Int. J.

Production Economics ] (]]]]) ]]]]]]

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Int. J. Production Economics

journal homepage: www.elsevier.com/locate/ijpe

Sustainable supply chain management (SSCM) in Malaysia: A survey

Suhaiza Zailani a,n, K. Jeyaraman a, G. Vengadasan a, R. Premkumar b,1
a
b

Graduate School of Business, Universiti Sains Malaysia 11800, Penang Malaysia

Faculty of Business and Management, AIMST University, Kedah, Jalan Bedong Semeling 08100, Bedong, Kedah, Malaysia

a r t i c l e i n f o

abstract

Article history:
Received 16 July 2010
Accepted 7 February 2012

As a developing country, Malaysia has moved from an agriculture-based economy to an industrialized

economy in which manufacturing is considered to be the highest contributor towards environmental
concerns. These concerns push rms into seriously considering the environmental impact while doing
their business. The implementation of sustainable supply chain management (SSCM) is a key enabler
that could push organizations to focus on alleviating environmental issues, and providing economic and
social benets. This study investigates the extent of implementation of sustainable supply chain
management practices (environmental purchasing and sustainable packaging). The study also examines the outcomes of these practices on sustainable supply chain performance. A survey via mail was
carried out among 400 manufacturing rms in Malaysia. Factor analysis of the survey data resulted in
four categories of outcomes (environmental, economic, social and operational). The study found that
environmental purchasing has a positive effect on three categories of outcomes (economic, social and
operational), whereas sustainable packaging has a positive effect on environmental, economic and
social outcomes. The results have empirically proven that SSCM practices have a positive effect on
sustainable supply chain performance, particularly from the economic and social perspective. Thus,
rms need to collaborate in advocating sustainable supply chain management (SSCM) practices as a
route for rms commercial success rather than as a moral obligation.
& 2012 Elsevier B.V. All rights reserved.

Keywords:
Practices
Outcomes
Sustainable supply chain
Developing country
Malaysia

1. Introduction
There is a rapidly increasing awareness in industry that todays
supply chains are awed. To date, many manufacturing companies
create waste and pollution and are threatening the existence of life
on earth. Consequently, these challenges and pressures push rms
to seriously consider the environmental impact while doing their
business. As the population of the world increases and resource
availability decreases, companies are starting to realize that supply
chains must be re-designed (Carter and Jennings, 2002). From the
companies perspective, they must portray the environmentally
friendly image of products, processes, systems and technologies,
and the way business is conducted (Vachon and Klassen, 2006a).
Recent developments in the world economic climate create
uncertainty in the business environment, which creates the
necessity for organizations to look at reconstructing and restructuring to enhance their strategy to sustain the business and
protability while remaining competitive in the marketplace.

Corresponding author. Tel.: 04 6533888x2786.

E-mail addresses: shmz@usm.my (S. Zailani),
dr_kjraman@usm.my (K. Jeyaraman), venga@yahoo.com (G. Vengadasan),
prem@aimst.edu.my (R. Premkumar).
1
Tel.: 604 4298000/8038; fax: 604 4298007/8008/8009.

Additionally, organizations are facing increasing global community

inquiries through media and non-governmental organizations
(NGOs) pertaining to the sustainability aspect of their development
(Sarkis, 2001). According to Porter and Kramer (2006), companies
are increasingly expected to extend their sustainability efforts
beyond their own operations to include those of their suppliers
and to meet their customers sustainability expectations. Forward
thinking companies are already taking steps to develop sustainability within their supply chains.
According to Carter and Jennings (2002), the supply chains
need to be closed-looped, environmentally friendly and conserve
and use as few resources as possible. Thus, many researchers
claimed that the future of supply chain management is sustainability (Carter and Jennings, 2002, 2004; Murphy and Poist, 2002;
Peneld, 2009). McKone-Sweet (2004) claimed that companies
are under pressure to improve the social and environmental
standards wherever they can exert their inuence, for instance,
at their suppliers and further along the supply chain. Most
of these pressures focus on the outsourcing activities from
large Western rms that source input from low cost manufacturers and service providers in developing countries by ignoring
the social and environmental deteriorating issues with respect
to supporting the short-term protability of the organizations
(Leenders et al., 2006).

0925-5273/$ - see front matter & 2012 Elsevier B.V. All rights reserved.
doi:10.1016/j.ijpe.2012.02.008

Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008

S. Zailani et al. / Int. J. Production Economics ] (]]]]) ]]]]]]

There are numerous denitions of the terms Sustainable Supply

Chain and Supply Chain. For example, Leenders et al., 2006 stated
that the supply chain considers the interactions between a business
and its customers and suppliers. They urged that a sustainable
supply chain the management of raw materials and services from
suppliers to manufacturer/service provider to customer and back
with improvement of the social and environmental impact be
explicitly considered. Although in the past supply chain management
only focused on the efcient and responsive system of production
and delivery from the raw material stage to the nal consumer,
currently, environmental issues in the supply chain are signicantly
growing, which is partly due to the wider debate on how industry
meets the challenges of sustainability (Seitz and Wells, 2006).
Pressure from various stakeholders present a great challenge for
supply chain managers in integrating sustainable practices in
managing their supply chains. A sustainable supply chain demands
that practices like environmental friendly packaging, return of endof-life and used products to the producer as well as the eco friendly
handling of returns, recycling, remanufacturing and adequate waste
disposal are enabled and are deemed to be important elements (Zhu
et al., 2005). However, some of the key challenges in adopting the
sustainable practices that are related to issues, such as price
competition and responsiveness, are of prime importance making
the adoption of sustainable practices a daunting task.
Carter and Mol (2006) stated that Asia is heavily emphasizing
sustainability despite the difference in views concerning corporate
social responsibility and sustainability between Europe and Asia. In
the context of Malaysia, Zailani et al. (2009) studied the key drivers
of sustainable supply chain management. However, Eltayeb and
Zailani (2009) researched the level of the adoption of a green supply
chain among ISO 14001 certied manufacturing rms within
Malaysia, whereas this paper is interested in determining the extent
of the involvement of Malaysian companies in the sustainable
supply chain. This paper will focus on the practices of a sustainable
supply chain within an organization and their relationship with the
performance of a sustainable supply chain.
The body of this paper comprises ve sections. This paper starts
with this introductory section, which provides a general idea
about the research topic and gaps of the study. Section 2 reviews
the literature related to a sustainable supply chain, practices and

performance for sustainable supply chain. Section 3 addresses the

methodology and Section 4 discusses the ndings from the data
analysis. Finally, Section 5 relates the conclusions, implications and
poses questions for future research, thereby fullling the purpose of
the paper.

