Journal of Cleaner Production 18 (2010) 12001210

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Journal of Cleaner Production

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

Green supplier development: analytical evaluation using rough set theory

Chunguang Bai a,1, Joseph Sarkis b, *
a b

School of Management, Dalian University of Technology, Linggong Street, Dalian 116024, PR China Graduate School of Management, Clark University, 950 Main Street, Worcester, MA 01610-1477, USA

a r t i c l e i n f o
Article history: Received 7 September 2009 Received in revised form 16 January 2010 Accepted 18 January 2010 Available online 28 January 2010 Keywords: Environmental Supply chain Greening Supplier development Rough set

a b s t r a c t
Suppliers development is a critical function within supply chain management. Green supplier development is also necessary for effective green supply chain management. Interestingly, there is a gap in the research on how an organization can effectively manage supplier development programs, and specically green supplier development. The use of formal models to aid green supplier development management is virtually non-existent. This paper aims to ll this gap by introducing a formal model using rough set theory to investigate the relationships between organizational attributes, supplier development program involvement attributes, and performance outcomes. The performance outcomes focus on environmental and business dimensions. The rough set methodology utilizes an incomplete information approach which is more realistic in some data poor environments. A multistage rough set methodology is detailed through an illustrative application. The methodology generates decision rules relating the various attributes to the performance outcomes. Included in the discussion are insights into how these rules for individual and aggregated performance (environmental, business, and joint performance) may be evaluated. Practical and research implications of this work are detailed in the paper. 2010 Elsevier Ltd. All rights reserved.

1. Introduction Some of the major issues in environmental sustainability relate to a products life cycle environmental burdens. For organizations to manage these burdens effectively they need to expand their vision of environmentally sound practices to go beyond their organizational boundaries. The one way they can fully accomplish this task from strategic and operational perspectives is through green supply chain management practices and programs. A critical aspect of this interorganizational focus is the development of suppliers, many who are small and do not have the necessary resources to address some of the ller, 2008). serious environmental issues they face (Seuring and Mu Interestingly, even though signicant research has been initiated and ller, completed on green supply chain management (Seuring and Mu 2008; Srivastava, 2007; Ilgin and Gupta, 2010), investigation into sustainability and supplier development programs is virtually nonexistent. Even general supplier development literature and research related to business performance is a relatively recent area of investigation. Much of this research is empirically based with a focus on general relationships between supplier development practices and

* Corresponding author. Tel.: 1 508 793 7659; fax: 1 508 793 8822. E-mail addresses: chunguang.bai@gmail.com (C. Bai), jsarkis@clarku.edu (J. Sarkis). 1 Tel.: 86411 8740 3728; fax: 86411 87403733. 0959-6526/$ see front matter 2010 Elsevier Ltd. All rights reserved. doi:10.1016/j.jclepro.2010.01.016

performance (e.g. Krause et al., 1998; Narasimhan et al., 2008; Wagner and Krause, 2008). The development or application of formal tools and models has been very limited in general supplier development programs. These types of models are recommended by the literature to help in supplier improvement and management (Krause et al., 1998). Formal tools and models for environmental supplier development to aid companies in managing environmental performance of suppliers are even more limited. Thus, in recognition of this fact, we introduce a formal methodology utilizing rough set theory as a modeling tool to aid organizations evaluate the performance of various environmental supplier development practices. One important purpose of such formal models is to aid organizations prioritize their investments in these programs to address the locus of investments for environmental supplier development initiatives (Narasimhan et al., 2008). All organizations have limited resources. Many times, unless there is signicant direct economic returns or because of mandated policies, the implementation of green supply chain programs may be disregarded. Thus, the determination of which specic green supplier management programs are most useful may free up resources that may enhance the returns on these programs while meeting environmental goals. Thus, formal models that help to identify specic green supplier programs that inuence either or both environmental and economic benets may provide easier justication for their inclusion by managers. This type of formal modeling tool is valuable for planning, design,

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implementation or maintenance of green supply chain management programs in organizations. The formal modeling approach introduced in this paper, using rough set methodology, will go through a number of stages resulting in a general series of rules that identify relationships between attributes of green supplier development programs, organizational characteristics and performance outcomes. The technique will involve the development of an information system table that includes conditional attributes comprised of various organizational characteristics and green supplier development programs. The information system table will also include decision attributes that will include previous performance on environmental and business dimensions. Suppliers represent the objects that will also be used to form the information system table. Rough set theory is a non-parametric methodology that completes a series of set theoretic operations and Boolean algebra to help reduce the set of attributes and suppliers to arrive at rules of various relationships between the conditional attributes (supplier characteristics and program involvement) and performance. It is advantageous in providing general relationships and also identifying the most pertinent factors that could contribute to environmental or business performance. Knowing this information will aid organizations to more effectively manage programs. Researchers and practitioners may also nd this methodology valuable to help narrow the set of factors that can be utilized in other techniques ranging from multi-attribute decision making to econometric and multivariate statistical tools. Thus, the goal of this paper is to show how rough set theory can be used to evaluate the results of green supplier development programs relationship to environmental or economic performance in an organization. To accomplish this goal the paper begins with a discussion and review of green supplier development programs and some previous work on evaluating the relationships of these programs. In addition some background on related tools for analysis of green supplier programs that do exist will help us identify what gaps occur in the literature. We then generally introduce the basic concepts associated with rough set theory including advances related to incomplete information analysis. Then, using an illustrative application example, we detail the methodology in a stepby-step detailed process. The results are presented with some discussion analyzing the results and implications of the technique. We nally conclude the paper with some limitations and future research directions in this emergent eld and topic. 2. Green supply chain management Recent topics on the greening of the supply chain have extended the work from conceptual developments to more rigorous empirical ller, 2008). The integration of and analytical studies (Seuring and Mu environmental concerns within supply chain management has itself evolved into a separate and growing eld. There have been hundreds of papers that have helped this sub-eld progress over the past couple of decades. Within the operations and supply chain management elds, there have been a number of journals introducing special issues related to green supply chain management topics, which also have been called sustainable supply chains (Jayaraman et al., 2007; Piplani et al., 2008; Seuring et al., 2008; Linton et al., 2007). As the eld has matured, reviews of the literature have also started to appear, e.g. ller, 2008; Srivastava, 2007; Ilgin and Gupta, 2010). (Seuring and Mu Theory and more complete understanding for this inchoate discipline are currently evolving. The terminology for the green supply chain management concept (and its many elements) has had many variations over the years and a comprehensive list includes some of the following terms:

