C. W. Hsu; A. H. Hu
Int. J. Environ. Sci. Tech., 5 (2), 205-216, Spring 2008
ISSN: 1735-1472
©
IRSEN, CEERS, IAU
Received 31 January 2008; revised 18 February 2008; accepted 29 February 2008; available online 10 March 2008
*Corresponding Author Email: s3679016@ntut.edu.tw
Tel.: +886 2 277 121 71; Fax: +886 2 277 647 02
Green supply chain management in the electronic industry
*C. W. Hsu; A. H. Hu
Institute of Environmental Engineering and Management, National Taipei University of Technology,1, Sec.3,
Chung-Hsiao E. Rd., Taipei 10643, Taiwan, R.O.C.
ABSTRACT:
Green supply chain management has emerged as a proactive approach for improving environmental
performance of processes and products in accordance with the requirements of environmental regulations. Various
approaches for implementing green supply chain management practices has been proposed and recognized in previous
literatures, yet no investigation has identified the reliability and validity of such approaches particularly in electronic
industry. This study examines the consistency approaches by factor analysis that determines the adoption and
implementation of green supply chain management in Taiwanese electronic industry. The fuzzy analytic hierarchy
process method is applied to prioritize the relative importance of four dimensions and twenty approaches among nine
enterprises in electronic industry. The findings indicate that these enterprises would emphasize on supplier management
performance in the crucial role of implementing green supply chain management. Establishing an environmental database
of products, asking for product testing report and top management support are among the most important approaches.
The results for the implications of green supply chain management implementation in electronic industry investigated
in this work generate a generic hierarchy model for decision-makers who can prioritize those approaches for implementing
green supply chain management in Taiwan.
Key words: Priority approaches, fuzzy analytic hierarchy process, supply chain environmental management
INTRODUCTION
With increase in environmental concerns during the
past decade, a consensus is growing that environmental
pollution issues accompanying industrial development
should be addressed together with supply chain
management, thereby contributing to green supply
chain management (GSCM) (Sheu et al., 2005). Since
the Waste Electrical and Electronic Equipment (WEEE),
Restriction of Hazardous Substances (RoHS) and Eco-
design for Energy using Products (EuP) directives were
passed by the European Union (EU), GSCM has been
adopted as a proactive strategy by leading electronic
industry companies, including Dell, HP, IBM, Motorola,
Sony, Panasonic, NEC, Fujitsu and Toshiba (Zhu and
Sarkis, 2006). Nowadays, similar regulation has been
spread throughout the world in the US, China, Japan
and Korea; the emerging issue of green product seems
to be quickly picked up in Asia. Some countries such
Japan, Taiwan and Korea are the heralds in terms of
green electronic products (Boysère and Beard, 2006).
Thus, it is inferred that GSCM practice can be viewed
as the primary strategy capable of complying with the
requirements of legislations and maintaining the
competitive advantage. The issue of GSCM is
significant for Taiwan’s electronics industry as recent
studies have shown that most of the world’s
manufacturing will be relocated to Asia within the next
two decades (US-AEP, 1999). Therefore, GSCM is an
operational initiative on the part of many organizations,
including those in Asia and South Asian region which
are adopting to address such environmental issues
(Rao and Holt, 2005). Taiwan is one of the most
industrialized countries in the Asia-Pacific region. Most
electrical and electronics manufacturers in Taiwan are
involved in Original Equipment Manufacturing (OEM)
and Original Design Manufacturing (ODM). These
companies play important roles in global markets as
their products share a substantial portion in market.
Once, Taiwan was the third largest producer of
information products all round the world (Chen, 2004).
Nevertheless, these industries are subject to customer
requests for green products and green manufacturing
that comply with emerging environmental directives
(such as WEEE, RoHS and EuP). These directives,
especially the RoHS, directly impact the electrical and
electronics industries in Taiwan and export products
to the EU-exports in 2004 exceeded US$7.8 billion. More
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C. W. Hsu; A. H. Hu
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than 3,000 companies were affected by the directives
of the EU. These directives also have a far-reaching
influence on supply chain partners for multinational
enterprises (Huang, 2005). Although, to the best of
our knowledge, various investigations have proposed
different approaches to implement GSCM (Lamming
and Hampson, 1996; Lippmann, 1999; US-AEP, 1999;
Bowen et al., 2001; Yuang and Kielkiewicz-Yuang, 2001;
Rao, 2002; Evans and Johnson, 2005; Zhu et al., 2005),
there have been far less research on identifying the
consistency and priority approaches to GSCM
implementation with the systematic analysis,
particularly in electronics industry. This is because the
complexity of GSCM practices, customer and cost
pressures and regulation uncertainty, implementing
GSCM is considered as a thankless task that increases
overall product cost. For example, the RoHS directive
lacks a standardized test procedure and an updated
exemption annex of chemicals. These shortcomings
result in significant problems when implementing
GSCM. Furthermore, increased regulations - RoHS-EU,
RoHS-Korea and RoHS-China - result in difficulties
executing GSCM practices. Hence, enterprises cannot
determine whether their executive strategies conform
to regulations or ensure that current management
approaches are working and have a low risk.
