SUSTAINABLE SUPPLY CHAIN MANAGEMENT PRACTICES AND THEIR MEDIATION EFFECT ON THE TEXTILE INDUSTRY

 Abstract

The Green supply chain management concept was not introduced to give a unique economic model, but it was born out of necessity. Nowadays, the hype of sustainable development is integrated and introduced into the management and production sector via the concept of GSCM (Green Supply Chain Management).  These decisions are made rapidly in the process of implementation to conserve our environment, which is the playing ground of all of our operations, activities, the process of distribution, and production. The traditional concept of supply chain management is to integrate and plan the network activities of procuring the material, machining them to attain the finished products, and then finally distributing them via the channel to end consumers. GSCM (Green supply chain Management) enables companies or corporations to plan their operations in a way to makes their procurement, manufacturing, and then distribution entirely sustainable. It is commonly called green procurement, green manufacturing, and green distribution. The Domain of Green supply chain management does not end with distribution but also the end waste must be environmentally friendly and biodegradable (Khan, 2018).

This study is carried out considering the NISHAT group of industries, one of the biggest and leading industrial chains in Pakistan. It specifically targeted the two main industries of NISHAT; Cement and Textile industry. In a country like Pakistan, where businesses are struggling to survive, the cement and textile industries are blooming exponentially contributing a lot to the country’s GDP and its revenues. The research endeavored to analyze the mediation effect of GSCM (Green Supply Chain Management) on the NISHAT group of industries. It also aims to evaluate the relationship between the green vendor (supplier), green innovation, green operation, environmental effects, the company’s performance, and the competitive advantage it attains due to shifting its operations to a green strategy. How the Green supply chain management is affecting the economic performance of the company. The study took into consideration the GSCM strategies employed by the company to leverage its operational competency and identify the problems faced by NISHAT in implementing the GSCM system.

The literature discloses that the GSCM is practiced widely nationally and internationally by companies to achieve their desired outcomes. The research approach used to conduct this paper is qualitative; based on the written data, literature review, and empirical data of the company. The framework of this research design includes Descriptive research, content analysis, and secondary data collection. The findings of this research revealed that the green agenda-based purchasing, manufacturing, distribution, and overall supply chain management, integration, and responsiveness have a positive impact on GSCM performance in the cement and apparel industry of the NISHAT group in Pakistan. Among these benefits, that are cited by different researchers, including waste reduction, cost reduction, and green material sourcing by substituting the raw materials with green and biodegradable materials. The waste minimization of harmful materials and chemicals is also an important impact of GSCM (KIPYATICH, 2013).

Introduction

The field of operation and production management broadly deals with environmental issues in supply chain management (Mathiyazhagan, 2013). Today’s market is competitive and with the inclination toward the green supply chain management system (GSCM) this field is blooming rapidly because every industry wants to get the first-come benefit. Hence, in the last decade, when environmental problems hit the world's all-time high creating a global level of change in many fields (Cullinane, 2010).  Extreme weather creates havoc by causing a chain reaction of disasters including drastic floods, heat waves in cities, coldness in some cities, increased ocean levels, decrease in water resources. Above all, the temperature of the world is also increasing making it a place, hard to live in. All these challenges are caused by humans directly or indirectly. There are some key reasons behind such challenges and that is deforestation; cutting of wood, and forests, the burning procedures involved in industries, and the synthetic compounds widely used by big companies. These activities contribute to polluting water, air, and soil. According to the report of the United Nations Environment Program, the carbon dioxide level in the mid-18^th century was 270-290 ppm. This rose to 345-350 ppm at the start of the 20^th century. While in the 21^st century, this carbon dioxide rate is expected to double, an alarming condition that will cause a massive disturbance in the environment ( (United Nations Environment Programme, 2010).

As the world is surviving under the shade of a capitalist system so every organization, company, or conglomerate tries to increase its capacity of producing goods not only to meet the market demand but also to top the competition. Hence, comes the Supply Chain management system to save the day. Now, due to current economical and environmental trends, this supply chain management system is evolving into a sustainable supply chain management system to deal with environmental crises.

