1.

Introduction
Global climate change has become a key topic and international trends have shifted
toward increased regulation of greenhouse gas emissions. In addition, economic
globalization has linked the environment closely to global supply chains. Balancing
between environmental and economic performance getting the boost in organizations.
Today, every organization is trying to fulfill their corporate social responsibilities.
Protection of environment became the demand of every customer and regulatory
authorities in every country that’s why environmental protection became the main
concerned of organizations [1][2]. Production activities consume tremendous energy,
with the manufacturing and transportation industries producing the most carbon
dioxide. Thus, corporations that wish to reduce greenhouse gas emissions in their
supply chain should begin with their manufacturing and transportation methods [3].
Furthermore, every organization is getting competitive and regulatory pressure to
reduce their wastage’s pressures [4][5]. This environmental pressure become
increasing day by day and demand for organizations to make their strategies to make
reduce the negative impact of their products and services on environment [6][7].
Globalization changed organizational traditional processes and activities to green or
environmental policies. Now, organizations trying to establish their green image
through the implementations of green strategies and practices [8][9]. Green practices
will result as the competitive advantage [10]. Beamon [11] defined a supply chain as
the network structure of raw material suppliers, manufacturers, wholesalers, retailers,
and end customers involved in the production and transportation of a product formed
through integration." To enable effective, long-term operations of the entire supply
chain, the design of Supply Chain Management (SCM) networks frequently involves
strategic policy concerns that encompass material sources, plant location selections,
plant production capabilities, and inventory management [12]. SCM networks also
involve the selection of transportation routes, which include raw material supply and
transportation modes that begin at the supply end and finish with the customers [13-
15]. Melo et al. [16] divided SCM network design according to the nature of product
demand and supply chain complexity into the following four categories: (a) single-

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stage or multi-stage supply chains; (b) single-product or multi-product supply chains;
(c) single-period or multi-period planning; and (d) fixed demand or random demand.
Transportation times and costs to solve the values of decision variables with the
objective of minimizing cost. Similar studies include Nishi et al. [17] who used
Lagrangian decomposition to solve the multi-stage supply network problems of a
single plant with multiple products. Kanyalkar and Adil [18] incorporated production
capabilities and limited inventory space, and applied the heuristic method to maximize
target profits. Hugo and Pistikopoulos [19] developed a multi-supplier and multi-plant
production transportation network model of production investment choices to select
production technology investments that achieved the target net present value and
carbon emission minimization.
In practice, product movement cannot be achieved by relying on only one
transportation mode. Suitable transportation modes must be selected on the basis of
product weight, dimensions, product value, and urgency. Das and Sengupta [20]
investigated numerous uncertain factors involved in international corporation
strategies and operations, including investment in raw materials, transit costs, duties,
and changes in demand and transportation time. This two-stage mathematical solution
model used profit maximization as the strategic dimension target to obtain supply
chain network decisions (e.g., whether plants should enter production, product types,
and quantity produced by each plant). The results were then used in the operations
dimension to explore cost minimization inventory strategies when transportation times
fluctuated.
In this study green supply chain, management practices will effect on organizational
performance. When organizations implement green supply chain management
practices, it will reduce organizational costs and protect the environment to protect the
environment and enhance organizational performance. The main problem statement
of this study is to fine “The effect of green supply chain management practices on
performance for Distribution strategy”.

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2. Recent trends in supply chain management
Supply chains are effective networks of firms performing activities in a particular
product/service value chain (21). Firms in a supply chain coordinate and share the
benefits through market mechanisms, contracts, and partnership arrangements, which
lead to the increasing efficiency of all partners. In today’s tough economy, the
competition among large corporations has long been extended to the competition
among players in supply chains. Automobile manufacturing involves hundreds of parts
from many suppliers; supply chain management is a critical area in operations
management of the industry and a decisive factor for the success or survival of the
auto makers. For the last several decades, we have witnessed several dominant
trends in supply chain management. In the 1980s, it was just-in-time production; in the
1990s, it was supply chain collaboration and the outsourcing of logistics activities; and
in the 2000s, it was application of the internet, according to supply chain thinker,
David Simchi-Levi (22). The design of the supply chain will become more central to
overall organizational effectiveness and efficiency in the future than ever before and
has attracted a lot of attention in the literature.
In particular, for the past several years, there have been six significant challenges in
the competitive world market that have affected supply chain design for many
multinational corporations (MNCs). These changes include:
1. globalization that produces longer and longer lead times in production;
2. reduction of costs for products and transportation that leads organizations to
take the advantage of economics of scales by shipping large quantities of
products from overseas that in turn, leads to increase in logistics costs and
large inventory;
3. long and geographically diverse supply chain that exposes to numerous threats
of disruption and risks;
4. significant increase of labor costs in developing countries (e.g. 20 percent
increase in China vs 3 percent increase in the USA) that shrinks labor cost
savings in these emerging entities overtime;

