CHAPTER -1

Introduction

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1.1 Introduction
Environmental concerns are finally finding its way from strategy and board room meetings to
operations and to supply chain management (SCM). A growing number of companies have
realized the world over that implementing supply chain management is only one of the
objectives they need to realize. The other important agenda is to make this SCM
environmentally friendly. This has catapulted SCM to a new height that promises to give a
major contribution to the companies overall strategy.
The companies are implementing ESCM (Environmental SCM) by looking beyond their own
facilities. Ofcourse this is only after they have ensured that their manufacturing facility is
friendly to the environment and does not throws or generates harmful waste products into the
environment. Companies are also involving their suppliers in environmental initiatives and
agendas. This is done by screening suppliers for environmental performance, working
collaboratively with them on green design initiatives and providing training and information
to build suppliers’ environmental management capacity.
Environmental supply chain management recognizes the crucial role to be played by the
purchasing and the function’s involvement in activities that include reduction, recycling,
reuse and the substitution of materials. Working with suppliers on environmental issues not
only generates significant environmental benefits, but also opportunities for cost containment,
improved risk management and enhanced quality and brand image. This will also help
companies streamline their supply base and develop more co-operative, long-term
relationships with key suppliers, a practice that has fostered greater opportunities to work
together on environmental issues.
It is hence important that Indian companies too make ESCM an important part of their
agenda. Already Asian Paints, M&M and some other companies have taken great strides in
this area.
However large scale adoption of environmental aspects within the framework of SCM is
essential. The starting point as for any other major strategy is the top management
commitment to the environmental issues. This is not only essential but is critical for the
overall success of the project. It should be the mission of the company’s top management to
sensitize everyone in the company towards environmental issues. It will also be a good idea
to have a separate environmental department reporting directly to the top management. This
department should look at all the aspects of the environment barometer and track its progress
on a regular basis. Any discrepancy is immediately reported to the CEO.
However, it is equally important to make everybody participate in the process with the same
gusto. This can happen by empowering the employees to act immediately in response to the
environmental problems, rather than simply offering suggestions. The rewards and incentive
structure also emphasizes results. This will allow the employees to think and be innovative in
implementing environmentally friendly policies and procedures.

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It is important to spread the message to the customers and thereby making them participate in
the environment journey. This can be achieved by branding the company and its products on
environmental lines. This can be done by bringing out the synergy between the company’s
strategy and its strong environmental image and reputation, and environmentally sensitive
products, suppliers etc. it deals with.
Next it is important to connect with the most vital link of the company – its suppliers. A
holistic approach, such as supply chain integration to environmental management links
reduction in energy consumption to waste generation and release of pollutants. Setting
aggressive and progressive environmental goals is important. This can be done by using tools
such as life-cycle management (LCM) and environmental audits (EA) improve environmental
and operating performance. Suppliers are asked to keep track of their cost of waste (COW) so
that this can be reduced. Supplier negotiations and selection revolve around COW and other
environmental issues.
Supplier audits on environmental issues are an absolute must and this process should be a
cross-functional initiative. This should involve employees from quality assurance,
environmental affairs and purchasing. Similarly, teams should include financial analysts who
decide whether suppliers will be the most productive from the perspective of maximizing
Environment Value Add (EVA) make-or-buy decisions. Adherence of suppliers to quality
and environment standards is a necessary prerequisite for achieving a company’s various
objectives. Early sourcing and early supplier involvement in basic product developmental
work is required and while doing so it will be easy for the companies to strictly adhere to the
norms it has prescribed for itself. These sourcing decisions must also take into consideration
safety issues, capacity of suppliers, and ability to treat compounds and effluents. Products and
processes should be subjected to continual critical analysis at every stage of the value-added
process. The early integration of suppliers into all decisions affecting them is critical to
environmental effectiveness.

1.2 Objective of the study

The main objective of the study was to investigate Environmental supply chain management
practices, performance, challenges of Service sector in Bangladesh.

The specific Objectives were:

1. To know supply chain management practices used in the Service Sector in
Bangladesh.
2. To know the impact of SCM to performance of the service industry.
3. To know the challenges of supply chain management practices faced by the Service
industry.

