This is a study which will identify the supplier selection criteria for sustainable organizations based on the changing requirements of the consumers. The industries that are resource dependent will always to make clear choices while selecting their suppliers from the market as the cost of raw materials cover ups a major portion of the production cost. The organizations should always develop an effective procurement process for overall cost reduction and keeping a strict policy in supplier selection criteria will reduce the risk of procurement and enhance total quality management (Karsak and Dursun 2014). This topic has significant importance in this respect and with the increase in green supply chain practices; there have been changes in supplier selection policies. These policies and criteria will be evaluated and identified to make improvements to the current supply chain criteria and develop selection criteria which can be used by all the resource dependent companies in different industries.
Globalization has increased the awareness of the consumers regarding organizations’ operation and effect of these operations on the corresponding environment. The companies are under the limelight for contributing to the society by being a good corporate citizen. The organizations also feel the pressure that they are under constant scrutiny as in the modern world for accompany to be successful, social contribution is fairly essential as consumers are more influenced by the contribution of the companies to society (Jie et al. 2015). There are instances where the consumers are focused on identifying whether the products used by them are causing any adverse impact on the society and the corresponding environment. Moreover, the green products have become a common phenomenon in the society and there are majority of the consumers that focus on using green products due to the rapid increase in consumption of resource dependent products. There have been serious repercussions of the management and organizational practices in different countries which led to the degradation of air quality, global warming and harmful affect on fauna and flora (Beikkhakhian et al. 2015). This led to the realization of the fact that using methods to reduce the level of pollution and harmful effect is a key for future sustainability of the society and the environment. Sustainable supply chain and green supply chain management are the latest trend in the market where sustainable practices are followed by majority of the companies to develop a product that will have no negative impact on the society and the environment. There are companies using eco innovation to attain sustainability at each stage of the product development and services.
The use of triple bottom into the organizational business model is the reason that the companies are focusing on contributing more to the society and measure the level of contribution the organizations able to create. In the modern society consumers value sustainable development of services and products more than the products developed by using traditional practices. This has fostered new management and supply chain practices that are sustainable and will facilitate in creating sustainable environment. There are different sets of consumer perception and there is particular segment if consumers that are environmentalist and buy products that are eco friendly and does not have any negative impact of the society (Dou, Zhu and Sarkis 2014). The amount of environmentalist have significantly increased in the past decade which shows that sustainable features are essential drivers for product purchase for majority of the consumers. Moreover, there are consumers willing to pay premium prices for these products having sustainable features. This can be understood by the increase in demand of the organic food products and there are consumers driven highly by the consumers (Karsak and Dursun 2014). This shows that consumers are highly affected and driven by sustainable product in the market which made the different companies focus on sustainable practices and put pressure on their suppliers to develop sustainable practices. Therefore, the organizations are more focused on the social, economic and the environmental aspect of the supply chain in developing products these products.
The levels of carbon emission in all countries are increasing with the increase in development of the society and the economy. The government in different countries are using measures to increase the level of awareness among the individuals for choosing products and options that are sustainable in the market. Therefore, the consumers are looking for products that have good quality and developed using the industry standards (Karsak and Dursun 2014). Government rules and regulations have been strictly modified to protect the environment and the society from harmful practices and products. The malpractices of different organizations are closely monitored by the regulatory bodies and any identified variations are easily spread on the online medium which reaches majority of the consumers. The modern consumer will never purchase product from companies that are morally and ethically wrong. These can be seen by the harsh comments and feedbacks given by the consumers on the organizations’ social pages and official websites.
The global leaders in the market are having started using sustainable practices that can be considered to be highly ambitious. This will completely change the supply chain practices and use certified resource sources. The dependencies of the companies on the consumers are changing and this factor is slowly being eliminated (Awasthi and Kannan 2016). Ethical trading is a key aspect of this problem where the companies are focusing on strictly adhering to the rules, regulations and industry standards. The organizations are collaborating with the suppliers to protect the environment and provide the consumers with product that have more social, economic and environmental value attached to it.
Therefore, supplier selection has been a crucial aspect in this case as majority of the companies are aiming to select suitable partners as the supplier practices will have a deep impact on the company’s reputation. Therefore, selecting suppliers and co-investment in developing sustainable management practices are essential for gaining competitive advantage in the market. There are certain companies dependent on multiple suppliers as the same time and collaborating with all of them to develop sustainable practices is a method of adding value to the products offered by the organization. These have changed the tradition supply selection criteria and have included sustainability factors to identify suitable suppliers that will facilitate in adding value to the organizations.
The research will aim to explore the sustainable supply chain practices to identify the supplier selection criteria that have been incorporated due to the changing nature of the consumer requirements. The study will conduct in depth analysis of collected data to identify the green supplier selection criteria and sustainable framework that can be used to develop sustainable supply chain practices.
