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Journal of Economics, Business and Management, Vol. 3, No.

9, September 2015

An Analysis of Drivers Affecting Green Supply Chain


Management Implementation in Electronics Industry in
Thailand
A. Kamolkittiwong and B. Phruksaphanrat


So, many organizations have been forced to implement
Abstract—Manufacturers attention now focuses on green GSCM [3].
supply chain (GSCM) due to pressure from the government and The impact of environmental problems has affected
environmental consciousness among customers. However, government to enact the law for protecting the environment.
implementation of GSCM is not easy, so it is necessary to study
about the key to success from the successful companies. In this Especially, The EU has regulations such as WEEE (Waste
research, electronics industry is depicted. The electronics Electrical and Electronics Equipment) and RoHS (Restriction
industry plays a significant role in Thailand due to high of Hazardous Substances in Electrical and Electronics
exporting to international market. This industry also generates Equipment) [4]. For this reason, it is necessary for business to
harmful wastes to the environment and makes social adopt GSCM, in order to respond to the current
environmental problems. Therefore, this study aimed to
identify factors that are critical for the implementation of the
environmental concern and create an enduring competitive
GSCM strategy of the electronic industry in Thailand in order advantage.
to help the newcomer in electronic industry who wants to The Ministry of Industry is the primary agency in Thailand
implement GSCM successfully. This study can be used as a who has set strategies for industrial development. In
guide for other industrial sectors. Data are collected through a promoting the growth and development of industries, the
questionnaire-based survey, and analyzed using analytic
Ministry of Industry has launched a Green Industry Project.
hierarchy process (AHP). Then, the main drivers those affect
GSCM on the electronics industry in Thailand are ranked. We Companies who enroll in this project will be certified and
have found that regulatory is one of the most critical factors. evaluated about green considerations in their organizations.
Moreover, supporting for top management, market/consumer As a result, these industries will have a good image of
and organization strategy are also important drivers for credibility and public trust. Moreover, the creation of a green
implementing GSCM. economy will result in higher gross domestic product (Green
GDP) [5]. The green industry levels are divided into five
Index Terms—Electronics industry, green supply chain
management, green industry. levels. Firstly, “Green Commitment” is for the company who
commits to reduce their environmental impact, and
communicates about green concern within their
I. INTRODUCTION organizations. Secondly, “Green Activity” is for the
Green supply chain management (GSCM) is one of the company who implements some methods to reduce the
corporate environmental management that has been adopted impact on the environment and fulfills the commitment set.
by among manufacturing firms. It intends to reduce or Thirdly, “Green System” is for the company who has a
minimize negative environmental impacts. The concept of system of environmental management. Fourthly, this level is
GSCM is the integration of environmental thinking and for the company who has assessed and reviewed for
supply chain management, such as development and product continuous improvement. Moreover, it should have the
design, supplier selection and procurement, manufacturing environmental award-winning and environmental standards.
process of clean technology, distribution of finished products Fourthly, “Green Culture” is the company that everyone in
to the customers as well as end-of-life recycling [1]. the organization cooperates in environmental concern. The
The electronics industry plays an important role in company has an environmental friendly in all aspects of the
Thailand. There are more than 2,055 electronics companies. operation. Green becomes part of the corporate culture.
Revenues from exporting electronics parts to the Finally, “Green Network” is the expansion of green to the
international market are 8,143.97 million USD [2]. The network of supply chain, by encouraging partners to process
major export markets are the United States, European Union and certify by Green Industry Project [5].
(EU), Japan and China, etc. While the international trades are However, the major factors that affecting to the
increasing, the environmental problems are also expanding. implementation of GSCM in the electronics industries in
Thailand has not been investigated. So, it is difficult for the
Manuscript received June 30, 2014; revised October 25, 2014. This work newcomers who want to initiate implementation of GSCM to
was supported in part by Rangsit University, Patumtani, Thailand.
F. A. Kamolkitiwong is with the Logistics Management Department,
their factories. Knowing the main drivers for successful
Faculty of Business Administration, Rangsit University, Rangsit Campus, implementation of GSCM will help the organization to start
Patumtani, Thailand (e-mail: [email protected]). the operation. Therefore, this study aimed to identify factors
S. B. Phruksaphanrat is with the Industrial Engineering Department,
Faculty of Engineeering, Thammasat University, Rangsit Campus,
that are critical to the implementation of the GSCM strategy
Patumtani, Thailand (e-mail: [email protected]). of the electronics industry in Thailand.

