2-1 Green Supply Chain Management
The concept of supply chain management (SCM) can be tracked back to manufacturing’s assemble line; since the early 1970s, supply chain management had started to be highlighted by academics and business management because of the global trade booming. The overall SCM is including all kinds of logistic planning and management, such as material sourcing, procumbent, product manufacturing, suppliers choosing and cargo distribution. Hence, a superior SCM can bring a comprehensive business success (Burgess, Singh & Koroglu, 2006). The green supply chain management (GSCM) has been paid more attention from the early 1990s because the awareness of environmental protection was raised. GSCM can be considered as an advanced SCM which integrates the environmental sustainability and part of corporate social responsibility. The basic concept of GSCM can be explained by the product’s life cycle. Sarkis (1995) viewed the entire product’s life cycle as Fig. 1. showing three primary phases of the life cycle, including procurement, production and distribution.
Figure 1. GSCM Product Life Cycle (Sarkis, 1995)
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The GSCM’s main purpose is to improve the efficiency of the whole supply chain.
By process and product designing beforehand, the material can be used properly and the waste can be reduced in each process; even the product enters distribution phase or customer’s hand, those secondary material or waste still can be reversed by the logistic.
Therefore, the entire product’s life cycle can minimize all kinds of waste and energy consumption. Besides, if the process has hazardous compound and potential environmental risk harming labors, a proper GSCM can provide the management procedure that can increase safety in the working environment (Darnall, Jolley &
Handfield, 2008).
Take the screw industry for example; the screw life cycle will necessarily affect the degree of GSCM. Steel is the major material for manufacturing screw and fastener;
the mining process of iron ore and coal is considered as a high pollution activity. In the material procurement phase, if screw companies can choose material suppliers with more environmental awareness or recycled material, it will increase the level of green procurement. During the manufacturing process, metal fragment or lubricant can be recycled and reused. Screw factories are usually a high temperature, noisy environment and volatile gas that are harmful to workers; in the GSCM procedures, those potential risks for workers should be decreased and minimized. Besides, in the distribution phase, cargo shipment can produce CO2, NOX, SOX and other particular matter; if the transportation vendors apply GSCM properly, those air pollution emissions should be reduced or eliminated.
Previous researches (Azevedo et al., 2011; Kuo et al., 2012; Nulkar, 2014; Kuei et al., 2015) have proved that GSCM can increase companies’ competitiveness and bring many business advantages, such as market profit and product quality increased, supply chain stabilized, customer satisfaction and efficiency improved. But due to SMEs’
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features, low-capital and limitation of resources, usually hamper the effective response to environmental pressures (Lee & Klassen, 2008). Screw industry is constructed by the high percentage of SMEs; the similar situation may occur and limit the will to apply GSCM. Therefore, the factors affecting enterprises to adopt GSCM are usually discussed with internal factors and external factors. Hervani, Helms & Sarkis (2005) explained those factors with detail; the Fig. 2. shows how the factors influencing the implementation of GSCM.
Figure 2. Factors Influence GSCM. (Hervani, Helms & Sarkis, 2005) PMS: Performance Measurement System.
The internal control factors indicate that internal pressure from companies, such as the cost of equipment adding and disposal fee. The various manufacturing process and product of screw industry may increase potential obstacle for building up GSCM.
Chun, Hwang & Byun (2015) studied Korea’s SMEs and explained that an upfront capital investment is usually a gap for SME adopting GSCM. The other internal factors come from the knowledge of constructing a GSCM with potential benefit to sustain company’s profit margins. Hervani et al. (2005) mentioned that “A successful environmentally beneficial innovations requires new combinations of knowledge with product characteristics, process and material characteristics, and available technologies
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and markets.” Without relative knowledge and information, applying GSCM may not bring positive effect on profit earning; therefore, the uncertainty of profit margin is another reason that causes SMEs’ hesitance. To sum up, despite the competitiveness increasing advantage by adopting GSCM, if SMEs cannot get the proper knowledge and information support, GSCM may be considered as a high-risk investment for SMEs.
The external pressure comes from environmental regulation and stakeholders. Due to lots of environmental issues affected by human activity, environmental regulation will be more comprehensive and stricter. Regional trading organizations often have their own environmental regulation which has influenced product vendors and trading partners; a significant body of research indicates that regulation is one of the major driving forces for companies’ environmental efforts (Walker, Di Sisto & McBain, 2008).
