Extending the supply chain to address sustainability

Abstract

In today's growing economy, overconsumption and overproduction have accelerated environmental deterioration worldwide. Consumers, through unsustainable consumption patterns, and producers, through production based on traditional resource depleting practices, have contributed significantly to the socio-environmental problems. Consumers and producers are linked by supply chains, and as sustainability became seen as a way to reverse socio-environmental degradation, it has also started to be introduced in research on supply chains. We look at the evolution of research on sustainable supply chains and show that it is still largely focused on the processes and networks that take place between the producer and the consumer, hardly taking into account consumer behavior and its influence on the performance of the producer and the supply chain itself. We conclude that we cannot be talking about sustainability, without extending the supply chains to account for consumers' behavior and their influence on the overall system performance. A conceptual framework is proposed to explain how supply chains can become sustainable and improve their economic and socio-environmental performance by motivating consumer behavior toward green consumption patterns, which, in turn, motivate producers and suppliers to change their operations.

Full text

Extending the Supply Chain to Address
Sustainability
Firouzeh Taghikhah a*, Alexey Voinov a , Nagesh Shukla a
a Center on Persuasive Systems for Wise Adaptive Living,
School of Information, Systems and Modelling
Faculty of Engineering and Information Technology, University of Technology Sydney,
NSW 2007, Australia
Email: {Firouzeh.Taghikhah, Alexey.Voinov, Nagesh.Shukla} @uts.edu.au
* Corresponding Author
Abstract
In today's growing economy, overconsumption and overproduction have accelerated
environmental deterioration worldwide. Consumers, through unsustainable consumption
patterns, and producers, through production based on traditional resource depleting
practices, have contributed significantly to the socio-environmental problems. Consumers
and producers are linked by supply chains, and as sustainability became seen as a way to
reverse socio-environmental degradation, it has also started to be introduced in research on
supply chains. We look at the evolution of research on sustainable supply chains and show
that it is still largely focused on the processes and networks that take place between the
producer and the consumer, hardly taking into account consumer behavior and its influence
on the performance of the producer and the supply chain itself. We conclude that we cannot
be talking about sustainability, without extending the supply chains to account for consumers’
behavior and their influence on the overall system performance. A conceptual framework is
proposed to explain how supply chains can become sustainable and improve their economic
and socio-environmental performance by motivating consumer behavior toward green
consumption patterns, which, in turn, motivate producers and suppliers to change their
operations.
Keywords: Circular supply chain, Sustainable production-consumption, Environmental
behavior, Green Consumer
Highlights
●To address sustainability, traditional supply chains need to be extended to include
consumers
●Responsible production is not enough for sustainability – we need responsible
consumption
●Changing consumer behavior plays a key role in transitioning to sustainability
1. Introduction
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Traditionally, profit enhancement and cost leadership were the primary focus of supply
chain (SC) management (SCM). However, more recently, the increasing rate of
environmental degradation and resource depletion caused by economic growth have shifted
focus to socio-environmental issues, which in the context of SC research led to more
concern about sustainability, and the concept of a Sustainable Supply Chain (SSC) has
emerged. At first, SSCs were to consider economic, environmental and social concerns in all
activities along the supply chain, from the point of origin to the point of consumption. Later,
this was supplemented by ideas of reuse and recycling borrowed from the circular economy
concepts. In Circular Supply Chains (CSC) sustainability was to be a concern over the entire
value chain, from cradle to grave. In this transitioning to SSC and then to CSC, the issues of
logistics network planning based on green initiatives, green production and inventory
management, waste management and eco-product design have been brought into
consideration.
However, the role of consumption, and consumer behavior has been largely ignored in the
literature on SC. Sustainable consumption or green consumer behavior refers to customers’
choice not to purchase and use environmentally harmful products, and instead consume
products that benefit the environment (Elkington & Hailes, 1988; Steg & Vlek, 2009).
Sustainable consumption patterns can considerably decrease the social and environmental
impacts (Steg & Vlek, 2009). According to the Intergovernmental Panel on Climate Change
(IPCC) report, global warming caused by energy-related emissions (over the 21st century)
can be contained to less than 2°C over pre-industrial levels by just switching to responsible
energy consumption and changing dietary preferences (IPCC, 2015). World Business
Council for Sustainable Development stressed that changing consumer behavior towards
more sustainable purchases can be accomplished throughout the supply chain (Mead,
2018). Supply chains are responsible for encouraging pro-environmental behavior of
customers and their willingness to pay for the green premiums. Since there are usually
additional costs of sustainable practices, green products tend to be more expensive than
conventional products (Nidumolu, Prahalad, & Rangaswami, 2009). Thus, if consumers have
no awareness of the advantages of green products, they may be not willing to pay for them,
and there will be no incentives for supply chains to adopt green practices.
Almost five years ago, Pagell and Shevchenko (2014) have noticed that sustainability and
SC research are difficult to marry and expressed huge concerns about the future of research
on sustainable SC. They have suggested that “Future SCM research will have to treat a
supply chain’s social and environmental performance as equally or more valid than
economic performance. Clearly, this was not and hardly is happening. As a solution Pagell
and Shevchenko (2014) proposed changes in norms, measurement, methods, and research
questions. Some of this resonates with the current proposals of developing SC in ways that
would resemble how natural systems work (Gruner & Power, 2017). We think that since
sustainability is largely a social concept (since after all, the natural and especially the
economic function of systems is important only for the sake of social benefits (Voinov, 2017),
it makes little sense to analyze SSC unless they include the social systems that they interact
with.
In this paper, we argue that - to be successful in operationalizing sustainability in the
context of SC, consumer behavior has to be considered as part of the SC analysis. We
propose a conceptual framework, the “extended sustainable supply chain” (ESSC), in which
the relationship between buying behavior of consumers and SSC operation is considered.
We argue that by motivating sustainable consumer behavior, we can, in turn, drive the
decisions along the whole SC, also influencing the production process. The key message of
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ESSC is that producing and consuming can both become more responsible and sustainable
if behavioral as well as operational aspects are taken into account.
