A Framework Towards a Sustainable Development in ...

A Framework Towards a Sustainable Development in Supply Chain Marina Bouzon Universidade Federal de Santa Catarina, Brazil ([email protected]) Francielly Hedler Staudt Universidade Federal de Santa Catarina, Brazil ([email protected]) Carlos Manuel Taboada Rodriguez Universidade Federal de Santa Catarina, Brazil ([email protected]) João Carlos Espíndola Ferreira Universidade Federal de Santa Catarina, Brazil ([email protected])

Abstract In face of environmental and social demands, companies have turn their focus to solutions that minimize environmental impacts and, at the same time, are economically and socially e supply chain management model. Thus, this paper proposes a framework for sustainable supply chain management (SSCM), with the ultimate goal of enabling the sustainable development selfactualization in the chain. Yet, this article helps to understand the current sustainable supply chain concept and which resources specifically enable the management and establishment of the chain. By using the concepts of the SSCM, like governance program and chain collaboration, companies may reach collaborative advantages in triple bottom line of sustainability. Key words: Sustainable Supply Chain, Supply Chain Management, Sustainability.

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1: INTRODUCTION There is significant evidence of the increase in the number of costumers concerned with understanding the conditions under which products are produced, and their desire that the products are produced in a sustainable manner (Wolf, 2011). Thus, supply chain (SC) managers become concerned not only about basic criteria for evaluating components and materials (e.g. cost, quality, and delivery), but also with a range of factors that includes the upstream and downstream flow chain. One of the highlighted factors is related to sustainable development, focusing not only at a company, but also partners in the supply chain (Vachon & Klassen, 2006). Thus, the focus of society and companies is directed towards solutions that reduce environmental and social impacts, and that are at the same time economically sustainable. Given this context, leading companies in the chain, usually called label companies, have been assessed based on social and environmental aspects of all its supply chain members, not only the most strategic. This has lead to the need to assess how sustainable supply chain management is performed. In view of the issues pointed out above, this paper proposes a framework for the management of a Sustainable Supply Chain (SSC). The model comprises the requirements found in the literature for the formation and integration of the SSC, as well as aspects related to its management. To this end, section 2 presents the proposed methodology, and subsequently a literature review on sustainability and the SSC concept is carried out. Section 5 presents researches on SSC frameworks, and section 6 describes the proposed model. The paper ends with some conclusions, as well as recommendations of further research opportunities in the area.

2: METHODOLOGY A qualitative approach has been adopted in this study, as we aim to develop and provide a conceptual theoretical model of Sustainable Supply Chain Management (SSCM) that enables future empirical testing and sophistication. This research is classified as a theoretical and conceptual development, because it seeks to propose a management structure for the subject. Although various authors have made contributions to this area, its theoretical development can still be considered to be relatively unformed. There is little in the literature that offers a holistic 9es Rencontres Internationales de la Recherche en Logistique

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management approach in SSC area. For developing such a framework, this research has been undertaken using a systematic literature review, in order to identify the key dimensions in managing SSC. Figure 1 illustrates that the research considered various literature sources such as journal and conference papers. Also, while reading the papers, other publications cited in texts as reference works on the subject were identified, and therefore were included in the analysis. Knowledge Fields Electronic Databases (journals, conference proceedings) Research Method

Keywords Literature Review

Sustainability

SSC and Governance

Review of SSC Frameworks

SSC deﬁni on Work Structure

Analysis SSC Management Guidelines Framework for Sustainable Supply Chain Management

Fig. 1 Research methodology and paper structure. The framework developed in this paper is intended to outline the purpose of the SSCM, its operational structure and the underlying principles that support the SSCM.

3: SUSTAINABILITY The concept of sustainable development was published in 1987 by the World Commission on Environment and Development, the Brundtland Report, "addressing the needs of present generation without compromising the ability to meet the needs of future generations" (WCED, 1987). In the business context, this means that business activities should protect natural resources 9es Rencontres Internationales de la Recherche en Logistique

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and the environment, and serve the common good of society reaching economic goals. This definition captures the three closely related dimensions - social, environmental, and economic the triple bottom line framework for sustainability (Elkington, 1998; Wu & Pagell, 2011), as shown in figure 2.

