Sustainable Supply Chain for Shishi AS

Introduction

With the recent changes in the internal and external business environments, it has become of utmost importance that business organizations step up their operations towards sustainability so as to ensure that they remain relevant in the market. Sustainability is considered from three perspectives namely: environmental, social and economically. Just as an overview, sustainability involves all practices that are aimed at ensuring that an organization is able to benefit maximally from its current operations without compromising the opportunity of future generations to benefit from the operations too (Cheung & Rowlinson 2011, p.481). One of the areas of business operations which have received a lot of attention in the business world is chain supply management. Supply chain management systems are systems which are aimed at ensuring that an organization is able to supply its products of trade to the market as per the market demands. The aim of this research paper is to indicate ways in which Shishi AS, a business organization which operates in the Scandinavian region can adopt sustainable chain supply management systems.

As indicated earlier, Shishi AS is a business organization with its head office in Tallinn, Estonia (Shishi, 2012, p.1). The designs and creates interior decorations for any place, be it home, office, stage, church and so on. The company operates in the Scandinavian region. It has operations in Russia, Norway, Ukraine, Estonia, Latvia, Lithuania and Kazakhstan. Some of the products which the company deals with include vases, natural and artificial flowers, artificial trees and other interior decoration products (Shishi, 2012, p.1).  Due to the wide market coverage of the company in addition to the vast number of products which it deal with and their delicate nature, it is important that the organization has supply chain management which ensures that the company is able to meet the market demands on time, and also ensure that their products are delivered in the best conditions possible. On another perspective it is important to acknowledge that the business environments are changing with time. The climate change is a proving to be threat to human existences, the financial fluctuations in the market are making it hard for business organizations to make profit and the society is changing its expectations from business organizations over time.  These changes make it necessary for organizations to adopt sustainable supply chain management systems (Colicchia, Melacini & Peroti 2011, p.707).  A sustainable supply chain system is one which enables an organization to reap maximum benefits from its operations without disadvantaging the future generations from reaping the same benefits. The following research paper will give ways in which Shishi AS can embrace sustainable supply chain systems.

Literature Review

A supply chain is a well coordinated system/ chain in which products move from their source (Production Company) to their final place (customer) (Javier –James 2012, p.195).  Generally, a supply chain consists of several supply chain stages. The supply chains start with customers. On this point, Shishi AS customers from all the countries named above make orders indicating the specific products which they are interested in. The customers are able to purchase their products of choice from retailers of their choice. Therefore retailers form the second stage of the supply chain.  If the retailers do not have the specific products that the customers are looking for, they may place requests from the wholesalers. A customer who wants products in bulk may also opt to go to the wholesaler rather than the retailer, hence getting discounted prices. The wholesalers or distributors supply the retailers and they form the third stage of the supply. The manufactures form the fourth stage of the supply chain. Customers may place customized requests for products. However, manufactures manufacture products according to the market demands. The manufactures use the wholesalers and the retailers to get the manufactured products to the market. The last stage of the supply chain is the suppliers of raw materials. These suppliers provide the manufacturer with all the raw materials needed to make the needed products.

As pointed out earlier, it is important that an organization practices supply chain practices which enable it to maximize their profits and at the same place ensure that the organization is able to enjoy the same benefits in the future. This is the main objective of sustainable supply chains.  The following section will give a review of sustainable supply chains with respect to the environment, social and economic perspectives.

Environmental Sustainability Supply Chains

Among the issues which have created a lot of fuss in the world with respect to sustainability is the environment. As at now, the climate changes in the world are giving man a run for his money and time. The environment is one of the basic tools of production and without it, the giant organizations which man boasts of will be no more. Carbon gasses are the main causes of climate change (Michael 2007, p.22). Carbon gases provide a permanent gas cover on the earth, hence leading to global warming which is the root cause of climate change. Other  factors which lead to environmental degradation are the encroachment of humans into the natural resources for example forests, the irresponsible use of natural resources for example fossil fuels and water among others.  With the corporate sector being one of the major contributors carbon gases and perpetrators of the anti environmental practices indicated above, it becomes of utmost importance for an organization to ensure that it employs sustainable business practices. Among the business practices which organizations have made moves of improving are supply chains (Saabany, Jaber & Bonney 2011, p.1202).

