Buyer and supplier perspectives on environmental initiatives. Potential implications for supply chain relationships

• DOI: https://doi.org/10.1108/IJLM-06-2016-0138
• Pages: 1319-1350
• Date: 13 November 2017
• Published date: 13 November 2017
• Author: Monique Lynn Murfield,Wendy L. Tate
• Subject Matter: Management science & operations,Logistics

Buyer and supplier perspectives

on environmental initiatives

Potential implications for supply

chain relationships

Monique Lynn Murfield

Department of Management, Miami University, Oxford, Ohio, USA, and

Wendy L. Tate

Department of Marketing and Logistics, University of Tennessee, Knoxville,

Tennessee, USA

Abstract

Purpose –The purpose of this paper is to examine managerial perspectives in both buyer and supplierfirms

implementing environmental initiatives in their supply chains, and explore the impact of environmental

initiatives on buyer-supplier relationships.

Design/methodology/approach –A qualitative, grounded theory approach is used as the

methodological appro ach to this research, in cluding 15 in-depth int erviews with managers from buyer

and supplier firms imple menting environmenta l initiatives in their sup ply chains to gain multiple

perspectives of the buye r-supplier relationships.

Findings –The results suggestthat implementing environmental initiativeswithin the supply chain changes

the buyer-supplierrelationshipfrom transactional to collaborative,shifting from a commodity-focused purchase

to a more strategic purchaseas environmental initiatives are implemented.

Research limitations/implications –Although both buyer and supplier perspectives were considered,

matched dyads were not used; researchers should continue to provide a holistic perspective of the

phenomenon with dyadic data. Additionally, the use of a qualitative research approach suggests a lack of

generalizability of results, and therefore researchers should further test the propositions.

Practical implications –Implementing environmental initiatives within the supply chain may require

different approaches to supply management and development for long-term success. Suppliers should

recognize that the capability to implement environmental initiatives with their customers is a differentiator.

The nuances involved in managing the implementation of environmental initiatives between firms can be

better managed by collaboratively developing metrics specifically related to the environment.

Originality/value –Previous research in environmental supply chain management has examined drivers

and barriers of implementing environmental initiatives with suppliers, but fails to address the relationship

dynamics involved when implementing environmental initiatives between organizations. This research

begins to fill that gap.

Keywords Buyer-supplier relationships, Environmental sustainability, Grounded theory

Paper type Research paper

Introduction

With many products and processes outsourced, firms are not only held accountable for their

own actions but also for the social and environmental practices of their suppliers

(Cummins, 2016; Lee et al., 2014). This responsibility is increasing in importance as

companies outsource up to 80 percent (or more) of their cost of goods sold. The role of

purchasing in dealing with high risk or high profile issues such as corporate en vironmental

positioning and implementation of environmental initiatives has changed significantly over the

years (Krause et al., 2009). As regulations are implemented and environmental performance is

tracked and reported, the purchasing function is now being tasked to improve the organization’s

environmental footprint (Gimenez and Tachizawa, 2012).

In global supply networks, a firm’s envir onmental performance relies heavily

on the environmental performance of its material, logistics, and service suppliers

The International Journal of

Logistics Management

Vol. 28 No. 4, 2017

pp. 1319-1350

© Emerald PublishingLimited

0957-4093

DOI 10.1108/IJLM-06-2016-0138

Received 3 June 2016

Revised 7 November 2016

13 January 2017

Accepted 13 January 2017

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0957-4093.htm

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Buyer and

supplier

perspectives

(Large and Gimenez Thom sen, 2011; Mollenkopf et al., 2010; Tate et al.,2011;

Dubey et al., 2015; Zhu and Sarkis, 2007). For example, it has been suggested that Scope

3 emissions, those from indirect upstream and downstream activities, can account for up to

70 percent of a firm’s carbon footprint (Cummins, 2016). As a boundary spanner

(Day and Wensley, 1983; Williams and Guinipero, 1994), purchasing creates inter-functional

and inter-organizational linkages crucial to implementing an environmental strategy within

a firm and its supply chain (Min and Galle, 1997; Wu et al., 2014; Lintukangas et al., 2015)

and managing its overall environmental footprint.

The influence that environmental initiatives within the supply chain have on the

inter-firm relationship can differ considerably between buyers and suppliers, especially

when the issues are high profile, ambiguous, or have a potentially high performance impact

(Nyaga et al., 2010). Environmental strategy, regulations, initiatives, and performance

measurement fall within the high profile or high impact categories (Tate et al., 2010).

This research focuses on environmental initiatives implemented across the supply chain,

or between buyer and supplier firms, which are discussed simply as “environmental

initiatives”from this point forward, as they are discussed in the context of implementation

between buyers and suppliers. This research focuses on the influence of environmental

initiatives on buyer-supplier relationships by questioning:

RQ1. How do environmentalprojects or initiatives influence buyer-supplierrelationships?

RQ2. How do high profileor high impact issues such as environmentalinitiatives influence

supplier relationship management and development?

