Sustainability in International Supply Chains - Nestle - Case Study Example

Sustainability in International Supply Chains Literature Review According to Burritt , Supply chain management is made up of all the activities that are involved in the process of consumer satisfaction right from production until the right product reaches the right consumer at the rightful and desired time. Supply chain management focuses on the activities of planning, designing assembling products and controlling the flow of information, materials and finances along the supply chain as well maintaining the best consumer service to ensure the best quality of product is supplied to the consumer. The supply chain is composed of manufacturers and suppliers, distributors, warehouses and the consumers of the products. Firms should therefore aim at maintaining a supply chain that ensures that they deliver the best to their customers compared to their competitors (Jung et al., 2007).Consumers look for the best satisfaction of their needs from the firms and this satisfaction is depended on the supply chain maintained by these firms. Supply chain management professionals aim at achieving a competitive advantage in ensuring they maintain a supply chain that allow them the best product delivery service, that is cost effective and enhances timely product delivery to consumers. The success of a supply chain management is ensured by two types of decisions which are supply chain strategic or design decisions and supply chain operating decisions. Strategic decisions concern issues such as what activities should be undertaken in the company and what should be outsourced, how to make the outsourcing decisions if any and decisions concerning the location of facilities (Koster & Delfmann 2007). The operating decisions on the other hand involve decisions such as forecasting demand, planning and control of production, procurement and distribution, management of transportation and inventory, decisions concerning processing of the orders of customers and maintaining and managing relationships with persons involved in the chain. The strategy of any supply chain is the cost that the company incurs in ensuring that it supply the best quality products to consumers (Waters 2010). Supply chain management is a requirement in all kinds of business organisations ranging from service companies to commodity producing companies (Craig et al 2011).Supply chain management role therefore is basic to every business organisation. Its strategic role is attributed to ensuring maintenance of the best customer service ensuring efficient and effective satisfaction of the customers’ needs as well as to the success of the company. It has resulted to increased level of outsourcing by companies and has resulted to a reduction in the product lifecycle in companies. It is important to the entire society since it results to an improved sustainability and living standards. This is because it forms an infrastructure to better living in societies since it leads to jobs creation, contributes to pollution reduction and to the overall improvement in the living standards. It also has a role in the growth of multinational corporations and enhancing their expansion globally (Bevilacqua et al 2012). The strategic role of supply chain management therefore focuses on the business in terms of customer satisfaction bringing proliferation in the product line, increasing the outsourcing level and business success at large, responsibility and global world in terms of enhancing the global expansion in the multinational corporations. Supply chain management therefore is entirely focused on achieving the economic goals of the business organiation and attaining the economic benefits. It therefore has a role of developing the supply chain culture in organisations’ operations (Lebreton, 2007). Sustainability of the supply chain management therefore is enhanced by observance to environmental standards, increasing the levels of transparency among the involved parties and maintaining a social performance. Sustainable supply chain management is therefore attributed to adherence to corporate social responsibility. Sustainability usually focuses on the society and more knowledge of sustainability has resulted from the growing knowledge of science in relation to the climatic change and increased transparency of organizations towards environment and social activities (Morana 2013). Supply chain managers have the ability of impacting the environmental and social activities either positively or negatively. Traditionally, supply chain management has operated without the consideration for a social responsibility and therefore sustainability has shifted to the consideration of aspects such as safety of employees’ human rights and environment. Sustainability has brought about the need to implement the aspect of social responsibility in the supply chain management, bringing about need for consideration of achieving social results alongside those traditionally focused on by many businesses which are usually the economic and legal results (Palevich 2012). Supply chain managers of organisations have focused on aiming at seeing that their supply chain management results to achievement of economic success and have ignored focusing on the importance of corresponding social and environmental benefits. Sustainability therefore has raised notion for focusing on the social and environmental achievements alongside the economic achievements of the supply chain management. These account to focusing on social responsibility activities as well (Thomas 2011). The sustainability in sustainable supply chain management is a requirement that the supply chain managers are required to lay focus on what should be done in the future of the business in order to improve the economic benefits. In this, they focus on the activities that fall within the bottom line of the business including the activities aimed at saving costs of disposal by recycling the waste products that can be recycled, saving and reducing labour costs by maintaining good working conditions and motivating workers to enhance their productivity and reduce costs such as those caused by redundancy of workers and those associated with lack of safety in the working environments (Cetinkaya 2012). There is also a focus on maintaining a good image for the organisation as a way of attracting more customers into the organisation. Sustainability therefore is aimed at achieving the organisational goals which are not only economic goals but also environmental and social goals. Sustainability therefore is aimed at incorporating the social goals for