Five major challenges were emerged after classification
and synthesis of challenges identified in the research studies (data were
collected from: systematic literature review, documents of the research
projects, survey and interviews with a sample of logistics companies). The five
major challenges and propositions for tackling them are briefly explained in
the following blog posts.
The first major challenge
is to ‘shift the values’ in the supply chains where the non-economic pillars of
sustainable development are equally weighted with the economic pillar.
One difficulty in shifting the values is
short-term profit maximization, based on the underlying logic of theory of the firm and transaction cost economics in
supply chain management, which discourages the inclusion of human and environmental
degradation costs or social responsibilities. While corporate
social responsibility and environmental concerns are regarded as very important
for the future of supply chains, costs and revenues are still the main drivers. This is
troublesome since sustainable
development, like any type of development, might initially be costly. To cite
examples, it is initially costly to redesign the supply chains, change the
logistical set-ups, develop new infrastructures, develop clean technologies, find
alternatives for non-renewable natural resources, change the physical resources
like the fleets, educate the stakeholders about their responsibilities, and apply for certifications.
Another difficulty is to change the customers’ priorities. It became apparent from the research
studies that customers still give priority to financial criteria like delivery time, price,
functionality, and service-rate ahead of environmental and social criteria like
emissions, pollutions, recyclability, and working conditions as well as rights
of workers. This becomes even more troublesome in global markets
as well as businesses with low profit margin where fair trade and business
ethics are clearly ignored. Non-economic aspects are mostly
considered when customers or legislators demand or accept.
To shift the sustainability
values, new business models should be developed that evaluate non-economic
values on equal terms with economic ones. Both top-down (e.g., tougher harmonized
global regulations and norms) and bottom-up (e.g., customers’ initiatives) mechanisms can facilitate the
development of such models.
The higher costs in developing
long-lasting environmentally sustainable solutions (such as clean infrastructures, technologies, vehicles, and fossil-free fuels) should dynamically become normalized for
supply chains stakeholders. Regulations should encourage
development of such solutions by, for example, adjusting the juridical laws,
giving subsidies and incentives, and encouraging research and innovation.