In a country like Pakistan, which is underdeveloped and surviving on loans, investments and exports are like the oxygen supply to them. Hence, revolutionizing industries to meet the current market trends is a big responsibility for the leading exporters and industrialists. Being a participant of GSCM also helps them to catch the investors. The current study examines the economic model of the NISHAT group a leading textile and cement tycoon of Pakistan under the GSCM, and the mediation effect of the GSCM.

Background of the Research

Green supply chain mismanagement (GSCM) is elaborated as “the process of utilizing eco-friendly inputs and modifying them into outputs that can be re-used and reclaimed at the end of their life cycle hence, creating a sustainable supply chain” (Dube, 2011).

Zhu and Sarkis (2006) defined Green Supply Chain Management as stretched from Green purchasing to the whole supply chain starting from the vendors, or suppliers to the production, to the buyers, and then reversing the logistics which is why it is a closed-loop system (Zhu, 2006).

Chiou et al. (2011) investigated the relationship between green suppliers and green advancement in the industry in Taiwan. He did this by using quantitative methods and by using the “Structural Equation Modeling”. He concluded that the benefits and the competitive advantage get the company is very much dependent upon the green supplier ( (T. Y, 2011)

Arimura et al (2011) conducted a study on japan industry to explore the influence of ISO 14001 on the GSCM, by utilizing the data from the Japanese facility. The study revealed that the EMS and ISO 14001 have both greatly influence the green supply chain management system, and the practices involved. These programs greatly emphasize the facilities to evaluate the environmental performance of its vendors. If they see any gap then ask the supplier to adopt these environmental practices to ensure the success of GSCM (Arimura, 2011). Another study by Zhu et al (Zhu, 2006) revealed that organizations and facilities can create a win-win relationship, by greening their supply chain, with their partners. This can ensure the success of GSCM for an industry or a large company.

Vijay Kumar Sharma et al (2016) investigated the vast range of indicators and sub-indicators to check the performance of GSCM implementation. He also checks the reliability of the GSCM in an industry by these indicators to rank them by using the “analytic hierarchy process analysis”. After a very vast literature review and conducting a series of industry experts, the study has filtered out the 13 indicators of performance and 79 sub-indicators. The quantitative phase was executed by using the standard questionnaire. It was a survey with different ARGO-based companies followed by a phase of qualitative research where the questionnaire (filled) was analyzed (KumarSharma, 2016).

Green supply chain management is the recent enhancement and innovation in the capabilities of traditional Supply chain management. Due to environmental pressure and need, the researchers have increased their interest in it. Practitioners and Industrial see it as an opportunity to increase sustainability in their industrial models and contribute positively to the world.

Fengfei Zhou (2009) studied and analyzed green supply chain management in the context of its implementation in the Textile sector. He finds that green supply chain management is the advanced management model that considers the environmental aspects and influence comprehensively and utilizes the resources efficiently in the whole model of the supply chain. It is the new model for the industrialists that is required in special industrial operations as it has become a problem that urgently needs attention.

Harnfield and Jason (2008) criticize the GSCM by saying that the EMS systems (Environmental Management Systems) are not that progressive and their progress is slow in reducing the harm to the environment, some future researchers negate their claim and said that this field is progressive

A requirement of achieving sustainability by the dint of greener practices has been felt universally because of the increase in ecological and environmental complexity. Pakistan ranked 129^th out of 165 countries, despite having a considerable area and population, in the recent SDG (Sustainable Development Goal) index (RASHID, 2021). Pakistan has given preference to sustainable development to let him join the league of first-world countries or at least the counties that we commonly call upper-middle-class countries. Pakistan was the very first country to accept the agenda of SDG 2030. Hence, a country like Pakistan, which always struggles with its international image, faces bigger pressure of implementing those things, which are distributed by industrialists and big companies (Ministry of Planning Development & Reform, 2022).

The NISHAT is one of the leading industries either in cement or textile. Hence, a need to address behavioral problems like Human resource management and the partner relationship of supply chain management. Hence, the other areas that must be the special focus of concern are closed-loop and open-loop supply chain management, waste management, and logistics management to ensure organizational sustainability (Amol Singh, 2016).