With respect to environmentally sustainable supply chains, organizations have adopted green supply chains/ green logistics. Green logistic in a supply chain involves all measures aimed at reducing the amount of carbon gas emissions (Dey, LaGauardia & Srinivasn 2011, p.1238). Green logistics includes the following practices. Green logistics starts with the design of the product and the planning of the production process. For instances, the design of the products can allow for the transportation of many products in bulk. The raw materials used in the production should be readily available and if possible, recycling should be employed. The second aspect of green logistics involves the actual distribution of products. On this aspect, it is recommended that organizations use transportation systems which reduce the emissions of carbon gases as much as possible. On this note, the organization should make use of greener transportations technologies. The third aspect involves the management of materials. Here, an organization should embrace manufacturing systems which have as less environmental impacts as possible. Lastly, green logistics calls for a reverse distribution where materials are recycled, hence being able to manage waste more effectively (Lau 2011, p.876).

Basically, sustainable supply chains are ones that have reduced impacts on the environment. The fundamental thing that should be upheld in a sustainable supply chain should be the reduction of carbon emissions while transporting good from one point to another. Statistically, the transportation sector is the second largest emitter of carbon gases in the environment. For this reason, it is important to reduce carbon emissions by transporting as much products as possible at a go, using transportations technologies which emit as low green gases as possible for instance petrol engines instead of diesel engines, unleaded fuels among others (Michael 2007, p.23).

Social Sustainable Supply Chains

A supply chain is said to be socially sustainable if it upholds social values. For this reason, a socially sustainable supply chain is able to benefit the society now as it would in the future. On this aspect of sustainability, the society expects that a specific supply chain will add value to it and not the vice versa. The following section will discuss some of the values which the society looks for in a supply chain. Safety is one of the major aspects of a sustainable supply chain. A socially sustainable supply chain is one which upholds the safety of the society. On this note, it is expected that a socially sustainable supply chain should transport products according to the recommended conditions. for instance, if the products being transported are consumables or perishables, it is expected that an organization makes use of transportation mechanisms which uphold the safety of the products. On a broader perspective, a safe supply chain is one which does not put the society at risk, for instance over speeding fleet.

A socially sustainable supply chain should also uphold the health of the society. This point is closely related with the safety of a supply chain. In fact, it is impossible to talk about one without talking about the other. On this point, it is expected that an organization transports its products in manners which do not compromise the health of the people who are going to use the products. Other aspects which impact on the health of the society such as pollution should also be eliminated. A supply chain should also make the products being supplied available to all. On this note, equity is also desired of a socially sustainable supply chain. A supply chain should not hold products in speculation of price hikes nor should it discriminate some markets against others. This makes a supply chain socially sustainable since it will always remain relevant to the society for time to come.

Economical Sustainable Supply Chain

Among the major objectives of any business organization is to make profits. This is made possible if an organization is able to sell its products which starts by ensuring that the supply chain meets the market demands. An economically sustainable supply chain embraces growth of an organization. Therefore, it must be able to supply to all the markets. It should also be efficient; delivering products at the time and place where they are needed. It should also create employment and also uphold good employment regulations (Massachusetts Institute of Technology, 2012, p.20). An economically sustainable supply chain should also enable an organization to compete with other businesses effectively. This starts with it being able to meet the demands in the market.  Lastly, an economically sustainable supply chain should give the organization various alternatives of going about supplying products to a specific market. This brings about redundancy. On this point, Shishi AS supply chain should adopt alternatives, growth and efficiency so as to be economically sustainable.

Methodology

For the purposes of finding a finding out the current supply practices in Shishi AS and consequently coming up sustainable supply chain recommendations to the company, a research study on the company was done. 

The research study involved the live interviewing of several Shishi AS staff. The interview was conducted on the 17^th of October 2012.

Data Analysis

The data collected from the interviews was mainly qualitative data. Therefore, the analysis of the data was done via a logical and a discourse analysis. A discourse analysis identifies patterns in the data while a logical analysis analyses the flow.

Results

From the study, the following was identified.