Research objectives
As stated by Rajesh and Ravi (2015), the choice of supplier is one o the key criteria in gaining competitive advantage and provides the consumers with a satisfying product. There have been significant changes in supplier selection criteria from the tradition method to the green supply chain. The consumers have become more aware of environmental sustainability where the companies are experiencing demands of products that are produced with sustainable practices in regards to the corresponding environment. According to Govindan et al. (2015), there are generally two types of suppliers used in the modern supply chain management such as multi sourcing and the single sourcing. In single sourcing a single supplier will be able to fulfil the entire requirement of the buyer whereas in case of multiple sourcing, more than one supplier is required to fulfil the requirement of the company. As opined by Rezaei et al. (2016), the supplier selection criteria is crucial for the company to improve their operational margin and at the same time the increase in awareness among the consumers and the government have forced the companies to make changes to the supply chain practices. The literature review will critically evaluate the traditional supply chain management along with the green supply chain management. Moreover, the changes in the supplier selection criteria will also be evaluated.
Kannan, Govindan and Rajendran (2015) states, that extensive single model approach has been used in traditional supply chain management process. This may include processes such as Analytical Hierarchical process (AHP) which promotes interaction and dependencies between the various criteria for selecting the supplier. On the other hand, Stanujkic, Karabasevic and Zavadskas (2015) propose that AHP can be used to deal with multiple criteria situation and ownership cost is taken in to account. Beikkhakhian et al. (2015) proposed that Analytical Network Process is decision making tool for taking into account multiple criteria. The author also provides a clear perspective on executing and designing models for evaluating the criteria for supplier selection. The interpretive structural model clearly depicts the relationship between the between different criteria and the significance of the supplier selection process. This will clearly define the relations between the supplier and the buyer along with certification and evaluation system, long term strategic goals, purchase performance, supplier development program, competitive pressure and joint action. This model evaluates all the dimension of supplier selection and summaries all the attributes for the best third party supplier.
As stated by Liou et al. (2016), a knowledge based system was developed for case based reasoning. Similarly, Kannan, Govindan and Rajendran (2015) developed a Fuzzy TOPSIS to access the weights and ratings of the linguistic values. The fuzzy set theory has been used to develop multiple numbers of models which can be used to deal with the supplier problems as it consist of multiple decision making process. Fuzzy extent analysis has been used by the organizations where the relevancy o the third party logistics is high (Karsak and Dursun 2015). In case of multiple sourcing, mathematical programming has been commonly used and according to Deshmukh and Vasudevan (2014), weighted linear program is suitable for selecting multiple suppliers. On the contrary, Govindan et al. (2015) developed a mixed integer linear program for analyzing the first order program. Multi objective programming is another program which can be used for analyzing criteria for supplier selection. This shows that various models have been developed to select suppliers may it be single supplier selection or multiple supplier selection. However, the advent of green supply changed the approach of the companies significantly in developing models for supplier selection.
As stated by Dou, Zhu and Sarkis (2014), green supply chain management has focused on providing encouragements to the companies so that they can include green management practices. Lee, Cho and Kim (2015), these practices have been very crucial in making the purchase decision of the organizations which is the reason that organizations have motivated them to acquire certifications regarding green supply chain practices. Fahimnia, Sarkis and Davarzani (2015) introduced a model which would reduce the waste discharge from electronic items without having any adverse affect on the corresponding environment. Rostamzadeh et al. (2015) stated that the tradition AHP model can be used by the organizations to develop a green rating system for supply chain. These will consist of five components of green management practices which are lifecycle analysis, ISO 1400 certification, green design and total environmental management quality. Luthra et al. (2017) stated that Delphi method developed an purchasing decision framework based in environmental consciousness by collecting opinions from the different environmental experts in different companies. As stated by Su et al. (2016), ANP has been used to develop a six dimensional model for strategic decision making which will improve the green management initiatives for suppliers and the companies. Therefore, it is essential for the companies to understand the green requirements which a supplier must possess in order to select from the multiple available suppliers in the market.
According Fahimnia, Sarkis and Davarzani (2015), ANP can be used as a new criterion for selecting suppliers in respect to hazardous substance management which will consist of factors such as environmental management systems, legal-competency compliance, hazardous substance management, green material coding, green purchasing and green design capabilities. On the other hand, Fahimnia, Sarkis and Davarzani (2015), proposed, factors such as technology capability, quality, pollution control, green products, green competencies and environment management for evaluating the suppliers in the High-tech industry. On the contrary, Dou, Zhu and Sarkis (2014) included sustainability as a criterion for supplier selection by using rough set methodologies and grey system. The major environmental metrics were also defined which consisted of factors such as resource consumption, pollution production, pollution controls, environmental management system and pollution prevention.
As stated Rostamzadeh et al. (2015), the two multi objective genetic algorithm developed consisted of four criteria for selecting the suppliers such as product quality, time, green appraisal score and cost. Therefore, in order to select suppliers the criteria to be followed are product recycling, cost of pollutant treatment, and performance assessment of the environment, green image, green design and green management of supply chain. This shows that the traditional models were modified using different algorithms which included environmental factors as a criteria of differentiating between the suppliers that suit the need.
The supply selection criteria have been one of the major topics of discussion as it is an essential component of different industries based on resources. Kumar Kar and K. Pani (2014) stated that there have been significant changes in evaluation criteria of selecting suppliers in decades. Moreover, it has been seen that cost and price has not been include into one of the widely used criteria for supplier selection. In modern supply chain management quality, delivery and then cost has been used as the criteria for selecting the suppliers which means that in respect to the single approach criteria cost is robust and not supportive. The traditional approach based on cost cannot guarantee that the hosen supplier is the optimal choice or selection and this because of the fact that the customer rented criteria such as flexibility, quality and delivery are not taken into account.
