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Supply chain management on the crossroad to sustainability: a blessing or a curse?

Supply chain management on the crossroad to sustainability: a blessing or a curse? Logist. Res. (2009) 1:83–94 DOI 10.1007/s12159-009-0012-y OR IGINAL PAPER Supply chain management on the crossroad to sustainability: a blessing or a curse? Arni Halldo ´ rsson Æ Herbert Kotzab Æ Tage Skjøtt-Larsen Received: 20 May 2009 / Accepted: 20 May 2009 / Published online: 9 June 2009 Springer-Verlag 2009 Abstract The implications of environmental sustainabil- Keywords Supply chain management  Sustainability ity and social responsibility transcend the actual ownership Social responsibility  Triple Bottom Line of the particular product; up-stream the supply chain to Reverse Logistics consider behaviour of suppliers, and down-stream to con- sider the impact of the product-in-use, and ultimately, its disposal. These concerns are frequently conceptualised as 1 Starting point of considerations and problem an extension to current theoretical approaches and practices statement in supply chain management (SCM). This paper raises the question of how SCM is actually addressing these issues. In Supply chain management (SCM) has had a substantial particular, it is argued that SCM can be seen as amongst the impact as a facilitator of globalisation of the world econ- causes of the problem rather than a viable solution. To omy. It seems, however, that the society pays a high price clarify this challenge, three generic strategies are devel- for the economic advantages of globalisation in terms of oped as a response: (1) enhancing the use of current SCM environmental shortcomings, which are today summarised approaches, (2) aligning SCM with social and environ- by terms such as ‘global warming’, ‘climate change’ or mental concerns and (3) rejecting SCM in its current ‘carbon footprint’. Issues conceptualised under the fashion to address environmental and social concerns and umbrella of corporate social responsibility (CSR) have suggesting a replacement strategy. become common in many mission statements and annual reports from multinational corporations. CSR relates to transparency in financial reporting, sustainability reporting, and opportunities for stakeholder dialogue. A closely related concept is sustainability, which Elkington [15] A. Halldo ´ rsson (p. 20) defines as ‘‘the principle of ensuring that our actions School of Management, University of Southampton, today do not limit the range of economic, social and SO17 1 BJ Southampton, UK environmental options open to future generations’’ and e-mail: arni@soton.ac.uk called this principle the triple bottom line approach. The A. Halldo ´ rsson economic, social and environmental dimensions are also Reykjavik University, Reykjavik, Iceland recognised as ‘‘three pillars of sustainability’’ [29, p. 1688]. The reactions to this development include the consid- H. Kotzab (&)  T. Skjøtt-Larsen Operations Management, Copenhagen Business School, eration of these issues in the design and operation of global 2000 Frederiksberg, Denmark supply chains. This has been synthesized by research into e-mail: hk.om@cbs.dk topics such as reverse logistics, closed-loop supply chains, T. Skjøtt-Larsen and sustainable supply chain management. A common e-mail: tsl.om@cbs.dk denominator here is that environmental and social issues will not only affect the individual company but also the H. Kotzab managed network of suppliers, producers, distributors and University of Greenwich, Greenwich, UK 123 84 Logist. Res. (2009) 1:83–94 customers; i.e. the supply chain will be influenced. machines, have in particular reduced sustainable thinking, Elkington [15] anticipated the importance of a triple benefit as modern technology has secured the long-term existence integrating economy, ecology and people at the supply of the agricultures’ organisation [23]. In 1962, Silent chain level, as companies ‘‘will increasingly be forced to Spring, a book written by Carson [7], spurred the ecolog- pass the pressure on their supply chains’’. This move is still ical discussion in the Western Hemisphere by documenting a challenging task as Seuring and Mu ¨ ller [55] make out in the detrimental effects of pesticides on the environment. their study on sustainable SCM. In 1972, the Club of Rome presented its first report The attempt to conceptualise sustainability as a part of ‘‘Limits to growth’’, which has been the starting point for a supply chain design, operations and performance is often discussion of a sustainable development of the society. The depicted as an extension to current theoretical approaches methodology behind this report has been the Systems and practices in SCM. But although, for example, logistics Dynamics approach [18] and the authors conclude that becomes ‘reverse’, the operations (e.g. movement of prod- ‘‘….it is possible to alter these growth trends and to ucts that are returned) do have implications for, e.g. the establish a condition of ecological and economic stability carbon footprint. Instead of calling for more focus on attri- that is sustainable far into the future’’ [41]. butes of the supply chain as solution—such as integration, The Brundlandt-report, [6] ‘Our common future’, can be performance, collaboration and centralization—we ought to seen as an extension of these ideas. The main outcome of take a step back and explore the intersection of SCM and the report showed the consequences of present economic sustainability. In doing so, we have taken notice of Gho- behaviour and suggested change in business activities. shal’s [22] critical view on management theories who states: Business should provide a sustainable development or ‘‘Our theories and ideas have done much to strengthen the sustainability, which is not a fixed state of harmony, but management practices that we are all now so loudly con- rather a process of change in which the exploitation of demning’’. On the basis of this, this paper seeks to address resources, the direction of investments, the orientation of the following question: How can sustainability be integrated technological development, and institutional change are in the SCM approach—is sustainability coherent, comple- made consistent with future as well as present needs. mentary or contradictory to the traditional SCM approach? Sustainability puts economic, social and environmental Derived from this are three propositions suggesting multiple elements together and, ‘‘like it or not, the responsibility for and perhaps fragmented ways in which SCM addresses the ensuring a sustainable world falls largely on the shoulders sustainable agenda. This prompts a more fundamental but of the world’s enterprises, the economic engines of the also sensitive issue; is SCM amongst the causes of the future’’ [13]. problem rather than a viable solution? This paper includes a Disciplines like marketing have incorporated these thoughts and presented subject-specific concepts such as discussion on the meaning of sustainability when it comes to SCM as well as a suggestion of how to incorporate sustain- eco-marketing, social marketing or society-based market- ability into the SCM concept. The character of this paper is ing [2, 35, 42]. Management theory introduced the business conceptual and based on a literature review and secondary case sustainability for strategic management [14], and the data analysis of illustrative case examples. corporate responsibility has recently been recognised as a After presenting the general notion of sustainability, the major driving force for the competitive strategy of com- paper presents a topical review of how sustainability is panies [47, 60]. discussed from an SCM point of view. Afterwards, three The Stern Review on the Economics of the Climate possible generic strategies are presented which show how Change [58] gave a wake-up call for logistics and SCM. SCM and sustainability can converge. These conversion This report primarily discussed the effect of climate change strategies refer to enhancing, aligning and replacing. The and global warming on the world economy widely and paper ends with a discussion on the managerial and largely and showed that agriculture, industrial production research implications of sustainable SCM. and transport together account for 40% of the total emis- sion of greenhouse gases in the world. These three sectors are vital elements of a supply chain which ‘‘encompasses 2 The notion of sustainability all activities associated with the flow and transformation of goods from the raw materials stage (extraction) through to The basic idea of sustainability was initially presented in the end user, as well as the associated information flows’’ the field of agriculture in 1713, when the Saxon miner [26]. The Stern report then proposes action plans on mul- Captain Hanns von Carlowitz requested a sustainable, tilateral frameworks such as the United Nations Framework continuous and enduring utilization of forest resources Convention on Climate Change (UNFCCC) or the Kyoto [11]. The technical and scientific progress in the field of Protocol and it also shows that the climate change miti- agriculture, e.g. the use of more effective fertiliser or gation raises the classic problem of the provision of a 123 Logist. Res. (2009) 1:83–94 85 global public good where an international management of also a new, growing business area for TPL providers [37]. common resources is required in order to avoid free riding. Brodin and Flygansvær [5] have empirically identified Taking these developments into account, supply chain three types of coordinators within the EEE-industry: The managers are requested to deal with the consequences dominant coordinator (closed-loop supply chains), the of climate change, ecological issues, polluted air/water, implicit coordinator (a recycling specialist of an open children labour, physical/psychological working condi- reverse logistics system), and the mediating coordinator tions and more—but are the traditional frameworks of (e.g. a TPL provider). logistics and SCM providing them with the necessary Stock et al. [59] argue that effective product returns guidelines? strategies and programmes can enhance the competitive advantage. Similarly, Johnson [32] states that ‘‘product returns have long been a necessary evil, but top companies 3 A topical review of sustainability in SCM today are managing their reverse supply chains as a source of value’’. Jayaraman and Luo [30] look at reverse logistics A systematic search and review of literature within SCM from a resource-based view of the firm, and claim that and logistics has already been conducted recently [9, 36, procedures, policies, and processes related to the firm’s 55, 57] Besides logistics, these reviews do even include reverse logistics are embedded in the operational routines references to operations management and purchasing. This of value-chain activities. Therefore, reverse logistics section provides a topical review of concepts within SCM belongs to the firm’s distinctive capabilities that are diffi- that are associated with sustainability. We summarise these cult to imitate, transfer or substitute [43, 52, 53]. discussions under the term ‘‘sustainable supply chain The variations in timing, quality, and quantity of product management’’ (SSCM) [9] and elaborate on the following returns make it difficult to forecast requirements and allo- concepts as the constituent components of SSCM: reverse cate resources to return systems on other than an ad hoc supply chains, green SCM, triple bottom line, product basis. Only a few companies have a formalised information stewardship, CSR in supply chains and carbon footprints in system and standard operating procedures for handling supply chains. We start this review by the notion of returns. An important problem is related to the fact that sustainability. products returned by end-users are often unpacked, without barcodes or other product identifications. When the prod- 3.1 Sustainability in logistics and SCM ucts are returned to consolidation or return centres, it is a time-consuming task to identify the product and re-label- 3.1.1 Reverse logistics and closed-loop supply chain ling it with a barcode. Time-to-remarket is essential for time-sensitive returns, Reverse logistics is defined by Rogers and Tibben-Lembke e.g. clothes, books, mobile phones, and electronic equip- [52] ‘‘the process of planning, implementing, and control- ment. Blackburn et al. [4] use the term ‘‘preponement’’ as a ling the efficient, cost effective flow of raw materials, in- strategy to make the reverse supply chain responsive by process inventory, finished goods, and related information reducing time delays and promote early collection, sorting, from the point