Sustainable Supply Chain Management - Essay Example

SUSTAINABLE SUPPLY CHAIN MANAGEMENT Introduction Businesses try to reduce their average costs in the most effective and efficient manner so that they can increase their output and overall profitability. There are very many ways that the business approaches its operation in order to meet this objective, but one, which stands to be critical, is the concept of effective management of supply chains. in general, there is always the need to have sustainable links between a business and its suppliers in a manner that provides mutual benefit for all of the parties involved. Effective and efficient association puts a business in a better position to maximize on its profits; a business needs to put in place effective methods of managing its chains so that it reduces any wastage that may result and at the same time, being friendly to the environment. Currently, the concept of environmental management has become a thorny issue across the globe, this has translated to heavy fines and penalties to those businesses and other entities found violating environmental management practices. For this reason, a business ought to rely on effective use and management of its vehicles so that they do not release most of them to places where effective planning can see the use of only few of them. This is the idea that has led to establishment of ideas into sustainable chain management. At the same time, it is important to realize the critical need for suppliers in the business and the importance of establishing more links. The work of the production and sales department should be to look for better opportunities for cheaper inputs while trying to sustain those suppliers that the business already has. In doing this, the business is able to remain in operation just in case there is a change in the supply environment, prompting the exit of some important suppliers in the business. the need to ensure sustainability and consistency in terms of product delivery into the market has been the ultimate aim of most businesses. Supply chain management. The concept of supply chain management is a great issue that affects supply chains or logistic networks of most businesses. This is in most cases with respect to environmental issues such as conservation and management as well as waste costs. Most high level executes are now looking at sustainable chain management as a bets alternative to deliver long-term profitability to the business. This method is now increasing in popularity among the top-level executives; in fact, it has so far surpassed discussion about money related expenses, value creation as well as speed and efficiency in business delivery. Over time, supply chains have been established as critical and essential associations that are responsible for establishing connections between inputs into a business and its final outputs. A business needs to have cost effective inputs so that it can be able to capitalize on the outputs that will be released to the market. In addition, the supply process needs to be as consistent as possible as possible so that the business does not experience periods of absence in the market. it is this absence that results in customers shifting their loyalty to rival businesses because their needs cannot be felt and fulfilled effectively by the business. In traditional approaches to management, some of the strategies which have been relied on to manage business’s supply chains include, use of methods that lowers costs as much as possible and making sure that supplies are delivered at the right time. Moreover, decreasing the number of times between transportation times in order to give room for reaction and adjustments to any prevailing challenges and issues in the business are included. One thing that is fast becoming an issue with supply chains is the ever-rising costs that is associated to environmental management. Modern approaches towards reducing carbon emissions from vehicle fuels has resulted to increased costs in terms of better systems that matches the set requirements. At the same time, customers have also been contributing greatly to this particular issue by advocating for those products that are eco-friendly. Most businesses have responded to these changes by taking supply chain sustainability as a new approach to evaluating profitability logistics in the business. This sudden shift can be seen through a critical understanding that an effective and efficient sustainable supply chain is equivalent to a gainful supply chain. In many companies, evaluation of the effectiveness and sustainability of business operations is the main activity that is carried out. Such companies find it difficult doing the for their esteemed suppliers and customers. It would be prudent if companies would have a consistent practice of evaluating the effectiveness of their links with suppliers as well as those that link it to their clients, this way, it would be easier to identify and reduce any wastage that comes a long and device better ways of alleviating them. When supply and customer links are not well measured and evaluated, the result is always the inability to determine the specific environmental expenses, hence the business sits on the receiving end, suffering from the particular costs. Currently, there has been much progress in the research about defining sustainability in supply chains and how businesses can make good use of efficient strategies that can establish sustainability and implementation of supply chain plans. Bearing in mind that effective and sustainable supply chain management goes a long way in giving the business the much needed profitability. One of the ways which sustainable supply chain management advocates for is collaboration between different parties involved in similar actions, for instance, sharing of not being distribution process in order to cut down on related wastes associated. A good example of such collaboration will see vehicles that do not fill to capacity not being dispatched to make deliveries. At the same time, those deliveries that are destined for a particular place should be in one vehicle. in as much as this practice is excellent in reducing wastage from