Sustainability Measuring and Reporting within the Supply Chain - Coursework Example

Topic: sustainability measuring and reporting within the supply chain Name Professor Institution Date Introduction In the current global market, sustainability measuring in the company’s supply chain has gained a lot value. The business stakeholders consider it a necessity to broaden the scope of benchmarking the supply chain. The current market requires that the company responsibility to go above the company level to supply chain level. This will make it possible for companies to improve their performance in the competitive market. For companies to determine which of their products, processes and services are sustainable, it is necessary to measure the sustainability in a qualitative manner. To have a sustainable supply chain, matters of accountability and transparency carries a lot of weight. The manner in which issues pertaining sustainability are handled affects the companies’ products and overall business. The supply chain can have impacts on social, environmental and economic sustainability. For an organization to be sustainable, it must be able to minimize its use of resources while maximizing its creation of value. Sustainable supply chain management has been widely implemented by organizations. This is attributed to the economic gains that it offers. Among the economic benefits are reduced cost of operation, increased efficiency and savings in cost. Revenue generation is also boosted through the use of appropriate measuring skills as the organization is able to gain a good reputation and good competitive advantages. The approach on sustainable supply chain management is based on how to measure it and do it successfully. Though a lot of researches have been done on the supply chain management, there is a gap in how to monitor and evaluate supply chain sustainability performance. The purpose of this paper is to look into the literature on sustainability measuring and reporting within the supply chain (Seuring and Muller, 2008). Benchmarking and sustainability This is a practice for evaluation of products and services based on the best practice. This is based on the individual who puts efforts to make sure they identify and carry out the best practices in their companies. Benchmarking acts as an important asset in helping the company to gain competitive advantage quality management and improvement of an organization. Benchmarking can also be utilized to define the operational measures used in performance as well as firm appraisal. Benchmarking relies heavily on the data analysis. Various tools are used for competitive analysis. These tools include flow charts, gap analysis, because effects diagrams among others. The area of focus in the supply chain is a single process within the supply chain. This means that benchmarking cannot look on the overall supply chain performance. There is high demand by the managers to know about the performance measurement in their companies utilizing benchmarking (Sroufe, 2006). Sustainability benchmarking There have been several efforts that have been addressing the incorporation of the economic, social and environmental sustainability into the supply chain. There has been an increasing need for incorporation of the measurements of the supply chain performance. In order to start benchmarking, there is nee for the determination of the sustainability indicators determination. There are several principles that are used in sustainability measurement. These principles include; addressing perspectives based on the resource consumption and value creation, leading and lagging indicators, product life cycle, economic environmental and social views. The second principle of sustainability requires that measurement and evaluations should consider economic, environmental and society perspectives. All the three aspects require to be balanced so that there is a clear understanding of the product or services sustainability. The measurement of sustainability in a supply chain should look into all stages in the life cycle of organization products. On top of focusing on the internal operations only, the companies are supposed to look into the inputs from the suppliers and customers. Lagging indicators are measurements of the outcome. They have gained wide use due to their ease of understanding. Resources are the required stock that is used in the creation of good and services. These are materials, labor and land. They give the results in a retrogressive perspective hence cannot be used in predicting company future performance. Leading indicators are used in places where there is a need to forecast the future. The main use of indicators is monitoring and gauges the performance in achieving the target (Sobczak, 2006). Sustainability performance measurement A sustainable supply chain should be able to determine profit and loss and look into both social and environmental aspects. This is what has been referred to as triple bottom line. The intersection between the social, environmental and financial sections makes the appropriate link for sustainability. The performance of a supply chain cannot be gauged by the financial performance only. The recent trend has shown that the traditional method of gauging business based on the financial performance can not work. For successful performance in the long term, triple bottom line is the best method. Pressure to use this method has also come from the government intervention, regulations and pressure from the competitors. This has made the process of determining the sustainability of the supply chain more involving. The process has brought other parties who are concerned with social and the environmental aspects. What leads to use of this process is to make ethically produced goods. The consumers will be able to purchase well produced goods which follows the triple line approach at a higher price. Using sustainability as the competitive advantage, the firm is able to benefit from having more customers. Sustainable supply chain operations are at the heart of supply chains in many companies. This approach helps in the reduction of consumption of energy, water and carbon as well as reducing material wastage (Sobczak, 2006). Sustainability performance measurement process The starting point in measuring the performance is the planning phase. The company should establish the framework that looks into the company most significant issues. To do this, company is required to come up with specific indicators and metrics and work toward achieving the target. The phases that are required involves developing a policy that is sustainable, identifying the significant aspects, establishing the objectives and selecting the required metrics and indicators. After this, it becomes possible to determine the required target (Sobczak, 2006). The organization must come up with a sustainable policy. The company model changes from being linear into a cyclical one. After making the required performance indicator, the organization begins the process of tracking and performance reporting. The first thing in ensuring that the framework for measuring is efficient is by identifying the challenges. In the implementing phase, the steps involved includes, gaining support, making it work with business process, following up on performance and improving the performance. The final phase deals with reviewing. Organizations should then gather feedback and then review their planning steps (Markley and Davis, 2007). Developing sustainable policy A sustainable policy is required during planning. This policy helps the company in its aims in accordance to social, environmental, and economic