Promoting a Sustainable Supply Chain

Promoting a Sustainable Supply Chain Strategy

Many of the espoused criticisms of sustainability standards (i.e., ISO 14000) by managers seem valid on the surface but may actually mask an underlying strategic position of an organization. Our research demonstrates that companies who fully integrate a formal environmental management system (EMS) can reap significant benefits internally and externally in terms of a sustainable supply chain strategy. Standards such as ISO 14000 do not have to be a non-value added paper-driven process. However, those companies who see registration as a game to keep business will not obtain the additional benefits seen in more proactive organizations where more effort is put into performance and supply chain integration. We found that there were significant differences between facilities that install a registered EMS with external coordination and integration. Those facilities that see registration as an opportunity to improve their EMS and supply chain integration of environmental standards will be part of a more sustainable supply chain. Supply chain managers wanting to improve the integration of sustainability within their supply base should seek out suppliers that are able to translate registration into internal efficiency improvement. Suppliers with a lesser amount of integration or who do not use registration as a catalyst for change will only do what is necessary for compliance, but not full integration, and should not be sought out by supply chain managers.

The issue of a sustainable supply chain was not explicitly built into our research interview protocol. The protocol was developed to be more generic, and not too specific, so that themes from managers could emerge more naturally. It was anticipated that sustainability standards such as ISO 14001 being forced upon suppliers by their customers would be a common theme and it was. The large OEMs placing pressure on their suppliers to likewise have their suppliers do the same was more prevalent than expected. However, we were struck by the lack of recognition of ISO 14001 to be used as a supply chain design tool by the large OEMs. The large OEMs simply dumped registration responsibility squarely onto their suppliers and the OEMs turned their attention to getting their own facilities registered, rather than using it as a supply chain design tool. However, the suppliers appeared to recognize the limitations of this approach by their customers. Several of the suppliers resented the OEM approach and they had the same experiences with quality standards such as ISO 9000 or TS 16949. These organizations mentioned that their customers did nothing in the way of education, coaching, mentoring, collaboration, etc., in regards to sustainability. Suppliers in the study also expressed the need for an industry network so that they can learn about which metrics to use, waste reduction opportunities, and potential operational improvements. However, our findings and previous research shows that the coaching and mentoring of a sustainability strategy for supply chain design usually needs to be initiated and undertaken by the “larger” organizations (which are often the customers and in this study the OEMs).

Sustainability standards appear to provide only a foundation for supply chain design because registration itself does not require information exchange, mentoring programs, or visiting suppliers to assist them to improve environmental performance. The suppliers in our study suggested that a supply chain design requires a range of activities that goes beyond registration in order to support a sustainability strategy. Several managers said that bare minimum includes addressing one’s own accreditation to an EMS standard such as ISO 14000 and assessing a supplier’s environmental performance by addressing their own accreditation to the same standard. Managers in our study suggested that industry associations or environmental business groups should be used to lead the way in designing supply chains that support sustainability strategies. While the managers in our study did not specifically make suggestions on specific activities, the research literature suggests several key activities that should be included such as: 1) seek information on environmental aspects of policies, processes and systems from suppliers 2) impose specific performance requirements upon suppliers 3) cease to purchase from suppliers who fail to meet criteria set 4) cease to purchase from suppliers who fail to provide information requested 5) create outreach activities to share experiences and best practices with suppliers 6) planning your sustainability product technology so that it can be fulfilled by the capabilities of your suppliers and 7) modeling potential future supply/demand imbalances in critical input materials such as energy, water, packaging, chemicals, etc.

The results of this study contribute to theory development by exploring a strategic dimension of sustainable supply chains; positing new research propositions; and confirming relationships posited in previous research. It also suggests that future research should take into consideration the strategic position of a plant when assessing the impacts of ISO 14001 or when modeling supplier selection practices that include ISO registration of a supply base. In this study we show that ISO 14001 has the potential, when used under the right circumstances, to improve sustainability across the supply chain. In other words it is a tool for sustainability. It can be applied across firms so as to tap into the synergies associated with the greening of a supply chain, i.e., better understanding of environmental processes, lower waste, pollution prevention and improved performance. Through the use of qualitative data collection methods, this study also helps to develop theory in a broader context, beyond just specific research propositions. It does this through a better understanding of the ISO 14001 uncertainties, risks, benefits and implications for sustainability within a supply chain. We find that ISO registration does not make for a level playing field and that the level of integration and impact on supply chain sustainability vary. This variance allows for some plants to actually obtain competitive advantages from registration while other plants will always struggle with sustainable development, integration, and compliance with registration.

Why are U.S. Firms Becoming Socially Responsible & Sustainable (or aren’t they)?


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