Green Logistics Strategies: An Analysis of Usage Pattern Abstract Environmental issues affect numerous logistical decisions throughout the value chain. This research identifies strategies that are most and least popular for managing and responding to such issues, and provides evidence of relationships between select company characteristics and the particular types of strategies employed in managing logistics-related environmental impacts. Data sources included companies in the United States, Canada, and the European Union. Study results suggest that the green logistics strategies of recycling materials, reducing consumption, and reusing materials are universally popular among western industrialized nations. Firms that exhibit more intense commitment to environmentalism than their peers augment use of these universal strategies with various specialized thrusts, such as environmental audits. There is little question that environmental issues have become an important consideration for many business decision makers in recent years, [1] with some corporate executives having referred to the 1990s as the "decade of the environment." [2] Many companies are designing their products to be more environmentally friendly, and many are using more environmentally friendly packaging materials. Estimates of the current environmental, or green, market range upwards of $200 billion. [3] While there is a burgeoning body of literature involving environmental issues in other business disciplines such as marketing, the corresponding literature involving logistics has been characterized as "small but expanding." [4] Spurring this expansion is the recognition by a number of writers, such as Lambert and Stock as well as Handfield and Nichols, that responding to environmental issues will be one of the major challenges facing logistics and supply chain management in the foreseeable future. [5] Such recognition tends to confirm the view that environmentalism has "come of age" as a major topic in logistics and no longer can be regarded as simply a peripheral concern or fad. [6] Indeed, Wu and Dunn demonstrate that environmental issues can impact numerous logistical decisions, including the acquisition of raw materials, inbound logistics, and outbound logistics, throughout the value chain. [7] With respect to the acquisition of raw materials, for example, some organizations are specifying that their vendors meet certain types of environmental qualifications. In fact, the International Standards Organization (ISO) has developed an international environmental standard known as ISO 14000, which is to be applied to vendors worldwide. [8] Not surprisingly, there are numerous environmental considerations with respect to inbound logistics. One such consideration, efficient warehouse design, can reduce the number of empty or partially empty forklift trips, which is environmentally beneficial due to improved vehicle utilization. Likewise, freight consolidation of inbound loads can reduce the number of partially loaded transport vehicles, thus improving fuel efficiency. [9]
Wu and Dunn also point out that many of the environmental issues associated with inbound logistics (e.g., warehousing, transportation mode decisions) are applicable to outbound logistics as well; nevertheless, some differences do exist). [10] In particular, organizations are faced with difficult decisions regarding the trade-offs involving inventory policies and environmentally responsible logistics programs. The contemporary emphasis on cycle time compression, for example, may result in a multitude of smaller shipments moving by fast, fuel-inefficient forms of transportation. Environmentally responsible logistics programs, by contrast, are more comfortable with fewer, larger shipments moving by slow, fuel-efficient forms of transportation. Moreover, McIntyre and colleagues suggest that there may be a basic dichotomy between measuring the performance of supply chains and the greening of supply chains. [11] That is, supply chain performance measurement tends to focus on short-term metrics (e.g., profitability) as well as the interests of corporate shareholders. The evaluation of environmental issues, by contrast, tends to involve longer time horizons and should accommodate the concerns of a variety of stakeholders (e.g., suppliers, customers, the local community). Another environmental topic that has been receiving increased attention in recent years is reverse logistics (RL). According to Kopicki and others, RI refers to the process "involved in reducing, managing, and disposing of hazardous and non-hazardous waste from packaging and products." [12] The growth and interest in RL is very likely to continue in the future as firms recognize that reverse logistics is a key component of the total logistics management process in much the same way as is true for inbound and outbound logistics. In fact, Stock characterizes the current state of development of RI as being analogous to inbound logistics ten to twenty years ago. [13] He cites as a critical success factor that reverse logistics programs and environmental initiatives be given priority and have sufficient resources (i.e., time, money, personnel) committed to them. [14] Today companies such as Xerox, Eastman Kodak, Mobil, Hewlett Packard, Sears, and Home Depot are taking a proactive value-seeking approach to RI, rather than simply a reactive one. [15] They have launched reverse logistics programs, which offer benefits such as tightened inventory management, reduced costs and better cost control, enhanced revenues and customer service, better data regarding the RL process, and improved public image. Moreover, Marien maintains that a reverse logistics program combined with source reduction practices can be used to increase competitiveness and gain a competitive advantage. [16] Indeed, Rogers and Tibben-Lembke contend that RL can be viewed as a "strategic weapon" that has potential long-term bottom-line impact. [17] Similarly, Blumberg estimates the current worldwide market for RL to be greater than $20 billion, and further suggests that RL "...will become a major business opportunity in the 21st century." [18] Carter and Ellram have furthered understanding of this strategic role by developing a model of the drivers and constraints to reverse logistics programs and how these factors interact. [19] RESEARCH PURPOSE AND QUESTIONS Additional environmental topics could be cited relating to other aspects of logistics; suffice it to say that much remains to be learned about how companies manage and respond to environmental issues in logistics. To this end, this article will analyze the current usage of select strategies for
