Green Lean Sustainable procurement

Cardiff Business School

COURSEWORK COVER SHEET 2014/2015

Section 1

Student Name: Charalambous Panayiota

Student Number: 1230836

Module Code: BS3745

Module Title: Strategic Purchasing and Supply chain management

Coursework Title: Procurement

Submission

date: 20.02.2015

Date

document last

saved/printed:

16.03.2015

(Updated

automatically)

Lecturer: Jane Lynch

Section 2 MARK AWARDED:

COMMENTS:

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Number of words: 3650

Charalambous Panayiota 1230836 BS3745 Strategic Purchasing and Supply chain management

Page 2 of 16

GREEN

LEAN SUSTAINABLE

PROCUREMENT

Contents

Executive Summary ................................................................................................................... 3

Introduction ................................................................................................................................ 3

Literature Review ....................................................................................................................... 3

Concept A: Sustainable Procurement ..................................................................................... 3

Concept B: Lean (Waste): ...................................................................................................... 5

Concept C: CSR Vs Sustainability: ........................................................................................ 6

Concept D: Catalytic change – behaviour: ............................................................................. 6

Case Study .................................................................................................................................. 7

Marks and Spenser: Plan A .................................................................................................... 7

Analysis ...................................................................................................................................... 8

Conclusion .................................................................................................................................. 9

References ............................................................................................................................ 13


Page 3 of 16

Executive Summary In this report a close discussion of the procurement concept will be analysed in terms of the

new trend of organisations being environmentally friendly and acting more ethical towards

nature and society. Companies develop new measure and programs in which they present

their new strategic planning of acting more eco-friendly looking at Corporate Social

Responsibility (CSR). A shift in the market of business expanding on green manufacturing

and recycling aiming to reduce waste and pollution. Activities like green supplier selection,

new product design, energy consumption and resource consumption, are examples of

organisations going green and developing new methods of processing and manufacturing their

goods in a way that can gain sustainable competitive advantage through green supply chain

management. Government is now acting more pressure on firms by giving incentives for eco-

friendly programs as well as taxing and giving fines to companies that do not comply with the

law. A case study of the Marks and Spenser ‘Plan A’ program reveals a wide variety of

activities where this company achieves to be one of the UK leading sustainable retailers.

Introduction The aim of this report is to examine the topic of procurement in a fast growing trend of

organisations adopting new methods of being more eco-friendly. This report is centred on the

environmental aspect of how companies achieve competitive advantage through green

procurement. In the section of sustainable procurement, triple bottom line is one of the key

concepts that brings together the three dimensions of the environment, society and economy

that overlap together, aiming to achieve sustainable development. Additionally, lean thinking

is discussed under the idea that ‘lean is green’ expanding on new developments of acting

more proactive as an organisation and collaborate with ‘green suppliers’ focusing on

improvements on products through activities like designing, recycling intending to reduce

waste. Linked to the above thinking, CSR and sustainability are major aspects of

procurement. In this section social growth and how business creates its own regulations and

activities acting ethical and responsible towards the community. Catalytic change is the last

part where literature is discussed around the theme of people, government and NGOs that put

pressure on firms to change the way they operate and adapt sustainable practises. Lastly, a

case study of Marks and Spenser is examined on the new environmental program they have

introduced in 2007 called Plan A. An analysis of this case study of how M&S is operates in

its own way towards green manufacturing linked to literature and research.

Literature Review

Concept A: Sustainable Procurement

The triple bottom line (TBL) idea was first established as a concept based on the

environmental, social and economic aspect were the first concepts researched were made in

the late 90’s for sustainable development (SD) and (CSR). The concept of TBL highlights the

importance for organisations to adapt and expand in the three main concepts of ‘profit, planet

and people’ (Elkington, 2004). In this way, based on the huge competition that exists in the

market, organisations need to adjust their production and elaborate close with suppliers in

order to build environmental friendly systems to achieve their daily goals. A shift in the

market in the early 2000’s of consumers acting more environmentally friendly and moving


Page 4 of 16

towards green products, has raised pressure to organisations and suppliers to operate more

conscious (See Appendix, 1-2).