The most famous regulation example came from EU’s RoHS which not only affected electronic companies, but also impacted the screw industry in Taiwan. Chien’s (2007) research mentioned that pressure from environmental regulation and stakeholders have a very significant effect on the company’s willing to apply GSCM; stakeholder’s pressure is also a critical factor to drive company to conduct relative issues. Walker et al. (2008) collected previous research and indicated that stakeholders have the power to force companies applying GSCM. The stakeholders include customers, competitors, business partners and even the entire society, which bring regulatory pressure or market pressure to company. Taiwan’s screw industry is a high export-oriented business; the customers’ demand comes from the EU, Japan and USA, where have more stringent environmental regulation than Taiwan. Besides, potential competitors from China and Southeast countries have part of the profit margin from the international market. Hence, this may be an opportunity to drive Taiwan’s screw industry to apply GSCM.
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In order to build up a GSCM, some procedures should be followed; Beamon (1999) suggested that by using the ISO 14000 series certificate could improve the overall outcomes of GSCM. Moreover, following the international standard can reduce the chance denied by other trading partners and customers. Table 1 simply introduces some certificates relative to GSCM and may apply to screw industry. ISO 14001 and ISO 50001 are based on the management procedures of ISO 9001 which represented the quality management system (QMS). Part of screw companies have adopted ISO 9001 due to product quality can remain consistent and fit customer’s demand.
Table 1
GSCM Certification Relative to Screw Industry
Certification Content
ISO 14001
The ISO 14001 standard is included in the ISO 14000 series.
This standard provides a brief framework for companies or organizations to follow and set up an effective Environmental Management System (EMS).
ISO 50001 Based on the structure of ISO 9001 or ISO 14001. This standard more focuses on integrating energy management into original management system.
ISO 26000 ISO 26000 offers a guidance on socially responsible behavior and possible actions. Its goal is to establish sustainable operational development that will encourage business and other organizations to practice social responsibility.
FSC FSC’s main goal is the forest and relative material management.
They addresses issues such as illegal logging, deforestation and global warming, and other commercial activities relative to wood.
Table content came from ISO official website: https://www.iso.org/home.html and FSC official website:
https://us.fsc.org/en-us.
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Previous researches (Karapetrovic & Willborn, 1998; de Sousa et al., 2014) had mentioned those organizations or companies which have conducted ISO 9001 or QMS can upgrade their management system into the environmental management system (EMS) without too much adaptation troubles. Therefore, it will be a good starting for screw industry apply GSCM. ISO 26000’s main target is to provide a management procedure to establish corporate social responsibility (CSR). This standard can maximize company’s sustainability and improve the relationship with stakeholders (e.g., labors, residential people, and customers). FSC stands for Forest Stewardship Council that is dedicated to international forest management. They encourage business activities to choose qualified suppliers who follow the procedures of forest sustainability and recyclable pulp and wood material. FSC also tracks the entire wood supply chain from logging to customer’s using behaviors, which is a very good example of GSCM. Screw industry is not directly related to FSC standard but during the cargo shipment process, lots of pallets and package material suppliers need to follow this stander; therefore, FSC can be considered as part of screw industry GSCM.
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2-2 Screw Industry
Current State
Taiwan’s screw industry is one of the important export-oriented products which contributes plenty of profit. According to the Metal Industry Intelligence’s 2016 report (Ji, 2016), screw industry created total 88.5 billion NTD in 2015. This industry includes numbers of SME, which have characteristics like low capital intensity, clustering and export-oriented. There are over 1,300 companies and screw relative industries in Taiwan. Moreover, one half of the companies located at Kaohsiung and nearby area due to the source of material; others are located in New Taipei, Taoyuan, Taichung, and Changhua (Lin, Wu & Huang, 2010; Jheng, 2013). Those SMEs have very different types of manufacturing process can be outsourced, which can fit various customers’
demand. Over 90% of the products export to overseas market; USA, EU and Japan are the top three buyers.