From the theoretical perspective, we highlight the holistic view of sustainability goals in
SSC and emphasize the role of consumption patterns in SC operation. From the managerial
perspective, this study explains how the financial risk of moving towards SSC can be
mitigated through increasing the market share of green products and investing in consumer
awareness and acceptance campaigns. We offer several examples of SC where
management focused on modifying consumer preferences toward more sustainable
products and SC operations. This in turn increased the overall profitability of the SC. In this
paper, we start with a broad review of the evolution of sustainable supply chain literature.
The proposed conceptual framework of ESSC is presented in section 3. The implications
and conclusions are discussed in section 4.
2. Evolving View on Sustainability in Supply
Chains
There are quite a few recent literature reviews available on sustainable and green supply
chains. For e.g. Govindan, Soleimani, and Kannan (2015), Ansari and Kant (2017), Barbosa-
Póvoa, da Silva, and Carvalho (2017), Bastas and Liyanage (2018) and Koberg and Longoni
(2018). In this paper, we focus on the evolution of the SSC concept in literature to show how
it was gradually embracing additional ideas and mechanisms relevant to sustainability, while
stopping short of including the consumer behavior into the picture. Some of the most
important papers in this area include publications by White and Lee (2009), who discussed a
framework for integration of social sustainability in SSC analytical approaches, Jaehn
(2016), who gave an overview of sustainable operations, Stindt (2017), who described a
general framework for decision-making in SSC, and Gaur, Subramoniam, Govindan, and
Huisingh (2016), who presented an overview of behavioral and operational aspects of waste
collection and reverse logistics. Logistics and transportation, network design, production
operation and product design are the most discussed topics in the SSC context. While there
are hundreds of papers published in this area, here we mention only the most relevant ones
as illustrations for each topic, for each category of SC analyses in the typology that we have
identified. They are critically compared and contrasted so that the gap of what still needs to
be known and researched can be identified.
Scientific databases such as Scopus and ScienceDirect were used to search for relevant
papers containing keywords such as “sustainable” or “green” together with “supply chain”
and “closed-loop supply chain” within their title, abstract, or keywords.
2.1 Traditional Supply Chain
With the emergence of globalization, most small and large organizations have realized the
need for intercontinental integration to compete in the global market. The goals of gaining
competitive advantage and reducing business costs could be reached only through
extensive cooperation and expansion beyond national boundaries and into other continents.
Supply chain research has emerged as a modern commerce solution to leverage this shift to
the networked economy (Tseng & Hung, 2014). The supply chain term, initially defined by
Oliver and Webber (1982), refers to the systematic collaboration between people,
processes, and information of alike organizations to create tangible (i.e., product) or
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intangible (i.e., service) values and deliver them to the customers. In this regard, supply
chain management evaluates and aligns end-to-end business processes with the market
demand to create competitive advantage over the rivals, while it does not consider how the
demand is generated.
In the digital age, more complexity could be afforded when analyzing supply chains which
changed its management perspective to accommodate flexibility, agility, and adaptability.
This broader perspective implies the need for extending the supply chain objective from
overall supply chain cost reduction to operational efficiency improvement. Aligned with this
change, the primary focus of research papers on supply chains shifted from pure economic
goals to operational goals (Goetschalcks & Fleischmann, 2008). Reducing the total costs of
supply chain operation, increasing the total income, and eliminating the asset's exposure to
risk are some examples of financial goals supply chains sought to attain in the long-term
(Goetschalcks & Fleischmann, 2008; Stadtler, 2008). To survive in increasingly competitive
business environment, competitive strategy formulation could assist supply chains in gaining
market leadership and maximizing the return on investment (Giunipero, Hooker, & Denslow,
2012). Time management, an important element in operation efficiency, and a source of
competitive advantage, was the focus of supply chain studies for a long time. Following the
time-based strategy, new technologies, based on highly-automated systems, and high-speed
communication routes were developed to shorten delivery time of orders. Enhancing
customer services, upgrading the quality of products, product customization, and building
resilience were the other examined strategies for gaining competitive results (Christopher,
2016).
To achieve the determined competitive strategies, the core business functions of supply
chains including transportation and logistics, manufacturing and service, and procurement
were to be re-evaluated and re-designed (Mentzer et al., 2001). Many avenues of research
on supplier selection and management, production planning and process optimization,
logistics and distribution, transportation selection, workforce scheduling, resilience and risk
assessment, finance and accounting have been developed for supply chain management
(Kouvelis, Chambers, & Wang, 2006). Figure 1 represents the major players involved in
traditional supply chains. Analyses of how exactly the materials were produced and supplied
and how the products were used by the customers was beyond the boundaries of supply
chain research.
Figure 1. Major players of a traditional supply chain
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2.2 Sustainable Supply Chain
Throughout the human history, deforestation, loss of soil fertility, and water shortage have
been ever-growing ecological issues resulting from farming, mining and other human
practices (Du Pisani, 2006). Maintaining the “everlasting youth” of the earth or what we today
call “sustainability” was a matter of discussion since the 5th century. Sustainability as a term
had first appeared in the German forestry industry in 1713 when there was a shortage of
wood supply in Europe. This promoted forest conservation, preservation and tree planting
programs (Du Pisani, 2006). Concerns about population growth, uncontrolled industrial and
economic growth, and non-renewable resource depletion increased following the first oil
crisis of 1973 (Du Pisani, 2006). Evolving over the years, sustainability has been discussed
in various contexts and was presented in a number of ways to draw the attention to the
environmental issues and the necessity to take serious actions. Most studies in Sustainable
Supply Chain (SSC) literature were developed based on Brundtland commission definition
for sustainability as meeting the needs of today without compromising the ability to meet the
needs of the future generations (WCED 1987). While there are serious concerns about the
meaning of this definition and vagueness about what present and future needs are, and
what should be sustained (Voinov, 2017), the Brundtland report was pivotal to introduce the
ideas of sustainable development to the political process.
Today, the challenge of sustainability is among the top 10 unresolved global concerns and
still draws much attention (Global Agenda Council on Climate Change 2018). To address this
concern, legislatures and governments, issued environmental laws describing a set of
preventive-protective policies, regulations, and procedures (Ageron, Gunasekaran, &
Spalanzani, 2012). The environmental laws accompanied by the societal norms and values,
the stakeholders’ awareness, and organizational culture, directly and indirectly, affected the
management strategies of many businesses. Environmental impacts related to the supply
chains in most sectors are considered to be increasingly important for sustainable
development. Under external and internal pressures, businesses decide whether they want
to change taking into account environmental concerns, and if so what changes should be
made in their supply chains. SSC is the incorporation of socio-environmental sustainability
goals into the systematic arrangement of key inter-business functions along a chain. It was
seen as a potential solution to improve the sustainability performance in the long-term
(Carter & Rogers, 2008).
