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Sustaining supply chain management in New Zealand

Article  in  International Journal of Logistics Systems and Management · January 2006

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 Int. J. Logistics Systems and Management, Vol. 2, No. 3, 2006 217

111
2 Sustaining supply chain management in New Zealand
3
4
5 C. Basnet*, P. Childerhouse, L.R. Foulds and
6
7 V. Martin
8 Department of Management Systems, Waikato Management School,
9 University of Waikato, Private Bag 3105, Hamilton 2020,
1011 New Zealand
1 E-mail: chuda@waikato.ac.nz E-mail: pchilder@waikato.ac.nz
2 E-mail: lfoulds@waikato.ac.nz E-mail: valeriem@waikato.ac.nz
3 *Corresponding author
4
5 Abstract: This paper reports on an exploratory study of supply chain
management practices in New Zealand. The results from our survey of
6 New Zealand manufacturers indicate that there has been a significant
7 increase in the general awareness of lean manufacturing, supplier integration
8 and quality improvement strategies. However, practice is still lagging
9 behind. We present these results and discuss challenges that are currently
2011 being faced by New Zealand organisations seeking to sustain and improve
their supply chain management processes. Certain facets of supply chain
1 management that require special emphasis in the New Zealand scene are
2 discussed and some examples of companies overcoming their supply chain
3 management challenges are presented. Finally, we summarise our conclusions
4 and indicate directions for further research.
5
Keywords: design; management processes; quality; supply chain management;
6 sustainability.
7
8 Reference to this paper should be made as follows: Basnet, C., Childerhouse,
9 P., Foulds, L.R. and Martin, V. (2006) ‘Sustaining supply chain management
30 in New Zealand’, Int. J. Logistics Systems and Management, Vol. 2, No. 3,
pp.217–229.
1
2 Biographical notes: Chuda Basnet is an Associate Professor at the Waikato
3 Management School, New Zealand. He has received a Bachelor’s degree in
4 Mechanical Engineering, a Master’s degree in Industrial and Management
5 Engineering, and a PhD in Industrial Engineering and Management.
His research interests are in the areas of manufacturing modelling, supply
6 chain management and decision support systems. He has previously published
7 in Decision Support Systems, the Journal of the Operational Research Society,
8 and the Annals of Operations Research.
9
40 Paul Childerhouse is a Senior Lecturer at the University of Waikato,
New Zealand. He obtained a PhD from Cardiff University whilst a researcher
1 in the Logistics Systems Dynamics Group. His research interests include
2 enabling supply chain change and supply chain classification. He has first-hand
3 industrial experience of the automotive, aerospace, dairy, construction and retail
4 sectors.
5
Les Foulds is Professor of Manufacturing Management at the Waikato
6 Management School, University of Waikato, New Zealand. He received a BSc
711
8

Copyright © 2006 Inderscience Enterprises Ltd.

