S U P P LY C H A I N M A N A G E M E N T

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 S U P P LY C H A I N M A N A G E M E N T

A
SUSTAINABLE
SUPPLY
CHAIN JUST THE FACTS

As part of a quality operations indepen-

dent study, the authors established a tool
that can be used readily by businesses to
holistically evaluate their supply chains A new tool to
according to the sustainability triple improve supply
bottom line of people, planet and profit. chain sustainability
The authors reviewed secondary liter- by Jillian Kessler
ature to identify tools that may exist with Lisa M. Walters
already and constructed a survey from
that analysis, which was administered
to several businesses. A tool built from
the quality management ideas of failure
mode and effects analysis and matrix
analy­sis resulted.

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 S U P P LY C H A I N M A N A G E M E N T

I
t’s a given that an organization’s sustainability depends on New York state, and I found myself limited
its profitability. However, it’s not just about the money. in how I would finish my study. My men-
Achieving key economic standards is mainstream and tor—Lisa Walters—and I constructed a
expected—but in a world faced with the threats of contingency plan to continue the study,
climate change, disease and famine, it’s important to albeit not at the depth that would be ideal.
follow environmental and societal standards as well.1 Our work presented here should be
Three components—profit, planet and people— considered a limited case study, with
​comprise what we consider sustainability,2 also known the resultant sustainability measure-
as the triple bottom line (TBL).3 This notion of sustain- ment tool (SMT) serving as a potential
ability is widely accepted as one of the most important tool that is readily available for those
factors of organizational growth and development.4 The implication interested in improving their supply
here is that a business that is unsustainable runs the risk of limited chain’s sustainability.
survival. Because the supply chain connects products and services to
customers throughout the world, it makes sense to look at the supply The indicators, SMT and triple
chain with an eye to sustainability.5 Achieving this type of analysis bottom score (TBS)
can be difficult, precluding an organization from adopting this sus- I searched the literature to find a clear
tainability in the supply chain focus. That difficulty is what brought definition of sustainability, pre-existing
me to my study. tools to measure it and relevant informa-
In spring 2020, I graduated from a small western New York univer- tion about the TBL that would lend itself to
sity with a bachelor's degree in business administration management. measurement. Early work by Joseph Fiksel,
As part of an independent project, I studied how organizations might Jeff McDaniel and David Spitzley provides a
readily evaluate their supply chains and any potential suppliers in concise definition of sustainability: “Meeting
terms of the TBL. As my work began in earnest, COVID-19 struck the needs of the present without compromis-
ing the ability of future generations to meet
their own needs.”6
This definition is consistent with the TBL literature,
so I determined that my model would focus on economic,
environmental and social metrics that support an organiza-
tion’s ability to meet future needs.
The literature revealed a variety of methods for
measuring supply chain sustainability. We identified
This notion of sustain-
a familiar tool, the balanced scorecard (BSC), a com-
ability is widely accepted monly employed strategy tool that lends itself to not
as one of the most only measurement but also control.7 In applying
important factors of the BSC in the study, the researchers coupled
the tool with a development envelope analysis
organizational growth (DEA), combining the qualitative analysis from
and development. the BSC with the quantitative robustness of the DEA.
This example is a terrific method, but it is complicated.
To construct a simpler model, I attempted to identify
the best indicator an organization might consider when
determining a particular sustainability component. This
indicator is the driving indicator. The literature repeatedly
identified profitability as the economic indicator,8 so what

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TA B L E 1 I was left to identify was a driving indicator for

