Int. J. Production Economics: Suhaiza Zailani, K. Jeyaraman, G. Vengadasan, R. Premkumar
Int. J. Production Economics: Suhaiza Zailani, K. Jeyaraman, G. Vengadasan, R. Premkumar
a r t i c l e i n f o
abstract
Article history:
Received 16 July 2010
Accepted 7 February 2012
Keywords:
Practices
Outcomes
Sustainable supply chain
Developing country
Malaysia
1. Introduction
There is a rapidly increasing awareness in industry that todays
supply chains are awed. To date, many manufacturing companies
create waste and pollution and are threatening the existence of life
on earth. Consequently, these challenges and pressures push rms
to seriously consider the environmental impact while doing their
business. As the population of the world increases and resource
availability decreases, companies are starting to realize that supply
chains must be re-designed (Carter and Jennings, 2002). From the
companies perspective, they must portray the environmentally
friendly image of products, processes, systems and technologies,
and the way business is conducted (Vachon and Klassen, 2006a).
Recent developments in the world economic climate create
uncertainty in the business environment, which creates the
necessity for organizations to look at reconstructing and restructuring to enhance their strategy to sustain the business and
protability while remaining competitive in the marketplace.
0925-5273/$ - see front matter & 2012 Elsevier B.V. All rights reserved.
doi:10.1016/j.ijpe.2012.02.008
Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008
2. Literature review
2.1. Sustainable supply chain management (SSCM)
According to Dyllick and Hockerts (2002), SSCM is comprehended
as the integration of sustainable development and supply chain
management whereby sustainable development is often described
as containing three dimensions integrating environmental, social
and economic issues for human development which also affects the
corporate strategy and action. Although the eld of SSCM is considered quite new, interest in SSCM has been growing rapidly over
the years. Seuring and Martin (2008) identied and reviewed 191
papers and found that the economic and environmental aspects of the
supply chain are by far the dimensions that are the most studied
among the papers reviewed (73.3%), and that papers integrating
sustainable dimensions only started to appear from 2002 onwards.
Sikdar (2003), who takes a macro-viewpoint, which includes
the social, environmental, and economic aspects, dened sustainability as a wise balance among economic development, environmental stewardship, and social equity. Reviews of different
elements related to supply chain sustainability suggests that SSCM
can be linked to green design, inventory management, production
planning and control for remanufacturing, product recovery, reverse
logistics, waste management, energy use and emissions reduction
(Ramudhin et al., 2009). Carter and Rogers (2008) dened SSCM as
the strategic, transparent integration and achievement of an organizations social, environmental, and economic goals through the
systemic coordination of key inter-organizational business processes
for improving the long-term economic performance of the individual company and its supply chain.
Teuteberg and Wittstruck (2010) proposed the House of
Sustainable Supply Chain (Fig. 1), built on the three dimensions
of the Triple Bottom Line, which are viewed as the key pillars
Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008
Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008
enhanced supplier engagement, reduced cost and minimized environmental impact, which could subsequently lead to a sustainable
supply chain performance.
2.2.2. Sustainable packaging
James et al. (2005a) described that packaging directly contributes to the success of the product in the supply chain whereby
it enables efcient distribution of products, and reduced environmental impact of product spoilage and waste. However, packaging has an environmental impact that is not sustainable in the
long-term, such as consumption of non-renewable resources,
generation of air emissions in production, transport and use,
and production of solid waste requiring disposal in landll.
According to Kooijmann (1996), the benets of sustainable
packaging might be obvious from an environmental perspective,
such as reduced waste and resource conservation, as well as the
economic and social benets.
Verghese and Lewis (2007) argued that, typically, when goods
pass through the industrial supply chain the associated packaging
waste is often a forgotten or ignored by-product that is poorly
managed and eventually leads to litter, poor recycling and
unnecessary waste to landll. These phenomena are further
aggravated by poor communication and lack of sense of responsibility among supply chain partners, which limits the potential
for improved packaging solutions that can simultaneously meet
the functional needs of the supply chains operating environment
and reduce the environmental impact and supply chain costs.
According to Jahre and Hatteland (2004), packaging plays a
signicant role in a large integrated system that involves many
actors throughout the supply chain, including materials handling,
inbound logistics operations, purchasing, manufacturing, warehousing, transportation, and retailing.
