Sustainability Strategies in Supply Chains
Sustainability Strategies in Supply Chains
Vernika Agarwal
Amity International Business School,
Amiy University, Noida, Uttar Pradesh 201313
[Link]@[Link]
Abstract
The existing ecological imbalance along with the rising social disparities are driving companies towards
consideration of adoption of sustainability driven supply chain (SC) strategies which aim at a holistic integration of
the economic, ecological and social enhancement of the overall SC. However, the challenge lies in consideration of
Triple Bottom Line (TBL). Further, increasing demand from stakeholders for accountability of the sustainability
practices has put immense pressure on companies for assessment of their SC activities in terms of sustainability.
However in few developing nations like India, even though companies are required to examine the environmental as
well as social ramifications of their SC activities, most firms are still focused more on the economic productivity.
This brings us to the motivation behind this research, in which a multi-criteria analytical framework is developed for
a manufacturing firm for identifying the sustainability practices, which can aid the firm in simultaneously improving
on TBL. Interpretive structural modeling (ISM) is utilized for establishing relationships between sustainability
strategies identified through extensive literature review and semi-structured interviews with decision makers.
Through the analysis of the ISM model developed for the case-based study, it is validated that environmental and
social sustainability enables economic sustainability in the long run.
Keywords
Supply chain strategies, electronics manufacturers, Interpretive Structural Modeling (ISM), Triple Bottom Line
1. Introduction
Escalating consciousness of the decision makers regarding environmental and social issues has encouraged most
manufacturing companies to increase its attention on adoption of sustainability practices, Darbari et al. (2017). In
particular, the growing stakeholder awareness in India is driving the manufacturers to incorporate sustainability into
their business, Govindan et al. (2017). The literature has analyzed various factors for implementing sustainable
practices for different industries. For instance, Diabat et al. (2011) analyzed the driving factors for carrying out
sustainability practices in Indian textile sector. The results show that social sustainability is mainly focused upon due
to factors such as employees' involvement, stability and community economic in case of textile industries. Darbari et
al. (2016), identified crucial factors for social sustainability in reverse supply chain for electronics industry. The
study concluded that top management commitment, government support and stakeholder empowerment are the most
imperative and essential facilitators for achieving the desired social performance level for Reverse Logistics (RL)
system. Kausar et al. (2016), Investigated the key drivers towards sustainability in supply chain (SC) for various
Indian industries. The authors concluded that ‘Government policies and support systems’ are the foremost enabler
for execution of sustainability practices in the Indian industries.
The manufacturing industry is one of the major contributors in the Indian economy with more than 12% share in the
overall GDP of the country, Mathivathanan et al. (2018). At present, Indian industries are well positioned for
growth, servicing both domestic demand and, increasingly, export opportunities, Kathuria et al. (2015). While the
Indian industries has much to look forward to, by way of steady growth, there are some clear challenges
accompanying these opportunities in terms of inclusion of sustainability into its operations, Mathiyazhagan et al.
(2014). Inclusion of sustainability is desirable, for it brings competitive advantage to the firm’s SC, Gopal et al.
(2016). Drive towards sustainability encourages firms to reduce wastage of energy, keep account of their carbon
footprint and generate an improved working environment, Beske et al. (2014). However, attaining a sustainable SC
is a challenging task for the manufacturers, as it may incur additional financial burden, Kumar et al. (2015). In this
regard, the manufacturers need to understand what sustainability initiatives should be adopted so that long term
benefits in the form of competitive advantage and improved market share are attained, which would eventually
result in economic enhancement of the SC, Hsu et al. (2014). Although stricter governmental legalizations have
already led to a majority of Indian manufacturers to adopt measures to improve their environmental performance
Luthra et al. (2015), however environmental standards adopted by firms are mostly at the assembly plants of the
manufacturers. Since majority of their processes are outsourced and the major pollution occurs at vendors’ site, thus
the environmental standards only take care of a very small percent of pollution generated by these companies,
Center for Science and Environment of India (CSE, 2011) and thus the environmental performance of the SC is not
appreciable. Toke (2017), Identifies key factors behind the successful achievement of environmental sustainability
in the Indian manufacturing industry and concludes that top management commitment and green procurement
practices are two of the most important factors to be focused upon, if the manufacturing firm wants to improve its
environmental and operational performance. Hence, Indian manufacturers must look for support of their top
management and incorporate environmental considerations in their value chain for enhancing their ecological
footprint. In addition, the social sustainability aspect must also be delved upon, an area mostly neglected by the
industries in India.
