Sustainable Supply Chain Management and Risk

  • 16 Pages
  • Published On: 18-12-2023

Executive summary

Sustainable supply chain management is the business practice that focuses on developing sustainable solutions to handle global supply chain and distribution network for running the business operations. the organisational leader and management team focus on managing the source of raw materials and other equipment as well as handle the organisational production and manufacturing activities, process, stocking and warehouse management of the raw materials, and managing the customers. The whole process is managed by sustainable supply chain. In the recent era of globalisation, the construction industry is growing rapidly; however, there are several risk factors to develop appreciate supply chain. The study is effective to identify the risk factor associated with the sustainable supply chain as well as identify the sustainable solutions to develop effective supply chain and distribution network for the benefits of the company.

The major risk factors are such as, raw materials shortage and environmental regulations, economic uncertainty, cargo theft and high cost, unsustainable supply chain management and lack of management of the suppliers. It is hereby necessary for the construction company to develop sustainable solutions for maintaining supply chain and the strategies of managing people, economic responsibly fulfilment through profit maximisation, social value creation, as well as environmental sustainability through waste management, managing quality raw materials in construction industry, utilising latest technology and equipment, reducing greenhouse gas emission and increasing the use of renewable resources are effective for the construction companies to develop green supply chain to secure future sustainable development.

Sustainable Supply Chain Management

Risk factors

Raw materials shortage

Strict environmental regulations

Economic uncertainty

Cargo theft and high cost

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responsibility of the corporate leaders and the managers to manage the global supply chain network of construction industry efficiently in order to maintain the quality of the construction project and sources the quality raw materials to produce the best quality project for the customers. The supply chain is conducted through the activities of sourcing the raw materials, production, processing, storage, wholesale distribution and project management to the customers

Supply Chain Management

Supply Chain Management is the practice of maintaining the flow of goods and services that includes all the process of transforming the raw materials into final outputs. It mainly involves the active streamlining of the business supply side to maximise the customer’s values and gain a competitive advantage in the marketplace (Blanchard, 2021). The organisations try to develop good Supply Chain in the market in order to manage the whole operations, starting from arranging raw materials, sourcing other organisational resources to final production so that it would be possible for the organisations to manage their operations and satisfy the clients in the market by delivering the best quality products and services (Asamoah et al., 2021).

Sustainable sourcing

Implementing latest technology and production equipment Maintaining quality of raw materials Utilising good labour and suppliers Processing and project planning Storing and developing construction building

management

Sustainable operations

Green environmental footprint

Economic responsibility

Social value creation

Business excellence

Creating suppliers values and retaining them with high return on

Triple bottom line for sustainable Supply chain

The strategies for developing sustainable supply chain are creating values for the customers, managing the people, maximise profitability and productivity to provide high return on investment,

The practice of waste management, paper packaging system, and green environmental footprint, solar panel for electricity, investing in electric cars and following legislations are effective to develop green supply chain

Social investment is mandatory for creating values for all the stakeholders.

Maintaining the business process through technological advancement and empowerment o

Sustainable Supply Chain Management

Introduction

Supply Chain Management is the practice of maintaining the flow of goods and services that includes all the process of transforming the raw materials into final outputs. It mainly involves the active streamlining of the business supply side to maximise the customer’s values and gain a competitive advantage in the marketplace (Blanchard, 2021). The organisations try to develop good Supply Chain in the market in order to manage the whole operations, starting from arranging raw materials, sourcing other organisational resources to final production so that it would be possible for the organisations to manage their operations and satisfy the clients in the market by delivering the best quality products and services (Asamoah et al., 2021). Through this study, it is possible to demonstrate the practice of Supply Chain Management in the organisations, so that the business leaders can manage their operations, and maintain the supply chain network for transforming the raw materials into final products of the company.

It is the responsibility of the corporate leader to manage the suppliers and retaining the efficient distributions of handling the supply chain network and through this study, it is possible to analyse the practices of developing sustainable supply chain for the benefits of the company. The first section of the study focuses on Supply Chain Risk Management, where the organisations can manage their risk factors associated with supply chain. On the other hand, the second part will be helpful to develop the practice of sustainable supply chain to manage the operations of the brands. In this study, the construction industry is being chosen for critical analysis, of managing supply chain and risk management, so that the construction company can expand their business strategically by handling their sustainable supply chain in long run.

