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Green manufacturing performance measures: an empirical investigation from Indian manufacturing industries

empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.
empirical investigation from Indian manufacturing industries Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K.

Abhijeet K. Digalwar, Ashok R. Tagalpallewar and Vivek K. Sunnapwar

Abhijeet K. Digalwar is based in the Mechanical Engineering Department, Birla Institute of Technology and Science, Pilani, India. Ashok R. Tagalpallewar is based in the Mechanical Engineering Department, SIES Graduate School of Technology, Navi Mumbai, India. Vivek K. Sunnapwar is based in the Mechanical Engineering Department Lokmanya Tilak College of Engineering, Navi Mumbai, India.

Summary

Purpose – The purpose of the paper is to explore the performance measures for the green manufacturing practices in the Indian manufacturing industries.

Design/methodology/approach – A tentative list of items/variables was developed for green manufacturing performance measures based on a thorough and detailed analysis of the pertinent literature. The survey questionnaire contained 128 items/variables, developed based on the literature and interviews with nine manufacturing industry experts, specifically green manufacturing areas. A total of 400 questionnaires were mailed out, and 114 were returned, of which 108 were valid, representing a response rate of 27 percent. Using the data collected, the identified items/variables were performed via factor analysis to establish reliability and validity.

Findings – A total of 12 performance measures of green manufacturing with their 66 items/variables have been developed: top management commitment, knowledge management, employee training, green product and process design, employee empowerment, environmental health and safety, suppliers and materials management, production planning and control, quality, cost, customer environment performance requirement, customer responsiveness and company growth.

Research limitations/implications – This study obtained 108 valid responses from the Indian manufacturing industries; the limitation of the study is the insufficient sampling. Future research needs to be performed using a larger sample and studying more countries.

Practical implications – The performance measures developed in this study enables decision makers to assess the perception of green manufacturing in their organization and in prioritizing GM efforts.

Originality/value – This study is probably the first to provide an integrative perspective of performance measures for green manufacturing practices in the Indian manufacturing industries. It gives valuable information, which hopefully will help this business sector to accomplish green manufacturing practices. This paper fills the gap in the literature on identification, establishment and validation of performance measures of green manufacturing for Indian manufacturing industries.

Keywords Statistical analysis, Green manufacturing, Critical success factors, India, Performance measures, Empirical studies

Paper type Research paper

Introduction

Recently, concern for the environment has led manufacturing industries to take a proactive role in the development of cleaner manufacturing processes and the design of recyclable products. The goal is development and adoption of green practices in manufacturing. European Union, Japan and parts of the USA lead in the implementation of environmentally conscious production. In India, the Ministry of Environment and Forest (MOEF) brings out new regulations, norms and standards on pollution prevention and control. Various arms of MOEF have forced industries to comply with these norms and failure to comply with has led to the closure of many industries. In addition, the recent judgments of the Supreme Court of India – ban on public transport vehicles that are running on diesel in Delhi, shifting of polluting industries out of Delhi or closure of mining in Aravali ranges around Delhi – has translated into losses of crores of rupees and joblessness for millions related to these

business and industry. The compliance with the regulations and norms does improve the environmental conditions, but it makes the environmental issues and norms monsters which the industry and business always try to avoid by just complying with these regulations and norms. Need of the hour is to make the environmental issues and norms simple and concise for business and industry so that they can improve their bottom-line by embracing these regulations and norms (Sangwan, 2006).

According to recent survey on the business risk and economic impacts of climate change at sector level in India, the report mentioned automotive, chemicals, constructions and materials, mining and metals, oil and gas, transport, utilities and health care sectors are in danger zone (KPMG, 2012). Also a vast majority of business community recognizes that climate change is the reality with potential risk and opportunities. A most recent report of the carbon disclosure project revealed that 79 percent of the responding companies consider climate change to present a commercial risk while 82 percent regard it is a commercial opportunity for both existing and future products (MOEF, 2010). It shows that green manufacturing is becoming increasingly more important for an enterprise to be able to manage its operations in a way that minimizes the negative environmental impact they might result in, directly or indirectly. At the same time, it is a fact that you cannot manage what you cannot measure. Thus, performance measurement is a key element in enabling performance management, performance improvement, and performance documentation. When combining the pivotal importance of environmental friendliness with the need for performance measurement, it is evident that ‘‘green performance measurement’’ is crucial and something every enterprise should master. This can be done, first, by understanding thoroughly the green manufacturing systems and their critical success factors or performance measures.

