Home' MHD Supply Chain Solutions : MHD Nov-Dec 2014 Contents Other unsustainable supply chain concerns
can relate to the amount of emissions or waste
being produced by a supplier. Emissions that
are considered pollution are often seen as a risk
if they exceed local acceptable levels, or if they
are higher than the industry average. However,
trying to navigate this issue can be difficult in an
And while successful supply chain
management of emissions can be elusive, most
companies are desperately searching for a
suitable way to handle this issue.
A major component of the issue lies in whether
a company is aware of emission issues in the
overseas country - and whether this is something
that the company that has been outsourcing
should be concerned about this, anyway.
The best option is to work out what
is considered safe and acceptable and
work towards confirming compliance with
standards where these exist. And while the
aim is to encourage planning based on better
environmental decisions, it can be complex to
extend that process to full sustainability in some
countries where leadership can be seen as a
competitive disadvantage if opportunities are not
fully examined, understood and implemented.
Finding a better way
Encouraging car sharing practices is a great
example of how companies can implement
better and more sustainable supply chain
For example, car manufacturers such as
BMW and Daimler have started car sharing
business units, including electric vehicles as part
of the car sharing offer. These sorts of business
transformations are not limited to improvements
of the existing supply chain of fuel-based cars,
but require replacement vehicles; perhaps even
electric automobiles, or software providers for
apps to quickly find the next available electric
cars and calculate the use and fees.
A next step could be setting up sustainable
supply chain management systems that include
the understanding of lists of allowed ingredients
and materials and the right use of defined
It is about the creation of a global
understanding of what sustainability means
for the target market, and requires that
sustainable product use be explained.
Also, the effects of these sustainable
product offers need to be identified and
verified with appropriate measures relating
to key sustainability criteria, providing
robust information of the contribution to
sustainable development to confirm and verify
This means the management of supply chain
risks and opportunities can spur sustainability-
orientated innovations for products and services.
Improved management approaches and
innovations can also measure:
• Existing levels of negative social and
environmental impacts and how they relate to
• Improvements and what effect these activities
have on economic performance.
• The social, ecological and economic effects of
actions taken targeting improvement.
Getting corporations on board
Admittedly, achieving sustainable supply chain
management requires new strategies and
methods, and is a complex task. Behind the
scenes is the question of whether it really pays
for companies to be green.
We believe the answer lies in the adoption
of a corporate sustainability-orientated
performance system to ultimately reduce the
amount of negative environmental and social
impacts that generally occur. Our research also
stresses the importance of transparency around
company strategies, and open discussion
regarding their effectiveness.
We have developed a multidimensional
framework to help companies develop a sustain-
able supply chain that can serve as a tool for
research scholars and supply chain practitioners
to identify and assess various economic, envi-
ronmental and social performance indicators.
This includes consideration of sustainability risks
and opportunities within existing supply chains.
We would like to see a sustainability
performance measurement adopted, so that
rich measurement scales for efficiency can help
innovate and redesign business models.
A new model needs to be developed so we
can move toward a sustainable supply chain
management system being considered the norm.
If sustainability is the target, appropriate
inducements should be introduced to change
the behaviour of suppliers and encourage them
to be more socially responsible.
The effective application of a policy to
influence the environmental goals of suppliers
through tender processes could work,
however we know that suppliers are less
ready to consider socially responsible goals in
Perhaps the new Global Reporting Initiative
G4 guidelines on supply chain disclosure will
help companies to think beyond their own legal
entities for the scope of reporting. However, the
jury is out, the notion of reporting on external
company factors most recently through integrated
reporting has been a moot point for decades.
We do know companies need to take care
during the review and implementation of a
sustainable supply chain framework, because
eliminating or replacing existing products and
supply chains often requires the introduction
of more services and reduced numbers of
products or different products.
To improve existing supply chains operating
within your company, look for ways to
create efficiencies, which could include the
implementation of recycling, down-cycling,
closed loop supply chains and reverse
logistics. These steps will create economic
value for the supplier, and also reduce
If you wanted to get more radical about the
improvement of a supply chain, you could
consider the following approaches, which can
be combined, and are mostly complementary
rather than exclusive:
• Eliminating parts of the supply chain may
appear unrealistic at first, but you could
implement various sustainability innovations
which introduce replacements. For example,
electronic cameras replacing plastic films,
eliminating chemical photo development
with its supply chain of chemicals, and
• The substitution of a new supply chain is
also worth considering. For example, electric
cars and motors have different supply chains
than for the production of diesel cars and
• The implementation of shorter supply chains
with less steps and less geographical spread
can work well, as this often leads to a
reduction of sustainability problems.
• Slimmer supply chains with less material
passing through the chain.
• More efficiently organised supply chains. If
the supply chain can not be eliminated or
slimmed down, then there is the introduction
of reverse logistic systems to reduce overall
The underlying principles behind these
strategies can guide the design of an improved
business model and supply chains for the
management of sustainability improvements.
Of course, the key to success lies in compa-
nies being proactive in this space, maintaining
continuity and assessing risk management of
any implementation being considered.
Companies should also look for ways
to substitute unsustainable materials with
biodegradable materials, bearing in mind that
these strategic sustainability approaches can
be combined. For example, replacing a heavy
car with car sharing that uses an electric car
fed with renewable energy.
Improved supply chain management can
help peoples around the world and future
generations to better lives.
Professor Roger Burritt is from the Department
of Accounting and Corporate Governance,
Macquarie University, Sydney.
MHD SUPPLY CHAIN SOLUTIONS --- NOVEMBER / DECEMBER 2014
SUPPLY CHAIN 67
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