Resources, Conservation and Recycling 120 (2017) 75–87

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Resources, Conservation and Recycling

journal homepage: www.elsevier.com/locate/resconrec

Full length article

Modelling green and lean supply chains: An eco-efficiency perspective

Helena Carvalho a , Kannan Govindan b,∗ , Susana G. Azevedo c , Virgílio Cruz-Machado a
a
UNIDEMI-Department of Mechanical and Industrial Engineering, Faculdade de Ciências e Tecnologia da Universidade Nova de Lisboa, Campus
Universitário, 2829-516 Caparica, Portugal
b
Center for Engineering Operations Management, Department of Technology and Innovation, University of Southern Denmark, Campusvej 55, Odense
M-5230, Denmark
c
UNIDEMI and CEFAGE-UBI - Department of Business and Economics, University of Beira Interior, Pólo IV – Edificio Ernesto Cruz, 6200-209 Covilhã,
Portugal

a r t i c l e i n f o a b s t r a c t

Article history: This manuscript proposes a model to support decision making and to help managers identify the best
Received 10 October 2013 set of green and lean supply chain management practices to improve their eco-efficiency. To attain this
Received in revised form 16 April 2016 objective, a mathematical model based on eco-efficiency concepts is suggested to overcome the trade-offs
Accepted 19 September 2016
between lean and green practices. To illustrate the model application, a case study from an automotive
Available online 12 January 2017
supply chain is presented. Some management practices that are instituted for green or lean benefits
have opposite effects on the environmental and economic performance of companies. One of the main
Keywords:
findings of our study is that not all companies belonging to the same supply chain can be absolutely lean
Eco-efficiency
Lean
or green. There should be compromises in the individual companies’ behaviour so the environmental and
Green economic constraints of the supply chain are both satisfied. The proposed model represents a strategic
Supply chain framework to support the design of eco-efficient supply chains.
Linear programming model © 2016 Elsevier B.V. All rights reserved.

1. Introduction Vachon and Klassen (2008) argue that the environmental man-
agement must go beyond the individual company and focus on
Eco-efficiency is recognized as an important tool to evaluate the supply chain perspective. That is, the development of a green
simultaneously the environmental and the economic challenges of supply chain extends the environmental concerns from individual
a company (Guenster et al., 2011; Tseng et al., 2014). Eco-efficiency companies to the whole network of companies involved along the
is called into question when a company excessively consumes product life cycle. However, considering the eco-efficiency perspec-
resources in order to reap economic benefits. The model encour- tive, reducing the environmental externalities of the supply chain is
ages a balance between a company’s environmental and economic not enough; it is necessary to promote value creation and produce
impacts and promotes the idea of creating more with less (Moreira economic value. The goal of efficiency is reached by the elimination
et al., 2010). The successful deployment of eco-efficiency strategies of wastes, the reduction of costs, and the improvement of efficiency
enables a business to reach an appropriate level of sustainabil- through lean supply chain strategies (Qi et al., 2009). Lean sup-
ity and it presents a method by which that company may gain a ply chain strategies focus on improving manufacturing efficiencies,
competitive foothold in the international marketplace (Cagno et al., profitability, and flexibility (Azevedo et al., 2012a).
2012). The influence of lean and green supply chain management
Innovations that improve the environment – called green inno- practices on business performance has been explored in various
vations – help a company to conserve their resources. Companies research studies. (Azevedo et al., 2012a; Carvalho et al., 2010,
who are among the first to establish green innovations will reap 2011). Carvalho et al. (2010) suggest a theoretical model to illus-
several advantages, including the ability to obtain a higher price trate and explore the influence of lean and green practices on the
for their environmentally-sensitive products, an improvement in performance of supply chains; they determine that most supply
their corporate image, the development of new markets, and a chain managers are not concerned with lean and green prac-
competitive edge. tices beyond the operational, economic, and environmental gains
potentially reached. Dües et al. (2013) and Martínez-Jurado and
Moyano-Fuente (2013) provide a comprehensive literature review
∗ Corresponding author. exploring the synergies among lean and green supply chain man-
E-mail address: [email protected] (K. Govindan). agement. Those reviews highlight that lean supply chain practices

http://dx.doi.org/10.1016/j.resconrec.2016.09.025
0921-3449/© 2016 Elsevier B.V. All rights reserved.
76 H. Carvalho et al. / Resources, Conservation and Recycling 120 (2017) 75–87

can promote sustainable green practices through waste reduction. and group them into four categories: supply practices, advanced
However, some trade-offs arise when lean and green practices are practices, product-based practices, and delivery practices.
deployed simultaneously. The deployment of green practices contributes to a set of
Most of the studies that focus simultaneously on lean and advantages such as cost reduction through a more efficient use of
green practices choose to analyze their impact on environmental resources (Walker et al., 2010), business sustainability, saving the
performance (King and Lenox, 2009; Simpson and Power, 2005; environment, and better firm reputation (Lee et al., 2013). These
Mollenkopf et al., 2010). The eco-efficiency approach primarily advantages mean that the implementation of green practices can
includes environmental concerns and the green paradigm (Tseng positively influence the company’s performance. It means that a
et al., 2014; Hansen and Klewitz, 2012; Solvang, 2008). The green company has engaged in some proactive environmental behaviour,
paradigm is concerned with the reduction of environmental risk actions that are designed to reduce pollution and to improve the
and negative impacts (Carvalho et al., 2010). The relationships economic performance of the business (Zhu et al., 2012). More-
between lean and eco-efficiency can be found in a few works over, Srivastava’s (2007) point of view considers the supply chain
(Moreira et al., 2010). The relationship between green and lean management; he states that the deployment of green practices may
practices and eco-efficiency has not been explored. Moreover, decrease the negative environmental impacts of industrial opera-
Govindan et al. (2014a) stress that there is still a need to integrate tions and may help that industry maintain their desired levels of
eco-efficiency in supply chains to highlight simultaneously the eco- quality, costs, reliability and energy efficiency.
nomic and environmental aspects along the value chain. There is
a gap in the literature relating lean and green supply chain man- 2.2. Lean supply chain
agement practices and eco-efficiency. Hence, an attempt has been
made in this paper to fill this gap. This paper aims to model lean Lean thinking is considered a dominant paradigm in manu-
and green supply chain practices and considers an eco-efficiency facturing companies (Jasti and Kodali, 2014; Marodin and Saurin,
perspective with the objective of minimizing the negative envi- 2013) and in supply chains (Jasti and Kodali, 2015; Manzouri and Ab
ronmental and economic externalities that result from the normal Rahman, 2013). The lean thinking is a wholly new way of thinking
operations of companies and supply chains. To attain this objective, about the roles of firms, functions, and careers to channel the flow
green and lean practices and respective implementation levels are of value from concept to launch, order to delivery, and raw material
selected and a mathematical model is proposed. into the arms of the customer in order to achieve a further “leap.”
The present study initially reviews the relevant literature on It represents a new concept which moves the whole ‘value stream’
lean and green supply chain management, existing trade-offs, (that for products dramatically in the direction of perfection (Carvalho
is, although it has been stated that lean and green complement each et al., 2011).
other, there are various situations where they are contrary), and Lean management strategies seek to increase the company’s
eco-efficiency in Section 2. In Section 3 the mathematical model actual value through waste reduction and improved customer
is developed from behaviours exhibited by both the company and satisfaction and profitability (Womack et al., 1991). Many orga-
the supply chain. Section 4 provides an illustrative case study from nizations have implemented lean principles and methods such
an automotive supply chain. Five scenarios are developed and the as time compression to eliminate inefficiencies along the sup-
model results discussed in Section 5, and we present our conclu- ply chain. The activity of time compression is designed to reveal
sions and offer some future research opportunities. problems in quality that are not immediately visible, and it will con-
tribute to improved efficiency in the company’s processes (Simons
and Mason, 2003). Anand and Kodali (2008) argue that a lean
supply chain uses resources more effectively than in traditional
2. Literature review systems; lean methods are integrated into both upstream and
downstream activities and may reduce demand variation by sim-
2.1. Green supply chain plifying, optimizing, streamlining, and creating capabilities. The
demand variation is a measurement of how much variability can
There are many reasons why companies have begun to occur in the demands from customers. As lean production focuses
adopt environmental concerns. Rigorous environmental regula- on the reduction of inventory and lead times, the demand must be
tions (Dahlmann et al., 2008), demands from customers, the more stable. Moreover, lean production is driven by real customer
opportunity to increase their profits, maintaining pace with com- orders, rather than forecasts that anticipate market demand. This
petitors, and simply due to taking an ethical stand are among the means that demand “pulls” a product through production, rather
most commonly cited reasons (Dahlmann et al., 2008). Beyond than management forecasts “pushing” it onto the shop floor. To
these common motivations, Paulraj (2009) and Chang (2011) high- accomplish this, lean thinking changes the focus of management
light the increase of competitiveness and ethical reasons; Thoumy from optimizing separate technologies, assets, and vertical depart-
and Vachon (2012) present the economic benefits, and Azevedo ments to optimizing the flow of products and services through
et al. (2012a) emphasize the environmental and social benefits. entire value streams that flow horizontally across technologies,
Researchers agree that companies can achieve a greater compet- assets, and departments to customers.
itive advantage by making their businesses more environmentally Manzouri and Rahman (2013) categorized and adopted lean
friendly. Green supply chain management practices may improve manufacturing principles for the supply chain management con-
the ecological efficiency and competitiveness of a company by text. Researchers agree that there are benefits for the supply chain
reducing its environmental risks and impacts (Zhu et al., 2007). when it adopts lean techniques; such techniques can result in
When sound environmental management practices are integrated greater manufacturing efficiency, reduced costs, and improved
into the companies that form the supply chain, the green sup- profitability and flexibility (Vonderembse et al., 2006). However,
ply chain may contribute to the company’s competitive advantage a cursory look at the advantages of lean techniques fails to dis-
(Ortas et al., 2014). If innovative green practices are employed close a deeper understanding of its environmental impacts (Dües
throughout the entire supply chain, including both the product et al., 2013). Lean techniques do assist in the minimization of waste
and the delivery, the company’s environmental impact will be and pollution, and promote the use of environmental management
enhanced (Azevedo et al., 2011; Diab et al., 2015). Azevedo et al. tools (EPA, 2003). One important question associated with lean
(2011) provide an extensive review of green supply chain practices techniques is its impact on the environment since it intends to
 H. Carvalho et al. / Resources, Conservation and Recycling 120 (2017) 75–87 77