A number of terms such as green supply chain (Srivastava, 2007), low-carbon supply chain
(Shaw, Shankar, Yadav, & Thakur, 2012), social supply chain (Hutchins & Sutherland, 2008)
and ethical supply chain (Seuring & Müller, 2008) can be found in the SSC literature. Green
supply chain referred to the idea of synchronizing green thinking with sourcing raw materials,
producing a product and delivering it to the final customer to gain competitive advantage in
terms of environmental sustainability (Srivastava, 2007). Social supply chain, on the other
hand, was the term used for supply chains that made a trade-off between their economic
goals and social responsibilities to improve their shared values with stakeholders (Porter &
Kramer, 2011). SSC was associated with the application of the triple bottom line indicators, a
well-established sustainability framework, to supply chains (Gimenez, Sierra, & Rodon,
2012). SSC encompassed three distinct economic, environmental and social dimensions for
sustainability. The competitive advantage of SSC can be achieved in the intersection of
these dimensions (Elkington, 2013). However, the challenge of integrating different
sustainability performance was yet to be addressed (Ansari & Kant, 2017).
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For transitioning to sustainability, managers revisited their current operations and identified
opportunities for mitigating the relevant impacts in specific areas within supply chains
(Brandenburg & Rebs, 2015). Logistics arose as the primary environmentally and socially
sensitive operation in supply chains. Many papers focused on different aspects of logistics
including transportation, distribution, and network design to decrease the stress on ecology
and society for long-term viability (Brandenburg, Govindan, Sarkis, & Seuring, 2014;
Fahimnia, Sarkis, & Davarzani, 2015). More specifically, the environmental values (e.g., the
reduction of carbon emissions, energy consumption) and social values (e.g., welfare of
society, labor condition, and ethical practices) were incorporated into the evaluation,
selection, and design of logistic networks.
Consider, for example, the transportation mode problem in logistics as it significantly
contributes to the issue of climate change. According to World Bank (2014), 20% of the
World carbon dioxide (CO2) emissions were generated from transportation and logistics.
Almost all primary modes of transport have harmful environmental impacts. Sustainable
logistics studies are continuously looking for green modes of transportation to decrease their
carbon and energy footprints. One way is to facilitate the use of environmentally-friendly
transport such as trains and ships/barges to decrease emissions (Jaehn, 2016). These
transportation modes have been less popular in supply chains. The low utilization rate of
low-impact transport was mainly related to the issue of poor accessibility. To address this
issue, intermodal transportation studies have been conducted in order to combine the most
eco-friendly modes and give easy access to customers (Kirschstein & Meisel, 2015).
Shared/ joint transport was another way for decreasing the environmental impacts by
intensifying use of vehicles or by ride-sharing. In joint transportation, a supply chain may
decide whether to join another supply chain transport, so that the logistic costs can be
redistributed among the partners (depending on the cost-sharing agreement) and the total
emissions would be reduced (Boyacı, Zografos, & Geroliminis, 2015).
Vehicle routing is another way to reduce environmental impacts. The routes for a fleet of
vehicles could be optimized with regard to costs and emissions. The emission reduction goal
for route selection was pursued through minimizing the energy/fuel consumption (Bektaş,
Demir, & Laporte, 2016). The rate of fuel consumption, in turn, was determined by various
factors including the travel distance and speed (Demir, Bektaş, & Laporte, 2014; Osmani &
Zhang, 2017), travel time, and the number and type of vehicles used (Lin, Choy, Ho, Chung,
& Lam, 2014). The integration of emissions reduction goals in vehicle routing can backfire,
when rerouting results in more traffic, higher fuel consumption and emissions (Jaehn, 2016).
Furthermore, the harmful impacts of vehicle routing may cause other environmental impacts
such as noise pollution or increase in impervious surfaces created by new roads. The
electric fleet routing problem as an alternative option to deal with environmental pollution has
attracted much attention in SSC logistics (Hiermann, Puchinger, Ropke, & Hartl, 2016). The
challenges of electric vehicle/fleet such as the long recharging times (Chung & Kwon, 2015;
Eberle & Von Helmolt, 2010), smaller capacities (Richardson, 2013), and limited availability
of recharging stations (Desaulniers, Errico, Irnich, & Schneider, 2016) were studied by a
number of researchers. Although electric fleet can decrease pollution, the environmental
impact of their batteries and generation of electricity have raised many concerns. The social
aspects of transportation were rarely incorporated into SSC studies. Providing goods and
services to people in remote areas, giving quicker accessibility to central facilities (e.g.,
schools, hospitals), noise pollution and accidents caused by traffic were rarely cited by
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scholars. Overall, it should be noted that in all these cases the ‘sustainability’ or ‘greening’ of
the SC was usually well connected to overall economic efficiency of the operations.
Sustainability issues became also important in logistics network design where social
sustainability was given considerable importance. This branch of logistics was about
determining the optimal location for one or more facilities to meet various, perhaps
conflicting, demands. To find a suitable location, a set of potential sites for facilities were pre-
selected and ranked with regards to economic, environmental and social considerations.
Then, the spatial locations of all the other available facilities involved in the supply chain
were identified. Finally, the desired number and location of new facilities were determined
such that adverse impacts were minimized and the customer demands were satisfied. The
optimal production allocation to different facilities and the optimal distribution of commodities
from facilities to customers with regard sustainability objectives (e.g., cost reduction,
ecological benefit, and public accessibility) were considered in several papers
(Eskandarpour, Dejax, Miemczyk, & Péton, 2015). Most SSC network design studies aimed
at minimizing the ecological impacts (e.g., reducing emissions) through minimizing
transportation (Bouzembrak, Allaoui, Goncalves, & Bouchriha, 2013; Zhang, Wiegmans, &
Tavasszy, 2013); nevertheless, there were studies considering the environmental impacts of
facilities as well, by examining their energy efficiencies (Devika, Jafarian, & Nourbakhsh,
2014; Govindan, Jafarian, Khodaverdi, & Devika, 2014).
