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Sustainable Supply Chains : A value based
societal perspective for holistic evaluation
Dr S G Deshmukh
ABV-Indian Institute of Information Technology & Management,
Gwalior
Plenary Talk
41st National Systems Conference Dayalbagh Educational Institute , Agra 282 005(UP)
2 Dec 2017
Speaking points…
• Introduction & Motivation
• Impressions about Sustainability
• Implications
• Value based Score card
• Impacts
• Closing Remarks
2
Acknowledgement
• Discussions with Prof R P Mohanty, Prof P N
Rao, Prof Abid Haleem, Dr Jitesh have helped
in crystallizing ideas
• Ph D works of Apratul Shukla & Neeraj Bhanot
are gratefully acknowledged
• This presentation is purely for academic
purpose. • Disclaimer : Various sources are mentioned wherever possible. In case, there are omissions, ,
these are not deliberate . Same is to be excused for inadvertent omission !
3
Opening quote….
“We do not inherit the earth from our
ancestors, we borrow it from our children…
Native American Proverb
We belong to mother earth and not other way !
Source:
https://quoteinvestigator.com/2013/01/22/borrow-earth/
Motivation ..1..
• Gandhiji’s trusteeship concept- Every member of the society is the trustee
of the wealth generated out of the collective efforts of all.
• Trusteeship will result into non-violent and non-exploitative socio-economic
relations and development models based on production systems centred
around the preservation of nature.
His sustainable development is based on a holistic paradigm which lays
stress on all round development of individual and society in relation with
nature.
• This thinking was based upon the ethical vision in which the individual is at a
central position. If inward change is achieved, outward change takes care of
itself.
• A judicial shift from the Consumer Society to the Conserver Society is
required.
5
Motivation ..2..
• Sense of empathy, connectedness
• Value orientation
• Involvement of all
• Community based perspective rather than
individual perspective
6
Motivation ..3..
Holistic view .. A way of life
Warli Painting .. A tribal
art form
• A unique style
• Holistic life depicted in the
paintings.• Coherence
• Creativity
• Collaboration
• Inside-out and outside- in
orientation
– Harmony with technology
– Harmony with people
– Harmony with nature
Source: http://www.biodiversityofindia.org/index.php?title=Warli_tribe_and_their_tribal_art
Impression : Sustainability
SustainabilityThe possibility that human and other forms of life on earth will flourish forever
-- John Ehrenfeld, Professor Emeritus. MIT
Sustainable Development (SD)Meeting the needs of the present generation without compromising the ability of future generations to meet their own needs-- Brundtland Commission, 1987 –
https://en.wikisource.org/wiki/Brundtland_Report
Sustainability issues
Economic issues :Cost, quality, speed of delivery,
flexibility, resource utilization, visibility and
innovativeness (Chan, 2003; and Gunasekaran et al,
2001).
Social issues: Respect of human and workers’ rights –
child labour, bonded labour, health and safety,
working conditions (Maignan et al, 2002); gender
equality, poverty alleviation, etc.
Environmental issues : pollution, climate change;
decline in ecosystems & biodiversity; deforestation;
soil degradation; resource depletion and fresh water
crisis (McAllister et al., 2005).9
Impression :
Three Legs of Sustainability
Economic Leg
Good Jobs
Fair wages
Security
Infrastructure
Fair Trade
Social Leg
Enabling working
conditions
Inclusive education
Community & Culture
Equitable justice
Environmental Leg
Zero Pollution &
Waste
Energy Conservation
Minimum disturbance to
Mother Nature
Source: Willard B, 2009, “The business case for sustainability”, Green innovations
conference, www.sustainabiltyadvantage.com
Implication 1:
Sustainable Value Creation
Capital Management
Financial
Capital as in
Balance sheet,
P&L statement
Natural
Capital borrowed from
Mother Earth
Human
Capital & Social Capital
Especially in emerging
economies like India
Source: Willard, 2009, “The business case for sustainability”, Green innovations
conference, www.sustainabiltyadvantage.com
Traditional Pyramid : What it is now !