For instance, the business operations need to examine the activities of each supplier, testing

their performance and monitor their progression (Elkington, 2004). It is key for every

business, the suppliers to share corporate common values and missions that can elaborate in

the same path way and collaborate close with the organisation in the future as partners

(Sharkis and Dhavale, 2014). The government puts pressure to organisations to be

environmentally friendly and comply with the laws through penalties for pollution,

environmental violations and illegal behaviour. As a result businesses should plan very

carefully who they partner with as their suppliers image reflects their environmental

awareness and ethic. In this way, organisations can identify their future suppliers and

potential strategic partners in a long term strategic dimension. Kuo et al. (2010) recommends

a ‘model using artificial neural network and two multi attribute decision analysis’ where

organisations can run an ‘analytic network process’ to assess each supplier performance and

flexibility (Subramanian and Gunasekaran, 2014; See Appendix 5). Key people are always

seen very important for organisations in creating and bringing new ideas in house aiming to

help the organisation expand its special skills and achieve maximum efficiency in the

production process (Dubey and Gunasekaran, 2015;Proxima Group, 2015). Environmental

programs can be introduced by the businesses to share information with suppliers and

employees and raise more awareness of the goals and mission of the company (Handfield et

al., 2002). Most of the studies researched, propose a framework of green supplier selection

proposing certain metrics and criteria in which organisations should apply and follow when

managing their green supply chain. An example is suppliers examined on the resources used

in the manufacturing process for reducing the energy used as well as reducing pollution. In

this way, business require time and trust to build strong relationships helping companies in

better information flow and good planning (Proxima Group, 2015). This can come into

contrast with concepts like ‘just in time’ since the suppliers will need to collaborate close with

the partners and make decisions for long term periods.

According to Seuring and Müller (2008) sustainable procurement expands in three areas of

‘supplier risk, performance management and sustainable product management’. Based on

these dimensions, environmental pressure for ‘green practises’ and a quick transformation of

new policies and practises for ‘green products’ and new developments in the green supply

chain management is required for green-suppliers (Hajmohammad et al., 2013; Tseng et al.,

2013). Strategic planning for minimising raw materials or even replacing suppliers that do

not comply with eco-friendly processes. In this way, future sustainability can emerge if

companies eliminate waste in production and manufacturing. This can take place through

activities using the bottom up approach like redesigning and reusing products justifying what

are the right materials needed for the entire lifecycle of goods as state in the table below by

Subramanian and Gunasekaran, (2014)( Min and Galle, 1997).

Social

Econo

mic

Environm

ental


Page 5 of 16

Sustainability overlaps in three main areas, in environmental, the economic and social sector.

All three areas overlap together. Focusing on the environmental side of the business,

Kummar Mittal, (2013) supports the idea that green manufacturing (GM) maintains a positive

side to the production of the business by eliminating the waste by processing with an eco-

friendly manner, creating new products (Dornfeld, 2009; See Appendix, 3). According to

Kimmar Mittal, (2013) integrating ‘eco-friendly’ production process, businesses can gain a

more desirable future outcome, creating values and new prospects in expanding in a new area

of energy saving and green product development. This can add value to the business goods

and assist them in regulating the materials and pollution production giving more knowledge to

the organisation and information disclosure (Chuang and Yang, 2013). Expanding in the

green market, companies will face new opportunities to cooperate with new suppliers coming

across new methods that will eventually lead to future reduction of operation cost by

becoming more environmentally friendly. Driessen et al., (2013) supports in his study the

idea of green product development seen as a positive related concept for stakeholders that can

increase the reputation of a company operating in a green sustainable lean method.

Additionally, companies should adopt a lean manufacturing strategy to reduce waste and

create value to the process of the new design product aiming to transfer the future value to the

stakeholders (Kummar Mittal, 2013).

Here are several examples suggested by Kimmar Mittal, (2013):

a) Minimise resources – sustainable materials

b) Ecological design of new products and processes

c) Reduction of CO2 intensity

d) Reduce waste

e) Recycle and reuse materials

f) Improve energy consumption

g) Reduce pollution in manufacturing and transport

Concept B: Lean (Waste):

According to Piercy and Rich, (2015) ‘lean is green’ and has been researched under the

principles of sustainability and CSR. In this way, according to the table below, the three main

concepts discussed in this section is the value, product, and waste (See Appendix, 4). Based

on this, environmental drivers success is brought to business by operating close with the