DOI: 10.7763/JOEBM.2015.V3.299 864


Journal of Economics, Business and Management, Vol. 3, No. 9, September 2015

The scope of this paper is to study the main drivers of external and internal drivers. External drivers include
implementation GSCM from 6 experts of the certified supplier (Sup), regulation (Reg), market/consumer (Mkt),
electronics factories who obtain a green culture and green competitors (Com) and social/stakeholder (Soc) and the
network levels in the green industry project. internal drivers are described as organizational factors, which
are supporting from top management (Top), organization
strategy (Org), Cost reduction (Cos), economic benefit (Eco)
II. GREEN SUPPLY CHAIN MANAGEMENT and reverse logistics (Rev). These key drivers affecting
GSCM strategy are gathered from many literatures and
A. Green Supply Chain Management summarized in Table I and Table II.
Green supply chain management (GSCM) definition can 1) External drivers
vary depending on the research objectives and related issues
[4]. GSCM comprises of the manufacturing process that a) Suppliers
minimize waste and pollution [6]. It also integrates There are a few researches, which identified suppliers as a
environmental thinking in supply chain management, from key driver of environmental supply chain management
conceptual product to design to the delivery of the final practices [13]. However, the role of suppliers is considered
product to the consumers, and also involves end-of-life an important part in fostering environmental practices. Due
management. GSCM emphasizes the concerns for the to the members within the supply chain requires the
environment along the whole supply chain and requires cooperation to achieve an environmental objective [13].
long-term and strategic collaborations between the supply Manufacturers collaborate with suppliers to set
chain members [7]. It encompasses environmental initiatives environmental standards for exploring green supply chain
in inbound logistics, production, outbound logistics, and management, such as designing product, which can eliminate
reverses logistics [8]. Moreover, it consists of green the environmental impact of producing and developing
procurement, green manufacturing or material handling, environmentally friendly packages [10]-[12], [20].
green distribution or marketing, and reverse logistics b) Regulatory
activities [9]. These concepts are applied to the methodology The government regulation and legislation is a major
of this research. driver for companies’ environmental efforts to implement
GSCM practices [3], [13]. The government of each country
B. The Drivers Affecting the Implementation of Green
has different regulations in the electronics industry [4].
Supply Chain Management
Therefore, manufacturing firms have to study regulations and
environmental standards for each country to maintain their
TABLE I: EXTERNAL DRIVERS AFFECTING THE GSCM ADAPTATION
market shares. In Thailand, the manufacture firms need to
References Sup Reg Mkt Com Soc
compliance with environmental legislation in the domestic
Diabat and Govindan (2011), [10]  
Zhu et al. (2004), [11]     and foreign market to satisfy customer’s requirements [4].
Khiewnavawongsa, (2011) [12]    Reference [3] argued that environment regulation and
Walker et al. (2008), [13]      policies are driving the organizations to become
Liu et al. (2012), [14]  
environmentally conscious. To improve a firm’s
Abdul Rehman and Shrivastava     
(2011), [3] competitiveness the organization has to strive in order to
Sari and Hasnelly (2012), [15]   meet current and upcoming stricter environmental
Lin (2013), [16]  
regulations. In addition, the environmental policies can foster
Routroy (2009), [17]  
Lee (2008), [18]   competition within the industry and improving the
Vachon (2008), [19]  profitability and environmental performance.
Note:  Shows the drivers that the corresponding study found to be c) Market/consumer
significant. Market factors affect the decision on green supply chain
management in the electronic industry because most
TABLE II: INTERNAL DRIVERS AFFECTING THE GSCM ADAPTATION
companies are international businesses. Manufacturers need
References Top Org Cos Eco Rev
to comply with environmental standards and requirements of
Diabat and Govindan (2011), [10]  
Zhu et al. (2004), [11]   each country such as RoHS, WEEE and EPA [4]. As a result,
Khiewnavawongsa (2011), [12]   the electronics industry have to implement GSCM to meet
Walker et al. (2008), [13]  customer requirements of exports to the international market
Liu et al. (2012), [14]  
[21].
Abdul Rehman and Shrivastava   
(2011), [3] Consumers’ behaviors are more likely to pay attention to
Sari and Hasnelly (2012), [15]   the environmental products. They are likely to purchase a
Lin (2013), [16]
product that is environmentally friendly. Reference [22]
Routroy (2009), [17]    
Lee (2008), [18]  found that consumers increasingly concern about the
Vachon (2008), [19]   environment, which can be known from purchasing pattern.
Note:  Shows the drivers that the corresponding study found to be The growing number of organizations adopted the green
significant. product also indicates the need for suitable segmentation and
positioning strategies.
The various important drivers for the implementation of d) Competitors
GSM practices can be divided into two categories, which are
Social responsibility has become an important variable in