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1.3 Methodology of the Study
The study is a descriptive in nature, which was conducted by collecting primary and
secondary data. The study tries to focus on supply chain management practice & challenges
of service industries and how customer perception about the service sector. In preparing a
report about the topic, it is a difficult and complicated task and no single method is
appropriate for preparing the report. The methodology of the task can be depicted as follows:
Sources of Data: Data have been collected from both primary and secondary sources.
Primary sources of data:
Primary data is raw information collected by researchers for a specific purpose. For the
purpose of my study I have been collected primary data through informal conversation with
the management (Officers & stuff), conversation with customers and observation of various
service industries.
Secondary sources of data:
Secondary data is information obtained by studying the reports of other researchers. I have
been collected secondary data through brochure, operational manual, different circulars and
web sites.

1.4 Limitations of the study:

Although efforts will be made to make the report as comprehensive as possible, nevertheless,
the following limitations have been identified for the preparation of the report.
 Time Constraints: Because it is not enough to have the scrupulous analysis of the data
within three months period.
 Inadequate opportunities to some into contact with the sources of information are also
a constraint.
 Employees are usually busy with their daily works and activities, so it is quite
impossible sometime to get time from them for getting information about my report.
 Sometimes the authority does not provide their internal information which is very
difficult to collect from any other sources.
 We did not have any proper financial support and limitation of time is also a barrier
for making this report.

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 CHAPTER -2
Literature Review

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2.1 Literature Review
Supply Chain Management encompasses the planning and management of all activities
involved in sourcing and procurement. It includes coordination and collaboration with
channel partners such as suppliers, intermediaries, third-party service providers and
customers (Morgan and Monczka, 2006). In essence, SCM integrates supply and demand
management within and across companies (Watts and Hahn, 2003). Slack (1995) defines
procurement as the acquisition of goods, services or works from an external source at the best
possible cost to meet the needs of the intended user in terms of quality and quantity, time and
location. Leavy (2001) explains that there are potential risks in procurement especially when
sourcing for procurement services. Outsourcing a component or service may leave a company
open to opportunism, where a supplier will try to exploit it by increasing prices. Sourcing for
procurement services from world class companies with their own reputation may limit this
risk or it may be seen as the cost of access to skills (Leavy, 2001). Morgan and Monczka
(2006) identifies logistics management as the part of SCM that plans, implements and
controls the efficient, effective forward and the reverse flow of goods, services and related
information between the point of origin and the point of consumption in order to meet
customer requirements.
Procurement and logistics management activities as well as warehousing and distribution
form SCM. According to Chandra and Kumar (2000), SCM touches major issues, including
the rapid growth of multinational corporations and strategic partnerships; global expansion
and sourcing; fluctuating gas prices and environmental concerns, disaster mitigation and
crisis management. Each of these issues dramatically affects livelihoods, corporate strategy
and the bottom line.
Organizations adopt numerous business improvement methodologies to improve their
performance. As competition intensifies, so do the challenges associated with getting a
product or service to the right place at the right time at the lowest delivered total cost. Service
industry has begun to realize the potential benefits and importance of strategic and
cooperative buyer-supplier relationships. They have started to involve strategic suppliers in
resource management decisions (Morgan and Monczka, 2006). Instead of relying on tools
such as acceptance sampling to establish the quality of incoming materials and component
parts, manufacturers purchase from a more limited number of qualified or certified suppliers
and embrace the concept of supply base management, hoping to reduce costs by cutting
inventory and improving efficiency throughout the supply chain (Watts and Hahn, 2003). The
supply chain management in general aims at improving value delivery to customers; relying
on just-in-time system; eliminating waste; getting the involvement of all stakeholders in the
value creation process as well as working closely with suppliers. According to Ireland and
Webb (2007), SCM continues to be adopted by organizations as the medium for creating and
sustaining a competitive advantage and points out that such a displacement is understandable
considering the potential benefits of successful supply chain management. Supply chain
management (SCM) is an integrated approach beginning with planning and control of
materials, logistics, services, and information stream from suppliers to manufacturers or

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service providers to the end client; it represents a most important change in business
management practices (Ou et al., 2010).

2.2 Supply Chain Management

The concept “Supply chain management” (SCM) is referred to the means by which firms
engage in creating, distributing and selling product. That includes all cooperative efforts
among members of the supply chain (SC) in order to reach higher market intelligence through
a more precise market information gathering, product research, product development and
design, and value analysis of the total system.
More common and accepted definition of Supply chain Management is:
1. Council of Supply Chain Management Professionals-The planning and
management of all activities involved in sourcing and procurement, conversion, and
all logistics management activities … also includes coordination with channel
partners, which can be suppliers, intermediaries, third party service providers, and
customers.
2. The Supply Chain Council-Managing supply and demand, sourcing raw materials
and parts, manufacturing and assembly, warehousing and inventory tracking, order
entry and order management, distribution across all channels, and delivery to the
customer.
3. Institute for Supply Management-The design and management of seamless, value-
added processes across organizational boundaries to meet the real needs of the end
customer.
4. Global Supply Chain Forum-Supply Chain Management is the integration of key
business processes across the supply chain for the purpose of adding value for
customer and stakeholder.
5. Supply chain Management is a set of approaches to efficiently integrate Suppliers,
Manufacturers, and Warehouses and stores so that the merchandise is produced and
distributed at right time of right qualities, at right locations in order to minimize
system wide costs while satisfying service level requirements of customers.

