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Management Research ReviewVol. 33 No. 6, 2010pp. 586-608# Emerald Group Publishing Limited2040-8269DOI 10.1108/01409171011050208

Critical factors for implementinggreen supply chain management

practiceAn empirical study of electrical and

electronics industries in Taiwan

Allen H. HuInstitute of Environmental Engineering and Management,

National Taipei University of Technology, Taipei, Taiwan, ROC, and

Chia-Wei HsuInstitute of Engineering Technology, National Taipei University of Technology,

Taipei, Taiwan, ROC

Abstract

Purpose – The purpose of this paper is to explore critical factors for implementing green supplychain management (GSCM) practice in the Taiwanese electrical and electronics industries relative toEuropean Union directives.Design/methodology/approach – A tentative list of critical factors of GSCM was developed basedon a thorough and detailed analysis of the pertinent literature. The survey questionnaire contained 25items, developed based on the literature and interviews with three industry experts, specifically qualityand product assurance representatives. A total of 300 questionnaires were mailed out, and 87 werereturned, of which 84 were valid, representing a response rate of 28 percent. Using the data collected, theidentified critical factors were performed via factor analysis to establish reliability and validity.Findings – The results show that 20 critical factors were extracted into four dimensions, whichdenominated supplier management, product recycling, organization involvement and life cyclemanagement.Research limitations/implications – This study obtained 84 valid responses from the Taiwaneseelectrical and electronics industries, the limitation of the study is the insufficient sampling. Futureresearches need to be performed using a larger sample and studying more countries.Practical implications – The Taiwanese electrical and electronics industry plays a decisive role inthe global information and communications technology (ICT) industry. Consequently, the validatedinstrument enables decision makers at ICT manufacturers to evaluate the perceptions of GSCM in theirorganizations. In addition, the critical factors of implementing GSCM practices validated in this workcan help enterprises identify those areas of GSCM where acceptance and improvements will be made,and in prioritizing GSCM efforts.Originality/value – This study presents an empirical investigation of GSCM practices, and fills a gapin the literature on the identification and establishment of critical factors for GSCM implementation inelectrical and electronics industries.

Keywords Supply chain management, Critical success factors, Taiwan, Electronics industry,Environmental regulations

Paper type Research paper

IntroductionGreen supply chain management (GSCM) has emerged as an important new approachfor enterprises to achieve profit and market share objectives by reducing

The current issue and full text archive of this journal is available atwww.emeraldinsight.com/2040-8269.htm

This manuscript was managed by Stefan Seuring as a special topic editor.

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environmental risk and impact (van Hoek, 1999). With the increased environmentalconcerns during the past decade, awareness is growing that issues of environmentalpollution accompanying industrial development should be addressed together withsupply chain management, thus contributing to the initiative of GSCM (Sheu et al.,2005). From a legislative perspective, the Waste Electrical and Electronic Equipment(WEEE) Directive of the European Union (EU) came into force in August 2004, andrequired manufacturers and importers in EU countries to take back used products fromconsumers and ensure their environmentally sound disposal (Widmer et al., 2005).Furthermore, the Restriction of Hazardous Substance (RoHS) Directive prohibitsthe use of regulated hazardous substances (lead, cadmium, mercury, hexavalentchromium, PBBs and PBDEs) in products.

Numerous multinational enterprises are investing in researching and developinggreen products, establishing standards restricting the use of hazardous substances,and requiring suppliers to provide products that are free of hazardous materials at alllevels of the supply chain. GSCM thus has emerged as a strategy for some leadingcompanies in the electronics industry, including Dell, HP, IBM, Motorola, Sony,Panasonic, NEC, Fujitsu, and Toshiba (Zhu and Sarkis, 2006). This phenomenonimplies that companies are now starting to recognize that environmental awarenesscan be a source of competitive advantage (Walton et al., 1998). GSCM can also promoteefficiency and synergy among business partners and their lead corporations, and helpsto enhance environmental performance, minimize waste and achieve cost saving(Rao and Holt, 2005). Meanwhile, the most far-reaching approach of environmentalmanagement is to create value through greening the supply chain (van Hoek, 1999).

The GSCM issue is significant because recent studies have shown that the majorityof the world’s manufacturing will be carried out in Asia within the next couple ofdecades (US-AEP, 1999). Taiwan is one of the most industrially developed countries inthe Asia-Pacific region. Most electrical and electronic manufacturers in Taiwan operateon the basis of original equipment manufacturing (OEM) and original designmanufacturing (ODM). Those organizations play an important role in the globalmarket because their products have a significant market share. For example, theTaiwanese information industry has outpaced the majority of its internationalcounterparts, at one time resulting in the island being positioned as the third largestproducer of information products globally (Chen, 2004). Notably, in 2004, Taiwan wasthe leading provider of notebook PCs, liquid crystal display monitors and chip foundryservices, with 72, 68 and 70 percent market share and worth of $22 billion, $14 billionand $8.9 billion, respectively (BusinessWeek, 2005).

The common problem of Taiwanese companies is that they suffer great pressurefrom customers and regulations requests with respect to green products and greenmanufacturing. Both WEEE and RoHS directives, particularly the RoHS, directlyimpact the electrical and electronic industries in Taiwan that export products to the EU –exports in 2004 exceeded US$7.8 billion. Also, more than 3,000 companies wereaffected by the directives of EU (Huang, 2005). In addition, China is developing itseconomy rapidly, while at the same time increasing its awareness of, and actionsassociated with, environmental protection (Zhu and Sarkis, 2006). Meanwhile, theChina government has instituted stringent environmental regulations (Wang et al.,2004), such as China’s RoHS and WEEE directives. This poses another significantpressure for Taiwanese electrical and electronics industries as most companies havemoved their factories from Taiwan to China.