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Journal of Economics, Business and Management, Vol. 3, No. 9, September 2015

creating a global competitive advantage. Manufacturers are environment benefit. Reverse logistics is a significant driver
developing the green product to meet the market requirement which regulated in Europe, North America, and state in other
in order to maintain competitiveness in the market [13]. parts of the word.
e) Social/stakeholder
Deterioration of the environment in the last decade has
increased public awareness of environmental issues. Social III. ANALYTIC HIERARCHY PROCESS (AHP)
has demanded for products from the company, which has The Analytic Hierarchy Process (AHP) is one of the most
environmentally friendly operation. The public pressure popular multicriteria decision making techniques. It was
causes most companies to review their environmental proposed by Thomas L. Saaty in the mid of 1970s. AHP
practices within their supply chain. The threat or disruption combines tangible and intangible aspects to obtain the
caused by the environmental awareness of the public could priorities associated with the alternatives of the problem.
create opportunities for companies to reach new customers This is the advantages of AHP. It has a structural framework,
who want environmentally friendly products [13]. which allows decision makers to improve the understanding
2) Internal drivers of complex decisions by decomposing the problem into a
hierarchical structure. The incorporation of all relevant
a) Supporting from top management decision criteria, and their pairwise comparison to trade-offs
Supporting from top management is the initially among criteria. It provides mechanisms to monitor the
significant issue to implement GSCM. The commitment of consistency with which a decision maker makes a judgment.
top management plays a significant role in bringing GSCM The steps to follow in the AHP are given below [24]:
strategies to achieve successful results. For example, top 1) Define the problem and determine the objective.
management defines the vision, mission and organization 2) Structuring the problem into a hierarchy. Hierarchies
policies, and communicates these policies to employees at distribute a property (the goal) among the elements being
different levels can achieve collaboration across the company compared (factors), to judge which one influences or is
[23]. influenced more.
b) Organization strategy 3) Construct a set of pairwise comparison matrices (size n ×
Consumers are more aware of environmental standards n) for each of the lower levels with one matrix for each
and preferable to buy the product from the companies that element in the level immediately above by using the
offering the environmentally friendly products. For this numerical rate as shown in Table III. The pairwise
reason, many firms had to adapt the green strategy to enhance comparisons are done in terms of which element
the brand image and maintain the market share [3]. dominates the other as the following matrices :
c) Cost reduction
1 a12 ... a1n 
The ultimate goal of business is to generate profits for the  1 
firms. By adopting GSCM leads to save the manufacturing  1 ... a2 n 
a  (1)
cost and increase the profit. Cost reduction refers to the A   12 
conservation of energy, water, and raw materials. The  
valuable of cost reduction is environment improvement and  1 1 
 ... 1 
reduction of cost [25]. Furthermore, the previous researches  a1n a2 n 
have supported that adopting GSCM can reduce the cost [3].
Reference [17] stated that the objective of GSCM is to 1) There are n(n  1) judgments required to develop the set
2
manufacture environmentally friendly product with
of metrics in step 3. Reciprocals are automatically
minimum resources (material, energy, water, etc.) and
assigned in each pairwise comparison.
minimum wastage. The benefit of GSCM is to create a
2) Hierarchical synthesis is now used to weight the
competitive advantage to the organization.
eigenvectors by the weights of the criteria and the
d) Economic benefit
summation is taken over all weighted eigenvector entries
The benefits derived from the implementation of GSCM corresponding to those in the next lower level of the
strategy are cost saving, increasing customer satisfaction, hierarchy.
new market opportunities, improving corporate image, and 3) Having made all the pairwise comparisons, the
higher profits [25]. Reference [17] also found that some of consistency is determined by using the eigenvalue, max ,
the significant benefits of GSCM are the system cost
reduction, easier penetration of global markets, reduction of to calculate the consistency index, CI as follows:
resource usage, reduction of wastes and risks, good publicity, max  n (2)
CI 
achieving competitive advantage, and enhancement of n 1
customer satisfaction. Moreover, the higher profits can
where n is the matrix size. Judgment consistency can be
motivate firms to implement GSCM increasingly.
checked by taking the consistency ratio (CR) of CI with the
e) Reverse logistics appropriate value (RI) in Table IV. The CR is acceptable, if
Reverse logistics refers to creating value added products it does not exceed 0.10. If it is more, the judgment matrix is
for reducing costs and environmental impact of the product inconsistent. To obtain a consistent matrix, judgments
life cycle. Reference [17] mentioned that the benefits of should be reviewed and improved.
reverse logistics not only economic benefits, bus also 4) Steps 3 – 6 are performed for all levels in the hierarchy.

