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Supply Chain Social Responsibility - Definition, Review & Implication

for Future Research

Conference Paper · November 2011

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Eliot Simangunsong
Prasetiya Mulya Business School
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© Copyright 2011 Elliot Simangunsong, Ph.D.

Elliot Simangunsong, Ph.D.
Chairman – Department of Operations & SCM
Prasetiya Mulya Business School
elliot@pmbs.ac.id
Elliot Simangunsong is a faculty member at Department of
Operations and Supply Chain Management, Prasetiya Mulya
Business School. He earned a Ph.D. degree in Management
Science at Lancaster University Management School, United
Kingdom.
He is also a certified trainer and consultant for International
Purchasing and Supply Chain Management (IPSCM), endorsed
by International Trade Centre (ITC/UNCTAD-WTO). He is also
a member of EurOMA - European Operations Management
Association and MLS-SCM - International Purchasing and
Supply Chain Management (ITC/UNCTAD-WTO) .

In addition to academic credentials, Dr. Elliot is also a researcher and authors. His latest works were published on
International Journal of Production Research (2011), Harian Kontan (2011), a book chapter on ‘Prasetiya Mulya on
Innovation’ (Prasetiya Mulya Publishing, 2010).
He spent many hours on training and consulting services to prominent companies including Astra International,
BCA, Bank Mandiri, BTN, KKG-Gramedia, Pertamina, Palyja, Sinarmas, Triputra Group and many more. His
expertise is mainly in the areas of operations management and supply chain.

© Copyright 2011 Elliot Simangunsong, Ph.D.

 Nike (2001): issue of using child labour and paid under
basic weekly wage
 McDonald’s (2002): issue of using growth-promoting
antibiotics among its global meat suppliers
 Starbucks (2002): a call for “fair-trade” coffee
 Mattel (2007): lost significant sums due to the costly
product recall of millions of toys tainted with lead paint
sourced from China
 Apple (2010): recent affair involving suicides at
Foxconn, Shenzhen, China
 Nestle (2010): diminishing source of agricultural
materials
© Copyright 2011 Elliot Simangunsong, Ph.D.
 SCSR in Food Industry (Maloni & Brown, 2006)
The food industry supply chain faces many significant social
responsibility issues from public criticism, including animal
welfare, biotechnology, environment, fair trade, health and
safety, and labor and human rights
 SCSR in Pharmaceutical industry (Smith, 2008)
Difficult challenges economically and politically in the global
market because of pressure from customers, governments, and
the general public
 SCSR in Auto Industry (Xia & Tang, 2011)
Outsourcing to low cost countries – the current supply chain
strategy – is not only unsustainable but also irresponsible for the
auto industry and society

© Copyright 2011 Elliot Simangunsong, Ph.D.

 Pressures from consumers and other stakeholders has
affected the behaviour of producers/manufacturers and
significantly influencing their supply chains
 Fabbe-Costes et al. (2011) define SCM as an integrative
philosophy to manage total flows as cooperatively as
possible, from the earliest raw materials suppliers to the
ultimate customers, and beyond, namely the disposal and
recycling processes.
 Supply chain social responsibility is a key to sustainable
supply chain where the end-to-end chain processes is run to
pursue profit while at the same time in a prudent and secure
manner to protect social and environmental benefits
© Copyright 2011 Elliot Simangunsong, Ph.D.
 Supply chain social responsibility (SCSR) is a
multiple activities where an organization explicitly
and comprehensively incorporates social
responsibility activities and environmental decision-
making for improving the long-term economic
performance of the individual company and its
supply chains

© Copyright 2011 Elliot Simangunsong, Ph.D.

 Beamon (1998) the focus of much early supply chain
scholarship is highly quantitative and emphasizes cost
minimization and avoidance of stock outs is changing
 Amaeshi et al. (2007) CSR is on its way to globalization
through practices and structures of world order
 Cruz & Matsypura (2009) found that many companies have
accepted their responsibility to do no harm to the
environment
 Kaynak & Montiel (2009) “the needs of the present must be
met without compromising the ability of future generations to
meet their own needs”
 Fabbe-Costes et al. (2011) found that recent worldwide
financial and energy crises are likely to reinforce academic
and corporate interest in sustainable development
© Copyright 2011 Elliot Simangunsong, Ph.D.
 Supply chain professionals are in an outstanding position to
impact sustainability practices as it can influence upstream &
downstream partners

Supply relationship is capable of leading to collaborative

programs and allows firms to better understand the
environmental impact of their supply chains

For example: reducing packaging, improving working conditions

in warehouses, using more fuel efficient transportation, and
requiring suppliers to undertake environmental and social
programs (Carter & Rogers, 2008).

© Copyright 2011 Elliot Simangunsong, Ph.D.

Galbreath (2009) argues:

The common approach to supply chain social

responsibility which includes developing corporate
codes of ethics, preparing triple bottom line reports
and launching public relations campaigns that
highlight a given socially responsible “act”

is not enough!

© Copyright 2011 Elliot Simangunsong, Ph.D.

 Core quality management practices
 Supplier quality management
 Environmental management practices
 Green supply management
 Customer relations management
 Human resource sustainability
 Code of conduct within a firm
 And extended code of conduct

Adapted from Carter & Rogers (2008), Galbreath (2009), Kaynak &
Montiel (2009), Dou & Sarkis (2010), Faisal (2010)

© Copyright 2011 Elliot Simangunsong, Ph.D.

 Cost savings due to reduced packaging waste, and the ability to
design for reuse and disassembly
 Reduced health and safety costs, and lower recruitment and labor
turnover costs resulting from better working conditions, safer
warehousing and transportation and better working conditions
 Reduced costs, shorter lead times, and better product quality
associated with increased motivation and productivity, and reduce
the absenteeism of supply chain personnel
 Enhanced reputation – engaging in sustainable behavior can make
an organization more attractive to suppliers and customers, to
potential employees, and to shareholders
 Proactively shaping future regulation – influence government
regulation modeled after a company’s existing production and
supply chain processes, leading to a difficult-to-replicate
competitive advantage for companies and their suppliers

© Copyright 2011 Elliot Simangunsong, Ph.D.

Supply chain enterprises
= Suppliers, Contractors, Distributors, 3PL Providers, Retailers, Licensees

 Does SCSR extend to all the levels and actors in the supply chain,
irrespective of proximity or remoteness from the firm?
 Can the SCSR be applied to a situation where the Firm is not
even in a position to control or influence a member of the supply
chain?
 Is unlimited exposure to social responsibility a good idea for the
business environment?
 How does social responsibility fit in with the concepts of
independent existence of supply chain members?

© Copyright 2011 Elliot Simangunsong, Ph.D.

 References are available upon request

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© Copyright 2011 Elliot Simangunsong, Ph.D.