The above discussion leads us to the understanding that there is a dire need for manufacturers to adopt a holistic
approach for improving the overall sustainable performance throughout the SC. However, there is lack of research
on analysis of prominent strategies for evaluation of sustainability for Indian companies. This brings us to the
following research questions that have guided this work:
1) What are the strategies which facilitate sustainability in firm?
2) What is the interrelationship between these strategies and strength of the influence between them?
3) Which are the prominent strategies which can drive the other strategies?
To achieve these research questions, the present paper presents a multi-attribute decision making model to identify
and measure the factors for enhancing sustainability of an electronics-component manufacturer’s SC. Interpretive
Structural Modeling (ISM) technique is employed to obtain the interrelationship diagraph connecting the variables
and for deriving the hierarchical structural model. A hierarchy establishing the appropriate relationships among the
sustainability factors would aid the decision makers in identifying the independent factors and the influencing
factors for aptly executing a sustainable SC network. MICMAC theory is used to classify the enablers on the basis
of their driving and dependence power. The contribution of the study is in developing a structural framework and
identifying the key factors, which can be focused upon by the managers for improving upon the sustainability
performance of SC.
2. Case Study
The company under consideration in the study is one of the leading electronics-component manufacturing firms
looking for incorporating feasible sustainable practices into their SC. The firm produces electronic products such as
Battery Cables, Headlights, and electric side/rear view mirrors, battery terminals. These products are distributed to
various states through a distribution network. To begin with, identifying and analyzing the practices that are
responsible for the overall sustainability is extensively time consuming and difficult. Moreover, the firm is also
struggling to identify the variables that are used for measuring the sustainability of the [Link] concerns of the firm
can be addressed by the following research objectives of the study:
(1) To identify the variables which measure the sustainability performance of SC.
(2) To analyze the relative importance of the variables and understand their impact on the potential performance
outcomes of the SC.
(3) To identify the hierarchy of actions to be taken for the conduct of sustainability operations in the electronics-
component supply chain, in order to achieve overall sustainability.
3. Research Methodology
The above-mentioned objectives of the paper are achieved using ISM, which is widely used as an analytical model
in complex decision making situations. Methodology of the paper adopted entails the following:
(1) Identification of strategies: The strategies relevant to the study are identified with the help of literature survey
and interactions with decision makers.
(2) Application of ISM: for building an inter-relationship among the strategies under consideration.
(3) Categorization of strategies: MICMAC analysis is carried for finding the driving and dependence power of the
strategies.
The strategies for evaluation of sustainability score of the company are identified with the help of extensive
literature survey and interactions with decision makers (DMs). A total of 18 strategies were shortlisted as Waste
Reduction (M1), Cleaner Technology (M2) SC Risk Management (M3), Flexible Transportation (M4), Reverse
Logistics (M5), ISO Certification (M6), Just-in-time (M7), Management Commitment (M8), /Quality Assurance
(M9), Environmental Collaborations (M10) Utility Process Management (M11), Consumer Satisfaction (M12),
Process Optimization (M13), Supplier Commitment (Towards Sustainability) (M14), SC Responsiveness (M15),
Customer Involvement (M16), Employee Training and Safety (M17), Government Policies and Schemes (M18) for
understanding the prominence relationship among them.
ISM proposed by Warfield et al. (1974), is used for complex and subjective problems, where poorly and
unorganized models are analyzed and converted into comprehensive well-defined models for better understanding.