As stated by Rezaei et al. (2016.), existing relationship, culture, timely delivery, contract flexibility, quality, cost, added capability, resource scope are the most crucial factors for selecting the suppliers. However, different surveys had the similar opinion that quality is the most important criteria for selecting the suppliers. However, delivery and performance of the supplier are key factors in this respect. These are the traditional supplier selection criteria which did not take green management into account.
The basic problem related supplier selections are the intangible and tangible criteria where multi criteria decision process is used to analyze the feasibility of the supplier. However, with the advent of green management there are new criteria included into the selection framework. Therefore other criteria have been included in the green supply chain such as design criteria, manufacturing criteria, technological criteria, green logistic criteria, research and development criteria, environmental management criteria, customer service criteria, operational management criteria, process management criteria, customer co-operation criteria and procurement management criteria (Awasthi and Kannan 2016). The design criterion focuses on component reuse, waste reduction and proper utilization of the different materials for protecting the environment. The other factors are also using the dimension of green management which emphasizes on improving supplier processes to reduce the harmful affect on the corresponding environment. The manufacturing focus on reduction in use of hazardous material, technological criteria focuses on improving the processes to reduce the emission of harmful materials into the atmosphere, procurement criterion focuses on green purchasing and all other criteria have similar approaches.
The primary purpose of the economic criteria is increasing the profitability of any organization which is quite similar to the traditional approach in supply chain management. This can be achieved by reducing time and cost of the project. The different criteria included in the economic aspect of the supply chain are inventory cost, product cost, logistics cost, ordering cost, inventory cost, insurance cost and custom cost (Deshmukh and Vasudevan 2014). The other important factors are quality certificates, product rejection rate, lean six sigma belts, hazard management and quality managements. There are several other factors such as environmental friendly packaging, waste disposal, on time delivery time and lead time. These factors are crucial for developing economies of scale within the organization and reducing the operating margin. An organization can gain competitive advantage and sustainability by using competitive pricing (Zimmer, Fröhling and Schultmann 2016). This is one of the basic pillars of sustainability for an organization where they will have to evaluate the factors that will have improvement chances in the sustainability within the organization. Therefore, it can be seen that these factors are crucial for gaining sustainability in the market.
There has been significant increase in awareness regarding the social aspect within the organization. The factors that have been included in the social aspect of sustainable supply chain management are wages, operations, child labour, working conditions, work safety, poverty and human rights. The consumers have become very much aware of these factors and government in different countries have made the laws stringent. Therefore, the stakeholders and management are forcing the organizations to be socially accountable by implementing policies for addressing all these essential factors (Ghadimi and Heavey 2014). The stakeholder wants the companies to implement factors such as the safety and health practices: education, occupational health, counselling, training, prevention, safety programs and programs for controlling risk processes so that they improve the quality of the working environment of the workforce (Fahimnia, Sarkis and Davarzani 2015). Social responsibility has also been included as one of the key criteria in supply chain management which will consist of supporting projects having long term and short term orientation. Moreover, the organization will have to develop programs to providing new skills, supporting learning for the workers and providing opportunities and guidance to develop their career. Employment practices also fall within the social criteria of sustainability which will consist of factors such as flexible working facilities, human rights, worker relations, abolition of child labour, diversity and discrimination management and labour source equity. These factors are important as organization are using triple bottom line where they have included a third bottom line within the organization so that they measure the benefit the organization is providing to the society or the community.
The environmental awareness in the society has increased due to the degradation of the corresponding environment and change in the climatic condition. This has led to the development of environmental rules and regulations which are the benchmarks for every industry. The stakeholders of different companies are forced to take measures which will consist of changing the safety practices. This will consist of practices like reuse, pollution and recovery which will enhance the business and public image of the brand. Moreover, this will attract the consumers that are environmentally aware and improvement in the quality of the product delivered. The pollution control criteria will consist of factors such as waste water, solid wastes, harmful material and air emission. Resource consumption is another critical criteria where use of raw materials, water and energy (Hashemi, Karimi and Tavana 2015). The next criteria is eco design and green products which will include use of technology and materials that is environmental friendly, designing of the processes to reduce the consumptions of energy and recycling of different materials and product designing to reduce the use of harmful materials and green packaging. The last criteria are environmental management system which consists of getting certifications such as ISO 14001, control and checking of environmental processes and policies (Kumar Kar and K. Pani 2014). Government plays an important in this context as they have developed different regulatory boards for controlling and monitoring the organizational processes and the companies will have to take permit requirements, strategic considerations, compliance requirements and government policies into account before making the choice of the supplier.
