SUSTAINABLE SUPPLY CHAIN MANAGEMENT: A REVIEW ON

APPLICATIONS

Do Thanh Luu
luu.dothanh@hoasen.edu.vn

Ho Trung Thao
thao.hotrung@hoasen.edu.vn

Duong Kim Thanh

thanh.duongkim@hoasen.edu.vn

Faculty of Economics and Commerce, Hoa Sen University, Vietnam

Abstract

Sustainable development is one of the policies emphasized by Vietnamese government

through world economy forums as well as the on-going negotiation process to join the Trans-
Pacific Partnership (TPP). To facilitate the implementation of that policy, it is necessary to
collect and analyze studies and practices about the field of sustainable supply chain
management (SSCM). If a firm follows the SSCM, it will try to operate its supply chain
efficiently in all three aspects of economic, social, and environmental. In this paper, we
synthesize the results and experiences of the application of the SSCM in five countries with
the hope to gain suitable lessons for Vietnamese firms. The research interests include the
scope of SSCM, the related standards, the drivers for firms to adopt, good practices, and so
forth.

Key words: Supply chain management, sustainability, corporate social responsibility, life
cycle analysis, performance measures.

1. Introduction

As a developing country, Vietnam highlights sustainable development in her economic

growth policy. It can be seen that firms, basic cells of economic system, are mostly the
elements in a supply chain. Then it is reasonable to make supply chain sustainable for
building sustainable economics as a whole. The development of supply chain has brought
products and services with lowest prices to customers and highest profits to firms. However,
it also causes negative impacts to society and environment. The increasing concern of

1
customers, governments, and stakeholders on the negative impacts have forced firms to
change in their supply chain. Beside the prime driver, economic, firms now need to care
about environment and society. Currently, sustainable supply chain management (SSCM)
becomes an emerging topic with various definitions and different approaches. Mollenkopf
and Tate (2011) indicated that the success of supply chain sustainability is related to the
identification of alternatives, environmental friendly ways of production. Krajewski et al.
(2013) pointed out that sustainability is the combination of three responsibilities, namely,
financial, environmental, and social responsibility. Darnall et al. (2008) claimed that firms
approaching sustainability in environmental dimension aim at eliminating waste as well as
reducing environmental impacts in their supply chain. Firms can improve their environment
performance through recycling, reusing and reducing the amount of material used in the
process named reverse logistics (Carter and Ellram, 1998). Firms also can evaluate
environmental impacts at every supply chain stage using life cycle analysis (LCA). Sarkis et
al., (2010) recognized that there are firms followed social sustainability which is concerned
with the management of social resources, relationship and social values.

While firms know about the need of integrating economic, environmental, and social
aspects in their supply chain management, the guidance, model/framework and experience
to approach SSCM are still limited. The governments are also required to have its right
policies in pressing and facilitating firms to engage in SSCM. Hence, a study of SSCM
practices across countries is useful to business firms as well as to governments.

With regard to the methodology, for the aim to investigate the application status of
SSCM in Vietnam we use the comparative, then the case study method. The exploratory
level of this approach is suitable since with the collected information we believe that Vietnam
is still in the early stage of SSCM adoption.

The following section will cover the practices of the SSCM in some countries (one in
America, two in Europe, and two in Asia). Then, the initial inquiry result from Vietnamese
enterprises will be analyzed. Finally, conclusions about the above cases which can be useful
to firms interested in approaching to sustainability and suggestions for disseminating SSCM
in Vietnam will be presented.

2. Literature review
Cases in Canada

Canada has played leading roles at the Organization for Economic Cooperation and
Development from its formation up to now. To deploy its strategy in sustainable development,
Canada has several institutions in charge of this mission.

2
 Morali and Searcy (2013) conducted their work with the aim to study how Canada
corporations integrate sustainability principles into their normal management activities. They
reviewed reports of over 4500 pages from 100 companies about their sustainable related
efforts and based on that they ran in-depth interviews with 18 Canadian experts on SSCM.

The authors’ findings have covered several aspects of SSCM implementation.