each of the remaining components. I constructed

Importance of social and a survey and administered it to supply chain pro-

fessionals in 20 different organizations in various

environmental indicators
industries. Eleven surveys were returned.
To construct the survey, the indicators gleaned
from the literature review were cross-referenced,
commonalities were identified and five indicators
In your opinion, rank the following SOCIAL indicators from most important (1)
to least important (5). were selected. We asked respondents to rank the
_ Benefits (for example, paid leave, gym availability and healthy foods) indicators, with one being the most important and
and pay (living wages) five being the least important. The importance
_ Societal reputation indicators for the social and environmental
_ Safety (accident/injury protections) consideration are illustrated in Table 1.
_ Employee turnover rate The choices among social indicators were
_ Employment gender ratio benefits and wages, societal reputation, safety,
employee turnover rate and employment gen-
der ratio. The environmental indicators were
In your opinion, rank the following ENVIRONMENTAL indicators from most
important (1) to least important (5). green infrastructure, air/land/water pollution
_ Green infrastructure (for example, solar panels and LEED-certified buildings) when making products, air/land/water pollution
_ Air/land/water pollution generation when making products (including transportation) when discarding products, length of product life
_ Air/land/water pollution generation when discarding products (for example, recyclability) and percentage of hazardous materials used in
_ Length of product life product manufacturing (generation and use of
_ Percentage of hazardous material used in product manufacturing hazardous materials).
In addition to investigating the importance of
LEED = Leadership in Energy and Environmental Design the indicators, we also sought to understand how
easily an organization could acquire information
about the nature of that indicator from a supplier,
TA B L E 2 as that organization perceived that accessibility.
These survey questions are illustrated in Table 2.

Accessibility of social and

Table 2 mirrors of Table 1 but with an emphasis
on accessibility. In terms of Table 2, a rank of five

environmental indicators
indicates information that is difficult for an orga-
nization to obtain from a supplier to a rank of one,
indicating information that is easily obtained.

In your opinion, rank the following SOCIAL indicators from most available (1)
to least available (5) in terms of ease of access from your supplier(s).
_ Benefits (for example, paid leave, gym availability and healthy foods) and pay
(living wages)
_ Societal reputation
_ Safety (accident/injury protections)
_ Employee turnover rate
_ Employment gender ratio
In your opinion, rank the following ENVIRONMENTAL indicators from most
available (1) to least available (5) in terms of ease of access from your supplier(s).
_ Green infrastructure (for example, solar panels, LEED-certified buildings)
_ Air/land/water pollution generation when making products (including transportation)
_ Air/land/water pollution generation when discarding products (for example, recyclability)
_ Length of product life
_ Percentage of hazardous material used in product manufacturing
LEED = Leadership in Energy and Environmental Design
Survey says ...
For the TBL component “social,” benefits emerged
as important, with a mean value of 1.73. With regard
to the statistical difference among the indicators,
benefits was statistically more desirable than all
indicators except safety, which had a mean value
of 2.18. In terms of accessibility, respondents per-
ceived their ability to obtain information regarding
benefits as achievable, providing a mean value of
2.36. Safety demonstrated an accessibility mean
of 1.91, also indicating perceived achievability in
obtaining this information.
Additionally, all indicators except gender were
statistically similar, as determined by one-way
analysis of variance (ANOVA). Because safety
often is driven by regulation as opposed to altruis-
tic initiative, benefits was selected as the driving
indicator for the TBL social component.

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 S U P P LY C H A I N M A N A G E M E N T

