Environmental sustainability and supply chain management

A framework of cross-functional integration and knowledge transfer

7th International Environmental Management Leadership Symposium

Dorli Harms

Rochester Institute of Technology in Rochester

2nd – 3rd May, 2011

Dorli Harms, CSM

Outline

■ Sustainable supply chain management & cross-functional integration

■ Research objective

■ Theoretical background

■ Framework

■ Conclusion & future research

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Dorli Harms, CSM

Sustainable supply chain management

■ Management of material, information and capital flows

■ Considering all three dimensions – environmental, social and economic –of sustainable development

■ Meet customer and stakeholder requirements

■ Cooperation among companies along the supply chain

■ Internal integration between demand-focused and supply-focused processes

(Carter et al. 1998; Carter & Rogers 2008; Seuring & Müller 2008; Esper et al. 2010)

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(according to the understanding of Harland, 1996, p. S63; Seuring & Müller, 2008, p. 1700)

external supply chain (demand side)

Sales/Mar-keting

external supply chain (supply side)

Stakeholderconventional SCM

Legend

Purcha-sing

Focalcompany

1st tier suppliers

2nd tier suppliers

Con-sumers

Custo-mers

Disposal/Recycling

Sustainable internal and external supply chains

Media/press

NGOs

Universities

General public/local community

Potential employees

R&D

CSR/CR

Legislative

StakeholderSSCM

PR HR Legal

Manufac-turing

Logis-tics

Internal supply chain

upstream

flow of information

downstream

Dorli Harms, CSM

Cross-functional integration

■ Collaboration of employees “with varying functional specialization”(Takeuchi & Nonaka, 1986, p. 5)

■ Internal supply chains include purchasing, production, and sales/marketing(Harland, 1996)

■ Every functional unit covers its own area of specialization

■ Specialization increases interdependencies and the need for coordination (Olsen, 1995)

■ Balance needed between benefits derived from specialization and the integration costs

(Galbraith, 1970, pp. 118–119; Thompson, 1967, 2003, p. 64; Turkulainen, 2008, p. 16)

■ Transfer of information and knowledge is demanded(Hsu & Hu, 2008)

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Dorli Harms, CSM

Research objective

■ Research question

How does cross-functional integration play a role in intra-organizational transfer of SSCM relevant information and knowledge?

■ Conceptual approach

■ Referring to knowledge-based theory of the firm (Grant, 1996)

“assumption that the critical input in production and primary source of value is knowledge” (Grant, 1996, p. 112).

■ Discussion of potential measurements to cross-communicate SSCM relevant information and knowledge between functional units

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Knowledge transfer in sustainable supply chains

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(modified from Sveiby, 2001, p. 347)

external sustainable supply chain (supply side)

external sustainable supply

chain (demand side)

individual competences

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internal sustainable supply chain

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Mechanisms of knowledge transfer

■ Rules and directives: e.g. internal rules concerning purchasing restrictions to suppliers who exploit child labor

■ Sequencing: e.g. production planning or inventory management could be measurements which affect energy consumption

■ Routines: can help to evaluate the environmental performance within a company

■ Problem solving by groups and decision making: building of cross-functional task force teams for product development or crisis management

(according to Grant, 1996)

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Framework

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Levels of knowledge transfer in SSCM

Mechanisms

(1) Within internal structure

(2) From external to internal structure

(3) From individual competence to internal structure

Rules & directives (I) Setting rules how to use IT for transferring SSCM information

(V) Issuing directives for suppliers

(IX) Establishing rule about four-eyes principle

Sequencing (II) Adding expert’s information in a internal data base

(VI) Learning from suppliers (e.g. job rotation)

(X) Transmitting knowledge obtained in seminars

Routines (III) Holding brief daily morning meetings (cross-functional)

(VII) Establishing knowledge-sharing routines

(XI) Behaving sustainability-oriented (waste reduction)

Group solving (IV) Setting up a task force group for internal improvements activities

(VIII) Developing sustainability- oriented products

(XII) Providing experiences with crisis management

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Conclusion & future research

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■ Cross-functional integration can improve the understanding for (internal and external) SSCM information

■ Learning to speak a common language across the supply chain with regard to sustainability information

■ Different mechanisms for information and knowledge transfer

■ Award systems might help to foster such cross-functional integration

■ Further research on

■ What are similarities and differences of environmental, social, and economic related information in the internal and external supply chain?

■ Who are the employees and organizations which exchange information?

■ In which structure and culture do they act?

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very much for your attention

Thank you

Dorli Harms

Centre for Sustainability Management (CSM)Leuphana University LüneburgGermanyTel. +49 (0)4131 677-2248dharms@uni.leuphana.de

Dorli Harms, CSM

References

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•Carter, C.R.; Ellram, L.M.; Ready, K.J. (1998): Environmental Purchasing. Benchmarking Our German Counterparts. In: Journal of Supply Chain Management, Vol. 34, No. 4, 28–38.

•Carter, C.R. & Rogers, D.S. (2008): A framework of sustainable supply chain management. Moving toward new theory. In: International Journal of Physical Distribution & Logistics Management, Vol. 38, No. 5, 360–387.

•Esper, T.L.; Ellinger, A.E.; Stank, T.P.; Flint, D.J. & Moon, M. (2010): Demand and Supply Integration. A Conceptual Framework of Value Creation Through Knowledge Management. In: Journal of the Academy of Marketing Science, Vol. 38, No.1, 5–18.

•Galbraith, J.R. (1970): Environmental and Technological Determinants of Organizational Design. In: J.W. Lorsch & P.R. Lawrence (eds.): Studies in Organization Design. Homewood, IL: Richard D. Irwin and The Dorsey Press, 113–139.

•Grant, R.M. (1996): Toward a Knowledge-Based Theory of the Firm. In: Strategic Management Journal, Vol. 17, Winter Special Issue, 109–122.

•Harland, C.M. (1996): Supply Chain Management. Relationships, Chains and Networks. In: British Journal of Management, Vol. 7, Special Issue, S63–S80.

•Hsu, C.-W. & Hu, A.H. (2008): Green supply chain management in the electronic industry. In: International Journal of Environmental Science and Technology, Vol. 5, No. 2, 205–216.

•Olson, E.M.; Walker, Or.C. Jr. & Ruekert, Robert W. (1995): Organizing for Effective New Product Development. The Moderating Role of Product Innovativeness. In: Journal of Marketing, Vol. 59, No. 1, 48–62.

•Seuring, S. & Müller, M. (2008): From a Literature Review to a Conceptual Framework for Sustainable Supply Chain Management. In: Journal of Cleaner Production, Vol. 16, No. 15, 1699–1710.

•Sveiby, K.-E. (2001): A knowledge-based theory of the firm to guide in strategy formulation. In: Journal of Intellectual Capital, Vol. 2, No. 4, 344–358.

•Takeuchi, H. & Nonaka, I. (1986): The New New Product Development Game. In: Harvard Business Review. Vol. 23, No. 1, 137–146.

•Thompson, J.D. (1967, 2003): Organizations in Action. Social Science Bases of Administrative Theory. 2. print, New Brunswick, NJ: Transaction Publishers.

•Turkulainen, V. (2008): Managing cross-functional interdependencies. The Contingent Value of Integration. Doctoral Dissertation Series 2008/8, Helsinki University of Technology, Department of Industrial Engineering and Management. http/lib.tkk.fi/Diss/2008/isbn9789512295333 (April 11, 2011)