Sustainable Supply Chains

This chapter gives an overview of the mainstream method of life cycle assessment (LCA) on the basis of the generally accepted principles as laid down in the International Organization for Standardization (ISO) series of standards on LCA. The first part is devoted to the key questions addressed by LCA and sketches the historical development toward that method. The second part provides an overview of the LCA method itself, while the third part discusses some examples of LCA applications. Finally, the fourth part discusses some of the future challenges to LCA including life cycle sustainability assessment (LCSA) and streamlined LCA techniques.

This chapter discusses several important aspects related to supply chain carbon footprinting. It presents the main motivations for carbon footprinting and describes how carbon footprints can be measured. It introduces different carbon accounting methods, ranging from direct measurement-based to extrapolation-based ones. It also provides an example of a supply chain carbon footprinting from the telecommunications industry. In this chapter, we show that defining the right scope is crucial, not only because it has strong implications for the type of measurement methods that can be implemented, but also because indirect scope 3 emissions, can represent a large share of an organization’s carbon emissions. While the lack of reliable and high-quality data can be an obstacle to correctly measure Scope 3 emissions, ignoring them can lead to a serious lack of information required to make appropriate decisions for reducing the supply chain’s carbon emissions. Finally, we discuss other additional challenges related to carbon footprinting and highlight the importance of extending the horizon of sustainable supply chains beyond carbon emissions.

Companies become increasingly aware that they contribute directly and indirectly to water scarcity and pollution and that this constitutes a risk they have to respond to. A growing number of companies are exploring their water footprint and searching for ways they can become better water stewards. The chapter discusses and compares three methods to trace resource use and pollution over supply chains: environmental footprint assessment, life cycle assessment, and environmentally extended input-output analysis. Next, it discusses what new perspective the water footprint concept brings to the table, compared to the traditional way of looking at water use. It then reviews some of the recent literature on direct and indirect water footprints of different sectors of the economy. Finally, it discusses future challenges, such as the issue of data gathering and reporting, the demand for water stewardship and greater product transparency, and the need to establish water footprint benchmarks.

Traditionally, logistics decisions have been driven by minimizing cost, maximizing profitability, or achieving customer service targets. As companies have added sustainability goals to their business objectives, there has been an increased interest in mitigating the social and environmental impact of their products and operations.

Green logistics refers to the systematic measurement, analysis, and, ultimately, mitigation of the environmental impact of logistics activities. This chapter describes the main environmental impacts of logistic operations, namely, greenhouse gases, pollution, noise, vibration, and packaging waste. It introduces the various green logistics strategies available to mitigate these impacts, how these impacts can be incorporated in logistics decision-making, and how organizations collaborate to implement green logistics in practice.

Green inventory management is concerned with the overarching question of how to efficiently manage inventories and thereby material flows in supply chains, considering both economic and environmental consequences, commonly translated into costs and emissions. As inventory decisions are interlinked with production and transportation decisions, a total cost and emissions perspective is important to avoid sub optimization. In this chapter we first identify some key questions and challenges for green inventory management by dividing the emissions and costs associated with operating an inventory system into those associated with ordering (i.e., producing and transporting) items, those associated holding items in stock, and those associated with not satisfying customer demand on time. We then provide a literature overview to illustrate what issues and challenges have been addressed in the literature so far and how. This exposé distinguishes between deterministic and stochastic demand models, and between single- and multi-echelon inventory systems. Although there is a wide range of models and results, a recurring finding is that green inventory management methods offer opportunities to substantially reduce emissions with relatively small increases in total costs. The chapter concludes with remarks about findings, practical implications, and what remains to be done.

Green location models are an important alternative to reduce CO₂ emissions in logistics, i.e., transportation, which is one of the main contributing factors to global carbon emissions and the sector with the highest growth. In this chapter, we discuss green facility location problems, i.e., a variant of facility location problems that specifically include the transport carbon emissions in the formulation. We review some fundamental location models (both analytical and discrete) and present managerial implications on the comparison between decisions obtained by a cost minimization and by green facility location models. Our results show that for the context of urban deliveries, cost minimization solutions tend to locate facilities closer to high-demand customers, while CO₂ emission minimization solutions tend to locate facilities closer to customers that have truck accessibility constraints. In addition, we illustrate the disadvantages of using aggregate estimation models in green facility location models (i.e., assuming the same structure), for example, in companies interested in intermodal transportation, using aggregate models may result in an increase in CO₂ emissions since the difference in parameters for transportation cost and CO₂ emissions can lead to a completely different set of solutions for both objective functions.