For the TBL component “environment,” the single driving the place of severity, occurrence and detection in the FMEA.
indicator in terms of lowest mean appeared to be generation Each driving indicator identified through the survey is oper-
and use of hazardous materials, with a mean score of 2.18. ationally defined and anchored with numeric values, rating
A one-way ANOVA illustrated, however, that this indicator each indicator with values of one through five, with five
wasn’t statistically different from any other indicator except representing the most desired score. The ratings represent
green infrastructure. This indicator had an accessibility an average value for that indicator over the fiscal year. And
mean of 2.82. A one-way ANOVA of the responses indicated instead of the RPN associated with FMEA, the product of
that all indicators were similar in terms of perceived acces- the economic, social and environmental components in the
sibility. Thus, the similarity among the indicators poses SMT results in a TBS, which provides insight into suppliers’
a problem in selection. TBL competence.
As noted earlier, profitability was To operationally define each indica-
selected as the economic indicator. tor and provide the one-to-five rating,
This was validated by the survey, we consulted the Corporate Finance
as the question that sought to Institute, which said that profit mar-
determine what organizations gin is an excellent indication of a
measured returned economic company’s profitability.12 Further,
profitability exclusively in more as a general rule, a 10% net profit
than half of the respondents margin is considered average,
The FMEA approach
(six of 11). Two of 11 respon- a 20% margin is considered
dents indicated that their provides a systematic high and a 5% margin is
organization considered method for identify- considered low. I used
all three aspects of ing all possible failures these data to establish
the TBL. The remain- operationally the ratings
ing three respondents
in a design, process, of three for average, five for
used economic, but they product or service. high and one for low. A rating
also considered either the of four would apply to profit
environmental or social factors. margins between 10-20%, while
a rating of two would mean profit
Now what? margins between 5-10%.
We considered two tools for supply My research in terms of benefits
chain sustainability analysis: the risk identified four major benefit areas:13
matrix, and failure mode and effects medical, life, disability and retirement.
analysis (FMEA). The risk matrix, which Additionally, an organization could offer
plots the severity of an event against the probability of that some icing on the cake in terms of employee assistance
event, is a semi-quantitative tool used in a variety of indus- programs or even pet insurance.14 To operationally define
tries.9 Hallmark to the approach is the color-coding scheme benefits, we determined an organization offering all four
in which red represents unacceptable risk, green represents major types of benefits as well as additional benefits would
acceptable risk and yellow represents risk that is as low as be rated a five. A supplier offering the four main types of
reasonably possible.10 benefits would receive a rating of four, and so on. If no
The FMEA approach provides a systematic method for benefits were received, suppliers would receive a zero rating
identifying all possible failures in a design, process, product for the social factor and be removed from consideration.
or service. Next, it evaluates the effects of these failures, To measure the environmental component—which, as
along with the notions of severity of the failure, the probabil- noted earlier, provided no clear driving indicator—I evalu-
ity of the failure or cause of the failure occurrence, and the ated fines associated with Environmental Protection Agency
ability to detect either the failure or its cause. Each of these (EPA) violations.15 Coupling these violations with the other
notions is anchored in terms of an operational numerical environmental indicators from the driving indicators survey,
definition, whose product provides a risk priority number I posed the following ratings:
(RPN) for each failure mode, design, process or product/ –
Five: Suppliers with no EPA violations and some level of
service from which the organization can improve.11 the four environmental considerations (water conserva-
The SMT represents a hybrid of these two tools. Each of tion efforts, waste reduction efforts, pollution mitigation
the TBL factors (economic, social and environmental) takes processes and freedom from hazardous waste generation).

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TA B L E 3
Key to operational ratings, TBL components
Key 1 2
Provides one of the four
main types of insurance
Social (medical, life, disability
and retirement).
Economic 5% profit margin.
Maintain and execute one
of the four environmental
Environmental considerations, and receive
no EPA violations, or one
criminal administrative
action from the EPA.
EAP = employee assistance program
EPA = Environmental Protection Agency
TBL = triple bottom line
Provides two of the four
main types of insurance
(medical, life, disability
and retirement).
5–10% profit margin.
Maintain and execute two
of the four environmental
considerations, and receive
no EPA violations or one
criminal administrative
action from the EPA.
3 4
Provides three of the four
main types of insurance
(medical, life, disability
and retirement).
10% profit margin.
Maintain and execute three
of the four environmental
considerations, and receive
no EPA violations or one
criminal administrative
action from the aEPA.
S U P P LY C H A I N M A N A G E M E N T
5
Provides all four main
types of insurance
Provides all four main (medical, life, disability
types of insurance and retirement) as well
(medical, life, disability as additional benefits
and retirement). such as EAP, time off,
health and wellness,
or scholarships.
10–20% profit margin. 20% profit margin.
Maintain and execute Maintain and execute
four environmental some level of the
considerations, but four environmental
may have one criminal considerations, and
administrative action receive no EPA violations.
from the EPA.
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TA B L E 4

Example of completed SMT

Supplier/
supply Social Economic Environmental Total
chain
1 4 3 5 60
2 5 5 4 100
3 1 4 2 8
4 2 5 3 30
5 2 2 1 4

SMT = sustainability measurement tool

– Four: Suppliers that maintained and executed the four environ-

mental considerations but may have one criminal administrative
action from the EPA.
– Three: Suppliers that maintained and executed three of the envi-
ronmental considerations and received no EPA violations or one
criminal administrative action from the EPA.
– Two: Suppliers that maintained and executed one or two of the
considerations and received no EPA violations or one criminal
administrative action from the EPA.
– One: Suppliers that maintained and executed one of the four
environmental considerations and received no EPA violations
or one criminal administrative action from the EPA.
– Zero: Suppliers that received any formal court actions
(civil, judicial or criminal) from the EPA.

