Performance Indicators in Sustainable Supply Chain Management - Coursework Example

Performance Indicators in Sustainable Supply Chain Management Student’s Name Registration Number Course Date Abstract A lot of interest is growing among the researchers and practitioners with respect to the environmental performance of global supply chains. However, the burning issue is whether the improvement in environmental performance through a single link of supply chain will really lead to the entire improvement of the sustainability of the chain. The sustainability in this case should factor in the economic, social and the resulting environmental outcomes. In trying to find the right answer to this question which is very much possible without the consideration of performance measurements, this paper’s aim is to answer the question: Which goals, needs and challenges that are there to the whole of the perspective of the supply chain sustainability? As it seeks to come up with the answer to this question, the paper takes care of accomplishing three major factors. Firstly, the paper factored in the review of several articles and books with the objective of providing the overview of the present methods applicable in the improvement of the business sustainability as well as the measurement of its performance. Secondly, there is the inclusion of a new framework within the supply chain sustainability. Thirdly, the propositions in the research shares relationship with the global supply chain sustainability measurement. In this regard, this research indeed comes with it impacts to the scholars who may apply the framework and the propositions with the objective of providing direction to new theoretical and empirical analysis. On the same note, the research has implications to practitioners such as managers, policy makers and community stakeholders who have interests in the development of the global supply chains into becoming more sustainable. Introduction Over the last few years, most firms put a lot of energy in their bids to ensure that their businesses “go green”. The effects of these efforts emerged from external pressures similar to instances such as increment in regulations and changes with the consumer preference. Other also include those forces that came from those within the organizations themselves such as firm’s values with respect to the kind of leadership taking place in the organization altogether (Pagell and Shevchenko, 2014). An example in this case is that instance where large appliances’ manufactures have to abide with new regulations with respect to the product recovery so that they conform to the design that will suit the next level of generations of washers and driers. In United States for instance, drivers were initially in love with large SUVs but presently prefer the top dollar that is a bit small in size and also friendlier to the environment type of hybrid model of vehicles (Schwartz, Tapper and Font, 2008). The instance is due to the analysis that the manufactures did with regard to the production of wastes from these vehicles as they sought for ways that could lead to their reduction, energy saving and also creation of other alternatives for those who would love to use the byproducts from the machines altogether. In this regard, majority of firms, governments and citizens as present see the urge to go past green and consequently have a lot of thoughts with regards to factoring of the aspect of sustainability in their daily operations (Teuteberg, 2011). Considering the so far presented issues with regard to the adoption of sustainability with the operational activities in a firm, it is therefore too important to give the general meaning of the term sustainability itself. For this reason, sustainability refers to the economic parties with the objective of satisfying the needs of the present without creating a hindrance blocks on the capability of the future generations in full filing their needs. Relying on this definition of sustainability, with regards to sustainable supply chain, it, in this case refers to that type of operation that leads to the generation of competitive returns on the capital assets with creation of the sacrifices on the basic needs of both internal and external stakeholders and in so doing creating impacts of its operations on people and environment (Wang and Sarkis, 2013). In the past studies concerned with supply chain sustainability, there were two broad classification of the aspect (Arif-Uz-Zaman and Nazmul Ahsan, 2014). First in this classification concentrated on the locals with the objective of ensuring that the realize improvement in sustainability. In this regard, the topic majorly tackled on the tools and the techniques that many firms applied as they seek to improve environmental performance as wells the efforts they put to meet such objectives especially to the external stakeholders. In this regard, there is a critical question that arises due to this research; Is it that causing improvement with respect to one dimension of sustainability for a single link in the supply chain will indeed lead to the increment in the whole of the sustainability supply chain? Elsewhere, the other broad field of the research that early studies focused on in line with the sustainability in the supply chain management is that aspect that concentrated on the global performance measurement (Bajdor, 2013). In this case, this aspect was more of concerned with the way to carry out the evaluations concerned with performance of industries, economies as well as countries. Following this instance, this broad area encompasses very many composite indicators such as multidimensional measures with their objective of evaluating on the complicated concepts (Bajdor, 2013). Such complex concepts are the human well-being, industrial competitiveness, and the performance of health care systems. Though there are as much valuable lessons possible to learn from this work, the fact still remains that it neither results into practical performance parameters or measures than in this case the managers may apply in ensuring improvement in the supply chain sustainability. Review of Sustainability Tools As already said earlier, many firms have a lot interests in sustainability with so many reasons behind of which some of this reasons may either be internal or external in nature. With regards to the same, the first major concern revolves on the local issues (Karol, and Brunner, 2009). The issues here are those that cover on the internal cases plus their way of management. In this regard, below are the four ways that the firms with regards to