of consumption to the point of origin for the disposition, and disassembly rather than late (postpone- purpose of recapturing value or proper disposal’’. The ment) process and product differentiation. closed-loop supply chain is a wider concept, and includes, Cannibalization is a problem for companies, which take besides reverse logistics, the return product process of back used products or new products returned from the end- acquisition, test, sort and disposition, including distribution customer to be returned to the market. In some cases the and marketing [25]. products are repacked and returned to the primary market Closed-loops consist of two supply chains: a forward at the same price. In other cases, the products are sold on a and a reverse chain, whereby the recovered product either secondary market, e.g. via a broker or an electronic auction re-enters the primary forward chain or is shunted to a (e-bay.com, lauritz.com, amazon.com).While performance secondary market. Examples of closed-loop supply chains measurements can be routine in the case of forward flows are Xerox-Europe [25], Kodak’s Single-Use Cameras [25], of products in the supply chain, return flows are rarely IBM’s spare parts [17], Caterpillar’s remanufacturing of measured in a systematic way. However, it is also impor- diesel engines [71] and the European Recycling Platform tant to set up performance measures for the reverse supply founded in 2002 by Braun, Electrolux, HP, and Sony [65]. chain, e.g., time from consumer complaint to replacement However, the return flow does not always go back to the of new product/repaired defect product at the customer origin, as noted by Bernon and Cullen [3]. In many cases, premise, time to pay-back the customer, quantity and collective schemes assume the responsibility of collecting quality of returns, causes of returns, costs involved in and disposing the returned products. Reverse logistics is returns, etc. The responsibility of the reverse supply chain 123 86 Logist. Res. (2009) 1:83–94 is often fragmented among different actors, and as a result, 3.1.3 Product stewardship no one takes overall responsibility. This often results in sub-optimization and inefficient solutions. Product stewardship is a product-centred approach to environmental protection. Product stewardship recognises that product manufacturers must take on responsibilities to 3.1.2 Triple bottom line reduce the ecological footprint of their products. By rethinking products and relationships with their supply The triple bottom line by Elkington or Dyllick and Hock- erts consists of the following three parts [14–16]: chain partners and end-users, some manufacturers can reduce costs, promote product and market innovation, and 1. Economy/profit: The economic dimension does not reduce the environmental impact of their products. refer only to profitability. At any time, economically Reducing use of toxic ingredients, reducing energy con- sustainable companies deliver cash flows that are sumption and material waste, designing for reuse and sufficient to maintain liquidity and offer a constant, recyclability, and developing take-back programs are some above-average return to the shareholders. of the opportunities to become better environmental stew- 2. Ecology/planet: In the past, the environmental dimen- ards of their products. sion has had the largest impact on sustainable devel- One example is the US-based Interface Carpets, a world opment, as an eco-system represents the ultimate profit leader in modular carpets, which has been committed to line. Dyllick and Hockerts define an ecologically becoming an environmentally sustainable company since sustainable company as a company that uses natural 1994. Interface’s sustainability efforts fall into three cate- resources that are consumed at a rate below natural gories: waste minimization, engineering changes, and reproduction or at a rate below the developments of product and process changes. Thus, Interface has imple- substitutes. Ecologically sustainable companies do not mented a closed-loop supply chain by leasing carpets, cause emissions that harm the environment, but are maintaining them, taking them back again, and reusing companies where managers limit the use of any type of them as raw materials for new carpets and fabrics. Fur- resources as necessary and minimise any waste as thermore, Interface has designed a system of eco-metrics much as possible. From a company point of view, it that allow them to measure the inputs and the waste outputs might also be clear, that the input into the companies’ per unit of finished product, so they can track their progress production systems are often natural resources, the and see, which areas to prioritise in the future [68]. output is not only a final product but also pollution and Another example is Apple, which is trying to eliminate other forms of waste. An ecologically sustainable all toxic chemicals from their new products. In 2006, Apple company can be characterised as a company that has became the first computer company to eliminate cathode- incorporated ecological considerations in its daily ray tubes (CRT). A CRT contains about 1.4 kg of lead. The operations as well as in its strategic planning. third-generation LCD-based iMac contains less than 1 g of 3. Equity/people: The ‘people’ dimension could best be lead. Since 2006 all Apple products worldwide have been characterised as the company’s social responsibility. compliant with EU’s RoHS Directive (Restrictions of The social dimension refers to a growth strategy Hazardous Substances in Electronics). In 2005 Apple without decreased job quality and it reflects internal as recycled 10% of the weight of their electronic waste. The well as external effects. According to Dyllick and target for 2010 is 30% [64]. Hockerts, socially sustainable companies increase the human capital of individual partners as well as 3.1.4 Green supply chain management advancing the societal capital of their communities, in which they operate [32]. These actions are in Srivastava [57] defines Green supply chain management as accordance with the company’s value system [67, 69]. ‘‘integrating environmental thinking into SCM, including The consideration of the 3P (Profit, Planet, People) product design, material sourcing and selection, manufac- within the SCM concept will lead to SSCM that can be turing processes, delivery of the final product to the con- defined as follows: Collaboration among supply chain sumers as well as end-of-life management of the product after its useful life’’. According to this definition green members within all activities, that concern the delivery of environmentally and socially responsible products and SCM essentially means that all activities related to the total services to the end customer, as well as attaining accept- supply chain should take into account environmental con- able profit and information in the supply chain [50]. A siderations as well as the more traditional economic con- sustainable supply chain as outlined in Table 1 includes the siderations. Green SCM focuses on two of the three Ps in inter-organisational dimension as well as the value-added the triple bottom line, namely profit and planet, while perspective, social and environmental issues. people issues are normally not included in this concept. 123 Logist. Res. (2009) 1:83–94 87 Table 1 A sustainable supply chain Supply chain stages Triple bottom line dimensions Environment/planet Equity/people Economy/profit Supply of raw Supplier evaluation and selection based on Supplier evaluation and Transport savings materials and environmental profile, e.g. ISO 14000 selection based on social Costs of supplier evaluation and monitoring components profile Consolidation of shipments Costs of internal and external audits of Training and education of Sharing of information suppliers’ compliance with codes of logistics employees conduct Use of eco-efficient transport modes Ensuring codes of conduct at Improved quality of products Reuse of transport packaging materials suppliers, e.g. safe working Reduced risk of damage to brand Cooperation with suppliers to reduce conditions, no child labour, environmental impacts and no abuse of union rights Production Elimination of waste and overuse of Automation of physical heavy Improved working conditions may increase resources in the production process work productivity Environmentally friendly packaging Minimization of specialised, Savings through resource minimization repeating work Green design and manufacturing Economical gains through new product Prevention of work accidents development Eco-efficient production, e.g. waste from one company becomes input to another Warehouse layout, that Costs of certification, documentation and minimise picking distances reporting Replace hazardous materials and processes In-service training of Recycling materials from used products employees Improved staff recruitment and retention Job rotation and job enrichment Distribution and Choice of environmentally friendly Reduced traffic congestion Savings due to consolidation of shipments to reverse logistics distribution channels customers Education in energy saving Choice of environmentally friendly types driving Savings due to increased capacity utilization of transport of transport modes Automation of loading and Substitute information technology for unloading Higher prices for eco-friendly products physical transport Respecting driving and Savings through increased reuse of materials Design effective return systems resting time rules and components Reuse packaging materials Adapted from [50, 57] Preuss [48] suggests five steps to achieving a greener management and evaluation and analysis of the products supply chain. First, the buying company should focus on and processes. The management evaluation includes the the products to be purchased and require its suppliers to introduction of an ecological management system, the comply with recognised international codes of conduct. assessment of the ecological performance and an eco-audit. Second, the buying company should be concerned about The product assessment includes the ecological aspects of the manufacturing processes used by the supply chain, e.g. product norms, eco-labelling and life-cycle-assessment. A by requiring accreditation to an environmental standard number of different standards apply within these areas, e.g. ISO 14001, 14004, 19011, 14015, 14031, ISO guide 64, such as ISO 14001. Third, the buying company should include environmental criteria in its assessment of suppli- 14020, 14021, 14040 and 14042 (www.iso.com). However, ers. Fourth, supply management should be involved in companies are not obliged to introduce the ISO standards; internal environmental protection initiatives, e.g. design for this is one of the main reasons ISO 14000 is yet to be environmental programs or establishing environmental widely implemented [69]. management systems. Finally, supply chain managers should be responsible for some downstream activities, such 3.1.5 CSR in supply chains as product recovery, recycling and environmentally friendly disposal of end-of-life products. CSR is based on the idea that a company may be held The ISO 14000 initiative was launched in 1993 and can socially and ethically responsible for a large range of be differentiated into two groups: evaluation of the stakeholders such as customers, employees, governments, 123 88 Logist. Res. (2009) 1:83–94 NGOs, investors, local communities, unions, and media national and cultural borders has given rise to stories about [34, 61]. multinational companies’ irresponsible practices, such as As the nature of many business relations is changing violation of union rights, use of child labour, dangerous from companies manufacturing goods within vertically working conditions, race and gender discrimination, etc. integrated facilities in national operations to companies Well-known examples from the media are Nike, Gap, engaging in supply chains and contract-based manufactur- H&M, Wal-Mart, and Mattel [19]. ing across national borders, the concept of CSR is likewise By now, many multinational companies have responded transforming. CSR is no longer the individual company’s to the pressure and expectations from stakeholders by domain; increasingly, it encompasses the entire supply defining, developing and implementing systems and pro- chain. In other words, multinational companies are not only cedures to ensure that their suppliers comply with social expected to behave in a socially responsible way inside the and environmental standards. Although firms choose their company. They are also held responsible for environmental own approach to systematising the CSR efforts in supply and labour practices of their global trading partners such