reduce the non-value added time (i.e., the amount of the produc- on the environment within a specific time period. The numerator
tion cycle time that does not directly produce goods or services) represents the financial value produced by these activities for the
and it defends a pull demand strategy (i.e., a strategy which aims to same period. Better levels of eco-efficiency are reached by compa-
produce according to actual customer demand) (Duarte and Cruz- nies when they are good environmental and economic performers.
Machado, 2013; Venkat and Wakeland, 2006). However, as Solvang (2008) stresses, the level of eco-efficiency is
related to a set of factors beyond the management principles. If
2.3. Lean and green trade-offs companies use eco-efficiency strategies in their supply chain man-
agement and their operating system, both their economics and
The supply chain management perspective considers the green the environmental performance should be more efficient (Seuring
and lean management practices essential to improving a company’s et al., 2008). This point of view is supported by Govindan et al.
environmental and economic performance (Azevedo et al., 2012a; (2014a), who discussed the integration of eco-efficiency concepts
Martínez-Jurado and Moyano-Fuentes, 2013; Garza-Reyes, 2015). in supply chains, along with many other strategies. Lean and green
Besides the complementarities that exist between lean and green, strategies will allow a company to balance the economic and envi-
the relationships between them could also reflect some trade-offs ronmental aspects and improve the business sustainability. Solvang
(Carvalho et al., 2010; Dües et al., 2013; Mollenkopf et al., 2010; (2008) discusses the need to promote eco-efficiency improvements
EPA, 2003; Carvalho et al., 2014). One trade-off is associated with in the overall supply chain. He emphasizes that eco-efficiency must
the replenishment frequency, which in lean supply chains is pro- address issues that extend beyond local optimization only and that
moted by just-in-time or just-in-sequence practices (Carvalho et al., moving environmental problems to other companies in the supply
2010). Just-in-time is a management system in which materials or chain must be avoided.
products are produced or delivered only as demand requires, and Eco-efficiency can be used to promote improvements in prod-
just-in-sequence is a method of manufacturing in which compo- ucts, processes, and services along the product value chain.
nents arrive at an assembly line in a specific order at the exact Fernández-Viñé et al. (2010) consider a set of 16 eco-efficiency
moment they are needed, and not before. A more frequent delivery practices and tools, including the use of environmental man-
of goods allows minimizing waste and reducing supply chain lead- agement systems, considering environmental aspects in the
time; however, more goods being shipped requires more deliveries production process, recycling or reuse of materials and waste,
and utilizes more vehicles for transportation which, in turn, pro- environmental packing of materials, and increasing the environ-
duce more carbon emissions. Moreover, carbon emissions might mental efficiency associated with the transportation and delivery
be reduced by using other modes of transport, or by reducing of products. According to Adams and Comber (2013) the follow-
geographic distances between entities. Because supply chains are ing practices could be used to improve eco-efficiency along the
complex, stakeholders often insist upon the adoption of green sup- value chain: decrease material and energy intensity, reduce disper-
ply chain management principles (Tachizawa and Wong, 2015). sion of toxic substance, enhance recyclability, maximise the use of
Lean principles shorten the distances between supply chain renewable energy, enlarge the durability of products, and increase
partners. But with marketplaces and networks being founded service intensity. These elements can be grouped into three main
throughout the globe, widely dispersed supply chains are required objectives: reduction of resources consumption, reduction of the
to move large quantities of cargo over much larger distances. negative impact on environment, and increase the value of product
Clearly, transportation over these extended distances will increase or service. These same objectives are targeted by lean and green
the consumption of fossil fuel energy and will result in greater supply chain management practices. Therefore, it is important to
emissions of carbon dioxide. Even if the supply chain network is consider lean and green practices in the supply chain to promote
restricted to a limited geographical area, raw materials are some- higher environmental and economic performance and to achieve
times shipped from other continents (Tachizawa and Wong, 2015). higher levels of eco-efficiency. However, Nieuwenhuis and Katsifou
Even if a company is located close to its main suppliers, it may (2015) argue that in terms of sustainability, when just one side
have to transport the finished products to another continent based of the “double bottom line” (economic and environmental dimen-
on demand. This case reflects an attempt to reduce the total cost sions of sustainability) is considered, many of the eco-efficiency
of operating a supply chain (EPA, 2003). Even in supply chains initiatives allow only partial results since they can focus only on
that adopt lean practices, trade-offs are present. For instance, the cost savings or on environmental impact reduction. Moreover, the
just-in-time delivery practice may reduce inventory levels more third pillar of sustainability concept, the social, is not a target of
rapidly, but that also means products must be replenished more eco-efficiency concepts.
frequently, and the added transportation creates more emissions. Schmidt and Schwegler (2008) stress the fact that a company
When great distances are part of the supply chain, trade-offs nec- could present a higher level of eco-efficiency by buying parts at a
essarily arise. Venkat and Wakeland (2006) highlight the lean low cost from suppliers with low environmental performance, and
location logic proposed by Womack and Jones (2005) which rec- then incorporate a known brand name in those parts and sell them
ognizes such trade-offs and suggests the adoption of a different at higher prices. In this case, the eco-efficiency of the focal com-
lean configuration. Companies can, on one hand, be concerned pany would be high, but the activities of the downstream suppliers
with the environment and, on the other hand, still seek to improve could originate negative environmental comments. To overcome
their profits. This balance may be accomplished by a reduction in this, they propose that the environmental externalities, or the
resource intensity, along with an awareness of the environmental negative environmental consequences of production of the down-
impacts of a company’s products/services, and a commitment to stream companies, should be integrated into the focal company’s
continuous improvement (Dias-Sardinha et al., 2001). eco-efficiency computation. To this end, Schmidt and Schwegler
propose a cumulative eco-intensity ratio. This eco-intensity ratio
2.4. Eco-efficiency represents the environmental impact reported to the value of the
product and is used for assessing the environmental impact of eco-
Eco-efficiency refers to the relation between economy and envi- nomic activities. They argue that this type of integrated indicator
ronment outputs (Huppes and Ishikawa, 2005), and it can be could be communicated in the market contributing to improve the
depicted by the following ratio (Thant and Charmondusit, 2010): focal company’s competitiveness.
Economic performance/Environmental performance. In this ratio, The eco-efficiency reflects trade-offs between the economic
the denominator represents the impact of a company’s activities and the environmental performance of businesses (Tachizawa and
78 H. Carvalho et al. / Resources, Conservation and Recycling 120 (2017) 75–87