the sustainability tools. Decision-Making Tools The moment a firm decides to take an action in relation to sustainability, the ever burning question is where the firm itself should begin from in implementing the objective altogether. All along most of the tools and methods that were in existence as far as twenty to thirty years ago indeed help in the fulfillment of the sustainability concepts in a business through decision making process (Karol, and Brunner, 2009).For example, the Life Cycle Assessment, LCA is that tool useful in the evaluation of the impact of environment on a product through identification and measurement of all the components as well as energy needed in production, delivery and the consumption of a particular product (Karol, and Brunner, 2009). As much as LCA is such an important and also a powerful tool, at some occasions it not be easy to use it in obtaining data that revolves on the subjective evaluations through those carrying out the analysis. On top of this, its main focus is on the environmental factors. Instead of giving an attention to the impacts created on the environment, there are some research studies that pay attention to the instruments that evaluate the costs and benefits of undertaking green practices (Pagell and Shevchenko, 2014). For instance, one of these studies gives the proposals with regard to frameworks that lead to the evaluation of the costs for the whole supply chain through use of the fashion industry as the base. The other study on its part presents a discussion on the development and the application of the methods helpful in the measurement of the environmental cost and the benefits that it has on small and medium sized organizations (Schwartz, Tapper and Font, 2008). From another study, it postulates that the traditional instance of productivity cases of measurement does not on its part capture the complex economic and technical efficiencies with regards to production processes (Lee and Kashmanian, 2013). However, it proceeds to give a new measure that in these cases is the summation of economic, environmental, quality, and productivity performance indices. In relation to the ideas above, to a much higher levels, another study suggests the methodology useful in the evaluation of the economical side of the impacts that arise from the innovations taking place in a environment with the intention of coming up with numeric index known as the global efficiency ratio (Karol and Brunner, 2009). Added to this, another study came up with a two step methodology that helps in the evaluation of the conscious manufacturing programs. Another study on its part presents a discussion on the way a balanced scorecard approach may be useful in tracking the major environmental, social and economic parameters of performance (Khoshnoodi, Fazlollahtabar and Mahdavi, 2013). In this regard, it enables the managers to have a beyond scope coverage with regards to the single measurement of performance. The other last study over the same came up with the analytical guidelines that may assist the firms in incorporating the sustainability factors in longer durations and at the same time factoring in the strategic decisions (Giese and Trockel, 2011). Following the reviews so presented above, they indeed have a critical role in enhancing the improvement in environmental and sustainability performance in many firms. On top of this, it may sometimes be elusive in measuring these improvements. Environmental and Sustainability Reporting One of the ways by which firms may ensure the improvement of sustainability and signal concerns with regard to issues above the financial scope is through creation of the respective reports on their sustainability performance (Krätzig and Warren-Kretzschmar, 2014). For instance, most of these reports have a lot of concerns with the issue of environmental performance and as such lead to the separation of the obvious yearly reports. Based on this perspective, the case of Triple Bottom Line, TBL accounting which is another basic form of sustainability reporting defines the expansion of the traditional accounting of financial performance to include environmental and social performance. TBL accounting for instance is works on the basis that businesses must provide solutions to stakeholders such as those under the influence of the actions that are within the firm (Golicic and Smith, 2013). As much as TBL is gaining rapid popularity in its application, there are however, very few cases that are still in existence over the same and again the benefits that firms get with regards to this mode of reporting still remain unclear. Apart from TBL reporting, there is the case of the corporate environmental reporting developed by the Polaroid. In this type of reporting, it provides the wider measures of performance and the best standards applicable (Krätzig and Warren-Kretzschmar, 2014). On the other hand, Global Reporting Initiative, GRI which is a nonprofit, collaborative effort seeks to enhance the development of the standards with regards to sustainability reporting. On top of GRI, there is also the Global Environmental Management Initiative that refers to the group of firms that work together with the objective of fostering the issues of health and safety in a particular of environment (Golicic and Smith, 2013). However, instead of promoting the generic guidelines in reporting, GEMI provides the information those talks on tools and practices as well as the attempts that promote leadership in the EHS management and sustainable development. According to one of the recent studies, it shows that the issue of sustainability reporting rates has a dramatic significant increment over the past few years (Teuteberg, 2011). For instance, in United States that was ever behind with respect to the same, noted double reporting cases since the year 2005. Though this incidence may appear encouraging, the previous studies gave a suggestion that many firms involve in sustainability and environmental reporting primarily for symbolic reasons instead of the genuine concern with regards to accountability to cover wide stakeholders (Teuteberg, 2011). Following this instance, the increment in reporting may not always provide a reflection on the cases of increased sustainability. Hence, firms have the option of making a choice on which kind of information to report on and as a result, there is no obvious drive to give attention on the positive results. That said the findings are more of objective in the measurement of sustainability performance as it seeks to make it more useful. Green Sourcing By incorporation of