Hofmann, Busse, Bode, & Henke (2014) in Sustainabilityrelated supply chain risks: Conceptualization and Management purpose is to identify and highlight some of the most common sustainability risks related to the supply chain model. The authors also conceptualize and manage the issues to provide solutions for organizations that are faced with risks in the supply chain model. Any issue on any part of the supply chain affects the entire process. This, in turn, affects the firm's ability to maximize its profits both in the short-term and in the long-term. Problems in the supply chain can either be ethical, environmental, or social.
Application of Supply Chain Management Theory in the Article
The single most important issue here is the management of the stakeholders who are actively involved in the supply chain process. Stakeholders are all crucial entities or groups that are directly affected by the supply chain as they own the commodities manufactured by the organizations (Hofmann et al., 2014). Stakeholders include suppliers, retailers, distributors, and consumers. The functionality of the supply chain model and its effective management reduces the risk of loss for all stakeholders why expect goods or services to reach them in the right quantity and the proper condition. This justifies why the executive team must liaise with the strategic department to create a trans-disciplinary approach to ensure a sustainability solution is achieved at all levels.
Background of the Issue
Firms experience losses in their supply chains. Most of these losses are as a result of the lack of a sustainability strategy to ensure the supply chain is an on-going process (Hofmann et al., 2014). Management teams lack the knowledge or idea on ways sustainability issues manifest themselves in the supply chain. This ignorance and lack of understanding have affected the way businesses are done with profits dwindling in the future. The absence of proper knowledge of ways in which risks in the supply chain arise, conceptualizations of strategic sustainability ideas will never be developed.
The supply chain managers have a significant role to play to ensure the model is functional and that all stakeholders access the commodities they need on time and in the right quality (Hofmann et al., 2014). A disruption in any stage of the supply chain model affects the entire process, justifying the need to come up with a best practice strategy to mitigate the risks associated with stalls in the system. One of the most significant issues arising from the supply chain process is the sustainability problem, which results from intertwined matters. The problem is mainly the application of low standards in the supply chain model. The strategic team has failed to adopt a business practice that aligns with the strengths of the firm (Giannakis & Papadopoulos, 2016). This means it is almost impossible for an organization to take advantage of the available opportunities that would catapult the firm to generate super-normal profits both in the short-term and in the long-term.
Sustainability, when taken in the supply chain context, means the extent to which organizations consider the environmental and social factors with little or no legal requirements (Hofmann et al., 2014). Supply chain managers have the responsibility of identifying the triggers and effects in the social and ecological factors. Analyzing each of the factors deeply to identify some of the potential risks related to an organization help reduce the probability of a shock or sudden negative impact if they happen. This is because the supply chain manager is aware that such an eventuality might happen, and a cushion has already been implemented to prevent an organization from experiencing much loss (Giannakis & Papadopoulos, 2016). For instance, an organization can evaluate third parties perceptions towards its existence or performance in the industry to understand some of the external issues which affect different stakeholders. Issues arising from each stakeholder are resolved with immediate effect, a confirmation that an organization values its customers' needs. The supply chain manager achieves this after stakeholders highlight specific issues and consider them unacceptable.
Arguably, identification of the available resources that could be used to curb the supply chain sustainability risks enables the executive team to develop an outline of the implementation process. The identification process is time-consuming; the supply chain team must consider the social, ecological, and ethical factors before designing a strategy (Hofmann et al., 2014). This ensures stakeholders are aware of the sustainability risk options. Organizations also reduce the probability of stakeholders accusing them of engaging in illegitimate behavior, some of which may have legal implications on the firm.
Organizations operating in different industries go through phases of losses, which is evident from their financial performance reported at the end of year. The supply chain model, which acts as an important ingredient for organizations' ability to satisfy its customers' needs, is one of the main causes of firms' experiencing losses. However, supply chain managers may lack the knowledge or technical know-how to understand ways in which environmental factors like ethical, social, and ecological have a direct impact on the success of a supply chain (Hofmann et al., 2014). Risks associated with the sustainability of the supply chain are hard to identify since they stem from an organization's interactions with its stakeholders. Stakeholders interpret organizations' intentions towards them based on the behavior they portray. For instance, some stakeholders have high expectations for firms' as they anticipate corporate social activities to take care of their social needs. Hence, an organization that is in touch with its stakeholders' needs ensures it budgets for such expenses on each financial year.
Giannakis, M., & Papadopoulos, T. (2016). Supply chain sustainability: A risk management approach. International Journal of Production Economics, 171, 455-470.
Hofmann, H., Busse, C., Bode, C., & Henke, M. (2014). Sustainabilityrelated supply chain risks: Conceptualization and management. Business Strategy and the Environment, 23(3), 160-172.
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