Supplier Selection: A Green Approach with Carbon Footprint Monitoring

Amit Kumar
Dept. of Mechanical Engineering
Indian Institute of Delhi
New Delhi, India
amit.hooda.1511@gmail.com
Prof. Vipul Jain
Dept. of Mechanical Engineering
Indian Institute of Delhi
New Delhi, India
vjain@mech.iitd.ac.in


Abstract As the climate change movement gathers momentum,
theres a pressing need to assess suppliers based on their
environmental performance along with other criteria for supplier
selection. The objective of this paper is to propose a comprehensive
approach for suppliers selection, which cuts across a huge variety
of supplier base, caters to almost all businesses, is environment-
friendly and robust. The approach encourages suppliers to go green
and cut down their carbon footprints in order to survive the
competition.
Keywords-carbon footprinting; data envelopement analysis,
dual role factors, emission norms
I. INTRODUCTION
Supplier selection is the process by which suppliers are
reviewed, evaluated, and chosen to become a part of the
organizations supply chain [1]. Supplier selection has always
been a challenging task in the supply chain for many
organizations. As the competition becomes fiercer,
organizations strive to gain the global edge, especially in cases
where purchasing accounts for a major portion of the total
costs. For such organizations a comprehensive approach for
decision making is highly desirable. Recently, there has been a
shift towards a reduced supplier base due to a variety of
reasons such as economies of scale, better communication
levels and lowered costs.
Supplier selection process is essentially a multi-criteria
problem, which includes both qualitative and quantitative
factors. Purchasing commands significant importance in most
organizations since purchased parts, components, and supplies
typically represent a major percentage of sales of its end
products. Thus relatively small cost benefits in acquisition of
materials can have a sizeable impact on profits.
Several supplier selection methods; including Multi
Criteria Decision Making (MCDM), Fuzzy Programming,
Genetic Algorithms are available today. All these approaches
aim at reducing the cost of overall supply chain. On the other
side of the spectrum, lies the eco-efficiency of the buyer and
the supplier. The Green Movement is spreading rapidly
across the globe and climate change has been recognized as a
major challenge. It is widely accepted that Greenhouse Gas
(GHG) emissions caused by humans are having a negative
impact on the environment.
Not only are organizations reducing their own carbon
footprint, but they are also beginning to demand the same from
their suppliers. According to a new report from the non-profit
Carbon Disclosure Project (CDP) and consultant firm A. T.
Kearney, they are prepared dissociate themselves with
suppliers that do not have carbon management plans of their
own. The report presents the results of a survey conducted
across 44 CDPs member companies. The responses indicate a
strong interest in carbon footprinting and management.
According to the report, 63 percent of the companies have a
formal, documented corporate climate change strategy. The
remaining 37 percent have general guidelines, and 90% of all
the companies surveyed have plans in place to reduce carbon
emissions [2].
The report also shows that, these organizations desire their
partners to go green. According to the survey, 89 percent of
respondents have "an established strategy" for working with
suppliers on carbon-related topics. In addition, 91 percent of
members have high ranking executives dedicated to climate
change related issues within their respective companies.
As more and more environmental norms and compliance
standards are enforced into practice, organizations which are
simply looking at cutting supply chain costs are most likely to
get stranded as theres no guarantee of the fact that the
suppliers would conform to these norms. Instead, organizations
should aim towards spreading carbon awareness amongst the
suppliers while concomitantly offering incentives to them to
become environment-friendly. This would require a
collaborative approach from both the buyer and the supplier.
The buyer should be prepared for the worst-case scenario as
well, which might involve de-selecting the supplier. The
supplier selection decision making approach should be able to
account for such inherent risks.
Carbon Footprints provide a precise, accurate and robust
measure that can fit in as an environmental impact criterion for
supplier selection. Thus, the decision making approach in
suppliers selection must take into account the environmental
impact of the suppliers vis--vis their carbon footprints.
This paper aims to propose to a common integrated
approach for Supplier Selection considering both the
objectives: cost cutting and environmental efficiency. The
approach builds on the DEA model proposed by Saen [3] with
weight restrictions and dual role factors. The model was
limited in scope, such that it could not deal with non-
homogenous suppliers. However, Saen [4] discussed an
approach to deal with non-homogeneous suppliers. We
incorporate this approach into the original model (with weight
Proceedings of 8th International Conference on Supply Chain Management and Information Systems (SCMIS 2010)
Hong Kong, China - 6-8 October 2010
ISBN: 978-962-367-697-7 Copyright 2010 The Hong Kong Polytechnic University 622
restrictions and dual role factors) and introduce the carbon
footprints of a supplier as a necessary dual role factor. A
supplier which doesnt have carbon foot-printing done would
be dealt with the non-homogeneous approach. Absolute weight
restrictions are applied on carbon footprints which allow the
decision maker to control the importance of carbon footprints
in the supplier selection process. Additional constraints are
introduced to model emission norms or compliance standards if
any.
The approach proposed in this paper is based on
encouraging the suppliers to reduce their carbon footprints in
order to survive the competition and go green. The approach
does not tell how a supplier should go green but provides a
reason as to why a supplier should go green.
The rest of the paper is organized as follows: Section 2
discusses the literature reviewed in brief. Section 3 explains
carbon footprinting and the steps involved in estimation of
carbon footprints. Section 4 presents the proposed model with
the mathematical formulation. Finally, the concluding
observations and remarks are given in the last section.
II. LITERATURE REVIEW
Various mathematical approaches such as linear
programming, fuzzy programming, and genetic algorithms
have been used to solve the supplier selection problem. A
majority of these approaches are based on the fact that supplier
selection is a multiple criteria problem, and the aim is to assign
weights to all the criteria in order to get an overall supplier
rating.
