Green Component Procurement Collaboration for Improving Supply Chain Management in the High Technology Industries: A Case Study from the Systems Perspective

The impacts of high technology industries have been growing increasingly to technological innovations and global economic developments, while the concerns in sustainability are calling for facilitating green materials and cleaner production in the industrial value chains. Today’s manufacturing companies are not striving for individual capacities but for the effective working with green supply chains. However, in addition to environmental and social objectives, cost and economic feasibility has become one of the most critical success factors for improving supply chain management with green component procurement collaboration, especially for the electronics OEM (original equipment manufacturing) companies whose procurement costs often make up a very high proportion of final product prices. This paper presents a case study from the systems perspective by using System Dynamics simulation analysis and statistical validations with empirical data. Empirical data were collected from Taiwanese manufacturing chains—among the world’s largest manufacturing clusters of high technology components and products—and their global green suppliers to examine the benefits of green component procurement collaborations in terms of shared costs and improved shipping time performance. Two different supply chain collaboration models, from multi-layer ceramic capacitor (MLCC) and universal serial bus 3.0 (USB 3.0) cable procurements, were benchmarked and statistically validated. The results suggest that the practices of collaborative planning for procurement quantity and accurate fulfillment by suppliers are significantly related to cost effectiveness and shipping time efficiency. Although the price negotiation of upstream raw materials for the collaborative suppliers has no statistically significant benefit to the shipping time efficiency, the shared cost reduction of component procurement is significantly positive for supply chain collaboration among green manufacturers. Managerial implications toward sustainable supply chain management were also discussed.