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Green Supply Chain Management and Performance of ISO Certified Companies in the U.S
Table of Contents
Data Analysis and Findings…………………………………………………………………..29
Green supply chain management (GSCM) refers to the concept of integrating sustainable production processes aligned with environmental protection policies into the traditional supply chain. This research's focus is on the importance and need of GSCM in manufacturing firms that are utilizing natural resources and exploiting the environment. The emphasis is placed on how GSCM is better than traditional supply chain management practices and how it could help a firm to gain a competitive advantage. In addition, the importance of GSCM for a manufacturing firm in terms of profitability, productivity, corporate social responsibility and competitive advantage is explained. This research is conducted by using a cross-sectional survey design appropriate where the overall objective is to establish whether significant relationships exist among variables at some point. The study population comprised all ISO 14001-certified manufacturing firms operating in the U.S.A. A detailed literature review is conducted, which shows the correlation between GSCM and the operational performance of an organization. This research aims to establish strong foundations for future researchers to focus on the entirety of the GSCM and its importance in environmental protection. This research will be able to find a real impact of GSCM practices in manufacturing firms and motivate firms to adopt it as a necessity because, in the coming future, firms lacking focus on sustainability and environmental protection practices will fail to establish a strong market position. The research paper is divided into different chapters discussing the research question and literature to highlight the relationship between the implementation of GSCM and operational performance.
CHAPTER ONE: INTRODUCTION
Supply chains are used by modern enterprises to develop, distribute, and transfer value to customers in the most feasible manner (Green et al., 2012). The supply chain boosts corporate success by combining enterprises to give consumers value at the lowest possible price (Bagher, 2018). Therefore, it is important that business managers create an efficient supply chain in order to increase consumer happiness, foster competitive advantage, and increase the wealth of their company (Diabat and Govindan, 2011). However, companies create externalities to the environment when they create and manage efficient supply networks; these externalities are typically negative and unsustainable. That is, when supply chains are managed more carefully by corporations, natural resources are depleted and carbon dioxide and its components—greenhouse gases—are released more often. This indicates a great danger to the environment (Dadhich et al., 2015). Accordingly, it is crucial for enterprises to be environmentally responsible and apply Green Supply Chain Management (GSCM), which aids to ensure that this practice of supply doesn’t harm the environment. Therefore, companies should match and relate their performance goals with sustainable performance.
A research has suggested a number of parameters for GSCM practice among firms. These include eco-design, eco-production, and green buying (Tan et al., 2016; Khan and Qianli, 2017). Businesses are required to conduct their supply chain operations within the parameters of environmental sustainability by applying these factors. The bulk of the research acknowledges that GSCM not only improves the environment but also helps businesses perform. According to Sari (2017) and Youn et al. (2013), green supply chain initiatives helped firms cut back on their use of energy and logistical expenses, which improved their performance. Green technology is favored by Seman et al. (2012), particularly in industrial companies that increase revenues.
The application of GSCM, according to Choi and Hwang (2015), enhances the working environment and performance of firms involved. According to empirical research by Tan et al. (2016), green supply chain management increases corporate competitiveness. The findings from Laari et al. (2016) support the claim that GSCM enhances the environmental and operational aspects of enterprises. Syakila (2016), on the other hand, emphasizes that GSCM does not necessarily support business competitiveness. Similarly, Khan and Qianli (2017) concurred that higher sustainable standards reduce businesses' profitability since GSCM necessitates significant technological expenditures. This is a different viewpoint that suggests GSCM might not improve firms' general well-being.
There is no unified viewpoint offered by the many theoretical approaches on the subject. Tripathi and Bains (2013), for instance, made the case that it is every company duty to maximize profit for its owners. According to Eccles et al. (2014), enterprises are under pressure to support environmental sustainability at the expense of investors, which creates issues between managers and shareholders.
The resource-based approach argues that businesses should use GSCM because it gives them a competitive edge in an increasingly cutthroat market. Hu and Hsu's (2010) findings, however, imply that poor green supply chain management practices may work against a firm's performance. This suggests that the adoption of the GSCM framework by corporate management is necessary for there to be a positive relationship between GSCM and business performance.