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The authors detected that the majority of electrical and electronics manufacturers inTaiwan had implemented well-developed GSCM practices. This is because Taiwanesegovernment (such as the Industry Development Bureau) has long been promoting theCorporate Synergy System (CSS), a cooperative system which large companies workwith their upstream suppliers and downstream buyers to achieve certain goalscommon to member organizations – such as industrial waste minimization. It isconsidered as an innovative measure to implement which was also originally deemedthe concept of GSCM (Chiu et al., 1999).

Recently, Taiwanese government has funded a Green Plan (also named G-Plan)project for electrical and electronics companies to tackle the EU directives. It includesto establish an information management system for their green supply chains and todevelop a recycling system and management platform for green products, as well asto generate a certification database for green parts and components that conform toenvironmental requirements, particularly for RoHS and WEEE directives of EU(MOEA, 2005). In addition, the RoHS Service Group, coordinated by the IndustrialDevelopment Bureau of Ministry of Economic Affairs (MOEA), is formed to providediagnostic and guidance services, as well as technological consultation, education andtraining, and an information service for Taiwanese electrical and electronics companies.

Moreover, the Taiwan Electrical and Electronic Manufacturers Association (TEEMA)have also invited domestic certification and verification organizations, and equipmentsuppliers, large electronics companies, and academic and research institutions to jointhe GP and assist industries in overcoming barriers to green technology. To date, morethan 1,480 companies have received guidance and assistance (MOEA, 2005). Rao (2002)argued that many large Taiwanese companies have adopted CSS systems to enhancetheir international competitiveness, improve product quality, enhance environmentalperformance and reduce production costs. Therefore, an investigation of critical factorsfor GSCM practices in Taiwanese organizations is worthwhile to carry out.

Although a number of authors (Lamming and Hampson, 1996; Lippmann, 1999; US-AEP, 1999; Bowen et al., 2001a; Eveloy et al., 2005; Handfield et al., 2005; Trowbridge,2001; Yuang and Kielkiewicz-Yuang, 2001; Rao, 2002; Evans and Johnson, 2005; Zhuet al., 2005; Wright and Elcock, 2006) have identified various factors for GSCMpractices, no study has yet explored and statistically established the reliability andvalidity of a set of critical factors. Consequently, the main objective of this study is toidentify the common set of critical factors for GSCM that could be used by themanagers in implementing and adopting their own GSCM practices, particularly inelectrical and electronics industries.

Literature reviewCurrently, the lack of consensus regarding the definition for GSCM is not surprising,as GSCM is the conflation of corporate environmental management and supply chainmanagement, both of which are relatively new areas of study and practice (Zhu andSarkis, 2004). Moreover, different studies (Green et al., 1996; Rao, 2002; Zhu and Sarkis,2004) have defined GSCM from different perspectives, driving forces and purposes(Rao, 2002), implying that the definitions for GSCM can be redefined for particularindustries, goals, and properties. In this study, GSCM is defined as the management ofraw materials, parts/components and processes from suppliers to manufacturers tocustomers and product take back with improvement to environmental impacts thoughlifecycle stages.

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A number of critical factors for implementing GSCM practice have been proposed.These strategies are aimed at mitigating the risks associated with supply chaininterruptions or delays, and protecting a company’s reputation and brand image fromdamaging public controversies. Critical factors for GSCM practices have been identifiedby various authors; they are briefly outlined below and summarized as Table I.

Suppliers meetingTo ensure that suppliers simultaneously can comply with the environmentalrequirements with their buyers, a supplier meeting is regarded as an effective toolfor addressing environmental issues and communicating expectations and sharinginformation with suppliers (Lippmann, 1999). At the AMD Corporation, quarterlymeetings with major suppliers have regularly been conducted to address supply andquality issues as well as to provide them with feedback on how AMD perceives theirperformance (Trowbridge, 2001).

Suppliers environmental questionnaireLippmann (1999) argued that questionnaires are probably the most common tools usedwithin the field of GSCM, largely because they are relatively inexpensive and simple toprepare (although they may be extremely resource intensive for suppliers to completeaccurately). Generally, a questionnaire survey was delivered to suppliers. The purposeof which was to help them conduct a self-assessment in advance, thus ensuring theyunderstand the environmentally conscious capabilities that meet environmentalregulations. In addition, the required information can be effectively acquired inadvance, hence saving time and resources. Furthermore, questionnaires can assistcompanies in identifying suppliers that require the most attention for high-riskcomponents. In addition, they help in identifying those that may require education andsupervision to ensure that they can deliver RoHS-compliant components (Handfieldet al., 2005).

Environmental auditing for suppliersThe integration of auditing into supplier management in GSCM can ensure that thesuppliers practice green manufacturing. It has been pointed out by Handfield et al.(2005) that GSCM involves the introduction and integration of environmental issues aswell as concerns into supply chain management processes by auditing suppliers usingenvironmental performance metrics. Additionally, Yuang and Kielkiewicz-Yuang(2001) also pointed out that supplier performances can be enhanced through on-sitethird-party auditing. Some suppliers may be reluctant to subject themselves to anaudit. Consequently, some firms have adopted a collaborative tone for these audits,presenting them as opportunity for joint learning that will strengthen theirrelationships (Lippmann, 1999).

Compliance statementOne of the most significant measures for GSCM practices is to request that suppliersprovide compliance statements. Evans and Johnson (2005) noted that compliancestatements should include a date (or dates) for compliance and outline supplierrequirements, such as methods for verification of compliance (i.e., testingdocumentation). This process can ensure that suppliers guarantee that all thematerials, parts and products manufactured conform to regulations. Likewise, it holdsthem responsible for the liability incurred. Moreover, in consideration of compliance

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Table I.Critical factorsfor GSCMimplementationemphasized byselected authors

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with the requirements of the RoHS directive, Eveloy et al. (2005) suggested that lead-free compliance self-certification should be supported by ‘‘compliance’’ documentationfrom the suppliers.