2.3 Supply Chain Management – Advantages

In this era of globalization where companies compete to provide the best quality products to
the customers and satisfy all their demands, supply chain management plays a very important
role. All the companies are highly dependent on effective supply chain process.
The key benefits of supply chain management are as follows:
1. Develops better customer relationship and service.
2. Creates better delivery mechanisms for products and services in demand with
minimum delay.
3. Minimizes warehouse and transportation costs.
4. Minimizes direct and indirect costs.
5. Assists in achieving shipping of right products to the right place at the right time.

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 6. Enhances inventory management, supporting the successful execution of just-in-time
stock models.
7. Assists companies in minimizing waste, driving out costs, and achieving efficiencies
throughout the supply chain process.

2.4 Flows in a Supply Chain

Figure 1: Flows of Supply Chain

2.5 Objective of Supply chain Management

To maximize overall value generated or Profitability of Supply chain.
Profitability = Revenue received from the customers - the sum of costs incurred in the supply
chain to produce and distribute the products to customers

2.6 Supply chain Evolution

Prior to 1900, there were few separate and distinct purchasing departments in U.S business.
Most Pre-twentieth century purchasing departments existed in the railroad industry. The first
specifically addressing institutionalized purchasing within this industry was the handling
Railway suppliers-Their purchase and deposition, written by Marshall M. Kirkman in 1887.
Early in the twentieth century, several books on purchasing were published, while discussion
of purchasing practices and concerns were tailored to specific industries in technical trade

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publications. The year 1915 saw the founding of The National Association of Purchasing
Agents. This organization eventually became known as the National Association of
Purchasing Management (NAPM) and is still active today under the name The Institute for
Supply Management (ISM).
Harvard University offered a course in purchasing as early as 1917. Purchasing as an
academic discipline was furthered with the printing of the first college textbook on the
subject, authored by Howard T. Lewis of Harvard, in 1933.
Early buyers were responsible for ensuring a reasonable purchase price and maintaining
operations (avoiding shutdowns due to stock outs). Both World Wars brought more attention
to the profession due to the shortage of materials and the alterations in the market. Still, up
until the 1960s, purchasing agents were basically order-placing clerical personnel serving in a
staff-support position. In the late 1960s and early 1970s, purchasing personnel became more
integrated with a materials system. As materials became a part of strategic planning, the
importance of the purchasing department increased.
In the 1970s the oil embargo and the shortage of almost all basic raw materials brought much
of business world’s focus to the purchasing arena. The advent of just-in-time purchasing
techniques in the 1980s, with its emphasis on inventory control and supplier quality, quantity,
timing, and dependability, made purchasing a cornerstone of competitive strategy.
By the 1990s the term “supply chain management” had replaced the terms “purchasing,”
“transportation,” and “operations,” and purchasing had assumed a position in organizational
development and management. In other words, purchasing had become responsible for
acq0uiring the right materials, services, and technology from the right source, at the right
time, in the right quantity.

2.7 Environmental Supply Chain Management

Environmental concerns are finally finding its way from strategy and board room meetings to
operations and to supply chain management (SCM). A growing number of companies have
realized the world over that implementing supply chain management is only one of the
objectives they need to realize. The other important agenda is to make this SCM
environmentally friendly. This has catapulted SCM to a new height that promises to give a
major contribution to the companies overall strategy.
The companies are implementing ESCM (Environmental SCM) by looking beyond their own
facilities. Ofcourse this is only after they have ensured that their manufacturing facility is
friendly to the environment and does not throws or generates harmful waste products into the
environment. Companies are also involving their suppliers in environmental initiatives and
agendas. This is done by screening suppliers for environmental performance, working
collaboratively with them on green design initiatives and providing training and information
to build suppliers’ environmental management capacity.