During the year of 2003-2006, EU launched their first stage of RoHS, which impacted the entire industry relative to electronic production. After spending lots of effort on improving manufacturing process and redesigning products, eventually, they overcame this impact from this new environmental regulation. In recent years, screw industry has met very aggressive competition from China and Southeast Asian due to their blooming screw manufacturing. This situation made the screw industry lose part of the Taiwan screw market share losing by price-cutting competition. On February 2016, EU repealed the anti-dumping duties on certain screw and fasteners originating in China. This event, by the estimate of Taiwan Industrial Fasteners Institute, may significantly decrease the market share in the EU. Therefore, Industrial Development Bureau’s NICE (Niche Product, Intelligent Equipment, Competent Workers and
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Friendly Process) screw and fasten upgrade project is to respond the incoming challenge and bring entire screw industry to a new level of production type.
Potential Pollution Source
The entire screw supply chain can be simplified by Fig. 3. Three main states, including Metal Material, Screw Manufacturing and Cargo Shipment. Each state causes specific environmental problem and pollution.
Figure 3. Kaohsiung’s Screw Industry Supply Chain
Steel, stainless steel and copper alloy are the three major types of material to produce screw and fastener. In Kaohsiung, high amount of metal material source is from China Steel Corp. (CSC) and Yieh United Steel Corp. (YUSCO). CSC provides most of the steel line material and YUSCO specializes in producing stainless steel. Relative
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companies provide the rest of the metal material. Screw industry supply chain in this state is a high energy intensity, and high CO2, NOx, SOx emission process. Recent research (Jhong, 2012; Wu, 2014; Yao, 2015) also showed that the steel industry is one of the main source for the particular matter (PM) 2.5 and PM 10 source which has been confirmed relative to respiratory problems and carcinogenic rate. Besides, during the smelting process, unscrupulous vendors dump huge amounts of slag randomly, which causes serious environmental problem.
In order to fulfill various customer needs, screw manufacturing often has customization service, which makes the entire screw manufacturing process become very complicated. Therefore, the procedures for handling industry waste are very diverse and difficult. Adding new equipment or improving the manufacturing process is costly and become a hard issue for most of SMEs. According to Industrial Development Bureau’s information, potential waste pollution comes from metal processing, heat treatment, and surface treatment; those potential pollution sources are listed in Table 2.
Table 2
Potential Pollution in Screw Manufacturing Process
Processing Item Potential Pollution
Metal Processing
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Metal processing and heat treatment are common processes for screw industry.
Comparing to surface treatment, those two processes producing simpler industrial waste can be properly controlled and recycled. But the working environment is full of heat and noise which may damage workers’ body condition (Jhang & Wang, 2011).
Surface treatment is a complicated process which can extend and improve the performance of metal feature, but it produces much acid, alkali solution, and plating sludge containing metal fragment or heavy metal icon. Those by-products have the value to recycle and reproduce, but relative equipment and process are expensive. Some factories just dispose the waste through tile drainage, which cause very serious water and soil pollution.
Potential pollution source from cargo shipment phase is simpler. The major discussions usually focus on cargo transportation’s exhaust emission and cargo package material. Recent year’s researches (Lu, 2013; Jhong, 2016) have indicated that most of greenhouse gas emission is from private vehicle. However, Gu (2016) explained the diesel particulate matter (DPM) from diesel trucks and cargo carries contains carcinogenic substances; this will increase the health risk for residential people living nearby industry area or harbor. March 2017, Environmental Protection Administration developed a new policy that sets higher exhaust standard and encourage cargo transportation industries to replace old diesel truck. The result still needs time to observe, but it is a positive beginning for DPM control.
FSC had been applied for years. Most of the cases are relative to pallets and package material. Screw industry’s product usually uses marine transportation; in this case, FSC encourages industry to reuse pallets and wood container. However, without proper treatment, that stuff may contain unexpectedly pest following cargo to overseas countries and become a leak of biocontrol. Traditional treatment used methyl bromide,
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which is a toxic and ozone depletion substance. Therefore, those containers with FSC standard ensure that no pest and chemical residue are remained, which is another practical example for GSCM.
2-3 Means-End Chain Theory
Means-End Chain (MEC) model has been used widely in the marketing or psychology to study factors influencing choice or decision-making by individuals and customers. By using the expectancy-value theory, Gutman (1982) developed MEC theory to discover the customers’ decision-making process. Customers usually face various brands and products. To know what kind of factors affecting their purchasing decision is not an easy task for marketing strategy makers; hence, MEC provides a method to discover the critical factors influencing customers (Reynolds & Olson, 2001).