 218 B.C. Basnet, P. Childerhouse, L.R. Foulds and V. Martin

111 in Mathematics in 1970 and an MSc with honours in 1972, both from The
2 University of Auckland, and a PhD in 1974 from Virginia Polytechnic Institute.
His main area of research is the development of decision support systems
3
for logistics, transportation and supply chain management. He has published
4 numerous articles on these topics in journals such as: Decision Support Systems,
5 Asia-Pacific Journal of Operational Research, Operations Research,
6 Management Science, the European Journal of Operational Research, Journal
7 of the Operational Research Society, and Annals of Operations Research.
8 Valerie Martin has an MSc in Information Management (Strathclyde University,
9 UK), and a PhD in Computer Integrated Manufacturing (Cranfield University,
1011 UK). She has had substantial research and consulting experience in the areas of
1 information management and knowledge management. Her main interest is
2 enhancing understanding in the organisational context in which information
systems function and she has specialised in manufacturing, supply chain,
3 financial services and small companies. She also has considerable experience
4 as a facilitator of learning clusters for small companies. Prior to taking up
5 a lecturing position at Waikato University, New Zealand, she was a research
6 fellow at Brunel University in London, UK.
7
8
9
2011 1 Introduction
1
2 Improved supply chain management (SCM) capability is critical to many New Zealand
3 organisations, which are often distant from their suppliers and markets, in their efforts to
4 compete in ever more demanding business environments. This is because New Zealand
5 supply chain managers along with their international counterparts, are being confronted
6 with: growing competition, pervasive change, relentless advances in technology,
7 ever-shorter life cycles, and alterations to the openness of markets. Better communications
8 and logistical innovations have increased global accessibility. Technological advances and
9 economic development have increased market opportunities but also created more
30 national and international competitors and, increasingly, greater expectations from
1 customers. Many supply chain managers are realising that traditional approaches are
2 inadequate for keeping up with these changes. These approaches do not provide the
3 means or the incentives to make the necessary continuous changes to remain competitive.
4 To stay in business, supply chain managers need to think and act differently, and the
5 changes required of them are profound. What differentiates ‘leaders’ from ‘laggers’
6 is the ability to provide, in a consistent and sustainable fashion, products and services
7 that reflect higher quality, lower price, higher speed of transportation and greater agility.
8 Among the concepts proposed to achieve these goals are: lean manufacturing, better
9 design and quality practices and environmental sustainability.
40 The primary goal of the research reported in this paper is to assess and facilitate the
1 adoption of the above concepts in New Zealand. This paper reports on an exploratory
2 study of supply chain management practices in New Zealand. The results from our
3 survey indicate that there has been a significant increase in the general awareness of
4 lean manufacturing, supplier integration and quality improvement strategies. However,
5 practice is still lagging behind. We present these results and discuss challenges that are
6 currently being faced by New Zealand organisations seeking to sustain and improve their
711 supply chain management processes. Certain facets of supply chain management that
8
 Sustaining supply chain management in New Zealand 219

111 require special emphasis in the New Zealand scene are discussed and some examples
2 of companies overcoming their supply chain management challenges are presented.
3 The next section presents a literature review of empirical SCM studies and SCM
4 in New Zealand. This is followed by a discussion of sustainable SCM practices, including
5 the current state of SCM in New Zealand. We then present our conclusions.
6
7
8 2 Literature review
9
1011 While there is plenty of published literature that explains or espouses SCM, there is
1 a relative lack of empirical studies examining SCM practices. Watts and Hahn (1993)
2 reported on a survey carried out to assess the extent and success of supplier development
3 programmes. They found these programmes to be broad in scope and quite relevant (63%),
4 especially among the larger firms surveyed. The aim of these programmes was more to
5 improve the quality and cost of the purchased products than to improve the capability of
6 the supplier. Krause (1997) carried out a survey of firms on the extent of supplier
7 development activities and on the benefits accrued from the activities. The responding
8 firms participated more often in limited involvement such as supplier evaluation and
9 feedback, site visits, requests from improved performance, and promises of increased
2011 present or future business, than in extensive involvement such as the training/education
1 of suppliers’ personnel or investment in suppliers’ operations. While the supplier
2 development efforts were generally fruitful, the buying firms were not very satisfied
3 with the results. From this study, Krause (1997) suggested a three-pronged approach
4 of competition, business incentives, and direct involvement in supplier’s operations.
5 Galt and Dale (1991) studied 10 organisations in the UK, and found that they were
6 working to reduce their supplier base, and to improve their communications with the
7 suppliers urgently. Tan et al., (1998) sought a relationship between firms’ SCM practice
8 and their performance. They were able to show positive and significant correlation
9 between certain SCM practices and performances of their respondent firms.
30 One of the main tenets of supply chain management is integration. A number of
1 studies have investigated how well supply chains are integrated in practice. The findings
2 are not encouraging: Towill et al. (2000) identified that most companies are struggling
3 with internal integration let alone attempting the difficult task of external integration.
4 These findings are backed-up by Fawcett and Magnan (2002), who discovered that 47%
5 of firms have not progressed past integration of their internal operations. This is also borne
6 out in the study of Al Falah et al. (2003) who found that Saudi manufacturers are in
7 the early stage (internal integration) of supply chain integration. A survey by Poirier and
8 Quinn (2003) further validates these findings.
9 Turning now to internal SCM activities of firms, Jayaram et al. (1999) found in
40 their survey of US automotive supplier industry that time-based performance was
1 positively related to business performance. Further, the action programmes of preventative
2 maintenance and standardisation had significant relationship to time-based performance.
3 Shah and Ward (2003) investigated four ‘bundles’ of lean manufacturing practice:
4 Just-In-Time (JIT), Total Quality Management (TQM), Total Preventive Maintenance,
5 and Human Resource Management, and used a survey of US manufacturers to measure
6 the relationship of these bundles to operational performance. They found that the
711 implementation of each of these bundles significantly improved operational performance
8
 220 B.C. Basnet, P. Childerhouse, L.R. Foulds and V. Martin

