Table of Contents
The concept of supply chain management is in the limelight among global producers and international corporations who have to deal with different producers and stakeholders. The competitiveness of supply chain network is essential to outperform rivals in international market. Therefore, the supply chains developed by global industries are fragmented and sophisticated so that it is often difficult to trace the success of all the chains included. However, some of the firms resort to trade-offs for the purpose of increasing performance and making the production sustainable. Hence, the economic and environmental sustainability can contribute to operations management through developing an effective supply chain network.
Sustainability and Supply Chain Management
In the globalized community, supply chain management plays an important role in production. Therefore, in order to sustain a competitive advantage over other firms, there should be corresponding supply chain strategies. The strategic role of supply chains can touch on many spheres such as ethics, environmentalism, value creation, and customer relations. All these factors should be considered in more detail. The research studies by Closs, Speier, and Meacham (2010) focus on the role of value chains which contribute to the company’s sustainability. In particular, the researchers explain that “from a supply chain perspective, sustainability goals strongly influence component selection, materials sourcing, production, packaging, distribution, and recycling decisions” (p. 101). To ensure sustainability, it is essential for the enterprise to take into consideration the cross-functional marketing of value-added processes. For instance, marketing decisions concerning promotion can be strongly associated with supply chain decisions that, in their turn, relate to packaging, producing, sourcing, distribution, and recycling (Closs et al. 2010). A poor package design can lead to reduced sustainability because of the threat of product damage. As a result, cross-process integration underscores the urgent need for a deeper understanding of the connection between supply chains, marketing, and sustainability. Additionally, Closs et al. (2010) provide efficient guidelines for enhancing operational sustainability. Therefore, the companies must employ trans-disciplinary perspectives in order to define and evaluate relevant trade-offs.
Sustainability reforms are strongly supported by governmental public and companies because its major essence lies in brand protection. As such, the commercial, regulatory, and political actions are taken to strengthen global sustainability. Decisions which are overreacted to one sphere can pose threats to another firm’s activity leading to economic instability. Because of the main environmental and economic risks, it is impossible to develop strategic, operational, and political decisions; furthermore, governmental and non-governmental organizations should involve expertise into developing a balanced perspective concerning company’s sustainability (Closs et al. 2010). Before focusing on the strategic goal of sustainability, it is essential to strengthen shareholder value, which should create a solid ground for any business. The point here is that customers and stakeholders consider social and environmental impact on the goods and services they consume.
According to Barney (2012), it is possible to consider the relationship between sustained competitive advantage and supply chain management through the prism of resource-based theory. According to the latter, supply chain management and purchasing will have the possibility for sustaining competitive advantage. In addition to the presented above considerations, Winter and Knemeyer (2013) have dedicated their study to the analysis of sustainability and its connection to supply chain management. The researchers have reviewed a number of resources and scientific literature that can be connected to these two concepts. The findings have demonstrated that current research studies are focused mainly on individual sustainability in terms of supply chain management instead of introducing an integrated approach. The studies have also found that individual dimension in the identified themes including green logistics is consistent with the defined study. As a result, this paper has made a positive contribution to expanding knowledge about sustainability in the context of supply chain management.
In the studies by Schaltegger and Burritt (2014), the main issue is concerned with the analytical framework developed for assessing the techniques for managing and measuring supply chain management networks. The current approaches are represented for the purpose of improving supply chains and advancing the recycling level. It also provides the research to sustainability and performance as well as their relation to supply chain issues. The framework can also be useful for managers in choosing sustainability performance tools and approaches. In general, the paper introduces well-structured overview of sustainability performance assessment of supply chain management. The framework introduces a solid foundation for further research.
There are also research studies in the sphere of biofuel energy supply chains. In particular, Awudu and Zhang (2012) have dedicated their study to supply chain management in the sphere of biofuel energy production. They have defined that biofuel is an important form of energy which is under greater attention nowadays. In order to accomplish this mission, an effective supply chain network should be developed in order to render a competitive biofuel level for end consumers. In their research studies, the authors attempted to introduce the evolution of biofuel energy as well as to provide the structure of corresponding supply chain. Additionally, the researchers have outlined three major types of decision-making approaches that could be beneficial for developing biofuel supply chain. Furthermore, important techniques for diminishing uncertainties have been presented for promoting decision making. Sustainability models and frameworks providing perspectives to economic social and environmental concepts have been introduced. Finally, the future research implications and conclusions have been highlighted for understanding sustainability concepts and uncertainties within the biofuel supply chain.
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In fact, there are efficient strategies for developing a sustainable supply chain network. To begin with, there should be a link between supply chain strategy and corporate strategy for achieving sustainability. There are four major elements for a sustainable supply chain such as strategic and holistic approach development, assessment and recognition of trends, implementation of ecological, social, and economical objectives, and, finally, balancing social, ecological, and social goals (Cetinkaya, Cuthbertson, Ewer, Klass-Wissing, Piotrowicz, & Tyssen 2011). The steps to be taken in this situation include assessment of a supply chain, environment evaluation of track changes, defining the approaches for evaluation, and adjusting to possible changes. In order to evaluate the effectiveness of supply chain, both internal and external challenges should be discussed. In order to ensure sustainability of a supply chain framework, the competitive issue should be considered. In other words, sustainable supply chain can take a competitive advantage over others. This competitive strength is defined by multiple critical success factors.
