PROJECT REPORT ON

“A STRATEGIC FRAMEWORK FOR

GREEN SUPPLY CHAIN
MANAGEMENT”

BY
GAURAV DUTTA
1212026
M-6
 INTRODUCTION
•Environment conscious business practices have been receiving great
scrutiny from both researchers and practitioners.
•Interdisciplinary research has integrated the efforts of management,
engineering, physical and social science to move forward toward green
supply chain.
•Moreover, when organization thinks for environmental decision to be
made, they are mostly strategic with complex mechanism which
includes internal & external implications for management of
organization.
• One of the methods to approach is to model the dynamic natural
environment into a decision framework that is capable of considering
the multidimensional qualitative and strategic characteristics.
• Alternative may include such factors of who to partner with, what type
of technology to introduce, or what type of organizational practice to
adopt.
• The decision to adopt one of alternatives are evaluated on
“network hierarchy” is necessary for an effective green supply
chain which is dependent on a no. of factors and elements.
• The technique for analyzing the decision is based on the
analytical network process (ANP) or the systems-with-feedback
approach first introduced by “Saaty”.
• Issues & possible extensions to the ANP approach identify some
of its application limitations and its flexibility.
 Green Supply Chain Management
Lowe defines industrial ecology as “ a systematic organizing
framework for the many facets of environmental management. It
views the industrial world as a natural system- a part of the local
ecosystems and the global biosphere. It offers a fundamental
understanding of the value of modeling the industrial system on
ecosystems to achieve sustainable environmental performance ”.
• It has been defined to exist on 3 levels which are characterized by the
amount of recycling or reuse of the material that is within the system
(or the system’s “openness”).
 1st level is a completely closed system with no material or energy
leaving the system.
 2nd level is identified by some factor of energy and material is reused
within the system.
 3rd level is completely open system with little material or energy,
once consumed, remaining within a system.
• 2nd level is most applicable model for actual systems. It is within these
industrial ecosystems models that green supply chains will play a
critical and practical one.
• Companies like Hewlett-Packard, IBM, Xerox & Digital Equipment
Corporation have introduced some form of initiative for green their
supply chains including the integration of suppliers, distributors, &
reclamation facilities with increased acceptance of ISO 14001
environmental standards.
• Multidimensional decision environment making includes the
elements like influences & relationships of the product life cycle,
operational life cycle, organizational performance measurements, &
environmentally conscious business practices. These serve as the
foundation for a decision framework for prioritizing or selecting
systems by the organization that will aid in managing green supply
chain.
Product Life Cycle Influence
 An organization strategic factor that will influence the management
of a supply chain is the product life cycle positioning of the product(s)
of an organization.
 The typical product life cycle is composed of 4 phases;
1. A product introduction phase is identified by investment in
product research & development.
2. A growth phase identified by increasing production capacity and
logistics channels.
3. A maturity phase identified where process & cost efficiencies are
typically implemented.
4. A decline phase identified where the focus is on product
divestment.
 The product life cycle phase will necessarily impact the greening
of the supply chain.
 In the mature and decline stages of the product life cycle the
improvement of processes and having an efficient reverse logistics
system in place will impact the environmental practices of the
organization.
 For a multiproduct analysis, environmental decisions become
increasingly complex. But, within the product portfolio of the
company there should be differential environmental strategies and
development product life cycle foci which will depend upon the
product’s life cycle maturity.