2. Literature review
2.1. Sustainable supply chain management (SSCM)
According to Dyllick and Hockerts (2002), SSCM is comprehended
as the integration of sustainable development and supply chain
management whereby sustainable development is often described
as containing three dimensions integrating environmental, social
and economic issues for human development which also affects the
corporate strategy and action. Although the eld of SSCM is considered quite new, interest in SSCM has been growing rapidly over
the years. Seuring and Martin (2008) identied and reviewed 191
papers and found that the economic and environmental aspects of the
supply chain are by far the dimensions that are the most studied
among the papers reviewed (73.3%), and that papers integrating
sustainable dimensions only started to appear from 2002 onwards.
Sikdar (2003), who takes a macro-viewpoint, which includes
the social, environmental, and economic aspects, dened sustainability as a wise balance among economic development, environmental stewardship, and social equity. Reviews of different
elements related to supply chain sustainability suggests that SSCM
can be linked to green design, inventory management, production
planning and control for remanufacturing, product recovery, reverse
logistics, waste management, energy use and emissions reduction
(Ramudhin et al., 2009). Carter and Rogers (2008) dened SSCM as
the strategic, transparent integration and achievement of an organizations social, environmental, and economic goals through the
systemic coordination of key inter-organizational business processes
for improving the long-term economic performance of the individual company and its supply chain.
Teuteberg and Wittstruck (2010) proposed the House of
Sustainable Supply Chain (Fig. 1), built on the three dimensions
of the Triple Bottom Line, which are viewed as the key pillars

Fig. 1. House of SSCM.

Source: Teuteberg and Wittstruck, 2010.

Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008

S. Zailani et al. / Int. J. Production Economics ] (]]]]) ]]]]]]

necessary to keep the building in balance whereas risk and

compliance management form the buildings foundation. SSCM
also requires the establishment of values and ethics throughout
the organization, an efcient and exible green IT environment
as well as the alignment of corporate strategy focusing on sustainable development. By taking these measures, it will effectively
protect the network against environmental and social threats
and risks.
2.2. Sustainable supply chain management practices
Carter and Jennings (2002), from their research on logistics
social responsibility (LSR), examined the processes related to
purchasing, transportation, packaging, warehousing and reverse
logistics and dened six topics to classify LSR environment,
ethics, diversity, working conditions and human rights, safety,
philanthropy and community involvement. Subsequently, other
research within the context of sustainable supply chain practices, such as Environmental Purchasing, linked traditional
purchasing activity with the environmental management element (Zsidisin and Siferd, 2001). While Deakin (2001) focused
on Sustainable Transportation, dening it as transportation that
meets mobility needs while preserving and enhancing human
and ecosystem health, economic progress, and social justice for
now and the future.
In addition to the above, Carter and Jennings (2002) also
discussed sustainable warehousing, which includes activities,
such as terminal and warehouse location, proper storing and
disposing of hazardous materials, donation of excess or obsolete
inventory to local communities, and training to safely operate
forklifts. Sustainable Packaging was dened by James et al.
(2005a) as packaging that adds real value to society by effectively
containing and protecting products during movement across the
supply chain; is designed to use materials and energy efciently;
is made up of materials that are recycled continuously and does
not pose any risks to human health or ecosystems. Another
sustainable supply chain practice is Reverse Logistics; De Brito
(2003) considered Reverse Logistics as a process that guarantees
the use and re-use (efciently and effectively) of the value put
into products.
Purchasing is at the beginning of the value chain, thus, a rms
environmental efforts will not be successful without integrating
the companys environmental goals with purchasing activities.
Purchasing can contribute to a rms overall environmental goals
and undertakings in a number of ways (Carter et al., 2000). In
addition, purchasing can identify packaging that can be more
easily recycled or reused leading to a signicant environmental
impact, as packaging materials account for the largest portion of
the municipal waste stream (Min and Galle, 1997). However,
Ciliberti et al. (2007) carried out an empirical research on the
extent of adoption of sustainable supply chain management
practices within Italian companies and found that 56% of the
companies practice Environmental Purchasing, 20% of the companies practice sustainable transportation, 17% practice reverse
logistics, 6% for sustainable packaging and only 1% practice
sustainable warehousing.
Sarkis (1999) dened the supply chain as a system
that includes purchasing and inbound logistics, production and
distribution (outbound logistics and marketing) and reverse
logistics. Based on the above denition, purchasing plays a key
role at the beginning of the value chain and inbound activities in
determining the environmental impact and the high level of
adoption on Environmental Purchasing among companies. In this
study, Environmental Purchasing is selected as one of the sustainable supply chain management practices. Sustainable packaging
is selected as the next sustainable supply chain management

practice in this study due to the fact that packaging inuences

and has a presence across the supply chain pipeline purchasing,
inbound, outbound and even reverse logistics whereby it plays a
signicant function in the context of both consumer packaging
and industrial packaging. The following subsections discuss the
two practices in more detail.