The traditional performance measures are invalid for the measurement of green manufacturing practices as they are based on outdated traditional cost management systems. Researchers also developed some non-traditional performance measures and conceptual performance measurement frameworks where they have integrated the traditional and non-traditional performance measures. It is observed that, all conceptual frameworks have their relative benefits and limitations, with the most common limitation being that little guidance is given for the actual selection and implementation of the performance measures (Ghalayini and Noble, 1996; Adams and Neely, 2000; Neely et al., 2001; Kennerley et al. 2003; Digalwar and Sangwan, 2011a, Taticchi et al. 2012).

Performance measures, derived from corporate strategies and capabilities, are a prerequisite for the implementation of green manufacturing systems to survive in today’s competitive environment. This paper focuses on building the concepts and learning about green manufacturing using the literature present on green manufacturing. It also involves identification and empirical investigation of various performance measures used to evaluate green manufacturing practices. The paper also attempts to validate a set of performance measures of green manufacturing from Indian manufacturing industries by adopting the methodology used by Saraph et al. (1989) and Digalwar and Sangwan (2007) in their papers.

Literature review

Green manufacturing differs from traditional manufacturing. It focuses on environmental impact, environment policies of governments, national and international environmental regulations, stakeholder activism and environmentalism, and competitive pressures Proper environmental regulations or standards can trigger green innovations that actually decrease cost, increase productivity, or make companies more competitive. However, companies are facing challenges like how to assess the performance of green manufacturing. Several traditional financial techniques have been proposed for evaluation of manufacturing systems that are either complex or exhaustive in nature, and require hard-core quantitative data that may be difficult to retrieve or formulate or theoretical in nature. Numerous companies have considered strategies to cope with the growing importance of environmental issues. Accordingly, many studies have attempted to implement a GM by addressing concrete strategies, success factors and technical and managerial concerns.

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Many studies have provided various considerations for evaluating green performance in manufacturing. Berry and Rondinelli (1998) illustrated six critical elements like training and education programs, top management involvement, resources, infrastructure, facilities, supplier management in order to create an effective proactive environmental management system. Inman (2002) reviewed the literature from the perspective of environmental and operations management and introduced the factors that influence companies to make strategic changes in various product areas. Panyaluck (2004) surveyed 108 electronics manufacturers to examine obstacles to implementing green environmental projects and identified the materials, processes, packaging, work environments and waste system that directly influence the success of green management in practice. Wee and Quazi (2005) developed and validated seven critical factors for implementation of environmental management systems, for their study they considered top management commitment, total involvement of employees, training, product and process design, supplier management, measurements and information management. Sangwan (2006) developed a multi-attribute decision model with 61 indicators to analyse the performance value of a GMS. According to the findings of Sangwan, GMSs offer far better competitive advantages than non-GMSs and the ability to maintain competitive advantage.

Zhou et al. (2008) described a green product using six attributes, namely development and design, manufacture, packaging, sale and transport, use and maintenance and recycling. Also established an evaluation index system, evaluation procedure and evaluation method, which can make an evaluation to the green product design project. The evaluation index system included six attributes: technical, environment, resources, energy, economical, and social and 37 indicators. These regulations and opinions become the requirements of the operational capability plan. Taghaboni-Dutta et al. (2010) proposed factors of green products that include materials, production methods, packaging and transportation, usage, waste and recovery. Madu et al. (2002) integrated both the designer and stakeholder aspects to form a hierarchical framework for environmentally conscious design. The framework evaluated not only product features but also environmental burden. Zailani et al. (2012) tried to examine the internal proactive environmental strategy and external institutional drivers to adopt eco-deigns that influence environmental performance of the firm.

Apart from this, many research papers on various aspects of green manufacturing were reviewed to identify and develop the performance measures and their variables/items. Table I provides performance measures of green manufacturing emphasized by selected authors.

The above review of literature on performance measures reveal that various authors have indicated a number of requirements for green manufacturing, which are based either on examinations of current best practices of manufacturing industries or the authors’ personal experience. Second, the prior work in the area of performance measurement failed to capture the entire domain of manufacturing organization. Finally, these performance measures were assessed with only one or two items and not through multi-item measures. Multi-item measures that are driven by theory, which are generalizable to diverse industry groups and which capture the entire domain of green manufacturing, still need to identify, test and validate.

