A REVIEW OF GREEN SUPPLY CHAIN CHARACTERISTICS

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1 ISSN: Home page: A REVIEW OF GREEN SUPPLY CHAIN CHARACTERISTICS Omid Reza Ali Hosseini Master of Public Administration, Science and Research Branch, Islamic Azad University, Guilan, Iran Abstract Green supply chain management is integration of supply chain management with environmental requirements in all stages of product design, selection and supply of raw materials, production and manufacturing, distribution and transmission processes, delivery to the customer and finally after consumption, waste management and reuse in order to maximize the efficiency of energy consumption and resources along with performance improvements in the entire supply chain. green supply chain managers is looking to minimize the social costs in addition to minimize supply chain regular costs (cost of ordering, inventory costs, etc.) in order to meet the organization's social responsibility and improve productivity, so that they create value and satisfy the needs of customers (especially customers informed and supportive of environment) and benefit from modify or create new demand, access to new segments of the market and changes in the cost with achieving to new ways of production as major source of innovation. Keywords: Green Supply Chain, Freight Logistics, Intra-Logistics, Green Production 1. Introduction In recent years, due to the increasing speed and volume of communication all over the world and to expand the competitive environment among manufacturing and service organizations is increasingly considered the importance of optimal design and implementation of a supply chain (Safar & et al, 2015). Ensure sustainable development of any country is depends on the preservation and efficient use of limited resources and irreplaceable in that country and various measures is done to deal with this issue by governments that including green law enforcement such as the use of raw materials compatible with environment in industrial production centers, reducing the use of fossil energy resources and oil, recovery and reuse of waste in companies and organizations of the public and private sectors. Extending government regulations to obtain environmental standards and consumers' growing demand to supply green products for supply chain that covers all activities associated with the flow of goods from raw material stage to the delivery of goods to final consumers, including the flow of information throughout the supply chain, is lead to new concept of "green supply chain management or GSCM that including product life cycle stages from design to recycling (Hosseini & et al, 2013). Green supply chain management is integration of supply chain management with environmental requirements in all stages of product design, selection and supply of raw materials, production and manufacturing, distribution and transmission processes, delivery to 159

2 the customer and finally after consumption, waste management and reuse in order to maximize the efficiency of energy consumption and resources along with performance improvements in the entire supply chain (Olfat & et al, 2011). Effective implementation of GSCM plays an important role to gain and sustain competitive advantages in an organization (Omidvar & et al, 2015). Today green supply chain managers in leading companies through the creation of utility and satisfaction from the perspective of environment throughout the supply chain trying that take advantage of green logistics and improve their environmental performance in the entire supply chain as a strategic weapon to gain sustainable competitive advantages (Boks & Stevels, 2007). Green supply chain is an opportunity for those who are concerned about the issue of sustainable consumption and environmental marketing functions. From a macro perspective, pay attention to green issues is important both as a mechanism to increase the ability to design green products and as a means to create markets for green products compatible with the environment. (Gilaninia et al, 2012) Green supply chain requires new entries that create an opportunity for companies because invest to design and produce greener products and resolve sustainability requirements and this includes not only consumer goods, but also inputs from suppliers and causes their involvement to create green markets (Ahmadi & et al, 2013). The main objective of the green supply chain is to reduce environmental pollution since to buy raw material, production and distribution of products to time of selling products and the loss them. Other objectives are to limit waste within industrial system in order to conserve energy and avoid the use of hazardous materials for the environment (Kuo & et al, 2010). 2. Green Supply Chain Supply chain management is a relatively new concept and green supply chain management is a newer concept (Hosseini & et al, 2014). In the early '90s, along with the improvement in manufacturing processes and deployment re-engineering patterns, many industry executives found that to continuation of presence at the market is not enough only improvement of internal processes and flexibility in the ability of the company, but also suppliers of parts and materials should also be produce materials with the best quality and lowest cost and distributors of products should also be have a close relationship with development market policies of manufacturer. With such an approach and by defining supply chain management as a set of actions which attempt to integrate product and service providers, manufacturers, warehouses and retailers because is produced the optimal amount of goods and send optimal values to the right places and at the time and perform this set of operations while is achieved customer satisfaction and are minimized costs, is led to emerge approaches of supply chain and its management (Jamali, 2011). In many countries, the implementation of supply chain management and taking advantage of its projects has needs to encourage government and promote environmental projects (Etezazian & et al, 2015). In the late '90s and early twenty-first century with increasing environmental awareness, economic globalization and the emergence of new consumer behavior, supply chain management concepts were revised and due to reduce costs, increase productivity and gain competitive advantage in operational area of organizations applied environmental rules and experiences in their supply chain and in the theoretical field of green supply chain management as an integrated supply chain management with environmental requirements at all stages of product design, selection and supply 160