In academic literature, the topic of environmental concerns and the incorporation of green practices into the supply chain have gained popularity. The growing concern about the environment and climate change, as well as the global efforts made by governments and organizations to lessen their environmental effect, is mirrored by this interest. Governments, society, and commercial groups have taken a significant interest in environmental challenges such as air pollution, solid waste management, ozone layer exhaustion, and global warming (Jemai et al., 2020; Al- Quran et al., 2020). Since businesses create more emissions than other commercial activities do in order to satisfy consumer requirements and desires, they are often seen as a source of pollution and environmental deterioration in developing nations where they are an important part of the economic structure. As a result, green supply chain management (SCM) strategies became increasingly important since they may help minimize the harmful consequences of industrial processes and boost businesses' competitive advantages (Al-Hawary & Al-Jawazneh, 2011; Shahzad et al., 2020; Wang et al., 2020).
Manufacturing organizations can use operational analysis, continuous improvement, measurement, and objectives that El-Baz and Iddik, (2021) stated to lead to green manufacturing by reducing waste (in all its forms), energy consumption, and resource use (material usage). It is necessary to create procedures with a supply chain focus. Efforts to enhance the environmental performance of acquired inputs or of the suppliers that deliver them are referred to as "green supply" operations (Bowen et al., 2001). This results in a more environmentally friendly product chain and a focus on supply chain management. The notion is that a new purchasing skill called "resource management" will be the answer to the "waste" (environmental) problem. The management of physical resources from their point of origin through various manufacturing and distribution stages to final consumption, recycling, or reuse is referred to as "resource management" by Kahn (2021).
Green supply chain management practices have been widely implemented by firms in the US but their impact has not been fully researched and the various ways that they have been helpful. Younis and Sundarakani (2019) state that figuring out how to meet product demand in this expanding global market while producing goods that have beneficial social and environmental effects along the whole chain. Vermeulen agrees with the World Bank's observation from 2003 that there has been a shift away from the old "development against environment" idea and toward a new one in which improved environmental management is crucial to sustainable development. According to Welford (2003), the present wave of globalization is forcing businesses to outsource more of their industrial operations. Utilizing internal management tools is the system. In other words, if new trends are handled in this manner, environmental problems could be poorly planned. The authors contend that new initiatives on social responsibility and more equitable trade relations must coexist with a renewed focus on green supply chain management and extended producer responsibility practices.
Environmental issues are getting more significant to businesses as a result of stakeholder demands that they tackle environmental sustainability in their industrial and commercial activities, including management, consumers, rivals, NGOs, and staff (Carter & Easton, 2011; Ashraf et al., 2020). The capacity of businesses to manage complicated supplier relationships will determine their ability to lessen their environmental impact (Darnall et al., 2008; Le, 2020; Reche et al., 2020). Intending to handle green supply chains, managing business activities from raw material producers to end customers, and developing connections between supply chain partners are some ways to lessen the environmental effects of commercial organizations (Linton et al., 2007; Micheli et al., 2020; Shahzad et al., 2020).
Risks associated to the business environment have emerged as one of the most pressing issues facing enterprises today. Such risks cannot be disregarded in any corporate overall planning, so risk management serves as a gauge of how well an organization can adapt to the swiftly changing business environment. As a result, organizations should identify the best ways to ensure their continuity in light of these changes based on their GSCM efforts. The primary goal of the current study is to ascertain how American companies’ performance is impacted by GSCM procedures and to identify if there is any relationship between GSCM and performance.
Cost savings: Implementing green practices can help reduce energy and resource consumption, which can lower costs. Improved brand reputation: Companies that are seen as environmentally responsible may attract more customers, and can differentiate their products from those of their competitors. Increased customer loyalty: Customers are increasingly interested in buying products from environmentally responsible companies. Compliance with regulations: Green supply chain practices can help companies comply with environmental regulations and avoid penalties. Risk management: by incorporating green practices into their supply chain, companies can reduce the risks associated with environmental incidents and potential liabilities. Innovation and competitiveness: companies that adopt green practices may be better positioned to develop new, innovative products and processes, which can help them, maintain a competitive advantage.