The company is not that much involved in all the aspects of the supply chain. It was identified that the company leaves approximately 90% of the supply chain management to the supply managers.

It was identified that the company supplies products to stores as per their demands. Each store is supplied to in one exclusive transport move. This means that no matter how small the consignment is, it is delivered individually.

It was also identified that each customer’s purchases were delivered at the time of purchase. Deliverer is offered according to the size of products that are purchased. For low purchases, customers are expected to meet the transportation costs.

On the other hand, delivery is provided for businesses which purchase from Shishi AS shops.

The supply of products from the over 30 factories which make Shishi AS’s products is delivered to the wholesalers directly from the factory.

The critical aspects of the supply chain are that it is not able to meet the high market demands during high seasons. Normally, there is inappropriate distribution of products in all the stores 

The company has only included economic sustainability aspects in the supply chain.

Discussion

From the results, the company needs to integrate environmental sustainability (green supply chain) and social sustainability in the supply chain. The company’s transportation system emits a lot of carbon gases, which is as a result of it not maximizing on the number of products it transports at any one given time. The company also does not satisfy the market demands with its supply chain due to ill management. This has led to unequal distribution of products. On this note, the company needs to integrate the use of the following two aspects.

Green Supply Chain

The company should adopt a green supply chain. This ensures that the company will reduce the amount of carbon emissions it emits to the atmosphere.  One of the things that the organization must do is to ensure that each freight carries as many products as possible. This will reduce the amount of carbon emissions per product delivered drastically. This is contrary to the company’s practices as at now; where the amount of products transported at any one time is not taken into consideration. The company should also make use of well maintained trucks which reduced the amount of carbon gases emitted per unit time. At present, some of the company’s fleet is ill maintained, hence producing a lot of smoke. The company should also use fuel efficient vehicles. On this point, the company should consider purchasing vehicles which have fuel saving technologies for instance EFI and VVTI.  This is contrary to the company’s present practices. This move will reduce the amount of fuel consumed per unit time, hence reducing the amount of smoke produced per unit time. Lastly, the company should consider a green logistics package as discussed above in the literature review (Saridogan 2012, p.112).

Socially Sustainable Supply Chain

With respect to this aspect of the company’s supply chain, it is recommended that the company adapts a more socially sustainable supply chain. As seen in the interviews, one of the aspects which have proved to be a problem in the chain is the in appropriate distribution of products. This has led to inequality in the instances whereby the customers from specific locations are not able to get what they want. This is socially inappropriate as per the social sustainability theory discussed earlier. Secondly, this kind of supply leads to inaccessibility of products. It creates no utility when a customer is not able to get what he/she wants at the specific time when he/ she want the product. It is therefore important that Shishi AS establishes a chain supply which factors in this aspect. 

As indicated earlier, the company is not able to supply its products according to market demands. This unequal distribution of products disadvantages some markets, hence leading to inaccessibility and inequality in the supply chain, which a move away from social sustainability. As  a move to ensure that this is rectified, the company should adapt strategic supply chain strategies for instance lean supply chains system which minimizes the costs of supply as low as possible and the AGILE supply chain system which takes into account the prevailing market demands, hence responding to it with the aggression required (Javier –James, A., 2012).

It should be noted that the modern consumer is conscious; hence makes decision after considering the general behaviors of an organization. For this reason, it becomes important to satisfy the customer now, and ensure that the customer is retained for future purposes, thus realizing sustainability. Economic sustainability comes about as an organization becomes socially and environmentally sustainable. This is because this increases the likely hood of attracting and retaining customers.

In conclusion, it has been seen from this research paper that sustainability in supply chains involves several aspects. It has been identified that a supply chain should be environmentally, socially and economically sustainable. Sustainability has been described as a means in which an organization is able to enjoy the full benefits of its operations without compromising the chances of future generations enjoying the same benefits. The research done on Shishi AS was helpful in identifying the possible aspects of the company’s supply chain where the company should embrace sustainability. The paper has identified two aspects of the sustainability which the company should adopt as green supply chains and social sustainability supply chains. Summing it up, sustainability is a must for any organization which wants to be present in the future. Precisely put, it is a bridge to the future.