9|Page
Environmental supply chain management recognizes the crucial role to be played by the
purchasing and the function’s involvement in activities that include reduction, recycling,
reuse and the substitution of materials. Working with suppliers on environmental issues not
only generates significant environmental benefits, but also opportunities for cost containment,
improved risk management and enhanced quality and brand image. This will also help
companies streamline their supply base and develop more co-operative, long-term
relationships with key suppliers, a practice that has fostered greater opportunities to work
together on environmental issues.
It is hence important that Indian companies too make ESCM an important part of their
agenda. Already Asian Paints, M&M and some other companies have taken great strides in
this area.
However large scale adoption of environmental aspects within the framework of SCM is
essential. The starting point as for any other major strategy is the top management
commitment to the environmental issues. This is not only essential but is critical for the
overall success of the project. It should be the mission of the company’s top management to
sensitize everyone in the company towards environmental issues. It will also be a good idea
to have a separate environmental department reporting directly to the top management. This
department should look at all the aspects of the environment barometer and track its progress
on a regular basis. Any discrepancy is immediately reported to the CEO.
However, it is equally important to make everybody participate in the process with the same
gusto. This can happen by empowering the employees to act immediately in response to the
environmental problems, rather than simply offering suggestions. The rewards and incentive
structure also emphasizes results. This will allow the employees to think and be innovative in
implementing environmentally friendly policies and procedures.

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 CHAPTER -3
Environmental Supply Chain Management

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3.1 Environmental Supply Chain Management
Top management commitment to environmental issues is critical. For example, a separate
environmental department reporting to the top management the importance attached to
environmental issues by the company. Employee issues are an important part of becoming
environmentally conscious. In 3M, employees are empowered to act in response to
environmental problems, rather than simply offering suggestions. The reward structure also
emphasizes results.
Synergy between the company's strong environmental image and reputation, and
environmentally sensitive products is important. A holistic approach, such as supply chain
integration, to environmental management links reduction in energy consumption to waste
generation and release of pollutants. Using a customer-driven environmental management
system along with standard operating procedures facilitates supply chain integration.
Setting aggressive and progressive environmental goals is important.
Using tools such as life-cycle management (LCM) and environmental audits (EA) improves
environmental and operating performance. Suppliers are asked to keep track of their cost of
waste (COW) so that this can be reduced. Supplier negotiations and selection revolve around
COW and other environmental issues.
It is desirable to make early financial investment in environmental protection. Novartis was
one of the first European companies to formulate environmental policies (1972).
Top management commitment to environmental issues (as indicated by a high position for
the environmental and safety department in an organization chart) is important to program
success and commitment. Decentralization of environmental specialists in the different
business units is most efficient.
 Environmental dimension should be viewed as an inseparable part of business
performance. It is useful to set quantitative targets for different environmental
performance measures.
 An initial strategy of speed to market followed by incremental changes in process
designs that are environmentally friendly is important.
 A supply chain emphasis is required for optimizing environment value added (EVA)
performance.
 An ability to tap emerging market suppliers for less sophisticated products as well as
managing associative risks is important.
 A lean corporate environment group is desirable for expediting decision-making.
Safe and environmentally responsible processes are important criteria for supplier
selection.
 Supplier audits on environmental issues require a cross-functional initiative involving
employees from quality assurance, environmental affairs and purchasing. Similarly,

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 teams should include financial analysts who decide whether suppliers will be the most
productive from the perspective of maximizing EVA make-or-buy decisions.
 Adherence of suppliers to quality and environment standards is a necessary prerequisite
for achieving a company's objective of speed to market.
 Because of the long lead-times for new products, companies need to resort to early
sourcing and early supplier involvement in basic product developmental work.
 Sourcing decisions must take into consideration safety issues, capacity of suppliers, and
ability to treat compounds and effluents.
 Because of an emphasis on a lean group, purchasing has more responsibility to conduct
timely supplier evaluations using criteria such as risk and environmental capability. This
in turn affects the training and technical expertise expected of purchasing staff.
 Because of the emphasis on environmental value-added performance, companies turn to
suppliers for use of their waste treatment facilities. Companies also seek to develop
suppliers who can collect, clean and reship process waste back to the company.
 The range of influence for sourcing strategies and supplier identification is global.
An experiential approach to environmental management as demonstrated by a
considerably long history of environmental awareness is needed.
 A unique environmental performance system as indicated by the development of a
customized composite index called Eco-productivity is needed.
 A proactive approach to environmental management as can be seen from the setting of
specific targets for future environmental performance for outcomes, inputs, and
processes is needed.
 An "open" approach of communicating environmental information to the general public
is needed.
 Companies must carefully justify all environmental changes through either cost reduction
or customer satisfaction issues.
 The focus of continuous improvement used so effectively during TQM program
implementation can be applied quite effectively to improving environmental efficiency
and effectiveness.
 The cross-functional relevance of environmental supply chain management is ensured by
its direct impact on the supplier selection and management processes.
 Change should be viewed as a competitive tool and environmental efficiency viewed as a
positive catalyst for change.
 Products and processes should be subjected to continual critical analysis at every stage of
the value-added process.
 The early integration of suppliers into all decisions affecting them is critical to
environmental effectiveness.
The case study results indicate the need for inter-functional coordination and the adoption of
a value-chain perspective, including a closer interface between purchasing and other

