Sustainability in Modern Supply Chains

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Table of Contents

Introduction
Sustainability of Modern Supply Chains
Impacts of Modern Supply Chains and Supply Chain Collaboration
Justifications for Sustainability of Supply Chains
Conclusion
References

Introduction

The most crucial aim of an effective supply chain management arm of an organisation is to ensure that the supply chain management system reduces the cost associated with supplies. For this research, sustainability is defined as a matter of concern for many businesses that influences their supply chain when it comes to the costs associated with jeopardy, waste, and the surroundings within which the businesses operate.

The supply chain is there to offer a plausible bond between the business inputs and outputs. This argument means that products and services need to be availed just whenever they are required in a manner that will sustain the increasing number of products that need to be availed in the market.

Fundamentally, supply chain administration involves the supervision of the progress of goods and services, finances, and information from the point of production to bulk sellers and then to the end consumers. It also encompasses “coordinating and integrating these flows both within and among companies” (Ketchen & Hult 2006, p. 573).

Supply chain management is an important function in an organisation since “organisations increasingly find that they must rely on effective supply chains or networks to compete in the global market and the networked economy” (Ketchen & Hult 2006, p. 574).

From this perspective, this paper deploys the concepts of supply chain and logistics management to discuss various ways in which supply chains can be sustained in the modern world of excess supply of commodities both in the local and international markets.

The paper argues that the establishment of successful relationships and closer alignment of strategic intent in modern supply chains is important for sustainability in the modern supply chains. An effort is also made to identify and discuss the impacts of sustainability relating to every participant associated with such collaborations from the paradigm of theoretical approaches to supply chain and logistics management.

Sustainability of Modern Supply Chains

Faced with the modern problems that are associated with the processes of production and distribution of products, supply chain managers need to have plausible information about the implications of supply chain and logistics strategies on physical and environmental participants.

This requirement is pivotal in helping to resolve various challenges associated with supply chain management in business environments characterised by the changing trends. Such trends link with globalisation coupled with the concerns of intensive competition and the need for securing and protecting the place within which the organisations are established.

There is also the need for “reliable, flexible, and cost-effective business systems that are capable of supporting customer differentiations” (Bullinger, Kuhner & Van Hoof 2002, p.3533). More than it has been experienced before, the current chain management personnel encounter a myriad of complex and dynamic supply chain problems, trends, and developments, which are incredibly hard to predict.

To resolve this stalemate, deployment of sustainable supply chain strategies is critical. This argument means that, in the future years, supply chain managers will have to understand various suitability issues that are articulated to the business and company operational environments.

Paying attention to the principles of corporate social responsibility constitutes one of the issues that may help to compose sustainable supply chain management. Consideration of CSR in supply chain management implies that organisations have to behave in a socially responsible manner while establishing distribution networks for their products coupled with treatment of the resulting wastes from the distributed products.

For the last one decade, concerns of environmental sustainability have transgressed from “an obscure fringe concept to mainstream concern at the highest level of corporate governance” (Maloni & Brown 2006, p.35).

These changes have taken place following changes in the environment of business and the excessive anxieties for climatic changes together with the concerns of energy security from various stakeholders and advocacy groups across the globe.

Maloni and Brown (2006) reveal how “regulatory directives oblige companies to consider the environmental impacts of their products and operations” (p.43). While deriving strategies that are necessary for ensuring sustainable supplies, it is important to evaluate the relationship between the strategies and such directives to determine whether they are in conflict.

This process involves the attempts of ensuring that an organisation is socially responsible. This argument means that, apart from serving its own interest and the interest of the owners through the adopted supplies chain management approaches, concerns are also paid on the protection and preservation of the environment of the organisation.

This case implies that an organisation must comply with the pressures by various environmental advocacy groups.

CSR is an incredible concern in the derivation of strategies for ensuring sustainable modern supply chains, especially following the heavy emphasis for an organisation to produce and distribute green products in the effort to curb environmental degradation.

Adopting green strategies for supply chain management is not only a measure for ensuring a sustainable supply chain management but also a measure of ensuring that an organisation behaves and acts in a socially responsible way. Ensuring a sustainable supply chain calls for the deployment of a number of principles.

Supplies chain principles must be directly related to the concerns of the people to whom the products are meant to be distributed. Firstly, sustainable supply chain forms and acts as entities for respect coupled with preservation of human rights.