This decision-making technique is interpretive as the decisions related to strategies interdependencies are based on
the experts’ committee judgments. The basic idea of adopting this methodology is that it uses practical knowledge
and experiences of experts to identify the inter-relationships among the strategies and represents it in a systematic
hierarchal structure. ISM is a powerful tool and has been applied successfully to numerous fields, which include
reverse logistics, green SC management, Third party logistics, supplier selection, SC risks and carbon management.
Following are the steps involved in the ISM model development:
1. Structural Self-Interaction Matrix (SSIM): Is developed using pair-wise relationship among the strategies under
consideration.
2. Initial Reachability Matrix: The SSIM is converted into a binary matrix and checked for transitivity’s.
3. Levels: The matrix obtained in step (4) is partitioned into various levels.
4. Diagraph: Using relationship obtained among the strategies from Reachability matrix, Diagraph is constructed
and further transitivity links are removed.
5. ISM Model: Diagraph is then converted to ISM by replacing strategy nodes to statements and checked for
inconsistencies if any.
Developing structural self-interaction matrix M = {aij} that shows the inter-relationships among the strategies is the
very first step of ISM. A contextual relationship thus obtained among the strategies identified is carried out using
interactions with various DMs and experts, with the help of various techniques such as nominal group technique.
Experts’ opinions from various industries are used in identifying the nature of contextual relationship between
various strategies. Contextual relationship of a strategy (if selected) diagnoses inter-dependencies among other
strategies. If we assume strategies under study are ‘i’ and ‘j’ then relationship between strategies (i and j) is denoted
(1) The initial reachability matrix (RM) represented by R1 = (rij 1) is obtained using SSIM, where SSIM is
converted to a binary matrix by substituting V, A, X, O with ‘1’ and ‘0’ with the following substitution rules:
(2) If (i, j) entry in the SSIM is V, then (i, j) entry in the RM is becomes 1 and the (j, i) entry is will become 0.
(3) If (i, j) entry in the SSIM is A, then (i, j) entry in the RM becomes 0 and the (j, i) entry will become 1.
(4) If (i, j) entry in the SSIM is X, then (i, j) entry in the RM becomes 1 and the (j, i) entry will becomes 1
(5) If (i, j) entry in the SSIM is O, the (i, j) entry in the RM becomes 0 and the (j, i) entry becomes 0.
(6) Further final RM represented by R2 = (rij2) is constructed using SSIM incorporating transitivities, which states
that if a strategy ‘x’ is related to strategy ‘y’ and ‘y’ to ‘z’ then strategy ‘x’ is directly related to strategy ‘z’.
Reachability matrix developed in the previous section is partitioned into various different levels. For this purpose,
we require reachability, antecedent and intersection sets, which are obtained from the reachability matrix.
Reachability set for each strategy consists of strategies itself and others, which it may help to achieve. Whereas,
antecedent set consists of the strategies itself and others, which may help in achieving them. Then, intersection of
both the previous sets is also derived for all the strategies. If for any given strategy, the reachability and intersection
sets are same, then that strategy is considered to be at level I and attains the bottom position in hierarchal model.
Further strategies that form level I are removed and with the remaining strategies process continues, until all
strategies’ attain some level.
Using the final reachability matrix, a structured model is developed. The relationship between the two strategies is
represented with help of arrows, pointing upwards from one strategy to the other. The graph is called Direct Graph
or Diagraph, whose finalized version is developed after removing the transitivities. The diagraph is then converted
into an ISM Model, in which strategies are placed based on their levels, with level I strategy placed on the top and
last level strategy at the bottom. Strategies at the first level have minimum or no influence on other strategies but can
they be influenced easily by other strategies. On the other hand, strategy at the last level has the maximum influence,
which can influence other strategies.
MICMAC analysis is done in order to analyze the driving and dependence power of the strategies. These strategies
can be broadly classified into four categories, namely autonomous, dependent, linkage, and independent.
