorporate environmental factors within these new philosophies. A
listing of practices is what has been presented in the current research work, whether these
practices have been effective in actually producing greener products and better environmental
performance, has not been investigated. This theme of linking practice to actual performance,
occurs throughout this paper.
In a comprehensive empirical survey of green practice by U.S. purchasing managers, Min
& Galle (1997) found that corporations were still relatively reactive when integrating
environmental issues into supply chain management practices. Some of these findings included
a focus on reducing liability and meeting regulations rather than environmental partnering when
a buying firm selects suppliers, a focus on recycling, rather than reuse or source reduction
(defined by low-density packaging), and scrapping or dumping as the major waste elimination
strategy. The differentiation of these practices among various organizations and their
characteristics was not completed. That is, explanatory considerations of why and eventually,
what resulted, were not completed.
From a strategic organizational perspective, and issue of debate, decentralization versus
centralization of corporate procurement is becoming a concern. One of the considerations here
has to do with whether a strategic environmental policy can be better maintained throughout an
organization with decentralized purchasing decision making. With empowerment, from total
quality management programs, further defusing throughout organizations, and especially the
purchasing function, various philosophies may be less homogeneous. Monitoring green product
procurement becomes more complex in a decentralized environment (Birett, 1998). Yet, a
decentralized decision environment may also present greater opportunity for purchasers to find
and build relationships with geographically closer vendors. This close proximity makes
transportation more efficient and less costly, and may make monitoring and auditing of supplier
activities more effective. In addition, multinational conglomerates who have a broad product
family and many subdivisions may find it more feasible to allow divisions to determine their
own supplier and purchasing environmental requirements. This is true at Philips Electronics

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where their medical systems division has separate supplier programs than their semiconductor
division, for example (Philips, 1999). Yet, within this decentralization, not all divisions included
supplier impact programs.
There is also a concern of who should be responsible for environmental issues in
purchasing. Whitaker, 1998, questions whether it is best to make a company’s purchasing
department responsible for managing the environmental performance of the supply chain. Since
they are responsible for cost, delivery, and quality issues, is it fair to add another level of
responsibility to this function (especially with the management of environmental surveys of their
suppliers). A solution, according to them, would be to help improve supplier environmental
performance rather than evaluating it.
The issue of managing various criteria for purchasing is one area of research controversy.
Min & Galle (1997) have found that purchasing managers believe that economic reasons form
the largest barrier for implementing green purchasing. Cox et. al (1998) in their survey found
that half of the respondents (they did not include just purchasing managers) felt that recycled
materials were more expensive and could thus provide a barrier to purchasing them. But the
biggest reason given by these companies for continued use of new materials was that customers
required them to use it. A third point of view is that of Cavinato (1991), who believes that public
policy will likely drive environmental and social decisions in organizations. Related to this
controversy is whether or not costs of recycled goods are more expensive or cheaper. Some
authors argue that the cost of recycled products may be greater due to the expense of reverse
logistics channels (Stock, 1992, estimates that reverse logistics channels and processes may add
30% more to the cost of a recycled product). Others argue that recycled material is usually less
expensive to purchase than comparable virgin materials (Dassagapa & Maggioni, 1993). Part of
the problem is that estimation of costs (and other factors) can not be completed without more
effective LCA type tools for analysis of total costs. Also various products and materials will
have differing cost structures resulting in dissimilar perceptions on cost, probably contingent on
product type and industry.
Another issue in purchasing, and seems to be a central one, is the selection of materials or
vendors. One of the requirements in this area is to determine what is, and what isn’t, green. For
example, the decision to purchase materials that are less toxic versus those that may mean more
energy efficiency can not easily be determined. To help address this some tools based on life

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cycle analysis (LCA) and design for the environment (DFE) have been developed (for example
see Horvath, 1999; Navindchandra & Bansal, 1994). Yet, even LCA is still a very imperfect tool
and model. Subjectivity and judgement play a large role. The issue is here is whether
purchasing managers are motivated and capable of evaluating and selecting environmentally
preferable materials and vendors. This issue also brings us to a major area of investigation
related to green purchasing at a strategic and operational level of analysis, vendor selection.
Vendor Selection
The above mentioned practices on green purchasing have focused on internal operations.
One of the more important functions of green purchasing has to do with the external
relationships of the purchasing function, especially for selection of vendors. Much of the vendor
selection research has focused on whether companies include environmental criteria in their
selection processes, the criteria for selection, and tools for their selection. Much of this research
has focused on anecdotal and prescriptive research. Descriptive, broad, empirical research has
been minimal.
In a focus group, to determine importance of various criteria, Walton et al. (1998) found
that purchasing managers in their study favored relatively reactive measures for evaluation (e.g
hazardous waste management, public disclosures). This finding supports the findings of Min and
Galle (1997) that found organizations still focusing on reactive environmental management
measures in purchasing. The reason for reactive measures have to do with liability concerns as
well as making sure that the supplier will be available for the long run. How these vendor
certification criteria evolve will be interesting. Also a linkage between organizational
environmental management philosophy and the criteria emphasis would be an interesting issue to
study. Will more proactive organizations incorporate more proactive criteria?
The supplier selection tools have been grouped by Noci (1997) into five sets of tools: 1.
The cateorical method; 2. The weighted point method; 3. The matrix approach; 4. The vendor
profile analysis (VPA) method; and 5. Analytical Hierarchy Process (AHP) based approaches.
One of the major concerns that Noci does mention, is that only one of the models (AHP) contains
both quantitative and qualitative factors. In his argument, Noci, has stated that the literature has
not explicitly included and evaluated environmental factors and much work needs to be
completed in this area. But, an issue here is whether these models could not just incorporate
environment as another factor? Or do they need adjustment for environmental characteristics?