Fig. 2 Sustainable triple bottom line. Source: Adapted from Xu & Cong (2011). The interconnections of the dimensions described in figure 2 as strategic and organizational culture, transparency and environmental profits were included by Xu & Cong (2011) to the original model of the triple bottom line, when evaluating the performance of the three dimensions. With regard to the interfaces of the economic issue, recently the number of companies that think that sustainability and profitability are not mutually exclusive concepts is growing (Büyüközkan & Berkol, 2011). In the SC perspective, it is stated that a sustainable company does not mean that its chain is also sustainable. Therefore, the emphasis on the chain is a step towards a wider adoption and development of sustainability, since SC encompasses the product from the processing of its raw materials to customer delivery, including issues of product design, end of life processes, among others (Büyüközkan & Berkol, 2011).


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4: SUSTAINABLE SUPPLY CHAIN AND GOVERNANCE The SC concept has evolved over the past decades, broadening its scope, including issues related to sustainable development, culminating in the concept of SSC. Table 1 summarizes the evolution of this concept in chronological order over the past decades.

Table 1 - Evolution of the Sustainable Supply Chain concept. Decade

Events

1960's and 1970's Companies said they did not cause negative impacts to the environment (Georgiadis and Besiou 2008) Proliferation of corporate social responsibility (especially in the 1970's) (Carroll 1999) 1980's

Beginning of attention on environmental issues related to logistics and evolution of this emphasis only in transportation (Chunguang et al. 2008) Publication of the Brundtland Report (WCED, 1987) Change from local optimization to chain optimization (Linton et al. 2007)

1990's

Environmental impact drives green logistics (Chunguang et al. 2008) The concept of Green SC is defined (Srivastava 2007 and Zhou 2009) CLM publishes its first definition of reverse logistics (Brito and Dekker 2003)

2000's

Logistics is seen as a competitive tool (Rutner and Langley Jr 2000) Early work is published from 2002 covering the triple bottom line sustainability in SC (Seuring and Müller 2008)

2010's

Sustainability is included into business management (Wittstruck and Teuteberg 2010) Research works are published on the integration and management of the SSC. The concept of risk management is included in the SSC (Wolf 2011)

According to Seuring & Müller (2008), SSC management is currently defined as managing the flow of material, information and capital as well as cooperation between companies along the chain, taking into account the objectives of the three dimensions of sustainable development, which are derived from the needs of customers and stakeholders. Wolf (2011) discusses the integration of the SSC, stating that its goal is to achieve sustained flows of products, services, information, and capital to deliver maximum value to all stakeholders. Xu & Cong (2011) define SSC management as the systemic coordination of traditional business process, transparent integration, environmental profits, strategy and organizational culture, for the purpose of improving the long-term performance of individual companies and its supply chains and


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achievements of an organiz order to achieve the goal of sustainability considering the three conditions (social, economic and environmental) and satisfying the pressures imposed by the main chain agents (government, customers, and other stakeholders), the company should expand its vision and role. Seuring & Müller (2008) argue that the main strategies used by companies to meet the needs of its stakeholders are sustainable products and sustainable supplier development including risk management. In order to enable product management across many companies, it was found that companies with the largest key assets began to play the role of SC coordinators. According to Seuring & Müller (2008), the leading company in the chain is characterized by: (i) it regulates or steers the SC, (ii) it has direct contact with the customer, (iii) it designs the product or service provided. According to Jiang (2009), the inclusion of social and environmental aspects in the chain decisions has changed the governance models, resulting in the involvement of all stakeholders in decision making. Vurro et al. (2009) cite several studies of processes in which sustainability is integrated and managed along the SC, and ascertain that the best performances take place in integrated approaches that are based on long-term cooperation, knowledge sharing and skills development with members both upstream and downstream the chain. Therefore, we may say that the "common goal" created by sustainability can lead to a vision shared by all members of the SC network (Vermeulen & Seuring 2009).