There can be both reactive and proactive approaches to managing green supply chain within the organization. The companies having reactive responses comply with the industry rules and regulations which are pipe line solutions. The organizations are forced to do this due to the pressure from the customers and the government. On the other hand, proactive responses are ones considering sustainability and quality are initiatives taken by the organizations themselves. As stated by Babbar and Amin (2018), reactive organizations will have to make changes to the internal functions and the measures taken by these organizations are measures of avoiding penalties by modifying the current processes to make it more efficient and have secondary ecological advantages. The reactive companies take measures such as reduction in pollution discharge instead of focusing n reduction in produced pollutants, including environmental clauses into their procurement contracts in order to seek compliance and using international standards like ISO 14001.The proactive organizations include innovation into their business model so that they are able to tackle the challenges in the environment. These organizations try to look beyond their current capabilities where they will use close loop supply chain along with cost analysis and total quality management.
No overview about the sustainable selection criteria that included the three aspects of sustainability which are environmental, economic and social where what was found that only two aspects are studied out of three which are environmental and economic.
This chapter has provided a detail description of the traditional and the green supply change management supplier selection criteria. The contrasting natures among these approaches are examined to differentiate between the traditional, contemporary and green management approach.
Research methodology is the structural way of collecting data and converting the data into something meaningful. The different methods, designs and approaches executed in the study are defined by the research methodology. This chapter of the study will provide valid justifications for selecting the different approaches and designs. The nature, purpose, design and general classification will determine the different methods selected for the study (Berger 2015). Therefore, based on these criteria it can be seen than the current study is an exploratory research where descriptive data analysis will be conducted. The research is subjective in nature and the study will conduct in depth analysis of data to convert valuable data into research findings. In this study, the supplier selection criteria based on the consumer demands will be determined.
There are three different approaches of research and they are abductive, inductive and deductive. The difference between the deductive and inductive approach can be understood by the significance of the hypothesis. In deductive approach the existing theories are provide using statistical techniques by developing hypothesis (Flick 2015). However, in inductive approach new theories are developed by exploring data and these possible theories are then tested by developing hypothesis if required. Abductive approach will present unbelievable facts at the introduction of the study and the rest of the study will justify the reasons for such facts. In this currents study, inductive approach is the correct research approach as it will provide in depth analysis of the collected data. However, the inductive approach may not produce any relevant new theory so there is no certainty of significant result.
In subjective study, inductive approach is the suitable approach as it will consist of observing the phenomenon in detail to formulate theories and dogmas. This will also facilitate in connecting the data that has been collected in the study by identifying the relationship and pattern to generate the theory.
The different strategies used for the research are experiment, survey, case study, action research, grounded theory, archival research and ethnography. Research strategy enables the researcher to develop the flow of research in answering the research question. This study is based on inductive approach to action research is the most effective choice (Saleh et al. 2015). In action research four themes are developed which will address the purpose and objectives of the research. The first theme will describe the purpose of the study, the second theme will depict the role of the researcher in the study, the third theme will be based on planning, and diagnosing and taking action and the final theme will identify the implications beyond the actual research.
The different types of research choices are mono method, multi method and mixed method. In this current study, mono method has been used where there is only one research design (McCusker and Gunaydin 2015). This study has used secondary analysis of data to reach a particular conclusion. The most preferred method is the mixed method as it provides a better result. However, this study descriptive so mixed method cannot be used as quantitative analysis cannot be conducted on the data collected. Therefore, mono method is the appropriate choice of research.
Research design is of two types, one is conclusive and other is exploratory and it can be defined as the different methods used to collect data and analyze them. In this current study, exploratory research design is the appropriate design as descriptive study is required to identify the supplier selection criteria (Holloway and Galvin 2016). This will enable to provide relevant insights on a particular situation and there are fixed procedure to it. This enables the research focus to be shifted to different genres if relevant findings and theories cannot be developed. Moreover, the theories developed using these processes are tentative and final conclusion can only be drawn if they are proven thoroughly (Mayer 2017).
There are generally two types of data collection method one is primary and other is secondary. In this study secondary data will be collected from various peer review journals, articles and web articles (Humphries 2017). These data can be analyzed using case base methods, content analysis and thematic analysis. There are no specific set of data analysis technique that should be used to provide the study with flexibility.
The time horizon in a study will identify whether the study is cross sectional or longitudinal. The study can be considered cross sectional when data collected is conducted only once over the whole time frame (Salthouse 2014). The longitudinal study uses data collection at least twice and it can go up even more. In this study, the data has been collected only once so it can be considered as a cross sectional study.
The study uses a single method where secondary data analysis will be conducted so chances of forming meaningful theories and generalizations are low. Moreover, the study will analyze the work of other researchers to develop crucial findings which is quite limited. The results developed will be tentative and proving these theories will take more time due to the level of subjectivity.
This chapter of the study will conduct a secondary data analysis to develop relevant findings from the study. This chapter will explore data from different peer reviewed journals, articles and web articles to develop graphs, chart and analyze the data used in that research to draw conclusion.
In order to maintain the corporate legitimacy along with the reputation of any organization it is essential for the organizations to monitor and control the process of supplier selection and evaluation. The firms are trying to increase their level of profits and effective use of supply chain processes that can provide the organization with added revenue. The cost of raw materials heavily affects the overall cost structure of a firm especially those that are totally dependent on resources (Memon, Lee and Mari 2015). Therefore, in the traditional supply chain processes price is the most crucial factor in selecting suppliers. Quality management is another key aspect of supplier selection and it is the second most crucial aspect of supplier selection. The delivery time of the suppliers is also another key aspect for fulfilling the needs of the consumers within the given time period and service quality is another crucial criterion for selecting the supplier. Therefore, the traditional supply chain management focused on factors like quality, price, time, service and delivery.
