TABLE OF CONTENTS

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EXECUTIVE SUMMARY
INTRODUCTION
INTRODUCTION
GREEN SUPPLY CHAIN MGT IN MALAYSIA
ADVANTAGES AND DISADVANTAGES
BENEFITS OF GSCM
IMPROVEMENT POTENTIAL
REFFERENCES

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EXECUTIVE SUMMARY
It has been increasing in consciousness of the environment in the last few decades. More
people are aware of the worlds environmental problems such as global warming, toxic
substance usage, and decreasing in non-replenish resources. The Government has released
campaigns to promote this problem to people. Several organizations responded to this by
applying green principles to their company, such as using environmental friendly raw
material, reducing the usage of petroleum power, and using the recycle papers for packaging.
The green principles were expanded to many departments within organization, including
supply chain. Green supply chain management (GSCM) was emerging in the last few years.
This idea covers every stage in manufacturing from the first to the last stage of life cycle, i.e.
from product design to recycle. Not only manufacturing, but GSCM can also be used to other
business sectors such as government, education and services.
The purpose of this paper was to describe the impact of green to the supply chain
management. It started with the importance of GSCM to the company in different levels or
what factors that influence the company to adopt the GSCM. These factors can be
categorized by different drives such as government, whole market, industry, competitors, and
within the company. Since GSCM can be applied to various areas within the company, this
report also discussed the implementation of GSCM to several areas. Furthermore, some
examples of GSCM application were demonstrated to support the concept.

INTRODUCTION
The objective of the assignment is to clarify the advantages both economic and
environmental that companies in Malaysia can draw from managing their supply chain and
adding green aspect to it. (Green Supply Chain management). Environmental awareness
among the public is low and the lack of demand for green products result in few drivers for
companies to become green.
One definition of green supply chain management (GSCM) is from (Srivastara, 2007). His
study collected and classified previous literatures relating to green supply chain
management. He defined GSCM as integrating environment thinking into supply chain
management, including product design, material sourcing and selection, manufacturing
processes, delivery of the final product to the consumers, and end-of-life management of the
product after its useful life.
According to this definition, GSCM relates to a wide-range of production from product
design to recycle or destroy, or from cradle to grave. This principal is similar to lifecycle of
product. Product lifecycle is an idea that products pass through a cycle of life, similar to
human, birth, maturity, death. The product lifecycle provides a degree of structure to the life
of products and thereby provides direction for the diverse functional efforts required to
produce and deliver product/service offerings (Birou, Fawcett, & Magnon, 1998). Many
studies addressed product lifecycle along with supply chain or GSCM, for example,
(Stonebraker & Liao, 2006) discussed that the stage of lifecycle variables is associated with
the various dimensions of supply chain integration.
Since GSCM normally involved the inverse of the product flow, reverse logistics are
automatically included in the study. There were numerous researches about this. (Sheu,
Chou, & Hu, 2005) proposed a linear multi-objective programming model optimizing the
operations of both integrated logistics and used product reverse logistics in green supply
chain. Results from their study showed that the proposed model improved net profits by
21.1%. In terms of both government and non-government organizations in the U.S., they
were aware of the environmental changes, especially from gas price. In (Trunick, 2006)
article, he discussed why the logistics companies should be more concerned on the GSCM.
He described some regulations released by either federal or local organizations such as U.S.
Department of Transportation (DOT) or California Air Resources Board (CARB), that affects
to the logistics and how they

According to (Boks & Stevels, 2007), they categorized green into 3 types depended on the
different perceptions of the environment among different stakeholders involved: scientific
green, government green, and customer green. In scientific green, life cycle assessment
(LCA) was used to determine the environmental impact of products, processes, and systems.
However, it concerned only the emissions, not other aspects. In government green, several
factors were involved such as population density, geographical position, and the availability
of energy sources. These factors affected the government agenda to maintain or improve
quality of life. For customer green, the perceptions of green were strongly linked to emotions
that were directly impacted to people, especially health and safety, than resources or
emissions.
Although GSCM was introduced not too long ago, there have been a number of studies about
it. These studies were differently in detail. There are a few papers that collect studies,
categorize them and conclude the trend of research. An example of a paper related to
previous GSCM studies is (Kleindorfer, Singhal, & Van Wassenhove, 2005). They collected
research from the first 50 issues published in The Production and Operations Management
Society (POMS) and found that there were substantial number of research related to
sustainability, including integrating environmental, environmental management, greenproduct design, and closed-loop supply chains. Another example is (Srivastara, 2007), he
gathered numerous article and study related to the green and sustainability supply chain, and
classified based on problems context into 3 types: importance of GSCM, green design, and
green operation. He also classified based on methodology into 3 types: empirical studies and
mathematical modeling.