managing and responding to environmental issues in logistic management. The strategies used to manage and respond to environmental issues in logistics were derived from an extensive search of the literature as well as from discussions with current logistics managers. Twelve prominently mentioned strategies were selected for inclusion in the study; these twelve "general" strategies were selected in part because the purpose was to investigate environmental management across industries as a whole, rather than within a specific industry or within specific logistics functional areas. Moreover, most of the twelve strategies have been cited as a "best practice" in the management of reverse logistics/environmental programs. [ 20] For purposes of this article, these strategies will be referred to as "green logistics strategies." This article will also investigate possible relationships between six distinct company characteristics and the twelve environmental strategies. The six characteristics are geographic location of the organization; type of firm; size of firm; importance of environmental issues; formalness of environmental policy; and logistics' degree of involvement in implementing environmental policy. Three of the six (geographic location, firm type, and firm size) are demographic variables, while the remaining three can be viewed as examples of, or surrogates for, the intensity of an organization's commitment to environmentalism. To summarize, the following research questions will be investigated: 1. What are the most, and least, popular strategies currently being used to manage and respond to environmental issues in logistics? 2. What relationships, if any, exist between select company characteristics and the strategies for managing and responding to environmental issues? METHODOLOGY The information to be analyzed comes from mail surveys sent to U.S., Canadian, and European Union Members of the Council of Logistics Management (CLM). Because the company personnel most knowledgeable about environmental issues in logistics are likely to be in positions of middle and upper management, the study focused on those members with job titles at the director level or above. Also, only members from manufacturing and merchandising (wholesalers and retailers) firms were included. Previous research has identified manufacturers and merchandisers as "primary channel participants"; that is, key players in distribution channels. [21] Surveys were mailed to 450 randomly selected CLM manufacturers and merchandisers in the U.S. as well as a non-U.S. group of manufacturers and merchandisers comprising 130 Canadian and 101 European Union CLM members meeting the selection criteria. Each sampling frame member received an initial survey packet consisting of a cover letter, a copy of the survey, and a self-addressed envelope (U.S. respondents received a postage-paid return envelope). A follow-up mailing, consisting of a cover letter, a copy of the survey, and a self-addressed envelope, was sent approximately one month after the initial mailing. Two of the U.S., three of the Canadian, and four of the European surveys were returned as undeliverable, reducing the sampling frames to 448, 127, and 97, respectively. A total of 133
usable surveys were received from U.S. organizations, for a response rate of 29.7 percent; 31 usable responses came from Canadian organizations, for a 24.6 percent response rate; and 24 usable responses came from the European firms, representing a 24.7 percent response rate. The overall response rate was approximately 28 percent (188 usable surveys/672 eligible respondents). Nonresponse bias was examined by comparing early and late respondents, a procedure that is based on the assumption that later respondents tend to be more like nonrespondents than like earlier respondents. [22] For this study, responses received within twenty-five days of the first mailing were compared to those received after twenty-five days. These tests revealed negligible differences between early and late respondents, suggesting that nonresponse bias is not a major problem in this study. There are several limitations to the present study that should be discussed before proceeding: First, the number of Canadian and European respondents is relatively small. While other professional organizations (e.g., the Canadian Association of Logistics Management, the European Logistics Association) could have offered larger sample sizes, some potential problems in cross-border research can be reduced if participants have some degree of commonality. For this study, such commonality was operationalized by membership in the same professional organization (i.e., CLM). The CLM is one of the few professional logistics organizations with a multinational membership, and its official correspondence language is English, meaning that our surveys could be developed in English. This is significant because it allowed us to avoid various language issues (e.g., translation and back translation) for some of the Canadian and European participants. Language considerations are frequently identified as one of the major challenges to conducting effective cross-cultural research? [23] A second limitation of the present study is that the CLM membership is skewed toward higher revenue firms who often tend to be on the leading edge of logistical practices. While these companies certainly provide an important perspective, we recognize that smaller firms may have different views with respect to managing and responding to environmental issues in logistics. RESULTS 1. What are the most, and least, popular strategies currently being used to manage and respond to environmental issues in logistics? The results for the most, and least, popular strategies are presented in Table 1 and are listed in decreasing order of current usage. Both recycling materials and reducing consumption are strategies currently being used by over 80 percent of the respondents, with reusing materials being utilized by nearly 75 percent. The popularity of recycling, reduction, and reuse should not be surprising, as they tend to be three of the better-known strategies for managing and responding to environmental issues in logistics. Moreover, the heavy use of recycling supports work by Min and Galle, who found recycling to be the most frequently used strategy among purchasing managers. [24]
