Factors Inhibiting Green Supply Chain Management Initiatives in a South African Pharmaceutical Supply Chain

Factors Inhibiting Green Supply Chain Management Initiatives in a South African Pharmaceutical Supply Chain

Aveshin Reddy (University of KwaZulu-Natal, South Africa) and Micheline Juliana Naude (University of KwaZulu-Natal, South Africa)
DOI: 10.4018/978-1-5225-7638-9.ch012
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Abstract

The Fourth Industrial Revolution and increased environmental awareness is forcing business leaders to adapt to the changing environment in functional areas such as the supply chain. This chapter focuses on the role of green supply chain management in achieving a sustainable competitive advantage, exploring the factors that affect green supply chain management initiatives at a leading pharmaceutical manufacturer in Durban. The study used a descriptive and exploratory case study approach in which in-depth interviews were conducted with 10 participants. Content analysis was used to analyze the collected data. The findings of the study reveal that the main factors affecting green supply chain management initiatives include high costs, lack of government support, and pressure to reduce selling prices. Since a limited number of studies have been conducted on this topic, the findings and recommendations of this work contribute to the existing body of research knowledge.
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Introduction And Background

The Fourth Industrial Revolution has the potential to increase global income levels and improve the quality of life for people. The technologies that underpin the Fourth Industrial Revolution, also known as Industry 4.0, are the internet of things, artificial intelligence, robotics, and the smart factory (Fields & Atiku, 2018). These technologies have created opportunities for businesses to improve efficiencies in the production environment and the supply chain in general by contributing to an improved usage of time, materials, and other resources. These are fundamental to supply chain sustainability and the greening of the supply chain (Duarte & Cruz-Machado, 2017).

The mushrooming of the Fourth Industrial Revolution and of technical innovation will have a significant impact on the supply-side, sustainability, and environmental issues, with long-term gains in efficiency and productivity (Szegedi, Gabriel, & Papp, 2017). Shifts will also occur on the demand-side as growing transparency, consumer engagement, better-informed consumers, and new patterns of consumer behavior will force businesses to change the way they design, market, and deliver products and services (Schwab, 2015). Consequently, business leaders need to understand the changing environment and continuously to innovate. Areas of change include environmental issues, which are amplified by the public's environmental awareness and knowledge of resource depletion. This has already resulted in regulators at various levels implementing stricter regulations (Zhu, Geng, Fujita, & Hashimoto, 2010).

Sustainability and environmental issues are prevalent in supply chains, particularly those which function in highly competitive industries. Supply chain management (SCM) is an important component of a business (Monczka, Handfield, Giunipero, & Patterson, 2016). It affects competitiveness, the way the business operates, how it procures its materials, and how it disposes of its waste (Fawcett, Ellram, & Ogden, 2014). SCM consists of core business processes such as procurement, operations management, logistics, and reverse logistics (Monczka et al., 2016). These processes may negatively impact on the environment, leading to the diminishing of natural resources, problems with air emissions and waste disposal, and increases in natural disasters. This has led to increasing pressure from various stakeholders to improve businesses environmental sustainability (Zhu, Sarkis, & Lai, 2007). In turn, businesses recognise that environmental management is a key strategic issue with the potential to achieve sustainable organisational performance (Diabat & Govindan, 2011). Consequently, the deterioration of the environment and pressure from stakeholders has led businesses to look to their supply chain department to assist in creating a sustainable method of operating (Griskevicius, Tybur, & Van den Bergh, 2010). This has given rise to a supply chain initiative known as green supply chain management (GSCM). It is an approach which seeks to improve the performance of processes and products in line with the requirements of environmental regulations (Luthra, Kumar, Kumar, & Haleen, 2011).

Key Terms in this Chapter

Sustainability: The reduction of waste so as to maintain natural resources and the environment for future generations.

Reverse Logistics: The aspect of logistics that deals with product returns, recycling, waste disposal, reuse of materials, remanufacturing, and repair of defected goods.

Supply Chain Management (SCM): The management of the flow of products through procurement, manufacturing, distribution, sales, and disposal.

Green Supply Chain Management (GSCM): The incorporation of environmental practices into supply chain activities so as to improve environmental performance and reduce a business’s negative impact on the environment.

Logistics: The movement and management of goods and services. It includes transportation, warehousing, and inventory management.

Procurement: The buying of goods and services for a business to meet its needs.

Supply Chain: The value adding chain of the movement of resources from the procurement phase up until its consumption and disposal by the end user.

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