Both tools could be

tested in parallel to
determine whether
better discrimina-
tion exists among
supplier scores.

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TA B L E 5

Ranges and actions for READ MORE

the triple bottom score
Range Meaning
This supplier is good to go and should just continue
80+ to be monitored by some sort of contractual means.
This supplier is also a good choice; however, opportunities
exist for further improvement. It could be beneficial to
35-79 partner with the supplier to assist in achieving desired
improvements. As with the highest-level supplier, this
supplier should be monitored.
This supplier is simply average. Contractual obligations
25-34 for improvement should be specified and monitored.
This supplier is undesirable. It should only be used in
difficult circumstances, such as a mono supplier, or as a
5-24 backup if necessary. If it is used, specific conditions should
be applied contractually and monitored.
This supplier should be removed from the supply chain or
approved supplier list. Only extreme circumstances should
<5 warrant its use, and if it is used, specific conditions should
be applied and contractually monitored.
Through its partnership with the American Productivity
and Quality Center, ASQ offers hundreds of bench-
marking reports and studies. Many are related to supply
chain management, such as “Planning for the Supply
Chain of the Future” and “Supply Chain Priorities During
the Year of COVID-19.” Check out these reports and
more at https://tinyurl.com/apqc-scm.
chain appears to be supplier two, followed by supplier one.
Supplier four appears to lend itself to contractual obligations
for sustainability improvement, with weaknesses in the
social component.
Table 5 provides suggested actions for each TBS.
These ranges were determined by taking the product
of every combination of indicator values and determining
categories by graphical analysis.

Each component was scored in terms of the operational
definitions for each indicator, as seen in Table 3 (p. 21).
The product of the scores was calculated for each supplier,
allowing for completion of the SMT, illustrated in Table 4.
If an organization wanted to measure the entire supply
chain, the critical suppliers are listed down the far left column
of the SMT, and the resulting TBS of each individual supplier
would be summed to understand the sustainability of the
entire chain.
In Table 4, for example, the total TBS would be 202,
with suppliers three and five posing the worst sustainability
measures with regard to the social and environmental com-
ponents, respectively. The most sustainable supplier in this
Improving the tool
Because of COVID-19, we were unable to complete valida-
tion of this tool. Consequently, room for improvement and
adjustments exists. One improvement is the development of
an SMT that uses a 10-point scale, the current best practice
for FMEA.16 Both tools could be tested in parallel to determine
whether better discrimination exists among supplier scores.
Another later area of improvement is the development
of indexes rather than one driver for each TBL component.
We look forward to finding willing and expert participants
to engage in this important topic.  QP
EDITOR'S NOTE
References in this article can be found on the article's webpage at qualityprogress.com.

Jillian Kessler is a PAC-3 delivery assurance associate for Collins Aerospace Co. in Vergennes, VT. She received a bachelor’s degree in
business management, quality management in the supply chain, from the State University of New York at Fredonia. Kessler was a student
member of ASQ and is a recipient of the Fredonia School of Business Yellow Belt award.

Lisa M. Walters is an associate professor at the State University of New York at Fredonia and a faculty advisor for the ASQ Fredonia chapter.
She also is a certified specialist in blood banking from the American Society for Clinical Pathology and serves on the medical-technical advisory board
of the American Association for Laboratory Accreditation. She received her doctorate in management from California Coast University in Santa Ana,
CA. A senior member of ASQ, Walters is an ASQ-certified quality auditor. She is the author of Romancing the Big Q: Dancing With the Quality Gorilla
(American Association of Blood Banks, 2012).

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