Traditional approaches to supplier selection made use of
Analytical Hierarchy Process (AHP) in combination with a
mathematical programming approach. Pi and Low [5], Haq and
Kannan [6], Kahraman et al. [7], proposed AHP models to
solve the supplier selection problem.
A variety of linear and integer programming approaches
have been proposed in literature. Ghodsypour and OBrien [8]
proposed an integration of AHP and linear programming to
consider both tangible and intangible factors in choosing the
best suppliers and giving them optimal order quantities so that
the total purchasing value is maximized. Ghodsypour and
OBrien [9] presented a mixed integer non-linear programming
approach to solve the multiple sourcing problem. The approach
takes into account the total cost of logistics, including net price,
storage, transportation and ordering costs.
Ting and Cho [10] proposed an integrated approach using
Linear Programming (LP) which integrates AHP with linear
programming. The approach considers both tangible and
intangible factors in choosing best suppliers and giving them
optimal order quantities. The objective is to maximize total
purchasing value.
Bayazit [11] proposed an ANP approach to supplier
selection. Shyur and Shih [12] proposed a hybrid model for
supplier selection in new task situations, which uses the Multi
Criteria Decision Making (MCDM) in combination with
Analytic Network Process (ANP). These ANP models go one
step ahead of the traditional AHP approaches which tend to
assume that the selection criteria are independent of each other.
Kumar, Vrat and Shankar [13] presented a Fuzzy Goal
Programming approach for Vendor Selection Problem (VSP).
In this approach, VSP is formulated as a Fuzzy Multi-Objective
Integer Programming problem with three important goals of
cost minimization, quality maximization and maximization of
on-time delivery.
Syarif, Yun and Gen [14] developed a spanning tree based
genetic algorithm approach for a multi-stage logistic network.
This study provided the groundwork for a more specific Supply
Chain Management problem such as Supplier Selection
Problem.
Jain, Wadhwa and Deshmukh [15] discussed supplier-
related issues in modeling a dynamic supply chain. It provides
a review of main approaches to these issues. The study
provides a groundwork for diverse modeling approaches to be
applied to the supplier selection problem.
TABLE 1. DEA Approaches for supplier selection
Reference Approach Used Scope
Weber,
Current and
Desai [19]
Multi-objective
programming(MOP)
With DEA
Evaluating number
of suppliers in
Procurement
situation
Liu, Ding and
Lall [20]
DEA Supplier evaluation
for individual
Product
Talluri and
Sarkis [21]
Improvement on BCC
model
Supplier
performance
evaluation and
Monitoring
Talluri,
Narasimhan
and Nair [22]
Chance Constrained
DEA (CCDEA)
Supplier selection
with uncertain
factors
Saen [23] Imprecise DEA
(IDEA)
Ranking suppliers
in presence of
imprecise data
Saen [24] Assurance Region
IDEA (AR-IDEA)
Ranking suppliers
in presence of
weight
Restrictions and
imprecise data
Saen [4] DEA Supplier Selection
with non-
homogeneous
suppliers.
Saen [3] DEA with weight
restrictions and dual
role factors
Supplier selection
in presence of
weight restriction
and dual role
factors.
A major issue with all these approaches is that these assign
arbitrary weights which are subjective and based on surveys
and questionnaires. This leads to inaccurate results as it is very
difficult to accurately assign numbers to preferences. Also,
Proceedings of 8th International Conference on Supply Chain Management and Information Systems (SCMIS 2010)
Hong Kong, China - 6-8 October 2010
ISBN: 978-962-367-697-7 Copyright 2010 The Hong Kong Polytechnic University 623
these models do not scale well as the number of performance
criteria are increased.
DEA provides a robust approach to supplier selection. The
basic DEA model that has been used is the Banker-Charnes-
Cooper (BCC) model proposed by Banker, Charnes and
Cooper [16]. An explanation to the basic DEA approaches is
given in Cooper [17]. Cook, Green and Zhu [34] discussed the
dual role factors in DEA.
Weber [18] presented a DEA approach for supplier
selection based on multiple criteria and identified benchmark
values which can be used. Since then, a number of DEA
approaches have been proposed for supplier selection. The
approaches reviewed are summarized in table 1.
A lot of organizations are moving towards green supply
chain management. Reference [25] presented the business case
for lifecycle analysis and building a green supply chain. The
article emphasized on the fact that lifecycle analysis,
judiciously applied, can help a company recognize lost
opportunities for increasing profitability and simultaneously
meet the climate goals.
Reference [26] discussed GreenSCOR, a robust green
supply chain analytical tool. This tool used Supply Chain
Operations Reference (SCOR) model developed by Supply
Chain Council (SCC) as a foundation. This is essentially
because SCOR is a proven supply chain tool. GreenSCOR
integrates environmental management into SCOR which
provides a foundation for improving operational activities
while reducing the environmental impacts. The tool enables
companies to implement green supply chain practices and
improve supply chain costs and efficiency as well.
There are very few approaches proposed in literature for
green supplier selection which take into account the
environmental impact of a supplier. Noci [27] presented a
green supplier rating system for assessment of a suppliers
environmental performance. The study provides a three phase
approach for implementing a green supplier selection
procedure which takes into account the corporate green
strategies and the suppliers key environmental performance
factors. Lee, Kang, Hsu and Hung [28] proposed a green
supplier selection model. The model uses fuzzy AHP to deal
with the subjectivity attached to the environmental factors that
are considered as these are based on questionnaires and
surveys.
Majority of literature surveyed has focused on green supply
chain as a whole or provided a general framework for green
supplier selection. The approach proposed in this paper makes
use of carbon footprinting as a measure of a suppliers
environmental performance. This is because carbon
footprinting is an accurate technique to deal with subjectivity in
environmental factors. It provides a precise and accurate
measure to judge a suppliers eco-efficiency.
The term carbon footprint is commonly used to describe the
CO2 and other Greenhouse Gas (GHG) emissions for which an
individual or organization is responsible. Footprints can also be
calculated for events or products [29].
There are other definitions available for carbon footprints.
Wiedman and Minx [30] explored the discrepancy between
various usages of the term and suggest a scientific definition
based on commonly accepted accounting principles and
modeling approaches.
III. CARBON FOOTPRINTING
11