Supply Chain Management and Performance
Internal and external supply chain management practices have potent performance outcomes. In this context, Zhu, Sarkis, and Lai (2013) have explored green supply chain management and its connection with performance. Specifically, the researchers have discovered that supply chain management practices do not positively correlate with economic performance, but it can be improved indirectly. Additionally, the researchers provide essential tips for managers acquiring green supply chain experience. The results also introduce policy issues for professional agencies, regulators, and legislators to promoting green supply chain management. In the light of the current ecological problems, the decision to promote green practices is a win-win solution for enterprises and companies which appreciate their reputation and integrate the corresponding social corporate responsibility. Similarly, Green, Zelbst, Meacham, and Bhadauria (2012) have found that the implementation of green supply chain management practices in producing organizations has contributed to improved economic and environmental performance that, in its turn, leads to an improvement in operational performance. Consequently, the latter strengthens organizational performance. Moreover, the researchers have revealed that internal environmental management systems are defined as essential precursors to the application of green purchasing, eco-design, cooperation with customers, and investment recovery.
The integration of supply chain management into performance system is possible through selecting different theoretical and practical methodologies. According to Bai, Sarkis, Wei, and Koh (2012), the sensitive analysis has demonstrated that differences in outcomes can have a potent impact on the range of major performance measurement tools for developing a sustainable supply chain. These tools can be essential for organizations that try to define the range of performance measures for developing sustainable supply chains. It also allows managers to endure minimum loss. After all, supply chain metrics is among the most effective techniques integrated into performance management methodology. According to Prajogo and Olhager (2012), supply chain management is an effective tool for supply chain performance. The key flow in such relationships is information and material. The studies have also addressed integration of information and material to supply chain management analysis. The paper has sought for analyzing integration of materials and information flows between supply chain stakeholders and their influence on operational performance. In particular, the role of long-term relationships between suppliers has been regarded as the driver of information and material integration. Relying on the data drawn from 232 firms, it has been found that logistic integration contributes to operational performance. Furthermore, the information technology capabilities and information exchange have a great influence on the logistics integration. More importantly, long-term supplier relations have affected performance both directly and indirectly; the indirect influence has been possible through the integration of information.
It is essential for any company to learn the mechanisms of measuring the supply chain issues and define major tools for enhancing the effectiveness of their production processes. In this context, Camemrinelli (2009) have outlined major metrics for evaluating the effectiveness of supply chain networks. These measurement tools include value issue, remanufacture efficiency and order completeness; stock, order fulfillment, and transportation costs; expenditures, flexibility, and quality of supply chain. There are also measurement tools for evaluating delivery accuracy, stock levels, inventory turnaround, supply performance, delivery reliability, and inventory level. These aforenamed factors are essential for understanding whether supply chain is effective or not. However, there are several key indicators that define supply chain management as effective. They are delivery performance, cost reduction, and customer service (Camemrinelli 2009). The attention to these issues is important for understanding the underpinning trade-off supply chains being developing. Additionally, the companies should also develop specialized strategic frameworks for improving their performance and sustaining their competitive environment (Chopra & Meindl 2015). In such a manner, it will be possible to achieve the highest results and simplify the process of material exchange, operational activities, and delivery.
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Supply chain management is essential for solving the problems with trade-offs. It should be admitted that supply chain network design is a sophisticated task that demands profound knowledge of operating costs, standards, and capacity norms. It also involves long-term capital investments which influence company’s operating capabilities. There are two important factors which are included into supply chain design. They are ownership and geographic scope. From the viewpoint of a geographic location, decentralized supply chains can influence lower delivery costs and greater responsiveness due to customer proximity. However, such networks require greater investments into facilities and logistics. At the same time, centralized supply chains can contribute to expanding customer base, generating economies of scale through a reduced number of facilities. Nevertheless, the accomplishment can be followed by bigger costs. Taking into consideration the complexity of trade-off schemes, it is essential to follow the basic principles of handling supply chains. First of all, it is necessary to develop sophisticated trade-off tools for estimating the advantages and shortcomings of strategic changes occurred to supply chains. Second, creating cross-chain measurement tools can capture the effect of supply chain trade-offs for stakeholders. Finally, the developing operating structure can support multiple solutions and introduce positive outcomes for trade-off goals.
Due to the fact that supply chain networks often sacrifice the performance of one dimension to the achievement of profitability rates in another dimension, the attention to case studies should be paid in order to gain a deeper understanding of the whole process. As an example, it is possible to refer to supply chain network developed by Coca-Cola Company for sustaining a competitive advantage over its major rival PepsiCo (Economist Intelligence Unit 2010). Specifically, it was reported that PepsiCo had expected to acquire major bottle producers for increasing efficiency and flexibility and reducing costs in production, marketing, and distribution. The integrated beverage business, therefore, can contribute to higher innovation in production and packaging. In response, Coca-Cola failed to make similar acquisitions because the company was determined that monopolized production of bottles is more efficient strategy (Economist Intelligence Unit 2010). After a while, however, the company has still decided to acquire the North American bottle producers for similar reasons: increasing flexibility, effectiveness, and cost savings. Hence, trade-off decision in this context refers to the possibility of reducing costs at the expense of acquiring a new chain in a supply system. This can also introduce new perspectives for innovation in making beverages.
