Environmental Supply Chain Management In United Arab Emirates Commerce Essay


Environment conservation fights are slowly getting out of boardroom meetings to practical applications such as on Supply Chain Management. Modern business management is embracing the idea that success needs a multi network approach: successful coordination, amalgamation with other partners to form supply chains and management. The Supply Chains are at the same time required to be environment friendly. A supply chain is therefore a network of relationships and multiple businesses. Environmental chain supply is defined as the set policies safeguarding the environment from pollution within the supply chain. The ESCM is concerned with the acquisition of raw materials, the production processes, the distribution of the goods and services, the final use, available substitute materials and recycling procedures with regard to the environment. The ESCM also provides training, green design initiatives and information to build the suppliers' environmental management competencies. Life Cycle Assessment (LCA) is the main tool of the ESCM used to collect data on environmental issues to be used to build up supply chains that will improve environmental impacts of the supply chains. It is mainly used in comparing evaluation of product and process design aid and improvement of analysis. The LCA works by compiling the inventory of the relevant inputs and outputs of a supply chain system, then evaluation of their potential environmental impacts and interpretation of the results with regard to the assessment. The LCA yields different results depending on the set objectives that were used to develop it. Low energy consumption, waste generation and release of pollutants are also an important aspect of the LCA. To achieve the objectives requires specific ways of integrating the LCA into the supply chain. The LCA helps the supply chains to develop improved risk management, brand image and enhanced quality. The LCA has a limitation when it comes to dealing with recycle loops and divergent processes; this is because the principle behind the LCA processes does not have a provision for the use of recycled products. Such processes with recycling and waste treatment processes require additional extensions to the standard LCA (Hagelaar & Van Der Vorst 2001).

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The advantage of the LCA is the fact that it allows for the establishment of inclusive baselines of information on a product's resource requirement. It is also easy to establish in a product's life cycle where the greatest impacts on environmental burdens can be arrived through. The major disadvantages of an LCA are that, one, it is data hungry and therefore requires a lot of data sets to make it work. The LCA has varying indices for different products leading to varied results even for the same product. Data Envelopment Analysis (DEA) is another method which compares the efficiency of a supply chain in relation to its competitors. This measure only takes into consideration direct output to the market but we know in the production there are some outputs in some intermediate processes that are used as input in the next processes. The DEA assumes a dynamic approach that takes into consideration both the input and output simultaneously generating sufficient information about a chain system. However the DEA is a data intensive system that requires a lot of data which is not easy to acquire from a supply chain. DEA just like other deterministic models are bound to have statistical noise which may be mistaken for inefficiency (Ondersteijn et al. 2008).

Research Findings

Few companies (less than 40%) factor green supply chain (green design, green sourcing, green operations/manufacturing) into their management strategic decisions. The degree to which companies subscribe to the green supply chain depends on the size of the company; large companies (40.9%) are more concerned of the environmental impacts of their product life cycle compared to the small companies (29.4%). The researchers characterized this to availability of resources and the large number of customers that use its products. The market sector was also a factor on the green supply chain (GSC) where transport, storage and communication had the highest at 57% while trading and repair services had the least. Companies which had adopted the GSC in decision making were largely driven by consumer expectation and partly to comply with the laid down regulations, policies and strategies of multi nationals, competitor behavior, regulations by export countries and the reduction on cost. The local government regulations are the driver force for transport, storage and communication sector whereas consumer awareness is the driver force for hotels, real estates and restaurants. It is therefore important to develop knowledge of the consumers on social and environmental issues about the GSC to push more companies to using it. The study revealed that the biggest impediment to the use of GCM had to do with lack of knowledge, followed by lack of supplier awareness, lack of commitment to deal with GSC issues and some argued that it was complex to implement in their daily operations. It will be important to note that only about 10% said that lack of financial ability was the key barrier to using GSC.

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Most of the companies had a manager whose principal role among the rest was to mange GSC issues. This also varied depending on the size of the company, 81% of large companies had a manager, 56 % of medium sized and 30.5% only of the small companies had the same position.

In terms of the communication of the GSC the majority of the companies did not reveal their health, environmental, safety and labor performance to suppliers (Rettab & Brik 2008).

