Performance measurement systems for green supply chains

Scientific Research and Essays Vol. 7(36), pp. 3149-3161, 13 September, 2012
Available online at http://www.academicjournals.org/SRE
DOI: 10.5897/SRE11.1655
ISSN 1992-2248 ©2012 Academic Journals
Full Length Research Paper
Performance measurement systems for green supply
chains using modified balanced score card and
analytical hierarchical process
G. P. Kurien1
* and M. N. Qureshi2
1
Department of Mechanical Engineering, Babaria Institute of Technology, Varnama, Vadodara-391240, Gujarat, India.
2
Department of Mechanical Engineering, Faculty of Technology and Engineering, M. S. University of Baroda,
Vadodara-390001, Gujarat, India.
Accepted 11 June, 2012
Environmental management is becoming a key strategic issue for Supply chain performance.
Performance measurement systems for green supply chain is critical for its monitoring, control and
improvement. A comparative analysis of some most widely cited Performance measurement systems
for supply chains have been undertaken, and it indicates that the modified Balanced score card is a
suitable framework for Green supply chain performance measurement. However, there are limitations in
this framework when they are used for strategic alignment and planning. The frameworks do not
provide weightings to the performance indicators nor does it tell the management the contribution of
each performance indicator in achieving organisational goals. Use of Analytic hierarchy process, along
with modified balanced score card helps in tiding over these limitations. This paper demonstrates
integration of Analytic hierarchy process with modified Balanced score card to facilitate effective Green
supply chain performance measurement.
Key words: Analytic hierarchy process (AHP), balanced score card (BSC), performance measurement system
(PMS), green supply chain (GSC).
INTRODUCTION
Organisations are increasingly been aware and are
concerned about environmental and social impact of their
business activities. Environmental management is
becoming a key strategic issue for Supply chain (SC)
performance (Zhu et al., 2008a; Simpson et al., 2007).
Environmental impacts occur across all stages of a
product‟s life cycle, from the raw material extraction, to
manufacturing, use and reuse, final recycling, and
disposal (Linton et al., 2008). Green supply chain
management (GSCM) has become an important strategy
for companies to achieve profit and market advantages
by reducing the environmental risks and improving
efficiency. According to Salam (2008), environmental
response capability is an important management
resource. Integrating environmental initiatives into
*Corresponding author. E-mail: gpkurien@sify.com. Tel: +91-
9974989072.
corporate management practices can lead to increased
business, improved business performance, and further
enhancement of the company‟s credibility with
stakeholders. The enhanced environmental concerns
necessitate performance measurement and reporting
systems catering to green initiatives (Morhardt et al.,
2002). An effective, balanced and dynamic performance
measurement system is critical for monitoring, controlling
and improving a Green SC.
A number of frameworks and models for Performance
measurement systems (PMS) in SC have been
developed since 1980s (Morgan, 2007). The traditional
PMS based on financial metrics alone have been
deemed inadequate, and more attention is being paid to
non-financial metrics (Beamon, 1999). Several broader
and balanced PMS have been designed, of which
Balanced score card (BSC) has been the least criticized
and most widely accepted (Kaplan and Norton, 1992;
Bititci and Turner, 2000). There have been earlier
attempts to use BSC for environmental performance

3150 Sci. Res. Essays
measurement (Länsiluoto and Järvenpää, 2008; Naini et
al., 2011). Many practical difficulties however, are
associated with the implementa-tion of BSC for
performance measurements in Green SC (Gomes et al.,
2004; Shaw et al., 2010). The traditional BSC does not
have environmental measures as its part. BSC provides
little guidance on how the appropriate measures can be
identified, introduced and ultimately used to manage
business at the operations level (Neely, 2005). Another
drawback observed in BSC is that it does not specify any
mathematical logical relationships among the individual‟s
scorecard criteria. It is thus difficult to make comparisons
within and across firms using BSC (Soni and Kodali,
2010). A modified BSC framework has been proposed by
Shaw et al. (2010), incorporating environmental
measures within the traditional BSC. This modified BSC
framework is found to be more appropriate for green
Supply chain performance measurement (SCPM).
