Sustainable Suppliers’ Selection in Ready-Made Garments: Toward Sustainable...

Proceedings of the 2016 International Conference on Industrial Engineering and Operations Management Kuala Lumpur,

Malaysia, March 8-10, 2016

Sustainable Suppliers’ Selection in Ready-Made

Garments:

Toward Sustainable Manufacturing

Maha Abdel Hamid Morssi Logistics and Supply Chain Management Department

College of International Transport and Logistics

Alexandria, Egypt

[email protected]

Abstract— Sustainability in Supply Chain has become a significant concern for manufacturing firms which integrates economic,

environmental and social issues. In order to achieve sustainability in manufacturing operations, all stages of an organization's supply

chain need to be incorporated towards sustainability, in other words, manufacturers firms that are willing to achieve sustainability

must be aware of their partners’ sustainable responsibility and practicing. The procurement of sustainable components must be

practiced through dealing with eligible sustainable suppliers which considered being a key factor to achieve sustainable

manufacturing. Therefore, suppliers play an important role in sustainable manufacturing which lead to sustainable supply chain.

The purpose of this study is to analyze and determine the suppliers’ selection criteria that must be followed in Ready Made Garments

(RMG) manufacturing companies in order to achieve sustainable manufacturing which is highly recommended in the EU market as

a large buyer from Egypt, these criteria will be evaluated among six different suppliers in Egypt to measure to what extend do these

suppliers engage to such sustainable criteria.

Keywords: Sustainable Supply Chain, Suppliers’ selection criteria and Sustainable manufacturing.

I. INTRODUCTION

Supply chain sustainability has been got more attention during the last years, toward both the organizations [1], [2] and research

topics [3]. In the beginning, many companies have viewed sustainability initiatives as mandatory and driven by regulation [4],

while recently more literature would suggest that organizations have begun to follow voluntary environmental programs in

order to maintain a competitive advantage [5]. Consequently, organizations started to follow sustainability in their

manufacturing operations; however, manufacturing more sustainable product can help organizations to move toward

sustainable manufacturing [6].

Generally, sustainability is the integration of economic, product responsibility, human rights, labor practices and decent work,

society, and environment [7], which in turn expressed through various criteria. Due to the shift in the manufacturing techniques

toward sustainability issues, firms need to closely work with their suppliers to face the environmental and social development.

Any product consists of many components that all need to be sourced from other manufacturing companies or suppliers, then

in the case of producing sustainable products all those sourced components are required to be aligned with the sustainability

policies of the buyer company [6]. Traditionally, the criteria of evaluating suppliers in conventional supply chain management

usually presented in price, quality, delivery time, and their provided service, but the criteria in sustainable supply chain

expanded to more sustainable features. Sustainability is described by three major dimensions which are environmental, society,

and economy. These dimensions called Triple Bottom Line (TBL). The TBL concept where all three dimensions of

sustainability are considered needs to be incorporated into the supplier selection policies of the buyer company, if the buyer

organization looks for moving toward sustainable manufacturing. The TBL helps organizations to engage in which not only

positively affect the natural environment and society, but which also results in long-term economic benefits and competitive

advantage for the firm [8].

Therefore, the main focus of this study is to shed light on the process of supplier selection in the ready-made garments (RMG)

industry sector where there is a limited academic research activities published. The study focuses on RMG industry that has

experienced significant environmental problems linked to the production process, which is characterized by the intense use of

chemical products and natural resources, resulting in a high environmental impact [9].

2140© IEOM Society International

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Despite that the study is focuses on determining the most important selection criteria affecting the RMG manufacturers as

buyers in their decision in sourcing their material from their suppliers. The considerable criteria can be used by these

manufacturers to select the most appropriate suppliers who contribute to the movement of the supply chain toward

sustainability.

