An Overview of Sustainable Supply Chain for Company’s Goal

Nurhayati Sembiring and Nazaruddin Matondang

Department of Industrial Engineering, Faculty of Engineering, Universitas Sumatera Utara,

Jalan Almamater Kampus USU, Medan, Indonesia 20155

Keywords: Economic, environment, social, supply system, sustainability

Abstract: There are three common company’s goal achievement, i.e. economic, social and environmental perspective

achievement. Business profitability, stability, social equity, improvement of people’s relationship,

environmental responsibility, friendly technologies, minimize ecological scarcities and reduce the

environmental risks are examples for that company’s goal achievement. Due to that achievement, there must

be a comprehensive and integrated working system of groups that connected to all operations in various

operations. This will give benefits for customer in term of using products and services with quality manner.

This network relationship is known as the supply system. Integration between supply systems and

sustainability is contained in strategic and transparent planning and implementation steps. The longstanding

economic performance improvement from each organization is achieved in the organization's aim in the

fundamental coordination of business operations between the main organizations. For implementing

sustainability in the supply system, good management is needed. This is known as Sustainable Supply Chain

Management (SSCM). SSCM contains information, materials and capital flow management along with

collaboration between companies throughout the supply system. The company's efforts to decrease the

negativity of environmental effects in their supply systems require SSCM to be combined with various

concepts.

1 INTRODUCTION

For having a better quality of company’s

achievement, there are three common perspectives

that business operations must have(Boukherroub, et

al, 2015). The focus of economic perspective is

about business profitability, stability and

significantly financial improvement. Achievement

for social perspective could be measured by social

equity and improvement of people’s relationship.

Environmental perspective focus to environmental

responsibility, friendly technologies and minimize

ecological scarcities and reduce the environmental

risks. All of these opportunities could be achieved

by company’s management when there is a balance

between natural case (environment), social case

(responsibility), and business case (economic)

(Gomes, et al, 2015). All of this goals are called

company’s sustainability goals. This deﬁnition

suggests to focus on the societies, the companies

serve, and sustainment of nature’s resources (Winter

and Knemeyer, 2013).

The use of the ISO standard that has been used

extensively nowadays, has resulted in the attention

to the company's sustainability and becoming a hope

in the future. Following are the ISO standards that

are widely used (Lodziensis, 2017): (1) ISO 14001,

is an application of the environmental management

operation. Inside of anybasic requirements that must

be met by the company (and any confirmation about

it); (2) ISO 14040 series, used as a product life cycle

evaluation model; (3) ISO 14020 series, used to get

the exact environmental label of a product. (4) ISO

14062, which is a practical guide to product design

that considers environmental aspects

(environmentally friendly design approaches and

relationships with partners in the supply chain); (5)

ISO 14064, to develop programs aimed at reducing

greenhouse gas emissions; (6) ISO 14051, contains

guidelines for accounting for the costs of material

flow in the supply chain. Using this ISO standard,

means that there must be a comprehensive and

integrated working system of groups.

This working system is connected to all

operations in various operations. This willgive

benefits for customer in term of using products and

services with quality manner. This network

relationship is acknowledged as the supply system.

The aim of the supply system is to give benefit in

Sembiring, N. and Matondang, N.

An Overview of Sustainable Supply Chain for Company’s Goal.

DOI: 10.5220/0008551701990203

In Proceedings of the International Conference on Natural Resources and Technology (ICONART 2019), pages 199-203

ISBN: 978-989-758-404-6

199

term of using products and services sent to

customers. "Sustainability is not only establishing

our choices and actions for economically

advantages, but also environmentally and socially

responsible. Social problems in the supply system

are described as product-related product operation

that influence human safety, community

development and welfare " (Bag, et al, 2014).

2 METHODS

To maintain the present case and analyze

opportunities for the following research on

sustainable SSCM, some articles have reviewed.

From a methodological side, article review is an

explicit, fundamental, approachable for analyzing,

classifying, and clarifying the reference journals

(Winter and Knemeyer, 2013) Figure 1

demonstrates an analysis of the elemental article

review methodology.

Step 1 – choosing period of paper publication

Several studies in the Period between 2007 and

2019 have been chosen as the main references. The

selection of this period of time is considered to have

sufficiently represented thinking that is a developing

science.