Analytic hierarchy process (AHP) is a problem-solving
method useful in multi-criteria decision making based on
variables that do not have exact numerical cones-
quences. Integrating AHP with modified BSC will help to
tide over the limitations of BSC and make the approach a
suitable candidate for green Supply chain performance
measurement system (SCPMS). This paper is an attempt
to use AHP integrated with modified BSC and
demonstrate its application and benefits. It is pertinent to
mention here that there have been earlier attempts in
integrating AHP with BSC for performance measurement
(Sharma and Bhagwat, 2007; Jovanovic and Krivokapic,
2008). The contribution in the present research is
different, in that, we are proposing a frame work to
integrate AHP with modified BSC (not the traditional BSC
as was considered by earlier authors) and its
implementation in green SCPM whereas earlier contribu-
tions did not consider the environmental aspects. The
paper is organised into three major parts: (i) An analysis
of Green supply chain management system (GSCM) and
Green SCPMS based on literature survey; (ii) Examina-
tion of BSC and the modification of BSC for Green SC;
(iii) AHP and demonstration of the integration of AHP with
modified BSC. The significance and the benefits of the
proposed method are discussed at the end.
Green supply chain management (GSCM)
GSCM has emerged as an effective management tool
and philosophy for leading organizations due to its varied
benefits (Zhu et al., 2008). GSCM involves all areas of
the SC from green purchasing to reverse logistics.
According to Morhardt et al. (2002), organizations adapt
green initiatives due to a sense of social responsibility
and the desire to adhere to societal norms. There is also
a feeling among firms that active environmental
management retains the firm‟s legitimacy (Sarkis et al.,
2011). Governments and licensing agencies are
instituting environmental performance measures and
compliances mandatory for organisations. In situations
where reporting of environ-mental and social
performance is not mandatory, organisations appear to
be doing it because of peer pressure and to improve
employees and other stake-holders‟ perceptions of the
company‟s environmental performance (Morhardt et al,
2002; Darnall et al., 2009). Earlier studies also indicate
that increase in environmental performance will
contribute to increased profit and market share (Chien
and Shih, 2007; Vachon and Klassen, 2008). Naini et al.
(2011) observed that environmental SCs are the set of
Supply chain management (SCM) policies practiced,
actions taken, and relationships formed in response to
concerns related to natural environment with regards to
the design, acquisition, production, distribution, use,
reuse, and disposal of the firm‟s goods and services.
According to Hervani et al. (2005), the „Green‟ in Green
supply chain management (GSCM) indicates the effect
the SC has on the environment. GSCM therefore can be
defined as the sum of Green purchasing, Green
manufacturing, Green materials management, Green
distribution and marketing and Green reverse logistics.
Hervani et al. (2005) has classified environment friendly
activities at the different links of the SC. These greening
activities at the various links of the SC are given in Figure 1.
Green supply chain performance measurement
system (SCPMS)
Interest on performance measurement has notably
increased in the last 20 years (Taticchi et al., 2010;
Thakkar et al., 2009). Organizations have realized that for
competing in the present global, dynamic business
environment, continuous monitoring of its performance
measurement is essential (Gunasekaran et al., 2004).
Performance measurement has been recognized as a
crucial element to improve business performance.
Focusing on performance of the company alone is not
sufficient; there is a need to focus on the performance
measurement of the SC in which company is a partner
(Charan et al., 2008). Many authors have defined PMS in
SC with varying approaches and context. Neely et al.
(2002) defined PMS as a balanced and dynamic system
that enables support of decision-making processes by
gathering, elaborating and analyzing information. Taticchi
et al. (2010) further elaborated this definition by
commenting on the concept of „balance‟ and „dynamicity'.
„Balance‟ refers to the need of using different measures
and perspectives that tied together give a holistic view of
the organization. The concept of „dynamicity‟ refers to the
need of developing a system that continuously monitors
the internal and external context and reviews objectives
and priorities. Bititci et al. (1997) defined SCPMS as the
reporting process that gives feedback to employees on
the outcome of actions. The objective of SCPM is to

Kurien and Qureshi 3151
Purchasing
 Certifying
suppliers.
 Purchasing
environmentally
sound materials
Product Design
 Minimum waste
generation.
 Use of safe
materials.