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Journal of Economics, Business and Management, Vol. 3, No. 9, September 2015

TABLE III: SCALE FOR PAIRWISE COMPARISONS [25], [26] implementation of green supply chain practice are significant
Numerical rate Definition in understanding of GSCM implementation. There are main 4
1 Equal important criteria, which have weight higher than 10% of the overall
2 Equally to moderately more important weight. They are regulatory, supporting from top
3 Moderately more important
management, market/consumer and organization strategy.
4 Moderately to strongly more important
These criteria are the main criteria for those companies who
5 Strongly more important
want to be successful in implementing GSCM in the
6 Strongly to very strongly more important
7 Very strongly more important
electronics industry in Thailand. For the criteria at medium
8 Very strongly to extremely more important level, economic benefit, competitors and cost reduction have
9 Extremely more important weights about 8%. The low weight criteria are social /
stakeholder, reverse logistics and supplier, which are lower
TABLE IV: AVERAGE RANDOM CONSISTENCY (RI) [25], [26] than 5%.
1 2 3 4 5 6 7 8 9 10
N
RI 0 0 0.58 0.9 1.12 1.24 1.32 1.41 1.45 1.49

In this research, AHP methodology is used to rank the


drivers affecting scores for implementation of GSCM in the
electronics industry. The goal of the AHP hierarchy is the
successful implementation of GSCM. Selected drivers for
GSCM are suppliers, regulatory, market/consumer,
competitors, social/stakeholder, supporting from top
management, organization strategy, cost reduction, economic
benefit and reverse logistics. The hierarchical structure can
be drawn as shown in Fig. 1.
Fig. 2. Combined comparison of the relative importance with respect to the
influence of implementing GSCM.

Fig. 1. The hierarchical structure of the successful implementing GSCM.