Carbon (CO2) emission results from a variety of activities
that humans undertake in their daily lives. Growing levels of
human attributed CO2 emissions are known to cause global
warming. Thus, today there is a pressing need to control these
emissions in order to arrest global warming. The term carbon
footprinting refers to the total amount of CO2 or green house
gases emissions an individual or organisation is responsible for
[29]. Full carbon foot printing encompasses a wide range of
emissions which include direct emissions from organizational
activities, emissions from the use of electricity, indirect
emissions from products and services [29].
In the context of supplier selection, carbon footprinting
would provide a concrete performance measure for the
suppliers environmental efficiency. Carbon footprinting is also
undertaken to reduce emissions over time, to identify and
quantify the key emissions sources, to report the footprint
accurately to a third party, to fulfil requests from business or
retail customers, or investors, to ascertain level of emissions
needed to offset, and to become carbon neutral.
Carbon footprinting essentially involves the following
activities [29].
Calculating direct emissions and emissions from
electricity-e.g. Onsite fuel usage, onsite electricity
usage, transports which one uses.
Calculate basic carbon footprints, convert the fuel,
electricity and transport consumption figures into
CO2 equivalents by using the standard emission
factors exclude the indirect emissions from the basic
carbon foot prints.
The exact steps for carbon footprinting are described next
[29].
1. Define the methodology- It is important to define
methodology in order to ensure accuracy, consistency
and to help individuals collect large data. It is
advisable to employ a widely accepted and understood
methodology so that the results produced are credible
and comparable .One commonly used methodology is
the GHG Protocol [31] produced by the World
Resources Institute (WRI) and the World Business
Council for Sustainable Development (WBCSD).
2. Specify the boundary and scope of coverage- This is
one of the most important steps as footprint estimation
would largely depend on the boundary. Boundary
definition may include/exclude treatment of emissions
from wholly or partially owned subsidiaries, leased