Intangibles / Nonfinancials /
Reputation
Tangibles
Financials
Typical Balance Sheet
80%
20%
Source: Willard, 2009, “The business case for sustainability”,
Green innovations conference, www.sustainabiltyadvantage.com
Sustainable Company Pyramid : What it
should be !
Intangibles
Non-financials
Reputation as a
responsible societal
member
Tangibles
Financials20%
80%
Source: Willard, 2009, “The business case for sustainability”,
Green innovations conference, www.sustainabiltyadvantage.com
Supply Chain .. 1..
Supply chain management (SCM) is the
integration of key business processes
from end-user through original suppliers,
which provides products, services, and
information, which add value for
customers and other stakeholders.
14
Supply chain ..2..
• Supply chains are all pervading,
• SC offers an opportunity to take a systems
view,
• Multiple-stakeholders involved, variety of
aspirations/expectations,
• Current evaluation based on maximization of
profit for select entities?
15
Challenges in emerging economies
• Inadequate and limited resources,
• Cultural and organizational challenges,
• Poor technical and physical infrastructure,
• Shortage of qualified and experienced
professional and,
• Manual and semi-automated supply chain
operations
16
Specific challenges ..
• Current Performance Measurement (PM)
system in most of the cases very conservative
and tilted towards individual profit maximization
view
• Typical goal … avoidance/minimization of risk
• Sustainability-an operational issue or strategic
challenge?
• We need a balanced view
Remarks..
• Sustainability : Concept is valid, but the phrase
“sustainability” may be overused/misused/abused
• It’s too comfortable and deceptively simple.
Interdisciplinary, complexity, umbrella, all
embracing concept rather than value judgments
on equity, long-term, change attitudes.
Some premises
• An organization exits not in isolation,
• An organization is a socio-technical system
having human and machine interactions and
interfaces in place,
• An organization is connected, dependent and
interdependent on society,
• The sustenance of the organization is critically
dependent on the sustenance of the society.
19
Some indicators
• Amount of energy and raw material spent
• Amount of waste produced and exposed to the nature
• Amount of hazardous material used in the production
process of goods and products
• Amount of fuel usage and gas emission in the
production, storage and transportation
• Amount of recycled material through the processes
• Number of partnerships with suppliers on the area of environmental awareness
• Level of reputation of the company in terms of
environmental sensitivity in front of the public eye 20
Sustainability Drives Innovation
Stages:
#1 Viewing sustainable compliance as an opportunity
#2 Making value chains sustainable with sustainable
products and services
#3 Value addition perspective
#4 Creating societal perspective Source:
https://hbr.org/2009/09/why-sustainability-is-now-the-key-driver-of-
innovation
Ram Nidumolu, C.K. Prahalad, and M.R. Rangaswami , 2009, Why Sustainability
is Now a Key Driver of Innovation, Harvard Business Review, pp 57-64,
Context
SCs create material wealth for humans
They consume a great amount of resources while generating a
lot of waste.
The waste generated during various processes, during the use
of the products and after the end of the life of the products is
responsible for the degradation of the environment.
To minimize the resource consumption and the environmental
impact of SC has become increasingly more important.
22
Remark..
• Sustainable SCM (SSCM) is an integrated system
that integrates product and process design issues
with issues of design, manufacturing, planning and
control in such a manner as to identify, quantify,
assess, and manage the flow of environmental waste
with the goal of minimizing the environmental impact
so that of the self-recovery capability of the Earth
could be enhanced .
23
Setting the stage..