Wong, 2015) and logistics networks (Quariguasi Frota Neto et al., 3.1. Company level modelling
2009). In this paper, we propose that trade-offs between lean
and green practices in the supply chain could be evaluated using 3.1.1. Management practices modelling
the eco-efficiency concept. Carvalho et al. (2014) investigated the Companies employ a set of practices to improve their eco-
trade-offs between lean and green paradigms in supply chain man- efficiency. Generally, their first goal is to reduce negative
agement, and they developed the set of practices pictured in Table 1. environmental impacts and, at the same time, to improve the eco-
Because, in this study, a mathematical model is proposed and it nomic performance. The foundational objective is to improve both
supports the eco-efficiency concept to overcome the trade-offs the company’s environmental and economic outcomes. Let Xijz be
between lean and green practices, we consider the same set of the notation used to refer to the implementation level z, of practice
practices. The following measures are used: (i) economic impacts: i deployed by company j. Each practice can be used by companies
operational, environmental and inventory costs;(ii) environmen- with a particular implementation level z. Following the suggestion
tal impacts: business wastage (which includes energy, water, and of Azevedo et al. (2013a), each practice implementation level is
scrap) and the level of CO2 emissions. assessed in a five-point Likert scale where z = 1 means “practice not
In this study it is considered that the green and lean practices implemented” and z = 5 means “practice totally implemented.”
deployed across supply chains have a cumulative impact on envi- The variable Xijz is binary where 0 means that the practice i is
ronmental and economic performance of companies and supply not implemented by company j with an implementation level z,
chains. Karp (2005) stresses that from a managerial perspective, and 1 means that the practice i is implemented by company j with
large companies are recently admitting their negative influence on an implementation level z. Therefore, for each company j only one
the environment due to the poor practices of their suppliers. The level of implementation for each practice is allowed (Eq. (1)).
US National Environmental Policy Act (NEPA) (NEPA, 1969) is rec-
ognized as an important legislative driver for the assessment of 
5
Xijz = 1 (1)
environmental cumulative effects. According to NEPA, the study of
z=1
cumulative effects should incorporate economic impact analysis.
Several authors (See Gamble, 1979; Odum, 1982) argue that the Each management practice that is implemented in the company
combination of independently minor effects of multiple actions will have a certain impact on their environmental rating. For exam-
over time may result in significant environmental changes. Smit ple, green practices like “to reduce energy consumption” and “to
and Spaling (1995) suggest various methods for cumulative effects reuse/recycling materials and packaging” (Azevedo et al., 2013b)
assessment, namely multi-criteria evaluation, programming mod- will, when successfully implemented, reduce the company’s neg-
els, land suitability, and process guidelines. The method used in this ative environmental ratings. Other practices might increase the
study is the “programming model” since it makes possible to opti- presence of environmental damages. For example, “frequent deliv-
mize different objective functions subject to specific constraints. eries” will promote a high level of CO2 emissions. However, because
it is difficult to measure exactly how a particular practice results in
either negative or positive environmental impacts, we propose that
3. Problem formulation a subjective scale to measure each impact be implemented. For each
practice i the factor ˛ijz gives the practice influence on the nega-
The work of Azevedo et al. (2013a, 2012b) is followed in this tive environmental impacts. This factor assumes a range of values
paper. Azevedo et al. states that if a supply chain is composed of a between −1 and +1, where
set of n companies, each one with a different level of implementa- −1 means “reduction of environmental negative impacts,”
tion of supply chain management practices, then the overall supply means “even-handed on environmental negative impacts,” and
chain behaviour will result from the aggregation of the individual +1 means “increase of environmental negative impacts.”
companies’ behaviours. Hence, in the present study, the environ- Therefore, for each variable Xijz a negative environmental impact
mental and economic negative impacts on a supply chain are given (NEnvIijz ) can be computed using Eq. (2).
by the cumulative effect of n companies’ individual impacts. It is
NEnvIijz = ˛ijz × Xijz (2)
also assumed that a linear relationship exists between the imple-
mentation level of each practice and (i) the negative environmental NEnvIijz can assume values between −1 to +1 where,
and economic impacts; and (ii) the environmental damage and −1 means that the practice i decreases the company’s negative
economic performance. environmental impacts (Xijz = 1 and ˛ijz = −1)

Table 1
Lean and green supply chain practices. Adapted from Carvalho et al. (2014).

Paradigm Practice Description

Lean Just-in-time production This practice prescribes the delivery of raw materials, work in process,
and finished goods, at the exact time they are necessary. It allows
companies to reduce material inventories along the production
systems and better utilization of resources.
Geographic concentration with This practice promotes the development of supplier parks nearby the
suppliers manufacturer. It allows the frequent delivery of small batches
supporting lower levels of inventory and lead time reduction.

