How Sustainability in Logistics and Supply Chain Management Affects Corporate Social Responsibility - Coursework Example

How Sustainability in Logistics and Supply Chain Management affects Corporate Social Responsibility and Business Success Introduction In current management practice, the concepts of supply chain management and logistics are identified as key parameters in corporate performance. Many corporations are using supply chain management and logistics to gain a competitive edge in the marketplace. However, the use of supply chain management and logistics for corporate success depends on the role they play in corporate social responsibility. Sustainability in supply chain management and logistics can be of great value to corporate performance. The objective of this paper is to show how sustainability in supply chain management and logistics affects the reputation of a firm as well as the overall success of business corporations. This is done in three parts: in part one, a brief overview of the differences and interrelationships between supply chain management and logistics is examined. Included are general definitions, concepts and an examination of the role of both concepts in the current theory and practice of management. The second part explores the concept of sustainability in supply chain management and logistics. A detailed evaluation of the role of sustainability in corporate social responsibility and how this contributes to the overall success of business organisations is given. Supply chain management and logistics: Differences and interrelationships Supply chain management is a complex concept which is central in the current theory and practice of management. There have been several attempts at providing a comprehensive definition of the concept. According to Handfield and Nichols (2002, cited by Jespersen & Skjort-Larsen 2005, p. 2), supply chain management can be defined as a process of integrating and managing all organisations involved in the supply chain as well as all activities in the supply chain. This is done through establishing and maintaining relationships which create cooperation, organisation, effective business processes and high levels of sharing information across the entire network of firms. These relationships create high performing value systems which provide a sustainable competitive advantage for member organisations. Separately, Mentzer (2001, p. 14) observes that the concept of supply chain management incorporates two separate yet related concepts: supply chain orientation and the concept of supply chain. Supply chain orientation is defined as the process by which corporations recognise the strategic implications of all the activities and processes involved in managing all the various flows in its chain of supply. It covers the tactical activities of distribution flows as viewed within a broader strategic context. Supply chain management is therefore the actual implementation of this orientation across various companies within the supply chain. The modern concept of supply chain management is characterised by five key principles (Mentzer 2001, p. 34). The first one is that in current practice, business corporations have shifted competition to the management of their supply chains. This is in contrast to early practice where competition between companies was based on core business processes. Second, the competitiveness of supply chain management is based on the value added exchange of information. The third principle is that supply chain partners provide the best opportunities for cost cutting and value addition measures for corporations. This is evident in the interface between supply chain partners of a business organisation. The last principle of supply chain management is that basing business competitiveness on supply chain management requires the collective determination of business strategy as well as complete integration of all business processes of the organisation. According to Christopher (1993, cited by Waters 2003, p. 34), logistics can be defined as the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory through an organisation and its marketing channels in such a manner that current and future profitability are maximised through the cost-effective fulfilment of orders. This definition implies that logistics is a key element of business processes, and that its focus is on timely delivery of materials, products and services whenever required.   The relationship between supply chain management and logistics is a complex one. The underlying differences and similarities between the two concepts are exemplified in their definitions. There are four different perspectives emerging from the definitions of the two concepts: traditional, unionist, re-labelling and intersectionist (Waters 2003, p. 35). In the traditional view, supply chain management is regarded as a subset of logistics; it is viewed as an add-on to the broad concept of supply chain management. This is in stark contrast to the interpretation offered in the unionist view which regards logistics as being a smaller concept included in the large inter-company and inter-boundary concept of supply chain management. The intersectionist view holds that there is a continuous overlap between the two concepts. Though both concepts have distinct parts, they also contain common characteristics and attributes that overlap in their definitions. In the re-labelling view, supply chain management is considered as the new term that has replaced logistics. According to this view, the term supply chain management is now used to describe all the concepts involved in logistics. The unionist view of the differences and relationship between supply chain management and logistics is what is generally regarded as the standard analysis (Mangan, Lalwani & Butcher 2008, p. 12). Under this view, logistics is regarded as part of supply chain management. Supply chain management is a wider, intercompany, boundary spanning concept that incorporates logistics. Despite these close interrelationships between logistics and supply chain management, Jespersen and Skjort-Larsen (2005, p. 4), state that there are several differences between the two concepts. For instance, whereas the practice of logistics is based on a single business seeking efficiency in its enterprise through internal and external planning and control, supply chain management is practised based on the external relationship between many players in the entire chain of supply and focuses on how to improve trade in general. Additionally, whereas logistics is made efficient through the business process re-engineering concept, supply chain management entails the use of a range of activities aimed at expanding the idea of business process re-engineering to cover the entire chain of supply (Jespersen & Skjort-Larsen 2005, p. 5). This implies that the main focus of supply chain management, unlike logistics, is to strengthen the overall chain of supply rather than seeking to sub-optimise processes in an individual business enterprise. Sustainability in logistics and supply chain management The need for developing sustainability in supply chain management systems cannot be overemphasised. As already defined, supply chain management entails managing a broad network of interrelated businesses which are involved in the ultimate provision of products and services as required by the customers. It covers all the necessary movement and storage of raw materials, inventory, work-in-progress and finished goods from the point of origin to the point of consumption.  