However, the currents scenario has changed significantly due to the increase in awareness about the environmental and social impact of the organizations of the society. Therefore, social factor and environmental factor has been incorporated into the supplier selection criteria. Scott et al. (2015) stated that the incorporation of the environmental criteria into the supply selection factors will lead to choosing a supplier that is more compliant. The environmental supplier selection criteria have been incorporated into four categories and they are current environmental efficiency, green competencies, net life cycle cost and supplier’s green image (Scott et al. 2015). According to Rajesh and Ravi (2015), an instrument based on the fishbone analysis suggested by Ishikawa can be used for selecting suppliers in terms of the environmental criteria. The fishbone analysis conducted the root cause analysis to identify four key factors for selecting the suppliers for the organization and they are evaluating the suppliers as a company, product evaluation, process assessments and transportation. Therefore, in green supply chain management non-economic criteria has been incorporated into the supply chain selection process. Scott et al. (2015) stated that there has been increase in positive impact of social responsibility on developing affecting supplier selection criteria. According to Memon, Lee and Mari (2015), environmental quantitative and qualitative criteria can be used as an effective tool for selecting consumers from the market. The review of the green supply chain criteria including the metrics, social sustainability classifications, indicators and CSR shows that incorporating social and economic factors into the supply chain will be essential for generating better revenue for the company and improving their brand image in the society (Memon, Lee and Mari 2015). The advent of the new socially aware era shows that the companies are constantly under pressure from the shareholders, governments and consumers to develop products and offer services without causing any harm to the corresponding environment and at the same time should contribute to the society by a good corporate citizen.
The focal stakeholders are the ones that are driving the change in the supplier selection criteria which consist of the customers, competitors, environment, stakeholders, government and staffs. The consumers in today’s market wants to purchase products that are of high quality and have a reasonable price along with the societal impact of developing this product. The first two factors have been there for decades but the societal impact is a factor which different consumers check and follow to evaluate the companies’ motives and their desire to do good for the society (Safa et al. 2014). The quality and price of the product are very much dependent on the raw materials used by the organizations. Therefore, the organizations going for quality and price will always ensure to use the best raw materials. Therefore, the consumers are forcing the companies to choose wisely if they want to remain sustainable for a long time. The competitors are another driving factor for the companies as companies try to provide the customers with high quality product at lower price (Freeman and Chen 2015). Therefore, in order to survive in the market, the companies will have to make sure that there have been significant changes in their supply chain so that the consumers feel proud to be part of the company.
The quality of life on earth is highly affected by the companies as they are polluting the environment at all forms be it land, air or sea. The consumers have become aware of these things and they voice their opinions on company websites and social media pages and on their own social media pages to tell the companies about their misdeeds (Safa et al. 2014). The study shows that there has been significant increase in environmental protection laws and protest from the population. Therefore, the supplier selection criteria are bound to change. The stakeholder only thought about generating more revenue but they have forced the management of their respective companies to incorporate green practices as they have realised that it is essential to save everything for the future generation and maintain long term sustainability of their environment, society and the raw materials used by them (Safa et al. 2014). The workers working in factories always seek best working conditions for themselves which will include work environment and health and safety measures. The green supply chain has made the organizations more aware of this practices as welfare of the workforce is a top priority for the organizations.
The characteristic of the raw materials is an important criterion in selecting suppliers and it has been taken into account in the modern corporate world. In order to meet the expectation of the consumers, the supplier selection criteria set by majority of the companies are business criteria, social criteria, economic criteria and environmental criteria (Memon, Lee and Mari 2015). The quality of the product, services, delivery time, commitment for improvement, product development, information sharing, flexibility, insurance and location are the business criteria used by all the major companies in the global market. The credit strength of the supplier and financial stability is another sustainability criterion. The suppliers become a part of the organization so it is essential for the organizations to choose suppliers that follow the rules and regulations provided by the industry and apply sustainability practices. The wrong deeds of the suppliers affect the reputation of the company so social criteria such as employment discrimination such as gender, religion, age, flexibility, customers, health and safety and cultural properties (Memon, Lee and Mari 2015). The environmental laws for the suppliers are strict which include control and protection of the environment. These factors are the modern criteria for selecting the suppliers and the consumers have contributed to develop such factors.
The use of triple bottom into the structural business model is the goal that the companies and they are concentrating on contributing more to the culture, and measure the level of involvement the establishments able to create. In the contemporary society, customers value, sustainable growth of services and goods more than the products developed by using old-style practices. This has fostered new organization and supply chain practices that are sustainable and will facilitate in creating sustainable environment (Laszlo and Zhexembayeva 2017).
