Design of global sustainable supply chains

Abstract

Increasing concern about the sustainability of supply chain operations is motivating companies and organizations to pursue strategies to reduce their contribution to global environmental and social negative impacts. While most papers in the field of sustainable supply chains have focused on economic and environmental performance at the firm level, recently some studies have considered the problem at the national level. However, there still exists a gap in quantitatively modeling social impacts, together with environmental and economic impacts, at the global level. To fill this gap, this research presents a multi-objective mathematical model for the design and planning of a supply chain, integrating the three dimensions of sustainability (economic, environmental, and social). In this research, the economic dimension of sustainability is addressed by considering the costs of the supply chain. Then MRIO, a national input-output table that describes the interdependencies between countries and economic sectors, is integrated with national environmental and social impacts to construct a triple bottom line (3BL) approach by industrial sectors. This model supports decision making by including both direct impacts, as well as indirect impacts, associated with upstream supply chain paths. This expands the range of impact considered in sustainable performance measurement both within and beyond the supply chain boundary. The integrated model can improve a company's ability to select supply chain partners based on a wider range of criteria, rather than being based on economics alone. A case study is conducted that considers three tiers of the transportation and equipment supply chain, which consists of six industrial sectors that are part of a larger system of fourteen industrial sectors operating across seventeen of the largest manufacturing countries in the world. The model is solved using a [epsilon]-constraint method; and the resulting Pareto optimal curves show the tradeoffs between the economic, environmental and social dimensions. The results reveal that indirect economic activities dominate when contributing to the environmental and social impact of the whole system. Expanding the scope of sustainability changes supply chain configuration decisions. Therefore, the primary result from this research is that firms and industry sectors need to change their focus from solely on economic aspects and include environmental and social aspects in supply chain decision making at operational and/or strategic levels of decisions.