What is supply chain management?
Supply chain management is the active management of all aspects of a company’s activities to maximize the consumer’s value and attain a sustainable competitive advantage. It involves conscious decisions by a company to develop and run its supply chain in the most effective and efficient ways possible. It encompasses all activities related to the procurement of inputs, in-bound logistics, production, outbound logistics, marketing, and reverse logistics. At every stage of the supply chain, waste materials is created. Thus, making supply chains sustainable involves dealing with these unwanted by-products of production. The figure below illustrates a typical supply chain’s scope and its relative environmental impacts.
Watch this video for a summary introduction on supply chain management: “What is supply chain management? Definition and Introduction” – AIMS UK.
An industry’s production processes are dispersed around the globe. Suppliers, companies, and customers are all linked by materials, information, and capital flows. At each stage of the supply chain, value can be created or lost. Because each step in the production process of a good or service incurs environmental and/or social costs, companies may be held accountable not only for their own production processes, but also that of suppliers further upstream.
Sustainability along the supply chain is especially relevant for big brand-owning companies that have large market exposure and are likely to come under pressure from their stakeholders such as NGOs and consumers. For example, apparel distributors like Nike, Disney, Levi Strauss, Benetton, and Adidas have been exposed in the media for social and environmental issues originating from their supply chain. Some of the issues highlighted include inhumane working conditions, forced or child labor, and contamination and degradation of the (local) environment. This is why companies are increasingly being pressured to be accountable for the environmental and social problems that occur along all stages of their supply chain.
The growing need for accountability and compliance, coupled with the awareness of the disproportionate levels of negative environmental impacts generated via inefficiencies in traditional supply chains, have reinforced the need for environmental and social sustainability to be integrated into all aspects of business operations – even those that may not seem to be directly under the management’s control.