Economic performance and supply chains: The impact of upstream firms' waste output on downstream firms' performance in Japan

A novel application of input-output analysis is used to statistically map out average levels of generation of unwanted solid and liquid waste materials and also greenhouse gases along manufacturing supply chains for the final demand products of manufacturing industries in Japan. One key finding is that assembler dominated manufacturing supply chains have different within-chain waste generation patterns than manufacturing supply chains that are not assembler dominated. A second key finding is that assemblers with suppliers that produce less waste tend also to have better economic performance. This suggests that for manufacturing supply chains in Japan at least, the adoption by a downstream assembler of green procurement policies can improve both environmental and economic performance. This in turn suggests that both the private sector and public policies aimed at reducing manufacturing waste should take account of the incentives for achieving waste reduction all along a supply chain of a downstream assembler or other focal firm in a position to coordinate product/service flows, knowledge flows, information flows and flows of funds within a supply chain.