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Sustainable supply chains: Bridging the gap between environmental economics and operations management


Type

Thesis

Change log

Authors

Wijnsma, Sytske 

Abstract

In 2030, we will reach the deadline of most Sustainable Development Goals (SDGs) set by the United Nations, which represent a universal call to end poverty and protect the planet. The SDGs are distinct from previous environmental and social targets because they recognise that development must balance economic, social and environmental sustainability since interventions in one area may affect outcomes in the others. The goals are therefore an integrated and balanced package and, following that same logic, will require an interdisciplinary and multi-stakeholder approach. This thesis integrates the fields of environmental economics and sustainable operations to uncover novel research questions and to provide more holistic solutions that will advance the attainment of the SDGs. This work focuses in particular on social and environmental issues in supply chain contexts that key organisations have identified as some of the most pressing challenges.

The first chapter looks at the triple-A (agile, adaptive, aligned) supply chain framework through the lens of sustainability. The concept of triple-A supply chains is that the best supply chains are not only fast and cost-effective but also agile, adaptable, and aligned. This notion has been studied extensively and has influenced the management approach in leading companies around the world. Yet since the triple-A concept was first developed, supply chains have become increasingly global, connected, and interdependent. The increased complexity of global supply chains has reduced much-needed visibility, further complicating their management, while the growing connectivity and interdependence among different stakeholders have led to many unforeseen environmental and social issues. In light of these new challenges and demands, we revisit the original triple-A definitions and expand these concepts for a more socially and environmentally conscientious world. This new framework can help firms see sustainability as a new opportunity rather than an additional constraint. We also discuss potential enablers of and barriers to sustainable triple-A supply chains and give an overview of sustainability topics yet to be explored in the supply chain literature.

The second chapter takes a unique look at the effect of waste regulations on the economic and environmental performance of the reverse supply chain. The project was motivated by my collaboration with Europol, the European Law Enforcement Agency. Every year, the world produces over $62.5 billion worth of electronic and electrical waste (e-waste), but only 10% of that is recycled in compliance with regulations. To minimise the negative impact of unwanted waste disposal methods such as dumping and export, policymakers have implemented or increased the enforcement of laws designed to combat them. Even so, violations are rampant as proprietary information and a high degree of heterogeneity between firms render monitoring imperfect. Decentralised waste disposal chains, a common form of inter-business organisation, compound this problem as firms also have limited information available on the other chain partner, therefore creating complex interactions between firm behaviour and policy interventions. Against this background, we analyse the effects of policy options on firm profits and compliance. Our analysis reveals that primarily focusing on penalizing dumping by treatment operators can worsen waste chain outcomes. Solely focusing on penalizing low-quality waste exports, a common intervention in practice, can also backfire. Instead, penalizing manufacturers for downstream dumping should be given consideration. In addition, the asymmetry in export burden between waste quality levels should be reduced, which improves both waste outcomes and treatment operator profits.

My third and final chapter focuses on alleviating poverty of rural smallholders. The project was built on findings from a research visit to the UN Environment Programme (UNEP) in Nairobi, the global environmental authority within the United Nations system, and from a continuous collaboration with the UNEP-WCMC, the conservation unit of the UN. Over 70% of the poor live in rural areas in developing countries and smallholder farmers are among the poorest. Since hundreds of multinational buyers have made commitments to source responsibly and poverty eradication is a fundamental objective of the SDGs, the importance of addressing rural poverty in a sustainable manner is self-evident. Traditionally, rural smallholders were primarily viewed as farmers, but development projects have shown that smallholders typically pursue a diverse portfolio of activities to complement their farming income. We therefore explore the link between rural poverty and livelihood composition, a factor rarely captured in current poverty analyses. Using a sample of over 4,000 rural smallholders across 16 developing countries, we explore the poverty impact of compositional aspects of household income, explicitly differentiating between income derived from environmental, farm, and non-farm sources. Our findings have important implications for how we understand rural livelihoods and how policymakers and buyers of commodities can improve the ability of smallholders to develop value-creating portfolios.

With under ten years left to achieve the Sustainable Development Goals, we have entered a decade where ambitious action is crucial. My research advances the attainment of these goals by applying frameworks in operations management, such as sustainable supply chain management, to challenges identified in Environmental Economics, such as illicit waste management and poverty. I hope that this thesis and the work built on it will help accelerate progress on the SDGs by showing the benefits of an integrated approach.

Description

Date

2021-02-18

Advisors

Kattuman, Paul
Lauga, Dominique

Keywords

Sustainability, Supply Chains, Operations Management, Environmental Economics

Qualification

Awarding Institution

University of Cambridge