GREEN SUPPLY CHAIN MANAGEMENT IN MALAYSIA.

As the global climate has changed rapidly due to global warming, manufacturing and
production process are viewed as the culprits in harming the environment, in the form of
waste generation, ecosystem disruption and depletion of natural resources (Fiksel, 1996). It is
necessary for the industry to react and transform the way production systems operate towards
sustainability. It can be achieved by extending the structure of the current one way supply
chain to a closed loop, including supply chain operation designed for end of life products and
packaging recovery, collection and reused in the form of recycling and remanufacturing
(Beamon, 1999). Companies do not often change their businesses processes and it is this
attitude allows inefficient processes to continue unabated causing unnecessary waste and
pollution. For example, ineffective processes in the US automotive industry allowed the
innovative Japanese automakers to become market leaders. Businesses that want to transition
to a green supply chain should take the opportunity to review all their business processes to
identify areas, where adopting a greener outlook can actually improve their business. Firms
should review each process along the supply chain to identify if a more environmentally
sound approach will help cure the inefficiencies that occur. Many companies in developed
countries that have been through this exercise have identified processes, where raw materials
were wasted, resources underutilized and unnecessary energy used due to inefficient
equipment.
But there are still a lot of companies in Malaysia still behind and yet to adopt the green
supply chain concept in their business strategy. According to Eltayeb and Zailani (2009),
Malaysian fully owned firms have the lowest level participation of green supply chain
initiatives compare to foreign based companies. One of the reasons that Malaysian owned
firm having lowest participation of green supply chain is the green purchasing is still a very
new concept in Malaysia. Other than that, Lee (2008) found that firm size is also an influence
factor for firm to practice green supply chain, bigger size firm tend to be more willing to
participate in green supply chain initiative. According to Lee (2008), SMEs usually lack of
the information resources or expertise to deal with environmental issue. Therefore, SMEs can
be a source of environmental risk and bottleneck in pursuing the goal of greener supply chain.

With increased pressures for environmental sustainability, it is expected that firms will need
to implement strategies to reduce the environmental impacts of their products and services
(Lewis and Gretsakis, 2001; Sarkis, 1995; Sarkis and Cordeiro, 2001). Otherwise, firms will
loose its competitiveness in the market. Environmental impacts occur at all stages of a
product production processes and supply chain. Therefore, in order to reduce environmental
impacts of a product, firms have to ensure its own production process and supply chain
practicing green initiative. According to Rao and Holt (2005), greening supply chain not only
allow firms to achieve substantial cost saving, it would also enhance sales, market share,
exploit new market opportunities, which lead to greater profit margins. All these benefits lead
contribute to economic performance of the firm. On the other hand, the main focus for firm is
to be profitable and sustainable in the competitive market. Under the pressure of global
economy crisis, firms are struggling to fight for survival.
Therefore, cost reduction program has become a key agenda especially for SMEs instead of
green initiative. According to Rao and Holt (2005), greening supply chain not only allow
firms to achieve substantial cost saving, it would also enhance sales, market share, exploit
new market opportunities, which lead to greater profit margins. By adopting green supply
chain initiative would allow firms to enjoy all these benefits lead contribute to economic
performance of the firm. But there are still a lot of firms in Malaysia still have low
involvement in the green initiatives. According to Eltayeb and Zailani (2009), local firms in
Malaysia have very low involvement in green initiatives compare to MNC (Multinational
Company). According to Wycherley (1999), small firms have difficulty to drive its supplier or
suppliers supplier to involve in the green initiatives. That showed that small firms are facing
various difficulties and barriers to adopt green supply chain initiatives. Therefore, this study
will find out the barriers that impede SMEs in Malaysia to adopt green supply chain
initiative. Base on the statistics from Malaysias Productivity report 2008, SMEs contribute
30.8% RM100,299 million or 30.9% of total manufacturing output in year 2008. Therefore,
the success of SMEs is critical to economic growth of Malaysia in the future. With the
increasing trend of global environmental protection awareness, SMEs in Malaysia will be out
of the competition if green initiatives still not adopted as part of their business strategy.
Therefore, this study will focus on the barriers which impede firms in SMEs context in
Malaysia to adopt green supply chain initiative.