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What makes environmental factors different, requiring new methods for vendor selection, is an
issue that does not seem to be addressed.
One of the issues in the selection of suppliers is the risk associated with their selection.
As stated before, liability issues seem to be a major concern for supplier selection. To determine
and integrate risk analysis into vendor selection is one of the goals that need to be pursued for
green supply chains. This goal is not typically covered in more traditional approaches
(Lamming, et al., 1999).
Certification (selection) requirements may be easier to address for organizations by
requiring some form of third party certification, specifically ISO 14001 certification. ISO 14001
certification may be adequate for organizations who do not wish to audit or evaluate suppliers for
selection. Yet, a number of suppliers (primarily small suppliers) are not necessarily supportive
of a ISO 14001 certification requirement (Mortensen, 1998). In a survey of industrial South
Wales showed (Baylis, et al., 1998) that only 22% of small companies believed that an EMS
would help them meet the needs of their customers. Burton & Del Rosario (1997), point out that
imposing a certification standard on a small supplier may actually have negative effects.
Obtaining certification is time-consuming and expensive. They argue that a small supplier may
have better business and environmental payback by putting resources into actual process
improvements, rather than developing an environmental management system with its supporting
bureaucracy, and in the some cases a small supplier might be forced out of business because it
lacks the resources needed to meet buyer environmental requirements. A small supplier may
wish to acquire ISO 14001 certification so it does not have to meet varying environmental
vendor certifications from multiple customers. A potential problem with forgoing organizational
vendor certification and evaluation in favor of ISO 14001 certification, is that there is no
guarantee that ISO 14001 organizations are compliant, much less environmentally proactive.
In-bound Logistics
One of the issues in delivery (and production) is the use of just-in-time (JIT) practice.
This practice is meant to reduce inventory, thus eliminating costs and waste. For example, less
storage and warehouse space is needed. This practice reduces the necessary overhead and
resource consumption needed to manage this inventory. Thus, JIT seems to be an
environmentally sound practice, yet when considered on the whole, the environmental savings
can be deceptive. For example, the major method to lessen the amount of inventory is to deliver

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and produce in small batches. These smaller batches mean more deliveries, thus raising fuel
consumption and traffic congestion (McIntyre et al., 1998; Penman, 1994; Sarkis, 1995b, Wu
and Dunn, 1995). Investigation of these tradeoff’s are necessary. But some of these issues are
mitigated with such practices as on-site suppliers or those that are in close proximity for JIT
reasons. Another factor related to JIT and supplier management is that fewer suppliers are
usually used in a JIT environment. This means better forecasting and fuller loads could be
planned. Of course this delivery approach will be dependent on demand levels and
characteristics.
Wu & Dunn (1995) have also identified a number of other “tradeoffs” and issues facing
in-bound logistics (and out-bound, as well). One is freight consolidation. Waiting for freight to
become a full load may lead to longer lead times but may yield savings and be environmentally
preferable. Another issue is mode selection. Some transport modes like rail and barge use less
energy or use energy more efficiently than other modes like road haulage and air cargo. In this
case, flexibility, timing and speed are tradeoffs to cost and environmental factors. The transport
mode decision determines which transport option to use and often affects traffic congestion and
air pollution both directly and indirectly. Carrier selection, a part of supplier selection, is an
important in-bound logistics decision. Transportation is important to all industries. As an
example, the Chemical Manufacturers Association cited Roadway Express, a major carrier, as a
responsive care partner in hauling chemicals.
The major question in these examples is whether companies are capable and willing to
make the tradeoffs. A issue that arises relates to any major environmental issue: when does the
environment play a large enough role to overcome other performance metrics? As well, the
addition of a third party (third-party carriers and logistics managers are quite popular) into the
decision process makes it more difficult for the vendor-customer relationship. Who makes the
decision on mode and freight consolidation, especially when organizations may have differing
environmental strategies?
To provide some possible additional insights into state of the art practice, additional
examples of corporate green practices in the purchasing and in-bound logistics function are
shown in Table 2.

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PRODUCTION
The manufacturing and production function’s role in corporate environmental has been
well addressed in the literature. The internal supply chain’s performance can best be managed
within this function. Since a number of reviews on environmentally conscious manufacturing
have been completed (for example, Florida, 1996; Gupta, 1995; Hanna & Newman, 1995;
Klassen, 1993; Sarkis, 1995a; Sarkis, 1999) we shall only focus on a few of the major principles
in this function.
A principle topic that has evolved within this area is total quality environmental
management (TQEM). But, similar to the concept of total quality management, it is hard to get a
concrete definition and practice of TQEM. It is a managerial philosophy, rather than a hard
technology or program, with a number of tenets (some of which are also espoused above in
dealing with suppliers as well). Some of the tenets of TQEM include empowerment of
employees, continuous improvement, team efforts, interfunctional collaboration, and leadership
elements. There are issues in each of these areas, one of the most important of these areas, from
a managerial perspective, is empowerment and employee involvement.
Empowerment means allowing workers to attain responsibility for decision making. An
issue here is whether employees are capable of making environmental decisions. What happens
to liability and corporate risk when such sensitive and sometimes technically complex issues are
part of the environmental decisions? Similar to quality control, which has evolved to include
everyone in an organization, can environmental decisions be allowed to permeate? These
questions are critical since employee involvement is a practice that researchers and practitioners
believe are central to pollution prevention in the production function (Florida, 1996; Kitazawa &
Sarkis, 1999). In a detailed field study of automotive manufacturers by Rothenberg (1999)
worker participation in environmental decisions was emphasized. But, even with this emphasis,
her findings showed that the amount of worker participation (and its significance) were much
less than the supposed involvement as mentioned by management. Rothenberg found that
inadequate technical expertise in environmental issues was one reason for limited worker
participation. This study also points to a need for a better definition of worker participation,
especially when it comes to environmental issues. “Participation” can range from putting an
item into a recyclable bin to serving on a design for environment project.

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 The principles of demanufacturing are also of importance within production portion of
the green supply chain. Demanufacturing includes disassembly, remanufacturing, and material
recovery principles. The investigations in this area have predominately been on the development
of tools to aid in the management of these processes. The two major categories of tools include
those that aid in designing products for demanufacturing (disassembly) (Dewhurst, 1993;
Navindchandra & Bansal, 1994; Spicer, et. al, 1996), and those used to optimize the
demanufacturing process (Guide et. al, 1997; Johnson & Wang, 1998; Lambert, 1997; Moore, et
al., 1998). The effectiveness of demanufacturing from an environmental and economic
perspective is still in its infancy. Currently, in a number of industries, remanufacturing, and
reverse logistics are relatively novel concepts. Since this operation is not as mature, a number of
inefficiencies still exist. Certainly, to be economically feasible and environmentally benign, the
systems flowing into and within the organizations operations need further development. The
determination of whether the lengthening of the life of these products and materials is worth the
additional efforts of energy use and waste generation have yet to be determined.
Closed-loop manufacturing is one of the internal measures that can be used to improve
the environmental performance of the internal supply chain. The philosophy of zero-emissions
(similar to zero-defects of many TQM programs) is what drives closed-loop manufacturing
practice. Closed-loop manufacturing is a process of producing products with no negative
environmental impact (Hasek, 1997). Currently, much of the emphasis on closed-loop
manufacturing is on development of supporting technology. This internal loop helps to lessen
some waste streams that flow from the production function, but may require additional energy
and resources to function and maintain. As part of the source-reduction philosophy closed-loop
manufacturing A related issue to the zero-emissions philosophy is substitutability, which has
become much more popular with design for the environment linkages. For example, substitutes
for environmentally toxic materials such as solvents with aqueous solution for processes and
powders paint for liquid paint (Vasilash, 1997) are examples of using substitutes to reduce and
eliminate emissions. The determination of life cycle impacts of these substitutes is still a
problematic proposition. The investigation of managing in this environment seems to be almost
non-existent. From a research perspective this is one of the more technology and tool driven
functions of the green supply chain.

