Sustainable Supply Chain Management Assignment

Sustainable Supply Chain Management Assignment

Introduction

Supply Chain Management Assignment shows recent developments in Supply Chain Management and their concern is the ill impacts of the supply chain on environment and thereafter efforts has been raised in order to build the green supply chain management system (GSCM). The concept of GSCM is of dual importance for both supply chain literature as well as for environmental safety literature and has gained immense attention in recent time by various academicians (Larson and Halldorsson, 2004). Green supply chain management system relates with the supply chain system and natural environment as well.

The concept of green supply chain management system concerns with development of the several supplier selection criteria which can shortlist the suppliers based on their environmental performance. In 21st century European communities has given several guideline for supplier development as per their environmental performance and stopping procurement through supplier which are not fit on their environmental aspects (Kumar et al, 2009). Supply chain management system requires high degree of co-operation among the various partners involved in the supply chain. There are several decision making aspects which needs to be addressed while selecting the suppliers and supply chain partners.

The factors which need to be considered while making supplier selection include some of the tangible factors while some other factors are intangible in nature. In order to make the supplier selection several criteria’s are gaining wide importance such as the AHP & ANP and their applicability has reached to high level for supplier selection (Donovan et al, 2006). These techniques help in identification of the priority coefficients which would optimise the whole supply chain management system.

The aim of the present paper is to develop green supply chain management system in which supplier selection criteria can be decided for WALMART Company. WALMART is an FMCG company which is having fluctuating demand, long list of inventory items, and number of suppliers and long duration of payback time. There is high pressure on the supply chain of the company as company have implemented JIT system. In such a situation green supply chain system can prove important asset for the organisation. Hence the present paper would provide the selection criteria for selecting vendors based on ANP model and procedure would be shown with the help of software named super decision in window for better understanding.

Literature review

Modern day academicians have been wide importance to the green supply chain management and have shown importance for further development. Sphere of influence theory has revealed that a green supply chain can be built only when companies place the GSCM into their focal point and engage their supply chain partner for improvement of supply chain on environmental parameters. Supplier selection for green supply chain development can be identified as the multi criteria process which is composed of analytical hierarchy process (Ketchen & Hult, 2006). These supplier selection criteria would be having aim of making the whole supply chain process environmental friendly and would consist of desire parameters which are important in order to ensure the green supply chain management such as operational cycle, environmental friendly process, overall performance and finally process management. These are some of the major recommended criteria in order to find out the supplier performance and can be used for ensuring environmental friendly and economically beneficial supply chain management system.

Green supply chain management process can be enabled with the help of e-supply chain process which require strong relationship and trust among buyer and supplier. Also analytical network process can be defined as one of the most important source of improvement in the supply chain performance (Kaushik & Cooper, 2000). Trust and long term relationship among the buyer and supplier is important in e-SCM as it involves mutual sharing of lot of data. Buyer and suppliers are usually reluctant to share their data because of the threat of backward or forward integration hence in order to develop an e-SCM trust is important among buyer and supplier then only such efficient supply chain system can be developed.

Kallrath & Maindl (2006) have used the goal programming and ANP process in order to develop system which is capable of information collection for supply chain system. Linear programming and goal programming method are best suited in order to handle the problems related to the supply chain management process. Such problems of supply chain management system consist of many variables which are important for supplier performance and these variables would be given some importance level. This decision making process would be having some pre-defined goal set for the tool and linear programming method would be used in order to adjust each of the criteria important for deciding the supplier performance based on the environmental factors.

Also Hines (2004) has made use of the analytical network process in order to develop agile manufacturing system. As ANP method of decision making makes use of several criteria for decision making and given them due importance in order to find out the overall impact of the combined variables which are contributing to some phenomenon. The present paper provides insight about the development of the criteria for vendor selection for development of the environmental friendly supply chain management system which would be sustainable in nature. The present literature would help in broader supplier management which would take step towards greener supply chain management process. Hence green supply chain management process goes through three main steps which are identification of the suppliers, development of the assessment criteria’s and finally assessment of the suppliers based on the criteria identified for green supply chain management.

Methodology

A list of criteria is developed looking at the business structure and procurement process of WALMART and opinion was taken from experts in order to finalise the criteria for development of the vendor selection process. Present vendor selection criteria only consider environmental related factors in order to assess the performance of the supply chain of the organisation but do not take into consideration crucial factors such as the cost (Mentzer, 2001). After analysis of the ANP process for vendor selection cost can be taken as the guiding factor cost can be included as one of the important factor in overall vendor selection process. Vendor selection process can be implemented with the help of liner programming process by putting demand function along with environmental factors satisfied by the suppliers for green supply chain process.