 Sustainable supply network management (Young and Kielkiewicz-Young, 2001; Cruz and Matsypura, 2009);  Supply and demand sustainability or corporate social respon cs, 2004) sibility networks (Cruz and Matsypura, 2009; Kova  Supply chain environmental management (Lippman, 2001; Sharfman et al., 2009);  Green purchasing (Min and Galle, 1997) and procurement nther and Scheibe, 2006); (Gu  Environmental purchasing (Carter et al., 2000; Zsidisin and Siferd, 2001)  Green logistics (Murphy and Poist, 2000) and environmental lez-Benito and Gonza lez-Benito, 2006) logistics (Gonza  Sustainable supply chains (Linton et al., 2007) In this paper, we focus on the relationships with upstream supply chain members (purchasing and vendor relationships) and their management from an environmental perspective. The practices available for green supplier development are as extensive as regular supplier development programs since many of these traditional development programs can be integrated with an environmental perspective. Researchers have categorized these green supply practices into various dimensions using a variety of empirical studies and scales (e.g. Zhu and Sarkis, 2006, 2007; Walton ller, in press; et al., 1998; Hervani et al., 2005; Lee, 2008; Thun and Mu Chien and Shih, 2007). Many of these studies have sought to link these practices to economic and environmental performance of an organization. These practices from the literature do not necessarily relate to supplier development activities, but could just be ways organizations green their supply chains. For example, the practice of auditing suppliers environmental performance may only be for selection purposes and not necessarily to help in supplier development. Development programs would be those focused on helping suppliers improve their environmental performance or relationships with a focal (buyer) organization. Green supply chain practices do provide an initial foundation for categorizing supplier development programs. One categorization that has been introduced is whether the practices are evaluative (e.g. environmental performance assessment) or collaborative (offering technical assistance) (Klassen and Vachon, 2003). In the broader supplier development literature categories for supplier development programs include practice groupings such as trust building, nancial investment, relational norms development, knowledge transfer, collaborative communication, bilateral management involvement, internal & external supplier integration, and socialization mechanisms (Narasimhan et al., 2008; Giannakis, 2008; Modi and Mabert, 2007; Lawson et al., 2009; Das et al., 2006). In this paper we have distilled and integrated the variety of practices that have appeared in this supplier development and green supply chain management literature. We arrive at three major, not necessarily mutually exclusive, categories as shown in Table 1. These categories include green knowledge transfer and communication, investment and resource transfer, and management and organizational practices. Since the purpose of this study is to help develop a methodology to evaluate the relationships to performance of these environmental supplier development practices, we will not delineate or detail the denitions, strengths and weaknesses of each. Given the large number of potential green supplier development practices rms can adopt, it is reasonable to assume that not all rms can afford to incorporate all these practices, or to determine the locus of investment easily for green supplier development practices (Narasimhan et al., 2008). Practically, a rm with limited resources would seek to prioritize the investments to be made in these green supplier development practices. Aiding organizations in this prioritization or evaluation of green supplier development

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Table 1 A comprehensive listing and categorization of environmentally-oriented (green) supplier development practices and activities. Green knowledge transfer and communication Training supplier employees on environmental issues Train suppliers in stakeholder expectations Train users in environmental capabilities Train suppliers on environmental and cost controls Giving green manufacturing related advice and awareness raising for suppliers Giving green technological advice to suppliers Giving eco-design product development related advice to suppliers (e.g. processes, project management) Conduct training and education programs for supplier personnel Supplier environmental evaluation and feedback Develop supplier environmental assessment programs Providing feedback about supplier environmental performance Strong formal supplier environmental evaluation Setting environmental improvement targets for suppliers Auditing suppliers Joint and team problem solving on environmental issues Information sharing on environmental topics Ongoing communication with supplier community via supplier environmental councils Investment and resource transfer Invest in improvement of transaction processes Reduce supplier environmental costs Solve supplier environmental technical problems Finance supplier major capital environmental expenditures Transferring supplier employees with environmental expertise to buying rm Transferring employees with environmental expertise to suppliers Investment in supplier capacity building Supplier rewards and incentives for environmental performance Management and organizational practices Requiring ISO 14000 certication for suppliers Long-term contracts with environmental dimensions incorporated Introduce a cross-functional supply chain team with environmental presence Building top management commitment/support within buyer organization for green supply practices Building top management commitment/support for supplier organization for green supply practices Organization management has formal long-term plans improve supplier performance Formal process for supplier development Identication of high-performing critical suppliers for cost reduction and other improvement opportunities Criteria established about when to enter into supplier development Formal process to identify supplier cost reduction targets The participation level of suppliers in the eco-design stage. The participation level of suppliers in the process of procurement and production. Sources: (Krause et al., 1998; Narasimhan et al., 2008; Wagner and Krause, 2008; Modi and Mabert, 2007; Lawson et al., 2009; Das et al., 2006; Dunn and Young, 2004; Williams, 2006; Sarkis, 1999).