It is therefore imperative that the best practices be employed in logistics and supply chain management. Sustainability in supply chain management is necessary in order to respond to the current needs of a sophisticated freight transport system, enable firms to compete on the global platform, and offer the benefits of potential savings in purchasing, manufacturing and labour costs as a result of global sourcing of materials (Mangan, Lalwani & Butcher 2008, p. 270). According to Boone, Jayaraman and Ganeshan (2012, p. 7),  there are three basic elements on which most firms focus while building sustainability in their supply chain management systems: having environmentally-sensitive designs, developing efficiency and having the capacity for recovery. It is observed that firms are designing products and services that cover the whole life cycle – from the use of raw materials to the recovery of the product after its use. To attain sustainability, companies ensure that products and services are designed to use fewer inputs, that smaller amounts of each input item are used in the manufacture of the products, and that the inputs can be recycled. This ensures that products are not only energy-efficient but they also use less energy when in use and at the end of their life, they can be dismantled, reclaimed and reused to avoid wastage. In addition, employing efficiency measures for sustainable supply chain management involves the use of less energy and water in the supply chain (Boone, Jayaraman & Ganeshan 2012, p. 8). It also involves taking measures aimed at reducing waste streams generated during the processes of procurement, production and distribution of products and services. Lastly, recovery entails taking back a product after its use for the sole purpose of recreating reusable raw materials from it. Sustainable supply chain management is critical to the success of business operations. The role of sustainability in overall corporate success is demonstrated in the link between sustainable supply chain management and the general competitive strategy adopted by a business corporation (Cetinkaya et al. 2011, p.18). The competitive strategy of a business may either be focused on producing goods and services that are highly differentiated in the marketplace or on producing goods and services using the least cost of production within the industry. The strategy chosen is usually determined by the prevailing business environment. This in turn is affected by three important factors: demand, supply and the general environment. Sustainable supply chain management plays a role in the competitive strategy of corporations by influencing the three key factors of a business environment: demand, supply and other stakeholders. Both suppliers and clients recognise the value of the supply chain used by a firm. An effective and sustainable supply chain is therefore reflected in the reputation of the firm to customers, suppliers and other stakeholders like regulatory bodies and pressure groups (Cetinkaya et al. 2011, p. 21). Although it is common for corporations to use hybrid and customised supply chain management systems in practice (Govil & Proth 2002, p. 54), maximising the competitive strategy of a corporation always demands that a particular supply chain management type be used for a matching strategy (Cetinkaya et al. 2011, p. 21). For instance, an agile type of supply chain is best used with a differentiation strategy. This enables a business corporation to have its differentiated-centred solutions completely segmented and diversified. On the other hand, adoption of a cost leadership strategy by a business corporation demands that the corporation also employs a lean supply chain that enables substantive reduction and control of costs of production. Sustainability in supply chain management and logistics helps organisations address three key dimensions: economic, environmental and social (Skjort-Larsen et al. 2007, p. 304).  The environmental dimension includes reductions in emissions, efficient utilisation of natural resources and ensuring proper management of waste products. Under the social dimension, concern for sustainability addresses three major issues: the health and safety of personnel, noise levels and the welfare of employees. The economic dimension demands that sustainability in supply chain management addresses the needs for efficiency, quality and responsiveness. All sustainable practices bear an impact upon these three dimensions. The effects are felt both internally within the corporation, as well as externally, by affecting other firms involved in the supply chain network. Improvements on any sustainability dimension contribute to the creation of overall sustainable supply chains (Palevich 2012, p. 144). Conclusion In conclusion, the reputation of a firm as well as its overall performance and success is affected by sustainability in its supply chain management and logistics. This is so because sustainability in the supply chain management and logistics of a firm affects its customers, suppliers and other stakeholders like government agencies and non-governmental organisations. Such key players value the products, services and actions of a corporation basing on a broad array of non-price parameters such as efficiency, satisfaction and sustainability. Also, increased needs for transportation in the current freight system, the demands of competition in a global environment and increased sourcing from different geographical locations have made the use of sustainable supply chain management systems a necessity for many corporations. It is therefore worthwhile for a corporation to adopt a sustainable supply chain management model. Adopting a sustainable supply chain model gives a firm added competitive advantage in its competitive strategy. This gives it an advantage over the competition in terms of low costs of production of producing highly differentiated products and services that target the loyalty of particular market segments. References Boone, T, Jayaraman, V & Ganeshan R 2012 (eds), Sustainable supply chain: models, Methods and public policy implications, Springer, New York. Cetinkaya, B, Cuthbertson, R, Ewer, G, Klaas-Wissing, T, Piotrowicz, W & Tyssen, C 2011, Sustainable supply chain management:  Practical ideas for moving towards best practice, Springer-Verlag, Berlin. Govil, M & Proth, J 2002, Supply chain design and management: Strategic and tactical     perspectives, Academic Press, San Diego, California. Jespersen, D B, Skjort-Larsen, T 2005, Supply chain management: In theory and practice, Copenhagen Business School Press, Copenhagen. Mangan, J, Lalwani, C & Butcher, T 2008, Global logistics and supply chain management, John Wiley and Sons, South Sussex. Mentzer, J T 2001 (ed), Supply chain management, Sage Publications, California. Palevich, R 2012, The lean sustainable supply chain: How to create a green infrastructure with lean technologies, FT Press, New Jersey. Skjort-Larsen, T, Schary, B P, Mikkola, H J & Kotzab, H 2007, Managing the global supply chain, Copenhagen Business School Press, Copenhagen. Waters, D 2003, Global logistics and distribution planning: Strategies for management, Kogan Page Limited, London. Read More