Part A: Supply Chain Risk Management in construction industry

The construction industry across the globe is running with huge profitability and sales volume as the demand for the houses and apartments is increasing and the clients make their purchase decision as per their choice and preferences (Verma, 2021). The construction industry is hereby growing rapidly and it is the responsibility of the corporate leaders and the managers to manage the global supply chain network of construction industry efficiently in order to maintain the quality of the housing and sources the quality raw materials to produce the best constructions. The construction supply chain is conducted through the activities of sourcing the raw materials, production, processing, storage and managing the process of construction (Wieland, 2021). These are the major activities of managing supply chain in the construction industry. Construction supply chain performance management is a key to meet the growing consumer demand for the products that are safe and of high quality, sustainably produced, of assured provenance. A well-managed supply chain has social, environmental and economic benefits, where the construction managers and retailers can create values for the stakeholders as a whole (Jermsittiparsert, Namdej & Somjai, 2019). Hereby, supply chain management in the construction industry is helpful to run their activities efficiently in the market where through managing the supply chain, it is possible for the Construction Company and manufacturers to manage the raw materials, storing the products and produce the best quality products for further customer satisfaction. Hereby, construction supply chain management is one of the effective ways to run the business in the market sustainably by creating values for the stakeholders. Hereby, the construction producers focus on creating good supply chain network, in order to produce the best quality products for the customers and maintain the distribution network so that it would be possible for the manufacturer and retailers to handle the market demand and retain the customers successfully (Teixeira et al., 2018).

However, there are several risk factors for which the construction manufactures face difficulties in maintaining the quality of their products and it hampers the brand values and reputation in long run. The major risk factors associated with supply chain management in the construction industry are such as, raw materials shortage, climate change, environmental regulations, economic uncertainty, cargo theft and high cost, as well as industry unrest and economic uncertainty and structural change. These are the major risk factors associated with the supply chain management (Ghani et al., 2017). The other risk factors are lack of management of the suppliers, increasing competition and excessive pressure on demand. It is important for the organisational leader and management team to manage the risks in construction supply chain management and develop alternative strategic planning to tackle sustainable supply chain.

Raw materials shortage

The major risk factor associated with the construction supply chain management is raw materials shortage, where the construction manufacturers try to manage their stock of raw materials to manufacture the final constructions in the industry (Vijayvargy, Thakkar & Agarwal, 2017). Due to lack of availability of the raw materials, the suppliers face issues to supply the raw materials and it further hampers the process of the construction building. It is important for the suppliers to source the raw materials efficiently on daily basis, so that continuity can be maintained and improve their efficacy to maintain the stock of the raw materials successfully (Tsai et al., 2021).

Environmental regulations

Economic regulations such as Environmental Protection Act as well as ethical rules are there to maintain business ethics and run the organisations sustainably. Due to increasing emissions, lack of waste management and poor supply chain management, the suppliers fail to maintain environmental standard in the construction industry which deteriorates the values of the organisation (Nguyen et al., 2021). It is hereby necessary to mitigate the risk of environmental footprint by developing sustainable supply chain, where the suppliers must cooperate with the organisational leader for successful waste management and tackling the climate change issue so that it would be possible to develop good supply chain network

Economic uncertainty

Economic uncertainty is another major risk factors related to the supply chain management, where the organisations in construction industry face economic slow down, with low demand of the products and less purchase volume of the customers. For example, in the recent pandemic situation, there is lack of demand of the construction building and the economic downturn across the globe hampers the global supply chain (Petljak et al., 2018). It deteriorates the supply chain activities in the construction industry and the business activities are also hampered due to such economic uncertainty, decrease in GDP and purchasing power parity of the individuals. It is important for the suppliers to manage the economic uncertainty by tackling their supply chain towards sourcing the necessary items in order to continue the business process of construction management by handling the quality raw materials.

Cargo theft and high cost

cargo theft and high cost of the cargo and freight services are other risk factors associated with the supply chain in the construction industry, where the suppliers face difficulties to manage the supply chain in a cost effective way, due to rising fuel cost and increasing the cost of maintaining business network, the cost of freight system is increasing over the time. It is hereby important for the suppliers to manage the cost of the cargo system by transforming bulk amount of raw materials required for construction and adopting sustainable practice to transform the items successfully (Balasubramanian & Shukla, 2017).