The GSC practices in Dubai most commonly practiced were the sale, recycling and packaging of used materials. The few companies that were initiating the GSC practices were concerned with very few practices making it clear that there is still lack of knowledge and awareness of the several other environmental friendly methods that could be used. Analysis of how many companies had a code of ethics that covered all environmental, health and safety, labor and human rights laws and regulations without any qualification or limitations showed that only 30% of the companies had this coverage. Companies that followed the GSC activities were involved in manufacturing (50.7), green sourcing at (32.6%) and green design (33.8%). Green design is meant to come with appropriate design that is cost effective and cuts down any environmental impacts throughout the phases of a product's life cycle. Green sourcing deals with procurement process by service providers, subcontractors or suppliers. The green measures taken include use of less polluting raw material and implementations of Environmental Management System (EMS) amid suppliers. EMS is the most applied green manufacturing/operation employed by most companies followed by Eco labeling (Rettab & Brik 2008).

Green supply approach has several advantages that companies gain following its implementation. They include; GSC helps in making the company distinct differentiating it from its competitors, it helped in satisfaction of the demands by their customers, and Eco labeling helps in improving the brand. Most companies however invest less than 5% of their budgets in GSC projects with an exception of approximately 11% investing more 10% of their budget. Rettab and Brik finally recommend a more dynamic way of assessing the impacts of a supply chain by the companies; they should work in line with the suppliers to improve their environmental performance. They further suggest that companies should come up with a Green Supply Chain training program and unlike the past make open their environmental friendly approaches in the supply chain, evaluate suppliers on their environmental performance. The suppliers should come up with, execute and maintain a universal standard of Environmental Management System (Rettab & Brik 2008).

The implementation of an ESCM should start with commitment by the top management. Sensitization and participation of the all the employees on environmental issues is very important on the success of the project. Having a department that deals specifically with environmental issues is an important move for any institution and helps the management on their general progress on environmental issues. Customers are also apart of a chain supply and should be brought on board on the journey towards a clean environment. The company should provide its clients with environmentally sensitive products creating a strong environmental reputation (Carter & Warren 2006).

A study trying to asses the opportunities and challenges faced by small and medium enterprises (SMEs) in greenhouse gas emissions and solid waste management shows that most of the large corporations had adopted green procurement policy not only to secure the good social and environmental responsibility but also because it had positive financial impacts. Government interest and those of their employees have been the major driver force in implementing environmental initiatives. It took into consideration the horizontal initiatives across the supply chains and the vertical initiative taken along the supply chains. The study took three medium sized enterprises in Nova Scotia and their suppliers since the SMEs account for 98% of all business with almost a 50% blame of all the pollution that occurs. Interesting turn of events is the fact that the pollutants load in the environment both water, air and land by the SMEs has been has been on the rise. Many of the SMEs have limited environmental expertise, they do not have means of quantifying their energy data, they have limited financial resources and low technical resources and low environmental expertise. Out of every 10, eight had environment management systems and inversely only two out of ten had environmental regulation policies to be met by the suppliers. The study points out that lack of time due to competing priorities is a major barrier when it comes to addressing solid waste management by the companies even more than issues of financial resources. This calls for flexibility to minimize conflicting priorities and help achieve the goals of the ESCM. The small suppliers directed all their resources in their manufacturing activities or providing the service and had a problem transforming any resources to environmental issues since they felt this was not part of their core function. Lopez et al. realized despite some enterprises engaging in recycling, there was still room for improvement in the field of recycling to cut on the energy consumption to be used in recycling products. The study points out that despite the individual actions on the supply chain having minimum benefits, the overall gain from implementing each of the actions is significant and can help a big deal in reducing the green house gas (GHG) emissions and solid waste management. Most of the managers of the SMEs were not aware of the energy and solid waste disposal making it the biggest challenge for the ESCM. They conclude by pointing out that it is important to develop environmental knowledge and convert it into action within the SMES via the managerial population. Despite an increasing number of corporations adopting the environmental procurement policies it is evident that they are not well developed in the Nova Scotia (Lopez et al. 2005).