practices is not extensively covered in the research literature. Most of the studies on supplier development practices, their antecedents, and outcomes (performance) have been studied either conceptually or in broad-based empirical surveys. These studies provide good overviews of relationships and their strengths and relationships in broad-based studies. Specic formal analytical models that help to evaluate how well specic and idiosyncratic supplier development practices are executed and to help organizations make decisions related to possible investments in green supplier development practices do not exist. 3. Formal models in green supplier development evaluation The utility of formal models for decision making and management for suppliers is recognized. The relative paucity of these models is a concern for the diffusion of green supply chain management

concepts amongst practitioners and researchers. Research into these more formal decision support models has included a number of tools. One of the more popular tools is the use of the multi-attribute decision making approach called the analytical hierarchy (network) process (AHP/ANP). The utilization of AHP to supplier assessment has been pursued (Handeld et al., 2002; Sarkis, 2003). AHP has been used to expose and identify poor environmental performers within the supply base, and to help direct supplier development strategies. AHP has been shown to be helpful in evaluating the suppliers. One of the few applications of ANP to supply practices evaluation from a general organizational perspective has been developed to evaluate various green supply chain practices, technologies and programs (Sarkis, 2003; Pochampally et al., 2009). Although application of AHP/ANP for evaluation purposes has some advantages, it is typically based on the perceptions of managers and decision makers, with a rigorous relationship evaluation to determine the strength and clarity of relationship not always present. Many times in this process a manager may have many factors that may or may not relate to performance outcomes. Having an approach to help identify the most pertinent and related factors, such as rough set theory, could prove valuable and complementary to a tool such as AHP. AHP ts within the category of multiple criteria decision making tools. A number of these multiple criteria formal decision making tools have been applied to environmental decision making within organizations and sometimes for supply chain management and design. For example goal programming has been used to strategic supplier selection and allocation of resources (contracts) (Tsai and Hung, 2009); data envelopment analysis has been applied to environmental technology (of which green supply chain practices may exist) evaluation and selection (Sarkis, 1999, 2000); and general mathematical (linear, integer) programming has been applied to supply chain network design for reverse logistics and general supply chains (Min et al., 2006; Hugo and Pistikopoulos, 2005); and outranking for environmental project selection (Rogers and Bruen,1998); water resources environmental supply chain management with the Borda and mathematical modeling approaches (Levner et al., 2008). From among these broad set of formal models no application for the evaluation of green supply chain development programs exists in the literature. Even though a variety of these and other techniques could have been selected for this green supplier development evaluation, e.g. regression or fuzzy systems, the main advantage of rough set theory is that it does not need any preliminary or additional information about data such as probability in statistics, or basic probability assignment, grade of membership or the value of possibility in fuzzy set theory (Pawlak, 1997). Rough set methodology can also effectively evaluate incomplete and intangible information. Also multi-attribute tools (e.g. AHP/ANP) typically require a priori denition of factors and signicant input from decision makers for the evaluation. For rough set methodology, the relative input required from decision makers when compared to AHP/ANP is signicantly less. As mentioned previously rough set can be used in conjunction with these and other tools to help complement the limitations such as poorly dened factors for AHP/ANP (Bai and Sarkis, 2010). Before introduction of an illustrative case study based on author generated data we initially introduce some basic rough set notation and denitions. 4. Rough set theory Rough set theory, proposed by Pawlak (1982), is a mathematical approach to vagueness and ambiguity. The method classies objects into similarity classes (clusters) containing objects that are indiscernible with respect to previous occurrences and knowledge. These similarity classes are employed to determine hidden data patterns

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or rules. Rough set theory has seen signicant application in datamining approaches. Approximation vagueness is usually dened by precise values of lower and upper approximations. Lower approximations describe the domain objects which denitely belong to the subset of interest. Upper approximations describe objects which may possibly belong to the subset of interest. The difference between the upper and the lower approximations constitutes a boundary region for the vague set. Hence, rough set theory expresses vagueness by employing a boundary region of a set. If the boundary region of a set is empty it means that the set is crisp, otherwise the set is rough (inexact). In many real world applications, the boundary regions are not always so crisp. For example, sometimes the performance of a supplier development program may have very good performance, and sometimes this performance may not be good even with similar characteristics and attributes. To more fully set the stage for the rough set theory supplier development application we introduce some notation and denitions. Denition 1. Let U be the universe and let R be an equivalence relation on U. For any subset XU, the pair T (U,R) is called an approximation space. The two subsets:

programs and organizational attributes) and the decision attributes (supplier environmental and business performance outcomes). To provide exibility into the application of the rough set methodology we will incorporate incomplete information into our analysis for both the conditional and decision attributes. To show the exibility of the approach we also include multiple decision attributes, or performance outcomes, that can be used to get specic and overarching, integrative, rules.

5. Methodological exposition through an illustrative application The illustrative case example will provide us with insights into application of the rough set approaches for green supplier development program evaluation. The technique to be proposed here is composed of seven steps. We shall go through each of these steps in detail with methodological operations explicitly presented. First, let us dene the information system table for the illustrative application. For our illustrative case U {Si, i 1, 2, . 30} (i.e. 30 suppliers) with ten total conditional attributes C {cj, j 1, 2, 3, . 10} each. The conditional attributes represent various supplier development programs and organizational characteristics. We assume the buyer organization has a mixture of three green knowledge transfer conditional attributes, G1, G2, and G3; two investment and resource transfer conditional attributes I1, I2; and two management and organizational practices attributes M1, and M2. We also incorporate three organizational characteristic attributes such as protability, size and industry (O1, O2, O3, respectively). These environmental supplier development attributes are a subset of the listing in Table 1. For the case illustration we assume two decision attributes D1 and D2. D1 represents a column whose outcome (decision attribute) is environmentally-oriented performance. D2 represents a column whose outcomes are business-oriented performance. Table 2 shows the full information system table. A series of steps to be able to complete a rough set analysis are now presented. Our rst step is to populate the table into the appropriate format. We now describe the steps of the methodology. 5.1. Step 1: populate the information system table The data in this illustrative application is randomly generated by the authors for illustrative purposes. To populate the information system table we utilize categorizations (information function) for attribute ranges for each conditional attribute (Va). The conditional attributes in this illustrative application include factors G1, G2, G3, I1, I2, M1, M2, O1, O2, O3. The decision attributes for this illustrative application include the business and environmental performance outcomes. These factors are now more fully described. We dene the seven green supplier development attributes (G1, G2, G3, I1, I2, M1, M2) to have information functions that are discrete with a range of 15 depending on level of involvement by suppliers in these programs (1 No Involvement, 5 Very High Involvement). These discretized values may be determined from either actual or perceptual data. For example, a relatively high amount of monetary investment (I1) in a supplier (Supplier 1) by a buyer will be assigned a value of 5 (i.e. f(1,I1) 5). In some cases perceptual/intangible values may need to be assigned. For example, participation level of supplier in eco-design initiatives may be less tangible and require managerial input on relative participation. Let us assume that managerial input showed that Supplier 1 had low levels of involvement or participation in eco-design initiatives (M2), then f(1,M2) 2. For the three organizational characteristic variables (O1, O2, and O3) we assume three levels (13) each. In our case we assume O1 to

RX RX

 xU xR 4X xU jxR XX sf

(1) (2)

are called the R-lower (1) and R-upper (2) approximation of X, respectively.