Roy et al., (2018) claim that as a result of market globalization, heightened competitiveness, and the increasing significance of customer centricity, there will be a shift toward more environmentally friendly supply chains. Specifically cited for instance, to maintain its competitiveness on a global scale, a company must adhere to international standards like ISO 14001, and to achieve a competitive edge, businesses must not only be distinctive but also fulfill client demands. You must have environmental products and a strategy in place. Supply chain implementation decisions are also influenced by consumer demand, increasingly strict regulations, and the need to foresee the possibility of a poor public image. Customers and other stakeholders frequently fail to distinguish between a company's suppliers and own all supply-related problems. For instance, only large enterprises in the US are subject to environmental audits, even though pollution comes from a variety of sources, including households, small businesses, and industry—the latter of which is large, if not entirely, to blame.
Every firm is a part of a supply chain or network, according to Carter and Washispack (2018), and numerous manufacturing, marketing, or procurement choices have an impact on the supply chain in several ways, including on the environment. Manufacturers and service providers are increasingly having their products tested for environmental compatibility. Their goods must not only satisfy the needs of customers in terms of cost and quality but also take into account societal environmental issues. Carter and Washispack (2018) also share that a shift in production philosophies was necessary to address the current condition and trend of environmental degradation (from a regulatory, consumer, and moral perspective). He continues by stating that although ISO 14000 reflects a shift in environmental thinking, it mainly focuses on processes and systems and makes no mention of emission standards, limits, or test procedures. There is a belief that the new problems that manufacturers and manufacturing firms worldwide are confronting can be solved by greening the supply chain. The difficulty, according to Beamon, is finding ways for industrial progress and environmental protection to coexist.
The goal of environmental performance, as claimed by Sanders et al., (2019), is to reduce an organization's environmental impact by managing those parts of its operations that have an impact on or have the potential to influence the environment. To address the need for ecologically friendly products, companies should embrace green supply chain management (GSCM), which includes green manufacturing, green purchasing, and green marketing. The Green Purchasing Network (Japan), for instance, is a green purchasing strategy that is thought to be the most powerful motivator for businesses to support the creation of environmentally friendly products and services and create green supply chains. This regulation, which became enforced in Japan in 2001, requires all government departments and agencies to adopt a green buying policy. This highlights the part that government may play in encouraging economies and manufacturing firms to embrace GSCM methods.
According to Carter and Washispack (2018), the Chinese government has applied pressure at both the local and national levels, such as through increasing environmental tax regulations, due to resource shortages, environmental degradation, and mounting consumer demand in China. The Chinese government has implemented resource tariffs and limits for some resources, like water, to prevent overexploitation and excessive usage. The need to reconsider how we approach the environment was reaffirmed at the World Social Forum. The Forum made note of the alarming rate of deforestation in developing nations, the indiscriminate use of natural resources, and the rise in industrial waste production. They argued that the government should get involved.
Green supply chain management practices have been highlighted to have various impacts on firms such as cost savings by reducing energy and resource consumption, which can lower costs, improved brand reputation where companies that are seen as environmentally responsible may attract more customers, and can differentiate their products from those of their competitors, increased customer loyalty where customers are increasingly interested in buying products from environmentally responsible companies, compliance with regulations as green supply chain practices can help companies comply with environmental regulations and avoid penalties, risk management by incorporating green practices into their supply chain, companies can reduce the risks associated with environmental incidents and potential liabilities. There are also increased innovation and competitiveness as companies that adopt green practices may be better positioned to develop new, innovative products and processes, which can help them maintain a competitive advantage.
Manufacturing firms in the U.S
The functions of manufacturing, which is a link in the supply chain, including the creation of new products, marketing, sales, and customer service. As a result, industrial and supply chain activities both depend on the environment Sanders et al., (2019). According to the Economist, there are more than 700,000 manufacturing businesses, which can be classified into 14 sectors. These industries are divided into groups based on the kinds of raw materials that businesses import or the goods that they produce.