 Pollution control
Manufacturing
 Pollution
control
Marketing
 Environmentally
friendly
packaging and
transportation
Reverse Logistics
Reuse, Remanufacturing, and / or Recycling
Figure 1. Green activities at supply chain links.
measure business performance, organizational
effectiveness and a tool for Quality Improvement
Initiatives (QII) (Gunasekaran et al., 2001; Cagnazzo et
al., 2010; Lynch et al., 2000). analyze and improve
business operational efficiency through better decision-
making processes.
The many SCPMS frameworks developed in the last 20
years have their relative benefits and limitations (Bourne
et al., 2003; Saad and Patel, 2006). The enumerated
advantages of a good SCM are: (i) increased customer
value; (ii) increased profitability; (iii) reduced cycle times;
(iv) average inventory levels; and (v) better product
designs (William et al., 2007). Authors (Tangen, 2005;
Charan et al., 2008) have attributed many rewards of
implementing SCPMS. Significant among them are:
(1) SCPMS act as vehicle for organizational change and
improvement;
(2) Inter-understanding and integration among SC
members is facilitated;
(3) It makes an indispensable contribution to decision
making in SCM, particularly in re-designing business
goals and strategies, and re-engineering processes.
Broadly accepted standards for measuring the total
environmental footprint of a SC could not be found in
literature. However, SCs are increasingly incorporating
Green performance measurements in their SCPMs
(Morhardt et al., 2002). There have been some significant
contributions in the field of Green SCPMS in the current
decade which are briefly reviewed in the succeeding
paragraphs.
Taxonomy of GSCM performance
Shang et al. (2010) conducted a study to identify the
taxonomy of GSCM capability and firm performance
which identified, on the basis of a factor analysis, six
GSCM dimensions: (i) Green manufacturing and
packaging; (ii) environmental participation; (iii) Green
marketing; (iv) Green suppliers; (v) Green stock; and (vi)
Green eco-design. Shang et al. (2010) identified 37
performance measure attributes for Green SCPMS.
However, based on respondents‟ perceptions, top five
GSCM attributes in respondents‟ firms identified are as
follows:
(1) Design of products to avoid or reduce use of
hazardous products and manufacturing processes;
(2) Substitution of polluting and hazardous
materials/parts;
(3) The manufacturing process capability to reduce the
noise pollution;
(4) Production planning and control focused on reducing
waste and optimizing materials‟ exploitation; and
(5) In purchasing, suppliers certification for green product
conformance.
The most widely cited SCPMS are the SMART (1988),
the Performance measurement matrix (1989), the BSC
(1992), and the Integrated dynamic PMS (1997). The
frameworks catering specifically for Green SCPMS are
the ISO 14031, Green supply chain operations reference
(Green SCOR) model, and the modified BSC proposed
by Shaw et al. (2010). Hart (1995) introduced a
conceptual framework called the „Natural Resource
Based View‟ composed of three interconnected
strategies: pollution prevention, product stewardship, and
sustainable development. The ISO 14031: 1999
Environmental management-Environmental performance
evaluation-guidelines gives guidance on the design and
use of environmental performance evaluation, and on
identification and selection of environmental performance
indicators (Environmental management, 2011). ISO
14031 is not a standard for certification. This allows any

Figure 2. Balanced score card (Source: Kaplan and Norton, 1992).
organisation to measure their environmental performance
on an on-going basis (ISO, 2009). ISO 14031 defines
environmental performance indicators as a specific
expression that provides information about an
organisation‟s environmental performance and divides
environmental performance indicators into three
classifications: (i) Management performance indicators
(MPI); (ii) Operational performance indicators (OPI); and
(iii) Environmental condition indicators (ECI). Supply-
chain operations reference-model (SCOR) is a process
reference model developed by the management
consulting firm PRTM, and endorsed by the Supply-chain
council (SCC) as the cross-industry performance
measurement tool for SCM (Lockamy and McCormack,
2004). SCOR enables users to address, improve, and
communicate SCM practices within and between all
interested parties in the SC (Huan et al., 2004). SCC, in
2008, incorporated additional elements that define
environmental processes, performance metrics and best
practices, and these additions allow the framework to be
used as a framework for environmental accounting. The
SCOR framework ties emissions to the originating
processes, providing a structure for measuring
environmental performance and identifying where
performance can be improved. The hierarchical nature of
the model allows strategic environmental footprint goals
to be translated to specific targets and activities.