As shown in Table 1, the least popular strategy, encouraging greater government involvement/regulation, is currently used by slightly more than 15 percent of the respondents. This is an interesting finding, given suggestions that environmental regulations can actually benefit a firm's performance and market competitiveness. [25] For example, Japanese and German car manufacturers responded to more stringent fuel consumption standards by producing lighter and more fuel efficient automobiles. U.S. car manufacturers, by contrast, aggressively opposed these fuel consumption standards--a stance that ultimately wasted billions of dollars and weakened their competitive position. [26] The information in Table 1 also indicates that three strategies--the redesign of logistical systems, increased education and training, and rejecting suppliers lacking environmental concerns--are likely to be added in the future as green strategies by at least 30 percent of the responding organizations. The redesign of logistical systems strategy offers support for the idea that environmentalism will be an important influence on the way that logistics managers do their job. [27] 2. What relationships, if any, exist between select company characteristics and the strategies for managing and responding to environmental issues? Of the six company characteristics to be investigated in this section, five will be analyzed through t-test, while the sixth, firm size, will be investigated through one-way analysis of variance. Only statistically significant differences at the .05 level or better will be discussed in this section. (a) Geographic location of the responding organizations. This issue was operationalized by comparing two respondent groups, namely, U.S. respondents and a non-U.S. group comprising both the Canadian and European participants. While these countries are somewhat similar in terms of their industrial orientation, well developed infrastructures, and business cultures, there are suggestions that they differ in terms of green activism and awareness. For example, German purchasing managers tend to be more involved than their U.S. counterparts with respect to environmental purchasing. [28] Moreover, Canada and Western Europe frequently are portrayed as having more advanced and proactive programs for managing and responding to environmental issues in logistics. [29 Given this perception, Table 2's discovery of only one statistically significant difference between U.S. and non-U.S. participants is somewhat surprising, and no different than would be expected by chance (i.e., at a .05 level of significance, there would be .60 [12 strategies x .05]--rounded to 1--statistically significant issue). As shown in Table 2, industry cooperative efforts are more likely to be used currently by non-U.S. respondents (mean score = 1.60) than by their U.S. counterparts (mean score = 1.96). The heavier utilization of this environmental strategy among European firms is consistent with previous literature. [30] Furthermore, the two groups report nearly identical usage for reducing consumption, rejecting suppliers, and increasing education and training. As a result, the information in Table 2 appears to suggest, at least in terms of green logistics strategies, a higher degree of similarity between U.S. and the Canadian/European firms than is generally acknowledged.
(b) Firm type. The results involving firm type, operationalized by comparing manufacturers and merchandisers, are presented in Table 3. Four of the strategies--increased education and training, conducting environmental audits, publicizing environmental efforts, and promoting industry cooperative efforts--exhibit statistically significant differences between manufacturers and merchandisers. In all four cases, manufacturers are more likely to be using the particular green strategy than are merchandisers. The four statistically significant differences are greater than would be expected by chance occurrence (i.e., one expected difference by chance occurrence). Therefore, the results in Table 3 suggest that manufacturers and merchandisers tend to differ in their usage of these four strategies to manage and respond to environmental issues in logistics. Moreover, as a general rule, manufacturers also tend to be more involved than merchandisers with respect to the remaining individual strategies. (c) Firm size. Three categories--revenues less than $500 million; revenues between $500 million and $999 million; revenues equal to/greater than $1 billion--were used to compare respondents based on firm size. Results for the firm size comparisons, presented in Table 4, indicate that there are five statistically significant differences. For all the significant differences, firms with revenues equal to or greater than $1 billion are the most likely to be using the particular green strategies; in four of the five cases, the strategies are least likely to be used by companies with annual revenues of less than $500 million. The discovery of five statistically significant differences is much greater than would be expected by chance (i.e., one expected difference by chance), and therefore suggests that strategy usage differs according to firm size. With respect to managing and responding to environmental issues in logistics, the largest firms appear to be the most progressive in the sense that they exhibit the greatest utilization of nearly every strategy listed in Table 4. (d) Importance of environmental issues. Respondents evaluated the importance of managing environmental issues using four categories, namely, no importance; slight importance; moderate importance; high importance. In this study, comparisons were made between two groups of respondents: (1) those who indicated high importance and (2) those who indicated the other three categories ("less than high importance"). The results of these comparisons, appearing in Table 5, indicate statistically significant differences for eight strategies, with each of the eight being statistically significant beyond the . 01 level. Moreover, each of the eight statistically significant strategies exhibits greater utilization by companies placing a high importance on the management of environmental issues. Green strategies exhibiting particularly strong mean score differences include rejecting suppliers (mean score for the high importance group = 1.82, compared to 2.62 for the less than high importance group) and publicizing environmental efforts (mean score for the high importance group = 1.49, compared to 2.11 for the less than high importance group). The eight statistically significant differences are far greater than would be expected by chance (i.e., one expected difference by chance), suggesting that green strategy usage differs according to a company's perception of the importance of environmental issues. The information in Table 5