ADVANTAGES AND DISADVANTAGES OF IMPLEMENTING SUPPLY

CHAIN MANAGEMENT IN MALAYSIAN COMPANIES

EXAMPLES OF ONE MALAYSIAN COMPANIES:-

Our Strengths in ZEC

In recent years, we have been promoting globalization and responding to rapidly expanding
internationalization and effort to protect the global environment through the development of
next-generation circuit breaker and earth leakage circuit breaker.

We are pioneering a new feature of circuit breakers, working to realize market globalization
by responding to international needs with products that offer enhanced ease of operation and
high performance, are developed with consideration for the environment in mind, that comply
with Sirim, ISO 14001 UKAS, JIS, IEC, EN, GB, and UL/CSA standards.

Z & Z Electical Company will continue its efforts to pioneer the future of circuit breakers
based on the theme Wide Selection & Better Performance We will utilize our innovative
technologies and accumulated know-how to introduce uniquely advanced products to the
market.

Weaknesses

Base from the interview and also our customer comments were find out that our main
weaknesses is in expanding the marketing area because of lack of our owned staff doing the
marketing in ZEC. For the time being we get the support from our channel distributors and
also our authorized resellers besides that we also utilized the advertisement inside the Yellow
pages and Local Radio public for awareness.

Secondly, we are confronting with others cheaper product that made in China using lower
grade material that flooding the market. Of course the price is very low distributed from
others competitors. This scenario will affected our market and sales target of the years.

Globalization always demanding a new technology and design, therefore we always try to
cope with the customers satisfaction. To do this there will lot of investment in our R&D
department to get the blend in the market segments.

Green supply chain: The traditional supply chain is defined as an integrated manufacturing
process wherein raw materials are manufactured into final products, then delivered to
customers via distribution, retail, or both (Beamon, 1999). Green Supply Chain
Managements definition has ranged from green purchasing to integrated supply chains
flowing from supplier, to manufacturer, to customer and reverse logistics, which is closing
the loop as defined by supply chain management literature (Zhu and Sarkis, 2004).
Comparing the definitions of SCM and GSCM, it is clearly shown that green supply chain
involved not only integrating the manufacturing processes and distribution to customers. It
also covers from the very beginning stage when the product is designed until the product is
disposed. That shows that it requires a full integration and collaboration of the players along
the product life cycle.
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In order to achieve the green supply chain, manufacturing organizations must follow the basic
principles established by ISO 14000 (Beamon, 1999). The ISO 14000 principle provides
framework, which guiding firms to implement EMS to improve environment performance
only within the firms operation boundaries instead of through the supply chain (Bansal and
Clelland, 2004; Handfield et al., 2005). Eltayeb and Zailani (2009) reviewed twenty one
literatures on green supply chain initiatives and concluded that the green supply chain
initiatives can be generally classified into three major elements:

