Benefits and Challenges of Sustainable Supply Chain Management - Literature review Example

benefits and challenges of sustainable supply chain management al Affiliation) Benefits and Challenges of Sustainable Supply Chain Management Introduction In the context of the modern day nature of the business environment, sustainability has grown to be an inclusive part of the society. Such factors as continuous sensitization on the existence of alternative energy sources, the impacts of the changes in climatic conditions on the planet and the need to embrace environmentally friendly techniques in daily human activities are all indicators of the increased awareness on the topic of sustainability. Indeed, through modern methods of production and consumption of energy, the globe has increased the transparency and essence of such campaigns to the comfort of the human life. Many businesses and organizations around the world are not left behind in trying to adopt more sustainable methods of production and supply in line with the campaigns of sustainable environmental activities. The relevance of sustainability in supply chain management is a topic that attaches utmost relevance to all the stakeholders of the business world. Customers, nongovernmental organizations, managers, employees, and company shareholders are embroiled in the increased communal demand to embrace the social and environmental issues that concern their activities. Therefore, supply chain management leaders are in the spotlight for their role in performing their environmental and social obligation towards sustainability through such duties as vehicle routing, choices in packaging, supplier development and selection, carrier and modal selection and decisions concerning the location of supply. Literature review This paper, examines the approach of businesses towards sustainable management of the supply chain. The supply chain is the series of channels that a final product undergoes before arriving at the final consumer of the product. In every business, a supply chain is responsible for ensuring that the demands of consumers over vast geographical locations are fulfilled, with adequate networks to eliminate possible deficiencies of the product. In the historic evolution of the management of the supply chain, several trends have emerged (Amir, Leiber & Maret, 2011). Since the beginning of campaigns on sensitization of sustainable supply chain management, many firms have adopted techniques that minimize negative implications of their choice of supply chains. In previous years for instance, the Chinese manufacturers adopted techniques that had severe social impacts on the reputation of their companies. These companies disregarded child labour, using underage populations in ferrying products across greater lengths of their vast territories. In addition to that, they had little concern on the health and safety of the populations as they adopted means that caused massive pollution to the environment. Due to these discrepancies, the globe adopted supply chain management in the wake of increased concern child labour. Supply chain management refers to the management and supervision of a network interconnecting multiple organizations that operate on the provision of products and services to the final consumer. In addition to that, sustainable supply chain management ensures that organizations and firms take full responsibility for the social and environmental operations of their suppliers (Belvardi, 2012). This responsibility championed the growth of green supply chains. Green supply chain management is an environmentally focused strategy that obligates customers, suppliers, and manufacturers to corporate in a supply chain towards implementing an environmentally friendly technique of supply. The external and internal pressures that constitute environmental conservation define the reason behind the need for each organization to adopt environmentally friendly processes in the production and supply of products. Manufacturing organizations have the obligation to adopt environmental sustainability to safeguard the viability and reputation of the organization amongst the customers. Corporate social responsibility plays a critical role in the performance of organizations in the business world (Andersen & Skjoett‐Larsen, 2009). The management of supply chains is shifting drastically from the competition between the organizations to the competition between the supply chains. In the event that a firm requires attaining a competitive advantage in the industry, there is overwhelming need for the organization to build a close and long-term relationship with strategic partners and suppliers. Moreover, many large multinational organizations have implemented sustainability strategies, annual reports on their environmental conservation and voluntary conduct codes that explain the commitment of these companies in maintaining their reputation in light of increased environmental awareness. Besides, many companies are yearning to receive accolades of their environmental responsibilities on platforms such as the media and academic institutions. Benefits of sustainable supply chain practices Sustainable supply chain practices maintain a significant position in providing financial benefits to organizations that implement these programs. The organizations adopt a distinct customer focus that guarantees an improvement in the financial and marketing performance of their products. Many consumers demand the purchase of products that are eco friendly, and many organizations strive to attain intelligence that suits the customer demands. In many cases, products that fail to satisfy the customer demand always remain unsold at shelves because they are blatantly unfriendly to the environment (Carter & Liane Easton, 2011). Moreover, with the current campaigns that sensitize consumers on the companies observing environmental conservation, many of these consumers desire these products not just for their utility but more so because of their eco friendly nature. This bond always ensures constant demand of products, hence establishing a growing gain in financial returns for the organization. These systems also reduce the production and supply costs drastically to maintain the corporate strategy of the organizations. Sustainable supply chain management advocates for the collaboration of suppliers and customers within