II. LITERATURE REVIEW

a. Sustainable Supplier Selection Criteria

Nowadays, the number of researches which incorporate the environmental and social factors in supplier evaluation and selection

are increasing. Supplier Evaluation is one of the fundamental steps to evaluate a supplier on the adaptability towards one’s

organization, as well as , it is a management decision-making process that addresses how organizations select strategic

suppliers to enhance their competitive advantage. Several studies have discussed how important to include sustainable criteria

in the supplier evaluation [10]; [11]. In fact, to follow sustainability suppliers’ selection criteria have to be deviated to

sustainability issues. In a study on Indian textile suppliers' sustainability evaluation [12] conducted from previous literatures

that the conventional supplier selection criteria have represented in price, quality, delivery and service, while the sustainability

criteria represents in discrimination, abuse of human rights, child labor, long working hours, society/unfair/competition, and

pollution/concern for the environment. As mentioned by [13] having environmental evaluation helps organizations in choosing

more compliant suppliers. Ref. [14] made a classification regarding the environmental supplier criteria into four categories

including green competencies, current environmental efficiency, supplier's green image and net life cycle cost. Ref. [15]

represented a framework merge between qualitative and quantitative environmental criteria that the organizations can use the

in their supplier selection stage. As shown by [21] quality, technology capability, pollution control, environment management,

green products and green competencies are important criteria for green supplier selection in the high-tech industry.

b. Sustainable Supplier Evaluation Methods

There are many studies applied several approaches to evaluate the suppliers’ criteria. Ref. [14] applied an Analytic Hierarchy

Process (AHP) model to design a green supplier rating system. Ref. [16] categorized five major components for green business

practices and that are analysis of life cycle, total environmental management quality, ISO1400 certification for green supply

chain and green design. A study made by [17] that utilized the Delphi method to collect environmental experts’ opinions from

different companies and proposed an environmentally conscious purchasing decision based on AHP. Moreover, [18] utilized

ANP to develop a six-dimension strategic decision framework for Green Supply Chain Management (GSCM). A proposed

model by [19] for manufacturers to have a better understanding of the capabilities that a green supplier must possess that can

evaluate and select the most suitable green supplier for cooperation and accordingly used Delphi and fuzzy extended AHP.

Ref. [20] presented Analytic Network Process (ANP) as a new criterion of supplier selection to hazardous substance. A fuzzy

multi criteria approach for evaluating the environmental performance of suppliers was presented by [21]. A developed

integrated analytical approach by [22], combining (AHP) with Quality Function Deployment (QFD), to enable the 'voice' of

the company's stakeholders in the process through developing four hierarchical phases: linking customer requirements with the

company's sustainability strategy, determining the sustainable purchasing competitive priority, developing sustainable supplier

assessment criteria, and lastly assessing the suppliers.

Ref. [23] used Technique for order preference by similarity to ideal solution (TOPSIS) method for selection of a supplier.

Furthermore, ref. [24] proposed a fuzzy multi criteria approach for measuring sustainability of a supplier and considered

pollution production, resource consumption, eco-design and environmental management system as environmental criteria.

Recently integrated models by AHP, Fuzzy set theory, Gray Relation Analysis and etc. are common [25], [26], [27], [28], [29],

and [30] .The strength of these kind of models are that despite the imprecision of experts' opinions in the evaluation process,

the models are easy to apply [24]

III. Egyptian Ready-Made Garments industry

Textiles and clothing constitute Egypt's third largest industrial sector, behind chemicals and food processing [31]. However

this industry employs over one million workers, the sustainability of this sector is critical to the Egyptian economy [32]. Also,




it considered to be as a critical component of Egypt's export-growth strategy and supports employment and export growth

targets in Egypt’s National [33]. The power player within the sector is ready made garments (RMG), worth 75% of the textile

and garment industry. The RMG subsector produced more than 340.6 million pieces in 2011/2012 with global brands such as

Marks & Spencer, GAP, Wal-Mart, Levi Strauss, Target and Calvin Klein sourcing from and investing in Egypt. Textiles and

RMG sector employ about 30% of local employment. The E.U. is already a major investor in Egyptian companies, accounting

for more than 60 percent of all foreign investment in the country. Total exports of textiles and RMG represent 14% of non-

petroleum exports. The EU countries represented 46.8% of Egypt exports of home textiles, 25% to USA and 16.7% to Arab

countries [34].