as chains, many studies reveal that the most visible element in suppliers, third party logistics providers, and intermediaries the approach of large multinational companies is the over which they have no ownership [31, 39, 51]. application of corporate codes of conduct. The number of Applications of CSR to the supply chain have not a long codes of conduct has grown spectacularly since the early history. According to Murphy and Poist [44] the logistics 1990s [28, 31, 61, 62]. Levi Strauss & Co.’s [70] code of discipline appears to have been more of a laggard with conduct labelled ‘‘Global Sourcing and Operating Guide- respect to social responsibility considerations. However, lines’’ from 1991 was the first of its kind in the interna- ethical considerations are increasingly becoming important tional apparel industry. to the logistics discipline since contemporary logistics and In short, a code of conduct is a document stating a SCM emphasise strategic outsourcing, buyer–supplier number of social and environmental standards and princi- relationships, and information sharing. ples that a firm’s suppliers are expected to fulfil [31, 40, The calls for CSR in supply chains should particularly 54]. Codes of conduct are increasingly introduced in con- be seen in light of the fact that a large part of global trade is tracts between a buyer company and its suppliers [61]. conducted through systems of governance which link firms They are typically based on the values with which the together in various sourcing and contracting arrangements individual firm wishes to be associated, and its principles [20, 56]. The term ‘governance’ implies that some key are often derived from local legislation and international actors in the supply chain—often large multinational cor- conventions, standards, and principles, such as UN’s Glo- porations—take responsibility for the inter-firm division of bal Compact, the Global Sullivan Principles, Social labour and specific participants’ capacity to upgrade their Accountability 8000, ISO 14001, Global Reporting Initia- activities [21]. Thus, they are able to control production tive, and the ILO Declaration on Fundamental Principles over large distances without exercising ownership [31]. and Rights at Work. In many large multinational compa- Gereffi [20, 21] argues that these key actors are typically nies, the codes are accompanied by elaborate managerial located in developed countries and include not only mul- systems for formulating, enforcing and revising the stan- tinational manufacturers, but also large retailers and brand- dards outlined in the codes of conduct. However, empirical name firms. The power held by these corporations stem evidence has shown that many multinational corporations from their market power and control over key resources have struggled with the issue of how to implement their needed in the supply chains, of which they are part. Given codes of conduct in their global supply chains [38]. Rec- their power, these actors play a significant role in speci- ognising this, the ILO has performed an in-depth study of fying what should be produced, how and by whom [20]. the management systems and processes used to implement The corporations might also provide technical support to Codes of Conduct in the sports footwear, apparel and retail their suppliers to enable them to achieve the required sectors [40]. performance. Several empirical studies have been conducted to The pressure exerted on multinational companies comes investigate how firms work with CSR-related issues in their from both internal and external stakeholders, who show supply chains [10, 61]. Most of these studies are not con- an increasing concern for the environmental and social fined to only large multinational corporations, but also conditions at offshore production locations, particularly in include small- and medium-sized enterprises (SMEs). developing countries [1, 33, 39, 61, 62]. This concern is Carter and Jennings [9] examined the impact of purchasing largely a result of an escalation of multi-media communi- social responsibility on supplier performance, and ways of cation technology, which makes it more difficult for overcoming barriers. Maloni and Brown [39] developed a companies to hide their own or their suppliers’ unethical comprehensive framework of supply chain CSR in the food practices. The escalating flow of information across industry. Mamic [40] presented a summary of an in-depth 123 Logist. Res. (2009) 1:83–94 89 study embarked upon by ILO of the management systems used to understand the relative amount of damage, which a and processes used to implement codes of conduct in the product or service causes to the environment [24]. sports footwear, apparel and retail sectors. Welford Large UK-based retailing companies such as Tesco, examined the written CSR policies of companies in 15 Marks & Spencer, Boots, and Sainsbury have already countries in Europe, North America and Asia [61]. started to label some of their products with carbon footprint Pedersen and Andersen [46] analyse how the interest of related information. Brand-owners, such as Walkers (snack the actors in the supply chain can be aligned with the terms food), Innocent Drinks (fruit smoothies) and Botanics of the codes. IKEA is used as a ‘‘best case’’ example to (shampoos) have measured their products’ carbon impact illustrate how codes of conduct can be effectively managed and committed themselves to reduce the carbon footprint in the supply chain. of their products. The British and Austrian governments However, despite many companies’ efforts to engage in are considering mandatory carbon footprint information CSR-related activities in their supply chains, there is often labelling on all products. Another example is Timberland, a gap between the expressed ethical standards and the manufacturer of the ikonic walking shoes, which has actual conditions in the supplier company. In other words, committed to becoming a carbon neutral enterprise by 2010 we might argue that so far only a limited number of mul- by using more renewable energy, incorporating more tinational corporations ‘‘walk the talk’’ of CSR in their recycled and renewable materials, generating less waste, global supply chains [12, 51]. manufacturing with fewer chemicals, and planting more trees [68]. The Danish–Swedish dairy giant Arla Foods has 3.1.6 Carbon footprints in the supply chain decided to reduce their global CO emissions from food production, transport and packaging by 25% before 2020. The European Commission has recently announced that When the British Standard for CO emission is accepted, member states are to reduce their emissions of greenhouse Arla Foods will start to affix a CO label on their products gases by at least 20% before 2020 as compared to 1990 in large UK retail stores [63]. levels, the reduction possibly reaching 30% if other industrialised countries, such as USA, China and India, commit themselves to a similar effort in connection with 4 How does SCM address the sustainable agenda? the coming climate conference in Copenhagen in 2009. This decision has an impact for all European Union 4.1 Evaluation of the theoretical findings member states as well as all included stakeholder groups such as globally organised companies, that have off-shored The evaluation as shown in Table 2 is based on the a lot of their production capacities to low-cost countries authors’ interpretation of the literature reviews and expe- and have set up long-linked inter-modal transport chains in riences from previous research in this topic. This reveals order to serve their markets. that the level of discussing of sustainability in SCM liter- An initial step towards the reduction of greenhouse gas ature is rather sobering. There is a lack of consensus and emissions has been the introduction of the carbon footprint coherence in the literature as regards definitions, scope and as a measure, which is ‘‘the total amount of carbon dioxide strategic importance of the concepts. Reverse logistics, for (CO ) and other greenhouse gases emitted over the entire example, is often considered as an operational/tactical lifecycle of a product or service’’ [21]. The carbon foot- approach to dealing with the return flows of goods, while print is typically measured in tons of CO and it can be CSR and Triple Bottom Line do not only encompass Table 2 Extent to which current activities in supply chain research addresses the sustainable agenda Stage in supply chain: streams of SCM research Design Sourcing Production Distribution Consumption/Use Disposal Reverse logistics ” s ”” dd Triple bottom line s ” dd ”” Product stewardship d ”” ” dd Green SCM dd d d ”” Corporate social responsibility sd ”” d ” Carbon footprint in supply chains s ” dd ”” s: Very limited if any consideration d: Comprehensively addressed ”: Partially or only more recently considered 123 90 Logist. Res. (2009) 1:83–94 supply chain activities, but also all business processes at products are designed for the environment by eliminating the corporate level. Product Stewardship is a product- hazardous or harmful materials and making recycling and centreed approach related to environmental protection disposal easy [57]; the current systems and solutions can while Green SCM includes all supply chain activities and already cope with these circumstances. takes into account both environmental considerations and The production process is organised to reduce waste of more traditional economic considerations. Carbon Foot- materials, emission of gases and polluted water, and min- print focuses on the emission of greenhouse gases during imise the consumption of non-renewable energy resources. the entire lifecycle of a product or service, but excludes Transportation and distribution is organised to minimise other environmental and social issues. The identified gaps total mileage, maximise capacity utilization by consolida- reflect the focal areas of the different streams of SCM tion of shipments, and to use environmentally friendly research (Table 2). transport modes when possible; this is seen as coherent It remains clear, that although the sustainable agenda with the logic of efficient distribution systems. The reverse has taken off within SCM, it has originated within different logistics system is organised to maximise the value crea- streams of research. Of the six streams of research dis- tion of the returned products, whether it is end-of-life cussed above, only one is unique to SCM, namely reverse products that are recycled or remanufactured or it is com- logistics. The other five have emerged elsewhere, but been mercial returns, which are taken back to the market as soon brought into the context of SCM. as possible [30]. An integrated strategy is thus a strategy where the focus 4.2 How could SCM deal with sustainability? has changed to include not only the traditional costs and A proposition of three approaches service considerations, but also the social and environ- mental impacts. Thus, the responsibility of greening the The intersection of SCM and sustainability can be under- supply rests on everyone in the supply chain; from design stood by three different approaches: of products, supply of materials and components, through production processes and delivery to the customers, and • An integrated strategy, where sustainability is fully finally the return recycling processes [27]. The measure- consistent with SCM ment of supply chain efficiency—such as costs, depend- • An alignment strategy, where sustainability is comple- ability, quality, reliability and speed—can be captured with mentary to the traditional SCM focus on costs and measures of environmental and social impacts. service By integrating social and environmental objectives and • A replacement strategy, where the traditional SCM performance criteria into the strategic and operational concept is replaced by an alternative approach to cope decisions in their supply chains, the firms can make the with the environmental and social aspects. appropriate balance between costs, service and environ- It should be noted that the nature of the argument mental and social impacts. amongst these three options varies. First, the degree to which SCM is expected to change increases gradually. 