Methodology

Development of the survey instrument

Based on the literature review, a tentative list of performance measures of green manufacturing was developed. Then to screen the performance measures and their variables, many experts who have a very good exposure of GM deployment were approached, most of them were top management level persons , but because of some or other reasons supports from only seven experts from industry and two academician who have green manufacturing teaching, research and consultancy background could be obtained. The selected industry experts were from different backgrounds and industries like electronics goods manufacturing industry, chemical industry, cement industry; paper

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Table I

Performance measures of green manufacturing emphasized by selected authors

 

Author

1

2

3

4

5

6

7

8

9

10

11

12

Azzone and Noci (1998) Berry and Rondinelli (1998) Hersey (1998) Mohanty and Deshmukh (1998) Walters (1999) Adams and Neely (2000) Buckley and Carter (2000) Laroche et al. (2001) Lin et al. (2001) Sanchez and Perez (2001) Dunk (2002) Rosemann and Meerkamm (2002) Kaebernick et al. (2003) Roy et al. (2003) Beheshti (2004) Bose (2004) Boyle (2004) Gunasekaran et al. (2004) Daub and Ergenzinger (2005) Digalwar and Metri (2005) Gosselin (2005) Haddock (2005) Rao and Holt (2005) Wee and Quazi (2005) Ayuso et al. (2006) D’Souza et al. (2006) Giancarlo (2005) Hervani et al. (2005) Issakson (2006) Lin and Tseng (2006) Pun (2006) Sangwan (2006) Sengupta and Chattopadhyay (2006) Shepherd and Gunter (2006) Wee and Quazi (2005) Digalwar and Sagwan (2007) Fenwick (2007) Liyanage (2007) Rusinko (2007) Simpson et al. (2007) Vachon (2007) Zink (2007) Brown (2008) Cheng et al. (2008) Jaju and Mohanty (2008) Lee (2008) Sakao (2009) Nunes and Bennett (2010) Ren and Ruan (2010) Kirchoff et al. (2011) Narula and Upadhyay (2011) Daily et al. (2012) Zailani et al. (2012)

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Notes: 1: Top management commitment; 2: Knowledge management; 3: Employee training; 4: Green product and process design; 5: Employee empowerment; 6: Environmental, health and safety; 7: Suppliers and materials management; 8: Production planning and control; 9: Quality; 10: Cost; 11: Customer environment performance requirements; 12: Customer responsiveness and company growth

industry, power industry, automobile industry, textile industry. The diversified group of experts is useful to assure better coverage of all sectors and take care of missing parameters. Based on the literature review and the interviews with the practitioners, a

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proposed set of twelve performance measures was developed. These performance measures are summarized in Table II.

The items/variables under each performance measure were identified based on the literature review. While the items/variables are literature based, inputs from the various interviewees/practitioners helped to determine appropriateness of the items/variables and their classification under each measure (construct). A few items/variables were also suggested by the interviewees, which were eventually added to the questionnaire. A total of 128 items/variables were developed under the 12 performance measures. The questionnaire was finalized by rearranging the various items/variables. Respondents were asked to rate each item/variable under a five-point interval rating scale (1-Very low, 2-Low, 3- Medium, 4-High, 5-Very high) to indicate the extent of practice in their respective organizations.

The level of green practices in an organization was assessed by the average ratings of the measurement items/variables for each measure. This approach is consistent with the method adopted by Saraph et al. (1989) in their study on critical factors of quality management and Digalwar and Sangwan (2007) in their study on development and validation of performance measures for world class manufacturing.