111 of the respondents. Yarrow et al. (2000) examined the adherence to excellence in
2 manufacturing practices by firms in North East England. A total of nine performance
3 criteria were used: process capability, maintenance, housekeeping, kanban, supplier
4 relationship, internal defects, progress chasing, customer delivery and customer
5 satisfaction. The average scores (on a scale of 1–5) ranged from 2.55 to 3.27, thus
6 indicating a mediocre performance by the respondents.
7 Abdul-Aziz et al. (2000) compared quality practices of manufacturing industries in the
8 UK and Malaysia. They found that sampling inspection was more prevalent than the use
9 of modern preventative quality practices. The UK industry had a higher incidence of
1011 ISO 9000 registration, but the Malaysian industry had a higher use of quality improvement
1 teams. Chin et al. (2002) surveyed Hong Kong manufacturing industries exploring the
2 importance placed by them on seven core quality areas and their performance in
3 these areas. Customer focus and leadership were perceived to be the most importance
4 areas, however customer focus strategies were practised the most, while leadership
5 strategies were practised the least. Laugen et al. (2005) found from their survey that
6 the best-performing companies were distinguished by their level of adoption of process
7 focus, pull production, equipment productivity and environmental compatibility.
8 Many articles have been published studying the design practices of manufacturing
9 firms. Meybodi (2003) in his study of firms that had implemented just-in-time
2011 manufacturing practices found that these firms had better new product development
1 process. He found that, compared to traditional firms, JIT firms performed better in
2 product quality, product development time, product development cost, manufacturing
3 cost and frequency of new product introduction. Primo and Amundson (2002) found
4 positive effects of supplier involvement on new product development.
5 An important aspect of supply chain management is reducing environmental waste
6 and pollution throughout the supply chain. Florida and Davison (2001) surveyed US
7 manufacturing firms to determine their adoption of environmental management systems
8 (EMS) and the benefits accrued from the adoption. They found that a fairly large number
9 of manufacturers were turning to EMS, and reported substantial financial as well as
30 community benefits. King and Lenox (2001) examined the relationship between lean
1 manufacturing and environmental performance through a survey-based research.
2 They found that lean production is indeed associated with lesser emissions, that is,
3 ‘lean is green’. Montabon et al. (2000) examined the impact of the implementation of
4 ISO 14000 environmental standards on firm performance. They found that the
5 performance of firms in each of 14 dimensions was significantly related to the stage of
6 ISO 14000 certification.
7 In general, researchers have found a correlation between a firm’s performance and
8 their adoption of good SCM practices. However, the average level of adoption is generally
9 found to be low. In this paper, we contribute further to the study of this significant gap
40 between theory and practice in supply chain management.
1 Turning now to SCM practices in New Zealand, previous studies (Anonymous, 1994)
2 have found that New Zealand manufacturers were generally lagging behind in the
3 application of new concepts in manufacturing. Corbett and Bayly (1991) surveyed
4 Just-In-Time (JIT) implementers in New Zealand to determine the perceived benefits,
5 success factors and problems related to JIT implementation. The respondents did not
6 find JIT implementation suitable for all manufacturing operations, especially where
711 overseas suppliers were involved. Hyde et al. (1995) concluded from their survey of
8
 Sustaining supply chain management in New Zealand 221