environmental issues with regards purchasing policies also emerges as one of the ways by which many firms make attempts in ensuring increment in the sustainability of their business operations (Cucchiella and Koh, 2012). In this regard, these firms are able to work with their suppliers in fining raw materials that come with reduced environmental impacts. Added to the some studies are presently available with details on the issue of green sourcing and also its practical applications. Based on this aspect, there is a study that proposes that the measurement of environmental performance in relation to the original manufacture of equipments may find it applicable in the evaluation of their potential suppliers by use of set of equations that explains on the relationship between inputs and outputs of a production process (Wang and Sarkis, 2013). Similarly, the use of quantitative technique in the evaluation of the suppliers with regard to the number of dimensions plus even the waste management and their certifications as well as the compliance with regulations stipulated by the government (Cucchiella and Koh, 2012). Meanwhile the use of case based approach may also help in the identification of the major focus areas that lead to the improvement in the purchase functions in relation to the impact on environmental performance altogether. Following this instance, this research with regards to supplier evaluation encompasses the environmental dimension and does so only for a single link in the supply chain. Supplier Codes of Conduct Supplier Codes of Conduct, SCC are basically the voluntary required, delineated desirable and also desirable behaviors that suppliers may have with them. SCC is indeed the major mechanisms whereby large corporations seek to incorporate the ethical behaviors on the side of suppliers who do business with them (Elena Windolph, Schaltegger and Herzig, 2014). For instance, SCC deals on issues pertaining to labor since they form part of the social dimension of supply chain sustainability. On the same note, initially, there were great concerns on the issues about the environmental dimension so as to be of a more degree, the social dimension of sustainability of businesses. However, from most of the studies, they only gave a lot of attention on the single processes or firms where in this case they only gave attention to one dimension at a particular time (Elena Windolph, Schaltegger and Herzig, 2014). On the other hand, work examining the larger context of supply chain may be more of descriptive in its nature altogether. Despite that they form the basic steps in understanding the issue of sustainability, there is still more effort required concerned with the instance of the supply chain links and at the same time the measures that seem to integrate with the multiple dimensions of performance. Review of Performance Evaluation Methods Most studies have attempts in the measurement of the industry’s performance in relation to economy and within the country level of performance with respect to various dimensions. Consequently, it is the outcomes from these studies that enhance the understanding of the instance of global supply chain sustainability measurement through also factoring in the benefits that accompanies the examination of these methods altogether. Closed-Loop Supply Chains Supply chain is that term that defines the system of people, activities, information, and other resources designed to transform raw materials into finished goods and services and ensure that they are within reach of the potential consumer (Ince and Yazar Soyadı, 2015). In this regard, the most essential change in the supply chain management over the past twenty years is the instance of the expansion of the definition of the term supply chain to encompass the open loop to closed loop supply chain. In this regard, the definition entails the reverse flow of materials and wastes. With regards to studies on closed loop supply chains, the study primarily paid attention on the reversed logistics and also the process that were essential in recovering, manufacture and recycling of the products (Johnson, 2013). For instance, there are various quantitative models in relation to the close loop supply chains with the inclusion of those that addresses the design of the network, production plans and the management of the inventory altogether. On the other hand, as much as product recovery and reverse logistics may those critical topics, they only small part of wider knowledge concerned with the green supply chains Supply Chain Performance Measurement Concerning the issue of the supply chain performance measurement, there is one study that introduces the framework applicable in the measurement of the supply chain performance in various fields (Arif-Uz-Zaman and Nazmul Ahsan, 2014). The same study also gives the suggestions on the metrics applicable to various dimensions and also studies in connection with supply chain (Giese and Trockel, 2011). Added to this, there is another study that concludes that there is indeed a lot of interests in the evaluation of the instance of the performance measurement though there are some uncertainty on how to handle the issue effectively. Likewise, the studies also presents on the challenges that is there in the measurement of the supply chain performance. Indeed, one of the essential tools in the evaluation of the supply chain performance is the Supply Chain Operations Reference model, SCOR. SCOR refers to the framework that gives the description, measurement and comparison of the supply chains (Arif-Uz-Zaman and Nazmul Ahsan, 2014). With regards to the same, the latest version of SCOR entails the metrics that seek to enhance improvement in the sustainability (Ince and Yazar Soyadı, 2015). For instance, the target here is the emissions cost per unit and the waste released expressed in terms of percentage of the product produced. On the other hand, most efforts are in place towards ensuring that supply chain sustainability focuses on environmental issues. Added to this, there are other studies that extend an olive branch to LCA and other related methods to supply chains such as the studies on emissions of carbon dioxide in the supply chains specifically with reference to the wine distribution. Another research study came up with the methodology that assesses the environmental impact of a given product as well as the processes leading to its production (Lutz, Vang and Raffield, 2012). In this regard, there is the development of a measurement that encompasses the social, ecological and the economical impacts of a particular product with