Sustainable Planning Strategies in Supply Chain

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Production Planning & Control

The Management of Operations

ISSN: 0953-7287 (Print) 1366-5871 (Online) Journal homepage: https://www.tandfonline.com/loi/tppc20

Sustainable planning strategies in supply chain


systems: proposal and applications with a real
case study in fashion

Yi-Ning Fung, Tsan-Ming Choi & Rong Liu

To cite this article: Yi-Ning Fung, Tsan-Ming Choi & Rong Liu (2019): Sustainable planning
strategies in supply chain systems: proposal and applications with a real case study in fashion,
Production Planning & Control, DOI: 10.1080/09537287.2019.1695913

To link to this article: https://doi.org/10.1080/09537287.2019.1695913

Published online: 09 Dec 2019.

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PRODUCTION PLANNING & CONTROL
https://doi.org/10.1080/09537287.2019.1695913

Sustainable planning strategies in supply chain systems: proposal and


applications with a real case study in fashion
Yi-Ning Fung, Tsan-Ming Choi and Rong Liu
Business Division, Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Kowloon, Hong Kong

ABSTRACT ARTICLE HISTORY


Pollution generated by the fashion industry drives people to pay attention to fashion companies’ sus- Received 31 January 2019
tainability practice. This increase in attention has induced vast literature studying the related area. Accepted 22 April 2019
Since the fashion apparel supply chain is complicated which involves a lot of interrelated steps and
KEYWORDS
decisions, how fashion companies can identify the demand in sustainable fashion and make the right
Sustainable supply chain
decision in resource allocation throughout the supply chain becomes a critical issue. As a result, this management; operations
paper examines how a fashion company can develop a successful sustainable planning strategy management theories; triple
throughout the sustainable fashion supply chain. The sustainability attributes and the sustainable plan- bottom line; sustainable
ning strategy mechanism are also discussed. Based on the institutional theory and resource-based the- planning strategy; case
ory, we first analyse the external pressure and internal motivations for companies to adopt a study; fashion company
sustainable planning strategy in the fashion supply chain. We then identify the core stakeholders
related to the sustainable planning strategy and propose how the decision-making theory can help
develop the sustainable supply chain management mechanism. Next, we establish a sustainable plan-
ning strategy framework. Finally, via a case study with public data on the fashion giant brand Nike,
we explore the application of our proposed sustainable planning strategy framework. The finding sug-
gests that the strategic planning of fashion companies on sustainability can improve the performance
of the stakeholders throughout the whole sustainable fashion supply chain.

1. Introduction global emissions which are more than the emissions created
by maritime shipping and international flights together.
1.1. Background and motivation
Nevertheless, the by-product of the fast-growing fashion
The fashion industry is a very important business area in the market is the disposal of fashion products after use. It is
world. It accounts for 2% of the world Gross Domestic reported that over 30,000 kg of used clothes are disposed
Product (GDP) (Strijbos 2018). It is recently reported that the each year, many of which are directly sent to the landfill.
global fashion industry values over 3000 billion dollars and These terrifying numbers show the seriousness of fashion
the forecasted projection is going up. However, the bigger industry-related pollution. With the growing awareness of
the business, the more resources it requires. The expansion the fashion sustainability, apart from the sustainability level
of the fashion industry is accused of bringing harm to the of the fashion apparel itself, people start to pay attention to
global environment in the planetary level. According to the the sustainability level of the fashion industry (Subramanian,
Secretary of the United Nations Economic Commission for Gupta, and Talbot 2009). They will question if the fashion
Europe (GLF 2018), the water consumption by the fashion companies are responsible for the environment, social war-
industry is the second largest among all industries in the fare and sustainable economy throughout the whole fashion
world. In addition, the increase in industrial water consump- supply chain or not. Any failure in achieving sustainable fash-
tion leads to an increase in wastewater produced. About ion will harm the company image and its business.
20% of the global wastewater is generated by the fashion Supported by the institutional theory, due to the huge exter-
industry (Kell 2018) Moreover, the introduction of fast fash- nal pressure, giant fashion companies like Nike and Levis’
ion increases the demand for speedy production and logis- invest a huge amount of resources and efforts to improve its
tics. The finished fast fashion products are produced and sustainability level (Horne and Textile Institute 2012). They
launched in the market in a short period of time (e.g. the have both committed to sustainable fashion in social, envir-
2 weeks magic exercised by the fast fashion brand ZARA). onmental and political aspects, and tried to build up a sus-
This high demand in production and global logistics services tainable image among their target customers. Besides,
sharply increases the carbon emissions of the fashion indus- according to the resource-based theory, companies can gain
try. According to Horne and Textile Institute (2012), the fash- competitive advantages by reinforcing the use of precious
ion industry’s carbon emissions account for 10% of the total resources (Barney 1991). Thus, fashion companies try to use

CONTACT Tsan-Ming Choi jason.choi@polyu.edu.hk Business Division, Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Kowloon,
Hong Kong
ß 2019 Informa UK Limited, trading as Taylor & Francis Group
2 Y.-N. FUNG ET AL.

the resources wisely to support their business growth. our knowledge, there are no prior studies in the literature
According to the decision-making theory by Simon (1976), which identify the external and internal motivations for
by evaluating the gathered market information and data, the fashion companies to develop the sustainable planning
decision makers can make the optimal decisions which gen- strategy (SPS), and how SPS of fashion companies can
erate the highest value. As the fashion apparel supply chain improve the performance of the stakeholders throughout
involves a huge amount of human and natural resources, the whole sustainable fashion supply chain (SFSC). This
companies need to have careful planning upon the sustain- paper hence aims at filling this gap and examines how
able business strategy and the corresponding movement. fashion companies can develop successful SPS which gov-
The implementation of sustainable planning strategy (SPS) erns the sustainable performance of the stakeholders
upon design, manufacturing, distribution and consumption throughout the sustainable fashion supply chain. A novel
will largely affect the sustainable performance of the down- theoretical framework namely, sustainable planning strategy
stream stakeholders (designers, manufactures, distributors framework (SPSF) is established for a sustainable fashion
and consumers) in the sustainable fashion supply chain supply chain in which the external and internal influencing
(SFSC). Thus, to achieve a SFSC, companies need to have an factors, resources allocation and decision-making mecha-
all-rounded planning strategy to make the right decisions for nisms of the SPS are analysed.
actions and movements.
2. Literature review
1.2. Research methodology 2.1. Sustainability
For the research approach, this paper adopts the Noor The growth of human civilisation leads to a domination of
(2008)’s model for the case study research. The model involves human to the ecological systems, which raises the concept
three stages, namely the preliminary stage, analysis stage and of sustainability (Caradonna & Ebrary, Inc 2014). Currently,
conclusion stage (Figure 1). In Section 2 (preliminary stage), there are many studies focusing on investigating sustainabil-
along with the theoretical foundation, we first conduct a lit- ity issues. According to Johnston et al. (2007)’s estimation,
erature review on sustainability frameworks, sustainable devel- the term sustainability has approximately 300 definitions. In
opment and sustainable fashion supply chain management. terms of planetary considerations, as the earth’s resources
The sustainable planning strategy framework (SPSF) is then are limited, we need to safeguard them against exploitation.
presented in Section 3. Next, in order to explore the By which, Gallopın and Raskin (2003) define sustainability as
application of SPSF, In Section 4 (analysis stage), we conduct the long-term well-being of both human society and the
a case study on Nike, and examine how the sustainable plan- planet, while the International Organisation for
ning strategy can help the company and the corresponding Standardisation views sustainability as a target goal derived
supply chain stakeholders to facilitate SFSC. Finally, in Section from the human–earth’s ecosystem equilibrium (ISO 15392
5, research implementation and managerial insights 2008). Meanwhile, Geissdoerfer et al. (2017) propose that the
are presented. most commonly accepted definition of sustainability is pro-
posed by the Brundtland Commission (Cassen 1987).
Brundtland Commission defines sustainability as the develop-
1.3. Contribution statement
ment which meets the present needs without compromising
There are many studies investigating sustainable fashion the future generations’ ability to meets their own needs.
and sustainable supply chain management. To the best of Based on these ideas, to enhance the human society–planet

Figure 1. Research approach adopted in this paper.