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Skirtmore and Albaloushi (2008) in an endeavor to reveal the degree to which awareness affects the United Arab Emirates' construction industry SCM, state that Supply Chain Management (SCM) enhances trust among chain partners and is a good innovation that is useful in management in the construction industry. In the UAE construction industry employing 16,000 contractors and 340,000 workers and is by far the largest single industry with an estimated turnover of about US$30 billion. They start of by pointing out that applying an SCM in the construction industry is not easy due to its complex network of organizations that operate to meet other conflicting business objectives. This study highlights the four roles played by SCM: focusing on the impacts of supply chain (SC) at the site with an aim of lowering the costs and reducing the time to be spent. The contractor at the site is the best beneficiary of adopting this course. The second role of the SCM is to assess how functional the SC is to help and creating lead-time and reducing costs. This is important for material and equipment suppliers. The SCM can also focus on the incorporated management and upgrading of the SC. This wok explains that the level of awareness by the industry of the SC, its operations and integration in the UAE is not well known. There is need to educate on the operation and reveal the benefits of the SCM on project performance to the stakeholders of the construction industry to increase their chances of abandoning their traditional management procedures. Many of the respondents in this study expressed the need to for use of SCM in meeting the project objectives but cited the barriers to its implementation as lack of necessary support from the upper management, rigid customer needs, the technical background of the supply chain and company rules which do not support the SCM. Specialization by different companies is important in the SC operations; this involves different companies splitting the SC activities reducing risks of poor coordination of the various processes and develops economies of scale. The success of an SCM entails cooperation, partnership, exchanging information, reliance partnerships, sharing technology, and a shift away from managing individual functional processes, to managing integrated chains of processes. They argue that the efficiency of an SC is characterized by its ability to remain relevant to the prevailing market conditions through out the stages of the chain and be able to provide appropriate feedback to the managers (Skirtmore & Albaloushi 2008).

It is also highlighted in this work that maximizing every aspect of the SC does lead to overall high performance; this is because of the inclusion of decisions by the various authorities that may not be perfect due to either lack of information or personal weakness. Major obstacles in the implementation of an SCM are distorted information as it moves from one source to another in the supply chain (Information processing obstacles), increase in variability in the supply chain due to the actions taken in placing orders (operational obstacles). The SC rewards its members at all the different stages which in a reduction in the total profits that result in an SC, they are normally referred to as incentive obstacles. Pricing policy of a certain product and the learning problems which cause communication breakdown within the supply chain are also some causes of problems on the SC. In the construction industry it is also important to note that the complex network of organizations operate to meet numerous different and incompatible business purposes. This makes it had for easy implementation of the CSC. The CSC is also hampered by fragmentation in the industry resulting from minimum direct interactions between the stakeholders lowering the chances of long term relationships, limited communications lowering the exchange of information and subsequently transparency among the members. Most of the members making up the CSC have little knowledge thus inadequate recognition of shared risks leading to narrow minded win/lose attitude among members (Skirtmore & Albaloushi 2008).

SC in the construction industry is a new thing that is perceived to have started in the mid 1990s. The SC in the construction industry involves every stage right from the demand of the owner, the construction process, the maintenance of the project eventually to the final demolition of the project alongside all the stakeholders i.e. the contractor, the architect/designer, the client and the suppliers. It can therefore be said that SC is a network of several organizations dealing with interconnected processes which are tailored in such a manner to satisfy the customer's requirements and at the same time rewarding all the participants in the chain. Construction Supply Chains (CSC) enables the flow of material, information, services and funds through all the stakeholders of the industry. It is much advantageous when it involves several projects which last for longer periods compared to a single project (Skirtmore & Albaloushi 2008).

There are three types of CSC; the primary SC, the support chain and the human resource SC. The primary SC is the chain that provides the final material to be used in construction while the support chain provides all the necessary equipment and material that facilitate the construction process but it is not raw material. The human resource chain deals with the labor both skilled and unskilled. The characteristics of a CSC are; it is convergent system directing all labor, material and equipment to the construction site. The projects are so different so the Sc will have little or no repetition at all. This paper also points out that Butler has been on the fore front of implementing the CSC in all the projects it participates in under the BUCON. The notable SC tactics employed are identifying core competencies, forming alliances with the architects, optimizing SC, evaluating performance, developing good customer relationships, employ designs for manufacturing, construction and life cycle maintenance (Skirtmore & Albaloushi 2008).

