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Sustainable Supply Chain Management: Insights from Australia’s Firms

Article in International Journal of Business and Management · October 2021

DOI: 10.5539/ijbm.v16n11p99

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 International Journal of Business and Management; Vol. 16, No. 11; 2021
ISSN 1833-3850 E-ISSN 1833-8119
Published by Canadian Center of Science and Education

Sustainable Supply Chain Management: Insights from Australia’s

Firms
Mehadi Mamun1
1
Faculty of Business Administration, Victorian Institute of Technology, Australia
Correspondence: Mehadi Mamun, Faculty of Business Administration, Victorian Institute of Technology,
Australia. E-mail: [email protected]

Received: May 24, 2021 Accepted: September 30, 2021 Online Published: October 20, 2021
doi:10.5539/ijbm.v16n11p99 URL: https://doi.org/10.5539/ijbm.v16n11p99

Abstract
While the sustainable supply chain is an emergent area of interest, the literature provides little guidance on how
best to carry out sustainable supply chain management. The purpose of this paper is to provide hints to
businesses on how best to approach the challenge of developing a sustainable supply chain. Hence, the case
studies method is undertaken to explore how Australia’s companies that are prominent worldwide for their
sustainability performance have approached the challenge of managing sustainability in their supply chain. This
study finds that sustainability action plans and governance tools that rightly reflect requisites for suppliers,
diverse evaluation means to measure the suppliers’ performance, and regular reviews of sustainable supply chain
management practices and policies enable businesses to manage sustainability in their supply chain. The study
contributes to the literature by providing a best practice model from the findings to provide practical guidance to
businesses.
Keywords: sustainability, supply chain management, Australia
1. Introduction
The transformation of conventional supply chain management (SCM) into sustainable supply chain management
(SSCM) creates enormous pressure on companies to make adjustments to their existing supply chain to meet the
sustainability requisites (Busse et al., 2017). Sustainable supply chain management is a management process that
incorporates the two fields of SCM and sustainability (Beske & Seuring, 2014). SCM is the assimilation of
major business processes, which delivers products, services, resources, and information from suppliers to
consumers that add value for consumers and other stakeholders (Lambert & Cooper, 2000), and sustainability is
conceptualised by its principles and dimensions (economic, environmental, and social) for the welfare of
businesses, environment and social systems for a sustainable future (Mc Loughlin, 2018). Hence, Ahi and Searcy
(2013, p. 339) define sustainable supply chain management as “the creation of coordinated supply chains
through the voluntary integration of economic, environmental, and social considerations with key
inter-organisational business systems designed to efficiently and effectively manage the material, information,
and capital flow associated with the procurement, production, and distribution of products or services in order to
meet stakeholder requirements and improve the profitability, competitiveness, and resilience of the organisation
over the short- and long-term.”
Firms that desire to enhance the sustainability in their supply chains need to be more proactive in monitoring
their suppliers across a range of business activities and entail a greater strategic promotion of performance on
sustainability to enable coordination across manufacturing, distribution, and marketing activities (Beske et al.,
2014; Hassini et al., 2012). Busse et al. (2017), Fahimnia et al. (2017), and Govindan et al., (2015) argue that
businesses with a formal line to monitor sustainability practices in their supply chain experience performance
advantages, greater engagement with all stakeholders, and improved corporate reputation. While several
researchers have highlighted the significance of integrating sustainability into the businesses’ purchasing
decisions (Fahimnia et al., 2017; Govindan et al., 2015; Ahi & Searcy, 2013), the research offers not much
guidance on how best to achieve this goal. Therefore, the objective of this paper is to find out in what ways
Australia’s firms that are well-known worldwide for their sustainability performance respond to the opportunities
and challenges related to pursuing sustainability in the supply chain. The present study, hence, seeks to explore
the following research question: How do Australia’s companies that are renowned for sustainability