There are different sets of consumer perception and there is particular segment of consumers that are environmentalist and buy products that are eco-friendly and does not have any negative impact of the society. The amount of environmentalist has significantly increased in the past decade which shows that sustainable features are essential drivers for product purchase for majority of the consumers (Beske, Land and Seuring 2014). Moreover, there are consumers willing to pay premium prices for these products having sustainable features. This can be understood by the increase in demand of the organic food products and there are consumers driven highly by the consumers. This shows that consumers are highly affected and driven by sustainable product in the market which made the different companies focus on sustainable practices and put pressure on their suppliers to develop sustainable practices. Therefore, the organizations are more focused on the social, economic and the environmental aspect of the supply chain in developing products these products (Beske, Land and Seuring 2014).
The levels of carbon emission in all countries are increasing with the increase in development of the society and the economy. The government in different countries are using measures to increase the level of awareness among the individuals for choosing products and options that are sustainable in the market (Font, Garay and Jones 2016). Therefore, the consumers are looking for products that have good quality and developed using the industry standards. Government rules and regulations have been strictly modified to protect the environment and the society from harmful practices and products (Font, Garay and Jones 2016). The malpractices of different organizations are closely monitored by the regulatory bodies and any identified variations are easily spread on the online medium which reaches majority of the consumers. The modern consumer will never purchase product from companies that are morally and ethically wrong. These can be seen by the harsh comments and feedbacks given by the consumers on the organizations’ social pages and official websites.
The global leaders in the market are having started using sustainable practices that can be considered to be highly ambitious. This will completely change the supply chain practices and use certified resource sources. The dependencies of the companies on the consumers are changing and this factor is slowly being eliminated (Bocken et al. 2014). There are suitable examples where Sainsbury’s have started using fair trade on all their products and companies like Unilever have started using green practices to clean up their supply chain. Marks & Spencer is another company using a plan for committing the company along with the suppliers in using sustainable raw materials and reduce waste and emission. Ethical trading is a key aspect of this problem where the companies are focusing on strictly adhering to the rules, regulations and industry standards. A significant change in sustainable practices is clearly visible from the examples which show that organizations have become more aware of these practices as the consumers have become more sensitive to this issue (Bocken et al. 2014). The organizations are collaborating with the suppliers to protect the environment and provide the consumers with product that have more social, economic and environmental value attached to it.
In current time, each of the organizations keeps the continuous focus on engaging the recurring cycles to develop the problem-solving functions. It has been observed that the developed functions for problem solving depend on the innovative procedures undertaken by the organisations to influence the buyer behaviour (Rezaei et al. 2016). While determining a new purchase, organisation has to pass through some of the specific problem-solving skills that would ensure the better outcome. Similarly, it is necessary for the organisation to keep the focus on the customer demands. Accordingly, the selection criteria need to be accommodated by concentrating on the basic needs and requirements of the customers. It is noticeable that the customers generally opt for the high-quality products and service with the reasonable pricing rate (Kumar, Jain and Kumar 2014). These two factors are much important while structuring the selection criteria of the suppliers. During the supply chain or manufacturing process of a product, the suppliers demand for the different charges from the company for supplying materials and distribution process. However, it is necessary to identify the quality and safety parameter of the materials supplied for the manufacturing purposes. If the materials are of higher quality, it would ensure better outcome (Zhang and Benyoucef 2016). On the other hand, the high quality materials ensure higher cost. It becomes quite difficult for the organisation to understand the right approach to keep the cost and quality balanced while manufacturing any product.
In terms of maintaining the selection criteria, the organisation creates the specific arrangements, which impacts on the positive state of mind. It is always essential for the organisation to list down the requirements and demands of the potential consumers (Nair, Jayaram and Das 2015). Selection criteria depend on some of the specific arrangements that an organisation list up prior to select the supplier. Such selection criteria have the considerable impact on the customer behaviour. In some of the cases, the organisations use the appropriate combination, which develops the high-quality product outcome that satisfies the needs of the customers (Hong, Tam and Yim 2016).
The interpersonal relationships maintained among members associated with the buying centre are much important segment. In fact, it is also necessary to recognize the individual characteristics of those members (Genovese et al. 2014). Understanding the complexity underlying the organizational buying behaviour helps in managing a large number of behavioural science and management findings, which indicates the purchasing behaviour of the customers (Genovese et al. 2014). However, it is even identified that some of the potential risks are also associated in such context. First is the financial risk, which indicates the higher charges and costs of the suppliers for delivering the material. The organisations often seek the better product quality for satisfying the customer need and maintaining the product sustainability (Kull, Oke and Dooley 2014). In such cases, it is essential to use the high-quality materials for manufacturing the products. In order to supply the high-quality materials, the suppliers often charge higher, which is a combination of the materials and the operational costs (Rajesh and Ravi 2015). Hence, the organisations might face the financial risks due to the added charges. The lack of the adequate capital resource may create the significant challenge in such cases.
It has been observed that in an operating location where the supplier bargaining power is higher for a particular product, it becomes difficult to manage the satisfactory level of the customers. The unexpected costs may arise if the shipping process is changed (Kull, Oke and Dooley 2014). Moreover, the customers expect a quick delivery. The insignificant selection or the financial crisis may delay the shipping process, which is a drawback for a company to create the appropriate distribution process. Such delays in the shipping process may affect the customers’ perception related to the brand image (Monczka et al. 2015). Another risk is observed in developing the relationship risk with the vendors and the buyers. If any of the delivery order is not fulfilled, the organisation may face the considerable challenge to sustain the customer base. While selecting the supplier, it becomes necessary to create awareness about the on time delivery of the order. It would create the impact on the customers’ mind as well. However, it is noticeable that the development of the strategic alliance can help in managing the effective relationship with the suppliers. In such contexts, the probable risks would be minimized (Monczka et al. 2015).
