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Master Thesis: Disclaimer
Master Thesis: Disclaimer
Master Thesis
Disclaimer
The author declares that the work presented in this Master thesis is original and that no sources other than
those
mentioned in the text and its references have been used in creating the Master thesis. The copyright of the
Master
thesis rests with the author. The author is responsible for its contents. RSM is only responsible for the
educational
coaching and cannot be held liable for the content.
The copyright of the photographic material used in this Master thesis also rests with the author.
Gorinchem, February 2014
Berdien Fennema
Please consider the environment before printing this master thesis.
Executive Summary
Legal and social pressures are increasingly demanding businesses to be more responsible and to produce green
and
sustainable products. Responsibility is stretched beyond the product and the production processes, throughout
the
entire supply chain and along the product’s life cycle. Simultaneously, the business environment is becoming
ever
more competitive and resources are becoming ever scarcer. The dependence on the willingness of suppliers to
provide the materials and on the customers to buy the products thus increases. The imperative for businesses is
clear: they must carefully manage their supply chain and develop relationships that last in the long-run while
taking
a comprehensive sustainability perspective that incorporates the triple bottom line: people, planet, profit.
The environmental pillar of sustainability has received increasing attention recently as pollution due to
industries
has reached record heights worldwide with far reaching consequences for flora, fauna and human health.
Hence,
there is a need to act. Along this urgency and driven by the future stricter regulations on waste, the Damen
Shipyards Group aspires to find a proactive solution to waste.
Two steps are prominent in achieving environmental sustainability: waste reduction and waste prevention.
Waste,
whether it is a byproduct or just a non-value added activity, is a sign of inefficient use of the resources time,
money
and materials through i.e. disposal efforts and costs. Next to internal inefficiencies, the generation of waste also
occurs along different external stages of the supply chain. From a resource-efficiency view, reducing or even –
more
proactively – preventing waste seems a logical step. It can aid a company to become more efficient and enable
the
company to concentrate only on activities and competencies that add value. Further advantages can be found
in for
instance an improved corporate image, better relations with stakeholders and the ability to exploit green
market
segments. Next to focal firm benefits, reducing inefficiencies within the supply chain can yield ample
advantages for
partners along the chain, such as suppliers.
From this standpoint, this research looks at proactive upstream solutions to waste and strategies termed as
environmental supply management practices (ESMPs). These practices relate to requiring suppliers to meet
certain
environmental criteria, or inducing them to operate in a more sustainable manner. The generic supply
processes
that are touched upon are selection and evaluation. By means of scrutinizing potential suppliers based upon
compliance to environmental requirements, the company can regulate more sustainable supply. Moreover,
supply
incentives can be used to induce suppliers to comply with certain requirements, whether by promising current
or
future business, or by awarding a certain supplier status. A supply process that is more mature and deeper is
supplier development, including collaboration, shared commitment and education.
Operating in an increasingly competitive industry that can still feel the consequences of the recent financial
crisis
related to for instance corporate funding, shipbuilding companies focus primarily on reducing costs. In
addition, the
industry is not on the forefront of environmentally-friendly initiatives. Hence, implementation barriers i.e. the
perceived financial burden, mitigation efforts and structural limits are expected to be perceived higher because
of
the lack of a track-record of such initiatives. Based on the request of Damen Shipyards and the academic
framework,
the main research question is:
How can waste prevention be induced at the supply base in the shipbuilding industry?
The optimal solution was derived by investigating the perceptions on the likely impact of different ESMPs –
supplier selection, evaluation, supply incentives and supplier development – next to the perceived barriers to
implementation both internally as well as among benchmarks in the manufacturing industry. The research
includes
the focal firm and supplier perspective.
Answering the main research question, waste prevention is best induced by means of the ESMP supplier
development, followed by supplier evaluation. The key word that evolves from the multiple case study is
collaboration. Collaboration in environmental activities is seen as vital by the focal firm as well as the supplier.
Remarkable is that the majority of the cases is currently only somewhat involved in cooperative efforts. Before
collaboration can bring benefits, environmental awareness and commitment of top management is needed to
prioritize environmental concerns, such as waste prevention, and put these areas of concern higher on the
corporate
agenda. As costs are a primary driver within the current business environment, this presents a first hurdle to the
focal firm to implement ESMPs and to suppliers to adopt waste prevention policies. Nevertheless, best practices
point out that economic benefits can be yielded by optimizing the supply chain from a holistic point of view,
reducing their environmental impact and by improving continuously. Less waste means more collaboration, less
pollution and more improvement, less individual burdens and more shared value. Hence, less is more.
Table of Contents
Disclaimer ................................................................................................................................................................................................... 0
Preface & acknowledgments
........................................................................................................................................................................ 0
Executive Summary ..................................................................................................................................................................................... 0
List of figures ............................................................................................................................................................................................... 0
List of abbreviations .................................................................................................................................................................................... 0
1 | Introduction ............................................................................................................................................................................................ 0
1.1 Context ............................................................................................................................................................................................ 1
The Damen Shipyards Group..................................................................................................................................................... 2
1.2 Problem statement ....................................................................................................................................................................... 5
1.3 Outline ............................................................................................................................................................................................ 8
2 | Theoretical framework............................................................................................................................................................................
8
2.1 Methodology ................................................................................................................................................................................. 9
2.2 Contribution ................................................................................................................................................................................ 9
2.3 Definitions ..................................................................................................................................................................................... 9
2.4 Sustainable supply chain management ................................................................................................................................ 10
Sustainable sourcing ................................................................................................................................................................... 13
Sustainable supplier evaluation and supply incentives ...................................................................................................... 17
Supplier development and integration .................................................................................................................................. 18
Challenges in sustainable sourcing strategies ..................................................................................................................... 20
2.6 Conclusion of the literature review ...................................................................................................................................... 22
Academic relevance of this research.......................................................................................................................................24
2.7 Conceptual model ..................................................................................................................................................................... 25
3 | Case description ....................................................................................................................................................................................
26
3.1 Supply chain ................................................................................................................................................................................ 27
3.2 Shipbuilding industry .............................................................................................................................................................. 29
3.3 SWOT analysis .......................................................................................................................................................................... 29
4 | Method & results .................................................................................................................................................................................. 29
4.1 Research design .......................................................................................................................................................................... 30
Research objective and methodology .................................................................................................................................... 30
Type of research question ......................................................................................................................................................... 30
Research strategy ......................................................................................................................................................................... 31
Case selection ............................................................................................................................................................................... 31
4.2 Data collection ........................................................................................................................................................................... 32
Research protocol ....................................................................................................................................................................... 33
Measurement procedure ........................................................................................................................................................... 34
4.3 Data analysis ............................................................................................................................................................................... 37
Across-case analysis ................................................................................................................................................................... 37
List of figures
Figures
Figure 1 Waste treatment hierarchy ................................................................................................................................................... 2
Figure 2 Pareto diagram on volume of waste (DSGo).................................................................................................................... 4
Figure 3 Pareto diagram on disposal value of waste (DSGo) .......................................................................................................
4
Figure 4 Conceptual model ................................................................................................................................................................ 25
Figure 5 Supply chain Damen ............................................................................................................................................................ 27
Figure 6 Conceptual model: conclusion .......................................................................................................................................... 54
Figure 7 Damen Shipyards Gorinchem and cluster ...................................................................................................................... 62
Figure 8 Project Plan Research Project ............................................................................................................................................ 63
Figure 9 Waste streams at DSGo: visual estimation .................................................................................................................... 66
Figure 10 Organizational chart DSGo and cluster ........................................................................................................................ 68
Figure 11 Within-case analysis .......................................................................................................................................................... 83
Tables
Table 1 Definitions of constructs ....................................................................................................................................................... 34
Table 2 Measurement of relationship between independent and dependent variable
........................................................ 35
Table 3 Measurement of relationship of side variables ................................................................................................................
36
Table 4 Internal cases: construct scores per respondent and preferences ..............................................................................
37
Table 5 External cases: construct scores per respondent and preferences .............................................................................
39
Table 6 Comparison of categories ..................................................................................................................................................... 41
Table 7 Construct preferences overall ............................................................................................................................................. 45
Table 8 Stakeholder map ..................................................................................................................................................................... 64
Table 9 Waste categories at DSGo ................................................................................................................................................... 65
Table 10 Development of literature on waste ................................................................................................................................. 67
Table 11 Waste definitions .................................................................................................................................................................. 67
Table 12 SWOT analysis: waste prevention at DSGo .................................................................................................................. 69
Table 13 Case and interview details.................................................................................................................................................. 70
Table 14 Internal questionnaire ......................................................................................................................................................... 76
Table 15 External questionnaire ........................................................................................................................................................ 77
Table 16 External questionnaire ........................................................................................................................................................ 78
Table 17 External questionnaire ........................................................................................................................................................ 79
Table 18 Supplier questionnaire ........................................................................................................................................................ 79
Table 19 Internal cases: computation table independent variables ..........................................................................................
80
Table 20 Internal cases: computation table side variable ........................................................................................................... 80
Table 21 External cases: computation table independent variables .........................................................................................
81
Table 22 External cases: computation table side variable .......................................................................................................... 82
Table 23 Additional questionnaire data external cases ............................................................................................................... 84
List of abbreviations
B2B business-to-business
B2C business-to-consumer
C1, C2, .. case 1, case 2, etcetera
C2C cradle-to-cradle
CD conformity declaration
CoC code of conduct
CSR corporate social responsibility
CYS contracting and yard support department
DSGo Damen Shipyards Gorinchem
EC European Commission
EMS environmental management system
ESM environmental supply management
ESMP environmental supply management practices
FTE full time employee
GP Green Passport
GSCM green supply chain management
HSE-Q health, safety, environment and quality assurance department
IHM inventory of hazardous materials
MD material declaration
NPR non-product related
PMO project management organization
PR product-related
QLIFT quality, logistics, innovation, flexibility and total costs
SCM supply chain management
SNC supplier non-conformity
SSCM sustainable supply chain management
SWOT strengths, weaknesses, opportunities and threats
TM top management
1 | Introduction
The tides are changing.