such deliveries, it is not very popular among many business for two reasons; one, companies fear about working with others, they may end up losing on their suppliers or customers an second, there is always an argument about who to control and manage the process effectively. Alternative ways of reduction of wastes in supply chain management is the use of different modes of transport other than the conventional methods. These methods include use of canals and airship. These alternative methods are very effective in reducing environmental impacts and subsequent costs. If a company can take all the necessary precautions to reduce environmental impacts and wastage in supply, it can be in a better position to increase not only its overall profitability, but also its competitiveness in the market. This can grant in the much-needed increased market share and overall influence. Setting up effective supply chain management processes The process of establishing effective sustainable supply chain management follows three main levels that have to be observed; the first one relates to proper comprehension of fundamental rights. Most organizations are at this stage, here, only simple actions and process are done to reduce any kinds of wastage in terms of costs. For instance, switching off all electric appliances like lights and computers especially when not in use, recycling of simple wastes like papers as well as opting for alternative greener modes of travelling and transportation in order to reduce carbon emissions into the environment. Alternatively, other companies opt for various kinds of technologies to manage processes like procurement. Technology enables fast and reliable communication between different managers in different locations without necessarily having to spend in booking hotels and conference halls; this can be done using teleconferencing mechanisms across the internet. The second stage involves learning to think about how to effectively implement sustainable supply chain strategies. In order to get insight at this stage, most companies evaluate their impacts and influences across a limited array of operations. With respect to supply chains, this approach involves management of specific suppliers, the design of their products and services rationalization of their manufacturing processes as well as optimization of their distribution systems and channels. One of the advantages of this approach is that it provides clarity about the impact of modifications to supply chain alertness, flexibility and costs that are important components of supply chain networks. movement towards this level is an indication that the company is being motivated by the prevailing business climate (where saving on costs using green operations are considered as being vital) and at the same time, advocating to regulations that are coming up not only at the industry level but also at the government level. When creating sustainability supply chain management systems, a business should always focus at its future, this means that it should come up with processes that will be beneficial at present and as well as for the future generations. It is always the dream of any business to be persistent in product and services for many generations. There are many different kinds of business that have existed and disappeared without proper knowledge of what contributed to their downfall. Successful businesses that have existed for many decades have always created efficient and flexible systems that are responsive to changes in market dynamics without affecting business operations. Sustainability Businesses managers have always thought of how to create lifelong structures and systems that can be beneficial to the business. This has placed focus on the importance of the concept of sustainability, which in actual sense refers to the incorporation of various social, environmental as well as economic obligations in business overall business management processes. In fact, the term appears to feature prominently in different literature as well as business disciplines like management and operations. This has seen many companies trying to understand and adopt the term in most of its sustainable chain management approaches. Comprehension of the term sustainability has seen the development and integration of systems which give the company long term use of different approaches to effective management of distribution and supply chains. For this reason, it is important to point out that firms that have engaged sustainable chain management practices in the business operations have always achieved high performances and success economically, compared to those that mainly concentrate on economic performance alone. This is because; adoption of strategies for sustainable supply chain management offers different alternative approaches to various aspects of suppliers and customer management. The approach does not just give emphasis to creation of profits alone; it focuses wholesomely at ways of getting the very profits now and future. This means that those systems that are adopted at present and prove to be reliable have to be sustained so that they can be useful in doing the same and even much better in future. Economic performance features most in companies that use traditional approaches to supply chain management, giving little emphasis on the importance of value creation and future concerns. One of the bets definitions that clearly fit sustainability is, “development that meets the needs of the present without compromising the ability of future generations to meet their needs.” (World Commission on Environment and Development, 1987). This broad definition of sustainability considers the influence of such issues as the impact of economic activities on the environment; this is for all countries that are developed and those developing (Erlich & Erlich, 1991). Also included in this definition is issue of overall world food security (Lal, Hansen, Uphoff, & Slack., 2002) as well as ensuring that human basic human needs are given priority (Savitz & Weber, 2006). It is unfortunate that the macro-economic and societal definitions of sustainability possess challenges in comprehension of this vital issue