BNR X RX R X

(3)

Thus the R-boundary region of X is represented by expression (3). If BNR(X) 0, then we have a crisp set, BNR(X) > 0 provides us with a rough set for our evaluation. POSR X R X is used to denote the R-positive region of X (represented by the blackened cells in Fig. 1). NEGR X U RX is used to denote the R-negative region of X (which is represented by the white cells in Fig. 1). The cells in Fig. 1 represent objects to be evaluated, white cells are considered to be outside the rough set, black cells are denitely within the rough set. Grey cells in Fig. 1 may or may not t within our set. Denition 2. Let S (U, C W D, V, f) be an information system where U is the universe, and C and D are conditional and decision attribute sets for U, respectively; V W Va indicates the attribute range of attribute a; f:U (C W D) / V is an information function, that is for cxU if aC WDthen f(x,a)Va. This denition will be used later in our process to help identify relationships among the conditional (environmental supplier development
aC WD

Fig. 1. A graphical representation of a rough set environment.

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Table 2 The information system for the illustrative application. Supplier identier Conditional attributes (C) G1 Supplier1 Supplier2 Supplier3 Supplier4 Supplier5 Supplier6 Supplier7 Supplier8 Supplier9 Supplier10 Supplier11 Supplier12 Supplier13 Supplier14 Supplier15 Supplier16 Supplier17 Supplier18 Supplier19 Supplier20 Supplier21 Supplier22 Supplier23 Supplier24 Supplier25 Supplier26 Supplier27 Supplier28 Supplier29 Supplier30 5 2 5 2 4 2 2 5 3 3 4 1 3 4 3 2 5 3 3 2 4 1 1 4 5 2 2 4 3 1 G2 * 3 5 3 5 5 5 2 2 2 4 5 2 2 * 4 * 3 3 4 4 3 3 5 5 3 4 * 2 1 G3 5 1 3 1 2 3 3 3 5 3 2 3 5 1 4 2 3 3 4 2 2 3 3 2 3 1 2 1 5 2 I1 3 4 2 4 2 2 2 4 4 5 5 2 4 3 5 3 4 1 5 3 5 1 1 2 2 4 3 3 4 5 I2 4 1 3 1 5 4 4 3 2 2 4 4 3 2 4 3 3 2 4 3 4 2 2 5 3 1 3 2 3 2 M1 5 * 4 2 3 5 5 * 3 2 5 5 2 1 3 3 4 * 3 3 4 5 5 3 * 2 3 1 2 1 M2 5 4 4 2 4 5 5 4 3 1 4 5 3 2 2 2 4 1 2 2 4 1 1 4 4 4 2 2 3 1 O1 3 3 3 3 2 1 1 1 2 1 2 1 1 2 3 2 1 2 3 2 2 2 2 2 3 3 2 2 1 3 O2 3 2 3 2 3 2 2 2 2 1 3 2 2 3 2 2 2 1 2 2 3 1 1 3 3 2 1 3 2 1 O3 2 1 3 1 2 2 2 3 2 1 2 2 1 3 2 2 3 2 2 2 2 2 2 3 3 1 2 3 1 2 Decision attributes D1 3 1 3 1 2 3 3 * 2 1 3 2 2 1 * 2 3 2 2 1 3 1 1 3 3 1 1 1 2 1 D2 3 2 3 2 2 1 1 2 1 1 2 1 1 3 3 2 2 1 2 2 2 1 1 3 3 1 1 3 1 2

represent organizational size, O2 to represent protability of organization, and O3 to represent Industry. Notice that conditional attributes valuations do not necessarily have to represent ordinal or interval data (size, protability), but may be categorical (industry). For VO1O3 only three levels are assigned for each of these organizational attributes; three sizes of companies (e.g. large, medium and small), three levels of protability (e.g. Low, Moderate, and High), and three industries (e.g. Metals, Chemicals, Pulp and Paper). The ranges for each level of the data can be determined by the analyst. It is necessary to keep in mind that a larger number of levels or categories within an attribute may make it more difcult to reduce sets at later stages, especially when common relationships are to be evaluated. The decision attributes (performance data) are also assigned three levels (1- Low performance, 2-Moderate Performance, and 3-High Performance). These values may be assigned based on actual or perceptual data. Discretizing the information greatly helps the discriminatory capabilities of the process. Two types of performance data are included for the illustrative application (Environmental and Business performance). Business performance for suppliers may include such characteristics of cost, delivery reliability, delivery speed, exibility in meeting volume requirements, etc. Environmental performance can be the amount of wastes generated by the supplier, green house gas emissions, or a number of other environmental performance categories. Even though we have two categories for performance, each of the performance categories can be further disaggregated to more specic performance measures. Specic performance measure relationships to decision attributes may be completed and relationship rules may be generated for each measure. Another approach is to aggregate these specic measures (e.g. air emissions, solid waste emissions, water emissions, etc.) into a general category of environmental performance before the rough set analysis. This type of aggregation could be

completed using multi-attribute tools such as AHP or Grey Relational Analysis. At this time, to maintain clarity in the process description we only include the two general decision attribute (performance outcome) categories. One nal aspect of our information system table is that not all information for each attribute across the various suppliers may be available. Missing, or incomplete, information is designated by an * in Table 2. We incorporate incomplete data to show the exibility of the approach and to introduce some of the latest methodological characteristics of rough set theory. 5.2. Step 2: determine conditional attribute elementary sets and overall information content Rough set theory requires some simplication of the data to be able to arrive at overall rules. Reducing the number of attributes, attributes reduction, is required for applications of knowledge discovery and data-mining in databases. Attribute reduction seeks to remove superuous attributes from information systems while preserving the consistency of classications (Wang and Miao, 1998). The reduction with the minimal number of attributes for a given database is called the minimal reduction. In this and additional steps we focus on the use of rough set theory to deduce the reduced set of attributes and a discernibility matrix to nd the relationships between the environmental supplier development practices (our conditional attributes), supplier organizational characteristics, and supplier performance outcomes (our decision attributes). To complete these steps, we need to determine the various conditional attribute elementary sets (X) for the suppliers. The rst step in this process is to determine how the level of information content across the conditional attributes (C) in the information system table using the expression (4) based on (Liang et al., 2006).