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 Exemplary state-of-the-art green practices in the production function are presented in
Table 3.
DISTRIBUTION AND OUT-BOUND LOGISTICS
Whereas, purchasing and in-bound logistics focuses on managing the vendor-
organization relationships of the supply chain, the distribution and out-bound logistics function is
meant to address the organization-customer relationship issues. We shall begin with a discussion
on some of the issues in a general category of “customer” relationships which includes some
developments in green marketing and product stewardship. A brief discussion on out-bound
logistics completes this section.
Customer Relationships
Customer relationships are greatly influenced by green marketing policies. Some studies
have found that ultimate individual consumer interest in the environment and environmentally
sound products is quite substantial, even though there has been a slight decline (Speer, 1997).
This interest along with government regulations, are two external pressures that flow throughout
the supply chain. Studies have shown that many companies are putting pressure on their
suppliers and suppliers are listening to corporate customers, as well as the end-user (Lamming &
Hampson, 1998).
One of the controversies in green marketing and customer relationships is whether
customer interest in environmentally sound products relates to actual purchase. Various studies
have shown that interest is usually higher than actual purchase. This argument can be made for
either individual consumers or corporate and industrial buyers. Even though this issue has been
shown to be an individual consumer phenomena (Mandese, 1991; Yam-tang & Chang, 1998;
Schlossberg, 1990), the extension to corporate buyers needs a more complete evaluation.
Some literature has looked at this issue, but it is still a point of contention. In their work,
Earl & Clift (1999) argue that individual consumers and business-to-business consumers (e.g
purchasing agents) have similar attitudes, actual behavior, and understanding of purchasing
green products. They argue against the theory supported by Karna & Heiskanen (1998) that
business consumers are more aware of environmental and green product characteristics and
issues than individual consumers. Whether or not these consumer groups have equal levels and
understanding of environmental issues with regard to purchasing products will influence
organizational marketing strategies and practices.

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 Another issue related to marketing to customers is to understand what their “hierarchy”
of criteria for purchasing. Price, quality, and convenience criteria are still at the top of this
hierarchy. An issue faced by green marketers is how to make environmental criteria more
important. Roberts & Bacon (1997) state that marketers have several options to achieve this
goal. These options include: increasing the importance of ecological compatibility (e.g.
explaining the effects of poor environmental products); change beliefs about a particular product
(e.g. disposable diapers may actually be more environmentally conscious than cloth diapers);
explain that the additional environmental benefits in addition to the other criteria. In addition,
Moorthy & Srinivasan (1995) recommend using money-back guarantees to overcome some of
the concerns about quality/price. These are all recommendations that still need to be tested and
evaluated. What type of response various markets (not just individual, but business) have with
each of these strategies. Roberts & Bacon (1997) have also found that individual consumers are
different in their environmental expectations as well as their definition of environmental
consciousness. This finding needs to be investigated for organizations as well. Differing
definitions and expectations of buying organizations may have some impact on the green
marketing strategy of an organization.
Product stewardship also plays a big role in an organization’s relationships with its
customers. Similar to the concepts of design for the environment, life cycle analysis, and
TQEM, product stewardship principles affect the whole supply chain. Product stewardship has
been defined as the minimization of the product’s harmful effects on the environment in every
stage of it’s product life cycle, from design and development to manufacturing, distribution, use
and disposal (Dutton, 1998; Hart, 1995). The practice and literature seems to focus on the
delivery and take back aspects of product stewardship and customer relationships. This is a
reason that we have included this issue within this function of the supply chain. This concept is
one of the foundational elements of the Chemical Industry’s Responsible Care program (Walsh,
1998). Under Responsible Care principles, chemical producers are required to evaluate the
handling of their products by customers to ensure, where possible, that safety measures are in
place.
An interesting customer relationship perspective related to product stewardship is under
investigation by the Tellus Institute. In what they have defined as the Chemical Strategies
Partnership (CSP) program, the Tellus Institute, is working on redefining how chemicals are sold

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and used. CSP seeks to change the chemical marketing transaction from a volume and sales
orientation to a service orientation. As an example, instead of selling solvents to a manufacturer
for cleaning circuit boards, a chemical supplier might manage the manufacturer’s cleaning. For
managing the cleaning operation, the supplier would be paid on a “per-circuit-board-cleaned”
basis. This shift in focus from sales to service creates a profit incentive for the supplier to clean
more circuit boards with less chemicals. In a few industrial sectors, especially automobile
manufacturing, this shift from chemical sales to services has begun (White et al., 1997). This
service orientation, similar to leases for product take-back measures, requires significant change
in management and accounting measures used by an organization.
Outbound Logistics
Wu & Dunn (1995) in their review of the literature found a number of areas within
standard practice of outbound logistics that have implications for greening the logistics function.
The design of a logistics network and its planning are two of the more strategic issues facing
logistics managers in this function. Many trade-off decisions need to be made with regard to the
firm's market, customer, product and logistical resources. Examples of typical logistics
decisions include options such as direct shipping or hub-and-spoke, central warehouse or
distributed network, intermodal or single mode, and third party services or private fleet. Some of
the design and management criteria that support environmental planning in this area include
fewer shipments, less handling, shorter movements, more direct routes, and better space
utilization. But, each of these issues includes a tradeoffs among delivery time, responsiveness,
quality and cost, as well as environmental performance.
Warehousing and delivery packaging design are two important issues in outbound (and
inbound) logistics and distribution. Wu and Dunn (1995) argue that warehousing, other than
land use requirements, also generates much of the packaging waste in the supply chain.
Standardized reusable containers, good warehouse layouts, easy information access all cut
storage and retrieval movements and save on operating costs and are environmentally more
sound. Freight consolidation functions and “breakbulk” operations carried out in warehouses
also have the potential of utilizing transport capacity more efficiently, thus minimizing the
environmental impact of the out bound transport system.
Packaging has been a very sensitive issue among European manufacturers and
consumers. The presence of packaging take-back laws has caused many organizations to rethink