1
This Section has been prepared mostly with the help of
experts in field and with guidelines available on carbon trust
website [29].
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Hong Kong, China - 6-8 October 2010
ISBN: 978-962-367-697-7 Copyright 2010 The Hong Kong Polytechnic University 624
assets, such as from a van which is leased from a hire
company. It should also consider the types of
emissions to be included - CO2including or excluding
other GHGs, direct emissions from onsite fuel use and
transport, manufacturing process, electricity purchased,
organisations supply chain and other indirect
activities. Scott, Weber and Hendrickson [32]
discussed the importance of carbon footprint
estimation boundaries.
In context of supplier selection, the scope may exclude
any supplier activities which do not cater to a buying
organization. As an example, consider a supplier
supplying product A to organization X and product B
to organization Y. Thus, when organization X has to
make a supplier selection decision based on carbon
footprints, it can exclude product B from its scope.
However, this is just a guideline. Organizations that are
very conscious of their own carbon footprint might just
extend the scope of footprinting for their suppliers as
well.
3. Collect emissions data and calculate the footprint-
This step involves collecting data based on onsite fuel
consumption, owned transport utilisation, emissions
from chemical reactions in manufacturing processes or
from land use or agricultural activities, electricity
consumption, employee travel by air, rail and in
vehicles not owned by the organisation, suppliers
emissions. Data on energy consumption can be
translated into equivalent CO2 emissions data using
standard emission factors. These factors may be
specific to a country. A set of widely accepted
emission factors are available from Department for the
Environment, Food and Rural Affairs (DEFRA) and
reproduced on the Carbon Trust website. Emissions of
other greenhouse gases must be translated into
equivalent emissions data in tCO2e (tonnes of CO2
equivalent), using the global warming potential factors
published by DEFRA and available from the Carbon
Trust.
4. Verify results- It is very important to lend credibility
to carbon foot printing by having it verified through a
consultancy or an accounting/auditing firm. Greater
levels of assurance or verification are more onerous
and expensive to achieve, but provide greater
confidence in the results. This will ensure that the
footprints are widely acceptable. In context of supplier
selection, organizations should employ a standard
verification procedure for carbon footprints calculated
by the suppliers.
5. Disclose the footprint- Whether the footprint is
disclosed in advertising material, a Corporate Social
Responsibility (CSR) report or other collateral, the
supplier should ensure that the data is presented
transparently, providing full information about the
process followed and what the information means.
The end result is a carbon footprint in tCO2e. One
important point to note is that carbon footprints can be
released as an annual figure or a per product figure. A per
product figure would be suitable in case of supplier
selection for one product. For multiple products, the
footprints can be combined or an annual footprint can be
used. This would be used in the supplier selection decision
making approach, which is presented next.
IV. PROPOSED MODEL
The model proposed by Saen [3] which considers both dual
role factors and weight restrictions is shown below. The model
does not demand exact weights from the decision maker.
Suppliers undergoing the selection process are referred to as
Decision Making Units (DMUs) in DEA terminology. The
relative weight restrictions are applicable only in respect of
DMU
0
being assessed, leaving free the relative virtual values of
the comparative DMUs. First, the notation used is explained.
Notation
Parameters
j = 1,..,n collection of suppliers (DMUs)
r = 1,,s the set of outputs
i = 1,.,m the set of inputs
f = 1,..,F the set of dual role factors
y
rj
= rth output of jth DMU
x
ij
= ith input of jth DMU
y
r0
= rth outputs of DMU
0
under investigation
x
i0
= ith inputs of DMU
0
under investigation
w
fj
= fth dual role factor of jth DMU
c
i
, d
i
, user specified constants for weight restrictions.
Decision Variables
u
r
= weight of rth output
v
i
= weight of ith input

f
= output weight of fth dual role factor

f
= input weight of fth dual role factor
The DEA formulation with weight restriction and dual role
factors is as follows:

= = =
+
F
f
f f
F
f
f f
s
r
r r
w w y u MAX
1
0
1
0
1
0
(1)
Subject To.
1
1
0
=

=
m
i
i i
x v (2)
j x v w w y u
m
i
ij i
F
f
fj f
F
f
fj f
s
r
rj r
+

= = = =
0
1 1 1 1
(3)
0
0
1
0

=
i i
m
i
i i i
x v x v c (4)
Proceedings of 8th International Conference on Supply Chain Management and Information Systems (SCMIS 2010)
Hong Kong, China - 6-8 October 2010
ISBN: 978-962-367-697-7 Copyright 2010 The Hong Kong Polytechnic University 625
0
1
0 0

=
m
i
i i i i i
x v d x v (5)
i v
i
(6)
r u
r
(7)
f
f f
0 , (8)

The objective function (1) is inclusive of the output weights
u
r
, as well as weights of dual role factors
f
and
f
on output
side and input side respectively. Constraint (2) is the standard
DEA constraint to linearise the objective function (1).
Constraint (3) is the basic DEA constraint inclusive of weights
from dual role factors. Constraints (4) and (5) are virtual input
and virtual output weight restrictions applied to DMU
0

respectively. Constraints (6), (7) and (8) impose lowers bounds
on the weights. The model presents a unified approach to deal
with weight restrictions and dual role factors.
We propose 3 modifications to the above model.
1. Consider Carbon footprints as essential dual role
factors with weight restrictions.
2. Introduce emission constraints to model country
specific environmental norms and penalize suppliers
for not meeting the norms.
3. Alter the formulation to account for heterogeneous
suppliers
These modifications are explained in detail next.
In the proposed model, Carbon Footprints are considered as
dual role factors in the above approach and following generic
constraint like (9) is introduced to model emission constraints.
ECAP w
10
(9)

Since, carbon footprint is a necessary dual role factor, let f
= 1, denote carbon footprints.
Here, ECAP is the maximum emission quantity in TCO2
e
which every DMU can emit. The above constraint puts an
upper limit on the emission quantity. The maximum emission
cap can be DMU specific, or based on the geographic location
of the DMU. For simplicity sake, we consider a common
emission cap. This can however be extended to a DMU
specific emission cap.
Constraint (9) has a small flaw. In order to satisfy the above
constraint, the input weight of carbon footprint
1
might be
forced to zero. Since, we want the carbon footprints to go down
in order to have a better eco-efficiency; we want these to have
a higher input weight which is quite contradictory to what the
constraint will enforce. Thus, we need another constraint to
ensure that carbon footprints behave more as an input factor.
The below constraint (10) does exactly that and along with
constraint (11) ensures that the emission cap is satisfied by the
carbon footprints. Here, the parameter would be the
minimum carbon footprint weight as an input factor in the
DEA model. More the value of , more the efficiency would be
dependent upon carbon footprints. Thus, this parameter must
be set carefully.
+
1 1
(10)

Since, the above emission constraint cannot be satisfied by
all DMUs, we introduce an allowance penalty e
j
for each DMU
which goes into the objective function as a negative term. So
constraint (9) becomes.
ECAP e w
0 10
(11)

Constraint (10) and (11) together provide an effective
approach to encourage suppliers with higher emissions to cut
down on the emissions in order to survive the competition.
Another modification to above constraint would be put a
total emission cap on all DMUs, but that would be incorrect as
the total emission cap should only apply to the selected
suppliers, and not all DMUs.
And the Objective becomes,
0
1
0
1
0
1
0
Pe w w y u MAX
F
f
f f
F
f
f f
s
r
r r
+

= = =
(12)