The manufacturing industry contributed 2.49 trillion dollars to the United States GDP (gross domestic product) in 2021. Small and medium-sized businesses (SMEs), which are responsible for 32% of the US’s exports and play a role in the supply chain network, are exempt from the EMCA, according to the 1999 baseline survey report. Some businesses have certifications from Green supply chain management which enables businesses to evaluate each channel's and its constituents' contributions to satisfying customer demands while upholding targeted environmental standards. Therefore, in the US context, a company's 1S014000 certification or environmental certification is insufficient. Different environmental sustainability techniques are required. U.S. manufacturing firms that are part of global corporations may react to environmental challenges differently than their local competitors. For instance, the multinational General Motors answered a query in the fourth automotive sector with the following statement: Why should we make the supply chain green? "We can do considerably more to enhance the environment along with our suppliers than GM alone could."
A supply chain known as GSCM aims to reduce waste, improve ecosystem quality, boost eco-efficiency, and accelerate material recycling. In practice, GSCM sought to generate sizable profits while paying attention to environmental efficiency. It does this by utilizing technological measures, novel facilities, training, and workforce allocation (Sugandini et al.,2020). Company executives must adhere to government regulations on potential pollution while increasing output using the green supply chain management approach. (Khaksar et al.,2016). Enhancing a company's financial, environmental, operational, and social performance is the goal of GSCM (Geng et al.,2017). Practically speaking, there is still a literature gap that needs to be conceptualized with a practical strategy for their unbiased measuring proxy (Karmaker et al.,2021).
Sustainable Supply Chain Management is one of the most important aspects of fostering organizational sustainability (SSCM) which has aspects of making it environmentally and economically conscious. Organizations are increasingly taking sustainability into account when making both long-term and short-term decisions because it is one of the most crucial challenges in supply chain management. For present and future organizational growth, Sánchez-Flores et al., (2020 P. 70) defined her SSCM and concurred on the significance of combining sustainable development activities with supply chain management (SCM). Additionally, the authors state that most businesses are implementing sustainable supply chain processes due to the fast-shifting customer demand patterns, escalating competition, and pressure from regulators and other stakeholders. The need to comprehend how businesses might interact with important supply chain (SC) actors to promote sustainability is also developing Sánchez-Flores et al., (2020 P. 70).
As a result of customer and governmental expectations for environmentally friendly operations, manufacturers are increasingly using GSCM techniques. To successfully adopt these principles, supply chain partners from both upstream and downstream must be integrated as has been well discussed and analyzed by Roy, Schoenherr, and Charan (2018). Environmental and operational performance is predicted to increase with the adoption of GSCM methods. There are questions as to whether enhanced operational and environmental performance will ultimately translate into enhanced business performance as indicated by a growth in market share and profitability (Tuffnell et al., 2020). Additionally, it is crucial to consider the institutional forces pushing firms to embrace these practices to comprehend the link between the use of GSCM methods and organizational success (Younis and Sundarakani, 2019). In terms of its impact on GDP, employment, and exports, manufacturing is significant to the world's economy. The environment is under more stress because of the expansion of this industry in the area. The expansion of this industry has been linked to rising levels of greenhouse gases, solid waste, wastewater, particulate matter, toxic gases, heavy metals, and other environmental contaminants (Sanders et al., 2020). More troublingly, there are almost no long-term studies on pollutant impacts at the local or regional level, and these nations lack effective procedures to monitor or regulate this deterioration. Companies are working to achieve EMS certifications like ISO14001 to stop this scenario.
The ISO 14001 accreditation offers a compelling reason to use environmental management strategies like GSCM strategies (Carter and Washispack, 2018). Whether implementing GSCM techniques improves corporate performance is an issue that troubles operations and supply, chain managers. To further understand this connection, numerous investigations have been carried out. This thesis critique indicates significant knowledge gaps. First, investigations have produced contradictory findings. There is a strong correlation between GSCM practice and organizational performance, according to several research (Tseng et al., 2019). Some revealed no real correlation between the variables. Others pointed to a bad connection. Others have discovered a mix of the good, bad, and unimportant. Due to the ongoing disagreement about whether incorporating GSCM methods can increase organizational performance, practitioners are unsure of the best course of action. To ascertain whether there is a connection between the adoption of GSCM techniques and organizational performance, we expand this earlier research to the US context in this study.