Data collection

Data collection involved sending out the questionnaire to manufacturing industries in the India. Manufacturing industry in India is made up of many different sectors, each of which is influenced by the overall manufacturing climate, but each of which also has its own ups and downs. From the Indian perspective and as far as green manufacturing practices are concerned, the major manufacturing sectors are automobile, electronics, engineering, and process industries (chemical, cement, textile, paper, power, refinery etc.). Also a recent survey conducted by KPMG India on the business risk and economic impacts of climate change at sector level mentioned most of these manufacturing sector industries are in a danger zone. Therefore, these four sectors of Indian Industry were selected for the survey. Target respondents were selected from the directory of ISO 9000 and ISO 14000 certified industries and industrial directory (Industrial directory, 2011). Firms within the manufacturers section and from the above sectors of these two directories were chosen. Questionnaires were addressed to either the managing director or the chief executive officer of the target organizations. It was also not feasible to contact each company to determine the appropriate person to complete the questionnaire. Therefore, it was left to either the managing director or the chief executive officer to decide on the appropriate person to complete the questionnaire. A total of 400 questionnaires were mailed out To increase the response rate, a reminder was sent to each of the companies after about two weeks of posting of the questionnaire. Personal calls were also made in some cases. Questionnaires were also resent, when a company informed that they did not receive the questionnaire. To ensure that the responding companies were from the above mentioned manufacturing sectors, respondents were asked to indicate the industry sector their firm belongs to. Only the responses, which indicated that they were from the above manufacturing sectors, were used in the final analysis. Finally 114 completed questionnaires were returned, of which 108 were valid, representing a response rate of 27 percent. Table III summarizes the characteristics of the respondents’ firms. Response was very less from the east region of India, this might be because the eastern region has fewer states and relatively less industry concentration. The position status of the respondents ranged from upper management to middle – upper management at large firms. Designation of officers who participated in the study are, Director, Dy.Director, General Managers (GM), Additional General Managers (AGM), Divisional General Managers (DGM), Assistant General Manager, Sr. Mangers, Managers, Chief Engineers, Superintending Engineers, Sr. Superintendents, Executive Engineers, Engineers etc. Although there are various positions, a high proportion of respondents belong to the category of middle upper management. Relative to the size of firm, number of employees and annual sales, the size of firms, respondents represent all size categories of organizations. The result from the study should therefore have relevance to both large and medium firms within manufacturing organization. Experience of the respondents’ ranges from 10 to 40 years.

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Table II

Performance measures of green manufacturing

Performance measure

Explanation of performance measure

1. Top management commitment

Commitment from top management is like a framework for environmental improvement. Top management decides the environmental policies to establish, the level of training and communication required

2. Knowledge management

There is a need to consider how best to make knowledgeable interpretations and recommendations to support sustainability across a wide range of stakeholders

3. Employee training

Environmental management requires a well-trained workforce not only to keep pace with a changing regulatory landscape but also to satisfy our goal to have the best-trained environmental engineers in the world

4. Green product and process design

In the design for environment process, designers may look at the source, makeup, and toxicity of raw materials; the energy and resources required manufacturing the product; and how the product can be recycled or reused at the end of its life

5. Employee empowerment

Empowered employees are motivated and committed to participate and engage in good environmental practices. Employees who are not empowered have less commitment for improvement than the empowered employees

6. Environmental, health and safety

The organization should have health examination and promotion programs, testing employee health and safety, and auditing these programs regularly

7. Supplier and materials management

Supplier and materials management is the coordination and management of a complex network of activities involved in delivering a finished product to the end-user or customer. It is a vital business function and the process includes sourcing raw materials and parts, manufacturing and assembling products, storage, order entry and tracking, distribution through the various channels and finally delivery to the customer

8. Production planning and control

It is suggested that the operations manager should play a significant role in the development as well as implementation of an environmental management system (EMS). Implementation of programs aimed at introducing ‘‘cleaner technologies’’, i.e. equipment and plant with a reduced impact on the state of natural resources

9. Quality

Performance measures related to quality can focus on preventing the production of non- conforming products before shipment to the customer and determining the consequences of non-conforming products discovered by a customer The competitive advantage can be achieved if the organization is able to develop an overall cost leadership without ignoring quality and service

10. Cost

11. Customer environmental performance requirement

Social environmental responsibility is a vital management function and appears to be important for the success of any business

12. Customer responsiveness and company growth

Corporate reputation on environmental issues may affect consumers’ perceptions to the extent that product sales and relative competitive advantage could be affected

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Table III

Profile of respondents’ firms

 

Percentage response

Regional distribution of respondents North East West South

23

7

45

25

Manufacturing segment Process Automobile Electronics Engineering

46

24

17

13

Number of employees Under 100

7

100-250

26

251-500

17

501-1000

18

Over 1000

32

Annual sales ( in millions) Under 50

14

50-100

20

100-150

15

151-350

31

351-500

6

Over 500

14

Data analysis and discussions

Importance index analysis

The numerical scores from the questionnaire provided a measure of strength of opinion of the effect of each item on the success of project. These are subsequently transformed into relative importance index using the following formula (adopted from Digalwar and Sangwan, 2011b).

Importance index of item=variable x ðI x Þ ¼

P

5

i¼1 a i x i

5

P 5

i¼1 x i

where:

a i

x i

i ¼ 1, 2, 3, 4, 5.

¼ Constant expressing weight given to i.

¼ Variable expressing frequency of response for i.