Eco-design or design for environment

Green purchasing
Reverse logistics

These three elements were selected as independent variables to measure the level of adoption
among ISO 14001 certified manufacturing firms in Malaysia. Firms are require to incorporate
these three elements into their corporate culture and formulate a strategy and practices in
order to allow firm to be the driver and initiator in green supply chain. On the other
hand, Eltayeb and Zailani (2009) found that green purchasing and reverse logistic have lower
adoption compare to eco-design. That showed that green supply chain initiatives that involve
external relationship with suppliers and customers have lower adoption compare to internal
focus. This indicated that firms in Malaysia are facing internal and external barriers to adopt
the three elements of green supply chain initiative. Hence, to incorporate these three elements
into SMEs corporate culture and business strategy is not an easy task.
Design for environment: Design For Environment (DFE) is a concept which reduces the
impact to environment of products or services across its life cycle. Design for environment
gives guideline for the design engineer to examine the environmental soundness of a product
over its entire life cycle (De-Mendonca and Baxter, 2001). The impact of product life cycle is
evaluated against other alternative for reducing waste and energy, recycling or elimination of
product waste during manufacturing. De-Mendonca and Baxter (2001) made a comparison of
the objectives between DFE and ISO 14000. They conclude that DFE is more comprehensive
than ISO 14000. That also aligns with the finding from Bansal and Clelland
(2004) and Handfield et al. (2005) that ISO 14000 standard does not provide sufficient
components to support green supply chain approach.
Green purchasing: Green purchasing means that purchasing or supply chain managers
consider the issue of sustainability in their purchasing of inputs in addition to the traditional
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purchasing criteria of cost, quality and delivery (Lambert and Cooper, 2000). Hamner
(2006) suggested seven basic elements for green purchasing element, which are product
content requirements, product content restrictions, product content labeling or disclosure,
supplier questionnaires, supplier EMSs, supplier certification and supplier compliance audit.
By having all these elements in the SMEs firm require additional effort and resources.
According to Lee (2008), buyer is the most important influential stakeholder to for the
supplier to participate in green supply chain initiative. That showed that green purchasing is
one of the key elements for firms to participate in green supply chain initiative.
However, Zsidisin and Hendrick (1998) concluded that purchasing managers are not the only
driver to promote and influence the environmental supply chain involvement, it is top
managements responsibility to prioritize the environmental concerns and cascade through the
entire organization which involve procurement, logistics, warehousing practices, operations,
marketing and governmental agencies. Therefore, the green purchasing initiative can be
viewed in two perspectives which are internal and external. In term of internal perspective,
top management is the key driver to drive its firm to take part in green supply chain initiative
by putting priority to drive all levels in the organization. On the other hand, in external
perspective, purchasing managers are the driver to drive its supplier along the supply chain to
participate in green supply chain initiative.
Reverse logistic: Reverse logistic is defined as returning the end of life product or packaging
from end user back to the supplier. The supplier can recycle, refill, remanufacture, refurbish,
repair, repackaging or reclaim the material. A well managed reverse logistics program can
result in savings in inventory carrying transportation and waste disposal costs as well as
improving customer service (Rogers and Tibben-Lembke, 1999). According to Wu and
Cheng (2006), reverse logistic programs can result in significant saving. Taking HPs laser jet
toner cartridge recycling program as example, HP has recycling programs throughout the
world and claims that since 1990, HP was able to divert over 18 million pounds of material
from landfills by recycling every toner cartridge received by providing consumers with prepaid UPS label to send the used toner cartridge back to HP. However, remanufacture the
returned products is limited to certain product or models due to its design, technology and
functionality because some returned product might be in poor condition where it cannot be
remanufacture (Klausner and Hendrickson, 2000). Therefore, firms need to understand the
cost structure and the feasibility of reverse logistic in its organization.
Barriers for SMEs to adopt green supply chain initiative: Simpson et al.
(2004) concluded that most of the SMEs in UK were unaware of the environmental
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legislation and the requirements. That also correlate to the finding by Lee (2008) that
government playing an important role to boost the awareness and knowhow about
environmental improvement. Therefore, government involvement and support through
funding, taxation policy, import duty, business training to promote SMEs to make their move
to involve in green supply chain initiative. According to Min and Galle (2001), adopting
green supply chain initiative requires additional effort and also higher cost and it is less
visible economic benefits from these initiatives.
Base on the study conducted by Simpson et al. (2004), most of the SMEs think that adopting
good environmental practice unable to gain competitive advantage and improvements in their
business and it was a financial cost added to the business which not possible to pass on to
customers. Min and Galle (2001) also found that cost concern is the most serious obstacle for
taking environmental factor into account in purchasing process. Therefore, SMEs had poor
perception that there is a need for environmental improvement. Another barrier which
highlighted by Wycherley (1999) in the case study of Body Shop International, existing
investments, information system and habits are costly and difficult to change. That happened
to Body Shop Internal whereby the volume of Body Shop International is too small to
influence its suppliers suppliers. That show that even Body Shop International, which an
international level corporation facing this problem. SMEs will face a tougher challenge to
influence its suppliers due to the size of the business is not big enough to influence its
suppliers or suppliers suppliers to change. Perron (2005) summarized that there are 4 barriers
found to impede the adoption of green initiatives in SMEs, which are:
Attitudinal and perceptions barriers: Resistance to change is one of the common attitudes
observed in top management, particularly among SMEs. Fear of the unknown and fear of
failure are the primary reasons for such an attitude.
Information related barriers: SMEs are often lack of awareness and information, the
management may not be aware of what is going wrong in the organization. They may not
understand the environmental impacts of activities of the organization. Also, internal
communication in the organization may be weak. Other than that, lack of exposure is another
common problems faced by SMEs. Management does not have information on what
initiatives have been taken by other organizations and how successful they have been.
Benefits of a system based and business-environment integrated approach are often not
known to the top management.
Technical barriers: State-of-the-art information on new technologies, materials, operations
and industrial processes is often not available to the top management particularly in SMEs
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and technical support is not updated within the industry. Lack of technical expertise is also a
major barrier.
Resources barriers: Resource barriers can be further breakdown into financial barriers and
human resource barriers. The issues for financial barriers include lack of funding for
environmental projects or ROI period is too long. Lacking of human resource in term of
quantity and quality can be the barrier for SMEs to pursue environmental management.
Another finding from Van Hemel and Cramer (2002) that the barriers for SMEs to green their
products is the SMEs do not perceive greening the environment is their responsibility that is
actually align with the finding from Perron (2005) in term of attitudinal and perception
barrier. Other than that, Van Hemel and Cramer (2002) also mentioned that there was no clear
information regarding environmental benefit in greening their products. That shows that
SMEs do not have a clear understanding and information regarding the benefits of green
initiative. That also aligns with the finding from Perron (2005) in term of information related
barrier. Van Hemel and Cramer (2002) also found that SMEs not able to find alternative
solution in designing their products to fulfill the design for environment requirements. That is
another form of technical barrier as described by Perron (2005). According to Walker et al.
(2008), there are more external barriers than internal barriers. The external barrier that
described by Walker et al. (2008) was regulation, poor supplier commitment and industry
specific barriers, whereas the internal barriers are cost and lack of legitimacy. Base on the
literatures, there are more internal barriers than external barriers which claimed by Walker et
al. (2008).
Business strategic orientation: According to the study from Wang and Ahmed (2009) on the
moderating effect of business strategic orientation on e-Commerce adoption from UK family
run SMEs, family run business can be classified into three clusters:
Family oriented: The focus is on family side where decisions in relation to the family like
keeping ownership within the family, generating income to dependent families and
maintaining family reputation are the major concern.
Business oriented: The focus is on business side where strategic issues such as adoption of
new technology, growth strategy of business and involvement of new investors may often
appear on the boards agenda.
Balanced oriented: Do not express clear preference of either family or business oriented, but
concerned to arrive at appropriate balance between family and business issue.

