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Luitzen de Boer, Jon Halfdanarson
SISVI WP3 Scientific seminar: Sustainability interaction in supplier networks
Trondheim, 21. October 2016
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NTNU Trondheim Postadresse: 7491 Trondheim
Norges teknisk-naturvitenskapelige universitet Besøksadresse: Alfred Getz vei 1
Fakultet for samfunnsvitenskap og teknologiledelse Telefon: 73 59 35 11
Institutt for industriell økonomi og teknologiledelse Telefaks 73 59 10 45
Org.nr. 974 767 880
Title: Bærekraftaspekter i innovasjonsprosesser
Report no.:
SISVI Report 2016-09
Project: Sustainable Innovation and Shared Value
Creation in Norwegian Industry
Project no.:
Contracting partners:
Norwegian Research Council
SINTEF Raufoss Manufacturing AS
Cooperating companies:
Plasto AS, Hexagon Ragasco AS, Raufoss Water & Gas
AS, Molde Kunnskapspark AS, Norsk Stålforbund, MRB
AS, Forsvarsbygg
Date: 21. October 2016
Number of pages: 3
Number of appendices: 1
Authors:
Luitzen de Boer
Jon Halfdanarson
Signature:
Responsible:
Department of industrial economics and technology
management (IOT),
Norwegian University of Science and Technology
(NTNU)
Signature:
Summary:
This report is a summary of the SISVI WP3 Scientific seminar, “Sustainability interaction in
supplier networks”. The seminar was held in English, in Trondheim, Norway.
The theme for the seminar was focusing on the research done and ongoing within supplier
interaction and sustainability integration in supply chains. Professor Pilar E. Arroyo-López
visited NTNU in Trondheim, she presented her work, and the work in WP3 was presented for
her, with following discussions.
Appendices:
Workshop presentations.
Key words: Green value creation, innovation, shared value creation, life cycle analysis,
strategy
Distribution/access: Open
Contents Participants (11) ......................................................................................................................... 2
Program ..................................................................................................................................... 3
Appendix 1 – Seminar presentations .......................................................................................... 4
Participants (11)
Name Affiliation
Luitzen de Boer NTNU
Elsebeth Holmen NTNU
Malena Ingemansson Havenvid NTNU
Pilar E. Arroyo-López Tecnologico de Monterrey
Anders Bratt Sletfjerding NTNU
Synnøve Dalen NTNU
Line Figenschou NTNU
Jon Halfdanarson NTNU
Ann Charlott NTNU
Poul H. Andersen NTNU
Maria Rodriguez NTNU
Sustainability interaction in supplier networks
WP3 Scientific seminar NTNU, Trondheim, Friday 21. October 2016
09.30 – 10.00 Welcome and introduction to the SISVI project and Work Package 3 – Interactions in networks and supply chains, by Luitzen de Boer, NTNU.
- What have we done so far and what are we currently working on?
10.00 – 10.45 Invited presentation: «Supplier development programs and sustainability in
Mexican industry», Pilar Arroyo, Monterrey Tech.
Break 11.00 – 11.45 Discussion: what can we learn from each other’s research?
11.45 – 12.30 Lunch
12.30 – 15.00 Presentation and discussion of WIP papers related to WP3
Appendix 1 – Seminar presentations
Research Project on Supplier Development
Pilar E. Arroyo-López
Research motivation
1. Lack of a qualified and reliable base of local suppliersto support the global sourcing strategies of lead firmslocated in Mexico
2. Weak integration (4-5 tiers) of national suppliers toglobal supply chains
3. Industry and government interest in developing aqualified supplier base
4. Need to design supplier development programs thatguarantee a significant improvement on theperformance and competitiveness of national suppliers
Customer develops and implements a Supplier’s Evaluation and Certification System (SiECPro)
Supplier enters its data in the PDP Web page and peforms a self
evaluation trough the (SiECPro)
PDP*-PNUD performs a basic supplier evaluation and publishes
the SiECPro in the Web
Satisfactoryresult?
Customer approves the
supplier
Customer conditions the
supplier
PDP applies the supplier development methodology
YESNO
ONE YEAR
National Program for SupplierDevelopment (PDP-PNUD)
Customers: “tractor” (large OEM of strategic sectors) and “gazell” (acceleratedgrowth) enterprisesSuppliers: Mainly SMEsDuration: 10‐12 monthsCosts of supplier development shared among government, SME and customer
Summary of the research project
Stage 1
• Identification of criteria used by industries of different sectors to evaluate/select suppliers
Stage 2
• Exploration of the current strategies for supplier development
• Assessment of the effectiveness of different activities for supplier development
Stage 1
• Selection of the most viable suppliers to be developed
Stage 2
• Outline of customized suppliers development programs
Phase I
Phase II
Phase III
Industrial sectors of interestThe three most important (strategic) industrial sectors inMexico:
Sectors with a long manufacturing tradition and asignificant contribution to employment
Aerospace AutomotiveElectronics
Apparel maquiladoras
Phase I
• Research questions• How suppliers are evaluated and selected for development?• What are current activities for supplier development used by the
enterprises that operate in Mexico?
• Methodology• In-depth interviews with critical informants: leaders of industrial
chambers and clusters, top management of lead companies(OEMs, sourcing agents, large appareal producers) and managers of SD programs
• Workshops with sourcing managers of lead industries in theautomotive (state of Mexico & Aguascalientes), aeronautic(Queretaro) and electronics (Chihuahua & Jalisco)
• Criteria identification and weighting by using fuzzy AHP
Mexicanmanufacturer
USA manufacturer
StrategicAlliance
International buyers
• Highly qualified (large) Mexican manufacturers: Siete Leguas & Sun Apparel, Kentucky‐Lajat Group, Parras‐Cone, Original Mexican Jeans
• Key criteria: price (low labor costs) of themaquila
Evaluation/selection of suppliers in apparel sector
Sourcing agent
(Traderintermediary)Local
suppliers
International buyer
• A unique point of contact for supply: improvedflows of goods, sourcing agent assures qualityin product and delivery
• Key selection criteria: product quality, on‐timedelivery, capacity and price
• Assistance during design and production
Evaluation/selection of suppliers in the apparel sector
Phase 1.1 Identification of criteria for selection/evaluation in lead sectors
Product and process quality
Purchase price
Reliability of delivery
Technological development
After‐sales service
Organizational culture
Financial health
Risk management
Position in the Industry
Defect and rejection rate
Quality system
Accuracy of deliveries
Incomplete deliveries
Product technology
Process technology
Communication technology
Product warranty
Response time and attitud toward claims
Confidence level (impression)
Flexibility toward strategic changes request
Historical financial performance
Level of financial solvency (future viability)
Plan for disaster recovery
Safeguard critical information
Base of Suppliers / Customers
Customer References
Industry experience
Organizational relationship
Evalu
ation
and s
election
of
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gic su
ppliers
Contractual relationship
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Phase 1.1 Relative importance of criteria (Fuzzy AHP)
Evaluation Criteria Electronics Automotive Aerospace
Purchase price 0.2316 0.2154 0.164Product and process quality 0.2282 0.1871 0.280
Reliability of delivery 0.1795 0.1616 0.207Technological development 0.0803 0.0500 0.109
After‐sales service 0.0932 0.1113 0.109Organizational culture 0.0000 0.1275 0.000
Financial health 0.1146 0.0884 0.016Risk management 0.0726 0.0075 0.11
Position in the industry 0.0000 0.0514 0.00
Phase 1.1 Relative importance of sub-criteria for supplier selection/evaluation
Evaluation/selection of suppliers in strategic sectors
• In criteriaThe three most important criteria applied by industries in strategicsectors are: “Purchase price”, “Product and process quality” and“Reliability of delivery”.