Product testing reportIn order to confirm their compliance with RoHS, producers of EEE should requestdocumentation from their suppliers for any materials, components, assemblies, orequipment that have been provided to them (Wright and Elcock, 2006). It is evidentthat the testing report of a component is regarded as a crucial document in determiningwhere RoHS-restricted substances exist within its components. Furthermore, Hu et al.(2008) argued that assembly manufacturers in Taiwan are using compliance testingreports as an essential requirement in ensuring that components do not containchemical substances that exceed their allowed limits. Thus, it is able to determine whois responsible when products violate environmental legislation.

Bill of materialAlthough RoHS requires manufacturers to know what substances are prohibited intheir products, it is also important to know what substances and materials are usedin them (Evans and Johnson, 2005). As an example of lead-free compliance self-certification, Eveloy et al. (2005) indicated that the Bill of Materials (BOM) represents asingle product or assembly, or a group of products, which can be used to recognize theRoHS-restricted substances in all materials and components in the final product.

Establishing environmental requirements for purchasing itemsSimilar regulations related to RoHS have spread throughout the world, such as RoHS-Korea, RoHS-China and RoHS-California (AB 48). Hence, this emerging issue has raisedgreat difficulties in managing hazardous substances for green components. Therefore, it isnecessary to formulate requirements for green purchasing as a management approach toensure that products comply with various environmental regulations and consumerrequirements. Environmental standards in purchasing thus provide a basis or constructivedialogue with suppliers involving a joint commitment to quality improvement. In turn, thisshould motivate suppliers to be more concerned with the activity of their own suppliers(Lamming and Hampson, 1996).

Green purchasingThe recent emergence of purchasing as an important participant in the corporatesustainable enterprise debate is the result of the convergence of several developmentsthat have highlighted the purchasing role in effective environmental management(Handfield et al., 2002). By incorporating the green principle into purchasing,companies can provide design specifications to suppliers that include environmentalrequirements for green purchased items. Moreover, this would assist them in decidingwhich suppliers to collaborate with for materials, equipment, parts, and services thatsupport environmental goals (Lamming and Hampson, 1996; Zsidisin and Hendrick,1998). The AMD Corporation can purchase a new chemical, whether for production orR&D, by taking a careful look at the EH&S personnel review available informationcontained in the material safety data sheet and supplemental information from thechemical user and supplier (Trowbridge, 2001).

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Collaborative R&D with suppliersWhile the capability of R&D is decided by suppliers, Lamming and Hampson (1996)argued that suppliers may be able to help customers understand environmental effectsand their causes in the supply chain if a collaborative approach is employed inpurchasing. For example, Philips Corporation works on eco-design initiatives with itskey suppliers, including developing common roadmaps for improving environmentalperformance and working together with its suppliers to attain the goals they have set(Yuang and Kielkiewicz-Yuang, 2001). Involving suppliers in the design process cangenerate significant environmental and business benefit. In the end, it can developmore environmentally friendly products in accordance with the requirements ofenvironmental regulations (Lippmann, 1999).

Information systemAn effective management of green supply chain involves the collection andincorporation of relevant information on each department within a company. Thiswould include information on products and components, and reports and documentsprovided by suppliers (Hsu and Hu, 2008). Companies must establish a database forinformation received from suppliers so that they can use it to determine compliancewith environmental regulations (Evans and Johnson, 2005). On its own initiative, AMDCorporation is currently implementing an enterprise resource planning system thatwill help centralize procurement information worldwide and ensure the closemonitoring of all suppliers in high-risk business areas (Trowbridge, 2001).

Joining local recycling organizationsThe EU’s WEEE Directive, which came into force in August of 2004, requiresmanufacturers and importers in EU states to take back their products from consumersand ensure environmentally sound disposal (Widmer et al., 2005). Consequently,companies may decide either to undertake the recovery of used products on their own,or to establish cooperation via local or more extended networks for the collection andrecycling of similar products (Tsoulfas and Pappis, 2006). Considering the complex andvarying recycling systems from different members of the EU, Acer Corporationdecided to join several recycling systems in Europe, including the Swiss Associationfor Information, Communications and Organization Technology (SWICO) inSwitzerland, the E1-Kretse in Sweden, the El-Retur in Norway, Recupel in Belgium,Information & Communications Technology (ICT) Producer Cooperative in Finland,ICT Milieu in Netherlands and Ecotrel in Luxemburg (Acer, 2006).

Collaboration on products recycling with the same sector industryThe WEEE directive encourages a set of criteria for collection, treatment and recoveryof waste electrical and electronic equipment and makes producers responsible forfinancing these activities (WEEE, 2003). IBM and Dell Computer Corporations haveembraced reverse logistics by taking steps to streamline the way they deploy oldsystems. In the process, they make it easier for customers to refurbish existingcomputers or buy new parts (Ferguson, 2000). The Global Asset Recovery Servicesorganization of IBM’s Global Financing Division has integrated some of the keycomponents of its reverse logistics network to support and enhance environmentalperformance (Grenchus et al., 2001). Moreover, reverse logistics program can bring costbenefits to the companies by emphasizing resource reduction, adding value from therecovery of products or by reducing the disposal costs (Ravi et al., 2005).

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Produce disassembly manualsProducers are required to educate consumers about the recycling and recovery optionsavailable to them, and explain that they must not dispose of WEEE together with theirgeneral trash (Wright and Elcock, 2006). To facilitate an end-of-life disassembly,product disassembly manuals need to be carried out as a reference for disassemblyworkers to implement the non-destructive detachment of components or modules andacquire the recovery of original functionality in order to contribute to environmentalbenefit.

Green designProbably the strongest testament to the greening of the international market is theexpanding number of companies seriously addressing environmental aspects as part oftheir product development process (Lewis et al., 2001). By incorporating the green issueinto new product development, the green design has increasingly considered as asystematic method for companies to reduce the environmental impact of their productsand processes while simultaneously cutting costs and increasing product marketability(Brezet and Hemel, 1997; National Research Council Canada, 2003). Xerox designers,for instance, choose a minimal number of materials from the Xerox materialenvironmental index to simplify the eventual segregation of materials and to avoid theuse of hazardous materials (Tsoulfas and Pappis, 2006).