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ecology

COMPANY
NEEDS

ECOP

PRODUCTS

economy

BENEFITS OF GSCM
Speaking of greening the supply chain, one might think only banning toxic chemical
substance usages or reducing emission or waste to the environment. However, it is much
more than just a mere reducing usage and pollution. Consequently, the benefits are not
limited only less toxic consuming or less waste. The GSCM principle can be applied to all
departments in the organization. The effects of GSCM expand to all area, both tangibly and
intangibly.
Some studies mentioned benefits of adopting GSCM, such as (Stevels, 2002). He
demonstrated the benefits of GSCM to different roles of supply chain including environment
and society in terms of different categories: material, immaterial, and emotion. For material,
GSCM helps lower environmental load for environment, lower cost prices for supplier, lower
cost for producer, lower cost of ownership for customer, and less consumption of resources
for society. In terms of immaterial, GSCM helps overcoming prejudice and cynicism for
environment, less rejects for supplier, easier to manufacture for producer, convenience and
fun for customer, and better compliance for society. For emotion, GSCM helps motivation of
stakeholder for environment, better image for supplier and producer, feel good and quality of

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life for customer, and make industry on the right track for society. He also provided
examples of company that were successfully adopted GSCM.
In (Duber-Smith, 2005), he identified ten reasons that the company should adopt the green:
target marketing, sustainability of resources, lowered costs/increased efficiency, product
differentiation and competitive advantage, competitive and supply chain pressures, adapting
to regulation and reducing risk, brand reputation, return on investment, employee morale, and
the ethical imperative.

WHAT DRIVE COMPANY TO ADOPT GSCM

Government
In the United States, there are a large number of government agencies controlling guide line,
regulation and law. Some agencies are federal by the government while some manage only in
the local area. These agencies and organizations are responsible for either similar or different
issues such as pollution, product material, and chemical waste. Different industries may be
controlled by different regulation depended on the industry characteristics and resources
needed. One example of the government agency is Environmental Protection Agency.
Environmental Protection Agency (EPA) is a government organization established to protect
human health and the environment. One of their responsibilities is to develop and enforce
regulations that implement environmental laws enacted by Congress (U.S. Environmental
Protection Agency, 2007). EPA was a main agency referred in most study related to
environment.
An example of environmental guide line is ISO 1400 series. ISO 14000 was formally
adopted in 1996 by the International Organization for Standardization (ISO). It represents a
new standard and approach to improved environmental performance (Montabon, Melnyk,
Sroufe, & Calantone, 2000). Results from their study showed that the ISO 14000 series can
positively impact both performance of the environmental management system and overall
corporate performance. It ensures that the company is well organized in the environmental
field. However, ISO 14000certification is no guarantee that such improvements are really
delivered (Stevels, 2002)
For companies dealing with company in Europe, they got a huge impact from a new
regulation released last year. The Restriction of Hazardous Substances (RoHS) limits the

