Systems Thinking for Sustainablity and Supply Chain Risks

Abstract

Sustainable Supply Chain Management (SSCM) is defined as the ‘Strategic achievement and integration of an organization’s social, environmental, and economic goals through the systemic coordination of key inter-organizational business processes to improve the long-term economic performance of the individual company and its value network’ (Carter and Rogers, 2008). Following the same concept, we analyze sustainable supply chains from a risk management perspective through systemic coordination (feedback loops). For supply chain traceability and risk mitigation we use a systems thinking approach to analyze two different closed loop supply chain systems, one with component supplier and other with contract manufacturer. The research presents a Sustainable Supply Chain Risk Management (SSCRM) sourcing decision framework.

Purpose: The research applies systems engineering concepts to understand supply chain systems and identify various risks associated with respect to sustainability. The two scenarios considered in paper provide insights for future research into the use of contract manufacturing as a possible risk mitigating strategy for strategic as well as sustainable sourcing.

Research Approach: Perspectives on sustainable supply chain management and supply chain risks were sought through an extensive literature review. Two cases of upstream supply chains are analyzed, one with OEM being supplied by a component supplier and other where OEM has contracted out the supply to a contract manufacturer. We use system dynamics tools for capturing the feedbacks in three different perspectives of sustainability (economical, environmental and social). For system conceptualization and modeling, we use the systems thinking approach.

Findings and Originality: This research has used systems thinking approach for investigating the supply chain risks seen from sustainability perspective. This research has modelled two different scenarios in Supply chain for cross comparing the systems performance. Research builds SSCRM sourcing decision making framework for sustainable procurement practices.

Research Impact: Outcomes of research will help academicians and practitioners to gain insights into risks seen from a systemic perspective and will guide them in developing simulation models for sustainable supply chain risk management. The two scenarios provide insights for future research. This work will be extended by developing a SSCRM toolkit for future sustainable supply chains.

Practical Impact: The SSCRM sourcing decision making framework will guide OEMs to consider for sustainable practices based on their respective business requirements. The research will encourage system dynamics approach for solving sustainable supply chain issues in future. The model can be further developed to generate a comprehensive toolkit for mitigating risks in various industry sectors.

Keywords: Sustainability, Supply Chain Risks, Systems Thinking