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(1)IMPACT OF SUSTAINABLE SUPPLY CHAIN PRACTICES ON ENVIRONMENTAL AND OPERATIONAL PERFORMANCE OF SRI LANKAN APPAREL INDUSTRY. Tikkamage Kushan Madawa Perera. Master of Business Administration in Management of Technology. Department of Management of Technology. University of Moratuwa Sri Lanka. November 2015.

(2) IMPACT OF SUSTAINABLE SUPPLY CHAIN PRACTICES ON ENVIRONMENTAL AND OPERATIONAL PERFORMANCE OF SRI LANKAN APPAREL INDUSTRY. Tikkamage Kushan Madawa Perera. Dissertation submitted in partial fulfillment of the requirements for the Degree of Master of Business Administration in Management of Technology. Department of Management of Technology. University of Moratuwa Sri Lanka. November 2015.

(3) 1. 2. INTRODUCTION .................................................................................................. 1 1.1. Background of the study ......................................................................................... 1. 1.2. Significance of the study ......................................................................................... 3. 1.3. Scope of the study ................................................................................................... 4. 1.4. Research problems .................................................................................................. 5. 1.5. Research questions .................................................................................................. 5. 1.6. Research objectives ................................................................................................. 6. LITERATURE REVIEW ..................................................................................... 7 2.1. Sustainable supply chain ......................................................................................... 7. 2.2. Environmental management systems ....................................................................... 7. 2.3. Sustainable raw material sourcing ........................................................................... 8. 2.3.1. Supplier selection for sustainability .................................................................. 8. 2.3.2. Eco labels ........................................................................................................ 9. 2.3.3. Relationship with the suppliers......................................................................... 9. 2.4. Customer approach ............................................................................................... 10. 2.5. Sustainable product development .......................................................................... 11. 2.6. Environmental performance .................................................................................. 12. 2.6.1. 3. 4. Sustainability in distribution........................................................................... 12. 2.7. Operational performance ....................................................................................... 13. 2.8. Challenges in improving on sustainable supply chain practices ............................. 14. 2.9. Sri Lankan garment export industry ...................................................................... 15. RESEARCH DESIGN & METHODOLOGY .............................................. 17 3.1. Conceptual model ................................................................................................. 17. 3.2. Hypothesis of the study ......................................................................................... 18. 3.3. Operationalization table ........................................................................................ 19. 3.4. Methodology......................................................................................................... 21. 3.5. Summary of the responses received ....................................................................... 22. DATA ANALYSIS ................................................................................................ 23 4.1. Data analysis summery.......................................................................................... 23. 4.2. Reliability analysis of the data............................................................................... 23. 4.3. Analyze of the present status ................................................................................. 25. 4.4. Pearson Correlation ............................................................................................... 26. 4.5. Regression Analysis .............................................................................................. 27. 4.6. Sobel Test ............................................................................................................. 30 i.

(4) 4.7. 5. 6 7. Correlations between concepts and indicators........................................................ 31. 4.7.1. Correlation between OP and concepts in SSC ................................................ 31. 4.7.2. Correlation between EP and concepts in SSC ................................................. 31. 4.7.3. Correlation between OP and indicators of SPD .............................................. 32. 4.7.4. Correlation between EP with its indicators ..................................................... 32. 4.7.5. Correlation between OP with its indicators ..................................................... 33. 4.7.6. Correlation between SSC and IEM ................................................................. 33. 4.7.7. Correlation between SSC and SRS ................................................................. 34. 4.7.8. Correlation between SSC and CAS ................................................................ 34. 4.7.9. Correlation between SSC and SPD ................................................................. 34. 4.7.10. Summary of the regression Analysis between EP and OP ............................... 35. CONCLUSIONS ................................................................................................... 36 5.1. Discussion of the findings ..................................................................................... 36. 5.2. Limitations of the study......................................................................................... 37. 5.3. Recommendations ................................................................................................. 38. REFERENCES ...................................................................................................... 39 APPENDIX ............................................................................................................. 44 7.1. Appendix 1 – Research questionnaire .................................................................... 44. 7.2. Appendix 2 – Summery of the responses received ................................................. 49. 7.3. Appendix 3 - Mean and standard deviations of all indicators ................................. 50. 7.4. Appendix 4 – Regression analysis ......................................................................... 52. 7.5. Appendix 5 - Correlations ..................................................................................... 65. ii.

