Green Supply Chain Management

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PART

1

Basic Concepts and Background
CHAPTER 1
Introduction

CHAPTER 2
Mathematical Background

CHAPTER

1

Introduction

I

n this introductory chapter, we review the development and evolution of green supply chain management and its impact on industry.

1.1 Development of Green Supply Chain Management
As the effects of environmental problems on the living conditions of the world’s population become more apparent, an emphasis on environmental awareness has become more prominent. The general public has started to pay more attention to the potential consequences of this global environmental problem. Some of the most pressing environmental issues include ozone layer depletion, global warming, and hazardous wastes. In an effort to mitigate the negative impacts of such environmental problems, many nations have passed laws and regulations and have set environmental standards aimed at reducing industry carbon and greenhouse gas emissions to the atmosphere. Some of these standards include endof-life vehicle (ELV); restriction of hazardous substances (RoHS); waste electrical and electronic equipment (WEEE); eco-design of energy-using products (EuP); and registration, evaluation, authorization, and restriction of chemicals (REACH). In addition, industries have been increasingly creating environmentally friendly products to satisfy consumers’ demand for green products. For instance, businesses have lessened the use of raw materials, have begun recycling old products, and have started using renewable energy. Supply chain management (SCM) covers industry planning and control activity that relates to trade, exchange, and logistics management. More importantly, it includes collaboration among suppliers, agents, and new customers. With increasing customer awareness and more stringent regulations, industries have started to integrate environmental factors throughout their organizations. Furthermore, industries have been gradually shifting towards environmentally friendly supply chains by integrating green technologies into their product designs, production, and distribution processes. These efforts, together

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Basic Concepts and Background
with the desire to incorporate extended production responsibility (EPR), have led to the evolution of green supply chain management (GSCM). In 1969, the Coca-Cola Company commissioned a study on lifecycle analysis to assess the environmental impact of its product packages, laying the framework for the life cycle assessment (LCA) practiced today. During this period, LCA emphasized reducing the negative environmental impact from production, transportation, and disposal of goods. However, progression in recent years has gradually transformed and integrated this methodology into the entire SCM system.

1.2 Evolution of GSCM from SCM
SCM was first discussed by a group of professional consultants back in the 1980s. This discussion and later developments have made people more aware of SCM (Oliver and Webber, 1982). In his book titled Competitive Advantage: Creating and Sustaining Superior Performance, Porter (1985) introduces the concept of value chain. He emphasizes that industry can perform a series of primary and support activities to increase the added value of products, which could in turn add value for customers. The linkages of these activities to add value to the products and services that an organization produces is known as the value chain. According to Porter, the support activities include inbound logistics, operations, outbound logistics, marketing, sales, and services. SCM is recognized as a network of interconnected businesses that form a tight linkage among raw material resources, production, transportation, and distribution of material resources, information, and financial flows for the ultimate provision of goods and services. Consequently, the Global Supply Chain Forum of 1999 defined SCM as, “An integration of procedures from suppliers to consumers to...
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