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 5. change in regulations requires companies to consider the amount of carbon
emission the supply chain produces that leads organizations to focus on green
supply chain and long-term sustainability; and
6. Volatility of commodity prices (e.g. coal, gold, oil, steel) that causes changes in
procurement of commodity (long-term vs. short-term commitment) in the
markets.

3. Green Supply Chain Management (GSCM)

Green supply chain management is full-fledged covered the stages of the product life
cycle especially focusing on green purchasing, green manufacturing, green logistics,
investment recovery and cooperation with customers. Through implementation of
green supply chain management practices, organizations can achieve organizational
performance focusing on environmental, social, economic and operational
performance [23]. Now, organizations are mature enough, they make strategies to
reduce their manufacturing cost through the reduction of wastage, and it is the only
solution to compete in the market. That is the main motivational concept for
organizations to move towards green supply chain management practices to enhance
their performance [2].
Traditional supply chain management is the only concern in the delivery of products
from buyer to customer. It does not concern with society. Traditional supply chain
management did not focus on the environment. Most of the time damaged and
outdated vehicle used to supply the products. These vehicles spoiled out carbon gas
as waste from their silencers, which will cause to air pollution. In many countries, air
pollution became a very serious issue. The main causes of air pollution are outdated
vehicles and factories. This air pollution will cause to damage society and become the
cause of many diseases and deaths for humans and animals [24]. The second main
problem in traditional supply chain management is high cost because damaged
vehicles need more maintenance charges. They use more fuel because these
vehicles have not been modern fuel saving technology. This fuel and maintenance
cost will increase the overall expenses of organization, which will be the resultant as
to increase the product cost. Traditional supply chain management is the main cause

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of high prices. In this era, every organization is fighting with their competitors based
on their cost. So, if organization faces high costs, then it is impossible to compete
based on price [25).
Some operational functions and activities in GSCM [26] include:
1. Procurement of green (Green Procurement) Green procurement is related to
the state of purchasing environment which consists of involvement in activities
to reduce purchases, reuse and recycle materials in the purchasing process.
Green procurement is a solution for the environment and conservative
economics of business and the concept of obtaining choices of products and
services that minimize environmental impacts.
2. Green manufacturing (Green Manufacturing) Green manufacturing is a
production process that uses inputs with low environmental impacts, is very
efficient and produces little or no waste or pollution. The benefit of
implementing green manufacturing is that it can reduce raw material costs,
benefit from production efficiency and improve company image.
3. Green Distribution (Green Distribution) Activities in green distribution are green
packaging and green logistics. Green packaging, including saving packaging,
using environmentally friendly materials, working with vendors to standardize
packaging, minimizing the use of materials and time to dismantle and promote
recycling programs. Green logistics, includes direct delivery to site users, use
of alternative fuel vehicles and distributing products in large batches
4. Reverse logistics Logistics reverse is the process of taking products from end
consumers for the purpose of increasing the value and proper disposal.
Activities in reverse logistics include collection, joint inspection / selection /
sorting, recovery, redistribution and disposal.

