Chapter 8: Sustainability

Sustainable Supply Chain management

refers to ensuring that all supply chain management operations are done in a way whereby sustainability practices is integrated throughout the supply chain hence maintaining competitiveness along with customer satisfaction

Importance of Sustainability in SCM

• Consumer demand - consumers are mroe aware of unethical practices hence they will avoid companies that engage in these behaviors (forced labor, child labor, dumping)

• Investor Demand - investors now focus more on companies that integrate sustainable supply chain practices (hesistant to invest in companies that dont have sustainable process)

• Climate change and global disruption - with large scale manufacturing and global production corporations are able to make changes to mitigate environmental, consumer and community damage (pollution etc.)

Sustainable design and production

Life cycle assessment valuates the environmental impact of a product from the raw material and energy input → disposal (end of its life). The goal of this is to ensure sustainable design and production to minimize environmental impact this can be done by implementing the 3Rs

3 R’s

recycle - refers to reusing raw materials or converting waste into products

reuse - refers to reusing a product and avoiding waste (reusable cups, straws, bottles

reduce - reduce the use of harmful materials and also cutting down on packaging, shipping materials

Why companies should be sustainable?

• Reduce waste and costs - by using sustainable materials and process can help cut down expenses and eliminate inefficiencies (example using Solar powered factory can reduce long run utility costs)

• Manage risks - by being sustainable and environmental friendly companies can avoid media backlashes, damaged reputation/brand image and avoid legal fines/lawsuit

• Sustain in global market - nowadays consumers are moving towards products that are eco friendly and environmental friendly (some countries make it a mandate to do so)

Issues affecting sustainability

• Product design - affects how eco friendly a product is (example: glued components in laptops make them hard to individually replace leading to full disposal)

• Product returns - returns products often end up being waste as sometimes restocking cost are high and product damage

• Extension of Product Life Cycle - products can made to last longer/reusable (costlier to do so)

• End-of-life disposal - the way products are disposed can help or harm the environment

• Recycling - struggling turn waste product into new products

• Refurbishment - difficult turn discarded products and restore them back to usable condition

• Remanufacturing - costly to rebuild products back to new conditions

• Resource substitution - expensive replace harmful products with safer alternatives

• Source reduction - riskier using less materials or smarter designs

• Packaging - Excessive use of packaging materials adds to waste

Types of sustainability

• Social

• Economic

• Environmental

Social Sustainability

refers to managing risk of reputation ensuring ethical labor practices, working conditions to protect brand image and company reputation creating a competitive advantage by doing so

Economic Sustainability

refers to making sustainability profitable by saving costs (cost efficiency) or increase brand value and investor interest/value

Environmental Sustainability

refers to reducing environmental impact through better shipping, packing, disposal, sourcing and manufacturing processes to reduce environmental harm and obey regulations (avoid fines and legal lawsuits)