“Organizational culture” and “Position in the industry” are onlyimportant for the Automotive Sector due to the Toyota philosophyand the long time it has been operating in Mexico.
Quality and reliability of delivery are more important than price forthe aerospace sector
• In the competitiveness of the supplier baseThe percentage of domestic suppliers at the “world-class level” is similar in all sectors, even when the Automotive sector has more years operating in Mexico and invests more resources in supplier development
Automakers and automotive(OEMs (tier‐zero & one)
Governmentand IndustryOrganizations Third parties
(Automotive cluster, CeDIAM)
S1 S2 Sn
Suppliers at the lower levels in the automotivesupply chain
CeDIAM = Association for the Development of Suppliers in the Automotive Sector
Private consulting agencies
Phase 1.2. SD programs in strategic sectors
Sn
S2
S1 C1
C2
Cm
Nationalsuppliers
InternationalManufacturers
PrI1
PrI2
PrIn
Governement programs
Private consulting agencies and universities
Chambers and associations of
producers
Order quality
Strategic alliances
Ince
ntiv
es &
ev
alua
tion
Largemnftngfirms
Knowledge interchange
Lead international and nationalbrand owners & distributors
Phase 1.2. SD programs in apparel sector
• Research Questions• What is the effectiveness (operational performance and
capabilities) of SD activities depending of their level ofinvolvement?
• How the capabilities of SD moderate the effectiveness of SDactivities on performance?
• Methodology• A survey of 57 strategic suppliers referred by the purchase or
supply manager of 2 automotive OEM (tier 0) and 3 automakers• Use of a structured questionnarie sent by email to participant
suppliers and posted on the Web• Measures: absorptive capabilities, relational capabilities,
participation in low-medium involvement SD activities and OKTA(operational knowledge transfer activities), operational andfinancial peformance, continuous improvement and innovationcapabilities
Phase II Phase 2. Level of involvement of supplier development activities
Low Medium High
• Incentives• Evaluation• Certification
• Evaluations and auditing in situ
• Customer‐suppliercollaborationprojects
• Workshops and technical assistance
OKT• Co‐design of
products• Joint continuous
improvementprojects
• Interchange of employees
Dependent variables
Independent variable Financial performance
Operational performance
Development of capabilities
Supplier development activities- Evaluation & feedback- OKTA
0.1452-0.056
0.12230.8689
-0.017250.8874 **
Preconditions for learning- Communication- Culture- Trust- Joint decision making- Win-win relation- Commitment
1.1177 0.801
3.806 *0.644-0.605
1.2569 *
0.61901.4920-2.03702.1060 *3.1610 **-0.1149
-0.51080.77821.661 *-0.13570.3833-0.3914
Absorptive capacity- Acquisition- Assimilation- Exploitation
0.7747 0.29430.8533
-0.1484-0.00660.3150 *
0.1328-0.0166-0.3960
Interaction terms- Communication * OKTA- Culture * OKTA- Trust * OKTA- Joint decision making * OKTA- Win-win relation * OKTA- Commitment * OKTA- Acquisition * OKTA- Assimilation * OKTA- Exploitation * OKTA
0.4567 -0.37071.5210 *-0.19860.0774
0.3250 *0.2498 -0.0548-0.1108
-0.2760-0.37600.70580.5062
0.8749 **-0.0463-0.0066-0.14840.3150 *
0.1829-0.24510.6341 0.1307-0.09420.1212-0.00090.0665
0.2365 *
FR2
2.56 **60.8
2.65 **61.6
8.71 **84.1
• Evaluation and feedback are only pre-conditions to identify thesuppliers viable for development• Participation in OKTA contributes to improve the operational andfinancial performance of suppliers provided a) proper absorptivecapabilities, b) a collaborative environment and c) pre-conditions forlearning• Incentives represent a recognition but not a motivator to improveperformance• Relationships characterized by trust, commitment, collaborativecommunication and joint decision making improve OKTA effectivenessmeasured as increased operational performance and enhancedcontinuous improvement and innovation capabilities• Current national programs should need to assess not only the currentperformance of potential suppliers but the fulfillment of a minimum levelof capabilitites required to take advantage of the technical consultingoffer
Phase 2. How effective are SD activitieswith different degrees of involvement
Phase III: Outline of customized development programs
• Research questions• How to select the most “promising” suppliers to be
developed?• What SD activities should be assigned to each potential
supplier to maximize the global improvement of the supplierbase given the available resources?