PRODUCTION PLANNING & CONTROL 3

relations, a sub-domain of sustainable development is devel- Based on the above-reviewed literature, we note that
oped. According to Robert, Parris, and Leiserowitz (2005), there are many prior studies exploring how to achieve sus-
through sustainable development, we can balance the local tainability. Specifically, CE, C2C and DfE focus on the environ-
and global efforts, whereas basic human needs can still be mental protection by means of design and manufacturing,
satisfied without disregarding or destroying the natural envir- while QMI and SR focus on the corporate strategy for
onment. However, how local and global parties can work enhancing sustainable economic performance and the corre-
together, which achieves the best utilization of the natural sponding social responsibility. However, it seems that none
resources, to safeguard the environment becomes one of the of them have covered all three aspects of sustainability, i.e.,
key research topics. environment, economic and social. Contrastingly, one of the
Traditionally, the global supply chain is in a linear form, best known and most widely used sustainability frameworks
this linear system can also present as an open-ended ‘take, – ‘Triple Bottom Line’ (TBL) by Elkington in 1998 seems to be
make and dispose system’ (Moorhouse and Moorhouse 2017) more comprehensive. In 1998, Elkington developed the triple
in which resources are taken from the nature, reproduced to bottom line framework, which consists of three sustainable
desired products, and disposed to form wastage after usage. pillars: profit (economic), people (social) and planet (environ-
This traditional open-ended system generates a huge amount ment). With reference to the TBL framework, companies can
of waste resources. This will ultimately exploit the planet set up sustainable goals and the corresponding measures to
resources and violate the concept of sustainability. To deal develop the global economy, to support the social welfare,
with this problem, Boulding (1966) and Stahel and Reday and to protect the global environment (Alhaddi 2015). As
(1976) propose a concept of closed loop economy. They sug- illustrated by the above findings, to make our study more
gest to bring the end-of-life resources back to the manufac- comprehensive, in the case study research, we will use the
turing cycle and minimise the waste generated by the TBL framework as a foundation to study the sustainable
industry. This concept of closed-loop systems provides the issues in the fashion industry.
foundation for the new concept of circular economy (CE). To
the best of our knowledge, the term CE was first proposed by
2.2. Sustainable fashion supply chain management
Pearce and Turner (1990). They think that the concept of recy-
cling is missing in the traditional open-ended system. By recy- Because of globalisation, the core stakeholders in the fashion
cling the waste resources, we can transform an open-ended supply chain are usually geographically dispersed. So how
system to form a closed-end system. According to Su et al. the stakeholders can co-coordinate together to achieve a
(2013), the concept of circular economy was first imple- sustainable supply chain becomes critical. To optimise the
mented in Germany. In 1996, Germany activated a law namely efficiency of green supply chains, we need to study the sup-
‘Closed substance cycle and waste management act’ which ply chain sustainability level and forecast the efficiency of
enhances the concept of waste recycling and the close-loop the stakeholders (Dubey et al. 2017; Shabanpour, Yousefi,
waste management. Meanwhile, Ellen MacArthur Foundation and Saen 2017; Zhao et al. 2017). As a virtual organisation,
promotes the concept of CE by publishing a range of reports the company in the supply chain should connect the stake-
and books (MacArthur 2013), in which the concept of CE is a holders in the supply chain and improve their competitive
closed-loop model which aims at restoring the unused resour- advantages via strategic governance. To manage the sustain-
ces back into the supply chain system for further regenera- able fashion supply chain, the company cannot only focus
tions and circulation (Lehmacher 2017; Urbinati et al. 2017). on the company’s internal process, but its entire network
Similarly, McDonough and Braungart (2002) suggest that in (Garetti and Taisch 2012). Any change in the company’s sus-
the view of nature, there is no concept of waste, because all tainable business strategy requires substantial efforts by its
materials will go back to the ecosystem. Based on this con- supply chain partners (Macchion et al. 2018).
cept, they propose the Cradle to Cradle (C2C) system. It is a As argued above, to make the fashion supply chain sus-
manufacturing approach to design and produce products tainable, we first need to understand the fashion supply
which can be recycled and sent back to the ecosystem. To chain mechanism and the corresponding stakeholders’ activ-
support the concepts of CE and C2C which promote the con- ities. Then, the company can develop sustainable strategies
cept of resources recycling and circulation, researchers try to and action plans correspondingly. The supply chain of the
study the concept of Design for Environment (DfE). Fiksel fashion industry is very complicated which involves the par-
(2009) investigate how DfE can be implemented within the ticipation of different parties and various interlinking proc-
product development process, while Jackson et al. (2016) esses. Traditionally, at the beginning of each season, the
examine the relationship between DfE and quality manage- management team of the company needs to plan the busi-
ment innovation (QMI) and how it would affect the perform- ness strategies and product assortments. Then, based on the
ance with respect to the environmental and economic company’s business strategy, teams of designers need to do
aspects. Furthermore, to facilitate the implication and disclos- research for the upcoming fashion trend about colours,
ure of the sustainable manufacturing and business strategies materials, and silhouette which would best fit the brand
based on the C2C and DfE, Garcia-Torres, Rey-Garcia, and image and target customers tastes. Then, designers will
Albareda-Vivo (2017) explore how sustainable actions of the design the collection and ask the merchandisers to source
corporations can be disclosed effectively and help gain public the desired materials, and factories to produce the proto-
awareness via sustainable reporting (SR). types. Once the prototypes are finished, the worldwide
4 Y.-N. FUNG ET AL.

buyers will have meetings and place orders for bulk produc- The above studies discover that there is a lack of clear guide-
tion. The production of fashion apparel involves a huge lines on how fashion companies can develop a sustainable
number of workers, for example, the sewing, accessories planning strategy which can improve the stakeholder’s per-
assembly, finishing packaging, etc. Nevertheless, due to the formance and the effectiveness of the whole fashion supply
globalisation and technology advancement, fashion apparel chain. As a remark, most prior studies have found that
merchandise will be sold and ship to customers which are designers and manufactures need a clear vision upon the
geographically dispersed. The corresponding logistics system level of sustainability, while the consumers do not trust the
also needs a huge amount of resources to support the global concept of sustainable fashion due to its low-level of visibil-
demand. As discussed above, we have identified the core ity. As a consequence, to develop a common vision and
stakeholders in the fashion supply chain. They are the transparent guideline for the company and its supply chain
retailer, designers, manufactures, distributors and consumers. members, we have to incorporate consumers into
To make the fashion supply chain sustainable, inter-cooper- the analysis.
ation between channel members is crucial. Researchers tried In the late 1960s, researchers developed a tool which is
to investigate how channel members can work together and now called ‘Life Cycle Assessment’ (LCA) to measure the
facilitate fashion supply chain coordination. For example, environmental impacts of manufacturing and production
Jabbour (2015) investigate how the development of green (Chang, Lee and Chen 2014). According to the International
teams within the leading company can facilitate the sustain- Standards Organisation [ISO] (Hauschild et al. 2005), LCA is
able supply chain management. Due to internationalisation divided into four phases, which are: (1) the goal and scope
and the advance of information technology, market informa- definition; (2) life cycle impact assessment (LCIA); (3) life
tion is highly visible to fashion consumers. To gain a higher cycle inventory (LCI) and (4) interpretation. At first, LCA
market share, the channel members need to react promptly mainly focussed investigating on the environmental impacts
to the market demand. According to Ailawadi (2001), as the on manufacturing. In the later studies, LCA was extended to
retailers interact directly with consumers, they can obtain the cover product design. Furthermore, researchers who study
latest market information which enhances the power of the the corporate social responsibility (CSR) uncover how compa-
retailer. Supported by the competitive advantage of retailer nies would disclose its sustainable commitments to the pub-
in the fashion industry, Wang and Liu (2007) investigate the lic with law and legislation foundation (Chan, Choi, and
effectiveness of a retailer-led supply chain via option contract Leung 2018). Through the CSR reporting system, companies
coordination. Choi, Li and Xu (2013) further examine the need to plan carefully in the early stage of strategic plan-
effectiveness of a retailer-led fashion supply chain via a sys- ning. The reason is that, the plans and corresponding move-
tematic comparison, which shows that the most effective ments are governed by the related laws and regulations
close loop supply chain in the fashion industry is led by the upon cooperate reporting. Any mismatching between the
retailer. Furthermore, Bloom and Perry (2001) study the report and the commitment will affect the corporate image
thought by a real-life case study of Wal-Mart. Thus, in this and business performance. As indicated by the above stud-
paper, we will set the retailer (the fashion brand) as the focal ies, although the LCA and CSR provide a measurable guide
company for later study and framework development. After for sustainable practices, they cannot cover all the three pil-
identifying the core stakeholders in the sustainable supply lars of TBL throughout the whole supply chain. According to
chain, the retailer can develop the business strategies for Strange and Bayley (2008), the three pillars of sustainability
design, manufacturing, distribution and consumption. (Economic, Social and Environment) are interrelated intim-
ately and cannot be considered separately. Folke et al. (2002)
and Cobbinah, Black, and Thwaites (2011) further enhance
2.3. Measurements for sustainability
the thinking with the concept of sustainable development. In
Although the TBL can act as a guide and lead us to sustain- these works, all the three pillars are revised and included in
ability, how to make the sustainable goals measurable and the model. This provides a pathway to achieve a symbolic
practical becomes the key to success. Researchers have tried relation among the three pillars. In recent years, countries
to propose different measurement guidelines for participants are more and more dedicated to sustainable development.
in the supply chain upon decision making. In fact, there are They aim at building a positive relation with the national civ-
many studies on sustainable supply chain management. De ilisation with the planet resources (Shaker 2015). By balanc-
Brito, Carbone and Blanquart (2008), Jørgensen and Jensen ing the sustainable development efforts between local and
(2012) and Shen et al. (2017) all try to investigate the sus- global, we can meet the basic human needs without degrad-
tainability issues in textiles and apparel supply chains. ing or destroying the natural environment (Kates, Parris, and
Moreover, Clancy, Fro €ling, and Peters (2015) conduct inter- Leiserowitz 2005). Based on the above national calls, the
views with Sweden garment companies’ employees and United Nations Developments Programme (UNDP) suggested
explore if ecolabeling can help to achieve a sustainable fash- the ‘Sustainable Development Goals’ (SDGs) in 2012. The
ion supply chain. On the other hand, Ko €ksal et al. (2017) SDGs are a universal call upon planet protection, which aim
study the supply chain management measures with respect at improving the social, economic and environment condi-
to social sustainability in the textile and apparel industry. tions especially in the least-developed countries with meas-

Zurga and Forte (2014) conduct an online questionnaire sur- urable guides and suggested actions (Dhahri and Omri
vey to examine consumers knowledge upon eco-labelling. 2018). The SDGs provide universal understandable and
PRODUCTION PLANNING & CONTROL 5

measurable guidance which covers all three pillars of TBL.


