Embed Size (px)
Citation preview
Sustainable supply chain management strategy for metal industry’s
sustainable development: An empirical research on Chinese metal
companies
Zhangqiong Wang1, a, Xiaozhen Qi2,b and Siyun Chen3,c 1,2,3
School of Logistics Engineering, Wuhan University of Technology, Wuhan, China, 430063
Keywords: Sustainable supply chain management; Sustainability; Sustainability reports; Metal industry.
Abstract. Metal industry in China is characterized by high energy consumption, pollution and
emissions. This paper established a conceptual framework of sustainable supply chain management
(SSCM) for metal industry sustainable development. Content analysis of sustainability reports was
applied to make empirical research, focusing on the top 10 Chinese metal companies. Findings
indicate that the majority of large Chinese metal companies are aware of SSCM, but the concept of
SSCM needs to be further spread in Chinese metal industry. Four strategies of SSCM adopted by the
leading metal companies include green procurement and supplier sustainability management,
low-carbon logistics, green manufacturing, and green marketing. Findings provide a successful
paradigm for other metal companies to follow sustainable development.
Introduction
Chinese metal industry plays the important role in the world. However, metals manufacturers in
China represent an environmentally sensitive sector. Huge carbon emissions from Chinese metal
industry [1] caused high attention home and abroad, which implies the issue of sustainability for
Chinese metal industry must be solved. In the other hand, issues such as environmentalism and
sustainability have become more important to consumers, companies and governments in recent
years. Governments and citizens ask companies to pay more attention to the environment and social
issues through green initiatives [2]. In this context, many firms have begun to implement various
sustainability strategies, especially within supply chain management (SCM). Companies can spread
philosophy of sustainability throughout SCM by cooperative efforts with their supply chain partners
[3], so that economic, environmental and societal benefits are achieved. Consequently, sustainable
supply chain management (SSCM) is receiving increasing interest from academicians and
practitioners [4]. Therefore, SSCM in metal industry can contribute to sustainable development.
This paper will shed light on the framework of SSCM, and identify the strategies of SSCM adopted
by the leading metal companies in China, which will provide a paradigm for other metal companies.
Conceptual framework of SSCM for metal industry
Simply, SSCM can be defined as the management of the entire supply chain from product design,
manufacturing, to product end-of-life, and recovery processes at end-of-life, aimed at fostering the
three dimensions of sustainability, i.e., economic, environmental and social [2, 4], meanwhile,
considering stockholders’ interests. Based on the definition of SSCM and the features of SCM in
metal industry, a conceptual framework of SSCM for metal industry was set up, shown in Figure 1.
The supply chain of metal industry is described on top of Fig. 1. As the core members on their
supply chains, metal manufacturers integrate the philosophy of energy saving and emission reduction
and environmental protection into their supply chains to construct sustainable metal supply chains.
Advanced Materials Research Vols. 869-870 (2014) pp 1085-1088Online available since 2013/Dec/13 at www.scientific.net© (2014) Trans Tech Publications, Switzerlanddoi:10.4028/www.scientific.net/AMR.869-870.1085
All rights reserved. No part of contents of this paper may be reproduced or transmitted in any form or by any means without the written permission of TTP,www.ttp.net. (ID: 128.250.144.144, University of Melbourne, Melbourne, Australia-10/10/14,00:53:54)
SSCM consists of the following four components: green procurement and supplier sustainability
management, green manufacturing, low carbon logistics and green marketing.
Green procurement is a means for creating sustainable supply chains [5]. Suppliers, complying
with environmental certificates, can provide environmentally-friendly materials. So, metal
manufacturers select and evaluate suppliers based on the environmental criteria and sustainability
performance more than economic performance.
Green manufacturing is the core competence for a metal manufacturer. It includes green
production design, clean production, and green technology to save energy, and recycling.
Logistics activities link members within supply chains, which have negative impacts on the
environment [6]. For example, transportation contributes 23% of the world’s emissions of carbon
dioxide from fossil-fuel combustion [7]. So, improvement of logistics activities, such as selecting
environmentally friendly transportation, can reduce the consumption of energy and carbon emissions.