2.2.1. Environmental purchasing

According to Jimenez and Lorente (2001), environmental
purchasing considers the issue of sustainability in their purchasing of inputs on top of the traditional purchasing criteria, which
only focuses on cost, quality, and delivery. According to Eltayeb
(2009) and Hamner (2006), the following are based on a summary
of the literature on green purchasing activities between the buyer
and supplier:
1. Product content requirements: buyers specify that purchased
products must have desirable green attributes, such as
recycled or reusable items.
2. Product content restrictions: buyers specify that purchased
products must not contain environmentally undesirable attributes, such as lead, CFCs, plastic foam in packaging materials.
3. Product content labeling or disclosure: disclosure of the environmental or safety attributes of purchased product content.
4. Supplier questionnaires: asking suppliers to provide information
about their environmental aspects, activities and/or management
systems.
5. Supplier environmental management systems: requesting suppliers to develop and maintain an environmental management
system (EMS) though buyer does not require supplier to certify
the system.
6. Supplier certication: buyers require suppliers to have an EMS
that is certied as fully compliant with one of the recognized
international standards, such as ISO 14001 from the International Organization for Standardization (ISO), and the European Union Eco-Management and Audit Scheme (EMAS).
7. Supplier compliance auditing: buyers audit suppliers to determine
their level of compliance with environmental requirements.
Based on the above, supply managers must consider the
ultimate disposition of the materials and components that enter
the rm. Carter et al. (2000) suggested that these life-cycle issues
need to be considered as part of the purchasing and procurement
process, and ask upstream members of the supply chain to commit
to waste reduction goals and to design and provide the purchasing
rm with the materials and components identied through the
design for disassembly and life-cycle analysis. Bjorklund (2010)
advocated that increasing strategic importance of the purchasing
function has increased the discussion on the contribution of
purchasing to decrease the impact on the natural environment
and concluded that purchasing could actually be a more powerful
change agent than any other corporate function. Carter et al. (2000)
claim that environmental purchasing has a positive effect on rm
performance in relation to net income and the cost of goods sold.
Zsidisin and Siferd (2001) provided a more holistic denition of
Environmental Purchasing, which is also applied in this research:
Environmental purchasing for an individual rm is the set of
purchasing policies held, actions taken, and relationships formed in
response to concerns associated with the natural environment. These
concerns relate to the acquisition of raw materials, including
supplier selection, evaluation and development, suppliers operations,
in-bound distribution, packaging, recycling, reuse, resource reduction and nal disposal of the rms products. Based on the above
review of the literature, environmental purchasing practices by
manufacturing companies can achieve multiple benets including

Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008

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enhanced supplier engagement, reduced cost and minimized environmental impact, which could subsequently lead to a sustainable
supply chain performance.
2.2.2. Sustainable packaging
James et al. (2005a) described that packaging directly contributes to the success of the product in the supply chain whereby
it enables efcient distribution of products, and reduced environmental impact of product spoilage and waste. However, packaging has an environmental impact that is not sustainable in the
long-term, such as consumption of non-renewable resources,
generation of air emissions in production, transport and use,
and production of solid waste requiring disposal in landll.
According to Kooijmann (1996), the benets of sustainable
packaging might be obvious from an environmental perspective,
such as reduced waste and resource conservation, as well as the
economic and social benets.
Verghese and Lewis (2007) argued that, typically, when goods
pass through the industrial supply chain the associated packaging
waste is often a forgotten or ignored by-product that is poorly
managed and eventually leads to litter, poor recycling and
unnecessary waste to landll. These phenomena are further
aggravated by poor communication and lack of sense of responsibility among supply chain partners, which limits the potential
for improved packaging solutions that can simultaneously meet
the functional needs of the supply chains operating environment
and reduce the environmental impact and supply chain costs.
According to Jahre and Hatteland (2004), packaging plays a
signicant role in a large integrated system that involves many
actors throughout the supply chain, including materials handling,
inbound logistics operations, purchasing, manufacturing, warehousing, transportation, and retailing.

operations reference (SCOR) model (SCOR, 2005) was one of the

notable key SCP metrics, which was developed by the Supply
Chain Council. The SCOR model is based on ve distinctive
process categories plan, sources, make, deliver and return.
The SCOR performance metrics goes beyond the concerns of
only achieving supply chain effectiveness but also incorporates
meeting customer requirements and improving supply chain
efciency by minimizing cost, reducing lead time and improving
quality. SCOR metrics encompass other measures, such as responsiveness, exibility, reliability or quality, and asset management.
It is stated that relying on cost measures alone would not provide
a truthful picture of supply chain performance (Chen and Paulraj,
2004). In the context of Sustainable Supply Chain Performance,
the measurement is more towards how well the supply chain
activity or practices undertaken by the organization cut across the
three facets of sustainability, which are the economic, environmental and social aspects. The social and environmental supply
chain activities that lie at the intersection with the economic
bottom line are dened as sustainable. Following are some of the
potential advantages from the sustainability perspective based on
the intersections of the supply chain practices between economic,
social and environmental performance.

 Cost savings due to reduced packaging waste (Carter and

Rogers, 2008; Mollenkopf et al., 2005; Rosenau et al., 1996).

 Ability to design for reuse and disassembly (Carter and Rogers,

2008; Christmann, 2000; Hart, 1995; Shrivastava, 1995c).

 Reduced health and safety costs, and lower recruitment and

2.3. Outcomes of sustainability supply chain management


In this paper, outcomes are dened as the positive results or
consequences that are actually realized from the adoption of
sustainable supply chain management practices. Organizational
performance refers to how well an organization achieves its
market-oriented goals as well as its nancial goals (Li et al.,
2006). Zhu et al. (2005) contended that inter-rm linkage, which
is facilitated by proximity, could lead to improvement in environmental performance whereas the relations with suppliers aid
the adoption and development of innovative environmental
technologies. These, coupled with the interaction of the customer
and suppliers staff, partnership agreements and joint research
and development can lead to improvements in environmental
performance.
In the context of supply chain performance (SCP), the shortterm objectives of SCP are primarily to increase productivity and
reduce inventory and cycle time, while the long-term objectives
are to increase market share and prots for all members of the
supply chain. Financial metrics serve as a tool for comparing
organizations and evaluating an organizations behavior over
time. Supply chain performance has indeed become an important
source of sustainable advantage in many industries due to the
increase in global competition from the supply chain perspective
(Hoole, 2005). Organizations should focus on the overall supply
chain performance as this is a direct indication of the rms
performance (Olhager and Selldin, 2004), which means that
supply chain management has a dual role to improve individual
rm performance and also the overall supply chain performance
(Mentzer et al., 2001; Li et al., 2006). In terms of measuring
Supply Chain Performance, although there are several established
metrics, such as Balanced Score Card (BSC), the supply chain