This argument implies that they must ensure and guarantee their commitment to prevention of abuse of human rights. In this extent, Maloni and Brown (2006) reckon, “supply chain management entities need to ensure that there is no forced labour, child labour, or discriminatory practices” (p.41).

As suggested by the application of the concepts of green supply chains, sustainable supply chains have to factor that environment does not suffer from any harm due to its operations. This claim means that sustainable supply chain entities need to encourage the implementation of various eco-friendly technologies.

One of such strategy involves phasing out paper documentation. Leclerc (2012) supports this strategy by further informing, “While there are advantages to the paper, the sheer amount used and the innovative technology have made it apparent that it is the time for a new direction” (p.68).

Arguably, the most preferred direction is the one that would ensure that the approaches of supply chains become cost-effective in a bid to make an organisation experience the advantages of competitive advantage.

The practice of effective supply chains should ensure the reduction of inventory levels. Unfortunately, tracking supplies using paper files is an immense hindrance to the creation of sustainable supply chains because it “is much more difficult to keep track when it comes to inventory and similar data files” (Leclerc 2012, p.68).

Although one of the green approaches to the creation of sustainable chain supplies driven by the perspectives of green supply chains is the recycling of paper, a more effective way is the establishment and embracement of technological ways of maintaining supply data through mechanisms such as holding data in soft form.

In fact, within the last few years, many organisations have strategically focused on programs for the creation of sustainable supply chains.

The strategy involves a transformative process that is meant to outline various comprehensive road maps for detailing various approaches that are implementable to ensure that business partners remain committed to the achievement of green technology in supply chains.

In this context, Aronsson and Brodin (2006) assert, “for an organisation to be actively engaged in building a sustainable supply chain, it starts with the right supply chain strategy, which will be inclusive of customer service levels, financial results, operation costs, and environmental targets” (p.395).

Sustainability in the current supply approaches initiates with simple but also significant practices that seek to optimise supply chain decisions. The beginning point is guaranteeing that inventories are availed at the respective areas at the required period and in the appropriate amounts.

Proper supply operation requires “synchronisation of supply practices to ensure improved operations in transportation efficiencies right from consumption of fuels to carbon emissions” (Leclerc 2012, p.68). This strategy has the aftermaths of reducing carbon prints for organisations. Indeed, carbon prints are one of the methodologies of determining the extent to which an organisation has embraced sustainable supply chains.

Carbon footprints are computed from the consideration of inventories of greenhouse gas emissions within a company, product and facility, or any other alternative entity. Such gases include methane, nitrous oxide, and carbon dioxide among others as defined by Kyoto Protocol.

Each of these gases contributes a given proportion to global warming. Any sustainable supply chain strategy must ensure that the contributions of each of the gases fitting in the definition of greenhouse gas emission have reduced impacts on global warming.

Establishing successful relationships and closer alignment of strategic intent in supply chains is important for sustainability in the modern supply chains. In fact, according to Linton et al. (2007, p. 4), “the focus on optimising operations has moved from a specific facility or organization to the entire supply chain.”

This argument implies the need for collaboration relationships with various supply chain partners as will be discussed in the next section to show how each partner contributes towards sustainability of the supply chain in organisations. The bottom line is that each of the partner has a crucial role to play right from the initial stage of the chain, for instance, “processing of raw materials to delivery to the customer” (Linton et al. 2007, p. 4).

Financial communities have recognised that sustainability is central to the improvement of shareholder’s value through perfection of cash flows. It is also important in “upgrading of asset utilisation, customer satisfaction, and brand recognition” (Maloni, & Brown 2006, p.41).

These critical aspects help in building the competitive advantage of an organisation. Indeed, competitive advantage is one of the supply chain management strategies that are vital success factors for sustainability.

An organisation may decide to pursue different types of competitive advantages among them being differentiation and low cost. With regard to Ciliberti et al. (2009), there are valid generic mechanisms of achieving excellence coupled with market success.

Such mechanisms include differentiation, cost leadership, and focus. The significance of these strategies in relation to sustainable supply chain is pegged on the idea that the most significant strategies for supply chains are the ones that would truncate into low costs both to an organisation and in terms of social costs.

