Green supply chain network design: A review focused on policy adoption and emission quantification

Abstract

We review the literature on green supply chain network design between 2010 and mid 2017, focusing primarily on models and methodologies that explicitly include carbon emissions and environmental policies. We find that supply chain network design has mostly incorporated four policies: carbon cap, carbon offset, cap-and-trade and carbon tax. All four policies succeed to achieve substantial emission reductions with a slight increase in total cost; mostly by configuring the supply chain to use lower-emitting resources. We investigate the prevalent sources of emissions within the supply chain. As expected, transportation contributes about one third, followed by power-intensive processes such as manufacturing, storage and warehousing. Other sources are raw material extraction and sourcing, facility construction and operation, and disposal. We observe that there is a lack of models that capture the complex nature of emissions. Nonlinear tax rates, multivariate emission functions and uncertainty are only considered in few papers. But most importantly, we find that the effect of emissions on demand is rarely accounted for.