Green Supply Chain Integration in Automotive Industry

Introduction

The world is undergoing revolution changes; from accelerating products innovation and technological changes to the increase of global market competitions and the changed on consumers’ preferences and values, organizations needs to be able to response quickly to this fast changing competitive environment in order to sustain in the market place. As globalization that fuelled by technological advances has reshaped the competitive landscape which caused an individual businesses no longer compete as solely autonomous entities, but rather as supply chain. Companies are increasingly focusing on core competencies. Thus, the success of an organization no longer depends on the product itself but will depend on management’s ability to integrate the organization’s intricate network of business relationships (Lambert et al., 1998; Holt & Ghobadian, 2009). Finally, more and more companies are focus on the need for more robust approaches to supply chain design and management.

Hervani et al. (2005) proposed that green supply chain management (GSCM) practices which include green purchasing, green manufacturing, materials management, green distribution/marketing and reverse logistics refer to the involvement of environmental thinking into the supply chain management from the extraction of raw materials to product design, manufacturing processes, delivery of the final products to the consumers and end-of life management (Srivastava, 2007). There are various activities involving in GSCM such as reuse, remanufacturing, and recycling which are embedded in green design, green procurement practices, total quality environmental management, environmentally friendly packaging, transportation, and various product end-of-life practices (Hervani et al., 2005). Zhu and Sarkis (2004) also state that GSCM involves from suppliers to manufacturers, customers and reverse logistics throughout the so called closed-loop supply chain.

GSCM has emerged as an important approach to reduce environmental risks and environmental burdens in manufacturing and disposal as well as enhance profit and competitive advantages (van Hock & Erasmus, 2000). The study and management of industrial pollution has been a critical issue for society and organizations (Sarkis et al., 2011) and the study of the automotive supply chain and environmental issues is important because its scope is international (González et al., 2008). Recognizing the importance of sustainable supply chain in automotive industry, this chapter aims to investigate the importance of environmental issues which can be achieve by implementing green supply chain integration in the automotive industry. The review of literature will lead the direction of green supply chain integration on outcome of organization such as operational performance and competitiveness.

Background

Environmental issues have become a critical issue for governments and organizations around the world since last decades (Vanalle et al., 2011). The global automotive companies face increasing pressures in the environmental issues (Lee & Klassen, 2008) and the impacts on the natural and human environment along all stages of the product’s life cycle (Koplin et al., 2007). Automotive companies had to decrease environmental damages due to the increase of pressures in environmental issues (Geffen & Rothenberg, 2000). As a result, regulations have been created to induce organizations to adopt sustainability strategies to improve their economic, social and environmental performances (Pusavec et al., 2010). They have to respond to increasingly strict governmental regulation and environmental and social expectations by applying management strategies (Commission of the European Communities, 2002). Many organizations have adopted environmental management system over the last decade including the application of lean production principles (King & Lenox, 2001) and pollution prevention technologies (Vachon & Kalssen, 2006) to the supply chain to address the sustainability challenge. A successful green management requires effective coordination of production design, manufacturing, delivery, distribution and a green management supports inter-organizational innovation practices throughout the supply chain (Hong et al., 2009).