Less is more: an evaluation of sustainable supply strategies 1
This chapter introduces the research context, as well as the problem definition, scope and relevance.
1.1 Context
Across industries worldwide the amount of waste is increasing on a large and growing scale (Eurostat, 2013),
cost
of raw material is rising, natural resources are depleting and at the same time the global population is rising at
a
high rate. Consequently, resource scarcity worsens and competition for resources is intensified (World
Economic
Forum, 2012) creating an enormous impact on global businesses. The European Commission (EC) has been
calling
for action regarding waste for several years (EC, 2013) leading to measures on e.g. disposal of (hazardous)
waste and
waste treatment. With Strategy 2020, the EC underlines the need to turn waste into a resource and aims to
‘modernize the existing legal framework and promote waste prevention’ (EC, 2012). The path hereto involves
new
economic and legal instruments that will have operational and financial impacts on businesses. For instance,
failure
to recognize and respond to regulations ‘may create serious problems in the form of penalties and
noncompliance
inconveniences’ (Hunt and Auster, 1990). The tides are changing.
Moreover, environmental awareness among consumers is rising. A new ‘green consumer’ has evolved who asks
for
smart and green solutions that generate a lower impact on the planet (Tencati, 2013). With the increased and
widespread use of Internet and communication tools e.g. social media, the consumer can exert more power
(World
Economic Forum, 2012). As a result, corporations face a new type of pressure and are forced to retain their
‘license
to operate’ (Eccles and Serafeim, 2013). It entails that ‘customers have to be willing to buy; suppliers to provide
the
materials, and people to go to work there’ (ibidem) and continuity can only be ensured when financial
objectives
are linked with social involvement and environmental performance (Tencati, 2013). By cutting out the non-value
added stream of waste completely, companies can concentrate their resources on value-adding activities, using
them more efficiently, reducing repurchases as well as disposal efforts and costs. Less in means less out, while
more
value is kept along the chain. Hence, less is more.
These developments are the starting point of this master thesis. The thesis is practice-oriented and regards the
operations of the Damen Shipyards Group (hereafter: Damen). Thus, Damen is defined as the practitioner.
Exposed
to the upcoming changes in waste regulations, Damen is looking for proactive methods to manage its waste
and
aims to be ahead of future regulations. Therefore, the general objective of this research is to extend the
practitioner’s
knowledge (Dul and Hak, 2008) and design a model that offers a proactive and sustainable solution to waste.
The
model should be applicable to the headquarter location (DSGo) and its cluster (Appendix 1).
»
2 Less is more: an evaluation of sustainable supply strategies
Prevention
Minimisation
Reuse
Recycling
Energy recovery
Disposal
The Damen Shipyards Group
Damen is one of the leading and most-recognized shipbuilding companies in the world serving an extensive
product
portfolio (Damen, 2013). Established in 1927 as Dutch family-owned business, Damen has grown into a
multinational company since its expansion in 1973. The company specializes in niche-markets and draws special
attention to high quality and excellence. Next to new-construction, Damen is engaged with repair, conversion
and
maintenance work, training and financing services. In addition, the company offers technical cooperation, and
supplies spare parts and components from its own manufacturing facilities. The focal aim of Damen is to ‘create
customer value beyond products by ensuring maximum uptime at a minimum cost’ (Veldhuizen, 2013). The
main
strategic focus is the customer; hence the company is sales-driven.
As noted by Schliephake et al. (2009), ‘it is important to understand where the largest losses occur in the supply
chain or where most waste is produced in order to make any improvements’. Therefore, as a start of the project
plan
(Van Aken, 2007; Appendix 2), all types of waste and all processes at Damen were explored.
Waste
There are different types of strategies with regards to waste management, as is depicted
Figure 1 from preferred to less preferred (EU, 2012). The current waste management
strategies at Damen are energy recovery, reuse and recycling. Since the majority of
waste is being incinerated, potential value is lost immediately: resources are disposed
to the sub-contractors who are paid for their incineration services and additionally
gain the energy generated. Only a few materials are reused or recycled, such as steel which still has a high
resale
value. Pallets are reused if they offer take-back fees within the Euro pallet system (Van der Stel, 2013).
Considering
the practitioner’s objective to find a proactive solution in waste management, prevention is the most optimal
strategy. The causes of waste are indicated to be the following:
Internally
From a general point of view, resource production and consumption induce waste generation, including endof-
use items or residues. Additionally, mistakes and errors during the construction process, or quality issues,
create waste. Moreover, waste arises due to the fact that items are purchased in ‘trade-sizes’ generally, which
means that these are non-modular and will cause cutting waste i.e. parts and pieces are not useable. However,
some of these items are sold back to the market, such as steel plates. Thereby, it is indicated that waste is
Figure 1 Waste treatment hierarchy
Less is more: an evaluation of sustainable supply strategies 3
caused due to coordination failures between logistics and transport e.g. miscommunication on transport
modalities, leading to repacking. Furthermore, the Services department has a policy stating that its client
deliveries should be packed in specific Damen packaging for sake of company branding. This requirement
creates the need of repacking and thus increases the waste volume (Peursem, 2013).
Overall, the mindset with regards to resources plays a vital role as well as the level of resource scarcity. If items
are not scarce, ‘it is easier to get a new item rather than recycle’ (Roos, 2013). Without a sanction policy in
place, the idea that the waste stream is a value stream is not spread throughout the organization. It also
depends on structural items such as the priorities that are set regarding activities and process efficiency. For
example, when the engine room is about to be painted, the ship needs to be cleaned. The procedure holds that
all other construction work is sojourned until this process is finished, in order to execute this process in the
most efficient manner (Roos, 2013). It implies that, for sake of efficiency and time, waste sorting is being
skipped until it is brought to the waste collection site subsequently. Damen also builds ships on speculation
which can result in rework and reconstruction when the customer’s wishes do not exactly match the ship built
in advance. In general, because of Damens client-based approach, the company does not prioritize lean
production or logistics. Hence, standardization is very limited. The strategy offers a limited potential on
learning, leading to a higher possibility of production defaults and consequently a higher chance on waste.
Perhaps a modular approach would be a solution here, as modules to fit most needs could cut waste by only
installing the final modules upon completion of the order by a client of a hull originally build on speculation.
Supply side
Waste is generated due to by-products of supplied inputs in the form of inappropriate or damaged packaging.
In addition, product defaults and delivery of wrong or incomplete items, whether due to communication or
production mistakes or lack of awareness of the supplier, generate waste. The limitation of customized supply
due to standard trade-sizes also generates cutting-waste at Damens production facilities. It should be noted
that the majority of packaging (~80%) will be shipped overseas to the shipyards abroad. Therefore, packaging
waste of DSGo amounts to ~10-20% of the total packaging waste that exists in the value chain.
The problem of waste relates to the organization as a whole and its supply chain partners, as waste is generated
along the supply chain. Stakeholders are both internal and external: i.e. the facility and procurement
department,
4 Less is more: an evaluation of sustainable supply strategies
the partner shipyards abroad, Damens suppliers, customers, the disposal contractors and logistics providers.
Appendix 3 presents these stakeholders and indicates their interests with regards to waste prevention.
The following diagrams represent waste amount figures for 2013 (Q1, Q2) retrieved from company data on
different
types of waste (Appendix 4) that are generated during the primary business activities at DSGo (Appendix 5).
Hazardous wastes as well as green wastes were excluded from the analysis due to the non-availability of data
on
these types of wastes and to limit the research complexity. Moreover, items that recover value after being
classified
as waste or those items that are processed in a cost-neutral way were excluded from the waste figures. Hence,
solely
waste categories that imply a business loss are included. To ensure that the analysis can be compared to yards
abroad, only business activities related the critical and primary processes of the company are considered.
Figure 2 Pareto diagram on volume of waste (DSGo)
Figure 3 Pareto diagram on disposal value of waste (DSGo)
Figure 2 and 3 show that wood and paper account for 80 percent of the waste volume as well as 80 percent of
the
disposal value. Hence, waste prevention is especially fruitful for these two types of waste. The company does
not
segregate and administrate the waste per location or business activity, thus there is no insight in the individual
contributions to e.g. wood and paper waste. The assumption is made that the largest proportion of this type of
waste is caused by packaging.
Moving from the practical context, the academic context is evaluated next in order to further define the
problem.
0%
20%
40%
60%
80%
100%
0
20000
40000
60000
80000
100000
Wood Paper Oil-water
sludge
mixtures
Empty paint
packaging
Glass
Pareto [volume | primary processes]
Waste volume (kilos)
Cumulative volume (%)
0%
20%
40%
60%
80%
100%
€-
€1.000,00
€2.000,00
€3.000,00
€4.000,00
€5.000,00
Paper Wood Oil-water
sludge
mixtures
Glass Empty paint
packaging
Pareto [disposal value | primary processes]
Waste value (Euros)
Cumulative volume (%)
Less is more: an evaluation of sustainable supply strategies 5
1.3 Outline
The master thesis document is organized in 5 chapters:
Chapter 1 introduces the research topic and context, acquainting the reader with the main concepts and
imperatives behind this research. The general research question is presented in the first chapter, based upon
the specific request of the practitioner and the related academic perspective. The practical relevance of the
research topic is also pointed out.
Chapter 2 reviews additional literature based upon the initial exploration presented in the introduction. This
more detailed literature review aids in finding specific research questions in order to build the conceptual
model. Furthermore, the academic relevance of this research is underlined. The conceptual model and the
research question guide the following chapters.
Chapter 3 shortly elaborates on the context of the practitioner with regards to the conceptual model, now
the
theoretical framework is known. This description is based upon the exploration of practice. With this
exploratory information, the next step is data collection and analysis to answer the research question, and
extend the literature by finding additional empirical evidence.
Chapter 4 describes the methods used for data collection and data analysis, hence the research design.