Methodology

The research methodology is the combination of specific procedures and techniques that are aimed at Process, identifying, and analyzing certain information regarding any topic. The research methodology is either qualitative or quantitative. Quantitative includes empirical data and the utilization of mathematical models and scientific equations to conclude a result and find the solution. On the other hand, qualitative research is the market analysis method based on data through open-ended questions, research, surveys, communication, previous literature, and current data analysis (questionpro, n.d.). This research follows some of the very common research methodologies and approaches that are widely used by researchers. The research methodology and approaches used in this research are discussed.

The present research is mainly qualitative but some quantitative methods are also utilized to find the primary model of NISHAT Cement and Textile to analyze the GSC framework It comprises non-numerical data and the process has involved in analyzing, interpreting, and collecting that data

The research started by giving a very brief and comprehensive introduction. Then the common research methodologies and approaches are applied to evaluate and analyze the data. The research approach applied in this research is qualitative, which helps the reader in the in-depth exploration of the organization’s economic, financial and strategic model to achieve its GSC goals. The sample for this study is scholarly and peer-reviewed latest articles. The research design of this study is secondary data from credible sources.

Data Collection

The data for this study will be collected from secondary sources. Peer-reviewed articles and scholarly articles will be selected to analyze the data and achieve the objectives of the study. The article will be selected from 2000-to 2022 period of time.

Data Analysis

Data will be analyzed after collecting the data from credible sources. To achieve the validity and reliability of the study the data will be analyzed several times from every point of view to obtain accurate results.

Aims and objectives

The objectives of this study are

·       To evaluate the relationship between the green vendor (supplier), green innovation, green operation, environmental effects, the company’s performance, and the competitive advantage it attains due to shifting its operations to a green strategy

·       How the Green supply chain management is affecting the economic performance of the company?

Research Question

The questions this research is going to answer are;

·       What is the effect of the Green Supply Chain Management and Environmental performance system in Pakistan’s Industry (NISHAT Cement and Textile industry)?

·       What is the mediation effect of GSCM on the NISHAT textile and cement industry?

Findings

The extensive literature review and quantitative methods suggested that Green Supply Chain Management has a direct impact on the industry’s financial and environmental performance directly. These green practices must cover the entire supply chain system (green purchasing, green manufacturing, green designing, good corporation with the consumer market, green wastage, and green information system), and even the suppliers play a significant role in ensuring this system’s success in a system. Additionally, the pressure of institutions plays a significantly modest nexus of green supply chain practices, financial performance, and environmental performance. Hence, green supply chain management practices can, not only help but also enhance the export performance and environmental approach of the textile and cement industry in Pakistan (M. N. and Siddiqui, 2019). Some factor that has not been given enough importance in GSCM is “Green warehousing”. In the industry like textile and cement, warehousing has a significant impact also. The textile industry in Pakistan can increase its economic performance through green recycling.

Analysis

Despite being a 3^rd, world nation industries in Pakistan were following sustainable development since the 1970s and 1980s. In the late 2000s, firms start taking it seriously and trying to take this sustainable development to a global level. Large companies from the cement sector were the first to adopt CSR and sustainable development to international standards. Lucky cement was the one who consider one of the leading initiators to adopt these practices and got international certification by winning a sustainability reporting award in 2011 (Munir, 2021). The NISHAT being the leading competitor is envisioned to fully equip the company to play a meaningful role in sustainable development to contribute to a green economy in Pakistan. The company is fully equipped to execute a GSCM to ensure a sustainable economy. NISHAT has the most modern and biggest textile industry in Pakistan, and it has the biggest business house in Pakistan overall. A deep view and a clear picture of such a big industry are very helpful in making a clear picture of sustainable development in the country (Nishat Mills Limited, 2014).

Conclusion

It is never too easy to adopt the GSCM practices when you are operating on a global level. The GSCM affects the business managers, policymakers, shareholders, and workers at the same time. How organizations engage in green practices and still say at the top of the competition helps to understand their models and the success of GSCM. In this ever-dynamic business world, the GSCM policies and resource-based theories can affect the whole society. In a country like Pakistan, responsibility for a green economy comes on the shoulders of big companies like NISHAT. They must raise their knowledge, and incorporate green practices in their operation to not only enhance their performance but also safeguard society.

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