We can argue that these types of SSC had a strong flavor of ‘green-washing’, since
optimizing transport, routing and networks was actually also a way to improve the
conventional profitability of the operations. The fact that some greenhouse gases could be
also saved came as a nice complementary factor, which could be further used for publicity
purposes.
Regarding the social aspects, the employment indicator was often considered in SSC
studies. Employment can be measured, for instance, as the total number of jobs created
(Osmani & Zhang, 2017; Santibañez-Aguilar, González-Campos, Ponce-Ortega, Serna-
González, & El-Halwagi, 2014), the total number of variable and fixed jobs created (Mota,
Gomes, Carvalho, & Barbosa-Povoa, 2015; You, Tao, Graziano, & Snyder, 2012), total
number of created jobs in less developed regions (Varsei & Polyakovskiy, 2017; Zhalechian,
Tavakkoli-Moghaddam, Zahiri, & Mohammadi, 2016), or the number of new employees in the
local economy (Miret, Chazara, Montastruc, Negny, & Domenech, 2016). Safety, another
frequently used indicator is quantified by accounting for the injury rate (Bouchery, Ghaffari,
Jemai, & Dallery, 2012), the number of working hours in every facility, and the health and
safety index of work environment (Santibañez-Aguilar, Ponce-Ortega, González-Campos,
Serna-González, & El-Halwagi, 2013). In some cases, indicators were used to assess two or
more social factors at the same time. For example, Dehghanian and Mansour (2009) used a
multi-criteria decision making approach to weight and integrate employment, damage to
workers, product risk, and local development criteria into a single social indicator. Similarly,
Devika et al. (2014) aggregated indicators of employment and safety in one to assess the
social impacts of designed network. Social objectives such as accessibility to goods and
services (e.g., food), equality in access to public utilities (e.g., healthcare, schools)
(Beheshtifar & Alimoahmmadi, 2015) and the risk of exposure to chemical and toxic wastes
(Pishvaee, Razmi, & Torabi, 2012) (for product and facility) were rarely mentioned in the
SSC literature. A summary of topics discussed in SSC is presented in Figure 2.
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Figure 2. Scope of sustainable supply chain
2.3 Circular Economy and Sustainable Supply Chain
As we go deeper in analyzing sustainability performance, we realize that obtaining
sustainable outcomes should be considered through extending producer responsibility
(Mena, Humphries, & Choi, 2013; Vachon & Klassen, 2006). It was suggested that the
responsibilities of producers for dealing with sustainability issues should not end once the
products are sold to customers. There should be some accountability for impacts of products
during consumption and in post-consumption phase and therefore waste and ‘end-of-life’
management programs should be adopted. As such, the linear paradigm of supply chain has
changed to a circular one.
Circular economy concept is being considered as a potential solution to address
sustainable development challenges, improving the economic-environmental productivity
ratio of business systems by decreasing the inputs rather than increasing the outputs
(Geissdoerfer, Savaget, Bocken, & Hultink, 2017). The integration of the circular economy
concept into the supply chain became known as “circular supply chain” (CSC) or “closed-
loop supply chain.” Both terms appear in literature and are used interchangeably in this
paper. Input materials into the CSC are reduced since some of the generated wastes are
retrieved to be used again as resources. Thus, the energy and resource dependencies could
be reduced without influencing the development and growth of the operations (Geissdoerfer,
Morioka, de Carvalho, & Evans, 2018). In fact, CSCs operationalize circular economy
concept through slowing, narrowing, intensifying and closing resource loops (Bocken, de
Pauw, Bakker, & van der Grinten, 2016). As the management of CSC does not terminate at
the point of sale, reverse logistics and waste management should be examined in
coordination with the functional areas of forward logistics.
In reverse logistics, the closing loop of supply chains provides a feedback flow from the
point of consumption to the point of origin to return items after they served their original
purpose. In particular, non-functional products and waste are collected from their typical final
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destination for the purpose of recapturing values through reusing, remanufacturing, and
recycling (Gaur et al., 2016). Though recovering or recycling the end of life products turn out
to be eco-friendly activities, the energy intensity and pollution generation of backward
transportation and treatment facilities should be considered. The transportation planning and
network design problems in reverse logistics were very much the same as the forward
logistics. However, the risks and uncertainties involved in quantity, frequency and quality of
collected products make these problems more complex (Govindan et al., 2015).
The collected end-of-life items can be sorted for recovery purposes depending on the type
of materials used. Product recovery refers to recapturing value from damaged products,
seasonal inventory, recalled items, and end-of-life products. The condition of returns
determines whether they are suitable for repair/reuse, refurbishing, or remanufacturing.
Repair-reuse is the most forward-thinking approach preventing extra costs of treatment. Due
to their waste preventing nature, this approach should be given priority in the product
recovery hierarchy. In refurbishing and remanufacturing, the defects of the returned product
are repaired or replaced with new components resulting in a relatively lower quality product
with a lower price. The challenges of product recovery problems are mainly concerned with
predicting the quantity (Clottey, Benton Jr, & Srivastava, 2012), quality and deciding on
optimum prices and production rates for remanufactured/refurbished products (Bulmuş, Zhu,
& Teunter, 2014; Xiong, Zhou, Li, Chan, & Xiong, 2013).
As a part of the reverse logistics process, waste management is also committed to
sustainability objectives. Waste management problem raises the questions of which
disposing option including recycling, incineration or landfill should be selected for each type
of waste and where to locate the corresponding facilities. Recycling at end-of-life meets the
raw material requirements of new products and thus adds sustainability value to the chain.
Incineration and landfill, while perhaps economically more profitable, are non-value adding
approaches that can be utilized as the last solution. In waste management problem, issues
such as the allocation of waste flow (Battarra, Erdoğan, & Vigo, 2014), the routing of
collection vehicles (Benjamin & Beasley, 2010), and the scheduling of collection times
(Faccio, Persona, & Zanin, 2011) are addressed in regards to socio-ecological impacts. A
special topic in this context focuses on locating disposal plants for hazardous waste (Nolz,
Absi, & Feillet, 2014), for example, infectious medical syringe, to reduce public health risks.