Green ISO 14001 certification It is used by companies to implement an environmental management

system. Also, it establishes that companies should evaluate their
suppliers and influence them to implement environmentally friendly
practices. It supports waste and pollution reduction along the supply
chain.
Environmentally friendly packaging It considers the development and use of reusable, returnable,
degradable or easy to recycle packing materials (boxes, bags, pallets,
racks, containers, among others). At the same time, environmental
costs and business waste are reduced to improve customer satisfaction.
 H. Carvalho et al. / Resources, Conservation and Recycling 120 (2017) 75–87 79

0 means that the practice i is not implemented or does not affect Considering this for each company j the objective function is given
the company’s negative environmental impacts (Xijz = 0 or ˛ijz = 0) by Eq. (6).
+1 means that the practice i increases the company’s negative 
MinNEnvIj
environmental impacts (Xijz = 1 and ˛ijz = +1).
⇒ Min(NEnvIj + NEconIj ) (6)
Each practice deployed by the company will have also a cumu- MinNEconIj
lative effect on the company’s economic performance. Once more,
it is difficult to assess exactly what is the contribution of each prac- 3.1.3. The company’s environmental constraints
tice to the reduction of negative economic outputs. Therefore, for In order to accomplish with a certain level of eco-efficiency each
each practice i, implemented by company j, with an implementa- company j needs to comply with maximum values of environmen-
tion level z, a negative economic impact (NEconIijz ) can be computed tal constraints such as CO2 emissions, polluting emissions, or water
in a similar way to the environmental impact. The factor ˇijz gives consumption. The level of environmental damage of each company
the influence of each practice i implemented by company j with an is a function of the practices used (Eq. (7)). The factor  ijz gives
implementation level z on the economic impacts (Eq. (3)). the magnitude of environmental damage (EnvDamageijz ) for prac-
NEconIijz = ˇijz × Xijz (3) tice i implemented by company j with an implementation level z.
This factor assumes a range of values between 0 and +1, where
NEconIijz can assume values between −1 to +1 where,  ijz = 0 means “no environmental damage” and  ijz = 1 means “high
−1 means that the practice i decreases the company’s negative environmental damage.”
economic impacts (Xijz = 1 and ˇijz = −1)
0 means that the practice i is not implemented or does not affect EnvDamageijz = ijz × Xijz (7)
the company’s negative economic impacts (Xijz = 0 or ˇijz = 0) EnvDamageijz can assume values between 0 to +1 where 0 means
+1 means that the practice i increases the company’s negative that the “practice Xijz does not lead to negative environmental
economic impacts (Xijz = 1 and ˇijz = +1). impacts” or “practice Xijz is not implemented” and +1 means that
the “practice Xijz leads to an extremely high negative environmental
3.1.2. Company environmental and economic negative impacts impact.”
modelling Since each company can deploy a set of m practices and each
Considering that the overall negative environmental impact of practice contributes cumulatively to the company’s total environ-
company j (NEenvIj ) will be function of the m practices that are mental damage, the overall impact of the set of practices is given by
deployed, Eq. (4) can be used to compute NEenvIj . aggregating the individual practices damages. For each company j
the overall environmental damage (EnvDamagej ) will be a function

m 
5

m 
5

NEnvIijz ˛ijz × Xijz of the m practices deployed (Eq. (8)).

NEnvIj =
i=1 z=1
=
i=1 z=1
(4)

m 
5

m 
5

m m EnvDamageijz ijz × Xijz

NEenvIj can assume values between −1 to +1 where, i=1 z=1 i=1 z=1
EnvDamagej = = (8)
−1 means that company j totally implemented the m practices m m
and all those practices contribute to reduce the company’s cumu- EnvDamagej can assume values between 0 to +1 where
lative negative environmental impacts 0 means that “for company j the set of practices do not lead to
0 means that company j implemented a set of practices that negative environmental impacts,” and
do not contribute to reduce or increase the company’s cumulative +1 means that “for company j the set of practices leads to an
negative environmental impacts. This could happen if: (i) none of extremely high negative environmental impact.”
the m practices is implemented X1jz = X2jz = . . . = Xmjz = 0; or (ii) the To comply with internal directives, environmental targets and
set of practices does not affect the company’s cumulative nega- compliance with regulations, each company should fulfill a max-
tive environmental impacts (˛1jz = ˛2jz = . . . ˛mjz = 0); or (iii) the set imum level of environmental damages (j ). If j is the maximum
of practices comprises simultaneously practices that reduce and value of environmental damage for company j, then Eq. (9) repre-
practices that increase the company’s cumulative negative envi- sents this inequality constraint.
ronmental impacts, which originate an even-handed situation on
EnvDamagej ≤ j (9)
environmental negative impacts.
+ 1 means that company j totally implemented the m practices Where j assumes continuum values between 0 and +1:
and all those practices contribute to increase the company’s cumu- j = 0 means that company j should have low environmental
lative negative environmental impacts (Xijz = 1 and ˛ijz = +1) damage;
For each company j the overall cumulative negative economic j = +1 company j can have high environmental damage (but is
impact (NEconIi ) will be a function of the practices that are deployed still in compliance with the legislation and regulations).
as shown in Eq. (5).
3.1.4. The company’s economic constraints

m

5

m

5
Each company j can be compelled to respect minimum values of
NEconIijz ˇijz × Xijz
economic performance that are traduced in minimum levels of pro-
i=1 z=1 i=1 z=1
NEconIj = = (5) ductivity or process efficiency. The level of economic performance
m m
of each company is a function of the practices deployed by the com-
Similar to the negative environmental impacts, NEconIj can pany (Eq. (10)). The factor ıijz gives the contribution of each practice
assume values between −1 to +1. i implemented by company j with an implementation level z to the
For each company j the eco-efficiency is given by the ratio: Eco- economic performance (EconPerfijz ). The factor assumes a range of
efficiency = Economic performance/Environmental performance. values between 0 and +1, where ıijz = 0 means “no economic gain,”
There are two ways to enhance the eco-efficiency: (i) to raise the ıijz = 0.5 means “low economic gain,” and ıijz = 1 means “elevated
economic performance, that is to minimize the negative economic economic gain.”
impacts (NEconIj ); or (ii) to reduce the environmental performance
that is, to minimize the environmental negative impacts (NEnvIj ). EconPerfijz = ıijz × Xijz (10)
80 H. Carvalho et al. / Resources, Conservation and Recycling 120 (2017) 75–87

The variable EconPerfijz can assume values between 0 to +1 3.2.2. Supply chain environmental and economic constraints
where: Similar to the individual companies’ environmental and eco-
0 means that the “practice Xijz does not generate any economic nomic constraints the supply chain overall behaviour also is subject
gain” or “practice Xijz is not implemented” to compliance with maximum values of environmental damages
+1 means that the “practice Xijz generates an extremely high and economic performance. The level of supply chain environmen-
economic gain.” tal damage and economic performance, respectively EnvDamageSC
The overall economic performance for each company j and EconPerfSC, is a function of the companies’ behaviour as pre-
(EconPerfj ) will be function of the set of m practices deployed (Eq. sented in Eqs. (16) and (17).
(11)).

n

m 5

m 5 EnvDamagej
EconPerfijz ıijz × Xijz j=1
EnvDamageSC = (16)
i=1 z=1 i=1 z=1 n
EconPerfj = = (11)
m m

n
Each company should fulfill a minimum level of economic per- EconPerfj
formance. Since each company can deploy a set of m practices and j=1
each practice will contribute with a factor ıijz to the economic EconPerfSC = (17)
n
gain, a minimum value should be set. If  i is the minimum level of
company j’s economic performance, then Eq. (12) represents this EnvDamageSC and EconPerfSC can assume values between 0 and
constraint. +1 where:
0 means that the m companies belonging to the supply chain do
EconPerfj ≥ j (12) not generate negative environmental or economic impacts.
+1 means that the m companies belonging to the supply chain
Where  j assumes values between 0 and +1: generate an extremely high number of negative environmental or
 j = 0 means that company j can have low economic performance economic impacts.
(but in line with the company’s internal goals of profitability) To comply with international directives, environmental targets,
 j = +1 company j presents a high economic performance. and compliance with regulations from major corporations, the sup-
ply chain should fulfill a maximum level of environmental damages
3.2. Supply chain overall environmental and economic negative (SC ) as represented by Eq. (18). In addition, the supply chain should
impacts fulfill a minimum level of economic performance ( sc ) as repre-
sented by Inequalities (18) and (19).
3.2.1. Management practices modelling
Considering a supply chain formed by n companies, each EnvDamageSC ≤ SC (18)
one with individual economic and environmental performances,
EconPerfSC ≥ SC (19)
NEconIj and NEnvIj the overall impact of the companies’ environ-
mental and economic impact in the supply chain (NEnvISC and Where SC and  i assume continuum values between 0 and +1:
NEconISC , respectively) can be computed as the summation of the 0 means that the supply chain can have low environmental
contribution of each company’s impacts as shown in Eqs. (13) and and economic performance but it remains in compliance with
(14): applicable environmental regulations and in line with the goals of
profitability.