111 New Zealand manufacturers that the prevalence of world class manufacturing practice
2 was low, although some exceptions existed. The low educational levels of the work force
3 and their supervisors, and the isolation of New Zealand were seen as formidable barriers
4 to the diffusion of world-class practices in manufacturing. Corbett (1998) carried out a
5 cross-country comparison of manufacturers along the measures of quality, inventory
6 and delivery. He found that New Zealand was behind other countries in terms of stock
7 turnover and on-time delivery.
8 Batley (1996) studied the best manufacturing practices in Australia and New Zealand
9 and examined the link between manufacturing practices and firm performance.
1011 They found that firms had improved their practices in the preceding five years.
1 There was also a strong correlation between adoption of best manufacturing practices
2 and performance in the areas of sales growth, export growth and cash flows.
3 Corbett (1996) found that globally-orientated manufacturing firms emphasised more on
4 quality improvement, process improvement, and design for manufacture, and these
5 firms had world-class manufacturing performance. Batley (1999) reported that there
6 was general acceptance of the concepts of total quality management in New Zealand,
7 although not all tenets were practiced. Knuckey et al. (1999) adapted the best practices
8 model of Australian Manufacturing Council (Anonymous, 1994) to further assess the
9 manufacturing practices in New Zealand. They found that New Zealand firms had
2011 improved their practices in a holistic way. In particular, the improvement was focused on
1 the relationships in the supply chain, from the suppliers to the customers.
2 On the negative side, they stressed that improvements were needed in the areas of human
3 resource management, technology, and benchmarking. However, Knuckey and Johnston
4 (2002) found that the focus in supply chain relationships was more on customers rather
5 than suppliers. A recent study of Australian and New Zealand logistics competences,
6 by Mollenkopf and Dapiran (2005) concluded that firms in these countries tend to be
7 working on their internal logistics/supply chain processes and generally lack externally
8 orientated capabilities. Apart from these studies, there is a dearth of empirical studies
9 on SCM practices in general, and specifically in regard to New Zealand. This paper aims
30 to fill this gap in the literature.
1
2
3 3 Exploring supply chain management practices in New Zealand
4
5 Basnet et al. (2003) used a postal survey of New Zealand manufacturers to benchmark
6 their SCM practices. Twenty five commonly cited SCM practices from the literature
7 were identified to describe the construct of SCM practices. These included practices
8 related to supply and materials management issues, operations, information technology
9 and sharing, and customer service. They found that the proportion of the firms professing
40 to practice some form of SCM was quite high (90%), chiefly with a view to improve
1 on-time delivery. The top three SCM activities were:
2
on-time delivery of own firm’s products directly to the customers’ points of use
3
4
on-time delivery of own purchased materials directly to the firm’s points of use
5
determining customers’ future needs.
6
711
8
 222 B.C. Basnet, P. Childerhouse, L.R. Foulds and V. Martin

111 Similarly, nine commonly cited concerns that restrain successful SCM were identified
2 and used to define the SCM concerns or hindrances construct. The top three issues
3 hindering SCM were:
4

suppliers’ geographical distance
5
6
lack of sophisticated information systems
7

lack of ability in managing inventories throughout the entire supply chain.
8
9 Obviously the geographical distance of New Zealand from global markets provides
1011 a significant challenge to SCM activities. Even when there is a strong motivation for
1 a New Zealand firm to adopt SCM, the small size of New Zealand firms often makes
2 it very difficult to pull all the supply chain members into the implementation.
3
4
3.1 Research objective and methodology
5
6 We now discuss some further findings of the above-mentioned survey that we believe
7 require special emphasis in the New Zealand scene. While Basnet et al. (2003) focused
8 on the inter-firm SCM practices, this paper is focused on intra-firm practices. Our research
9 objective was to explore these practices with a view to ascertain their prevalence.
2011 We used the survey methodology to obtain a representative sample. This survey polled
1 627 largest New Zealand manufacturing organisations drawn from a commercial
2 database (KOMPASS). The results are based on the 69 usable responses that were
3 received (11% response rate).
4
5 3.2 Lean manufacturing
6
7 Lean manufacturing, linked to the continuous improvement of supply chains, has
8 been known and practiced in Western industry for over 20 years. The notion of waste
9 being invisible, needing continual attention, and requiring innovative technology,
30 is now commonplace. As Flinchbaugh (2004) has pointed out, lean-thinking supply chain
1 managers dig below the surface to find the causes of waste and work to eliminate them.
2 It is an ongoing process, because waste continuously creeps back into organisations
3 and their operations. The main concepts in lean manufacturing are as follows.
4
5 3.2.1 Inventory reduction
6 In lean production every effort is made to reduce inventory since inventory is seen
7 as wastage. Inventory should be produced only in amounts needed for the next stage
8 of production, only at the time it is needed.
9
40 3.2.2 Set up time reduction and small-lot production
1 Clearly, reducing set-up times can enhance supply chain management operations
2 by improving capacity. Set-up time reduction permits producing in small-lots, thus
3 decreasing work-in-process inventory. This not only reduces inventory costs, but also
4 makes it possible to have immediate feedback on quality. Another benefit is the reduction
5 in lead times, which contributes significantly to better supply chain management.
6
711
8
 Sustaining supply chain management in New Zealand 223