The Operational Life cycle

 A more tactical set of organization elements that will influence how
the supply chain is to be managed (either internally or externally) can
be described by the operational life cycle (or value chain) of an
organization.
 The major elements of the operational life cycle will typically include
procurement, production, distribution & reverse logistics.
 The procurement or purchasing decisions will impact the green
supply chain through the purchase of materials that are either
recyclable or reusable, or already been recycled. The selection of
vendors will also be an important decision at this stage.
 Production processes can influence the greening of the supply chain
in numerous ways. Some of these impacts include : a process capacity
to use certain materials, capabilities to integrate reusable or
remanufactured components to system (which would require
disassembly capacities), and how well the processes are designed for
the prevention of waste.
 Distribution and transportation operations networks are important
operational characteristics that will affect the green supply chain. A
no. of decisions including distribution outlet location, just-in-time
policies, will not only influence the forward logistics network, but also
the reverse logistics network.
 The reverse logistics operation is probably the least developed &
studied of the operational functions. The definition of it from
environmental perspective focuses primarily on the return of
recyclable or reusable products and materials into the forward supply
chain.
 Porlen & Farris in a study of the plastics reverse logistics process have
identified a no. of stages within a reverse logistics channels. Included
are : Collection, Separation, Densification, transitional processing
delivery, and integration.
 Packing has a strong relationship with other components of the
operational life cycle. It characteristics such as size, shape & materials
have an impact on distribution due to their affect on the transport
character tics of the goods. Better packing, along with rearranged
loading patterns, can reduce materials usage, increase space
utilization in the warehouse and in the trailer, and reduce the amount
of handling required.
• Environmentally Influential Organizational Practices
o 5 major practices that will impact the waste generated by a supply
chain : reduction (reduce), reuse, remanufacture, recycle & disposal
alternatives.
o Reduction may be to design the product and process to take into
consideration environmental factors (as defined as design for the
environment) .Introduction of alternative processes and materials
may be used to reduce more hazardous material.
o Reuse, remanufacture & recycle practices are similar, but only vary in
degree of reuse of the material.
o Reuse typically keeps the original physically structure of the material
with little substitution.
o Remanufacturing requires some disassembly and replacement of
parts or components around a core.
o Recycling can take on new physical and chemical characteristics of
the product.
o The choice of which practice is best for an organization will depend
on the organization and product characteristics.

o A summary of the possible relationships between operational life

cycle and environmentally conscious organization practices are
shown in figure 1.

Fig 1: Functional model of an organizational supply chain

with environmental influential practices.
• KEYWORDS
@ Raw Material @ Process Design @Waste Distribution
@ Virgin Material @ Product Design @ Reuse
@ Fabrication @ Procurement @ Remanufacture
@ Assembly @ Production @Recycle
@ Customer @ Waste @Disposal @Energy

• Process Design : It is the process of creating a new product to be

sold by a business to its customers.
• Process Design : It is the design of new facilities or it can be the
modification or expansion of existing facilities.
• Raw Material : It is basic material used in the production of goods,
finished products or intermediate materials.
• Energy : It is a source of power, such as fuel, used for driving
machines.
• Procurement :It is the acquisition of goods, services or works from
an outside external source.
• Virgin Material : It is processed material after raw material used in
production of goods , finished product or intermediate material.
• Fabrication : It is the building of small components by different
manufacturing processes.
• Assembly : It is a manufacturing in which parts are added as the
semi-finished assembly moves from work station to work station
where the parts are added in sequence until the final product is
produced.
• Production : It is the act of manufacturing goods
• Customer : It is the recipient of a good, service, product, or idea,
obtained from a seller, vendor, or supplier for a monetary or other
valuable consideration.
• Waste : It is useless materials generated during a manufacturing
supply.
• Waste Distribution : It is the process of collective waste collection
from raw material till customer ends.
• Reuse : It is process to use an item again after it has been used.
• Remanufacture : It is the process of disassembly and recovery at the
module level and, eventually, at the component level.
• Recycle : It is a process to change (waste) materials into new
products to prevent waste of potentially useful materials, reduce the
consumption of fresh raw materials.
• Disposal : It is the action or process of getting rid of waste or the
product.
• Diagram of the cycles is typical for a single organization. A chain of
these figures can be developed that show the relationship among a
number of organization. Moreover, feedback arrows shown in the
figure may represent a no. of organizations that are involved in
reverse logistics process.
 Organizational Performance Requirements
• To complete the decision framework specific organizational
performance requirements are included.
• The alternative that is selected should not only best support the
green supply chain, but also make business sense.
• The categorization of elements for organizational performance
requires : cost, quality, time & flexibility.
• Characteristics of organizational performance is that they are not
static. They tends to change over time and will be greatly influenced
by the product life cycle.
• In the introduction phases, flexibility & time may be more important
than cost. Whereas cost efficiencies tend to gain important in more
mature environments. These dynamical characteristics are
incorporated into decision framework
 Green Supply Chain Alternatives
• The alternative may include technological, process, or organizational
characteristics. Ex- Organizational goal to improve the TQEM (Total
Quality Environmental Management), Acceptance of ISO 14000 over
ISO 9000 by suppliers and customers, Introduction of information
systems such as electronic data interchange which may justified for
other reasons, but can evaluated from a greening perceptive.
• A good discussion of various systems, requirement and alternatives
than can aid the development of green supply chain can be found.
 The Decision Making Framework
• It is represented by an “organization network hierarchy”, which is
varies from a standard decision structure as defined by standard
analytical hierarchy process.
• The variation occurs primarily because 2 way & ‘looped’ relationships
are allowed among the various levels. These levels may also be
defined as clusters. These relationships represent multiple
dependencies & independencies among the elements within the
clusters.
Figure 2 : High level graphical representation of clusters s and influence relationships for decision framework for managing and improving the green supply chain