Step 2 – choosing journal

In this journal, a decision was made to spotlight

on specific subjects for the analysis. International

journals such as Journal Supply Chain

Management, Management Science, Journal of

Physical Distribution and Logistics Managemen,

Journal of Cleaner Production, Journal of Social

Science and Humanity, had beenselected as

citations. These journals contain disciplines

logistics/SCM, Social science, operations/production

management, and social/environmental

management.

Step 3 – choosing article

The main criterion for selecting articles to be

included in the analysis is clear relationship of the

content of the article to the framework of the

previously defined text.

Step 4 – analysis

The next step is to study and examine selected

articles to find out how research has developed over

time. This analysis also provides capability to

analyzethe article opportunities in current article

because it connects to the integration of

sustainability and SCM. This provides further input

and specifications concerning potential research

opportunities.

]

Figure 1: Methodology of Research

3 RESULT AND DISCUSSION

3.1 Dimension Of Sustainability

Sustainability is defined as "development that meets

current needs without reducing the ability of

posterity to fulfil their needs" (Seuring and Müller,

2008).This description is most often used.

Sustainability has two principles, one is the concept

of 'needs', especially the basic needs of the world's

poor. This must be seen as the most important

priority; Two is the idea of meeting current and

future needs is associated with environmental

conditions. Attention to all dimensions is what must

be done holistically and totally. These things are also

often termed attention to People, Planet and Profit.

Also often termed Economic, Environment and

Equity. These three "pillars" are the main topics in

reviewing sustainability (Ashby, et al, 2012).In

simple terms, the following questions represent the

meaning of sustainability (Linton, et al, 2007):

1. In the future, what resources will be needed?

2. In the future, how can a waste or pollutant be

released by having a positive effect?

3. For posterity,the extent can new sources of

exhausted resources be provided?

4. How is exploitation of renewable resources taken

into account that these resources can still be

updated?

5. How can sustainable use of technology for

processing resources with increased material

wealth?

6. At what level can consumers who are market

forces drive sustainability? How do you change

your lifestyle?

7. to realize sustainability, what policies must be

established?

The table 1 shows several indicator of

sustainable development in each dimension

(Gomes et al., 2015).

Step 4

Analysis

Step 2

Step 3

Choosing journal

Choosing article

Step 1

Choosing period

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200

Table 1: Indicator of Sustainable Development

Indicator of Sustainable Development

Social

Environment

Economic

Institutional

 Equity

 Security

 Housing

 Education

 Population

 Health

 Atmosphere

 Fresh water

 Land

 Oceans, seas, coasts

 Biodiversity

 Economic structures

 Consumptions and

productions patterns

Institutional framework

Institutional capacity

3.2 Supply chain

The whole physical operation needed starts from the

fulfillment of crude materials from suppliers that

contain all steps of the process to produce finished

products, directly or indirectly, so that this product

finally arrives at the end user and the related

information flow is a clear definition of Supply

chain. In this supply chain, many separate

companies are interrelated based on their section in

satisfying or meeting the special needs of end

consumers. There is a close and integrated

relationship between producers, suppliers, carriers,

warehouses, retailers, and end-users of the product

(Tay, et al, 2015).

3.3 The integration between

sustainability and supply chain

Integration between supply chains and sustainability

is contained in strategic and transparent planning

and implementation steps. So that each of

company’s long-term economic performance

improvement is achieved in the group's economy

social and environmental aim in the fundamental

management of business operations between the

main organizations. In addition, for achieving

sustainability in the supply system, good

management is needed. This is known as Sustainable

Supply Chain Management (SSCM). SSCM

contains information, material and capital flow

management including collaboration between

companies throughout the supply system(Linton et

al., 2007). All objectives things contained in the

ranges of sustainable development such as economy,

environment and social, are analyzed inside of

accounts that come from the requirements of

customers and stakeholders. Therefore, the principle

that only considers profit and profitability is the only

element in the longstanding success of business and

the economy is not relevant anymore. Due to

business system is aggressive and unstable, it creates

the urgency for firms to enhance their sustainability

and profitability to accomplish their will to gain

advantage. These new business types emphasize the

obligation to boost product’s life span, material

reuse, recycling and recovery. This allows

companies to save resources, reduce costs, improve

their competitive position, fulfil those sustainability

goals and increase the customer’s loyalty. Another

goal is to achieve corporate resource self-sufficiency

through the recovery of waste (Sgarbossa and Russo,

2017). Sustainable Supply chain has been used in

many areas such as for the heavy industry, Small

and medium entrepreneur, the meat industry, health

care system, textile industry. the essence of urban

and rural eco-development ( the bamboo industry

and place making in Anji Anji, China, etc.(Singh, et

al, 2012).