16
the design of their product’s packaging as well as how to manage the packaging delivery and
logistics, once it is used. One controversy that seems to be growing in the packaging area is
whether single use packaging is more environmentally sound than reusable packaging. For
example, the Association for Beverage Cartons and the Environment has reported no specific
benefit for using either type of packaging, after 15 studies were undertaken (Reeves, 1998). Part
of the difficulty in determining which part of this debate is correct, is the poor development of
LCA.
Another packaging debate focuses on consumer perception and acceptance of green
packaging. Earl & Clift (1999) reference a study by Pegram Walters Associates (1994) which
showed that while most people regarded packaging as bad for the environment, they still chose
packaged over unpackaged alternatives when buying. Yet, anecdotal evidence has shown that
some companies, after instilling more environmentally preferable packaging, had increases in
their market shares (see Dorn (1996) for an example of Nestle Corporation’s experiences). This
issue relates to consumer attitudes and behavior. Whether these situations are applicable to
industrial buyers and buying is another issue. A study of environmental packaging and its
influence on industrial buying is an issue that has not received much attention. Although some
issues relevant to purchasing practice after passage of packaging laws, have been presented in
the literature (e.g. see Lamming and Hampson, 1996).
Table 4 presents some current and exemplary practices that have impact on the greening
of distribution, out-bound logistics and marketing.
REVERSE LOGISTICS
Reverse logistics incorporates the return of materials, components and products back into
the “forward logistics” chain. Carter and Ellram (1998), have further defined reverse logistics as
an environmentally conscious approach by incorporating reverse distribution and resource
reduction. Their complete definition for reverse logistics is the return, upstream movement or a
good or material resulting from reuse, recycling, or disposal with the minimization of waste
which results in more efficient forward and reverse distribution processes.
Reverse logistics operations include the following major steps: collection, separation,
densification or disassembly, transitional processing , delivery and integration. The operational
emphasis is dependent on the type of material or component that flows in the reverse logistics

17
channel. For example, disassembly will be required for copy machines, whereas plastic bottles
would require densification.
Since reverse logistics is a “core competency” that does not exist in most original
equipment manufacturers and organizations, outsourcing to third-party logistics specialty
companies to manage operations in this function have become very popular (Anonymous, 1999;
Gooley, 1998). The development of such third party service providers may provide potential
competition to original equipment manufacturers, if these reverse logistics organizations decide
to demanufacture and remanufacture products.
Some of the practical issues facing reverse logistics have been summarized by Pohlen
and Farris, (1992): 1) Most logistics systems are ill-equipped to handle product movement in a
reverse channel. (2) Reverse distribution costs may be up to nine times higher than moving the
same product from producer to consumer. (3) Returned goods often cannot be transported,
stored and/or handled in the same manner as in the forward channel. In addition, Bettac, et al
(1999) reference a German study by Junemann (1995), found that reverse distribution channels
may be up to 14 times longer transportation distances then regular disposal and incineration. In
their study of the furniture industry, Handfield, et al. (1997) found that reverse logistics scored
lowest, in terms of progress, among all the functional areas. This finding supports the issue of
the immaturity of this function, but also provides ample opportunity for improvements and
growth.
From a modeling perspective reverse logistics, incorporates a number of managerial and
modeling issues. There are two major issues that Fleischman et al. (1997) focus on in their
review of modeling approaches for reverse logistics. They include inventory and production
planning management. The inventory management of these systems is difficult since return
logistics flows are more difficult to forecast requiring increased flexibility in terms of capacity
and equipment, as well as additional safety stocks for inventory to manage the variability and
uncertainty (Fleischmann et al., 1997; Sarkis, 1998). The production planning area is more
closely related to demanufacturing issues presented earlier. In summary, tools and models for
disassembly scheduling, planning and control are still in their infancy. The proposed approaches
have looked at altering standard manufacturing models like MRP systems. A series of
quantitative modeling approaches for such issues as network design, systems evaluation, etc.,
were not part of this review of the literature. This gap in the research literature points to a major

18
opportunity of future normative, prescriptive modeling research. Noting that a number of
models in this area are adjustments to current models, a question that does arise, similar to the
issue on vendor selection models, on whether new models need to developed.
Other than quantitative modeling approaches the reverse logistics research is the most
immature of all the functions discussed in this paper. Principles for managing reverse logistics
channels, have yet to be developed, much less investigated. Only a few propositions focusing on
reverse logistics have been put forward by Carter and Ellram (1998), much of these propositions
have been based on anecdotal and trade publications. Even exploratory field research focused on
reverse logistics has been difficult to find.
Table 5 presents some practical examples of issues that have been addressed in the
reverse logistics function.
SYSTEM AND EMERGING ISSUES
A number of issues that encompass the green supply chain or that are common across the
supply chain are now presented. Within these issues are a set of emerging organizational topics
and fields that may have direct impact on the green supply chain.
Small Companies and the Green Supply Chain
One of the more difficult, and probably most important, groups to incorporate into the
supply chain are the small companies. Murphy, et. al (1995, 1996) in an academic survey of 135
companies found smaller companies attached less importance to management of environmental
issues when compared to larger firms (greater than $1 billion). Walton et al. (1998) have found
in a study of manufacturers that convincing small companies to become involved in green
purchasing was a major barrier for these manufacturers. Ahmed et al. (1998), in a more general
study of corporate performance and environmental consciousness, found that larger companies
are more inclined to be environmentally conscious. Yet, Cox et al. (1999) in a regional survey of
small manufacturer practices found a large number of them were interested or practicing
environmental practices (especially recycling initiatives) in their organizations. Almost a third
of these companies also monitor their suppliers.
In an investigation of industrial co-location and inter-firm networking’s influence on
economies in environmental management, Kassanis (1997) finds that these strategies can help
small organizations gain environmental savings. Such savings manifest themselves in the form
of less expensive environmental management infrastructure and services; accelerated and less