Furthermore, it elaborates on the initial findings of the data analysis. By explaining the methodology and the
specific steps taken in this research, replication of this research is enabled.
Chapter 5 closes the analysis by filing the concluding remarks. These conclusions complement the conceptual
model, answering the general and specific research objectives. Next to the theoretical conclusion, the
implications for the practitioner are noted in order to fulfill the practitioner’s knowledge need. Thereby, the
limitations of the research trajectory are discussed and directions for future research are indicated.
2 | Theoretical framework
Connecting the lines.
Less is more: an evaluation of sustainable supply strategies 9
First, the methodology and contribution of the literature review are explained. Definitions of basic concepts are
given to ensure assumptions are clear. The review starts with a discussion of articles wherein sustainable supply
chain management is addressed. Following, research on sustainable sourcing, evaluation and supply incentives
is
described. The benefits and pitfalls of these sustainable supply management practices are discussed last.
2.1 Methodology
Literature was mainly sourced using scientific databases, academic journals and online search engines. In order
to
find relevant literature with respect to practice, I started searching for research on the shipbuilding industry with
a
focus on sustainable operations and waste management. As this search did not deliver sufficiently useful
articles, I
generalized my search to manufacturing industries. The main key words that were used are sustainable
operations,
environmental management, waste (management), waste prevention, supply chain coordination and
environmental
supply chain management, green or environmental purchasing and sustainable supply practices. I concentrated
on
articles from the Journal of Operations Management, the Journal of Supply Chain Management, the Journal of
Operations and Production Management, the International Journal of Production Research, the International
Journal of Production Management, the Journal of Purchasing and Supply Management, and the Journal of
Cleaner
Production. Furthermore, I consulted the Sloan Management Review and Harvard Business Review magazines.
2.2 Contribution
Reviewing theoretical frameworks and studies supports in finding hypotheses to assess the practitioner’s
problem.
The review contributes by developing a basis for the research project, giving an overview of the existing theory
by
evaluating the common themes and discussing differences and gaps. Thereby, the literature review defines the
a
priori constructs that are part of this research.
2.3 Definitions
For sake of clarity, the following general definitions are assumed for the main concepts that are stated in the
review:
The supply chain is referred to as the ‘logistics network, consists of suppliers, manufacturing centers,
warehouses, distribution centers and retail outlets as well as raw materials, work-in-process inventory, and
finished products that flow between the facilities’ (Simchi-Levi et al. 2009).
Supply chain management comprises the ‘set of approaches utilized to efficiently integrate suppliers,
manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities,
10 Less is more: an evaluation of sustainable supply strategies
to the right locations, and at the right time, in order to minimize system wide costs while satisfying service
level requirements’ (Simchi-Levi et al. 2009).
Sustainability is the capability of an organization to ensure continuity by incorporating social, environmental
and economic factors in its strategy and operations and so contributing to the quality of life by respecting
ecological limits (definition built on Sarkis et al. 2011; Tencati, 2013).
Waste provides a signal for opportunity as well as a guide for continuous improvement, notifying failures and
inefficiencies in the system (definition built on Porter and Kramer, 2006; Van der Laan, 2013).
Waste prevention is a sustainable and integrated strategy that underscores continuous improvement and
aims to
avoid waste and the generation thereof by employing a resource-efficient attitude to products and processes
within the chain (definition built on Porter and Kramer, 2006; Walton et al. 1998; Lilja, 2009).
2.4 Sustainable supply chain management
The topic of sustainable supply chain management (SSCM) has received attention from a variety of researchers
over
a span of three decades. The concept retrieves its relevance from the association between sustainable
development
and supply chain management (Hall et al. 2012) and because of the fact that ‘when a focal company is
pressured, it
usually passes this pressure on to suppliers’ (Seuring and Müller, 2008). Multiple ways have been used to
describe
this relationship, i.e. environmental management (Hunt and Auster, 1990; Hamner, 2006; Vachon and Klassen,
2008), sustainable operations management (Kleindorfer et al. 2005), green supply chain management (Hervani
et al.
2005; Srivastava, 2007;, Sarkis, 2010) and SSCM (Seuring and Miller, 2008;, Carter and Rogers, 2008; Carter and
Easton, 2011) and environmental supply or supplier management (Koplin et al. 2007; Tate et al. 2012). These
concepts are mostly similar, especially on the level of integration of the triple bottom line factors( Elkington,
1998).
Environmental management (EM) is defined as the use of environmental technologies that ‘include design;
equipment and operating procedures that limit or reduce negative impacts of products or services on the
natural environment’ (Vachon and Klassen, 2008). It can serve as a ‘critical component for sustaining
competitive advantage’ (Hunt and Auster, 1990) and provide a basis for ‘green purchasing’ (Hamner, 2006).
Sustainable operations management (SOM) emphasizes the impact of internal operations on the external
stakeholders. The concept was defined as ‘the set of skills and concepts that allow a company to structure and
manage its business processes to obtain competitive returns on its capital assets without sacrificing the
Less is more: an evaluation of sustainable supply strategies 11
legitimate needs of internal and external stakeholders and with due regards for the impact of its operations on
the people and the environment’ (Kleindorfer et al. 2005).
Green supply chain management (GSCM) is more product-based and highlights sustainability within the
different life cycle phases. It involves ‘the influence and relationships of supply chain management to the
natural environment’ from ‘an environmentally conscious mindset or a competitiveness motive’ (Hervani et al.
2005). Based upon the different supply chain phases, it is described as ‘the integration of environmental
thinking into supply chain management’ and includes product design, material sourcing and selection,
manufacturing, distribution and marketing, reverse logistics as well as end-of-life management of the product
(Hervani et al. 2005, Srivastava, 2007). Linton et al. (2007) emphasized the cost perspective of GSCM, since
‘supply chains must be explicitly extended to include by-products of the supply chain, and optimize the
product not only from a current cost standpoint but also from a total cost standpoint’, and must so include the
effects of resource depletion and the generation of by-products that are neither captured nor used (pollutants
and waste)’ (Linton et al. 2007).
Sustainable supply chain management (SSCM) takes a more comprehensive view, including all three
dimensions and stakeholder requirements in the ‘management of material and information flows as well as
cooperation among companies along the supply chain’ (Seuring and Miller, 2008). The concept was defined as
the ‘strategic achievement and integration of an organization’s social, environmental, and economic goals
through the systemic coordination for key inter-organizational business processes to improve the long-term
economic performance of the individual company and its value network (Carter and Rogers, 2008; Wolf, 2011).
Environmental supply management is a further in-depth concept based on SSCM with an emphasis on the
environmental pillar of sustainability. It involves the ‘integration of environmental criteria/standards into
product and production related decisions along the whole supply process’, thus regarding the supply chain as
well as the product by optimizing the ‘environmental compatibility of purchased goods’ (Koplin et al. 2007).
From including the triple bottom line aspects within the focal firm itself, definitions evolved to include
stakeholders and to emphasize collaboration and integration focusing upon the holistic supply chain instead of
the
sole single entity (Tate et al. 2012). It has developed to an inclusive concept that is set to improve not only the
focal
firm but its supply chain network. This approach is due to the increased pressure to be sustainable and ‘perform
well, not just on traditional measures of profit and loss, but on an expanded conceptualization of performance
that
»
12 Less is more: an evaluation of sustainable supply strategies
includes environmental and social indicators’ (Closs et al. 2011; Tencati, 2013). Hence, ‘engaging in SSCM is not
discretionary but rather a requirement’ (Carter and Rogers, 2008). Therefore, SSCM is particularized from here
on.
Apart from avoiding and preventing environmental risks, SSCM may create opportunities to add value
(Lamming
and Hampson, 1996) and enhance companies’ competitive advantage (Walton et al. 1998) and reputation
(Carter
and Rogers, 2008; Tate et al. 2011). Thus, ‘managers should not adopt green management practices just
because of
societal pressures alone, but rather because it advances their organization’s strategic goals’ (Siegel, 2009).
SSCM is
found to provide ample benefits: reducing long term risks associated to resource depletion, pollution and waste
management (Linton et al. 2007; Srivastava, 2007), minimizing reliance on scarce environmental resources, while
minimizing waste (Closs et al. 2011), increasing revenues and profits through significant operational efficiency
gains
and reduced costs (Lamming and Hampson, 1996; Linton et al. 2007; Closs et al. 2011; Tate et al. 2012) as well
as
resource efficiency through reduction of material consumption, packaging and production waste (Wittstruck
and
Teuteberg, 2011), compliance with regulatory requirements (Closs et al. 2011) and finally, long-term global
viability
and sustainability (Linton et al. 2007; Closs et al. 2011). The definition of sustainable supply chain management
that
is used for this research is as follows:
Sustainable supply chain management is the efficient integration of and cooperation with all stakeholders along
the supply chain
while including environmental, social and economic factors, thus ensuring benign operations.
The literature focuses on SSCM as a lowering of risks and an improvement of risks, efficiency and therefore
costs
and profits, whereas the benefit of stronger relationships is rarely mentioned. Advantages described are mainly
quantitative factors. Next to reputation and the related license to operate, qualitative factors could be included
i.e.
the levels of trust and satisfaction between the stakeholders, supply chain partners and consumers. Moreover,
research on SSCM benefits and impacts is mainly centered towards the focal firm, whereas the definitions have
evolved to include the value network. Moreover, there is a need to include the supplier perspective in SSCM
research, especially because ‘the supply base has more direct impact on the environmental footprint of the
supply
chain than the buying firm’ and therefore adoption of environmental practices at the supply base is ‘an area of
high
potential impact’ (Tate et al. 2011).