labor turnover costs resulting from safer warehousing and

transportation and better working conditions (Carter and
Rogers, 2008; Brown, 1996; Carter and Stevens, 2007).
Lower labor costs better working conditions can increase
motivation and productivity, and reduce the absenteeism of
supply chain personnel (Carter and Rogers, 2008; Holmes
et al., 1996; McElroy et al., 1993).
Proactively shaping future regulation companies that proactively address environmental and social concerns can inuence government regulation when this regulation is modeled
after a companys existing production and supply chain processes, leading to a difcult-to-replicate competitive advantage for companies and their suppliers (Carter and Rogers,
2008; Carter and Dresner, 2001).
Reduced costs, shorter lead times, and better product quality
associated with the implementation of ISO 14000 standards,
which provide a framework for environmental management
systems (Carter and Rogers, 2008; Hanson et al., 2004;
Montabon et al., 2000; Tibor and Feldman, 1996).
Enhanced reputation engaging in sustainable behavior can
make an organization more attractive to suppliers and customers (Carter and Rogers, 2008; Ellen et al., 2006), to potential
employees (Carter and Rogers, 2008; Capaldi, 2005), and
to shareholders (Carter and Rogers, 2008; Klassen and
McLaughlin, 1996).

This paper will measure the possible contribution of the two

key Sustainable Supply Chain Management (SSCM) practices of
Environmental Purchasing and Sustainable Packaging and how
well they intersect with the Economic, Environmental and Social
aspects from a supply chain perspective and the extent of
contribution of these SSCM practices toward Sustainable Supply
Chain Performance.
2.4. Theoretical foundation
The degree of vertical integration between SSCM practices in
contributing toward sustainable supply chain performance can be

Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008

S. Zailani et al. / Int. J. Production Economics ] (]]]]) ]]]]]]

associated with the Transaction Cost (TC) theory. According to

Mighell and Jones (1963), vertical coordination includes all ways
of harmonizing the successive vertical stages of production and
marketing. The market-price system, vertical integration, contracting, cooperation singly or in combination are some of the
alternative means of coordination. Williamson (1975) stated that
transaction costs are important because they affect the organization of economic activity or vertical co-ordination and rms
attempt to acquire resources at a low cost and in a stable manner.
In addition to the above, Arminas (2004) stated that when rms
become increasingly dependent on scarce and valued resources, it
will result in a tendency to increase coordination with other
members of the supply chain, such as acquiring access to strategic
supplier technologies and knowledge by forming supplier partnerships and strategic alliances. Thus, in the context of supply
chain management there is always some kind of vertical coordination for any activity to take place. Based on the literature
review in the previous sections, the study identies various
variables and dimensions of the main constructs of the study,
which are sustainable supply chain management practices and
their outcomes. Fig. 2 shows the theoretical framework.
Bjorklund (2010) stated that the increased focus on the
purchasing function has increased the discussion on the contribution of purchasing in reducing the impact on the natural environment and concluded that purchasing could actually be a more
powerful change agent than any other corporate function. In
addition, the results from Carter et al. (2000) show that environmental purchasing has a positive effect on rm performance in
relation to net income and cost of goods sold. This implies that
with environmental purchasing being at the very front of the
value chain means it possesses characteristics that can inuence
the organization supply chain performance from a sustainable
perspective.
Twede (1995) commented that managing packaging waste is a
costly task, especially to collect, reuse or even recycle those
wastes, due to the variety of materials and small quantities that
make up the packaging waste. In addition, James et al. (2005a)
suggested that besides ensuring the successful movement of the
product across the supply chain, sustainable packaging must
ensure the reduced environmental impact of product spoilage
and waste. The reduction in waste and environmental impact
derived from sustainable packaging can have a direct inuence on
the sustainable supply chain performance of the organization.
Based on the above, the following hypotheses are postulated:
H1. Sustainable Supply Chain Management Practices positively
affect Sustainable Supply Chain Performance
H1a. Environmental Purchasing positively affects Sustainable
Supply Chain Performance
H1b. Sustainable Packaging positively affects Sustainable Supply
Chain Performance

3. Methodology
3.1. Research design
The population frame for the study consists of manufacturing
rms in Malaysia. Li et al. (2006), however, stated that supply
chain practices tend to be more prominent among large sized
companies. This implies that large sized companies tend to
emphasize supply chain related practices as opposed to smaller
sized companies. Thus, the majority of the respondents for this
study are large manufacturing companies or multi National
Corporations operating in Malaysia. These rms are expected to
have a high rate of adoption of environmental, safety and human
rights initiatives. The minimum requirement for a sample is one
variable to ten respondents (Hair et al., 2006), thus, a respondent
size of 106 is considered sufcient for this study. Stratied
random sampling is used in this study.
The unit of analysis of the study is the individual rm. Since, the
study combines issues related to sustainability focusing on the
environment, economic and human rights aspects with business
aspects of supply chain, the most appropriate respondent will be
the Supply Chain, Purchasing and Material Packaging representative
of the rm. Thus, the questionnaire will be addressed to the Supply
Chain, Purchasing and Material Packaging personnel who are usually
from logistics operations, purchasing or the material engineering
department of the rm.
3.2. Survey instrument
The primary data were gathered through a questionnaire
survey. Questionnaires are considered an efcient method to
collect data from the respondents, especially when the researcher
knows what is required and how to measure the variables of
interest. The questionnaire is divided into ve sections with a total
of 76 items. A 5-pointLikert scale from Low Extent (1) to High
Extent (5) is used to measure the extent of the sustainable
development related practices within the organization. Specically,
the items for Sustainable Supply Chain Management Practices on
Environmental Purchasing were adopted from Carter et al. (2000).
Items for Sustainable Supply Chain Management Practices on
Sustainable Packaging were adapted from Kooijmann (1996).
All of the items for Environmental Purchasing and Sustainable
Packaging were initially validated by three managers working in
multinational companies. It is believed that this process is deemed
necessary to suit the measurements with the context of Malaysia.
For the outcomes, the questions were designed using a 5-point
Likert scale from Strongly Disagree (1) to Strongly Agree (5) to
measure the effect of the sustainable supply chain practices on
the organization supply chain performance. The questionnaire
model for Sustainable Supply Chain Performance was adapted
from Harmon and Cowan (2009).