For the industrial types involved, three sectors of metals-mining, energy, and finance
are accounting for 62% of the corporations disclosing their corporate sustainability initiatives
out of all the other industry sectors combined. The environment impact is the main reason of
the two first sectors for their attention of sustainability. In the meantime, the financial
institutions have to include sustainable requirements in budgeting to their customers.
The major drivers for their sustainability pursue are to improve the triple-bottom-line
result (economical, environmental, and social) and to response to the stakeholder pressures.
However, the concentration on the social aspect is still not clear.
Although the need for collaboration among all supply chain partners is recognized, it is
performed mainly in upstream than downstream. The level of formality is also dispersive.
There are limited number of corporations having standards exerting on suppliers for SSCM.
This may show that firms are accelerating their introduction of sustainability to their supply
chain partners. Moreover, it seems that is easier to play pressure to suppliers than to
customers.
One main barrier to apply accountability within supply chain is that SSCM governance
practices are still not in the same priority levels amongst corporations. This is obviously
because firms are different in their reputation, industrial sector, …, especially their size.
To make SSCM more prevalent, two important issues should be addressed. First,
knowledge about SSCM must be available for supply chain partners including corporations,
industry practitioners, customers, and so forth. This is rooted from the fact that the level of
awareness is still dispersed among corporations. Second, three pillars of SSCM which are
economic, environment, and social should be built in more integrated form and performance
measures for a holistic SSCM should be available, united, and standardized. The reason for
this mention is that many firms do not have a clear way to introduce sustainability practices
to their current operation.
Cases in Japan

Among manufacturers in the world, Japan is one of leading countries encouraging

practices in reduction, reuse, and recycling. Japan also belongs to the group of seven leading
economies in the world (“G7”).

3
 Zhu, Geng, Fujita, and Hashimoto (2010) studied Japanese manufacturers in regards
of their GSCM (Green Supply Chain Management) drivers, implementation, and
performance improvement. GSCM is one part of SSCM that focuses to the environmental
aspect only rather than three full ones. The authors investigated nine large manufacturers
that are considered as traditional polluting industries. Specifically, they compose of four
chemical, one petro-chemical, two electrical and mechanical appliance, one electrical, and
one food manufacturer(s). The authors developed two sets of questionnaire. The first one
including 21 questions covers the topics such as internal environmental management, green
purchasing, customer cooperation with environmental concerns, eco-design, and investment
recovery. The second one including 17 questions is about environmental, economic, and
operational performance.

This study has provide us with various distinctive results.

These manufacturers carry out the internal environmental management practice very
actively and effectively. However, they implement quite moderately in four other practices of
GSCM which are green purchasing, customer cooperation with environmental
considerations, eco-design, and investment recovery. This may from the fact that related
regulations in Japan are coercive.
The main drivers and mechanisms for the GSCM practices are Japanese laws and
policies on reuse, recycling, and recovery. One instance is the Law on Promoting Green
Purchasing taken effect since 2002 which requires public organs to procure environmental-
friendly products and encourages private sectors to do so.
There is no significant extension or requirements of the environmental experiences from
these leading large manufacturers to their suppliers and customers. This is a surprise in
comparison with other countries. For a satisfied explanation to this phenomenon, we need
more research. With the extension of our knowledge, we think that environment awareness
in Japan is covered largely. Furthermore, since Japanese firms have the tradition of long-
term cooperation with limited suppliers, then share values are built for a long term also rather
than in ad-hoc type.
GSCM experiences in these Japanese manufacturers can be adopted by manufacturers
in developing countries such as China. This helps them to raise their opportunities to export
to developed countries as well as provide their products to foreign firms in China. This idea
is raised because China manufacturers also want to share current markets of Japan
manufacturers such as European Union which requires the high standards of corporate
social responsibilities.
Cases in UK

Walker and Jones (2012) investigated data from seven leading companies in UK to
explore issues and factors influencing their implementation of SSCM. The related sectors

4
are aerospace, retail, pharmaceuticals, and food and drink. Out of these seven companies,
the minimum annual turnover is £7.4bn, the minimum number of employees is 22,000. All of
them have placed their CSR (Corporate Social Responsibility)/sustainable/environmental
policy available in their web site. These companies were selected thanks to their merit in
sustainable direction. They have obtained the related awards from the bodies like the
Chartered Institute of Purchasing and Supply (CIPS) or Business in The Community (BiTC).
The authors have conducted fourteen semi-structured face-to-face interviews with at least
one senior manager in each organization based on its SSCM projects or initiatives. In
addition, secondary data have been exploited from reports and web sites, including annual
reports, environmental/CSR policies, supplier evaluation questionnaires and internal
newsletters.