4.2.2 An alignment sustainability strategy for SCM Second, whilst the first two assume that current SCM the- ories and practice are part of the solution, the third is of a Following an alignment strategy, economic, social and more radical nature and implies that SCM is actually environmental concerns will be balanced against each amongst the root causes of the problems of the sustainable other. They are considered as complementary, meaning agenda. that they all have to be taken into account simultaneously, when companies are making important decisions regarding 4.2.1 An integrated sustainability strategy for SCM the design or operations of their products and supply chains. The triple-bottom line approach is an example of This is the approach taken in the research streams: reverse an alignment strategy [15], and trade-offs between these logistics, product stewardship and green SCM. Therefore, three dimensions are made to meet the desired output of a sustainability is just another characteristic added to the particular process. SCM concept. The use of current theory and practice The same is true for CSR [39]. The main difference should be enhanced to address and solve the sustainable between an aligned strategy and an integrated strategy is agenda. On the supply side, suppliers are chosen, devel- that the overall objective in the integrated strategy is to oped and monitored based on their compliance with increase value creation to customers. If the customers ask international codes of conduct, and this provides sufficient for environmental and social concerns these are integrated comfort to industrial buyers, who want to know about the in the planning, design and operations decisions. If not, the origin of raw material and components [39, 40]. The company will comply with existing laws and regulations. 123 Logist. Res. (2009) 1:83–94 91 An aligned SCM strategy puts equal weight on profit, Second, carbon footprint is only one aspect of the envi- people and planet, irrespective of the customers’ require- ronmental impacts of a product. Other aspects are related to ments. Social and environmental issues are part of the water waste, air pollution, energy use, use of raw materials, company’s mission statement and the company accounts etc. Third, the implication of focusing on the carbon for all three aspects in its annual reports. On some occa- footprint may be a major change in the design of the global sions, measures such as speed and reliability must be supply chain in terms of location of production, choice of replaced by, e.g. ‘energy use’, ‘material use’, carbon distribution channel and transport mode, selection of sup- footprint’ and ‘waste/landfill’. An aligned strategy focuses pliers, etc. on co-operation and competence building in the entire One possible consequence might be a local-to-local supply chain. It is not enough to claim and control that the approach instead of the current global-to-local approach. suppliers comply with the focal company’s codes of con- This is actually taking place in various countries; take for duct. It is also necessary to co-operate with the suppliers example the ‘farmers markets’ in the UK that are now and help them to improve the working and environment competing with supermarkets. Local markets squares in conditions. towns and cities around UK regularly (weekly or every fortnight) arrange a sales outlet for local farmers and food 4.2.3 A replacement sustainability strategy for SCM producers. Such community efforts focus heavily on the sustainable agenda. It could be argued that the full implementation of the idea First, the food must be produced locally, i.e. challenging of SCM is contradictory to sustainability. If, for example, the distance and volume of global supply chains. Second, an agile supply chain design can increase the responsive- packaging is at a minimum, where the extensive use of ness to meet customer requirements, this may happen at the packaging is also due to long distances, dispersed respon- cost of resources (inventories, warehouses) and CO sibilities and complex liability in the global supply chain. emissions (e.g. by use of airfreight from China to Europe Third, products are fresh and preferably organically grown, instead of container transport). i.e. challenging the artificial maturation process during The main objective of SCM is to maximise customer long-distance transport in refrigerated ships and trucks. This value in the most effective and efficient ways possible. In is seen as complementary to local shops, and to the business order to survive in the global competition, companies prosperity of the local community; farmers and producers extend their supply chains to further distant locations in must operate within a 30–50 mile radius from the market order to reap the benefits of differences in labour costs and outlet [67]. Should global supply chains now turn local as take advantage of efficient transportation networks. Out- regards other products? Pearce identifies thereby how dif- sourcing and off-shoring to the Far East, South America ficult it is—from a consumer’s perspective—to act in an and Eastern Europe has increased dramatically during the ‘environmental-correct’ manner. He calls some of the re- last decade. This shift has increased the distance between localization strategies also patriotism-strategies and shows production and consumption considerably with negative that in some cases it is better to buy green beans from Kenia results on the use of non-renewable energy resources and instead from England as most of the CO -emissions stem emission of greenhouse gases. From this perspective, the not from transport but from the production process [45]. success of the extended enterprise is positive for the rev- enues of the companies, but negative for the environment. Therefore, a call for a paradigm shift is needed. Instead 5 Learnings and implications of continuing to squeeze every penny out of the total costs of products, firms have to reconsider, how and where they 5.1 Conclusions produce their products, and customers have to reconsider their decision criteria for buying the products and the way There is no doubt that social and environmental issues are they dispose them after use. A possible way to change the becoming more important on the business agenda. The traditional SCM approach could be to measure the carbon clear signals of global warming and the devastating effects footprint of the product throughout the supply chain over on climate and life on earth cannot be denied anymore. The the product’s lifecycle, including the disposal and recycling international society will, in the future, take dramatic [24]. A label on the product indicating the total amount of precautions against emission of greenhouse gases and other CO per unit will tell the customer how green the supply environmentally damaging actions. Companies have to chain of the product has been. revisit their supply chain strategies in the light of envi- However, calculating the carbon footprint of a product ronmental concerns. through the supply chain is not an easy task. First, a global In order to answer the research question, the relevant standard for measuring carbon footprint is still lacking. literature was screened, a topical review developed, and 123 92 Logist. Res. (2009) 1:83–94 theoretical findings on how the literature discusses the issue operations across the supply chain. The complex interac- at hand was assessed. Based on these findings three different tion between economic concerns and social and environ- strategies for dealing with sustainability from a supply chain mental issues have to be considered. Sustainability moves perspective were proposed: an integrated strategy, an beyond current practice. Companies, legislators and alignment strategy, and a replacement strategy. This means researchers have to address new issues, policies and that sustainability will either be a vivid part of SCM, an approaches to meet this challenge. add-on to SCM or a complete re-definition of SCM. SSCM includes organisations’ activities upstream as Reverse logistics, green SCM and product stewardship well as downstream in the supply chain. An increased focus is related to the integrated strategy. Triple bottom line and on sustainability leads to new ways of collaboration with CSR are mainly related to the alignment strategy, and suppliers, customers and intermediaries in the supply finally the carbon footprint is related to the replacement chain, including environmental audits, technical and strategy. Still, the literature discusses the topics from a training assistance to critical suppliers, industrial agree- micro-point of view, but not from a macro-point of view. It ments of codes of conduct, etc. Kova ´cs demonstrates in a may be possible that sustainability may be an external cross-industrial study of 16 Finnish trans-national corpo- factor impacting the design of supply chains and their rations that supply chains can be seen as mediators of operations. It is then likely that a contingency approach is industry regulation across industry and regional boundaries the most prosperous way, assuming that there are differ- [36]. ences between industries, products, and countries as Environmental issues should be integrated in all parts of regards to the most appropriate way to handle sustainability corporate life, including supplier auditing and assessing, in a supply chain. Further research is therefore necessary to product design, manufacturing, distribution, and end-of-life determine the contextual factors for a sustainable supply disposal. Handfield et al. [27] emphasise the importance of chain strategy. environmental goals that are specific and measurable. Each We were also able to show that there is no single product/process should have its own set of environmental understanding of sustainability. It is a multi-facetted term, goals, depending on its potential impact on the environ- which can include many layers ranging from operative ment. SSCM must consider the entire lifecycle of the reverse logistics to strategic sustainability on a corporate product through the supply chain. Cradle-to-cradle analy- level (CSR). From a SCM point of view, we identified a ses must be performed to calculate the total costs from raw certain gap in the sustainability discussion, which refers to materials to final disposal. the network dimension of SCM. Sustainability in all facets The relationship between the concept SSCM and eco- is typically discussed from the single company, but not nomic performance is not well documented either in research or in practice. In other words, ‘‘Does it pay to be from a chain perspective. However, recent discussions show that sustainable cooperation can positively affect the sustainable? Research has yielded mixed findings regarding total supply chain [49]. the impact of CSR on firm performance. Carter [8] suggests that a possible explanation for these mixed findings is that 5.2 Managerial and research implications this relationship is likely mediated by one or more key variables. He introduces organisational learning as such a There are several drivers for companies to ‘go sustainable’. mediating variable. First, international regulations force companies to at least The current global financial and economic crisis raises comply with the new environmental standards set forward the question whether companies can afford to maintain in terms of limits of toxins in the products (RoHS direc- their commitment to sustainability. When companies are tive), restrictions on air and water pollution from produc- facing tough times through decreasing demand and lower tion, producer’s responsibility for environmentally friendly prices on their products and services, social and environ- disposal of end-of-life products (WEEE directive), etc. mental issues in the supply chain appear to be an attractive Second, consumers are more concerned about the carbon area for cutting costs. However, an alternative approach is footprint of products, especially food products, and of to align sustainability efforts with cost-saving efforts. An social and environmental impacts of production in devel- example is Wal-Mart, which recently announced tougher oping countries. Third, ‘‘sustaining’’ the supply chain can measures to improve social and environmental standards in reduce the operating costs and create value to the products. factories supplying the large American retail company, Fourth, shareholders and investors are demanding that including factory’s gas emissions, wastewater discharges, companies are socially responsible, because bad press can and toxic and hazardous waste. The agreement will be damage share prices. phased in, beginning with suppliers in China in January These drivers put a pressure on companies to explore 2009 and expand to other suppliers worldwide by 2011 new business models to improve the sustainability of according to a company statement [66]. An international 123 Logist. Res. (2009) 1:83–94 93 15. Elkington J (1998) Cannibals with forks. The triple bottom line of standard for measuring carbon footprint in supply chains is 21st century business. New Society Publishers still lacking. 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Supply chain management on the crossroad to sustainability: a blessing or a curse?