Environmental education and trainingInitially, companies encounter challenges when implementing green initiatives relatedto GSCM practices. As such, practices are generally very complex, and most employeesare not aware of green principles. Various education and training in green issues needto be launched for promoting the environmental awareness of their staff and suppliers.As pointed out by Lippmann (1999), a wide range of training can enhance the suppliers’own environmental management capabilities. Moreover, enterprise provides educationon quality, environmental performance and other aspects simultaneously. As a result,this can greatly improve their staff’s environmental awareness (Zhu and Geng, 2001).Furthermore, in the educational training needed to understand lead-free products,there is a need to cover a host of topics ranging from lead-free legislation,implementation, material and part election, design, manufacturing, to lead-freereliability (Eveloy et al., 2005).

Top management supportMany supply chain management and environmental professionals in leading companiesnoted that the understanding of the top management of the value and support for theirefforts made a critical difference to the success of their GSCM programs (Lippmann,1999). To comply with the RoHS directive, Evans and Johnson (2005) pointed out thatsenior management must support this initial exposure assessment and someone withinthe company must take responsibility for directing the effort. Also, Handfield et al.(2005) argued that top management at the company should recognize the importance ofenvironmental issues in the supply chain.

Environmental policy for GSCMYuang and Kielkiewicz-Yuang (2001) indicated that in order to deliver and raise theawareness of environmental issues among suppliers, customers and staff, the organizationneeds to draw up the environmental policy for GSCM to its customers/suppliers.

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In view of this, the company can facilitate GSCM practices by establishing anenvironmental policy for its suppliers as a manifestation of its position regarding greenpurchasing, green design, and supplier auditing, among others.

Cross-function integrationThe broad scope of GSCM leads to some complexity and difficulty in its implementation.Therefore, a cross-functional team of representative personnel should be integrated toachieve optimal synergy. Yuang and Kielkiewicz-Yuang (2001) argued that the cross-functional teams should consist of sales, environmental personnel, purchasing personnel,and personnel from other relevant departments, all of which can be found inorganizations with the most advanced strategies for sharing sustainability-orientedinformation. Moreover, the most successful GSCM systems incorporate environmentalissues with their firm’s existing supply chain management strategies applied throughoutthe design, procurement and distribution processes (Lippmann, 1999).

Manpower involvementBy incorporating a corporate-wide compliance team into GSCM practices, Evans andJohnson (2005) pointed out that the RoHS directive requirements are complex and theirimpacts are far-reaching. Thus they affect product design, manufacturing, distribution,procurement and sale. There are some manpower issues involved in theimplementation of GSCM because the staff of various departments must takeresponsibility for individual impact and requirement of environmental regulations.

Effective communication platform within companies and with suppliersIn order to facilitate GSCM practices, it is essential to establish an effective communicationplatform between companies and suppliers. Lippmann (1999) pointed out that companiesshould provide clear, consistent and frequent communication about environmental issueswith their suppliers and other partners in the green supply chain. To do so, suppliersmust understand how to carry out the green initiatives of GSCM in accordance with therequirements of clients. In addition, companies need to communicate their environmentalgoals within their hierarchy. Likewise, it must ensure that the people throughout theorganization understand how these goals relate to their individual functions. This isnecessary because the GSCM involves various and complex issues. Hence, an internalcommunication platform is needed not only to raise the awareness of their employees onGSCM but also to eliminate the barriers in the successful implementation of the GSCM.

Establish an environmental risk management system for GSCMConsidering the risk management of GSCM related with the issue of hazardoussubstances, Evans and Johnson (2005) indicated that product-specific assessments arenecessary to identify the components at the greatest risk for compliance and the keysuppliers of those components. Their study suggested that a risk-based supply chaincompliance program should combine components risk with the suppliers risk indetermining the situation of risk along the green supply chain. As further pointed outby Hu et al. (2008), a novel risk assessment framework of green components tohazardous substances has been developed. This framework can systematically detecthigh-risk green components as an insight for incoming quality control staff to improvethe efficiency of inspection for hundreds and thousands of green components.

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Supplier evaluation and selectionGiven that a firm’s environmental sustainability and ecological performance can bedemonstrated by its suppliers (Godfrey, 1998), supplier selection in GSCM is clearly acritical activity in purchasing management (Rao, 2002; Lamming and Hampson, 1996;Yuang and Kielkiewicz-Yuang, 2001). If appropriate consideration within supplierselection is not accomplished with environmental regulations, a company may be atrisk and lead to a disrupted supply chain (Hsu and Hu, 2009). An example of this maybe taken from the experience of Sony Corporation in 2001, when more than 1.3 millionboxes of PlayStation2 game systems were blocked by the Dutch government because itexceeded the allowed amount of the toxic element cadmium in the cables of the gamecontrols. This caused losses exceeding $130 million, while indirectly leading to the re-inspection of over 6,000 factories and the establishment of a new supplier managementsystem (Esty and Winston, 2006). Apparently, large electronics firms have exertedpressure on their suppliers not only to achieve better environmental performance (Zhuet al., 2005) but also to implement a supplier rating system to recognize the high risksupplier.

Tracking the development of directivesSimilar regulations have spread throughout the world, and the emerging issue of thegreen product seems to have been picked up rapidly in Asia. This is particularly truein countries such as Japan, Taiwan and Korea, which are forerunners in terms ofgreen electronic products (Boysere and Beard, 2006). Companies need to track thedevelopment of environmental regulations with respect to the emerging hazardoussubstances. This is necessary because the restricted substances and exemption annexof RoHS directive are continuously being updated. Otherwise, without a systematicmechanism for collecting the information of environmental regulations related tohazardous substances, enterprises cannot avert the risk while their green productsexceed the allowed amount of chemicals.