Relational data were obtained with the aid of questionnaire Fig. 3. The overall ranking of drivers affecting the implementation of green
from a group of executive such as directors, production supply chain management.
managers and engineers within the electronics firms, which
Regulatory is the most important driver among the entire
obtained a green culture and green network levels in Thailand,
identified GSCM drivers, which is similar to the results
totally 6 experts. In this research, Expert choice software
obtained in the previous studies. In 2004, [11] investigated
based on AHP is used to calculate weight of criteria.
and described GSCM drivers, practices, and performance
among various Chinese manufacturing organizations. They
found that Chinese enterprises had increased their
IV. RESULTS AND DISCUSSION
environmental awareness due to regulatory, competitive, and
Results of questionnaires from 6 experts are combined by marketing pressures. Reference [3], studied the relationship
geometric means. The result of combined comparison based among the identified GSCM drivers using interpretive
on the pairwise comparison provided in Fig. 2. Main drivers structural modeling (ISM) and classified these drivers
affecting the implementation of GSCM with respect to goal depending upon their driving and dependency on power.
of successful implementation of GSCM in Thailand are Their study found that drivers, which are important in
regulation, supporting from top management, understanding of successful GSCM implementation, are
market/consumer and organization strategy. The weights of regulatory and market competitive pressures. Reference [28]
each driver are regulated (0.271), supporting from top also confirms that government regulations drive GSCM
management (0.138), market/consumer (0.123), organization efforts.
strategy (0.114), economic benefit (0.084), competitors Secondly, top management or entrepreneurial enterprises
(0.083), cost reduction (0.081), social/stakeholder (0.044), have multifunctional roles such as scanning for external
reverse logistics (0.039), and suppliers (0.021), accordingly opportunities, encouraging innovation, acquiring necessary
as shown in Fig. 3. The overall inconsistency ratio is 0.01, resources from external sources, and monitoring progress.
which is lower than 0.1. So, consistency of experts is Reference [29] studied the barriers in implementing
acceptable. corporate environmental responsibility in Thai seafood
The importance levels of drivers affecting to the industry. She has identified three barriers: the lack of system

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Journal of Economics, Business and Management, Vol. 3, No. 9, September 2015

perspective on sustainability, absence of top management opportunity.