Decision makers in the supply chain can refer to the SDGs Triple Bottom Line Institutional theory
during the sustainable product development process. Thus,
in Section 4 (analysis stage), we will use SDGs as a measure-
Social Pillar Social knowledge
ment guide to analyse the successfulness of the sustainable
(cognitive dimension)
planning strategies.
Economic Pillar Value systems
(normative dimension)
2.4. Theoretical background
2.4.1. Institutional theory Environmental Pillar Governmental policies
(regulative dimension)
As mentioned in Section 1, the seriousness of fashion related
pollution brings up the global awareness of the fashion sus-
tainability. Any failure in achieving sustainable fashion will Figure 2. Inter-relationships between TBL and the institutional theory.
hurt the company image and its business. This global norm
is supported by the institutional theory, according to the advantages. According to the resource-based theory, compa-
companies’ business model and practices will be affected by nies can gain competitive advantages by reinforcing the use
the external pressure (Hirsch 1975). According to Shmidt and of precious resources and responding properly to environ-
Khudyakova (2015), the uncertainty implied by the external mental opportunities (Barney 1991). A few studies examine
environment can affect the industrial enterprises’ level of the performance of the fashion industry based on the
sustainability. For example, the local highway transportation resource-based theory. For example, Gardetti and Torres
system will affect the energy consumption and environmen- (2015) explore the social and environmental performance in
tal efficiency (Song et al. 2017), while the external environ- the luxury fashion industry, while Sekiguchi (2012) studies
mental restrictions will affect the water resources utilisation the implications of the resources-based theory on strategic
efficiency of the sustainable fashion supply chain (Song, human resource management in the fashion industry.
Wang and Zeng 2018). Apart from the sustainable economic Expanding the resource-based theory to the sustainable fash-
environment, the interaction between the sustainable fashion ion industry, fashion companies can implement sustainable
industry and the society is crucial for the company’s strategic strategies that exploit their internal and external strengths in
planning upon sustainability. If the sociality is closely sustainable development. According to Capon, Farley, and
engaged to the sustainable fashion, the retailer needs to ful- Hoenig (1990), the key outcome variables of the resources-
fil the social expectations on the sustainable fashion industry. based theory focus on the performance. Thus, together with
According to Scott (2008), the institutional theory classified the SDGs, companies can develop sustainable strategies by
the external pressures into to three different areas which are: assigning resources to where they have competitive advan-
(1) social-knowledge and perceptions which are commonly tages and achieve the desired performance outcomes
shared; (2) political-laws and regulations which restrict some of SDGs.
behaviours and promote the others; (3) Economic – resist-
ance/acceptance of the shift of common values. By using the
2.4.3. Decision-making theory
institutional theory, Kostova (1997) extends the model to a
The decision-making theory can be divided into two parts,
country level. To produce a three-dimensional country insti-
which are the normative decision theory and the descriptive
tutional profile, Kostova (1997) applies the three pillars of
decision theory (Black, Hashimzade and Myles 2012; Peterson
social knowledge (cognitive dimension), governmental poli-
2017). The normative decision theory provides suggestions
cies (regulative dimension) and value systems (normative
on how to make optimal decisions under uncertainty (Wang
dimension) at the country level. Following this stream of lit-
et al. 2017), while the descriptive decision theory concerns
erature, we can apply the institutional theory to examine
how people make decision in the real life. The ever-changing
global sustainability with respect to the triple bottom line
fashion industry is full of risks and uncertainties. Any change
framework (Figure 2). The cognitive dimension focuses on
in the demand will affect the whole supply chain, especially
the external pressure upon the social impact of sustainability,
when it comes to the demand in sustainable fashion. Lee
while the normative dimension demonstrates pressures on
et al. (2014) study that the consumer demand on sustainable
the economic value of sustainability. Finally, the regulative
fashion changes in time, when the information transfer along
dimension shows the key pressure upon the government
the fashion supply chain, it will get distorted which are
legislation on sustainability.
called the ‘green bullwhip effect’. So, how decision makers
along the supply chain make the optimal decision in resour-
2.4.2. Resources based theory ces allocation becomes critical. Supported by the normative
Due to globalisation in business operations, fashion apparel decision theory, companies can evaluate the alternatives and
companies are facing worldwide competitions. Competitors select the best option by comparing the comparative advan-
are not limited to local organisations but include the ones tages. Furthermore, based on the descriptive decision theory,
from the global market. To stand out from the massive com- by evaluating the real market data, the decision makers can
petition, companies need to enhance its competitive make optimal decisions which generate the highest value
6 Y.-N. FUNG ET AL.

Table 1. Theories for sustainable planning strategy (SPS) which are relevant to sustainable fashion supply chain management.
Theory Description of theory Relevance to sustainable fashion supply chain management
Institutional theory Companies’ business model and practices will be affected To react to the global demand on sustainable fashion. Fashion
by external pressures. companies need to re-design their business model and
achieve sustainable fashion supply chains.
Resources-based theory Companies can gain competitive advantages by Through the implementation of sustainable strategies, fashion
reinforcing the use of precious resources and companies can reinforce the use of resources and gain
responding properly to the environmental competitive advantages which exploit their internal
opportunities. strengths and improve their weaknesses.
Decision making theory Normative decision theory: Providing suggestions on how The ever-changing fashion industry is full of risks and
to make optimal decisions under uncertainty uncertaintyies. Fashion companies are seeking for solutions
Descriptive decision theory: By evaluating the real market to make optimal decisions on sustainable development.
data, the decision makers can make optimal decisions By gathering the market information on the sustainable
which generate the highest value demand in fashion, fashion companies are able to react to
the market demand and make optimal decisions.

Figure 3. Sustainable planning strategy framework. Note: Recycle and reuse should be considered in all functions in stage 2, namely ‘Sustainable Planning
Strategy’, ‘Design’, ‘Manufacturing’ and ‘Distribution and Consumption’.

(Simon 1976). Thus, by gathering the market information 3. Sustainable planning strategy framework
upon the sustainable demand in fashion, decision makers
As the fashion industry is well known in generating a huge
throughout the fashion supply chain are able to react to the
amount of fashion wastes, the growth in the fashion industry
market demand and make optimal decisions.
brings public awareness of fashion sustainability. So how
companies can achieve sustainable supply chain manage-
2.4.4. Theoretical implications in sustainable fashion sup- ment becomes critical. As mentioned in Section 2.2, to man-
age the sustainable fashion supply chain and implement the
ply chain
planned sustainable strategy, the engagement of related
As discussed above, we have discovered that the features of
channel members and their counting methods are required
the sustainable fashion industry are well-supported by three
(Macchion et al. 2018). Shen et al. (2017) find that to manage
core theories, namely: Intuitional theory, resources-based the-
a sustainable fashion supply chain, fashion companies like
ory and decision-making theory. To make the illustration spe-
H&M and North-Face incorporate the business strategies of
cific, in Table 1, we highlight the relevance of these theories sustainable investments and management systems with the
to the sustainable fashion supply chain management. co-related supply chain members. Furthermore, after the
Based on the institutional theory and resources-based the- implementation of the sustainable strategy, in the final stage,
ory (study in Section 2.4), the fashion retail company needs performance evaluation is needed to evaluate the outcomes
to identify the external demand on fashion sustainability and of the strategy for future improvements.
analyse the company’s internal strengths and weaknesses for Based on the above findings, we develop the ‘Sustainable
resources allocation. Then, based on the decision-making Planning Strategy Framework’ (Figure 3) which demonstrates
theory by Simon (1976), by evaluating the gathered external how companies can facilitate the sustainable performance of
market information and internal data, the retailer can make its related stakeholders and achieve a sustainable fashion
optimal decisions for strategic planning and generate the supply chain. The Sustainable Planning Strategy Framework
highest business values. is divided into 3 stages, which are: (1) Information gathering
PRODUCTION PLANNING & CONTROL 7