Figure 3 illustrates the various research scopes found in CSC.
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Figure 3. Research conducted in the circular supply chain area
2.4 Sustainable Circular Supply Chain
Reducing waste and need for virgin raw materials are the provided justifications for this
assumption that CSC is inherently sustainable (Melachrinoudis, 2011; Srivastava, 2008).
The validity of this claim is under question unless CSC supported not only the reverse
logistics activities but also the design of green products. Accordingly, the next generation of
CSC, sustainable CSC, achieves the best socio-environmental values in alignment with the
value circle, from value proposition (i.e., designing green products), to value delivery and
creation (i.e., incentivizing for going circular), and value capture (i.e., Reduced
environmental burden) (Geissdoerfer et al., 2018).
Value proposition focuses on offering sustainable products and services to ensure profit
and minimize socio-environmental impacts while value creation is handled via incentivizing
actors to collect and return disposal (Accorsi, Manzini, Pini, & Penazzi, 2015; Mota, Gomes,
Carvalho, & Barbosa-Povoa, 2018).
Sustainable/green product design is now seen as the leading strategy for saving
resources and reducing adverse eco-effects (Leigh & Li, 2015). Various potential designs of
a product along with different configurations of supply chains should be analyzed to come up
with the optimal product design. Generally, product design strategies can be categorized into
two streams:
(i) Designing products with the application of cleaner production principles to decrease
environmental impacts and resource dependency, known as design for material efficiency
and sustainable production (Stindt, 2017).
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(ii) Designing products that have longer life cycle and can be easily taken apart at the end
of life so that these parts can be reused, called design for sustainable usage and design for
recovery (Stindt, 2017).
In the former strategy, the harmful or resource dependent components of a product are
identified and replaced with eco-friendly materials (Hassini, Surti, & Searcy, 2012). This
strategy requires significant investments as new cooperation with green material suppliers
may need to be established and new technologies for processing these materials and
producing environmentally friendly products need to be implemented. The new design is to
reduce toxic use, waste and necessity for post-use treatment. The latter strategy, however,
tries to preserve the inherent value of products for as long as feasible. The objectives of this
strategy are compatible with the preventive design strategy but the focus shifts to enhanced
durability, product–service combinations, updatability via software upgrades, or
manufacturability approaches (Munasinghe, Jayasinghe, Ralapanawe, & Gajanayake,
2016). Here, the products are designed for remanufacturing, disassembly or recycling. Such
products can be easily, cost-effectively and rapidly dismantled in their post-use phase so that
parts can be either reused or recycled (Bansal, 2005). The waste management policies and
availability of appropriate technologies can explicitly influence the success of this strategy.
For instance, governmental regulations, such as a fee on disposal and waste take-back, in
which manufacturers are responsible for collecting and treating their end of life products,
motivates the adoption of design for disassembly strategy (Tang & Zhou, 2012). Similarly,
investment should be made in technologies that increase the re-manufacturability of returned
products. Technology selection decisions should be taken not purely in accordance with the
economic and technical factors (e.g., production costs, process flexibility), but also with
socio-environmental factors (e.g., rate of waste generation, energy consumption, safety
index, etc.) (Tang & Zhou, 2012). Examining the sustainability impacts of adopted
technologies is an important lever for supply chains involving sustainability improvements
(Tang & Zhou, 2012).
Addressing the socio-environmental impacts of products has become one of the main
design challenges in the last two decades. Thus, in the first step of green design, the
footprints of a given product are analyzed across its entire life cycle, from the point of origin
to the point of production-consumption and post-consumption. This provides designers with
important information regarding the potential hotspots for resource savings or pollution
reduction in the production cycle (Munasinghe et al., 2016). According to the identified
hotspots, supply chain decisions are made with respect to the design strategies and possible
improvements in the operations. Life cycle assessment methodologies such as life cycle
assessment (LCA) and social life cycle assessment (sLCA) are appreciated as tools for
quantifying the sustainability impacts of various products, processes and industrial systems
for both research and practical needs (De Luca et al., 2017). It is noted by many scholars
that green product design is linked to the product LCA results. These results highlight the
most impactful areas of a product life cycle and help researchers to determine potential
improvement scenarios to reduce impacts (De Luca et al., 2017).
LCA evaluates the environmental impact of a given product, from raw materials extraction
through to production and recycling/incineration along its life. There is a growing consensus
on the use of LCA approach in SSC studies as an objective methodology for appraising
different typologies of environmental impact Since the LCA approach offers a broader
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environmental impact analysis throughout the product life cycle and allows for comparisons
of various products, it fits well within the discourse on sustainability (De Luca et al., 2017). In
addition, sLCA aims at quantifying the social impacts derived from many different factors
during each life cycle phase of a product.
Despite the usefulness and popularity of the LCA approach, its full implementation hugely
depends upon the nature of given products and the standardization level of the production
process (De Luca et al., 2017). Although LCA evaluations have already been conducted for
a wide range of products, in some cases we run into methodological challenges. These
challenges are related to defining the functional unit, collecting data or analyzing the
inventory. For food and agricultural products, as an example, data collection under various
farming systems (organic or non-organic), climatic factors and local environmental elements
(e.g., soil type, water availability) requires much effort (De Luca et al., 2017).
In case of sLCA, there is no consensus among researchers regarding the social impacts
assessment. On the one hand, due to lack of methodological standardization, there is
neither an agreed structure nor a unique evaluation process for the sLCA approach (De Luca
et al., 2017). On the other hand, a clear definition of social responsibility has not been
proposed mainly because it has a multi-disciplinary and multi-stakeholder nature (Chaabane,
Ramudhin, & Paquet, 2012). Therefore, the incorporation of sLCA into SSC studies faces
many challenges and its full implementation is still not practically possible (Popovic,
Barbosa-Póvoa, Kraslawski, & Carvalho, 2018).
For these reasons, in many papers on sustainable CSC, researchers are likely to use
partial LCA methodologies. Depending on the characteristics of the products that are to be
investigated, this method focuses only on the most impactful environmental impacts
categories or covers particular life cycle stages (e.g., cradle to gate versus cradle to cradle
to undertake the assessment (Eskandarpour et al., 2015). Acidification, eutrophication,
global warming, ozone depletion, photochemical ozone creation, and energy use are the big
six impact categories of LCA.