The authors summarized the enablers and barriers to the SSCM which are collected from
previous research.
The enablers include:

 Top management commitment.

 A supportive culture.
 The involvement of employees including middle management.
 An adoption of an Environmental Management System.
 Proactivity for better managing reputation and environmental risk which lead to
stronger competitiveness.
 The alignment between SSCM and corporate strategy.
 Capability of the purchasing and supply function.
 Good internal corporate social responsibility practices.
 Influence of large customers to smaller suppliers.
 Government policy and regulation.
 Pressure from NGOs and investors.
The barriers include:

 The reluctance of small firms in engaging in SSCM.

 Lack of supportive corporate structure and processes.
 Lack of management commitment.
 A limited support from traditional accounting methods for facilitating triple bottom line
reports.
 A focus on cost reduction in short-term purpose.
 Lack of training and understanding, and distracting from the sustainability factor in
the purchasing and supply function.
 Desire for low prices from consumer.
 Competitive pressure.

5
  Lack of commitment amongst suppliers.
 Industry type.
 Greenwashing (Contrariety between implementation and announcement of
environmental initiatives).
When conducting the study, the authors found additional enablers and barriers.
The additional enablers include such items as academic involvement (e.g. in improving
product packaging), media influence (increasing the reputation through media), using
industry standards as foundation for SSCM work (adoption of an available framework),
procurement’s willingness to work with other functions (common goal in sustainability
direction shared among different functional department in a firm).
The additional barriers include such items as resource limitation (in comparing to public
companies), reputation risk (for some strong brand reputation, better performance in SSCM
do not assure an increase in demand for its products), contrary performance targets (in
interacting with current targets), and too wide audits.
Cases in Germany

Wolf (2011) intended to know how firms integrate sustainability factor to their current
supply chain management. She analyzed four case firms renowned in supply chain
integration and/or sustainability merit. The firms belong to the manufacturing sector including
car, pharmaceuticals, apparel, and food industries. Two firms were selected thanks to their
sustainability ranking. Two others were chosen based on their merits on supply chain
activities which were published in newspaper and business press articles. The primary data
is formed from the structured interviews and the secondary data is from such sources as
company reports and web sites, supplier codes of conduct where available, etc.

This work has resulted in several practical outputs.

A sustainable strategy should cover the diversity of external stakeholders’ expectations.
The firms should balance the weights of different stakeholder in regards of their concern
about sustainability.
For successful sustainability strategies, leadership support plays a vital role in terms of
compensating for a lack of clear sustainability goals and direction, stretching between firm’s
existing resources and its aspirations, and defining suitable sustainability metrics to track
achievements.
A perceived gap of experiences and knowledge of sustainability inhibits its
implementation. Therefore, training is essential.
Process thinking is necessary to get through the functional barriers. Each functional
department should know that products delivered to customers need undergoing through

6
series of activities contributed from those departments. Therefore, their collaboration is
critical for perfect results.
Internal procedural integration needs supports from an efficient incentive and reward
system. This is reasonable because new efforts often need new recognition.
To ease the creation of new, more sustainable products and processes and to manage
sustainability risk better, the involved suppliers should include from tier-1 to tier-n, strategic
and non-strategic, even commodity suppliers. This assures that all supply partners are
monitored although their impacts might be not the same.
Cases in China

China has chosen in our study due to two reasons. Firstly, published works related to
the sustainability issue are available. Secondly, we think that the development gap in this
issue between China and Vietnam is not too broad, and therefore, we can share suitable
experiences more directly.

