Green Logistics Strategies: An Analysis of

Usage Pattern
Abstract

Environmental issues affect numerous logistical decisions throughout the value chain. This
research identifies strategies that are most and least popular for managing and responding to such
issues, and provides evidence of relationships between select company characteristics and the
particular types of strategies employed in managing logistics-related environmental impacts.
Data sources included companies in the United States, Canada, and the European Union. Study
results suggest that the green logistics strategies of recycling materials, reducing consumption,
and reusing materials are universally popular among western industrialized nations. Firms that
exhibit more intense commitment to environmentalism than their peers augment use of these
universal strategies with various specialized thrusts, such as environmental audits.

There is little question that environmental issues have become an important consideration for
many business decision makers in recent years, [1] with some corporate executives having
referred to the 1990s as the "decade of the environment." [2] Many companies are designing
their products to be more environmentally friendly, and many are using more environmentally
friendly packaging materials. Estimates of the current environmental, or green, market range
upwards of $200 billion. [3]

While there is a burgeoning body of literature involving environmental issues in other business
disciplines such as marketing, the corresponding literature involving logistics has been
characterized as "small but expanding." [4] Spurring this expansion is the recognition by a
number of writers, such as Lambert and Stock as well as Handfield and Nichols, that responding
to environmental issues will be one of the major challenges facing logistics and supply chain
management in the foreseeable future. [5] Such recognition tends to confirm the view that
environmentalism has "come of age" as a major topic in logistics and no longer can be regarded
as simply a peripheral concern or fad. [6]

Indeed, Wu and Dunn demonstrate that environmental issues can impact numerous logistical
decisions, including the acquisition of raw materials, inbound logistics, and outbound logistics,
throughout the value chain. [7] With respect to the acquisition of raw materials, for example,
some organizations are specifying that their vendors meet certain types of environmental
qualifications. In fact, the International Standards Organization (ISO) has developed an
international environmental standard known as ISO 14000, which is to be applied to vendors
worldwide. [8]

Not surprisingly, there are numerous environmental considerations with respect to inbound
logistics. One such consideration, efficient warehouse design, can reduce the number of empty or
partially empty forklift trips, which is environmentally beneficial due to improved vehicle
utilization. Likewise, freight consolidation of inbound loads can reduce the number of partially
loaded transport vehicles, thus improving fuel efficiency. [9]
Wu and Dunn also point out that many of the environmental issues associated with inbound
logistics (e.g., warehousing, transportation mode decisions) are applicable to outbound logistics
as well; nevertheless, some differences do exist). [10] In particular, organizations are faced with
difficult decisions regarding the trade-offs involving inventory policies and environmentally
responsible logistics programs. The contemporary emphasis on cycle time compression, for
example, may result in a multitude of smaller shipments moving by fast, fuel-inefficient forms of
transportation. Environmentally responsible logistics programs, by contrast, are more
comfortable with fewer, larger shipments moving by slow, fuel-efficient forms of transportation.

Moreover, McIntyre and colleagues suggest that there may be a basic dichotomy between
measuring the performance of supply chains and the greening of supply chains. [11] That is,
supply chain performance measurement tends to focus on short-term metrics (e.g., profitability)
as well as the interests of corporate shareholders. The evaluation of environmental issues, by
contrast, tends to involve longer time horizons and should accommodate the concerns of a
variety of stakeholders (e.g., suppliers, customers, the local community).

Another environmental topic that has been receiving increased attention in recent years is reverse
logistics (RL). According to Kopicki and others, RI refers to the process "involved in reducing,
managing, and disposing of hazardous and non-hazardous waste from packaging and products."
[12] The growth and interest in RL is very likely to continue in the future as firms recognize that
reverse logistics is a key component of the total logistics management process in much the same
way as is true for inbound and outbound logistics. In fact, Stock characterizes the current state of
development of RI as being analogous to inbound logistics ten to twenty years ago. [13] He cites
as a critical success factor that reverse logistics programs and environmental initiatives be given
priority and have sufficient resources (i.e., time, money, personnel) committed to them. [14]

Today companies such as Xerox, Eastman Kodak, Mobil, Hewlett Packard, Sears, and Home
Depot are taking a proactive value-seeking approach to RI, rather than simply a reactive one.
[15] They have launched reverse logistics programs, which offer benefits such as tightened
inventory management, reduced costs and better cost control, enhanced revenues and customer
service, better data regarding the RL process, and improved public image.