Despite the popularity of partial assessments, a number of researchers questioned the
validity of its results. Schlegel et al. (2016) criticized the results of partial assessment of road
construction practices by comparing them to the results of more comprehensive
assessments. Valuable sustainability outcomes can be lost and wrong environmental
decisions may be made, if a predefined, limited set of environmental or social indicators are
used for impact assessment (Michelsen, Fet, & Dahlsrud, 2006). To address this concern,
participatory life cycle sustainability assessment (LCSA) framework was developed recently
to partially assess the impacts that are most important for particular groups of stakeholders.
LCSA is an aggregation of LCA, sLCA and life cycle costing methodologies devoted to
comprehensive sustainability evaluation. Participatory approaches in this framework refer to
those techniques and methods (e.g., multi-criteria decision making, multi-attribute utility
theory, etc.) that allow the involvement of stakeholders, particularly those who are affected
by the impacts of products and processes (Ekvall, Ljungkvist, Ahlgren, & Sandvall, 2016;
Guijt, 2014). The involvement of participatory approaches in LCSA enables stakeholders to
decide on assessment scope, indicators, weights and aggregation methods (De Luca et al.,
2017). The practical use of comprehensive approaches for measuring the effectiveness of
12

supply chain like participatory life cycle sustainability assessment is to be considered more
in future research. Figure 4 summarizes the issues that are described in the text above.
Figure 4. Scope of sustainable circular supply chains
3. Towards the ESSC Conceptual Framework
3.1 Sustainability and Financial Performance
The relationship between the efforts towards making SC sustainable (including SSC, CSC
and sustainable CSC) and their financial performance has been investigated in a large body
of literature (see review by de Oliveira, Espindola, da Silva, da Silva, and Rocha (2018)).
The results are contradictory: some studies found efforts towards sustainability in supply
chains as financial burdens, whereas, others reported increased profitability and
competitiveness (Wu & Pagell, 2011).
Environmental efforts such as minimization of resource consumption and reducing the
fossil fuel consumption do reduce the costs and increase profits but may require upfront
investments. The implementation of green technology, designing green products, and going
circular are not quite aligned with cost-saving objectives. The investments in new design and
technologies may take a long time to get paid off. Longer returns on technology investment
put the financial health of the supply chain at risk (Mathiyazhagan, Govindan, NoorulHaq, &
Geng, 2013). Munasinghe et al. (2016) found that adjusting an already existing supply chain
to produce new low carbon products was more costly and difficult compared to designing the
appropriate production processes from scratch. Xia, Govindan, and Zhu (2015) report that in
most small and medium size supply chains, funding for research on design for disassembly
or remanufacturing is often cut and reverse logistics activities are limited to waste
management. Also, other expenses related to green upgrades, such as energy efficient
13

machinery and green materials tend to increase the total cost of products and ultimately the
product prices (Eccles, Ioannou, & Serafeim, 2014). Therefore, for many supply chains that
took steps towards sustainable development, costs have become a big concern (Bhanot,
Rao, & Deshmukh, 2017).
Substantial upfront costs required for initiating a green revolution affect the financial
strength and pure profit margins of supply chains adversely, at least in short term. The
reduced financial performance and eroded competitive advantages causes uncertainties in
stakeholders’ decisions for going green, as the promise of improved benefits does not come
true immediately (Nidumolu et al., 2009). Therefore, the major challenge facing supply
chains is how to compensate for the increasing costs of transition towards sustainable SSC.
Despite the warnings by Pagell and Shevchenko (2014), most of the papers are still talking
about financial gains and losses only in monetary terms. We argue that by incorporating
societal preferences and norms into the SSC analysis, we have a better chance to account
for other drivers that may not immediately translate into purely financial measurements.
Decisions, like closing the resource loop or greening different processes, create a green
image of the supply chain (Park, Sarkis, & Wu, 2010). The positive relationship between
green image and environmental performance (Rao & Holt, 2005) lead to enhanced
competitive advantage, sales and market share, profit margins and superior economic
performance (Schrettle, Hinz, Scherrer-Rathje, & Friedli, 2014). This immediately calls for
deeper considerations of consumer behavior and how it can impact the overall success of
the SC. People will be buying certain goods not only because they deliver more functionality
for a lower price, but because they approve how they were produced and delivered, because
they appreciate the SSC, no matter what the monetary costs are. Researchers highlighted
that sustainable SSCs can both minimize socio-environmental impacts and maximize
financial benefits (Zhu & Sarkis, 2004). However, it is difficult to come to a clear conclusion
because of changing market rules, varying regimes of taxation and subsidies. These in turn
depend on governmental policies and decisions (Li, Chen, Xu, & Hou, 2018), further raising
the importance of accounting for the consumer preferences and choices at the ballot boxes.
Unless the social processes and dynamics are part of the analysis, we will not be able to
account for all the delicate feedback effects and non-monetary metrics.
3.2 Sustainability and Consumer Behavior
Excessive use of natural resources to provide for ever-increasing irresponsible
consumption of products and services in recent decades have prompted environmental
degradation worldwide (Chen & Chai, 2010). Consumption patterns and consumer
preferences have a significant impact on environmental deterioration (Biswas & Roy, 2015),
and attracted attention of several researchers who study green consumer behavior. A set of
terms such as green, eco-conscious, sustainable, responsible, and pro-environmental
behavior have been used to define consumers’ care for the environment (Kumar & Polonsky,
2017). However, consumer behavior has been receiving little attention in the context of
supply chains. The few examples that we found include Pankaew and Tobe (2010), who
studied whether the greenness was a selection criterion for electronic device consumers,
and Dan-li, Zhen, and Hong-yan (2011), who demonstrated that the demand of consumers
could be shifted towards green products by adopting competitive price strategies. Coskun,
Ozgur, Polat, and Gungor (2016) proposed a model for the green supply chain network
design based on consumers' green expectations.
14

Making changes in diet, taking energy conservation measures, and managing and
recycling waste are a few examples of desirable pro-environmental behavior change. Some
people choose to ignore the environmental impacts of their purchases and explain the
negative environmental messages about products to marketing attempts. They undermine
the green products value and question whether a green product is worth the higher price.
Changing the irresponsible behavior of this group is hard, just like changing any other
human behavior.