• Methodology• Evaluation of the current performance (based on the criteria
used by each industry) of a group of candidate suppliers in each strategic sector
• In-depth interviews with managers of SD programs(universities and industry) to select a set of potentialworkshops and define expected improvements and use of resources
Phase 3.1. Definition of performance metrics
Criteria Key indicatorPurchase price product price
average cost of a new product development project planned cost reductions total landed costs
Product & process quality
number of rejected parts PPM (defective parts per million of parts produced) downtime hours quality certifications obtain by supplier failure contention and traceability systems incoming material controls operators training and certification
Accuracy of delivery Number of lots delivered out of time Number of lots with less quantity of parts Number of lots with mixed parts Number of lots without certifications
Financial health financial solvency net income results profitability and inventory rotation
After‐sales service Communications channels Quality of service Time to respond to quality complaints
Phase 3.1. Evaluation of suppliers to identify performance gaps
1.0 1.0
0.8 0.8
0.6 0.6
0.4 0.4
0.2 0.2
0.0 0.0Purchase price
Quality (Product & Process)
Accuracy of Delivery
Financial health
After‐sales Service
5
5 5
7,9 7 7
7,95,95
9
97
Efficiency indexes of suppliers 5, 7 & 9 in key criteriaElectronics Sector
• Fuzzy segmentation of suppliers in ordered clusters• Non-viable suppliers • Suppliers with potential for development through SD activities• Suppliers that may improve performance without external
assistance
• Proposal: SMAA-PROMETHEE to rank suppliers for development (Corrente et al., 2014)
• Stochastic Multiobjective Acceptability Analysis (SMAA) is a family of MCDA methods [Lahdelmaa and Salminen, 2009]
• Uncertainty in the criteria weights and vagueness in the meaning of each criteria is represented by stochastic variables {gi, wj} with uniform density functions
• The PROMETHEE's indiference and preference parameters are inferred by using a Goal Programming approach based on a pre-order of suppliers initially defined with a deterministic data analysis (MDS) and levels of“acceptability” defined by DMs
Phase 3.1. Selection of suppliers viable for development
Electronics Sector
Phase 3.1. Selection of suppliers viable for development
Indifference, preferenceSupplier (0, 1.2) (1, 1.8) (2, 3.1) MDSS1 1.5 1.5 1.5 1S2 2.5 3 3.5 3S3 9 9 9 9S4 7 5 8 8S5 3.5 5.5 5.5 5S6 2 2 2 2S7 6.5 6.5 6.5 7S8 5 4.5 3.5 4S9 6.5 6.5 6.5 6Ideal 0.5 0.5 0.5 0
Phase 3.2. Outline of customized development programs
Specific activities to improve product and process quality• Workshops on quality tools
• Failure mode and effect analysis (FMEA)• Statistical control charts• Design of experiments (DOE)• Mistake proofing (Poka-yoke)• Six sigma
• Technical support to get a quality certificationSpecific activities to improve reliability of delivery
• Inventory control• Material requirement planning (MRP)• Warehouse automation• JIT and Kanban systems implementation and• Route optimization
Phase 3.2. Outline of customized development programs
• Finding the set of activities aiding to the developing of aset of suppliers with the same initial level of performanceis an instance of the set covering problema (SCP) withmultiple objective functions
Max (max ∑ ) Min ∑ ∑Min ∑ ∑
Solve by using an algorithm based on the progressive building andpruning of candidates in a máximum number of steps. On each roundthe function candidates Lk-1 generates new candidates by adding thek-th activity to the set and identifies feasible and non-feasible solutions
Phase 1.2. Algorithm aiding to identify non-dominated solutions
FOR 1; ;∈ | |∪ \ ∈ /∃ ´ ∈ ´ ≻Function candidates ∅
FOR ∈∪ ∪∪Return
Phase 3: Outline of customized development programs
Activity Improvement Time (months)
Cost (USD)
Reduction of production scrap
0.42 2 49
Certification of operators
0.50 4 82
Quality tools 0.63 6 30Implementation of a poka yoka system
0.39 2 35
Inventory reduction 0.71 5 50Electronic identification of shipments
0.17 4 10
• Any activity implies the same improvement in performance for all suppliersclustered together
• Any activity uses a specific amount of resources (time and cost) independently of the number of suppliers
Phase 1.3. Assignment of development activities to suppliers
Solution Activity AverageImprovement
Time Cost
252414
474
7127
121612
161717
17 0.920.910.91
13129
254177231
Future work• Improve the identification of SD activities, their cost, time and expected
improvement• Suppliers may have different organizational capabilities (absorptive,
collaboration, pre-learning, etc.) then expected performance, cost andtime for development varies with the supplier initial condition
• Define a better strategy to identify ROI (Region of Interest) solutions(Bechikh et al., 2015)
Exploring the green strategies of firms in Mexico
Green Marketing Strategies: An Exploratory Analysis of firms in Mexico
• Research questions• What are and how advanced are the green actions currently
implemented by firms operating in Mexico? • What are the motivators of implementing green practices among
firms located in Mexico?• How green actions are evaluated?
• Methodology• A series of in-depth interviews with executives and managers of
thirty four companies of different size and capital of origin• Companies selected by judgment provided they have
implemented some environmental-friendly program as evidenced at their Web pages or open documents
Activity classification
Description of the gren activity Companies
Products - Manufacturing or distribution of green products (radical and incremental innovations)
- Substitution of regular products and materials by ecological ones (biodegradable and/or organic)
- Packing reduction or substitution
A3, A4, A6, A8
A2, A5, A7, A8
A10Transportation and distribution
- Use of collective transportation for consumers- Transportation network operates under a carbon trading scheme
A9A10
Communication(Promotion)
- Massive campaigns to create awareness among customers and suppliers about sustainability issues and solutions (recycling of materials, alternate energy sources)
- Environmental information and tips via on‐line and directly with local communities and schools
- Showrooms and direct sales of green products manufactured or commercialized by the firm
- Promotion of environmental practices via social networks
A10, A11
A2, A7
A3, A5, A6, A8
A1, A3, A9Reduction of resources or waste
- Energy- Water (reduction and treatment for reuse)- Use of recyclable materials - Paperless and reduction of operating supplies
A2, A4, A10, A11 A4, A11 A3, A6, A7, A11 A10
Price - Justification of premium prices due to the use of more ecological products and materials
- Financial credits offered to stimulate the acquisition of environmental‐friendly products
- Portfolio or green products with menu of prices to serve price‐sensitive consumersEff t t t i k t i th h d t d ith l i l
A2, A3, A4, A5, A8,
A10
A3
A3 A5 A6 A10
classificationProducts - R&D and manufacturing of green products (radical and incremental
innovations) - Substitution/reduction of materials- Packing reduction, substitution of packing materials and use of recyclable
packages and bottles- Reuse of containers and pots
C1, C3, C4, C5, C6, C11, C12, C15 C1, C2, C3, C4, C5, C8, C9, C10, C11, C12C4, C5, C7, C8, C11, C15, C16 C2, C4
Processes - Redesign of production processes to save water or to reduce pollution- Adoption of more environmentally friendly technologies- Byproducts and waste are processed or sold to manufacture additional
products- Substitution of fuels in the service delivery processes - Substitution of materials in the maintenance processes
C1, C6C3, C7, C14 C9
C14C14
Distribution and inverse logistics
- Promotion of green transportation during direct distribution- Recuperation and treatment of obsolete or discarded products
manufactured by the company
C3, C7, C15
C5, C12, C15, C16
Reduction of resources and waste
- Energy- Water (reduction and treatment for reuse)- Use of recyclable or returnable materials - Paperless and reduction of operating supplies
C1, C3, C5, C6, C7, C8, C9, C11, C13, C15, C16 C1, C3, C7, C13, C15, C16C2, C3, C16C4, C10, C11, C16
Communication(Promotion)
- Massive campaigns to create awareness among final consumers, industrial customers and suppliers about sustainability issues and solutions (recycling of materials, alternate energy sources)