Moreover, Marien maintains that a reverse logistics program combined with source reduction
practices can be used to increase competitiveness and gain a competitive advantage. [16] Indeed,
Rogers and Tibben-Lembke contend that RL can be viewed as a "strategic weapon" that has
potential long-term bottom-line impact. [17] Similarly, Blumberg estimates the current
worldwide market for RL to be greater than $20 billion, and further suggests that RL "...will
become a major business opportunity in the 21st century." [18] Carter and Ellram have furthered
understanding of this strategic role by developing a model of the drivers and constraints to
reverse logistics programs and how these factors interact. [19]

RESEARCH PURPOSE AND QUESTIONS

Additional environmental topics could be cited relating to other aspects of logistics; suffice it to
say that much remains to be learned about how companies manage and respond to environmental
issues in logistics. To this end, this article will analyze the current usage of select strategies for
managing and responding to environmental issues in logistic management. The strategies used to
manage and respond to environmental issues in logistics were derived from an extensive search
of the literature as well as from discussions with current logistics managers. Twelve prominently
mentioned strategies were selected for inclusion in the study; these twelve "general" strategies
were selected in part because the purpose was to investigate environmental management across
industries as a whole, rather than within a specific industry or within specific logistics functional
areas. Moreover, most of the twelve strategies have been cited as a "best practice" in the
management of reverse logistics/environmental programs. [ 20] For purposes of this article, these
strategies will be referred to as "green logistics strategies."

This article will also investigate possible relationships between six distinct company
characteristics and the twelve environmental strategies. The six characteristics are geographic
location of the organization; type of firm; size of firm; importance of environmental issues;
formalness of environmental policy; and logistics' degree of involvement in implementing
environmental policy. Three of the six (geographic location, firm type, and firm size) are
demographic variables, while the remaining three can be viewed as examples of, or surrogates
for, the intensity of an organization's commitment to environmentalism. To summarize, the
following research questions will be investigated:

1. What are the most, and least, popular strategies currently being used to manage and respond to
environmental issues in logistics?

2. What relationships, if any, exist between select company characteristics and the strategies for
managing and responding to environmental issues?

METHODOLOGY

The information to be analyzed comes from mail surveys sent to U.S., Canadian, and European
Union Members of the Council of Logistics Management (CLM). Because the company
personnel most knowledgeable about environmental issues in logistics are likely to be in
positions of middle and upper management, the study focused on those members with job titles
at the director level or above. Also, only members from manufacturing and merchandising
(wholesalers and retailers) firms were included. Previous research has identified manufacturers
and merchandisers as "primary channel participants"; that is, key players in distribution channels.
[21]

Surveys were mailed to 450 randomly selected CLM manufacturers and merchandisers in the
U.S. as well as a non-U.S. group of manufacturers and merchandisers comprising 130 Canadian
and 101 European Union CLM members meeting the selection criteria. Each sampling frame
member received an initial survey packet consisting of a cover letter, a copy of the survey, and a
self-addressed envelope (U.S. respondents received a postage-paid return envelope). A follow-up
mailing, consisting of a cover letter, a copy of the survey, and a self-addressed envelope, was
sent approximately one month after the initial mailing.

Two of the U.S., three of the Canadian, and four of the European surveys were returned as
undeliverable, reducing the sampling frames to 448, 127, and 97, respectively. A total of 133
usable surveys were received from U.S. organizations, for a response rate of 29.7 percent; 31
usable responses came from Canadian organizations, for a 24.6 percent response rate; and 24
usable responses came from the European firms, representing a 24.7 percent response rate. The
overall response rate was approximately 28 percent (188 usable surveys/672 eligible
respondents).