Applying LCA to carry out eco-reportIn 2003, the Energy-using Products (EuP) directive emerged as the first EuropeanCommission directive with a focus on green design. Its aim is to reduce overallenvironmental impact by pinpointing the products related to energy use (Hansen et al.,2005). Grote et al. (2007) pointed out that the ‘‘life cycle assessment’’ (LCA) principle isthe basis for the EuP directive. This is sometimes referred to as the ‘‘cradle to grave’’approach. Moreover, Yung et al. (2008) indicated that the EuP directive is directlylinked to LCA with respect to the ‘‘whole life cycle’’ concept. As mentioned above, LCAis an appropriate tool that could be employed for facilitating the analysis ofenvironmental impacts. This is needed in order to construct the eco-profile of productsin their compliance with the EuP directive.

Establish an environmental database of productsIn considering the RoHS compliance related to hazardous substances for a substantialnumber of green components, Evans and Johnson (2005) suggested that a companymust establish a database for information received from suppliers. The EuP directiverequires manufacturers to integrate eco-design considerations into the product designstage and establish eco-profiles for products via a lifecycle approach. This employs anapproach wherein the highest priority is the inventory of environmental data forproducts throughout their lifecycles as a foundation for generating eco-profiles. It is

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essential, therefore, to launch an environmental database of products in order toacquire systematically huge data for implementing the analysis of the environmentalimpact of green products.

MethodologyDevelopment of the survey instrumentThis study focused on sampling the perceptions and experience of GSCM-basedcompanies in the Taiwanese electrical and electronics industries. Based on theliterature review (Lamming and Hampson, 1996; Lippmann, 1999; US-AEP, 1999;Bowen et al., 2001a; Eveloy et al., 2005; Handfield et al., 2005; Trowbridge, 2001; Yuangand Kielkiewicz-Yuang, 2001; Rao, 2002; Evans and Johnson, 2005; Zhu et al., 2005;Wright and Elcock, 2006), authors’ consultation experience and interviews with threemanagers responsible for GSCM, 25 elements were identified and used as the basisfor questionnaire development. An in-depth discussion with the semi-structuredinterviews was conducted with three senior quality assurance and product assurancerepresentatives to establish the tentative list of critical factors for supportingquestionnaire development. Both of them were selected as the demonstrated firms ofGSCM implementation for the G-Plan Program in Taiwan for having abundantexperience in GSCM. The reason for interviewing personnel from the quality andproduct assurance departments is that GSCM is usually considered to control thehazardous substances within products and currently most quality assurance andproduct assurance personnel are responsible for it in Taiwan.

The questionnaire designed in this study mainly comprised two parts: companyprofile and critical factors of GSCM. The first part was designed to provide fundamentaland background information, including firm size and industry type; meanwhile, thesecond part focused on analysis of the critical factors for GSCM implementation.Respondents were asked to rate each item under a five-point Likert-type scale (e.g.1 ¼ not at all important, 2 ¼ not important, 3 ¼ moderate, 4 ¼ important,5 ¼ extremely important), to indicate the extent to which each item was practiced intheir respective organization.

Data collectionData collection covered distributing questionnaires to various companies involved inelectrical and electronics manufacturers, which include semiconductors, optoelectronics,communication and networks, household appliances, and electronics and computers. Alltarget respondents were selected from among the members of the TEEMA, the greatestassociation in Taiwan, which have more than ten thousand members and have a longhistory since 1948. Questionnaires were addressed to the managing directors of thequality assurance or purchasing departments of the target organizations. This was donebecause most of the sample companies may lack GSCM representatives or departments.A mail survey was utilized to gather data in order to facilitate the questionnaire whichwas being sent to a large number of organizations. Because Taiwan is a small inlandher excellent postal system provides a very convenient and prompt service.

A total of 300 questionnaires were mailed out and 87 were returned, of which 84were valid, representing a response rate of 28 percent. Regarding the other studiesrelated to green supply utilized a sample size of similar proportion to this study, Bowenet al. (2001b) used a sample of only 24 firms to conjecture that supply managementcapabilities are jointly developed by a proactive corporate environmental approach anda strategic purchasing and supply process. In addition, Rao (2002) produced significant

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finding of green supply with a sample only 52 firm. More recently, Simpson et al. (2007)also used a sample of 56 usable surveys to explore the moderating impact ofrelationship conditions existing between a customer and its suppliers in greeningsupply chain. This implies that the sample proportion of response rate of this study isacceptable, and it reflects the virtue of novel issue of GSCM practice. Collected datawere analyzed using statistical software – SPSS Version 10.0, and both factor analysisand reliability testing were carried out to identify the critical factors for GSCM practice.

Data analysis and resultsProfile of respondentsTable II lists the distribution of respondents in terms of their sectors and company size.The highest percentage of respondents is from computer industries (37.0 percent),followed by electronics and household appliances (26.2 percent), communicationand networks (19.0 percent), and semiconductors and optoelectronics industry (17.8percent). Regarding the size of the respondents, it ranged from under 500 to over 2,500employees which found that respondent’s enterprises are mainly from less than 500 tomore than 2,500 as shown in Table II.

Identification of critical factors using factor analysisThe authors utilized factor analysis to extract factors based upon the principalcomponents analysis with varimax rotation. Bartlett’s test of sphericity and the Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy were employed to test theappropriateness of the data for factor analysis (Kaiser, 1974; Bagozzi and Yi, 1998). Thetest results of KMO show that the compared value is 0.863, significantly exceeding thesuggested minimum standard of 0.5 required for conducting factor analysis (Hair et al.,1995). Based on the above tests, it is evident that all factors are suitable for applyingfactor analysis. The authors performed factor analysis to extract factors in accordancewith the eigenvalues of discontinuity greater than 1 (Tabachnick and Fidell, 1989); andfactor loading exceeding 0.6 was principle in choosing factors (Kline, 1997). The fivevariables were eliminated because their factor loadings were less than 0.06. Theremaining 20 items, therefore, were re-analyzed and extracted into four dimensions,which denominated supplier management, product recycling, organization involvementand life cycle management (see Table III).