n

NEnvIj +1 means that the supply chain should have high environmental
and economic performance.
j=1
NEnvISC = (13)
n
4. Illustrative case study

n
NEconIj
4.1. Case study description
j=1
NEconISC = (14)
n In the previous section, a decision support model was pro-
For each supply chain NEconIj and NEnvISC can assume values posed to help managers find out the best set of green and lean
between −1 to +1 where: supply chain management practices to reduce the negative envi-
−1 means that in the supply chain the n companies imple- ronmental impacts and improve economic performance, the goal
mented totally the set of m practices and all contribute to decrease of eco-efficiency. To this end, a case study methodology was cho-
the companies’ negative economic/environmental impacts. sen to illustrate the application of the proposed model in a real
+ 1 means that in the supply chain the n companies totally case context. The case study is about the automotive supply chain
implemented the set of m practices and all practices contribute which is represented by one automaker and three 1st-tier suppli-
to increase the companies’ negative economic/environmental ers. The automotive supply chain was chosen because this industry
impacts. is the most concerned with environmental issues and where lean
For each supply chain the overall eco-efficiency can be increased principles and tools are more developed. The automotive sector
by reducing the companies’ negative environmental impacts and has been hard-pressed from customers and society with regard to
improving economic performance; this task may be accomplished its environmental performance because of its resource-consuming
by reducing the companies’ negative economic impacts. See the products (Thun and Müller, 2010). The automotive supply chain is
objective function given in Eq. (15). also concerned with sustainability issues as a way of improving its
 environmental, social, and economic behaviour while still achiev-
MinNEnvISC ing high economic benefits (Govindan et al., 2014b). Moreover, the
⇒ Min(NEnvISC + NEconISC ) (15) tendency of many automotive companies to look for low cost solu-
MinNEconISC
tions may contribute to the leanness of the supply chains (Azevedo
 H. Carvalho et al. / Resources, Conservation and Recycling 120 (2017) 75–87 81

Table 2 mentation level of the research practices for the individual

Automotive companies’ profiles.
company.
Company Main product Supply chain Company size The 1st-tier suppliers under study are located in the same indus-
label (j) position (employees) trial park near the automaker. In this way the “just-in-sequence”
1 Vehicles Automaker More than 1000 delivery of components and parts to the automaker’s assembly line
2 Plastic parts 1st-tier supplier 200–500 is assured. The automaker also insists for its nearest 1st-tier suppli-
3 Front rear 1st-tier supplier 50–100 ers to adopt quality environmental systems, namely ISO 9001 and
4 Exhaust systems 1st-tier supplier 50–100
ISO 14001, to reduce the company’s negative environmental and
economic impacts.
The 1st-tier suppliers adopt a “just-in-sequence” policy to
et al., 2012a). Table 2 illustrates the research profile of the auto- produce components and a make-to-order policy in the case of sub-
motive companies according to their main product, supply chain assemblies which are produced in batches. This practice requires
position, and company size. that the automaker assembly line be fed by frequent delivery of
small quantities from the 1st-tier suppliers. Therefore, transporta-
4.2. Data collection tion demands increase, leading to higher negative environmental
impacts due to energy consumption and CO2 emissions. However,
The gap between management research and practice identi- this practice lowers the average level of inventory that companies
fied by Govindan et al. (2014b) justifies the automotive supply must hold since the materials are received in the right time to feed
chain case study methodology adopted in this study. The case study the assembly line, avoiding work-in-process stocks. Thus, the con-
illustrates how the proposed mathematical model can be used by tinuous flow of materials along the assembly line increases not only
managers to assess eco-efficiency and to consider the various lean the resource utilization rate but also efficiency and, consequently,
and green trade-offs of individual companies and the correspond- reduces the company’s negative economic impact.
ing supply chain. The 1st-tier suppliers purchase a variety of parts and compo-
Semi-structured interview questions were devised for the col- nents from the 2nd-tier suppliers located all over the world: from
lection of primary data and to limit expert bias. The questionnaire Europe, Mexico, Asia, and other locations. The 2nd tier-suppliers
was originally sent via email, and the interviews were completed were selected by the automaker corporation to assure the best price
in person and by phone. One professional from the automotive and quality for parts and components. Since the 1st-tier suppliers
industry and three academics were polled to substantiate the rel- utilize a “just-in-sequence” policy, a constant flow of parts from
evance and clarity of the questions, and their suggestions helped those locations are shipped to their facilities. The increased level
to strengthen the protocol. Lean and green practices are measured of CO2 emissions from 1st-tier suppliers represents an increase in
on a 5-point Likert scale, with 1 meaning that the practices present their negative environmental impacts.
a low level of implementation and 5 meaning that the practices The transport of the final sub-assemblies from the 1st-tier sup-
are totally implemented. Secondary data sources, such as com- pliers to the automaker are shipped in specific reusable containers
pany internal documents, website information, and sustainability or racks tailored to each type of product. This green practice reduces
reports, were also utilized. the company’s negative environmental impacts through a decrease
in solid waste; packaging is reused, not disposed. The return of
reusable containers to the suppliers works like a Kanban since it
4.3. Practices influence on environmental and economic negative
informs them that the assembly line needs to be fed with more
impacts
components. The number of available containers and racks in the
industrial park depicts the inventory management policy of the
In the case study the practices with negative economic
automaker and reduces inventories to a minimum level, thereby
impacts are evaluated in terms of their operational, environmen-
improving the internal business process. Although initially there
tal, and inventory costs. The practices with negative environmental
is a cost associated with the acquisition of reusable packaging, in
impacts are evaluated by considering performance measures such
the long term it leads to cost reduction and lowers the company’s
as business wastage (including energy, water, and scrap) and the
negative economic impact.
level of CO2 emissions. When a company’s green image decreases,
Considering all the above evidence, and for illustration purposes,
that is considered a negative environmental impact.
a suggested value for ˛ijz and ˇijz was attributed for each company
Since the focus of this research is on lean and green paradigms,
under study (Table 4).
the following management practices are considered: (i) Lean
Another important input for the model is the contribution of
practices: “Geographic concentration with suppliers” and “just-
each practice to the company’s environmental damage and eco-
in-sequence” production; (ii) Green practices: “ISO 14001” and
nomic performance. For example, for the automaker the geographic
“Environmentally friendly packaging.” Table 3 provides the imple-
proximity to suppliers promotes low inventory and operational
cost; it has a considerable impact on economic performance. But for
Table 3 this supply chain, the deployment of this practice also has another
Practices implementation level. positive effect, since it shortens the distance between supply chain
Lean and green practices Implementation level z on company j partners and lessens the level of CO2 emissions, leading to a low
environmental damage. But for the 1st-tier suppliers under study
Label Description j=1 j=2 j=3 j=4
it is not possible to implement this practice. They are located near
1 Geographic concentration 5 1 1 1 the automaker but distant from their suppliers. The implemen-
with suppliers tation of this practice (Geographic proximity to suppliers) at the
2 ISO 14001 5 5 5 5
3 Just-in-sequence 5 5 5 5
1st-tier suppliers’ level means that these companies would have
production to abdicate from the low prices charged by 2nd-tier suppliers in
4 Environmentally friendly 5 5 5 5 distant locations like Asia or México. Therefore, for companies 2–4
packaging the deployment of this practice will promote a low economic per-
Legend: z = 1 Means low level of implementation; 3 moderate level of implementa- formance. Considering all the above evidence, and for illustration
tion; 5 totally implemented.
82 H. Carvalho et al. / Resources, Conservation and Recycling 120 (2017) 75–87

Table 4
Practice influence on environmental and economic negative impacts.

