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Environmentally Responsible Supply Chains pp 313–337Cite as

Managing the Chemicals and Substances in Products and Supply Chains

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Part of the book series: Springer Series in Supply Chain Management ((SSSCM,volume 3))

Abstract

This chapter explores the challenges that companies face in managing the chemicals and substances found in their products and supply chains. The topic is presented from both a practice and an academic perspective. Based on the authors’ work with an environmental nonprofit, a model is presented that examines levers available to both companies and nonprofits for improving the environmental performance of suppliers. The chapter concludes by discussing potential future research directions with respect to chemicals management and sustainable supply chains.

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Notes

  1. 1.

    The chemical composition information shared between supplier and buyer is collected and entered into MiQ by SciVera, a third-party chemical safety assessment provider.

  2. 2.

    Under TSCA, the EPA has successfully restricted the use of only four chemicals. The ban on the use of a fifth chemical, asbestos, was overturned in 1991.

  3. 3.

    Within the supply chain contracting literature, a number of papers analyze how a buyer can incentivize a supplier to improve her quality or process through supplier competition (e.g., Deng and Elmaghraby 2005; Li and Debo 2009), supplier development (e.g., Corbett and DeCroix 2001; Kim and Netessine 2013; Zhu et al.  2007), or a combination of the two (e.g., Li 2013; Li et al.  2013). However, as a nonprofit, GreenBlue is not in a position to coordinate the supply chain. Therefore, we focus our discussion on how the structure of the buyer-supplier dynamic impacts a supplier’s environmental performance.

  4. 4.

    The model presented in Sect. 17.4 is based on the working paper “Buyer and Nonprofit Levers to Improve Suppliers’ Environmental Performance” by Karaer et al.  (2015).

  5. 5.

    There exists an extensive literature that examines conformance quality. For example, Baiman et al.  (2000), Chao et al.  (2009), Lim (2001), and Zhu et al.  (2007) study supplier-buyer interactions in the context of conformance quality. Similar to Kaya and Özer (2009), we instead consider environmental quality or performance as a “demand-enhancing” attribute. We refer the interested reader to Banker et al.  (1998), Karaer and Erhun (2015), Karmarkar and Pitbladdo (1997), and Moorthy (1988) for examples of a firm facing quality decisions under competition.

  6. 6.

    For extreme cases, supplier competition may not always increase quality. Specifically, if there is a large difference between \(\bar{c}\) and c, then cases may occur in which competition does not influence the existing supplier’s quality performance. To ensure that competition produces nontrivial results, we assume throughout our analysis that \(d(2c -\bar{ c}) + y \geq 0\).

  7. 7.

    For 8.0 % of a sample of 868,660 cases tested, q CS ∗(γ ∗) > q C ∗. For these cases, \(\bar{c}/c\) and \(d/\theta\) are both high and the median \(\hat{\omega }= 0.21\).

  8. 8.

    We emphasize that for all three dynamics, it is never optimal for the buyer to use a premium to induce the supplier to produce a quality level greater than the centralized solution. Either the size of the premium needed is too large or the supplier captures too much of the supply chain margin for the buyer to financially justify offering a premium to achieve a quality level that high.

  9. 9.

    A Restricted Substances List is a voluntary list a company creates and publishes to either prevent or restrict the use of nonregulated substances and chemicals in its supply chain.

  10. 10.

    Results regarding public versus private companies were found using a logistic regression model. Surveyed participants included 29 (16) companies with 2013 revenues greater (less) than $1B; 26 retailer/first-tier suppliers and 19 second-tier suppliers.

  11. 11.

    These results were found using a logistic regression model.

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Acknowledgements

The authors thank James Ewell, Minal Mistry (GreenBlue), and Joseph Donlan (University of Virginia) for their helpful contributions to this chapter; Atalay Atasu, Basak Kalkanci, Beril Toktay, and the participants at the 2015 Sustainable Operations Workshop (Georgia Institute of Technology) for their constructive feedback; and Mirko Janc (INFORMS) for his editorial support and helpful feedback.

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Authors and Affiliations

  1. Darden School of Business, University of Virginia, Charlottesville, VA, 22903, USA

    Tim Kraft & Kathryn Sharpe

  2. Industrial Engineering Department, Middle East Technical University, Ankara, Turkey

    Özgen Karaer

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  1. Tim Kraft
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Correspondence to Tim Kraft .

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  1. Scheller College of Business, Georgia Institute of Technology, Atlanta, Georgia, USA

    Atalay Atasu

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Kraft, T., Karaer, Ö., Sharpe, K. (2016). Managing the Chemicals and Substances in Products and Supply Chains. In: Atasu, A. (eds) Environmentally Responsible Supply Chains. Springer Series in Supply Chain Management, vol 3. Springer, Cham. https://doi.org/10.1007/978-3-319-30094-8_17

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