Sustainable Supply Chain Management Master Supply Chain Management
Articles with slides Author: Andreas S. Melisse
Lecture 1 – Monday 12-04-2021
Making Sustainability Sustainable – Montabon, F., Pagell, M., & Wu. Z. (2016)
Sustainable development is a development that meets the needs of the present without compromising the ability
of future generations to meet their own needs, the socially inclusive and environmentally friendly economic
growth, and the principle of good governance. A wicked problem is a social or cultural problem that is difficult or
impossible to solve for as many as four reasons: incomplete or contradictory knowledge, the number of people
and opinions involved, the large economic burden, and the interconnected nature of these problems with other
problems. Traditional view: Triple Bottom Line (local environment, social equity, and sustainable economy; win-
win focus), while emerging view: sustainability as complex network science; acknowledges tensions, trade-offs
and cross-level linkages.
Introduction
Instrumental logic is defined as treating the social and environmental aspects discretely and sequentially as if
such issues are emerging distractions and they explain that this logic has its foundations in stakeholder theory,
which places the firm in the centre of a stakeholder network and views these stakeholders as either enables or
inhibitors of the firm’s primary goal of creating wealth. The key to instrumental logic is that economic
performance is the goal, not sustainability. The instrumental logic has two significant weaknesses and motives
this study to offer an alternative, the Ecologically Dominant (ED). (1) this logic is backward looking
in that it studies existing unsustainable supply chains to determine what they are doing to become
less unsustainable, and (2) while sustainable supply chain research is ostensibly aimed at the entire
chain and all of its stakeholders, the reality is that it is usually conducted from the perspective of
a focal firm. The Ecologically Dominant logic is explicit in its priorities when trade-offs are
encountered and is aimed at creating a truly sustainable supply chain, not at reducing the harm
from a single focal firm. Here, economic and social systems exist inside of and depend upon
environmental systems. Sustainable development emphasizes the interactions between three
complex systems. Sustainable development as the science of complex systems. Emerging properties of complex
systems – characteristics emerge from the interactions of the components to produce something that is, more
than the sum of its parts. Unexpected characteristics, nonlinear way to respond to shocks.
The need for a new logic
Culture is typically viewed as an organization’s or society’s values, beliefs, and ideology. It is built on the deeper
level of logics or cognitions, which are often preconscious and complex combinations of problem-solving routines
and cognitive elements such as assumptions and decision-making rubrics. Logic refers to the framework that
guide research and practice in sustainable SCM, it drives organizational and individual cognitions and decisions.
Cognitions are driven by the logic but occur at the individual, firm or supply chain level, and reflect how decisions
are made within the supply chain.
The Triple Bottom Line has been a dominant concept in sustainability research. It is defined as an accounting
framework that incorporates three dimensions of performance: social, environmental and financial. The
Resource-Based View is an integrative theory of sustainability with the natural environment as a key constraint.
Firms and supply chains can be environmentally friendly and make a profit. Creating shared value is defined as
policies and operating practices that enhance the competitiveness of a company while simultaneously advancing
the economic and social conditions in the communities in which it operates.
Development of a new logic
Defining sustainability as the progressive maintenance of the life-supporting capacities of the planet’s
ecosystems requires the subordination of traditional economic criteria to criteria based on social and ecological
values. If economic-based actions destroy the environment, mankind itself becomes unsustainable. The
environment therefore is the central constraint of our proposed Ecologically Dominant logic. Sustainability is not
conceptually instrumental, but it is generally researched and implemented in an instrumental manner that gives
primacy to profits over environmental and social outcomes. This then creates a feedback loop where becoming
less unsustainable is conflated with becoming sustainable, effectively enabling organizational irresponsibility any
time there is a trade-off between profits and other outcomes. Ecologically Dominant logic explicitly places profits
in a subservient position to the environment and society. Adopting the Ecologically Dominant logic will likely lead
to significant creative destruction, starting with instrumental logic that has led to unsustainable supply chains.
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, Sustainable Supply Chain Management Master Supply Chain Management
Articles with slides Author: Andreas S. Melisse
Research propositions
The Ecologically Dominant logic in essence
says make as much money as possible after
you have satisfied ecological and societal
stakeholders. Waste reduction is likely to
improve the environment’s ability to sustain
life and increase a supply chain’s profits. The
Ecologically Dominant logic is an explicit
attempt to shift norms and values to change
the institutional logic of managers and
researchers.
Discussion
The framework is offered to spur future
research aimed at creating truly sustainable
supply chains. The propositions suggest that this will require significant measurement development as well as
new research questions. The first proposition presents the research challenge of measuring and identifying
supply chains that use the Ecologically Dominant logic. The second research proposition asks about the relative
importance of various stakeholders in supply chain decisions. The third research proposition asks researchers to
consider whether a supply chain considers customer demand in conjunction (or not) with environmental and
social concerns. Propositions 4 and 5 offer additional guidance for creating measurements. The last proposition
gets to the heart of the matter, which is achieving sustainable supply chains, as opposed to making unsustainable
supply chains less unsustainable.