4. Data analysis
4.1. Prole of the companies

Environmental
Purchasing

Sustainable
Packaging

H1a
Sustainable
Supply Chain
Performance
H1b

Fig. 2. Theoretical framework.

A total of 400 questionnaires were mailed to the respondents.

Although, overall, 109 completed questionnaires were received,
only 105 responses were considered usable as four of the responses were incomplete. The ndings show that about 44.8% (47)
of the rms employ more than 1500 employees, followed by
16.2% (17) with 501 to 1500 employees, 26.7% (28) rms with
50 to 500 employees and 12.4% (13) rms with less than 50
employees. Approximately 60% (63) of the rms are fully owned
by a foreign company, 21.9% (23) of rms are joint ventures

Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008

S. Zailani et al. / Int. J. Production Economics ] (]]]]) ]]]]]]

between local and foreign, and 18.1% (19) are fully Malaysian
owned rms. In addition, 66.7% (70) of the rms are part of a
larger organization in line with the foreign and joint venture
ownership of the rms as shared above, while 33.3% (35) of the
rms are not part of a larger organization.
In the context of manufacturing sectors, as expected, 68.6%
(72) rms belong to the electrical and electronics (E&E) industry,
which is the largest manufacturing sector in Malaysia; 9.5% (10)
of the rms belong to the paper products and printing sector; 5.7%
(6) belong to the machinery and equipment sectors; 4.8% (5) of
rms fall under the chemical sector and 3.8% (4) of rms belong
to the pharmaceutical sector. Food and Beverage, Textiles and
wearing apparel sectors consist of 1.0% (1) rms each for both
sectors. Based on the rm age, 42.9% (26) of the rms have existed
in Malaysia for more than 26 years; followed by 10.5% (11) of
rms between 21 and 25 years; 19% (20) of rms with an age of
16 to 20 years; 10.5% (11) rms between 11 and 15 years; 16.2%
(17) rms between 5 and 10 years; and only 1.0% (1) of rms have
been in existence for less than ve years.
4.2. Goodness of measures
In this study, factor analysis was used to validate whether the
items in each section loaded into the expected categories. In
addition, Cronbachs alpha was used to assess the internal consistency or homogeneity among the items.
4.2.1. Factor analysis for sustainable supply chain management
practices
Factor analysis with Varimax rotation was done to validate the
dimensionality and appropriateness of the measurement scale.
With eigenvalues greater than 1.00 the total variance explained
was 70.63%. The KMO measure of sampling adequacy was 0.896
indicating sufcient intercorrelation while the Bartletts Test of
Sphericity was signicant (Chi square1.2603, p o0.001). There
were 14 questions on sustainable supply chain management
practices and two factors were extracted (Table 1).
4.2.2. Factor analysis for sustainable supply chain performance
Table 2 shows factor analysis for the sustainable supply
chain performance or outcomes. The initial theoretical framework

dened that sustainable supply chain management practices

will lead to only one outcome of sustainable supply chain
performance. However, the results from factor analysis show
four different factors for the outcomes. A review of the literature
on green supply chain initiatives by Zhu and Sarkis (2004)
stated that the possible outcomes of green supply chain management can be categorized as the economic and environmental
outcome.
However, Kassinis and Soteriou (2003) derived intangible outcome as another type of outcome of green supply chain initiatives.
These categories of outcome were compared with the sustainable
supply chain management outcome proposed by Carter and Rogers
(2008) who categorized outcomes of sustainable supply chain as
environmental, economic and social outcome. Referring to the
question items derived from the SCOR model and by citing the
supply chain performance metrics by Gunasekaran et al. (2004)
who termed the key metrics as operational outcomes, this study
uses four factors of outcome economic, environmental, social and
operational outcomes which are directly aligned with sustainable
supply chain performance.
Varimax rotation was used to validate that there are four
constructs that are distinct in sustainable supply chain performance. The results showed four solutions with eigenvalues
greater than 1.0 and the total variance explained was 79.95%.
The KMO measure of sampling adequacy is 0.832 indicating
sufcient intercorrelation, while the Bartletts Test of Sphericity
was signicant (Chi square1.1243, p o0.001). This result conrms that the construct is unidimensional and factorially distinct
and that all the items used to measure a particular construct are
loaded on four factors.

4.3. Modied research framework and hypotheses

Based on the result of factor analysis for sustainable supply
chain performance, four variables were added to the study on
Outcome, categorized as Operations, Environmental, Social and
Economic. The theoretical framework of the study has been
modied to reect the changes in the variables. The modied
framework includes four outcomes instead of one outcome as
conceptualized in the original framework. Fig. 3 presents the
modied theoretical framework.

Table 1
Factor analysis for sustainable supply chain management (SSCM) practices.
Items

Items no.

