CONCEPTUAL STUDY ON SUSTAINABLE MANUFACTURING PRACTICES AND FIRM PERFORMANCE.
ABSTRACT : The world is currently experiencing increasing levels of industrial contamination: The demand for sustainable product and raw material aligned with the ecological pollution. Thus it increases the awareness on sustainability in the related areas. Sustainable manufacturing practices are rapidly evolving in the recent years and the effort of manufacturing industries to achieve sustainable production
Has led to the concern on economic environmental and social impact in Malaysia. Various sustainable manufacturing practices have diverse effect towards organization performance. There is a limited empirical investigation on the impact of sustainable manufacturing practices in Malaysian manufacturing firms within the current literature. This research aims to contribute to the body of knowledge by reviewing the literature on sustainable manufacturing practices in Malaysia. Drivers and their impacts on the firm's performance in selected industries in the Malaysian manufacturing sector will be considered.
KEYWORDS: Sustainable manufacturing manufacturing practices manufacturing organizations firm performance 1.0 INTRODUCTION
Sustainability in manufacturing has achieved special attention from many researchers and several research papers have been published in this new realm of science . However sustainability is a widely accepted idea with little guidance about its practical implementation and impact towards firm's performance. Manufacturing industries account for a significant part of the world's resources consumption and waste generation. Nevertheless they have the potential to become the driving force for creating a sustainable society. They can design and implement integrated sustainable practices and develop products and services that contribute to better environmental performance . In Malaysia manufacturing industries play a significant role and contributed 25% to the national GDP in 2011.
The long term sustainability of the corporation largely relies on how organizations maintain their competitiveness while simultaneously preserving a sustainable environment . Additionally companies must simultaneously look at internal manufacturing operations as well as the external markets. The issue of new product development which will move a business towards becoming more economically sustainable should be also considered .
In recent years many organizations have implemented environmental sustainability programs in their organizations; however it is difficult to find details on their implementation. In cases which the details are available the focus tends to be on the specific technology rather than a broader industrial engineering perspective . In addition current sustainable manufacturing practices are not well mapped. Therefore the justification and mechanism for improvements and their impacts are unclear.
The area of sustainable manufacturing is a rapidly developing field. There are few good reports on current levels of sustainable manufacturing activities in companies specifically in Malaysia. Furthermore there is limited literature discussing on the impact of sustainable manufacturing in Malaysia. In addition  has underlined that researches on the impact of environmental practices towards organizational outcomes is still somewhat inconclusive.
The introduction of the National Green Policy in 2009 has urged Malaysian manufacturers to practice sustainable manufacturing in order to comply with the national agenda. This study intends to fill this gap by creating a sustainable manufacturing model for manufacturers in Malaysia. To date there are limited researches on the factors affecting sustainable manufacturing practice and its impact on the performance of manufacturing organizations in Malaysia. This study aims to uncover the pertinent issues related to sustainable manufacturing such as the challenges practice and drivers that lead to sustainable manufacturing practices in manufacturing organizations in Malaysia. Furthermore this research seeks to shed light on the manufacturing sustainability drivers which firms should be exposed to. In addition their impact on firm performance which is measured through the triple bottom line concept
(economic environment and social impact) is also considered. Consequently this study will propose a model illustrating the relationships between sustainable manufacturing practices and firm performance in manufacturing industries as suggested by .
The rest of the paper is organized as follows: Section II reviews the literature related to the sustainable manufacturing concepts challenges drivers and practices. Section III describes the relationship between sustainable manufacturing drivers and firm performance and discusses the new proposed framework for sustainable manufacturing. Finally the conclusion is presented in Section VI.
2.0 LITERATURE REVIEW
Sustainable manufacturing has received attention and been redefined due to the rapid changes in the development of worldwide concern on the environmental degradation and greening effort as well as striving for competitiveness. The early concept was introduced by the Brundtland Commission in 1987 where they defined sustainable development as development that meets the needs of the present without compromising the ability of future generations to meet their own needs" . The concept and definition of sustainable manufacturing is changing with the development in research. Recently sustainable manufacturing was defined as providing goods and services for satisfying the customers' requirements in a society while accelerating economic growth and decelerating the environmental damage .
2.1 Sustainable Manufacturing Challenges Manufacturing industries are confronted with a new major challenge on sustainability due to depleted energy and natural resources devastating global environment deterioration and human desiring in higher life quality . Generally the challenge for companies in both manufacturing and services is to design products services and delivery processes that will leave less carbon footprint and simultaneously stay competitive in the global market . One of the key challenges for companies to practice sustainable environmental development programs (i.e. green practices) is an unsupportive organization culture which lacks institutional incentives . Other challenges faced by global organizations to practice a holistic and integrated environmental program include price competition among suppliers and the high cost of practicing sustainable manufacturing .
With regard to the Malaysian context the challenge for sustainable manufacturing practice remains to be seen if Malaysia can sustain its growth momentum to enter the league of developed industrial nations by 2020 . The challenges facing the fast growing Malaysia in fulfilling its vision on the National Green Technology Policy are different from other developed countries. Thus limited lessons can be drawn from the earlier experiences of developed nations. Considering Malaysia's openness and highly trading environment the economic vulnerability to external shocks necessitates rethinking of strategies for sustainable growth and development.