Statement of the problem
According to Sanders et al., (2019), it is nearly difficult to open a magazine or newspaper without reading about the prospective effects of climate change on the world and how crucial it is for companies to be "green". Due to their waste production, the devastation of ecosystems, and the depletion of the natural environment, manufacturing and manufacturing operations are the most frequently regarded opponents of environmental protection Younis and Sundarakani (2019). According to the US Economic Survey (2006), many cities face threats from noise, rivers, water, and air pollution, with planting trees being the lone accomplishment. U.S Environmental Protection Agency’s (EPA) major difficulties include solid waste management and rising environmental health hazards. Pesticides, municipal and industrial waste, and the usage of hydroelectric power are some factors that are putting pressure on water resources. Some industries were forced to close due to high production costs brought on by power rationing and high fuel prices, which in turn raised the price of their goods. Laws and consumer demands are additional threats to U.S. manufacturing' capacity to sustain their economic viability. The supply chain and the environment are referenced in some of the arguments.
If a corporation does not adhere to the environmental requirements set forth by the company, the International Finance Corporation (IFC) will not lend to such a company. Designing environmentally friendly goods and services is high on all political, social, economic, and economic agendas, but connectivity may be a ways off. Green supply chain management is potentially useful as a strategy to boost competitiveness, economic performance, and the environment, according to Tuffnell (2019). According to Lawson (2002), the emergence of operational strategies is the result of changing demand patterns and conflicting priorities.
Green supply chain management is increasingly being adopted by businesses in China, the United States, Europe, and Japan as a kind of environmental reaction. For instance, Zhu et al. (2005) claimed that external GSCM practices has increased in importance as he bases his argument on the findings of Carter and Washispack (2018) who investigated the meant managers in UK, Germany, and the USA and discovered important environmental purchasing criteria as those offering design specifications to vendors who specify environmental specifications for goods purchased, cooperating with suppliers for environmental targets, and enforcing environmental laws and regulations. Investment recovery and eco-design were identified as the two new environmental applications for China that have notable internal and external influences on GSCM, with the conclusion that Chinese businesses have increased environmental recognition due to competitive, regulatory, and marketing pressures and drivers.. As a result, it can be said that eco-design, green purchasing, and green marketing are all essential components of Chinese businesses' better environmental performance. In other words, GSCM is an operational strategy that businesses may use to address environmental problems including resolving the six environmental concerns of their clients and reducing the environmental effect of their production and service operations. This could be seen as a move by manufacturers to try to respond to that query. What does "Product Responsibility" entail? Given the current circumstances and actual data from other parts of the world, the study is needed to provide answers to the following questions regarding the necessity for GSCM in the US.
Will GSCM result in better performance of the U.S companies? Is there any kind of relationship between GSCM practices and business performance?
GSCM Practices and Organizational Performance
The relationship between green supply chain management and organizational performance is direct and is grounded in stakeholder theory and institutional theory. According to research, the implementation of GSCM practices would reduce production costs and improve product value in the market. The use of GSCM also enables a company to gain a competitive advantage in competitive markets (Porter & Van der Linde, 1995; Hart & Ahuja, 1996; Madsen & Ulhøi, 2003). Green supply chain management includes reuse and recycling; thus, it decreases operational costs in the long run. Reduced production costs and increased sales resulted in improved market position and financial performance. According to Molina-Azorin, Claver- Cortés, López-Gamero and Tari ́ (2009), the implementation of GSCM positively affects a firm's marketing performance. In addition, the implementation of GSCM improves the reputation of a firm, and business relationships flourish positively.
A number of research studies address the direct link between organizational performance and GSCM practices motivating emerging organizations to adapt to the green supply chain. Numerous studies establish a positive relationship (Rao & Holt, 2005). Some other studies reveal that there is not a prominent relationship between organizational practices and green supply chain management (Pullman et al., 2010). These differences in consensus about the relationship between GSCM and organizational performance cause a research gap in the existing literature. This gap arises because different researchers are looking at different dimensions of GSCM, and they lack focus on the entirety of this concept.
According to research, currently, a number of firms have started implementing green supply chain strategies within firms to capitalize on profit and improve organizationa
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