ANP methodology

ANP can be defined as the process of decision making through multiple assessment criteria and it’s a simple form of AHP process. There are several advantages offered by ANP over other assessment process such as the goal programming and expert system etc. ANP is used as one of the most widely used decision making criteria in corporate and it takes into account many tangible and intangible factors for decision making (Donovan, 2006). This methodology would provide the comparative analysis of the various factors on which supplier is assessed hence resource allocation can be done based on the scale measurement of the different factors.

AHP process is one of the special cases of ANP while both processes are used for comparison of the results obtained through some other decision making criteria as well considering time factor (Larsen et al, 2003). Analytical network process can be divided into two main processes, first process would be related to the objective of setting criteria for decision making while other part would be related to the sub network which would help in decision making process. The ANP process of decision making has wide applicability starting from marketing, political, social and forecasting problems.

Problem description in detail

The present case study deals with retail FMCG industry which has seen dynamic changes in recent past. After liberalisation in market many multinational companies has entered into FMCG industry worldwide. The present context is example of WALMART which want to setup its green supply chain management system through the process of vendor selection in FMCG industry for WALMART.

Present case considers that WALMART is a retail FMCG giant having target market across major developed and developing countries. Now its target market countries have forced WALMART to adopt ROHS (Restriction in use of hazardous substance). Hence company needs to revamp its supply chain management process in order to develop the green supply chain management process (Pagh et al, 2007). For decision making regarding green supply chain management process in total there are 21 criteria which has been selected under 4 major clusters. The importance of each criterion can be judged based on the expert rating for the criteria regarding relative importance.

Procedure

Procedure adopted for ANP implementation consist of three major steps which are construction of the decision structure, second level of ANP would consist of identification of the major criteria for decision making which are operational life (D1), environmental life (D2), overall performance (D3) and process management (D4) etc and final step would be evaluation of the several alternative such as supplier A, B & C under above mentioned criteria. The below process would be followed in order to carry out the supplier selection process:

Step-1: The first step in the software would be formation of the problem with the help of several connections and nodes (Saaty, 2005). The problem of supplier selection has been designed with goal as topmost cluster and there are several links attached with the problem such as relationship, business and technology criteria etc.

Problem Structuring Image

Figure 1: Showing the structuring of problem with nodes and connections

Step-2: Each of the four subnets would consist of the two clusters which would be cluster alternative and attributes.

Step-3: All the nodes would be compared against one common comparison criteria.

Step-4: In this step weighted and limiting super matrices would be generated

Step-5: Subnet level values are raised at the goal and super matrix levels

Step-6: Values formed at matrix level are taken at goal and overall synthesis for the model is achieved.

Step-7: An analysis is done which shows the impact of variation in priorities

Cluster Node Levels                                 FactorsGoal
Environment friendlyOperational life cycleOverall performance evaluationProcess managementGreen supplier selection
FactorsEnvironment friendly0.2370.2370.2370.2370.237
Operational life cycle0.1090.1090.1090.1090.109
Overall performance evaluation0.2900.2900.2900.2900.290
Process management0.2820.2820.2820.2820.282
GoalGreen supplier selection0.0000.0000.0000.0000.000

Table 1: Limited goal matrix

Result-ANP modelling

Below table provides the priority coefficients for the four suppliers based on the ANP modelling process:

NameIdealsNormalRaw
Supplier-A0.6690.2100.669
Supplier-B0.7520.2360.752
Supplier-C0.7630.2390.763
Supplier-D1.0000.3131.000

Table 2: Showing the priorities coefficients

The table above shows that there are three kinds of coefficients which have been determined for each supplier which are ideals, normal and raw coefficients. Ideal coefficients identified for the supplier’s shows the coefficient when there is ideal performance from each of the four suppliers and in this coefficient of four suppliers can be denoted as 0.669, 0.752, 0.763 and 1.000. Hence ideally supplier D has perfect performance. There are other two performance coefficients which are normal and raw which shows the normal condition performance and extreme condition performance for each of the supplier of the company. In order to analyse the performance of each supplier we would consider the normal priority coefficients only so that performance of the each supplier under normal condition can be assessed in order to judge them on the environmental aspects.