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 Figure 1. Aktifitas dalam Green Supply Chain Management
(Sumber: Ninlawan C., Seksan P., Tosapol K and Pilada W, 2010)

4. Theories related
Summarized and mentioned in the below Table 1.

Table 1. Related theories [27]

Theory Description Link with this study
Transaction cost theory is based on
some assumption regarding to
The purpose of
governance those describe the effect
innovation reduces cost
Transaction of internal and external transactions.
and time to enhance
cost This theory is advancement of agency
performance. Therefore,
economics theory. Because this theory is different
green innovation in this
(TCE) from contractual relationship with
study supported this
shareholders (Kaplan Financial
theory.
Knowledge Bank 2012; McClelland,
O’Brien 2011).

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 Social exchange theory based on the In this study, Green
balance between give and take among supply chain
all relations. Because everyone management practices
weights his benefits and costs to will effect on the
Social
maintain their relationship with others. relationship between
exchange
If the cost and benefit are in the equal buyer and seller. Both
theory (SET)
ratio, then they can sustain their parties gain benefits from
relationship. So, it is the rational choice each other. Therefore, it
to develop the relationship will support social
(Cropanzano, Mitchell 2005). exchange theory.
In this study, Green
Resource-based view to identify and supply chain
analyze organizational resources and management enables
capabilities to develop their strategies organizations to
based on their assets to gain understand and analyze
competitive advantage. When their assets effectively
Resource- organizations know their resources and make their
based view and capabilities then they also realize procedure easy to gain
(RBV) their strengths and weaknesses. When competitive
organizations know their capabilities, advantage.Normally,
then they can make good strategy to organizations use
win competitive advantage (Fikru software for supply chain
2016; Business Dictionary 2017; management those can
Rivard et al. 2006). provide different required
reports.
System theory is actually the interlink
among all the set of activities and
processes to achieve a common goal.
In green supply chain
This is also interlinking among internal
management, all
organizational resources like humans,
activities like inventory,
machine and environment to interact
purchasing, suppliers
with each other has and enhance
Systems and customers are
organizational performance. Therefore,
theory interlinked with each
it starts from the input resources of
other to enhance
organization. Then organizations do
organizational
some processes on these inputs to
performance in this
produce some output under certain
study.
environmental conditions (Environment
and Ecology 2017;
Bronfenbrenner 1992).

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 Network theory focuses on the
relationship between buyer and seller Green supply chain
or direct or indirect relationship management practices
between organizations. Furthermore, are not isolated these are
Network this theory also engaged different interlinked with different
theory organizational networks to do some network actors like
specific tasks with the help of each suppliers and customers.
other to transfer and transform their Therefore, this study will
organizational resources (Moliterno, support network theory.
Mahony 2011; Chaston 2015).
Institutional pressure and
Contingency theory suggests
green innovation are not
becoming flexible according to
constant. They are
situation. Because there is no single
rapidly changing.
theory, which is good every time.
Therefore, organizations
Therefore, in this technological rapid
Contingency need to align their
change environment organization
theory practices with institutional
should be flexible enough to design,
pressure and innovation
control and select their systems
to enhance their
according to environment. And must
performance. That is why
be flexible and adopt changes
this study will support
(Stonebraker, Afifi 2004).
contingency theory.
The diversity of both the institutions
driving environmental pressures,
including external and internal In this study, the
Institutional pressures to the organization and the moderating variable
Theory corresponding organizational institutional pressure
responses developed within each supported this theory.
company (He et al. 2016; Wu et al.
2012).

5. Green supply chain network

Since 2000, SCM research topics have shifted toward multiple products. [28]
examined the dynamic production and transportation problems involving multiple
products using a single plant location and distribution center to plan production,
transportation, and inventory within a limited cycle. The study contained different
Sadjady and Davoudpour [29] discussed single-phase requirements and network
planning of multiple products, and then used cost minimization to determine the
location of plants and distribution warehouses and transportation modes. The Mixed
Integer Programming (MIP) model proposed by Sadjady and Davoudpour