In this paper, outcomes are dened as the positive results or
consequences that are actually realized from the adoption of
sustainable supply chain management practices. Organizational
performance refers to how well an organization achieves its
market-oriented goals as well as its nancial goals (Li et al.,
2006). Zhu et al. (2005) contended that inter-rm linkage, which
is facilitated by proximity, could lead to improvement in environmental performance whereas the relations with suppliers aid
the adoption and development of innovative environmental
technologies. These, coupled with the interaction of the customer
and suppliers staff, partnership agreements and joint research
and development can lead to improvements in environmental
performance.
In the context of supply chain performance (SCP), the shortterm objectives of SCP are primarily to increase productivity and
reduce inventory and cycle time, while the long-term objectives
are to increase market share and prots for all members of the
supply chain. Financial metrics serve as a tool for comparing
organizations and evaluating an organizations behavior over
time. Supply chain performance has indeed become an important
source of sustainable advantage in many industries due to the
increase in global competition from the supply chain perspective
(Hoole, 2005). Organizations should focus on the overall supply
chain performance as this is a direct indication of the rms
performance (Olhager and Selldin, 2004), which means that
supply chain management has a dual role to improve individual
rm performance and also the overall supply chain performance
(Mentzer et al., 2001; Li et al., 2006). In terms of measuring
Supply Chain Performance, although there are several established
metrics, such as Balanced Score Card (BSC), the supply chain
Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008
3. Methodology
3.1. Research design
The population frame for the study consists of manufacturing
rms in Malaysia. Li et al. (2006), however, stated that supply
chain practices tend to be more prominent among large sized
companies. This implies that large sized companies tend to
emphasize supply chain related practices as opposed to smaller
sized companies. Thus, the majority of the respondents for this
study are large manufacturing companies or multi National
Corporations operating in Malaysia. These rms are expected to
have a high rate of adoption of environmental, safety and human
rights initiatives. The minimum requirement for a sample is one
variable to ten respondents (Hair et al., 2006), thus, a respondent
size of 106 is considered sufcient for this study. Stratied
random sampling is used in this study.
The unit of analysis of the study is the individual rm. Since, the
study combines issues related to sustainability focusing on the
environment, economic and human rights aspects with business
aspects of supply chain, the most appropriate respondent will be
the Supply Chain, Purchasing and Material Packaging representative
of the rm. Thus, the questionnaire will be addressed to the Supply
Chain, Purchasing and Material Packaging personnel who are usually
from logistics operations, purchasing or the material engineering
department of the rm.
3.2. Survey instrument
The primary data were gathered through a questionnaire
survey. Questionnaires are considered an efcient method to
collect data from the respondents, especially when the researcher
knows what is required and how to measure the variables of
interest. The questionnaire is divided into ve sections with a total
of 76 items. A 5-pointLikert scale from Low Extent (1) to High
Extent (5) is used to measure the extent of the sustainable
development related practices within the organization. Specically,
the items for Sustainable Supply Chain Management Practices on
Environmental Purchasing were adopted from Carter et al. (2000).
Items for Sustainable Supply Chain Management Practices on
Sustainable Packaging were adapted from Kooijmann (1996).
All of the items for Environmental Purchasing and Sustainable
Packaging were initially validated by three managers working in
multinational companies. It is believed that this process is deemed
necessary to suit the measurements with the context of Malaysia.
For the outcomes, the questions were designed using a 5-point
Likert scale from Strongly Disagree (1) to Strongly Agree (5) to
measure the effect of the sustainable supply chain practices on
the organization supply chain performance. The questionnaire
model for Sustainable Supply Chain Performance was adapted
from Harmon and Cowan (2009).
4. Data analysis
4.1. Prole of the companies
Environmental
Purchasing
Sustainable
Packaging
H1a
Sustainable
Supply Chain
Performance
H1b
Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008
between local and foreign, and 18.1% (19) are fully Malaysian
owned rms. In addition, 66.7% (70) of the rms are part of a
larger organization in line with the foreign and joint venture
ownership of the rms as shared above, while 33.3% (35) of the
rms are not part of a larger organization.
In the context of manufacturing sectors, as expected, 68.6%
(72) rms belong to the electrical and electronics (E&E) industry,
which is the largest manufacturing sector in Malaysia; 9.5% (10)
of the rms belong to the paper products and printing sector; 5.7%
(6) belong to the machinery and equipment sectors; 4.8% (5) of
rms fall under the chemical sector and 3.8% (4) of rms belong
to the pharmaceutical sector. Food and Beverage, Textiles and
wearing apparel sectors consist of 1.0% (1) rms each for both
sectors. Based on the rm age, 42.9% (26) of the rms have existed
in Malaysia for more than 26 years; followed by 10.5% (11) of
rms between 21 and 25 years; 19% (20) of rms with an age of
16 to 20 years; 10.5% (11) rms between 11 and 15 years; 16.2%
(17) rms between 5 and 10 years; and only 1.0% (1) of rms have
been in existence for less than ve years.