Table II.Distribution of surveyrespondent enterprises

Profile of respondents Frequency Percentage

SectorSemiconductors and optoelectronics 15 17.8Electronics and household appliances 22 26.2Communication and networks 16 19.0Computers 31 37.0Total 84 100

Size (employees)>2,500 24 28.61,000-2,500 14 16.7500-1,000 17 20.2<500 29 34.5

Total 84 100

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Table III.Factor analysis results

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vir

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712

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9289

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722

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0.82

84.

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du

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842

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0.61

96.

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0

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ing

loca

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org

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886

2.60

560

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0.83

382.

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0.93

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0.61

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1.32

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0.93

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750

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dw

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0.67

77.

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727

8.S

up

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0.63

9

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1.03

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0.91

562.

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0.82

9

Factors forimplementing

GSCM

599

Reliability and validity analysisReliability concerns the extent to which an experience, test or any measuring procedureyields the same results on repeated trials (Carmines and Zeller, 1979). The reliability of thefactors needs to be determined to support any measures of validity that may be employed(Nunnally, 1978). Both reliability tests and item analysis were recalculated without thosefive items. Table III lists the new Cronbach’s alpha values, ranging from 0.8338 to 0.9367,after the five items were dropped. Generally, Cronbach’s alpha value exceeding 0.7 isconsidered to have high internal consistency of scale (Nunnally, 1978). All the Cronbach’salpha values in our study are greater than 0.7, revealing the high internal consistency.

Content validity depends on how well the researchers create measurement items tocover the content domain of the variable being measured (Nunnally, 1967). The contentvalidity of the questionnaire in this work is based on an exhaustive literature reviewand detailed evaluations by three senior quality assurance and product assurancepractitioners. Consequently, we are confident that the critical factors constructed bythe factor analysis have content validity. Criterion-relation validity, sometimes calledpredictive validity or external validity, is concerned with the extent to which ameasuring instrument is related to an independent measure of the relevant criterion(Badri et al., 1995). No criterions were designed to explore the correlation with theperformance for GSCM. The results of this study may provide a better understandingand help identify the opportunities of GSCM implementation.

Summary of empirical findingsThe various approaches of GSCM practices proposed by different authors wereextracted into four dimensions and 20 critical factors of GSCM by factor analysis, andstatistical tests showed that four dimensions were all valid as shown in Table IV.

Level of critical factors of GSCM practiceTable IV shows the rated levels of GSCM practice for each of the critical factors forGSCM in the Taiwanese electrical and electronics industries. It is observational fromanalysis results of this investigation as shown in Table IV, the mean of all criticalfactors in the dimension of supplier management and organization involvement almostare over 4.0 (important). The only factor whose mean (3.9459) falls somewhat belowimportant (4.0) is the factor of BOM. Most factors may be seen that importance are verystrong that Taiwanese electrical and electronics enterprises are quite aware of thosepractices for implementing GSCM as to complying with the environmental regulationsof EU. Some items of critical factors for GSCM practices show much higher ratings.Those items include the following:

. top management support;

. compliance statement;

. product testing report;

. green purchasing;

. environmental auditing for suppliers;

. establishing environmental requirements for purchasing items; and

. supplier evaluation and selection.

The analytical results demonstrate that top management support is the mostimportant item for the successful implementation of GSCM practice in the Taiwanese

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electrical and electronics industries. Numerous environmental professionals of supplychain management at leading companies noted that top management’s understandingof the value of, and support for, their company efforts was crucial to the success ofGSCM programs (Lippmann, 1999). Trowbridge (2001) also pointed out that uppermanagement can strongly support GSCM and risk management as internal drives tostrengthen cooperative mechanisms among various units. Because of GSCM practicesinvolve a broad scope and wide-ranging tasks, which lead to complexity and difficultyfor operation. In addition, Walton et al. (1998) suggested that purchasing managersmust proactively influence supplier process, since liability for non-compliance toenvironmental regulations extends to all supply chain management. Consequently, top-level managers have a better understanding of the needs of supply chain managementbecause they are the most cognizant of firm strategic imperative to remain competitivein the market place (Hahn et al., 1990).

The results also indicated that both product testing reports and compliancestatements are equally important for enterprises to ensure that supplier providedproducts are environmentally friendly. Currently, wide-ranging approaches to suppliermanagement for OEM/ODM companies in Taiwan embrace testing report and

Table IV.Level of practiceof GSCM

Factors of GSCM Mean Standard deviation Rank

Dimension 1 – Supplier management1. Environmental auditing for suppliers 4.3919 0.7731 52. Supplier environmental questionnaire 4.1892 0.8387 113. Compliance statement 4.4189 0.8110 24. Product testing report 4.4189 0.7586 25. BOM 3.9459 0.7919 156. Establishing environmental requirements for

purchasing items 4.3784 0.7531 67. Green purchasing 4.4054 0.7387 4

Dimension 2 – Product recycling1. Joining local recycling organization 3.7297 0.9972 192. Collaboration on products recycling with the same

industry sector 3.5405 1.0878 203. Produce disassembly manual 3.9459 0.9636 15

Dimension 3 – Organization involvement1. Green design 4.2703 0.7271 102. Top management support 4.4730 0.6869 13. Environmental policy for GSCM 4.2838 0.7123 84. Cross-function integration 4.2838 0.8362 85. Manpower involvement 4.0676 0.7645 136. Effective communication platform within companies

and with suppliers 4.1370 0.7873 127. Establish a environmental risk management system

for GSCM 4.0548 0.7244 148. Supplier evaluation and selection 4.3014 0.7009 7

Dimension 4 – Life cycle management1. Applying LCA to carry out eco-report 3.8378 0.9367 182. Establish an environmental database of products 3.9459 0.9916 15

Notes: e.g. 1 ¼ not at all important, 2 ¼ not important, 3 ¼ moderate, 4 ¼ important, 5 ¼ extremelyimportant

Factors forimplementing

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compliance statement as requirements essential to assuring that products do notcontain hazardous substances, as those approaches can recognize the responsibilitywhen products violate environmental legislation. Eveloy et al. (2005) argued that firmstrategy (or legal policies) to comply with the RoHS Directive should be established anddocumented as a position statement that can be distributed to customers and suppliers.Additionally, customers frequently require suppliers to provide a compliance statementof self-certification to promise that their products conform to EU regulations regardingproduct characteristics. This action can enable firms to ensure that all the materials,parts and products manufactured for consumers will completely fulfill the RoHSdirective and will also be held to compensate for any accidental event occurred.

