Sustainable supply chain

Being invited to attend a circle table meeting in World Business Council for Sustainable Development was overwhelming. I was so deeply interested in seeing supply chain as a massive outcome for the innovative sustainable researches that I had only realised, after a few minutes, that I was sitting next to managers considered to be the leading experts in the topic.

The speaker never stopped to emphasise how the concept of sustainability in supply chain is compelling and in a constant growth. Compelling because, so far, 90% of the transport sector is dependent on oil and a new solution is needed. With growing I mean 1.8 billion people are expected to join the global middle class and the demand for transport vehicles will endlessly increase by 2025.

The renewed supply chain goals are not as easily achievable as expected. Even if we know that the final outcome of the sustainable principles in supply chain is to build, defend and improve long-term social and economic value for all market-driven stakeholders, we are wondering if these principles are applicable or if this is only a wonderful utopia[1]. In fact, even if the steps that should be undertaken by a sustainable company are straightforward, they are used to deliver doubt to the reader. The main steps – commit, assess, measure and communicate – can be effectively concretised in many different ways but, still, have some obstacles to overcome[2].

The first roadblock is the sense of affinity. It is a principle that has to be followed to increase commitment between operators. Try to imagine a big retailer such as Amazon, it obviously purchases products from suppliers which, in turn, obtain the input from another company and so on. This articulated process can prove the idea that a three-four stages processes needs a deep sense of affinity between all operators. This is because, if not, it can negatively influence the suppliers’ transparency. Sub-contracting is an additional relevant problem, it usually implies a lack of intercommunication, limited resources and time, so that solvency and a policy regulation is needed. Even operational costs have to be considered. Clients are always looking for better prices; thus, driving the organisation to incur the lowest possible costs in order to propose low prices[3]. In addition, more than 50% of the small to medium enterprises around the globe see elevated cost as the main obstruction to reach the sustainable goal. However, researchers also underlined that around 50% of the small to medium enterprises acknowledged that budgetary prosperity is likelihood to be achieved if firms will implement sustainable related activities[4].

Overall, supply chain sustainability can be considered as a tradeoff between benefits and overall negative consequences. Every company should be able to balance these two contradictory leverages in order to understand that most of the time benefits are greater than costs. So that firms will start consider sustainability as the most relevant driver to foster change in management.

Davide Baino

[1] United Nations Global Impact, 2010, Supply Chain Sustainability, a practical guide for Continuous Improvement [Online], Available: https://www.bsr.org/reports/BSR_UNGC_SupplyChainReport.pdf [June, 2010]

[2] International Energy agency, 2009, Transport, Energy and Co2. Moving toward Sustainability [Online], Available:  https://www.iea.org/publications/freepublications/publication/transport2009.pdf

[3] Drivers and Obstacles for Creating Sustainable Supply Chain Management and Operations, May Alzawawi, n.d., [Online], Available: http://www.asee.org/documents/zones/zone1/2014/Student/PDFs/109.pdf

[4] A. Revell, D. Stokes, and H. Chen, “Small businesses and the environment: turning over a new leaf.,” Journal of Business Strategy and the Environment, vol. 19, pp. 273- 288, 2010.

 

 

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