111 3.2.3 Just-in-time supplies

2 Lean production emphasises not only just-in-time production of inventory, but also
3 just-in-time delivery of supplies by the suppliers. Supplier base is whittled down
4 to make it possible to integrate with the few suppliers left. Pushing the idea of
5 small-lot-production to the suppliers, they are encouraged to increase their delivery
6 frequencies and deliver in small lots.
7
8 3.2.4 Total preventative maintenance
9 In lean manufacturing everything is done to smooth the flow of production. Production
1011 equipment is kept tidy, well-oiled, and well maintained. The responsibility of doing
1 this is passed to the production worker.
2 The average importance rating (5 = high importance, 1 = low importance) given
3 to lean manufacturing practices by our respondents are given in Table 1.
4
5 Table 1 Importance of lean manufacturing practices to the respondents
6
7 Practice Average importance rating
8
9 Reducing inventory, which in turn frees up capital investment 4.41
2011 Reducing set-up time 3.73
1 Increasing delivery frequencies 3.52
2 Reducing lot sise 3.46
3 Preventive maintenance 3.44
4
Reducing inventory to expose manufacturing and scheduling problems 3.35
5
Reducing supplier base 3.29
6
7 Buying from JIT suppliers 3.17
8
9
Apart from inventory reduction, the other practices are not rated highly at all.
30
Even inventory reduction is valued from the viewpoint of capital investment, not from
1
the perspective of other lean manufacturing benefits. It appears that lean manufacturing
2
is practiced by only a few of our respondents. The supplier management aspects of lean
3
manufacturing received particularly low importance.
4
Since New Zealand manufacturers are particularly concerned with on-time delivery
5
(Basnet et al., 2003), they need to give more attention to lean manufacturing practices,
6
particularly setup reduction, preventive maintenance, and JIT purchasing since these
7
practices have shown positive relationship to speed of delivery (Jayaram et al., 1999).
8
9
40 3.3 Design processes in improved supply chain management
1
The design and development activity of firms has also come under focus in the efforts
2
to improve supply chain management. Using common modules and parts across multiple
3
products allows the demand for these modules and parts to be aggregated, which reduces
4
the need for buffer stocks, reduces obsolescence and allows quick response. Following this
5
concept of inventory aggregation, firms should adopt the following practices:
6
711
8
 224 B.C. Basnet, P. Childerhouse, L.R. Foulds and V. Martin

111
standardisation of component parts (trying to use more standard parts)

2

simplification of component parts (trying to use fewer parts)
3
4
use of value analysis/value engineering (deleting product parts and materials which
5 don’t add value to the product)
6

modular design of parts (for use in multiple product applications).
7
8 Another aspect of design and development is the lead time required for an idea to turn
9 into a product in the market. As mentioned earlier, this is a very important competitive
1011 issue in the fast-changing global markets of today. Superior supply chain management
1 helps a firm in this endeavour by allowing the suppliers to be integrated in the process.
2 Suppliers need to be involved early in this process to give feedback to the design team.
3 Concurrent engineering is a term often used where all the stake-holders in the process,
4 including the suppliers and the production function, are involved early in the product
5 design process.
6 Looking at the other end of the supply chain – the customers – they obviously
7 have a role to play in the design of products. Progressive manufacturers are using
8 a technique called Quality Function Deployment (the House of Quality model),
9 which permits customer preferences to be weighed against engineering specifications.
2011 We asked our respondents about the importance they placed on the activities
1 mentioned above. The average ratings (5 = high importance, 1 = low importance) are
2 given in Table 2.
3
4 Table 2 Importance of design and development practices to the respondents
5 Practice Average importance rating
6
7 Use of quick product development and introduction time 3.32
8 Standardisation of component parts 3.18
9
Early supplier involvement 3.00
30
Simplification of component parts 2.82
1
2 Use of value analysis/value engineering 2.76
3 Use of concurrent engineering 2.72
4 The use of quality function deployment 2.50
5 Modular design of parts 2.46
6
7
8 All of the practices mentioned above are rated rather low in the firms’ efforts.
9 Top practices in the design and development area of supply chain management
40 receive scant attention from our respondents, even though these practices, particularly
1 standardisation have been shown to be significantly related to time-based performance
2 (Jayaram et al., 1999), which is an important objective for New Zealand manufacturers
3 (Basnet et al., 2003).
4
5
6
711
8
 Sustaining supply chain management in New Zealand 225