19
expensive information flows; decreased incidence and intensity of land-use conflicts; and an
enhanced ability on the part of the public sector to enforce environmental regulations. Thus,
close and inter-firm networks could be a way to help small organizations become more effective
environmental partners. The use of eco-industrial parks and government sponsored waste
exchange programs as techniques to aid the linkage between small and large companies (Lowe,
1997). Another approach is to aid small companies is through mentoring programs from large
companies as evidenced by a study in Guadalajara (Champion, 1998). Knowing that there is a
difference between large and small companies in their involvement and acceptance of green
supply chain principles is one issue for investigation. Another, more important issue is
determining requirements and practices that would help small manufacturers become more
involved in this process.
Governmental Roles in the Green Supply Chain
“Do state and federal regulations significantly influence green purchasing efforts?” Is a
question that has been posed by (Min and Galle, 1997). The results from their survey of
purchasing managers is, yes. In this case, superfund and liability issues play the largest role. The
reason for this is that government agencies seeking “deep” pockets may find “potentially
responsible parties” throughout the supply chain for superfund based penalties. These issues
have greatly influenced how major organizations select and purchase products, a great variety of
factors come into play when considering regulatory compliance: the processes being operated,
the markets the organization sells into, the countries where the organization is based, the
geographical and geological setting of the premises (Rickman, 1994). The reaction to these
regulations are only one example. Other governmental regulations that have influenced supply
chain practices have already been mentioned, including take-back and packaging laws in
European countries.
One regulatory scheme that has been quite controversial are government supported eco-
labeling regulations (EU Ecolabel for the European union, but various countries have their own
specific labeling schemes such as Blue Angel and Green Dot in Germany or Ecomark in Japan)
for various industries. These regulatory schemes may have some potential for aiding buyers
identify organizations, materials and products that are green, thus lessening the need for
certification of suppliers, etc. These labeling systems are meant to help consumers identify
environmentally preferable products. Some countries have looked at these proposals as de-facto

20
environmental policy setting tools (Loprieno, 1997). Yet, the development of industry or even
product certification for eco-labeling purposes is difficult due to the subjectivity of much of the
criteria. There have been calls on both sides of the environmental fence (industry and NGO’s)
for revising and making these eco-label systems more effective, or simply eliminating them
(Anonymous, 1996; Williams, 1995; Williams, 1996).
These command-and-control governmental measures (some may argue that eco-labeling
is less of a comman-and-control regulatory mechanism) have been giving leeway to more
cooperative voluntary measures set up by various government levels. For example, governments
have also used procurement as an instrument of environmental policy. These government green
purchasing initiatives have occurred at all levels of government. The basic idea is that by
purchasing large quantities and selecting preferred suppliers, the government could shift product
markets to favor one product type over another. Thus, by government purchases providing an
earlier and larger market for green products, it allows firms to lower costs through scale
economies and learning-by-doing. This concept is a subset of use of procurement as an
industrial policy setting mechanism (Goreski, 1990). This method of policy setting for further
development of green products was evaluated, economically, by Marron, (1997). Marron, found
this policy setting mechanism for green product development to be weak. The issue of whether
explicit regulatory mechanisms work better or are more effective than market development
through purchasing mechanisms to increase green product markets is something that needs to be
further investigated.
Integral and Emerging Issues
As can be seen, much of the research completed on green supply chain management has
been narrowly focused on one functional area or another. A complete and integrative evaluation
and monitoring of performance is required. A systems perspective does not seem to permeate
this type of literature. Industrial ecology, falls into similar problems. Yet, an integrative study
can become complex and difficult to complete. It can be clearly seen that even the
representation of the supply chain and its topics in Figure 1, is not exhaustive. Additional factors
and issues can be integrated. How to make sense of all this and the attempt to develop theory to
explain various managerial phenomena is a difficult proposition. Reductionist scientific
approaches may not be the best way to study this topic. One way of looking at some of the
issues is too consider and evaluate integral issues that permeate throughout the supply chain. A

21
few of these are now listed with their related concerns and studies. These issues can be grouped
into strategic and operational levels of analysis (with some overlap). The more strategically
oriented issues include: industry differences, evolving organizational forms, linkage to
environmental strategy, and the relationship between organizational performance and green
supply chains. Operationally oriented issues include: performance measurement, third party
certification, product life cycles, and life cycle assessment.
Industry Differences
The investigation of industry differences in green supply chain practices is also an issue
that has been observed in each of the functions. Azzone et al. (1997), have found industrial
differences in how organizations incorporate environmental strategy. Part of the reason is that
they share the same external stakeholders that put pressure on them. One of the difficulties of
extending this type of analysis to green supply chain research is the heterogeneity of suppliers
and customers in the supply chain. That is, it is difficult to only have a supply chain made up of
chemical industry companies, for example. The influences of NGO’s , professional
organizations and other stakeholders on green supply chain management practice may also be
investigated, when industrial characteristics are to be evaluated.
Evolving Organizational Forms
Part of organizational supply chain formation will be effected by the “new”
organizational forms defined as networked or virtual organizations (Larson, 1991; Osborn, 1997;
Snow, et al. 1992) have implications for green supply chains. These network organizations have
the goal of forming on an ad-hoc basis to meet a specific market need and dissolving after their
formation after the market need has been met. In a case study of a networked entrepreneurial
company and sustainability (Farrow et al., 1999), the “broker”, Walden Paddlers Inc. used a
“decision guide of environmental responsibility”. The network organization (other than the
broker) includes the designer, two manufacturers, two plastics suppliers, a packaging and a
shipping company. The environmental and economic success of this network company was the
strong leadership of the entrepreneur, the use of simple goals and measures, and the consistent
application of the decision guide. The companies involved were all small companies. According
to the authors the application of this concept to existing, larger companies may not be as easy.
The environmental measures focused primarily on reduction and recycling. This is one of the

22
first studies in this area. The issue of responsibility for environmental problems did not come up
in this case.
How to form such an organization such that environmental liabilities are minimized, is an
issue. These organizations are meant to form and dissolve rapidly. Responsibility for any
environmentally malignant behavior by the company or its members may provide unforeseen
liabilities and consequences, with responsibilities of this behavior difficult to trace. Having an
initial environmental strategy, which drove the formation and operations of this organization, is
not usually one of the concerns of forming these types of organizations. Also, in this case study,
“win-win” opportunities did seem to exist, but according to Walley and Whitehead (1994), these
opportunities may be fewer and fewer as the organization matures. How to maintain and build
on these practices for environmental and economic sustainability is another issue.
The structure and organizational form of the supply chain is also an issue that Green, et
al. (1998) and Zsidisin & Hendrick (1999) have mentioned as a possible areas of study. Some
questions related to these issues include: Will these network organizations better environmental
performance? What about issues of power relationships, how can this hurt or aid improving
environmental performance of the supply chain? Are long-term relationships espoused by the
latest supply and partner management literature better than the short-term relationships supported
by network organization theory, within the context of green supply chain management? What
cultural issues support or bind corporate environmental performance? Are there differences in
national and regional cultures that may cause organizations to support green supply chains?
Linkage to Environmental Strategy
It has been argued that corporate environmental programs work best when they are part
of a strategic program and vision (Azzone, et al. 1997; Shrivastava & Hart, 1995; Starik, et al.,
1996). Yet, when dealing with supply chains, with various tiers of suppliers to many possible
levels of customers, the supply chain (in general) and the environmental supply chain (in
particular) are only as good as their weakest links, especially in terms of closing the supply chain
loop. The influence of varying corporate environmental strategies and where they exist on the
environmental strategy and behavior spectrum (see Noci, 1997 for a summary of various
spectrums) on the supply chain, needs to be investigated.
The Relationship between Organizational Performance and Green Supply Chains