Li (2011) investigated performance measurement for GSCM based on a database of

over 128 manufacturing facilities in China. The study was conducted through three stages of
pilot test, convenience surveys, and random survey. The pilot test which aims to validate and
refine survey questionnaire has received suggestions from 28 respondents. The
convenience surveys was conducted with the participation of audiences in the workshops
organized by the author’s university. The random survey was conducted within the Xi’an
province in China and received 300 responses. This data was then analyzed using SPSS
10.0 for factor analysis and reliability testing, and identifying the critical factors for GSCM
performance management.

The author has withdrew the conclusions that can be valuable for developing countries.

Environmental awareness is driven from all regulatory, competitive, and marketing

factors. These ones repeats the finding from previous researches.
An environmental-friendly image of Chinese enterprises will raise their opportunities in
exporting or supplying to foreign firms in China. This is importance because China has been
recognized as “factory of the world” and Chinese firms are main suppliers to the companies
invested in China.
Although pursuing such standard as ISO 14001 certification is quite prevalent, GSCM
practice adoption is still not strong enough. The causes can be listed as the lack of necessary
tools, management skills and knowledge, and a reasonable economic justification. This fact
reveals that getting accreditation standards like ISO 14001 is just early steps to achieve
fruitful results of implementation of GSCM or, more general, the SSCM.

7
Cross-case analysis
To view the result of analysis in five different countries above in a more holistic way, we
summary these in the table below.
Country Canada Japan UK Germany China
Methodology Qualitative- Qualitative- Qualitative- Qualitative- Quantitative -
Case study Case study Case study Case study Survey
Sample size 100 reports; 9 companies 7 companies 4 companies 300
18 interviews responses
Industrial Numerous Chemical, Retail, Food, Apparel, Numerous
sector Electrical, Pharmaceutical, Car,
Food Defense, Pharmaceutical
Aviation, Food
Regulatory Established Strong Established Established Encouraged
driver
Market driver Yes Yes Yes Yes Yes
Internal Not Not Yes Yes Not
collaboration mentioned mentioned mentioned
barrier
Training Yes Not Yes Yes Yes
needed mentioned
Supply Not extend Focus to firm Focus to As much as Not
partner to customers itself suppliers possible mentioned
included yet

3. Analysis of an initial inquiry result from Vietnamese enterprises

When we are conducting this research, the Asian Institute of Technology in Vietnam
had carried out their survey and interviews to know the current status of Green Manufacturing
Management in some sample companies. This part aggregates the results of in-depth
interviews with four enterprises in the fields of manufacturing agricultural products and
foodstuffs, and consumer goods such as electronics, mechanics & equipment, paper
products.

The survey research aims to provide enterprises with benefits of the green supply chain
management program, construct of the related vision with associated challenges and
opportunities, identification key supply partners. Through these systematic review, the
enterprises are be able to enhance their capability and competitive advantages.

Contents of in-depth interviews focuses on such issues like sustainable development

strategy of enterprises, activities of development, effective use of natural resources, and
social obligations.
The surveys and interviews have shown interesting results.

8
 Similar to the international cases in the literature review, the drivers for case firms to
pursue Green manufacturing also include customer demand, the value of the enterprise,
enterprise image, business opportunity creation, compliance with laws, competitive position
improvement. They have also willingness to build the standardized Environmental
Management Systems such as ISO 14001, MAS, ISO 14064, ISO 16000, and proactively
comply with environmental laws.
However, the case firms just focus to improve their internal environmental performance
instead of covering enhanced activities like eco-design, closed-loop control, etc. With this
focus, their efforts include diversified activities like energy saving, waste reduction, recycling,
energy saving, water saving, use of renewable energy.
Like some international cases, the biggest difficulties can be listed as complicated
implementation process, high cost, lack of experts, and unclear course of action.
One distinctive feature is related to the issue of economic sustainability. Some firms have
combined its activity of supplier development with the poverty reduction program of the
government by offering production opportunities to the poor and/or the households in the
remote areas.
In summary, it seems that the development of Green manufacturing in the sampled
companies is still in the early stage and there is a need to integrate the Green SCM as well
as Sustainable SCM in a more systematic way.

