Sustainability in the Supply Chain

Supplement to Chapter 5
Corporate Social Responsibility
• Corporate social responsibility (CSR):
Managerial decision making that considers
environmental, societal, and financial impacts.

• Shared value: Developing policies and

practices that enhance the competitiveness of an
organization while advancing the economic and
social conditions in the communities in which it
operates.
Sustainability
• Sustainability: Meeting the needs of the present without
compromising the ability of future generations to meet their needs.
• Sustainability decisions:
▫ Systems Views
▫ Commons
▫ Triple Bottom Line:
 People: Companies are becoming more aware of how their
decisions affect people - not only their employees and customers
but also those who live in the communities in which they operate
 Planet: Operations managers look for ways to reduce the
environmental impact of their operations
 Profit: Social and environmental sustainability do not exist
without economic sustainability. Economic sustainability is
appropriately allocating scarce resources to make a profit.
Design and Production
for Sustainability
• Product Design: The decisions that are made during
this phase greatly affect materials, quality, cost, processes,
related packaging and logistics, and ultimately how the
product will be processed when discarded.
• Production Process: Conservation of energy and
improving energy efficiency come from the use of
alternative energy and more energy-efficient machinery
• Logistics: As products move along in the supply chain,
managers strive to achieve efficient route and delivery
networks, just as they seek to drive down operating cost.
Doing so reduces environmental impact.
Design and Production
for Sustainability
• End of Life Phase: Products with less material, with
recycled material, or with recyclable materials all
contribute to sustainability efforts, reducing the need
for the “burn or bury” decision and conserving scarce
natural resources.

Innovative and sustainability-conscious companies are

now designing closed-loop supply chains wich means
Supply chains that consider forward and reverse product
flows over the entire life cycle.
Regulations and Industry Standards
• International Environmental Policies and
Standards
▫ European Union Emissions Trading System:
The European Union has developed and implemented
the EU Emissions Trading System (EUETS) to combat
climate change.
▫ ISO 14000: The International Organization of
Standardization family of guidelines for sustainable
development. ISO 14000 has been implemented by
more than 200,000 organizations in 155 countries.
ISO 14001 addresses environmental management
systems.