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functions. Purchasing must interface with engineering to ensure that materials that are
specified can be recycled or reused, or meet resource reduction goals.
The case studies yielded 16 themes relating to environmental supply chain management. The
most important themes pursued by firms in this case study included: life-cycle management,
environmental performance management, assessing supplier's environmental capability, and
environmental auditing.
Projected Trends Relating to Environmentalism. While current trends affecting
environmental manufacturing relate to re-manufacturing, reuse, process waste, human
resource programs (such as empowerment, waste remediation teams, and employee
suggestion programs), and inbound logistics, the future holds new trends that will change the
face of environmental manufacturing. These trends are described as propositions:
Proposition 1: The level of consumer awareness of environmental issues will increase
rapidly.
The influence of this trend can already be felt; consider the example of products relating to
health care. Because of stringent product labeling standards and media exposure, there is
considerable awareness among consumers of environmental topics that were heretofore "too
technical."
Proposition 2: Firms will place an increasing emphasis on environmentalism in the
evaluation of effectiveness of business processes.
Currently, there are several companies that use sophisticated environmental performance
measurement schemes. This trend is expected to increase because an orientation toward
business processes is common among most firms. Therefore, one can to assume that
environmental issues should be considered at each business process level.
Proposition 3: The transfer of knowledge among subsidiaries of large firms will increase
rapidly.
Firms will place an increasing emphasis on environmentalism in the evaluation of
effectiveness of business processes through knowledge diffusion and uniform environmental
standards.
Proposition 4: Four major inter-organizational forces will drive environmental supply chain
activities. Those forces are governments, suppliers, customers, and competitors.
While the literature review suggests a set of internal and external drivers of environmental
supply chain activities, this case research has provided a multi-variate empirical examination
in order to identify which of these factors are the key driver(s) of environmental supply chain
management activities.
Proposition 5: Upstream members of a supply chain will increasingly affect environmental
supply chain activities, and purchasing managers will need to take action to manage these
effects.
It is logical that a firm's customers, suppliers, and competitors, and its supply chain are
affecting environmental supply chain management activities.

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Proposition 6: As the quality of environmentally friendly inputs increases, greater will be the
level of environmental supply chain management.
Increased vertical coordination through the supply chain will affect environmental purchasing
activity. The case study data suggest that as vertical coordination increases, so too will the
rate of adoption of new technology. While not all environmental supply chain management
activities fall under the formal rubric of technologies, it is reasonable to consider the manner
in which new environmental programs are adopted and implemented in a similar fashion. For
example, the introduction of new environmentally efficient resources into the conversion
process will require purchasing managers to act as coordinators of both process engineers and
the suppliers of these resources.
Proposition 7: The greater the supply uncertainty, the greater the level of vertical
coordination between buyers and suppliers.
The case study data suggest several propositions based upon the concept of environmental
uncertainty. This proposition indicates that vertical coordination will in turn be positively
correlated with the degree of supply uncertainty.

This project found that environmental supply chain management strategies appear to be in
their infancy stage. Even among the early adopters of environmental management, the
majority seems to pursue environmental goals that avoid violations of environmental statutes
and regulations. The use of proactive environmental programs as an aid to supplier selection
and supplier quality assurance is distinctly lacking in importance. Purchasing also was found
to have a major responsibility in implementation of a recycling strategy.
The environmental implications of purchasing activities on operational considerations and
strategic considerations such as supply management and supply chain management was
examined in this study. Three common purchasing practices that have the potential to
undergo widespread change in the future due to environmental issues were identified. These
were the identification of capable suppliers, domestic versus global sourcing, and the
purchase of systems.
The accumulated evidence suggests that environmental supply chain issues will gain
tremendous importance in the future. In Europe, trends toward environmental supply chain
management are already visible. Although, an average U.S.-based firm may not be thinking
along environmental issues while developing corporate strategy, pressures from global firms,
including those based in the United States, are likely to influence other firms to follow the
European trend.
Also, the results suggest a need to increase coordination with suppliers of environmentally
friendly materials and technology, as well as with downstream channel members, including
users and customers. The results also mandate the need for increased coordination and
communication throughout the supply chain, as well as within the firm.

