Ecological Performance as a New Metric to Measure Green Supply Chain Practices

Ecological Performance as a New Metric to Measure Green Supply Chain Practices

June Poh Kim Tam (Universiti Sains Malaysia, Malaysia) and Yudi Fernando (Universiti Malaysia Pahang, Malaysia)
DOI: 10.4018/978-1-5225-7362-3.ch075

Abstract

This chapter discusses the concept of ecological performance. Sustainable development has become a focus of governments, companies, communities, and even individuals. Manufacturing companies need a performance measurement that can balance between profit and environment. The concept of reduction of resource use and waste generation is not limited to the manufacturing processes of a focal company, but it can be embraced into product design that benefits the end users as well as stakeholders. Companies can build competitive advantages by integrating ecological performance into business value stream mapping. Reduction of resources and energy use can help companies to be cost effective and thus able to survive a market price war. Companies can enhance product quality through eco-design and sustainable manufacturing to preempt competitors. Companies can build green images to gain customer loyalty. Waste reduction can help companies to save capacity and be more flexible in shipment delivery and support customer dynamic needs.
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Background

World Business Council for Sustainable Development (2000) defined eco-efficiency as delivery of competitively priced goods and services that satisfy human needs and bring quality of life while progressively reducing ecological impacts and resource intensity throughout the life cycle to a level at least in line with Earth’s estimated carrying capacity. In short, eco-efficiency means creating more value with less impact. It is a concept that combines both economic and environment management. Managers will be motivated to engage in environmental management if the green supply chain initiatives can achieve both environment and economics performance at the same time.

Current environment performance focuses more on environment impact intensity and resource use intensity by the firms. Although there is positive linkage between environment performance and economics performance, however it varies between firms. Ecological performance could bring more solid outcome measurement of green supply chain initiatives at market level (Boons & Wagner, 2009). According to Hart (1995), a company can build competitive advantages via natural environment management. Besides being cost effective, integration of natural system into business core value can help a company to have continuous improvement in aspects like quality and flexibility which can preempt competitors and appears as market leader in the manufacturing industry.

Therefore, the scope of performance measurement should be extended to wider indicators other than monetary facors. Besides cost reduction, Eltayeb, Zailani, & Ramayah (2011) suggested operational performance can be investigated from the perspective of quality, flexibility and delivery. In business context, organization has to be responsive to customer requirement in cost reduction, flexibility and quality product. Nowadays, supply chain responsiveness is not limited to business needs but environment needs as well. Supply chain responsiveness has to be designed with green concept incorporated which efficient to both economic and environment. The benefits brought by green supply chain initiatives are not constraint to the focal company manufacturing activities. Instead, it can be extended into wider scope so that more and more parties can enjoy the benefits.

Key Terms in this Chapter

Industry Ecology: A study about manufacturing activities and their impacts towards ecosystems and ecological sustainability. Its intention is to find ways to mitigate the issues aroused by manufacturing activities.

Environmental Performance: A measurement metric that used to quantify the environmental impacts intensity caused by anthropogenic activities.

Sustainable Development: Developments that are balance between economic, environmental and social. Economic developments should not built upon the sacrifices of human and other living things on the earth planet.

Ecological Performance: A measurement metric that used to measure and numerically marking the impacts towards ecological and economic sustainability by a series of human activities.

Eco-Efficiency: A strategy that emphasize on resource and energy optimization and waste minimization. It advocates balance development between economic and ecology.

Green Supply Chain Management: Supply chain management that integrated environmental element into the flow from upper stream to downstream. Green supply chain activities including green purchasing, green manufacturing, green logistics, green distribution and reverse logistics.

Company Competitiveness: The ability of a company to preempt the competitors in the same market and continue to be market leader.

Resource Efficiency: A cradle to cradle approach in managing the useful life of extracted materials. The materials can be recycled to different forms to extend its perpetuality.

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