In addition to the performance changes through trade-off decisions, Coca-Cola Company also focuses on the sustainability issues to be improved with the introduction of new sphere of management, an agricultural sector. To enlarge on this issue, the company introduced new perspectives and integrated sustainability into procurement networks. Integrating suppliers into a new system with high standards provides a new outlook for the sustainable development. The sustainability of agricultural sector can also contribute to better management of resources for the purpose of higher production quality (The Coca-Cola Company 2014). Due to the fact that supply chain system in agriculture involves complex networks, it is essential to consider sustainable agriculture guiding principles that have been developed for ensuring collaboration with non-governmental organizations. Establishing cooperation with the World Wildfire Fund, for example, allows the company producers to implement projects aimed at improving farm practices and products. It also focuses on attracting sugarcane producers who are interested in cooperation and supply chain integration from all over the world.
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Further, by supporting sustainable collaboration with Bonsucro, the company can significantly promote itself in international market. It has been reported that Bonsucro advanced VSS supplies by five times, and currently it accounts for nearly two-thirds of global suppliers. In order to acquire Bonsucro certification, sugar should be assessed in terms of environmental, social, and economic perspectives of its production (The Coca-Cola Company 2014). In this respect, the collaboration with Bonsucro can help Coca-Cola in increasing quality standards and attracting the development of new partnerships and collaborations with other companies.
Currently, the Coca-Cola Company cooperates with global suppliers and discusses the necessity of introducing greater sustainability into their operations. In order to do this, the company has searched for suppliers’ input in order to encourage long-term success for both suppliers and the company itself. After the summit, the company gained over 200 offersfrom major suppliers as well as some strategies and ideas regarding logistics, sustainable packaging, water stewardship, sustainable agriculture, and portfolio innovation (Brammer, Hoejmose, & Millingon n. d.). By means of these initiatives, the company can make beneficial trade-off decisions that provide new possibilities for high-quality management.
The Coca-Cola Company is currently implementing the supply chain management process that is composed of strategic framework and leverages. The company believes that supply risks are essential for adding value and differentiating products. There are multiple factors contributing to supply risks, but the team identified the major characteristics as well as business objectives which have been defined for succeeding in organizational performance (Lambert 2008; Tallant 2011). These factors involve such aspects as supply performance, manage risk and vulnerability, close supplier management, and develop preferential relationships (Lambert 2008). The executives of the company have outlined supply relationship management initiatives for providing employees with the progressive details. They have also implemented new programs and training courses for employees in order to understand how supply supporters contribute to successful management and organization.
In order to compensate performance quickly in one dimension and find the partnership in other one, the omnipotent strategy could be used for reaching product availability. It connects well with the market and meets the requirements of brand-focused corporate strategy. The omnipotent strategy in supply chain explains that certain product is available and desired. In this respect, it supports the organizational goals of product availability as well as enhances marketing efforts and captures consumer market share. Coca-Cola is a bright example of how this strategy can be effectively used within the supply chain management opportunities (Gattoma 2003). The major goal of the company is attracting the consumers and persuading them that the products they offered are exactly what they need. The company resorts to these strategies for pushing the products through the distribution channel.
In general, it should be stressed that supply chain management framework has implications in terms of such factors as profitability, efficiency, customer loyalty, and growth. Customer loyalty, however, is regarded as pivotal issue for the organizational success because it contributes to overall performance and reputation. Customer loyalty could be improved by developing strong relationships between distributors and suppliers. Coca-Cola Company is among such business ventures which has been successfully managing in order to sustain its strengths and distribution excellence which is possible regarding achievements in customer satisfaction. High level of customer loyalty is promoted by the introduction of one-on-one individualized service for intermediaries and consumers. Moreover, trained and experienced professionals are good at building relationships between retailers and wholesalers (Management Association 2012). As a result, the attention to customer relationship management provides the improvements in the sphere of supply chain management. The managers in this field are highly appreciated, and they introduce effective managerial strategies for customers and employees for focusing on quality of production and accuracy of distribution. The attention to customer services, individual concerns, and satisfaction of employees are among the leading approaches in enhancing supply chain performance and sustainability.
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In conclusion, it should be stressed that the analysis of articles and scientific studies has shown the evidently positive correlation between efficient supply chain management, performance, and sustainability. It can also explain the trade-off decisions of the firms with the help of which some companies are able to sustain a competitive advantage over other firms as well as to achieve long-term success for them. The case of Coca-Cola Company is a bright example of how sustainable supply chain should be. Moreover, it demonstrates what dimensions should be emphasized for achieving success in all other directions.