Developing supplier management from environmental and social perspective

Abstract

Interest in sustainability in supply chains has become more widespread in both research and business over the past decade. The case company of the thesis had also identified the growing importance of sustainability for business. The objective of this case study was to examine the development of supplier management from social and environmental perspective. More specific, the objective of the research was to identify how the sustainable performance of the supplier could be evaluated continuously. In addition to this, the objectives were to identify what information the suppliers disclose about themselves and how can the supplier’s sustainable performance and transparency be developed.

Articles of the literature review identified that sustainability can be observed through triple bottom line and the articles identified four different supplier management practices: supplier selection, supplier monitoring, supplier development and supplier collaboration. It was observed that supplier selection and monitoring do not have influence on supplier performance, and supplier development is required for improving supplier performance. The articles examined indicated that the indicators are suitable for the continuous evaluation of the sustainable performance of the supplier. In addition, a way of observing the supply chain transparency was found in the literature.

The research was conducted using a qualitative single method approach, which included fourteen semi-structured interviews. Six interviews were conducted within the case company and eight interviews were conducted with case company’s suppliers. The research strategy was a case study, and the case of the research was the supplier management from sustainability perspective. The data of the research was analysed using thematic analysis and the collected data was coded twice.

The most significant result of the work is the framework for developing the supplier sustainable performance and transparency. The framework was adapted from the previous research based on the results of the research. A buyer’s indicators for suppliers’ sustainable performance should be based on the buyer’s objectives according to the framework. Suppliers’ own sustainability indicators should be based on the supplier’s objectives and buyer’s requirements. The metrics for indicators should be defined by the buyer and supplier in cooperation and should be derived from external, recognized source. The buyer identifies development targets through supplier evaluation. The buyer must identify supplier’s available resources and buyer’s influence on the supplier regarding the allocation of development activities. When the influence on the supplier is strong, indirect and direct development activities are necessary, depending on the supplier’s resources. The research did not identify development activities when the buyer’s influence on the supplier is weak. In addition, the results of the research include the suitability of the indicators for the continuous evaluation of the supplier sustainable performance, and that suppliers disclose their sustainability information to the public and to customers, but in terms of systematic sustainability reporting, suppliers comply with the requirements of the legislation.

The most significant theoretical contribution of the research is the framework given as a proposal for action. In addition, the research found, among other things, that the terminology of sustainability is not completely established in the case organization and its environment despite previous research, as well as the importance of trust in supply chain transparency. Further research is generally needed of the topic. More specific, further research would be needed on development activities when the buyer’s influence is weak, the practical functionality of the proposed framework, and the implementation of emerging technologies to improve transparency.