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jU j 1 X

1205

I C 1

j U j2 i 1

jX i j

(4)

Table 3 Elementary sets based on similar conditional attribute values. Elementary set type TYPE1 TYPE2 TYPE3 TYPE4 TYPE5 TYPE6 TYPE7 TYPE8 TYPE9 TYPE10 TYPE11 TYPE12 TYPE13 TYPE14 TYPE15 TYPE16 TYPE17 TYPE18 TYPE19 TYPE20 TYPE21 Supplier members in elementary set type Supplier1 Supplier3, Supplier25 Supplier21 Supplier11 Supplier6, Supplier7 Supplier8, Supplier17 Supplier24 Supplier5 Supplier12 Supplier13, Supplier29 Supplier15, Supplier19 Supplier9 Supplier18 Supplier16, Supplier20 Supplier4 Supplier22, Supplier23 Supplier10 Supplier2, Supplier26 Supplier27 Supplier14, Supplier28 Supplier30 Number of suppliers in set (jXj) 1 2 1 1 2 2 1 1 1 2 2 1 1 2 1 2 1 2 1 2 1

In expression (4) I(C) is the information content2 over the full set of conditional attributes (in our case the supplier development programs and organizational characteristics), jUj is the cardinality of the universe of suppliers (30 in our example). j Xij is the number of suppliers with similar attributes levels across all the conditional attributes for a supplier i. It is also dened as the number of members within the conditional attribute elementary set for supplier i. That is, two suppliers i and j are members of the same set only if c(i) c(j) for every cC, where c(i) denotes the value of attribute c for supplier i, and C is the full set of conditional attributes under consideration. Expression (5) describes this as a binary relationship between two elements in the set U with complete information and expression (6) describes this binary relationship with incomplete information (Kryszkiewicz, 1999, 1998).

SIM C fi; jU U jccC ; ci cjg

(5)

SIM C fi; jU U jccC ; ci cj; or ci *; or cj *g 6 SigC nfG1g G1 I C I C nfG1g

From step 2 we know I(C) 0.946667. Using Expression (4) we calculate I(C/{G1}) 0.937778. Thus, SigCn{G1}(c) 0.946667 0.937778 0.008889. The only other supplier programs that provide signicant (non-zero) signicance values are programs and characteristics M1, M2, O2 and O3 with signicance values of 0.002222, 0.004444, 0.004444, and 0.002222, respectively.

Xi is dened as the set of {iUj(i,j)SIM(C)}. Thus, Xi is the maximal set of objects which are possibly indiscernible by C with i. As an example, supplier 3 is in the same conditional attribute elementary set (type) as supplier25, thus jX3j 2. This situation also makes jX25j 2. See Table 3 for the listing of all the conditional attribute elementary set types and respective jXjj values for each object (supplier) within that set. Thus, using expression (4) and the data in Table 3 the information content for the original set of conditional attributes is

5.4. Step 4: form core attribute matrix and reducts We now form an initial matrix made up of only the core remaining conditional attributes and the decision attributes. The formation of this matrix is based on the results from step 3 where:

I C 1

1 j30j

! 1 2 1 . 2 2 1

48 900

0:946667 coreC
5.3. Step 3: determine information signicance of each green supplier development program and organizational characteristic (conditional attribute) Next we identify the information signicance of each of the attributes (green supplier development programs or organizational characteristics). The information signicance will help to reduce the set of programs and organizational characteristic attributes and only keep those conditional attributes that provide strong evidence and relationships with the performance outcomes. This relationship may be negative or positive. To determine the information signicance of a conditional attribute (SigCn{c}(c)) we use expression (4) and (7).

 o  cC SigC nfcg c > 0

(8)

SigC nfcg c I C I C nfcg

(7)

In this situation core (C) {G1, M1, M2, O2, O3}. We then compare the information content of the core set I(core(C)) with the information content of the original conditional attribute set (I(C)). To calculate I(core(C)) we use expression (4) only including conditional attributes G1, M1, M2, O2 and O3. If I(core(C)) I(C) we stop, this is the reduced set of conditional attributes and we can form the reduced core attribute matrix shown in Table 4. We nd that I(core(C)) 0.946667 I(C) 0.946667. We stop at this point and the core has been found. If I(core(C)) < I(C), another attribute is added into the core set and the new core sets information content is calculated. This calculation is completed using a three step procedure (Liang and Xu, 2002): a. For each conditional attribute c not in the core set (cC-core(C)) calculate the signicance where:

Expression (7) identies the difference between the information content of the full set and the information content of the reduced set that does not include attribute c. Thus the signicance of the green supplier development program G1 is written as:

SigcorefC g c I coreC fcg I coreC

(9)

This term has also been dened as information entropy of a system (Liang and Shi, 2004).

b. The conditional attribute c0 not in the core set with the maximum signicance is selected and this conditional attribute is added to the core set. That is:

