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Arindam Chaudhuri, Editor-in-Chief, 4Ps B&M Editor-in-Chief
Dr. Arindam Chaudhuri
A.Sandeep Editor's Desk
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Is your Supply Chain On The Right Track?
In Order to be Truly Sustainable, Supply Chains have to Operate within a Realistic Financial Structure as well as Contribute value to The Society
Issue Date - 28/07/2011
Economies are built on demand and supply. As more of the world moves towards a demand-led consumer culture, the role of retail, distribution and supply chain management becomes pivotal in delivering economic success – but is it sustainable? Sustainable supply chains are not restricted to so-called ‘green’ supply chains. In order to be truly sustainable, supply chains have to operate within a realistic financial structure, as well as contribute value to society. A real definition of sustainable supply chain management must take account of all relevant economic, social and environmental issues.

Within the Oxford Institute of Retail Management at Saïd Business School, we have been working towards understanding how supply chain practitioners can deliver sustainable supply chains. The result is a book entitled Sustainable Supply Chain Management: Practical Ideas for Moving Towards Best Practice (Centinkaya, Cuthbertson, Ewer, Klass-Wissing, Piotrowicz & Tyssen, 2010). The research contained within the book was funded by the European Commission.

The implications of modern supply chain management
European transport volumes before 1980 broadly grew in line with economic growth. However, since the 1980s, transport requirements have grown at a faster rate than the overall European economy, largely due to the increasing importance of retail and distribution within our consumer society. It is important to emphasise that this continuing growth in transport requirements is not simply driven by increasing demand volumes, but rather the changing nature of demand. Supply chains are more responsive, more flexible and more global than ever before, helping to grow emerging economies, reduce production and inventory costs, increase consumer choice and increase recycling capacity – but they are also increasing transport requirements! More sophisticated supply chain management fosters economic growth and is an essential element in maintaining and increasing the competitive advantage of companies and nations, but transport requirements also have social and environmental impacts. This means that any improvements in supply chain management are desirable not only to the firm, but also to the wider community.

For sustainable supply chain management, the potential impacts of any practice should be understood across three key dimensions: social, economic and environmental. These impacts should not only be considered internally, within a company, but also, wherever possible, in relation to business partners, supply chains and the external environment.

Each dimension, social, economic and environmental, can be further divided into sub-dimensions. Improvement along any of these dimensions, without a detrimental effect in another dimension, will lead to a more sustainable supply chain.

‘Best practice ’ in supply chain management
Supply chain management covers all the necessary movement and storage of raw materials, work-in-process inventory and finished goods from the point-of-origin to the point-of-consumption. While transporting goods to where they are most valued makes economic sense, there are major social and environmental implications. For example, trucking product by road may lead to congestion and pollution, but packing vehicles more densely reduces both congestion and pollution, creating a more sustainable supply chain.

So-called ‘best’ practices are both relative and transitory. They are neither ‘best’ in every way, nor ‘best’ for all time. Today, supply chains know few boundaries and learning from successful practices by other people, companies, supply chains, industries and countries is hugely valuable.

Moving towards sustainable supply chains
While there is some customer awareness around sustainable supply chains (particularly ‘green’, environmental issues, and, to a lesser extent, social issues), there is usually a more obvious focus on the supply chain as an economic cost – reflected in the price of supply chain services or as an element of the product price. There is much scope to improve awareness, although this may lead to excessive pricing differentials between those firms that are focused solely on short-term costs and those with a longer-term view of sustainable supply chains.

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