5: SSC FRAMEWORKS Alternative taxonomies towards achieving a SSC have been proposed in other researches. The purpose of this section is to show some of the latest models, and the structure proposed by the authors will be presented in the next section. Initially, there is the work of Wittstruck & Teuteberg (2010), who sought to highlight actors which influence a company in the chain to become sustainable. Those authors claim that the strategy for achieving a SSC is based on the standards and guidelines imposed by the law. In addition, the company should be concerned with risk management and trends. From this 9es Rencontres Internationales de la Recherche en Logistique

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foundation the three pillars of sustainability rise: social, economic and environmental. The company's culture and organization must be aligned with the pillars. But since there are risks posed by the market, the company must align information technology with the business in order to enable a SSC, which has as an important influential factor the environmental risks. According to Büyüközkan & Berkol (2011), in order to attain a SSC, the companies involved need to meet some basic needs targeted by the sustainability pillar: Economic: total cost, economic benefit, equity use and inventory management; Environmental: fuel usage, emissions and waste created; Social: health and security, laws and regulations. One of the requirements for achieving a SSC is the integration of the links. Thus, the work of Wolf (2011) identifies the most important factors that enable or prevent the integration of sustainability in SCM. Figure 3 shows the required skills of companies to achieve sustainable performance.

Fig. 3 SSC Management Integration. Source: Adapted from Wolf (2011). Similarly, Peters et al. (2011), in the context of pro-active inter-organizational strategies in SSC, identified the resources that allow the establishment of voluntary sustainability initiatives, which are: integration with external stakeholders, cross-functional integration, managing business units with low coupling, SC implementation, improvement process, and cultural structure.


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To achieve sustainable development, Walsh (2011) presents a model that combines Maslow's hierarchy of needs with Porter's value chain. As shown in figure 4, the success of sustainable development is based on the combination of policies, planning and management in governance institutions. In addition, the three pillars of sustainable development are represented by one or more primary activities. According to Walsh (2011), only when sustainable development (socially, economically, and environmentally) is achieved society has reached the stage of being selfactualized.

Fig. 4 Sustainable development. Source: Walsh (2011). This concept of sustainable development will be used in the proposed framework described the next section.

6:

PROPOSAL

OF

A

SUSTAINABLE

SUPPLY

CHAIN

MANAGEMENT

FRAMEWORK This section seeks to describe a framework of sustainability management in the SC, which is shown in figure 5. In the lower part of figure 5 the foundation for the implementation and upholding of the sustainable chain is represented.


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The first basis to be built in order to attain a SSC is the inclusion of sustainability aspects in the culture of the companies in the chain, from the individual principles of its employees to the commitment of top management. The second basis for the management of the SSC is the integration between all links, with the sharing of responsibilities, information and risks, focusing on meeting the needs of the stakeholders in the chain. For best results, analysis of environmental, social and economic impacts can be prepared under the control of a governance program. In this program, the most influential company in the SC analyzes its upstream and downstream sides, and determine which companies and processes have greater impact on the deployment of the triple bottom line of sustainability in order to build up future action plans. The governance program should also generate performance measures not only local, but along the chain regarding the implementation and upholding of sustainability. In addition to this alignment of strategies, the integration through governance also contributes to risk reduction in the chain. Risk management along the chain must include all suppliers, not only the strategic ones.

Performance Target

Sustainable Development in SC

Sustainable Supply Chain Structure

Performance Measurement Sustainable Supply Chain Foundation

Governance Program Transparency and Collaboration Culture

Fig. 5 Framework to Manage Sustainable Supply Chain.


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Once the foundation is completed, the three pillars for the triple bottom line will guide the actions to support sustainable development in the SC, ensuring the effectiveness of results in the social, environmental and economic aspects. In this sense, collaborative activities can be carried out, including frequent planning meetings with members of the chain regarding environmental and social issues, sharing knowledge about the development of greener products or modification of processes, and reduction of causes that damage the environment (e.g., residues) in logistic processes. These activities seek to provide benefits to all participants in the chain, being an evolution of competitive advantages in order to reach the objective of "sustainable development" in the SC. Thus, the structure must ensure that the discrepancies are balanced along the chain among the environmental, social and economic performances.