(5) LIST OF FIGURES. Figure 1: Conceptual Model ................................................................................................ 17 Figure 2: Sobel test ............................................................................................................. 30. LIST OF TABLES. Table 1: Scale of the apparel manufacturing companies in Sri Lanka ................................... 16 Table 2: Operationalization table ......................................................................................... 20 Table 3: Environmental performance................................................................................... 23 Table 4: Operational performance ....................................................................................... 23 Table 5: Internal environmental management ...................................................................... 24 Table 6: Sustainable raw material sourcing.......................................................................... 24 Table 7: Customer approach on sustainability...................................................................... 24 Table 8: Sustainable product development........................................................................... 24 Table 9: Mean and standard deviation of concepts in conceptual model............................... 25 Table 10: Pearson correlation matrix ................................................................................... 26 Table 11: Regression analysis of SSC on OP ....................................................................... 28 Table 12: Regression Analysis of SSC and EP on OP .......................................................... 29 Table 13: Correlation between OP and concepts in SSC ...................................................... 31 Table 14: Correlation between EP and concepts in SSC ...................................................... 31 Table 15: Correlation between OP and indicators of SPD .................................................... 32 Table 16: Correlation between EP with its indicators........................................................... 32 Table 17: Correlation between OP with its indicators .......................................................... 33 Table 18: Correlation between SSC and IEM ...................................................................... 33 Table 19: Correlation between SSC and SRS ...................................................................... 34 Table 20: Correlation between SSC and CAS ...................................................................... 34 Table 21: Correlation between SSC and SPD ...................................................................... 34 Table 22: Regression Analysis between EP and OP ............................................................. 35. iii.

(6) LIST OF ABBREVIATIONS. SSC – Sustainable supply chain IEM – Internal environmental management SRS – Sustainable raw material sourcing CAS – Customer approach on sustainability SPD – Sustainable product development EP – Environmental performance OP – Operational performance. iv.

(7) ACKNOWLEDGEMENT. First of all, lot of thanks go to Dr. Dharmasri Wickramasinghe as the research supervisor for guiding me to conduct this research effectively and for his valuable advices with knowledge sharing. I must thank all the lecturers of Department of Management of Technology (MOT) for their valuable dedication in knowledge sharing. The help given by all the executives who spent their valuable time to respond to my research questionnaire should be highly appreciated. Lot of thanks go to my wife Nildiya Wijesinghe for being with me by encouraging me always. Special thank goes to my sister in law Duwani Wijesinghe for the advices received in research analysis. I must thank my parents and sister Meththa Perera as well for their guidance & immense support received throughout this MBA program.. v.

(8) DECLARATION I certify this dissertation does not incorporate, without acknowledgement, any material previously submitted for a Degree or Diploma in any University and to the best of my knowledge and belief, it does not contain any material previously published or written by another person or myself except where due reference is made in the text. Also I hereby grant to University of Moratuwa the non-exclusive right to reproduce and distribute my thesis/dissertation, in whole or in part in print, electronic or other medium. I retain the right to use this content in whole or part in future works (such as articles or books).. …………………………. Date:. Signature of the candidate. ……………………….... Date:. Signature of the supervisor Name of the Supervisor: Dr. Dharmasri Wickramasinghe. vi.

(9) ABSTRACT. Sustainability is an important driving force for Sri Lankan apparel industry for future competitive advantage. Although there are lot of apparel companies in Sri Lanka where various initiatives for sustainability in apparel have been already started, it is worth in assessing on what is the relationship and contribution it has on supply chain, environment and operational performance. Although the apparel manufacturers strive towards sustainability, there is a concern whether they receive expected gains from customers for that. This research was conducted to see the impact of sustainable supply chain practices on environmental performance and operational performance in Sri Lankan apparel industry. A questionnaire was developed based on the literature survey data and expert ideas to collect responses from executives who work in Sri Lankan apparel manufacturing companies. The received responses were analyzed using SPSS statistical software to derive conclusions. The results indicated that both sustainable supply chain practices and environmental performance are positively related to operational performance of the Sri Lankan apparel manufacturing companies. And, sustainable supply chain practices are positively related to the environmental performance. Another important indication received from this is that there is a low contribution for improving cost efficiency by using green materials and green production. So, it is important to consider ways on how to increase the cost efficiency while moving towards green concept. This will have a high impact for survival since there is a huge competition coming from the Asian region garment manufacturers. Sri Lankan apparel manufacturing companies should promote offering more green products to the customers with a clever convincing capability. Since the customers does not seem to be willing to pay for sustainability, there should be some strategies created to increase their willingness towards sustainability. Organizational performance also an important aspect as operational performance and it can be taken in to study if the financial details can be accessed.. vii.

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