Nonresponse bias was examined by comparing early and late respondents, a procedure that is
based on the assumption that later respondents tend to be more like nonrespondents than like
earlier respondents. [22] For this study, responses received within twenty-five days of the first
mailing were compared to those received after twenty-five days. These tests revealed negligible
differences between early and late respondents, suggesting that nonresponse bias is not a major
problem in this study.

There are several limitations to the present study that should be discussed before proceeding:
First, the number of Canadian and European respondents is relatively small. While other
professional organizations (e.g., the Canadian Association of Logistics Management, the
European Logistics Association) could have offered larger sample sizes, some potential problems
in cross-border research can be reduced if participants have some degree of commonality.

For this study, such commonality was operationalized by membership in the same professional
organization (i.e., CLM). The CLM is one of the few professional logistics organizations with a
multinational membership, and its official correspondence language is English, meaning that our
surveys could be developed in English. This is significant because it allowed us to avoid various
language issues (e.g., translation and back translation) for some of the Canadian and European
participants. Language considerations are frequently identified as one of the major challenges to
conducting effective cross-cultural research? [23]

A second limitation of the present study is that the CLM membership is skewed toward higher
revenue firms who often tend to be on the leading edge of logistical practices. While these
companies certainly provide an important perspective, we recognize that smaller firms may have
different views with respect to managing and responding to environmental issues in logistics.

RESULTS

1. What are the most, and least, popular strategies currently being used to manage and respond to
environmental issues in logistics?

The results for the most, and least, popular strategies are presented in Table 1 and are listed in
decreasing order of current usage. Both recycling materials and reducing consumption are
strategies currently being used by over 80 percent of the respondents, with reusing materials
being utilized by nearly 75 percent. The popularity of recycling, reduction, and reuse should not
be surprising, as they tend to be three of the better-known strategies for managing and
responding to environmental issues in logistics. Moreover, the heavy use of recycling supports
work by Min and Galle, who found recycling to be the most frequently used strategy among
purchasing managers. [24]
As shown in Table 1, the least popular strategy, encouraging greater government
involvement/regulation, is currently used by slightly more than 15 percent of the respondents.
This is an interesting finding, given suggestions that environmental regulations can actually
benefit a firm's performance and market competitiveness. [25] For example, Japanese and
German car manufacturers responded to more stringent fuel consumption standards by producing
lighter and more fuel efficient automobiles. U.S. car manufacturers, by contrast, aggressively
opposed these fuel consumption standards--a stance that ultimately wasted billions of dollars and
weakened their competitive position. [26]

The information in Table 1 also indicates that three strategies--the redesign of logistical systems,
increased education and training, and rejecting suppliers lacking environmental concerns--are
likely to be added in the future as green strategies by at least 30 percent of the responding
organizations. The redesign of logistical systems strategy offers support for the idea that
environmentalism will be an important influence on the way that logistics managers do their job.
[27]

2. What relationships, if any, exist between select company characteristics and the strategies for
managing and responding to environmental issues?

Of the six company characteristics to be investigated in this section, five will be analyzed
through t-test, while the sixth, firm size, will be investigated through one-way analysis of
variance. Only statistically significant differences at the .05 level or better will be discussed in
this section.

(a) Geographic location of the responding organizations. This issue was operationalized by
comparing two respondent groups, namely, U.S. respondents and a non-U.S. group comprising
both the Canadian and European participants. While these countries are somewhat similar in
terms of their industrial orientation, well developed infrastructures, and business cultures, there
are suggestions that they differ in terms of green activism and awareness. For example, German
purchasing managers tend to be more involved than their U.S. counterparts with respect to
environmental purchasing. [28] Moreover, Canada and Western Europe frequently are portrayed
as having more advanced and proactive programs for managing and responding to environmental
issues in logistics. [29