A wide-range of complex factors influence environmentally responsible purchasing and
eco-conscious behavior. These factors can be generally classified as individual factors and
situational factors (Joshi & Rahman, 2015). Individual factors related to green behavior are
derived from the individual's personal traits, cultural norms, education, subjective knowledge,
and life experiences. Individual factors including environmental concerns and responsibility,
perceived consumer effectiveness, perceived behavioral control, values and personal norms,
and knowledge positively influence green consumption behavior (Groening, Sarkis, & Zhu,
2018). However, environmentally damaging habits and lack of trust in green products can
deter individual actions toward ecologically-conscious consumption behavior. Situational
factors are concerned with the circumstances and situations in which a person makes
decisions (Joshi & Rahman, 2015). Situational factors such as product price, availability of
products and alternatives, social norms and reference groups, product quality, store related
attributes (e.g., size, location, etc.), brand image, eco-labeling, and certifications can impact
pro-environmental consumer behavior (Joshi & Rahman, 2015). All these individual and
situational factors can discourage or encourage green purchase behavior, but the extent to
which they influence sustainable behavior requires further research.
While the rate of environmental degradation is rapidly increasing, the changes of individual
behavior to more sustainable purchasing practices are much slower (Taufique &
Vaithianathan, 2018). Thus, after identifying the causal factors of a particular green behavior,
it is necessary to adopt intervention strategies that target the promotion of relevant
behavioral factors. A set of various strategies for different behavior determinants have been
proposed to promote green changes. They are broadly classified into informational and
structural strategies. The former are aimed at changing the individual factors of green
behavior (e.g., green concern, knowledge, personal norms), whereas, the latter focus on the
situational factors influencing environmental behavior (e.g., price, availability, social norms)
(Abrahamse, Steg, Vlek, & Rothengatter, 2005). Prompts and information campaigns,
individualized social marketing, social support and role models, public involvement and
participatory approaches are examples of effective informational strategies for the adoption
of pro-environmental behavior (Steg & Vlek, 2009). Structural strategies are associated with,
for instance, providing better behavioral options, making environmentally harmful behavior
less feasible or infeasible, rewarding good and punishing bad behavior, and proposing
financial and legal measures (Steg & Vlek, 2009). The effectiveness of these strategies in
orienting people’s behavior towards greenness depends on the characteristics, motivation,
regional culture, and situation of different target groups.
Consumer behavior shows not only in the purchasing decisions that are made, but also
impacts the governmental performance and the policies that are delivered. These in turn
feed back into human behavior. The impact of government policies on pricing of eco-friendly
products (Li et al., 2018) and waste management (Zand, Yaghoubi, & Sadjadi, 2019) has
been well documented and only confirms importance of close integration of social,
behavioral aspects into the SSC analyses.
15

What is most important, and what we see from the overall effectiveness of various
commercials and advertisement methods, is that changing consumer preferences and
behavior is possible, and it would be inappropriate to ignore or overlook it when designing
and managing supply chains in a sustainable way.
3.3 Extending Circular Supply Chain for Sustainability
Much of the supply chain success depends on the extent to which it is capable of predicting
and meeting customer expectations. One of the principles of supply chain management is
that customer demand drives the entire supply chain, pulling products through production
and distribution processes. The demand-driven supply chain or customer-centric supply
chain terms resulted from customer-focused thinking approach. Likewise, in today’s green
economy, environmental needs of consumers have profoundly influenced the disposition of
supply chains for transition towards SSC. In fact, the pro-environmental behavior of supply
chains is guided by customers’ attitude towards eco-friendly products. That is to say, the
consideration of green consumer behavior in the management of involved companies on the
supply chain is critical (Lacoste, 2016).
Paying attention to consumer demand and preferences is crucial for addressing
sustainability. We cannot claim that a supply chain is sustainable unless we consider both
the impacts on natural resources and the society. Consumer preferences are key to making
sure that supply chains are modified to take into account sustainability issues. Without
additional support and incentives from consumers, it is unlikely that SSC can be competitive
and financially viable. Consumer choices and their willingness to pay more for green
products can make sustainable products more competitive. The focus on sustainability in SC
can, in turn, influence consumer behavior and raise their awareness about socio-
environmental concerns. We, therefore, propose a conceptual framework (see Figure 5) to
emphasize the importance of consumers and their green behavior for sustainability features
of supply chains.
The “Extended Sustainable Supply Chain” (ESSC) can be considered as an extension to
the traditional concept of sustainable circular supply chain that includes behavioral aspects
of consumers. ESSC is motivating sustainable consumer behavior to drive decision-making
process along the whole SC for improving socio-environmental performance. By extending
the supply chain analyses to include consumer behavior we may be entirely changing the
goals/objectives used in the supply chain optimization efforts, and, therefore, affecting the
performance of the supply chains. If consumers are motivated to switch from purely
economic cost/benefit considerations when making their purchase decisions, and start to
bring in additional considerations about environment, social and intergenerational justice,
ecological and human health, etc., then these preferences start to feed back into the design
and organization of the supply chain. As a result, we will likely see very different solutions
and investment strategies becoming dominant.
16

Figure 5. Extending circular supply chain to address sustainability (ESSC framework);
where represents the feedback from green consumers and - - - represents the feedback
from erratic/uncertain consumers
As discussed above (see section 2), SSC literature had no (as in traditional SSC) or poorly
defined relationships (as in CSC and sustainable CSC) between upstream firms and final
consumers, making it difficult for suppliers (i.e., manufacturer, distributor, etc.) to perceive
and influence green consumer expectations (Lacoste, 2016). Also, the results of literature
analyses show that green consumer expectations have been either left out of consideration
entirely or just touched upon (Govindan, 2018; Tseng & Hung, 2013).
Current SSC studies assume that consumers make entirely informed choices based on
rationality. So far, rational behavior optimization and immediate equilibrating process in
markets are used for demand modelling which is very different from the way consumers
actually behave. The growing literature in social science emphasizes that many issues in
consumer pro-environmental behavior are complex (Bamberg, Rees, & Seebauer, 2015);
that the choices the consumers make are influenced by behavioral factors (e.g., attitudes,
norms) rather than the more predictable rationality. Underestimating these factors, analyses
of market changes can be misleading. This is especially important in the context of
sustainability, which is a largely social concept and assumes that consumers can
substantially change their preferences, values, and behavior. Consumers can be influenced
by information (awareness campaigns, targeted advertisement), they can learn from the
behavior of other consumers (neighborhood effects). These changes, in turn can significantly
modify demand and drive the whole SC. These aspects are largely ignored in existing
research on SC.