According to Skirtmore & Albaloushi (2008), the following initiatives increase the efficiency of SCMs, improving logistics between the suppliers and contractors improves the flow of material through the supply chain. It actually improves the interface between site activities and the supply chain. It is important to take time and detailed analysis to come up with specific, low cost SCs for every task. This helps improve the productivity and performance of the SCs. Coming up with proper designs reduces on site activities increasing time performance of an SC. This is aided by the continued industrialization process. Currently the integration between SCs and the site proposes for open construction and sequential procedures. The open building provides for outside wall construction and the filling in of the partitions is done later as per the needs for of the owner. This makes the building always easy to configure to satisfy the changing demands throughout its life cycle. This replaces the temporal SCs with more permanent SCs (Skirtmore & Albaloushi 2008).

In a study by Ondersteijn et al., (2006) to evaluate the Agri-Food Supply Chain they pointed out that one needs to consider the specific characteristics of the chain. The Agri-Food Supply Chain can be divided into two i.e. the chain dealing with only fresh food like vegetables and that dealing with the processed food like the canned or bottled. In this study there major chain of interest was the fresh agricultural products with its stakeholders being the growers, the importers, exporters, the wholesalers and retailers. These chains processes include growing, harvesting, storing, packing, transporting and trading. The major characteristics of this food chain include a small shell life with the decay forming the end of the supply chain, the production of a new product takes some time and is subject to seasonality, weather, pests and other biological hazards, the transportation process requires special qualities (conditioned transportation). The supply chain being a food industry there are specific government regulations that also affect the chain.

In some study by Yang and Sheu (2007), they describe the Supply Chain Environmental Management (SCEM) as the idea of collaborating with supply chain parties to improve manufacturing sustainability. It is also called the greening of the supply chain. They state that much of the available literature discuss the benefits of SCEM but do not provide knowledge to enhance its development and practical applications in the existing supply chains. Their research study involved systematic interviews and direct observation with five manufacturers in trying to find out how manufacturing firms involve the supply chain partners. The study took the following as there supply chain partners; suppliers, environmental organizations, customers and the government. The results indicated that there is need to develop an SCEM to monitor the environmental impacts of the supply chain. Environmental Management Strategy (EMS) of every firm should be made public to all its members in the chain so that it can be evaluated to see whether the firm and the chain at large have achieved or not their environmental protection goals.

In an effort to determine whether Supply Chain Management is an emerging discipline (Emerald Group Publishing 2006), brings out clearly that more businesses are adopting and adopting the SCMs in their operation management and the increased number of academic publications on the SCMs. They also say it is restricted to a few areas such as purchasing, marketing, logistics and IT. From the literature review the earliest publications are of 1985 with most of the articles being published in the 90s. Most of the studies conducted have been based on manufacturing industries with consumers as there main target groups and a generalization based on that disregarding the differences in the various industries. They discovered a variety of definitions for SCM, citing maturity of the industry but categorized it under the developmental stage since many more definitions are bound to come up or get modified. One thing bout al the definitions is that they are all describing the process or rather they are of the same point of view. Another fact that came out of this study is the fact there were no many theories used to give diversified views about SCM.

Due to the emerging problems of climate change and green house gas (GHG) emissions there is rising need for the supply chains to be managed effectively to obtain sustainability of the global environment. This has led to the rise of Green Supply Chain Management (GSCM) with companies like IBM, Xerox and Hewlett-Packard leading the pack in green-manufacturing, green-marketing and green logistics. Governments of Europe, Japan and North America have legislations that promote the GSCM requirements. The legislations among other things encourage recycling of used to products to reduce industrial pollutions by the supply chains. Most big companies are yet to fully embrace the idea of sustainability despite their financial ability. Some argue out that it is because of the mixed messages received from the stakeholders, regulators and the government (Wilsner et al. 2008).

The Chinese automotive industry has seen a sudden rise and modernization in the recent past leading to environmental burdens and resource shortages. More than industrial pollution vehicles have replaced industries when it comes to air pollution compromising the air quality. The Chinese automobile Supply managers were faced with increased pressures from all quarters requiring their implementation of the GSCM practices to cut down on their environmental impacts and at the same time improve their economic performance with regards to enhanced competition from the other world vehicle manufacturers. The GSCM practices in the automotive supply chain are not that thriving since very few have been fully adopted .i.e. eco-design, internal environmental management and investment recovery. Other aspects of GSCM like recycling are not being put into use partly because of the demand of the local market. However there is a legislation requiring the Chinese automobile system to develop a take back system of the used cars to close the supply chain. The GSCM motivating factors (pressures/drivers) of the automotive industry are regulation by both the government, market requirements by the consumers, internal incentives and supplier drivers while the practices involved are customer cooperation with environmental concerns, investment recovery, green purchasing and internal environmental management. The Chinese automobile chain supply has strong internal pressure to adopt GSCM practices unlike the external pressures like customer cooperation and green purchases. It has therefore not made any significant improvement on improving environmental affairs. There is still room for improvement on the use of GSCM on the China Automobile company (Zhu, Sarkis & Lai 2006).