! £ 100%

The importance indices range from 0 to 100. These indices reflect the relative importance of the variables/items listed in the questionnaire. As would be expected, while some items have high leverage, and others do not. The importance indices have been classified into five categories to reflect the respondents’ ratings as follows:

1. Very important: 80 , I # 100.

2. Important: 60 , I # 80

3. Preferred: 40 , I # 60

4. Less important: 20 , I # 40

5. Not important: 0 , I # 20

Based on the classification, out of 128 variables 51 variables/items are rated ‘‘very important’’ 76 items are rated as ‘‘important’’ and only one variables that are rated as

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‘‘preferred’’ No variable is rated as either ‘‘less important’’ or ‘‘not important’’ category. These variables according to the ranking are listed in Table IV.

Ideally, all the variables would be included for performance measurement. Therefore, all the variables are considered for performance measurement study and further analysis purposes. The frequency of favorable response to performance measures indicates that a representative majority of industry professionals have recognized the concept and it’s potential.

Reliability assessment and item analysis

Reliability concerns the extent to which an experiment, test or any measuring procedure yields the same results on repeated trials (Carmines and Zeller, 1979). Internal consistency analysis was carried out to measure the reliability of the items under each critical factor using Cronbach’s alpha. Item(s) was/were eliminated in order to achieve maximization of the alpha coefficient, where needed. During the initial analysis, none of the items were dropped to improve reliability. Values of Cronbach’s alpha are above the significance value of 0.60 for all performance measures (ranging from 0.6234 to 0.9221), which is acceptable for the internal consistence of the scale (Nunnally, 1978; Saraph et al. 1989).

After assessing reliability, detailed item analysis was carried out by adopting Nunnally (1978) method for proper assignment of items to each scale (measure). After the elimination of items during reliability assessment, scale scores were calculated by averaging the scores of the remaining items under each factor. Item score to each scale score correlations were used to examine if an item belonged to the measure assigned. Since scale scores were the average of the respective hypothesized items under each measure, high correlation between each scale score and its respective items were expected. If an item correlates higher to its scale score relative to other scale score, it is deemed that the particular item has been properly assigned to that factor. Any item that correlated higher to other scale scores relative to its own was dropped. Both, reliability tests and item analysis were performed again and the results are shown in Table V. Final Cronbach’s alpha ranges from 0.6390 to 0.9287, which means that the items/variables of all the performance measures are highly reliable. The values of correlation coefficients also have high values as shown in Table V, which proves that the items/variables had been properly assigned to their respective scales.

Validity assessment

The validity of a measure refers to how well it measures what it sets out to measure (Litwin, 1995). Content validity and construct validity are generally considered for validity assessment.

Table IV

Summary of importance index analysis

 
 

Number of

Very

Less

Not

Performance measures

items

important

Important

Preferred

important

important

Top management commitment Knowledge management Employee training Green product and process design Employee empowerment Environmental, health and safety Supplier and material management Production planning and process control Quality Cost Customer environment performance requirement Customer responsiveness and company growth Total

14

13

1

10

2

8

11

1

9

1

8

1

7

7

2

5

15

4

11

13

4

9

13

4

9

9

8

1

5

1

4

4

2

2

19

9

10

128

51

76

1

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Table V

Reliability and item analysis results (after deletion of inappropriately assigned items)

 
 

Final

 

Total number of items (original)

Total number of items deleted

Number of items (remaining)

Cronbach’s

Range of correlation coefficients

Performance measures

alpha

Top management commitment Knowledge kanagement Employee training Green product and process design Employee empowerment Environmental, health and safety Suppliers and materials management Production planning and process control Quality Cost Customer environment performance requirements Customer responsiveness and company growth Total

14

5

9

0.9035

0.692-0.793

10

7

3

0.7706

0.772-0.857

11

6

5

0.8670

0.729-0.823

8

5

3

0.7689

0.730-0.890

7

4

3

0.6390

0.512-0.885

15

6

9

0.9287

0.762-0.919

13

7

6

0.8988

0.683-0.924

13

6

7

0.8899

0.666-0.840

9

3

6

0.8575

0.633-0.887

5

0

5

0.8669

0.647-0.890

4

1

3

0.8970

0.896-0.921

19

12

7

0.8861

0.672-0.860

128

62

66

Content validity. A performance measure has content validity if there is general agreement that the measure has items that covers all aspects of the variable being measured. Content validity is not evaluated numerically. It is subjectively judged by the researchers. Since the twelve measures of green manufacturing were developed based on exhaustive review of literature and detailed evaluation by the top level practitioners, they were considered to have content validity. Content validity depends on how well the researchers created the measurement items to cover the content domain of the variable being measured (Nunnally,

1978).