Here, P is a penalty which enforces a stringent emission
norm on the supplier, that is, if the supplier does not meet the
emission norm, its relative efficiency is bound to go down.
The model still doesnt account for heterogeneity, that is, it
cannot handle the case when some suppliers do not
comprehensively consume common inputs to supply common
outputs. Saen [4] present an approach using series mean
technique and AHP to supply the missing values of inputs and
outputs for such suppliers. Saen [33] present another approach
to supply the missing values with expert opinions. However,
both these approaches are for DEA models without dual role
factors and weight restrictions. We discuss both the approaches
briefly and there implications to the proposed model.
For the suppliers lacking one or some feature (input, output
or dual role factor), the contribution with respect to the lacking
factor is considered as missing value (s). These values are
inserted in a 2 step process:
1. Calculate the series mean of the input, output or dual
role factor vector which lacks at least 1 DMU.
2. Calculate a correcting factor using AHP based on the
mean of other inputs, outputs or dual role factors
(except the vector pertained to the DMU has a missing
value) with respect to input and output values that a
DMU has a missing value. Based on this a correcting
factor is calculated which applies to the series mean to
provide the missing value. For this, a hierarchy is
Proceedings of 8th International Conference on Supply Chain Management and Information Systems (SCMIS 2010)
Hong Kong, China - 6-8 October 2010
ISBN: 978-962-367-697-7 Copyright 2010 The Hong Kong Polytechnic University 626
constructed in which the second level comprises all
input and output factors, excluding the factor(s) that
certain DMU lacks it. In the third (final) level of the
hierarchy, two alternatives are being compared with
respect to the attribute of the higher levels. These two
alternatives are (i) the DMU which lacks the factor(s),
(ii) the mean of other DMUs. The data for mean of
other DMUs is obtained by taking the mean of each
factor of all DMUs except the one which is having
missing value.
The missing values obtained from the above procedure are
placed in the DEA model above. However, this translates the
DEA model above into a Chance Constrained DEA (CCDEA),
as the above estimation assumes that data is normally
distributed and makes use of series means. This is essentially to
minimize the risk as the missing value calculated above is a
mean value. The variance needs to be computed from the
concerned column of missing data. Then, an appropriate
probability level can be applied to formulate a deterministic
version of CCDEA.
The idea for the formulation is presented briefly. We define
the following subsets:
Subset Definition
o1: Set of all combinations (r,j) where the value of rth output
for jth DMU is given
o2: Set of all combinations (r,j) where the value of rth output
for jth DMU is missing
i1: Set of all combinations (i,j) where the value of ith input for
jth DMU is given
i2: Set of all combinations (i,j) where the value of ith input for
jth DMU is missing
f1: Set of all combinations (f,j) where the value of fth dual role
factor for jth DMU is given
f2: Set of all combinations (f,j) where the value of fth dual role
factor for jth DMU is missing
Next, we define a modified set of inputs and outputs to
account for the missing values as follows:
y
rj
= y
rj
for (r,j) o1
Missing output value supplied from series mean and
AHP technique for (r,j) o2
x
ij
= x
ij
for (i,j) i1
Missing input value supplied from series mean and
AHP technique for (i,j) i2
w
fj
=w
fj
for (f,j) f1
Missing output value supplied from series mean and
AHP technique for (f,j) f2
Then, the constraint (3) would transform into the following
CCDEA constraint.
[ ] [ ]
[ ] [ ]
j
x v x Var v w Var
w Var y Var u
x v w
w y u
m
i
ij i ij i
F
f
fj f
F
f
fj f
s
r
rj r
m
i
ij i
F
f
fj f
F
f
fj f
s
r
rj r

+ +
+
+

+




= =
= =
= =
= =
0
' ) ' ( ) ' (
) ' ( ) ' (
645 . 1
' '
' '
1
2
1
2
1
2
1
2
1 1
1 1

(13)
The complete CCDEA model with emission constraints is
as follows:
0
1
0
1
0
1
0
Pe w w y u MAX
F
f
f f
F
f
f f
s
r
r r
+

= = =
(14)
Subject To
[ ] 1 ) ' ( 645 . 1 '
0
2
1
0
= +

=
i i
m
i
i i
x Var v x v (15)
[ ] [ ]
[ ] [ ]
j
x v x Var v w Var
w Var y Var u
x v w
w y u
m
i
ij i ij i
F
f
fj f
F
f
fj f
s
r
rj r
m
i
ij i
F
f
fj f
F
f
fj f
s
r
rj r