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Springer Journals
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Copyright © 2009 by Springer-Verlag
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Engineering; Engineering Economics, Organization, Logistics, Marketing; Logistics; Industrial and Production Engineering; Simulation and Modeling; Operation Research/Decision Theory
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1865-035X
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10.1007/s12159-009-0012-y
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Abstract

Logist. Res. (2009) 1:83–94 DOI 10.1007/s12159-009-0012-y OR IGINAL PAPER Supply chain management on the crossroad to sustainability: a blessing or a curse? Arni Halldo ´ rsson Æ Herbert Kotzab Æ Tage Skjøtt-Larsen Received: 20 May 2009 / Accepted: 20 May 2009 / Published online: 9 June 2009 Springer-Verlag 2009 Abstract The implications of environmental sustainabil- Keywords Supply chain management  Sustainability ity and social responsibility transcend the actual ownership Social responsibility  Triple Bottom Line of the particular product; up-stream the supply chain to Reverse Logistics consider behaviour of suppliers, and down-stream to con- sider the impact of the product-in-use, and ultimately, its disposal. These concerns are frequently conceptualised as 1 Starting point of considerations and problem an extension to current theoretical approaches and practices statement in supply chain management (SCM). This paper raises the question of how SCM is actually addressing these issues. In Supply chain management (SCM) has had a substantial particular, it is argued that SCM can be seen as amongst the impact as a facilitator of globalisation of the world econ- causes of the problem rather than a viable solution. To omy. It seems, however, that the society pays a high price clarify this challenge, three generic strategies are devel- for the economic advantages of globalisation in terms of oped as a response: (1) enhancing the use of current SCM environmental shortcomings, which are today summarised approaches, (2) aligning SCM with social and environ- by terms such as ‘global warming’, ‘climate change’ or mental concerns and (3) rejecting SCM in its current ‘carbon footprint’. Issues conceptualised under the fashion to address environmental and social concerns and umbrella of corporate social responsibility (CSR) have suggesting a replacement strategy. become common in many mission statements and annual reports from multinational corporations. CSR relates to transparency in financial reporting, sustainability reporting, and opportunities for stakeholder dialogue. A closely related concept is sustainability, which Elkington [15] A. Halldo ´ rsson (p. 20) defines as ‘‘the principle of ensuring that our actions School of Management, University of Southampton, today do not limit the range of economic, social and SO17 1 BJ Southampton, UK environmental options open to future generations’’ and e-mail: arni@soton.ac.uk called this principle the triple bottom line approach. The A. Halldo ´ rsson economic, social and environmental dimensions are also Reykjavik University, Reykjavik, Iceland recognised as ‘‘three pillars of sustainability’’ [29, p. 1688]. The reactions to this development include the consid- H. Kotzab (&)  T. Skjøtt-Larsen Operations Management, Copenhagen Business School, eration of these issues in the design and operation of global 2000 Frederiksberg, Denmark supply chains. This has been synthesized by research into e-mail: hk.om@cbs.dk topics such as reverse logistics, closed-loop supply chains, T. Skjøtt-Larsen and sustainable supply chain management. A common e-mail: tsl.om@cbs.dk denominator here is that environmental and social issues will not only affect the individual company but also the H. Kotzab managed network of suppliers, producers, distributors and University of Greenwich, Greenwich, UK 123 84 Logist. Res. (2009) 1:83–94 customers; i.e. the supply chain will be influenced. machines, have in particular reduced sustainable thinking, Elkington [15] anticipated the importance of a triple benefit as modern technology has secured the long-term existence integrating economy, ecology and people at the supply of the agricultures’ organisation [23]. In 1962, Silent chain level, as companies ‘‘will increasingly be forced to Spring, a book written by Carson [7], spurred the ecolog- pass the pressure on their supply chains’’. This move is still ical discussion in the Western Hemisphere by documenting a challenging task as Seuring and Mu ¨ ller [55] make out in the detrimental effects of pesticides on the environment. their study on sustainable SCM. In 1972, the Club of Rome presented its first report The attempt to conceptualise sustainability as a part of ‘‘Limits to growth’’, which has been the starting point for a supply chain design, operations and performance is often discussion of a sustainable development of the society. The depicted as an extension to current theoretical approaches methodology behind this report has been the Systems and practices in SCM. But although, for example, logistics Dynamics approach [18] and the authors conclude that becomes ‘reverse’, the operations (e.g. movement of prod- ‘‘….it is possible to alter these growth trends and to ucts that are returned) do have implications for, e.g. the establish a condition of ecological and economic stability carbon footprint. Instead of calling for more focus on attri- that is sustainable far into the future’’ [41]. butes of the supply chain as solution—such as integration, The Brundlandt-report, [6] ‘Our common future’, can be performance, collaboration and centralization—we ought to seen as an extension of these ideas. The main outcome of take a step back and explore the intersection of SCM and the report showed the consequences of present economic sustainability. In doing so, we have taken notice of Gho- behaviour and suggested change in business activities. shal’s [22] critical view on management theories who states: Business should provide a sustainable development or ‘‘Our theories and ideas have done much to strengthen the sustainability, which is not a fixed state of harmony, but management practices that we are all now so loudly con- rather a process of change in which the exploitation of demning’’. On the basis of this, this paper seeks to address resources, the direction of investments, the orientation of the following question: How can sustainability be integrated technological development, and institutional change are in the SCM approach—is sustainability coherent, comple- made consistent with future as well as present needs. mentary or contradictory to the traditional SCM approach? Sustainability puts economic, social and environmental Derived from this are three propositions suggesting multiple elements together and, ‘‘like it or not, the responsibility for and perhaps fragmented ways in which SCM addresses the ensuring a sustainable world falls largely on the shoulders sustainable agenda. This prompts a more fundamental but of the world’s enterprises, the economic engines of the also sensitive issue; is SCM amongst the causes of the future’’ [13]. problem rather than a viable solution? This paper includes a Disciplines like marketing have incorporated these thoughts and presented subject-specific concepts such as discussion on the meaning of sustainability when it comes to SCM as well as a suggestion of how to incorporate sustain- eco-marketing, social marketing or society-based market- ability into the SCM concept. The character of this paper is ing [2, 35, 42]. Management theory introduced the business conceptual and based on a literature review and secondary case sustainability for strategic management [14], and the data analysis of illustrative case examples. corporate responsibility has recently been recognised as a After presenting the general notion of sustainability, the major driving force for the competitive strategy of com- paper presents a topical review of how sustainability is panies [47, 60]. discussed from an SCM point of view. Afterwards, three The Stern Review on the Economics of the Climate possible generic strategies are presented which show how Change [58] gave a wake-up call for logistics and SCM. SCM and sustainability can converge. These conversion This report primarily discussed the effect of climate change strategies refer to enhancing, aligning and replacing. The and global warming on the world economy widely and paper ends with a discussion on the managerial and largely and showed that agriculture, industrial production research implications of sustainable SCM. and transport together account for 40% of the total emis- sion of greenhouse gases in the world. These three sectors are vital elements of a supply chain which ‘‘encompasses 2 The notion of sustainability all activities associated with the flow and transformation of goods from the raw materials stage (extraction) through to The basic idea of sustainability was initially presented in the end user, as well as the associated information flows’’ the field of agriculture in 1713, when the Saxon miner [26]. The Stern report then proposes action plans on mul- Captain Hanns von Carlowitz requested a sustainable, tilateral frameworks such as the United Nations Framework continuous and enduring utilization of forest resources Convention on Climate Change (UNFCCC) or the Kyoto [11]. The technical and scientific progress in the field of Protocol and it also shows that the climate change miti- agriculture, e.g. the use of more effective fertiliser or gation raises the classic problem of the provision of a 123 Logist. Res. (2009) 1:83–94 85 global public good where an international management of also a new, growing business area for TPL providers [37]. common resources is required in order to avoid free riding. Brodin and Flygansvær [5] have empirically identified Taking these developments into account, supply chain three types of coordinators within the EEE-industry: The managers are requested to deal with the consequences dominant coordinator (closed-loop supply chains), the of climate change, ecological issues, polluted air/water, implicit coordinator (a recycling specialist of an open children labour, physical/psychological working condi- reverse logistics system), and the mediating coordinator tions and more—but are the traditional frameworks of (e.g. a TPL provider). logistics and SCM providing them with the necessary Stock et al. [59] argue that effective product returns guidelines? strategies and programmes can enhance the competitive advantage. Similarly, Johnson [32] states that ‘‘product returns have long been a necessary evil, but top companies 3 A topical review of sustainability in SCM today are managing their reverse supply chains as a source of value’’. Jayaraman and Luo [30] look at reverse logistics A systematic search and review of literature within SCM from a resource-based view of the firm, and claim that and logistics has already been conducted recently [9, 36, procedures, policies, and processes related to the firm’s 55, 57] Besides logistics, these reviews do even include reverse logistics are embedded in the operational routines references to operations management and purchasing. This of value-chain activities. Therefore, reverse logistics section provides a topical review of concepts within SCM belongs to the firm’s distinctive capabilities that are diffi- that are associated with sustainability. We summarise these cult to imitate, transfer or substitute [43, 52, 53]. discussions under the term ‘‘sustainable supply chain The variations in timing, quality, and quantity of product management’’ (SSCM) [9] and elaborate on the following returns make it difficult to forecast requirements and allo- concepts as the constituent components of SSCM: reverse cate resources to return systems on other than an ad hoc supply chains, green SCM, triple bottom line, product basis. Only a few companies have a formalised information stewardship, CSR in supply chains and carbon footprints in system and standard operating procedures for handling supply chains. We start this review by the notion of returns. An important problem is related to the fact that sustainability. products returned by end-users are often unpacked, without barcodes or other product identifications. When the prod- 3.1 Sustainability in logistics and SCM ucts are returned to consolidation or return centres, it is a time-consuming task to identify the product and re-label- 3.1.1 Reverse logistics and closed-loop supply chain ling it with a barcode. Time-to-remarket is essential for time-sensitive returns, Reverse logistics is defined by Rogers and Tibben-Lembke e.g. clothes, books, mobile phones, and electronic equip- [52] ‘‘the process of planning, implementing, and control- ment. Blackburn et al. [4] use