23
 In a paper by Green et al. (1998), the question raised is “do they (green purchasing and
supply policies) improve companies’ environmental performance”. Their finding was a “we do
not yet know”. This can also be taken to another level to ask, “does green supply chain
management improve organizational environmental performance?” And to a further level, maybe
more important to managers, “do green supply chain management improve corporate financial
and overall performance?” There have been investigations of organizational corporate
performance and environmental performance (Klassen & McLaughlin, 1996; Hart and Ahuja,
1995; Cordiero & Sarkis, 1997). But, even these studies have found conflicting evidence (at the
strategic level of analysis) between environmental management and organizational performance
(Cordeiro & Sarkis, 1997). Ample opportunity exists in this area to identify how various
environmental management policies and principles effect corporate performance, as well as why
variations in results have been occurring.
Performance Measurement
Related to strategic corporate performance relationships are the consideration of
operational performance measurements for green supply chains. Performance measurements
have been developed for purposes of managing the various elements of the supply chain. Many
of these measures are time and cost based (McIntyre et al. (1998)). The use of performance
measures will be used for managing each of the functions and elements. The short-term focus of
these measures will make it difficult from a greening perspective. In fact, there is even a goal to
go beyond simple greening measures to sustainability performance measures, incorporating other
socially oriented factors. One size fits all, in terms of performance measurement, is not plausible
(Green et al., 1996). Investigation into monitoring what works and what doesn’t is still missing.
Third Party Certification
As we have mentioned, third party certification, is one approach for enabling green supply
chain development. For example, ISO 14000-like guidelines are one set of guidelines to aid in
this area. Cascio, Woodside and Mitchell (1996), point out that to become ISO 14001 certified, it
would not be necessary “for an organization to:
• Request information from the supplier or contractor about activities performed, chemicals
used, waste generated, potential releases to the atmosphere, and other actual or potential
environmental aspects and impacts experienced by them.
• Impose its own EMS on suppliers and contractors.
• Visit a supplier site to ensure that applicable legal requirements are being met.

24
Demand that suppliers and contractors have a registered EMS.” (pp. 126-127).

ISO 14000 currently has some limitations in this area. Whereas, IS0 9000 standards (for
quality) mention external relationships with customers and suppliers, these relationship issues are
not explicitly mentioned in the ISO 14001 standards.
Product Life Cycles
Another issue that arises for the overall green supply chain management system, is the
they dynamic nature of the product life cycle and it’s implications on the various practices and
their emphasis. Sarkis (1995c) has argued that the organizational emphasis on which functions it
develops and supports in the green supply chain is dependent on the product’s (and industry’s)
marketing life cycle. That is, whether the product is in the early innovation stages or later
maturity or decline stages may influence whether the organization is putting more emphasis on
the procurement stage (selecting appropriate vendors) or on reverse logistics (enough products
and material exist for efficient reverse logistics channels). Thus, the issue here is that
organizations planning for long-term green supply chains need to be aware of the necessary
requirements for strengthening the supply chain as it matures.
Life Cycle Assessment
The issue of LCA looms large in each of the functions. The lack of appropriate life cycle
analysis tools makes the appropriate decision on product and material selection, supplier
selection, production technology, delivery mechanism, transportation selection, etc. all difficult
to determine. How well decisions perform environmentally, either practically or for research
measurement purposes, all require effective life cycle assessment measurements. Yet, suppliers
and organizations find LCA is one of the most problematic aspects of managing the supply
chain. For example, in a survey of suppliers, Lucent technology (Nagel, 1998), one of the most
difficult issues was in the definition of LCA. Managing the overall supply chain without agreed
upon LCA measures will require more art than science.
SUMMARY AND CONCLUSION
We have reviewed a number of issues related to green supply chains and their
management. The structure of the presentation was based on four major functions that could be
considered as drivers within the green supply chain. These functions included purchasing and
in-bound logistics, production, distribution and out-bound logistics, and reverse logistics. A
number of integrative issues potentially effecting each of these functional areas were then

25
presented. Even in this relatively new field of green supply chain management a number of
debates have emerged, within and between functions. It has been found that most of the literature
on green supply chain management has been descriptive, anecdotal, and/or prescriptive. As, well
much of the literature has investigated small portions of the whole supply chain. Academic
journals have only begun to address issues that have been appearing in the trade journals since
the early 1990’s. With only a few empirical studies, which have been exploratory, the amount of
generalizable knowledge and theory development in this area is almost non-existent. To truly
address these emerging debates and issues, effective research agendas and methodologies will be
required. Even then, the debates may never truly be answered. As in all environmentally based
research arenas tools, techniques and theory from a number of disciplines will be required for a
truly complete study of this area. We feel that as the new millennium arrives, this topic and field
and its debates will keep a number of researchers busy.

26
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Table 1: A listing of environmentally based initiatives for the purchasing function.

