25. Supply Chain Management for Sustainability

Supply chain management for sustainability, or providing a sustainable supply chain, has become increasingly important with the growing awareness on global warming and energy security. This chapter discusses management issues such as sustainable supply chains, sustainable enterprises, and sustainable manufacturing.

Viewing the subject from the perspective of manufacturing enterprises, the conventional studies related to this area can be classified into two categories: environmental issues and risk management. A supply chain that addresses environmental issues is often called a green supply chain, and it incorporates energy efficiency and reverse supply chain reducing waste and health problem caused by hazardous substances. These issues are widespread and important for a sustainable society in terms of global warming, energy security, and pollution. A key approach is systems thinking – visualizing problems, defining boundaries, setting goals, and simulating policies to predict their effects. A methodology to tackle these issues should involve all stakeholders in the supply chain, i.e., consumers and governments, as well as the product lifecycle, which includes mining, refining, power generation, processing, assembly, logistics, sales, maintenance, and recycling. Even if one sector reduces the environmental load, the activities might significantly increase the environmental load in other sectors. Other management aspects are the time, where policy and technological developments work in the reverse direction from specific goals within a time frame, and space, which is increasingly global.

Risk management for disruptive events in supply chains requires a methodology of monitoring and resilience to mitigate disruptions such as natural disasters and financial crises. Globalization forces globally distributed enterprises to act more quickly when a disruptive event occurs. A systematic approach, such as visualizing risks and defining metrics, is still important for preventing and mitigating risks. Management must understand that disruptive events create not only hindrances, but also opportunities to win business from competitors.

Japan is well known for its energy-efficient and environmentally sound technology. This chapter also presents the history of Japan, which witnessed events from people suffering from health problems due to pollution of water, soil, and air, to the development of energy-efficient technology to deal with oil crises twice in the 1970s. The introduction explains why the enterprises and people of Japan are well aware of environmental issues.

A few examples from the automotive industry illustrate the specific challenges of managing supply chains. The examples include the substitution of materials in cars in terms of lifecycle assessment and a predicted shortage of copper for clean energy vehicles. The smart grid system is an example of a large system that requires system and lifecycle approaches.

Finally, other challenges are discussed for future research. There are three levels for analyzing environmental issues: macro, mezzo, and micro approaches. The mezzo level approach is the most appropriate for supply chains and is expected to be studied by more researchers. A socio-technical approach that includes both policy and technology roadmaps appears to be a promising approach.