GreenSCOR integrates environment best practices and
metrics into the entire SC planning process. It also
enables a systematic study of the SC to unearth
opportunities for making the SC greener. (SCC, 2010,
2011).
Modified balanced score card (BSC) for green
SCPMS
The Balanced score card (BSC) was developed in 1992
by Robert Kaplan and David Norton, as an innovative
approach to performance measurement (Kaplan and
Norton, 1992). The BSC complements financial
measures of past performance with measures of the
drivers of future performance (Paranjape et al., 2006).
BSC proposes that a company should use a balanced set
of measures that allows top managers to take a quick but
comprehensive view of the business from four important
perspectives.
These perspectives (Figure 2) provide answers to four
fundamental questions (Kaplan and Norton, 1992;
Tangen, 2004): (i) How do we look to our shareholders
(financial perspective)? (ii) What must we excel at
(internal business perspective)? (iii) How do our
customers see us (the customer perspective)? And (iv)
How can we continue to improve and create value
(innovation and learning perspective)? The BSC includes
financial performance measures giving the results of
actions already taken. It also complements the financial
performance measures with more operational non-
financial performance measures, which are considered
as drivers of future financial performance (Kaplan and

Figure 3. Modified BSC for Green SCPMS (Source: Shaw and Grant, 2010).
Norton, 1996). By giving information from four
perspectives, the BSC minimizes information overload by
limiting the number of measures used. It also forces
managers to focus on the handful of measures that are
most critical. Further, the use of several perspectives also
guards against sub-optimisation by compelling senior
managers to consider all measures and evaluate whether
improvement in one area may have been achieved at the
expense of another (Tangan, 2004; Kurien and Qureshi,
2011).
The balanced scorecard provides a high level strategic
view of corporate performance (Kaplan, 2005) and could
be adapted for Green SCPMS. There have been earlier
studies where attempts were made to integrate
environmental measures with BSC. Länsiluoto and
Järvenpää (2008) discuss a case study in which a
Finnish food manufacturing company implemented
environmental management system (EMS) using BSC.
They have found, based on the case study, that it is
beneficial and possible to integrate environmental issues
with BSC. Naini et al. (2011) proposes a mixed
performance measurement system using a combination
of evolutionary game theory and the BSC in
environmental supply chain management in the context
of automobile industry. The study analyses the suitability
and limitations of BSC in environmental performance
measures, and suggest a new method, an intellectual
knowledge-based BSC for strategic planning that sets or
selects the firm‟s strategy using the evolutionary game
theory. Shaw et al. (2010) proposed the use of modified
BSC by incorporate environmental measures. The two
ways in which Green or environmental measures could
be expressed within the balanced scorecard are: (1) As a
fifth environmental perspective; or (2) as part of the four
existing perspectives.
By incorporating environmental measures within the
balanced scorecard framework as a fifth perspective or
as part of the four existing perspectives, organisations
are identifying that environmental management is one of
their strategic goals. It raises the profile and importance
of environmental management and satisfies the
stakeholders that it is being treated as a core value. A
modified BSC framework, proposed by Shaw et al.,
(2010), incorporating environmental measures within the
balanced scorecard framework as well as a fifth
perspective as shown in Figure 3. Review of related
literature indicates certain limitations and weaknesses to
the BSC approach. The main weakness of BSC is that it
is primarily designed to provide senior managers with an
overall view of performance (Ghalayini and Noble, 1996).
Thus, it is not intended for (nor is it applicable to) the
factory operations level.
Another limitation of BSC is that it provides little
guidance on how the appropriate measures can be
identified, introduced and ultimately used to manage
business (Neely, 2005). BSC is more like a strategic
management tool, rather than a true complete PMS. BSC
does not specify any mathematical logical relationships
among the individual‟s scorecard criteria.
It is thus difficult to make comparisons within and

Build ‘Hierarchy’
1. Define goal or
objective.
2. Identify the
choices.
3. Outline factors to
evaluate each option.
4. Identify criteria
5. Build a hierarchy
of decision criteria.
Establish ‘Priorities’
1. Using paired
comparison,
determine criteria
preferences.
2. Rate preferences
from 1-9.
3. Repeat this for
each level in
hierarchy.
Synthesize
1. Synthesize, or
combine, the
ratings
2. Calculate
weighted criteria
scores that
combine all of the
ranking data.