Low carbon logistics consists of low-carbon transportation, green packaging and green warehousing.
Green marketing aims at providing environmentally-friendly services for customers at the end of
the supply chain, including providing green products and after-sale services, and advocating green
consumption.
Empirical research methodology
Sampling companies in the empirical research. Larger companies seem to be more aware of SCM
and sustainability, thus, clarification of their strategies of SSCM can provide benchmarks for other
companies. The top 10 metal companies, according to the China Enterprise Confederation and China
Entrepreneurs Association by annual revenues (http://www.cec-ceda.org.cn), were selected as
sample. Most of them published sustainability reports (SRs), which provide accounts of corporate
sustainability strategies, plans and performance to stockholders thus can be used as data resource.
Then, their SRs were downloaded from China Sustainability Reporting Resource Center or
specific company websites. The reporting year of 2011 was used. But one company in the sample did
not publish SR yet. Sampling companies are listed in Table 1. Table 1. Top 10 Chinese metal companies in study
No. Companies annual revenues
[million RMB]
SR:
Y/ N No. Companies
annual
revenues
[million RMB]
SR:
Y / N
1 BaoSteel 272984.09 Y 6 WuhanSteel 190691.11 Y
2 ChinaMinmetals 254217.54 Y 7 JiangsuShaGang 178623.98 N
3 HebeiSteel 227097.11 Y 8 AnSteel 151572.09 Y
4 ShouGang 197534.46 Y 9 TaiyuanSteel 116548.38 Y
5 Aluminum 195433.09 Y 10 ShandongSteel 109760.27 Y
Mineral firms Metal manufacturer Distributors Consumers
Green
manufacturing
Green procurement&
supplier sustainability
management
Green
marketing
Low carbon logistics
Fig. 1. The conceptual framework of SSCM for metal industry
1086 Sustainable Development of Industry and Economy
Analysis method and process. The SRs were content analyzed so that salient characteristics of SRs
could be identified.
Firstly, SRs in PDF documents were converted to Microsoft Word for the purpose of analysis.
Secondly, in order to acquire important messages from SRs, three keywords were identified:
supply chain, procurement/supplier management, logistics (combination of logistics, transportation,
physical distribution, inventory, packaging and warehousing).
Thirdly, the important sentences and paragraphs containing keywords were extracted from SRs
and used as the data source for further analysis.
Findings
Awareness of SSCM in Chinese metal companies. The frequency of keywords in SRs was used as
an indicator reflecting the level of awareness of SCM in corporate sustainability strategy, with higher
frequency implying higher level of awareness. Figure 2 showed the frequency of the keywords in all
9 SRs. A total of eight companies (80%) discussed the SCM-related themes in their SRs, but one
company did not, and one did not release SR.
Two findings can be drawn intuitively from Fig. 2. Firstly, most (80%) of metal companies in
sample have recognized the importance of SCM on corporate sustainability practices. Secondly, the
level of awareness of SSCM varies greatly from companies, but does not appear to significantly vary
with company’s size.
Strategies and practices of SSCM for Chinese metal industry. A thematic analysis was performed
on the extracted texts, focusing on the measures and actions of sustainability and environmental
responsibility. SSCM strategies and measures adopted by the leading Chinese metal companies were
identified from their SRs:
Strategy one is green procurement and supplier sustainability management. A search of combined
keywords “suppliers/procurement+ green/ environmental /sustainability” was conducted. 70% of
companies took this strategy, by carrying out the three measures: a) setting up green procurement
policies and purchasing green products, b) selecting suppliers based on sustainability requirements,
such as ISO 9001 and ISO 14001 certificates, and c) training and helping suppliers to enhance their
sustainability.
