Sustainability

We can imagine the world as an apartment with a number of tenants in which different people with different life styles are living. Whereas they are independent from each other, they are responsible for their actions and behavior. If in one of the flats, for example, a fire starts by a cigarette, at a glance, the whole apartment will be burned. It is obvious that one’s mistake has a harmful impact on all. On the other hand, tenants sooner or later should move from apartment and new tenants will be replaced. It is not nice and fair, if new tenants have to pay for damages or services which the previous ones caused/used beforehand. We fervently believe that, unfortunately, it is the case with land and environment nowadays.

New technological breakthroughs, at a growing pace, are appearing in a modern life, while at the same time, constrains relating to damage to environment, lack of resources and experiencing inefficient use of these resources are growing pains. As mentioned earlier, negligence in devising a decent plan to deal with climate change and global warming leads to irreparable damage to the environment. This clearly indicates that we need to rethink and revise the way of doing things.

To this end, most of companies and organizations started to find most efficient and productive ways of using resources. One of the controversial topics, in this area, is incorporating sustainability with environmental, economic and social perspectives into SCM. To pursue this interest, current thesis tries to benefit from mathematical modelling for considering sustainability in environmental and economic aspects of SCM.

It is worthwhile to emphasize that GSCM can play a fundamental role in competitive advantage of companies by fulfilling the customers benefit. Porter and Van der Linde (1995) declare that customers, directly or indirectly, have to pay the cost of inefficiently used resources and the pollution created, for example, tax for emission and disposal of wastes with no value for customers.

Sarkis et al. (2011) comprehensively reviewed organizational theories in GSCM literature. Their research investigates on nine theories that have been applied for a concept of being green in SCM. These theories are complexity theory, ecological modernization, information theory, institutional theory, resource based-view, resource dependence theory, social network theory,

stakeholder theory, and transaction cost economics. They also introduced diffusion of innovation, path dependency, social embeddedness, and structuration theories as another four organizational theories which are valuable for further investigation and study in GSCM.

Bras (2009) in a systemic and schematic way illustrated sustainability in a closed loop supply chain (Figure 3).

Figure 3. Representation of sustainability concept (Bras, 2009)

Giunipero et al. (2012) studied the drivers and barriers of implementing sustainable purchasing in SCM. They interviewed 21 leading supply management executives in order to rank derivers and barriers of GSCM. Given their findings, drivers can be ranked from high to low as follows:

 “Top management initiatives;

 Compliance with laws and regulations;

 Competitive differentiator;

 Cost savings;

 Increased resource utilization;

 Customer requirement;

 Competitors adopted;

 Reduce carbon footprint;

 ISO 14000; and

 Government Incentives”.

On the other hand, barriers are prioritized based on importance as follows:

 “Initial buyer and supplier investment;

 Economic uncertainty;

 Short vs. long term goals;

 Lack of regulations;

 Lack of standards;

 Additional burden on suppliers;

 Little top management support;

 Suppliers lack resources;

 External awareness; and

 Policy change difficult”.

Also, Govindan et al. (2014) comprehensively considered barriers of implementing GSCM in companies. They found problem in five main criteria ranging from outsourcing, technology, knowledge, financial, to involvement and support with 45 sub-criteria which are the source of failure in applying environmental concept.

Ageron et al. (2012) developed a framework for GSCM. According to them, enabling conditions and a number of factors need to be considered for success in GSCM; reasons influencing implementation of GSCM, defining performance criteria, greening supply chains, characteristics of suppliers, managerial approaches for GSCM, recognizing barriers to GSCM, as well as benefits and motivations behind GSCM.

Lintona et al. (2007) discussed the convergence of supply chains and sustainability. They believe that embedding sustainability into entire supply chain is useful for a broad range of reasons, for example:

 Considering environmental impact in product design;

 Manufacturing by-products through clean and lean production techniques;

 Using by-products produced during the production to support sale of original product;

 Extending the life of product, end-of-life concept of product by appropriate initial product design; and finally,

 Decent recovery processes at end-of-life concerning variety of products.

According to different regulations on climate change and global warming, which all try to improve the current and future livability of the world, Plambeck (2012) emphasized that companies have to find new solutions for reducing their own direct emissions as well as monitoring and imposing some environmental standards for their suppliers and customers. They can promote environmental awareness of suppliers and customers by expanding their knowledge about the consequences of the climate change and providing them special intensives. Plambeck (2012) considered Walmart as the highest ranked corporation in the world regarding revenue with an effective SCM structure. He believes that by means of emission reduction, Walmart enjoys from reducing costs via energy efficiency, increasing revenues due to consumers attention to green products, enhancing public relations by its efforts for greenhouse gas emissions reduction, increasing employees motivation and having the chance to participate at climate policy makers committees, forcing suppliers to measure and report their emissions according to defined targets, scrutinizing in entire supply chain for all of its 6000 private brand products with the intention of any possible costs and emission reduction, long term purchasing contract to motivate suppliers to invest in equipment to enhance environmental performance, and finally, collaboration with third parties, e.g., nonprofit organizations, academics, suppliers and any other committees whose concern is reducing emissions.