suggests that the high importance companies manifest their commitment to managing environmental issues by using a wide variety of relevant strategies rather than relying on only one or several. (e) Formality of environmental policy. Respondents evaluated the status of their companies' environmental policies according to three categories--no policy; informal (or unwritten) policy; formal (or written) policy. Two groups were used for comparison purposes: (1) those respondents reporting a formal environmental policy and (2) those indicating the other two categories ("non-formal"). The results for these comparisons appear in Table 6. As shown in Table 6, nine of the twelve strategies exhibit statistically significant differences between the two groups, with the majority being statistically significant beyond the .01 level. Each of the statistically significant strategies exhibits greater utilization by companies with formal environmental policies. The most noticeable differences involve environmental audits (mean score for the formal policy group = 1.36, compared to 2.13 for the "non-formal" group) and increased education and training (mean score for the formal policy group = 1.40, compared to 1.96 for the "non-formal" group). The nine statistically significant differences are far greater than would be expected by chance (i.e., one expected difference by chance); as a result, green strategy usage appears to differ based upon the degree of formality of a company's environmental policy. Likewise, the information in Table 6 suggests that those companies reporting formal environmental policies also believe in employing a wide range of strategies for managing and responding to environmental issues in logistics rather than simply a few. (f) The role of logistics in implementing environmental policy. Respondents evaluated the role of logistics in implementing environmental policy according to "no role/responsibility," a "minor role," or a "major role." For analysis purposes, the former two (no role, minor role) were combined into one category ("not a major role") and compared with the responses of organizations where logistics has a major role in implementing environmental policy. The results for these comparisons, appearing in Table 7, indicate four statistically significant differences between the two groups, with each significant strategy being used more extensively by companies in which logistics plays a major role in the implementation of environmental policy. The most noticeable differences involve rejecting suppliers (mean score among the major role group = 1.94, compared to 2.32 for the "not a major role" group) and environmental audits (mean score among the major role group = 1.43, compared to 1.77 for the not major role group). As has been the case with most of the company characteristics, the four statistically significant differences involving the role of logistics in implementing environmental policy are greater than would be expected by chance (i.e., one expected difference by chance). Therefore, green strategy usage appears to differ according to logistics' role in implementing environmental policy. As a general rule, companies in which logistics plays a major role in the implementation of environmental policy tend to exhibit greater utilization of the individual strategies.
(g) Summary of demographic analyses. The results from the demographic analyses, presented in Table 8, indicate that the usage of some strategies is relatively robust in the sense that the usage is unaffected by various demographic variables. For example, there were no statistically significant differences associated with either recycle materials whenever possible or reduce consumption whenever possible, and only one statistically significant difference for both reuse materials whenever possible and use outside or third parties to manage environmental issues. In general, this suggests that these strategies tend to have more universal usage, regardless of demographic variables. On the other hand, there are a number of strategies whose usage appears to be influenced by particular demographic characteristics. For example, two strategies, conduct environmental audits and increase education and training of company personnel, exhibit statistical significance on five of the six demographic variables. Three additional strategies exhibit statistical significance on four of the demographic characteristics. This suggests that these strategies have a more specialized usage, depending upon select demographic variables. More will be said about this tendency toward universal and/or specialized usage in the following section. CONCLUSIONS AND IMPLICATIONS This study investigated select strategies currently being used to manage and respond to environmental issues in logistics. Responses from a multinational group of respondents revealed recycling materials, reducing consumption, and reusing materials to be the three most commonly utilized green logistics strategies. Although greater government involvement/regulation emerged as the least used strategy, its utilization might be expected to increase, given recent suggestions that environmental regulations tend to be more beneficial than harmful to organizational performance. The article also explored potential relationships between select company characteristics and the strategies for managing and responding to environmental issues. One unexpected finding was the relatively high degree of similarity between U.S. companies and a non-U.S. group comprising Canadian and European respondents. This similarity was rather unexpected given that Canada and several European countries are frequently perceived to be more progressive than the U.S. when it comes to managing and responding to environmental issues in logistics. All other company characteristics exhibited a moderate to substantial number of statistically significant differences in terms of the current usage of the environmental strategies. In fact, two characteristics, the importance of environmental issues and the formalness of environmental policy, exhibited statistically significant differences on over one-half of the total number of strategies. Furthermore, there was tremendous consistency across the company characteristics in terms of the "direction" of the various relationships. With respect to the type of environmental policy, for instance, each of the nine strategies exhibiting statistically significant differences is used more extensively by companies reporting a formal environmental policy. Likewise, each of the eight statistically significant strategies related to the importance of environmental issues is used more heavily by firms that assign a high importance to environmental issues.