commitment and cultural diversity. The result of interviews Global organizations face very high competitive pressure.
demonstrated that top managers were positioned to To maintain the customers and market share, firms need to
communicate their green visions and support the integration initiate and differentiate from the competitors [3], so
of environmental responsibility into corporate strategy. The competitors is also one of the factors. Greening the supply
study was shown that environment management depends chain leads to significant values for competitiveness and
upon the shape of organizational culture initiated by top economic performance [8], [33].
management. Lack of top management commitments means Cost reduction is to save the manufacturing cost and
that the goal of environmental strategy is unlikely to be ultimately boosts the profit margin [3]. Research by [21]
achieved. References [23] and [28] demonstrated that top found that the Chinese enterprises have increased their
management should contribute the integration of information environmental awareness to implement a variety of GSCM
sharing into an overall organizational business strategy and practices. However, GSCM practices have improved
provide vision, guidance, and support for the effective economic performance. The benefits range from
implementation of GSCM [13], [21]. straightforward cost reduction of facilitating the development
Thirdly, market/consumer requests green products or the of co-operative relationship with suppliers, and holistic view
implementation of environmentally friendly practices to the to management supply chain.
manufacturers. Reference [30] argued that there are two main The remaining criteria are the low weight criteria for
reasons that organizations’ concern to develop green electronics industry in Thailand, they are social/stakeholder,
products. First, green consumerism is the end-customer reverse logistics and supplier.
requirement on green products. Second, there are the Social/stakeholders are individuals or groups who affect a
considerable pressures from the customers and retailers who company’s activities and influence the company involved in
want their supply chains to be green. The foreign motorcycle environmental practices [32]. Reference [34] indicated that a
firms in Vietnam have been studied to answer two key firm formulation of an environmental plan is positively
questions: (a) how does market demand influence a firm’s influenced by customer pressure, shareholder pressure,
green product innovation? and (b) how can green product government regulatory pressure, and neighborhood and
innovation affects firm performance? [31]. The empirical
community group pressure.
findings were shown that market demand positively
Reverse logistics includes the handling and disposition of
correlated to both green product innovation and firm
returned products and the use of related materials and
performance. Furthermore, green product innovation
information [17]. There is the evidence that government
performance is positively correlated to firm performance.
regulation and legislation and reverse logistics are significant
Moreover, [market pressure triggering environmental
drivers to achieve the collaboration between product
innovation practices, comes from two sources [30]. The first
designers and suppliers to reduce and eliminate product
one is from overseas customer’s green consumerism. The
environmental impact [10].
second one is from domestic customers’ green consumerism
pressure. Suppliers who pay attention to environmental concern
Organization strategy is also one of the critical criteria for should be able to support the firms to be GSCM. However,
implementing GSCM. According to the work of [32] , they the relationship between firms and suppliers are very
analyzed the factors influencing the adoption of green important to support the green implementation [12].
practices in the Chinese logistics industry. The determinant
factors compose of technological, organizational, and
environmental dimensions. Research results revealed that V. CONCLUSION
organizational support, the quality of human resources and In this study, we have found the priority of factors that
company size will affect green adoption behavior of Chinese influence the implementation of GSCM in the electronics
logistics companies by providing education and training industry in Thailand. Firstly, regulatory is one of the most
program for managing environmental issues. critical initiating factors for the development of
Regulations, supporting from top management, environmental strategy. The electronics firms possess more
market/consumer and organization strategy are the main experience of international business and faces higher
criteria for electronics industry in Thailand. Regulatory and regulatory pressure to initiative green supply chain
market/consumer are external factors which strongly effect to management than other businesses. So, government should
the implementation of GSCM. For internal factors of an promote the green industry project to create the business
organization, top management and organizational strategy opportunities by improving people, increasing
are the main drivers, which encourage members of an knowledge-based, technology, innovation and creativity
organization to start concerning and implementing GSCM. based on the concept of environmentally-friendly
Criteria at the medium level from this study are an manufacturing industries. Supporting from top management
economic benefit, competitors and cost reduction. is the second rank of factors in implementation GSCM. The
Economic benefit can lead to the better financial attitude of top management toward environmental issues and
performance. Reference [30] found that the adopting of visions is directly affected to organization policy. Thus, top
environmental innovation practices is lead to improve a management should commit to complete environmental
firm’s environmental performance, and indirectly improve policies, encourages employees to learn green knowledge,
financial performance. The finding indicated that firms and provides resources for the environmental projects.
should change the attitude and perception to intent on Market/consumer concern is also a very important factor.
environment improvement as an economic and competitive This awareness level can only be increased by proper

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Journal of Economics, Business and Management, Vol. 3, No. 9, September 2015

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B. Phruksaphanrat hold a B.Eng. in industrial
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M.Eng. in manufacturing systems engineering from
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Asian Institute of Technology in 1997. She obtained
in Indonesia: A Conceptual Model,” Procedia - Social and Behavioral
D.Eng in information sciences and control Engineering
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from Nagaoka University of Technology, Japan in
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2003.
management practices,” Journal of Cleaner Production, vol. 40, pp.
She is an associate professor in Industrial Engineering Department at
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Faculty of Engineering, Thammasat University. Her research interests focus
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on production planning and control systems, supply chain and logistic
management implementation in manufacturing environment,” The IUP
Journal of Supply Chain Management, vol. 6, pp. 20-35, 2009. planning, multiple criteria decision making, fuzzy sets and systems and
[18] S. Lee, “Drivers for the participation of small and medium-sized applied operations research. Dr. Pruksaphanrat was awards by international
suppliers in green supply chain initiatives,” Supply Chain Management: association of engineering in 2010 and national industrial operations
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