- Environmental information and tips via on‐line and directly with local communities and schools
- Showrooms and direct sales of green products manufactured or commercialized by the firm
- Promotion of environmental practices via social networks
C1, C2, C5, C6, C8, C10, C12, C13, 15, C16
C1, C4, C11, C14, C16
C5, C6
C16
Motivation Drivers Exemplary Quotes
Economic
Consumer environmental demands (development of the green market)
Our segment of consumers [green consumers] has grown and diversified, therefore our enterprise is customizing each product to serve the unique needs of the segment (A3, Mexican local)First of all there is [consumer] consciousness, at this time we prefer biodegradable, in other words this consciousness lead to demand (A5, Mexican local)
Cost reduction or profitability increment
Through the efficient use of natural resources, the reduction of the emissions to the atmosphere and the minimization in the residual generation we get both benefits, ecological and economic (C1, multinational)It’s a main issue to improve the productivity… [the investment in sewage treatment] solved some environmental problems but also represented important water savings and reduction in solid‐waste treatment (B6, Mexican international)
Improvement of competitive position through differentiation
This enterprise wants to be recognized each time as a greener firm and [distinguished] from others by developing products more ecological (C11, multinational)Being a green enterprise is very important and is taking into account by the consumer at the time to choose among options (C2, multinational)
LegitimationEnvironmental regulations
The risk of penalties of course! Mainly is a question of government regulations. I know there are specific laws… very strict ecological regulations that force us to take the environment into consideration (B6, Mexican international)The new laws and norms, for example the use of land requires a study of ecological impact. But we also meet additional criteria to get the certifications of Social Responsible Enterprise and Ecological Enterprise which are important to lead firms (B5, Mexican international)
Pressure of environmentalist organizations (NGOs, industrial/commercial/civil associations)
Society itself is forcing enterprises to be ecological (A1, Mexican local)I think that the influence of some social groups is critical and is something good because they trust us and even promote our products (A3, Mexican local)
Social responsibility
Ecological responsibility
We have adopted a triple bottom line model: being economically viable, socially responsible and environmentally right… [Our firm] is convinced that only those organizations able to understand the current challenges and implement a sustainable administration will make the difference in the future (C4, multinational) The government proposes initiatives and laws but our group goes further. We recognize individuals have an increased concern about the environment and support our [environmental] compromise … we also have the support of universities and look for certifications that go beyond what is required in our industrial sector (B3, Mexican foreign)
Influence of internal stakeholders
It’s something that comes from the initial owners… they had a strong sense of social responsibility and the interest to preserve the environment (C12, multinational)The main motivation is the compromise of the members of the Board of Directors… return something to the environment in exchange of what we receive, then is a matter of a compromise with the society and the environment (B4, Mexican foreign)
Type of firm Barriers Exemplary Quotes
MultinationalsFinancial
The economical investment, the price of R&Dabout green technologies (C14)
Market environmental cultureIt is difficult to get the participation andcompromise of the consumers, to gain theirinterest in our green products and promotions(C2)
TechnicalOur team is working in understanding what is thebest technology to use to maximize thecost/environmental benefit ratio (C7)
Mexican foreignFinancial
The money… there is a need to invest andmaintain the [green] technologies adopted (B6)
Market environmental cultureThe perception of the people because they thinkgreen products are too expensive (B1)
TechnicalThere are no clean packing technologies in themarket that work for us (B4)
Limited environmental perspective
The priority of this firm is to reduce costs then…our logistics efforts are mainly oriented toconsolidation, selection of equipment, use ofgasoline but we also include reduction ofpollutants (B5)
Management and employee support
Inside the firm there was too much apathy amongemployees… but eventually all areas are involvedand proposing actions (B3)
Mexican localFinancial
The main barrier is capital availability…small firmshave limited economical resources (A7)
Market environmental cultureThe challenge is to convince the customer tomake the investment because it represents anenvironmental benefit (A6)
MotivationsEconomical Legitimacy Ecological responsibility
Greenpractices Resource savings and waste reductionUse of alternate sources of energyAdoption of green technologiesProcess efficiencyDevelopment of the green market
Compliance with norms and regulationsGreen certificationsDiffusion of green practices
A CSR policy which considers environmental protectionDevelopment of the environmental consciousness of the marketR&D in ecological technologies
Generalstrategy Functional or tacticalQuasi‐strategic
Quasi‐strategic Quasi‐strategicStrategic
Metrics‐Energy/water consumption (cost, amount)‐Consumption/output ratio‐Recyclable of materials ratio‐Recycled waste ratio‐Air emissions‐Growth of the green market (%, number of customers, sales)‐Return on investment
‐International standards and indicators (example Water foot print)‐Adoption of indicators stated in green certifications (example ISO 14000)‐Activity in social networks (number of tweets, likes, etc.)
‐Number and objectives of specific projects at the corporative level focused on environmental protection‐Number of green products marketed‐Number of products at the end of life cycle returned to the manufacturer for re‐work or disposal
Quotations
‐We have measured [our green actions] through the reduction in energy and water consumption… our new systems resulted in a 30% cost reduction (A4, Mexican local)‐The firm uses several indicators… emissions of greenhouse gases, raw materials efficiency and disposal of packages. Several methodologies have been adopted to do the measurement (C4, multinational)‐[With our green products] we are entering new markets like Guadalajara and Monterrey… we are also increasing our participation in the children market (A8, Mexican local)
‐In 2011 in Mexico, 23 enterprises adopted a sustainability index. There is an external audit to qualify [how green] is an enterprise. We adhere to that index (B3, Mexican international)‐ [Use] of social networks is and indicator people are interested in green products. [The indicator] is the number of likes, tweets and answers sent (A10, Mexican local)
‐Each year we develop and commercialize more green products with the purpose to attain the objective of our corporative Sustainable Plan. An example is the reduction in the packages of our deodorants which represents a 2000 tons reduction in plastic and also an economical saving (C11, multinational)‐With the analysis of how many products are sold and then returned, this helps us to measure the results of our [global recycling] program (C5, multinational)
J
Integration in loosely coupled garment supply chains: the trader as a linking pin
Pilar Arroyo, Elsebeth Holmen & Luitzen de Boer
21.10.2016
2
Abstract. The aim of this work is to explore how traders contribute to the integration of
the textile & garment supply chain by coordinating the basic processing activities to
provide finished products to international buyers. The integration of the supply chain by
using a trader as a full service provider is becoming an alternative model of integration in
East Asia but is still developing in Latin American countries. We address how this model
operates in this context and which benefits it represents to suppliers through the case
analysis of Aztex Trading, a Mexican trader. The analysis of the case puts forward the
trader’s crucial role as linking pin between specialized suppliers, both small and large,
and international customers that look for full package sourcing solutions for high-fashion
garments of superior quality.