Practice i Implementation level z ˛ijz − Influence of practice i on negative ˇijz − Influence of practice i on negative
environmental impact for company j economic impact for company j

j=1 j=2 j=3 j=4 j=1 j=2 j=3 j=4

Geographic 1 1 1 1 1 1 −0,5 −0,5 −0,5

concentration with 3 −0,5 −0,5 −0,5 −0,5 −0,5 0 0 0
suppliers 5 −1 −1 −1 −1 −1 1 1 1

ISO 14001 1 1 1 1 1 0 0 0 0
3 −0,5 −0,5 −0,5 −0,5 −0,5 −0,5 −0,5 −0,5
5 −1 −1 −1 −1 −1 −1 −1 −1

Just-in-sequence 1 0 −1 −1 −1 1 0 0 0
production 3 0 0,5 0,5 0,5 −0,5 0 0 0
5 0 1 1 1 −1 −0,5 −0,5 −0,5

Env. friendly packaging 1 1 1 1 1 0 0 0 0

3 −0,5 −0,5 −0,5 −0,5 −0,5 0 0 0
5 −1 −1 −1 −1 −1 −0,5 −0,5 −0,5

Legend:
z = 1 Means low level of implementation; 3 moderate level of implementation; 5 totally implemented.
˛ijz = −1 Reduction of negative environmental impacts; 0 even-handed on negative environmental impacts; 1 increase in environmental negative impacts.
ˇijz = −1 Reduction of negative economic impacts; 0 even-handed on negative economic impacts; 1 increase in negative economic impacts.

purposes, further suggested values for  ijz and ıijz were attributed 4.4. Model results and discussion
for each company under study (Table 5).
In the automotive supply chain, the automakers’ corporations The proposed model provides a set of practices, and their respec-
are under pressure from consumers and governments to comply tive implementation level, that companies should deploy to achieve
with strict environmental legislation that restricts, for example, the goals described by the objective function and that satisfies all
CO2 emissions. The corporations naturally wish to develop a constraints. Therefore, the model output will represent the level of
responsible corporate image, one based on respect for the envi- implementation z of each practice i in company j. This set of prac-
ronment and people. The automaker under study belongs to a tices is the one that maximizes the supply chain eco-efficiency;
corporate group that requires that all suppliers to share the same these practices will minimize the supply chain’s overall negative
environmental and social concerns as follows: implementation of environmental and economic impacts.
environmental management systems, proactive dealing with eco- To analyze how the negative environmental and economic
logical challenges, decrease of negative environmental impacts, impacts can be minimized in a supply chain context, five scenarios,
investment in products and processes with low resource consump- with different decision making settings, were developed as follows
tion, reduction of waste, and increased recycling. The automaker (Table 7):
requires their contractors and suppliers to respect most of the social
and environmental laws and regulations. The 1st-tier suppliers
also belong to international corporations that deploy practices to
• Scenario 1 – the objective is to find out the minimum value of
promote environmental protection and social standards. For illus-
the negative environmental impacts in the supply chain without
tration purposes, suggested values for the maximum amount of
considering the economic impacts of companies and supply chain
environmental damage and the minimum value of economic per-
(this is translated by  i = 0 and  sc = 0). This scenario represents
formance were attributed for each company j and supply chain
the best solution to improve the environmental performance
(Table 6).
without considering economic performance.

Table 5
Contribution of practices environmental damage and economic performance.

Practice i Implementation level z  ijz – Practice i contribution to ıijz – Practice i contribution to economic
environmental damage of company j performance of company j

j=1 j=2 j=3 j=4 j=1 j=2 j=3 j=4

Geographic 1 1 1 1 1 0 1 1 1
concentration with 3 0,5 0,5 0,5 0,5 0,5 0,5 0,5 0,5
suppliers 5 0 0 0 0 1 0 0 0

ISO 14001 1 1 1 1 1 0 0 0 0
3 0,5 0,5 0,5 0,5 0,5 0,5 0,5 0,5
5 0 0 0 0 1 1 1 1

Just-in-sequence 1 0 0 0 0 0 0 0 0
production 3 0,5 0,5 0,5 0,5 0,5 0,5 0,5 0,5
5 1 1 1 1 1 1 1 1

Env. friendly packaging 1 1 1 1 1 0,5 0,5 0,5 0,5

3 0,5 0,5 0,5 0,5 0,5 0,5 0,5 0,5
5 0 0 0 0 1 1 1 1

Legend:
z = 1 Means low level of implementation; 3 moderate level of implementation; 5 totally implemented.
 iijz = 0 Low environmental damage; 0,5 suitable environmental damage; 1 elevated environmental damage.
ıijz = 0 Low economic performance; 0,5 suitable economic performance; 1 elevated economic performance.
 H. Carvalho et al. / Resources, Conservation and Recycling 120 (2017) 75–87 83

Table 6
Companies and supply chain environmental and economic constraints.

Companies Supply chain

Individual constraints j=1 j=2 j=3 j=4

j 0,5 0,75 0,75 0,75 SC 0,5

Maximum value of environmental Maximum value of supply chain
damage for company j environmental damage

j 0,75 0,5 0,5 0,5  SC 0,75

Minimum value of economic Minimum value of supply chain
performance for company j economic performance

Legend:
 = 0 Low environmental damage; = 1 high environmental damage.
 = 0 Low economic performance;  = 1 high economic performance.