Supplier Environmental Questionnaires

Supplier Environmental Audits and Assessments
Environmental Criteria on Approved Supplier List
Require Suppliers to undertake independent Environmental Certification
Jointly Develop Cleaner Technology/Processes with Supplier(s)
Engage Suppliers in Design for Environment product/process innovation
Reduce packaging waste at the customer/supplier interface
Reuse/Recycling of materials requiring co-operation with supplier
Reuse initiatives (including buy-backs and leasing)
Conduct LCA with cooperation from suppliers
Seek to influence legislation in cooperation with suppliers
Create supply “club” to collaborate on environmental issues
Coordinate minimization of environmental impact over full supply chain
Build environmental criteria into supplier contract conditions
Audit Supplier Environmental Performance

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 Table 2: Exemplary Industrial Practices for the Green Purchasing Function.
B&Q, (a British retailer) has a system of auditing and accrediting the “environmental correctness” of all its suppliers (over 500),
guided by its corporate environmental mission statement. Their supplier certification system (QUEST) required the merger of the
quality and environmental departments. Its range of concern is global, since products arrive from many international locales. (Green
et. al, 1998).
Boeing Corporation sponsors Supplier Technical Exchange forums every 18 months to collaborate on common environmental
challenges. During these weeklong events, Boeing brings together 40-50 people from Boeing and representatives from the company's
key suppliers to exchange ideas and work jointly to address environmental issues, such as life cycle assessment. Boeing has also
provided its suppliers with technical information on ways to reduce their air emissions to meet the U.S. Environmental Protection
Agency's National Emissions Standards for Hazardous Air Pollutants (NESHAP) for the aerospace industry. The company has also
worked one-on-one with suppliers to help them find environmentally preferable substitutes for hazardous materials. (BSR, 1999)
Bristol-Myers Squibb conducts an EHS evaluation of a contractor or supplier. Determining whether an evaluation is warranted
depends on the extent of Bristol-Myers Squibb’s involvement in the operations of the contractor or supplier, as well as the nature of
such operations. In addition, the Worldwide Medicines Group has developed an EHS questionnaire that is sent to a contractor or
supplier if it falls into one of the following categories: Sole source; Manufacturer of a strategic material; Manufacturer of a material to
Bristol-Myers Squibb’s specifications; Referenced in the New Drug Application submitted to the U.S. Food and Drug Administration.
Bristol Myers Squibb recently (November 1998) sent out a letter to suppliers encouraging ISO14001 certification or at least following
those guidelines. (Company Report, 1999)
Cosmair , has worked with suppliers to recycle or reuse its shipping containers. Cosmair works with key suppliers to ensure that they
make deliveries in reusable containers and ships these containers back to suppliers after they are empty. (BSR, 1999)
Fetzer Vineyards , a winery in Northern California, created an information-sharing forum on organic farming for its growers. Because
the company currently grows less than 10 percent of the grapes it uses for its wines, it developed a training program to help its growers
meet its increased demand for organic grapes. Fetzer hosted a group of its growers, dubbed "Club Bonterra," to discuss organic farming
methods and exchange strategies and research for combating pests without the use of pesticides. (BSR, 1999)
Fiat Auto – A document called "Guidelines for Cooperation," signed in February 1994, requires that partners accept the increasing
environmental compatibility of their products and manufacturing processes as a priority, while respecting the economic and
competitive balance. A survey of 360 suppliers was conducted in 1994 to monitor their management of environmental resources
(energy, water, air, and so on). A packaging waste control program is under way with 70 suppliers, monitoring incoming and outgoing
materials. (Company Report, 1998)
General Motors formed a Supplier Environmental Advisory (SEA) Team to explore ways that GM can work effectively with
suppliers to integrate environmental concerns into the design, sourcing, and manufacturing processes. The SEA Team has identified
near-term and longer-term opportunities for collaboration among GM and its suppliers on environmental management systems (EMS),
design for environment, and environmental metrics throughout the supply chain. Working with the SEA Team, GM developed a policy
statement on "Environmental Performance Management in GM's Value Chain." (Company Report, 1998, BSR, 1999)
Hewlett-Packard : Environmental performance is one of six criteria HP uses to evaluate suppliers (The others are technology, quality,
responsiveness, delivery and cost). They favor, whenever possible, suppliers who demonstrate the best performance in these areas. It is
up to their suppliers to make their own commitments and to develop plans for being environmentally responsible. (Ditz &
Ranganathan, 1997; Maxie, 1994).
Nokia’s supplier environmental issues are handled, reviewed and audited within Nokia's comprehensive supplier assessment processes,
forming an integral part of the process. The guiding principle is the adoption of the ICC Business Charter for Sustainable Development
and serves as a platform for Nokia in supply chain management. Nokia has played a role in the European Eureka project for
development of a procurement tool for environmentally compatible electronic products. (1998 Corporate Environmental Report)
Polaroid's Global Sourcing principles include a Principle of Conduct which includes environmental factors. Commitments to specific
environmental improvements are incorporated into their contracts with Polaroid. Polaroid takes a three-tiered approach to evaluating
suppliers by gathering information independently, asking direct questions of the supplier and visiting selected suppliers, depending on
their logistical significance and the nature of their operations. They share technical information on environmental issues, develop less-
wasteful packaging methods for purchased materials, and create programs to recycle and reuse various types of vendor packaging.
Some Polaroid suppliers have instituted "life cycle" programs under which the supplier takes back surplus materials for reuse or
recycling or recovers reusable materials from manufacturing byproducts. (1998 Corporate Environmental Report)
Texas Instruments in the Phillipines in response to one of their major Japanese customers’ goals to have all its suppliers be
ISO 14001 certified, completed ISO 14001 certification. (Hamner and Del Rosario, 1997).
Volvo has very specific expectations for suppliers' environmental performance and clearly communicates these expectations to
suppliers through periodic updates and meetings. The company formally describes environmental expectations for its suppliers in a
section of its environmental policy, titled "Environmental Requirements for Suppliers”. (BSR, 1999)

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Table 3: Exemplary Industrial Practices for the Green Production Function.
Compaq (formerly Digital Equipment Corporation) has a recovery facility for electronics parts where purchasing
agents also serve as marketers and salesmen. They have developed relationships with a number of organizations
that send their electronics components and products there for demanufacturing and organizations (such as
Envirocycle Inc.) that use their outputs as inputs for their products. (Sarkis, 1998)

Crown Cork and Seal's Minnesota plant involved production workers as the centerpiece of its efforts to eliminate
waste and reduce toxins. They formed teams of workers to focus on environmental issues, including recycling
teams and quality improvement teams whose objectives focused on an environmental problem and hazardous waste
generation. From these efforts, the plant achieved reductions in solvents, air emissions, and solid waste disposal
(Florida, 1996).

Disney built an on-site material recovery facility (MRF), which began handling recyclables from the Walt Disney
World Resort. The MRF handles more than 45 tons of paper, plastic, glass, steel, aluminum, and cardboard, daily,
representing an average recycling rate of more than 30% of these materials. Other used equipment and excess items
are sold to Cast Members or auctioned to the public. (Corporate Environmental Report, 1999)

Kennedy Die Casting in Worcester, Massachusetts has three separate internal closed loop waste water systems.
Each is unique to its manufacturing centers, depending on the level of contamination and the use of the water. One
process includes a simple heat capturing and cooling water closed loop system. In this system the water has no
direct contact with the material or solvents. Another closed loop wastewater treatment process is more complex
with the use of settling tanks, skimmers and centrifuges to help decontaminate the water for reuse. (Sarkis, 1999)

Novartis conducts benefit-risk analysis for its core manufacturing processes. The results are broadly disseminated
as publicly available information. Employees are made responsible for contributing to better environmental
performance. For auditing purposes the company has developed an objective reporting system called SEEP which
allows the company to obtain real time accurate information on 90 percent of emissions from the company,
worldwide. (Narasimhan & Carter. 1998).