These questions are addressed by first reviewing the research on the importance of

purchasing’s involvement in environmental initiatives, buyer-supplier relationships, and

environmental purchasing issues. Using a protocol that developed from insights in the

existing literature, 15 qualitative in-depth interviews were conducted with managers at both

buyer and supplier organizations implementing environmental projects or initiatives. From

these interviews, some interesting results developed with indications that the relationships

between organizations change in nature due to the implementation of these initiatives.

While it may be common for companies to consider suppliersegmentation and collaborate

with more strategic suppliers on initial efforts for environmental supply chain initiatives

(Vachon and Klassen, 2006, 2008), the results of this research suggest that when companies

work with suppliers or service providers that are not typically strategic, that implementing

environmentalinitiatives has the potentialto shift relationshipsto be more strategic. There are

three inherent reasons for this adaptation –the alignment of environmental strategy and

initiatives acrossorganizations, the level of risk inherentin environmental initiatives, and the

proclivity of bothorganizations to minimize the riskassociated with these types of initiatives,

and finally the changes to performance metrics and measures.

Literature review

Importance of supply management in environmental initiatives

Research and practice have emphasized how supply management contributes to the

sustainability of firms and their supply chains (Andel, 2013; Dubey et al., 2015;

Krause et al., 2009; Lintukangas et al., 2015; Srivastava, 2007). Buyer firms can manage

their environmental footprint through collaborating with suppliers to design more

environmentally responsible products and processes (Carter and Carter, 1998; Lee and

Kim, 2012; Noci, 1997; Porter and van der Linde, 1995; Zsidisin and Siferd, 2001).

Additionally, purchasing managers are able to assess the organizational environment for

product and process change, and analyze materials for resource reduction programs

(Porter and van der Linde, 1995; Walker et al., 2012). For example, one example of an

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environmental supply chain initiative is highlighted in a recent New York Times article,

which suggests that Dannon is working directly with farms that supply milkfor its yogurt

products in order to provide transparency to consumers, improve their use of the land, and

decrease the environmental footprint of Dannon’s supply chain (Strom, 2016).

Research recognizes that firms’need to consider the source of material inputs and

involve suppliers in the initial stages of product development to minimize the environmental

impact of the supply chain (Carter and Dresner, 2001; Pujari et al., 2003; Roome and Hinnells,

1993). Much of the environmental purchasing research has focused on extending

environmental sustainability to suppliers through assessment (see review by Gimenez and

Tachizawa, 2012) and criteria for supplier selection and evaluation processes, including

those that are cost-driven, focus on suppliers’environmental strategy, and examine the

commitment of potential suppliers (e.g. Handfield et al., 2002; Huang and Keskar, 2007;

Humphreys et al., 2003; Min and Galle, 2001; Wong et al., 2012).

As the focus switches away from by-products to raw material manufacturers,

competition among suppliers is also increasing; suppliers are often eager to work with

customers on innovative environmental solutions (Copeland, 2013). Research suggests that

firms are moving away from many transactional supplier relationships toward strategic

partnerships with key suppliers that incorporate environmental factors (Chkanikova, 2015;

Klassen and Vachon, 2003; Lamming and Hampson, 1996; Simpson and Power, 2005;

Vachon and Klassen, 2008). Buyer and supplier firms have to consider how these changes

will influence the more standard performance metrics of cost, quality, and service, and try to

balance those with environmental needs (Butner et al., 2008).

Buyer-supplier relationships and environmental initiatives

Buyer-supplier relationship research is vast in bre adth and depth, wit h reviews

underscoring the dynamic and evolutionary nature of buyer-supplier relationships

(Daugherty, 2011; Palmatier et al., 2007; Terpend et al., 2008). Much scholarship has

centered on a categorization and portfolio approach to buyer-supplier relationships,

hinged on Kraljic’s (1983) seminal article. Kraljic (1983) pushed for purchasing to be

considered as a strategic function and be recast as supply management, though

researchers have just begun to extend this approach to environmentally sustainable

supply management (Chkanikova, 2015; Pagell et al., 2010).

Portfolio approach to managing supplier relationships. The purchasing portfolio model

suggests that organizations have limited resources and will not form strategic relationships

with all of their suppliers, as this would be difficult and costly to maintain (Kraljic, 1983).

Kraljic’s model suggests that supplier relationships vary based on the type of purchase or

category of spend, and that purchasing performance is enhanced when resources are

appropriately allocated (cf. Pagell et al., 2010). The model categorizes purchases into a

four-quadrant matrix based on the strategic importance of the purchase (based on value,

volume, and importance to firm’s key products and strategic objectives) and the supply risk

or complexity of the purchase, as shown in Figure 1.

Noncriticalitems are widely availablefrom multiple suppliers and areoften purchased in a

transactional manner. In contrast,bottleneck itemsare categorized by a high amount of supply

risk or complexity, meaning that few suppliers make the product, input, or provide a given

service. Bottleneck items have to be managed carefully to mitigate risks while minimizing the

costs of the supplier relationship. Leverage items are strategically important inputs to the

overall product or service butwidely available. Finally,strategic items are veryimportant to a

firm’s overall strategic objectivesand profitability, and have a high degree of supply risk and

complexity.Strategic items shouldbe purchased using a total costof ownership approach and

managed through long-term strategic relationships with key suppliers (Kral jic, 1983).

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