Construct validity. A measure has construct validity if it measures the theoretical construct that it is designed to measure. Muttar (1985) stated three methods of determining construct validity: multi-trait multi-method analysis, factor analysis and, correlation and partial correlation analysis. Out of these three methods, factor analysis is usually used to identify items, which should be included in a consistent measuring instrument (Muttar, 1985). Given that one of the objectives of this study is to develop items/variables to assess each performance measure, factor analysis is chosen to evaluate construct validity, which is consistent with the literature (Nunnally, 1978; Saraph et al., 1989; Flynn et al. 1994; Badri et al., 1995; Quazi et al., 1998; Digalwar and Sangwan, 2007). Appropriateness of the data for factor analysis is also determined by examining the minimum number of observations required per variable. The sample meets the general rule that there must be at least five times as many observations as there are variables (Hair et al., 1995). According to Flynn et al. (1997) a sample size of 30 or more is statistically sufficient for the analysis.

Next, the appropriateness of the factor model is determined by examining the strength of the relationship among the items/variables. Correlation matrix, Barlett’s test of sphericity and Kaiser-Meyer-Oklin (KMO) measure of sampling adequacy are the three measures recommended in the literature (Norusis, 1994; Hair et al., 1995; Digalwar and Sangwan, 2007) for the purpose of determining the strength of relationship before carrying out the factor analysis. Results of these test shown the strength of model and concluded that all 12 performance measures are suitable for applying factor analysis (see Table VI).

Factor analysis. Factor analysis was conducted on items under each measure based on principal components analysis with varimax rotation using the statistical computing package SPSS 11.5 for Windows. A total of 12 analyses were carried out. The number of factors to be extracted in each analysis was determined by the Eigenvalue. Number of factors was extracted in accordance to the number of Eigenvalue over one. The results of the factor

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analysis are shown in Table VII. As observed from Table VII, all measures (constructs) are uni-factorial. This means that items hypothesized under the measures each formed into a single factor.

Next, an analysis of the factor loading was performed. The factor loading represents the correlation between the variables and their respective factor. The squared loading of each variable is the amount of the variable’s total variance accounted for by its factor. Based on the sample size of 108, factor loading is considered to be significant if they are greater than ^ 0:45 (Hair et al., 1995). The factor loading of all the items under all twelve measures have met the above criteria, with the lowest loading at 0.512 (see Table VII). Since the factor loadings exceeded ^ 0:45, all items contributed to the factor represented. Thus, the findings indicate that the performance measures have the construct validity.

Findings

The various measures of green manufacturing proposed by different authors were organized into a set of twelve performance measures of green manufacturing and items/variables for each of the performance measures were developed as shown in Table VIII.

Importance index analysis result shows, out of 128 variables 51 variables/items are rated ‘‘very important’’ 76 items are rated as ‘‘important’’ and only one variables that are rated as ‘‘preferred’’ No variable is rated as either ‘‘less important’’ or ‘‘not important’’ category. This result indicates that a representative majority of industry professionals have recognized the concept and its potential.

Table VI

KMO measures for different factor

Performance measure

KMO

Top management commitment Knowledge management Employee training Green product and process design Employee empowerment Environmental, health and safety Suppliers and materials management Production planning and process control Quality Cost Customer environment performance requirements Customer responsiveness and company growth

0.844

0.679

0.776

0.641

0.550

0.844

0.851

0.863

0.791

0.837

0.747

0.810

Table VII

Summary of factor analysis result for each performance measure

 
 

Item loading

% variance

Number of factors extracted

Performance measure

range

Eigenvalue

explained

Top management commitment Knowledge management Employee training Green product and process design Employee empowerment Environmental, health and safety Suppliers and materials management Production planning and process control Quality Cost Customer environment performance requirements Customer responsiveness and company growth

0.692-0.793

5.08

56.52

1

0.772-0.857

2.06

68.65

1

0.729-0.823

3.27

65.40

1

0.730-0.890

2.06

68.68

1

0.512-0.885

1.78

59.58

1

0.762-0.919

5.35

66.91

1

0.683-0.924

4.02

67.02

1

0.666-0.840

4.23

60.50

1

0.633-0.887

3.54

58.99

1

0.647-0.890

3.29

65.86

1

0.896-0.921

2.48

82.93

1

0.672-0.860

4.19

59.85

1

PAGE 68 j MEASURING BUSINESS EXCELLENCE j VOL. 17 NO. 4 2013

Table VIII

Green manufacturing performance measures

Performance measure

Items/variables

1.

