The logistics of greener supply chains

Much research has focused on green technologies and management practices in the manufacturing industry. But how do companies in other parts of the supply chain “go green”?

Logistics companies provide services such as warehousing, transportation, inventory management, order processing and packaging, implying they can have a substantial environmental footprint. As many are also small businesses (82 percent of firms surveyed had fewer than 300 employees), logistics firms can be dogged by resource and knowledge constraints.

Using regression analysis and a survey of 322 logistics firms in China's Shanghai and Shenzhen areas, Chieh-Yu Lin and Yi-Hui Ho (both of Chang Jung Christian University in Taiwan), analysed the factors that influence the adoption of green practices within the logistics industry. Green practices investigated include the adoption of fuel efficient vehicles, electricity management systems and solar energy systems.

The study also explored the roles of organizational factors (such as the firms' size and the quality of their human-resources systems, for example), the business context (pressure from customers or the government and uncertainty in the business setting) and technological factors. Technological factors, such as the relative benefits of new technologies and innovations, how well suited they are to a firm’s needs and how easy they are to understand and use, are a relatively new focus for research.

The results show that technological factors can impact green technology adoption: Firms were more likely to adopt green technology and practices when they offered an advantage and were well suited to a business. Complex practices were less likely to be adopted by firms.

Green practices were also more likely to be adopted if firms provided organizational support, such as extra resources and training, increasing employee motivation for adoption and when they were subjected to regulatory pressures and/or received government support.

Uncertainty in the business setting, in the form of frequent and unpredictable changes to technology or customer preferences, inhibited firms from adopting green practices.

Customer pressure is not as significant a factor in the adoption of green practices for logistics firms as it is for manufacturing firms. This is likely because they are further down the supply chain and seen as “removed” from the manufacturing process.

Practical implications for managers:

  • Businesses and their managers should be aware of the environmental impact of logistics activities. Those wanting to green their supply chains should engage with logistics providers and make sure they understand the importance of their environmental performance.
  • The providers of fuel-efficient vehicles, electricity management systems or other green practices and technologies should make sure that the benefits of their services, such as reduced energy bills, are clearly stated and easy to understand. They should also ensure they are well suited to current logistics practices, such as making sure fuel-efficient vehicles have the same capabilities, such as load space, as older models.
  • Logistics managers can support the adoption of green practices through commitment from top management and enhanced human resource efforts, including staff training and awareness-raising programs.

Research conducted in different jurisdictions and service industry sectors would help researchers and managers understand when and if the findings of this study can be generalized.

Source: Lin, C.Y., & Ho, Y.H., (2010). Determinants of Green Practice Adoption for Logistics Companies in China. Journal of Business Ethics. 98:67-83. Summarized by Thomas Long, University of Leeds and the NBS team.

Retrieved from Network for Business Sustainability. Photo by Andrey Tirakhov via Shutterstock.