111 3.4 Quality practices

2
3
3.4.1 Standardising operations and ISO
4 The International Organisation for Standardisation (ISO) defines quality via ISO 9000
5 as the degree to which a set of inherent characteristics fulfils requirements. Quality
6 characteristics are classified into several categories. If a company is seeking to standardise
7 its operations, it often attempts to gain a level of ISO certification. As Clegg (2003) states,
8 “ISO 9000, has contributed significantly to defining, developing, and emphasizing the
9 need for controlled documentation.” This has particular applicability in standardising
1011 supply chain operations. Only 54% of our respondents had IS0 9000 certification.
1
3.4.2 Process improvement
2
3 A number of practices have been identified that contribute to the improvement of quality.
4 Statistical process control (SPC) is designed to identify and decrease process variation,
5 which can have direct implications for supply chain management. ‘Six Sigma’ is a
6 quality philosophy based on SPC. As Bossert (2003) has stated, ‘Six Sigma and lean
7 manufacturing work together to enhance production effectiveness. The worker has the
8 empowerment and skills to recognise a problem when it occurs and, if it cannot be
9 resolved, to shut down the line in order to eliminate the root cause.’ Total quality
2011 management (TQM) lays the primary responsibility for product quality on top
1 management, but stresses empowerment of workers to spot quality problems, and to
2 find solutions. Inspecting quality into a product is considered wasteful, since it
3 happens after the fact. Instead quality should be designed into the product, and monitored
4 by the workers themselves while manufacturing the product. Continuous process
5 improvement (‘kaizen’) is the cornerstone of TQM – opportunities for improvement
6 are continually identified and implemented. One source of identifying improvement
7 opportunities is benchmarking – comparing own operations with the best. Table 3
8 presents the importance placed by our respondents on these practices.
9
Table 3 Average importance rating of quality practices
30
1 Practice Average importance rating
2
3 Process improvement (modification of process) 4.16
4 Top management communication of quality goals to the organisation 4.09
5 Designing quality into the product 4.00
6 Emphasis on quality instead of price in the supplier selection process 3.92
7
Employee training in quality management and control 3.91
8
9 Empowerment of shop operators to correct quality problems 3.91
40 Inspection 3.88
1 Using benchmark data 3.47
2 Statistical process control 3.12
3
4
5 The ratings here are certainly better than the ratings for the last group of practices.
6 While it is pleasing that process improvement is perceived as highest in importance,
711 inspection is placed ahead of statistical process control! This is similar to the finding of
8
 226 B.C. Basnet, P. Childerhouse, L.R. Foulds and V. Martin

111 Abdul-Aziz et al. (2000) sampling inspection was more prevalent than the use of modern
2 preventative quality practices in the UK and Malaysia. New Zealand manufacturing
3 has been slow in adopting benchmarking as well. This is in line with the findings of
4 Knuckey et al. (1999).
5 Stabi-Craft Ltd (http://www.stabicraft.com/) is a company in New Zealand excelling
6 in its quality practices (Knuckey et al., 1999). The company manufactures recreational
7 boats in Invercargill and has a holistic approach to all aspects of the business, including:
8 leadership, planning, planning and supplier relations. The company has committed
9 itself to customer-focused continuous improvement in its manufacturing operations and
1011 maintains very close relations with its dealers and their customers. Stabi-Craft Ltd
1 has a quality and supplier focus through agreements with its suppliers to ensure a
2 very high standard of quality of all incoming materials. Standards are set so that the
3 quality of the boats does not reduce the growth of the business. Components are checked
4 as they move between the work centres and when the production process is finished,
5 Stabi-Craft tests the boats for safety and floatation, which is part of the requirements
6 of the Boating Industries Association. Also, the manufacturer engages in enlightened
7 employee practices, including: clear job descriptions, good induction, review,
8 communications and training processes. The company benchmarks via dealer and
9 customer feedback, employing a market-back, rather than a cost-plus approach.
2011
1 3.5 Environmental management of the supply chain
2
3 Leading companies are pursuing the ‘Three Zeroes’: zero waste, zero defects and zero
4 pollution. Toupin (2001) states, “Less waste, a more efficient process, and stronger
5 materials are just a few of the benefits that come when designing with the environment in
6 mind. Designing for recyclability can not only earn a company respect, but it can also save
7 money and lead to an overall better product.” One of the main examples of how design for
8 recyclability is useful in supply chain management is illustrated in the automotive
9 industry. Mainly with noise reduction in mind, first-tier suppliers, in particular, have
30 ramped up efforts to develop new automotive materials that can not only help improve
1 acoustic performance, but also meet the added goals of reduced weight, lower cost and
2 improved recyclability. An indication of environmental commitment is the adoptions
3 of ISO 14000 (environmental management standards) certification. Only about 9.4%
4 of our respondents had achieved this certification. New Zealand firms need to be
5 made more aware of the benefits of green supply chain management, such as those
6 reported in Florida and Davison (2001): improved compliance, reduced environmental
7 risks, improved stakeholder management, and better community relations. Adoption of
8 lean manufacturing concepts alone should improve the environmental performance
9 (King and Lenox, 2001).
40 The following is an example of a company that has shown leadership in supply chain
1 management sustainability in New Zealand (Knuckey et al., 1999). Design Mobel, which
2 is based in Tauranga, New Zealand, designs, manufactures, markets, and exports bedroom
3 furniture and is focused on a sustainable future for its manufacturing. It uses only
4 sustainable timber resources and has an extensive native tree replanting programme in
5 place, as the company plants a tree for every bed or furniture suite it sells. Also, as a part
6 of its commitment to the environment, the manufacturer sponsors schools to plant trees.
711 Currently, the wood shavings produced in the production process are compressed
8
 Sustaining supply chain management in New Zealand 227