1206 Table 4 The reduced core attribute matrix. Supplier identier Conditional attributes (C) G1 Supplier1 Supplier2 Supplier3 Supplier4 Supplier5 Supplier6 Supplier7 Supplier8 Supplier9 Supplier10 Supplier11 Supplier12 Supplier13 Supplier14 Supplier15 Supplier16 Supplier17 Supplier18 Supplier19 Supplier20 Supplier21 Supplier22 Supplier23 Supplier24 Supplier25 Supplier26 Supplier27 Supplier28 Supplier29 Supplier30 5 2 5 2 4 2 2 5 3 3 4 1 3 4 3 2 5 3 3 2 4 1 1 4 5 2 2 4 3 1 M1 5 * 4 2 3 5 5 * 3 2 5 5 2 1 3 3 4 * 3 3 4 5 5 3 * 2 3 1 2 1 M2 5 4 4 2 4 5 5 4 3 1 4 5 3 2 2 2 4 1 2 2 4 1 1 4 4 4 2 2 3 1

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Any decision table may be regarded as a set of generalized decision rules of the form
Decision attributes O2 3 2 3 2 3 2 2 2 2 1 3 2 2 3 2 2 2 1 2 2 3 1 1 3 3 2 1 3 2 1 O3 2 1 3 1 2 2 2 3 2 1 2 2 1 3 2 2 3 2 2 2 2 2 2 3 3 1 2 3 1 2 D1 3 1 3 1 2 3 3 * 2 1 3 2 2 1 * 2 3 2 2 1 3 1 1 3 3 1 1 1 2 1 D2 3 2 3 2 2 1 1 2 1 1 2 1 1 3 3 2 2 1 2 2 2 1 1 3 3 1 1 3 1 2

^a; v/nd; w;

where

aA; v Va ; wVd ; d;A

(12)

The discernibility matrix can then be formed where the elements in the discernibility matrix can be dened as follows:

9 8 < aA; where Va xsVa y and Va xs* and = aA x; y Va ys*; x; yU ; : B; where dx dy; x; yU (13)
We now arrive at discernibility rules (functions) D which is a discernibility function for a decision table D if and only if
D

DD ^fnaA x;y:x;yU fzU ;dz;vA xg;aA x;ysfg (14)

DD(x) is a discernibility rule for an object x in a decision table D if
and only if

DD x ^fnaA x; y : yfzU ; dz;vA xg; aA x; ysfg

(15)

The full set of discernibility rules for suppliers with High Environmental, DD13 (i.e. D1 3), and High Business, DD23 (i.e. D2 3), performance are shown in Table 5. The rst rule, (G1 5)^(O2 3), states that if a supplier has a high level of involvement in green knowledge transfer program 1 (G1 5) and has high protability (O2 3) then the environmental performance is expected to be high. This is a relatively strong rule with the RSES program generating 3 observations of this rule. 5.6. Step 6: Filtering rule sets and identifying relationships between green supplier development programs, supplier organizational characteristics and performance outcomes Initially, to arrive at a slightly more concentrated set of relationship rules, we go through a simple minimum decision algorithm. If there are relationship rules (functions) that have the same set of conditional attributes within these relationships, then it would sufce the rule to take the lower bound, encompassing values associated with those attribute relationships. This is a dominance rule that assumes ordinal variables (it is not a rule that can be applied to categorical variables such as industry). Formally, that is:

If c0Cn(core(C)), let SigcoreC c0 and

coreC Wfc0 g/coreC :

cC =corec

max

fSigcoreC cg

c. If I(core(C)) I(C), then stop this is the reduced set of conditional attributes and we can form the reduced core attribute matrix shown in Table 4, else go to sub-step a of this procedure. The core set is also call a reduct. Formally, a set A 3 C is a reduct of an information system S if and only if SIM(A) SIM(C), cB 3 A, SIM(B) s SIM(C). 5.5. Step 5: formation of rules between core conditional attributes (initial reducts) and decision attributes In this step we take the core attributes (initial reducts) of the previous steps and relate them to the various decision attributes through a series of rules to discern the relationships. We will complete this step by utilizing the Rough Set Exploration System (RSES) (Bazan and Szczuka, 2005) software and uses expressions (10)(15) below based on the works of Liang et al. (2006), Kryszkiewicz (1999, 1998), Pawlak (1991). The methodology to formally complete step 5 rst requires denition of a function vA:U / P(Vd), A 4 C as follows:

  if DD C ; Vi 4DD C ; Vj DD C ; Vj

then

DD C ; Vi WDD C ; Vj

 (16)

As an example, let us take a look at three rules from Table 5 for

DD1 3:
G1 2^M1 5 G1 5^M1 5 G1 4^M1 5
We see that the G1 green supplier development program for each of these rules has a moderately low (G1 2), high (G1 5), and moderately high (G1 4) levels of involvement (while M1 5), that result in high environmental performance. We can assume that any supplier with moderately low levels and higher involvement in green supplier development program G1 and high levels of involvement in green supplier development program M1 (M1 5) will generate high levels of environmental performance. Thus the rule (G1 2) ^ (M1 5), with the minimal level of involvement in G1 that provides high environmental performance is assumed to subsume (dominate) the other rules, which are deemed redundant, and thus we can simplify the rule set.

vA x fi : i dy; ySA xg

(10)

where vA is the generalized decision in D (the decision matrix or table) and SA(x) denotes that the set {yU:(x,y)SIM(A), A 3 C} as the maximal set of objects which are possibly indiscernible by A with x. The minimal reduct for D is dened as follows: a set A 4 C is a reduct of D if and only if

vA x vC x; cB3A vB xsvC x:

(11)

C. Bai, J. Sarkis / Journal of Cleaner Production 18 (2010) 12001210 Table 5 Initial full set of rough set decision rules (DD) Generated for D D1, D2, (D1 3, D2 3)(High performance).