Autonomous category consists of the strategies with low dependence and driving power. These variables are
relatively disconnected from the system, they have only a few links, and these links may not be strong, Barve
(2009). Dependent category consists of the strategies with high dependence and low driving power. Linkage
category consists of the strategies with high driving and dependence power but they are unstable in nature. Lastly,
independent category consists of strategies with high driving and low dependence power. Each strategies fall into
one and only one category and this can be graphically represented with autonomous in first quadrant, dependent in
second, linkage in third and independent in fourth quadrant.
4. Case Illustration
The ISM methodology is applied to the strategy analysis problem of the company in consideration. Firstly, we
construct the SSIM which describes the subjective judgments of the DMs based on the pairwise comparison of the
strategies. Table 1 illustrates that “Employee training and safety”(M17) will help in improving the strategy ”Waste
reduction”(M1), therefore a171 is represented as “A”. Similarly strategy “Cleaner Technology”(M2) will help in
improving strategy “Total Quality Management”(M9), therefore a29 is represented as “V”. “Flexible
Transportation”(M4) and “ISO Certification”(M6) are not related to each other; hence a26 is represented as “O”.
Similarly relationship among all the strategies is formed.
Table 1. SSIM
FACTO M1 M1 M1 M1 M1 M1 M1 M1 M1 M M M M M M M M
RS 8 7 6 5 4 3 2 1 0 9 8 7 6 5 4 3 2
M1 O A A O O A O O A A O O A A O O O
M2 O A O O O O O O O V O O A O O O .
M3 O O O A O O O O O A A O O O O .
M4 O O O V O O O O O O A O O V .
M5 O O A O A O O O O O A O V .
M6 A V O O A O V O V V A O .
M7 O O O V X O O O O O O .
M8 A V O O O V O O V V .
M9 O A O O O O V V O .
M10 O O A O X O O O .
M11 O A O O O O O .
M12 O O O A O O .
M13 O A O O O .
M14 O O O O .
M15 O A A .
M16 O O .
M17 A .
M18 .
Initial RM as shown in Table 2 is next formed using the rules from previous section. Cell number a11 holds a value
‘A’ and thus is converted to ‘0’ and cell a17 is updated with value ‘1’. Similarly cell number a41 holding value ‘V’ is
replaced with value ‘1’ while the entry a15 is converted to‘0’. The cells with the value ‘O’ are updated with value
‘0’.
M M M M M M M M M M M M M M M M M M
18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1
M1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1
M2 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 1 0
M3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0
M4 0 0 0 1 0 0 0 0 0 0 0 0 0 1 1 0 0 0
M5 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 1
M6 0 1 0 0 0 0 1 0 1 1 0 0 1 0 0 0 1 1
M7 0 0 0 1 1 0 0 0 0 0 0 1 0 0 0 0 0 0
M8 0 1 0 0 0 1 0 0 1 1 1 0 1 1 1 1 0 0
M9 0 0 0 0 0 0 1 1 0 1 0 0 0 0 0 1 0 1
M10 0 0 0 0 1 0 0 0 1 0 0 0 0 0 0 0 0 1
M11 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0
M12 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0
M13 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 1
M14 0 0 0 0 1 0 0 0 1 0 0 1 1 1 0 0 0 0
M15 0 0 0 1 0 1 1 0 0 0 0 0 0 0 0 1 0 0
M16 0 0 1 1 0 0 0 0 1 0 0 0 0 1 0 0 0 1
M17 0 1 0 1 0 1 0 1 0 1 0 0 0 0 0 0 1 1
M18 1 1 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0
Final RM shown in Table 3 incorporates transitivities that help in illustrating the driving and dependence power for
all the strategies. For example, cell a21 and a23were holding value ‘0’ in the initial RM but in the final RM these cells
gets updated to value ‘1’ because of transitivity. The final RM so obtained is further partitioned into various levels.
In order to derive levels of the hierarchal structure, reachability set (RS) and antecedent set (AS) is obtained from
final RM.