The core assumption of MEC is that consumers selecting products or services are more relevant for achieving their personal values. This theory separated the selecting process into three parts, products/services attributes, consequences of using products/services and personal goals or values achieved by the use of that product/service (Reynolds &
Olson, 2001). Attributes means the observable or perceived features of a product/service, consequences are the benefits attained by the specific attributes, and values imply highly abstract motivations that guide usage behavior (Reynolds &
Gutman, 1988). Olson and Reynolds (1983) adjusted Gutman’s (1982) model by describing more details in attribute, consequence, and value, which is shown in Fig. 4.
Figure 4. Details of Means-End Chain (Olson & Reynolds, 1983)
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Concrete attributes are the physical and concrete product/service character which can be directly measured, such as the taste of food or color of a car. Abstract attributes are more subjective and existing in the minds, such as communication quality of cell phone or company’s reputation. By sensing those basic product’s attributes, the consuming behavior will occur and move to second level-consequence. After using the product, customer will gain the consequence that can be separated into Functional Consequence and Psychosocial Consequence. Functional consequences refers to the practical benefits and performance outcome affecting directly to the consumers from consuming the products or service, such as, contacting friends or saving time to work.
Psychosocial consequences are defined as psychological feelings or social considerations (e.g., satisfaction and security). The highest level of MEC is Personal values that have Instrumental Values and Terminal Values. Instrumental values are defined as specific modes of behavior (e.g., be cheerful, be independent); terminal values refer to the end states of being (e.g., self-esteem, self-fulfillment) (Rokeach, 1973; Pitts, Wong & Whalen, 1991)
Jenkins and Yakovleva (2006) mentioned that “Corporate Social Responsibility (CSR)” and “sustainability” are two of the many terms used to describe the social and environmental contributions and consequences of business activity. In this case, screw companies are just like individual customers; building up a GSC can be considered as a new business model (product) which is chosen and contained sustainability and CSR.
According to MEC theory, screw companies have their own value with GSC containing its own product attributes. Therefore, by using the MEC approach, the relationship between attributes, consequences and values can be linked and the critical factors which affect screw industries to adopt GSC will be found out.
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2-4 Laddering
MEC approach often adopts Laddering interview to elicit consumer’s Attribute-Consequence-Value (A-C-V) chain linkages. This technique was originally developed by Hinkle (1965) and allowed the interviewers to conduct an in-depth, one-to-one interviewing. It allows researchers to dig down customers’ surface cognition of product/service attributes and connect back to their values motivating behavior (Reynolds & Olson, 2001). Depending on the way of proceeding the interview, laddering can be distinguished from soft laddering and hard laddering. The soft laddering is a free elicitation interview, respondents can freely answer the question and the interviewer can continuously ask, “why is it important for you?” to know deeply from the respondent’s answers. Hard laddering is usually conducted by paper-and-pencil or computerized questionnaires with option lists to choose. Respondents have to answer the question level by level, which can reduce the personal prejudice influencing the result (Gutman, 1982; Botschen & Hemetserger, 1988). Both types of laddering have their proper ways to apply; according to Bieberstein and Roosen (2015) compared previous researches, soft and hard laddering can generate similar result, but soft laddering can extract more complex and abstract result. However, soft laddering may contain interviewer’s subjective opinion and not easy to conduct mass scale of respondents; in order to get more precise results, two types of laddering should be applied by different situation or cross-use properly (Russell et al., 2004).
After the interview, transferring those qualitative information into quantitative data has to rely on three steps. (Reynolds and Gutman, 1988) The process begins by performing a content analysis which can create the A-C-V’s elements to construct an implication matrix. This matrix represents the numbers of direct/indirect relationships
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among the A-C-V. The second step is to draw a Hierarchical Value Map (HVM), which has the advantage of providing a well-organized summary of data from the implication matrix. A HVM consists of nodes and lines which represent the linkages of A-C-V. The final step is categorizing the concepts into a smaller number of categories and the chains can form pathways from one attribute to one value, which will reflect the means-end process for a large number of consumers.
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