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performance take up sustainability in their supply chain? This study contributes to the literature by providing a
common practice model for SSCM, which can also be followed by the other companies as exemplary.
The remainder of the paper is structured as follows. The next section outlines an overview of relevant literature
on sustainable supply chain management, the third section draws the research method, while the fourth section
provides the research findings. Concluding remarks, limitations, and scopes for further research are made in the
fifth section.
2. Literature Review
Due to the increasing globalisation of the world economy, constructing, managing and interacting within the
supply chain has turned out to be a challenging task (Genovese et al., 2017). While traditional supply chain
management mostly focuses on the economic outlooks, sustainable supply chain management is linked with the
assimilation of the environmental and social objectives along with the economic objective (Tseng et al., 2015;
Wittstruck & Teuteberg, 2012). Fahimnia et al. (2017), Govindan et al., (2015), and Glover et al., (2014) find
that the businesses that embrace sustainable activities have competitive advantages and long-term economic
benefits. The economic perspective of SSCM focuses on the incorporation of sustainability criteria in such a way
that profitability is achieved with efficient management of the environment and social resources (Carter &
Easton, 2011). Hence, Ortas et al. (2014) and Carter and Rogers (2008) focus on the embracing of environmental
and social measures along the lines of the firm’s economic objectives.
The environmental perspective in sustainable supply chain management is largely about the protection of the
environment that the supply chain is working in. The environmental aspect of sustainable supply chain
management involves the goals, action plans, and practices that promote grander environmental responsibility
and support eco-friendly knowhows (Min & Kim, 2012). Mota et al. (2015) and Wiese et al. (2012) suggest a
few sustainable supply chain management activities that can be incorporated into the business strategies, such as
effective product design that utilise reusable and recycled materials, eco-friendly packaging and warehousing,
and suitable working conditions. Van Hoof and Thiell (2014) and Darnall et al. (2008), therefore, suggest the
firms to act closely with their suppliers to enhance the environmental performance of their production processes
and products, and advise their suppliers to take on sustainable measures such as ethical labour practices and
sensible utilisation of natural resources. Customers also favour green packaged products and firms’ green
procurement strategies in recent times due to the growing environmental worries (Tonelli et al., 2013). Kuik et al.
(2011), hence, suggest the firms to adopt sustainability in the supply chain, and classify sustainable supply chain
management into 3R’s such as recycle, reuse, and remanufacture for process development, and reduce, recover,
and redesign for product design.
The social aspect of sustainable supply chain management is inclusive of society, organisations, and individuals.
The social facet of sustainability is one of the most essential facets in sustainable supply chain management as
organisations include various stakeholders with different perspectives and goals, and managing this variant sets a
challenge to managers (Hall & Matos, 2010). Social sustainability is about the management of social values and
justice, human rights, and the welfare of workers, people, and the whole society (Simoes et al. 2014; Sarkis et al.,
2010). Social sustainability is directly linked to corporate social responsibility, which brings the idea that a firm
should meet the economic, ethical, legal, and other expectations of stakeholders keeping in mind the
environmental and societal needs (Sarkis et al., 2010; Defee et al., 2009). Hence, Simoes et al. (2014) and
Harms et al. (2013) suggest that the supplier management strategies should involve guiding the suppliers to carry
out sustainable supply chain practices and take into account stakeholders’ concerns in the decision-making
process.
Gimenez and Tachizawa (2012) also concentrate on a firm’s governance mechanisms that help to implement its
sustainable strategies and improve sustainability performance. Formentini and Taticchi (2016) define sustainable
supply chain governance as a set of numerous actions to consolidate relationships with the inter-organisational
sectors, supply chain actors, activities, and stakeholders to achieve the sustainability goals. Gimenez and Sierra
(2013) and Vurro et al. (2009) argue that a collaborative relationship with the suppliers generates the maximum
impact in the supplier’s actions for sustainability, and collaborative governance act as a robust means for the
promotion of sustainable supply chain management. In a non-collaborative situation, Formentini and Taticchi
(2016) suggest imposing a firm’s decisions and set the governance to the supply chain counterparts through the
contractual power. The present study, therefore, investigates how Australia’s companies that are prominent
worldwide for their sustainability performance have dealt with the economic, environmental, social, and
governance issues in their supply chain.

