A Study on the Relationship between Sustainable Logistics Practices and Operational Performance of FMCG industry in Sri Lanka

Abstract

Degradation of environmental quality has become a global issue. Industrial activity is a major cause of environmental destruction. Increasing environment cost of these networks and consumer pressure for eco-friendly products has led organizations to look at supply chain sustainability as a new measure of profitable logistics management. The development and use of innovative green logistics practices can be a solution to reduce the impact of environmental issues due to activities of Fast Moving Consumer Goods (FMCG) industry. Adoption of sustainable logistics practices in the FMCG industry is an interesting area since it deals with optimization of production processes, increasing service levels, reduction of product costs and maximizing customer satisfaction, which characterize the FMCG industry. This paper has analysed the relationship between sustainable logistics practices and operational performance in the FMCG industry in Sri Lanka. It is based on the research question ‘What is the relationship between use of sustainable logistics practices and operational performance of FMCG industry in Sri Lanka?’ The core objective was to analyse whether sustainable logistics practices have a relationship with operational performance of FMCG industry in Sri Lanka. The independent variables were sustainable transportation, sustainable distribution, green purchasing and green warehousing. The dependent variable was operational performance. A sample of 35 FMCG manufacturing companies were selected from the Western province as many FMCG organizations are situated there. Primary data collection was done through a questionnaire constructed through an extensive literature review and responses were captured through a 5 point Likert scale. In the analysis, a KMO test value of 0.794 was obtained and Cronchbac alpha value was 0.852. The Correlation analysis was done. The results show that sustainable transportation, green purchasing practices, sustainable distribution practices and green warehousing all have positive relationships with operational performance. Out of these only green warehousing and sustainable transport have a strong positive relationship with operational performance.