Effects of Green Supply Chain
Management Practices on
Organizational Performance: A
Study on the Indian Manufacturing
Industry
DHAR ROHAN, BISWAS MUKESH AND ANBANANDAM RAMESH
INDIAN INSTITUTE OF TECHNOLOGY (IIT), ROORKEE
Introduction-Why Green SCM

Today, the world is moving towards greater environmental concern
and awareness. The anti -environmental policies followed in the
early stages of industrialization is no longer a viable option.

Modern thinking is that environment and industrialization must go
hand in hand. Hence, the notion of today’s world is sustainable
development, and it is an integral part of it is Green Supply Chain
Management or Sustainable Supply Chain Management.

Nowadays companies’ sole aim cannot only be improvement of its
performance but its policies must be environment friendly as well.
Literature Review

Green Supply Chain Management: A number of terms are used for
green supply chain management, including environmental supply
chain management and eco supply chain management,
depending on the researcher’s point of view.

Specifically, Narasimhan & Carter (1998) defined green supply chain
management as involving the purchase of methods that reduced
the use of materials in addition to recycling and reuse.

Godfrey (1998) defined green supply chain management as
company practices that continuously monitor the environmental
impact of a supply chain and improve its results.

On the other hand, Beamon (1999) emphasized the importance of
cooperation with a company and defined green supply chain
management as utilizing the supply chain between a central company
and a cooperating company, to support the organization of eco
management know-how in the central company and the development
of clean manufacturing techniques

Sarkis (2003) also defined green supply chain management as a
combination of the activities of an environmental company and reverse
logistics, and emphasized the latter’s importance.

Johny (2009) defined it as a process that added the green element to
existing supply chain management, and showed how a reverse supply
chain, an organization, and innovative activity reconstruct a system. This
goes beyond the pursuit of efficiency to include the pursuit of innovation
in the supply chain with regard to expenses, profits, and the environment.
The
GSCM v/s Conventional SCM
Green SCM
Conventional SCM
Objective
Economic & Ecological
Economic
Ecological Impact
Integrated approach, Low
High
Costing & Pricing
High
Low
Speed & Flexibility
Low
High
Supplier Selection
Criteria
Long term relation
Short term relation
Consumer’s selection
Criteria
Less preferable due to high
pricing
More preferable due to low
pricing
Research Methodology
1.
Development of concepts on the effects of GSCM practices
implementation on the performance of an organization
2.
Development of measurement items for evaluating GSCM practices
implementation and Organizational Performance
3.
Data Collection
4.
Model Testing

Validity and reliability test of factors

CFA test for measurement models

Comparison of measurement models

SEM model
Objective

Objective –To propose a model to measure the effect Green Supply
Chain Management (GSCM) on the performance of an
organization.

In this study, the Indian industries have been taken under
consideration, which included several large as well as small and
medium industries, covering a variety of sectors, like manufactures in
automobiles, steel, chemical, electronics.
.
Research Methodology

Two constructs:

GSCM practices and implementation

Organizational Performance, which are followed by a path analysis
exhibiting the dependence of OP on GSCM implementation and
practices.

We have utilized exploratory results from Zhu and Sarkis, 2004, from
which we have taken the measurement items in the scale for
evaluating GSCM practices, which are IEM, GP, CC, ECO and IR.

We have also included GM and EA, which are found to be
significant in the Indian scenario. The construct of GSCM practices
implementation as well as that of OP, in the Indian context, appears
to adequately fit the data collected.
Data Collection

To collect data for the purpose of the study, a detailed questionnaire
was prepared investigating about the organization profile, GSCM
practices and its impacts on organizational performance.

The questionnaire was developed with an aim to bring out to light in
what the factors influence the green supply chain management
practice. The questionnaire comprises five questions on the profile of
the respondent and 41 questions to confirm the significance of the
parameters in the context of this research.

A 5-point Likert scale has been adopted for the purpose of the
questionnaire. The survey for this study was done in three stages through
Pilot testing, convenience sampling and random Sampling.

In pilot testing, the questionnaire prepared was verified by experts and
their valuable suggestions and advice was taken to refine the same.

We conducted the survey by administering the questionnaire amongst the
attendants of training workshops at a premiere academic institution as well
as personally visiting and interviewing several respondents in the northern
and eastern parts of India. We explained the purpose of our study to the
respondents and collected 167 valuable and usable questionnaires.
Convenience sampling helped us to build a framework for our study as they
were well informed about the concepts of GSCM.

We followed this up by random sampling in which we mailed the
questionnaire to around 1000 manufacturing companies, explaining the
purpose of our study and received 134 responses, several days later. This
was done to avoid potential bias from convenience sampling as well as to
obtain a more generalized data. The employee size, category of
respondents, annual turnover (in Cr Rs.) and sector wise distribution are
shown in fig. 2, fig.3,fig.4 and fig.5 respectively
Model

Chi-square:49.87

GFI: .97

CFI: .94
Conclusion

It’s is an attempt to analyse the effect of implementation of GSCM on organizational
performance and its implications on the various parameters deciding the
organizational performance. This study adopted eight parameters namely IEM,GP,
ECO, CC, IR, GM, GRM and EA as measurement parameters for GSCM.

Also, four parameters namely FP, BI, EV and MS have been adopted to measure the
organizational performance.

We have proposed a model and we found that OP has a statistically significant
relationship with the adoption of GSCM practices.

Hence, GSCM and OP are correlated and the implementation of GSCM has a
positive impact on OP.

This gives the managers an insight into the relationships between GSCM and OP and
leaves them with an opportunity to create a sustainable business environment and
model, which can yield progressive economic benefits and can be mutually
beneficial for the environment as well.

It also helps the managers to assess the effect of GSCM practices implementation on
the OP and the direction in which it affects it.
Findings

Findings –The model results confirmed the validity of the proposed
correlation of GSCM and Organizational Performance. The findings
also show that the implementation of GSCM is positively associated
with the performance of the organization