Compare Alternatives
1. using the combined
scores, calculate a final
score for each
alternative
2. Conduct sensitivity
analysis of the
outcome
Figure 4. Overview of Analytical hierarchical process (AHP).
across firms using BSC (Soni and Kodali, 2010). The
present work is an attempt to provide a framework which
overcomes these limitations of BSC by providing a
mathematical and logical relationship within the
scorecard criteria by integrating AHP with modified BSC.
Analytical hierarchical process (AHP)
The AHP is a general problem-solving method that is
useful in making complex decisions (for example, multi-
criteria decisions) based on variables that do not have
exact numerical consequences (Saaty, 2008). The AHP
is a systematic procedure for representing the elements
of a problem, hierarchically. AHP uses pair wise
comparisons of attributes in the decision making process.
Pair wise comparison is used to determine the priorities
of each pair of criteria, indicating the strength with which
one element dominates the other. It helps to quantify
intangible and non economic factors included in the
factors affecting the decision. The AHP helps to rank and
make decision in a rational and systematic way. Broad
areas where AHP has been successfully employed
include: selection of one alternative from many; resource
allocation; forecasting; total quality management;
business process re-engineering; quality function
deployment (Forman and Gass, 2000) and in the present
work, the BSC. The three primary functions of AHP are
(Hepler and Mazur, 2007):
Structuring complexity
Structuring complexity is achieved by hierarchical
structuring of complexity into homogeneous clusters of
factors.
Measurement
For complex problems with hierarchical structuring, ratio
scales would most accurately measure the factors that
comprised the hierarchy.
Synthesis
Although AHP‟s hierarchical structure does facilitate
analysis, a more important function is AHP's ability to
help us measure and synthesizes the multitude of factors
in a hierarchy (Saaty, 2008). An overview of the
methodology of using AHP is given schematically in
Figure 4. Detailed methodology on AHP formulation and
solution including examples are available in literature
(Forman and Gass, 2000; Islam and Rasad, 2005; Hepler
and Mazur, 2007; Saaty, 2008).
Integration of AHP with modified BSC for
GreenSCPMS
Using the framework of the Modified BSC for Green
SCPMS‟s five perspectives, generic performance
measures were identified for the purpose of analysis and
developing the current model. The measures considered
are in line with other researchers (Shaw et al., 2010) and
is depicted in Table 1.
Step 1
Building ‘hierarchy’: The first step in solving a decision
problem by AHP is decomposing the problem into a
hierarchy of criteria and alternatives. A hierarchy is
structured from the top (primary objective(s) or goals),
then intermediate levels which are criteria/sub-criteria on
which subsequent levels depend to the lowest level which
is usually a list of alternatives from which to choose or
compare. Based on the criteria selected for performance
measurement using Modified BSC, given in Table 1, an
AHP hierarchy model is prepared. The hierarchy model
consists of the „goal‟ which is „sustainability and growth‟
at the top, the contributing levels of „criteria‟ and
„alternatives‟. The five perspectives of the modified BSC
form the Level 1 criterion and the performance measures
which contribute to each of the five perspective forms the
second level criteria. The competing SCs form the

Table 1. List of measures used in the study.
Financial perspective (FP) Customer perspective (CP) Internal business perspective (IB) Innovation and learning (IL) Environment (EN)
Energy efficiency saving (ES) Environment policy (EP) Carbon emission ratio (CE) Cleaner SC (CS) Environment index (EI)
Carbon trading allowances (CA) ISO Accreditation (IS) EMS certification (EM) Renewable energy (RE) Social index (SI)
Carbon trading penalties (CT) FTSE Good index (GI) Benchmarking (BM) Environmental team (ET) Economic index (EC)
EMS (EM)
SUSTAINABILITY AND GROWTHGOAL
LEVEL 1
CRITERION
Financial
Perspective (FP)
Customer
Perspective (CP)
Internal Business
Perspective (IB)
Innovation &
Learning (IL)
Environment
Perspective (EN)
Energy Efficiency
Saving (ES)
Environment Policy
(EP)
Environment Index
(EI)
Cleaner SC (CS)Carbon Emission
Ratio (CE)
Carbon Trading
Penalties (CP)
ISO
Accreditation (IS)
Social Index
(SI)
Renewable Energy
(RE)
EMS Certification
(EM)
Carbon Trading
Allowances (CT)
FTSE
Good Index (GI)
Economic Index
(EC)
Environmental Team
(ET)
Benchmarking (BM)
EMS (EM)
LEVEL 2
CRITERIONS
ALTERNATIVES
ORGANISATION A ORGANISATION B ORGANISATION C
Innovation
and Learning
Figure 5. AHP Hierarchy Scheme for GreenSCPMS.