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 CHAPTER-4
Findings and Analysis

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4.1 Measurement Model
This research used the partial least squares technique of the structural equation method. It has
two advantages of establishing measurement and structural models together and having no
strict assumption on the population’s distribution, as well as sample size. Using PLS, we
conducted a confirmatory factor analysis to make sure that all measurement items were
grouped into the same construct, and presented the results in Table. We also established our
measurement model with PLS. For assessing the reliability of our constructs, we examined
Cronbach’s and factor loadings. All factor loadings for all constructs are greater than 0.7, as
shown in Table. Cronbach’s for all measurement items is also greater than 0.7, as shown in
Table Therefore, all measurements in this study presented strong reliability. To investigate
convergent validity, we checked the composite reliability (CR) and average variance
extracted (AVE). In order to confirm internal consistency, the CR numbers must greater than
0.7 and AVEs must be greater than 0.5. All values for CR and AVE indicate strong
convergent validity, as presented in Table 1. Finally, based on, in order to confirm the
discriminant validity of our measurement model (representing no correlations exist among
constructs), we calculated the square root of AVEs and then compared those values with the
correlations of each variable. Table 3 shows that the values of the diagonal elements and the
square root of AVEs are greater than those of the non-diagonal elements and the correlation
values of all variables.

Correlation Matrix: Discriminant Validity

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4.2. Structural Model
We used the PLS technique to establish the structural model using a bootstrapping procedure.
Our research results support Hypothesis 1: supply disruption risk has a negative relationship
with environmental practice. The result provided empirical evidence of a statistically
significant relationship between supply disruption risk and environmental practices, with a
path coefficient of 0.323 and a t-score of 4.37 at 0.01 level of significance. Supply disruption
risk negatively affects environmental practices. Perceived supply disruption risk prevents
managers from implementing environmental practices. Our results also supported Hypothesis
2: integration with suppliers has a positive relationship with environmental practices. We
found a statistically significant positive relationship between integration with suppliers and
environmental practices, with a path coefficient of 0.348 and a t-score of 4.00 at a 0.01 level
of significance. Integration with suppliers is positively associated with the implementation of
environmental practices. Collaboration with suppliers helps to facilitate buyers’
environmental practices. Our empirical results confirmed Hypothesis 3: environmental
practices positively affect performance, with a path coefficient of 0.401 and a t-score of 4.76
at a 0.01 level of significance. There is a statistically significant positive relationship between
environmental practices and performance. Environmental practices improve firms’ financial,
operational, and supply chain performance. Our data analysis supports Hypothesis 4: supply
disruption risk negatively affects performance, with a path coefficient of 0.130 and a t-score
of 2.99 at a 0.01 level of significance. As supply managers’ perceived risk increases, firm
performance declines. As managers perceived more supply disruption risk, they that that firm
performance would go down. Our results support Hypothesis 5: integration with suppliers
positively affects performance, with a path coefficient of 0.157 and a t-score of 2.71 at a 0.01
level of significance. As per our empirical results, integration with suppliers can improve the
firm’s performance. Consistent with previous studies, supplier integration improves firms’
financial, operational, and supply chain performance. Figure 2 describes our research results.

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4.3 Discussion
This study investigates the impact of implementing environmental practices in managing
green supply chains. It examines the role of supply disruption risk in terms of the external
environment, integration with suppliers (as organizational and supply chain characteristics),
and environmental practices as technology. This study establishes a research framework to
understand the importance of environmental practices for GSCM and performance. Our
research provides meaningful insight for both academic researchers and management
personnel. We attempted to include internal and external factors in the context of GSCM. By
reflecting internal and external factors together, this study presents useful approaches to
adopting environmental practices in the supply chain and operations management literature.
More importantly, this study establishes a linkage between environmental practices and
supplier integration as organizational and supply chain characteristics, and between
environmental practices and supply disruption risk as the external environment. With our
research framework, this study provides empirical evidence supporting the positive
relationship between environmental practices and financial, operational, and supply chain
performance. More importantly, this research framework added integration with suppliers (as
a positive impact supply disruption risk) as a negative impact, affecting environmental
practices in the supply chain.