SSCM can be achieved in different phases. Hunt and Auster (1990) defined five stages in the ‘environmental
management development continuum’ ranked by the level of protection from environmental risk i.e. the
beginner,
the firefighter, the concerned citizen, the pragmatist and the proactivist. Alternatively, Closs et al. (2011) took a
»
Less is more: an evaluation of sustainable supply strategies 13
resource-based view and divided environmental management into three categories: conservation, usage
reduction
and good business management practices. The first category comprises of ‘initiatives to better manage and
minimize reliance on energy, water and other natural resources’ (Pullman et al. 2009). This approach affects
product design, choice of materials, packaging, logistics and transportation, along with product disposal (Closs
et
al. 2011). The second category focuses on reducing (toxic) waste, and thus increasing recycling and finding
other
purposes for end-of-life items. The third, most proactive element includes initiatives on collaboration across
value
chain partners, design efforts and green purchasing (Carter and Jennings, 2002). This last element concerns
proactive supply processes, which are of most interest to this master thesis, and are therefore elaborated on in
the
next paragraphs with a focus on green purchasing and collaboration.
Sustainable sourcing
The concept of environmental purchasing (Carter and Carter, 1998; Humphreys et al. 2003; Tate et al. 2012) has
frequently been described as green purchasing (Min and Galle, 1997; Bowen et al. 2001a; Chen, 2005;, Hervani
et al.
2005; and Hamner, 2006), along with sustainable sourcing (Walton et al. 1998; Hall, 2000; Koplin et al. 2007;
Pagell
and Wu, 2009) and environmentally conscious purchasing (Handfield et al. 2002). The notion covers the process
of
‘introducing and integrating environmental issues and concerns into the purchasing process’ (Handfield et al.
2002)
and serves as an integral component of SSCM by ‘managing all aspects of the upstream component of the
supply
chain to maximize triple bottom line performance’ (Pagell and Wu, 2009). Among these aspects are ‘the
acquisition
of raw materials, supplier selection, evaluation and development, suppliers’ operations, in-bound distribution,
packaging, recycling, reuse, resource reduction and final disposal of the firm’s products’ (Zsidisin and Siferd,
2001).
Environmental purchasing is an effective way of ‘managing a company’s environmental policy by diffusing
environmental management techniques along the supply chain’ (Humpreys et al. 2003).
The purchasing function has received more attention in environment-related literature due to several factors.
First,
increased global competition for resources has made resource management ‘much more frugal’ (Kraljic 1983,
Akinc
1993). Since dependence on supply has grown, performance of a firm increasingly depends on the actions of
suppliers (Vonderembse and Tracey, 1999; Zsidisin and Siferd, 2001) thus the need emerges to ‘effectively
manage
suppliers (Kannan and Tan, 2002) and build long-term strategic alliances (Vonderembse and Tracey, 1999). As
purchasing fulfills ‘a critical boundary-spanning function’ that connects a firm with the suppliers and external
environment (Zsidisin and Siferd, 2001; Chen, 2004), the role of purchasing has gained ‘visibility and additional
14 Less is more: an evaluation of sustainable supply strategies
responsibility’ (Vonderembse and Tracey, 1999). It controls and generates pressure on production performance
(Chen, 2004), and is so able to facilitate environmental management activity focused on waste minimization,
energy efficiency and innovation (Simpson and Power, 2005). Hence, purchasing shifted from a tactical activity
to a
strategic component that has an impact on the competitive success of a firm and its corporate environmental
performance (Handfield et al. 2002). Next to sustainable product supply, researchers started to include supply
management activities that ‘improve the environmental performance of the suppliers that provide them’
(Bowen et
al. 2001b). Proactive purchasing activities address environmental issues within the firm as well as within the
supply
chain (Zsidisin and Siferd, 2001). The main aim of vendor relations should be ‘to reduce and eliminate any waste
involved in the procurement of materials i.e. ‘poor quality parts, early or late shipments, shipment count and
invoicing discrepancies, rework, poor process yields, boxes or pallets, poor forecast and changes in production
schedule’ (Akinc, 1993). Purchasing is the most capable of ‘leading programs of collaborative waste reduction
and
cost-effective environmental solutions’ (Lamming and Hampson, 1996; Chen, 2004; Simpson and Power, 2005).
It
can enhance the effectiveness of a source reduction strategy in a number of ways: a) reducing the purchased
volume
of items that are difficult to dispose of or are harmful to the ecosystem, b) reducing the use of hazardous virgin
materials by purchasing a higher percentage of recycled or reused content, or c) requiring that suppliers
minimize
unnecessary packaging and use more biodegradable or returnable packaging (Min and Galle, 1997). Companies
can
realize advances in efficient resource utilization by selecting and purchasing optimal items (Schliephake et al.
2009). Additionally, sustainable sourcing can ‘have a positive impact on both the image of a company as much
as on
the drive for sustainability of the business (Koplin et al. 2007). It is an ‘effective tool’ for risk mitigation with
respect to environmental impacts of consumption and a ‘promoter’ for development of clean production
technologies (Chen, 2004; Vachon, 2007). Wolf (2011) added that ‘buying practices can impact suppliers’ ability
to
improve their sustainability’. Sustainable sourcing actions mainly include the following factors: ensuring that
supplier processes and products are environmentally sound, purchasing recyclable/reusable packaging and
containers, participating in design for reuse and recycling, identifying and sourcing non-hazardous alternatives,
and
identifying local sourcing options (Zuidwijk, 2012). The sourcing function is the ‘key actor to search for,
evaluate,
and monitor suppliers’ (Koplin et al. 2012). Hence, sustainable sourcing activities fall into the following three
elements (Walton et al. 1998; Kannan and Tan, 2002): supplier selection, supplier performance evaluation, and
supplier development.
Less is more: an evaluation of sustainable supply strategies 15
The following definition of sustainable sourcing is assumed in this research:
Sustainable sourcing involves the processes of selecting, monitoring and integrating suppliers, in order to
manage the upstream inflow
based upon triple bottom line factors and enhance the firm’s resource-efficiency and sustainability.
Sustainable supplier selection and evaluation
Supplier selection is one of the ‘critical issues faced by operations and purchasing managers to help
organizations
maintain a strategically competitive position’ (Chen et al. 2006). Using selection criteria ‘compatible with the
company’s corporate strategy’ enables achieving alignment between suppliers and the focal firm ‘in terms of
goals
and objectives’ (Jabbour and Jabbour, 2009) and purchase goods and services based on environmental
specifications
(Lamming and Hampson, 1996). With these criteria, suppliers can be pre-selected through, for instance, the use
of
supplier questionnaires or material specifications (Hamner et al. 2006) and when accredited, supplier tenders
can
be evaluated based upon their individual ‘rating’ with respect to environmental features (Belvedere, 2013). As
the
selection and evaluation address compliance to the agreed upon standards, requirements and performance,
they
provide a strategic and risk-management tool vis-à-vis the suppliers (Vachon, 2007). In line with SSCM, these
processes enhance the ‘supply-base continuity’ which is the notion that ‘all members of the chain do not only
stay in
business but they do so in a manner that allows them to thrive, reinvest, innovate and grow’ (Pagell et al. 2010).
Hence, for those companies that focus on sustainability, commodity and price-based relationships are ‘no
longer
acceptable’ (Humphreys et al. 2003; Simpson and Power, 2005; Bai and Sarkis, 2010). Consequently, criteria for
supplier selection have become more complex, with the involvement of environmental, social and customer
satisfaction factors’ (Lamming and Hampson, 1996; Kannan and Tan, 2000; Simpson and Power, 2005;, Athawale
and Chakraborty, 2011). Environmental criteria have been divided into quantitative and qualitative criteria, and
related to the following categories according to the classification of Humphreys et al. (2003):
Quantitative: environmental costs of pollutant effects, environmental costs of improvement
These items are for instance solid waste amounts, air emissions, clean technologies, redesign and recycling.
Qualitative: management competencies, green image, design for environment, environmental management
systems (EMS), and environmental competencies.
Criteria included are i.e. management commitment, training, stakeholder relationships and prevention policies.
Standards focused on environmental issues are increasingly inserted in the selection and evaluation criteria of
suppliers (Walton et al. 1998; Seuring and Müller, 2008; Hoejmose et al. 2012). Next to the criteria of
compliance to
16 Less is more: an evaluation of sustainable supply strategies
mandatory standards set by governments, companies can embrace voluntary standards that can function as
strategic instrument of value chain coordination (Ponte, 2004). These voluntary standards ‘arise from a formal
coordinated process in which key participants in a market or sector seek consensus’ e.g. the ISO standards and
offer
the advantage of verification and transparency versus private standards (Ponte, 2004). Just as with selection
criteria, standards are both process and product-based. One prevalent process-based standard is the
ISO140001
certification which is meant to ‘impose environmental safeguards on suppliers’ (Chen, 2004; Vachon, 2007).
Product-based standards are also in place, such as the European Directive RoHS which sets requirements on the
(amount and type of) hazardous materials used. Other environmental metrics that are proposed for supplier
selection decisions relate to environmental practices and performance. These include in general pollution
control,
pollution prevention, environmental management systems, resource consumption and pollution production
(Humphreys et al. 2003; Bai and Sarkis, 2010). Next to criteria, code of conducts are commonly used though
these
might ‘not be sufficient’ to ensure adequate implementation of sustainable sourcing (Hoejmose et al. 2012). In
summary, the following three levels can be found in greening the supply chain: product-based green supply,
greening the supply process and advanced green supply (Bowen et al. 2001b) of which the last category is
considered the most proactive and hence most preferred. However, though environment-focused supplier
selection
is encouraging in theory, in practice it is more difficult to insert it in the dynamic of the supply chain (Jabbour
and
Jabbour, 2009). A one-size-fits-all strategy might not be feasible, since different customer-supplier relationships
‘may require distinctive selection strategies based upon the time horizon and the content of the relationship in
terms of the nature of integration between the two parties’ (Masella and Rangone, 2000). Supplier selection
should
not impart including future capabilities and performance. Furthermore, supplier selection should rather be
tailored
to the type of supplier relationship, whether it concerns critical, strategic, leverage or commodity items (Kraljic,
1983; Masella and Rangone, 2000). As a result, ‘some strategies are more likely than others to promote
sustainable
behavior among suppliers’ (Hamner et al. 2006). The definition of sustainable supplier selection adopted for this
research is:
Sustainable supplier selection is the search for, assessment of and decision to contract potential suppliers
based upon requirements
that incorporate economic, environmental and social concerns and thus manage supply chain risks and supply-
base continuity.