There are a number of implications for practitioners and researchers that arise from the study results. Perhaps most important, the study highlights some of the major strategies being used by a demographically diverse set of practitioners to manage and respond to green issues in logistics. As such, the findings represent useful benchmarks for comparison with what other firms are doing in the area of environmentalism. In some cases, reevaluations and changes in strategy usage may be called for based upon these comparisons. As pointed out previously, the aggregate results indicated recycling materials, reducing consumption, and reusing materials to be the three most commonly used green strategies. Moreover, these findings are very robust in the sense that virtually no statistically significant differences emerged when analyzed across company demographics (see Table 8). For example, these three strategies were heavily utilized irrespective of a responding organization's home country, firm type, and so on. In short, the study results suggest that the green logistics strategies of recycling materials, reducing consumption, and reusing materials appear to be universally popular in western, industrialized nations. These strategies would appear to be a "safe" starting point for those companies that have been slow to adopt environmental management practices. Another implication is that firms that are more intensely committed to environmentalism consistently manifest this commitment through heavier usage of various specialized green strategies in addition to the more universal ones. For instance, companies placing high importance on environmentalism and having formal or written environmental policies are much more likely to conduct environmental audits and publicize environmental efforts and accomplishments, among others. Moreover, this suggests that firms with a more intense environmental commitment tend to rely upon a comprehensive set of green strategies rather than just one or several. As a result, it appears that a sincere commitment to environmentalism consists not only of words, but a tangible set of strategic actions as well. The results of the study also have implications for future research. For example, it has been suggested that future studies on environmental logisitics might focus on three general categories: (1) applied macro-level studies, (2) applied micro-level studies, and (3) theoretical. [31] Applied macro-level studies focus on environmentalism's impact with respect to public policy considerations such as zoning regulations, packaging regulations, and facility design. McKinnon suggests that these macro-level studies, traditionally the purview of economists and engineers, could benefit from the expertise of modern logistics managers. [32] Applied micro-level research focuses on environmentalism's impact on company operations, with this study representing a specific example of such research. [33] While this article analyzed twelve general strategies that might be used to manage and respond to environmental issues in logistics, future research might focus on a more in-depth investigation of various green logistics strategies. Interested researchers, for example, could investigate the application of specific strategies (e.g., reuse of materials, source reduction) across various logistical functions such as transportation, warehousing, materials handling, and so on. [34] Alternatively, interested researchers could learn more about particular strategies for managing environmental issues in logistics. For example, with respect to environmental audits, researchers might investigate a comprehensive series of issues, to include the existence of written
environmental policies, the objectives of environmental policies, the costs of environmental policies, and employee awareness of environmental policies, among others. [35] The third general category, theoretical research, "...reassesses traditional logistics principles within an environmental context and, where necessary, develops new conceptual frameworks for environmental analysis." [36] Stock, for example, suggests that environmentalism might be studied in terms of its contributions to the concept of sustainable development. [37] Furthermore, as pointed out earlier, Carter and Ellram used previous studies as a basis for developing a series of propositions to guide future research on reverse logistics. [38] In conclusion, it is hoped that this article will serve as a stimulus for further research dealing with the greening of logistics. Environmental logistics clearly has emerged as a dynamic force, with far-reaching consequences for effective and efficient supply chain management. While this article represents an example of survey-based, applied micro-level research, additional empirical and theoretical research is necessary to successfully address the environmental challenges facing the logistics discipline at the new millennium and beyond. Mr. Murphy, EM-AST&L, is professor of business logistics, Boler School of Business, John Carroll University, University Heights ENDNOTES (1.) S. Melnyk and R. Handfield, "Greenspeak," Purchasing Today, July 1996, pp. 32-36.