Lecture 10 - Strategic Supply Chain Management Flashcards
Name examples of irresponsible supply chains.
The Rana Plaza, Bangladesh, 2013
- Nike, GAP
BP oil disaster, Gulf of Mexico, 2010
Lac-Megantic rail disaster, Quebec, 2013
Horesemeat Scandal, UK & Europe, 2013
- Tesco
Name examples of responsible supply chains
Abengoa - investing in renewable energies
IKEA - IWAY sustainable trees
DuPont - investing in reducing raw materials through innovation and increasing transparency between factories as part of Responsible Care programme.
What is sustainability?
“Development that meets the needs of the present without compromising the ability of future generations to do the same”
- Brundtland Commission, 1987
Why should companies take a green supply chain perspective?
- EU laws - restriction of hazardous substance directive
- UK pledging to clean up environmental emissions by 80% in 2050.
- WEEE legislation
- Greenpeace pressues
What are the motivations for having a responsible supply chain?
Gender equality Provide safer working conditions Fair wages Fairtrade Alleviate pressures on charities and non profit organisation
Why act responsibly?
ENHANCE/PRESERVE THE BRAND (Ikea, Apple, Nike) MEET LEGAL REQUIREMENTS MAKE PROFIT (Seventh Generation) CREATE SAVINGS (DuPont and Abengoa) PRE-EMPTY FUTURE LEGISLATION (Ikea) AVOID BOYCOTTS (Coke and Nestle) CATER FOR ENVIRONMENTALLY FRIENDLY CUSTOMERS (Body Shop) COMPANY STRATEGY/ETHOS (eg Patagonia)
How can acting responsibly enhance/preserve a brand?
Can prevent bad publicity. eg Apple and Nike suicides
Can create competitive advantage. eg IKEA
How can a responsible supply chain help a firm meet legal requirements?
Can help meet EU and UK law
Can help meet WEEE directive (Electrical products)
How can a responsible supply chain help a firm make profit?
WIN/WIN SITUATION (LOW HANGING FRUIT)
Closed loop supply (H&M)
Eco branding (Patagonia, Seventh Generation) - Plant based and recycled materials, reduce waste
Environmental cost leadership (Colgate-Palmolive)
- Strategy based around triple bottom line, not at high prices
How can a responsible supply chain help a firm create savings?
REDUCE WASTE (lean) -> material efficiency - DuPont by reducing consumption of raw materials
INNOVATION -> new processes that are greener (can boost competitive advantage)
- DuPont using technology, biology and chemistry to make products with reduced environmental impact
- Abengoa investing in R&D to create wave energy (diversification from purifying sea water and biofuel)
- US car manufacturers fighting legislation for fuel efficient cars yet German’s embraced it.
What is the triple bottom line?
Concept that simultaneously considers and balances economic, environmental and social goals from a microeconomic standpoint.
ELKINGTON, 1998, 2004
What do Carter and Roger’s identify as key elements in sustainable supply chain management?
Supply chain risk management
Transparency
Strategy and culture
What is risk management?
The ability of the firm to understand and manage its economic, environmental and social risks in the supply chain.
What is transparency regarding SSCM?
What are the issues with it?
Actively engaging with stakeholders, using their feedback to input to secure buy in and improve the sustainable supply chain.
Try to avoid greenwashing
What is the GRI?
Global Reporting Initiative
- Shared reporting structure to compare sustainable practises within firms if they use the same structure.
Many firms use their own frameworks across a whole supply chain eg IKEA
What do Carter and Roger propose about visionary SSCM firms?
Firms that strategically undertake SSCM will achieve high economic performance than those that pursue only one or two components of the triple bottom line.
How does SSCM link to TCE?
Firms dependent on key, external resources improve economic sustainability through vertical coordination.
eg: IKEA
Positive relationship between vertical coordination and the interaction of uncertainty and resource dependency.
How does SSCM link to RBV?
Supply chains which integrate social and environmental resources and knowledge may be more difficult to imitate, thus leading to economic sustainability (better use of resources in house)
What are the two approaches to SSCM?
Reactive
Proactive
What the 3 types of SSCM firms?
Formentini and Taticchi, 2016
SUSTAINABILITY LEADERS
SUSTAINABILITY PRACTITIONERS
TRADITIONALISTS
What are sustainability leaders?
- Clear actions reflecting a desire to support the environment, reflective through the whole supply chain.
- Characterised by a triple bottom line approach which extends to SSCM.
Eg: IKEA, Patagonia
What are sustainability practitioners?
One or two triple bottom line approaches worked on, little focus and isolated SSCM initiatives.
Eg: GAP.
- Main focus on people and performance, not planet.
Chemical dyes in Indonesian rivers.
What are traditionalists?
Use a myopic and business/financial mind with the intention to make high profit.
Lean approach may be efficient for business but may not be a clear action to show explicit triple bottom line and SSCM approach, may include only some elements.
How should firms create sustainable practises?
1) Create meaningful expectations
2) Confirm suppliers and agree upon targets
3) Measure supply chain performance
4) Evaluate and improve
eg: Illy working to improve by having clear indicators regarding the maximum amount of water and pesticides that can be used on their coffee plantations.
eg: Starbucks’ C.A.F.E. Coffee and Farmer Equality
- Ensure Starbucks source sustainability by evaluating triple bottom line of coffee production through measures on practises generic and smallholder scorecards.
- Benefitted over 1 million workers.
What is Seuring and Miller’s (2008) conceptual framework - STRATEGY 1?
SUPPLIER MANAGEMENT FOR RISK AND PERFORMANCE
- Which factors triggering SSCM act as barriers and which as opportunities?
What are the barriers to SSCM in relation to Seuring and Miller’s conceptual framework STRATEGY 1?
- High costs
- Coordination effort and complexity
- Insufficient/missing communications
What are the opportunities to SSCM in relation to Seuring and Miller’s conceptual framework STRATEGY 1?
- Company overlapping communication
- Management systems
- Monitoring, evaluation and sanctions
- Training of employees and suppliers
- Integration into corporate policy
What are the GOALS to SSCM in relation to Seuring and Miller’s conceptual framework STRATEGY 1?
- Win win sitautions
- Trade offs
- Minimum requirements
What is STRATEGY 2 in Seuring and Miller’s conceptual framework?
Opportunities to interact with suppliers to improve sustainability whilst gaining competitive advantage and satisfying customers.
Requires:
- Increased communications
- Sharing the same criteria
- Supplier development
What are the pressures and incentives for sustainability according to Seuring and Miller, 2008?
Legal demand Customer demand Response to shareholders Competitive advantage Environmental and social pressure groups Reputation bias
What broad perspective does SSCM have to consider?
Beyond buyer/supplier relationships
Consider cultural and environmental dimensions of sustainability
Increasing the need for cooperation among partnering companies
- sharing knowledge will improve overall social approaches of suppliers
What does Pagell, 2010 theorise?
It is important to treat commodities differently according to their importance in the supply chain.
- Move from traditional leverage items being purchased in a style closely aligned to critical/strategic items.
Talk through the Barilla case study.
Supply contracts for durum wheat sourcing in Emilia Romagna region for sustainability.
Farmers stopped exiting durum wheat business
- Barilla paid a premium price
Farmer had more monthly cash flow
- No need to time the sale of durum wheat
Barilla had more locally procured wheat in line with sustainability goals at a more stable price
