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The Importance of the cooperation along the supply chain
Due to globalization, which is driven by political measures of international institutions and technological progress, the behavior of companies has changed since the middle of the 20th century. As a result of the reduction of trade barriers, the linking of markets and increasing technological innovations, production and acquisition processes are relocated globally.

This development is intensified in developing countries and emerging economies as focal companies gain cost advantages due to weakly enforced or lacking of social and environmental law. Not only does this development lead to an increase of branching and complexity of supply chains, but it also gives rise to the outsourcing of control and knowledge of particular steps in the production process to the supplier. With respect to SSCM, this reallocation of knowledge and control demands an intra-company and inter-company transfer of knowledge on sustainability to compensate the negative effects of companies’ actions within the supply chain. Cooperation across the supply chain is necessary to meet these requirements. Hence a company cannot pursue a sustainable strategy in isolation but is forced to harmonize its actions with other participants of the supply chain.

Strategic approaches
For the integration of sustainability in SCM, three different approaches can be differentiated.

The integrated strategy is in line with traditional SCM because thereby traditional cost and service considerations are merely complemented by social and environmental issues. The main focus still lies on increasing the customer’s value even though customer preferences regarding social and environmental aspects are more incorporated than before. Methods which are typically used by following this approach are reverse logistics, product stewardship or green SCM, for instance.

The alignment strategy, however, rates economic, social and ecological aspects equally which induces trade-offs between the three dimensions of sustainability. In contrast to an integrated strategy, an alignment strategy considers environmental and social issues not only as a response to customer demand but also based on discrete organizational goals. Examples are the triple bottom line or CSR approaches.

The replacement strategy substitutes the traditional SCM concept with an alternative concept to actually fulfill social and environmental requirements. It is based on the idea that the traditional SCM concept is inconsistent with sustainability. The aim of SCM to increase value for the customer as effectively and efficiently as possible has caused spatial distance between production and consumption which resulted in expanding transportation. Growing transportation in turn tends to have negative effects on the environment. The replacement strategy therefore gives up the absolute profit-oriented SCM approach and focuses more on how and where production takes place. Thus, customers should also reconsider their criteria for product choices. A possible consequence might be that instead of the for SCM currently common “global-to-local” concept a “local-to-local” concept is applied. A “local-to-local” concept implies that production as well as consumption take place on a regional level, which means that production is not shifted on the global level. A typical approach to this strategy is the carbon footprint, in order to unfold the amount of greenhouse gas emissions released on the entire life cycle. Furthermore, there are similar approaches concerning water and air pollution or energy and resource consumption.

Implementation of a SSCM strategy
In order to implement a sustainable supply chain strategy, several aspects have to be taken into account. Scientific as well as applied literature deals with risk assessment and the evaluation and control of the supply chain. These are typically listed as important steps towards the implementation of a SSCM.

Risk Assessment

Risk assessments support companies in analyzing risk factors from internal structures, from its supply chain and environment. For this purpose, the strategy, practices, resources and capabilities which are applied by or found in a company, are analyzed. Due to the interdependency of focal companies with their partners along the supply chain, this analysis is not restricted to the company itself but covers the partners within the supply chain as well. The goal is to identify potential conflicts within the organization and between organizations of the supply chain. However, a company should first identify, understand and cope with problems found in-house before working out the details of a sustainable supply chain with other companies. A sustainability report might support this. Such a risk analysis enables the company to classify suppliers into risk groups and to establish a suitable management approach.

The goal of risk assessment is to identify gaps in the SCM strategy and to develop approaches to alleviate risks. Depending on the size of those gaps, more or less aggressive actions are necessary.

Evaluation and control of the value added chain

Similar to SCM, SSCM is based on communication and cooperation between the focal company and its supply chain. /> Financial instruments are relevant to ensure the development of quality improving programs in production facilities in developing countries and emerging economies. These cover, for example, minimum wages, education and training of employees on the prevention of risks at the work place.

The supply chain has to be continuously and closely monitored with respect to the compliance to sustainability conventions, ensuring the implementation and success of the sustainable system along the supply chain. The focal company or external institutions might conduct inspections of its partners. Evaluation reports and other forms of performance control enable the company to assess the sustainable performance of the supply chain. These allow a periodical assessment or re-evaluation of the links of the supply chain and their capabilities to fulfill the criteria of the focal company. Suitable methods are necessary to execute the evaluation. They are of key importance as they supply necessary information needed for the supplier management. Relevant information covers rules and standards, communication materials, pre-qualifications of suppliers, acquisition guidelines and supplier partnerships.

The conformity approach is one possible tool. It covers the set-up of a monitoring and control chain to identify the origin of resources and conditions at the point of origin. It includes systems such as ISO 14001, SA8000, AA1000 and Enviro-Mark. An alternative is the process management approach, which is more individualized towards the company through the development of own environmental management systems and supplier norms.

Another method is the balanced scorecard. Balanced scorecards enable the evaluation with respect to financial aspects (eco-efficiency, financing, socio-efficiency), sustainability aspects (environment, customers, society), supply chain aspects (products and services, planning and structures, processes) and educational and growth aspects (humans, cooperation and communication, information systems, technology, infrastructure, resources).

Based on these evaluations, the company can decide on the future cooperation within the supply chain. Similar to the traditional SCM, the cooperation is based on the preferential treatment of partners that receive positive evaluations, for example through long-term contracts. Further incentives for meeting the sustainability requirements arise due to the threat of contract termination in case of performance deficits.

The implementation of evaluation instruments leads to the introduction of sustainable development as a key figure on all organizational levels and hence introduces sustainable development into the corporate strategy. This introduction can be eased by announcing a person in charge of this management objective.

Methods of SSCM
Depending on the strategy for SSCM, several methods are available to implement SSCM.

Reverse logistics and closed-loop supply chains
Two common methods of SSCM are reverse logistics and closed-loop supply chains. Rogers and Tibben-Lembke define reverse logistics as:

the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in process inventory, finished goods, and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.

Reverse logistics hence can serve as an environmentally friendly tool through recycling, remanufacturing or reusable packaging.

In contrast to reverse logistics, closed-loop supply chain management additionally takes into account the whole return process of products, including acquisition, testing, sorting, distribution and marketing. It consists of two chains, a forward and a backward chain. The forward chain serves to distribute the product whereas the backward chain serves to return the product. A returned product enters the primary market through the forward chain, or is redirected to a secondary market.

Hence reverse logistics and closed-loop supply chains focus especially on the value added for the customers and their preferences regarding social and environmental issues. Therefore they are particularly suited for the integrated strategy.

Product stewardship
Product stewardship refers to the responsibility which manufacturers and retailers take for their products. From the perspective of SCM this is particularly related to sustainability. Manufacturers and retailers thus are responsible to reduce the ecological footprint of their products in accordance with their supply chain partners and therefore try to diminish the impacts their products have on the climate. The approach hence focuses on the product and the value added for the customer so that it is attributed to the integrated strategy.