111 into blocks which are used in landfills. The company also has a remarkably low level of
2 production waste in manufacturing operations and is a top performer with regard to
3 quality, lead time reduction, leadership and planning, supplier focus, employee practices,
4 information management and benchmarking in New Zealand. For example, the company
5 can deliver its products faster to its Melbourne customers than its Australian competitors.
6 The company has both ISO9001 and ISO14001 accreditation. Design Mobel is respected
7 not only for its design and recycling but also for its general supply chain management
8 activities.
9
1011
1 4 Conclusions and directions for further research
2
3 Over the past 15 years, many New Zealand organisations have made genuine
4 improvements in moving from cost-based to quality-based and customer-focused supply
5 chain management strategies and tactics. There has been a significant increase in the
6 general awareness of lean manufacturing, supplier integration and quality improvement
7 strategies. However, practice is still lagging behind. Our research shows that there is
8 little awareness and practice of advanced design and development strategies and of
9 environmentally sustainable practices. Thus managers need to lay more emphasis on
2011 these poorly addressed areas of supply chain management to gain or sustain competitive
1 advantage.
2 We have discussed some of the current issues faced by New Zealand organisations that
3 are seeking to sustain and improve their supply chain management processes. Efforts to
4 improve supply chain management sustainability should not be viewed as a programme
5 with a definite completion date – the effort must continue as long as the manufacturer
6 exists. This calls for patience, gradualism, and the acceptance that there may be dips in
7 productivity during temporary paradigm shifts in the management of the supply chain.
8 There is a positive correlation between an overall, global, systems approach and an
9 improvement in sustainable supply chain management outcomes. One managerial
30 implication is that firms need to advance on all the areas discussed in this article to get
1 the benefit of synergy among the practices (Cua et al., 2001).
2 The contribution of the paper has been in reporting the state-of-play in the four areas
3 of supply chain management in New Zealand. This should help in the identification
4 of future strategies for firms, as well as future directions of research for researchers.
5 Limitations of this study include the low response rate from our respondents, use of single
6 informants and use of a single methodology – the survey method. This indicates that
7 further work should be done to confirm/triangulate the findings.
8 We believe productive future research may be carried out on the effect of
9 New Zealand’s unique circumstances (geographical isolation from the markets, small
40 population and market, small scale industries, etc.), on supply chain sustainability
1 and on developing strategies that suit these unique circumstances.. Longitudinal studies
2 may also be carried out tracking the progress made in the implementation of the
3 concepts discussed in the article. Further studies are needed to confirm or refute the
4 benefits of supply chain practices to industry and to identify contingent constructs
5 that influence the benefits.
6
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 228 B.C. Basnet, P. Childerhouse, L.R. Foulds and V. Martin

111 Acknowledgements
2
3 The authors wish to acknowledge the contributions of Jim Corner, Joel Wisner and
4 Keah Choon Tan to this study.
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