2.2 Sustainable Manufacturing Drivers
Regarding various literature reviews some of the drivers contributing to sustainable manufacturing practices are namely policy and regulation [912-14] market forces [12.14] strategic leadership  and resource availability .
The most dominant factor discovered in most organizations is the government policy and regulation. Reference  has found that government legislation regulation and incentive are major drivers for sustainability operations and this is supported by other scholars [12-14; 16-20]. Government policy and regulation has put a pressure on manufacturing organisations to give more priority on sustainable manufacturing practice in order to comply with the environmental standard and regulatory framework.
The key factor for the successful implementation of sustainable manufacturing practice is also largely driven by the commitment from top management (management support and management role) in the organization . Another related factor that may be considered in strategic leadership is firm strategy . However the management has a broader perspective about the concept of sustainability in organizations where most executives act the requirement of becoming sustainable as a corporate social responsibility divorced from the business objectives in the organization .
In addition one major factor that contributed to the sustainable manufacturing practice in Malaysia is the availability of resources. Significant funds and resources are essential to support enterprises to adopt sustainable practice and make the transition towards the development of sustainability . Devoid of adequate resources the effort to become sustainable organizations may be difficult to be realized. Hence the resources are driven by a steadfast commitment to ensure that the next generation will have a planet which can sustain them into their future. One of the resources that becomes a fundamental criterion for success in sustainable manufacturing practice is ensuring manufacturing organizations have the right skills on the technology to be used when they are required. Workforce planning will need careful steering and support by the management. It is believed that engaged and dedicated employees are the drivers of successful sustainability programs
that include employee empowerment and training . Many scholars have highlighted that one major factor contributing to sustainable manufacturing practice is from the market forces. Reference  has classified market forces such as the customers competitors and suppliers as the exogenous factors which drive a firms' sustainability efforts besides government regulation norms and values in society. Customer's demand is a major driver in the market forces that can be considered as a major contribution factor that leads to the practice of sustainable manufacturing . Customer's demand has also been a major motivation factor to adopt environmental standards as customers prefer products that are environmentally friendly . In many parts of the world market forces have started to motivate manufacturing companies to consider sustainability more seriously as well as social and environmental factors .
Besides that when implementing sustainable manufacturing practices for any firm it is important to consider strategic initiatives such as business strategic practices that respond to the pressures of the external environment namely including requirements and societal expectations . In addition environmentally sustainable products can enable organizations to differentiate their offerings from other competitors foster a positive corporate image and make a difference to the organization.
2.3 Sustainable Manufacturing Practices
Previous studies have highlighted many sustainable manufacturing practices such as waste management  green manufacturing  pollution prevention  sustainable material [28.29] and sustainable manufacturing process  which are adopted by organizations However this research only focuses on three sustainable manufacturing practices namely waste management sustainable manufacturing process and sustainable material.
Waste minimization is a process of increasing resource utilization or reduction of waste and extracting maximum from the waste stream before final disposal or recycling . As globalization leads to increased knowledge and capability standards it is possible to achieve a high quality of life and living standards through waste minimization without long-term harm to the environment. Organizations that adopt lean practices could minimize or eliminate wastes in all forms. In addition lean practices are helpful for firms to remove pollutant and harmful emissions by means of reduction in product shipment volumes and waste reductions .
Implementing new manufacturing processes in the business environment is also one of the approaches for organizations to be more sustainable. Many suppliers have adopted various approaches to improve the sustainability of their products and developed new additive formulations and technologies which can minimize the environmental impact. Other innovations include developing systems with unique properties and focusing on reducing waste production and energy consumption . Reference  suggested that humanity adopts technology which uses renewable resources controls population growth and reduces pollution where collapse would be avoided and consequently would provide high living standards and human welfare.
New materials development is a necessary part of meeting the growing demand for infrastructure while reducing the industry's environmental impact . Material technologies will provide the foundation for moving forward and embracing sustainable practice while many other opportunities exist for new innovations .
2.4 Firm Performance
The influences of sustainable manufacturing practices are incremental and they affect the industry sectors differently . Manufacturing companies that adopt environmental sustainability need to examine the impact of the triple bottom line to properly asses the value of initiatives  and commit to track the environmental impact along the entire manufacturing chain . This study uses the Triple Bottom Line (TBL) concept to examine the performance of manufacturing firms which may represent the manufacturing sustainability.
The environmental impact concerned with the facility physical space and the by-products of its manufacturing that influence the carbon footprint . Environmental sustainability practices are proven to reduce energy consumption and water waste in its manufacturing processes and also reduce absolute greenhouse gas emissions . In addition the approach has the potential to be self- maintaining by reducing pollution and resource consumption  while steel companies embed sustainability in their organizational designs through encouraging research and innovations to minimize the negative environmental impacts of steels.