M M M M M M M M M M M M M M M M M M
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
M1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
M2 1 1 1 0 0 0 0 0 1 0 1 1 0 0 0 0 0 0
M3 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
M4 1 0 1 1 1 1 0 0 0 0 0 1 1 0 1 0 0 0
M5 1 1 0 0 1 1 0 0 1 1 0 1 0 0 0 0 1 0
M6 1 1 1 0 0 1 0 0 1 1 1 1 1 1 1 0 1 0
M7 0 0 1 0 1 1 1 0 0 1 0 1 1 1 1 0 0 0
M8 1 1 1 1 1 1 0 1 1 1 1 1 1 1 1 0 1 0
M9 1 0 1 0 0 0 0 0 1 0 1 1 0 0 0 0 0 0
M10 1 0 0 0 1 1 1 0 0 1 0 0 0 1 0 0 0 0
M11 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0
M12 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0
M13 1 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0
M14 1 1 0 0 1 1 1 0 1 1 0 1 0 1 1 0 1 0
M15 1 0 1 0 0 0 0 0 0 0 0 1 1 0 1 0 0 0
M16 1 0 1 0 1 1 0 0 0 1 0 1 1 1 1 1 0 0
M17 1 1 1 0 0 0 0 0 1 0 1 1 1 0 1 0 1 0
M18 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 0 1 1
The first column in the Table 4 represents RS consists of the strategies it influences and AS consists of strategies
influencing it. The intersection of the two sets is represented by column ‘Z’ = (RS+AS). Strategy with RS = Z are
assigned with a LEVEL, that is when the strategy level is set it cannot influence any other strategy above that level,
hence its discarded. Strategies number M1, M3, M11, M12 were found to be at level I.
Table 4. I-Iteration
9 1,3,9,11,12 2,5,6,8,9,14,17,18 9
10 1,5,6,7,10,14 5,6,7,8,10,14,16,18 5,6,7,10,14
11 11 2,6,8,11,17,18 11 I
12 12 2,4,5,6,7,8,9,12,14,15,16,17,18 12 I
13 1,13 4,6,7,8,13,15,16,17,18 13
14 1,2,5,6,7,9,10,12,14,15,17 6,7,8,14,15,16,17,18 6,7,10,14
15 1,3,12,13,15 4,6,7,8,14,15,16,17,18 15
16 1,3,5,6,10,12,13,14,15,16 16 16
17 1,2,3,9,11,12,13,15,17 5,6,8,14,17,18 17
18 1,2,3,4,5,6,7,8,9,10,11,12,13,15,17,18 18 18
To obtain next strategy level, strategies M1, M3, M11, M12 are excluded and new RS, AS and Z are determined.
The second iteration leads to assignment of strategy number M9, M10, and M13 in the second level. The process is
continued until all the strategies are assigned a specific level. Total of nine iterations were carried out to obtain nine
different levels. Strategies with theirs corresponding level can be seen in Table 5. Further these levels help in
obtaining the hierarchy of ISM model, which identifies the influencing behavior of all strategies and aids in nodes
positioning of the diagraph.
Table 5. Levels
The digraph is generated from the final RM (after removing transitivities), which is converted into an ISM model as
shown in Figure 1. Among all the strategies identified in the study the most important one that aids in achieving the
overall sustainability of manufacturing firm is strategy M18 “Government rewards and recognitions”, which will
lead to better customer involvement (M16) and management commitment (M8). While those at the top of the
hierarchy namely, waste reduction (M1), utility process management (M11), customer satisfaction (M3) and supply
chain risk (M12) hold much less importance as compared to other strategies. Hence, the firm should work with an
aim to make its practices environment friendly, incorporating all the parameters defined by the government, to get
recognized and rewarded. This will lead to enhancement of all the strategies responsible for sustainability.
MICMAC analysis is performed with the help of Table 4 (final RM). All the 18 sustainability strategies are
classified and positioned into one of the four quadrants (as shown in Figure 2). For the study, there are no
autonomous strategies. Absence of strategies from I-Quadrant indicates the success of identification of sustainability
strategies, as they would create hindrance in achieving sustainability. The II-Quadrant consists of strategies waste
reduction (M1), supply chain risk (M3) and customer satisfaction (M12) with high dependence power.