Table 7 ties of their operations (Scenario 2). Table 8 provides model outputs
Scenarios description.
for Scenario 1 and Scenario 2.
Scenario Objective function Constraints As can be observed in Table 8, in Scenario 1 all companies totally
deploy the set of green and lean practices that support the reduc-
Environmental Economic
tion of the environmental externalities. If the objective is only to
1 Min NEnvISC no no
reduce the negative environmental impacts, the companies will not
2 Min NEconISC no no
3 Min NEnvISC yes yes deploy the “just-in-sequence” practice because this practice will
4 Min NEconISC yes yes contribute to higher CO2 emissions.
5 Min (NEnvISC + NEconISC ) yes yes In Scenario 2 the companies will deploy all the practices that
improve the economic performance, those that reduce negative
economic impacts. Therefore, the 1st-tier suppliers will not deploy
the practice “geographic concentration with suppliers,” since this
• Scenario 2 – the objective is to find out the minimum value of the
practice increases the purchase price of materials. 1st-tier suppli-
negative economic impacts in the supply chain with no restric- ers purchase the parts and components from a network of 2nd-tier
tions to the companies and supply chain environmental impacts suppliers spread around the globe, relying on suppliers that provide
(this is translated by j = 1 and SC = 1). Therefore, it represents minimum price at a high quality.
the best solution to improve the economic performance, but it Table 8 also depicts the trade-offs that exist between practices.
does not take into account environmental performance. The practices “ISO 14001” and “environmentally-friendly packag-
• Scenario 3 – the objective is to find out the minimum value of the
ing” contribute simultaneously to improve the environmental and
negative environmental impacts of the supply chain which do not economic performances. However, the practices “geographic con-
overcome the maximum values of environmental damage and centration with suppliers” and “just-in-sequence” production have
which respect the minimum values for economic performance. opposite effects on environmental and economic performance, as
• Scenario 4 – the objective is to find out the minimum value of
follows:
the negative economic impacts of the supply chain which do not
overcome the maximum values of environmental damage and
i) the practice “just-in-sequence” production improves the eco-
which respect the minimum values for economic performance.
• Scenario 5 – the objective is to find, simultaneously, the minimum nomic performance since it contributes to a significant reduction
in the inventory of raw materials, works in process, and fin-
value of the environmental and economic negative impacts of
ished goods. Therefore, it is expected to reduce the inventory
the supply chain which do not overcome the maximum values of
levels, quality, and throughput levels (Petersen et al., 2000).
environmental damage and which respect the minimum values
However, the frequent delivery of materials leads to a higher
for economic performance.
level of CO2 emissions, weakening the company’s environmen-
tal performance (Garza-Reyes, 2015);
In the supply chain under study, if the objective is solely to ii) the practice “geographic concentration with suppliers” reduces
minimize negative environmental impacts (Scenario 1), then all the transportation distance between supply chain entities,
companies will deploy the set of green and lean practices that decreases fuel consumption, and the subsequent reduction
decrease their individual negative environmental impacts. Other- of CO2 emissions. However, this practice could prevent an
wise, companies can select the set of practices that will maximize improvement in the company’s economic performance. Accord-
economic performance without considering the negative externali- ing to Petersen et al. (Petersen et al., 2000) companies consider

Table 8
Scenario 1 and 2 outputs.

Practice i Scenario 1 – Min (NEnvISC ) without constraints Scenario 2 – Min (NEconISC ) without constraints

Implementation level z in company j Implementation level z in company j

j=1 j=2 j=3 j=4 j=1 j=2 j=3 j=4

Geographic concentration with suppliers 5 5 5 5 5 1 1 1

ISO 14001 5 5 5 5 5 5 5 5
Just-in-sequence production 1 1 1 1 5 5 5 5
Env. friendly packaging 5 5 5 5 5 5 5 5

NEnvISC −0,94 −0,19

NEconISC −0,22 −0,72
84 H. Carvalho et al. / Resources, Conservation and Recycling 120 (2017) 75–87

Table 9
Scenario 3 and 4 outputs.

Practice i Scenario 3 − Min (NEnvISC ) Scenario 4 −Min (NEconISC )

Implementation level z in company j Implementation level z in company j

j=1 j=2 j=3 j=4 j=1 j=2 j=3 j=4

Geographic concentration with suppliers 5 3 5 3 5 1 1 1

ISO 14001 5 5 5 5 5 5 5 5
Just-in-sequence production 5 3 1 1 5 5 5 5
Env. friendly packaging 5 5 5 5 5 5 5 5

NEnvISC −0,75 −0,19

NEconISC −0,50 −0,72

that global sourcing strategies reduce costs and increase quality, nies and the supply chain constraints. Therefore, the supply chain
thereby enhancing their competitive positions. could comply with the maximum level of negative environmental
impacts, and Companies 2–4 should have a moderate geographic
To evaluate the consequence of the existence of maximum proximity with their suppliers and do not deploy the “just-in-
environmental damages and minimum economic requisites that sequence” production practice. Companies 1 and 4 should totally
companies have to comply with (as shown in Table 6) Scenario 3 and deploy the “just-in-sequence” production practice so the supply
Scenario 4 were developed. The results of model for these scenarios chain complies with the minimum level of economic performance.
are presented in Table 9. Table 11 summarizes the model results under each decision making
In Scenario 3 it is possible to observe that when minimum val- setting.
ues for environmental performance are imposed in the supply chain When the different model outputs are compared with the actual
and in companies, the minimum value for NEconISC is higher than implementation level of the practices in each company (Table 3)
in Scenario 1, which leads to a worse economic performance. But it is possible to verify that according to the outputs of Scenario 4
this scenario provides gains in the environmental performance. In (Table 8), this one better reflects the current situation of the stud-
Scenario 3, companies 2 and 4 should moderately deploy the prac- ied supply chain. In this setting, companies make an attempt to
tice “geographic concentration with suppliers” and companies 1 maximize their economic performance but do not overcome the
and 2 should initiate “just-in-sequence” production to assure that maximum limits of environmental damage. This is the managers’
the minimum values for the companies and supply chain economic goal: to reduce direct costs and to avoid non-compliance sanctions
performance are achieved. In Scenario 4, the reached solution is or damages of the company image (Fernández-Viñé et al., 2010).
equal to the one obtained in Scenario 2. This means that the set of Moreover, Fernández-Viñé et al. (2010) stress that in order for
practices that maximize the economic performance also complies companies to benefit from eco-efficiency tools, they need adequate
with the maximum values allowed for the environmental damages resources.
as seen in Table 6. Depending on the individual context of each company, the best
Finally, Scenario 5 presents the model output when the objective set of practices is then customized to determine the level of green
is to minimize not only the negative environmental or economic or lean practices to be adopted. In the present case study, Company
impacts, but also to simultaneously reduce both. This eco-efficiency 1 (the focal company) implemented all green and lean practices,
perspective complies with environmental and economic con- but Companies 2–4 do not implement the “geographic concentra-
straints. Table 10 contains the set of practices that companies tion with suppliers” practice as a way of maintaining low material
should deploy in this scenario. prices. Therefore, the automaker (as focal company) presents
The model output for Scenario 5 is a compromise between Sce- higher levels of eco-efficiency and its 1st-tier suppliers adopt lower
nario 3 and Scenario 4. The results indicate that managers should levels. The best setting is the one that complies with the individual
implement the set of practices that result in the simultaneous and overall environmental negative impacts and simultaneously
reduction of negative environmental impacts and to the purpose- maximizes the companies’ and supply chain’s economic perfor-
ful increase in economic performance. In the present study this mance by reducing negative economic impacts. Moreover, although
practices are “ISO 14001” and “environmentally-friendly packag- companies make efforts to reduce their negative environmental
ing.” The main complexity appears in the decision of what should impacts, economic considerations and compliance with environ-
be the implementation level of the practices that create trade-offs mental legislation dominate their behaviour (Paulraj, 2009).
among environmental and economic performance. In this situation, Guenster et al. (2010) explained that eco-efficiency measures
the best solution is the one that satisfies the individual compa- the environmental performance of a company in a relative sense
since companies facing the same environmental challenges can
still do well relative to their competitors and reap financial ben-
Table 10 efits. In the case study, all the companies operate in a supply
Scenario 5 outputs.
chain where the environmental concerns of stakeholders (e.g.,
Practice i Scenario 5 – Min (NEnvISC + NEconISC )