1207

DD13
(G1 5) ^ (O2 3) (M2 4) ^ (O2 3) ^ (O3 3) (M1 4) (M1 5) ^ (O2 3) (G1 2) ^ (M1 5) (G1 2) ^ (M2 5) (G1 5) ^ (M1 5) (G1 5) ^ (M2 5) (G1 5) ^ (O3 2) (M2 5) ^ (O2 3) (G1 4) ^ (M1 5) (M1 5) ^ (M2 4) (M1 3) ^ (O3 3) (G1 4) ^ (M2 4) ^ (O3 3)

Number of occurrences 3 3 3 2 2 2 1 1 1 1 1 1 1 1

DD23
(O2 3) ^ (O3 3) (G1 5) ^ (O2 3) (G1 4) ^ (O3 3) (G1 4) ^ (M1 1) (M1 1) ^ (M2 2) (M1 1) ^ (O2 3) (M1 1) ^ (O3 3) (G1 4) ^ (M2 2) (M2 2) ^ (O2 3) (M2 2) ^ (O3 3) (G1 5) ^ (M1 5) (G1 5) ^ (M2 5) (G1 5) ^ (O3 2) (M2 5) ^ (O2 3) (M1 3) ^ (O3 3)

Number of occurrences 5 3 3 2 2 2 2 2 2 2 1 1 1 1 1

business performance. To arrive at these rules one more step in this evaluation process is completed to integrate the nal rule sets. We have two sub-steps for this process. The rst sub-step is to determine the rules that intersect (17) completely on both the attributes and values.

DG C ; V DD1 C ; V XDD2 C ; V

(17)

Where DG(C,V) is the generalized rule for the aggregated business and environmental performance outcome. These rules are directly put into our nal aggregated set. For example, we have three rules from Table 6 that are equivalent. These are:

G1 5^O2 3 G1 5^O3 2 M1 5^O2 3

The second sub-step is to determine the intersection of rules based on similar attributes within for each of the decision outcomes. Once these rules are identied, they are integrated by applying a dominance rule that only includes the higher value associated with the attributes, or them more restrictive rule in line with intersect logic. For example we have (G1 2) ^ (M1 5) >DD13 and (G1 5)&(M1 5)>DD2 3. The intersection of these rules yields (G1 5) ^ (M1 5) >DG3. The nal rule set for the generalized performance (joint economic and environmental performance) is shown in Table 7. 6. Results and interpretations Discussion into how these rules for individual and aggregated performance may be evaluated is now presented. Using the nal results in Tables 6 and 7 we can examine all the rules that result in high performance. We can begin this analysis be rst determining which green supplier development programs are not needed for higher performance in either business or environmental performance. We see that none of the Investment and Resource Transfer categories (I-categories) are in the rule sets. The organization should evaluate why these programs are not producing (related to) either good environmental or business performance. From a practical perspective, organizations can either seek to improve these green supplier development programs or eliminate them. From research or theoretical perspectives this nding can help eliminate the need to incorporate these factors into research models. Thus, this result may be helpful in reducing the number of factors to be evaluated in empirical studies. This initial result may also help to identify research areas where improvements in green supplier methodologies are needed, if our rough set methodology is applied to a broader set of empirical data from multiple organizations. Within the illustrative application it is also found that organizational size (O1) may not be an important indicator for environmental or business performance. Yet other organizational characteristics play a signicant role. Overall, the illustrative
Table 7 Final set of rough set decision rules (DG3) generated for joint high performance environmental and business outcomes. ( ( ( ( ( ( G1 5) ^ (O2 3) G1 5) ^ (O3 2) M2 5) ^ (O2 3) G1 5) ^ (M1 5) G1 5) ^ (M2 5) M2 4) ^ (O2 3) ^ (O3 3)

Another consideration in reducing the set of rules is to determine infeasible rules. Even the initial rules generated may miss some lower level performance results that cause infeasibility to occur. For example in Table 5 RSES generates the rule (M1 5) ^ (M2 4) for D1 3. But if we investigate Table 4 carefully we see that Supplier 12 has the following relationship (M1 5) and (M2 5), with D1 2. We deem (M1 5) ^ (M2 4) as an infeasible or contradictory rule. To apply this rule reduction technique, only ordinal attributes G1; M1; M2; O2 may be used. Attribute O3 is ordinal thus, the bigger is better dominance characteristic does not work on this rule reduction technique. The nal rule set for the D1 and D2 decision results are shown in Table 6. One additional step that can be used to further lter the rules is to only include rules with occurrences over a specied level (e.g. more than 2 occurrences of a rule for the rule to be valid). The number of occurrences of a rule can also be used to prioritize the rules. For our illustrative application the number of nal rules is at a relatively manageable number. No further ltration or rule reduction is necessary for our illustration. 5.7. Step 7: integration of rules for overall decision rule set Step 6 provides the nal rule set for the separate relationships of green supplier development and organizational characteristics with environmental and business performance. An analysis of these step 6 results will be completed in the next section. But, some organizations will also be concerned with arriving at a winwin situation that provides rules for both high environmental and high
Table 6 Final set of rough set decision rules (DD) Generated for D D1, D2, (D1 3, D2 3) (high performance). The rules for D1 3 (G1 2) ^ (M1 5) (G1 2) ^ (M2 5) (G1 5) ^ (O2 3) (G1 5) ^ (O3 2) (G1 4) ^ (M2 4) ^ (O3 3) (M1 3) ^ (O3 3) (M1 5) ^ (O2 3) (M2 4) ^ (O2 3) ^ (O3 3) (M2 5) ^ (O2 3) Number of occurrences 2 2 3 1 1 1 2 3 1 The rules for D2 3 (G1 5) ^ (O2 3) (G1 5) ^ (M1 5) (G1 5) ^ (M2 5) (G1 5) ^ (O3 2) (M2 5) ^ (O2 3) (O2 3) ^ (O3 3) Number of occurrences 3 1 1 1 1 5