4.2. Goodness of measures
In this study, factor analysis was used to validate whether the
items in each section loaded into the expected categories. In
addition, Cronbachs alpha was used to assess the internal consistency or homogeneity among the items.
4.2.1. Factor analysis for sustainable supply chain management
practices
Factor analysis with Varimax rotation was done to validate the
dimensionality and appropriateness of the measurement scale.
With eigenvalues greater than 1.00 the total variance explained
was 70.63%. The KMO measure of sampling adequacy was 0.896
indicating sufcient intercorrelation while the Bartletts Test of
Sphericity was signicant (Chi square1.2603, p o0.001). There
were 14 questions on sustainable supply chain management
practices and two factors were extracted (Table 1).
4.2.2. Factor analysis for sustainable supply chain performance
Table 2 shows factor analysis for the sustainable supply
chain performance or outcomes. The initial theoretical framework
Table 1
Factor analysis for sustainable supply chain management (SSCM) practices.
Items
Items no.
Factor
EP
Environmental purchasing
Purchases recycled packaging.
Purchases packaging that is of lighter weight.
Participates in the design of products for disassembly.
Participates in the design of products for recycling or reuse.
Uses a life-cycle analysis to evaluate the environmental friendliness of products and packaging.
Asks suppliers to commit to waste reduction goals.
Sustainable packaging
Effectively recovered and utilized in biological and industrial cradle-to-cradle cycles.
Benecial, safe and healthy for individuals and communities throughout its life cycle.
Physically designed to optimize materials and energy.
Maximizes the use of renewable or recycled source materials.
Sourced, manufactured, transported and recycled using renewable energy.
Meets market criteria for performance and cost.
Manufactured using clean production technologies and best practices.
Made from materials healthy in all probable end-of-life scenarios.
KMO
Bartletts Test of Sphericity
Eigenvalue
Percentage variance (70.63%)
EP1
EP2
EP4
EP6
EP3
EP5
SP8
SP1
SP7
SP4
SP3
SP2
SP5
SP6
.907
.920
.891
.861
.897
.882
.221
.227
.182
.171
.268
.237
.126
.010
.896
1.2603
5.096
36.401
SP
.263
.204
.211
.241
.174
.136
.771
.763
.808
.767
.661
.670
.755
.811
4.793
34.237
Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008
Table 2
Factor analysis for sustainable supply chain performance.
Items
Item no.
Operations (OPE)
Ability to reduce manufacturing operating cost.
Number of days for a supply chain to respond to plan, source, make and deliver unexpected demand variations.
Ability to quickly respond to changes to competitors product offerings.
Inventory days of supply/inventory turnover rate (number of days cash is tied up in inventory).
Ability to fulll perfect order(complete, without any delays and damage free).
Economic (ECO)
Signicant improvement in terms of sales and market share.
Signicant reduction in terms of waste and its disposal costs.
Signicant improvement in terms of resources management efciency.
Social (SOC)
Signicant improvement in its image in the eyes of its customers.
Signicant improvement in relations with community stakeholders, e.g., Nongovernmental organizations (NGO)
and community activists.
Signicant improvement in product image.
Environment (EN)
Signicant improvement in its compliance to environmental standards.
Signicant reduction in consumption for hazardous/harmful/toxic materials.
Signicant reduction in energy consumption.
KMO
Bartletts Test of Sphericity
Eigenvalue
Percentage variance (79.95%)
Environmental
Purchasing
Sustainable
Packaging
Component
OPE
ECON
Ope4
Ope3
Ope2
Ope5
Ope1
.887
.878
.873
.855
.846
.090
.069
.154
.127
.197
.234
.149
.119
.138
.160
.087
.081
.039
.138
.196
Econ3
Econ1
Econ2
.170
.146
.171
.903
.881
.875
.220
.123
.274
.155
.254
.164
Soc2
.221
.122
.826
.261
Soc3
.163
.263
.778
.147
Soc1
.263
.237
.772
.220
En1
En2
En3
.057
.204
.107
.832
1.1243
4.045
28.891
SOC
EN
.149
.203
.162
.124
.166
.282
.859
.765
.737
2.677
19.121
2.280
16.288
2.192
15.654
Operation
Economic
Environmental
Social
4.4. Reliability
Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008
Table 3
Reliability.
