http://www.iaeme.com/IJMET/index.asp 317 editor@iaeme.com
International Journal of Mechanical Engineering and Technology (IJMET)
Volume 10, Issue 03, March 2019, pp. 317–330, Article ID: IJMET_10_03_033
Available online at http://www.iaeme.com/ijmet/issues.asp?JType=IJMET&VType=10&IType=3
ISSN Print: 0976-6340 and ISSN Online: 0976-6359
© IAEME Publication Scopus Indexed
LEAN AND GREEN SUPPLY CHAINS – KEY
PRACTICES, INTER LINKAGES AND EFFECTS
ON SUSTAINABILITY - A CASE STUDY WITH
REFERENCE TO AUTOMOBILE INDUSTRY
Ghanshyam Sharma
Research Scholar, Amity University, Noida, U.P, India
Dr. Rushina Singhi
Assistant Professor, Amity University, Noida, U.P, India
Dr. Alok Mittal
Director, Lal Bahadur Shastri Institute of Technology and Management,
Indore , M.P. India
ABSTRACT
The need of time is to find a competitive supply chain strategy for Organizations .
Lean and Green are the appropriate strategies recommended for competitiveness and
sustainability, But the grey area is their integration and impact on each other . Lean
Practices being followed since long and are very well recognized and accepted in the
Organizations , whereas Green Concept is relatively new and still struggling to find
its way in the Industry supply chains . In View of current environmental scenario,
there is Huge pressure on Industry to build and adopt process ,favorable to
environmental sustainability . Green Supply Chain is the option available but it needs
to be linked with Lean Practices to find a competitive edge with benefits to
Organization and contribution to nature . This Paper aims to identify key practices of
Lean & Green Supply Chain strategies and their inter linkages in terms of issues and
impacts. The structured analysis approach is adopted to improve performance of
Automotive supply chain by integration of Lean and Green Strategies . An Automobile
OEM was selected for the study . Data collection and Analysis was done to find out
Prevailing Lean and Green Practices in the organization . Research carried out to
find out integration scope amongst these practices and add /Implement new Green
Practices . Results derived after integration and implementation. An integrated Supply
Chain Model developed with benefits of Green and Lean. The Model Provides a route
map for developing sustainable Green Supply chains with acceptability and
adoptability in Industry.
Key words: GSCM , Lean , Green , Automobile Industry , Supply Chain
Management, Organizational Performance , Cost Saving , Green Packaging
Lean and Green Supply Chains – Key Practices, Inter linkages and Effects on Sustainability
- A Case Study with reference to Automobile Industry
http://www.iaeme.com/IJMET/index.asp 318 editor@iaeme.com
Cite this Article: Ghanshyam Sharma, Dr. Rushina Singhi, Dr. Alok Mittal, Lean and
Green Supply Chains – Key Practices, Inter linkages and Effects on Sustainability
- A Case Study with reference to Automobile Industry, International Journal of
Mechanical Engineering and Technology 10(3), 2019, pp. 317–330.
http://www.iaeme.com/IJMET/issues.asp?JType=IJMET&VType=10&IType=3
1. INTRODUCTION
Supply chain management is a complex network of business relationships that organizations
maintains with their suppliers or partners in order to purchase , produce , and supply products
or services. Supply Chain practices are evident in organization activities i.e. raw material
procurement, intermediate manufacturing , Storage , dispatch and transportation of finish
goods to end customers . Supply chain may include various companies, individuals and
institutions (Pramod & Garg, 2006). Supply chain management is the complex flow of
material, information, and financials between and among all the stake holders and participants
.There are various supply chain paradigms introduced by researchers and practitioners in the
past , to achieve the aim of effective supply chain management , most of those are developed
in context to automotive industry only . But in order to achieve most effective supply chain
Integration of diverse entities is a mandatory requirement . (MALEKI & CRUZ MACHADO,
2013)
Supply Chain function plays an important role in organizations competitiveness and
profitability. Synonymously this function is considered as a strategic key factor for
enhancement of organizational goals such as effectiveness, competitive edge and profitability
. (Govindan, Azevedo, & Carvalho, 2015) . Lean and Green are the Key paradigms of Supply
chain management and considered as critical for supply chain competitiveness and success .
(Govindan, Azevedo, & Carvalho, 2015) . Many Organizations across the Globe are using
Lean practices to improve their product and service quality and to reduce costs ,But they do
not necessarily integrate environmental concerns in their lean paradigm . Past researches on
Lean and Green Paradigm reveals that while Lean and Green have different Drivers and
Approaches ,But they can be compatible and can build synergistic systems . (Govindan,
Azevedo, & Carvalho, 2015) . Lean Paradigm can add value to green efforts by reducing
many types of environmental impacts, connecting green practices to stronger financial drivers
and improving the effectiveness of green procedures (Tice, Ahouse, & Larson, 2005) .
Environmental wastes and risks are not explicitly included in the wastes targeted by lean.
However, lean practices contribute to reduce some of these environmental impacts because of
their intrinsic focus on waste elimination (Tice, Ahouse, & Larson, 2005) .