by businesses and other organizations. This definition is scanty in providing guidance and directions on how organizations should draw distinctions between future and present needs, the specific technologies and other resources that can meet the needs effectively. Besides, it this approach makes it difficult to effectively comprehend the means and approaches in balancing the obligations of organizations to several business stakeholders such as shareholders, employees as well as supply chains. There is also the aspect of macro-stakeholders who are usually very essential in the success of any business activity; this is the society. It is therefore evident that sustainable supply management has to be all-inclusive, this means that is has to take care of the interests of all the parties interested in the affairs of the business. If the strategies developed are biased in one way or another, then it is difficult for the business to effectively achieve its goals and objectives. Therefore, a business has to make all possible consultations in order to incorporate the views and opinions of these parties before coming up with a framework to guide into creating and implementing sustainable supply chain management processes. Another drawback that has been witnessed in the application of the macro-economic perspective on sustainability is that organizations experience challenges in determining their specific roles and functions with this perspective (Porter & van der Linde, 1995; Stead and Stead, 1996). Applications of the macro-economic perspectives on sustainability have been prevalent in other disciplines such as management, operations and different areas in engineering. Within the context of management, conceptual frameworks and applications have given emphasis on ecological management and sustainability, i.e, the natural environment. Under this framework, the focus has been on inherent realization of the social and economic obligations (Jennings & Zandbergen, 1995) For operations, the focus of sustainability has also been on the issue of ecology but without openly incorporating the wider social aspects of sustainability (Sarkis, 2001). On the other hand, similar definition sin the engineering field have been far reaching. they are openly encompassed a majority of the social, environmental as well as economic dimensions of the broader macro-viewpoints by looking at the overall organizational sustainability as, “a wise balance among economic development, environmental stewardship, and social equity.” In general, there are very many definitions and approaches to sustainability, and how it integrates in effective supply chain management. However, the prevailing differences are not as great as any one may initially perceive. It is important to note that a majority of the definitions give some amount of concern about environmental and concern issues. In fact, corporate social responsibility practices in organizations gives some consideration about social and environmental issues and develops ways of ensuring their sustainable management. Like any scholarly inquiry, it is common to find many definitions about the prevailing concepts, issues and critical terminologies (Kuhn, 1996). For any inquiry into a great idea that has the potential of abundant usefulness in human activities, there must always be definitional diversity, something that underpins its overall significance. The Triple Bottom Line The concept of sustainability in organizations on a wider perspective is known to consist of three main components; the natural setting, social as well as economic performance, these three issues comprises of the idea about the triple bottom line. This concept is known for its ability to simultaneously give consideration and balancing of economic issues, environmental as well as social goals and objectives from a microeconomic point of view. in this regard organizations realize that sustainability is not just an issue of good corporate citizenship, but an important concept of smart management (Savitz & Weber, 2006). By smart management, organizations should not just put their efforts creating good relations with its internal and external systems. It should do so with an aim to conserve the environment and achieve success. Organizations that are able to inculcate this approach in their management practices go a long way in establishing management systems that remain useful over generations. Thus, the triple bottom line approach to organizational sustainability posits that, when social, environmental and economic factors intersect during performance, there are special activities that the particular organisation has to fully engage in. this activities are important, not only for effective positive management of the immediate environment and society, but for the long term economic advantages and competitive merits of the business in the long haul. The three aspects interacts according to the diagram shown below; Arguments for the Support the Triple Bottom Idea The Triple Bottom Line has been known to provide thorough insight into some of the important business practices that happen oftenly. These factors include; risk management, transparency, structure and the most important component of organizational culture. In normal business practice, there are many different types of risks that happen routinely. With respect to sustainability, the issues of risks and their management approaches are therefore seen as issues that keep on occurring in different styles. This means that sustainable approaches have to provide reliable security that calls for safety measures against potential chronic threats as well as protection against destructive disruptions in the business environment. This brings into surface a variety of issues that require effective protection for long-term businesses sustainability, success and performance. some of these factors include loss of biodiversity, issues of climate change, scarcity of freshwater, food as well as matters of population increase, in addition, when companies can affectively provide clear approaches to management of all these issues, then they are able to manage any risks that results from any of them. It is believed that these