3
IntroductionTraders in East Asia have evolved from simple exporting agents to system coordinators able to manage the activities of a large and configurable network of worldwide suppliers and to contribute to the flexibility and responsiveness of the T&G chain (Christopher and Towill, 2000; Fung et al., 2007; Jin, 2004; Lam y Postle, 2006; Masson et al., 2007; Mihm, 2010),
Mexican producers seem to have failed to attain supply chain integration and remain specialized (Jin, 2004), yet recent and in-depth studies of this region are lacking. Hence, the main purpose of this research is to shed light on how local traders may contribute to revitalize the attractiveness of Mexico as an apparel sourcing region by acting as a linking pin between local suppliers and globally operating customers.
With this paper, we intend to contribute in two ways.
Firstly, most existing studies on traders have focused on Asian cases and emphasized the value traders represent to global buyers. Hence, it is relevant to extend the research to other regions, such as Mexico and to take into consideration the supplier’s perspective, which we do in this study.
Secondly, in terms of the theoretical contribution, and following the analysis of the data, we aim to refine the existing, general notion of supply chain integration by proposing conceptually how the desired effects of true integration may occur without the stringent requirements for such integration being in place. 4
The organization of the article is as follows.
The first section presents the theoretical background for the study, consisting of three
parts: (1) a conceptual study of supply chain integration from a system theory
perspective, (2) a discussion of different forms of coordination in supply chains
supporting integration and (3) a discussion of different ways in which firms strategize
in a supply network.
The following section outlines the methodology used to collect information about a
Mexican trader, followed by a description of the activities coordinated by this trader.
After that, the findings from the case are analyzed in relation to the theory presented
earlier. In the final section of the paper we draw general conclusions, discuss the
potential contribution traders could make to the competitiveness of the Mexican T&G
sector and we present implications for researchers and theory building in this area.
5
Theoretical background
Supply chain management (SCM) has been conceptualized as the integration of business processes across independent firms to provide products, information and services to create value to the final customer (Cooper et al., 1997).
The ultimate purpose of supply chain integration (SCI) is the achievement of sustainable competitive advantage through the seamless coordination of business processes (connectivity) and elimination of processes’ redundancies (simplification) (Chen et al., 2009).
Integration of the entire chain is typically put forward as a key element of SCM but empirical evidence suggests that integration is difficult to attain even at the dyad level (Fawcett and Magnan, 2002).
6
If elements are tightly linked to each other, the local processes of adapting are
likely to interfere with each other and the time required to find a new stable state
for the entire system will be become infinitely long. As Ashby (1960) writes (p.
155):
“Thus, for the accumulation of adaptations to be possible, the system must not be
fully joined. The idea so often implicit in physiological writings, that all will be
well if only sufficient cross-connexions are available, is, in this context, quite
wrong. This is the point. If the method of ultrastability is to succeed within a
reasonably short time, then partial successes must be retained. For this to be
possible it is necessary that certain parts should not communicate to, or have an
effect on, certain other parts”.
7
Mutuality of coordination
Complementarity Coherency
Focus of
coordination
Operational
linkages
Logistics
synchronisation
Information
sharing
Organisational
linkages
Incentive
alignment
Collective
learning
Table 1. A taxonomy of supply chain coordination modes
(Simatupang et al., 2002)
8
9
When combining the insights from the previous two subsections and relating them to our
general discussion of supply chain integration from a system perspective, the analysis
clearly confirms, as expected, that there is no true, all compassing, seamless and “full”
integration of the supply chain studied. Considering a supply chain, or more correctly, a
supply network as a loosely, or partly joined system seems appropriate and useful.
Although not fully joined, couplings between various parts of this system do indeed exist.
However, as the analysis shows, they are not necessarily active all the time and not every
subsystem is connected to each other subsystem, e.g. large international customers and
small, local garment assemblers. In fact, trying to explain the existing couplings (when
active) as primarily driven by a ‘constraint from below’ (Glassman, 1973) may seem
fitting. The observed couplings arguably constitute a minimal required set in order to
produce, transport and deliver the final product. The resulting system is flexible and
allows the subsystems to operate rather independently from each other, each focusing on
their own objectives and maintaining predictable and stable conditions. Furthermore, as
the analysis showed, the suppliers and buyers are not connected through advanced and
joint IT systems.
Research Project on Supplier Development
Pilar E. Arroyo-López
Research motivation
1. Lack of a qualified and reliable base of local suppliersto support the global sourcing strategies of lead firmslocated in Mexico
2. Weak integration (4-5 tiers) of national suppliers toglobal supply chains
3. Industry and government interest in developing aqualified supplier base
4. Need to design supplier development programs thatguarantee a significant improvement on theperformance and competitiveness of national suppliers
Customer develops and implements a Supplier’s Evaluation and Certification System (SiECPro)
Supplier enters its data in the PDP Web page and peforms a self
evaluation trough the (SiECPro)
PDP*-PNUD performs a basic supplier evaluation and publishes
the SiECPro in the Web
Satisfactoryresult?
Customer approves the
supplier
Customer conditions the
supplier
PDP applies the supplier development methodology
YESNO
ONE YEAR
National Program for SupplierDevelopment (PDP-PNUD)
Customers: “tractor” (large OEM of strategic sectors) and “gazell” (acceleratedgrowth) enterprisesSuppliers: Mainly SMEsDuration: 10‐12 monthsCosts of supplier development shared among government, SME and customer
Summary of the research project
Stage 1
• Identification of criteria used by industries of different sectors to evaluate/select suppliers
Stage 2
• Exploration of the current strategies for supplier development
• Assessment of the effectiveness of different activities for supplier development
Stage 1
• Selection of the most viable suppliers to be developed
Stage 2
• Outline of customized suppliers development programs
Phase I
Phase II
Phase III
Industrial sectors of interestThe three most important (strategic) industrial sectors inMexico:
Sectors with a long manufacturing tradition and asignificant contribution to employment
Aerospace AutomotiveElectronics
Apparel maquiladoras
Phase I
• Research questions• How suppliers are evaluated and selected for development?• What are current activities for supplier development used by the
enterprises that operate in Mexico?