An important factor that could be incorporated in the selection process is the benefit of compliance to the
supplier,
underscoring the supply-base continuity concept. Hence, instead of proposing the measures as solely
mandatory, »
Less is more: an evaluation of sustainable supply strategies 17
they could be hinted as opportunities for continuous improvement and chain benefits can be pointed out.
Though
compliance is necessary for selection, it provides a more comprehensive argumentation and incentive for the
supplier to improve, and this way the supplier perspective is included as well. Moreover, the viability of
selection as
a SSCM process should be looked into in different industries and across different buyer-supplier relationships.
Sustainable supplier evaluation and supply incentives
Because supplier performance is at ‘risk of opportunism without the protection of appropriate safeguards or
monitoring’ (Simpson and Power, 2005), suppliers should be evaluated on their commitment and environmental
performance on a regular basis (Lamming and Hampson, 1996). It allows firms to ‘evaluate a supplier’s
performance,
compare it with the performance of other suppliers and provide suppliers with a direction to drive improvement
objectives’ (Simpson and Power, 2005). Supplier assessment systems range from a) detailed questionnaires on
the
supplier’s willingness to cooperate, b) supplier compliance auditing, c) supplier EMS auditing to d) star ratings
(Lamming and Hampson, 1996; Hamner, 2006). Though transaction costs initially increase when monitoring
suppliers, payoff can be realized through reduced risk, lower total (transaction) costs in the long term and
increased trust (Zsidisin and Siferd, 2001). Supplier assessment also provides several advantages for suppliers,
as it
offers the possibility to demonstrate quality and compliance, to achieve cost savings through eliminating
efficiencies and to embed themselves in the customer’s value chain (Lamming and Hampson, 1996). However,
criteria such as the ISO14000 certification alone ‘cannot provide sufficient information to screen suppliers and
to
evaluate their performance’ (Chen, 2004). Strategies to influence suppliers with standards such as ISO14001
have
limited appeal, and ‘without additional strategic efforts, very few firms will adopt new governance systems’
(Delmas and Montiel, 2009). Though product-based initiatives are adopted increasingly, process-based
standards
are moderately implemented; the cooperative risk-sharing and reward-sharing agreements are almost non-
prevalent
(Bowen et al. 2001b). The dilemma that arises is that ‘suppliers can produce greener products without
necessarily
becoming green themselves’ (Simpson and Power, 2005) and so limit the potential benefits of sustainability
along
the supply chain. Therefore, supplier selection and monitoring are limited. The following definition of
sustainable
supplier evaluation is used in this research:
Sustainable supplier evaluation involves the process of assessing a supplier’s performance on environmental
and social criteria in
order to compare across the supply base, reduce risks and inefficiencies, and investigate points of
improvement.
18 Less is more: an evaluation of sustainable supply strategies
Since it takes time and money for suppliers to implement good environmental practices and requiring the same
approach for their own suppliers, this strategy will only work if they adopt an ‘environment-focused mindset’
(Hamner, 2006). Supply incentives are meant to ‘motivate suppliers to improve by signaling that improved
performance is rewarded with increased business and preferred status for future business’ (Simpson and Power,
2005; Krause et al. 2000). However, existing supply chain contracts focus upon sharing costs, revenues and
(inventory) risks (Simchi-Levi et al. 2013; Chopra and Meindl, 2013), while incentives for sharing responsibilities
with regards to sustainability and environmental practices remain to be incorporated. Market forces,
competition
and cooperation (Krause et al. 2000; Tate et al. 2011) have been found to be ‘increasingly important to suppliers
in
the competitive world, and play a more important role to engage in environmental activities’ (Chen, 2004).
Sustainable supply incentives are defined as follows:
Sustainable supply incentives involve rewards to proper environmental and social performance of suppliers in
the form of increased
(future) business or preferred status.
Though evaluation can be a useful element in the buyer-supplier relationship to assess if suppliers have indeed
implemented sustainable practices, it should take into account the supplier’s process next to the product
output.
Even though it could be beneficial for both the focal firm and the supplier, it is mentioned that evaluation alone
will
not lead to the adoption of environmental practices. Incentives as an additional or alternative process have
evolved
from a carrot-and-stick approach to competitive constructions and shared responsibilities. The feasibility of
these
incentives to inducing actual adoption of SSCM practices has not been studied to great extent. This might be
due to
the fact that it is harder to measure than traditional contracts and incentives.
Supplier development and integration
On the other hand, supplier involvement and development might play a more direct and critical role in
achieving
improvement (Krause et al. 2000). Green or environmental purchasing is linked positively to the degree of
partnership with suppliers in environment-related projects (Carter and Carter, 1998). With the increasing
scarcity
and thus risk of supply interruptions (Kraljic, 1983), cooperation becomes a ‘strategic response to the challenges
that arise from the dependencies among supply chain members’ (Xu and Beamon, 2006). In general, two or
more
companies working together ‘can achieve greater success then when acting in isolation’ (Simatupang and
Sridharan,
2002). Herein, a relationship ‘built on trust, communication and collaboration may be more effective’ in
ensuring
sustainable sourcing compared to transactional relationships (Hoejmose et al. 2012). When asked by the buyer
‘to
»
Less is more: an evaluation of sustainable supply strategies 19
engage in environmental practices, the suppliers expect support from their larger buyers’ (Tate et al. 2011).
Hence,
more emphasis should be placed upon relationship-building (Kannan and Tan, 2000). A collaborative
procurement
approach can improve the understanding of suppliers with regards to their environmental effects and causes in
the
supply chain and potential competitive advantage when complying with criteria (Lamming and Hampson,
1996).
Integration of business processes is seen as favorable from both the economic as well as the environmental
perspective, as it ‘may deliver greater value through shared information and activities that accelerate product
design
at lower cost, or create more efficient resource utilization and minimal process duplication’ (Schliephake et al.
2009). Environmental benefits can be achieved in the form of less raw material consumption and waste,
enhanced
product packaging and increased social responsibility (Linton and Jayaraman, 2005). A constructive dialogue
between buyer and supplier can enhance quality, keep environmental harm to a minimum, and aid continuous
improvement (Vonderembse and Tracey, 1999; Zsidisin and Siferd, 2001). Furthermore, if these collaborative
activities have ‘only marginal (if any) impact, then suppliers will select their pollution prevention technologies’
(Vachon, 2007). Thus, the waste prevention approach will catalyze along the value network. In addition, a good
buyer-supplier relationship is ‘important in finding solutions to achieve greater efficiencies and costs savings’
(Schliephake et al. 2009). Organizations developing pollution prevention technologies ‘would benefit from
environmental collaboration with suppliers’ Vachon (2007). Consequently, to fully prosper from a SSCM
approach,
companies need to develop inter-organizational cooperation along the chain (Carter and Rogers, 2008). This
research defines sustainable supplier development as follows:
Sustainable supplier development involves strategic efforts focused on relationship-building with suppliers such
as collaboration on
intra- and inter-organization processes, supplier involvement and education with the aim of long-term supply
chain improvement.
Whereas on sustainable supplier selection extensive literature exists, supplier development and involvement are
still only infrequently included (Tate et al. 2012). Strategies to induce collaboration are hardly described,
whereas
benefits on the economic, social and environmental level are denoted frequently. As different buyer-supplier
relations might ask for different approaches to collaboration, further research could study what strategies are
optimal within a specific buyer-supplier context and how companies can reach a mature buyer-supplier
relationship.
»
20 Less is more: an evaluation of sustainable supply strategies
Challenges in sustainable sourcing strategies
In spite of the fact that benefits of SSCM are extensively described, there are significant barriers to implement
successful proactive strategies. According to the tragedy of the commons (Hardin, 1968), ‘freedom in a
commons
brings ruin to all’. Unless this freedom is restricted, the individual costs incurred to solve the problem will be
higher
than the expected benefits. Barriers can be categorized into three types: behavioral, economic and structural.
I. Behavioral barriers include managerial attitudes and perceptions of risk (OECD, 1995 and OECD, 2003).
Carroll (1979) identified four management values that could be of influence on managers’ environmental
agenda: economic, ethical, legal and discretionary values. Managers assume different roles towards social issues
such as waste. For example, managers might be concerned about being the corporate seagull, and moving their
strategy away from day to day workings (Lamming and Hampson, 1996). Strong top-management buy-in,
commitment and the recognition of environmental impact on the long term are of key importance for
successful
adoption of environmental management (Petulla, 1987; Carter and Jennings, 2002; Walker et al. 2008;
Hoejmose et al. 2012). Gupta (1995) added that ‘direct involvement of corporate managers and operations
managers’ is essential for a successful waste prevention strategy. Additionally, the attitude of personnel is
emphasized as the single most important aspect for waste prevention and resource efficiency (Pongrácz, 2009).
Moreover, tension can arise ‘when environmental and financial goals within the organizations conflict’ (Sarkis
et al. 2011). Along the supply chain, behavioral barriers can arise, for instance, mitigation of efforts when a
powerful firm is less dedicated to the reduction of environmental effects (Walton et al. 1998). The definition for
behavioral barriers that is used in this research is the following:
Behavioral barriers include managerial and personnel attitudes and awareness with respect to sustainability
that may lead to
mitigation of efforts or lack of involvement imposing a barrier to implementation.
II. Structural barriers are mainly related to organizational structures (OECD, 2003) including a lack of resources,
technological barriers and requirements set by consumers and authorities (Pongrácz, 2009). The lack of total
chain perspective (Schliephake et al. 2009) or perceived issues in coordination or communication (Seuring and
Müller, 2008) as well as the lack of a champion within a supply chain could imply barriers to greater resource
efficiency (Schliephake et al. 2009). The decision to employ environmental management practices can also be
part of a strategic choice, whether taking a Constraint or a Component perspective (Angell and Klassen, 1999).
