Green supplier development program selection using NGT and VIKOR under fuzzy environment

Highlights

• We investigate the problem of green supplier development program evaluation.

• The approach can be applied under limited or no quantitative data.

• Program evaluation uses linguistic ratings (fuzzy numbers) obtained from experts.

• An integrated approach based on NGT and fuzzy VIKOR is proposed.

• Sensitivity analysis is performed.

Abstract

Developing environmental performance of suppliers is critical for green supply chain management. Organizations are nowadays investing in various green supplier development programs to enhance their supplier performances. The decision to select the right program for green supplier development is often a challenging decision due to lack of prior experience, limited quantitative information, specific context of the organization, and varying supplier backgrounds. This paper addresses the problem of evaluating green supplier development programs and proposes a fuzzy NGT (Nominal Group Technique)-VIKOR (VlseKriterijumska Optimizacija I Kompromisno Resenje) based solution approach. NGT is used to identify criteria for evaluating green supplier development programs. Fuzzy theory is used to address qualitative (linguistic) ratings for the alternatives and the selected criteria used under lack of quantitative information. VIKOR is used to generate green supplier development program rankings and recommend the best program(s) for implementation. Sensitivity analysis is performed to determine the influence of modeling parameters on ranking results of alternatives. A numerical application is provided.

Introduction

Improving the environmental performance of suppliers is critical in developing green supply chains. Suppliers being the first and the foremost critical link in any organization exercise a great control in developing green supply chain performance by furnishing essential raw materials. More and more organizations are investing in various green initiatives such as green purchasing (Min and Galle, 2001, Tate et al., 2012), design for environment, reverse logistics, ISO 14001 certification (Chen, 2005, Chiarini, 2013) to enhance their business performance and competitiveness. Several studies now confirm that organizations involved in greening the suppliers, green operations, and green innovation rank superior on environmental performance and competitive advantage (Caniëls et al., 2013, Chiou et al., 2011, Figge and Hahn, 2012, Lo et al., 2012, Rao and Holt, 2005, Wong et al., 2012, Yang et al., 2010). Therefore, it is critical to investigate solution approaches that enhance environmental performance of suppliers for greening the supply chains.

Environmental performance evaluation of suppliers is the first step in green supplier development. Suppliers who rank low on environmental performance could be assisted through various green supplier development programs such as ISO 14000 certification, supplier training, resource sharing, supplier rewards, capacity building. Bai and Sarkis, 2010a, Bai and Sarkis, 2010b classify green supplier development programs into three categories: green knowledge transfer and communication, investment and resource transfer, and management and organizational practices. The green knowledge and transfer communication programs include supplier training on environmental issues, providing advice on environmental considerations, information sharing on environmental topics, etc. The investment and resource transfer programs include activities such as transferring employees with environmental expertise among buyer–supplier firms, supplier rewards, and investment in supplier capacity building. The management and organizational practices involve developing a formal process of supplier development, mandatory ISO 14000 certification, building top management commitment, etc. Table 1 presents the commonly used approaches in green supplier performance evaluation and development.

It can be seen in Table 1 that majority of the supplier environmental performance evaluation and development approaches used are multicriteria in nature. Bai and Sarkis (2010b) introduced a formal model using rough set theory to investigate the relationships between organizational attributes, supplier development program involvement attributes, and performance outcomes. Fu, Zhu, and Sarkis (2012) introduced a formal structured managerial approach for organizations to help evaluate the influence relationships amongst GSDPs. They used a formalized grey-based DEMATEL methodology within a telecommunication systems provider to evaluate the GSDPs. Blome, Hollos, and Paulraj (2014) adopted the opposing theoretical views of legitimacy in evaluating firm performance and top management commitment as results to green supplier development. Also, they investigated the effects of green procurement and green supplier development on supplier performance. Dou, Zhu, and Sarkis (2014) proposed a grey ANP-based model to determine GSDPs that will effectively develop suppliers’ environmental performance in a leading manufacturer in China’s pivot irrigation equipment industry. Situations of suppliers about environment is determined through supplier monitoring programs which evaluates suppliers’ environmental systems and practices, and according to results of these evaluations, companies aid their suppliers to improve and develop suppliers’ environmental performances and practices through GSDPs. These supplier environmental monitoring programs can provide support such as training or information sharing to other supplier development programs in order to afford improvement in weak areas of suppliers about environmental issues (Fu et al., 2012).

From Table 1, we can also observe that very few studies exist on green supplier development although much work has been done on evaluating the environmental performance of suppliers. Dou et al. (2014) report green supplier development as fertile area of investigation with several opportunities for development of formal models.

In this paper, the problem of evaluating and selecting green supplier development programs for the purpose of ameliorating environmental performance of poorly performing suppliers is investigated. An integrated approach based on NGT (Delbecq et al., 1986, Henrich and Greene, 1991, Moore, 1987) and VIKOR for evaluating green supplier development programs under limited quantitative information is proposed. NGT is used to generate criteria for ranking green supplier development programs. To address data scarcity, participatory decision making techniques involving experts, stakeholders are often used to generate qualitative (or linguistic) ratings for criteria and alternatives (Arnette et al., 2010, Delgado-Galván et al., 2014, Krueger et al., 2012, Ritzema et al., 2010). Fuzzy VIKOR is used to select the best program(s) for implementation. The advantage of VIKOR over other multicriteria decision making techniques is that it is able to deal with conflicting criteria, works independently of criteria units and generates compromise solutions based on closeness to ideal solution (Opricovic, 1998).

The rest of the paper is organized as follows. Section 2 presents the problem definition followed by the solution approach in Section 3. Section 4 contains the numerical application and discussion of results. The managerial implications of the proposed work are given in Section 5. Finally, the conclusions and future works complete the paper in Section 6.