3.4 Drivers towards SSCM

The company's efforts to minimize negative

environmental impacts in their supply chains require

SSCM to be combined with various concepts. Top

management has a big influence in the SSCM

application. Internal incentives to be involved in the

problem of sustainable supply, provide a strong

motivation in implementing this. Government

regulations, general standards that must be met and

customer requirements are external influences so

that SSCM can be more successfully implemented

(Tay et al., 2015). Table 2 shows some of Drivers

towards SSCM

An Overview of Sustainable Supply Chain for Company’s Goal

201

Drivers Towards Sustainable Practices

Internal Drivers/Enablers

External Drivers/Enablers

Worker

Issues

Strategy Issues

Functional

Issues

Politic

Competitors

Patrons

Suppliers

Investo

NGOs

 Employee

involveme

 Top

manageme

commitme

 Culture

 Competitive

advantage / firm

competitiveness

 Alignment of

company

strategy

 SCM Company

sustainable

strategy

 Risk

management

 Purchasing

and supply

function:

Capabilities

purchasing

and supply

function

 Other

internal CSR

practices

 Government

policy

 Regulation

 Pressures

from

competitors

 Pressures

from

customers

Cooperate

with

suppliers

Push

from

investors

Influence

of NGOs

3.5 Sustainability Performance

Criteria

Economic factors namely financial aspects (capital

investment, the total operating cost of the new plant,

the revenue, return on investment, etc.) are usually

made as a measurement of SC performance. This is

always associated with Flexibility (high adaptability

in the fields of production, distribution, etc.), and

suitability of demand (production quality, service

quality, etc.), responsiveness (lead time, cycle time,

etc.), reliability (approximate reliability, service

shipment rates, etc.). Environmental and social

performance has not been the focus of attention

because performance still depends on the industrial

sector. However some standards such as the SCOR

(reference model, OECD guidelines, GRI, ISO

26000, etc. can be used to determine environmental,

economic and social performance criteria

(Boukherroub et al., 2015). Sustainability

performance criteria could be seen in table 3.

Table 3: Sustainability performance criteria

Sustainability performance criteria

Dimension

Economy (Eco)

Environment (Env)

Society (Soc)

Criterion

 Financial performance

 Responsiveness

 Flexibility

 Reliability

 Quality

 Resources consumption

 Climate change Pollution

 Hazardous materials

 Safety and Health

 Job creation and Wealth

 Work Condition

3.6 Future research.

Future research is needed to address problems found

in many industrial fields (e.g. electronics, heavy

industry, and also in Small and Medium Industries).

Other fields such as education, banking, fisheries,

livestock, agriculture and others can also be used as

research land. Qualitative and quantitative research

can be applied to this field. Experimental research is

also needed. The application of a multidisciplinary

approach such as the use of logistics / SCM

disciplines, manufacture operations / management,

social / environmental management, strategic

management, marketing and finance. Another thing

that can also be used as the research theme is the

synergy between risk management and sustainability

related to SCM. Research related to sustainable

SCM and outsourcing or depends on initiatives seem

to be feasible for future research efforts. Things like

profit indicators, variations in supply chain

productivity, energy process performance. Ordinary

themes in the fields of logistics, product

development, supplier relations, manufacturing and

supervisory issues can also be investigated. Attempts

to link or convert existing theories and approaches to

research are needed in all these fields (Singh et al.,

2012a).

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4 CONCLUSION

Sustainable supply chain management is needed in

terms of competitive industrial commercialization.

There are many incentives to create sustainable

supply chains, including pressure from global

warming and environmental problems. The

implementation of effective and sustainable supply

chains will apply throughout the world. New ideas

contained in future research must always be

encouraged to strive for continuous improvement in

sustainable supply chain management.

ACKNOWLEDGEMENTS

Authors wish to express sincere gratitude to Siti

Habibah Rhadiatullah and all of the student that

helping authors for editing the template of this paper

and search the source as references to make this

paper.

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