The former most dominant perception ‘considers environmental performance requirements to be an externally
Less is more: an evaluation of sustainable supply strategies 21
imposed constraint’ while the latter infers that ‘operating issues such as pollution control, waste minimization,
and material reduction, reuse, and/or recycling form a distinct portion of operations strategy’ (ibidem). Thus,
environmental issues can be either reactively or proactively managed at the strategic and operational level
which impacts the ease of participation. Structural barriers are defined as follows:
Structural barriers involve the lack of resources, procedures, policies or strategies with respect to sustainability
that impose a
barrier to implementation.
III. Economic barriers are described as the ‘green financial burden’, a concept that is defined as ‘the additional
expense that is involved in manufacturing a product to ensure ecological sustainability’ (Barari et al. 2009;
Seuring and Müller, 2008). This burden includes additional investments incurred due to greening and the
penalties levied for not meeting the standards. Furthermore, transaction costs are involved by the
incorporation of environmental supplier management in the forms of financial, capital and personnel resources
(Simpson and Power, 2005). Thereby, when the ‘low-hanging fruit’ is picked, companies need to invest in more
long-term projects which might result in higher costs (Carter and Rogers, 2008). Demand for lower prices is
also seen as a cost associated to sustainable supply chain management (Walker et al. 2008). The following
definition of economic barriers is assumed in this research:
Economic barriers involve (perceived or actual) additional costs or lower profits due to sustainability imposing a
barrier to
implementation.
Although these barriers exist, there are ways to overcome them. Behavioral barriers can be surmounted by ‘a
shared
organization-wide long range vision’ that motivates change (Carter and Rogers, 2008), is fair and supportive
(Carter and Jennings, 2004) and integrates SSCM into the corporate policy (Seuring and Müller, 2008).
Moreover,
training and education of employees and suppliers could support in the adoption of SSCM practices (Seuring
and
Müller, 2008). Companies can also fuel their prevention strategies by learning through a multi-organization
network (Clarke and Roome, 1995), which can be enhanced by information provision and signaling (Wittstruck
and Teuteberg, 2012). By investing in their supplier development, companies can realize adoption of
sustainable
practices and simultaneously create firm-specific relationships that might become difficult to imitate (Pagell et
al.
2010) and thus provide competitive advantage (Porter and Van der Linde, 1995; Tate et al. 2011). Adoption at
the
supply base is increased ‘if the supplier perceives that the additional transaction costs associated with adoption
of
22 Less is more: an evaluation of sustainable supply strategies
the environmental practice are part of maintaining the ongoing relationship’ (Tate et al. 2011). Management
systems
such as ISO14001 and codes of conduct can also secure a higher priority of SSCM (Seuring and Müller, 2008).
With respect to economic barriers, Hardin (1968) referred to the idea of ‘mutual coercion’ whereby ‘social
arrangements or mechanisms coerce all participants to behave in a way that helps the common good. It can be
attempted through e.g. a command-and-control approach or market mechanisms or cap-and-trade and
emission
taxes (ibidem). Thereby, companies should consider the costs of noncompliance or reactive strategies to
regulations
next to the financial burden of implementing sustainable practices, as well as the fact that energy costs will
continue to rise and materials become more scarce (Shrivastava, 1995; Carter and Rogers, 2008). The benefits of
SSCM should be considered as well as the fact that it can increase profits (Petulla, 1987; Gupta and Sharma,
1996;
Siegel, 2009; Chopra and Meindl, 2013) notwithstanding that profit does not necessarily have to be the ‘driving
force’ of an organization (Carter and Rogers, 2008; Closs et al. 2011).
The attitude of top management and personnel is highlighted by most researchers. Furthermore, legislative and
competitive pressures are said to play substantial roles in transforming the management’s priorities. In general
it is
declared that when a company adopts a supply chain perspective, the advantages of cooperation and mutual
learning will become clear. Nonetheless, specific best practices for certain industries are not pointed out
whereas
industrial or buyer-supplier relationship differences might considerably impact the success of SSCM adoption
(Carter and Easton, 2011; Tate et al. 2012), providing a direction for research.
»
Less is more: an evaluation of sustainable supply strategies 23
A related development is the shift from employing individual, firm-specific and reactive strategies, to embracing
a
holistic supply chain approach that is proactive. Academics have started to highlight the strategic importance of
stakeholders and the associated benefits of collaboration and integration in a global corporate environment.
Stakeholders are being seen as ‘licensors to operate and exist’ instead of obstructive externalities. Research is
now
increasingly underlining the idea of shared competitive advantage and shared value, which implies lower waste
volumes, minimized reliance as well as efficiency and viability of the supply chain. The emergence of the notion
of
supply base continuity highlights this view, wherein trust and collaboration are the primary drivers of
sustainability of a supply chain. The ‘extended organization’ involves integration, communication, and a focus
on
value enhancement within the relationship. Purchasing is stressed to have a key role in green supply, which is
increasingly seen as a strategic asset rather than an operational function, and moving from arms-length
transactions
to long-term partnerships.
Processes designed for inducing collaborative practices range from selection to evaluation and assessment, to
supplier involvement and development programs. Since new types of inter-firm relationships have evolved,
managing these relationships becomes more and more crucial next to alignment across the factors people,
planet
and profit. The factors risks, rivalry, resource scarcity and rising prices are top priority herein. Consequently,
alignment has moved from providing purely monetary incentives to enabling development structures wherein
collaboration, dialogue, shared commitment and education prevail. From reinforcing the suppliers, the literature
has moved to ‘raising’ and developing suppliers. Though literature exists on supplier development and supply
incentives to motivate suppliers to adopt environmentally friendly systems have been developed, the feasibility
and
appropriateness of these strategies remain to be confirmed by empirical evidence. Furthermore, instead of a
specific
focus on waste prevention, the majority of the articles take a broader stance on the environment at large.
Even though the proposed structures have proven feasible and beneficial in some studies, it is being recognized
that
there are difficulties with regards to implementation. Different types of buyer-supplier relationships and
industries
can impact the level of success of the programs, or define other processes as optimal. Academics have
designed
general sustainable supply processes, but variances in the application thereof and success factors within
different
industries are still rarely considered. Hence, these processes need to be further refined. One concern is that
suppliers might provide green products, but not be green themselves. How to avoid this type of ‘window-
dressing’
or mitigation behavior and induce genuine mutual commitment remain topics to be studied in-depth.
24 Less is more: an evaluation of sustainable supply strategies
Academic relevance of this research
Previous research shows several gaps with regards to the feasibility of SSCM practices. First, the focal firm
perspective is taken primarily, which condemns the actual impact of suppliers on the focal firm’s supply chain
and
environmental footprint. Secondly, the viability of certain SSCM practices has not been confirmed by empirical
evidence nor tested for feasibility within specific industries. Moreover, these different practices have not been
largely compared in their (perceived) effectiveness on the supply base, and in particular the impact of supplier
development. Additionally, the influence that various types of buyer-supplier relationships have on the
adoption of
these practices is not yet studied into detail. The barriers that can confront implementation are studied in
general,
though these might differ across industries and different relationships.
These gaps indicate a need for theory-building as well as for empirical testing (Melnyk and Handfield, 1998;
Carter
and Rogers, 2008; Seuring and Müller, 2008; Tate et al. 2012). This research aims to fill the theoretical and
empirical
gap by testing the perceived impact of different SSCM practices on the adoption of waste prevention policies
by the
supply base. Next to the perspective of the focal firm, the supplier perspective will be assessed by interviewing
suppliers of the practitioner, inquiring their response to potential focal firm’s actions regarding waste
prevention
policies. Implementation barriers are also studied as these might differ across the manufacturing industry and
hence
impact the actual adoption of waste prevention policies by the supply base. Since it is useful from a practitioner
standpoint to discover best practices, multiple cases are studied across the Dutch manufacturing industry that
are
not related to the practitioner nor the industry. The benchmark results are related to the specific industry
characteristics of the shipbuilding industry in order to provide a solid and feasible model both in theory as well
as
in practice. As waste prevention is the desired result, this research emphasizes SSCM from an environmental
perspective and therefore the term environmental supply management (ESM) is used from this point onwards.
Less is more: an evaluation of sustainable supply strategies 25
3 | Case description
Floating topic.
Less is more: an evaluation of sustainable supply strategies 27
This chapter elaborates on the supply chain management practices in place at Damen, visualizing the supply
chain
as well as the business context of Damen.
»
Less is more: an evaluation of sustainable supply strategies 29
5 | Conclusion
It is time to set sail.
Less is more: an evaluation of sustainable supply strategies 54
First, the theoretical and practical conclusions are stated. Subsequently, this chapter evaluates the
characteristics of
this study, relates to the limitations of this research as well as directions for further research.
5.1 Theoretical conclusion
The multiple case study shows that sustainable supply processes positively impact the likelihood of upstream
waste prevention adoption. Still, some ESMPs are stated to have more impact than others. This conclusion
points
out which processes are preferred and the variables that play a role in the implementation of ESM. It intends to
answer the general research question: How can waste prevention be induced at the supply base in the
shipbuilding industry? Based
upon the data analysis and theory development, the conceptual model has evolved as follows (Figure 6):
Figure 6 Conceptual model: conclusion
The likelihood of the first ESMP, supplier selection, to induce the adoption of waste prevention policies at the
supply base is found to be limited, as shown in Figure 6 with the dotted lines. Conversely, supplier evaluation
and
supplier development with suppliers are believed to be main stimuli for suppliers, both ranked to be
substantially
likely to induce suppliers to engage in waste prevention. The impact of collaboration is confirmed by the
supplyside
view. Even though the supply-base values an increase in status, the focal firm perspective perceives supply
incentives – and especially financial incentives – mainly as counterproductive as they will not result in a change
of
mindset but in a carrot-and-stick game. Thus, the ESMP supply incentives is indicated as having only a limited
probability of influencing the upstream adoption of waste prevention policies. When regarding environmental
supply management in general, several factors are found to influence the likelihood of inclusion of ESM
practices.