and analysis; (2) Strategy development and implementation; model draws the market attention which drives the consum-
(3) Performance evaluation. ers away from consumption.
By evaluating its strengths and weaknesses on environ-
mental, economic and social performance, the retailer can
3.1. Stage 1: information gathering and analysis
develop sustainable planning strategies with its stakeholders
Using the institutional theory studied in Section 2.4.1, the and react to the market demand. As mentioned in Section
company needs to identify the external demand of fashion 2.2, we identify the key channel members in the sustainable
sustainability. Combining the findings in Section 2.1, we can fashion supply chain (SFSC) which are the design, manufac-
identify the 3 core areas of TBL as the external pressures of turing, distribution and consumption stakeholders. Thus, in
sustainable fashion which motivate the fashion retailers to this paper, the planning strategy of the company will focus
amend its business model to achieve a sustainable fashion on these three areas.
supply chain. Thus, in Stage 1, the retailer needs to gather
external information on market’s demand for sustainable
3.2.2. Design planning strategy
fashion. The information is divided into three areas, namely
The design theory has been widely used in the discussion
economic, environmental and social. According to Song et al.
of product design and design process. According to the
(2017)’s investigation, social and environmental sustainability
definition proposed by Walls, Widmeyer and El Sawy (1992)
can be facilitated by big data evaluation. Through evaluating
on the design theory, the design theory is composed by
the gathered external market information and data, a retailer
two parts, namely, ‘Design Product’ and ‘Design Process’.
can make optimal decisions in the later stages.
Moreover, Simon (1996) suggest that the essential compo-
nents of design are how organisations shape the design
3.2. Stage 2: strategy development and analysis and the corresponding design process. Besides, Gregor and
Jones (2007) further elaborate the design theory. They
After gathering and analysing the external information, the
focus on the design functions and the corresponding action
retailer can move to Stage 2, which is about the sustainable
plan throughout the design process, for example, the
planning strategy development and implementation. The
technological consideration upon design and its implemen-
sustainable planning strategies aim at improving the per-
tation. With the support of design theory, we find that, to
formance of the retailer and its related supply chain stake-
produce sustainable products, the retailer needs to work
holders to achieve optimal sustainable fashion supply chains.
closely with its related stakeholders and design the features
carefully with the corresponding action plans throughout
3.2.1. Analysing strengths and weaknesses of the retailer the whole design process.
Based on the resource-based theory, through analysing the To achieve sustainable fashion, retailers need to take all
company’s strengths and weaknesses, companies can allo- the three pillars of TBL into considerations during the
cate resources effectively which enhance the strengths and apparel product design process. The apparel product design
overcome weaknesses of the sustainable fashion supply will affect the whole fashion supply chain. As mentioned
chain. Besides, according to Peterson (2016), through careful above, the materials, manufacturing processes and garment
resources allocation and integration, companies can develop finishing processes induce a huge negative environmental
sustainable strategies that educate channel members and impact. Thus, selecting sustainable materials and finishing
encourage cooperative processes via strategic governance. methods can reduce the unfavourable environmental and
Thus, in order to react to the market demand upon sustain- social impacts throughout the whole fashion supply chain.
able fashion, the retailer needs to evaluate its internal Kasarda et al. (2007) suggest a new concept of eco-product
strengths and weaknesses. From the economic point of view, design, namely Design for Adaptability (DFAD). Through
the retailer needs to consider the financial resources of the innovative design, the product can be adapted to the
company itself and its stakeholders. It is because, to imple- changes and the product life can be elongated. Meanwhile,
ment sustainable strategies extra financial resources are innovative design can add value to the sustainable product
needed (e.g. labour, green technology development and which benefits the company and the economy (Santolaria
green performance evaluation, etc). Also, the retailer needs et al. 2011). Thus, fashion retailer can integrate their sus-
to consider the expected return and the return period on tainable strategic plans with eco-design to facilitate the sus-
the sustainable investment. Next, the retailer needs to evalu- tainable fashion supply chain. Furthermore, Niinim€aki and
ate its social and environmental performance. Any failure Hassi (2011) present different design opportunities on eco-
sustainable social performance will harm the business. For design strategies and the corresponding consumers’ per-
example, a recent report from Bloomberg (Paul 2017) shows ceived value towards the sustainable design approaches.
that the growth in th total revenue of Zara goes down. Based on their studies, the retailer’s management teams
Studies show that, this drop-in sale resulted from the fact and its design stakeholders can work together and select
that Zara fails to address the complaints in achieving sustain- the ultimate eco-design direction which benefits the sus-
able social responsibility. The usage of sweatshop for produc- tainable fashion supply chain and the planet at the
tion and the waste derived by Zara’s fast fashion business same time.
8 Y.-N. FUNG ET AL.

3.2.3. Manufacturing planning 


and eco labelling, etc. Both Zurga and Forte (2014) and
Fashion manufacturing is notorious for generating environ- Clancy, Fro€ling, and Peters (2015) study the impact of eco-
mental pollutants. To achieve sustainable fashion supply chain labelling. They find that eco-labelling can enhance the con-
management, the retailer needs to pay attention to all three sumers’ knowledge on retailers’ sustainability movements, for
pillars of TBL and evaluate the performance of its related man- example, the use of eco-materials, sustainable production
ufacturing stakeholders. As such, they can develop sustainable 
and manufacturing. Zurga and Forte (2014) even discover
manufacturing strategies for actions and implementation. that consumers are willing to pay more if the product has
Many studies evaluate the sustainable performance of the eco-labelling which explains the sustainable features of the
fashion manufacturing and production. Cox et al. (2013) and product. With reference to the study of Goworek (2014), the
Mair, Druckman, and Jackson (2016) focus on the social retail buyer plays a significant role in the fashion industry.
aspects of sustainable clean production whereas Alkaya and They determine what kind of merchandise should be offered
Demirer (2014) study a manufacturer in Turkey and investi- to the market. If the retail buyers gather sufficient market
gate how to apply different measurements on sustainable information on the consumers’ sustainable requirements,
fashion production. Furthermore, apart from improving the they will offer corresponding products with eco-labelling to
existing manufacturing and production method, Dissanayake satisfy the needs. Also, through careful product assortment
and Sinha (2015) examine a new manufacturing process for planning, retailers can educate the consumers for sustainable
fashion re-manufacturing. Unlike the traditional forward fash- consumption which supports further sustainable develop-
ion supply chains, re-manufacturing involves reverse supply ment. Furthermore, by addressing the customers’ demand
chains which require the support of green production tech- for sustainability and cooperation with customers, the sus-
nologies (Wang and Song 2017). Through understanding of tainable performance of the supply chain can be enhanced
the external environment in stage 1 and evaluating the sus- (Jabbour et al. 2017).
tainable performance of the SFSC stakeholders, retailers can
design sustainable manufacturing strategies and allocate 3.3 Stage 3: performance evaluation
resources for improvement and enhancement. For example,
Agrawal, Atasu, and Van Ittersum (2015) explore the consum- In the final stage, the retailer will evaluate the performance of
ers’ perceived value of re-manufacturing and find that they the company itself and the related channel members in the
have different perceived value towards re-manufactured prod- sustainable fashion supply chain. The sustainable planning
ucts with respect to the re-manufacturing methods (e.g. recy- strategy is a cycle. As the fashion industry is an ever-changing
cling waste from production process or the used end industry, to achieve sustainable business based on the per-
products). After knowing the demand for fashion waste mini- formance report and new external information, the company
misation and fashion waste recycling, the giant fashion com- can work on future improvement plans. As mentioned in
pany H&M invests in the new fibre reuse and recycle Section 2.3. The sustainable development goals provide uni-
technology, so that the blended textile materials can be re- versal understandable and measurable guides that cover all
cycled and re-produced into new cloths. The above studies the three pillars of TBL. The retailer can refer to the SDGs and
evaluate sustainable performance of its stakeholders and itself.
demonstrate the benefits of applying sustainable manufactur-
ing strategies towards the environment and economy.
4. Case study
3.2.4. Distribution and consumption planning According to Siggelkow (2007), in order to have a better the-
Not limited to the apparel manufacturing, the distribution oretical understanding and implications, it is suitable to use
and consumption of fashion apparel also induce huge envir- the case study approach (Yin 2009). The case study in this
onmental issues (Choi et al. 2012). As mentioned in paper is conducted by analysing the secondary data gath-
Section 2, nowadays, the consumption of fashion apparels ered from Nike’s annual sustainable business report (fiscal
increased by 60% from the year of 2000. This dramatical years 2016 and 2017), news articles, internet documents and
surge in consumption is facilitated by the norm of fast fash- other published documents. Based on the collected informa-
ion. Consumers tend to update and dispose the fashion tion on sustainable actions of the sustainable fashion com-
apparel in a rapid and constant manner (Cox, Li and Xu pany, we conduct a content analysis and examine the
2013). However, numerous reports have shown the environ- application and successfulness of its sustainable planning
mental issues caused by the over-consumption of fashion strategies. Content analysis is a research method allows
apparels. People start to pay attention to the sustainability researchers to study documentation texts and analyse the
level of the fashion companies, and they are willing to pay global phenomena (Bauer 2007). Content analysis is widely
more for sustainable fashion apparel products (Choi et al. used in the fashion industry-related research (see, e.g. Chan
2012). To generate positive reputation among consumers, and Astari 2017; Mundel 2013; Turker and Altuntas 2014).
retailers are inclined to promote their sustainable acts
through different retailing methods. Yang, Song and Tong
4.1. Case selection
(2017) list some of the sustainable retailing methods, namely,
slow fashion (as mentioned in Section 2.3), reverse logistics The case study company is selected based on its global rank-
(as mentioned in Section 2.3), green branding, e-commerce ing and the present of sustainable strategy throughout its
PRODUCTION PLANNING & CONTROL 9

36
30
27

Ranking
22 24
23
21
19 21
20 20
19 19
17 8 8

2014 2015 2016 2017


Nike 22 17 18 18
LV 19 20 19 19
H&M 21 21 20 23
ZARA 36 30 27 24
World Ranking

Nike LV H&M ZARA


Figure 4. Best global brands 2014–2017.

