ABSTRACT
This study examined the relation between sustainable supply chain practices on the organization performance of pharmaceutical manufacturers. Academic inquiry on sustainable practices has gained prominence with increased examination on the efficacy and reliability of economic transition into sustainable frontier from the present depletive and destructive industrial activities that are destroying the planet risking the survival of future generations. This study looked into the role of triple bottom line sustainable platform notably; environmental, social and economic sustainability within the pharmaceutical supply chain. The study sought to determine whether, environmental sustainable, social sustainable and economic sustainable supply chain practices have an impact on the organizational performance of pharmaceutical manufacturers. The study employed descriptive survey methodology with the target population composed of Tobinco Pharmaceuticals Company LTD in Accra. The study utilized census sampling technique, drawn by the fact that only 40 firms are fully certified in undertaking production and distribution of pharmaceutical products in Accra region. A structured questionnaire, with a 5-point scale, was utilized as the tool for data collection. The tool was designed with a leading set of questionnaire items covering the three sections of triple bottom sustainability approach which are; environmental, social and economic sustainability. Participants from Tobinco Pharmaceuticals Company LTD was selected for study drawn from a senior management position. The study established that triple bottom line sustainability factors including environmental, social and economic sustainable supply chain practices impacted on the organization performance of pharmaceutical manufacturers. Environmental sustainable practices accounted for variability and change on organization performance (R2 = 0.301, β1 = 0.730) which is an incremental parallel outcome. Similarly, social sustainable supply chain practices were found to account for changes (R2 = 0.431, β2 = 0.948) in organization performance output. Finally, the economic sustainable practices were found to account for variability and changes (R2 = 0.711, β3 = 1.074) on the organizational performance. The study concludes that triple bottom line factors for sustainability notably, environmental sustainable supply chain practices, social sustainable supply chain practices and economic sustainable supply chain practices account for significant quantitative changes in organization performance for pharmaceutical producers. The study recommends for increased investments in high-tech infrastructure across the entire supply chain of pharmaceutical sector. Such technology should be tailored to offer sustainable operational solutions notably; eliminate exhaust pollution, ensure carbon emission control, integrated closed loop system and expanded compatibility to diverse clean energy sources. The study proposes for introduction of incentives through government policy to boost adoption of clean and renewable sources for energy. Additionally, the study recommends enhanced corporate efforts towards coal causes that uplift the society such as enlightenment of public hygiene, environmental conservation and expanded access to life-saving medicines.
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Sustainable SC practices within the pharmaceutical industry has attracted significant attention amongst SC chain scholars (Kumar et al., 2019;Sazvar et al., 2021;Toh & Chew,2017;Zandieh et al.,2018) from across the globe. Pharmaceutical sector is one of the largest and most critical industries of the world (Narayana, Pati & Vrat, 2012). Disposal phase in pharmaceutical SC, is ranked as the most delicate and dangerous processes as it involves destroying and dumping medical chemical waste whose input materials include dangerous chemicals that can be harmful to the society. Sustainable practices within pharmaceutical industry address solutions to medical waste disposal, manufacturing efficiency, medical products reverse logistics, affordability of critical life saving medicines and re-usability of pharmaceutical inputs for medicine production (Toh & Chew, 2017).
Advances in technologies and material sciences has boosted the global scaling of sustainable measures within pharmaceutical sector with adoption of reverse logistics and end-of-life recycling boosting operational efficiencies (Zhi-Dong et al., 2011).Furthermore, advances in clean energy production, has enabled pharmaceutical producers integrate green energy sources which boosts environmental sustainability and economic sustainability through new jobs in green technologies (Bhusnure et al., 2015). Similarly, increased corporate social responsibility (CSR) initiative by pharmaceutical companies in areas such as price differentials for pharmaceutical products, assisting in infrastructure development for drug distribution in developing countries, contributing in public health awareness campaigns etc.(Droppert & Bennett, 2015). Evidence cited on progress of sustainability programs in pharmaceutical sector highlights the existing potential of sustainable practices value within the purview of social, environmental and economic fronts towards a greener future.