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incorporated transportation times, carrying costs, and facility setup costs of various
transportation modes and used Lagrangian relaxation to obtain solutions. Typically,
supply chain network designs do not have single objectives; decisions must frequently
balance different and even mutually exclusive objectives. Researchers have focused
on multiple-objective programming problems because actual situations require fulfilling
two or more objectives simultaneously. Multiple objectives require managers to
balance numerous objectives and use this balance as the basis of decision making
[30-32]. For example, cost is no longer the only objective in supply chain design; other
economic objectives are responsiveness and service standards. As Melo et al. [16]
indicated, in addition to the supply chain network design, which involves plant site
selection, facility number and production capacity, and movement of raw materials
and products between plants, increasing environmental social awareness has
advanced environmental topics to the forefront in SCM. Unlike typical supply chain
design models, which emphasize cost minimization, numerous scholars have recently
introduced environmental protection concepts into SCM to ensure that both economic
and environmental protection factors are considered [30-33]. Wang et al. [34] used
investment in equipment and plants combined with costs and carbon dioxide
emissions to yield innovative designs of multiple-objective supply chains. Hugo and
Pistikopoulos [35] included the product Life Cycle Assessment (LCA) into decision
criteria and proposed a multiple-objective MIP. Ferretti et al. [35] used the aluminum
supply chain in the aluminum industry as an example to evaluate the influence of the
economy and environment. Cholette and Venkat [36] maintained that the design of
supply chain networks had a direct correlation with energy consumption and carbon
emissions. They considered the wine making industry to explore the influence of plant
and warehouse location, transportation modes, and inventory management strategies
on carbon dioxide emissions. Their results indicated that inventory management and
plant location could effectively reduce carbon dioxide emissions. Paksoy [37]
proposed a production-transportation MIP model for three-stage supply chain
networks that considered the raw material sources, transportation quantity limitations
of raw materials, and transportation modes. Paksoy added carbon emission quotas to
the supply chain network plan. The results indicated that the design of supply

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networks could be used to reduce carbon dioxide emissions from industries. Chiu et al.
[38] studied a 5-layer supply chain network problem with reverse logistics, which
contained suppliers, manufacturers, wholesalers, retailers, and end customers. The
authors calculated total revenues and total cost of forward and reverse supply chain
based on different scenarios and, then, applied fuzzy summation calculations to
calculate the value of each scenario.
In terms of the multi-transportation mode of the green supply chain network, Jamshidi
et al. [39] considered multi-objective functions (minimal total cost and minimal gas
emissions) of the green supply chain problem, which contained multiple customers,
distribution centers, warehouses, manufacturers, suppliers, and transportation modes.
Al-e- Hashem et al. [40] studied a stochastic green supply chain problem, which
contained multi-product, multi-transportation mode, multi-plant, multi-period, and
limitations of CO2 emissions. They formulated a two-stage stochastic optimization
model and calculated its expected minimal total cost. Meanwhile, Fahimnia et al. [41]
presented a green supply chain problem whose objective function was to minimize
total costs. The authors considered multiple products, suppliers, manufacturers,
retailers, transportation modes, and planning periods. They constructed an MIP model
and applied CPLEX to obtain the optimal solution. Coskun et al. [42] studied a green
supply chain network that consisted of stores, carriers, distribution centers, and
manufacturers. They considered demand, capacity, and greenness expectations of
manufacturers, carriers, distribution centers, and retailers to construct an MIP model
and applied goal programming to solve the proposed model. Entezaminia et al. [43]
integrated collection and recycling centers into a green supply chain network; its
features consisted of multi-period, multi-product, multi-transportation mode, and
multisite factors. For the green concept, they added the limitations of CO2 emissions
in both production and transportation as constraints and added one objective function.
Although the studies discussed here considered transportation capacity and CO2
emissions of each transportation mode, they did not consider the transportation time
of each transportation mode in their supply chain network and nor did they investigate
the impact of transportation-mode selection decisions on the green supply chain
network design. Addressing this limitation is a strong motivation of the current

