Supply Chain Management Case Study

Manufacturing Firms and Environmental Issues

Mitchell & Walinga defined manufacturing firms as "business firms that use components, parts or raw materials to make a finished good, where these finished goods can be sold directly to consumers or to other manufacturing businesses that use them for making a different product". According to IEA, manufacturing industries are significantly responsible for the consumption of a huge amount of resources and waste generation throughout the world. From 1972 to 2004, there was an increase of 61% in the consumption of energy by manufacturing industries which consists of one third of the global usage of energy. Apart from being the main cause of environmental issues like increasing levels of pollution, overflowing waste sites, and diminishing raw material resources, the manufacturing sector is also responsible for the emission of 36% of carbon dioxide (CO2) in the world. Therefore, a renewed focus on the impact of manufacturing industries' stakeholders such as the regulatory makers, shareholders, customers, and employees have been shifted to seeking from the manufacturing organizations to be more responsive to their environments with respect to their products and the process. The concept of sustainable manufacturing practices relates toward the procedures, policies, and the techniques used by firms in monitoring and controlling the effects of their production processes and operations on the natural environment.

Environmental concerns and conscious are driving business firms to look onto their operational impacts. Referring to Junquera et al., environmentally sustainable performance is defined as "the evaluation of organizational reduction for emissions, decrease of consumption for hazardous or harmful materials and efficient energy or resources use". Environmentally sustainable performance is 'achievements in reducing the resource usage, pollution emitted and waste generated resulting from the undertaken efforts. Environmentally sustainable performance is also strongly related to the environmental goals of the organization including the decrease of frequency for environmental accidents and solutions to improve an enterprise's environmental situation. The environmental performance can also be a useful indicator in decreasing environmental risks, as well as supporting external communication and policy-making for both public and private sectors.

Economic sustainability is continuing to be one of the major goals for business firms. According to Green et al. and Liu et al., economic sustainable performance is "evaluation of organizational cost reduction, promotes market shares, return on assets, and improve income and profits regarding the economic goals of performance". The implementation of GSCM practices among manufacturing firms has resulted in better economic performance. The positive result from economic aspect can be achieved through multiple direct pathways of sustainable supply chain management. Previous research from Eltayeb et al. investigated on green supply chain initiative among Malaysian certified companies and the result has confirmed the positive relationship between economic performance and green supply chain initiatives. Consumers are the main driver of green practices implementation and playing a huge role by demonstrating their influence and environmentally conscious in choosing companies, increasing competitiveness, and economic performance.