Unsustainable supply chain management

Unsustainability in supply chain management is also another major risk factor associated with the supply chain in the construction industry, where the suppliers and distributors fail to manage their global supply chain in a sustainable way. The problems are such as increasing greenhouse emissions, increasing use of resources, plastic usage and environmental pollution due to poor waste management (Wibowo, Handayani & Mustikasari, 2018). The suppliers and construction producers must cooperate with each other or tacking these risk factors, and develop good strategic planning for managing sustainable supply chain. The practice of paper packaging system, using electric cars for transaction and utilising renewable resources would be beneficial of tackling this risk of unsustainability and maximise industry performance by managing sustainable practices.

Lack of management of the suppliers

Increasing competition in the construction industry further raises the bargaining power of the suppliers, where the organisational management team fail to handle the suppliers due to lack of profitability, poor stakeholders management, lack of communication and non-cooperation (Harland, 2021). Hereby, in order to mitigate these risk factors, it is essential for the organisations in construction industry to manage the suppliers with high return on their investment as well as develop stakeholder management practices by improving corporate bonding.

Part B: Sustainable Supply Chain Management

Sustainable Supply Chain Management is important of the construction industry in order to maintain the production and manufacturing units of the producers as well as create values for the customers in long run. Triple bottom line is the practice through which it is possible to maintain sustainability in the supply chain management (Moktadir et al., 2021). Triple bottom line is effective to improve corporate social responsibility of the organisations where the strategy of triple bottom line includes managing planet, people and profit. Through triple bottom line strategy, it is possible for the construction managers to manage sustainable supply chain, where they can manage the suppliers and retain them for long run. The organisations under construction industry must focus on managing people, planet and profit in order to develop good supply chain management (Moosavi et al., 2021). Further strategic solutions will be evaluated for developing sustainable supply chain in the construction industry.

People management

It is the responsibility of the organisational leader and managers to manage the people engaged with the construction company. For managing the supply chain, it is necessary for the construction companies to handle the external stakeholders who are engaged with the supply chain. The external stakeholders of the company are such as the suppliers, distributors, social communities, customers and government, who are directly and indirectly related to the supply chain of the construction companies (Shao et al., 2021). The organisation needs to manage their external stakeholders by providing them high return on their investment. By providing the best quality products at effective price, the company must create values for the customers. Additionally, following the government regulations and creating value for the social communities, it is essential to manage the sustainable business practices (Kaur et al., 2018). The suppliers and distributors are the major stakeholders in the supply chain of the organisation in the construction industry. Hence, the organisation must provide high return on their investment, incentives and rewards as well as develop good bonding by improving trust and respect for them. These practices in the organisation are effective to manage the suppliers of the company and retain them for long run (Balasubramanian & Shukla, 2017). The internal stakeholders such as employees, and managers are also engaged with the supply chain where the internal process of the company, such as storing and processing the products, handling supply chain network through technology are the major tasks of the internal stakeholders, where the organisation needs to create values for them through providing corporate culture, freedom to work and incentives.

Profitability or economic responsibility

Profitability management is another practice of developing sustainable supply chain in the organisation. In this regard, the company must maximise their profitability in order to provide high return to the internal and external stakeholders of the construction companies. The organisations must manage their production and processing efficiently to serve the customers with the best quality products and services. It further helps the brands to generate revenue and enhance their sales volume in long run (Nasir et al., 2017). The construction companies are hereby able to maximise their profitability and in this regard it is necessary to fulfil their economic responsibility by providing high return to the stakeholders. By using sustainable techniques and resources, increasing the efficiency of buildings, vehicles and machinery at a significant cost savings and it further helps to maximise profitability and productivity to run the supply chain sustainably (Chawla et al., 2021).

Planet or Environmental stewardship

Managing planet is important for sustainable supply chain and ensuring Environmental stewardship, where it is possible to utilise renewable resources and improve efficacy in protecting the natural resources (Blanchard, 2021). The organisations in construction industry must focus on utilising quality materials as well as follow the sanction planning of the construction. It is also important to manage the climate change to source the raw materials to the construction companies. In addition to this protecting the natural resources and increasing the use of renewable energy resources are important. The construction companies must implement solar panel for electricity as well as using renewable solutions for protecting the natural resources. It is beneficial for the organisations to manage sustainable supply chain across the international countries (Badi & Murtagh, 2019). Waste management through preservation, Recover through Recycling, thermal treatment, composting and bioremediation are mandatory to manage the construction industry supply chain so that the suppler can run their activities in a sustainable way.