Factor
EP

Environmental purchasing
Purchases recycled packaging.
Purchases packaging that is of lighter weight.
Participates in the design of products for disassembly.
Participates in the design of products for recycling or reuse.
Uses a life-cycle analysis to evaluate the environmental friendliness of products and packaging.
Asks suppliers to commit to waste reduction goals.
Sustainable packaging
Effectively recovered and utilized in biological and industrial cradle-to-cradle cycles.
Benecial, safe and healthy for individuals and communities throughout its life cycle.
Physically designed to optimize materials and energy.
Maximizes the use of renewable or recycled source materials.
Sourced, manufactured, transported and recycled using renewable energy.
Meets market criteria for performance and cost.
Manufactured using clean production technologies and best practices.
Made from materials healthy in all probable end-of-life scenarios.
KMO
Bartletts Test of Sphericity
Eigenvalue
Percentage variance (70.63%)

EP1
EP2
EP4
EP6
EP3
EP5
SP8
SP1
SP7
SP4
SP3
SP2
SP5
SP6

.907
.920
.891
.861
.897
.882
.221
.227
.182
.171
.268
.237
.126
.010
.896
1.2603
5.096
36.401

SP

.263
.204
.211
.241
.174
.136
.771
.763
.808
.767
.661
.670
.755
.811

4.793
34.237

Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008

S. Zailani et al. / Int. J. Production Economics ] (]]]]) ]]]]]]

Table 2
Factor analysis for sustainable supply chain performance.
Items

Item no.

Operations (OPE)
Ability to reduce manufacturing operating cost.
Number of days for a supply chain to respond to plan, source, make and deliver unexpected demand variations.
Ability to quickly respond to changes to competitors product offerings.
Inventory days of supply/inventory turnover rate (number of days cash is tied up in inventory).
Ability to fulll perfect order(complete, without any delays and damage free).
Economic (ECO)
Signicant improvement in terms of sales and market share.
Signicant reduction in terms of waste and its disposal costs.
Signicant improvement in terms of resources management efciency.
Social (SOC)
Signicant improvement in its image in the eyes of its customers.
Signicant improvement in relations with community stakeholders, e.g., Nongovernmental organizations (NGO)
and community activists.
Signicant improvement in product image.
Environment (EN)
Signicant improvement in its compliance to environmental standards.
Signicant reduction in consumption for hazardous/harmful/toxic materials.
Signicant reduction in energy consumption.
KMO
Bartletts Test of Sphericity
Eigenvalue
Percentage variance (79.95%)

Environmental
Purchasing
Sustainable
Packaging

Component
OPE

ECON

Ope4
Ope3
Ope2
Ope5
Ope1

.887
.878
.873
.855
.846

.090
.069
.154
.127
.197

.234
.149
.119
.138
.160

.087
.081
.039
.138
.196

Econ3
Econ1
Econ2

.170
.146
.171

.903
.881
.875

.220
.123
.274

.155
.254
.164

Soc2

.221

.122

.826

.261

Soc3

.163

.263

.778

.147

Soc1

.263

.237

.772

.220

En1
En2
En3

.057
.204
.107
.832
1.1243
4.045
28.891

SOC

EN

.149
.203
.162

.124
.166
.282

.859
.765
.737

2.677
19.121

2.280
16.288

2.192
15.654

Operation

H1.2a. Sustainable Packaging positively affects environmental

outcomes

Economic

H1.2b. Sustainable Packaging positively affects economic outcomes.

Environmental
Social

H1.2c. Sustainable Packaging positively affects social outcomes

H1.2d. Sustainable Packaging positively affects operational
outcomes.

Fig. 3. Modied theoretical framework.

4.4. Reliability

In view of the changes in the theoretical framework, the original

hypotheses related to the relationships between sustainable supply
chain management practices and outcomes were restated. The
restated hypotheses reect the addition of operation, economic,
environment and social as the new list of variables for outcomes.
Accordingly, new hypotheses were added to reect the hypothesized relationships between sustainable supply chain management practices and operation, economic, environment and social
outcomes.
H1: Sustainable Supply Chain Management Practices positively
affect outcomes

The inter-item consistency measure of Cronbachs alpha was

used to assess the reliability of all major variables. All the
reliability values are above 0.80, thus all major variables are
reliable measures (Nunnally, 1978). The Highest Cronbachs alpha
was observed for environmental purchasing at 0.962 and the
lowest for Environment (0.787). The high value of Cronbachs
alpha for all the variables under study indicates that the question
items are reliable and consistent. This can be attributed to the fact
that all the questionnaire items were either adopted or adapted
from published journals or articles that have been empirically
tested or conceptualized.
4.5. Regression analysis

H1.1. Environmental Purchasing positively affects outcomes

H1.1a. Environmental Purchasing positively affects environmental outcomes
H1.1b. Environmental Purchasing positively affects economic
outcomes.
H1.1c. Environmental Purchasing positively affects social outcomes
H1.1d. Environmental Purchasing positively affects operational
outcomes.
H1.2. Sustainable Packaging positively affects outcomes

Table 3 shows the ndings from multiple regression. Multiple

regression analyses are used to determine the inuence of a set of
independent variables on a dependent variable, i.e., how much of
the variance in the dependent variable is explained by the set of
predictors or independent variables (Hair et al., 1998). Table 4
presents the results of the regression analysis for sustainable
supply chain management and performance. The rst model is
between sustainable supply chain practices and environmental
performance and it was signicant (F24.847; p o0.001) with
R2 .328 and adjusted R2 .314. Environmental purchasing was
not found to have any relationship with environmental performance (b .062, p4.05). However, sustainable packaging was

Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008

S. Zailani et al. / Int. J. Production Economics ] (]]]]) ]]]]]]

 Sustainable Packaging only has a positive effect on environ-

Table 3
Reliability.

mental, economic, social and operational outcomes.