30,000
25,000
$Million

20,000
15,000
10,000
5,000
0
2014 2015 2016 2017
Nike 19,875 23,070 25,034 27,021
LV 22552 22,250 23,998 22,919
H&M 21083 22,222 22,681 20,488
ZARA 12126 14,031 16,766 18,573
Axis Title

Nike LV H&M ZARA


Figure 5. Revenue 2014–2017 (Nike, LV, H&M, ZARA).

entire fashion apparel supply chain. According to the 100 how fashion retail companies can achieve sustainable fashion
best global brands 2017 (Strijbos 2018), the top fashion by implementing sustainable planning strategy.
brands in the list are the sportswear brands, luxury brands
and fast fashion brands. With reference to the best global
brand 2017 (Interbrand 2017), Nike randed the highest 4.2 Nike sustainable business: an application of
among all fashion brands. Its ranking was even higher than sustainable planning strategy
the luxury and fast fashion brands (Figure 4). In 2017, Nike
4.2.1 Stage 1 – information gathering and analysis –
generated over 34 Billion of revenue with market value over
100 Billion (Strijbos 2018). Besides, Nike’s revenue keeps
external pressure of Nike
growing over the past 5 years (Figure 5). 4.2.1.1. Environment pressure. Environment consideration is
Based on the common understanding, the higher the rev- one of the major pillars of TBL. The natural resources in the
enue a company generates, the more merchandise it will sell planet are limited while the desire of humans is unlimited.
and the more waste it will generate. However, Nike breaks With the rapid growth of human population, there is a tre-
the rules. Nike CEO suggested that, through the adoption of mendous demand for natural resources. If this situation con-
sustainable supply chain operations, Nike can make better tinues, the problem of scarcity of natural resources will hurt
use of its resources. With the support of sustainable supply the well-being of our future generations. So, a critical issue is
chains, the greenhouse emission drops by almost 3% while how can we safeguard the planet resources? Global economy
the revenue increases by 26% (Nike’s Revenue Increases with grows rapidly in the past two decades, which supports the
Sustainability 2014). As mentioned above, it is important to expansion of the fashion industry. With the rapid growth in
study Nike’s sustainable business strategies and its corre- the fashion industry, the needs of agricultural productivity
sponding movements. Therefore, we can ultimately address increase. According to the International Cotton Advisory
10 Y.-N. FUNG ET AL.

80
60

Million
40
20
0
1985 1990 1995 2000 2005 2010 2015 2020
year

Apparel manufacturing -number of people employed


Texles - number of people employed
Texles & Clothing -number of people employed
Figure 6. Employment in fashion-related industries. Source: Global fashion industry statistics – International apparel.

Committee (2018), compared with 2016/2017, the projected contribute in reducing the water pollution during the manu-
world cotton consumption in 2017/2018 increased by 11%, facturing process. They invested in a new dying technology
which is about 25.4 million tons. While the International called ‘Air-Dye.’ Compared to the traditional dying process,
Wool Textile Organization (2015) states that, 1.160 million kg using the Air Dye, only 5% of water and 14% of energy are
of clean raw wool were produced from 1.163 billion of sheep consumed for production. Meanwhile the greenhouse gases
to satisfy the world demand. In 2015, this huge demand of emission is 84% less than before (Hepburn 2015)
nature resources (plant-based fibres and animal fibres) put
pressure on the agricultural industry and damaged the envir- 4.2.1.2. Social pressure. Furthermore, as the well-being of
onment. Over-growing and grazing led to the loss of organic people is one of the core foci of sustainability, the Triple
carbon soil and soil erosion, which is harmful to the agricul- Bottom Line framework suggests social responsibility meas-
ture industry. As the agriculture industry is the largest ures for companies to follow. Fashion companies should pay
employer in the world which took up 40% of global liveli- attention to the labour equality and conduct a fair business
hood (UNDP 2018), corruption in agriculture will increase the which benefits the community and society. For example,
undernourished population. Therefore, careful planning on fashion retail companies should trade fairly with its stake-
agriculture productivity and its corresponding environmental holders. By paying its upstream stakeholders’ sufficient
impact is crucial. amount of money, stakeholders can pay fair wages and pro-
Moreover, the world population increases approximately vide proper working environments to their workers. Refer to
83 million per year. With the increase in population and the the global fashion industry statistics (Figure 1; Strijbos 2018),
corresponding activity, the water pollution problem is get- the employment in the fashion-related industries increased
ting more and more serious. Around 80% of the wastewater dramatically in the past 30 years. From 1990 to 2014
generated from human activities is discharged into the (Figure 6), the number of people employed in apparel manu-
waterway without removing the pollutant. Meanwhile, the facturing, textile and textile & clothing industries increased
fashion industry is one of the largest industries on water by 71%, 68% and 69%, respectively. They took up almost
consumption and pollution generation. As we mentioned 3.5% of the global labour force. The above employment sta-
above, the cotton consumption for textile and clothing is tistics show that the ethnical performance of the fashion
huge, which induces high demand for raw cotton material. industry is very important, which can affect the global pov-
To ensure the stability of cotton supply, insecticides and erty level. However, it is reported that many giant fashion
prettifies are widely used, which accounts for 24% and 11% companies are challenged by ethical issues in manufacturing
of the world usage, respectively, while these toxic chemicals and production (Caniato et al. 2012). For example, Adidas,
are washed into the waterways and cause serious damages Benetton, and Levi Strauss (Seuring and Mu €ller 2008) are
to the ecosystems. Nevertheless, the dyeing and finishing blamed for ethnical issues during the production and manu-
treatment of the fashion apparel manufacturing accounts for facturing processes.
20% of the world industrial water pollution (Bethany 2018). In addition, fighting for women and girls’ equality and the
To cope with these problems, fashion companies of the end of the gender discrimination is a serious sustainable
fashion apparel supply chains should minimise their eco- topic for decades. Even though empowering women and
logical footprint which benefits the eco system and protect girls is proved to benefit the economy with multiple effects,
the planet environment from dissipation. By carefully plan- women still cannot have full access to jobs fairly in some
ning the retailer’s business model and its supply chain, nat- regions. It is reported that men earn 27% more than women
ural resources can be saved. This can benefit both the for the same job (UNPD 2018). To cope with this problem,
environment and the sustainable fashion apparel business. the fashion industry creates job opportunities for women in
To Nike, the competing bands like Adidas has tried to Turkey. With the financial support of the Swedish
PRODUCTION PLANNING & CONTROL 11

International Cooperation and Development Agency (SIDA), 4.2.2 Stage 2: strategy development and implementation
the coordination between the fashion brand Argande, United 4.2.2.1 Internal strengths & weaknesses and correspond-
National Development Programme (UNDP) and Reginal ing action plans of Nike.
Development Administration of Southeastern Anatolia Economic: According to the financial report released by
Project (GAP) were established subsequently. Through the Nike in 2016, Nike’s revenue surged 6% and reached to 32.4
coordination, more than 4300 women in the Southeast billion US dollars in 2016. Besides, Nike planned to further
Anatolia can participate in the manufacturing and other pro- expand its business in year 2017. With this huge revenue,
ject-support activities to generate income (Helmore 2018). the company has massive resources for sustainable develop-
ment. To achieve such a business target, the management
4.2.1.3. Economic pressure. The economic pillar of the triple team foresees that huge energy resources are needed. Due
bottom-line framework focuses on the impact of the compa- to the oil crisis, the energy cost fluctuate and affects the
nies’ business development against the global economy growth of business. Furthermore, it is reported that Nike has
(Elkington 1998). It suggests that companies should set up over 75 distribution centres around the world. The bigger
sustainable profit measures which can benefit the company’s the growth of the business, the more the energy it needs to
business and the economy at the same time. With this win- consume, and the higher the carbon footprint it will incur
win situation, future generations can enjoy healthy economy (especially for its inbound and outbound logistics). To deal
with continuous growths (Spangenberg 2005). with this potential problem, Nike’s management team seeks
The average clothing purchased per capita in 2018 cost-effective alternative renewable energy to replace the
increased by 60% compared with 2000. However, only 60% energy generated by fossil fuel. Together with onsite wind,
of the purchased clothing were used, while 40% are never solar energy and locally produced biomass and hydro
worn before disposal. According to the population growth energy, Nike’s logistic campus in Belgium achieved 100% re-
rate, the apparel consumption is expected to increase from renewable energy usage. Meanwhile, 35% of Nikes Taicang
62 million tons to 102 million tons in year 2039, which logistics centre energy usage was generated by solar panels.
means more clothing will be purchased and disposed. By using cost-effective and low-risk renewable energy, Nike
Moreover, the fashion consumption is further enhanced by can save the energy cost and generate a lower level of car-
the upcoming trend of fast fashion. This growth in the fash- bon footprint.
Environment: Apparel manufacturing generates a huge
ion apparel business and the corresponding consumption
amount of pollutants and waste. This will also be the case for
lead to the rise of the pollution. Fashion companies should
the giant fashion companies like Nike. In 2016, there are over
not only focus on their business growth, but also pay atten-
500 manufacturers which are business partners with Nike and
tion to their business model and marketing strategies in
produce Nike’s product. This reported number shows that the
considering the business decision. Pookulangara and
production chain of Nike is very complicated which needs
Shephard (2013) and Jung and Jin (2016) suggest that fash-
high resources on corporate governance. In 2016, Nike
ion retailers should promote the concept of ‘slow fashion’
planned to eliminate the impact caused on environment by
to make the fashion industry sustainable. The concept of
half. To achieve this target, Nike set different goals on waste
slow fashion is composed of three main components,
reduction among its related manufacturers and suppliers. As
namely (1) the value identification of local resources, (2) the
the lack of fresh water will harm Nike business and also the
production transparency and (3) extend the extension of the
environment, Nike plans to reduce the water usage by setting
product’s usable life. Everlane, a U.S fashion brand fully up ‘Nike Water Minimum program’. Nike collects data on its
adopts the concept of slow fashion in its business model. It manufacturers’ wastewater treatment via this programme,
tries to show high product transiency to its consumers. We where manufactures can figure out which part of production
discover the clear cost break of every single product from process generates the most wastewater through data evalu-
its website which includes material price, hardware price ation so that they can re-structure their production and
(sundries), labour cost, and duties and transportation cost achieve higher water efficiency. Also, they can develop the
(freight). Furthermore, the website also shows the source of corresponding water recycling infrastructure and prepare for
production of each corresponding product. Everlane calls closed-loop water recycling.
this business model as ‘Radical Transparency’. Through care- Apart from the wasted water, the common problem of
ful factories selection, Everlane can achieve sustainable sup- apparel manufacturing is the usage of chemicals and the cor-
ply chain with full transparency. Also, the selection of responding chemical pollution. As Nike is one of the biggest
materials can elongate the life spent on the apparel prod- apparel retailers which sell a huge amount of merchandise,
ucts. Moreover, Everlane tries to educate its consumers the chemical usage is also huge. To solve this problem and
upon careful and responsible consumption. On the one improve the chemical usage, Nike targets a zero discharge of
hand, such business model can enhance the level of fashion hazardous chemicals with serious action plans. In early 2017,
sustainability whereas on the other hand it can promote the Nike adopted the AFIRM Group upon restricted substance list
sustainable business economy. The factories with high ethni- (RSL). Through the AFIRM group, not limited to the compli-
cal score of compliance can be promoted through Everlane ance requirements, massive types of chemical used in Nike’s
website which may attract other brands to approach them apparel production process were tested and evaluated.
for production. Reports of the environment impacts corresponding to each
12 Y.-N. FUNG ET AL.