Environmental purchasing
Sustainable packaging
Environment
Social
Economic
Operations
No. of items
Cronbachs alpha
6
8
3
3
3
5
.962
.903
.787
.844
.939
.940
5. Discussion
Table 4
Regression of sustainable supply chain management on performance.
Sustainable
supply chain
practices
Environmental
purchasing
Sustainable
packaging
R2
Adjusted R2
F
Environment
performance
Social
Economic
Economic
performance performance performance
.062
.297nnn
.255nn
.848nnn
.542nnn
.478nnn
.409nnn
.031
.442
.431
40.443nnn
.325
.312
24.543nnn
.328
.314
24.847
.742
.737
141.106nnn
Signicance Level:
nn
p o0.01.
po 0.001.
nnn
The results of the study showed that environmental purchasing does not have a positive effect on environmental outcome,
which contradicts the ndings of Bjorklund (2010) that the
increased focus on the purchasing function has literally increased
the discussion on the contribution of purchasing in reducing the
impact on the natural environment. One of the possible reasons
for the above result could be that the responding rms believe
that the benets of these initiatives may reect on external
parties rather than on the rm itself. For example, although
environmental purchasing focuses on improving the environmental performance of its suppliers, by purchasing environmentally
friendly materials the direct benet goes to the suppliers rather
than the rm indirectly. Another contributing factor to the above
nding could be the lack of availability of systematic monitoring
and sharing of key performance indicators derived from the
environmental purchasing activities from the environmental
aspect of the organization. Thus, the lack of visibility on the key
indicators could lead to the above ndings of environmental
purchasing not contributing to the environmental performance
of an organization.
However, environmental purchasing showed a positive effect
on economic, social and operational outcomes. For economic
Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008
5.3. Conclusion
Today, sustainability is receiving an increasing level of attention at both the local and global levels, which eventually leads to
questions on how to integrate sustainability with business operations and strategy. Sustainable supply chain management (SSCM)
could be a good means to extend the responsibility of business
organizations from being reactive in reducing pollution and waste
and other sustainable related efforts, to proactively assuming full
responsibility for their products from acquisition of raw materials
to the nal disposal of the products from a sustainability perspective. This paper examines sustainable supply chain management practices within manufacturing rms in Malaysia.
The main contribution of the paper is its proof concerning the
effects of the SSCM practices on the sustainable supply chain
performance of the rm. Environmental purchasing and sustainable packaging were found to have a direct impact on the rms
performance outcome, especially on economic and social outcomes. This signals that SSCM practices can bring value to both
the organizations and the external environment. SSCM practices
will lead to a reduction in resources, material and waste, thereby
enabling better resource utilization, and play a signicant role in
achieving the triple bottom line of social, environmental, and
economic performance, and, thus, contributing to sustainable
development of the country.
In summary, the overall ndings indicate that sustainable supply
chain management practices represent an interesting area of
research and practice, which requires further research to understand
why rms adopt sustainable supply chain management practices
in the rst place. This study attempts to set a solid theoretical
and empirical basis for this area of research. Thus, future studies
are encouraged to make use of this study for further investigation of
this interesting and important topic, namely, sustainable supply
chains.
Appendix
See Table A1 for more details.
Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008
10
Table A1
Items for the variables.
Environmental purchasing: currently our company y.
EP1
EP2
EP3
EP4
EP5
EP6
Low
Moderate
High
High extent
Low extent
Low
Moderate
High
High extent
Low extent
Benecial, safe and healthy for individuals and communities throughout its life cycle.
Meets market criteria for performance and cost.
Sourced, manufactured, transported and recycled using renewable energy.
Maximizes the use of renewable or recycled source materials.
Manufactured using clean production technologies and best practices.
Made from materials healthy in all probable end-of-life scenarios.
Physically designed to optimize materials and energy.
Effectively recovered and utilized in biological and industrial cradle-to-cradle cycles.
O1
O2
O3
O4
O5
O6
O7
O8
O9
O10
O11
O12
O13
O14
Strongly
disagree
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Please cite this article as: Zailani, S., et al., Sustainable supply chain management (SSCM) in Malaysia: A survey. International Journal
of Production Economics (2012), doi:10.1016/j.ijpe.2012.02.008