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3. Research Method
Since the field of SSCM is relatively new (Touboulic & Walker, 2015), the purpose of this study is to look at
how Australia’s companies that are renowned worldwide for their sustainability performance have practiced to
take up the sustainability in their supply chain. This study, therefore, employs the case study research method as
this research technique focuses on a contemporary phenomenon in a factual context (Yin, 2014).
The Dow Jones Sustainability Australia Index, which is the most cherished independent sustainability ranking
system that benchmarks publicly listed firms’ performance across the industry and evaluates what progress they
are making in terms of achieving their strategic sustainability goals (Searcy & Elkhawas, 2012), has published
the top 10 publicly listed Australia’s companies by sustainability index weight in 2020. Of the 10 companies, the
top six companies have been considered for this study as the development of similar findings over multiple cases
help to generalise findings. The names of those top six companies, which span different industries are presented
in Table AI (see Appendix). Content analysis of secondary information is the key instrument used in this study as
this research means has been widely used in examining companies’ practices on sustainability disclosure (Talbot
& Boiral, 2015; Bowen, 2009). Hence, the sample of six companies’ annual reports, websites, CSR reports or
sustainability reports, and supply chain guides have been used to find out their approaches to sustainable supply
chain management.
4. Cross-Case Findings
The study finds that all of the sample case study organisations recognise the value of corporate social
responsibility to their supply chain and highlight the need to monitor their suppliers’ sustainability performance.
As part of the SSCM strategy, companies’ initiatives include (i) SSCM policy development, (ii) current suppliers’
performance data collection and potential new suppliers’ screening, and (iii) supplier management and
development of a code of conduct for them. In the policy documents, companies convey a clear statement of the
principles and goals pertaining to SSCM. It includes a guideline for the existing suppliers and methods for
weighing new suppliers, which comprise details on requirements for suppliers in the areas of economic,
environmental, social, and governance issues.
To assess current suppliers’ performance and screen new suppliers, a questionnaire is used to collect data on their
performance. The questionnaire of about 100 questions, which is informed by the Daw Jones Sustainability
Index and discussion with sustainability experts, captures information on how suppliers minimise their
environmental impacts, and their policies in the other areas of sustainability, such as labour practices, human
rights, and community involvement of social aspect of sustainability. Table 1 presents an outline of the different
aspects of sustainability contained in the questionnaire where each topic of the questionnaire examines the extent
of strategic position, commitment, and resource investment made by the suppliers.

Table 1. The SSCM questionnaire’s elements

Economic Environmental Social Governance

Economic performance Policies Diversity Policies

Market presence Targets Anti-discrimination Management systems

Industry-specific criteria Eco-performance Child and forced labour Crisis management

Product stewardship Human-capital development Codes of conduct, anti-corruption,

and compliance
Environmental reporting Quality of working life
Public reporting
Workplace health and safety
Collaboration with procurer
Community involvement’s policy,
activities and impacts

The study also finds that all the studied organisations have formed a code of practice that indicates the minimum
corporate social responsibility requirements for all of their suppliers and offers a self-compliance template for
them. In the four cases, small suppliers are not needed to fulfil the SSCM questionnaire, instead, they are
expected to dedicate themselves to the standards required by the code and fill up the self-compliance template.
Each year, a sample of suppliers is also audited against the responses to the SSCM questionnaire and the code to
assess their actual performance against their policies and management systems, and know how to better use

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resources to support the suppliers to improve their performance on sustainability.

5. Conclusion, Limitations, and Future Research
While the previous studies offer little guidance on how best to pursue the goal of integrating sustainability into
the businesses’ purchasing decisions, the present paper’s objective is to provide a guide on how to respond to the
opportunities and challenges related to pursue sustainability in the supply chain through adopting strategies of
Australia’s firms that are well-known worldwide for their sustainability performance. Following a review of the
literature, hence, case studies approach is employed to explore how Australia’s six best companies that are
prominent worldwide have incorporated the challenge of adopting sustainability-oriented purchasing strategies.
Deriving from the findings, therefore, this paper offers a guide for companies wishing to adopt similar strategies,
such as (i) develop sustainability action plans and governance tools that aptly reflect requisites for suppliers, (ii)
develop diverse evaluation means to measure the suppliers’ performance and compliance, and (iii) carry out
regular reviews of SSCM practices and policies to make improvements where necessary.
It is worth mentioning here that the present study should be read with caution, as it is solely based on disclosures
made by companies in the public domain. Further research is, thus, warranted to employ other research methods,
and recognise the experiences and thoughts of managers and other stakeholder groups. Future research can also
be built on this study by exploring whether these strategies can be generalised across geographic boundaries and
businesses.
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Appendix 1
Table AI. The names of the sample Australian companies and their sectors
Australian companies Sector
BHP Group Ltd Materials
National Australia Bank Ltd Financials
Westpac Banking Corp Financials
ANZ Banking Group Financials
Wesfarmers Ltd Consumer Discretionary
Transurban Group NPV Industrials
Source: S&P Dow Jones Indices (2020)

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