• Need to look at SC from Social audit point
of view, especially in emerging economies
like India
• Social and community context is more
important than an individualistic cotenxt
24
Social audit of SC ..1..Sn Dimension Meaning
1 Environmental
Consciousness
Sensitization about Environmental Issues
Energy conservation, Use of Clean and green
technologies, Emphasis on reuse/re-cycle/refurbishing
etc. , environmental impact assessment of the affluent
generated/gases emitted and mechanisms to address
these
2 Social Impact Impact on society through community led initiatives,
extension and outreach programmes
Impact of product innovation, Conduct of community
programmes, Impact through local employment, CSR
activities
3 Involvement of
Community
Community participation in company’s activities
Citizen centric activities ,Role of community in preventing
unfair practices such as child labor, 25
Social audit of SC ..2..Sn Dimension Meaning
4 Relevance of
product/services
Societal relevance of product/services
How much society has to benefit by design?
Is the product folio relevant to the societal
consumptions?
What kind of damage the manufacturing process is
causing?
5 Gender
Consciousness
Sensitivity about gender in employment,
Gender mix
Mechanisms to redress/resolve gender issues,
Concept of gender budgeting, encouragement given
to weak gender for development
6 Involvement of
NGOs
Networking with NGOs and other local agencies for
enriching/transmitting the knowledge base for green
initiatives26
Trusteeship perspective
• Concern for environment
• Concern for human being
• Conservator rather than Consumer
• At narrow level
– Trust between supplier & buyer/manufacturer
– Trust between manufacturer & consumer
– Trust between formal & informal sector
– Trust between employer and employee 27
Remarks..
• Indian context :
– Trust based
– Family orientated
– Relationship oriented rather than transaction
oriented
28
Community perspective
• Interdependence of organization & society
• Organisation vis-à-vis society
• Involvement of community
• Community as a collective narrative
29
Remarks..
• An organization owes it to community
• Rather than profit maximization for the
focal firm, it is the welfare of community
and society at large
• Sense of collectivism and ownership
30
Holistic perspective
• Harmony with technology
• Harmony with people
(multiple stakeholders)
• Harmony with nature
(minimum damage to
mother earth)
• Creativity, coherence &
collaboration
31
Remarks..
• Mutually beneficial co-existence of firms
• Concern and respect for surrounding
environment
• Localised orientation for using material, and
other resources
• Resect for context & culture
• Respect for individuals, respect for mother
nature
• Look at the celebration of various festivals -
• Sustainability is inherent in nature !! 32
Sustainable SC
Trusteeship
Holistic
Sustainable SC
Our Research : Sustainability
• Apratul Shukla, 2011, Critical Analysis of Supply Chain Management in Indian Context: A Case of Suitability, Scalability and Sustainability, Ph D Thesis, IIT Delhi
• Neeraj Bhanot , 2017,Development of an Integrated Sustainable Manufacturing Assessment Framework for Turning Process, Ph D Thesis, IIT Delhi
Phases of SSCM
*Need,
Opportunity
Scope,
Threats, and
Benefit
assessment
* Willingness
to adopt and
adaptation,
* Participation
in sustainability
drive.
*Early
measures
initiation
* Accepting
sustainability
as strategic
level
* Full scale
involvement in
activities
* Adopting clean
technology
* Commitment
towards 5
pillars of SMS
* Energy and environment
efficient practices
* Adopting and devising
best practices
* Technological innovation
* Performance
measurement
system for
sustainability
* Trendsetter and
knowledge hub
* Promoter of
sustainability
* Reputation and image
building
* Corporate social
responsibility
Awareness Involvement Active Participation Sustainability Excellence
Sustainable
Manufacturing
System
Phases
Insights
• Threat to the existence of the mankind on planethas provided an opportunity to revisit allbusiness processes.
• SSCM is new philosophy to prevent negative effectsof the manufacturing
• Reflects opportunities of using sustainability asstrategy, realign the manufacturing to become morecompetitive, efficient and effective and reposition inmarket where customer is willing to pay additionalprice for sustainable practices.
• Organization vis-à-vis society
• Value from societal perspective
Performance Measurement
• Based on the concept of a balanced score card , a sustainability scorecard is proposed based on 5 pillars of sustainability. – Economic; Environment ; Social
– Health & Safety; Cultural & Ethnic
• This helps in identifying the contextual performance measures from the developed list of metrics.