Given this perception, Table 2's discovery of only one statistically significant difference between
U.S. and non-U.S. participants is somewhat surprising, and no different than would be expected
by chance (i.e., at a .05 level of significance, there would be .60 [12 strategies x .05]--rounded to
1--statistically significant issue). As shown in Table 2, industry cooperative efforts are more
likely to be used currently by non-U.S. respondents (mean score = 1.60) than by their U.S.
counterparts (mean score = 1.96). The heavier utilization of this environmental strategy among
European firms is consistent with previous literature. [30]

Furthermore, the two groups report nearly identical usage for reducing consumption, rejecting
suppliers, and increasing education and training. As a result, the information in Table 2 appears
to suggest, at least in terms of green logistics strategies, a higher degree of similarity between
U.S. and the Canadian/European firms than is generally acknowledged.
(b) Firm type. The results involving firm type, operationalized by comparing manufacturers and
merchandisers, are presented in Table 3. Four of the strategies--increased education and training,
conducting environmental audits, publicizing environmental efforts, and promoting industry
cooperative efforts--exhibit statistically significant differences between manufacturers and
merchandisers. In all four cases, manufacturers are more likely to be using the particular green
strategy than are merchandisers.

The four statistically significant differences are greater than would be expected by chance
occurrence (i.e., one expected difference by chance occurrence). Therefore, the results in Table 3
suggest that manufacturers and merchandisers tend to differ in their usage of these four strategies
to manage and respond to environmental issues in logistics. Moreover, as a general rule,
manufacturers also tend to be more involved than merchandisers with respect to the remaining
individual strategies.

(c) Firm size. Three categories--revenues less than $500 million; revenues between $500 million
and $999 million; revenues equal to/greater than $1 billion--were used to compare respondents
based on firm size. Results for the firm size comparisons, presented in Table 4, indicate that
there are five statistically significant differences. For all the significant differences, firms with
revenues equal to or greater than $1 billion are the most likely to be using the particular green
strategies; in four of the five cases, the strategies are least likely to be used by companies with
annual revenues of less than $500 million.

The discovery of five statistically significant differences is much greater than would be expected
by chance (i.e., one expected difference by chance), and therefore suggests that strategy usage
differs according to firm size. With respect to managing and responding to environmental issues
in logistics, the largest firms appear to be the most progressive in the sense that they exhibit the
greatest utilization of nearly every strategy listed in Table 4.

(d) Importance of environmental issues. Respondents evaluated the importance of managing

environmental issues using four categories, namely, no importance; slight importance; moderate
importance; high importance. In this study, comparisons were made between two groups of
respondents: (1) those who indicated high importance and (2) those who indicated the other three
categories ("less than high importance").

The results of these comparisons, appearing in Table 5, indicate statistically significant

differences for eight strategies, with each of the eight being statistically significant beyond the .
01 level. Moreover, each of the eight statistically significant strategies exhibits greater utilization
by companies placing a high importance on the management of environmental issues. Green
strategies exhibiting particularly strong mean score differences include rejecting suppliers (mean
score for the high importance group = 1.82, compared to 2.62 for the less than high importance
group) and publicizing environmental efforts (mean score for the high importance group = 1.49,
compared to 2.11 for the less than high importance group).

The eight statistically significant differences are far greater than would be expected by chance
(i.e., one expected difference by chance), suggesting that green strategy usage differs according
to a company's perception of the importance of environmental issues. The information in Table 5
suggests that the high importance companies manifest their commitment to managing
environmental issues by using a wide variety of relevant strategies rather than relying on only
one or several.

(e) Formality of environmental policy. Respondents evaluated the status of their companies'
environmental policies according to three categories--no policy; informal (or unwritten) policy;
formal (or written) policy. Two groups were used for comparison purposes: (1) those
respondents reporting a formal environmental policy and (2) those indicating the other two
categories ("non-formal"). The results for these comparisons appear in Table 6.