Conclusion
The Ecologically Dominant logic can lead to the development of sustainable supply chains; the instrumental logic
cannot. In the instrumental logic sustainability is approached from the standpoint of “Is it good for the firm?”
This inside-out logic limits the stakeholders and impacts that the firm considers and pushes the supply chain to
focus on win-win opportunities in the guise of total quality environmental management, shared value and the
like. These decisions tend to focus on incremental changes to the supply chains that are done with relatively
short time horizons. The end result is organized irresponsibility where the improvements made lead to bring less
unsustainable but cannot lead to sustainability because the trade-offs inherent in sustainability are never fully
addressed. In the Ecologically Dominant logic supply chain managers start by assessing the impact of their
economic activity in the environment and society. This outside-in logic leads to the consideration of a wide range
of stakeholders and outcomes and forces the supply chain to focus on doing no harm. In order to survive
economically, a supply chain functioning under this logic will have to significantly alter both what they do and
how they do it. In so doing, they will also likely identify opportunities to refocus existing practices toward harm
elimination instead of profit maximization. These changes require a long time horizon and a willingness to take
responsibility for the organization, even when that means not satisfying certain customer demands. Following
this trajectory can lead to solutions to the complex problems of sustainability and does not lead to organized
irresponsibility; rather, it leads to sustainable supply chains. The normative Ecologically Dominant logic provides
a clear nested hierarchy for the elements of the Triple Bottom Line.
Slides Sustainable Supply Chain Management (Spring 2021 Session 1)
Comparison of Current Sustainability and Ecologically Dominant Logic
Current Sustainability Logic Ecologically Dominant Logic
Relationship among environmental, All are equal-efforts that create shared value or The three are nested. Need to satisfy
social and economic which are less unsustainable are acceptable environmental, then social prior to economic
Time horizon Short Long term
Practical reality Satisfies customers’ expectations while doing least Does not harm while satisfying customers’
amount of harm expectations
Outcome Organized irresponsibility / tragedy of commons Integrated sustainable supply chains
Cognition-managers If it is not profitable you do not do it If it harms environment or society you do not do it
Cognition-researchers Does it pay to be green? How to be profitable while doing no harm
Looking for win-win outcomes Conservation
Efficiency (gross domestic product) Well-being (gross domestic happiness)
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, Sustainable Supply Chain Management Master Supply Chain Management
Articles with slides Author: Andreas S. Melisse
Supply side (Efficiency approaches) Demand-side (Sufficiency approaches)
Focus in business studies Focus in ecological economics, recent adaption in business
studies
Moderation of production inputs of materials, energy and Moderation of end-user consumption
labour
Eco-efficiency New ways of consumption habits, lifestyle and behaviour
Production-focused Change of mindsets
E.g. energy reduction techniques, CO2 emissions E.g. focus on functionality rather than ownership
techniques
E.g. boiling only the amount of water needed for a cup of E.g. doing without the cup of coffee.
coffee
Creating sustainability is not the same as reducing unsustainability. Most sustainability approaches adopted by
companies are rather quick-fixes. Eco-efficiency or material productivity are being less bad type of solutions.
Creating sustainability: (1) requires changes at a more fundamental level, changes in behaviour; (2) consumer
education, communication and awareness; (3) demand management; (4) product longevity; and (5) frugal
business models.
Sustainable SCM – Relevant global trends and drivers
• Changing societies. Consumer demand for transparency, fairness and eco-friendliness of business
processes.
• Disruptive technologies. Social, mobile, cloud, big-data and green technologies.
• Global economy. High levels of off-shore production with low impact on global income equality.
• Environmental issues. breaking levels of pollution overexploitation of resources and growing resource
scarcity.
• Stringent policies. Compliance and anti-corruption measures, social and environmental standards for
businesses.
Sustainable SCM – Drivers and barriers
• Drivers and Motivations. Top management vision; Government regulatory requirements; Nature of
business; Customer expectations; Competition; Other stakeholder pressure (e.g. NGO); and Supplier’s
green initiatives.
• Barriers and Challenges. Financial cost and low ROI; Lack of top management commitment and
resources; Shortage of skills and knowledge on green product design, low carbon economy, etc.; Lack
of visibility and high complexity of supply chains; Insufficient communication in supply chains; Poor
supplier commitment (due to size, location, skills, culture); Firm’s previous sustainability experiences;
and Product prices. Key Barrier: Achieving SC Visibility.
From Compliance to Commitment Approaches
Compliance Commitment
Approach Rules or standards focus, meeting standards Uncovering, analysing and correcting root causes
or current issues
Mechanisms Policing, detailed audit protocols (checklists), Joint problem solving, information sharing, trust,
inspections, documentation reciprocity
Dynamics Us versus them, functional division of labour, Mentoring, coaching, diffusion of best practices,
mixed signals integration of standards with operational
excellence
Drivers of change Repeated audits, pressures from above, (negative) Learning, capacity building, (positive) incentives,
incentives mutual respect
Collaborative approaches are needed to understand the local socio-cultural-institutional settings/constraints and to jointly develop solutions
which work for the local context.
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