• Societal and value adding view from a system view point
Source: Shukla Apratul, 2010, Critical analysis of supply chain management in Indian context: A case of suitability, scalability and sustainability, Unpublished Ph D thesis, IIT Delhi
Source: Apratul Shukla’s Ph D work
Impact: Sustainable Scorecard
Environmental performance
Social Performance
Economic Performance
Vision and
strategy for
sustainability
Cultural and ethnic Performance
Health and Safety Performance
Customer perspective
- Code of conduct and
ethical guidelines
Internal perspective
- Use of child labour
Learning and growth
perspective
-Social auditing
Financial Perspective
- Fare wage scheme
Customer perspective
- Increased pride
Internal perspective
- Employment to minorities
Learning and growth
perspective
- No of events arranged
Financial perspective
- Cost of culture conscious
initiatives
Customer perspective
- Increase in product safety
Internal perspective
- No. of accidents/
incidences/ year
Learning and growth
perspective
- Information transparency
Financial perspective
- % of revenue allocated
to H &S
Customer perspective
-Customer query time
Internal perspective
Inventory turn over
ratio
Learning and growth
perspective Employee training yearly
Financial Perspectives
Return on Investment
Customer perspective
- Reduced packaging in %
Internal perspective
- Reduction in material usage
Learning and growth perspective
- EMS implementation
Financial Perspectives
- % recycled material used
Balanced score card
Sn Pillars Predominant Perspective
1 Economic Holistic
2 Environment Trusteeship
3 Health & Safety Trusteeship
4 Social Community
5 Cultural & ethnic Community
39
Sustainable SC
Trusteeship
Holistic
Sustainable SC
Research Opportunities
• Design a template for such score card
• What framework for such evaluation (AHP,
Fuzzy logic etc.) to be used?
• How do we validate the same?
41
Identification of Sustainable
Parameters
With inclination towards sustainability aspects, use
of environmental, health and safety (EHS), and
social indicators have started taking place
Bhanot Neeraj, 2017, Development of an Integrated Sustainable Manufacturing Assessment Framework for Turning
Process, Unpublished Ph D thesis, IIT Delhi
Shukla Apratul, 2010, Critical analysis of supply chain management in Indian context: A case of suitability, scalability and
sustainability, Unpublished Ph D thesis, IIT Delhi
Summary of Environmental .
Parameters : 28 Parameters
A. Water Consumption: 1 Water Intensity; 2 Consumption of
water per unit of output; 3 Source of water for the process.
B. Energy Consumption: 4 Energy Intensity; 5 Energy
consumed per unit of output; 6 Renewable proportion of
energy consumed.
C. Types of material: 7 Materials; 8 Hazardous materials
(kg/product); 9 Chemicals (litres/product); 10 Raw materials
(kg/product); 11 Material composition (%); 12 Packaging re-
usability (kg/product); 13 Packaging recyclability (kg/product);
14 Distance from source (km/product).
Source: Neeraj Bhanot’s Ph D work
D. Waste and Pollution: 15 Waste Management;16 Weight of
releases into air from production process; 17 Weight of releases
into surface water from production process; 18 Weight of
releases into land from production process; 19 Weight of
transfers into disposal from production process (consumables,
chips, scraps); 20 Weight of transfers for treatment from
production process; 21 Weight of transfers to recycling from
production process (chips and scraps); 22 Weight of transfers for
energy recovery from production process; 23 Consumables
reuse ratio; 24 Weight of transfers to sewage from production
process; 25 Pollution impact on ozone layer; 26 Wastage and
Spill over during production; 27 Mass of coolant loss.
E. Government Rules and Regulation: 28 Existing Environmental
Regulations.
Summary of Environmental Parameters
Summary of Social Parameters
:24 Parameters
A. Health Issues: 1 Worker Health; 2 Chemical Contamination
of working environment; 3 Mist/dust level; 4 Physical Load
Index; 5 Noise Level; 6 Health related absenteeism rate; 7
Compliance with national and international regulatory
requirements imposed on industry; 8 Admitted level of
emissions and waste from machining operations.