55 Less is more: an evaluation of sustainable supply strategies
First, top management commitment to environment and waste prevention is highlighted as a key component
that is
likely to aid the development of green purchasing. Commitment of higher management is deemed to impact
the
supply management culture, which in itself is expected to positively affect the adoption of ESMPs if the culture
is
environmentally aware and considers the triple bottom line instead of just profit maximization or conversely
cost
minimization. However, the corporate environmental policy should be adequately enforced to indeed have
influence
on the supply management processes.
Regarding supplier development there is a gap between the current practices and the perceived potential
impacts.
Currently, organizations are mainly involved in mere transactional relations, whereas collaboration and supplier
development are marked as important factors to improve environmental performance. The main focus is still on
the
individual corporation itself and perspective that incorporates all stakeholders’ views is yet rarely taken.
Environmental issues have not yet received priority status at most case companies hitherto, and their current
corporate focus on costs is attributed to the recent financial crisis while efforts on ESM are seen as costly,
opposing
a barrier to implementation. The main driver for compliancy to environmental regulations is avoiding penalties
and
thus costs, employing a rather reactive strategy. In contrast, the best practice cases point out that a corporate
social
responsibility and proactive stance to reduce reputation risks can optimize the supply chain with regards to
waste
and waste prevention. The best practice cases take a holistic approach, beyond cost-thinking and have
completely
incorporated a continuous improvement philosophy.
Therefore, to become proactive and induce waste prevention at the supply chain, companies must ensure that
their
top management is committed to continuous improvement on the three factors of corporate social
responsibility:
economic, social and environmental. When integrating these three pillars into the organization’s culture and
supply
management processes with a focus on supply base continuity and collaboration, their supply base will be more
likely to adopt the waste prevention policies which can lead to mutual benefits. Recognizing these benefits
beyond
the costs is deemed essential to initiate a proper sustainable supply chain management strategy. The focal firm
should allow learning from its supply base while giving support to the supply base whether in the form of
incentives or collaboration, training and involvement. Overall, supplier development is found to be the keystone
in
inducing waste prevention at the supply base.
Less is more: an evaluation of sustainable supply strategies 56
Contribution of research to theory
This research contributes to theory by empirically testing the feasibility of different ESMPs on one specific
environmental activity by means of a multiple case study within the Dutch manufacturing industry and refining
these results to the applicability within the shipbuilding industry. This research ratifies that certain ESMPs are
preferred to induce upstream waste prevention: evaluation and supplier development. Though unexpected
based on
the literature, supply incentives are seen as less probable to influence adoption of waste prevention policies at
the
supply base. This result might indeed be industry-specific. It is believed that the margins in the current
environment of Dutch manufactures cannot cover these expenses, and awards are not deemed to have a
substantially large impact. Complementary to previous studies on ESM this research indicates a need for
supplier
development and a holistic supply chain management approach. Still, in contrast to earlier research, the
traditional
transactional relationships are not largely replaced yet for a more comprehensive and responsible way of
managing
resources, risks and reputation. Again, this might be related to the specific industry. Regardless, two best
practices
confirm that the holistic approach is indeed beneficial to their company and supply chain. Furthermore,
according
to preceding academic statements, supply management is moving away from focusing on short-term financial
benefits to collaborative advantages on the long run. Then again, in contrast with previous research stating that
evaluation is limited as a tool, this ESMP is still preferred amongst the respondents of this research. The
selected
cases from the Dutch manufacturing industry value evaluation as it offers a direction and guide to
improvement. In
congruence with the literature, the role of selection is seen as limited. However, in practice selection and
evaluation
are deemed inseparable and seen as the first two steps that should be taken before any more mature supply
management practice can be adopted. Hence, this provides an additional factor to the literature on the
implementation of supplier development. With regards to implementation barriers this research confirms earlier
research, emphasizing the (perceived) financial burden. In contrast with the extensive literature on ample
benefits
of ESM, benefits on an economic level are only rarely pointed out by the respondents. In general, the research
contributes by assessing the supply-side perspective on the probability of positive responses to imposed
ESMPs by
the focal firm. This point of view builds upon previous research and considers the conditions under which
suppliers
are willing to engage in waste prevention policies.
57 Less is more: an evaluation of sustainable supply strategies
5.2 Managerial implications
From a managerial perspective, this research provides a guide for the implementation of environmental supply
management practices by ranking the ESMPs from most to less likely in inducing waste prevention at the
supply
base. Before implementing these practices, it should be noted that implementation is likely to face behavioral,
structural and economic barriers, especially when top management is not committed to greening its supply and
not
willing to spend time and money on developing the appropriate systems. Hence, top management
commitment is
vital. Top management commitment to ESM can be achieved by pointing out the economic benefits, the
regulatory
pressure and advantages of collaboration when engaging in environmental supply management. This state of
mind
is believed to be the starting point of any ESMP implementation. From here on, the steps that should be taken
to
engage the supply base in waste prevention are the following:
Incorporate environmental criteria into supplier selection and evaluation criteria as a first step, hereby
creating
environmental awareness among suppliers and the focal firm itself.
Evolve the purchasing function from operational to strategic by acknowledging the critical role of purchasing
in reducing the environmental and economic impact of primary processes. This transformation includes a
change in the hierarchy of procurement within the organization, as it should be seen as key performance driver.
From transactional relationships, procurement should move to exclusively focus on strategic partnerships that
consider the long run rather than the short-term.
Enhance the priority of environmental factors across the supply management culture that consider both the
focal firm and the supplier perspective. The focal firm has to ‘breathe’ the environmental supply management
culture, emphasizing the environment as a key priority in selecting and evaluating suppliers.
Include supplier development factors such as collaborative efforts and dialogue, training and involvement
into
the supply management processes focused on mutual benefits. Procurement has to point out the advantages
that can be reached on both sides.
Reap the benefits of a holistic supply chain that is sustainable and takes a proactive stance towards waste,
ahead of future environmental legislation.
Less is more: an evaluation of sustainable supply strategies 58
Implications for the practitioner
Defined as a concerned citizen in the sustainable supply chain management continuum (Hunt and Auster,
1990),
Damen has to take significant steps before it is able to induce adoption of waste prevention policies at its
supply
base. The main concern to implement ESM at Damen is the fact that the maturity of supply chain management
is
still low, partly related to its position in the hierarchy. As the company is fully client-driven, SCM is subordinate
to
sales. Product groups define the strategic purchases which implies that SCM is considered only at operational
and
tactical level, leaving little room for strategic supply management improvements. Whether from an economic,
social
or environmental standpoint, SCM has lower decision-making power than the product groups. Moreover, the
corporate policy is focused on costs. Therefore, it is advisable for the company to link the product groups closer
to
SCM. Whether this means changes within the organizational hierarchy or emphasizing the relationship between
these departments remains an issue to be decided by the practitioner. In any case, enhancing the
communication
and cooperation between these two departments is recommended. If strategic partners are considered by SCM
and
the product groups simultaneously, SCM will be more apt to properly manage these relationships from the
start. It
enables SCM to adequately select and evaluate suppliers based upon their criteria including environmental
concerns, whereas product groups now mainly focus on cost prices. Hence, it is advisable to bring procurement
to a
strategic level and evolve decision-making with respect to supply management to a shared discipline as well as
responsibility of both product groups and SCM. Moreover, a mindset change is recommendable to guarantee
accurate implementation of ESM. A mindset that considers the environment and the associated regulatory costs
as
a management priority, while acknowledging the potential benefits that can be reached along the supply chain,
spurs the implementation of ESM. When SCM has gained responsibilities at the strategic level, ESM practices
can
be implemented according to the steps indicated before. As Damen already maintains close relations with a
selection of its suppliers and is moving on the scale of the environmental management continuum, supplier
development is expected to be a logical next step.
59 Less is more: an evaluation of sustainable supply strategies
5.3 Limitations
First, during the exploration of practice, assumptions are made based upon data on waste amounts that are by
now
outdated. These assumptions might lead to discrepancies with regards to the associated relevance of specific
waste
types and the actual causes of waste. Since the further study is based upon this analysis, the research might
have
pursued a wrong direction in hindsight. Thereby, due to the non-availability of data or results on supply chain
management initiatives, there might be incongruities with the applicability of the results to the practitioner.
Secondly, the probabilistic nature of the hypotheses has a pitfall with regards to the usability for the
practitioner.
Testing a deterministic relation is preferred in managerial decision-making as they are stronger and are better
able
to predict outcomes (Dul and Hak, 2008). However, the probabilistic relation is equipped to study the research
topic which is a relatively new phenomenon within the industry and as a qualitative method was employed.
Thirdly, the choice of employing case research has some implications. With regards to drawing conclusions
from
the gathered data, generalizability is limited with multiple case studies (Voss et al. 2002; Yin, 2009). Thereby, the
sample size of this research is small due to limits in time, as well as willingness and availability of case
respondents.
Hence, this research is limited by the response bias of the interviewees. To validate all findings, a larger or more
specific sample focused on the shipbuilding industry is needed. Academic scholars not associated to any player
in
the industry may be better equipped to do so than myself.
Moreover, qualitative research is subordinate to biases and idiosyncrasies as it asks for perceptions of
interviewees
on their ideas of the case company’s environmental policy and activities and on how waste prevention can be
induced at the supply base. There can be a tendency among respondents to answer more favorably which
might
lead to a distortion of data. Stability of the data was achieved by conducting the internal interviews within one
week and the external interviews within one month time. In addition, respondents might be subject to the
selfserving
bias, attributing successes to internal factors and failures to external factors. However, these limitations
were restricted by asking several types of questions in order to outline the respondent’s circumstances and
perspectives in multiple ways. Additionally, interviews were recorded on tape to avoid bias and anonymity of
the
respondents was promised to avoid any possible valuation of the respondents within the internal organization
as
well as with external cases (Brymann and Bell, 2007). Still, the supply-side perspective analysis might be biased
as
the suppliers were informed of the practitioner’s involvement which may have led to distorted data on their
views.