issues play an important role in the establishment quality of the quality of inputs into supply chains as well as fluctuations in the costs of energy. At the same time, when the business plays an active role in the management of these inputs, it puts itself in a better position to reduce the dangers of introduction of new regulations that may end up being costly to the business. A risk, with respect to business practice can be looked at as chances of variations, which surrounds a probable outcome. Risks have been subjects for instruction in various fields like economics and management, where both disciplines project different models and theories for analysis about how to treat the risks in different dimensions of business practice. In fact, the concept of finance and insurance came into existence to provide an understanding about different types of risks and how they should be treated, not only at business level, but also at personal level. Another management scholar examines the issue of supply chain risks as the possible happening of an incident which along the course of supply, and affects the ability of the business to meet the needs of their customers. there are different causes of risks that can affect a business’ supply chain, they include; hazards from natural disasters like earthquakes and hurricanes, poor approaches in forecasting future demands of the business as well as the inability to effectively coordinate specific requirements of demand in the course of supply chain. When these risks occur, the result can be a great loss in a business’s profits, or depending on the kind of risks, a business can end up collapsing. The thought of the huge costs that may be required in bringing back the business to its current position should always be the motivation behind establishment of solid systems that can handle these risks and other. however, it should be understood that a business may not prepare adequate enough to handle all its probable challenges, there are those which the business can effectively handle and control, these are those challenges which are from its internal environment. on the other hand, challenges in the business external environment may be dynamic and unpredictable, for this case, the business can only build enough capacity to respond to the challenges at the time of their occurrence. The best way to respond to any challenges depends on the kind of risk, for instance, risks relating to price fluctuations and raw materials should prompt the business to establish flexible pricing systems that can easily change during the different economic systems while maintain business profitability. Expectations of future shortages in raw materials should make the business build enough stock to remain in production during the anticipated times or change their product line. This will ensure that the business does not have to close when the rivals are made to do so. Poor environmental practices and strained relationships with suppliers should be checked, this is because, when it occurs, it often leads to huge unexpected costs on legal matters (Carter & Jennings, 2004; Klassen & McLaughlin, 1996). The goal of any business is to minimize on costs as much as possible while making maximum profits from its outputs, these should always remain the standing principle even when the business has to struggle with solving certain risks and crises. Within the context of this framework, supply chain risk management can therefore be defined as capacity of a firm to comprehend and effectively manage it prevailing economic, environmental as well as social hazards that are occurring with its supply chain. This means that the business has to be in a position to effectively foresee the occurrence of the risks and prepare to handle them in the most prudent manner. In order to improve the supply chain management practices as well as enhancing the performance of specific companies, different processes and business practices are usually integrated in order to add value for clients and other business stakeholders. Based on this understanding, the concept of sustainable supply chain has been adopted by most businesses. In this regard, the concept of sustainable supply chain management is defined as the apparent integration and attainment of the organizational goals relating to social, environmental and economic dimensions. The definition of SSCM draws much of its information from the triple bottom line approach; the framework is diagrammatically represented as shown below; By establishing the sustainable supply chain management framework, business expect to ensure that their supplier are in a better position to get together the social as well as environmental expectations for present and future generations. In this endeavor, the business seeks to project the understanding that success in these issues is a collaborative effort References Carter, C.R. & Jennings, M.M. (2004), “The role of purchasing in the socially responsible management of the supply chain: a structural equation analysis”, Journal of Business Logistics. 25(1); 145-86. Erlich, P.R. & Erlich, A.H. (1991), The Population Explosion, New York, NY: Touchstone. Jennings, P.D. & Zandbergen, P.A. (1995), “Ecologically sustainable organizations: an institutional approach”, Academy of Management Review, 20(4); 1015-52 Klassen, R.D. & McLaughlin, C.P. (1996), “The impact of environmental management on firm performance,” Management Science. 42(8); 1199-214. Kuhn, T.S. (1996), The Structure of Scientific Revolutions, Chicago, IL: University of Chicago Press. Lal, R., Hansen, D.O., Uphoff, N. & Slack, S.A. (2002), Food Security and Environmental Quality in the Developing World, Boca Raton, FL : CRC Press. Porter, M.E. & van der Linde, C. (1995), “Green and competitive: ending the stalemate”, Harvard Business Review, 73(5); 120-34. Sarkis, J. (2001), “Manufacturing’s role in corporate environmental sustainability”, International Journal of Operations & Production Management, 21(5/6); 666-86. Savitz, A.W. & Weber, K. (2006), The Triple Bottom Line, San Francisco, CA: Jossey-Bass. World Commission on Environment and Development (1987), Our Common Future, New York, NY: Oxford University Press. Read More