Purchasing has been considered recently as an important participant in creatinga sustainable enterprise for their role in contributing effective environmentalmanagement practices (Handfield et al., 2002). In GSCM practice, purchasing wasinvolved in the activities of reduction, recycling, reuse and materials substitution,which are all necessary to lead and facilitate the GSCM implementation. The resultsof this investigation show that practicing green purchasing and establishingenvironmental requirements for purchasing items can ensure product environmentalquality. Both of them can enable firms to provide design specifications to suppliersthat include environmental requirements for purchased items, and can collaboratewith suppliers to provide materials, equipment, parts and services that supportenvironmental goals (Lamming and Hampson, 1996; Zsidisin and Hendrick, 1998).

There is an increasing attention for companies recently to integrate environmentalissues into supplier selection and evaluation while adopting GSCM (Handfield et al., 2002;Humphreys et al., 2003; Rao, 2005; Koplin et al., 2007); that is because the environmentalperformance and sustainability of a company depends on their suppliers. This approachcan ensure that supplier processes do not contravene the purchasing firm’s environmentalposture (Zsidisin and Siferd, 2001). In addition, GSCM involves introducing andintegrating environmental issues and concerns into supply chain management byauditing and assessing suppliers on environmental performance metrics (Handfield et al.,2005). Taiwanese manufacturers commonly utilize supplier auditing to recognize andinspect the situation for their suppliers to see whether they have implemented GSCMpractices regularly. The focus of supplier auditing encompasses extensively environmentalpolicy compliance with regulations, environmental management plans, environmentalcommunication, green design, operational management, environmental monitoring, andhazardous substances.

Regarding the dimensions of product recycling and life cycle management, allfactors seem to be considered as the slight important aspects with the means of lessthan 4.0. Table IV shows that some of the items of GSCM have relatively low practiceratings as follows:

. collaboration on products recycling with the same sector industry;

. joining local recycling organizations;

. applying LCA to conduct eco-reports;

. BOM;

. produce disassembly manuals; and

. establish an environmental database of products.The above results show that Taiwanese enterprises lack awareness of carrying outproduct recycling initiatives, which is related to the disposal stage. This is mainly

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because Extended Producer Responsibility concept is relatively new for Taiwaneseelectrical and electronics industries. Most manufacturers have not embraced thisconcept until the EU WEEE Directive came into force in the August of 2004, makingenterprises responsible for taking back their products from consumers and ensuringtheir environmentally friendly disposal in EU countries. In addition, most Taiwanesemanufacturers are ODM, OEM or electrical manufacturing services (EMSs), they willnot be directly impacted by the WEEE directive, for the take-back and environmentallyfriendly obligation of disposal for the WEEE directive are focused mainly on theordnance bench mark (OBM) enterprises. This is also the same reason that ‘‘producedisassembly manuals’’ received a low rating. Moreover, it is observed from theTaiwanese OBM companies that they preferred ‘‘joining local recycling organization’’for recycling electronic waste. Because ‘‘collaboration on products recycling withinthe same industry sector’’ needs to consider a lot of aspects, including the volume ofproduct recycling, economic effects, risk, capital and manpower investment, anddifference of recycling laws in each EU country.

The dimension of life cycle management is not as strong as important, it is notsurprising because the initial development of requirements of EuP directive areunclear so that enterprises rated slight importance for adopting LCA technique andestablishing database of green products. LCA has been extensively applied to greenproduct design to explore the environmental characteristics of products. Neither theapplications of the LCA technique nor the establishment of an environmental databaseof products are critical for the Taiwanese electrical and electronics industries.Taiwanese manufacturers have minimal experience using LCA software due to thedifficulties encountered when operating software (e.g. Simapro, GaBi) and lacking ofnecessary database in carrying out LCA. Based on authors’ consultation experience,firms need to invest enormous time and money maybe is another reason for Taiwanesecompanies reluctant to apply this technique. Although the EuP directive does requestcompanies to provide ecological profiles for products, it has not had clear anddefinitive standards regarding the criteria of eco-design. Hence, the attitude ofTaiwanese manufacturers at this moment is to wait and see LCA becoming one of thecandidate tools to comply with the EuP directive.

Comparative analysis of empirical findingsCompared to previous studies for GSCM practice, this empirical investigation is thefirst one to study the green initiatives of GSCM in electronics industry. Specifically,its emphasis is on the compliance with the EU WEEE, RoHS and EuP directives.Moreover, it is examined from the experiences of Taiwan, an important OEM or ODM-based country for global ICT market. Although various investigations have proposeddifferent approaches for implementing GSCM (Lamming and Hampson, 1996;Lippmann, 1999; US-AEP, 1999; Bowen et al., 2001a; Eveloy et al., 2005; Handfield et al.,2005; Trowbridge, 2001; Yuang and Kielkiewicz-Yuang, 2001; Rao, 2002; Evans andJohnson, 2005; Zhu et al., 2005; Wright and Elcock, 2006), there have been far lessresearch in identifying the consistency critical factors of GSCM implementation forresponding to the EU directives, particularly for electronics industry. Most of theavailable studies focus mainly on the experience of case study or over review of GSCMpractice (Lamming and Hampson, 1996; Lippmann, 1999; Yuang and Kielkiewicz-Yuang,2001; Evans and Johnson, 2005). On the other hand, for those studies which conductedstatistical analysis on GSCM, they did not focus on the electronics industry (Zhu et al.,2005).