Less is more: an evaluation of sustainable supply strategies 60
Furthermore, reliability is achieved by ensuring that measures are used consistently: the same computations are
applied to the different ESMPs for both internal and external cases. However, due to the fact that the research is
qualitative, repetition may result in different findings (Yin, 2009) since replicating this research can unlikely be
performed with the same cases and within the same time frame. To ease future replication, all research steps
including the data collection approach and interview protocol as well as all computations are described into
detail
(Chapter 4 and Appendix 10-13) and data gathered is made available as far as the cases’ confidentiality allows.
Lastly, validity is ensured by defining the ESMPs based upon previous literature on similar topics. Concurrent
validity was achieved by inquiring for general company information, enabling cross-examination and
explanation
for differences related to varying criteria. Construct validity was increased by using multiple sources of data and
consequently data triangulation (Voss et al. 2002; Yin, 2009) which enabled cross-examination.
5.4 Directions for further research
First, the developed theory could be tested in a different industry next to the shipbuilding industry, for instance
the
fast moving consumer goods industry (FMCG) or the high-end technology sector to increase the
generalizability of
this study. As these industries are primarily B2C, the corporate focus might differ from the construction industry
as
the company’s impacts are more directly related to the customer and social and environmental responsibility
might
have already gained more attention. As the success factors might also differ from the shipbuilding industry, a
specific case study within the same industry might provide useful results and new best practices.
Secondly, as this research is qualitative, an additional step in research could be to either test ESM practices in a
quantitative manner or use mixed methods to assess relations across ESMPs. Quantitative research might be
able to
provide a more concrete imperative to management to include green purchasing practices into their policies, as
it
can quantify the outcomes. Moreover, it would be interesting to compare cases that have implemented the
environmental supply management practices and relate these outcomes to the expectations of cases that have
not
yet implemented ESMPs using actual figures and results.
Thirdly, reproduction of this research in a longitudinal fashion might indicate whether the perceived impacts of
ESM practices do indeed lead to the expected results at the supply base. Additionally, it can be studied whether
issues have occurred during implementation, and if or how these are overcome. Furthermore, the impact of the
moderating variables could be studied into greater detail, assessing causality and causal relations across
constructs.
61 Less is more: an evaluation of sustainable supply strategies
From an agency-theory perspective, it might be relevant to investigate whether the background or (power)
status
of corporate decision-makers has an influence on the likeliness that ESM practices are adopted, whether at the
focal
firm or at the supply base. As it is not yet prevalent in the literature, continued research considering a supplier
perspective is recommendable as well as further research on the impacts of supplier development specifically.
From a practical perspective, it could be interesting for Damen to investigate whether the lack of customer
pressure
with regards to environmentally-friendly products and manufacturing could explain the fact that the company
lags
behind in comparison to other companies and industries.
In general, more theory building is needed within ESM with additional confirmatory empirical data.
Less is more: an evaluation of sustainable supply strategies 62
Appendix
1) Damen Shipyards Group
The Damen Shipyards Group structure and the headquarters’ cluster are depictured below.
Figure 7 Damen Shipyards Gorinchem and cluster
63 Less is more: an evaluation of sustainable supply strategies
2) Project plan
Following the project plan of Van Aken et al. (2007), the exploration of practice involved a background and SWOT
analysis.
Simultaneously, literature was reviewed on the relevant topics connected to the knowledge need, in order to frame
generic
processes and techniques.
Figure 8 Project Plan Research Project
Less is more: an evaluation of sustainable supply strategies 64
3) Stakeholder map
Stakeholder analysis DSGo
Type Examples of specific stakeholders Damen Concerns vis-à-vis environment
NGOs
e.g. Greenpeace, UN, International Maritime Bureau
(IMB), Maritime and Coastgard agencies, MARPOL
convention, Living Seas program, Off the Beach
campaign
Climate change management, use of resources
and hazardous materials, waste management
and disposal, ship dismantling and end-of-life
procedures
Customers
B2C: individuals (mega yachts)
B2B: ports (tugs, workboats), fishermen (fishing
vessels), offshore (high speed craft and platform
supply vessels), dredging companies (equipment and
vessels), governments (e.g. ministries of defense for
naval vessels), shipping corporations (short-sea and
cargo vessels), municipalities (e.g. ferries), current
ship owners (repair)
Corporate responsibility, low footprint of
vessel e.g. lower emissions, competitive and
sustainable vessels (durability)
Suppliers
Ranging from small parts suppliers (e.g. nuts/bolts)
to critical items such as ship engines supplied by
Caterpillar and PON
Sustainability in supplier relations, risksharing,
use of sustainable resources, locality,
low footprint of logistics
Science Cooperation with engineers from TU Delft, TNO,
Marin
Knowledge generation and cooperation on
environmentally-friendly vessels
Employees
Trade union Metalektro, trade union FNV, works
council
Knowledge generation, awareness and clear
(assigned) responsibilities and/or awards on
green initiatives
Financial market Banks, especially for loans and pre-financing options
for customers.
Corporate social responsibility, continuity of
business, financial opportunities with ‘green’
and sustainable markets
National
authorities and
government
agencies
e.g. Dutch government, Municipality of Gorinchem,
Ministry of Infrastructure and Environment (MIM)
and Rijkswaterstaat, Committee of Avelingen-West
and Oost, International Maritime Organization
(IMO)
Sustainability trends and prospects,
sustainable mobility, regulations on waste
management, disposal and pollution of the sea,
quality of ecology e.g. of the river Merwede and
the near nature reserve.
Neighbors
Inhabitants of the city Gorinchem, near villages and
cities, neighboring companies on Avelingen-West
and Oost.
Sustainability with regards to water, land and
air
Classification
institutions Lloyds Register The Netherlands
Correct EMAS and environmental procedures,
compliance with regulations and standards
Table 8 Stakeholder map
65 Less is more: an evaluation of sustainable supply strategies
4) Waste categories
Office waste Ferrous scrap (zinc) Hazardous waste:
Wood B Ferrous scrap (steel) Displays
Paper Ferrous scrap (aluminum) Fridges/freezers
Glass Office waste
Frying fat Waste oil bulk Lead batteries
Pallets Oil booms Aerosols
Oil-water sludge mixtures Silicone cartridges
Empty paint packaging Bilge water Oleiferous waste
Paint sludge Cloths Grease
Barrels Filters Paint (Solid, Pasty)
Blasting grit Empty packaging of metals/plastic
Construction waste Rust / Sludge Adhesive Resin Kit
Fat Tires and Rubber fenders
Asbestos Film Oil filters
Green waste Paint related products
Table 9 Waste categories at DSGo
Less is more: an evaluation of sustainable supply strategies 66
5) Waste streams
The table below summarizes the processes, the types of waste that are generated and the according disposal
contractors. The
yellow notes point out the two major polluters – the types of waste that generate the largest amounts.
Figure 9 Waste streams at DSGo: visual estimation
67 Less is more: an evaluation of sustainable supply strategies
7) Organizational chart
The figure below presents the organizational chart of DSGo and its according cluster. It shows that Supply Chain
Management
(Logistics in this figure) is a supporting department to the different product groups, who – in contrast – are in direct
line with
the sales department. Sales reports directly to management and has a major role within the organization, mainly due
to the
client-driven approach.
Figure 10 Organizational chart DSGo and cluster
69 Less is more: an evaluation of sustainable supply strategies
8) SWOT analysis
Strengths Opportunities
Commitment to continual improvement
Key player in shipbuilding industry
Reputation: innovative and high-quality
Good relationship with suppliers and high level of
cooperation with regards to Green Passport
Large amount of waste thus a high potential of value
recovery
Supplier Non Conformity (SNC) library recording
incorrect deliveries and packaging is established
Green and collaborative initiatives are launched already
(e.g. QLIFT)
No industry champion yet: first-mover advantage
Competitive advantage: higher resource efficiency and
differentiator ‘green supply chain’ chain
responsibility starts upstream: include suppliers,
provide basis for shared competitive advantage
Digitalizing information flow: higher availability and
transparency of information
Avoiding double work – reduce time and motion waste
simultaneously (green wastes)
Green and aware customers: market potential
Using renewable resources and recycled material
Weaknesses Threats
Lack of top-down environmental commitment
Lack of awareness employees and ease of using new
items no scarcity in parts inventory
Coordination failures on transport modalities
Suppliers: resistance to look for alternative ones due
to ‘years of friendly relationship’
Non-existing classification of waste streams based upon
location leading to lack of knowledge on quantities of
waste generated and thus urgency
Ambiguous ownership of ‘problems’ whether it
concerns waste or supplier defaults
Cleanliness vs. availability of waste bins
Speculative construction: need to rebuild, part of
company philosophy
Legislation: legislative sanctions and liability
Higher procurement costs due to depletion of
resources and rising prices of commodities caused by
increased global consumption and production
Supplier resistance: losing critical suppliers, longer
lead time, higher costs of delivery
Competition: green solutions by competitors, with
higher efficiency and lower costs
Upcoming legislation and economic measures with
regards to waste (prevention)
Rising disposal costs
Reputational risk
Table 12 SWOT analysis: waste prevention at DSGo
Less is more: an evaluation of sustainable supply strategies 70
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i Notion of sustainable development as defined by the World Council on Environment and Development (WCED) in 1987:
‘development meeting
the needs of the current generation without compromising the ability of future generations to meet their own needs’
ii The concerned citizen status of Hunt and Auster (1990) is given to corporations that ‘express a commitment to good environmental
management
but have not yet implemented effective, far-reaching, proactive programs’. Environmental departments are existent but are not
placed high in the
corporate hierarchy.__