Top management commitment

 

1.1

 

Setting an environment vision or corporate policy

1.2

Strategic planning by top level management incorporates environmental inputs

1.3

Top management monitor the environmental activity progress

1.4

Top management involved /participate in environmental projects

1.5

Sufficient resource allocated to implement certain environment project

1.6

Top management assume responsibility for environment quality

1.7

Top management assume that environment friendly product development is a way to increase profit

1.8

Existence of a complete green manufacturing plan in the firm

1.9

Review of environment performance in top management meetings

2.

Knowledge management

2.1

 

Availability of resources for KM

2.2

Willingness of employees to share knowledge related to green aspects

2.3

Number of times the knowledge has helped to solve environmental problems

3.

Employee training

3.1

 

Availability and allocation of resources for training

3.2

Frequency of training and retraining on environmental aspects

3.3

Employees to be trained in skills that are required to fulfill their environmental responsibilities and achieve their environmental goals

3.4

Training inside the company by outside trainers

3.5

Environmental training scope and content should also be regularly reviewed and improved

4.

Green product and process design

4.1

 

Introduction of new product/process in such a way that it minimizes adverse impact on the environment

4.2

Life cycle analysis used to assess the environmental impact of product throughout the entire life span of the product

4.3

Manufacturing processes are examine to reduce the amount of waste , energy consumption and emissions

4.4

Recycling activities carried out to ensure full usage of resources

4.5

Adopt a preventive approach and integrate environmental concern into the product during its design phase

5.

Employee empowerment

5.1

 

Green teams are being setup to tackle environmental problems

5.2

Employees are actively involved in the process of determining environmental goals

5.3

Employees are encourage to give suggestions on environmental performance improvements

6.

Environmental, health and safety

6.1

 

Reduction of number of recordable injuries/illnesses and number of lost workday cases

6.2

Reduction in amount of hazardous waste generated and quantity of toxic chemicals released

6.3

Increase in type/volume of non-regulated materials recycled

6.4

Increase in type/volume of non-regulated materials disposed

6.5

Reduction in ozone depleting substance use

6.6

Percentage of staff attending safety committee meetings

6.7

Total annual EHS capital costs

6.8

Health and safety auditing in health and safety

6.9

Testing of employees knowledge of health and safety policy

7.

Suppliers and materials management

7.1

 

Environmental performance used as one of the criteria when choosing a supplier

7.2

Environmental policies of the company are clearly communicated to the supplier

7.3

The company educate the suppliers with regard to environmental issues

7.4

Organizations are using environment friendly raw materials for their products

7.5

Environmental audits or certification programs are to be carried out by the firm on its suppliers

7.6

Suppliers responsiveness to requests for changes

 

(Continued)

VOL. 17 NO. 4 2013 j MEASURING BUSINESS EXCELLENCE j PAGE 69

Table VIII

 

Performance measure

Items/variables

8.

Production planning and control

8.1

Number of recycling/reuse schemes adopted

8.2

Extent to which inspection, review, or checking of work is automated

8.3

Amount of incoming inspection, review or checking

8.4

Amount of final inspection, review or checking

8.5

Stability of production schedule/ work distribution

8.6

Responsiveness to urgent deliveries

8.7

Extent to which process design ‘fool-proof’ and minimize chances of employee errors

9.

Quality

9.1

Development of quality policies and system

9.2

Effectiveness of quality department in improving quality

9.3

Encouragement of a company-wide green culture committed to quality improvement

9.4

Product reliability, durability, functionality, environment friendliness relative to competitors

9.5

System effectiveness in identifying non-conformance of product

9.6

Development of environment quality policies and system

10.

Cost

10.1

Percentage of reduction in product cost

10.2

Percentage of reduction in cost related to labour, material, material handling, distribution, transportation, storage, energy

10.3

Percentage of reduction in after sales service cost (warranty/guaranty replacement cost)

10.4

Percentage of reduction in total number of data

10.5

Percentage of reduction in maintenance cost (equipment failure cost, breakdown cost, repair or rework cost, spare parts inventory cost)

11.

Customer environment performance requirements

11.1

Customer requires us to achieve ISO 14000 Certification

11.2

Customer has a clear policy statement on their commitment to the environment

11.3

Customer would withhold our supply contract if we did not meet their environmental performance requirement

12.