Consequently, sustainability in supply chains can be enhanced in an organisation by aiming to be the lowest cost leaders within any industry. These cost leadership strategies include “economies of scale, proprietary technology, and preferential access to raw materials” (Ciliberti et al. 2009, p.119). From the perspectives of deferential strategy, organisation seeks to supply products, which are unique in any industry.

Such products also deserve to create value to their consumers. It is from this line of thought that the perspectives of green sustainable supplies have emerged in the discipline of supply chains and logistics management.

Many advocates of the above school of thought contend that adopting strategies that will ensure an organisation supply’s green products is imperative in ensuring that the products produced and distributed by an organisation result in low social costs to their consumers. Such costs include reduction of the extents of global warming by reducing the emission of green house gases (Orsato 2006).

Christopher (2005) emphasises that an organisation seeking to succeed in the efforts to achieve sustainable chain supplies needs to “focus on one or more attributes that customers perceive as important, which usually lead to low cost levels” (p.78).

In the globalisation era, impacts of global warming are one of the issues that are considered incredible by customers. For this reason, sustainable supplies and chain management concepts need to be organised around the perceptive of going green.

Impacts of Modern Supply Chains and Supply Chain Collaboration

Creating sustainable chain supplies requires the interplay of myriads of stakeholders. These stakeholders must work in collaboration with each other. According to Linton (2007), any successful relationships must go hand in hand with alignment of strategic intents. For instance, in the sustainability chain, manufacturers have the impact of ensuring that they produce products in sustainable ways.

This strategy is important since supply chain initiates from the manufacturing of products before logistical arrangements are made to distribute the products. A good example of how the manufacturing component of supply chain may ensure a sustainable supply chain is evidenced by the case of Apple Company.

Apple Company has implemented an approach of sustainable supply chain through supplier score carding. The aim of supplier score carding is to permit business establishment to evaluate the existing suppliers in a proactive manner.

This strategy helps in the determination of whether it is appropriate to seek new suppliers in case the existing suppliers distribute and dispose product-related wastes in a manner that exerts social costs to the societies consuming the products.

Therefore, this argument means that there should be close collaborations between the organisation and the manufacturers to boost sustainability of the existing supply chain. As a collaboration effort of manufacturers to enhance sustainable supplies, vetting process for suppliers to ensure that they are oriented towards the best practices for social corporate responsibility in the distribution of products is critical.

As noted by Leclerc (2012), Apple Company is one the companies, which has managed to achieve this concern as evidenced by the “…endless efforts to create publicity regarding the working conditions at the Foxconn facility in China that produce iPads and iPhones” (p.68).

When such corporations inculcate mechanisms for putting in place sustainable supply chain practices, consumers of products rest assured that the products they consume are made through processes that are responsible having low tendencies of influencing social costs among them being deterioration of the environment in which they interact with the products.

Otherwise, these key stakeholders need to be well served in the supply chain as they have the impact of determining whether manufacturers will continue with their role or not in the supply chain.

As discussed before, sustainable supply chain strategies are driven by the strategic effort of an organisation to adopt a low-cost strategy as a competitive approach. This argument reveals a myriad of strategies that must be in place in any supply chain applying to all stakeholders. One would wonder the role of strategic connections of these various existing strategies.

Therefore, for any successful relationships between the stakeholders in any supply chain (suppliers, clients, and the organization), there is the need to ensure that the strategies are aligned, are complementary, or are similar all along the SC so that they all aim for the same sustainability goals.

From an Apples’ company’s perspective, “low scoring suppliers often put the company’s brand equity at risk, threaten the efficiency and drive costs up” (Leclerc 2012, p.67). Low scoring may be attributed to failure of an organisation to meet the demands for adoption of best standards with regard to labour practices and respect of human rights.

With such a business portfolio, it becomes hard to place and avail products to customers in large quantities due to negative associations of the process through which the products are produced. This case means that poor reception of the products is likely to emanate thus impairing with sustainable supply chain strategies.

Many nations including the U.S. have enacted policies that prevent supply and subsequent sale of products that are produced with child labour. This case has caused many companies such as NIKE to face negative publicity due to the allegations of producing their products with child labour in their Asian-based factories.

Such allegations pose a heavy challenge for the NIKE Company to adopt sustainable supply chain strategies especially in the nations, which have enacted policies that ban the sale of products produced with child labour within their markets.

From this argument, it sounds imperative to infer that any sustainable supply chain strategy needs collaboration and compliance with the established legal provisions with regard to supply of products within a nation.