„alternatives‟ in the AHP hierarchical model. The
AHP hierarchical model for modified BSC for
environmental performance measurement is
shown in Figure 5.
Step 2
Establishing Priorities: After decomposing
problem into levels of criteria and building the
hierarchy, the next step is generating the priority
matrix for each level of criteria. AHP uses pair
wise comparison of the same hierarchy elements
in each level (criteria) using a scale indicating the

Table 2. The fundamental scale of absolute numbers.
Intensity of relative
importance
(Comparison values)
Definition Explanation
1 Equal importance Two activities contribute equally to the objective
3 Moderate importance of one
over another
Experience and judgment slightly favor one activity over another
5 Essential or strong importance Experience and judgment strongly favor one activity over another
7 Demonstrated importance An activity is strongly favored and its dominance is demonstrated
in practice
9 Extreme importance The evidence favoring one activity over another is of the highest
possible order of affirmation
2,4,6,8 Intermediate values between
the two adjacent judgments
When compromise is needed
Reciprocals of above
non-zero numbers
If an activity has one of the above numbers compared with a second activity, then the second
activity has the reciprocal value when compared to the first
(Source: Saaty, 2008; Sharma and Bhagwat, 2007).
Table 3. Comparison matrix for level 1 criteria.
Paired comparison
Financial
perspective (FP)
Customer
perspective (CP)
Internal business
perspective (IB)
Innovation and
learning (IL)
Environment
(EN)
Financial perspective (FP) 1 1/3 2 3 2
Customer perspective (CP) 3 1 3 4 2
Internal business perspective (IB) 1/2 1/3 1 2 1/3
Innovation and learning (IL) 1/3 1/4 1/2 1 1/5
Environment (EN) 1/2 1/5 3 5 1
importance of one element over another with respect to a
higher-level element. The importance of scale between
elements is shown in Table 2. For each level of Criteria,
by „Paired comparison‟ and by using „Comparison
values‟, „Comparison matrix‟ is generated. The
comparison matrices are obtained through brainstorming
of selected representatives of the organisation. The
„comparison matrix‟ for Level 1 criterion is shown in Table
3. Similar „comparison matrices‟ are prepared for each
group in Level 2 criteria. The „Comparison matrix‟ forms
part of the Eigen matrix.
Step 3
Generation of Eigen Vectors: Based on the Comparison
matrix, Eigen Vectors are calculated for each level of
criteria. The Eigen vector represents the Priority measure
of each criterion. Consistency of comparative matrices
are then checked to see whether the „paired
comparisons‟ are logical.
This is to check the consistency of judgment of the
decision maker. The Consistency index (CI) is calculated
as:
)1n(
1
CI max



(1)
Where:
max (Sum of column values of Comparison Matrix Eigen vec  
max (Sum of column values of Comparison Matrix Eigen vector Element)  
n = number of criterion under paired comparison. Based
on the Consistency index (CI) and the Random
consistency index (RI), Consistency ratio (CR) is
calculated as:
)RI(IndexyConsistencRandom
)CI(IndexyConsistenc
)CR(RatioyConsistenc 
(2)
Random consistency index (RI) values are taken from the
Random consistency index table (Table 4). RI is selected
for the same order matrix from Table 4. The condition for
consistency of judgement is that Consistency ratio (CR) <
10% (Saaty, 2008). Eigen vectors generated and the
priority matrices for all levels of criteria are calculated and
shown in Table 5. The calculated CI values are also
shown in Table 5. The CGI software for AHP has been
used for calculation of Eigen vectors.

Table 4. Random consistency index table.
n 1 2 3 4 5 6 7 8 9 10 11 12
R I 0 0 0.58 0.9 1.12 1.24 1.32 1.41 1.45 1.49 1.51 1.58
(Source: Saaty, 2008; Sharma and Bhagwat, 2007).