From the past researches , it is evident that most of the researches have focused on
studying individual paradigms in supply chain management with the focus on lean or green
(Anand & Kodali, 2008) .Although studies on simultaneous integration of lean and green
paradigms in supply chain management are unknown, they are considered crucial to help
supply chains to become more efficient, streamlined and sustainable (Carvalho, Duarte, &
Cruz-Machado, Lean, agile, resilient and green: divergencies and synergies, 2011). This work
intends to fulfill the research gap that exists on this topic and to improve the knowledge as
regards the simultaneous influence of lean and green paradigms on supply chain performance.
Paradigm Perspective is an important perspective towards supply chain integration and
combination of these different paradigms may result in the most effective supply chains . (Lee
& Wei, 2009). A concept of Combining four paradigms namely Lean, agile, resilient, and
green was introduced in recent years. This supply chain concept is considered as an important
integrated model approach that has its own characteristics . In addition, these supply chain
Ghanshyam Sharma, Dr. Rushina Singhi, Dr. Alok Mittal
http://www.iaeme.com/IJMET/index.asp 319 editor@iaeme.com
practices as introduced by Carvalho, Azevedo, & Cruz-Machado which paved the way for
further development the integration model. (Carvalho, Duarte, & Cruz-Machado, Lean, agile,
resilient and green: divergencies and synergies, 2011)
Various Supply Chain management approaches, such as ―green‖ and ―lean,‖ have been
adopted by manufacturing organizations throughout the globe . (Gunasakaran, Patel, &
McGaughey, 2004) . The integral deployment of green and lean practices leads to improved
business performance while creating economic, social, and environmental benefits. There are
many past researches that focus on green and lean approaches, but they treat them separately
(Anand & Kodali, 2008) . A study of both paradigms together is done by Y. Kainuma and N.
Tawara, in which the authors highlights the opportunities for improving both financial and
environmental performance. (Kainuma & Tawara, 2006) . Only few researches has
highlighted the importance of studying the influence of both paradigms on supply chain
performance (Carvalho, Garrido, & Cruz-Machado, Supply chain performance management
Green and lean paradigms,, 2010) . There is lack of research addressing the relationship
between green and lean approaches, specifically in the upstream SCM, and their influence on
the sustainable businesses improvement .
Based on the research gap , this study aims to investigate the deployment of green and
lean upstream SCM practices and to understand the influence of these practices on sustainable
business development, with impact on economic and environmental performance. The
research is translated into three main objectives as follows :
The green and lean upstream SCM practices used by organizations to achieve sustainable
development
Integration of green and lean upstream SCM practices to improve the sustainable development
of businesses in a balanced way
Effects of green and lean upstream SCM practices on economic and environmental
performance of businesses (Azevedo, Carvalho, Duarte, & Cruz-Machado, 2012)
The paper is organized as follows. After the introduction, a brief review of literature
related to lean and green paradigms followed by theoretical framework , Case Study , findings
and observations . Finally, results & conclusions are drawn.
2. LITERATURE REVIEW
The very first definition of sustainable business development was made by the World
Commission on Environment and Development: ―Development that fulfills the needs of the
present without compromising future generations ability to meet their demands ‖ (Brundtland,
1987) .Sustainable development involves a compromise between the natural environment and
economic growth. (Redclift, 1993) . The main interdependent and interrelated components of
sustainable development can be classified as : society, environment, and economy. (Seuring &
Muller, 2008) . The sustainable business development aims to adopt business strategies and
activities that fulfills the needs of the organizations and its stakeholders today while
protecting, sustaining, and enhancing the human and natural resources that will be required in
the future (Zhang, Shen, Love, & Treloar, 2000) . The sustainable business development can
be achieved by adopting new supply chain management approaches, such as green and lean.
(Mefford, 2011)
The green management approach is defined as the effective use of resources such as
water, raw material and energy to achieve cost reduction. (Walker, Redmond, & Giles, 2010) .
Organizations which don‘t make effective use of resources may loose on potential
commercial and opportunities . Green supply chain management is defined as integration of
environmental thinking into supply chain practices . It includes product design, procurement
Lean and Green Supply Chains – Key Practices, Inter linkages and Effects on Sustainability
- A Case Study with reference to Automobile Industry
http://www.iaeme.com/IJMET/index.asp 320 editor@iaeme.com
& sourcing and, manufacturing practices and finish goods delivery to end customers
(Srivastava, 2007) . Few important green practices suggested in the upstream supply chain
context are the following :
Strategic planning to anticipate environmental-related problems and agreement to resolve
them .
Purchase Contracts and agreements with suppliers for material flow and logistic impact .