Economic sustainability is relatively easy to measure as it is to a large degree and easy to quantify;  thus the impact is relatively easy to indicate. Many manufacturers realize that a balanced approach to sustainability can lead to increased profitability  and achieve high levels of economic growth . Most companies view sustainability as activities that can improve returns on capital which often means reducing operating costs through improved natural- resource management such as energy use and waste . For instance lean practices allow firms to achieve cost savings and thus increase profitability  and are accepted to increased customer loyalty . Furthermore both the economic and environmental benefits of sustainable manufacturing are apparent in cost savings due to energy reduction and waste minimization .
Sustainable manufacturing practice also has direct and indirect impacts towards social well being. A study by  mentioned that the increase of production rate causes more social impact where a higher workload results in higher worker mental and physical challenges which consequently lead to frequent worker injuries. For instance ineffective waste management can lead to many social and public health problems . It is believed that it is not only vital to foster a culture of environmental sensitivity among employees but also necessary to care for employees through equitable hiring practices workplace fairness and shared accountability . For instance improved air quality and reduction in energy bills would provide significant benefits gained by common people; hence they can improve upon occupant comfort and health minimize strain on local infrastructure and contribute to overall quality of life .
However social sustainability is somewhat more difficult to be measured because of its itangible nature and the subjectivity of many factors that are deemed beneficial to society .
3.0 CONCEPTUAL MODEL
This particular section discusses the research design and research methods which provide a foundation for the data collection process. This study will improve and advance research in sustainable manufacturing areas in Malaysia by developing a new framework using new construct and methodology. Specifically it aims to examine the firm performance level impact from the drivers and sustainable manufacturing practices which covers selected industries in the manufacturing sector. It also verifies the influence of sustainable manufacturing practices on the mediating effect between sustainable manufacturing drivers and firm performance using the TBL concept. To achieve this purpose this study uses questions developed from previous literature and adapted by a few studies  that relate to drivers of sustainable manufacturing sustainable manufacturing practices and firm performance.
After a rigorous review of the literature it was found that scholars have suggested many factors that drive manufacturing companies to adopt sustainable manufacturing practices. These factors are considered as resources to increase firm performance and become sustainable. The same theory applies to sustainable manufacturing studies where it is believed that firm performance can be predicted by sustainable practices and drivers. It is also predicted that other factors such as firm size duration of practice and industry type can moderate firm performance between firms. The complexity of this relationship can be illustrated in the research framework in Figure 1 Manufacturing companies with different sizes industry types and duration practice may possess different resources. Thus it is believed that they may have positive relationship that influence towards sustainable manufacturing practice and firm performance. Hence the following hypotheses are suggested (Table 1):
The population of this study comprises of three industries namely the Electric and Electronic Engineering Supporting industry as well as Machinery and Equipment from the Federation of Malaysian Manufacturer (FMM) 2014 database. These three industries were chosen based on the contribution of high pollution and industrial waste from manufacturing. The sample was selected using a stratified random sampling method according to industry. The respondents were drawn from different types of products by using this sampling method in order to gain a greater variance in the outcome. Furthermore stratification is an efficient research design that provides more information within the population frame and variation between the subgroup specified.
The questionnaire is used as the main data collection tool. Specifically postal and email questionnaires are used to reduce method bias by increasing the response rate and to test for non-response bias by comparing with non- respondents. This method also ensures the merit of postal and email questionnaire due to the large geographical coverage and the possibility of achieving greater generalizability. All items in the questionnaires were developed by referring to previous literature. They are seven-point Likert-scale questions. Data will be collected by post and e-mail and the respondents should be able to answer the questions within 15 minutes. Data collected will be keyed into a computer for further analysis using SPSS 21.0 and AMOS 21.0. The first phase of data analysis will be performed by SPSS to obtain the descriptive statistical results such as means standard deviations Cronbach's alphas and Exploratory Factor Analysis (EFA).
Meanwhile analysis of moment structures (AMOS) will be sed in the second phase for structural equation modeling (SEM) purposes where the measurement model structural model and hypotheses will be tested.
Table 1: Hypothesis development
This paper presents a general overview of sustainable manufacturing practices and proposes a new framework which is considered to have interlinked relationships between the drivers and firm performance mediate by sustainable manufacturing practices. Sustainable manufacturing shows a higher level of attention to thee environment. It has been a long time that many researchers have addressed the factors which should be considered for implementing sustainable manufacturing in the organization as well as the sustainable manufacturing practices. However the issue should be explored further by evaluating the influence of manufacturing practices towards the economy society and environment.
This research will provide information for managers in manufacturing organizations to gain insights to practice sustainable manufacturing successfully. Secondly it will provide knowledge and empirical evidence for firms to ensure the success of the sustained effort. Thirdly the study will evaluate the current state of manufacturing practice in Malaysian manufacturing organizations. This research is intended to be in line with the National Green Policy in 2009 which shall be a driver to accelerate the national economy and promote sustainable development. The next stage of this study aims to construct a data collection instrument to be tested and piloted with manufacturing organizations. Apart from theoretical and academic contributions we hope that the proposed framework will be further validated to unveil their practical implications towards the industries explored.
This work was partly supported by Universiti Teknikal Malaysia Melaka and the Malaysian Ministry Of Higher Education under the Centre Of Excellence for Malaysian REFERENCES
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