the term ‘‘preponement’’ as a ling the efficient, cost effective flow of raw materials, in- strategy to make the reverse supply chain responsive by process inventory, finished goods, and related information reducing time delays and promote early collection, sorting, from the point of consumption to the point of origin for the disposition, and disassembly rather than late (postpone- purpose of recapturing value or proper disposal’’. The ment) process and product differentiation. closed-loop supply chain is a wider concept, and includes, Cannibalization is a problem for companies, which take besides reverse logistics, the return product process of back used products or new products returned from the end- acquisition, test, sort and disposition, including distribution customer to be returned to the market. In some cases the and marketing [25]. products are repacked and returned to the primary market Closed-loops consist of two supply chains: a forward at the same price. In other cases, the products are sold on a and a reverse chain, whereby the recovered product either secondary market, e.g. via a broker or an electronic auction re-enters the primary forward chain or is shunted to a (e-bay.com, lauritz.com, amazon.com).While performance secondary market. Examples of closed-loop supply chains measurements can be routine in the case of forward flows are Xerox-Europe [25], Kodak’s Single-Use Cameras [25], of products in the supply chain, return flows are rarely IBM’s spare parts [17], Caterpillar’s remanufacturing of measured in a systematic way. However, it is also impor- diesel engines [71] and the European Recycling Platform tant to set up performance measures for the reverse supply founded in 2002 by Braun, Electrolux, HP, and Sony [65]. chain, e.g., time from consumer complaint to replacement However, the return flow does not always go back to the of new product/repaired defect product at the customer origin, as noted by Bernon and Cullen [3]. In many cases, premise, time to pay-back the customer, quantity and collective schemes assume the responsibility of collecting quality of returns, causes of returns, costs involved in and disposing the returned products. Reverse logistics is returns, etc. The responsibility of the reverse supply chain 123 86 Logist. Res. (2009) 1:83–94 is often fragmented among different actors, and as a result, 3.1.3 Product stewardship no one takes overall responsibility. This often results in sub-optimization and inefficient solutions. Product stewardship is a product-centred approach to environmental protection. Product stewardship recognises that product manufacturers must take on responsibilities to 3.1.2 Triple bottom line reduce the ecological footprint of their products. By rethinking products and relationships with their supply The triple bottom line by Elkington or Dyllick and Hock- erts consists of the following three parts [14–16]: chain partners and end-users, some manufacturers can reduce costs, promote product and market innovation, and 1. Economy/profit: The economic dimension does not reduce the environmental impact of their products. refer only to profitability. At any time, economically Reducing use of toxic ingredients, reducing energy con- sustainable companies deliver cash flows that are sumption and material waste, designing for reuse and sufficient to maintain liquidity and offer a constant, recyclability, and developing take-back programs are some above-average return to the shareholders. of the opportunities to become better environmental stew- 2. Ecology/planet: In the past, the environmental dimen- ards of their products. sion has had the largest impact on sustainable devel- One example is the US-based Interface Carpets, a world opment, as an eco-system represents the ultimate profit leader in modular carpets, which has been committed to line. Dyllick and Hockerts define an ecologically becoming an environmentally sustainable company since sustainable company as a company that uses natural 1994. Interface’s sustainability efforts fall into three cate- resources that are consumed at a rate below natural gories: waste minimization, engineering changes, and reproduction or at a rate below the developments of product and process changes. Thus, Interface has imple- substitutes. Ecologically sustainable companies do not mented a closed-loop supply chain by leasing carpets, cause emissions that harm the environment, but are maintaining them, taking them back again, and reusing companies where managers limit the use of any type of them as raw materials for new carpets and fabrics. Fur- resources as necessary and minimise any waste as thermore, Interface has designed a system of eco-metrics much as possible. From a company point of view, it that allow them to measure the inputs and the waste outputs might also be clear, that the input into the companies’ per unit of finished product, so they can track their progress production systems are often natural resources, the and see, which areas to prioritise in the future [68]. output is not only a final product but also pollution and Another example is Apple, which is trying to eliminate other forms of waste. An ecologically sustainable all toxic chemicals from their new products. In 2006, Apple company can be characterised as a company that has became the first computer company to eliminate cathode- incorporated ecological considerations in its daily ray tubes (CRT). A CRT contains about 1.4 kg of lead. The operations as well as in its strategic planning. third-generation LCD-based iMac contains less than 1 g of 3. Equity/people: The ‘people’ dimension could best be lead. Since 2006 all Apple products worldwide have been characterised as the company’s social responsibility. compliant with EU’s RoHS Directive (Restrictions of The social dimension refers to a growth strategy Hazardous Substances in Electronics). In 2005 Apple without decreased job quality and it reflects internal as recycled 10% of the weight of their electronic waste. The well as external effects. According to Dyllick and target for 2010 is 30% [64]. Hockerts, socially sustainable companies increase the human capital of individual partners as well as 3.1.4 Green supply chain management advancing the societal capital of their communities, in which they operate [32]. These actions are in Srivastava [57] defines Green supply chain management as accordance with the company’s value system [67, 69]. ‘‘integrating environmental thinking into SCM, including The consideration of the 3P (Profit, Planet, People) product design, material sourcing and selection, manufac- within the SCM concept will lead to SSCM that can be turing processes, delivery of the final product to the con- defined as follows: Collaboration among supply chain sumers as well as end-of-life management of the product after its useful life’’. According to this definition green members within all activities, that concern the delivery of environmentally and socially responsible products and SCM essentially means that all activities related to the total services to the end customer, as well as attaining accept- supply chain should take into account environmental con- able profit and information in the supply chain [50]. A siderations as well as the more traditional economic con- sustainable supply chain as outlined in Table 1 includes the siderations. Green SCM focuses on two of the three Ps in inter-organisational dimension as well as the value-added the triple bottom line, namely profit and planet, while perspective, social and environmental issues. people issues are normally not included in this concept. 123 Logist. Res. (2009) 1:83–94 87 Table 1 A sustainable supply chain Supply chain stages Triple bottom line dimensions Environment/planet Equity/people Economy/profit Supply of raw Supplier evaluation and selection based on Supplier evaluation and Transport savings materials and environmental profile, e.g. ISO 14000 selection based on social Costs of supplier evaluation and monitoring components profile Consolidation of shipments Costs of internal and external audits of Training and education of Sharing of information suppliers’ compliance with codes of logistics employees conduct Use of eco-efficient transport modes Ensuring codes of conduct at Improved quality of products Reuse of transport packaging materials suppliers, e.g. safe working Reduced risk of damage to brand Cooperation with suppliers to reduce conditions, no child labour, environmental impacts and no abuse of union rights Production Elimination of waste and overuse of Automation of physical heavy Improved working conditions may increase resources in the production process work productivity Environmentally friendly packaging Minimization of specialised, Savings through resource minimization repeating work Green design and manufacturing Economical gains through new product Prevention of work accidents development Eco-efficient production, e.g. waste from one company becomes input to another Warehouse layout, that Costs of certification, documentation and minimise picking distances reporting Replace hazardous materials and processes In-service training of Recycling materials from used products employees Improved staff recruitment and retention Job rotation and job enrichment Distribution and Choice of environmentally friendly Reduced traffic congestion Savings due to consolidation of shipments to reverse logistics distribution channels customers Education in energy saving Choice of environmentally friendly types driving Savings due to increased capacity utilization of transport of transport modes Automation of loading and Substitute information technology for unloading Higher prices for eco-friendly products physical transport Respecting driving and Savings through increased reuse of materials Design effective return systems resting time rules and components Reuse packaging materials Adapted from [50, 57] Preuss [48] suggests five steps to achieving a greener management and evaluation and analysis of the products supply chain. First, the buying company should focus on and processes. The management evaluation includes the the products to be purchased and require its suppliers to introduction of an ecological management system, the comply with recognised international codes of conduct. assessment of the ecological performance and an eco-audit. Second, the buying company should be concerned about The product assessment includes the ecological aspects of the manufacturing processes used by the supply chain, e.g. product norms, eco-labelling and life-cycle-assessment. A by requiring accreditation to an environmental standard number of different standards apply within these areas, e.g. ISO 14001, 14004, 19011, 14015, 14031, ISO guide 64, such as ISO 14001. Third, the buying company should include environmental criteria in its assessment of suppli- 14020, 14021, 14040 and 14042 (www.iso.com). However, ers. Fourth, supply management should be involved in companies are not obliged to introduce the ISO standards; internal environmental protection initiatives, e.g. design for this is one of the main reasons ISO 14000 is yet to be environmental programs or establishing environmental widely implemented [69]. management systems. Finally, supply chain managers should be responsible for some downstream activities, such 3.1.5 CSR in supply chains as product recovery, recycling and environmentally friendly disposal of end-of-life products. CSR is based on the idea that a company may be held The ISO 14000 initiative was launched in 1993 and can socially and ethically responsible for a large range of be differentiated into two groups: evaluation of the stakeholders such as customers, employees, governments, 123 88 Logist. Res. (2009) 1:83–94 NGOs, investors, local communities, unions, and media national and cultural borders has given rise to stories about [34, 61]. multinational companies’ irresponsible practices, such as As the nature of many business relations is changing violation of union rights, use of child labour, dangerous from companies manufacturing goods within vertically working conditions, race and gender discrimination, etc. integrated facilities in national operations to companies Well-known examples from the media are Nike, Gap, engaging in supply chains and contract-based manufactur- H&M, Wal-Mart, and Mattel [19]. ing across national borders, the concept of CSR is likewise By now, many multinational companies have responded transforming. CSR is no longer the individual company’s to the pressure and expectations from stakeholders by domain; increasingly, it encompasses the entire supply defining, developing and implementing systems and pro- chain. In other words, multinational companies are not only cedures to ensure that their suppliers comply with social expected to behave in a socially responsible way inside the and environmental standards. Although