Consequently, enterprise embraces the appropriate
approaches for implementing GSCM practice and it is
significant to mitigate potential risks from green supply
chain. The central purpose of this study is to establish
the consistency and priority approaches for
implementing GSCM in response to environmental
regulations of WEEE, RoHS and EuP. The fuzzy analytic
hierarchy process (FAHP), which is applied to conduct
the relative importance of different approaches, is
extremely crucial, since the results can be used by
managers implementing and adopting their own GSCM
practices.
MATERIAL AND METHODS
To improve the AHP method and to recognize
consistent strategies for implementing GSCM, this
study applies the FAHP and uses triangular fuzzy
numbers to express comparative judgments of decision-
makers. A systematic approach of FAHP to identify
priority approaches for GSCM implementation was
adopted based on a complex and multi-criteria
environment. From September to November 2006, the
authors utilized FAHP to recognize the priority
approaches that will affect the implementation of GSCM
practice in Taiwanese electronics industry. The
methodology consists of three phases, including (1)
constructing the hierarchy of GSCM practice via factor
analysis, (2) collecting data from industrial expert
interviews and (3) determining the normalized weights
of individual dimensions and approaches. The GSCM
practices implementation and FAHP will be discussed
through a literature review and the construction of the
hierarchy of GSCM implementation will also be
presented afterwards.
Approaches to GSCM implementation
A number of approaches for implementing GSCM
practice have been proposed in previous literature, in
which they are aimed at mitigating the risks associated
with green supply chain interruptions or delays and
protecting a company’s reputation and brand image
from damaging public controversies. Various
approaches to GSCM practice have been identified by
various researches; they are briefly outlined below and
summarized as shown in Table 1. Lamming and
Hampson (1996) explored the concepts of
environmentally sound management (e.g. life cycle
analysis, waste management, product stewardship and
the like) and linked them to supply chain management
practices such as vendor assessment, lean supply,
collaborative supply strategies, establishing
environmental purchasing policy and working with
suppliers to enable improvements. Lippmann (1999)
proposed various critical elements for the successful
implementation of supply chain environmental
management. Those components include the
production of written GSCM policies, supplier
meetings, training, collaborative R&D, top-level
leadership, cross-functional integration, effective
communication within companies and with suppliers,
effective processes for targeting, evaluating, selecting
and working with suppliers and restructuring
relationships with suppliers and customers.
US-AEP (1999) improved understanding of industry
approaches to supply chain environmental
management (SCEM) by focusing on seven major
electronics firms. Some of the common SCEM tools
employed by these firms are summarized as follows:
• Prequalification of suppliers
• Environmental requirements during the purchasing
phase
• Supply base environmental performance management
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Int. J. Environ. Sci. Tech., 5 (2), 205-216, Spring 2008
Table 1: Approaches for GSCM implementation emphasized by selected authors
Approach Representative references
1. Suppliers meeting Lippmann (1999), Yuang and Kielkiewicz–Yuang (2001), Rao (2002)
2. Environmental auditing for suppliers Lippmann (1999), US-AEP (1999), Yuang and Kielkiewicz–Yuang (2001), Zhu et al. (2005)
3. Suppliers environmental questionnaire Lamming and Hampson (1996), US-AEP (1999), Bowen et al. (2001), Rao (2002), Evans and Johnson (2005)
4. Requesting compliance statement Yuang and Kielkiewicz–Yuang (2001), Evans and Johnson (2005)
5. Asking for product testing report Evans and Johnson (2005)
6. Demanding bill of material (BOM) Evans and Johnson (2005)
7. Establishing environmental requirements for purchasing items Lamming and Hampson (1996), Lippmann (1999), US-AEP (1999), Evans and Johnson (2005)
8. Implementing green purchasing Yuang and Kielkiewicz–Yuang (2001), Rao (2002), Zhu et al. (2005)
9. Collaborative R&D with suppliers Lamming and Hampson (1996), Lippmann (1999), US-AEP (1999), Bowen et al. (2001), Rao (2002)
10. Information system Yuang and Kielkiewicz–Yuang (2001), Evans and Johnson (2005)
11. Joining local recycling organizations US-AEP (1999), Bowen et al. (2001), Rao (2002)
12. Collaboration on products recycling with the same sector industry Yuang and Kielkiewicz–Yuang (2001)
13. Produce disassembly manuals Lamming and Hampson (1996), Rao (2002)
14. Green design US-AEP (1999), Yuang and Kielkiewicz–Yuang (2001), Rao (2002)
15. Environmental education and training Lippmann (1999), Yuang and Kielkiewicz–Yuang (2001)
16. Top management support Lippmann (1999), US-AEP (1999), Evans and Johnson (2005)
17. Environmental policy for GSCM Lamming and Hampson (1996), Lippmann (1999), US-AEP (1999), Yuang and Kielkiewicz–Yuang (2001)
18. Cross-function integration Lippmann (1999), US-AEP (1999), Yuang and Kielkiewicz–Yuang (2001), Evans and Johnson (2005)
19. Manpower involvement Rao (2002)