Organization Product Life

Performance Cycle Stages
Criteria
Improved Green
Operational Life Supply Chain
Cycle / Logistics Operations
Focus

System Alternatives for Environment Influential

Green Supply Chain Organization Practices
• Figure 2 shows a “high level” description of the analytical hierarchy
network, which does not detail the components within each clusters.
• The objective or goal of the organization, which appears on the right
side of figure 2, is to develop improved green chain.
• The relationships may vary due to assumptions made by the decision-
makers, and level of complexity they wish to model.
• The arrows represent the relationships among the clusters.
• Another set of relationships exists between the organization
performance measures and the operational life cycle elements. The
relative importance of different performance measures may be
allowed to vary among the operational life cycle elements.
• Within the network, the relative impact (importance) of each
alternative will be evaluated for both the performance measures and
the environmental practices.
• There is a two-way dependency between the operational and
product life cycles.
• The relative importance of each operational life cycle element will be
dependent on what stage of the product life cycle is being
considered. Moreover, the importance of each product life cycle with
respect to a given operational element will also be determined (e.g.
the early stages of the product life cycle will have more of an
influence on the procurement operations than the decline stages).
• The various environmental practices may also play distinct roles
within the operational life cycle.
• The effect would be give a relatively larger importance valuation on
reduction than reuse for the production element.
• For the packing portion, the reuse capability may be more important
than disposal.
 Evaluating the Analytical Network hierarchy
Figure 3 : graphical representation f relationships for the green supply chain evaluation
framework.
• The evaluation methodology will composed of two phases.
1. The first phase will focus on the development of pairwise
comparisons for each of the dependency relationships to determine
their relative importance weights which will be used as an input to
the systems-with-feedback supermatrix to help determine the
network influences from among the various relationship
represented in figure 2 & 3.
2. The supermatrix evaluation, the second phase, will encompass 3
steps, the formation of the supermatrix, the normalization of the
supermatrix (making it “column stochastic”) and convergence to a
solution.
• The converged supermatrix will provide us with the relative
priorities for each of the alternatives considered within the decision
framework
 Pairwise Comparison Evaluations
• The fundamental decision makers inputs required for the ANP
technique are the pairwise comparisons of each elements within
each cluster, from which pairwise comparison matrices are formed.
• A pairwise comparison matrix is required when the relative
importance of lower level elements are to be determined for their
‘controlling’ element.
• To determine the relative importance of the operational life cycle
elements (the lower level elements) to the introduction phase of the
product life cycle elements (the controlling element) a no. of pairwise
comparison questions will be asked of the decision-maker.
• A pairwise comparison matrix can show the relative importances of
the operational life cycle elements within the introductory phase of a
product life cycle.
• The valuation scales used are those recommended by Saaty, where 1
is equal importance, 5 is strong importance, 7 is very strong or
demonstrated importance, & 9 is extreme important. Even numbered
values will fall in between importance level. Reciprocal values means
less importance , strongly less importance, etc.
• Once all pairwise comparisons are complete, the relative importance
weight for each component is determined.
• A is pairwise comparison matrix, weights can be determined by
expression (1).
Aw = λmax w (1)
where λmax is the largest eigenvalue of A and w is the relative
importance weights or priority vector (actually the eigenvectors for
the principal eigenvalue λmax).
Table 1 Pairwise comparison matrix for operational life cycle elements relative importances during introduction phase of
the product life cycle