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This study contributes to addressing a gap in the supply chain and operations management
literatures by representing the impact of integration with suppliers on environmental practices
with the three dimensions of eco-design, material reduction, and EMSs. Integration with
suppliers is considered a popular supply chain practice, due to the benefits in the supply chain
such as cost savings and delivery reduction. Our research results provide empirical evidence
that integration with suppliers also promotes coordination and collaboration for ecological
product design, source reduction, and implementation of EMSs. Thus, this study confirms
that integration with suppliers plays an important and positive role that facilitates
comprehensive aspects of environmental practices in managing green supply chains when
managers decide to adopt environmental practices in their firms. Although prior studies point
out various benefits of integration with suppliers in supply chain management, this study
found out that integration with suppliers, resulting in more collaborations with suppliers,
facilitates manufacturers’ environmental practices, including eco-design, source reduction,
and EMS. Collaboration and frequent communications with suppliers helped manufacturers
to establish eco-design of the process, and to reduce source materials and EMS together in
supply chain. In addition, this research emphasized the importance of working with suppliers
on vitalizing the manufacturers’ environmental practices. In other words, it provides
empirical support regarding integration with suppliers, generating various benefits, including
helping to facilitate buyers’ environmental practices.
While implementing environmental practices, manufacturers share their information, as well
as know-how, with their suppliers. The study of pointed out the positive link between
integration and supply chain environment practices. Unlike their study, this research added
more contributions that integration with suppliers helped manufacturers to boost their eco-
product design, material reduction, and EMS implementation by identifying the integration
with suppliers as an antecedent of manufacturers’ decision making on implementing eco-
product design, source reduction, and EMS implementation. Thus, this study provided
empirical evidence of the benefits of supplier integration on manufacturers’ various
environmental practices, leading to better firm performance. It provides managers with
another reason for encouraging integration with suppliers with regard to implementing
environmental practices in the supply chain. When managers establish green supply chain
strategies, this research will give useful insights to managers by considering integration with
suppliers as a driving force of facilitating eco-design, source reduction, and EMS. By
categorizing environmental practices into three dimensions, eco-product design, material
reduction, and EMS implementation, supplier integration helps to design the product with
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environmentally friendly, material reduction in the whole supply chain process, using EMS
implementation (which needs to collaborate with suppliers as one of success factors in
environmental practices).
This study also found a negative association between perceived supply disruption risk and
eco-design, source reduction, and the EMS of environmental practices. While the relationship
between perceived supply disruption risk and environmental practices has not been
investigated so far, our research examines the effect of supply disruption risk on establishing
green supply chains. The research results confirmed the negative relationship between
perceived supply disruption risk and environmental practices, showing that supply disruption
risk is an obstacle to implementing environmental practices. Previous studies identified the
negative impact of perceived supply disruption risk in the context of performance. This study
newly identifies that perceived supply disruption risk is considered as a negative antecedent
of encouraging manufacturers’ environmental practices in the supply chain. Supply
disruption risk negatively affects maintaining a smooth flow in the supply chain when
establishing eco-design of the process and EMS, and attempting to reduce source materials.
More importantly, perceived supply disruption risk might be considered as a barrier to
implement or facilitate manufacturers’ environmental practices. Therefore, when managers
decide to implement environmental practices, such as eco-design, source reduction, and EMS
in their supply chains, they also need to consider risk-mitigating strategies in order to prevent
and minimize supply disruption risk. Perceived supply disruption risk affects negative firm
performance, as well as facilitation of environmental practices (which plays a barrier role).
In order to emphasize the prominence of implementing environmental practices in
manufacturing firms, they should take care of issues of supply disruption risk to maximize
the effects of environmental practices. Kleindorfer and Saad introduced ten principles for risk
mitigating strategies in the supply chain: mitigating each supply chain members’ risk,
sourcing diversification, collaboration, a prevention-first strategy, avoiding extreme leanness
and efficiency, contingency plans, information sharing, risk assessment, supply chain agility
and flexibility, and quality management . In other words, when faced with both perceived
supply disruption risk and environmental practices, managers should consider strategies in
mitigating supply disruption risk, in order to facilitate the successful implementation of
environmental practices in the supply chain. Since supply disruption risk is considered as a
perceived barrier for managers implementing environmental practices, managers need to
think of risk-mitigating strategies in the supply chain, in order to adopt environmental
practices successfully. They also need to establish a mitigating plan toward supply disruption
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risk in implementing environmental practices. In addition, managers need to consider the type
of product when establishing a mitigating strategy, since it can establish single sourcing in
the supply chain structure, due to the fact that it is very difficult to find a supplier with a
special product. Supply chain integration has been heavily discussed in the SCM literature, in
order to determine its relationship with firm performance. In line with the results of the
previous literature, we found a positive relationship between integration with suppliers and
performance. However, this study contributed to the literature that integration with suppliers
improves financial aspects of performance such as revenue and incomes, as well as supply
chain performance (like supply chain response time) and operational performance (such as
lead time Prior literatures, which focus on the positive impact of integration with suppliers on
firm’s financial performance. The study of used the performance in the context of market-
based, operational-based, and accounting-based systems in their meta-analysis research.
Managers need to recognize that supplier integration can be beneficial to all aspects of firm
performance. More importantly, this study attempts to eliminate conflicting issues regarding
performance measurement by having three dimensions of measurement; financial,
operational, and financial performance. By measuring all aspects of the firm performance,
this research answered which performance was positively influenced by integration with
suppliers. Therefore, we empirically support that supplier integration has a positive impact on
all areas of performance in the supply chain. In addition, this study affirmed the literature that
states that integration with suppliers positively influences firms’ financial, operational, and
supply chain performance via environmental practices. Integration suppliers makes a positive
impact on performance, directly and indirectly. This research changes the view of the benefits
of supplier integration. Prior literatures focuses on the positive impact of supplier integration
on firms’ financial performance. However, this research applies this perspective to
operational and supply chain performance. It provides empirical evidence that supplier
integration also makes a positive impact on other firms’ performance.
As supply chain networks become more complicated, the supply disruption risk increases.
Thus, any disruptions in the supply chain will lead to poor consequences and losses in
performance.
Given our findings regarding the negative relationship between perceived supply disruption
risk and performance, establishing risk mitigating strategies in the supply chain for improving
performance emerges as a priority for supply and purchasing managers. Hendricks and
Singhal found negative abnormal returns of firm’s stock market reactions with supply
disruption announcements.
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Wagner and Bode found negative associations between disruptions in supply and supply
chain performance. By differentiating prior studies, this research provided empirical evidence
of a direct and negative relationship between supply disruption risk and firm performance.
More importantly, this study confirmed that perceived supply disruption risk negatively and
directly affects all aspects of performance, including financial, operational, and supply chain
performance, thereby implying that managers perceive that supply disruption risk broadly
damages all areas of the firm performance:
financial, operational, and supply chain performance. More importantly, this study
accomplished research suggested by that proposed the negative relationship between supply
disruption risk and performance by presenting empirical evidences. Previous studies
investigated the relationship between environmental practices and performance. Our research
results proved consistent with previous studies that found a positive relationship between
environmental practices and performance. However, this study extended the literature by
measuring comprehensive environmental practices using three dimensions:
eco-design, material reduction, and EMSs, finding that all of these practices in the
organizations and supply chains have a positive influence on performance. The results
indicated that comprehensive environmental practices improve performance; this is an
important finding for managers who are considering the implementation of environmental
practices or looking for ways to improve performance. In implementing environmental
practices, managers need to adopt a comprehensive approach by considering eco-design,
material reduction, and EMS at the same time.