Environmental regulation has important implications on the design and operation of sustainable supply chains. In particular, driving supply chains toward environmental sustainability heavily depends on how the regulation is implemented. To realize a simple regulatory principle, various implementation choices may be available to regulators, and these choices can generate very different incentives on different stakeholders and how they operationalize sustainability. In this chapter, we review a number of recent research papers in operations management to illustrate this phenomenon in the context of take-back regulation and posit that looking through an operational lens should be an essential component of appropriate formulation and effective compliance for environmental regulation.

Considering that food supply chains are a major part of many discussions about sustainability, it is worrying that a lot of the food that is produced does not actually make it to consumption. This means that related environmental impacts were made in vain, while at the same time food insecurity is a main problem in many parts of the world. In this chapter, we discuss food loss and waste (FLW) in the context of sustainable supply chain management. We provide an overview of the drivers behind FLW for different supply chain stages. Subsequently, we discuss potential actions to prevent or reduce FLW in food supply chains as well as provide a brief outlook towards the future of sustainable food supply chains. Many of the FLW reduction strategies lead to the development of novel and different supply chains, dealing with redistribution of surplus food, valorization of FLW streams, management of novel processing and packaging technologies, developing intelligent pricing strategies, extending product assortments, and changing procurement practices. From an operations and supply chain perspective, these issues provide many challenges and opportunities for practitioners and researchers alike.

Supply chain management is about fulfilling demand. Most of the current supply chain literature models demand as an exogenous factor. This also holds true for sustainable supply chain management. However, demand itself is shaped by long- and short-term decisions on, for example, not only assortments and prices but also lead times and service quality. In addition to revenues and costs, demand management also has the potential to impact a firm’s environmental performance in the broadest sense, i.e., emissions, waste, and material and energy consumption. In this chapter, we discuss opportunities for endogenizing demand in sustainable supply chain management. We first discuss the impact of relevant demand characteristics on a firm’s environmental performance. Subsequently, we introduce common demand management levers and then review examples of how they have been applied to manage environmental objectives. We close the chapter by synthesizing our main observations and discussing potential avenues for future research.

In this chapter, we highlight the crucial role of collaboration within supply chains to collectively address sustainability challenges. Traditionally, companies have primarily concentrated on improving their own sustainability impacts, often neglecting the broader supply chain context. However, stakeholders and regulations now hold companies accountable for the sustainability impacts of their entire value chains, making supply chain sustainability an imperative for businesses. We argue for a shift toward collaborative approaches in supply chain sustainability, involving all actors within the supply chain and extending beyond industry-level initiatives. While acknowledging the complexities and potential barriers associated with collaboration, we emphasize the significance of aligning and acting collectively across the supply chain. Throughout the chapter, we present three cases that illustrate various forms of supply chain collaboration, showcasing downstream to upstream engagement with suppliers and sub-suppliers. These cases serve as concrete examples of the positive outcomes that collaboration can achieve, considering the intricate dynamics of supply chain interactions. By strengthening collaboration efforts, we can pave the way for a more sustainable and resilient future for supply chains.

The urgent need for deep decarbonization involves substantial structural changes to minimize carbon emissions. Fortunately, green technologies for decarbonization already exist in heavily polluting industries, supported by well-established policy instruments. However, the deployment of these technologies lags behind. This chapter starts with a macro-level overview of decarbonization and then provides a deeper dive into the energy and industrial sectors, the two heaviest polluters. For Energy, we note that the levelized costs of renewables reached a near parity with conventional sources, but their intermittent call to focus on energy storage technologies, which we review. For Industry, we focus on the triangulation of demand, supply, and policy mechanisms. Throughout, we discuss recent research in operations and supply chain management and the adjacent relevant fields.