Introduction Procurement Production Distribution Reverse Packing Importance

Phase Logistics weights
Procurement 1.000 6.000 3.000 8.000 2.000 0.448
Production 0.167 1.000 0.500 2.000 0.200 0.073
Distribution 0.333 2.000 1.000 4.000 0.500 0.151
Reverse 0.125 0.500 0.250 1.000 0.167 0.043
Logistics
Packing 0.500 5.000 2.000 6.000 1.000 0.285
• The consistency index for a pairwise comparison matrix is determined
by:
C.I. = λmax –n / (n-1) (2)
where n is the number of components that are evaluated in the
pairwise comparison matrix.
• The C.R. is calculated by taking the C.I. and dividing by a random
inconsistency (R.I.) value.
• A consistency index (C.I.) and consistency ratio (C.R.) also need to be
calculated.
• For a pairwise comparison matrix to be consistent, C.R < 0.10. In
Table 1 we show the values for λmax, C.I., and C.R. We see that this is
a relatively consistent set of weights. The priority vector shows that
for organization and industry, procurement , followed by packaging ,
seem to be the functions that are deemed most important for the
early stages of a product’s life cycle.
 Supermatrix formation
• The supermatrix (M) is formed from a number of sub matrices that
are used to model Figs. 2 and 3 in matrix notation.
• The supermatrix and its general sub matrices are shown in Fig. 4.
There will be 9 sub-matrices (A, B, C,D, E, F, G, H and J) that will be
formed using the priority vectors. An additional identity sub-matrix (I)
is added for the alternatives cluster for computational requirements.

Figure 4 : General sub matrix notation for supermatrix

X GSC PLC OLC PRF ENV ALT

GSC 0 0 0 0 0 0
PLC 0 0 A 0 0 0
OLC B C D 0 0 0
PRF 0 E F 0 0 0
ENV 0 0 G 0 0 0
ALT 0 0 0 H J I
• The formation of sub-matrix C will require the determination of the
relative impact of each operational life cycle phase on each of the
four product life cycle stages. Four priority vectors will be required to
complete C. Already shown one set of priority weights for C this
vector begins in the second column and sixth row of the initial
supermatrix, which appears in bold lettering in Table 2.