4. Conclusion

There are several interesting points we can withdraw from the cases across countries
presented above. Firstly, perhaps thanks to a long time of introduction, the awareness about
sustainability of the firms joining their supply chains is quite prevalent. Secondly, in terms of
the activity diversity, they overcome the basic in-house environmental solutions to develop
the approaches more systematic like eco-design, Life Cycle Analysis, reverse logistics, and
so forth. Lastly, while there exist some common phenomenon such as the influence from
large companies to smaller suppliers in almost all cases, the distinction still occurs in the
Japan case where the firms place no request on their suppliers to implement SSCM.

The survey result from Vietnamese companies discloses both opportunities and
challenges in raising their capability of implementation of SSCM. The in-house environmental
problem has been solved from several different aspects. However, the solutions seem
passive and not holistic. The scope of their activities has not yet linked partners in the supply
chains in such a multi-tier way. From the aspect of CSR, the efforts of these companies for
their employees have not yet been informed much like what they do for outside stakeholders.

9
 To improve the competitive capability of Vietnamese firms through the implementation
of SSCM, we think the following items should be addressed. First, the government should
issue the related law, policy, and regulations as soon as it could. Second, the media should
update the progress of all business sectors and promptly praise good cases publicly. A
technical infrastructure for SSCM in Vietnam needs to be well prepared. It includes
knowledge, guideline, framework, performance measures, training and consultancy
services, etc. Of course, to claim a liable, practical and effective resource to have, it is
essential to gain the participation from several partners, at least from governmental
agencies, academics, industrial practitioners.

Acknowledgement The authors would like to thank the Asian Institute of Technology in
Vietnam for its support in data collection. They also appreciate Faculty of Economics and
Commerce of Hoa Sen University for its encouragement and time resource reservation for
them to pursue this topic.
References
Carter, C.R. and Ellram, L.M. (1998). Reverse logistics: a review of the literature and
framework for future investigation. Journal of Business Logistics, Vol. 19, pp. 85-102.
Darnall, N., Jolley, G.J. and Handfield, R.B. (2008). Environmental management systems
and green supply chain management: complements for sustainability?. Business Strategy
and the Environment, Vol. 18, pp. 30-45.
Gold, S., Seuring, S. and Beske, P. (2009). Sustainable supply chain management and inter-
organisational resources: a literature review. Corporate Social Responsibility and
Environmental Management, Vol. 17 No. 4, pp. 230-45.
Krajewski, L. J., Ritzman, L. P., Malhotra, M. K. (2013). Operations Management, 10th ed.,
Pearson, Boston, MA.
Li, Y. (2011). Research on the performance measurement of green supply chain
management in China. Journal of Sustainable Development, 4(3), 101-107.

Mollenkopf, D. A., Tate, W. L. (2011). Green and Lean Supply Chains. CSCMP Explores,
Vol. 8, pp. 1-17.
Morali, O., Searcy, C. (2013). A review of sustainable supply chain management practices
in Canada. Journal of Business Ethics, 117, 635–658.

Sarkis, J., Helms, M.M. and Hervani, A.A. (2010). Reverse logistics and social sustainability.
Corporate Social Responsibility and Environmental Management, Vol. 17, pp. 337-54.
Walker, H., Jones, N. (2012). Sustainable supply chain management across the UK private
sector. Supply Chain Management: An International Journal, 17(1), 15–28.

10
Wolf, J. (2011). Sustainable supply chain management integration: a qualitative analysis of
the German manufacturing industry. Journal of Business Ethics, 102, 221–235.

Zhu, Q., Geng, Y., Fujita, T., Hashimoto, S. (2010). Green supply chain management in
leading manufacturers: Case studies in Japanese large companies. Management Research
Review, 33(4), 380-392.

https://en.wikipedia.org/wiki/Trans-Pacific_Partnership

http://en.vietnamplus.vn/Home/Vietnam-moves-towards-a-green-
economy/20144/49032.vnplus

11