‘right’ suppliers building long term relationships and sharing information that can improve the

quality of products. Developing and redesigning products in a more eco-friendly way, it can

limit faults in the manufacturing process, reducing cost and delivering the same output (Piercy

and Rich, 2015). Consequently, collaborating closely with ‘green suppliers’ it can limit the


Page 6 of 16

waste stage of a company and increase the performance of both organisations (Simpson and

Power, 2005). As a result, designing new products with suppliers businesses can predict the

right resources needed for each production, avoiding unnecessary investments in resources

that are unprofitable. In this way, organisations can reduce their stock and produce the right

production of goods by redesigning the process of each product in a more efficient energy

save way (Aydin, 2014). This can also help the environment in reducing pollution by using

only the energy required in each production stage where companies can recycle components

or even reuse materials (Buysse and Verbeke, 2003). In this way, if a business can adapt to

the new shift of a proactive environmental management company which seeks to protect the

environment satisfying its stakeholders by producing clean production processes (Aydin,

2014).

Green purchasing strategies and trends (Min and Galle, 1997)

Concept C: CSR Vs Sustainability:

Expanding on the research corporate sustainability (CS) and CSR are seen as two overlapping

concepts which companies use together and elaborate with the concept of the triple bottom

line emphasizing the importance of balancing the ‘environmental integrity’ and ‘social

growth’ (Sarvaiya and Wu, 2014, See Appendix 6). CSR was first established as a

philanthropic approach and then shifted towards a more strategic approach, of a business

acting in the right manner by making decisions that are morally right and of value to the

society (Bowen, 1953). CSR is also a concept used to achieve issues raised by society and

managed by stakeholders, targeting to accomplish ‘ecological balance’ (Sarvaiya and Wu,

2014). On the other hand, sustainability is a concept perceived for short and long term

decision making developments which can satisfy the requirements of today’s demand without

the need to limit abilities of future peers. Shrivastava, (1995) states that there are four

dimensions in which companies can achieve sustainability in the environmental market:

a) total quality environment management

b) ecological sustainable competitive strategies

c) technology for nature swaps

d) corporate population impact control

Concept D: Catalytic change – behaviour:

Implementation of the green policy and the environmental legislation are the two key aspects

of companies and their code of conduct. In the past few years research has shifted more

towards the green supply chain and the pressure of the ‘green purchasing’ and environmental

conscious buying (Gurtu, Searcy and Jaber, 2015; See Appendix 7). The government begun

to establish legislations towards green production aiming to increase awareness and pressure


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to businesses for protecting the environment. ‘Financial incentives’ are given to businesses

starting to develop green approaches, as well as ‘grants’ and ‘capital investments’. For

companies to operate in a green manner the Federal Ministry of the Environment (2011)

provides the incentives state above to organisations willing to diversify their business in an

eco-friendly environment. However, after the Kyoto protocol was signed for the ‘climate

change’ legislation, companies are now required to purchase a ‘certificate’ which claims the

right for the company to ‘emit greenhouse gases’ (Kummar Mittal, 2013). These are

international standards where companies, private and public are required to comply in order to

fulfil certain characteristics like to ‘fulfil stakeholder needs, promote efficiencies’ and several

other requirements: ISO 1400 – ISO 1403 (Iso.org, 2015). Penalties for not complying with

regulations can also be another motivation for companies to develop new processes and be

more committed to the environmental side of production recreating the operations (Zhu and

Geng, 2013).

There are several challenges of implementation for GM. Pressure from stakeholders for green

level performance push companies to shift towards a ‘cleaner production’ (Kummar Mittal,

2013). This means practises and regulations which the company can create to avoid pollution

from the production process and services to boost efficiency and minimise risk to human

nature (Aydin, 2014). In this way, reducing pollution helps the business to act greener and

gain competitive advantage through the disposal of generated waste and in this way

companies can reduce operation costs by lowering inputs through reverse logistics (Handfield

et al., 2002; See appendix, 8).