consideration by supply chain managers when they are setting the goals to be achieved. Environmental concerns considered in the sustainable supply chain management are the climatic changes and rise in prices of energy, with the effects being different depending on the nature of the organisation. This can either be a service providing organisation or a commodity organisation. Sustainability therefore in the supply chain management is focused on the need for business firms to focus on the need for incorporating the social and environmental goals and considering their need as much as the need for economic goals and benefits is focused on by the supply chain managers (Shah 2009). The aspect of sustainability has transformed the perception of supply chain management from being entirely and sorely economic based to being based on other social and environmental aspects. This need for sustainability has been facilitated by the dynamic global world, with manufacturing, production, procurement and distribution of goods and services becoming globalised. The need for supply chain management is not only in the commodity producing firms but also in the service delivering companies. They all need a system for ensuring that their products reach the customers at the rightful time and in the desired conditions. Sustainability therefore does not compromise the economic goal which for any firm, the core economic goal is the maximisation of the shareholders’ value. Sustainability only requires for incorporating the social and environmental goals while at the same time maintaining the core economic goals (Cater & Rogers 2008). Sustainability encourages the implementation of the most beneficial environmental and social goals that are most material and that will impact positively on the core goal of the business which is maximization of the shareholders’ wealth. This is implied by the cost saving approach that is aimed at achieving sustainability. In this approach, business organisations save costs associated to labour such as costs associated with health problems and unsafe working conditions by ensuring that they maintain the good working conditions for workers. In this case, the maintenance of good working condition is a social goal which materially and positively impacts the shareholders’ wealth maximization goal (Caroll, 1991). Through the cost minimisation approach also, the organisations have found ways of recycling their waste products as an aim of reducing the costs that are associated with disposing the waste products. In this way, organisation have shown the concern for the environmental goal by not causing environmental pollution and at the same time doing it in a way that it results to attainment of the economic goal of shareholders’ wealth maximization (Pagel & Wu, 2009). The sustainability in the supply chain management therefore takes into concern these issues ensuring that the right measure is taken and that results to positive impacts to the economic goals. The effects of the considered social and environmental concerns and goals on financial performance of the company should also be considered. These effects however differ for different companies considering that these issues vary from one company to another and also considering the different measures taken by the different companies (Cater &Easton 2011). Sustainability is also connected to creation of an image for the company to the outside world. A company that engages in social and environmental activities and that is concerned about environmental and social goals is more likely to create a positive corporate image in the eyes of the public. This places the company that has a sustainable supply chain management at an advantages compared to its competitor that does not engage in such activities and is therefore assured of getting more customers from this positive perception. The effects of social and environmental goals on the financial performance of business that practices sustainable supply chain management therefore cannot be quantified since the effects on some companies is positive while on others it is negative. These effects vary depending on the different social and environmental conditions that are faced by different companies and the different measures and goals that are taken by the different companies (Kersten 2011).Sustainability in the supply chain management also do not just focus on the current period’s result but also focuses on the future implication that will be caused to the business. It is concerned with how the goals will impact the business in the future. With globalization taking effect in the business operations it is therefore worth considering what the effects of the current sustainability will be to the operation as well as the success of business organizations. Social concerns therefore are applicable to all the persons that are involved or are affected by the business operations of the specific business organisation which cut across the shareholders, employees, government, lenders, customers, the society where the business operates and the suppliers. Sustainability of the supply chain management therefore ensures that business is able to find the right solutions to the current problems without negatively affecting the future operations. The future is therefore of great concern in the implementation of sustainability in the supply chain management. The results of using a sustainable supply chain therefore ensures that at the end, economic and financial benefits are achieved and the right measures are taken to take care of the environmental as well as the social concerns (Cater & Easton, 2011) Case analysis Nestle is one of the companies that use a sustainable supply chain to supply cocoa to a large number of consumers. Nestle has established a supply chain named as cocoa plan, which is focused on ensuring that the best quality of cocoa is supplied internationally to a large number of consumers and guaranteeing their satisfaction. The plan ensures that the best quality of cocoa is sourced from the cocoa farmers and the best quality and sustainable delivery later made to the consumers. The supply plan has observed sustainability by being socially responsible whereby it provides training economic security to the cocoa farmers who are its suppliers as well as the community and has a future plan of continuing to offer the training to more farmers. The cocoa plan has also ensured a supply of cocoa plants to suppliers and has a goal of continuing to supply more. It has also extended the goal to the community whereby it has made partnerships to ensure building of schools for the community. It also intends