• Methodology• In-depth interviews with critical informants: leaders of industrial
chambers and clusters, top management of lead companies(OEMs, sourcing agents, large appareal producers) and managers of SD programs
• Workshops with sourcing managers of lead industries in theautomotive (state of Mexico & Aguascalientes), aeronautic(Queretaro) and electronics (Chihuahua & Jalisco)
• Criteria identification and weighting by using fuzzy AHP
Mexicanmanufacturer
USA manufacturer
StrategicAlliance
International buyers
• Highly qualified (large) Mexican manufacturers: Siete Leguas & Sun Apparel, Kentucky‐Lajat Group, Parras‐Cone, Original Mexican Jeans
• Key criteria: price (low labor costs) of themaquila
Evaluation/selection of suppliers in apparel sector
Sourcing agent
(Traderintermediary)Local
suppliers
International buyer
• A unique point of contact for supply: improvedflows of goods, sourcing agent assures qualityin product and delivery
• Key selection criteria: product quality, on‐timedelivery, capacity and price
• Assistance during design and production
Evaluation/selection of suppliers in the apparel sector
Phase 1.1 Identification of criteria for selection/evaluation in lead sectors
Product and process quality
Purchase price
Reliability of delivery
Technological development
After‐sales service
Organizational culture
Financial health
Risk management
Position in the Industry
Defect and rejection rate
Quality system
Accuracy of deliveries
Incomplete deliveries
Product technology
Process technology
Communication technology
Product warranty
Response time and attitud toward claims
Confidence level (impression)
Flexibility toward strategic changes request
Historical financial performance
Level of financial solvency (future viability)
Plan for disaster recovery
Safeguard critical information
Base of Suppliers / Customers
Customer References
Industry experience
Organizational relationship
Evalu
ation
and s
election
of
strate
gic su
ppliers
Contractual relationship
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
A,S,E
S
A,S,E
A,S,E
A
Phase 1.1 Relative importance of criteria (Fuzzy AHP)
Evaluation Criteria Electronics Automotive Aerospace
Purchase price 0.2316 0.2154 0.164Product and process quality 0.2282 0.1871 0.280
Reliability of delivery 0.1795 0.1616 0.207Technological development 0.0803 0.0500 0.109
After‐sales service 0.0932 0.1113 0.109Organizational culture 0.0000 0.1275 0.000
Financial health 0.1146 0.0884 0.016Risk management 0.0726 0.0075 0.11
Position in the industry 0.0000 0.0514 0.00
Phase 1.1 Relative importance of sub-criteria for supplier selection/evaluation
Evaluation/selection of suppliers in strategic sectors
• In criteriaThe three most important criteria applied by industries in strategicsectors are: “Purchase price”, “Product and process quality” and“Reliability of delivery”.
“Organizational culture” and “Position in the industry” are onlyimportant for the Automotive Sector due to the Toyota philosophyand the long time it has been operating in Mexico.
Quality and reliability of delivery are more important than price forthe aerospace sector
• In the competitiveness of the supplier baseThe percentage of domestic suppliers at the “world-class level” is similar in all sectors, even when the Automotive sector has more years operating in Mexico and invests more resources in supplier development
Automakers and automotive(OEMs (tier‐zero & one)
Governmentand IndustryOrganizations Third parties
(Automotive cluster, CeDIAM)
S1 S2 Sn
Suppliers at the lower levels in the automotivesupply chain
CeDIAM = Association for the Development of Suppliers in the Automotive Sector
Private consulting agencies
Phase 1.2. SD programs in strategic sectors
Sn
S2
S1 C1
C2
Cm
Nationalsuppliers
InternationalManufacturers
PrI1
PrI2
PrIn
Governement programs
Private consulting agencies and universities
Chambers and associations of
producers
Order quality
Strategic alliances
Ince
ntiv
es &
ev
alua
tion
Largemnftngfirms
Knowledge interchange
Lead international and nationalbrand owners & distributors
Phase 1.2. SD programs in apparel sector
• Research Questions• What is the effectiveness (operational performance and
capabilities) of SD activities depending of their level ofinvolvement?
• How the capabilities of SD moderate the effectiveness of SDactivities on performance?
• Methodology• A survey of 57 strategic suppliers referred by the purchase or
supply manager of 2 automotive OEM (tier 0) and 3 automakers• Use of a structured questionnarie sent by email to participant
suppliers and posted on the Web• Measures: absorptive capabilities, relational capabilities,
participation in low-medium involvement SD activities and OKTA(operational knowledge transfer activities), operational andfinancial peformance, continuous improvement and innovationcapabilities
Phase II Phase 2. Level of involvement of supplier development activities
Low Medium High
• Incentives• Evaluation• Certification
• Evaluations and auditing in situ
• Customer‐suppliercollaborationprojects
• Workshops and technical assistance
OKT• Co‐design of
products• Joint continuous
improvementprojects
• Interchange of employees
Dependent variables
Independent variable Financial performance
Operational performance
Development of capabilities
Supplier development activities- Evaluation & feedback- OKTA
0.1452-0.056
0.12230.8689
-0.017250.8874 **
Preconditions for learning- Communication- Culture- Trust- Joint decision making- Win-win relation- Commitment
1.1177 0.801
3.806 *0.644-0.605
1.2569 *
0.61901.4920-2.03702.1060 *3.1610 **-0.1149
-0.51080.77821.661 *-0.13570.3833-0.3914
Absorptive capacity- Acquisition- Assimilation- Exploitation
0.7747 0.29430.8533
-0.1484-0.00660.3150 *
0.1328-0.0166-0.3960
Interaction terms- Communication * OKTA- Culture * OKTA- Trust * OKTA- Joint decision making * OKTA- Win-win relation * OKTA- Commitment * OKTA- Acquisition * OKTA- Assimilation * OKTA- Exploitation * OKTA
0.4567 -0.37071.5210 *-0.19860.0774
0.3250 *0.2498 -0.0548-0.1108
-0.2760-0.37600.70580.5062
0.8749 **-0.0463-0.0066-0.14840.3150 *
0.1829-0.24510.6341 0.1307-0.09420.1212-0.00090.0665
0.2365 *
FR2
2.56 **60.8
2.65 **61.6
8.71 **84.1
• Evaluation and feedback are only pre-conditions to identify thesuppliers viable for development• Participation in OKTA contributes to improve the operational andfinancial performance of suppliers provided a) proper absorptivecapabilities, b) a collaborative environment and c) pre-conditions forlearning• Incentives represent a recognition but not a motivator to improveperformance• Relationships characterized by trust, commitment, collaborativecommunication and joint decision making improve OKTA effectivenessmeasured as increased operational performance and enhancedcontinuous improvement and innovation capabilities• Current national programs should need to assess not only the currentperformance of potential suppliers but the fulfillment of a minimum levelof capabilitites required to take advantage of the technical consultingoffer
Phase 2. How effective are SD activitieswith different degrees of involvement
Phase III: Outline of customized development programs
• Research questions• How to select the most “promising” suppliers to be
developed?• What SD activities should be assigned to each potential
supplier to maximize the global improvement of the supplierbase given the available resources?