the environmental frameworks. Through enterprise resource planning, adequate information systems are created to support the collaboration between the partners of the supply chain. Through this collaboration, the company achieves an integrated approach towards marketing its product as an environmentally friendly product, backed by the information of all the parties involved in the supply chain. This helps in saving the costs related to advertisement and legal fees incurred due to cases involving degradation of the environment. In addition to financial growth, sustainable management of the supply chain helps in the mitigation of social, market and environmental risks. One of the fundamental concerns of companies that are undertaking the construction and design of new operations is the reduction of risks (Diane, 2011). Sustainable supply chain management techniques have a risk assessment tool that focuses on reducing the risks of supply activities to the comfort of human life. This is the mitigation of social risks, as encountered in the earlier cases of child labour. In addition to that, such risks as poor remuneration and deplorable living standards for the people involved in supply are trampled by the adoption of sustainable supply chain management. Nevertheless, environmental risks include pollution and abuse of the environmental heritage in the choice of a supply chain. The use of heavy machinery that a release toxic effluent into the atmosphere or into water bodies is a practice that historically caused pollution and degradation of the environment. However, with sustainable supply chain management, the concept of supply has been overlooked beyond financial gains (GALASKIEWICZ, 2011). The introduction of more environmentally friendly methods of supply helps in mitigating the risks that accrue to supply, hence helping the organization maintain a social reputation that is credible and reliable. Market risks encompass a wide range of facets within the enterprise sustainability range. In some conditions, the political environment affects the reputation of a brand. For instance, in the entry of Yahoo and Google into the Chinese market, the companies faced a risk of reputational damage for adhering to the Chinese government rule of censorship of certain internet sites. However, using a sustainable supply chain management, the companies maintained a delicate balance between avoiding the reputational hazard and complying with the Chinese laws that orders the blockage of certain sites. In fact, Google managed to establish its brand in Hong Kong, hence overcoming the stigmatization related to laws of censorship. Sustainable supply chain management also promotes the alignment across the supply chain (Zhu, Sarkis & Lai, 2012). To implement the sustainability of an organization, this sustainable supply chain management plays a critical role. Starbucks Corporation represents a leading global coffee seller. Alignment in the supply chain of the coffee used by this company helps to eliminate the intermediaries who often exploit the farmers and tarnish the reputation of the company at the lowest level of the supply chain. However, these bureaucracies are eliminated when Starbucks Corporation mentors and supports coffee farmers in developing countries such as Costa Rica and Ethiopia. These efforts indeed help in building a sustainable supply of coffee to the company. Besides, by securing the supply chain, the company mitigates the risks involving the depletion of product inventory and eliminates the possibilities of fluctuation in the costs of products. While these are to the advantage of the company, the society also notices the efforts of the company in promoting environmentally friendly practices (Green et al., 2012). The corporate social responsibility of a company accrues from the impacts of a company’s operations on the society. Most companies have implemented sustainable supply chain management as a means to minimize the costs of repairing damages of the company’s operations on the surrounding environment. For instance, giant automobile manufacturers Nissan and Toyota face a shortage of batteries that have sufficient energy to support the move towards the manufacture of electric vehicles. However, these companies derived a strategy of manufacturing these products and selling them to competitors. This is a positive gesture of making the products available to other companies within the industry. As seen by the consumers, these companies are concerned about reducing the auto emissions above the creation of revenue. This creates a competitive advantage for the companies in the industry, and adds to the corporate social responsibility of the companies (Zhu & Sarkis, 2004). Barriers to implement sustainable supply chain practices The implementation of sustainable practices is evidently a recipe for improved organizational performance. Nevertheless, there exist barriers that hinder the implementation of these practices by all the companies within an industry. The cost pressures of a company tend to override other initiatives within the business. Many companies have a corporate strategy that aims at adopting a cost effective method towards production and supply of its products (McLellan and Corder, 2013). Therefore, many companies are unable to invest in systems and work forces that may possible oversee their engagement in sustainable supply chain management. In most circumstances, many companies have the perception that their supply chain does not require any changes; hence saving the costs that may have been incurred upon implementing a new strategy of integrated supply chain management. The lack of commitment by the management of various companies also hinders the implementation of a sustainable supply chain. The management of a company holds the mantle of the company and shapes the attitudes of all the stakeholders towards the decisions that the company chooses to make. Lacklustre attitudes towards the implementation of green supply chains often affect the company, hence hindering the implementation of this strategy. Apart from the managerial lack of commitment, inadequate knowledge on the part of consumers and purchasers also contributes largely towards the slow implementation of the sustainable practices. Despite the fact that many campaigns exist to sensitize the consumers on the need to embrace sustainable practices, this information