chemical were studied and evaluated by the members of the called ‘flyknit’. The flyknit technology eliminated the complicated
AFIRM group. A list of restricted chemicals was shown in the footwear construction and made the whole upper part of the rac-
RSL. This RSL acts as a guide for Nike’s manufacturers or ers in one piece. This can speed up the whole production process
even the whole fashion industry. It is because RSL not only with a huge reduction in human resources needed in production.
satisfies the legislation requirements, but also facilitates vol- This tremendous improvement enables Nike to produce trainers
untary hazardous chemical reduction. in US and increase the probability of customisation. Designers
Social: In the past few decades, Nike was reported to run can now react to the fashion trend and market needs promptly
sweatshop operations in producing its products (Macchion by designing racers which fit the trend and demand that can be
et al. 2018). To deal with this problem, Nike seeks for the launched in a short period of time.
support of Fair Labour Association (FLA), Better Work (a joint Environmental: Nike is targeting zero waste for its prod-
programme of the International Finance Corporation and ucts. To achieve this goal, Nike tries to select sustainable
United Nations) and other independent third-party organisa- materials during the design process. Nike developed a sus-
tions to develop its own Sustainable Manufacturing & tainable materials index (SMI) which can act as a guide to
Sourcing Index (SMSI). Factories which cannot meet Nike’s the material and design teams upon which materials are
requirements or with rating lower than bronze level cannot more environmentally preferable, thus encouraging team
manufacture Nike’s products. Nike will audit the factories members to select materials wisely during design and devel-
regularly to ensure they keep up to Nike’s and other third- opment. First, material teams will source from suppliers with
party organisations’ standards upon human rights. good sustainable performance. Then, based on the index,
Besides, Nike was recently involved in a lawsuit with its ex- they will work with suppliers to drive the use of sustainable
employers (Helmore 2018). They alleged that male employees materials. For example, Nike’s apparel moves to use sustain-
received a much higher salary and bonus compared with the able cotton which are certified as organic cotton, recycle cot-
female employees. Moreover, the management team of Nike ton or BCI cotton instead of using conventional cotton.
reviewed the company human resource record and admitted Social: For the social aspects, Nike aims at designing
that they have failed to promote women in year 2018. With this products which facilitate healthy and active life style. By inte-
breaking news, the image of Nike has been spoiled. To win back grating the sustainable life style concept into the product
the trust from worldwide customers, Nike made dramatical design and development process, Nike’s product becomes
changes in its business and operations. According to Statista more sustainable. Starting from the initial design concept,
(2018), Nike’s worldwide employees were over 74,000 in 2017. materials and product assortment review, designers are sup-
In 2016, Nike formally launched ‘U.S. Family Care benefit pro- ported with a full range of sustainable information.
gram’. This programme aims at providing competitive benefits
and promoting equality and healthy family life, which allows 4.2.2.3 Nike’s manufacturing strategy and stakeholder’s
employees to enjoy paid time off while taking care of family implementation.
(e.g. spouse, dependents or Partners, etc). Apart from its own Economic: As one of the biggest retailers in the world,
employees, Nike engaged in building healthy community by Nike’s products cover many different apparel categories (for
building partnership with Ministry of Education in China in example, clothing’s, racers, sports accessories, functional
2017. Besides, Nike designed a new human resource structure sportswear, etc.) All these apparel products require different
and programme for the upcoming 2019. For example, Nike manufacturing processes, facilities and resources. To make
plans to conduct management training and unconscious bias sure all the resources are used effectively and efficiently,
awareness training. Through these trainings, Nike’s manage- Nike developed a waste management centre. The waste
ment team can fully adapt to the company value and have a management centre consolidates the materials used in pro-
clearer understanding on the human resources evaluation and duction. Through evaluation, factories can figure out the
requirements to reduce bias and unfair situations. Moreover, causes of waste generated during the production process.
new monitoring systems and bonus structures are introduced They can even develop a cross fictional materials efficiency
to reinforce the team cohesiveness and fairness. team to identify the underlying problems, so that they can
develop solutions regarding the reduction of manufacturing
4.2.2.2 Nike’s product design strategy and stakeholder’s waste and the optimisation on the use of resources.
implementation. Environment: The key environmental impacts of manufac-
Economic: As a world leading Sportswear brand, Nike always turing include water pollution, carbon emission, and manufac-
seeks for innovative designs to facilitate its business growth. turing wastes. To minimise these environmental impacts, Nike
Traditionally, a pair of Nike racers need approximately 35 pieces adopts different technologies and programmes during the man-
to assemble which requires intensive production procedures and ufacturing process. Firstly, Nike developed a ‘Water Risk
labour. Also, the lead time for production and assembly is very Mitigation Guideline’ for manufactures to follow during produc-
long which makes it difficult to have responsive reaction towards tion. Following with these guidelines, Nike can control their
the upcoming demand. To deal with this problem, Nike hired a water usage and equipment for treatment process in a struc-
team of engineers and computer programmers to re-engineer a tured approach during production. To further reduce the water
sweater machine which can weave the upper part of racers. They usage, Nike introduced a technology named ‘Colordry’ in 2012.
called this ‘micro-level precision engineering’ (Matthew 2012). In This technology recycles CO2 to replace water in the process of
2012, Nike launched a new innovative footwear technology dying. For the energy usage and waste reduction, Nike designs
PRODUCTION PLANNING & CONTROL 13