B. Safety Issues: 9 Worker Safety; 10 Exposure to toxic
chemicals; 11 Exposure to high energy components; 12
Number of occupational accidents; 13 Near Misses; 14
Operator Risk Level; 15 Ergonomic Design of human
interface.
Summary of Social Parameters (contd)
C. Labor Issues: 16 Labor Relations; 17 Hourly Wages; 18
Working Hours; 19 Workload; 20 Community
Engagement; 21 Local Employment.
D. Workforce Training: 22 Training and Education; 23
Average Number of Hours of training per operator; 24
Required Skill Level.
Source: Neeraj Bhanot’s Ph D work
Hierarchy of Parameters
Hierarchy of parameters categorized in three dimensions
viz. economic, environmental and social.
Classification of parameters in Level I, II and III being
Dimension, Aspect and Indicator.
Sorting parameters in each Level in descending order of
arrangement on basis of number of times each has been
used by various researchers in respective models.
Source: Neeraj Bhanot’s Ph D work
Hierarchy of Environmental Parameters
Hierarchy of Social Parameters
Research Posers
• What is the relevance of social audit in the bigger picture of
supply chains ?
• What are the linkages between the sustainability of supply
chains of organized sector vis-à-vis unorganized sector with a
social objective?
• What are the Inter-linkages of production, distribution, quality
systems and service for unorganized sector vis-a-vis-organized
sector so as to achieve certain social goals?
• What are the dimensions required in the evaluation of such
supply chains from societal perspective?
• Are these dimensions fully quantifiable? If not, what type of
frameworks do we use?
50
Closing Remarks..
• Sustainability offers a challenge : As a change driver, as a stimulus for innovation
• A balanced scorecard need to be evolved incorporating trusteeship, community and holistic perspectives
• Systems philosophy enables one to take a balanced view
• When an organization applies its vast resources, expertise, and management talent to problems that it understands and in which it has a stake, it can have a greater impact on social good than any other institution
• “The Link Between Competitive Advantage and CSR” Michael E. Porter and Mark R. Kramer, Harvard Business Review, December 2006
Key References
• Bhanot, N., Rao, P.V., Deshmukh, S.G., 2016, An integrated sustainability assessment
framework: a case of turning process, Clean Technologies and Environmental Policy, 18 (5),
1475-1513.
• Bhanot, N., Rao, P.V., Deshmukh, S.G., 2016, Survey results for sustainable turning process
parameters based on perceptions of researchers and industry professionals, International
Journal of Advanced Operations Management, 8 (2), 79-104.
• Deshmukh S G, 2016, Manufacturing competitiveness: Research Opportunities, International
Journal of Global Business and Competitiveness, 11(1), 1-6
• Bhanot, N., Rao, P.V., Deshmukh, S.G.2017, An integrated approach for analyzing the
enablers and barriers of sustainable manufacturing, Journal of Cleaner Production, 142,4412-
4439.
• Shukla, A.C., Deshmukh, S.G. and Kanda, A,2009,, Environmentally Responsive Supply
Chains: Learnings from Indian Auto Sector, Journal of Advances in Management Research,
Vol. 6, No. 2, pp. 154-171.
• Shukla, A.C., Deshmukh, S.G. and Kanda, A.,2010., Flexibility and Sustainability of Supply Chains: Are They Together?” Global Journal of Flexible Systems Management, Vol.11, Nos.1 & 2, pp 25-38.
52
Closing quote….
The dharma of water is wetness,
The dharma of honey is sweetness,
The dharma of flower is fragrance,
The dharma of air is breathe,
The Dharma of our culture is to save its
heritage ecology (a holistic purview) ―
promoting deeper moral values
Swami Vivekananda.
/
Thank you very much for
your sustained attention [email protected]
https://www.slideshare.net/SanjeevDeshmukh/