Theories notably; Triple Bottom line theory, sustainability theory, and stakeholder theory were adopted. Three theories including; triple bottom line theory, sustainability theory and stakeholder theory were adopted in this study. Triple bottom line advances the need of corporate business to expand its focus beyond singular bottom line (profits) to include, people (social) and the planet (environmental) impact which make up three Ps of bottom line (Henry, Buyl & Jansen, 2019).
The sustainability model aligns the role of three factors, including; environmental, social and economic consciousness as a corporate duty of modern business (Harrington, 2016; James, 2014). The sustainability theory thus explains the role of pharmaceutical industry players in undertaking their obligations in the purview of social, environmental and economic sustainability. The stakeholder theory offers a link between organizations and their stakeholder (both internal & external). The Stakeholder theory posits on the duty of business sector towards demonstrating care for all communities, people, entities and organizations that are impacted by their operations (Freudenreich et al., 2020). Therefore, the stakeholder theory details the obligations corporations have in attending to the interests of all their stakeholders.
1.1.1 Sustainable Supply Chain Management Practices
Three spheres of sustainable supply chain notably; environmental supply chain sustainability, social supply chain sustainability and economical sustainable supply chain sustainability, defines the framework for sustainable pharmaceutical supply chain. Submissions by (Milanesi, Runfola & Guercini,2020; Zhi-Dong et al., 2011) pins environmental sustainability scope of pharmaceutical supply in utilization of techniques such as; reverse logistics, recycling of production inputs, diversification of sources for raw materials, cutting of carbon emission in drugs manufacturing, utilizing green packaging in transportation etc. Kumar et al.(2019) acknowledged initiatives smart waste management for healthcare facilities as positive contribution towards environmental sustainability.
Social sustainable pharmaceutical supply chain encompasses integration of SC operational measures that enables pharmaceutical players to compensate the social welfare of external stakeholders in regard to operations of pharmaceutical companies (Droppert & Bennett, 2015). Undertaking measures such as upgrade to the drug distribution infrastructure in developing countries boosts poor communities access to critical medicines such as; medication for lifestyle diseases (Rocha et al., 2020). According to (Droppert & Bennett, 2015) also pharmaceutical companies investing in downstream distribution of medicines contributes in reducing drug prices thus boosting access to life-saving drugs for the poor communities.
Economic sustainable pharmaceutical supply chain anchors the pharmaceutical corporations into adopting economic solutions aligned with green manufacturing techniques. According to (Bhusnure et al. 2015; Milanesi et al. 2020) creating new jobs in clean energy production within pharmaceutical ecosystem forms an important step towards integrating sustainability techniques towards pharmaceutical industrial processes. In addition, economic sustainable pharmaceutical SC should be defined by commitment of medicine distributors and manufacturers towards embracing fair working practices and pay equal share of taxes to the government on a periodic basis (Droppert & Bennett, 2015).
1.1.2 Organizational Performance
Several factors affect the organization performance of pharmaceutical companies across the world. Information gleaned from several types of research indicates that environmental factors as well company-specific variables contribute immensely towards the performance of the organization in the market. The environmental factors that affect the performance of pharmaceutical firms in the market include competition and market-related changes for example expiry of patents or drug withdrawal from the market (Chemutai and Nzulwa, 2016). The company-related factors include the company structure, marketing strategies, human resources, financial resources, and product quality factors (Mailu et al. 2018). Financial, managerial, and product variables anchor the key performance measures of organizational performance. The financial related performance indicators consist of profitability, cost of production, and availability of funds for expansion (Srimarut and Mekhum, 2020; Mahmodabadi et al., 2019).
1.2 Research Problem
Several studies indicate that sustainability measures that an organization incorporates into its operations affect the overall organizational performance. Analysis by Islam et al. (2017) established that sustainability contributed toward organizational performance by improving the competitive advantage of a firm. Further studies have shown that sustainability boosts the economic aspects of performance, which include production and the cost of production thus contributing towards organizational performance (Medne and Lapina, 2019; Srimarut and Mekhum, 2020).