new efficient tools for production; for example, moulding tools customers through data analysis. In addition, Nike invested
for shoe’s production. The bottom part of a Flyknit shoe is made huge among of efforts upon the technology improvement. It
by midsole, which is formed by injecting pellets to a mould. On introduces a new app function which allows Nike’s store to
the one hand, it can improve the production efficiency, on the recognise customers who have installed the app. The apps
other hand, it can bring down the energy consumption during can select the favourable items corresponding to the cus-
manufacturing and production. Moreover, Nike tried to improve tomers’ preferences recorded. Once the app recognises the
the cutting technology to minimise the amount of waste gener- customer, it will select products which are tailored for the
ated during the cutting process. Clothing and apparels usually customer. Meanwhile, customers can make a reservation of
consist of different panels and parts. Factories need to spread the products and hold in a personal locker for try-on. They
the materials on a cutting table and place the pattern piece on can even pay in the app without lining up.
the fabric plies for cutting. However, as the shapes of panels are Environmental: Compared with the traditional full load
irregular, there must be gaps between each panel when it lay shipment, shipments for e-commerce generate higher carbon
fat on the fabric. All those gaps are wasted in production. To emissions. As Nike is a worldwide sportswear retailer which
reduce this waste in materials, Nike improved the cutting tech- produces and sells its products around the world, it has
nology and designed more efficient cutting patterns, which introduced the Supply Chain Sustainability Index (SCSI) to
allow smaller gaps between each panel to reduce wastes. minimise the carbon footprint generated by the supply
Social: As apparel manufacturing is a labour-intensive pro- chain. Based on SCSI, all Nike’s logistic service providers
cess, Nike pays high attention to workers’ engagement. need to follow the requirements of minimum sustainability.
Engagement of workers is one of the key elements attributed to Nike’s logistics partners can only use inbound air freight and
the business success. Apart from the factories’ social welfare ocean freight providers when necessary. Moreover, Nike
auditing from year 2014 to 2017, Nike conducted social welfare identified delivery options to generate fewer carbon emis-
pilots test which involved over 28,000 workers. The pilot workers sions like delivering products by bike.
came from 17 factories located in Vietnam, Indonesia, China and Apart from the bulk product shipment and e-commerce
Thailand. Based on these pilots, Nike designed a protocol stand- delivery, Nike also pays attention to the environment impact
ard which helps to measure the workers engagement. With the upon the retail sales floor. As mentioned in the previous sec-
support of the pilots and survey, the turnover rate and absent tion, Nike has introduced the ‘NIKE Direct’ which allows Nike to
rate of workers decreased. Meanwhile, Nike developed an control its ‘Nike Direct’ stores around the world and commits
‘Engagement and Wellbeing Survey’ as a guide for the manag- to sustainable retailing. In 2016 and 2017, Nike employed an
ers to identify the implications upon the workers’ working Energy Management System (EMS), which centralised the elec-
experience. Through this survey, workers can point out the trical systems and automatised HVAC lighting system. By using
problems in the working environment and manufacturing proc- EMS, Nike can spot the energy-saving opportunities for
esses. Based on the feedback received by factories’ manage- improvement. For example, it upgrades the lightings in LEED
ment, it showed that the level of workers’ well-being and stores which reduce retail locations’ energy usage.
engagement have been significantly improved. Social: Due to the upcoming trend of the sharing commu-
nity, Nike has introduced the ‘BIKETOWN’ programme and set
up 100 bikes stations with 1,000 bikes across Portland. Last but
4.2.2.4 Nike’s distribution and consumption strategy and
not least, in order to have a worldwide education upon sus-
stakeholder’s implementation.
tainable consumption, Nike has introduced ‘Reuse-A-Shoe’ to
Economic: With the ever-changing retail environment,
its retail stores. Customers can drop-off any brands’ athletic
Nike found that the traditional bricks and mortar stores are
shoes to Nikes Reuse-A-Shoe collection point. Nike will trans-
not good enough to serve the customers. They found that
form the collected shoes to Nike Grind which are used to build
the traditional retailing business model which provides cus-
tracks, courts, playground or fields (Figure 7).
tomers with homogeneous products without much customer
interaction cannot support Nike’s target growth in business.
In order to provide customised service to individual custom- 4.2.3 Stage 3: performance evaluation of Nike’s sustain-
ers at scale, Nike launched a new company alignment opera- able planning strategy
tions programme called ‘NIKE Direct’ in June 2017. Nike Performance of Nike: It is reported that there is an increasing
marketed its products around the world which includes, trend of renewable energy used by Nike in 2015, 2016 and
China, North America, Europe Asia Pacific & Latin America 2017, namely 14%, 20% and 22%, respectively. Besides, Nike is
(APLA), Middle East & Africa (EMEA), etc. Besides, it adopted targeting to use 100% reusable energy in 2020. Due to the
a variety of retail channels such as community stores, factory comprehensive planning of the water minimum programme,
stores, company-owned retail stores, mobile applications and 40% of Nike’s suppliers recycle the wastewater to its manufac-
official websites. This ‘Nike Direct’ programme allows Nike to turing process during the production of primary materials. This
co-ordinate and control the sales channels around the world. led to a drop of freshwater usage by 7.4% compared to the
By using new technologies and data sharing, Nike can serve year of 2016. At the end of financial year 2017, based on the
customers based on individual personality and provide cus- adoption of AFIRM Group upon restricted substance list (RSL)
tomised service at scale. In early 2018, Nike acquired a leader and the corresponding actions, 82% and 72% of Nike’s manu-
in data analytics called Zodiac (NIKE Inc. 2018). Such acquisi- factures and suppliers were trained respectively. Meanwhile,
tion enabled Nike to have a better understanding for its 98% of the used materials are in compliance with the RSL.
14 Y.-N. FUNG ET AL.

Figure 7. Influence factors in sustainable planning strategy and implementations.

Furthermore, based on the adoption of Sustainable team kits and other classic shoe components. One of the most
Manufacturing & Sourcing Index (SMSI), all factories are regu- festinating achievements is that Nike transforms over 4.6 bil-
larly audited and passed Nike’s requirements with rating lion of plastic bottles to sports apparels. The use of environ-
higher than the Bronze level. For the internal employees, the mentally friendly materials in its product designs facilitate the
‘U.S. Family Care benefit program’ launched in 2016 allows continuous growth of the planet. Although Nike aims at
employees to enjoy paid time off while taking care of family designing products which encourage a healthy and active life
(spouse, dependents or partners, etc). Also, the partnership style, there is no information upon the sustainable product
programme with Ministry of Education has trained approxi- proportion towards Nike’s total product assortment. Higher
mately 7000 to engage and deliver sports lessons. Meanwhile, visibility is needed in this area (Table 3).
Nike provides sports-related resources to over 300 schools Performance of manufacturing stakeholders: Compared
across China and encourages kids to be more active in sports. with the 2016, the revenue of Nike has increased by 8% in
Nevertheless, Nike supports US active sports schools and is 2017. The growth in revenue is not only contributed by the
committed to a three-years ‘Active School and Active increase in total sales, but also the optimisation of manufac-
Community’ which provides over 60,000 kids with positive turing process. In 2018, it is reported that the energy used in
sports experience (Table 2). Nike footwear finished goods has been reduced by 60%
Performance of design stakeholders: This new Flyknit compared with 10 years ago. The reduction in energy usage
design is developed through ‘micro-level precision engineer- implies a saving in costs, which is beneficial to Nike’s busi-
ing’. Programme was widely accepted by the market. In 2015, ness. Through Water Risk Mitigation Guideline and the new
Nike launched 25 models of racers by using the fly knit tech- ‘Color dry’ dying facilities, Nike saved 20 million litres of
nology and the numbers of Flyknit models still keep growing. water for dying 600,000 yards of fabric. Furthermore, com-
This innovative design and production technology bring sus- pared with the traditional running shoes, this free midsole
tainable footwear production to the next level. Compared with moulding process can reduce the waste up to 60%. From
the traditional racers, Flyknit racers generate 60% less of pro- the social perspective, even though Nike found that the fac-
duction waste and 100% of the core yarn are made from tories participating in the Engagement and Wellbeing Survey
recycled polyester. Apart from it, it generates remarkable sales. performed better than the peers, more detailed data are not
The footwear revenue of Nike increases from 13.5 billion US available in its sustainability report and hence higher visibil-
dollars in 2012 to over 20 billion US dollars in 2018 (Statista ity and data support are needed (Table 4).
2018). Also, 98% of the rubber used by Nike was environmen- Performance of distribution and consumption stake-
tally preferred rubber which employs environmentally pre- holders: This new ‘direct to customer’ retailing method of
ferred compounds during processing in 2017. Nevertheless, ‘Nike Direct’ facilitates the growth in worldwide sales.
the core yarn used in Nike’s Flyknit are 100% recycled polyes- Compared with the sales of the same quarters of 2016 and
ter. The recycled polyester may come from elite track, football 2017, business growth in the digital direct sales recorded a
PRODUCTION PLANNING & CONTROL 15

Table 2. Performance of Nike.


TBL Action plan Performance SDGs
Economic Cost-effective alternative renewable energy 22% of energy use in Nike are cost effective renewable 7
Environment Nike water minimum programme 40% of Nike’s suppliers recycle the wastewater; 6
Drop in freshwater usage by 7.4% compare to year 2016 6
AFIRM Group Restricted Substance List (RSL) 98% of used materials being compliant with the RSL 12
Social Sustainable Manufacturing & Sourcing Index 100% manufacturers rate higher then Bronze 12.17
Partnership with Ministry of Education (SMSI) Trained 7000 teachers 3
Active School and Active Community Help 60,000 kids with positive sports experience 3

Table 3. Performance of Nike design stakeholders.


TBL Action plan Performance SDGs
Economic Micro-level precision engineering Launches 25 models of racers by fly knit 7
Flyknit technology Footwear revenue of Nike increases from 13.5 billion US dollar in yearn 2012 to over 20 billion US
Environment Sustainable material index (SMI) Nike transforms over 4.6 billion of plastic bottles to sports apparels 6
Generates 60% less of production waste 6
100% of the Flyknit core yarn are made from recycle polyester 12
Social Design for environment Higher visibility on sustainable product proportion towards Nike’s total product assortment is needed 12

Table 4. Performance of Nike manufacturing stakeholders.


TBL Action plan Performance SDGs
Economic Cross fictional materials efficiency team Reduce the energy used in Nike footwear finished goods by 60% 7.17
Waste Management Centre
Environment Water Risk Mitigation Guideline-Colordry Save 20 million litres of water for dying 600,000 yards of fabric 9.6
New efficient tooling for production Reduce the waste up to 60%. 9.6
Social Engagement & Wellbeing Survey and Pilot test Factories perform better than the peers in social wellbeing 1.5
Higher visibility and data support is needed

40
30
20
10
0
North America Europe, Middle East, Africa Asia Pacific & Lan America Greater China
−10

Year-over-year growth of DTC sales (%) Year-over-year growth of wholesale sales (%)
Figure 8. Nike’s Direct-to consumer growth outpaced wholesale 2017 (Marc 2018).

growth of 18%. Figure 8 demonstrates that the growth in is outstanding. Although the environmental performance in
the ‘direct to customer’ sales outpaced the wholesale in logistics has been improved it still has room for further
Europe, Middle East, Africa, Asia Pacific, Latin America and improvements. The social aspect of consumer’s contribution
Greater China in 2017. From the environmental perspective, should be highlighted. From Nike’s sustainability report 2017,
Nike introduced SCSI, which guides its distribution partners the post-consumer waste collected from distribution centres
to use inbound freight only if necessary and motivate them in 2017 were over 1.3 million pounds through Reuse-A-Shoe
to use bike as a means of delivery. According to Nike’s 2017 programme (Table 5).
sustainability business report, the energy consumption in Overall performance of Nike’s sustainable fashion sup-
inbound increased over 30% compared with 2016. This figure ply chain: Based on the above findings, we discover that as
indicates that Nike needs to work closer with logistics part- the world’s largest sportswear company, Nike pays
ners to implement the energy-saving scheme. Thus, more high attention in its level of sustainability. It firstly plans
resources shall be employed to enhance the effectiveness of the corporate sustainable targets from the economic, envir-
the SCSI. From the retailing and consumption perspectives, onmental and social perspectives. Then, different pro-
Nike implemented the Energy Management System (EMS). grammes and policies are planned for the related supply
Through this EMS, Nike controlled its electricity usage retail- chain stakeholder’s product design, manufacturing, distribu-
ing. With 18% increase in sales, the energy usage in 2017 only tion and consumption. Table 6 shows the overall perform-
increased by 0.5%, which shows that the performance of EMS ance of Nike’s sustainable planning strategy.
16 Y.-N. FUNG ET AL.

