Sustainable SCM
Lecture 1
Articles lecture 1 – Montabon (2016)
The key to instrumental logic is that economic performance is the goal, not sustainability. In the
instrumental logic, the triple bottom line is applied. However, one construct becoming more
environmentally or socially sustainable, influences another such as profits. The emphasis on finding
shared value, win-win outcomes or determining when it pays to be green has certainly moved the
field forwards. However, the instrumental logic dominated by economics, especially manifested as
profits.
The instrumental logic has two significant weaknesses. First, this logic is backward looking in that it
studies existing unsustainable supply chains to determine what they are doing to become less
unsustainable. In extant research, sustainability is mainly addressed from the perspective of
what can existing firms do to reduce their harm while maintaining or increasing their profits.
Research of this nature cannot lead to truly sustainable supply chains because it addresses trade-offs
by prioritizing the profits of existing firms over other sustainability outcomes including the survival of
society and the environment. Second, 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. This means that research to date has mainly investigated sustainability-
related performance measures of the focal firm while generally overlooking other members of the
chain and the communities in which the supply chain operates.
The Ecologically Dominant logic is explicit when trade-offs are encountered and is aimed at creating a
truly sustainable supply chain, by prioritising environment then society and only then consider
economics when trade-offs occur. It is aimed at creating a truly sustainable supply chain, not at
reducing the harm from a single focal firm.
When trade-offs are inevitably encountered, the priority is to protect the environment, then society
and only then to consider profits. Moreover, the Ecologically Dominant logic will account for a wider
range of stakeholders and outcomes than the instrumental logic of sustainability. Next, The
instrumental logic emphasizes satisfying customers’ demands while doing the minimal amount of
harm. The Ecologically Dominant logic emphasizes first satisfying environmental and social
constraints and then attempting to meet customer demands. Also, Supply chain managers using the
Ecologically
Dominant logic focus their practices on harm elimination and are only willing to make decisions that
increase profits if they at worst cause no harm to environmental or social systems. Next, Supply chain
managers using the Ecologically Dominant logic will make decisions with a long time horizon that
prevents the harm from occurring. All in all, the adoption of the Ecologically Dominant logic will be
fundamental to the creation of sustainable supply chains.
Lecture 1
Sustainable development: a development that meets the needs of the present without
compromising the ability of future generations to meet their own needs (WDEC, 1987). OR Socially
inclusive and environmentally friendly economic growth (Sachs, 2015). OR the principle of good
governance (Sachs, 2015).
1
,Sustainability is a wicked problem (difficult to solve, with a lot of different people and opinions, the
economic burden, and the interconnected nature of these problems with other problems). And,
who’s responsible to solve this? Everyone! That actually makes it more difficult to solve. Everyone is
pointing at each other. Government can make rules, but people will find loopholes in the laws. It’s
not enough.
The triple bottom line (social, ecological, economic) is simplistic, and it’s interpreted as a win-win
focus: instrumental outcome. They do sustainable, only for things that will also be profitable.
Complex network science is an emerging view with regards to sustainability. It acknowledges
tensions, trade-offs and cross-level linkages. The way the system interacts is not understandable and
unexpected:
Then, a comparison of current sustainability and ecologically dominant logic.
2
, Creating sustainability is
different than reducing
unsustainability.
Creating Sustainability
requires changes at a more
fundamental level, changes
in behavior.
So we need to focus more
on demand-side.
There are several global drivers on sustainable SCM:
- Changing societies (consumer demand transparency, fairness and eco-friendliness)
- Disruptive technologies (social media)
- Global economy
- Environmental issues (e.g. floods)
- Stringent policies (compliance, and anti-corruption measures)
-
And within the companies? What drives it? Top management vision, government regulatory
requirements, nature of business, customer expectations, competition, other stakeholder pressure,
supplier’s green initiatives.
And what are barriers and challenges within companies? Financial costs and low ROI, lack of top
management commitment and resources, shortage of skills and knowledge on green product design
& low carbon economy, lack of visibility and high complexity of supply chains, insufficient
communication in supply chains, poor supplier commitment, firm’s previous sustainability
experiences and product prices.
Visibility within the supply chain is mainly very hard. You first need to know who is in your supply
chain (a lot of companies don’t know). They often don’t know where the raw materials come from.
Even if there’s budget + motivation, it therefore is still very hard.
There are several stakeholders for sustainable SCM: investors (related to risk management +
sustainability reporting), customers, employees, political leaders & industry alliances (legislation +
support).
Leading firm perspective (one main visible firm, like Apple or Philips). The pressure of government,
customers and other stakeholders is mostly put on those leading firms. Those have to communicate
that to their suppliers.
You can have push factures (pressures): legal demands/regulation, customer demands, reputation
loss, environmental and social pressure groups.
Pull factors are incentives: satisfied bustomers, competitive advantage (market share + higher
profits).
3
, Traditionally, there were external pressures to global brands. Those made codes of conduct, and
then did monitoring / factory audits. The results of these audits let to either brands that exit the
factories or to improved working conditions (and continue the relationships).
BUT, codes of conduct don’t work. Suppliers are good in deceiving the auditors. It works better to
have commitment, and develop collaboration and a cooperative relationship. Try to develop good
rules by seeing the situation.
So we need to go from
compliance to commitment
approaches. Collaborative
approaches are needed to
understand the local socio-
cultural institutional
settings/constraints and to
jointly develop solutions
which are good for the local
context.
Articles lecture 2
Lampikoski et al (2014)
There are four green innovation games: Rationality, Collaboration, Radical and clarity. See next page
for the table.
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