regards to dimensions such as manufacturing, packaging, use, and disposal. For instance, the study develops a model that examines the tradeoffs that exist on various dimensions of performance within the entire supply chain Composite Performance Indicators Definitely, economists, sociologists, ecologists, policy makers, and other scholars all along sought to carry on measurement on the performance of a country in line with one or many dimensions (Karol and Brunner, 2009). The same way as Gross Domestic Product, GDP is the agreed way of measuring the level of any country’s fortitude, there are however some indices in place that also measures the country’s performance in relation to various dimensions such as healthcare and the well being of the citizens in particular (Wang and Sarkis, 2013). That said what emerges to be one of the composite metric is the aspect of the Environmental Sustainability Index, ESI. ESI, which is an invention of the academic and government institutions, provides the benchmark in determining the ability of the nations as they seek to enhance the protection of the environment in the next years to come (Mrak, 2013). In this regard, the index utilizes seventy six variables that in this case capture all the information content related to the resources, policies, and performance of about 150 nations in the world. On top of this, there is the reduction of the seventy six variables into twenty one indicators. For this reason, each country’s ESI score is attainable through applying the twenty one indicators (Wang and Sarkis, 2013). However, the five major factors that the twenty indicators rely on such as environmental systems and social capacities have their definitions well stipulated. Measuring Global Supply Chain Sustainability The scope of this section is to present on the development of the quantitative measure of supply chain sustainability (Bajdor, 2013). In this regard, this section enhances the objective of this study which is to lay the base for the measurement that captures the views in enhancing a more complex and also multi-dimensional concept. Following this instance, the below shall form part of the aspects applicable in the measurement of global supply chain sustainability. Building Blocks Building blocks entails a measure of that incorporates the factors beginning from more than one dimension instead of the s ingle dimension and in turn providing a more comprehensive scope of sustainability (Baird, 2009). However, the main concern is that it has various challenges with regard to measurement. Following this instance, there are five stages in the development of the composite indicators. First is the development of a theoretical framework followed the development of related variables. The third stage is the standardization of variables and then weighing of the variables in the group. Finally the last stage is the performance of the sensitivity s analysis. In spite of this, there are challenges that accompanies the development of these stages of composite indicates. For instance, one of the challenges is the development of the framework. In this case, most of sustainability frameworks rely on the context of performances within the country levels (Lee and Kashmanian, 2013). By using some of these frameworks as a foundation leads to the framework applicable in the assessment of the sustainability in an industry. The concept presented in this context is in turn what finds their applications within the context of the global supply chain (Markman and Krause, 2014). The reason is because the framework offers the lens in which an individual is at a position to understand the aspect of sustainability. In the end, he or she will know the major effects where each of the variables have or include in the construct altogether. Environmental Sustainability Measures and Indicators Sustainability itself entails those factors in three broad dimensions such as environment, society, and economy (Cagnazzo, Taticchi and Brun, 2010). In this regard, the environmental factors of sustainability are the natural environmental components. The natural components here are both the living and the non living things since they naturally exist on the earth. Examples of these are land, water, plants and animals. For this reason, factoring improvement in the environmental sustainability in this case is simply the reduction of the ecological footprint of the supply chain (Chen, Honda, Hosoda and Hayase, 2014). Considering the three dimensions, the aspect of supply chain management is the most studied area so far. For example, from one the studies, it states that there are indeed more than fifty environmental performance indicators whereby evaluation of the suppliers is possible. Elsewhere, there are also various factors in relation to the environmental sustainability. In this regard, the environmental factor indicators of sustainability are in six categories (Golicic, and Smith, 2013). First is the air which defines the local impacts that accrue from carbon monoxide emissions, as well as global impacts, such as ozone depletion (Huang, Fu, Pan and Chen, 2012). The other factor is water which encompasses both quality and quantity impacts such as toxic releases and also the total usage (Krätzig and Warren-Kretzschmar, 2014). On its part, land as an environmental factor of sustainability refers to the extent by which the utilization of the same land occurs plus the resulting impacts of its use such as pollution effects. The fourth factor which is the materials entails the quantity of material used, the type of material used, and the potential effects of that material (Ince and Yazar Soyadı, Y, 2015). Meanwhile the use of non-renewable mineral and energy resources falls in the category of minerals and energy factors of sustainability. The last factor which is the institution or systems entails the values, procedures, and systems that are either both internal and external in relation to the environment. Conclusion The paper presents a theoretical base with regards to the knowledge concerning the development of an objective measure of the global chain supply sustainability. Consequently, the paper develops three contributions as it seeks to meet this goal. First of all, the paper offers a review of the tools and methodologies that as at present many businesses use in the incorporation of the instance of sustainability within their business practices. Secondly, the paper also gives an introduction of the framework of thoughts applicable in the exploration of the supply chain sustainability. 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