However, going forward, the organisations even face the difficulties in selecting the suppliers who are professionally skilled and efficient regarding their job responsibility. There would be the probability of the wrong mix of the skills that affect the entire manufacturing process as well as the supply chain distribution (Nair, Jayaram and Das 2015). The customers would expect the higher quality of the products since they are paying for specific needs within the demanded products. If the suppliers are not professionally efficient or skilled, it affects the entire operational process due to which the organisation may have to suffer (Sawik 2014). It would even hamper the brand image for the longer run. These specific conditions are quite essential to be evaluated prior to take any decisions regarding the supplier selection process. It is always necessary to communicate with more transparency regarding the basic needs, time stipulation, and the budget at the initial level while selecting the specific supplier for an organisation (Nair, Jayaram and Das 2015). The evaluation matrix can also help in judging these criteria in the basis of the customers’ needs. Identifying the major areas of concerns and developing the strategic functionalities would help in mitigating the risks underlying such context. The maintenance of the effective interpersonal relationship is supposedly working on these specific attributes that are visible in the suppliers. Melding the entire organisational distributing and manufacturing process according to the customers’ needs would be profitable but concentrating on the availability of the feasible supplier capacity is also necessary. Judging the suitability of the suppliers’ criteria would also help the organization to create the profitable scenario and strengthen the customer base (Nair, Jayaram and Das 2015). On the other hand, the appropriate selection can also help in shaping the buyers’ decisions towards purchasing the offered products.
The study has analyzed both the traditional and the sustainable supply selection criteria for developing criteria essential for gaining competitive advantage. The different criteria are as follows:
Cost is crucial criteria for reaching economies of scale in their operations and the right supplier will reduce the cost of production for the company. The organization will have to reduce the cost of production in all the aspects by establishing control on costs. The difference areas of cost control are purchasing, inventory, maintenance, inspection, security, transportation and ordering (Galankashi et al. 2015). The organization should have the capacity of order fulfilment which means that they will have to select suppliers that can provide the organization with the organizations at the right time, condition and place.
According to Rezaei et al. (2016), order fulfilment can be achieved by integrating elements like product execution, order fulfilment planning, cross application integration and distribution management. Therefore, delivery is another crucial factor for the modern supplier selection criteria. However, the organizations will have to focus on the changing needs of the consumers so focusing on delivery lead time for maintaining just in time inventory and control the flexibility in volumes. This criterion is key as delivery is one of the essential component of supply chain and is a component of overall quality and service.
Quality of the supplied goods is essential for gaining competitive advantage in the market as it will assist in develop quality products. Therefore, in order to maintain the quality of the raw materials and finished goods total quality management and business process reengineering has been used. This will enable process improvement and process control where the environmental impact of these processes will be criteria for integrating better operational and supply chain processes within the organization (Freeman and Chen 2015).
The service quality and consumer satisfaction is the most important criteria for customer retention. This will consist of providing the consumers with high quality product at lower prices than the competitors in the market. Therefore, in order to improve the service level the organization will have to focus on stock management, design capability, and responsiveness (Mahdiloo, Saen and Lee 2015). The firms can improve the quality of the service they provide by incorporating these factors into the logistics. Therefore, the firms have to set their individual operational goals which will be essential for gaining competitive advantage in the market. The suppliers are key component of effective supply chain process and so service ability of the suppliers will have to be evaluated and identified.
Justification for including strategic alliances, environmental management and pollution control
Strategic alliance is the effective way of sharing information, risk and beliefs which will enable to develop more effective supply chain process. Suppliers form partnership with the company and they are included into the internal stakeholders for the organization. The capability of the organization to develop healthy long term relationship, sharing cultural, beliefs, norms and values are essential for companies together effectively. The suppliers should use eco-friendly measures to derive the raw materials where energy consumption, harmful material use and solid waste are three sub factors taken into account. Similarly pollution control is another factor consisting of sub factors such as reuse, recycle, green packaging and remanufacturing. The last factor is environmental management which consist of getting certifications such as EUP and ISO 14001 (Azadnia, Saman and Wong 2015). These certifications are needed as the organization and their suppliers should be aligned similarly and should have similar beliefs. Otherwise, it will lead to conflict in their goals and objectives. These certifications develop faith within the consumers that will trust the organization and purchase the products based on the certification.
Therefore, these factors are the ideal supplier selection criteria in the modern business world where social and environmental impact are essential for maintaining their sustainability. The implementation of these factors will have a long term impact on the organization and the chances of long term sustainability of the organization will increase significantly. On the other hand, Sarkis and Dhavale (2015) stated that green and non-green supply chain factors will have to be clubbed together to develop a better criteria and method for selecting the suppliers in the market. The current supply selection criteria have been developed by taking into account both the green and non-green supply chain management process. The balance between the both is essential otherwise the cost of production will increase significantly. Moreover, the consumers have become more aware about green management and regulatory bodies are forced to implement policies that will be enhance environmental management and pollution control.