Environmental collaboration and monitoring with suppliers
ISO14001 certification of suppliers
Green Recyclable purchasing
In recent years ,Green supply chain management concept has been evolved as an
important organizational approach to achieve competitive growth and improved profit
margins with simultaneous reduction in environmental impacts and risks associated with
organization business practices . (Zhu, Sarkis, Cordeiro J, & Lai K-H, 2008a) Suppliers and
partners are considered as an integral part of this GSCM approach (Rao & Holt, 2005). There
are many factors like global competition , mandatory ISO 14000 certification requirement ,
pressure from social & government pressure groups , Organization image , Cost reduction and
competitiveness , that are driving Organizations to adopt Green Supply Chain practices
(Rondinelli & Berry, 2000), (Christmann, 1998) (Zhu, Sarkis, Cordeiro J, & Lai K-H, 2008a)
. Integration of GSCM practices in the complete supply chain process is essential to improve
business competency and sustainability. (Zhu, Sarkis, & Geng Y, Green supply chain
management in China: pressures, practices and performance, 2005) .The various dimensions
of upstream green supply chain management includes supplier collaboration & active
participation , environmental certification , process improvements by adopting EMS ,
recycling initiatives , green packaging implementation , and clean technology for product
manufacturing (Bowen, Cousins, Lamming, & Faruk A, 2002)
The Lean management approach was developed by Ohno (1988) at Toyota Motor
Corporation in Japan (Ohno, 1988). The globally renowned and accepted TPS system that is
Toyota Production System is based on this Lean management approach . It has two main
pillars namely ‗‗autonomation‘‘ and ‗‗just-in-time‘‘ (JIT) production. The main objectives of
lean paradigm are waste ( known as Muda in Japanese language ) reduction and enhancement
of Value added activities in business processes , to meet customer requirements with
profitability (Govindan, Azevedo, & Carvalho, 2015) . Reichhart and Holweg (2007) defined
lean production towards the supply chain downstream level as lean distribution with
minimum wastage in the supply chain, by ensuring availability of right product at customer
end at right time and destination (Reichhart & Holweg, 2007). A lean supply chain system
synonyms continuous improvement that focus on waste reduction by eliminating non-value
added activities across supply chain . (Vonderembse, Uppal, Huang, & Dismukes, 2006)
The wastage concept in context to lean paradigm includes all possible non value added
activities , broadly categorized as motion, transportation ,waiting, over processing , rejection
manufacturing , correction, extra production, inventory, and knowledge competency
(Womack & Jones, 2003). Anand and Kodali emphasized in their research that a lean Supply
chain involves an effective use of assets than the conventional supply chain system .It
facilitates integration of all the upstream and downstream activities for simplifying,
streamlining and optimizing supply chain activities (Anand & Kodali, 2008) . The important
lean practices suggested for deployment in the upstream Supply chain are just-in-time (JIT) ,
subcontracting /outsourcing/in house production , centralized procurement with consolidation
, supplier certification , supplier rating and evaluation , supplier involvement and development
Ghanshyam Sharma, Dr. Rushina Singhi, Dr. Alok Mittal
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and Direct materials delivery to the point of use or consumption (Anand & Kodali, 2008),
(Wilson & Roy, 2009) (Ward & Zhou, 2006)
Useful comparison between Lean and Green paradigm can be described as (1) Lean—
cost reduction and flexibility by continuous improvement with elimination of waste or non-
value added activities across the supply chain. (2) Green—sustainable improvement across
supply chain with reduction in environmental or ecological impacts on society (Carvalho,
Duarte, & Cruz-Machado, Lean, agile, resilient and green: divergencies and synergies, 2011)
There are evidences of how integration of green and lean upstream SCM practices can
improve business sustainability. Vachon and Klassen provide an example where an
organization working in close coordination with their chemical suppliers drastically reduced
the solid waste associated with chemicals inventory levels .Markley and Davis provides
another example where Ford Company implemented recyclable plastic containers termed as
FLC , for dispatch of their car components as against the cardboard boxes , improving process
efficiency because of ease in handling by working staff and transportation cost reduction by
approx .25%. (Markley & Davis, 2007)
3. THEORETICAL FRAMEWORK
To identify and establish the relationships between green and lean upstream SCM practices
and sustainable business development , it is assumed that the implementation of these
practices will affect following key businesses aspects :
Economic performance
Environmental performance.
Source : (Azevedo, Carvalho, Duarte, & Cruz-Machado, 2012)
The proposed frame work to the study of relationships between lean and green upstream
supply chain practices and sustainable development of businesses considers the following
important green and lean upstream SCM practices.
EMS ( Environment management system ) & ISO 14001 mandatory for Tier 1 Suppliers .
Using Recyclable & reusable packaging for material deliveries.
Just-in-time: Material delivery directly to the point of use for example assembly Line , to
avoid holding costs..
Geographical concentration: Development of supplier network in the close vicinity of plant .
For example Supplier parks in / near to the OEM Campus .
Information sharing through Electronic data interface for example E- Kanban , web base
intranet , emails , RFID tags etc.
Single sourcing: This procurement policy is adopted to build mutual trust between producer
and supplier
Source : (Nishitani, 2010) (Azevedo, Carvalho, Duarte, & Cruz-Machado, 2012)
Key Benefits of implementation all of above green and lean practices are waste
minimization , inventory cost reduction , improved material and information flow , improved
profit margins and competitive environment friendly global image
The theoretical framework to support the study of relationships between lean and green
upstream supply chain practices and sustainable development of businesses can be
represented as shown in below figure