Sustainability and

Supply Chain
Management
Subtitle
 Lecture outline

Tragedy of Definition of
commons SSCM

Pillars of Supply chain

sustainable SCM and the drivers

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 What is SSCM?

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 The tragedy of the commons
 The tragedy of the commons is a situation in a shared-resource system where
individual users, acting independently according to their own self-interest,
behave contrary to the common good of all users by depleting or spoiling the
shared resource through their collective action. 
 The concept originated in an essay written in 1833 by the British economist
William Forster Llyod.
 The concept became widely known as the "tragedy of the commons" over a
century later after an article written by Garrett Hardin in 1968.
 Hardin discussed problems that cannot be solved by technical means, as
distinct from those with solutions that require "a change only in the techniques
of the natural sciences, demanding little or nothing in the way of change in
human values or ideas of morality"

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 Any solutions of tragedy???
A social arrangements or mechanisms coerce all participants to behave in a
Mutual coercion way that helps the common good.

The government or regulators set standards that everybody

Command and control approach must adhere to.

Constrains the aggregate emission by creating a limited number of

Cap and trade tradable emission allowances that emission sources must secure and
surrender in proportion to their emission.

Control emission Imposing Tax on who are generating emission.

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 social
Economic

Key pillars of sustainable

supply chain Environmen
t

Sustainable SCM
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 Key pillars of sustainable supply chain
 Social Pillar: Measures a firm’s ability to address issues that are important for its workforce,
customers and society. Work-related factors include respect of human and workers’ rights –
child labour, bonded labour, health and safety, working conditions (Maignan et al, 2002);
gender equality, poverty alleviation, etc.
 The cost of audits and capability building at suppliers are often borne by a firms, whereas the benefits from
supplier improvement accrue to all that use the supplier. Large firms do not spend sufficient effort on audits
and capability building at suppliers because of the absence of effective mechanisms for mutual coercion.
 Lack of coordinated action. Example: After the incident of Rana Plaza, two groups are created. One group-
The Bangladesh Accord for Fire and Building Safety- including European brands, and other group-
Bangladesh Workers Safety- including 26 companies from Canada and the United States. The absence of
coordinated action hurt outcomes in Bangladesh even though the companies involved may have had the best
of intentions.

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 Key pillars of sustainable supply chain

 Environmental Pillar: Measures a firm’s impact on the environment,

including air, land, water, and ecosystems. Firm activities that improve
the environmental pillar can be categorized as resource reduction,
emission reduction, and product innovation.
 Resource reduction activities result in a more efficient use of natural resources in
the supply chain.
 Emission from a firm that may harm the environment include greenhouses gases,
carbon dioxide, ozone-depleting substances, nitrogen and sulphur oxides, waste
and water discharges.

 Economic Pillar: Cost, quality, speed of delivery, flexibility, resource

utilization, visibility and innovativeness (Chan, 2003; and Gunasekaran
et al, 2001).

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 Factors driving the sustainable SCM

1 Reducing risk and improving the financial performance of

the supply chain.

2 Community pressures and government mandates

3 Attracting customers that value sustainability

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 Sustainability and key supply chain drivers
• Significant consumers of energy and water
• Emitters of waste and green house gases
• Profitable improvement comes from using technology to balance the peak
Facilities
load for energy across a chain of convenience store.
• Production facilities often have significant opportunity to reuse heat energy
generated and reduce water usage during the process

• Discarded inventory in a landfill after use, the cost of this inventory is borne
collectively by society.
Inventory • The goal of the supply chain should be to track its landfill inventory and
separate it in term of harmful additives and unused value.
• Life-cycle assessment can be used to assess the environmental impacts.

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THANK YOU!