Posts Tagged ‘GCSM’

Greener Suppliers Boost Customers’ Green Innovations and Reputation

June 13, 2013  |  Buyer-Supplier Partnerships, Green Innovation  |  Comments Off on Greener Suppliers Boost Customers’ Green Innovations and Reputation

Chiou T-Z, Chan H K, Lettice F and Chong S H. 2011.  The influence of greening the suppliers and green innovation on environmental performance and competitive advantage in Taiwan, Transportation Research Part E: Logistics and Transportation Review, 47, pp 822-836.

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The aim of this research was to find out the extent to which firms are greening their supply chain and implementing green innovations and to see if this led to improved environmental performance and competitive advantage.  The study was conducted in Taiwan using a questionnaire survey with 124 respondents.

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In response to increasing environmental concerns, more organisations are actively seeking to reduce their environmental impact and are introducing ‘green’ products and using eco-design techniques.  These organisations are also increasingly expecting their suppliers to do likewise.  Some of the key reasons given for pursuing these green initiatives are to comply with regulation and legislation and to reduce costs.

Although there are many different definitions for Green Supply Chain Management (GSCM), GCSM can be broadly classified into internal and external environmental management.  The internal aspects are compliance with certification and managerial support for GCSM and the existence of environmental management systems within the organisation.  The external aspects include greening the supplier and involving them in helping the organisation to achieve its environmental objectives.  It can also include green purchasing, cooperation with customers, eco-design practices and green product innovation.  Long term strategic advantage can be achieved by working more closely and in partnership with suppliers, but this does involve significant investment in time and resources for both sides.  Guidance, advice and assistance are important to enable skills and knowledge to be shared about how to become more green.  Some companies have even established their own environmental standards for their suppliers.

Green innovation is often classified into green product and green process innovations.  Managerial support is also an essential part of reducing the negative environmental impact of a product and its associated manufacturing processes.  Green product innovation helps to reduce the negative impact of a product on the environment at any stage of its life cycle. Green process innovation requires adaptation to the manufacturing process that reduces environmental impact during material acquisition, production and delivery.

Greener suppliers help an organisation to develop more green innovations.  These initiatives can help to reduce material and packaging in the product and manufacturing processes.  Suppliers can also be invited to help to improve the product design directly and help to achieve better overall compliance with environmental regulations.

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As well as reducing negative impact on the environment, green innovation helps to improve an organisation’s reputation and competitive advantage.  Green supply chain initiatives enhance environmental performance and help with making cost savings.  The reputational benefits may also open up new business opportunities.  Our survey results showed that for the companies that responded, there was a significant and positive relationship between greening the supplier and developing green product and process innovations.  The results also showed that green product and process innovation leads to improved environmental performance and improved  competitive advantage.  These results suggest that there are new business opportunities, cost savings and reputational benefits for organisations that invest in greening their suppliers and green product and process innovations.  It is therefore worth investing time and effort in such green initiatives.