Sustainable supply chain is a function of all persons and agencies involved d in the whole supply chain until the products of an organisation are consumed followed by waste disposal. These persons and agencies are key stakeholders in the supply chain who have the impact of ensuring smooth flow of goods right from their production to their consumption.

For instance, green technology and green product communities will be interested to know whether the products supplied by a given organisation through its supply networks meet the concerns of environmental protection.

In the case of issues coming up that the products supplied by a given organisation fail to meet the demand placed on such an organisation, organisations have to deal with the challenge of redesigning their products to meet the emerging new demands.

While collaboration with the concerned parties in the process of redesigning is necessary, an organisation has existing and loyal customers who must be supplied with products and services.

To establish a successful balance of all the interested parties in the company’s products and services, an organisation has to increase its communication and collaboration efforts to ensure that its supply chain remains sustainable in the short-term and long run.

Bakshi and Fiksel (2010) support this line of argument by further adding, “with the scope and the sheer size of supply chains around the world, collaboration and communication must be at a premium to reduce the margin of error, thus conserving resources” (p.1355).

This argument means that sustainability in supply chain management can be enhanced through some programmed inter supplier communication strategies. Such strategies cut across many sustainable supply efforts including sending automated emails to inform customers on the new advances in product evolution coupled with tracking and linking of information via strategies such as instant messaging.

Linking all customers and interest groups to the developments in the supply chain concerns and the mechanisms adopted by an organisation to ensure that such concerns are being met call for the creation of the means through which collaboration between customer and other people is executed on a single page.

In this context, Ketchen and Hult reckon, “Supplier B and Supplier C should even collaborate on their separate processes to increase working operations with Company A” (p.574). This argument implies that effective collaborations and communication as a means of accomplishing sustainable supply chains cannot be achieved without the deployment of technology.

Indeed, real time communication, as a strategy enhanced through deployment of technology in supply chain, can increase the chances of having an accurate supply chain that is capable of preventing inefficiency coupled with the waste of resources in the distribution channels.

The argument here is that sustainable supply chains also need collaboration with technology experts who can invent new strategies for waste minimisation. Such an effort entails consolidation of technology tools such as software in supply chains.

Technology is the integrating facet for many functions of an organisation. Supply chains can also credibly benefit from these noble roles of technology, which aid in driving the competitive advantage of many organisations across the globe.

With regard to Bakshi and Fiksel (2010), this goal can be realised through collaboration and or by “consolidating service providers to simplify data management and networking of supply chain operations” (p.1351). This step goes far in eliminating time consuming and inefficient supply chain technologies such as the use of paper to reflect and document transactions.

Although collaboration with technology experts is important, it is inefficient to have multiple service providers because they “make it very complicated for leadership to troubleshoot if anything goes wrong along the chain” (Bakshi & Fiksel 2010, p.1351). Indeed, software is currently in place to allow organisations to follow up the whole process of supply chain through a distinct gateway.

This strategy enables an organisation to trace accurately the places where problems that are likely to impair the cost effectiveness strategy for sustainable supply chain.

Such software integration is crucial in helping an organisation to establish the best solution for solving the recurrent problems in supply chains coupled with how to maintain supply chain integrity. Attempts to maintain a sustainable supply chains involve heavy commitment of organisations’ resources to alter processes. The question that arises is- are such attempts justified?

Justifications for Sustainability of Supply Chains

The marketing theory provides incredible justification for the creation of a sustainable chain supply within an organisation. Several decisive factors help in determining the nature of a business environment. They include demand and supply coupled with the general environment within which an organisation operates.

These factors help in the determination of the appropriate competitive advantage that an organisation can adopt for long-term success (Bullinger, Kuhner & Van Hoof 2002: Chopra & Meindl 2004). Supply side factors include employees, competitors, and suppliers.

An organisation seeking to have a sustainable supply chains must organise its long-term and cost effective strategies to meet the capabilities of employees to deliver its products in a socially responsible manner (Christopher 2005). This role must be done in a manner that offsets the capabilities of the competing supplier in the same industry especially those industries that deal with substitute commodities.

The modern business environment is characterised by competition among organisations on who is able to engineer the best strategies that will ensure that the chain supply strategies adopted satisfy all stakeholder and interest groups. One of the competitive strategies is ensuring that organisations manufacture and distribute environmentally friendly products.