aspects. The central aim is to make a business strategy that will help in looking at issues of the stakeholders. The actions of the organizations have effects on the stakeholders in very many ways. The ultimate aim of the stakeholders is the benefits associated with the sustainability to the firm. Through getting to know the concerns of the stakeholders, the organization is able to come up with a sustainable policy (Krause, Vachon and Klassen, 2009). Selecting major aspects The company then acts in identifying how they can select their significant aspects. Companies use different means to come up with aspects that can help in performance tracking. The main method used involves coming up with all aspects that seems to be necessary, determining their importance using the selected indicators and finally arranging them according to the priority. To achieve this, the company requires using brainstorming, interviews and reviews. After noting the significant aspects, ranking can be carried out (Krause, Vachon and Klassen, 2009). Establishing the objectives The organization then sets objectives which may be long term or short term. The objectives come from sustainability policy and in most cases are quantifiable. The objectives arrived at should be based on the triple bottom approach. The central focus of the objectives should be resource conservation or adding value to the organization (Epstein and Roy, 2001). Indicators and metrics After coming up with the objectives, the organization should try and come up with the indicators and metrics. This is inline with their sustainability program (Veleva et al. 2003). Having indicators and metrics helps in showing to the stakeholders the level of commitment. For a manager to choose the appropriate indicators, he has to follow steps. The selected indicator should be comprehensive, controllable, cost efficient, easy to manage, have meaning and timely. Using the guidelines, those involved are able to avoid difficulties. To track a performance indicator, performance metric is used (Carter and Rogers, 2008). Determine the target When an organization has set all the indicators and metrics, it becomes possible for it to commit. The organization identifies the long-term and short-term goals which it intends to achieve. Using the metrics, it becomes easier to quantify the indicators. The company can then use the targets to gauge their performance. It is a general practice where targets are set after establishing a baseline level. It becomes possible to eliminate future failure by determining the capability of the organization (Carter and Rogers, 2008). Importance of supply chain sustainability measuring and reporting One of the reasons why companies measure their sustainability performance is to determine the supplier performance. Firms feel the need of having the best supply chain so as to have the bets results. The suppliers’ management is always given priority in many of the firms’ procurement concerns. In order to maintain continuo performance, firms have to get enough knowledge on their suppliers. The supply chain should be well outlined in terms of risk management, compliance and sustainability (Kleindorfer, Singhal and Wassenhove, 2005). Cost reduction Using the supply chain correctly, the firms utilizing sustainability are able to cut down their costs. Through utilizing of the bets sourcing methods in the supply chain, the initiative has led to price reduction on a more holistic cycle. Also, sustainability brings the process improvements in areas such as design, quality, packaging and logistics into the supply chain processes (Cherchye and Kuosmanen, 2006). Reduced risk/ sustainable supply chain There is a shift from looking at only financial risk to the overall risk management. Having long term sustainable processes acts as the solution for the unstable prices of commodities. Brand Through having a sustainable supply chain, a company is capable of making a name for the brand. A good company reputation comes from having quality products in the market. Through product differentiation, the companies are able to build a niche that helps in gaining a competitive advantage. The integration of the environmental and social concepts into the traditional business values has led to new awareness into the business perspective. Measuring performance hence forms an integral part of the business. Having a good sustainability process management helps in decision making that reduce consumption of resources. This also adds value to the resources. Sustainable supply chain also helps in adding value to the resources and acts as a valuable tool in showing progress (Cherchye and Kuosmanen, 2006). Conclusion For the supply chains to be more efficient, adoption of sustainability performance measurement principles acts as a key concept. Business activities become more coordinated and integrated to the environment and social aspects. This is in line with the globalization and effects that are associated with it. The issue of environmental conservation is one of the central concerns in the global business. By measuring the sustainability of the supply chain, the company is able to adjust and fit into the market that is rapidly growing. In any business, transparency can be highly enhanced use of scorecards. The performance measured should be communicated to all the stakeholders to enhance team work in the improving it. The central aim in the sustainable product development is to meet the company’s present needs while at the same time not compromising the future. The firm should give competitive returns on the assets while at the same time not compromising the needs by all stakeholders. The most significant aspect is that the process of measuring is the most important step in sustainable supply chain management, as opposed to measuring. References Cherchye, L., and Kuosmanen, T. (2006). Benchmarking sustainable development: A synthetic meta-index approach. In M. McGillivray, and M. Clarke (Eds.) Understanding Human Well-Being, (pp. 139–168). Tokyo: United Nations University Press. Carter, C. R. and D. S. Rogers. (2008). A framework of sustainable supply chain management: Moving toward new theory. International Journal of Physical Distribution and Logistics Management, 38(5), 360-387. Epstein, M. J. and Roy, M.J. (2001). Sustainability in action: Identifying and measuring the key performance drivers. Long Range Planning, 34(5), 585-604. Kleindorfer, P. R., K. Singhal, and Wassenhove. (2005). Sustainable operations management. Production and Operations Management, 14(4), 482-492. Krause, D. R., S. Vachon, and R. D. Klassen. (2009). Special topic forum on sustainable supply chain management: Introduction and reflections on the role of purchasing management. Journal of Supply Chain Management, 45(4), 18-25. Markley, M. and L. Davis. (2007). Exploring competitive advantage through sustainable supply chains. International Journal of Physical Distribution & Logistics Management, 37(9), 763-774. Seuring, S. and M. Muller. (2008). Core issues in sustainable supply chain management-A Delphi study. Business Strategy and the Environment, 17(3), 455–466. Sroufe, R. (2006). A framework for strategic environmental sourcing. In J. Sarkis (Ed.) Greening the Supply Chain, Berlin: Springer Sobczak, A. (2006). Are codes of conduct in global supply chains really voluntary? From soft law regulation of labor relations to consumer law. Business Ethics Quarterly, 16(2), 167– 184. Veleva, V., Hart, M., Greiner, T. and Crumbley, C. (2003). Indicators for measuring environmental sustainability: A case study of the pharmaceutical industry. Benchmarking: An International Journal, 10(2), 107-119. Read More