Table 5. Performance of Nike distribution and consumption stakeholders.


TBL Action plan Performance SDGs
Economic NIKE Direct Business growth in the digital direct sales grown by 18% 8
Environment Supply Chain Sustainability Index (SCSI) Energy consumption in inbound increased over 30% 7
Energy Management System (EMS) Electricity usage in retailing increases 0.5% 7
Social BIKETOWN Introduce 100 bikes stations and 1000 bikes across the city 11
Reuse-A-Shoe Collect over 1.3 million pounds post-consumer waste 11.12

Table 6. Performance of Nike sustainable planning strategy. tension management, organisations can identify the balance
Performance Economic Environmental Social between operations and sustainability performances. Referring
Nike 冑 冑 冑 to Van der Byl and Slawinski (2015)’s findings, the tension can
Design Stakeholders 冑 冑 PS be alleviated by four different approaches, namely win-win,
Manufacturing stakeholders 冑 PS 冑
Distribution and consumption stakeholders 冑 PS 冑 trade off, integrative, and paradox. The win-win approach sug-
冑-Successful; PS-partially successful. gests that organisations can avoid tensions by focussing on sus-
tainable goals where alignment exists. While the trade-off
approach eliminates the tensions be selecting one goal over
5. Concluding remarks and research limitations another. Contrastingly, an integrative approach aims at aligning
all three elements of TBL together, while through the institu-
Considering the long-term well-being of both human society tional theory paradox, organisations can explore creative solu-
and the planet, how can we safeguard the planet resources tions for the demand of sustainability. Based on this paper’s
against exploitation is a critical issue. However, the expan- findings and case study evaluations, we can conclude that the
sion of the fashion industry has threatened the global envir- proposed Sustainable Planning Strategy Framework would be
onment in the planetary level. With the growing awareness able to assist organisations in finding a balance between opera-
of the fashion sustainability, people start to pay attention to tions and sustainability performances (Table 8).
the sustainability level of the whole fashion industry apart Through the Sustainable Planning Strategy, leading retail
from the sustainability level of the fashion apparel itself. Any companies can respond to the gathered market information
failure in achieving sustainable fashion throughout the whole and improve the operations performance which enhances
supply chain will harm the company’s image and its busi- the economic growth of the respective sustainable supply
ness. Supported by the intuitional theory, the external pres- chain. Meanwhile, by following the suggested steps of
sure drives fashion companies to engage in fashion Sustainable Planning Strategy, the leading company can
sustainability. Meanwhile, suggested by the Resource-Based develop different strategies and programmes that can
Theory, by reinforcing companies’ competitive advantages improve the environmental and social performance through-
and reacting to the market demand, companies can stand out the sustainable supply chain (Jabbour, Frascareli and
out from the sustainable fashion competition. However, how Jabbour 2015).
companies can identify the demand in sustainable fashion We admit some limitation in this study. Firstly, we only
and make the right decision in resource allocation through- study one giant sportswear company which cannot represent
out the supply chain is a key issue. This paper aims at the whole fashion industry. From Interbrand’s Best Brands
addressing this question. By studying the related literature ranking (Interbrand 2017), the top three fashion brands are
upon sustainability and sustainability measurements, we first Nike, LV, H&M. Different from Nike, LV is a luxury brand,
identify the fundamental framework (TBL) which covers most while H&M is a fast fashion brand. The business models of a
of the market demand upon sustainability and the corre- luxury brand and fast fashion brands are totally different
sponding measurement goals (SDGs). Furthermore, based on from the sportswear brand. Meanwhile, the common under-
the Decision-Making Theory, we investigate the key road- standing is that the luxury and fast fashion brands generate
maps in the fashion product development process for further a huge amount of industrial waste. According to the recent
study. This study provides guidance for the company to study from Chan, Choi, and Leung (2018), H&M and Nike per-
develop a sustainable planning strategy to facilitate the per- form the best in the environmental and social categories cor-
formance of supply chain stakeholders and achieve sustain- respondingly while LV should fulfil customers’ sustainable
able fashion. We have established a Sustainable Planning expectations along with its intrinsic brand value. This shows
Strategy Framework (SPSF) which helps fashion companies to that different brand’s positioning will affect its level of efforts
address the key problems for resources allocation. towards sustainability. To conduct a more holistic study, we
Furthermore, we examine how the SPSF can help decision can further explore the fast fashion and luxury brands by
makers in the fashion supply chain to make managerial deci- using the Sustainable Planning Strategy Framework (SPSF)
sions without missing the core demand in sustainable fash- developed in this study.
ion. Based on the Nike case study in Section 5, we found
that the sustainable SPSF can be applied to the real-world
example. Table 7 shows how the theories for sustainable Acknowledgments
planning strategy can be applied in the Nike case study. The authors sincerely thank the editors and reviewers for their helpful
According to Van der Byl and Slawinski (2015), cooperate sus- comments. They are also grateful for Dr Windy Wen’s assistance on the
tainability is embraced by different tensions. Through careful page-proof. This study is a part of the first author’s PhD dissertation.
PRODUCTION PLANNING & CONTROL 17

Table 7. Theories for sustainable planning strategy (SPS) application and evaluation in Nike’s case study.
Theory Description of theory Nike’s case study (application and evaluation)
Institutional theory Companies’ business model and practices will be affected Nike reacts to the global demand on sustainable fashion. It develops
by the external pressures. a sustainable business model and achieve sustainable fashion
supply chains.
Resources-based theory Companies can gain competitive advantages by reinforcing Through evaluating the company’s internal strengths and weaknesses,
the use of precious resources and responding properly to Nike reinforces the use of company’s resources. By implementing
the environmental opportunities. sustainable strategies, Nike and its sustainable supply chain
stakeholders gain competitive advantages which exploit their
internal strengths and improve overcome their weaknesses.
Decision making theory Normative decision theory: Providing suggestions on how to Through evaluating Nike and its sustainable supply chain
make optimal decisions under uncertainties. Descriptive stakeholders’ strengthes and weaknesses, Nike aims at making
decision theory: By evaluating the real market data, the optimal decisions for sustainable planning strategies. Based on the
decision makers can make optimal decisions which gathered market, Nike reacts to the market demand by developing
generate the highest value sustainable business strategies and making correlated decisions.

Table 8. Features of sustainable planning strategy (SPS) and the satisfaction of these features by Van der Byl & Slawinski (2015)’s approach of tension.
Approach Method of managing tension Applications of sustainable planning strategy framework Satisfied?
Win-Win Avoiding tension via optimisation/alignment of By evaluating the strengths of the retailer and its aligned yes
sustainable elements supply chain stakeholders, retailers are able to plan for
strategic alignments which enhance the efficiency of
sustainable performance.
Trade off Avoiding tension via choosing one sustainable element By evaluating the weakness of the retailer and its aligned Yes
over another stakeholder, retailers are able to plan for strategic
enhancements of weak-links and avoid failure in
sustainability
Integrative Managing tension via shifting economic focus to Through evaluating the external market demand of Yes
environmental focus and/ or social focus sustainability, the retailers are able to address all the
three core elements of TBL and react accordingly.
Paradox Rather than resolution of tension, acceptance and By evaluating the internal and external demand for Yes
exploration of tension is applied sustainability, the retailer is able to explore creative
solutions which can balance the economic growth with
the social and environmental contribution

Disclosure statement interests include biofunctional textiles and apparel design, development
and innovation for healthcare, rehabilitation and sports. Rong published
No potential conflict of interest was reported by the authors. 80þ SCI journal papers, book chapters and conference proceedings, and
received 19 granted patents and 18 international Design and
Research Awards.
Notes on contributors

Tsan-Ming Choi is currently a Professor of Fashion


Fung Yi Ning is currently a PhD research student of
Business at The Hong Kong Polytechnic University
Institute of Textiles & Clothing at The Hong Kong
(PolyU). He has authored/edited 16 research hand-
Polytechnic University (PolyU). She holds MA in
books, and published over 200 papers in well-estab-
Global Fashion Management, and BA in
lished Web of Science listed citation journals. He is
Merchandising and Marketing. Before she started her
now serving as the Co-Editor-in-Chief of
PhD study in 2017, she had worked as a Visiting
Transportation Research – Part E, a senior editor of
Lecturer at PolyU and got over 10 years solid indus- Production and Operations Management, an associ-
trial working experience (in companies such as Li ate editor of IEEE Transactions on Systems, Man, and
and Fung). Her research interests include fashion Cybernetics – Systems, and Information Sciences, and an editorial board
product development, sustainable fashion management, active sports member of Clothing and Textiles Research Journal of ITAA.
apparel product innovation and fashion design.

Rong Liu, Assistant Professor, Institute of Textiles


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