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amount of lead and five other substances that may be contained in products sold to Europe
after July 1, 2006 (Jorgensen, 2005). Not only manufacturers who produce products, but
suppliers, distributors or even customers do get great impact from this new regulation. One
example of changes was that suppliers need to assign new part numbers to all lead free
components.
Market and Competitor
In todays business world, the competitive among company is very high. To make customer
impress, the company needs to make themselves standing out from others. Being
environmental friendly is one way to differentiate them from the competitors. Furthermore,
when competitors already adopted GSCM, the company gets a pressure instead. Therefore, it
is a good idea to implement GSCM no matter the competitors have adopted it or not. Not
only competitors, but do customers affect to the companys decision to adopt the GSCM. In
many cases, customers were the one who require special treatment or special products.
Therefore, the company needs to make changes to make them satisfy and stay with them.
Some papers studied about the relationship between applying GSCM with customers
requirement such as (Simpson, Power, & Samson, 2007). In this study, they explored the
moderating impact of relationship between a customer and its suppliers and effectiveness of
customers environmental performance requirements.
Company
Two drivers mentioned earlier are from external factor. Sometimes a driver is from the
company itself. Numerous studies support that adopting GSCM can reduce the cost (DuberSmith, 2005), (Stevels, 2002), and (Gunther, 2006). There also are other reasons such as
increase efficiency, eliminate waste and pollution, and generate brand reputation. In terms of
human resources, in (Duber-Smith, 2005), he mentioned that more sustainability enhances
employee morale from some green programs such as wellness programs, ergonomic work
environment.
There are several studies about the factors or benefits that make the company apply GSCM.
In Chinese industry, (Zhu & Sarkis, The Moderating Effects of Institutional Pressures on
Emergent Green Suply Chain Practices anad Performance, 2007) developed a survey to 341
Chinese manufacturers to examine the relationships between GSCM practice, environmental
and economic performance, incorporating 3 moderating factors market, regulatory, and
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competitive institutional pressures. Results showed that they experienced increasing

environmental pressure to implement GSCM practices. Market and government pressures
through regulation influenced them to improve environmental performance. Another study of
this kind of study is (Hu & Hsu, 2006). They develop a set of critical factors of GSCM
practices that could be used by managers. They surveyed in the electrical and electronics
industries in Taiwan. Results showed that there were four critical factors: supplier
management, product recycling, organization and involvement and life cycle management.
Factors and drivers to adopt GSCM in different industries were differently. In a study of
(Zhu, Sarkis, & Lai, Green Supply Chain Management Implications for "Closing The Loop",
2008), they developed a survey to 4 industries in Chinese to evaluate their perceived GSCM
practices and relate them to closing the supply chain loop. Results showed that automobile
industry lagged behind the other industries, power generating, chemical/petroleum and
electrical and electronic. They assumed that the reason may result from a high level of
complexity in the adoption of GSCM practices.

IMPLEMENTATION OF GREEN
From product lifecycle concept, the cycle starts at the designing of product. According to
(Srivastara, 2007), literatures related to green design emphasize both environmentally
conscious design and life cycle assessment/analysis. In designing a product, the designing
team can change the raw materials or substances used during the manufacturing to be less
toxic, more environmental friendly. Some terminologies are related to design for green such
as design for environment or EcoDesign. An example of green product is hybrid car. Due to
the increasing demand and decreasing amount of petroleum, automobile manufacturers
needed to redesign the engine that consumes no or less gas. Hybrid car has been developing
from day to day. One article about automobile design is (McAuley, 2003), he discussed the
green design of automobile, which tend to change to advanced lightweight materials and
fewer materials in vehicle design. In designing a product, the manufacturing company needs
a high level of cooperation with their suppliers. An example for the research on suppliermanufacturer cooperation in EcoDesign is (Stevels, 2002). He also presented two examples
of successful green supply agenda between manufacturer and suppliers.
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In manufacturing process, the company can apply green by several methods to reduce the
energy and resource consumption. This is where reuse and recycling are referred. Several
papers provided green practices such as (Duber-Smith, 2005). He suggested some practices
including reducing energy consumption, recycle and reuse, using biodegradable and nontoxic materials, minimize harmful emissions, and minimize or eliminate waste. In a Chinese
sugar manufacturer, Guitang Group can reduce the wastes and improve their financial
performance by using waste from the upstream as raw materials for downstream production
(Zhu & Cote, Integrating Green Supply Chain into An Embryonic Eco-Industril
Development: A Case Study of the Guitang Group, 2004).
Further than design and manufacturing, other departments in an organization are involved
with the green. Purchasing could become an important agent for change regarding
environmental initiatives in the supply chain (Preuss, 2001). In (Walton, 1998) article, he
conducted a qualitative study to explore the primary areas for change to increase purchasings
impact on environment.
As mentioned earlier, not only manufacturer, other supply chain roles got impact from GSCM
also. For a largest retailer in the U.S., Wal-Mart has an interesting story of adopting GSCM
to their organization. In October 2005, Wal-Mart CEO committed the company to 3 goals: to
be supplied 100% by renewable energy; to create zero waste; and to sell products that sustain
Wal-Marts resources and the environment, and Wal-Mart was launching a business
sustainability strategy to dramatically reduce the company's impact on the global
environment and become "the most competitive and innovative company in the world
(Plambeck, 2007). In this study, she provided 8 practices engaged with 14 network partners.