As for September 2014, the textiles industry consisted of 4428 companies, of which 4228 companies operating inland and 200

companies operating in free zones with total investment of USD 5.79 billion, according to GAFI database. According to a

recent report, Egypt's manufacturers face critical challenges in remaining globally competitive such as; environmental friendly

aspects [37]. As a result, the Egyptian export of RMG has been declined in the recent years and it isn't still among the largest

Suppliers/Exporters to EU [36].

Also, this problem evidenced by [32] who made a survey about the most important selection criteria among the most important

German buyers of Egyptian RMG and he concluded that the German buyers recommended that the Egyptian RMG

manufacturers must focus on competitive and environmental friendly products together as an important selection criteria as a

buyers, so that Egypt could improve its market share as a supplier/exporter to the German market in RMG industry.

IV. RESEARCH METHODOLOGY

As mentioned before, academic research on sustainable supplier selection criteria gained more attention due to the importance

and the need of following and applying sustainability manufacturing. However there was a lack of research that investigate the

sustainable supplier selection criteria in RMG industry, therefore this research examined the suitable supplier selection criteria

which affected the decision of the RMG manufacturer as a buyer in order to achieve sustainable manufacturing.

In order to carry out this investigation a list of supplier selection sustainable criteria were gathered from various literature

reviews. After that, despite that the study is exploratory, semi-structured interviews used on a sample of 6 suppliers for RMG

manufacturers in Egypt to evaluate the level of implementation of such sustainable criteria that had been collected from

literatures. A five-point scale was used to rate these criteria, with 1" Not at all implementing ", and 5"Extremely implementing".

Purposive Sampling method is applied on such suppliers companies, which is a type of non-probability sampling. The main

goal of purposive sampling is to focus on particular characteristics of a population that are of interest, which will best enable

you to answer the researcher questions.

V. RESEARCH FINDINGS

a. Listing supplier selection criteria

Starting from in-depth analysis of the scientific literatures, as in [12], [37]. [38], [39], [40], and some of sustainable criteria

toward supplier selection have been mentioned, as shown in Table I. These criteria categorized from the three main elements

of sustainability which are the Economic, Environment and Social.

TABLE I SUSTAINABLE SUPPLIER SELECTION CRITERIA IN RMG

Dimension Sub-Criteria Authors

Economic

Economic performance

Baskaran, et al. (2012) Market presence

Indirect economic impacts

Optimization of Flow management

through logistics integration

Brito, et al. (2008)

Quality

Ghadimi and Heavy (2014) Delivery/Service

Cost




Technical capability

credit strength

Molamohamadi, et al. (2013) financial stability

Initial price

Reduce excess packaging

Environmental

Recycled material Carter et al. (2000), Charter et al.

(2001), Handfield et al. (1997), Jay

(2010), Rao (2002), Thanaraksakul and Phruksaphanrat (2009), Ueltchy and

Tate (2009), Akili (2009), and Williams

(2003). Sourced from Baskaran, et al. (2012)

Nontoxic materials.

Nontoxic Energy

Nontoxic water

Biodiversity, reduce emissions, Effluent and waste, compliance and

transport.

Green image

Ghadimi and Heavy (2014) Pollution control

Green competencies

Environmentally

friendly

transport Brito, et al. (2008)

Resource sharing

Solutions

environmental management systems for

preventing and controlling pollution ( (such as emissions, effluents, and waste)

Molamohamadi, et al. (2013) resource consumption (energy, water,

minerals)

recycling

animal rights

Packaging – may use renewable or non-

renewable resources, and generate

recyclable or non-recyclable Waste

Manufacturing Skills Australia (2012)

generates significant greenhouse gas

(GHG) emissions

Environmental degradation and animal

welfare issues related to farming (e.g. cotton and wool

High use of water, largely potable (high

quality, treated and drinkable) in

manufacture and for the care of the product throughout its life.