firms choose their company. They are also held responsible for environmental own approach to systematising the CSR efforts in supply and labour practices of their global trading partners such as chains, many studies reveal that the most visible element in suppliers, third party logistics providers, and intermediaries the approach of large multinational companies is the over which they have no ownership [31, 39, 51]. application of corporate codes of conduct. The number of Applications of CSR to the supply chain have not a long codes of conduct has grown spectacularly since the early history. According to Murphy and Poist [44] the logistics 1990s [28, 31, 61, 62]. Levi Strauss & Co.’s [70] code of discipline appears to have been more of a laggard with conduct labelled ‘‘Global Sourcing and Operating Guide- respect to social responsibility considerations. However, lines’’ from 1991 was the first of its kind in the interna- ethical considerations are increasingly becoming important tional apparel industry. to the logistics discipline since contemporary logistics and In short, a code of conduct is a document stating a SCM emphasise strategic outsourcing, buyer–supplier number of social and environmental standards and princi- relationships, and information sharing. ples that a firm’s suppliers are expected to fulfil [31, 40, The calls for CSR in supply chains should particularly 54]. Codes of conduct are increasingly introduced in con- be seen in light of the fact that a large part of global trade is tracts between a buyer company and its suppliers [61]. conducted through systems of governance which link firms They are typically based on the values with which the together in various sourcing and contracting arrangements individual firm wishes to be associated, and its principles [20, 56]. The term ‘governance’ implies that some key are often derived from local legislation and international actors in the supply chain—often large multinational cor- conventions, standards, and principles, such as UN’s Glo- porations—take responsibility for the inter-firm division of bal Compact, the Global Sullivan Principles, Social labour and specific participants’ capacity to upgrade their Accountability 8000, ISO 14001, Global Reporting Initia- activities [21]. Thus, they are able to control production tive, and the ILO Declaration on Fundamental Principles over large distances without exercising ownership [31]. and Rights at Work. In many large multinational compa- Gereffi [20, 21] argues that these key actors are typically nies, the codes are accompanied by elaborate managerial located in developed countries and include not only mul- systems for formulating, enforcing and revising the stan- tinational manufacturers, but also large retailers and brand- dards outlined in the codes of conduct. However, empirical name firms. The power held by these corporations stem evidence has shown that many multinational corporations from their market power and control over key resources have struggled with the issue of how to implement their needed in the supply chains, of which they are part. Given codes of conduct in their global supply chains [38]. Rec- their power, these actors play a significant role in speci- ognising this, the ILO has performed an in-depth study of fying what should be produced, how and by whom [20]. the management systems and processes used to implement The corporations might also provide technical support to Codes of Conduct in the sports footwear, apparel and retail their suppliers to enable them to achieve the required sectors [40]. performance. Several empirical studies have been conducted to The pressure exerted on multinational companies comes investigate how firms work with CSR-related issues in their from both internal and external stakeholders, who show supply chains [10, 61]. Most of these studies are not con- an increasing concern for the environmental and social fined to only large multinational corporations, but also conditions at offshore production locations, particularly in include small- and medium-sized enterprises (SMEs). developing countries [1, 33, 39, 61, 62]. This concern is Carter and Jennings [9] examined the impact of purchasing largely a result of an escalation of multi-media communi- social responsibility on supplier performance, and ways of cation technology, which makes it more difficult for overcoming barriers. Maloni and Brown [39] developed a companies to hide their own or their suppliers’ unethical comprehensive framework of supply chain CSR in the food practices. The escalating flow of information across industry. Mamic [40] presented a summary of an in-depth 123 Logist. Res. (2009) 1:83–94 89 study embarked upon by ILO of the management systems used to understand the relative amount of damage, which a and processes used to implement codes of conduct in the product or service causes to the environment [24]. sports footwear, apparel and retail sectors. Welford Large UK-based retailing companies such as Tesco, examined the written CSR policies of companies in 15 Marks & Spencer, Boots, and Sainsbury have already countries in Europe, North America and Asia [61]. started to label some of their products with carbon footprint Pedersen and Andersen [46] analyse how the interest of related information. Brand-owners, such as Walkers (snack the actors in the supply chain can be aligned with the terms food), Innocent Drinks (fruit smoothies) and Botanics of the codes. IKEA is used as a ‘‘best case’’ example to (shampoos) have measured their products’ carbon impact illustrate how codes of conduct can be effectively managed and committed themselves to reduce the carbon footprint in the supply chain. of their products. The British and Austrian governments However, despite many companies’ efforts to engage in are considering mandatory carbon footprint information CSR-related activities in their supply chains, there is often labelling on all products. Another example is Timberland, a gap between the expressed ethical standards and the manufacturer of the ikonic walking shoes, which has actual conditions in the supplier company. In other words, committed to becoming a carbon neutral enterprise by 2010 we might argue that so far only a limited number of mul- by using more renewable energy, incorporating more tinational corporations ‘‘walk the talk’’ of CSR in their recycled and renewable materials, generating less waste, global supply chains [12, 51]. manufacturing with fewer chemicals, and planting more trees [68]. The Danish–Swedish dairy giant Arla Foods has 3.1.6 Carbon footprints in the supply chain decided to reduce their global CO emissions from food production, transport and packaging by 25% before 2020. The European Commission has recently announced that When the British Standard for CO emission is accepted, member states are to reduce their emissions of greenhouse Arla Foods will start to affix a CO label on their products gases by at least 20% before 2020 as compared to 1990 in large UK retail stores [63]. levels, the reduction possibly reaching 30% if other industrialised countries, such as USA, China and India, commit themselves to a similar effort in connection with 4 How does SCM address the sustainable agenda? the coming climate conference in Copenhagen in 2009. This decision has an impact for all European Union 4.1 Evaluation of the theoretical findings member states as well as all included stakeholder groups such as globally organised companies, that have off-shored The evaluation as shown in Table 2 is based on the a lot of their production capacities to low-cost countries authors’ interpretation of the literature reviews and expe- and have set up long-linked inter-modal transport chains in riences from previous research in this topic. This reveals order to serve their markets. that the level of discussing of sustainability in SCM liter- An initial step towards the reduction of greenhouse gas ature is rather sobering. There is a lack of consensus and emissions has been the introduction of the carbon footprint coherence in the literature as regards definitions, scope and as a measure, which is ‘‘the total amount of carbon dioxide strategic importance of the concepts. Reverse logistics, for (CO ) and other greenhouse gases emitted over the entire example, is often considered as an operational/tactical lifecycle of a product or service’’ [21]. The carbon foot- approach to dealing with the return flows of goods, while print is typically measured in tons of CO and it can be CSR and Triple Bottom Line do not only encompass Table 2 Extent to which current activities in supply chain research addresses the sustainable agenda Stage in supply chain: streams of SCM research Design Sourcing Production Distribution Consumption/Use Disposal Reverse logistics ” s ”” dd Triple bottom line s ” dd ”” Product stewardship d ”” ” dd Green SCM dd d d ”” Corporate social responsibility sd ”” d ” Carbon footprint in supply chains s ” dd ”” s: Very limited if any consideration d: Comprehensively addressed ”: Partially or only more recently considered 123 90 Logist. Res. (2009) 1:83–94 supply chain activities, but also all business processes at products are designed for the environment by eliminating the corporate level. Product Stewardship is a product- hazardous or harmful materials and making recycling and centreed approach related to environmental protection disposal easy [57]; the current systems and solutions can while Green SCM includes all supply chain activities and already cope with these circumstances. takes into account both environmental considerations and The production process is organised to reduce waste of more traditional economic considerations. Carbon Foot- materials, emission of gases and polluted water, and min- print focuses on the emission of greenhouse gases during imise the consumption of non-renewable energy resources. the entire lifecycle of a product or service, but excludes Transportation and distribution is organised to minimise other environmental and social issues. The identified gaps total mileage, maximise capacity utilization by consolida- reflect the focal areas of the different streams of SCM tion of shipments, and to use environmentally friendly research (Table 2). transport modes when possible; this is seen as coherent It remains clear, that although the sustainable agenda with the logic of efficient distribution systems. The reverse has taken off within SCM, it has originated within different logistics system is organised to maximise the value crea- streams of research. Of the six streams of research dis- tion of the returned products, whether it is end-of-life cussed above, only one is unique to SCM, namely reverse products that are recycled or remanufactured or it is com- logistics. The other five have emerged elsewhere, but been mercial returns, which are taken back to the market as soon brought into the context of SCM. as possible [30]. An integrated strategy is thus a strategy where the focus 4.2 How could SCM deal with sustainability? has changed to include not only the traditional costs and A proposition of three approaches service considerations, but also the social and environ- mental impacts. Thus, the responsibility of greening the The intersection of SCM and sustainability can be under- supply rests on everyone in the supply chain; from design stood by three different approaches: of products, supply of materials and components, through production processes and delivery to the customers, and • An integrated strategy, where sustainability is fully finally the return recycling processes [27]. The measure- consistent with SCM ment of supply chain efficiency—such as costs, depend- • An alignment strategy, where sustainability is comple- ability, quality, reliability and speed—can be captured with mentary to the traditional SCM focus on costs and measures of environmental and social impacts. service By integrating social and environmental objectives and • A replacement strategy, where the traditional SCM performance criteria into the strategic and operational concept is replaced by an alternative approach to cope decisions in their supply chains, the firms can make the with the environmental and social aspects. appropriate balance between costs, service and environ- It should be noted that the nature of the argument mental and social impacts. amongst these three options varies. First, the degree to which SCM is expected to change increases gradually. 