Exploring Themes and Challenges in Developing Sustainable Supply Chains - A Complexity Theory Perspective

University dissertation from Lund University (Media-Tryck)

Abstract: Popular Abstract in English If you wonder about the journey of goods and services before they reach you and the effects that journey has on the natural environment and the society, this dissertation is for you. In order to deliver goods and services from raw materials to you, the customer/consumer, several organizations and individuals interact with each other. They source the materials, manufacture or produce the products, pack and handle them, transport and distribute them, and ultimately sell them. These interactions and activities make up the supply chain (SC). Supply chain management (SCM) involves the management and integration of these interactions and activities. Numerous evidence-based studies show that SCM can increase your satisfaction as a customer and consumer, meet your demands, and reduce costs and conflicts for the organizations, businesses and individuals involved. Businesses are beginning to realize that SCs have several negative effects on their surrounding natural environment and societies that should be minimized. Examples of these are that SCs are still dependent on fossil fuels and nonrenewable natural resources. They give rise to atmospheric, land, water, noise, air pollution; lead to waste, congestion, injuries, and accidents; produce/manufacture and trade goods and services according to unethical laws and standards; and abuse human as well as employees’ rights. If remedies for mitigating the negative effects are not found soon, the costs will be too high for future generations to cope with the effects. It might also be too late for them to find and implement long-term solutions to keep our planet a sustainable place to live and our businesses sustainable to operate. The purpose of this research was to explore themes (topics, activities) in developing sustainable SCs so that the negative effects can be minimized. It also explored challenges (difficulties, obstacles, or dilemmas) that can hinder sustainable development of SCs. In-depth studies of logistical services and activities were carried out because they have not been well examined with a sustainability lens. The results revealed a pattern of themes in developing sustainable SCs. The first theme originated from the direct characteristics of sustainable goods and services. Goods and services can be sustainable if they are effective and efficient with minimized pollution, if they are sourced from renewable raw materials and natural resources, and are recyclable, safe, healthy, secure, and transparently traceable. This means that appropriate steps should be taken to generate goods and services sustainably so that all sorts of waste, emissions, toxicants, noise and air pollution are minimized. The second theme was related to sustainability in the resources necessary for generating goods and services, including the physical, financial, human, and intangible ones. Among the aspects discussed are: effectiveness and efficiency (appropriate resources, rightly utilized) with minimized pollution; recyclability; safety; security; respecting the rights of employees; developing a learning context; exploring and exploiting innovation; fostering diversity; employee development; protecting trust, brand, and reputation; maintaining and continuing business relationships; dealing with risks; as well as resistance and resilience. Sustainability does not emerge in just the goods, services, and resources of SCs, though. The third theme sheds light on inter-processes and interrelationships in sustainable SCs including the flows of goods and services from suppliers to consumers and vice versa that should be integrated. All the businesses involved should take and share responsibilities in following the ethical norms and minimum standards and requirements. They should also be responsible and collaborative in their relationships with others. Businesses also have responsibilities in developing their societies such as social investment, supporting public services, and vi philanthropy. Finally, the fourth theme underlined managerial and governmental activities in developing SCs. The results also revealed the pattern of the challenges in developing sustainable SCs. The first challenge was to shift the values in the supply chains in a way that the two non-economic pillars of sustainable development (environmental and social friendliness) are equally weighted with the economic pillar. This can hinder sustainable development of SCs when short-term costs are in focus or when customers prioritize financial criteria such as delivery time, price, functionality, and service-rate ahead of environmental and social criteria such as recyclability, emissions, and working conditions or rights of employees. The second challenge was related to the difficulties of operationalization due to asymmetric knowledge in the interpretation of criteria for sustainable development in different parts of SCs; difficulties in changing the resistant, reluctant, disregarding, or short-term mind-sets and behaviors; and uncertainties about short- and long-term changes that might affect SCs. The third challenge was dealing with the increasing complexity associated with the sustainable development of SCs. The first dimension that contributes to this complexity is the difficulty in evaluating SC sustainability. This is due to the subjectivity in defining the changing SC boundaries, the organizations and individuals involved, as well as the multiple ways that SC activities affect or are affected by their surrounding societies and environments. The second dimension relates to leakage/spillovers in open SCs because of the shift of emissions from one sector to another (from transport to production of electricity, for example) or from one country to another. Leakage may also occur when a stakeholder evades its responsibilities or externalizes its social and environmental degradation costs by transferring to or sourcing from places or stakeholders with looser regulations and standards. The third dimension involves several trade-offs that exist in the sustainable development of SCs, where making one part sustainable leads to unsustainability in another. There are also several conflicts of a paradoxical character that simultaneously exist in the managing and governing of sustainable SCs. The fourth challenge was related to the difficulties in corporate governance of sustainable SCs due to the large scale of interactions and activities. There are several contexts where supply chains operate, ranging from local to urban areas, regions, and different countries. Different rules, laws, standards, certificates, labels, norms, bureaucracies, and administration processes exist. There is considerable heterogeneity regarding sustainability practices between and within industries, and a reluctance of businesses to accept legislation or to participate in initiatives. There are also concerns over transparency, accountability, and the credibility of standards, norms, and third party or external auditors and certifiers. Finally, the fifth challenge was related to the difficulties of small and medium sized enterprises, as they may be uncertain about the benefits of upgrading to new sustainability standards and codes of conduct. They may also lack the knowledge, skills, time, money and human resources to respond to the social and environmental requirements of global buyers and SCs. The conclusion is that taking a complexity theory perspective (CTP) on sustainable SCs is beneficial to better understand, manage, and govern gradual and radical changes in them. A CTP takes into account changes in the themes and challenges and is helpful in dealings with the challenges, such as changing customers’ priorities; changing short-term mind-sets and behaviors; uncertainties; subjectivity in embodying SCs; dealing with leakage/spillovers, trade-offs, and paradoxes; and heterogeneity regarding sustainability practices between and within industries.