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 CHAPTER -5
Recommendations and Conclusion

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5.1 Recommendations and Conclusion:
This study deals with some limitations, because of characteristics of empirical studies. This
research only applies to the buyer’s perspective in the Korean manufacturing industry.
To overcome this issue, we can expand our future research by applying the supplier’s
perspective. We also can apply and validate this research framework in other countries’
manufacturing industry or service industry while considering the input of service industry
characteristics. Another point is that since we applied the survey methodology, firm
performance has been measured by subjective comparison. Future research can collect
financial data and validate the causal relationship between environmental practices and firms’
financial performance. In that way, we can apply a more objective approach. In addition,
instead of using information sharing, we can further expand to knowledge sharing in the
supply chain. Future research can apply knowledge as a strategic resource in the supply
chain. In our research framework, we can develop knowledge sharing as a strategic way to
strengthen the impact of environmental practices in the supply chain
In today’s changing environment, it is important to apply costs saving strategies to the
different logistics and supply chain functions such as inventory management and logistics
management to optimize end-to-end costs and efficiency. Companies with low logistics and
supply chain costs usually give managers the power to make changes to the whole process.
Managers need to focus their attention on changing customer demands and should be able to
identify the costs benefits that can be derived from utilizing logistics and supply chain
management costs saving strategies. The implementation guide was broken down into three
different levels from tactical to strategic to operational to make sure the different groups
involved in implementation do not see the long-term goals in different ways. If the logistics
and supply chain management guide above is executed correctly and adjusted based on the
changes in the environment, the service industry will be able to use these strategies as a guide
to gain a competitive advantage.

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