Implementation level z in company j Table 11

Overview of the model results.
j=1 j=2 j=3 j=4
Scenario Objective function Constraints NEnvISC NEconISC
Geographic concentration 5 3 3 3
with suppliers Env. Econ.
ISO 14001 5 5 5 5
1 Min NEnvISC no no −0,94 −0,22
Just-in-sequence 5 1 1 5
2 Min NEconISC no no −0,19 −0,72
production
3 Min NEnvISC yes yes −0,75 −0,50
Env. friendly packaging 5 5 5 5
4 Min NEconISC yes yes −0,19 −0,72
Min (NEnvISC ) −0,72 5 Min (NEnvISC + yes yes −0,72 −0,56
Min (NEconISC ) −0,56 NEconISC )
 H. Carvalho et al. / Resources, Conservation and Recycling 120 (2017) 75–87 85

customers, ONG, governments) are an important driver for the without compromising its eco-efficiency. The proposed model rep-
implementation of green practices. The automotive industry is resents an important framework in supporting decision making
highly regulated; companies have to comply with an extensive set related to the design of eco-efficient supply chains.
of directives and regulations concerning to CO2 emissions, pol-
lution, and noise emissions, car and components safety, vehicles’ 5.1. Limitations of the study
reusability, recyclability, and recoverability, among other require-
ments. This extensive regulation effectively damages the industry’s Besides the important contributions of this study, some lim-
competitiveness. The automakers, as the focal company, can use itations are identified. First, the model is developed under the
eco-efficiency as a tool to manage the trade-offs between envi- assumption that the companies’ cumulative environmental and
ronmental and economic performance that arise along the supply economic negative impacts could be added along the supply chain.
chain. Moreover, it was considered that the environmental and economic
negative impacts are associated in a linear way with each practice
implementation level. These assumptions should be validated in
5. Conclusion future studies.

A mathematical model is proposed in this study to select the set 5.2. Future research
of lean and green practices that managers should deploy in their
companies as a way of improving the eco-efficiency of companies Future research should explore the application and validation
and supply chains. Because there are several trade-offs among lean of the suggested model in an extended supply chain context. Also,
and green practices in the supply chain context, the selection of the a structural equation model should be developed to explore the
best set of practices is not a trivial choice. To overcome this diffi- kind of relationships that exist among lean and green practices and
culty, the utilization of the eco-efficiency concept seeks to select eco-efficiency.
the lean and green practices that best contribute to reducing the
company’s negative environmental impacts and to improving their 5.3. Managerial implications
economic performance, while not compromising the supply chain’s
overall eco-efficiency. The model considers that the supply chain Although each company has its own reasons and motives for
overall behaviour results from the aggregation of individual com- being more green and lean, a decrease on environmental dam-
panies’ behaviours. Therefore, the supply chain environmental and age and an improvement on economic performance − being
economic negative impacts are given by the cumulative effect of more eco-efficient – is an important and motivated reason. Using
the companies’ individual impacts. the suggested set of lean and green supply chain management
To illustrate the model application a case study from the practices (geographic concentration with suppliers, ISO 14001,
automotive supply chain is presented. The case study includes “just-in-sequence” production, use of reusable containers and
one automaker and four 1st-tier suppliers. The set of lean and racks), companies and corresponding supply chains will become
green practices under study are “geographic concentration with more efficient since business wastage will decrease, resources will
suppliers,” “ISO 14001,” “just-in-sequence” production, and “envi- be conserved, operations will be streamlined, and costs will also
ronmental friendly packaging.” Five scenarios are developed to decrease. The benefits of companies and supply chains using ISO
analyse different decision making settings. The results highlight the 14001 standard are numerous, such as cost savings in waste, recy-
existence of trade-offs between two practices: “geographic concen- cling and consumption; competitive advantage over competitors;
tration with suppliers” and “just-in-sequence” production.” Both improved corporate image among regulators, customers and the
of these practices had opposite effects on the environmental and public; less use of virgin resources, water, and energy; generate
economic performance of companies. less waste and pollution; improve production methods.
One of the main findings is that in the supply chain context,
not all companies can be absolutely lean or green. There should be Acknowledgments
compromises in the individual company’s behaviour so the supply
chain environmental and economic constraints are satisfied. In a The authors are pleased to acknowledge financial
scenario in which the objective is to minimize simultaneously neg- support from Fundação para a Ciência e a Tecnologia
ative environmental or economic impacts, the model results show (PEst-OE/EME/UI0667/2014) and FEDER/COMPETE (grant
that for the automaker to be more lean (i.e., better economic perfor- UID/ECO/04007/2013).
mance), 1st-tier suppliers must be less lean and need to implement
practices that balance the negative environmental effects of the Appendix A.
automaker.
The proposed model intends to bridge the research gap on how See Table A1.
to integrate lean and green practices in a supply chain context

Table A1
Notation.

Description Notation Explanation

Decision variable Xijz Binary variable where:

• 1 means that supply chain entity j deploys practice i with an implementation level of z
• 0 means that supply chain entity j does not deploy practice i

Label z Practice implementation level z, where z = 1 means low level of implementation, z = 2 means
moderate level of implementation, z = 3 means high level of implementation
j Company j where i = 1, ., n (number of companies belonging to the supply chain)
i Practices are labelled by i which comprises a set of m practices: j = 1, 2, 3, . . ., m
86 H. Carvalho et al. / Resources, Conservation and Recycling 120 (2017) 75–87

Table A1 (Continued)

Description Notation Explanation

Objective function ˛ijz Is the contribution of each practice i deployed by company j with an implementation level z to the
coefficient negative environmental impacts. It assumes continuum values between −1 and +1

• ˛ijz = −1 reduction of negative environmental impacts

• ˛ijz = 0 even-handed on negative environmental impacts
• ˛ijz = +1 increase in negative environmental impacts

ˇijz Is the contribution of each practice i implemented by company j with an implementation level z to
the negative economic impacts. It assumes continuum values between −1 and +1

• ˇijz = −1 reduction of negative economic impacts,

• ˇijz = 0 even-handed on negative economic impacts,
• ˇijz = +1 increase in negative economic impacts

Objective function NEnvIj Company j overall negative environmental impacts

NEnvIijz Company j negative environmental impacts of practice i, with an implementation level z
NEconIj Company j overall negative economic impacts
NEconIijz Company j negative economic impacts of practice i, with an implementation level z
NEenvISC Supply chain overall negative environmental impacts
NEconISC Supply chain overall negative economic impacts

Company  ijz Contribution to environmental damage (EnvDamageijz ) of each practice i implemented by

environmental company j with an implementation level z. It assumes continuum values between 0 and +1
constraints
•  ijz = 0 low environmental damage
•  ijz = 0,5 suitable environmental damage
•  ijz = +1 elevated environmental damage

EnvDamageijz Environmental damage of each practice i implemented by company j with an implementation

level z
EnvDamagej Company j the overall to environmental damage
j Maximum value of company j environmental damage. It assumes continuum values between 0
and 1 (number of practices deployed by company j)

•  = 0j = 0 company j should have extremely low environmental damage in all the practices
deployed
•  = 1j = 1 company j can have elevated environmental damage in all the practices deployed

Company economic EconPerfijz Economic performance of each practice i implemented by company j with an implementation
performance level z
constraints EconPerfj The overall economic performance of company j
ıijz Contribution to economic performance (EconPerfijz ) of each practice i implemented by company j
with an implementation level z. It assumes continuum values between 0 and +1

• ıijz = 0 low economic performance

• ıijz = 0,5 suitable economic performance
• ıijz = +1 elevated economic performance

j Minimum value of company j economic performance. It assumes continuum values between 0 and
1

•  i = 0 company j can have low economic performance (ıijz = 0) in all the practices deployed
•  i = 1 company j should economic performance damage (ıijz = +1) in all the practices deployed

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