Sustainability can also be achieved without directly focusing on them as they are highly dependent on other
strategies. Those in the Linkage-Quadrant have ability to influence/getting influenced and any change in them can
affect the other strategies (and vice-versa), which includes cleaner technology (M2), effective transportation (M4),
reverse logistics efficiency (M5), just in time (M7), quality (M9), environmental collaborations (M10), UPM (M11),
process optimization (M13) and employee training and safety (M17). The last and most important quadrant is
Independent-Quadrant, which includes Management Commitment (M8), ISO Certification (M6), Supplier
Commitment (Towards Sustainability) (M14), SC responsiveness (M15) and Government rewards and recognition
(M18). These strategies have the ability to influence others without getting affected by others, hence they are also
termed as ‘key strategies’.
MICMAC analysis shows that none of the strategy was obtained in the autonomous-quadrant and only three
strategies were in the dependent-quadrant which shows that there is less instability among the selected ones. That
means waste reduction, supply chain risk and customer satisfaction need better attention by DMs, as there is still
scope for improvement in them. Linkages-quadrant consists of maximum number of strategies, as this quadrant
illustrates high driving/dependence power, which clearly shows the potential of these strategies in influencing the
overall SC performance. Further, strategies constituted in the independent-quadrant holds most importance, as
focusing more on these can lead the electronics-component manufacturing firm towards higher sustainability score.
The relationships among the strategies are demonstrated with the help of the diagraph (Figure 2). Implication drawn
from the model is that Government rewards and recognition, management commitment and customer involvement
are most essential strategies for the firm. So a firm working towards making its practices environment friendly,
incorporating all the parameters defined by the government, gets recognized and rewarded. ISM model shows a
practical case of an Indian electronics-component manufacturing firm, which will help DMs for focusing on
improving those sustainability strategies that will eventually aid in improving the overall performance of the firm.
Our study can be applied to the general electronics industry. Although the DMs’ opinions may change as per each
firm’s requirements, however the validity of the judgments can be checked used structural equation modeling (SEM)
in future.
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Biographies
Rahul Solanki is a PhD scholar at Department of Operational Research, University of Delhi, India. He has obtained
his [Link]. and [Link]. degrees in the year 2016 and 2018, respectively. His research work is in the field of green and
sustainable supply chain management, particularly for electronics and automobile component manufacturing
industries. His research interests revolve around marketing management, optimization and modeling of supply
chains, carbon evaluation, carbon pricing and tax implementation in supply chains.
Dr Jyoti Dhingra Darbari is an Assistant Professor in Department of Mathematics at Lady Shri Ram College,
University of Delhi, India. She has a teaching experience of about 18 years. She obtained her MPhil and MSc
degrees in Mathematics from University of Delhi, Delhi, India in 1999 and 1996 respectively. She obtained her
doctoral degree from Department of Operational Research, University of Delhi. Her research interests include
modeling and optimization in sustainable supply chain management. She has published numerous papers in reputed
journals. She was the recipient of Best Track Paper in Supply Chain Management Track for the 2015 IEOM
Conference.
Prof. P. C. Jha obtained his Ph.D., [Link]. and M.A. degrees in Operational Research from University of Delhi,
Delhi, India in 2004, 1988 and 1986, respectively. He is currently the Dean Faculty of Mathematical Sciences and
Professor and Head in the Department of Operational Research, University of Delhi, Delhi, India. He has published
more than 45 research papers in the areas of software reliability, marketing and optimization in Indian &
International journals and edited books. He has also co-authored a book Software Reliability Assessment with OR
Applications, published by Springer, 2011. His research interests include modeling and optimization in software
reliability, marketing and supply chain management.
Vernika Agarwal is an Assistant Professor in Amity International Business School, Amity University, Noida, India.
She obtained her MPhil and MSc degrees in Operational Research from University of Delhi, Delhi, India in 2014
and 2012 respectively. Her research interests include green supply chain, modeling and optimization in sustainable
supply chain management, application of multi-criteria decision making in supply chain management. She was the
recipient of Best Track Paper in Supply Chain Management Track for the 2015
IEOM Conference.