This chapter of the study will link the objectives to the findings of the study to develop relevant conclusion. Sustainability has been included in all the major industries as especially for the companies that consider supply chain as the most crucial part of their operations. These will enable them to develop products with sustainability which requires powerful infrastructure so that they can implement sustainability at every phase of the business model. This shows that supplier selection is not limited to sustainability and the supplier will have to appropriate for the values, culture and purpose of the organization. Consumers have been a major factor for the development of the supplier selection criteria as social awareness have increased significantly and the change in the consumer needs have caused the companies to make drastic changes to their supply chain process and suppliers.
Objective 1: To identify the sustainable supplier selection criteria based on the requirement of the consumers
The extensive analysis of the study shows that consumers are willing to buy products that are produced from green practices. The consumers are willing to pay more for the green products and the consumers are turning organic. Globalization has exposed the developing countries in to growth where the economies are developing at rapid rate and the consumers’ disposable income has increased significantly so the customers are willing to pay extra for saving the society and the environment. This has led to the change in the supplier selection due to the pressure from the stakeholders, customers and government bodies (Hashemi, Karimi and Tavana 2015). Therefore, the traditional supply chain selection criteria have changed significantly and green supply chain practices have been included in the supply chain of the organization. The quality of the product, services, delivery time, commitment for improvement, product development, information sharing, flexibility, insurance and location are the business criteria used by all the major companies in the global market (Freeman and Chen 2015). The credit strength of the supplier and financial stability is another sustainability criteria. The suppliers become a part of the organization so it is essential for the organizations to choose suppliers that follow the rules and regulations provided by the industry and apply sustainability practices. The wrong deeds of the suppliers affect the reputation of the company so social criteria such as employment discrimination such as gender, religion, age, flexibility, customers, health and safety and cultural properties (Hashemi, Karimi and Tavana 2015). The environmental laws for the suppliers are strict which include control and protection of the environment. The above-mentioned factors have been incorporated into the business model of different organizations as most of them have included an extra bottom line which measures the social contribution of the organizations. Therefore, the external stakeholders play a crucial role for changing the supplier selection criteria where social and environmental aspect has been incorporated.
Objective 2: To evaluate the importance of sustainable practices in modern business operations
Sustainable practices are one of the essential factor in modern operations as it ensures long term sustainability and consumer retention. Moreover, it improves the image of the brand and the company if they get involved in social activities and make efforts to protect the environment. The levels of carbon emission in all countries are increasing with the increase in development of the society and the economy. The government in different countries are using measures to increase the level of awareness among the individuals for choosing products and options that are sustainable in the market (Bocken et al. 2014). Therefore, the organizations have choice but to adhere to the new rules, regulations and industry standards which are required for sustainable operations. Government rules and regulations have been strictly modified to protect the environment and the society from harmful practices and products. The malpractices of different organizations are closely monitored by the regulatory bodies and any identified variations are easily spread on the online medium which reaches majority of the consumers. The modern consumer will never purchase product from companies that are morally and ethically wrong. These can be seen by the harsh comments and feedbacks given by the consumers on the organizations’ social pages and official websites (Bocken et al. 2014). The media in the modern era is also very active and negative publicity about any organizations will spread worldwide within no time. Moreover, importance of sustainability for the future of the organization has been considered by the stakeholders as they know that resource deponent organizations will have to take green measures for sustaining the business in the long term. Therefore, sustainable practices in the modern business era is needed and important for maintaining the long-term sustainability and consumer retention.
Objective 3: To recommend suitable supply selection criteria for managing sustainable supply chain practices
The exploratory study has provided key findings regarding the supplier selection where it shows that environmental and social factors are key to developing green practices. Therefore, it is recommended that taking society and environment into account is important for managing and developing sustainability in supply chain. The organizations will have to force the suppliers in following the rules and regulations formed by the regulatory bodies in terms of green supply chain and get a certificate that will authorize them to deal in a particular segment (Luthra et al. 2017). The shift from economic aspect to the social aspect has been drastic where the companies know that good social and environmental contribution will increase market share, consumer based and facilitate in retaining the existing consumers. Therefore, the organization should initially evaluate the organizations-based on their suitability to the organizations process and then suggest environmental and social practices followed by the organizations. In case of organizations requiring multiple suppliers will have to carefully state the standards each of the suppliers have to maintain in order to be a part of this collaboration.
This research has analysed the secondary data collected from different journals, articles and web articles. Therefore, the study uses a single research design and the supplier selection criteria have been selected based on the previous conducted in the last few years. Therefore, the study has not been able to accommodate the current opinion of managers and practices used by the companies. Moreover, the supplier selection criteria developed is a generalized finding and there is a scope of narrowing down the topic even further. The use of mixed method for further analysis will provide a different dimension as the result from the qualitative analysis and be compared with the quantitative data.
The study in future can be narrowed to a specific organization or a specific country which will provide a clear, in depth clear analysis of the organizations in a particular country. The study can conduct primary data analysis which will be able to analyse the perspective of both the supply chain managers along with the lower level employees. Therefore, the criteria for selecting supplier and practicing supply chain sustainability can only be illustrated in future research.
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