The above table shows that supplier D is having highest priority coefficient of 0.313 followed by supplier C, B and A respectively. Hence it can be interpreted that supplier D is best supplier for company. Also supplier D is the present supplier of the company and provides several branded FMCG products. Being regular supplier of the company there are good relationship between company and supplier D. There is hierarchy which has been made in order to select the green supplier which includes selection of the sub criteria under the four major headings i.e. operational life cycle, environmental friendly practices, overall performance evaluation and process management which are given as below along with their pair wise comparison:

FactorsOperational cycleEnvironmental friendly processOverall performance evaluationProcess management
Operational cycle1¾2/43/5
Environmental friendly process4/313/43/4
Overall performance4/24/311
Process management5/34/311

Table 3: Pair wise comparison for each four factors

Operational cycleEnvironmental friendlyOverall performanceProcess management
Product designWaste reductionOrganizationalManagement of hazardous substances
ProcurementRecycleCostPre-shipment inspection
ManufacturingReproduceQualityProcess auditing
DistributionReuseFlexibilityWarehouse management
LogisticsDisposalTime 
R&D   
    

Table 3; Showing the sub factors consisted by four major factors

As shown in the table above that each parameter for selection of vendor consists of some of the sub parameter which would be rated by experts. Each of the existing suppliers of the company along with any potential supplier identified would be rated by experts based on the above mentioned criteria for determining their environmental performance.

Conclusion

The present paper has provided green supply chain management system in order to select the supplier based on their environmental performance. In order to decide about the various parameters which would be included in order to select the vendor decision super decision software tool has been implemented. WALMART is trying to implement the green supply chain management system due to pressure from its European demand segment. In order to decide on the selection criteria ANP method of decision making has been used in the current project.

Though WALMART has chosen several criteria of vendor selection in past but the aim of the present selection criteria is to include the environmental factors into vendor selection process. This model would assess the performance of the green supplier so that out of the present suppliers of the company, suppliers which are environment friendly can be assessed and in future procurement can be done through these suppliers only. The ANP methodology used for decision making purpose makes use of both qualitative and quantitative data in order to analyse the supplier performance. Hence the present ANP method can be followed in order to assess the supplier performance and prioritizing supplier based on the several characteristics which has been recommended through the experts.

In the present case study WALMART has implemented the ANP method in order to make decision about their vendor selection process with high consideration to environmental factors. Four major attributes were selected in order to assess the performance of the supplier which was operational life, environmental friendly practices, overall performance and process management. These four factors were containing many sub factors and based on the priority coefficient found through super decision making software supplier D has emerged as the best supplier for the company.

Recommendations     

The present industry norms have considered the green supply chain as the new concept but it is gaining wide importance in coming future. Hence it is important for the companies to implement the green supply chain management system so that they do not have to take lot of pain in near future for doing so. In order to develop such supply chain management system it is important to chose the parameters which are necessary to include in prioritizing the suppliers and also due emphasis should be given to each parameter. Also suppliers which are having good relationship with the company and dealing with the company since long time should perform better looking at both the economical aspect and environmental aspects. Supplier selection process of green supply chain management is not one time process but it’s an ongoing process and would take lot of time in order to implement the process. Hence it is advisable for the big corporate to include the objective of GSCM into their vision and should continuously strive to achieve it.

References

  • Saaty, Thomas L. (2005). Decision Making with Dependence and Feedback: The Analytic Network Process. Pittsburgh, Pennsylvania: RWS Publications. ISBN0-9620317-9-8.
  • Cooper, M.C., Lambert, D.M., & Pagh, J. (2007) Supply Chain Management: More Than a New Name for Logistics. The International Journal of Logistics Management Vol 8, Iss 1, pp 1–14
  • Haag, S., Cummings, M., McCubbrey, D., Pinsonneault, A., & Donovan, R. (2006), Management Information Systems For the Information Age (3rd Canadian Ed.), Canada: McGraw Hill Ryerson ISBN 0-07-281947-2
  • Halldorsson, Arni, Herbert Kotzab & Tage Skjott-Larsen (2003). Inter-organizational theories behind Supply Chain Management – discussion and applications, In Seuring, Stefan et al. (eds.), Strategy and Organization in Supply Chains, Physica Verlag.
  • Handfield and Bechtel, 2001; Prater et al., 2001; Kern and Willcocks, 2000; Bowersox and Closs, 1996; Christopher, 1992; Bowersox, 1989
  • Hines, T. 2004. Supply chain strategies: Customer driven and customer focused. Oxford: Elsevier.