Reduction of carbon footprint

It is important to reduce the carbon footprint for developing sustainable solutions to the business and in this regard the organisation must utilise electric cars for transferring the products and raw materials from one place to another. It is the responsibility of the business leader to invest in electric cars, so that it would be possible to reduce the greenhouse gas emission and choose sustainable way to transact the final products and also source the raw materials through environmentally sustainable way (Sharma, Chandna & Bhardwaj, 2017).

Legislation

There are legislations and ethical practices that support the construction manufacturing companies to develop sustainable supply chain and in this regard Building and Other Construction Workers Welfare Cess Act, 1996 is the major legislative structure to protect the safety and security for serving the customers with quality construction projects. Health and Safety at Work Act 1974 is effective to maintain safety measures at the construction sites and Construction (Design and Management) Regulations 2015 also provides guidelines to develop the constructions project according to the sanctioned planning (de Oliveira et al., 2018) . The safety legislation is effective to mitigate the issues insecurity and hazardous, loss of productivity and infestations. The organisations also follow the Data Protection Act 1998 as well as the Human rights guidelines, to protect the interest of the suppliers and other stakeholders for developing sustainable supply chain management (Elbaz & Iddik, 2020). The legislative structure is hereby beneficial for the construction companies to run their supply chain sustainably and create values for all the stakeholders, by managing hazardous situation, protecting the wellbeing of the individuals, managing safety measures, providing insurance in the construction sights, continuous monitoring and quality supervision, so that the employees can be guided and supported to work efficiently.

Social values creation

For sustainable supply chain management, it is necessary to develop social sustainability which in turn helps to create values for the social communities as a whole. In this regard, the organisations under construction industry must invest in social developmental projects, education and NGOs for social values creation (Moktadir et al., 2021). Additionally, the construction companies must ensure human rights and equality and diversity management in working cooperatively. This further helps the company to provide equal scope to the suppliers and distributors to work collaboratively and contribute in the organisational achievements (Cousins et al., 2019). The supply chain process includes, supplying raw materials, production, processing and developing building construction with effective planning as well as customer handling and in this regard, it is necessary for the organisations to provide good working culture with equality and diversity as well as manage health and safety at the workplace, providing safe environment to work to all the stakeholders for better management of the construction projects (Tseng et al., 2019). These practices are hereby beneficial to create sustainable supply chain and achieve the organisational vision strategically. Through maximising social values, the construction company can manage their suppliers efficiently by protecting the natural resources, reducing environmental pollution and investing in the social developmental projects.

Internal and external business process

Internal and external business process must be enhanced over the period of time. The product quality management and advanced techniques are necessary to be maintained for inbound logistics management by ensuring quality warehousing and product stock management. Additionally, it is essential to manage the outbound logistics through increasing transportation services and instant delivery system where the suppliers and distributors are able to manage their responsibility by utilising the organisational resources and capabilities (Dinçer, Yuksel & Bozaykut-Buk, 2018). Reducing fuel consumption and cost effective strategic implementation further boost the organisational efficacy and economies of scale which in turn provides a scope to the companies to manage the business excellence. Latest technology including ICT and ERP are necessary to be implemented in the company where the construction manufacturers and managers can manage the suppliers and distributors through the online activities and integrated software system. This further increases efficacy and reduce the time of conducting supply chain activities.

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Conclusion

For securing business sustainable development in future, it is essential to manage sustainable supply chain by developing partnership working practice with cooperation among the suppliers, distributors, manufacturers, wholesaler and retailers. In order to mitigate the major risk factors relate to supply chain management in the construction industry, it is important for the companies to develop sustainable solutions. In this regard, utilising electric cars for reducing greenhouse gas emissions, waste management process and utilising renewable resources are the best practice of business sustainable solutions. On the other hand, making the business profitable and providing high return on the investment as well as customer value creation by providing the best quality products are also important strategy to develop sustainable supply chain in the construction industry. Moreover, the organisations in construction industry must ensure green environmental footprint, protecting natural resources and developing social value by following legislations, human rights and maintain equality and diversity, so that the suppliers and distributors are managed well and the corporate leaders would be able to develop sustainable supply chain in running the business efficiently.

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