Research Conclusion

A major factor affecting the supply chain is the consumer demands and the change in behaviors of buying by the consumers. They are demanding for value added products and more environmental friendly produce. The demands for the consumers are governed by security, price, quality, quantity, shell life and sensory properties among other things (Ondersteijn et al. 2006).

Suppliers are required to monitor their costs of waste which should be audited by the environmental management authorities and quality assurance bodies in conjunction with the financial analysts. Maximizing Environment Value Add is important in helping the suppliers achieve their objective with a balancing act on quality and environment standards. When looking for a supplier you should consider suppliers capacity, safety issues and how capable they are in treating compounds and effluents. During the stages of the value added process, products and processes should be continually analyzed critically. In addition, suppliers should be involved in decisions that affect them in order to achieve environmental effectiveness (Wilsner et al. 2008).

By 2008 more than 88,000 facilities worldwide had certified their Environmental Management Systems (EMSs) that address the impacts on the natural environment. Much as the EMSs state the environmental policies and procedures, they do not have the action plan. Some scholars have also argued that the EMSs can only improve the organization environmental performance in isolation of the whole supply chain. They further state that companies which have adopted the EMSs are more likely to utilize the GSCM practices like assessing their suppliers' environmental performance, tracking the cost of waste and educating customers of ways to reduce environmental impacts. In summary the EMSs and GSCM practices are complimentary and industries that have adopted EMSs have high probabilities of adopting the GSCM more than those that have not. They equally have a high chance of not only improving the environment just within their boundaries but also within the whole chain. The complementary abilities of the EMSs and the GSCM are as a result of the following factors; they both require organizational commitment. This involves educating the employees on all the issues at hand about environmental issues and the firm's measures to minimize the environmental impacts. The EMS just like the GSCM requires good inventory control system to cut down on wastes that may come in as excess input or unnecessary stock materials. The GSCM is a model on continual improvement reducing the impact of supplier input on the organizations final product while the EMS deals with continual improvement on the impacts of the organization on the environment. Both these practices require good coordination across the business units starting from the suppliers, design department and the marketing to minimize losses and at the same time maintain high profits. This study points out that it is important for management to understand the interaction between strategic innovation, success and sustainability. Successful companies are known to use innovation to achieve desirable results and success. Through sharing of information with other members of the supply chain it can help examine the history and relevance of EMSs and GSCM and how they positively affect businesses making a sub­stantial impact. The management should be able to implement strategies to grow business throughout the supply chain while making a positive impact on the environment (Jolley 2009).

Some of the earliest beneficiaries of GSCM include Common Wealth Edison that produced a whooping 50 million US dollar benefit from implementing the life-cycle management approach, Pepsi-Cola saving 44million US dollar for switching from corrugated shipping containers to reusable plastic shipping containers. Some of the benefits of GSCM include innovative process in the production system characterized by continuous improvements while mitigating risks. Due to the various stake holders involved in the process, GSCM encourages negotiation building rapports with both customers and suppliers. The best practices to be used in GSC include aligning the business goals and the supply chains; one should be able to first identify the role of the environment to the business. Secondly management should focus on green sourcing to reduce waste; general pollution, energy waste and production waste are actually representing incomplete or ineffective production process. The use of LCA should be able to bring out clearly the weaknesses of the production system and show how best to modify the general production system to reduce environmental impacts. The GSC should also be a catalyst for innovation in the general production in order to reduce the environmental impacts. Implementing GSCM properly leads to an in crease in business value.

The Lean and Green Supply Chain report by a US environmental Protection Agency argues that information is a vital tool in the management of supply chains. It states that keen following of the material in a manufacturing process will help in noticing the waste streams that had not been accounted for and material losses. The report requires that the suppliers provide information and support the customer's efforts in energy and solid waste management. It also requires that the supplier should not let any by product that can be recycled go into waste, at the same time establish a system of tracking the waste disposal system, separate the solid wastes for ease disposal (Lopez et al. 2005).