Table 5. Tables for calculated eigen vectors (E.V).
Eigen matrix for level 1 criteria
FP CP IB IL EN Eigen Vector
FP 1 0.3333 2 3 2 0.2249
CP 3 1 3 4 2 0.3912
IB 0.5 0.3333 1 2 0.3333 0.1032
IL 0.3333 0.25 0.5 1 0.2 0.0627
EN 0.5 0.5 3 5 1 0.2179
C.I.= 0.0680892
Eigen matrix for level 2 criteria (IL) Eigen matrix for level 2 criteria (EN)
IL CS RE ET Eigen Vector EN EI SI EC
Eigen
Vector
CS 1 0.25 3 0.2255 EI 1 0.2 0.3333 0.1047
RE 4 1 5 0.6738 SI 5 1 3 0.6369
ET 0.3333 0.2 1 0.1006 EC 3 0.3333 1 0.2582
C.I.= 0.0428833 C.I.= 0.0192555
Eigen matrix for level 2 criteria (FP) Eigen matrix for level 2 criteria (IB)
FP ES CA CP Eigen Vector IB CE EM BM
Eigen
Vector
ES 1 4 2 0.5584 CE 1 5 3 0.6369
CA 0.25 1 0.333333 0.1219 EM 0.2 1 0.333333 0.1047
CT 0.5 3 1 0.3196 BM 0.333333 3 1 0.2583
C.I.= 0.00914735 C.I.= 0.0192555
Eigen matrix for level 2 criteria (CP)
CP EP IS GI EM
Eigen
Vector
EP 1 3 2 4 0.447
IS 0.333333 1 0.25 2 0.1280
GI 0.5 4 1 4 0.3414
EM 0.25 0.5 0.25 1 0.0833
C.I.= 0.0440928
Step 4
Aggregate priority vectors: The Aggregate priority vector
table provides relative weights and contribution of each
criterion. This is obtained by normalizing individual Eigen
matrices. The normalized priority matrix values are
calculated such that the values of Sub criteria are within
the weight of its corresponding higher criteria (Parent
criteria). Table 6 shows the normalized priority matrix.
Step 5
Overall performance index: Overall performance score of
the organization is calculated once measures of each
criterion are available. The data used is of a hypothetical
firm. The scales and units of the performance measures
are different. Hence, the performance scores are
normalised to a uniform scale of 0 to 100. The normalised
performance scores are multiplied by the normalised
Eigen vectors (weighting measure) to obtain the overall
performance score. The overall performance score is
calculated at Table 7. The aggregate of performance
score at each level of criterion is calculated to provide the
overall performance index of the SC.
RESULTS AND DISCUSSION
The Normalized priority matrix is a useful tool to evaluate
importance of each criterion (Measure) in achieving

Table 6. Aggregate priority vectors showing contribution of all criteria.
Criteria Eigen value Normalized eigen value
% Contribution
Level 1 Level 2
Innovation and learning (IL) 0.0627 0.0627 6.27
Cleaner SC (CS) 0.2255 0.0141 1.4139
Renewable energy (RE) 0.6738 0.0422 4.224
Environment team (ET) 0.1006 0.0063 0.6308
Environment (EN) 0.2179 0.2179 21.79
Environment index (EI) 0.1047 0.0228 2.2814
Social index (SI) 0.6369 0.1388 13.878
Economic index (EC) 0.2582 0.0563 5.6262
Financial perspective (FP) 0.2249 0.2249 22.49
Energy Eff. saving (ES) 0.5584 0.1255 12.558
Carbon transport allowance (CA) 0.1219 0.0274 2.7415
Carbon transport penalties (CT) 0.3196 0.0719 7.1878
Internal business (IB) 0.1032 0.1032 10.32
Carbon emission (CE) 0.6369 0.0657 6.5728
EMS certification (EM) 0.1047 0.0108 1.0805
Benchmarking (BM) 0.2583 0.0267 2.6657
Customer perspective (CP) 0.3912 0.3912 39.12
Environment policy (EP) 0.4471 0.1749 17.490
ISO accreditation (IS) 0.128 0.0501 5.007
FTSE good index (GI) 0.3414 0.1336 13.355
EMS (EM) 0.0833 0.0326 3.2587
Total 6.0000 2.0000 100 100
organizational goal of „sustainability and growth‟. AHP
provides weightings to the performance measures which
indicate its contribution in a quantitative manner.