Chemical used in the manufacturing of drugs being harmful to the environment. Pharmaceutical manufacturing process involves wide variety of bio-chemical inputs sources from many places globally (Aus der Beek et al., 2016). Larsson (2014) detailed array of toxic effluents in pharmaceutical industries including the Active Pharmaceutical ingredients (API’s) such as the estrogens in pharmaceutical effluent which destroyed marine life in the 90’s. Equally, pharmaceutical supply chain contributes massive levels of greenhouse emissions that compromise the atmosphere negatively contributing to global warming (Aus der Beek et al., 2016). This history of environmental degradation attributed to pharmaceutical manufacturing highlights the urgency towards integration of sustainability strategy which addresses environmental, social and economic obligation by pharmaceutical firms.
Increased focus on sustainability is hinged on the need to reverse dangers posed by industrial operations such as pollution which has contributed to global warming and desire to preserve existing natural resources for future generations. Sustainability literature is anchored on three fundamental pillars that include; environmental sustainability, social sustainability and economic sustainability (Korir, 2014; Mani, Agrawal & Sharma, 2015). Environmental, social and economic pillars on sustainability are applicative across diverse fields in all manufacturing and service sectors. However, the aspect of these practices and the impact on the performance of pharmaceutical manufacturing companies is less studied, hence the motivation for the current study pharmaceutical manufacturing companies in the country.
An array of past studies on sustainability has attracted examination on different elements of sustainable practices in operational, service and industrial activities. A study by de Campos et al. (2017) analyzed reverse logistics for pharmaceutical products that have reached the end of use state. A study by Nyatondo (2019) explored on the subject of the green supply chain for the milk industrial processing in Zimbabwe. Additionally, a study conducted by Srimarut and Mekhum, (2020) using questionnaire survey approach established that SSCM practices employed by Thailand pharmaceutical companies boosted improved the productivity and the cost of production by the drug manufacturing firms.
Besides, a study by Murage (2011) performed an industry analysis centering on green supply chain practices and the performance of manufacturing companies in Ghana. The study employed descriptive research approach with participants drawn from the Ghana Association of Manufacturers (KAM). The study revealed underlying gains for manufacturers in areas such as cost-cutting and enhanced operational and production efficiencies.
From the aforementioned studies, its evident sustainability practices have attracted academic inquiry across various industries from around the globe to the local context. However, the past analysis focused on a diverse set of industries from manufacturing to service sectors. The studies examined sustainability in a shell and how it's adopted in a practical production context. The area of sustainable supply chain practices in the performance of pharmaceutical manufacturers has not been extensively examined. This has a present knowledge gap that the current study will seek to close. The key research questions include: What are the sustainable supply chain practices adopted by Tobinco Pharmaceuticals Company LTD? How do sustainable supply chain practices adopted by pharmaceutical manufacturers affect organizational performance?
1.3 Objectives of the Study
1.3.1 Main Objective
The main objective of this study is to determine the implementation of sustainable supply chain management practices in Tobinco Pharmaceuticals Company LTD.
1.3.2 Specific Objectives
i) To determine the effect of environmental sustainable supply chain practices on Tobinco Pharmaceuticals Company LTD.
ii) To examine the influence of social sustainable supply chain practices on Tobinco Pharmaceuticals Company LTD.
iii) To evaluate the effect of economic sustainable supply chain practices on Tobinco Pharmaceuticals Company LTD.
1.4 Significance of the Study
The study explored on all the factors relating to sustainable supply chain practices; environmental sustainable management, social sustainable management and economic sustainable management and the effect they wield on the operational performance of pharmaceutical manufacturers. The study has identified and proposed strategies for adopting and implementing sustainable supply chain practices within operational framework for pharmaceutical manufacturing processes. This shall have long term benefits towards aligning operational framework for pharmaceutical manufacturers with sustainability goals contributing in greener and efficient production processes.
The findings of this offer recommendations on policy and regulatory dimensions of sustainability platform. This is valuable to policy formulators and legislators in government towards development of policies, operational procedures and laws on the adoption of sustainable supply chain practices within the pharmaceutical supply chain. This is critical towards creating legal and regulatory framework in regard to sustainable practices among pharmaceutical manufacturers thus aid in the realization of national goals on sustainability.
The findings of the current study have significant value for the academia. The subject of sustainability in general is gaining momentum across the academic spectrum. The current study has submitted additional knowledge in literature on the role of sustainability within the purview of pharmaceutical supply chain. More evidence on sustainable supply chain practices shall present future researchers and scholars on sustainability with additional sources for literature and referencing while carrying out their own studies on sustainability practices.
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