Environmental purchasing
Sustainable packaging
Environment
Social
Economic
Operations

No. of items

Cronbachs alpha

6
8
3
3
3
5

.962
.903
.787
.844
.939
.940

5. Discussion

Table 4
Regression of sustainable supply chain management on performance.
Sustainable
supply chain
practices
Environmental
purchasing
Sustainable
packaging
R2
Adjusted R2
F

Environment
performance

Social
Economic
Economic
performance performance performance

.062

.297nnn

.255nn

.848nnn

.542nnn

.478nnn

.409nnn

.031

.442
.431
40.443nnn

.325
.312
24.543nnn

.328
.314
24.847

.742
.737
141.106nnn

Signicance Level:
nn

p o0.01.
po 0.001.

nnn

The initial theoretical framework dened that sustainable

supply chain management practices will lead to only one outcome of sustainable supply chain performance; however, the
results from the factor analysis show four different factors for
the outcomes. The review of literature on green supply chain
initiatives by Zhu and Sarkis (2004) stated that the possible
outcomes of green supply chain management can be categorized
as economic and environmental outcome.
However, Kassinis and Soteriou (2003) derived intangible
outcome as another type of outcome of green supply chain
initiatives. These categories of outcome were compared with the
sustainable supply chain management outcome proposed by
Carter and Rogers (2008) who categorized outcomes of sustainable supply chain as environmental, economic and social outcome. Referring to the question items derived from the SCOR
model and by citing the supply chain performance metrics by
Gunasekaran et al. (2004) who termed the key metrics as
operational outcomes, in this study, the four factors of outcome
will be dened as economic, environmental, social and operational outcomes, which are directly aligned with sustainable
supply chain performance. The denitions of the four outcomes
are as follows:

 Environmental outcomes: dened as positive consequences of

signicantly related with environment performance (b .542,
p o.001).
The next model is between sustainable supply chain practices
with social performance. This model can explain 44.2% (R2 0.442)
of variance on social performance and was signicant (F40.443,
po.001). The 55.8% due to error or explained by other factors are
not included in this study. Environmental Purchasing (b .297;
p40.001) and Sustainable Packaging (b .478; p40.001) were
found to be statistically related with social performance. The third
model is the results of the regression analysis undertaken to test
the sustainable supply chain management on economic performance. The model is signicant (F24.543; p valueo0.001). The
coefcient of determination (R2) was found to be 0.325 indicating
that 32.5% of Economic performance is explained by the sustainable supply chain management. From the regression analysis it can
be observed that Environmental Purchasing (b .255; p40.01) and
Sustainable Packaging (b .409; p40.001) did have a signicant
inuence on Economic performance.
The last model is the results of the regression analysis
undertaken to test the effect of two dimensions of sustainable
supply chain management on operations performance. The model
is signicant (F141.106; p value o0.001). Environmental
purchasing and sustainable packaging were entered into the regression, the coefcient of determination (R2) was found to be 0.742
indicating that 74.2% of operations performance was explained by
sustainable supply chain management. The remaining 25.8% is
unexplained in this model. From the regression analysis, it can be
observed that environmental purchasing (b .848; po0.001) did
have a signicant inuence on operation performance. Nevertheless,
sustainable packaging (b .031; p40.05) was not found to have a
signicant relationship with operation performance.
The results can be summarized as follows:

 Environmental purchasing only has a positive effect on economic,

social and operational outcomes.





green supply chain initiatives on the natural environment

inside and outside the rm (Zhu and Sarkis, 2004).
Economic outcomes: dened as nancial returns that can actually result from the adoption of green supply chain initiatives
(Zhu and Sarkis, 2004).
Social outcomes: dened as conceptual or difcult to quantify
outcomes that can actually result from the adoption of green
supply chain initiatives (Kassinis and Soteriou, 2003).
Operational outcomes: dened as operational level measures,
which include the ability in day-to-day technical representation, adherence to developed schedule, ability to avoid complaints and achievement of defect free deliveries (Gunasekaran
et al., 2004).

The results of the study showed that environmental purchasing does not have a positive effect on environmental outcome,
which contradicts the ndings of Bjorklund (2010) that the
increased focus on the purchasing function has literally increased
the discussion on the contribution of purchasing in reducing the
impact on the natural environment. One of the possible reasons
for the above result could be that the responding rms believe
that the benets of these initiatives may reect on external
parties rather than on the rm itself. For example, although
environmental purchasing focuses on improving the environmental performance of its suppliers, by purchasing environmentally
friendly materials the direct benet goes to the suppliers rather
than the rm indirectly. Another contributing factor to the above
nding could be the lack of availability of systematic monitoring
and sharing of key performance indicators derived from the
environmental purchasing activities from the environmental
aspect of the organization. Thus, the lack of visibility on the key
indicators could lead to the above ndings of environmental
purchasing not contributing to the environmental performance
of an organization.
However, environmental purchasing showed a positive effect
on economic, social and operational outcomes. For economic

Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008

S. Zailani et al. / Int. J. Production Economics ] (]]]]) ]]]]]]

outcome, the nding is supported by the proposition from Carter

et al. (2000) that environmental purchasing has a positive effect
on a rms performance in relation to net income and cost of
goods sold. On social outcome, the nding corresponds with the
nding by Preuss (2000), which states that a company adopting
social and/or environmental standards can leverage on their
purchasing function to transfer those standards to suppliers, thus
generating a chain effect leading to quick and deep changes in the
overall social and environmental elements. The positive relationship between environmental purchasing and operational outcome
can be linked with the ndings of Zhu et al. (2005) that green
supply chain practices were perceived to have a large inuence
on promoting product quality. This can be related to the strategic
stage of the supply chain performance metric proposed by
Gunasekaran et al. (2004), which focuses on the level of customer
perceived value of a product.
The results of the study showed that sustainable packaging has
a signicant positive effect on the three types of outcome
environmental, economic and social. The ndings of James et al.
(2005a) that sustainable packaging must ensure the reduced
environmental impact of product spoilage and waste supports
the result of the positive relationship between sustainable packaging and the environmental, economic and social outcomes. This
is because a reduction in the resources and waste directly implies
the key environmental element, which can be related to overall
cost reduction from an economic point of view. While sustainable
packaging through environmentally friendly packaging and waste
reduction can be said to fulll external societal drivers due to
increasing public awareness, consumer demand for environmentally friendly performance, and the inuence of NGOs concerned
with corporate green wash.
However, the result shows that sustainable packaging does not
have a positive effect on operational outcome, which contradicts
the study by Twede (1995) who stated that through a reduction in
the cost of packing and by mechanizing operations; organizations
are able to improve the speed of packing and eliminate assembly
line downtime. The contradictory nding between sustainable
packaging and operational outcome could be due to the inability
to associate the benets of sustainable packaging with actual
outcome from an operational key metrics perspective. This can be
partly due to the lack of a monitoring system or indicators that
can directly link sustainable packaging with improvements on
operational outcomes, such as improvement in overall supply
chain delivery cycle time.
In summary, both environmental purchasing and sustainable
packaging showed a positive effect on economic and social outcomes. This indicates that, in general, Malaysian rms place
high consideration on the business benets of sustainable supply
chain management practices as key determining criteria to adopt
sustainable supply chain management practices. Thus, although a
positive result on social outcome might not reect the reason for
rms to adopt sustainable supply chain management practices, it
could be towards the expectation that sustainable supply chain
management practices leads to an improvement in the nancial
and market position of the rms.