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application also found that two industries (Industry 2, O3 2; and Industry 3, O3 3) have some possible relationships to both high environmental and business performance. This result may also point to additional investigation on why suppliers within Industry 1 are having difculty achieving higher performance on both dimensions. Highly protable suppliers (O2 3) are usually the better performers overall. Causation analysis may be warranted in this situation. That is, do suppliers who are more protable generate better performance, or do they have better performance because of protability. For high environmental performance, there is signicant synergistic interplay between the organizational characteristics and either green management and organizational practices or with knowledge transfer and communication. That is, no single supplier development program alone seems to generate good performance without another conditional organizational characteristic or attribute. The existence of these relationships would require further investigation and explanation in both a researcher and practitioner setting. Another general practical implication from our resulting rules is improving environmental performance by suppliers, especially protable ones, can be completed by increasing involvement in green supplier development programs G1, M1, and M2. A similar analysis can be completed business performance. The strongest, most rule occurrences, relationship occurs for highly protable suppliers in Industry 3 with 5 occurrences. Again, profitability may be very high in these industries in general, or they have better performance because of their protability. We can observe that these organizational characteristics play a signicant role, overall. Yet, some green supplier developer program involvement, especially in program G1 benets business performance too. Finally, using Table 7, we can evaluate what attributes contribute to joint winwin performance outcomes in the illustrative application. The contributions of green supplier development program G1 are pretty evident. High involvement should denitely be encouraged in this program, but also in other green management and organizational development programs M1 and M2, regardless of protability or industry of the supplier. Even though, industry 3 and highly protable suppliers have a better chance at high joint performance. This discussion of the results of the illustrative application shows how the rules may be analyzed. Since this is a rough set analysis, general rules are developed to help guide either practicing managers or researchers for more in depth evaluation of these initial, rough, results. In summary, managers and researchers can use this technique to determine: (1) which green supplier development programs to emphasize; (2) which programs to deemphasize; (3) what characteristics contribute to performance, and (4) where they could put additional investment or disinvestment in their suppliers to help green them. Thus, the formal rough set methodology is valuable for planning green supply chain management development programs. Planning activities may include identifying which green supply chain programs to introduce into new facilities and organizations or which green supplier development programs could be diffused of throughout a broader organizational setting across other plants or facilities. From a organizational design stage perspective, green supplier development programs identied as not contributing to either or both environmental or economic performance may be redesigned to be more effective. Maintenance of green supplier development programs may be completed through elimination of ineffective or redundant programs. Finally, the rough set methodological approach itself may serve as an auditing and benchmarking tool to determine, over time, whether the green supplier development programs contribute to performance after any design or maintenance changes. This last practical application requires

development of a dynamic data system to continuously monitor performance and supplier development program relationships. 7. Summary and conclusion In this paper the importance of evaluating green supplier development programs for organizations has been made evident. Signicant resources are allocated to supplier development programs. As organizations feel greater pressures to have greener supplier chains, green supplier development programs will further receive greater emphasis and resources. Businesses do not want to see their supply chains becoming greener at the expense of poorer business performance (e.g. poorer delivery, quality, costs). Thus, selection and management of green supplier development programs will require signicant planning and management. Having formal tools to help in the implementation, management, and evaluation of these programs is valuable to both researchers and practitioners. Yet, there is a paucity, if any exist, of formal tools for evaluation of supplier development programs, and especially green supplier development programs. We introduced a rough set theory methodology to help ll this gap in the green supply chain literature. The methodology is spelled out in a robust illustrative application example and analysis of the results is presented. The methodology is benecial for various stages of green supplier development programs including planning, design, maintenance, and auditing management phases. Practically, this rough set methodology could advance green supply chain management not only from the perspective of identifying supplier development programs, but also for other green supply chain management activities. For example, nascent work in applying rough set approaches to supplier selection (Li et al., 2008); and performance measurement (Zheng and Lai, 2008). These techniques can be expanded to green supply chain management practices. Advancements in rough set methodology such as use of fuzzy and neighborhood rough sets, and linkages to other techniques such as AHP/ANP also provide unique opportunities for further development and application to green supply chain management research and practice. The introduction of rough set theory for this green supplier development application also opens the door for other signicant and similar research investigation within cleaner production. For example, the use of rough set theory can be used in research and applications to evaluate green technology, Life Cycle Analysis, design of products and materials, management of clean production training programs within organizations, and evaluations of environmental performance from other practices. We believe rough set theory is a very exible methodology with potential applications in these and possibly other unforeseen topics in cleaner production. Even with signicant potential and advantages of rough set theory and methodology, there are also limitations and practical managerial concerns. For example, the number of rules can become quite large depending on the volume of data to be analyzed. More effective ltration approaches to narrow the rules are required. With numerous rules, optimal solutions are not available and signicant interpretation by management will be required. The rules are rough. That is why the recommendation would be to use this tool for exploratory analysis and not nal deterministic decision making. Understanding this limitation is critical to effective implementation. Another issue with the technique is that it is very data driven, having and using the right data is a necessity. Manager data acquisition and inclusion should be carefully completed with an understanding of the sensitivity of the methodology due to its data-driven nature. The sensitivity of the results may also arise from the levels selected when discretizing the data. Broader ranges of data may arrive at more clear rules, but the breadth of the ranges may limit

C. Bai, J. Sarkis / Journal of Cleaner Production 18 (2010) 12001210

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the analysis of the rules. Alternatively, more, smaller ranges, may make it difcult in reduct steps. Missing attributes and data collection may also limit the technique. These are a couple of examples of some of the subjectivity in rough set modeling. These are also similar concerns for most formal modeling approaches. To help mitigate some of these concerns, sensitivity and what-if analysis should be encouraged. Managers and analysts need to realize that developing and integrating this type of model is not necessarily a trivial task. For example, information may not be readily available and require systems development for data acquisition. The relative ease of data gathering will be dependent on the type of information and environmental systems available, level of integration of these systems, and the level of cooperation from supply chain managers and the suppliers themselves who may have to supply this information. Supplier performance measurement systems will need to be in place to more effectively gather performance data. Not all organizations have supplier business performance data, much less supplier environmental performance data. The data that needs to be acquired may also need to be collected from a variety of organization functions, and the need to overcome a silo mentality may be encountered. Thus, there are informational, infrastructural and organizational limitations and barriers that may exist and need to be overcome and should be considered. In summary, even with practical and methodological limitations and the concern that rough set theory is a relatively new eld, the variations of approaches is constantly growing as the eld matures. It is evolving into a powerful tool for decision makers and researchers, especially in complex decision environments associated with sustainability and greening. We believe the impact on green management and cleaner production will be quite extensive as both the methodology and the cleaner production eld mature.

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