Uzin Georg Utz Gmbh & Co. (a cement and tile manufacturer) focuses it’s effort on investment in advanced
production technology. They view technology as a strategy to improve environmental effectiveness of its
production function. Uzin’s major processes are physical and mechanical in nature (not chemical), thus the cleaning
and maintenance of these products is of environmental concern to the organization. (Narasimhan & Carter. 1998).

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Table 4: Exemplary Industrial Practices for the Green Outbound Logistics and
Distribution Function.

Bethlehem Steel, is a member of General Motor’s (GM’s) Supplier Environmental Advisory Team in 1997. The
SEA Team discusses opportunities for collaboration with other GM suppliers to help GM meet its economic and
environmental goals. Bethlehem’s representatives on the team have met several times with GM and other suppliers
to exchange ideas and support GM’s efforts to promote sustainability and improved environmental performance in
its supply chain. (Corporate Environmental Report, 1998).

Bristol Myer’s Squibb has a customer related environmental program that educates customers, typically health care
management institutions to aid in environmental practices (Corporate Environmental Report, 1998).

British Telecom and Nortel are currently developing two pioneering product takeback schemes. Under the first
scheme, Nortel will remanufacture spare parts such as telephones and printed circuit boards for private switching
systems which BT leases out to customers. BT will then be able to re-lease the repaired or upgraded equipment
instead of throwing it away. Under the second scheme, though it is still early days, BT and Nortel are working to
offer third parties a jointly run remanufacture and reuse service for telecommunications spare parts. (Internet site
http://www.bt.com/World/society/reports/html/matter/procurement/ 1999).

DuPont has developed a partnership with Ford Motor in which DuPont’s payments are based on the number of
cars that are painted. This creates an incentive for the two companies to use paint as efficiently as possible (Denton,
1998).

Noranda Company visits the premises of all Canadian customers buying sulphuric acid to evaluate their
equipment, employee training, handling procedures, and intended uses. Their stated policy is to only sell acid to
companies that handle it and intend to use it in a safe and environmentally responsible way. (Corporate
Environmental Report, 1998)

3M, within its life cycle management system identifies conditions under which use its products. In this analysis
they focus on assessing customer needs for training and education regarding safe and effective use and disposal of
the product. They may also restrict the sale of products to customers and markets based on the ability and
motivation to use 3M’s products safely. (Narasimhan & Carter. 1998).

Toyota Motor Manufacturing in Kentucky, uses returnable plastic containers to ship over 90 per cent of its
materials and parts from over 170 suppliers. These plastic containers and pallets meet Automotive Industry Action
Group (AIAG) specifications for maximum cube space utilization within truck trailers and minimize environmental
impact on local landfills. The container system works harmoniously with the JIT operation that is used in the plant.
(Wu & Dunn, 1995)

W.R. Grace, set up a distribution code for the Grace Certified Program Carrier initiative to qualify, select and
monitor the performance of U.S. transportation vendors. Grace rates its carriers on regulatory compliance, safety
performance, employee training and safety management systems. Monthly carrier performance ratings including on-
time delivery, claims handling, hazardous material incidences and billing accuracy, are used to score each carrier.
(Corporate Environmental Report, 1999).

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Table 5: Exemplary Industrial Practices for the Reverse Logistics Function.
Chesebrough-Pond centralized a decentralized program for returns. Previous practices had returns of personal care
products sent to their distribution centers or handled in the field. Many products were just discarded or destroyed.
Through centralization the process and having all items come into one place equipped with a good reverse logistics
software program, information became available as to what was being returned and what condition it was in. This
enabled product to be either put back into active inventory or sold on the secondary market. The amount of product
destroyed was reduced significantly (Andel, 1997).

Rank Xerox, with a history of leasing copier equipment, has implemented programs to increase the leasing option
to help in recovery of parts and equipment. These programs have increased the rate of return for purposes of asset
recovery. Decreasing the costs of fully warranted equipment at reduced prices. Marketing programs have been
developed strictly for promoting these “green” products. (Ayres, et al. 1997).

Service Merchandise (a retailer) and Redwood Systems (a third-party logistics company) have an unusual gain-
sharing agreement that encourages the third party to manage the reverse-logistics process aggressively. Results
show that transportation costs are down, merchandise is more closely tracked, and the returns process has become
much easier for store personnel. (Gooley, 1998).

Siemens Nixdorf Informationssysteme AG, has a recovery plant located in Paderborn, Germany. The recovery
plant reconditions and recycles used computers. The customer bears the burden of some of the disposal costs. It
charges customers on a sliding scale based on the product type and disassembly and recycling costs. (Ayres, et al.
1997).

Whirlpool Corporation’s environmental concerns focus on the return and management of their products after use.
This is especially true in countries with “take-back” legislation. Instead of their organization becoming responsible
for the recycling of their products, they have outsourced the recycling function to outside companies. In the U.S. the
outsourcing is to Appliance Recycling Centers of America (ARCA). ARCA recycles, reconditions, resells and
replaces older refrigerators with more energy-efficient models in early retirement programs. . (Narasimhan & Carter.
1998).

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 Energy Energy
Energy

Closed-Loop Manufacturing,
Demanufacturing,
Location Analysis,
Internal Source Reduction Disposal
External Inventory Management,
Transportation TQEM
Transportation Raw and Warehousing
Virgin Transportation
Material Inventory Packaging Customer Relationships
Selection Management Green Marketing
Fabrication Product Stewardship
New
Vendors Components Distribution,
Storage Storage
and Parts Forward USE
Logistics
Recycled, Assembly
Reused
Material and
Parts PURCHASING,
MATERIALS OUTBOUND
MANAGEMENT, PRODUCTION LOGISTICS
INBOUND Energy
LOGISTICS

Product/Process
Design Reusable,
Waste Waste Waste Remanufacturable,
Recyclable
Materials and
Marketing Components
Engineering

REVERSE
LOGISTICS

Waste
Figure 1: Operational functions and environmental practices within the supply green supply chain.

40