Management can know how much each criterion will
contribute to achieving the organizational goal. For
example, from Table 6, we can infer that at the first level
of criterion, Customer perspective (CP) has the highest
weighting, and its contribution to achieve „sustainability
and growth‟ is 39.12%. The percentage contributions of
Level 1 criterion are represented graphically in Figure 6.
At the second level, Environment policy (EP) contributes
17.49% whereas the Environmental team (ET)
contributes only 0.63% to achieve „sustainability and
growth‟. The percentage contributions of Level 2 criterion
are represented graphically in Figure 7. Therefore, based
on this analysis, it will be prudent for the management to
align its resources and processes more to the criterion
which contributes most to achieve organisational
objectives. The management can also use this
information to look into those performance criterions
which are contributing lower than expected to achieve
organisational objectives to take steps to improve its
contribution.
Overall performance index derived through AHP - BSC
integrated model (shown in Table 7) quantifies overall
performance of a SC. The calculated value of 60.35
overall performance indices is significant when it is
compared with earlier performance indices or compared
with performance indices of similar SC. This quantified
performance index will help in comparing similar supply
chains, comparing performance of sub units of a supply
chain, and also in comparing with earlier performances of
the same SC or sub unit. These measures can also be
used for target setting and as a feedback for mid course
correction and monitoring.
Conclusion
Properly planned, implemented and managed green SCs
enable organisations to be responsible corporate citizens,
resulting in higher profitability, and retain competitive
advantage. Selection and use of appropriate Green
SCPMS is critical for success of the green SC. Industry
standard frameworks like SCOR version 9, ISO 14031
and Modified BSC incorporating a fifth dimension on
environment are the preferred guidelines available for
Green SCPMS. The limitations of BSC; that it is difficult
to make comparisons within and across firms and that the
measurements making the scorecards unbalanced have
been overcome by incorporating AHP with BSC. The
AHP framework will be a useful tool to assess importance
of each criterion (Measure) in achieving organizational
goal. Management can know how each criterion will

Table 7. Overall performance index.
Level 1
criteria
Level 2
criteria
Original scale
Score
Normalised
score in scale
of
0 - 100
Normalised
eigen vector
Overall performance
score
Lower
limit
Upper
limit
Level 1
score
Level 2
score
IL
CS 0 10 6 60.00 0.0141
4.30
0.8460
RE 1 1000 700 69.97 0.0422 2.9527
ET 0 100 80 80.00 0.0063 0.5040
EN
EI 1 50 20 38.78 0.0228
14.08
0.8842
SI 1 10 7 66.67 0.1388 9.2538
EC -10 10 4 70.00 0.0563 3.9410
FP
ES 0 1 0.8 80.00 0.1256
13.67
10.0480
CA 20 50 40 66.67 0.0274 1.8268
CT -1 1 -0.5 25.00 0.0719 1.7975
IB
CE 0 10 9 90.00 0.0657
8.65
5.9130
EM 0 1 0.8 80.00 0.0108 0.8640
BM 100 200 170 70.00 0.0267 1.8690
CP
EP 0 50 20 40.00 0.1749
19.65
6.9960
IS 0 100 75 75.00 0.0501 3.7575
GI -10 10 0 50.00 0.1336 6.6800
EM 0 100 68 68.00 0.0326 2.2168
Overall Performance Index 60.35 60.35
Innovation and Learning
Financial Perspective
Customer Perspective
Figure 6. Percentage contribution of measures at level 1 criteria.
contribute in achieving Greening of the SC. Management
can thus prioritise its resource deployment and make
more informed decisions. Overall performance index
derived through AHP-modified BSC integrated model
may also help management for benchmarking of Green
initiatives of organisations. The numerical performance
index will help in comparing Green initiatives of similar
SCs, comparing performance of sub units of a SC and
also in comparing with earlier performances of the same
SC or sub unit in the area of sustainability. These
measures can also be used for target setting and as a
feedback for mid course correction and monitoring.

Environment Team
Energy Efficiency Saving
Carbon Transport Allowance (CA)
Carbon Transport Penalties
Figure 7. Percentage contribution of measures at level 1 criteria.
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