Corporate Environmental Strategies

Stakeholders increasingly demand firms to manage their sustainability performance in a comprehensive manner. Companies are expected to surpass regulatory requirements and address sustainability issues in their extended supply chains and along the life cycles of their products. The need for comprehensive approaches in environmental management constitutes the underlying motivation for the three research projects presented in this dissertation. The first research project provides an explicit assessment of the supply chain vs. firm orientation of corporate environmental strategies. To conduct this assessment, an original typology of environmental management practices is developed and used in a content analysis of corporate sustainability reports. The second research project studies carbon footprint and supply chain responsiveness trade-offs in strategic network design using mathematical modelling and optimisation tools. A model for the cost-effective definition of carbon abatement strategies is proposed. Using this model, the effect of carbon policies on costs and network configuration is analysed for both functional and innovative products. Numerical analyses illustrate the relevance of product innovativeness in the definition of different types of carbon targets and explore the traditional equivalence between price and quantity instruments. Finally, having conducted in-depth interviews and a broad survey, the third research project presents managers’ perspectives on ecolabelling and empirically studies the adoption of ecolabels by firms. Practitioners’ views on ecolabelling’s benefits, reasons for scepticism, the challenges ahead and their recommendations are discussed. Using regression analysis, different factors explaining the adoption of ecolabels by firms are identified.

Modeling and implementing strategies for supply chain alignment

Kerstin Langenberg

Optimal supply chain design depends on the business context the chain caters for. In this dissertation, we are concerned with attaining and maintaining this alignment between a firm's supply chain portfolio and its business context. Following an introduction in Chapter 1, in Chapter 2 of this dissertation, we analyze the influence of a firm's product types on optimal supply chain design: Academics and practitioners agree that functional products are best delivered via physically efficient supply chains, while innovative products are best delivered via market responsive chains. However, to date, only a few firms have systematically adjusted their supply chain strategies according to this argument. Instead of carrying only one product type, firms deliver a number of both functional and innovative products in parallel complicating the alignment of supply chain portfolios with product portfolios. We address this issue and analyze in detail a firm's optimal supply chain portfolio as a function of its product portfolio. We target the tactical level of decision-making and develop a generic mathematical model to analyze how product portfolios affect the optimal setup of supply chain portfolios. We identify generic problem properties and perform extensive sensitivity analysis to illustrate our findings with numerical examples. Our results indicate that effective supply chain and product portfolio alignment holds the potential for significant cost savings. Because of the large number of factors influencing the optimal set-up, however, profound quantitative analysis is required to exploit the full potential of aligning the supply chain with the product portfolio and to guide implementation. In Chapter 3, we extend our modeling framework and take into account the fact that a firm's products and global business parameters, such as labor rates and transportation costs, evolve over time. Hence, firms need to adapt their supply chain portfolios frequently to stay aligned in the long term. Adapting a well-established supply chain portfolio, however, may involve high costs and expose a firm to unforeseeable risks. We address this issue, differentiating business dynamics into product portfolio dynamics and global business dynamics, and classifying supply chain adaptation into high, medium and low. Building on these classifications, we extend our mathematical model to analyze how much supply chain adaptation a firm actually requires to respond to the business dynamics it faces. Our results indicate that supply chain adaptation may indeed be crucial for a firm to retain its competitiveness. The need for adaptation, however, varies widely across firms: For example, a firm faced with product portfolio commoditization may be required to adapt its entire manufacturing footprint, while a firm with a high product turnover rate may not need to adapt its supply chain portfolio at all. Furthermore, the need for supply chain adaptation is not only determined by the business context in which a firm operates, but can also be manipulated by the firm's product portfolio decisions. Finally, a firm should carefully align its supply chain portfolio with the employed supply chain adaptation strategy to exhaust attainable benefits. In Chapter 4, we widen our scope and develop a step-by-step process to guide sustained alignment between a firm's business context and its supply chain portfolio in practice. Drawing on academic literature, insights from our quantitative models, and extensive interviews with executives from leading firms, we propose and detail four process steps. In the first step we suggest challenging the performance of a firm's current supply chain setup and identifying pressure points to evaluate how acute supply chain realignment is. As a second step we propose and detail a business context analysis to identify what a supply chain lacks and potential areas for realignment. To complement the previous analysis, in a third step, we frame and discuss generic options for long-term supply chain strategy. As a fourth step, we lay out opportunities and pitfalls during the project implementation. We conclude with recommendations on how to stay aligned in the long term. We end the dissertation with a conclusion in Chapter 5.