Customer responsiveness and company growth

12.1

Quality of customer service

12.2

Customer service representatives attitude, knowledge and skill of handling problems

12.3

Use of environment friendly information and communication system for customer service

12.4

Increase in market share due to green image of company

12.5

Increase in number of customers

12.6

Launching new environment friendly product successfully

12.7

Increase in number of shareholders

Statistical tests showed that all the 12 performance measures identified were reliable and valid. With reliability and validity established, the items/variables under these performance measures should be able to act as gauging measures of performance of green manufacturing practices. The validated instrument of green manufacturing measures reported here may be used by organizations to audit their practices. Such an audit may help management to prioritize its management efforts. This instrument could also be used by the organizations to assess the performance of their respective suppliers.

Conclusion and direction for future research

This study aims to explore and analyze the performance measures of GM practice implemented in Indian manufacturing industries. The main contribution of this study is to recognize the performance measures of GM implementation in manufacturing industry from a environmental perspective, which can assist enterprises in mitigating risk, reducing cost and adopting strategies in response to customer and legislative needs. In addition, identification of the performance measures of GM permits managers to obtain a better understanding of GM practices and follow academic researchers to proceed with the task of

PAGE 70 j MEASURING BUSINESS EXCELLENCE j VOL. 17 NO. 4 2013

developing and testing theories of GM. The performance measures developed in this study enables decision makers to assess the perception of GM in their organization. Additionally, the performance measures of GM practice in this study can help other stakeholders like government regulations, politicians, community, suppliers, trade organizations, shareholders, employee concerns, consumers, market, environmental advocacy groups to identify those areas of GM that require acceptance and improvements.

Empirical results presented in this study show that the performance measures identified in this study are reliable and valid for GM practice. The systematic and comprehensive literature review that conducted by different authors shown in Table I ensure the content validity of the measures. The obtained reliability coefficient Cronbach’s alpha ranges from 0.6390 to 0.9287 of the performance measures. This measurement result demonstrated that all of the Cronbach’s value in our scales are greater than 0.6 and reveals the high internal consistency. In order to obtain a better and more comprehensive understanding of GM practices, it is suggested to increase the number of participating firms and compare with different countries. It is also worthwhile to explore the differences of the implementing approaches for GM between the firm’s home-country and host-country.

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Further reading

Affisco, J.P., Nasri, F. and Paknejad, M.J. (1997), ‘‘Environmental versus quality standards an overview and comparison’’, International Journal of Quality Science, Vol. 2 No. 1, pp. 5-23.

Melnyk, S.A. and Smith, R.T. (1996), Green Manufacturing, Society for Manufacturing Engineering, Dearborn, MI.

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Young, P., Byrne, G. and Cottere, W.M. (1997), ‘‘Manufacturing and the environment’’, International Journal of Advanced Manufacturing Technology, Vol. 13 No. 7, pp. 488-493.

About the authors

Abhijeet K. Digalwar received a PhD from BITS Pilani, India. Presently, he is Assistant Professor in Mechanical Engineering. He has over 15 years of teaching experience at graduate and post graduate levels. His areas of interest are performance measurement systems, world class manufacturing, total quality management, green manufacturing, knowledge management and manufacturing strategy. He has published more than 35 papers in national/international conferences and international journals. He is life member of Indian Society of Technical Education and a member of Performance Measurement Association, UK, and Decision Sciences Institute, USA. He is reviewer of many prestigious national and international journals and also works as an editorial board member for International Journal of Manufacturing Systems, Asian Journal of Industrial Engineering and Research, Journal of Business Management of Academic Journal inc of USA. Abhijeet K. Digalwar is the corresponding author and can be contacted at: akdigalwar@gmail.com

Ashok R. Tagalpallewar is presently an Associate Professor and Head of the Department of Mechanical Engineering Department of SIES Graduate School of Technology, Nerul, Navi Mumabi, India. He has more than 30 years of teaching experience at UG level. His area of interest includes green manufacturing, supply chain management, performance measurement systems.

Vivek K. Sunnapwar did his BE from Amaravati University, ME from BITS Pilani and PhD from Amaravati University. He is presently working as a Principal and Professor of Mechanical Engineering Department at Lokmanya Tilak College of Engineering, Koparkhairane, Navi Mumbai, India. He has over 21 years’ teaching experience at graduate and post graduate levels. He has published many research papers in national and international journals. He has organized various training programs and conferences in the area of his research interest in the institute. He is reviewer of many prestigious national and international journals. His areas of research interest are green manufacturing, world-class manufacturing, operations management, Dr Sunnapwar is life member of Institution of Engineers (India), Indian Institute of Industrial Engineers (IIIE) and Indian Society of Technical Education.