+ +
+
+

+




= =
= =
= =
= =
0
' ) ' ( ) ' (
) ' ( ) ' (
645 . 1
' '
' '
1
2
1
2
1
2
1
2
1 1
1 1

(16)
[ ] 0 ) ' ( 645 . 1 ' '
0
2
0
1
0
+

=
i i i i
m
i
i i i
x Var v x v x v c

(17)
[ ] 0 ) ' ( 645 . 1
0
2
1
0 0
+

=
i i
m
i
i i i i i
x Var v x v d x v

(18)
ECAP e w
0 10
(19)
+
1 1
(20)
i v
i
(21)
r u
r
(22)
Proceedings of 8th International Conference on Supply Chain Management and Information Systems (SCMIS 2010)
Hong Kong, China - 6-8 October 2010
ISBN: 978-962-367-697-7 Copyright 2010 The Hong Kong Polytechnic University 627
f
f f
0 , (23)
j e
j
0 (24)
The other approach to heterogeneous supplier selection as
suggested by Saen [33] is to use estimations in the form of
intervals. These intervals are based on expert opinions. The
exact data are viewed as a special case of interval data with the
lower and upper bounds being equal. Therefore, all the input
and output data are now transformed into interval numbers and
can be evaluated using interval DEA models.
A slight modification is suggested if a supplier does not
have carbon footprinting done. Although, using the series mean
and AHP technique, the missing footprint can be estimated, but
it would not encourage the supplier to go for carbon
footprinting. In that case, a small penalty in form of weight
restrictions or negative efficiency can be levied on the supplier,
to encourage the suppliers to go for carbon footprinting in
order to survive the competition or else face elimination. This
penalty may be similar to the penalty applied in objective
function (14) and would go against a suppliers selection in
case the supplier doesnt have carbon footprinting done.
The following binary variable is introduced.
c
j
= 1, if a DMU
j
doesnt have carbon footprinting done
0, otherwise.
Then, objective function (14) would change to the
following:

0 0
1
0
1
0
1
0
Fc Pe
w w y u MAX
F
f
f f
F
f
f f
s
r
r r

+

= = =


(25)
where F would enforce the penalty in terms of efficiency
percentage.
V. CONCLUSION AND REMARKS
As the green movement spreads across the globe,
organizations are under pressure to reduce the emissions across
their supply chain. On the other hand, they need to cut supply
costs to gain the competitive edge. Thus, a comprehensive
supplier selection strategy which models supply costs as well
as emissions is essential.
This paper proposed a unified approach to model the
supplier selection problem with carbon footprints of suppliers
as a necessary dual role factor. The approach caters to non-
homogeneous suppliers as well and incorporates the logic to
encourage suppliers to cut their emissions as well as go for
carbon footprinting if they have not yet executed it. The model
encourages a supplier to go green with a two-pronged
approach, firstly more carbon footprints would reduce the
supplier efficiency as a dual role factor and secondly, if the
supplier does not meet the emission norms, then it would be
penalized for it.
The model is not an enhancement over DEA, but an
approach to model environmental factors within a DEA
framework. There are many DEA models available, each with
its own set of assumptions. In the real world, all these
assumptions should be taken into consideration before a full
scale implementation.
In the proposed model, an established carbon footprint is
assumed as a necessary dual role factor, which might not be
true in all cases. Also, weight restriction assumptions may not
hold always. In such cases, the model needs to be tailored to
exclude the assumptions.
The approach considered in this paper is at initial stage of
investigation, and a rigorous validation of the approach with
real time data needs to be carried out. However, it provides a
common framework for future research in terms of a green
supplier selection strategy.
A suggested research in this area would be to apply the
model to other multi criteria decision making problems as well.
ACKNOWLEDGMENT
The authors thank Ms Ruchika Drall, Associate, ICF
Consulting India Pvt. Ltd. to help with carbon footprinting
procedural details.
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Proceedings of 8th International Conference on Supply Chain Management and Information Systems (SCMIS 2010)
Hong Kong, China - 6-8 October 2010
ISBN: 978-962-367-697-7 Copyright 2010 The Hong Kong Polytechnic University 629