Home' MHD Supply Chain Solutions : MHD JULY-AUGUST Contents Financially, small suppliers perceived environ-
mental initiatives as add-ons to their businesses
and given that a majority of them were saying
that they will not be able to pass the costs of
environmental investments on to their custom-
ers, they were more cautious about integrating
the environment into their business practices.
This demonstrates that environmental creden-
tials are still not widely considered a competitive
advantage. Suppliers know that it is not just
them that have a passive approach it is their
A less proactive environmental supply chain
strategy is exacerbated by some external con-
straints. Government can drive firms to look
beyond their borders into their supply chains,
which then can result in increased pressure by
buyer organisations on their suppliers.
Nevertheless, the existing regulations provide
no or little motivation for participants to engage
with their supply chain partners on environmen-
tal issues. The fear of forthcoming regulations,
however, has driven some firms to implement
some forms of environmental initiatives. Whilst
environmental legislations are essential to the
process of greening supply chains, they can act
as barriers too.
Given that organisational strategies by their
nature are to avoid risk and minimise costs, it
is unlikely that more stringent regulations would
spur a behaviour that exceeds compliance.
In other words, environmental regulations are
incapable of encouraging firms to invest in more
systemic environmental innovations.
Another external factor is consumer and
customer demand for greener products. Despite
the marketing opportunities for green products,
consumers, in general, do not pay attention to
environmental problems and, even when they
are aware of environmental issues, they are not
willing to pay premium prices for such products.
A possible explanation for such unwillingness
which seems to be a worldwide issue — is
because consumers may think it is the responsi-
bility of either the government and/or manufac-
turers to look after the environment and make
sure products are environmentally friendly.
Therefore, while the concern over environmental
impacts of businesses is increasing, the market
response to reward good environmental perfor-
mance is still weak.
Consumers play a key role, but when firms
realise that consumers have little knowledge
about environmental issues or seem to be less
willing to contribute financially to a greener
economy, they may not necessarily ‘play the
Large buyer organisations tend to deal with
the subject of public image through compliance
with regulations and public relations strategies
and standardisation of their environmental com-
munication, rather than by self-regulating their
environmental conduct. Smaller suppliers, on
the other hand, are less concerned, because
considering their position in supply chain, they
are one step farther from consumers and they
are smaller, too. Thus, suppliers tend to be less
affected by the activities of consumers.
The main conclusion to be drawn from this
research is that, to drive environmental innova-
tions along the supply chains, there should be
more focus on changing the internal factors.
The notion of many business decision makers
that environmental initiatives negatively impact
the financial performance of firms is a major
challenge. If their view is that environmental
initiatives are an ‘add-on’ to their businesses, it
is difficult, if not impossible to begin any envi-
ronmental initiative including greening supply
chains. It would be unrealistic to expect firms to
invest in environmental initiatives at no cost.
There is, of course, cost involved in imple-
menting green practices and adopting envi-
ronmental innovations. However, with a more
holistic approach that considers the benefits
and costs together, many environmental invest-
ments could become feasible. As stated by
some participants in this study, though limited,
environmental supply chain initiatives could
improve supply chain efficiency (e.g. reducing
waste, reducing material and energy usage,
better utilisations of facilities, improved transpor-
tation) not just for an environmental benefit per
se, and may be undertaken without assigning
specific environmental resources.
Within Australia and across many other coun-
tries, there are some reputable organisations
that provide references and materials — some
free of charge — to help managers to be aware
of their legal environmental responsibilities.
These organisations also provide firms with the
essential tools and guidelines they need for
greening their supply chains.
To the best of the authors’ knowledge,
Eco-buy and Net Balance located in Melbourne
provide special services in the area of green
supply chain management. And Sedex, the
online platform for supplier assessment, has
released a free, publicly available document
offering practical guidance to help suppliers
all around the world to understand what ‘good
practice’ looks like in the areas of labour, health
and safety, environment and business ethics.
Mohammad Yarahmadi is a business improve-
ment specialist and ASQ Certified Six Sigma
Green Belt (email firstname.lastname@example.org),
and Professor Mike Clements is Head of School,
School of Business at the University of Sunshine
Coast (email email@example.com).
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to enhance the professionalism of members; raise the profile of the logistics and supply chain
industry in Australia and; promote education initiatives and career development.
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REAL ESTATE SERVICES
Fig 8. Barriers to invest in GSCM
75% Low importance of EIs to buyers
58% High cost and long payback period of EIs
67% Lack of resources (finance, human and capital)
“... environmental supply chain initiatives could
improve supply chain efficiency (e.g. reducing
waste, reducing material and energy usage, better
utilisations of facilities, improved transportation)
not just for an environmental benefit per se, and
may be undertaken without assigning specific
Fig 7. Motives to invest in GSCM
100% Cost-saving opportunities
50% Building a positive image
25% Compliance with enviromental regulations
25% Doing what is right
25% Increased requests from business customers
MHD SUPPLY CHAIN SOLUTIONS — JULY / AUGUST 2014
MHD July-Aug 2014 52-74.indd 54
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