• Methodology• Evaluation of the current performance (based on the criteria
used by each industry) of a group of candidate suppliers in each strategic sector
• In-depth interviews with managers of SD programs(universities and industry) to select a set of potentialworkshops and define expected improvements and use of resources
Phase 3.1. Definition of performance metrics
Criteria Key indicatorPurchase price product price
average cost of a new product development project planned cost reductions total landed costs
Product & process quality
number of rejected parts PPM (defective parts per million of parts produced) downtime hours quality certifications obtain by supplier failure contention and traceability systems incoming material controls operators training and certification
Accuracy of delivery Number of lots delivered out of time Number of lots with less quantity of parts Number of lots with mixed parts Number of lots without certifications
Financial health financial solvency net income results profitability and inventory rotation
After‐sales service Communications channels Quality of service Time to respond to quality complaints
Phase 3.1. Evaluation of suppliers to identify performance gaps
1.0 1.0
0.8 0.8
0.6 0.6
0.4 0.4
0.2 0.2
0.0 0.0Purchase price
Quality (Product & Process)
Accuracy of Delivery
Financial health
After‐sales Service
5
5 5
7,9 7 7
7,95,95
9
97
Efficiency indexes of suppliers 5, 7 & 9 in key criteriaElectronics Sector
• Fuzzy segmentation of suppliers in ordered clusters• Non-viable suppliers • Suppliers with potential for development through SD activities• Suppliers that may improve performance without external
assistance
• Proposal: SMAA-PROMETHEE to rank suppliers for development (Corrente et al., 2014)
• Stochastic Multiobjective Acceptability Analysis (SMAA) is a family of MCDA methods [Lahdelmaa and Salminen, 2009]
• Uncertainty in the criteria weights and vagueness in the meaning of each criteria is represented by stochastic variables {gi, wj} with uniform density functions
• The PROMETHEE's indiference and preference parameters are inferred by using a Goal Programming approach based on a pre-order of suppliers initially defined with a deterministic data analysis (MDS) and levels of“acceptability” defined by DMs
Phase 3.1. Selection of suppliers viable for development
Electronics Sector
Phase 3.1. Selection of suppliers viable for development
Indifference, preferenceSupplier (0, 1.2) (1, 1.8) (2, 3.1) MDSS1 1.5 1.5 1.5 1S2 2.5 3 3.5 3S3 9 9 9 9S4 7 5 8 8S5 3.5 5.5 5.5 5S6 2 2 2 2S7 6.5 6.5 6.5 7S8 5 4.5 3.5 4S9 6.5 6.5 6.5 6Ideal 0.5 0.5 0.5 0
Phase 3.2. Outline of customized development programs
Specific activities to improve product and process quality• Workshops on quality tools
• Failure mode and effect analysis (FMEA)• Statistical control charts• Design of experiments (DOE)• Mistake proofing (Poka-yoke)• Six sigma
• Technical support to get a quality certificationSpecific activities to improve reliability of delivery
• Inventory control• Material requirement planning (MRP)• Warehouse automation• JIT and Kanban systems implementation and• Route optimization
Phase 3.2. Outline of customized development programs
• Finding the set of activities aiding to the developing of aset of suppliers with the same initial level of performanceis an instance of the set covering problema (SCP) withmultiple objective functions
Max (max ∑ ) Min ∑ ∑Min ∑ ∑
Solve by using an algorithm based on the progressive building andpruning of candidates in a máximum number of steps. On each roundthe function candidates Lk-1 generates new candidates by adding thek-th activity to the set and identifies feasible and non-feasible solutions
Phase 1.2. Algorithm aiding to identify non-dominated solutions
FOR 1; ;∈ | |∪ \ ∈ /∃ ´ ∈ ´ ≻Function candidates ∅
FOR ∈∪ ∪∪Return
Phase 3: Outline of customized development programs
Activity Improvement Time (months)
Cost (USD)
Reduction of production scrap
0.42 2 49
Certification of operators
0.50 4 82
Quality tools 0.63 6 30Implementation of a poka yoka system
0.39 2 35
Inventory reduction 0.71 5 50Electronic identification of shipments
0.17 4 10
• Any activity implies the same improvement in performance for all suppliersclustered together
• Any activity uses a specific amount of resources (time and cost) independently of the number of suppliers
Phase 1.3. Assignment of development activities to suppliers
Solution Activity AverageImprovement
Time Cost
252414
474
7127
121612
161717
17 0.920.910.91
13129
254177231
Future work• Improve the identification of SD activities, their cost, time and expected
improvement• Suppliers may have different organizational capabilities (absorptive,
collaboration, pre-learning, etc.) then expected performance, cost andtime for development varies with the supplier initial condition
• Define a better strategy to identify ROI (Region of Interest) solutions(Bechikh et al., 2015)
Exploring the green strategies of firms in Mexico
Green Marketing Strategies: An Exploratory Analysis of firms in Mexico
• Research questions• What are and how advanced are the green actions currently
implemented by firms operating in Mexico? • What are the motivators of implementing green practices among
firms located in Mexico?• How green actions are evaluated?
• Methodology• A series of in-depth interviews with executives and managers of
thirty four companies of different size and capital of origin• Companies selected by judgment provided they have
implemented some environmental-friendly program as evidenced at their Web pages or open documents
Activity classification
Description of the gren activity Companies
Products - Manufacturing or distribution of green products (radical and incremental innovations)
- Substitution of regular products and materials by ecological ones (biodegradable and/or organic)
- Packing reduction or substitution
A3, A4, A6, A8
A2, A5, A7, A8
A10Transportation and distribution
- Use of collective transportation for consumers- Transportation network operates under a carbon trading scheme
A9A10
Communication(Promotion)
- Massive campaigns to create awareness among customers and suppliers about sustainability issues and solutions (recycling of materials, alternate energy sources)
- Environmental information and tips via on‐line and directly with local communities and schools
- Showrooms and direct sales of green products manufactured or commercialized by the firm
- Promotion of environmental practices via social networks
A10, A11
A2, A7
A3, A5, A6, A8
A1, A3, A9Reduction of resources or waste
- Energy- Water (reduction and treatment for reuse)- Use of recyclable materials - Paperless and reduction of operating supplies
A2, A4, A10, A11 A4, A11 A3, A6, A7, A11 A10
Price - Justification of premium prices due to the use of more ecological products and materials
- Financial credits offered to stimulate the acquisition of environmental‐friendly products
- Portfolio or green products with menu of prices to serve price‐sensitive consumersEff t t t i k t i th h d t d ith l i l
A2, A3, A4, A5, A8,
A10
A3
A3 A5 A6 A10
classificationProducts - R&D and manufacturing of green products (radical and incremental
innovations) - Substitution/reduction of materials- Packing reduction, substitution of packing materials and use of recyclable
packages and bottles- Reuse of containers and pots
C1, C3, C4, C5, C6, C11, C12, C15 C1, C2, C3, C4, C5, C8, C9, C10, C11, C12C4, C5, C7, C8, C11, C15, C16 C2, C4
Processes - Redesign of production processes to save water or to reduce pollution- Adoption of more environmentally friendly technologies- Byproducts and waste are processed or sold to manufacture additional
products- Substitution of fuels in the service delivery processes - Substitution of materials in the maintenance processes
C1, C6C3, C7, C14 C9
C14C14
Distribution and inverse logistics
- Promotion of green transportation during direct distribution- Recuperation and treatment of obsolete or discarded products
manufactured by the company
C3, C7, C15
C5, C12, C15, C16
