Executive Briefings

Supply Management's Strategic Role in Environmental Practices

Whether it is due to regulatory, customer, investor, or internal forces, most companies realize that environmental performance is a critical business issue. In fact, many organizations regard sustainability as a tidal wave that will help to buoy proactive organizations above their competitors and crash down upon companies that are reactive and unprepared.

The supply management function has the opportunity to strategically engage in environmental practices (various environmental initiatives, projects, and programs). However, supply executives and managers are often unsure of what their role should be. How can the supply management function strategically contribute to an organization's environmental practices? When should supply management take the lead and when should it follow others in the organization? What are the barriers to successful involvement in environmental practices and how can supply managers overcome these barriers?

To help answer these questions, our research team conducted a series of focus group interviews in major cities throughout the United States during the Spring of 2008. Supply managers from more than 40 Fortune 1000-sized organizations participated. Our team then reviewed the 700 pages of transcripts from these interviews--reading and re-reading, identifying and sorting themes, and discussing and reanalyzing the findings. The results provide guidance to supply management executives who are struggling with how to implement environmental practices within their organizations and with how to integrate these practices into their supply management strategy.

A summary of our findings is presented below. The full report provides more detailed findings, as well as recommendations for how to implement environmental practices and how supply management can make a strategic contribution to an organization's environmental performance.

Major findings include the following:

1. The business case for environmental practices can differ from traditional business cases in terms of being more nuanced and using different time frames, and in terms of the multiple metrics used to make decisions.

2. Top management support is a key enabler of environmental practices, although this support is often in response to other drivers such as regulation and certification, customer pressures, cost drivers, and "grassroots" initiatives within their organizations.

3. The definition of success associated with environmental practices is also different, multidimensional, and more complex as compared to other supply management practices. There are a number of ways that environmental practices can "succeed" and there is generally no single criterion that all environmental practices need to meet in order to be successful.

4. One broad barrier to environmental practices is the lack of a clear definition and understanding concerning what the terms environmental and sustainability meant to the organization. We define both of these terms, within the context of supply chain management, in the Introduction section of this report.

5. Several more specific obstacles were identified during the course of our study. The most significant of these barriers includes the perception of higher costs, uncertainty concerning which criteria to use, the sheer size of an organization and its supply chain, a lack of time and resources, and the absence of buy-in from key stakeholders in the decision process. At the same time, there are many viable workarounds to these hurdles, including making more effective businesses cases for environmental initiatives, linking environmental practices to supply management strategy and the broader organizational strategy, and creating seamless procurement practices that funnel internal users and decision makers into viable, environmentally preferable alternatives.

6. The supply base can be a source of opportunities and new technologies and processes, allowing supply management to initiate environmental change within the organization and the broader supply chain.

7. The expanded role that supply management will likely play in the future includes supplier relationship management--managing the existing supply base through environmental measurement, monitoring, and supplier recognition; spanning--monitoring the supply base for environmental innovations and intelligence; disseminating--advocating or advancing environmental practices within the organization and educating personnel in other functions regarding the environment; and protecting--helping to mitigate environmental liability and other threats by understanding the risks associated with suppliers' processes and ensuring that suppliers comply with applicable regulations.

We encourage you to read through the full report at www.capsresearch.org to learn how to more effectively engage in environmental practices and elevate the strategic contribution of the supply management function in the environmental arena. Please note that first-time visitors need to create a user login profile to access the research documents.

Focus Study Authors: Thomas F. Gattiker, Ph.D., Associate Professor of Supply Chain Management, Boise State University; Wendy Tate, Ph.D., Assistant Professor of Logistics, University of Tennessee; Craig R. Carter, Ph.D., Associate Professor of Supply Chain Management, University of Nevada.
CAPS Research

Whether it is due to regulatory, customer, investor, or internal forces, most companies realize that environmental performance is a critical business issue. In fact, many organizations regard sustainability as a tidal wave that will help to buoy proactive organizations above their competitors and crash down upon companies that are reactive and unprepared.

The supply management function has the opportunity to strategically engage in environmental practices (various environmental initiatives, projects, and programs). However, supply executives and managers are often unsure of what their role should be. How can the supply management function strategically contribute to an organization's environmental practices? When should supply management take the lead and when should it follow others in the organization? What are the barriers to successful involvement in environmental practices and how can supply managers overcome these barriers?

To help answer these questions, our research team conducted a series of focus group interviews in major cities throughout the United States during the Spring of 2008. Supply managers from more than 40 Fortune 1000-sized organizations participated. Our team then reviewed the 700 pages of transcripts from these interviews--reading and re-reading, identifying and sorting themes, and discussing and reanalyzing the findings. The results provide guidance to supply management executives who are struggling with how to implement environmental practices within their organizations and with how to integrate these practices into their supply management strategy.

A summary of our findings is presented below. The full report provides more detailed findings, as well as recommendations for how to implement environmental practices and how supply management can make a strategic contribution to an organization's environmental performance.

Major findings include the following:

1. The business case for environmental practices can differ from traditional business cases in terms of being more nuanced and using different time frames, and in terms of the multiple metrics used to make decisions.

2. Top management support is a key enabler of environmental practices, although this support is often in response to other drivers such as regulation and certification, customer pressures, cost drivers, and "grassroots" initiatives within their organizations.

3. The definition of success associated with environmental practices is also different, multidimensional, and more complex as compared to other supply management practices. There are a number of ways that environmental practices can "succeed" and there is generally no single criterion that all environmental practices need to meet in order to be successful.

4. One broad barrier to environmental practices is the lack of a clear definition and understanding concerning what the terms environmental and sustainability meant to the organization. We define both of these terms, within the context of supply chain management, in the Introduction section of this report.

5. Several more specific obstacles were identified during the course of our study. The most significant of these barriers includes the perception of higher costs, uncertainty concerning which criteria to use, the sheer size of an organization and its supply chain, a lack of time and resources, and the absence of buy-in from key stakeholders in the decision process. At the same time, there are many viable workarounds to these hurdles, including making more effective businesses cases for environmental initiatives, linking environmental practices to supply management strategy and the broader organizational strategy, and creating seamless procurement practices that funnel internal users and decision makers into viable, environmentally preferable alternatives.

6. The supply base can be a source of opportunities and new technologies and processes, allowing supply management to initiate environmental change within the organization and the broader supply chain.

7. The expanded role that supply management will likely play in the future includes supplier relationship management--managing the existing supply base through environmental measurement, monitoring, and supplier recognition; spanning--monitoring the supply base for environmental innovations and intelligence; disseminating--advocating or advancing environmental practices within the organization and educating personnel in other functions regarding the environment; and protecting--helping to mitigate environmental liability and other threats by understanding the risks associated with suppliers' processes and ensuring that suppliers comply with applicable regulations.

We encourage you to read through the full report at www.capsresearch.org to learn how to more effectively engage in environmental practices and elevate the strategic contribution of the supply management function in the environmental arena. Please note that first-time visitors need to create a user login profile to access the research documents.

Focus Study Authors: Thomas F. Gattiker, Ph.D., Associate Professor of Supply Chain Management, Boise State University; Wendy Tate, Ph.D., Assistant Professor of Logistics, University of Tennessee; Craig R. Carter, Ph.D., Associate Professor of Supply Chain Management, University of Nevada.
CAPS Research