is limited to certain people (Weele, 2010). Many consumers overlook eco friendliness to price and utility, hence making it difficult for the campaign to pressurize manufacturers on the necessity to implement sustainable practices. In addition to inadequacy of knowledge, other factors as reluctance in the organization and poor strategies also limit the implementation of sustainable supply chain management practices. Moreover, external barriers play a critical part in reducing the adoption of sustainable practices. Language and cultural diversity creates a wide pool of standards across geographical settings. The consumers perceive these barriers often as hindrances to competition. Insufficient commitment by the supplier to be part of the integrated processes also hinders the implementation of sustainable practices (Nidumolu, Prahalad and Rangaswami, 2013). In addition to that, other government demands for licensing and operational code of conduct make it difficult for multinational companies to define their sustainable practices as priorities. Benefits of monitoring sustainable supply chain practices The monitoring of supply chain practices helps in ascertaining the authenticity of goods and services in line with the environmentally friendly standards. Through continuous supervision, many companies are obliged to keep up with the industrial regulations that guarantee the survival of companies within a given industry. In addition to that, monitoring enables the governments through its regulators to prevent certain malpractices such as pollution and poor remuneration that often derail the efforts to conserve the environment and promote social equity. The implementation of the supply chain practices is not enough to guarantee the elimination of such practices if the individual participants in these integration processes are unwilling to maintain the stipulated code of conduct (Walker and Jones, 2012). Monitoring, therefore, ensures that the malpractices are eliminated as new supply chain systems are adopted. Furthermore, monitoring of supply chain practices encourages innovation. Since companies are characterized with their eco friendly practices, the innovation and creativity of companies will determine the market leaders in the process that an industry is fully connected to the green supply chain (Rao and Holt, 2005). In addition to that, monitoring enhances the smooth incorporation of closed loop manufacturing to the greatest possible extents. Consequently, monitoring plays a critical role in determining the rewards mechanism for the leading companies that encourage environmental, social and market practices hence obligates other companies to adopt these techniques to guarantee their survival in such an industry. Through creativity and monitoring, the waste products generated from the manufacturing processes are recycled into other products of economic use to the markets. Therefore, monitoring ensures the complete utilization of resources; and ensures that the disposal of wastes is not harmful to the ecosystem. The recycling and re use of materials is a possibility only with the continuous monitoring and sensitization about the exhaustion of usage of materials. Besides, monitoring of supply chain practices helps in the incorporation of total quality management principles especially in countries that have high unemployment levels. Many companies in such countries issue false results concerning worker empowerment, hence creating an unfair and discriminatory working environment for the people involved in both production and supply functions (Souza, 2012). Therefore, with monitoring, the elements of fraud and mismanagement of the human resource are eliminated gradually. Barriers to monitor sustainable supply chain practices Despite the fact that the success of implementing sustainable supply chain practices is dependent on the monitoring, certain barriers hinder the monitoring process hence discouraging the overall implementation process. Lack of government commitment proves to be the biggest hindrance to the monitoring process. The governments have enough legislative powers to create strong institutions that oversee the monitoring of supply chain practices. Despite this, many governments are driven by the motivation to attract many investors for industrialization in their economies, hence viewing monitoring as a negative incentive to the attraction of investors. Inadequate legal and technical frameworks have been established to perform the monitoring process (Swinnen and Vandeplas, 2010). Many people argue that this process adds more cots to the production and supply processes, hence contributing to cost ineffectiveness. This notion discourages the investment of governments and private entities in the formulation of instruments that facilitate the monitoring process. In addition to that, reluctance by the relevant authorities contributes to the inadequate monitoring of supply chain practices. In many developing countries, the governments put in place institutions to perform this function, but along the process, the institutions are infested with poor governance and political interference. This creates an atmosphere of reluctance and bureaucracy in the management of these institutions. Lack of knowledge also plagues the monitoring process. Despite the desire of many authorities to implement the monitoring process, the inadequate knowledge at the disposal of the authority makes it difficult to invest and train people to perform this duty (Szymczak, 2013). Besides, monitoring most of the time receives plenty of condemnation from private investors as a means of unfair competition and government involvement in the competition of a perfectly competitive market. Moreover, monitoring of suppliers by the company illustrates the lack of trust, a virtue that is important in building loyalty in business relationships. This notion often discourages companies from monitoring their supply chain in order to avoid the risk of losing loyal supply intermediaries. Conclusion The role of sustainable supply chain practices is revolutionizing the global business arena (The Chemistry of Sustainable Supply Chains, 2012). Many educational syllabi should take into consideration the introduction of sustainable practices into their systems in order to tackle these problems in less developed countries. 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