Case Study

Marks and Spenser: Plan A

Marks and Spenser (M&S) is one of the most successful retailers in the UK market, operating

with 600 stores having the most prestigious name for the quality products and high value

goods they offer for its ‘British’ made goods (Marksandspencer.com, 2015). M&S is one of

the leading companies that accommodates womenswear, kids wear, menswear, home and

food. Operate with a list of 2000 suppliers globally, the company’s main target is to

contribute to the creation of products with great value to its customers as well as build trust

and close relationships with its partners (Butler, 2013). Subsequently, M&S decided to

propose an eco-friendly five year plan called ‘Plan A’ (Marksandspencer.com, 2015). The

project was designed in the early 90’s setting one hundred commitments to be done in the

next few years. Even though M&S achieved to complete already the 39 commitments of the

plan was launched for the purpose of diversifying the company to an eco-friendly business

(Marksandspencer.com, 2015). Strategic planning was designed for the organisation to meet

the demand for ‘sustainable products and services’ with an inspiration to diversify people’s

life in the ‘community’ (Actionsustainability.com, 2015). In this way, CSR was one of the

key concepts for the company operating towards its goals through high collaboration with

society. One of the examples M&S has done was to partner up with Oxfam and encourage

people to give their old clothes to the charity company and earn a £5 voucher from M&S

(Businessgreen.com, 2015). This shows a positive action of the company and its stakeholders

participating together, aiming to raise money for charity and achieving to recycle £1.8 million

clothes (Actionsustainability.com, 2015). Another way in which M&S was stated to act

environmentally friendly was to manage and eliminate 50,000 tonnes in Co2 emission.

Additionally, 400 million less bags have been used in the past year aiming to discourage the

consumers to purchase bags by adding a small charge to the bag, where the money again goes

to charity. As a result, M&S operates in a green level supply chain achieving 0% waste by

recycling all of its products in the manufacturing process. Recycle is also seen through

actions like recycling the hangers in store. Lastly, the company has achieved to reinvest


Page 8 of 16

profits in the plan worth £50 million for supporting the environment. Based on this example,

one of the biggest M&S stores in Cheshire Oak was built recently from recycle materials with

an eco-design of using Solar panels for electricity. Marks and Spenser has accomplished an

important rewarded for being the ‘retailer to attain certifi4cation to all three Carbon Trust

Standards, covering Carbon, Water and Waste management’ (Businessgreen.com, 2015).

Analysis As revealed by literature research highlights a shift in lean sustainable procurement in which

organisations seek to redesign their business and move towards environmental conscious

processes. In this way, the TBL is put into practise for businesses intending to focus on the

three main concepts of the environment, social and economic dimensions. M&S steps in the

market introducing Plan A in 2007 aiming to become ‘the world’s most sustainable retailer’

by 2020 (Butler, 2013). The company’s procurement team developed its own environmental

program based on the principles of BS 8903 intending to understand better the importance of

sustainable procurement as a concept, in order to apply it in practise into the everyday

production process. Bringing together literature and the case example, M&S has adopted a

similar approach towards sustainable lean procurement where the company is looking to

purchase and use resources that are only needed in the production process and will be

eventually dispose, reducing any negative effect by promoting diversification to sustainable

procurement. Additionally, based on the lean thinking, M&S sources goods as a strategy

aiming to extract the best possible value over ‘the total life cycle’ leading to stakeholder

benefit (Marksandspencer.com, 2015). M&S (2015) plan A introduces seven pillars in

sustaining an eco-friendly approach in practise: ‘Involving our customers in Plan A, Making

Plan A how we do business, Climate change, Waste, Sustainable raw materials, trading fairly,

and Healthy living’. Based on these seven principles M&S has achieved to reduce CO2

emissions by ’50,000 tonnes’ and increase in store efficiency for ‘19%’. Both activities create

an image of a company improving environmental performance measures that lead into

reducing pollution and improve energy consumption. Besides this example, government is

now pushing organisations to change behaviour and based on Dube and Gawande (2012)

research, in order for companies to become environmentally sustainable they need to comply

with drivers such as ‘government’, ‘supply chain efficiency’, ‘CSR’ and ‘ROI’. In the same

way, M&S achieves to fulfil this criteria and have developed key drivers by investing ’£50

million’ in UK to help the environment aiming to give back to its local community.

CSR is an important aspect for big organisations like M&S aiming to change the ‘lifestyle’ of

the locals. Philanthropic actions and social growth is two of the key drivers of M&S. An

example is a huge investment of ‘£13, 2 million’ in welfare. Also, M&S has partner up with

OXFAM to help poor people and offer a £5 voucher to every customer that offers their

clothes for recycle, helping people in need. In this way the triple bottom line is put into

practise by offering help to the society and by acting environmentally friendly by recycling.