20. Effective communication platform within companies and with suppliers Lippmann (1999)
21. Establish a environmental risk management system for GSCM Bowen et al. (2001)
22. Supplier evaluation and selection Lamming and Hampson (1996), Yuang and Kielkiewicz–Yuang (2001), Rao (2002)
23. Tracking the development of directives US-AEP (1999)
24. Applying LCA to carry out eco-report Lamming and Hampson (1996), US-AEP (1999), Rao (2002)
25. Establish an environmental database of products Lamming and Hampson (1996)
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Green management in electronic industry
• Building environmental considerations into product
design
• Cooperating with suppliers to deal with end-of-pipe
consumer environmental issues
• Reverse logistics
• Influencing legislation to facilitate better SCEM
policies
• Working with industry peers to standardize
requirements (for suppliers and purchasing items)
• Informing suppliers of corporate environmental
concerns
• Promoting the exchange of information and ideas
Bowen et al. (2001) conducted an exploratory
analysis of implementing patterns and inductively
derived three main types of green supply. The first
type, i.e. greening the supply process, represents
adaptations to supplier management activities,
including collaboration with suppliers to eliminate
packaging and recycling initiatives. The second type,
i.e. product-based green supply, attempts to manage
the by-products of supplied inputs such as packing.
The third type, i.e. advanced green supply, includes
more proactive approaches such as the use of
environmental criteria in risk-sharing, evaluation of
buyer performance and joint clean technology programs
with suppliers. Yuang and Kielkiewicz-Yuang (2001)
presented an overview of current practices in managing
sustainability issues in supply networks. Cross-
functional teams, consisting of sales, environmental
personnel, purchasing personnel and personnel from
other relevant departments, can be found in
organizations with the most advanced strategies for
sharing sustainability-oriented information.
Organizations make available to their customers/
suppliers their sustainability purchasing policy, goals
and future targets via open days. Moreover,
organizations have specific criteria as well as
recognized standards (ISO14001), technical (lead-free
soldering) and performance specifications that its
suppliers must meet to be recognized as preferred
suppliers. In addition, supplier performances can be
enhanced through on-site third-party auditing or
periodic self-assessment by suppliers. Through
collaboration with suppliers, training not only is
administered to companies that provide advice on
sustainability issues in purchasing, but also is delivered
to suppliers to provide them with information on
product life cycle. Rao (2002) argues that GSCM
practices should include working collaboratively with
suppliers on green product designs, holding awareness
seminars, helping suppliers establish their own
environmental programs and so on. To green the
supply chain, from the perspective of practitioners,
companies have to integrate the ideas of green
purchasing total quality management in terms of
employee empowerment, customer focus, continuous
improvement and zero waste, life cycle analysis and
environmental marketing. Green purchasing comprises
a number of environment-based initiatives, including a
supplier environmental questionnaire, supplier
environmental audit and assessments, environmental
criteria for designating approved suppliers, requiring
suppliers to undertake independent environmental
certification, jointly developing cleaner technology/
processes with suppliers, engaging suppliers in eco-
design and product/ process innovation. Evans and
Johnson (2005) suggested that manufacturers should
install documented and auditable systems to prevent
non-compliant products from entering the EU. The
installation of such systems would involve three steps.
The first step is to determine the legal exposure of the
company to the EU directives and senior management
must support this initial exposure assessment. The next
step is to assign the task to a corporate-wide compliance
team due to the complex requirements of the RoHS
directive. The third step is to develop a corporate
compliance statement, which should include a date for
compliance and might also outline supplier
requirements, i.e. testing, documentation and so on.
Through assessing the supply chain exposure to the
EU directives, companies can establish the material
declaration process. However, companies should also
qualify suppliers to determine their level of RoHS
preparedness via questionnaires. Zhu et al. (2005)
described a number of GSCM practices implemented
by Chinese enterprises to improve their performance.
Internal environmental management is a key to
improving enterprise performance in terms of senior
manager commitment and cross-functional cooperation.
Commitment of senior managers is extremely conducive
to the implementation and adoption stages for GSCM,
because without such upper management commitment
most programs are bound to fail. All GSCM practices
are integrative and require cross-functional
cooperation rather than simply being oriented to a
single function or department. They suggested that
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