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BENEFIT OF GREEN SUPPLY CHAIN MANAGEMENT

Positive impact on financial performance
Despite ample evidence to the contrary, there persists a myth that going green costs additional
expense. Some of the factors responsible for persistence of this myth are inertia, the lack of a
systematic approach and an unwillingness to engage in sustained and changed thinking that is
necessary to create a green supply chain.However, the most fundamental benefit of Green
Supply Chains is a positive long term net impact on the financial performance of the
organization. This has been proven by both analysis and empirical evidence.

Sustainability of Resources
Green Supply Chains sponsor the effective utilization of all of the available productive
resources of organizations. By incorporating Green Supply Chain Management thinking
through their entire business decision making process, organizations may now purchase green
input resources that will flow through environmental friendly production process to produce
the desired green outputs.

Lowered Costs/Increased Efficiency

At the core of Green Supply Chain Management is the principle of reducing waste by
increasing efficiencies. Effective management of resources and suppliers, can reduce
production costs, promote recycling and also, the reuse of raw materials. Also, the production
of hazardous substances can be reduced, thereby preventing organizations from being fined as
a result of violating environmental regulations.

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Overall, the green supply chain industry sector has a number of challenges. However, it is
first important to note that when we look at supply chain, we start with product innovation
and the marketing impact. We also end at the supply chain with consumer products and
product recall. Sales planning are a second function. The third function would be
manufacturing planning and manufacturing operations. Here are few challenges of green
supply chain management.

Standards
Standards are the most confusing aspect the challenge is that each organization may have to
comply with all of these different standards. They may comply with only part, and the issue
faced by manufacturers, retailers and supply chain professionals is that the awareness or
knowing what to go after is a challenge.
The first step for someone new to the sector is to understand what standard they need to
comply with and understand what direction to go. This needs to be done first.

Business Case Development

Social responsibility, competitive pressures, as well as lot of others issues out there are hard
to measure. Business case development is one of those things that organizations are fighting
through.

Communications Planning
The environmental sustainability green space is very broad. It encompasses everything from
renewables to various definitions and terms. Organizations have to get the communication
strategy under control pretty quick as they start to go out and implement new programs.

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Malaysias new inter-ministerial green technology council has promised to

galvanize efforts to form an integrated national green strategy. The key challenge faced by the
Malaysian government in going green has been the absence of an institution tasked solely to
drive green technology. Green technology efforts have always been fragmented with
different ministries and agencies running their own projects. Environmental initiatives often
involve several parties across the government, so we need to first strengthen the institution.
The council will take a consolidated approach, providing a national strategic focus and plan.
According to Prime Minister Razak (pictured), the government will lead by example by
adopting green technology in government facilities.
The Ministry of Energy, Green Technology and Water which the Green Technology
Division falls under will be the key coordinator and facilitator for the green technology
roadmap. It has already taken a lead in going green. Its building is the first to be rated a Low
Energy Office in Malaysia and reported energy savings of more than 50 per cent compared to
new office buildings.