5.1. Implications of the study

From the transaction cost (TC) perspective, there is empirical
evidence of strong vertical integration between sustainable supply chain management (SSCM) practices and the four types of
outcome (environment, economic, social and operational) concerning sustainable supply chain performance. In respect of
managerial implications, the results indicate that SSCM practice
has a positive effect on sustainable supply chain performance,

particularly from the economic and social perspective. This aligns

with the notation that expected business benets have a signicant effect on sustainable supply chain management practices.
Thus, the rms need to work together to share the benets and
success stories of sustainable supply chain management practices with other rms so as to spread and create interest in SSCM
concepts across a large number of rms. Importantly, SSCM needs
to be conveyed as a route for rms commercial success rather
than as a moral obligation.

5.2. Directions for future research

Future research could utilize the concepts and results to
develop a detailed conceptualization of sustainable supply chain
management practices and their impact on sustainable supply
chain performance, especially in the context of Malaysia. Future
studies can replicate this study by looking at other forms of SSCM
practices, such as Sustainable Warehousing and Sustainable
Transportation, and in different contexts, such as different sectors
or States. Future studies may use longitudinal analysis in studying
sustainable supply chain management practices as a means of
providing a clear picture concerning the effect of SSCM. A good
example will be to perform a comparison on the outcomes of
SSCM before and after the adoption of SSCM practices.

5.3. Conclusion
Today, sustainability is receiving an increasing level of attention at both the local and global levels, which eventually leads to
questions on how to integrate sustainability with business operations and strategy. Sustainable supply chain management (SSCM)
could be a good means to extend the responsibility of business
organizations from being reactive in reducing pollution and waste
and other sustainable related efforts, to proactively assuming full
responsibility for their products from acquisition of raw materials
to the nal disposal of the products from a sustainability perspective. This paper examines sustainable supply chain management practices within manufacturing rms in Malaysia.
The main contribution of the paper is its proof concerning the
effects of the SSCM practices on the sustainable supply chain
performance of the rm. Environmental purchasing and sustainable packaging were found to have a direct impact on the rms
performance outcome, especially on economic and social outcomes. This signals that SSCM practices can bring value to both
the organizations and the external environment. SSCM practices
will lead to a reduction in resources, material and waste, thereby
enabling better resource utilization, and play a signicant role in
achieving the triple bottom line of social, environmental, and
economic performance, and, thus, contributing to sustainable
development of the country.
In summary, the overall ndings indicate that sustainable supply
chain management practices represent an interesting area of
research and practice, which requires further research to understand
why rms adopt sustainable supply chain management practices
in the rst place. This study attempts to set a solid theoretical
and empirical basis for this area of research. Thus, future studies
are encouraged to make use of this study for further investigation of
this interesting and important topic, namely, sustainable supply
chains.

Appendix
See Table A1 for more details.

Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008

10

S. Zailani et al. / Int. J. Production Economics ] (]]]]) ]]]]]]

Table A1
Items for the variables.
Environmental purchasing: currently our company y.
EP1
EP2
EP3
EP4
EP5
EP6

Low

Moderate

High

High extent

Low extent

Low

Moderate

High

High extent

Purchases recycled packaging.

Purchases packaging that is of lighter weight.
Uses a life-cycle analysis to evaluate the environmental friendliness of products and packaging.
Participates in the design of products for disassembly.
Asks suppliers to commit to waste reduction goals.
Participates in the design of products for recycling or reuse.

Sustainable packaging: currently our packaging y.

SP1
SP2
SP3
SP4
SP5
SP6
SP7
SP8

Low extent

Benecial, safe and healthy for individuals and communities throughout its life cycle.
Meets market criteria for performance and cost.
Sourced, manufactured, transported and recycled using renewable energy.
Maximizes the use of renewable or recycled source materials.
Manufactured using clean production technologies and best practices.
Made from materials healthy in all probable end-of-life scenarios.
Physically designed to optimize materials and energy.
Effectively recovered and utilized in biological and industrial cradle-to-cradle cycles.

For the last three years, my rm has achieved y.

O1
O2
O3
O4
O5
O6
O7
O8
O9
O10
O11
O12
O13
O14

Strongly
disagree

Disagree Moderate Agree Strongly

agree

Signicant improvement in its compliance to environmental standards.

Signicant reduction in consumption for hazardous/harmful/toxic materials.
Signicant reduction in energy consumption.
Signicant improvement in product image.
Signicant improvement in its image in the eyes of its customers.
Signicant improvement in relations with community stakeholders, e.g., Nongovernmental organizations
(NGO) and community activists.
Signicant reduction in terms of wastes and its disposal costs.
Signicant improvement in terms of resources management efciency.
Signicant improvement in terms of sales and market share.
Ability to fulll perfect order(complete, without any delays and damage free).
Ability to quickly respond to changes to competitors product offerings.
Number of days for a supply chain to respond to plan, source, make and deliver unexpected demand
variations.
Ability to reduce manufacturing operating cost.
Inventory days of supply/inventory turnover rate (number of days cash is tied up in inventory).

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Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008