Social discrimination in employment (age,

religion, gender, and other similar factors

Molamohamadi, et al. (2013)

child labor

flexible working arrangements

satisfactory working environment

health and safety of the staff and customers,

customer privacy, and cultural

properties

Wage standard(Standard of wages

against

man hours spent)

Discrimination

Mani (2014)

Sanitation(population who have adequate sewage facilities

Health care delivery (Access to primary

health care facilities

Safety measures(Safety measures

undertaken

by the company to protect the employees)

Human rights

Percentage of child employed

Living conditions




Human and floor ratio

Hygienic conditions

Health & safety (Safety audit and assessment, Standardized health and

safet conditions) Ghadimi and Heavy (2014)

Employment practices

(Training,Disiplnary and security practices)

b. Evaluating the sustainable criteria:

The aim of this study is to focus on the criteria of selecting suppliers towards sustainable manufacturing in the RMG industry;

it is almost neglected in current supplier selection literatures. The researcher had been gathered such criteria from previous

literatures and then evaluated the level of implementation of them by 6 different suppliers that sell to large RMG buyers in

Egypt as shown in Table II.

TABLE II COLLECTIVE EVALUATION OF ADOPTING THE SUPPLIERS TO THE SUSTAINABLE CRITERIA

Sustainable criteria

Level of implementing Not at all

implementing

Slightly

implementing

Somewhat

implementing

Moderately

implementing

Extremely

implementing

Economic Economic performance 6

Market presence 6

Optimization of Flow

management through

logistics integration

4 1 1

Quality 6

Delivery/Service 3 3

Cost 6

Technical capability 2 4

credit strength 5 1

financial stability 4 2

Initial price 6

Reduce excess packaging 5 6

Subtotal 15 28 28

Percentage 21% 39.5% 39.5%

Environment

Recycled material 3 2 1

Nontoxic materials 4 2

Nontoxic Energy 4 2

Nontoxic water 4 2

Reduce emissions 3 3

Environmental management systems for

preventing and

controlling pollution

3 3

Green competencies 3 3

Environmentally

friendly

transport

5 1

Animal rights 4 6

Packaging ( use

renewable resources) 5 1

Subtotal 19 3 29 13




Percentage 30% 5% 45% 20%

Social

Discrimination in

employment (age, religion, gender, and

other similar factors)

4 2

Child labor 4 2

Flexible working

arrangements 3 3

Satisfactory working

environment 4 2

Health and safety of the

staff 4 1 1

Customer privacy, and

cultural properties

Wage standard(Standard

of wages against

man hours spent)

4 2

Employment practices

(Training ,Disciplinary

and security practices)

4 2

Subtotal 15 12 9 4

Percentage 37.5% 30% 22.5% 10%

The previous table clearly shows the suppliers’ implementation level of such three dimensions (Economic, Environment, and

Social) of sustainable criteria. Each dimension with its sub criteria will be clarified in three different figures Fig.1, Fig.2, and

Fig.3.

Fig.1. Economic criteria level of implementation

Fig. 1 showed that the level of implementing the economic criteria represents a high percentage between extremely and

moderately implementing, as long as, that somewhat implementing takes a moderate percentage. In contrast, not at all and

slightly implementing are at zero percent of implementation. Therefore, it appeared that the economic criteria at all are highly

implemented by the suppliers.

0% 0%

20%

40% 40%

0%

10%

20%

30%

40%

50%

Not at allimplementing

Slightlyimplementing

Somewhatimplementing

Moderatelyimplementing

Extremelyimplementing

Economic

Implementation Level




Fig. 2 Environment sub criteria level of implementation

Fig. 2 showed that the level of implementing the environmental criteria represents a high percentage in moderately

implementing, as long as, that extremely and slightly implementing represent a moderate percentage. However, not at all and

is at zero percent of implementation, as well as, somewhat implementing at low level. Therefore, it appeared that the

environmental criteria at all are moderately implemented by the suppliers.

Fig. 3 Social sub criteria level of implementation

Fig. 3 showed that the level of implementing the social criteria represents a low percentage in extremely implementing, also

moderately implementing not far from it. However, slightly and somewhat implementing are both at high percentages. This

showed that the social criteria in general are at a low level of implementation by suppliers.