to offer programs of training teachers who will teach in the schools that will be built. The supply chain is also aiming at coming up with programs that will enable the community to better their understanding of human rights. It views offering education to the community in which it operates as a vital requirement in maintaining a sustainable supply chain. This is evidence that the supply chain is concerned with the social goals. It is also concerned with the customers since it ensures that every party involved in the supply chain is engaged in ensuring that timely delivery of high quality cocoa is made to the consumers. It is therefore focused in offering the best satisfaction to the consumers and to ensure further sustainability, it has made partnerships that will enhance quality and timely delivery (Fair Labour Association, 2012). The supply chain has also focused on social goal by focusing on human rights whereby it has made efforts in training the farmers and the community about the vices of employing children to work on the cocoa farms and has encouraged them to follow and adhere to the human rights that children should not be forced into labour. It has succeeded in helping people to discover the risks that are associated with using children as source of labour on their firms with many ceasing to employ minors on their farms. It has also prioritised the measures needed to deal with child labour to ensure that this form of human rights violation is effectively dealt with. To effect this, it has come up with a code that is expected to be implemented following its distribution to the cocoa farmers. It has ensured that the training on child labour has also extended to the employees who are involved in the cocoa plan to ensure that they all do not advocate for the employment of children. The much focus on child labour training is because the supply chain found out that so many cocoa farmers employ children to work on their farms and thus decided to set up a social goal of dealing with it. It has also worked hand in hand with the government to ensure that this violation of the children’s right is stopped. The supply chain has also ensured the maintenance of a good relationship with the community and farmers and has helped them in dealing with problems such as management of water and nutrition. In this, the supply chain has shown concern for environmental goals alongside the core economic goal. It has ensured that the farmers engage in carrying out the appropriate activities by offering them with training and has ensured that they are able to supply a good quality of cocoa by providing them with the best quality plants (Moyano, 2014). This conforms to what is earlier discussed that sustainability maintains social and environmental goals that will positively impact its economic goals. The core economic goal for cocoa plan in this case is increasing the shareholders’ value which in this case will be attained if the customers are satisfied. Customer satisfaction is only achieved by offering the best quality of cocoa. The cocoa plan on the other hand will only be able to supply the best quality of cocoa if it obtains the best quality from the farmer which is achieved by the supply chain offering the best quality plants and training to the farmers (Fair Labour Association, 2012).This social goal of the supply chain therefore has a positive impact on its economic goal and thus suits sustainability. The social goal of building schools in the community and training teachers who are expected to teach in those schools also conforms to a sustainable supply chain management. This is because once the children are educated, they will be able to become productive citizens who can later deliver their skills in the supply chain as employees or participate as being other parties in the supply chain. The building of schools may also be aimed at making the environment which the supply chain operates to be better in order to avoid vices that might later result and that might end up costing heavily on the cocoa plan. These might be for instance costs that would be involved in dealing with theft cases. This further will have a positive impact on the economic goal of the supply chain which is maximizing the wealth of the shareholders. The cocoa plan also provides training to its employees and other persons who take part in the supply chain. This will enable them to be efficient and effective in their work and will help them to work more productively in ensuring that the best quality cocoa is delivered to the customers at the right time (Moyano, 2014). Showing concern towards the environment by practicing water management practices has also shown sustainability in the supply chain indicating that it is concerned about the environment. Water management also has a positive impact on the economic goal of maximising the wealth of the shareholders in that it helps the supply chain to save on costs that could occur in future for instance as a result of floods in case water is not managed in the first place. In addition, sustainability is observed from the fact that all along the cocoa plan aims at getting the best from the cocoa suppliers who are the farmers so that it can be able to deliver the best quality to the consumers. It aims at seeing that its consumers are satisfied from a timely delivery of the best quality cocoa. This matches the requirement of a sustainable supply chain which is aimed at delivering the best to consumers in terms of time and quality (Moyano, 2014).It therefore qualifies to being a sustainable supply chain. The sustainability is also observed from the fact that the cocoa plan involves the government for the implementation of its plans concerning the training on child labour. It also shows sustainability through its conforming to the legal regulations in its supply operations and finally, the cocoa operates towards achieving an economic goal of maximising the wealth of the shareholders alongside this, it has other goals which are social goals and environmental goals which all have an impact on the core economic goal (Fair Labour Association, 2012). Reference list Bevilacqua, M., Ciarapica, F. E., & Giacchetta, G. (2012). Design for environment as a tool for the development of a sustainable supply chain. London: Springer. Burritt, R. (2011). Environmental management accounting and supply chain management. Dordrecht [etc.: Springer. Carroll, A. B. (1991). The pyramid of corporate social responsibility: toward the moral management of organizational stakeholders. Business horizons, 34(4), 39-48. Carter, C. R. & Easton, P. L. 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