As shown in Table 6, nine of the twelve strategies exhibit statistically significant differences
between the two groups, with the majority being statistically significant beyond the .01 level.
Each of the statistically significant strategies exhibits greater utilization by companies with
formal environmental policies. The most noticeable differences involve environmental audits
(mean score for the formal policy group = 1.36, compared to 2.13 for the "non-formal" group)
and increased education and training (mean score for the formal policy group = 1.40, compared
to 1.96 for the "non-formal" group).

The nine statistically significant differences are far greater than would be expected by chance
(i.e., one expected difference by chance); as a result, green strategy usage appears to differ based
upon the degree of formality of a company's environmental policy. Likewise, the information in
Table 6 suggests that those companies reporting formal environmental policies also believe in
employing a wide range of strategies for managing and responding to environmental issues in
logistics rather than simply a few.

(f) The role of logistics in implementing environmental policy. Respondents evaluated the role of
logistics in implementing environmental policy according to "no role/responsibility," a "minor
role," or a "major role." For analysis purposes, the former two (no role, minor role) were
combined into one category ("not a major role") and compared with the responses of
organizations where logistics has a major role in implementing environmental policy.

The results for these comparisons, appearing in Table 7, indicate four statistically significant
differences between the two groups, with each significant strategy being used more extensively
by companies in which logistics plays a major role in the implementation of environmental
policy. The most noticeable differences involve rejecting suppliers (mean score among the major
role group = 1.94, compared to 2.32 for the "not a major role" group) and environmental audits
(mean score among the major role group = 1.43, compared to 1.77 for the not major role group).

As has been the case with most of the company characteristics, the four statistically significant
differences involving the role of logistics in implementing environmental policy are greater than
would be expected by chance (i.e., one expected difference by chance). Therefore, green strategy
usage appears to differ according to logistics' role in implementing environmental policy. As a
general rule, companies in which logistics plays a major role in the implementation of
environmental policy tend to exhibit greater utilization of the individual strategies.
(g) Summary of demographic analyses. The results from the demographic analyses, presented in
Table 8, indicate that the usage of some strategies is relatively robust in the sense that the usage
is unaffected by various demographic variables. For example, there were no statistically
significant differences associated with either recycle materials whenever possible or reduce
consumption whenever possible, and only one statistically significant difference for both reuse
materials whenever possible and use outside or third parties to manage environmental issues. In
general, this suggests that these strategies tend to have more universal usage, regardless of
demographic variables.

On the other hand, there are a number of strategies whose usage appears to be influenced by
particular demographic characteristics. For example, two strategies, conduct environmental
audits and increase education and training of company personnel, exhibit statistical significance
on five of the six demographic variables. Three additional strategies exhibit statistical
significance on four of the demographic characteristics. This suggests that these strategies have a
more specialized usage, depending upon select demographic variables. More will be said about
this tendency toward universal and/or specialized usage in the following section.

CONCLUSIONS AND IMPLICATIONS

This study investigated select strategies currently being used to manage and respond to
environmental issues in logistics. Responses from a multinational group of respondents revealed
recycling materials, reducing consumption, and reusing materials to be the three most commonly
utilized green logistics strategies. Although greater government involvement/regulation emerged
as the least used strategy, its utilization might be expected to increase, given recent suggestions
that environmental regulations tend to be more beneficial than harmful to organizational
performance.

The article also explored potential relationships between select company characteristics and the
strategies for managing and responding to environmental issues. One unexpected finding was the
relatively high degree of similarity between U.S. companies and a non-U.S. group comprising
Canadian and European respondents. This similarity was rather unexpected given that Canada
and several European countries are frequently perceived to be more progressive than the U.S.
when it comes to managing and responding to environmental issues in logistics.