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research. Furthermore, the difference between Wang et al. [34] and the current
research is that Wang et al. [18] studied a supply chain network design problem,
namely, a one-time decision, to determine the new locations and new investment
levels of factories among potential alternatives, in order to minimize total costs and
CO2 emissions simultaneously. In their model, they considered multiple products,
suppliers, and customers, but they did not consider multiple transportation modes or
multiple planning periods. Wang et al.'s [34] model is useful for helping companies,
especially international/foreign companies, to decide on their factories' locations and
investment levels prior to entering a new market, thereby creating a new supply chain
network. However, the current research focuses on determining multi-period decisions
about production batches produced by each factory and transportation modes used by
each pair of supply chain partners. Although the objective functions (total cost and
CO2 emissions) in both models (Wang et al. [34] and the current research) are similar,
the detailed items of the objective functions are different. In addition, the model in the
current research is useful for enabling manufacturers to decide on their optimal
production batch-size plans among factories and transportation plans (modes) for an
existing supply chain network throughout the planning periods. For the constraints of
both models, Wang et al. [34] considered flow conservation, supplier capacity, order
fulfillment, production capacity, environmental level, and nonnegative and binary
constraints whereas the current research considers flow conservation, supplier
capacity, order fulfillment, production capacity and production batch size,
manufacturing and transportation time of products, transportation capacity between
suppliers and manufacturers and between manufacturers and customers, and non-
negative and binary constraints. Although the methodologies used by both models
(Wang et al. [34] and the current research) are the same, the decisions and
constraints in both proposed models are somewhat different, leading to dissimilar
observations and conclusions in the two studies. This study considers the subject to
investigate a three-stage multiple-product production-transportation network design
that incorporates suppliers, plants, and customers. Upstream suppliers are component
or material vendors representing different supplier locations, production capabilities,
and ordering costs. Midstream plants are primarily responsible for product

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manufacturing. Because plant manufacturing capabilities are limited, plant selection is
required to ensure sufficient production and satisfy customer demand. Downstream
represents demand where customers present different product demands at different
times. However, suppliers have an upper limit to their supply capability for each period.
Suppliers are selected by considering the upper limit of transportation quantity,
ordering costs, component carrying costs, and carbon emissions for various
transportation combinations.

6 Distribution Logistic
Logistics is the management of the flow of resources between place / point of origin
and place / endpoint to meet desired needs, for example the needs of customers or
companies. The activities in logistics distribution are as follows:
1. Logistics Procurement: consists of activities such as market research, planning
needs, make-or-buy decisions, supplier management, ordering, and control.
Targets in procurement logistics may conflict between maximizing efficiency by
concentrating on core competencies, outsourcing while maintaining company
autonomy, or minimizing procurement costs while maximizing security in the
supply process.
2. Logistics Production: connecting procurement for logistics distribution. Its main
function is to use available production capacity to produce products needed in
logistics distribution. Production logistics activities related to organizational
concepts, layout planning, production planning, and control.
3. Logistics Distribution: its main task is to deliver finished products to customers.
This consists of order processing, warehousing and transportation. Logistics
distribution is needed because the time, place and quantity of production are
different from the time, place and quantity of consumption.
4. Logistics disposal / removal: its main function is to reduce logistics costs and
improve services related to the disposal of waste generated during business
operations.
5. Reverse Logistics: The process of reverse logistics is the process of moving
goods from the final place of the goods for the purpose of being reused or to be

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 disposed of properly. This process includes management and surplus sales,
and the product is returned to the vendor from the buyer.
Activities in the Green Distribution logistics include:
1. Green Packaging: packaging savings, use of environmentally friendly materials,
collaboration with vendors to standardize packaging, minimize the use of
materials and time to dismantle and promote recycling programs.
2. Green Transportation: shipping directly to site users, using alternative fuel
vehicles and distributing products in large batches.

7 Case Study
7.1 Background
At present the company is experiencing significant developments and changes that
demand its role in maintaining the environment by reducing pollution, causing the
emergence of green supply chain management in the implementation of supply chain
strategies. This study aims to analyze distribution strategies in a green supply
management approach. The research method used was a qualitative approach with a
case study at the OTEL Service company. Data obtained through interviews and
observations on 5 key informants then analyzed through reduction and drawing
conclusions. Based on data reduction found that Suppliers, manufactures, distributors,
shareholders and customers play an important role in corporate competition. From the
perspective there are effects on price, delivery service, technology and quality, where
environmental quality is a new factor. The concept of the green supply management
distribution strategy that is produced is order processing (Green Order Processing),
procurement / purchasing (Green purchasing), green packaging (Green Packaging),
warehousing (Green inventory), and transportation (green transportation).