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The empirical findings of this study show that the dimensions of suppliermanagement and organization involvement have been identified as important. Thesefindings are similar to those in the earlier literature (Lippmann, 1999; Yuang andKielkiewicz-Yuang, 2001; Handfield et al., 2002; Humphreys et al., 2003; Evans andJohnson, 2005; Rao, 2005). Evidently, green initiatives related to supplier managementand organization involvement are essential and applicable for conducting GSCM practicesregardless of the difference of the environmental legislative and industrial property.

Considering the environmental regulations for WEEE and EuP directives inimplementing GSCM practices, both of the dimensions of product recycling and lifecycle management are identified as differences to previous studies associated withGSCM practices. This is because the requirements of WEEE and EuP directives focusmainly on the electronics industry. Moreover, studies related to GSCM practices inelectronics industry for exploring the approaches in response to WEEE and RoHSdirectives have never found in previous literature.

With respect to the dimension of product recycling, however, this study found it wasslightly important for implementing GSCM practices. Likewise, this result is differentfrom the findings of Zsidisin and Hendrick (1998). Their study found that in the USAand Germany, enterprises highlight investment recovery as the most importantpractice for green purchasing. Zhu et al. (2005) pointed out recently that investmentrecovery in China has received much less attention due to Chinese waste managementpolicies and the insufficiency of recycling systems. Although our result is similar to thestudy by Zhu et al. (2005), the causes are different. Most firms in Taiwan employ OEM,ODM and EMS, but the direct influence and significant impact of WEEE directive tothe enterprises is mainly on the OBMs. Considering the WEEE-compliance in the EUarea, our interview with industrial experts indicated that Taiwanese enterprisesembrace the priority approach to merge the local recycling systems. There are somedifficulties in the collaboration of product recycling of companies in the same sector.This is due to the varying volume of recycling products and recycling systems in eachmember-state in the EU. The enormous volumes of products recycling are sufficient tocreate market value and economic benefit. On the other hand, the examples of IBM andDell Computer Corporations show that they have embraced reverse logistics by takingsteps to streamline the way they deploy old systems. In the process, it became easierfor the customers to refurbish existing computers or buy new parts (Ferguson, 2000).

Conclusions and future research directionsAs growing numbers of business functions and operations are outsourced, andservices, components, sub-assemblies and even whole products are purchased fromoutside, organizations are increasingly relying on their supply networks to competesuccessfully in the global marketplace (Yuang and Kielkiewicz-Yuang, 2001). Untilrecently, supply chain management practices of enterprises that consideredenvironmental factors as either threats or opportunities were still limited to conformto environmental regulations. However, WEEE, RoHS and EuP directives, andparticularly the RoHS, not only directly impact the electrical and electronics productsTaiwanese exports to Europe, but also strongly influence the distribution of supplychain partners for multinational enterprises. As a result, uncertainties in currentregulations have resulted in difficulties implementing GSCM practices. Consequently,enterprises cannot ensure their current management approaches are working or havingrisks and whether they can continue to maintain sustainable operations and advantagein the future.

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This study aims to explore and analyze the critical factors of GSCM practiceimplemented in Taiwanese electronic and electrical industries. The main contributionof this study is to recognize the critical factors of GSCM implementation in electronicsindustry from a regulation perspective, which can assist enterprises in mitigating risk,reducing cost and adopting strategies in response to customer and legislative needs. Inaddition, identification of the critical factors of GSCM permits managers to obtain abetter understanding of GSCM practices and follow academic researchers to proceedwith the task of developing and testing theories of GSCM. The instrument developedin this study enables decision makers to assess the perception of GSCM in theirorganization. Additionally, the critical factors of GSCM practice in this study can helpother enterprises to identify those areas of GSCM that require acceptance andimprovements, and in prioritizing GSCM efforts.

Empirical results presented in this study show that the critical factors identified inthis study are reliable and valid for GSCM practice. The systematic and comprehensiveliterature review that conducted by different authors (Lamming and Hampson, 1996;Lippmann, 1999; US-AEP, 1999; Bowen et al., 2001a; Eveloy et al., 2005; Handfield et al.,2005; Trowbridge, 2001; Yuang and Kielkiewicz-Yuang, 2001; Rao, 2002; Evans andJohnson, 2005; Zhu et al., 2005; Wright and Elcock, 2006) helped ensure the contentvalidity of the measures. The obtained validity coefficient (alpha) of the measures rangedfrom 0.8338 to 0.9307. This measurement result demonstrated that all of the Cronbach’s� value in our scales are greater than 0.7 and reveals the high internal consistency.

To date, GSCM remains a new management paradigm that lacks sound andcomprehensive theory for companies, especially in electronic and electrical industriesdue to the uncertainty of regulations. As a result, the current results of analysis forimplementing GSCM would be transferred to accompany changes of regulations inthe future; further studies should continue exploring GSCM practice for acquiringcompetitive advantage. In order to obtain a better and more comprehensiveunderstanding of GSCM practices, it is suggested to increase the number ofparticipating firms and compare with different countries, particularly in China, formany manufacturers have shifted their factories from Taiwan to China. It is alsoworthwhile to explore the differences of the implementing approaches for GSCMbetween the firm’s home-country and host-country.

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About the authorsAllen H. Hu received his PhD degree in Environmental Engineering from the University ofConnecticut in 1996. After graduation, he went back to Taiwan and worked for IndustrialTechnology Research Institute (ITRI) for three years. In 1999, he changed his career to academiaand stayed with Nanhua University for four years. He joined the Institute of EnvironmentalEngineering and Management, National Taipei University of Technology as an AssociateProfessor in 2003. His research interests are all related to corporate environmental management,including strategic environmental management, environmental disclosure and reporting, greensupply chain management, life cycle assessment, and corporate social responsibility. Allen H. Huis the corresponding author and can be contacted at: allenhu@ntut.edu.tw

Chia-Wei Hsu is a PhD Candidate of the Institute of Engineering Technology, National TaipeiUniversity of Technology. He received his BS of Environmental Engineering and MS ofEnvironmental Management from Da-Yeh University and Nanhua University in 2002 and 2004,respectively. His research interests include corporate environmental management, green supplychain management, design for environment, and corporate social responsibility.

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