Strategy two is low-carbon logistics. This strategy consists of low-carbon transportation and green
packaging. Low-carbon transportation strategy was taken by three companies—Aluminum, BaoSteel
and WuhanSteel, through four measures: a) optimizing delivery procedures and vehicle routes, b)
improving packaging to increase loading efficiency, c) monitoring fuel consumption and reducing the
dust pollution, and d) selecting green carriers who are required to pass ISM/NSM certificates. The
Fig. 2. Frequencies of keywords contained in SRs (by companies’ rankings)
Advanced Materials Research Vols. 869-870 1087
strategy of green packaging was implemented in WuhanSteel Co., who developed the technologies
for reusable containers of steel cord products and standard trays for rail transport of steel products,
which greatly reduced the pollution resulting from protective packaging materials being disposed of
in the surrounding environment of the downstream customers.
Strategy three is green manufacturing. Six companies in the sample adopted the strategy of green
manufacturing, through three practical measures. The first measure is green products design. For
example, AnSteel, ShouGang and WuhanSteel designed green products with the character of low
pollution, less material consumption, light weight, easy processing, non-toxicity and innoxiousness.
The second measure is clean production. For example, WuhanSteel developed technologies for
recycling of steel slag, disposal and utilization of metallurgical wastes, and applied them in
production, in order to save energy and to decrease emissions. The third measure is environment
management system. For example, BaoSteel made the green management system, including energy
management system and environmental management system conforming to ISO14001.
Strategy four is green marketing. BaoSteel provided customers with green solutions to jointly build
the green industrial chain.
Conclusions
This study established a conceptual framework of sustainable supply chain management (SSCM) for
the metal industry, and then took an empirical research to identify the strategies of SSCM in Chinese
metal firms. The findings provide a number of insights into SSCM in Chinese metal industry.
Firstly, most (80%) large metal companies in the sample are aware of SCM in corporate
sustainability practices, but company size does not appear to influence the awareness of SCM in
corporate sustainability in this study. Secondly, the leading metal companies took four strategies of
SSCM in their sustainability practices, which supported the conceptual framework of SSCM in this
paper. These strategies are demonstrated to bring about economic, environmental and societal
performance in the entire supply chain, thus, providing a successful paradigm for other metal
companies.
However this study has limitations. The first one is the small sample size because of few SRs. The
second one is that the research lacks longitudinal analysis. So, we have many opportunities to further
research in this area.
Acknowledgements
This work was partly guided by Dr. James Stock, the professor in the University of South Florida,
USA. He contributed the suggestion about the empirical research based on corporate SRs.
References
[1] R. Zhang, and Z. Liu: China Population Resources and Environment, Vol. 11(2012), P. 5 (in
Chinese)
[2] S. Seuring, and M. Müller: Journal of Cleaner Production, Vol.16 (2008), P.1699
[3] B.M. Beamon: Science and Engineering Ethics, Vol. 11 (2005), P.221
[4] J. D. Linton, R. Klassen and V. Jayaraman: Journal of Operations Management, Vol.25(2007),
P.1075
[5] M. A.Salam: International Journal of Business Insights & Transformation, Vol. 3(2011),P.83
[6] H. Wu and S. C. Dunn: International Journal of Physical Distribution & Logistics Management,
Vol.25(1995), P.20
[7] E. Zusman, A. Srinivasan and S. Dhakal: Low carbon transport in Asia: Strategies for optimizing
co-benefits (Hoboken: Taylor & Francis 2011)
1088 Sustainable Development of Industry and Economy
Sustainable Development of Industry and Economy 10.4028/www.scientific.net/AMR.869-870 Sustainable Supply Chain Management Strategy for Metal Industry's Sustainable Development: An
Empirical Research on Chinese Metal Companies 10.4028/www.scientific.net/AMR.869-870.1085
DOI References
[2] S. Seuring, and M. Müller: Journal of Cleaner Production, Vol. 16 (2008), P. 1699.
http://dx.doi.org/10.1016/j.jclepro.2008.04.020 [3] B.M. Beamon: Science and Engineering Ethics, Vol. 11 (2005), P. 221.
http://dx.doi.org/10.1007/s11948-005-0043-y [4] J. D. Linton, R. Klassen and V. Jayaraman: Journal of Operations Management, Vol. 25(2007), P. 1075.
http://dx.doi.org/10.1016/j.jom.2007.01.012