 The Solution Procedure

• The supermatrix M is a reducible matrix with a multiple root, as
defined by Saaty.
• To solve for the values of the alternatives, Saaty recommends that
the values of M be column stochastic. That is, the sums of the
columns should be normalized to equal a value of 1.
• One method of making M column stochastic is by determining the
relative importances of clusters and multiplying their relevant matrix
elements by their relative importance score.
• We just assumed that all clusters were of equal importance. Two
adjustments will need to be completed for the supermatrix to be
translated into a column stochastic matrix.
• The first adjustment influences the operational life cycle and
performance measure clusters and their impact on the product life
cycle elements. Since there are two clusters, each representative sub
matrix, in this case sub matrices C and E, are multiplied by 0.5.
• The second adjustment will be for the four clusters that influence the
operational life cycle represented by sub matrices A, D, F and G.
Assuming, once again, that each cluster equally impacts the
operational life cycle, we multiply sub matrices A, D, F and G, by 0.25.
• The adjusted column stochastic supermatrix (Ms) is shown in Table 3.
• The final step in the process is to obtain a priority ranking for each of
the alternatives.
• To determine this ranking by calculating the influence of each of the
alternatives on the objective of improving the green supply chain.
• Saaty states that a simple hierarchy and the additive solution
approach is appropriate if strong dependencies among the criteria do
not exist.
• Schenkerman has shown that the supermatrix approach is capable of
reducing the occurrence of rank reversal, thus providing more
accurate portrayals of decision-maker preferences.
• Saaty recommends a simple solution technique to solve this problem
by raising the supermatrix Ms to a large power until convergence
occurs.
• There is need to raise the supermatrix to a power of 16 (M16s )
before convergence occurred within the fourth decimal place (i.e.
104). The converged supermatrix is shown in Table 4. The relative
influences of the alternatives on the objective of improving the
environmental performance of the supply chain are shown in the
“Goal” column.
 Discussion
• The ANP approach, in practical application, requires significant
decision maker input. Its application needs to be targeted to those
areas where strategic decision making is required.
• Its use should be limited, especially if its use in the decision making
process costs more than the outcome of the decision.
• For the case of greening the supply chain, the decision is strategic
and will broadly effect the operations of not just one, but many
organizations.
• The investment in making a decision that would profoundly effect the
operation of the supply chain clearly requires intensive and robust
managerial analysis.
• One important consideration in the effectiveness and efficiency of
the decision framework begins at the modeling stages. The model
and the various dependencies will determine the amount of effort
required to arrive at a solution. This effort includes input from
decision-makers as well as the mathematical approach to solve the
problem.
• There are some managerial aides that the supermatrix does provide
through its summarized structure. One of these aides is a summary of
the various linkages and relationships. This summary allows
managers to determine what patterns might exist among the various
relationships.
• A management team is able to look at submatrices C and E to see
how the priorities of the organization are shifting over a product’s life
cycle. The shifting of priorities can be monitored and evaluated by
observing this supermatrix. This observation of the managerial
significance of the supermatrix has implications for sensitivity
analysis.
• An interorganizational application of this decision framework will
have to incorporate the perceptions of a number of stakeholders. Not
only will there be diverse preferences and perceptions within an
organization, but also those of other organizations.
• Alterations to the supermatrix and an addition to the decision
framework incorporating a “firm” control hierarchy, where relative
organization influences or impact determinations are made can
incorporate some of the diversity of opinion or preferences among
the organizations.
• The decision framework has only modeled internal influences and
relationships. A number of external factors could be introduced into
the model.
• The type of environmental forces such as remediation, command and
control, or cooperative regulatory policies may also be modeled.
• The models may be formed as control hierarchies or as part of
network hierarchies for decision modeling purposes. A control
hierarchy has the characteristic of being separate from a network
interdependency model, where the results can be aggregated using
an additive model.
• A number of other decision factors and criteria can be included in the
model, yet the complexity of the decision environment will tend to
increase. Increasing complexity, even though more realistic, usually
requires additional effort for preference elicitation from decision
makers and more complex computations.
• The tradeoffs between amount of decision maker time and ‘realism
'of the model need to be considered.
• The application of the ANP approach should not only be concerned
with a ‘final’ solution to the problem, but it also should be applied as
a learning tool for decision makers and managers to help understand
the various linkages among the various components, clusters, and
elements.
 Summary
• The issue of organizations incorporating the natural environment into
strategic and operational decisions is a reality that they will or have
already encountered. The influences of the natural environment
organizational decisions will not only effect the organization that
makes the decision, but its customers and suppliers, as well.
• Incorporating various elements, functions and activities of supply
chain management is one method to incorporate some of the
systemic organizational and inter-organizational implications of
environmentally influential policies.
• A number of business and environmental factors need to be
integrated into this decision. One such decision framework that
considers these factors, whose goal is to improve the green supply
chain.
• These elements include product life cycle, operational life cycle,
performance measures, and environmentally influential
organizational policy elements. The goal of the framework is to help
evaluate a number of alternatives(projects, partnerships, systems or
technologies, etc.)that impact these various factors,
• The decision framework is modeled and solved as an analytical
network process (ANP).
• The ANP methodology is a robust multiattribute decision making
technique for analyzing the major issues facing green supply chains
and environmentally conscious business practices, both of which are
strategic in scope.
• The major disadvantage of the ANP approach is the large amount of
decision-maker input required, even for rather simple networks.
• The advantage of allowing managers and decision-makers the
flexibility to identify and incorporate major interdependencies among
many factors and clusters in a “dynamic” fashion, makes this
technique a viable alternative to AHP and other multiattribute
approaches.
•
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