This chapter explores the various ways in which supply chains are or could approach sustainability by answering three questions all managers will need to answer as part of their sustainability strategy. First, what has to change in our supply chain to reach true sustainability? Second, how have previous decisions enhanced or limited our options? Third, how will the decisions we make today limit our options in the future? To answer these questions the chapter covers what we know about how supply chains pursue sustainability, and then details the four path dependent trajectories that supply chains follow when addressing sustainability; the wait and see trajectory, the balanced trajectory, the focused trajectory and the opportunity first trajectory. The guiding assumption of this chapter is that it is the series of decisions managers make that determines the supply chain’s sustainability trajectory. Every new process, decision to switch to less harmful materials, or redesign of products will not only have operational implications in terms of waste, risk and innovation, but will also affect and be affected by the chain’s strategic trajectory. This chapter uses a number of examples to detail how a series of path dependent decisions underpins the strategic trajectory of today’s leaders and laggards in sustainable supply chain management.

Growth and prosperity of economies have been traditionally linked with the production, distribution, and consumption of tangible goods. However, such product-based economies have been increasingly generating a large amount of solid waste and greenhouse gas emissions. One potential solution to ensure a more sustainable future is for companies to move towards business models that rely less on the transfer of ownership of products and more on the provision of the services that the products can deliver. Switching the base of the transaction from the product level to the service level can restructure the economics of production and consumption and potentially improve both economic and environmental performance. In this chapter, we examine the potential of such a solution from both economic and environmental perspectives. We provide several examples of product-based companies who have successfully transitioned away from product-based business models towards service-based business models. We then discuss opportunities and challenges firms may face when making this transition and the key decisions they will need to make. We conclude this chapter with directions for future research.

Managers that consider a closed-loop supply chain just another environmental initiative need to update their thinking. Modern firms that use closed-loop supply chains as a competitive strategy receive many benefits—particularly higher profitability and control over a product’s entire lifecycle. In fact, the market for multiple lifecycle products continues to grow, with estimates holding that remanufactured product sales exceed $100 billion per year. As a result of analyzing the ever-growing remanufacturing sector through years of working with managers in numerous industries, various levers and themes surrounding effective closed-loop supply chain strategies became apparent. This chapter presents these findings and shows how firms in multiple industries experienced both successes and failures of their closed-loop supply chain strategies, recently also synonymously called circular economy strategies.

This chapter presents a guiding framework for circular economy implementation in supply chains. Closing the loop for resource efficiency is a well-known practice in the industry. To concretize the circular economy implementation strategies, closed-loop thinking requires innovation and adaptation. Circular supply chains (CSCs) are one of the key enablers in closing the loop by design or intention for value recovery and profit maximization. CSC is an emerging area, and the view of CSC where forward and reverse supply chain is seamlessly integrated with the overall aim to achieve system-wide circularity is missing in the academic debate. By offering a cross-functional and systemic perspective of circular supply chains, we present a guiding framework to structure and understand the underlying complexities and highlight the crucial elements of circular supply chain implementation. The framework categorizes the circular supply chain into four building blocks: systemic approach, main drivers, levels of decision making, and mechanisms to manage the full loop closure and minimize the inherent uncertainties of a complex system. We conclude the chapter by illustrating the applicability of the circular supply chain framework using two industrial cases that are transitioning toward the circular economy.

Single-use packaging is one of the major contributors to the growing issue of plastic waste, pollution, and resource depletion. A promising solution is a switch to reusable packaging. However, although the market for reusable packaging is experiencing rapid growth, the large-scale adoption of reuse systems is still challenging. In this chapter, we review the development of reusable packaging systems in the B2C business. We specifically focus on three waste hotspots of consumer-facing packaging: (1) the fast-moving consumer goods (FMCG) sector, (2) e-commerce, and (3) takeaway food services. We first present a general framework characterizing the fundamental structure of reuse systems, independent of the application. For each application area, we then highlight different challenges to be mastered for large-scale adoption and, thus, effective reduction of single-use packaging. Moreover, we provide some directions for future research in the area of reusable packaging systems.