Findings from the past survey by Insight (2008) showed that 52% of companies received
benefits in terms of reducing logistics cost and have reduction in manufacturing costs when
the companies practice green supply chain in their business activities. Logistics activities are
one of the major and important parts along the supply chain. Besides that, the results revealed
that 47% of companies benefited from green supply chain by giving them a competitive
advantage in order to compete with other companies. While survey from Aberdeen Group
(2008) found that by practicing green supply chain it can help to reduce emissions, reduce
waste and improve disposal.
Green logistics practices by switching into alternative fuel such as biodiesel and
bioethanol can help to give efficient fuel consumption because of this characteristic of
alternative fuel. Beside that this fuel is very cheap compared with the other development of
other renewable fuel alternative such as hydrogen (McKinnon, 2010). Green logistics
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practices such as true recycling or re-use of plastic products can significantly reduce the
energy required across the life cycle because the high energy inputs needed to process the
requisite virgin materials greatly exceeds the energy needs of the recycling or re-use process
steps (Arvanitoyannis, 2007). Ubeda (2010) found that green logistics practices such as of
choice to reduce number of routes, introducing backhauling in logistics activities and design
the shortest routes can control the emissions of carbon dioxide emission.
This can be very beneficial to the environment and to the society because reduction in
this type of gases can help to reduce environmental impact such global warming and at the
same time improve the society health status. According to Rodrigue (2001) if the company
less practice just-in-time (JIT) in logistics activities it can help to reduce traffic congestion,
reduce more energy consumption and reduce from producing more emissions CO2,
particulates, NOx, etIn order to satisfy todays customer demands, it is not enough to offer
cheap and good product, the consumer today, also draws much attention to whether was
manufactured and delivered in a manner which does not adversely affect the protection of the
environment.

In conclusion customers coming from poor countries, pay no attention to either the
quality of our products are environmentally nature this type of customer is only interested in
the offered price of the product. However, despite the global trend is just so environmental
awareness and firms seeking to meet the demand of customers are forced to introduce
measures to protect the environment. However in addition to improving economic
performance and build a positive corporate image among consumers, green supply chain
allows the realization of goals such as reduction or complete elimination of hazardous
materials that are used both in industry agriculture, improvement and implementation of
ecology behavior, systems design, equipment, machinery and long term relationships, which
in time will bring environmental and economic benefits.

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BARRIERS OF APPLYING GSCM

In (Zhu & Cote, Integrating Green Supply Chain into An Embryonic Eco-Industril
Development: A Case Study of the Guitang Group, 2004), they studied the integration of
green supply in sugar industry. They mentioned three barriers: maintaining close
relationships with their main suppliers, obtaining a larger market share through competition
with other market share through competition with other domestic sugar refineries by
improving product quality and reducing costs, and ensuring the sustainability of their
operations including reducing the environmental impacts. At the same times, there are some
research studied barriers of applying GSCM from suppliers perspective. An example of
suppliers barrier is (Wycherley, 1999), he conducted a qualitative study on the suppliers
barriers of GSCM implementation for an environmental-friendly image products like the
Body Shop.

IMPROVEMENT POTENTIAL
Several studies were exploratory study about a company succeed in applying GSCM, various
in different industry such as electronics, automobile, furniture, and packaging. An example
of Electronics Company is Advanced Micro Devices. Advanced Micro Devices (AMD )
wanted to be recognized as a sustainable organization. They wanted to better mage the risk
of a potential supply chain and work together with suppliers to identify alternative materials
an equipment to minimize environmental impacts. Moreover, they were drove by their
customers, investors, and non-governmental organization groups externally (Trowbridge,
2001). In packaging Industry, results from survey showed that green supply chain practices
were positively linked to operational performance. Also, the green supply chain practices
were affecting the allocation of resources among 3 types of environmental technologies:
pollution prevention, pollution control, and management systems (Vachon, 2003).

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REFFERENCES

1. Mind the Chain:Lessons for Firms in distressed markets, Igor Zax, Private
Equity News, May 25, 2009-Issue 282
2. Baziotopoulos, 2004
3. MacDuffie and Helper, 1997; Monden, 1993; Womack and Jones, 1996;
Gunasekaran, 1999
4. Drucker, 1998; Tapscott, 1996; Dilts, 1999
5. Lambert, Douglas M.Supply Chain Management: Processes, Partnerships,
Performance, 3rd edition, 2008.
6. http://en.wikipedia.org/wiki/Supply_Chain_Management
7. http://en.wikipedia.org/wiki/Inventory_control_system
8. http://lcm.csa.iisc.ernet.in/scm/supply_chain_intro.html
9. http://www.medwelljournals.com/fulltext/?doi=ibm.2010.20.27
10. http://bestsupplychainmanagement.com/advantages-and-disadvantages-ofsupply-chain-management/

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