In this way fulfilling stakeholder’s needs, M&S achieves to bring customers and suppliers

closer to the business and create a positive image of an ethical company.

Meanwhile green manufacturing and supply chain aims to reduce the ‘negative impact’ of all

the production process to nature and create new principles through activities that lead to less

harmful outcomes to the environment. For instance Gurtu, Searcy and Jaber, (2015) suggest

that green activities like ‘green design’, ‘recycle’, remanufacture’ and ‘reverse logistics’ are

examples of possible activities that companies can adopt. There have also been efforts by

M&S to redesign their packaging of food and recycling ‘400 million’ bags in order to

encourage people to act more eco-friendly. This action brings opportunities with packaging

of using sustainable new resources that can benefit both the organisation and the customer.

The company can benefit in reducing and reusing recycle materials, decreasing the input cost

and the customer is given the chance to act more ethical towards the environment and recycle


Page 9 of 16

the package of each product. According to the above case study, ‘90%’ of M&S packaging is

recycled. The re-design of M&S package has contributed to information sharing to the

consumers acting more eco-friendly by providing symbols of the category of each package for

recycle (eg. Plastic) (Businessgreen.com, 2015).

Lastly, one of the most important aspects of going green is suppliers. Engaging with the right

suppliers in the right process means having common values and sharing similar code of ethics

in the way the two companies collaborate. It is crucial for the business to create a good

reputation and relationship with their suppliers by having the right skills to manage their

communication and set some standards and criteria that suppliers can meet and perform in an

ethical manner. In this way, M&S has introduced its own environmental program aiming to

cooperate close with their suppliers and share knowledge and information on the performance

of each suppler through their online website of ‘Plan A Supplier’

(ExchangePlanareport.marksandspencer.com, 2015). This example shows that M&S wants to

motivate its suppliers to follow the goals of the company and raise awareness of the

company’s mission to act more ethical aiming to satisfy its goals towards the society, the

environment and the economic (Businessgreen.com, 2015). . Accomplishing a genuine,

trustworthy relationship with the suppliers, M&S can build a future strategic planning that can

create value and quality to its stakeholders by understanding each organisation vision.

On the other hand organisations practising lean manufacturing require an extensive

collaboration with suppliers for ‘information sharing’, fast performance progress which can

be seen as a very risky action for firms that cannot fulfil the criteria and alter their

manufacture process. Going green is a very long time consuming and expensive procedure

that companies cannot afford to lose time and fall behind competition. This can be seen from

the research done by Mollenkopf et al., (2010) with pressures of global companies using a

‘push method’ where companies need to source their production in other country having to

increase their inventory since all the procedures take longer ‘lead time’. This comes to

conflict with lean manufacturing as it supports ‘pull method for inventory control’.

Conclusion

On the whole, sustainable procurement can be achieved through several ways in which

companies perform activities towards an environmentally ethical manner aiming to reduce

pollution, waste, become more socially responsible by offering back to the communities and

becoming greener with the right selection of partners and suppliers. In this way companies

can be very successful in creating value and quality of a product and a firm with a good

reputation towards its stakeholders that can gain a competitive advantage through the use of

the right resources and activities that can bring success and create strong trustworthy

relationships with its stakeholders. Collaborating close with suppliers, employees and the

community, companies present an ethical manner with responsibility and respect towards its

environment. In this way, green lean sustainable procurement can benefit organisations

customers and stakeholders.


Page 10 of 16

Appendix

1. ‘Sustainable procurement’ journal research, (2015)

2. ‘Green’, ‘Lean’, ‘Procurement’, ‘CSR’ journal research(2015)

Year No. of

Journals

published

2000-2005 74

2005-2010 360

2010-2015 870

3. Evolution of sustainable manufacturing (Jawahir et al., 2007)

4. Product, Value and Waste,(2015)

1220

23

0

1990

No. of

journal

s

2000

2490

2005 2010 2015

3

8

Over-

production

Value

Quality

Delivery

Cost

Inventory

Transporting

Waste

Product


Page 11 of 16

5. ‘Subramanian and Gunasekaran, (2014)

6. The triple bottom line takes off (Elkington, 2004)

7. Changes in the use of keywords in papers between 2007 and 2012 (Gurtu, Searcy and

Jaber, 2015)


Page 12 of 16

8. The AHP model (Handfield, 2002)


Page 13 of 16

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