All other company characteristics exhibited a moderate to substantial number of statistically

significant differences in terms of the current usage of the environmental strategies. In fact, two
characteristics, the importance of environmental issues and the formalness of environmental
policy, exhibited statistically significant differences on over one-half of the total number of
strategies. Furthermore, there was tremendous consistency across the company characteristics in
terms of the "direction" of the various relationships. With respect to the type of environmental
policy, for instance, each of the nine strategies exhibiting statistically significant differences is
used more extensively by companies reporting a formal environmental policy. Likewise, each of
the eight statistically significant strategies related to the importance of environmental issues is
used more heavily by firms that assign a high importance to environmental issues.
There are a number of implications for practitioners and researchers that arise from the study
results. Perhaps most important, the study highlights some of the major strategies being used by
a demographically diverse set of practitioners to manage and respond to green issues in logistics.
As such, the findings represent useful benchmarks for comparison with what other firms are
doing in the area of environmentalism. In some cases, reevaluations and changes in strategy
usage may be called for based upon these comparisons.

As pointed out previously, the aggregate results indicated recycling materials, reducing
consumption, and reusing materials to be the three most commonly used green strategies.
Moreover, these findings are very robust in the sense that virtually no statistically significant
differences emerged when analyzed across company demographics (see Table 8). For example,
these three strategies were heavily utilized irrespective of a responding organization's home
country, firm type, and so on. In short, the study results suggest that the green logistics strategies
of recycling materials, reducing consumption, and reusing materials appear to be universally
popular in western, industrialized nations. These strategies would appear to be a "safe" starting
point for those companies that have been slow to adopt environmental management practices.

Another implication is that firms that are more intensely committed to environmentalism
consistently manifest this commitment through heavier usage of various specialized green
strategies in addition to the more universal ones. For instance, companies placing high
importance on environmentalism and having formal or written environmental policies are much
more likely to conduct environmental audits and publicize environmental efforts and
accomplishments, among others. Moreover, this suggests that firms with a more intense
environmental commitment tend to rely upon a comprehensive set of green strategies rather than
just one or several. As a result, it appears that a sincere commitment to environmentalism
consists not only of words, but a tangible set of strategic actions as well.

The results of the study also have implications for future research. For example, it has been
suggested that future studies on environmental logisitics might focus on three general categories:
(1) applied macro-level studies, (2) applied micro-level studies, and (3) theoretical. [31] Applied
macro-level studies focus on environmentalism's impact with respect to public policy
considerations such as zoning regulations, packaging regulations, and facility design. McKinnon
suggests that these macro-level studies, traditionally the purview of economists and engineers,
could benefit from the expertise of modern logistics managers. [32]

Applied micro-level research focuses on environmentalism's impact on company operations,

with this study representing a specific example of such research. [33] While this article analyzed
twelve general strategies that might be used to manage and respond to environmental issues in
logistics, future research might focus on a more in-depth investigation of various green logistics
strategies. Interested researchers, for example, could investigate the application of specific
strategies (e.g., reuse of materials, source reduction) across various logistical functions such as
transportation, warehousing, materials handling, and so on. [34]

Alternatively, interested researchers could learn more about particular strategies for managing
environmental issues in logistics. For example, with respect to environmental audits, researchers
might investigate a comprehensive series of issues, to include the existence of written
environmental policies, the objectives of environmental policies, the costs of environmental
policies, and employee awareness of environmental policies, among others. [35]

The third general category, theoretical research, "...reassesses traditional logistics principles
within an environmental context and, where necessary, develops new conceptual frameworks for
environmental analysis." [36] Stock, for example, suggests that environmentalism might be
studied in terms of its contributions to the concept of sustainable development. [37] Furthermore,
as pointed out earlier, Carter and Ellram used previous studies as a basis for developing a series
of propositions to guide future research on reverse logistics. [38]

In conclusion, it is hoped that this article will serve as a stimulus for further research dealing
with the greening of logistics. Environmental logistics clearly has emerged as a dynamic force,
with far-reaching consequences for effective and efficient supply chain management. While this
article represents an example of survey-based, applied micro-level research, additional empirical
and theoretical research is necessary to successfully address the environmental challenges facing
the logistics discipline at the new millennium and beyond.

Mr. Murphy, EM-AST&L, is professor of business logistics, Boler School of Business, John
Carroll University, University Heights

ENDNOTES

(1.) S. Melnyk and R. Handfield, "Greenspeak," Purchasing Today, July 1996, pp. 32-36.