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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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I. INTRODUCTION

(Tsiakis, et al., 2001) presented a typical supply chain network (Figure 1), that included entities such as suppliers, plants, storage facilities (warehouses and distribution centers) and final costumers.

Figure 1 – Typical supply chain network (Tsiakis, et al., 2001).

This network involves mainly two major activities: (i) production planning and inventory control; (ii) distribution and logistics process. Although these two activities are interrelated, the first one is related with the manufacturing, storage and their interfaces and the second one corresponds to decisions about product transportation from warehouses to retailers. From this definition, it's possible to characterized a supply chain as the flow of materials from suppliers to customers and by a flow of information on the opposite direction; from customers to suppliers.

Managing a supply chain is usually related with managing a large size of physical supply network and intrinsic uncertainties.  One of its major issues is to determine the optimal supply chain configuration, in which requires long time horizon decisions, for instance: characteristics of manufacturing sites, warehouses and distribution centers, such as number, location and size; production planning and scheduling; connection between the different network entities, such as the allocation of warehouses to markets; inventory and replenishment policies decisions; and, transportation decisions. (Brandenburg, et al., 2014) defined supply chain management as the coordination of the, logical and financial flows management between the supply chain networks, and (Wang, et al., 2004) added that the ultimate goal should be to deliver the right product, in the right amount, at the right time, for the right customer, meaning to efficiently respond to customer.

Having this into account, it was possible to conclude that companies could gain competitive advantage in the global business environment when an optimum management of the supply chain is applied (Bojarski, et al., 2009). Because of this, the design and planning the supply chain has become a crucial business activity, due to the increased competitive environment, advances in information technology (Gupta and Maranas, 2003) and also the fact that the configuration of the supply chain requires a large investment of capital resources for a long period of time (Azaron et al., 2008).

Usually supply chain network design and planning optimization has been based on economic benefits. Tsiakis et al. (2001) explained that, in order to survive in a competitive environment, a supply chain should minimize costs, inventories and investments; and, maximize deliveries, profit, return on investment, customer service level and production. So, there is a need to full integrate and coordinate all entities to form an efficient network structure and a successful supply chain, which comprises cost-effective operations and a quickly customers' satisfaction (Baghalian et al., 2013). However, due to increased competitive, government pressures (Sundarakani et al., 2010; Hassini et al., 2012), and consumer awareness, many companies have to take into account the environmental impacts (Guillen-Gosalbez and Grossmann, 2009; Sundarakani et al., 2010). Thus, in the 90s the concept of sustainability in the management literature has emerged. Also began to appear concepts such as green supply chains (Ramudhin et al., 2008; Bojarski et al., 2009; Wang et al., 2011); sustainable supply chain management (Hassini et al., 2012; Chaabane et al., 2012; Brandenburg et al., 2014); and, triple bottom line (The economist, 2009).  

II. Progresses of Green Supply Chains

As mentioned before, traditional supply chain management focus on economic and financial performances. However, nowadays there is a focus on the creation of a green supply chain, since companies are pressure to consider their environmental impact. Consequently, in recent years, there is a trend to integrate environmental impacts in the optimization process. The concept of sustainability appeared in the management literature in the 1990s and quickly increased since then, as shown in Figure 2 (Linton et al., 2007).

Figure 2 – Number of articles about sustainability in the management literature (Linton et al., 2007).

Some of the factors that are pointed out to be the cause for this rapid increase are the restrictions of some non-renewable resources, such as metal and oil (Chaabane et al., 2012) and, pressures imposed by stakeholders, such as government regulators and community activists (Hassini et al., 2012). Hassini et al. (2012) also added other factors like: market, science, technology, product developments, process capability, sourcing and operations, transport and logistics, and marketing. Consequently, due to these pressures, some companies have joined green strategies in their logistics activities, such as reduce emissions, producing environmentally friendly products, establish recycling systems (Cruz, 2008) and diminish the effects of global warming (Nagurney et al., 2007).

Hassini (2012) defined business sustainability as the ability to manage taking into account the objective of long-term well-being of the society, the environment and the economy; and, the same author, stated that the concept of sustainable supply chain management is defined as the maximization of the supply chain profitability, the minimization of the environmental impacts and the maximization of the social well-being, through the management of supply chain operations, resources, information and funds. This definition implies that companies need to make a trade-off between multiple and possible conflicting objectives. For example, while profit maximization requires a reduction in operational costs, reducing environmental impacts normally requires an increase in operational costs.

On an opposite side of traditional supply chain management, sustainable supply chain management integrates the environmental and social aspects with economic objectives (Chaabane et al., 2012; Brandenburg et al., 2014). This is usually known as the triple-bottom-line (TBL) dimensions of organizational sustainability. The TBL concept was presented by John Elkington in 1994 and consists of three Ps: profit, people and planet. The first one is a measure of profit and loss account. The second is a measure of how companies' operations are social responsible. The last one evaluates how environmental responsible the company has been.

In order to comply with environmental regulation of carbon emissions in an efficient manner in terms of costs, the supply chain network design model should include costs related to greenhouse gas emissions (GHG emissions) in all levels of the supply chain, as well as, social variables that affect the quality of life of the community by supply chain operations (Chaabane et al., 2012). This is due to the fact that is proved that actions like recovery of products and re-processing, may not be sufficient to achieve a long-term sustainability.

GHG emissions consist mainly of “water vapor, carbon dioxide, methane, nitrous oxide, ozone and CFCs. GHGs contribute to maintaining the Earth's temperature at comfortable levels for living organisms through the greenhouse effect. … GHGs levels have been rising ever since the industrial revolution of the 19th century due mainly to human activities” (Ramudhin et al., 2008, p.1093). These emissions have been considered responsible for climate change and one of the most damaging elements to the environment (Chaabane et al., 2012). Carbon dioxide composes the majority of GHG emissions from transportation of products, which are the type of pollution that human kind is most responsible for (Sadrnia et al., 2013).

Wang et al. (2011) stated that transportation of products is an activity that considerably contributes to air pollution and GHG emissions, and so has negative impacts on human health and on global warming. However, transportation allows that raw materials can reach the production process at the right time and that the final products can reach the costumers (Nagurney et al., 2007).

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