4.2.2 An alignment sustainability strategy for SCM Second, whilst the first two assume that current SCM the- ories and practice are part of the solution, the third is of a Following an alignment strategy, economic, social and more radical nature and implies that SCM is actually environmental concerns will be balanced against each amongst the root causes of the problems of the sustainable other. They are considered as complementary, meaning agenda. that they all have to be taken into account simultaneously, when companies are making important decisions regarding 4.2.1 An integrated sustainability strategy for SCM the design or operations of their products and supply chains. The triple-bottom line approach is an example of This is the approach taken in the research streams: reverse an alignment strategy [15], and trade-offs between these logistics, product stewardship and green SCM. Therefore, three dimensions are made to meet the desired output of a sustainability is just another characteristic added to the particular process. SCM concept. The use of current theory and practice The same is true for CSR [39]. The main difference should be enhanced to address and solve the sustainable between an aligned strategy and an integrated strategy is agenda. On the supply side, suppliers are chosen, devel- that the overall objective in the integrated strategy is to oped and monitored based on their compliance with increase value creation to customers. If the customers ask international codes of conduct, and this provides sufficient for environmental and social concerns these are integrated comfort to industrial buyers, who want to know about the in the planning, design and operations decisions. If not, the origin of raw material and components [39, 40]. The company will comply with existing laws and regulations. 123 Logist. Res. (2009) 1:83–94 91 An aligned SCM strategy puts equal weight on profit, Second, carbon footprint is only one aspect of the envi- people and planet, irrespective of the customers’ require- ronmental impacts of a product. Other aspects are related to ments. Social and environmental issues are part of the water waste, air pollution, energy use, use of raw materials, company’s mission statement and the company accounts etc. Third, the implication of focusing on the carbon for all three aspects in its annual reports. On some occa- footprint may be a major change in the design of the global sions, measures such as speed and reliability must be supply chain in terms of location of production, choice of replaced by, e.g. ‘energy use’, ‘material use’, carbon distribution channel and transport mode, selection of sup- footprint’ and ‘waste/landfill’. An aligned strategy focuses pliers, etc. on co-operation and competence building in the entire One possible consequence might be a local-to-local supply chain. It is not enough to claim and control that the approach instead of the current global-to-local approach. suppliers comply with the focal company’s codes of con- This is actually taking place in various countries; take for duct. It is also necessary to co-operate with the suppliers example the ‘farmers markets’ in the UK that are now and help them to improve the working and environment competing with supermarkets. Local markets squares in conditions. towns and cities around UK regularly (weekly or every fortnight) arrange a sales outlet for local farmers and food 4.2.3 A replacement sustainability strategy for SCM producers. Such community efforts focus heavily on the sustainable agenda. It could be argued that the full implementation of the idea First, the food must be produced locally, i.e. challenging of SCM is contradictory to sustainability. If, for example, the distance and volume of global supply chains. Second, an agile supply chain design can increase the responsive- packaging is at a minimum, where the extensive use of ness to meet customer requirements, this may happen at the packaging is also due to long distances, dispersed respon- cost of resources (inventories, warehouses) and CO sibilities and complex liability in the global supply chain. emissions (e.g. by use of airfreight from China to Europe Third, products are fresh and preferably organically grown, instead of container transport). i.e. challenging the artificial maturation process during The main objective of SCM is to maximise customer long-distance transport in refrigerated ships and trucks. This value in the most effective and efficient ways possible. In is seen as complementary to local shops, and to the business order to survive in the global competition, companies prosperity of the local community; farmers and producers extend their supply chains to further distant locations in must operate within a 30–50 mile radius from the market order to reap the benefits of differences in labour costs and outlet [67]. Should global supply chains now turn local as take advantage of efficient transportation networks. Out- regards other products? Pearce identifies thereby how dif- sourcing and off-shoring to the Far East, South America ficult it is—from a consumer’s perspective—to act in an and Eastern Europe has increased dramatically during the ‘environmental-correct’ manner. He calls some of the re- last decade. This shift has increased the distance between localization strategies also patriotism-strategies and shows production and consumption considerably with negative that in some cases it is better to buy green beans from Kenia results on the use of non-renewable energy resources and instead from England as most of the CO -emissions stem emission of greenhouse gases. From this perspective, the not from transport but from the production process [45]. success of the extended enterprise is positive for the rev- enues of the companies, but negative for the environment. Therefore, a call for a paradigm shift is needed. Instead 5 Learnings and implications of continuing to squeeze every penny out of the total costs of products, firms have to reconsider, how and where they 5.1 Conclusions produce their products, and customers have to reconsider their decision criteria for buying the products and the way There is no doubt that social and environmental issues are they dispose them after use. A possible way to change the becoming more important on the business agenda. The traditional SCM approach could be to measure the carbon clear signals of global warming and the devastating effects footprint of the product throughout the supply chain over on climate and life on earth cannot be denied anymore. The the product’s lifecycle, including the disposal and recycling international society will, in the future, take dramatic [24]. A label on the product indicating the total amount of precautions against emission of greenhouse gases and other CO per unit will tell the customer how green the supply environmentally damaging actions. Companies have to chain of the product has been. revisit their supply chain strategies in the light of envi- However, calculating the carbon footprint of a product ronmental concerns. through the supply chain is not an easy task. First, a global In order to answer the research question, the relevant standard for measuring carbon footprint is still lacking. literature was screened, a topical review developed, and 123 92 Logist. Res. (2009) 1:83–94 theoretical findings on how the literature discusses the issue operations across the supply chain. The complex interac- at hand was assessed. Based on these findings three different tion between economic concerns and social and environ- strategies for dealing with sustainability from a supply chain mental issues have to be considered. Sustainability moves perspective were proposed: an integrated strategy, an beyond current practice. Companies, legislators and alignment strategy, and a replacement strategy. This means researchers have to address new issues, policies and that sustainability will either be a vivid part of SCM, an approaches to meet this challenge. add-on to SCM or a complete re-definition of SCM. SSCM includes organisations’ activities upstream as Reverse logistics, green SCM and product stewardship well as downstream in the supply chain. An increased focus is related to the integrated strategy. Triple bottom line and on sustainability leads to new ways of collaboration with CSR are mainly related to the alignment strategy, and suppliers, customers and intermediaries in the supply finally the carbon footprint is related to the replacement chain, including environmental audits, technical and strategy. Still, the literature discusses the topics from a training assistance to critical suppliers, industrial agree- micro-point of view, but not from a macro-point of view. It ments of codes of conduct, etc. Kova ´cs demonstrates in a may be possible that sustainability may be an external cross-industrial study of 16 Finnish trans-national corpo- factor impacting the design of supply chains and their rations that supply chains can be seen as mediators of operations. It is then likely that a contingency approach is industry regulation across industry and regional boundaries the most prosperous way, assuming that there are differ- [36]. ences between industries, products, and countries as Environmental issues should be integrated in all parts of regards to the most appropriate way to handle sustainability corporate life, including supplier auditing and assessing, in a supply chain. Further research is therefore necessary to product design, manufacturing, distribution, and end-of-life determine the contextual factors for a sustainable supply disposal. Handfield et al. [27] emphasise the importance of chain strategy. environmental goals that are specific and measurable. Each We were also able to show that there is no single product/process should have its own set of environmental understanding of sustainability. It is a multi-facetted term, goals, depending on its potential impact on the environ- which can include many layers ranging from operative ment. SSCM must consider the entire lifecycle of the reverse logistics to strategic sustainability on a corporate product through the supply chain. Cradle-to-cradle analy- level (CSR). From a SCM point of view, we identified a ses must be performed to calculate the total costs from raw certain gap in the sustainability discussion, which refers to materials to final disposal. the network dimension of SCM. Sustainability in all facets The relationship between the concept SSCM and eco- is typically discussed from the single company, but not nomic performance is not well documented either in research or in practice. In other words, ‘‘Does it pay to be from a chain perspective. However, recent discussions show that sustainable cooperation can positively affect the sustainable? Research has yielded mixed findings regarding total supply chain [49]. the impact of CSR on firm performance. Carter [8] suggests that a possible explanation for these mixed findings is that 5.2 Managerial and research implications this relationship is likely mediated by one or more key variables. He introduces organisational learning as such a There are several drivers for companies to ‘go sustainable’. mediating variable. First, international regulations force companies to at least The current global financial and economic crisis raises comply with the new environmental standards set forward the question whether companies can afford to maintain in terms of limits of toxins in the products (RoHS direc- their commitment to sustainability. When companies are tive), restrictions on air and water pollution from produc- facing tough times through decreasing demand and lower tion, producer’s responsibility for environmentally friendly prices on their products and services, social and environ- disposal of end-of-life products (WEEE directive), etc. mental issues in the supply chain appear to be an attractive Second, consumers are more concerned about the carbon area for cutting costs. However, an alternative approach is footprint of products, especially food products, and of to align sustainability efforts with cost-saving efforts. An social and environmental impacts of production in devel- example is Wal-Mart, which recently announced tougher oping countries. Third, ‘‘sustaining’’ the supply chain can measures to improve social and environmental standards in reduce the operating costs and create value to the products. factories supplying the large American retail company, Fourth, shareholders and investors are demanding that including factory’s gas emissions, wastewater discharges, companies are socially responsible, because bad press can and toxic and hazardous waste. The agreement will be damage share prices. phased in, beginning with suppliers in China in January These drivers put a pressure on companies to explore 2009 and expand to other suppliers worldwide by 2011 new business models to improve the sustainability of according to a company statement [66]. An international 123 Logist. Res. (2009) 1:83–94 93 15. Elkington J (1998) Cannibals with forks. The triple bottom line of standard for measuring carbon footprint in supply chains is 21st century business. New Society Publishers still lacking. 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Journal

Logistics ResearchSpringer Journals

Published: Jun 9, 2009

References