0%

30%

5%

45%

20%

0%10%20%30%40%50%

Environment


0%

38%

30%

22%

10%

0%

10%

20%

30%

40%

Social





Fig. 4 Three Dimensions of Sustainable Criteria Implementation Levels

The previous figure shows that the Economic criteria are at a highly implementation level by the suppliers in contrast, the

Social criteria are at a low level among the suppliers. However, Environmental criteria are at a low level. The researcher

conducted from the interviewees’ points of view that the social factor has the lowest implementation because of the culture in

the Egyptian market is not aware enough to take care of such factor. Although they already have rules and legislations by the

government but in fact when it comes to implementing they are neglecting to follow the instructions, also they stated that the

industry itself is at a high pollution level such as noise, chemicals, toxic water, etc.

VI. CONCLUSION AND FUTURE WORK

In conclusion, the concept of sustainability, as mentioned before, has become important issue regarding

manufacturing, as well as, it took more attention from researches recently. Nowadays, manufacturers started to

focus on their upstream stages through evaluating and selecting their suppliers who are following the sustainability

dimensions (Economic, Environment, and Social) in their work in order to achieve sustainable manufacturing.

When suppliers are selected based on these criteria, both suppliers’ performance and buying firms’ performance is

expected to increase. This exploratory study investigated the suitable sustainable criteria for selecting and evaluating

suppliers of RMG manufacturers, and then evaluates the real actions of implementing of these criteria by 6 suppliers

of RMG manufacturers.

According to the suppliers’ interviews, it concluded that the Economic factor are at a highly implementation level

in their operations as it contains the cost and quality factors that represent the most criteria focused by the buyers

firms in Egypt. In contrast, the Social factor are at low implementation level as they stated that the main reasons

behind this are the lack of awareness of labor in how to deal with the pollution coming from the industry itself and

they are not caring of how to protect themselves, as they are not willing to improve their atmosphere of working.

Moreover, regarding the Social criteria, they stated that the poor people in the society are not mind to let their Childs

working to get money in return to rescue from poverty. Although, it is important to educate and train workers

regarding new standards and guidelines for paying attention to their safety and health as any serious incident during

manufacturing could affect the company’s reputation.

Regarding the Environmental criteria, it appeared in-between the moderately and slightly implemented due to the

nature of the industry that consists of several pollution factors, and the lack of awareness to apply the concept green

is still representing such as; green transportation, recycling, and renewable resources.

The contribution of this study is determining sustainable criteria for selecting and evaluating suppliers in RMG

industry; these criteria could be furthered utilized to improve the tendency of the suppliers to become stronger in

0% 0%

20%

40.00% 40.00%

0%

30%

5%

45%

20%

0%

37.50%

30%

22.50%

10%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Not at allimplementing

Slightlyimplementing

Somewhatimplementing

Moderatelyimplementing

Extremelyimplementing

Economic Environment Social




the market while following these criteria, as well as, to be potentially selected by large RMG manufacturers that

export to large markets such as EU. Further research could be recommended to investigate more supplier selection

criteria by actual RMG manufacturers through more studies. Another path for future work that the conducted criteria

in this study could be used for selecting suppliers of RMG manufacturers/buyers through using several approaches

like AHP, ANP, and TOPSIS, etc. Moreover, there is a need for future work to propose integration, incentive and

innovative strategies between manufacturers and suppliers to improve the social and environmental practices

towards the suppliers. Also further work needed, to propose a comprehensive study to compare performance of an

organization that concern about sustainability in their supplier selection and vice versa.




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BIOGRAPHY

Maha Morssi is working as a Lecturer Assistant in the College of International Transport and Logistics, Department of Supply Chain

Management, Arab Academy for Science and Technology and Maritime Transport (AASTMT), Alexandria, Egypt. She earned a Bachelor

Degree in Trade Logistics and International Transport Management from college of International Transport and Logistics, AASTMT,

Alexandria. Egypt. She holds a Master Degree in Foreign Trade Logistics from Institute of International Transport and Logistics, AASTMT,

Alexandria, Egypt. She got a Higher FIATA diploma in Supply Chain Management. She had published a research paper in the International

Conference in Hong Kong - May 2014 under the title of 'The Supply Chain Perspective on Slow Steaming'. She has taught many courses

related to supply chain and logistics management. As well as, her research interests include sustainable supply chain, sustainable

manufacturing, buyer-supplier relationship and green supply chain management.


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