Reduction of resources and waste
- Energy- Water (reduction and treatment for reuse)- Use of recyclable or returnable materials - Paperless and reduction of operating supplies
C1, C3, C5, C6, C7, C8, C9, C11, C13, C15, C16 C1, C3, C7, C13, C15, C16C2, C3, C16C4, C10, C11, C16
Communication(Promotion)
- Massive campaigns to create awareness among final consumers, industrial customers and suppliers about sustainability issues and solutions (recycling of materials, alternate energy sources)
- Environmental information and tips via on‐line and directly with local communities and schools
- Showrooms and direct sales of green products manufactured or commercialized by the firm
- Promotion of environmental practices via social networks
C1, C2, C5, C6, C8, C10, C12, C13, 15, C16
C1, C4, C11, C14, C16
C5, C6
C16
Motivation Drivers Exemplary Quotes
Economic
Consumer environmental demands (development of the green market)
Our segment of consumers [green consumers] has grown and diversified, therefore our enterprise is customizing each product to serve the unique needs of the segment (A3, Mexican local)First of all there is [consumer] consciousness, at this time we prefer biodegradable, in other words this consciousness lead to demand (A5, Mexican local)
Cost reduction or profitability increment
Through the efficient use of natural resources, the reduction of the emissions to the atmosphere and the minimization in the residual generation we get both benefits, ecological and economic (C1, multinational)It’s a main issue to improve the productivity… [the investment in sewage treatment] solved some environmental problems but also represented important water savings and reduction in solid‐waste treatment (B6, Mexican international)
Improvement of competitive position through differentiation
This enterprise wants to be recognized each time as a greener firm and [distinguished] from others by developing products more ecological (C11, multinational)Being a green enterprise is very important and is taking into account by the consumer at the time to choose among options (C2, multinational)
LegitimationEnvironmental regulations
The risk of penalties of course! Mainly is a question of government regulations. I know there are specific laws… very strict ecological regulations that force us to take the environment into consideration (B6, Mexican international)The new laws and norms, for example the use of land requires a study of ecological impact. But we also meet additional criteria to get the certifications of Social Responsible Enterprise and Ecological Enterprise which are important to lead firms (B5, Mexican international)
Pressure of environmentalist organizations (NGOs, industrial/commercial/civil associations)
Society itself is forcing enterprises to be ecological (A1, Mexican local)I think that the influence of some social groups is critical and is something good because they trust us and even promote our products (A3, Mexican local)
Social responsibility
Ecological responsibility
We have adopted a triple bottom line model: being economically viable, socially responsible and environmentally right… [Our firm] is convinced that only those organizations able to understand the current challenges and implement a sustainable administration will make the difference in the future (C4, multinational) The government proposes initiatives and laws but our group goes further. We recognize individuals have an increased concern about the environment and support our [environmental] compromise … we also have the support of universities and look for certifications that go beyond what is required in our industrial sector (B3, Mexican foreign)
Influence of internal stakeholders
It’s something that comes from the initial owners… they had a strong sense of social responsibility and the interest to preserve the environment (C12, multinational)The main motivation is the compromise of the members of the Board of Directors… return something to the environment in exchange of what we receive, then is a matter of a compromise with the society and the environment (B4, Mexican foreign)
Type of firm Barriers Exemplary Quotes
MultinationalsFinancial
The economical investment, the price of R&Dabout green technologies (C14)
Market environmental cultureIt is difficult to get the participation andcompromise of the consumers, to gain theirinterest in our green products and promotions(C2)
TechnicalOur team is working in understanding what is thebest technology to use to maximize thecost/environmental benefit ratio (C7)
Mexican foreignFinancial
The money… there is a need to invest andmaintain the [green] technologies adopted (B6)
Market environmental cultureThe perception of the people because they thinkgreen products are too expensive (B1)
TechnicalThere are no clean packing technologies in themarket that work for us (B4)
Limited environmental perspective
The priority of this firm is to reduce costs then…our logistics efforts are mainly oriented toconsolidation, selection of equipment, use ofgasoline but we also include reduction ofpollutants (B5)
Management and employee support
Inside the firm there was too much apathy amongemployees… but eventually all areas are involvedand proposing actions (B3)
Mexican localFinancial
The main barrier is capital availability…small firmshave limited economical resources (A7)
Market environmental cultureThe challenge is to convince the customer tomake the investment because it represents anenvironmental benefit (A6)
MotivationsEconomical Legitimacy Ecological responsibility
Greenpractices Resource savings and waste reductionUse of alternate sources of energyAdoption of green technologiesProcess efficiencyDevelopment of the green market
Compliance with norms and regulationsGreen certificationsDiffusion of green practices
A CSR policy which considers environmental protectionDevelopment of the environmental consciousness of the marketR&D in ecological technologies
Generalstrategy Functional or tacticalQuasi‐strategic
Quasi‐strategic Quasi‐strategicStrategic
Metrics‐Energy/water consumption (cost, amount)‐Consumption/output ratio‐Recyclable of materials ratio‐Recycled waste ratio‐Air emissions‐Growth of the green market (%, number of customers, sales)‐Return on investment
‐International standards and indicators (example Water foot print)‐Adoption of indicators stated in green certifications (example ISO 14000)‐Activity in social networks (number of tweets, likes, etc.)
‐Number and objectives of specific projects at the corporative level focused on environmental protection‐Number of green products marketed‐Number of products at the end of life cycle returned to the manufacturer for re‐work or disposal
Quotations
‐We have measured [our green actions] through the reduction in energy and water consumption… our new systems resulted in a 30% cost reduction (A4, Mexican local)‐The firm uses several indicators… emissions of greenhouse gases, raw materials efficiency and disposal of packages. Several methodologies have been adopted to do the measurement (C4, multinational)‐[With our green products] we are entering new markets like Guadalajara and Monterrey… we are also increasing our participation in the children market (A8, Mexican local)
‐In 2011 in Mexico, 23 enterprises adopted a sustainability index. There is an external audit to qualify [how green] is an enterprise. We adhere to that index (B3, Mexican international)‐ [Use] of social networks is and indicator people are interested in green products. [The indicator] is the number of likes, tweets and answers sent (A10, Mexican local)
‐Each year we develop and commercialize more green products with the purpose to attain the objective of our corporative Sustainable Plan. An example is the reduction in the packages of our deodorants which represents a 2000 tons reduction in plastic and also an economical saving (C11, multinational)‐With the analysis of how many products are sold and then returned, this helps us to measure the results of our [global recycling] program (C5, multinational)