Orsato supports this strategy by positing that sustainability issues within the supply chain studies have resulted in empowering environmental protection organisations such as Greenpeace to exert even more pressure on the chain supplies and logistics professionals to develop supply strategies that ensure that the environment remains safe to both flora and fauna (2006, p.128).

From the perceptive of demand of products and services, customers are becoming concerned about the impacts of product in terms of costs such as social costs that are likely to be created by the nature of goods and services supplied to them. McKinno (2010) adds that customers also “increasingly recognise the value of supply chain services and quality as they are less likely to select products and services based on price” (p.27).

It is through thinking of supply chains from these dimensions that has seen corporations such a Dell and Apple outperform other organisations in the adoption of sustainable supply chains. Indeed, in today’s business operations, apart from an entire organisation being in competitions with other organisations, respective supply chains of organisations are in constant competition with one another.

Existing theories provide substantive grounds for advocating for sustainable chain supplies. Sustainable supply chain is essential in driving competitive strategy for an organisation. Theory and practice evidence two major types of supply chains, which can help to drive the competitive advantage for an organisation.

With regard to McKinno (2010), they include, “costs leadership and differentiation strategy (lean, cost, efficiency-driven) supply chains and agile fast service driven supply chains” (p.36). Lean supply chains are one of the ways of enhancing sustainable supply chains that fit with cost leadership strategies.

Conclusion

Modern supply chains are faced with an incredible challenge of ensuring that they reduce their costs. This case is essential in ensuring that organisations remain competitive. In the paper, it was argued that supply chain costs go beyond the costs of distributions of products, which are often reflected not only in the final prices of commodities and services but also in terms of social costs.

Based on these assertions, the paper considered embracement of the concept of CSR as one of the ways of ensuring that supply chains remain sustainable and competitive.

Other issues considered in the paper in relation to the sustainability of modern supply chains include the effects of the strategies of supply chain on the environment especially with immense consideration of the need to produce green products to ensure protection of the environment. Based on this concern, the paper argued that the subject of creating sustainable supply chains comprises interplay of a variety of stakeholders.

The goal of an organisation seeking to have a sustainable supply chain is to ensure harmonisation of all stakeholders with sustainable strategies for supply chain. It was held that this goal could be achieved through collaboration of all involved stakeholders.

References

Aronsson, H & Brodin, M 2006, ‘The environmental impact of changing logistics structures’, The International Journal of Logistics Management, vol. 17, no. 3, pp. 394–415.

Bakshi, R & Fiksel, J 2010, ‘The Quest for Sustainability’, Supply Chain and Logistics Management, vol.49 no.6, pp. 1350-1358.

Bullinger, J, Kuhner, M, & van Hoof, A 2002, ‘Analysing supply chain performance using a balanced measurement method’, International Journal of Production Research, vol. 40 no.15, pp. 3533–3543.

Chopra, S & Meindl, P 2004, Supply chain management: Strategy, planning, and operation, Prentice Hall, Upper Saddle River, NJ.

Christopher, M 2005, ‘Logistics and supply chain management: Creating value-adding networks, Prentice Hall, Horlow.

Ciliberti, F et al. 2009, ‘Codes to coordinate supply chains: SMEs’ experiences with SA8000’, Supply Chain Management: an International Journal, vol. 14, no. 2, pp.117-127.

Ketchen, G & Hult, T 2006, ‘Bridging organisation theory and supply chain management: The case of best value supply chains’, Journal of Operations Management, vol.25 no. 2, pp. 573-580.

Leclerc, Y 2012, ‘Sustainability and The Supply Chain: How to Reduce Cost and Save the Environment’, Manufacturing business technology, vol. 2.no. 1, pp. 67-71.

Linton, J et al. 2007, ‘Sustainable Supply Chains: An Introduction’, Journal of Operations Management, vol. 559 no. 8, pp. 1-7.

Maloni, M & Brown, E 2006, ‘Corporate Social Responsibility in the Supply Chain: An Application in the Food Industry’, Journal of Business Ethics, vol. 68 no. 1, pp. 35-52.

McKinno, A 2010, Green logistics: Improving the environmental sustainability of logistics, Kogan Page, London.

Orsato, R 2006, ‘Competitive Environmental Strategies: When does it pay to be green?’, California Management Review, vol. 48, no. 2, pp. 127–143.

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