In this chapter, we review the main aspects related to Sustainable Non-Renewable Materials Management. We start with the more general aspects of material management and its importance to firms and nations. We discuss relevant risks such as geopolitical constraints, availability, pricing as well as recent developments due to the COVID-19 pandemic and the Ukraine–Russian War. We then explain the social–environmental challenges of mining and recycling and focus on criticality assessment and materials flow analysis concepts and tools. We discuss in detail how materials flow analysis can be utilized by firms and conclude with some policy relevancy, following key lessons summary. The chapter is designed to give an overarching view on the topic of materials management beyond the classic view and economic importance.

The COVID-19 pandemic has highlighted how uncertain our world is and, importantly, how vulnerable our operations and supply chains are—from empty supermarket shelves, to shortages of personal protective equipment and microchips, to problems with the supply and recycling of cardboard boxes, and increased food waste in restaurants due to mandatory closures. Beyond COVID-19, newspaper headlines remind us on a daily basis of the consequences of risks and the globally connected nature of our world. Oil price rises due to the war in Ukraine, staff shortages in Dutch and German airports in the summer of 2022, and the Deep Water Horizon Spill in the Gulf of Mexico in 2010 are just a few of the many examples. From these examples we see that supply chain disruptions can affect any of the three dimensions of sustainability—economic, environmental, and/or social—meaning the concepts of supply chain risk and sustainability are closely linked. That is, organizations need to manage sustainability related risks while any given risk can also threaten a company’s long-term sustainability. This chapter examines how supply chain risk management practices support organizations and their supply chains in achieving long-term economic, environmental and/or social sustainability. We examine the process of supply chain risk management—including risk identification, assessment and analysis—and the risk management strategies available to organizations and supply chains. Further, we show how supply chain resilience extends traditional supply chain risk management by enabling organizations and their supply chains to deal with unforeseeable events.

Global supply chains have delivered many benefits for consumers and firms. At the same time, they have become so integral to business that disruptions due to natural or man-made disasters can lead to major shortages in components and final products. Concurrently, social, environmental and ethical problems have arisen and continue to persist, despite government, private sector and nongovernmental efforts to address them. What are effective methods for global firms, or buyers, to gain an understanding of social and environmental problems in supply chains and to address them? We examine strategies using a sense and response framework, and find various approaches within this framework to be associated with improved performance. In particular, research suggests that using a collaborative, proactive approach with suppliers and providing meaningful incentives can be effective. There exists an opportunity to cascade these efforts to second tier suppliers and beyond, where some of the greatest impacts and opportunities to affect change lie.

As discussed in Chap. 1 by Bouchery et al. (Sustainable supply chains: introduction. In: Bouchery Y, Corbett CJ, Fransoo JC (eds) Sustainable supply chains: a research-based textbook on operations and strategy. Springer, Cham, 2023), improving supply chain responsibility is not only seen as a way to mitigate a variety of risks and meet regulations, but also as a means to increase profits, either by saving costs, growing revenues via positive brand image, or doing both. In this chapter, we discuss supply chain practices associated with improved social, environmental, and in several cases, economic performance. We discuss how leading firms are complementing compliance programs, which remain important, with an increased emphasis on building shared value for various actors along the value chain.

We start with four questions facing managers and researchers regarding how social responsibility can or should be incorporated into supply chains. These questions pertain to (1) delineating the scope and context of supply chain operations, (2) dealing with many definitions and objectives of social responsibility, (3) figuring out how to work with the “poor,” and (4) developing an overarching framework across the company or supply chain. We outline the views in the literature culminating with the stakeholder resource-based view (Sodhi. Prod Oper Manag 24(9):1375–1389, 2015) and how it helps address these questions. We report the findings regarding how organizations work with the poor and the implications for companies wishing to fulfill their social responsibility using their supply chains. Finally, we describe potential areas for application and further research.

Sustainability issues are becoming more complex. Private companies respond to the new challenges with the pursuit of corporate social responsibility. One way to contribute to society and to deal with the increased pressure is by engaging in cross-sector partnerships with non-profit organizations. But under which conditions are these partnerships successful? Using a multiple case research design we study the challenges in the process of creating sustainable value for supply chains through cross-sector partnerships between pharmaceutical companies and non-profit organizations operating in developing countries. The chapter answers two research questions: (1) What are the challenges affecting the success of cross-sector partnerships to create sustainable value? (2) How can these challenges be addressed by Operations Management (OM)/Supply Chain Management (SCM) research?