7.2 Formulation of the problem

1. What is the Logistics distribution strategy in the OTEL Service company?
2. Why does the strategy not reflect green logistics distribution?
3. What is the green logistics distribution strategy model at the OTEL Service
company?

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7.3 Methodology
The research method used in this study used a qualitative approach with case studies
at the OTEL Service company. Research instrument using observation method and
interviewing 5 informants such as internal board of director; internal operations
manager; internal logistic manager; warehouse supervisor; external vendor or supplier,
then analyzed through reduction and drawing conclusions.

7.4 Discussion and Result

The Logistics distribution strategy in OTEL Service companies is explained in Figure 2

Figure 2. Strategy Logistic Distribution of Logistics Service Express Ontime

Based on Figure 2, Otel Service activities have two major activities that have been
carried out, namely activities in the field of cargo management which consist of online
booking management activities, PO Management, Shipment Status, Tracking,
Document Management Control, shipment message sharing and statistics. In addition
to cargo management control activities, Otel has other activities, namely inventory
management & control activities in which activities consist of transaction execution,
flexible inventory attribute tracking and cycle counting. If the series of process
activities is carried out properly, the company is expected to generate profits.

7.4.1 Exploring Green Logistics Distribution at OTEL Service Company

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 1. The traditional Supply Chain practices that have been implemented so far have
not yet paid attention to the environmentally friendly logistics distribution
process so that it can lead to inefficiencies in logistics costs.
2. The importance of the existence of a Green Supply Chain Management saving
the use of resources, eliminating waste, increasing productivity by
implementing:
a. ISO 14000 series
b. Green purchasing,
c. Green transportation (route optimization / amount / capacity / fuel, green
mode of transportation),
d. Green warehousing (optimization of quantity / capacity / layout / material
handling),
e. Green inventory (quantity optimization / reorder point / forecasting,
f. Handle well returned, and products
g. Green packaging will facilitate the preparation of goods, can reduce the use
of materials, increase the utilization of warehouse space and transportation
equipment, and reduce the number of handling needed.

7.4.2 Suggestion & Result

The green logistics distribution strategy model in the OTEL Service company that is
suggested is as follows:

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 Figure 3. Green Distribution Logistic Ontime Express Service Strategy

From Figure 2 and Figure 3 it can be distinguished from the supply chain activities
carried out by the Otel Express company to supply chain activities with Green Supply
Chain Management (GSCM). Figure 2, the company's supply chain is conventionally
focused on company goals that focus on value, while Figure 3 is the Otel Express
strategy based on Green Supply Chain Management where the ultimate goal of
logistics distribution activities in addition to achieving value will also have a significant
ecological. The activities that must be developed by the company in the future as part
of the company's strategy focus on sustainability, namely order processing,
procurement / green purchasing, green packaging, green inventory, and transportation
(green transportation).

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8. Conclusion
Transportation sector is the irreplaceable infrastructure upon which economic and
social development is possible. Million tons of freight and numbers of passengers are
carried by the sector each day. People go to their work places, cargoes are shipped to
and from plants, students are given ride to their schools, families go shopping for their
groceries and many more activities are dependent on the sector. However, at the
same time of its importance to the global life it is a danger to it, since it is one of the
hugest consumers of petroleum products and hence a prime creator of the existing
harmful particles including greenhouse gases and CO2 as the most prevalent of them,
in the air. In order to realize an environmentally sound industry concept, the company
needs to implement a Strategy Green Distribution concept on Supply Chain
Management that focuses on sustainability. By applying the Strategy Distribution
Green Supply Chain Management concept, the company will have the opportunity to
increase the efficiency of logistics activities to reduce the company's total logistics
costs.
It is a while that an urgency to reduce these emissions has been realized and global
communities have been activated under the umbrella of the “Green Transportation”
paradigm. This is the best house to gather all attempts toward securing the planet and
its living creatures. Mechanical engineers, policy makers, urban planners,
environmental engineers, management scholars, industrial engineers, social and
behavioural advocates, chemical engineers, business administrators, transportation
researchers, automotive engineers and others in many more fields of knowledge, are
now working together for greening the transportation sector.

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