7: CONCLUSION Recently the problems of environmental pollution from products and processes have been recognized as social problems, causing changes in the government policies and in the population. Sustainability has been seen as a way to protect the rich biodiversity that is left to humans while considering the welfare of the population and the involved economic aspects to enable this protection. Based on the triple bottom line, the Sustainable Supply Chain (SSC) provides the means to overcome the pressures imposed by the population, government and other stakeholders on companies to pursue sustainability. In this sense, this paper provided a historical evolution of SSC concept over the past decades. Currently, we may say that the goal of the SSC is to achieve flows of products, services, information, and capital to provide the maximum sustainable value for all business stakeholders. However, it is important to note that often an environmentally correct decision does not necessarily lead to a short-term economic return for the company. The way companies make these decisions depends on its long-term commitment and goals. Especially with regard to the economic


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aspect, it frequently prevents sustainable decisions, resulting in an inadequate practical implementation from the environmental standpoint. In order to force sustainable awareness and facilitate its development into SSC organizations, governments have made laws for preserving the environment that require the company to give the correct consumption culture is necessary, which should be inclined towards "environmentally friendly" products. In this context, this paper presented a framework for managing sustainable development within the SC, and it was based on publications on topics related to the SSC and other recent frameworks already published. The proposed structure seeks to provide: (a) performance effectiveness of green SC; (b) a socially responsible SC; and (c) an economically competitive SC, with the ultimate goal of enabling the sustainable development self-actualization in the chain. Future work on the subject may study the combination and sequencing of activities, as well as the fundamental capabilities to establish sustainable initiatives in the context of SC. Another suggestion is to plan a form of implementation of sustainable development in the SC, detailing a step by step method to achieve the management framework of this paper. In addition, a system of sustainable chain performance measurement can be developed, creating indicators based on the proposed framework.

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Chunguang, Q.; Xiaojuan, C.; Kexi, W. ; Pan; P. (2008) Research on Green Logistics and Sustainable Development. International Conference on Information Management, Innovation Management and Industrial Engineering (ICIII 2008), Taipei, Taiwan. Elkington, J. (1998), Cannibals With Forks - The Triple Bottom Line of 21st Century Business. Consortium Book Sales & Dist (1st edition). Georgiadis, P. ; Besiou, M. (2008) Sustainability in electrical and electronic equipment closedloop supply chains: A System Dynamics approach, Journal of Cleaner Production, Vol. 16, Nº 15, pp. 1665-1678. Jiang, B. (2009) Implementing Supplier Codes of Conduct in Global Supply Chains: Process Explanations from Theoretic and Empirical Perspectives, Journal of Business Ethics, Vol. 85, Nº 1, pp. 77 92. Linton, J. ; Klassen, R. ; Jayaraman, V. (2007) Sustainable supply chains: An introduction, Journal of Operations Management, Vol. 25, Nº 6, pp.1075-1082. Peters, N.J. ; Hofstetter, J.S. ; Hoffmann, V.H. (2011) Institutional entrepreneurship capabilities for interorganizational sustainable supply chain strategies, The International Journal of Logistics Management, Vol. 22, Nº 1, pp. 52-86. Rutner, S.M.; Langley, Jr C.J. (2000) Logistics Value - definition, process and measurement, The International Journal of Logistics Management, Vol. 11, Nº 2, pp. 73-82. Seuring, S. ; Müller, M. (2008) From a literature review to a conceptual framework for sustainable supply chain management, Journal of Cleaner Production, Vol. 16, Nº 15, pp. 16991710. Srivastava, S. K. (2007) Green supply-chain management: A state-of-the-art literature review, International Journal of Management Reviews, Vol. 9, Nº 1, pp. 53-80. Vachon, S.; Klassen; R.D. (2006) Extending green practices across the supply chain: The impact of upstream and downstream integration, International Journal of Operations & Production Management, Vol. 26, Nº 7, pp. 795-821. 9es Rencontres Internationales de la Recherche en Logistique

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