3 of raw materials, production and manufacturing, distribution and transmission processes, delivered to the customer and finally, after consumption, management of recycling and reuse in order to optimize energy efficiency and resources along with improving overall supply chain performance was added to the concepts of management field (Jamali, 2012). Green supply chain management was introduced by the association of Industrial Research at Michigan State University in 1996 that in fact is a new management model for environmental protection. Green supply chain management in terms of product life cycle includes all stages from raw materials, product design and manufacture, product sales and transportation, product use and recycling of products. Using supply chain management and green technology, companies can reduce environmental negative impacts and achieve to optimal use of resources and energy (Niknejad, 2011). Figure 1: Green supply chain management structure (Ramzania & et al, 2011; Imani & Ahmadi, 2009) Green supply chain and traditional supply chain are different in other ways. summarizing the major differences between traditional and green supply chain is proposed in following table (Niknejad, 2011). Table 1: Comparison of traditional supply chain management and green Features Traditional supply chain Green Supply Chain Managemen management Goals and values Economic Economic and Ecology Ecological optimization Effective in ecology tegrated approach and low impac Ecology Restrictions of supplier selectionpeed switching suppliers based Aspects o of ecology and long-term price and short-term relationship relationship Cost pressures and price High cost pressure, low price High cost pressure, high price Speed and Flexibility high low 3. Green Supply Chain Assessment Indicators Several researchers have expressed different indicators for measuring green supply chain that despite multiplicity, have persuasive convergence. Shang & et al (2010) stated five dimensions of GSCM including green design, green suppliers, green logistics, green marketing and green production. 161

4 Hervani & et al (2005) and Zhu & Sarkis (2006) stated that green supply chain is including green buying, green production and materials management, distribution and marketing of green and reverse logistics (olugu et al,2010). Wu & et al (2011) has considered green supply chain factors including green buying, collaboration with customers, green design and return on investment. Hsu & Hu (2008) to prioritize green supply chain dimensions in the electronics industry considered standards of supplier management, product recycling, collaboration and lifecycle management of organization. By review Bibliography of green supply chain management and environmental management, it becomes clear that most studies in the field of assessment of the green supply chain have focused five indicators including green suppliers and purchase, green design, green production, green packaging and transportation and distribution of green that continue is stated definition of each of these indicators (Zanjirchi & et al, 2013). - Green suppliers and purchase - Green suppliers and purchase includes activities that its purpose is to ensure proper purchased materials with the environment. These activities include the ability to reuse, recycle and reduce the use of hazardous materials (Eltayeb & et al, 2010). - Green Design It includes activities that their goal is to minimize the environmental impacts of the product on all its life cycle (Eltayeb & et al, 2010) - Green production Green production is defined as manufacturing processes that use inputs with relatively low environmental impact and has high performance, as well as less waste or pollution (Ninlawan & et al, 2010). - Green packaging This category includes smaller package, use of green materials in packaging, collaborate with vendors to provide standard package, minimizing the amount of used and time of packaging and to promote recycling programs and reuse (Ninlawan & et al, 2010). - Green Transport and distribution This indicator includes direct delivery of product into place of consumer, the use of suitable vehicles and distribution of products in smaller packages (Ninlawan & et al, 2010). 162

5 Figure 2: green supply chain assessment indicators 4. Effective Variables in Green Supply Chain Management Basis of the green supply chain management is the integration of environmental management and supply chain management is to control the environmental destructive impacts in product life cycle through information sharing and harmony and cooperation of all members of the supply chain. Departments involved in the supply chain have mutual relations so that by changing a variable will be affected several variables in the supply chain. In green supply chain generally in decisions of supply chain managers in addition to consider the tangible costs, try to minimize the intangible costs that is not included in finished price of the product and have negative effects on the environment and indirectly paid by the company (social spending). In other words, green supply chain managers is looking to minimize the social costs in addition to minimize supply chain regular costs (cost of ordering, inventory costs, etc.) in order to meet the organization's social responsibility and improve productivity, so that they create value and satisfy the needs of customers (especially customers informed and supportive of environment) and benefit from modify or create new demand, access to new segments of the market and changes in the cost with achieving to new ways of production as major source of innovation that finally it will lead to a competitive advantage for organizations. Green supply chain is generally divided into three parts: 1- Intra-Logistics Intra-Logistics involves activities associated with receiving, storing and moving of raw materials. Decisions of managers will affect Selection of shipment method, vehicle selection, maintenance of raw materials, storage and management of transportation routes, improving transport and vehicle efficiency. Selection of shipment method will have extremely high effect on the environment and traffic and logistics managers should consider this article in its decisions. 2- Green Production 163

6 Production consists of the entry of raw materials and transforms them into final products through the activities of the assembly, testing and packaging. Green production involves factors such as clean production, product design by considering the environment, reproduce, comfortable Production. 3- Freight Logistics Intra-Logistics activities with freight logistics is not much different, except that freight logistics deals with finished goods and with higher added value and more controllable variables but most of the decisions in relation to exchange in intra-logistics will be different with freight logistics and logistics managers must understand these differences. Freight logistics encompasses all physical distribution activities and includes the collection, storage and distribution of finished goods between buyers (Naseri Taheri, 2006). 5. Discussion and Conclusion The main objective of the green supply chain is to reduce environmental pollution since to buy raw material, production and distribution of products to time of selling products and the loss them. Other objectives are to limit waste within industrial system in order to conserve energy and avoid the use of hazardous materials for the environment. Today green supply chain managers in leading companies through the creation of utility and satisfaction from the perspective of environment throughout the supply chain trying that take advantage of green logistics and improve their environmental performance in the entire supply chain as a strategic weapon to gain sustainable competitive advantages. Green supply chain is an opportunity for those who are concerned about the issue of sustainable consumption and environmental marketing functions. From a macro perspective, pay attention to green issues is important both as a mechanism to increase the ability to design green products and as a means to create markets for green products compatible with the environment. Green supply chain requires new entries that create an opportunity for companies because invest to design and produce greener products and resolve sustainability requirements and this includes not only consumer goods, but also inputs from suppliers and causes their involvement to create green markets. 164

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