EPFL2008

A model for the design of effective and resilient supply chain security management systems

Ximena Gutiérrez Rueda

The current business environment has become more risky and variable. In particular, the recent terrorist attacks against western economies have revealed the vulnerability of global supply chains. These events showed that companies that move cargo internationally are subjected to a broader spectrum of risks, for which they might not be yet prepared. The perception of a higher level of security risks has motivated a wide variety of efforts from the academic, public and private sectors to increase global supply chain security. First, governments, border agencies and international organizations are designing and promoting new security initiatives and regulations to force companies to take more responsibility for the security of their supply chains. Second, academics have started to apply traditional concepts of risk and security management to the supply chain context, leading to the theory of supply chain security management (SCSM). Third, companies are following the new mandatory security regulations. However, most of them are still waiting before implementing those initiatives which are not yet mandatory. At the moment, each of these parties is approaching this problem from different a perspective. However, they all face one main common challenge: Increasing security without affecting supply chain performance or creating new trade barriers. The management of security in a supply chain environment has been usually associated with the implementation of rules and activities that are obstacles for the efficient flow of goods, non-value adding operations or cost generators. It is therefore necessary for these parties, to develop security initiatives which enhance security without affecting supply chain performance or jeopardizing trade. This study builds on the theory of SCSM which is still in its infancy. The literature review shows that some of the most relevant gaps are: i) the disconnection between the governments and border agencies' security initiatives and the theory developed by academics, ii) the non-inclusion of a systematic, holistic and process perspective in the design of SCSM initiatives, and iii) the lack of adequate management tools for companies to implement and maintain the new SCSM initiatives. Based on these literature gaps and the challenges imposed by the new supply chain security risk context, the main research question of this study is: How companies and governments can develop effective (capable of reducing the probability of disruptions occurrence) and resilient ( preparing the supply chain to recover from disruptions) SCSM systems? The main goal of the study is to develop a SCSM model which can help companies and governments to make use of the most relevant lessons from the existing academic theories and the new security initiatives, by integrating them in one practical comprehensive management tool. The research study investigates the supply chain security management by companies with large experience in managing high-risk areas and products. Initially, a survey is conducted to study how some of these companies have increased their security level by implementing a voluntary security program. The analysis of this data enables the identification of some of the factors which can positively impact the success of these programs and confirms the systemic nature of supply chain security management programs. Following these results, supply chain security systems are studied from a more holistic perspective by carrying out two in-depth case studies. The analysis and comparison of these case studies allow the identification of the most relevant challenges that these companies face to manage their supply chain security. Furthermore, they show that the traditional methods of corporate security management present several obstacles to deal with these challenges. The lessons and insights obtained through the analysis of the empirical data, together with the SCSM best practices identified in the literature, are integrated into the proposed "Supply Chain Security Management Model". This model provides a concrete framework to help practitioners adding the process dimension to the management of security. The framework also allows a better understanding and managing of the interactions between the supply chain and the security systems. To complete this research study, the model is validated by applying it to the two case study companies. The results of this initial exercise show that the proposed SCSM model constitutes an innovative management tool for the evaluation of SCSM systems, which drives the attention to critical points that were neglected in the past. This practical application exemplifies how the model can be used to collect and represent in a comprehensive way the security related information that is usually spread amongst different company functions and business partners. The main advantage of such representation is that it allows for a quick identification of the areas with potential for improvement.

EPFL2007

Assessing the Comprehensiveness of Supply Chain Environmental Strategies

Joana Maria Comas Marti, Ralf Seifert

As environmental awareness grows, firms are expected to expand the scope of their environmental strategies beyond organisational boundaries and to address more comprehensively environmental issues in their supply chains and product life cycles. Drawing on different literature streams, international standards and corporate disclosure, this paper presents a conceptual framework for the quantitative assessment of the comprehensiveness of firms' environmental strategies. This framework allows us to capture: (i) the environmental inputs and outputs addressed, (ii) the firm versus supply chain orientation of environmental strategies, and (iii) the environmental management practices adopted by companies. We illustrate the application of this framework with a content analysis of corporate sustainability reports for a cross-sectoral sample of sustainability leaders. Our results indicate that there is a need for greater specificity in environmental reporting and that, overall, companies remain firm-oriented. It is also observed that supply chain orientation can generally be associated with stakeholder pressure. Copyright (c) 2012 John Wiley & Sons, Ltd and ERP Environment.