17

In the ESSC framework, the customer behavior is considered through identifying different
market segments and influencing their green purchasing behavior. The results of market
segmentation in regards to sustainability shows three general categories of green, erratic,
and non-green consumers. Green consumers pay significant attention to socio-
environmental, as well as health impacts of products during use and post-use. Erratic
consumers have some level of environmental awareness and intention, which might or might
not lead to a green behavior. Non-green consumers, buy products with no concern for their
environmental or social impacts, making their choices based only on their selfish cost/benefit
considerations, or simply lacking information and awareness about the sustainability issues.
The sustainability efforts of suppliers, manufacturers, distributors and retailers should be
adjusted to meet the expectations of each segment. Not only meeting each particular
demand is the ultimate objective, but ESSC aims to see how this demand is formed and how
it can be modified to increase the market share of green consumers and decrease the
negative socio-environmental impacts. Factors affecting green consumers purchasing
behavior and intervention strategies were discussed above in Section 3.2. With this setting,
supply chains can reduce the resistance of partner organizations to change their
unsustainable approaches and initiate their transformation efforts towards sustainable
development. Just like advertisement is largely responsible for creating the current
consumer society, similar efforts, but probably in the opposite direction, are required and
should be expected if we are to move toward sustainability.
As we discussed in Section 3.1, many supply chains that begin their journey towards
sustainability are hesitant about making changes because of concerns about their
profitability after the transition. Green materials, for instance, tend to be more expensive (Wu
& Pagell, 2011). Replacing hazardous materials with them would raise the overall cost of
production and prices of final products (Beske, Koplin, & Seuring, 2008). However, if
consumers are willing to pay more for the green products, the extra cost will be transferred
to them and compensated for the producers. At the same time, we should be prepared that
while paying higher per unit prices, consumers may be inclined to decrease the overall
number of units to be purchased, which will certainly impact the overall performance of the
SC.
Consider the following cases in food and garment production. In a food supply chain, if
consumers are persuaded that organic, ethical food (i.e., fair trade (O'Connor, Sims, &
White, 2017)) are better for health, environment, society, and thus worth the extra cost, they
will be then willing to pay a higher price for such products (Rödiger & Hamm, 2015). By
doing so they provide financial support for mitigating the risks involved in organic food supply
chain. These risks are not only limited to real physical risk (e.g., threat of pests destroying
crops) but also they are related to the costly process of getting certified (at least 750 USD in
the United States) and timely conversion from conventional to organic farm (approximately 3
years). According to the International Federation of Organic Agriculture Movements (IFOAM)
and Food and Drug Administration (FDA) regulations, organic food producers are
responsible for meeting sustainability requirements in all supply chain stages, from farm
management and transportation, to storage and packaging (Marques Vieira, Dutra De
Barcellos, Hoppe, & Bitencourt da Silva, 2013). Because of the high risk of organic food
contamination, it cannot be carried with other food in trucks and cannot be stored together
with conventional food. This may lead to an increase in complexity of logistics and supply
18

chain management as additional provisions are required for organic product transport.
Garment industry is another example showing how changing consumer behavior can
address environmental issues of supply chains. Raw material production is reported to be
the most environmentally impactful phase of garment life cycle (Bevilacqua, Ciarapica,
Giacchetta, & Marchetti, 2011). However, research showed that garment usage phase which
is dependent upon the customer behavior could be even more harmful. In particular, for
sensitive fabrics, washing followed by drying and ironing was the most energy-intensive
activity (Dewaele, Pant, Schowanek, & Salducci, 2006). Changing washing habits can
reduce carbon emissions by 2% and energy by 4% per product (Munasinghe et al., 2016).
The eco-friendly behavior of consumers can be extended to promote recycling. Textiles are
then recovered and reused so that the dependency on virgin materials (i.e., cotton) is
reduced and environmental performance is improved. Using cold-water detergent and
washing machines at lower temperature settings provide another significant opportunity to
reduce environmental impacts. The result of an LCA study on lowering washing temperature
from 32 °C to 15 °C has shown a 300g reduction in CO2 equivalent per load as less energy
was consumed to heat water (Nielsen, 2005). Although using cold water can save money
($US 60 - 200 per year) and energy (GHG equivalent to 1000 miles of driving), some
consumers do not perceive washing at cold temperatures hygienic (Mars, 2016). Thus,
increasing consumer awareness about the effectiveness and safety of cold-water washing is
necessary to address their concerns and promote energy-saving habits.
These examples show how by raising consumer awareness and motivating behavioral
shifts, the impacts of supply chains on environment are reduced. When turning conventional
supply chains into sustainable supply chains behavioral changes may deliver as much
economic and environmental efficiency as all the other technological/methodological
developments in the field. Because of the multitude of feedback effects between the
operation of the supply chain and the consumer behavior, we suggest that the two are
integrated and considered jointly within the framework of ESSC, rather than bringing in
considerations about consumers at the end assuming them to be beyond the SC analyses.
3.4 Application of ESSC in Practice
In this section, we apply our proposed conceptual framework in two case study settings,
forward SSC and sustainable closed loop SC. For each case, we explain how economic and
socio-ecological performance can be improved if the companies revisit their practices in
accordance to ESSC framework.
3.4.1 Extending a SSC for Bicycles
Park, Kremer, and Ma (2018) proposed a SSC model focusing on sustainable supplier
selection and optimal order allocation. They aimed to minimize total cost, defects, delivery
delays and carbon footprint of global supply chains. In this study, initially, a set of supplier
regions (countries) were determined based on regional sustainability indices and then the
final suppliers were selected from the list of candidate regions. The performance of the
model was demonstrated in a bicycle SC case study with a budget of $9 million to meet a
demand of 12,000 units. Their analysis indicated that the optimal solution reached 75.6% or
77.3% of the ideal solution if the decision maker gave higher values to cost or environmental
impact objectives, respectively. Although environmental impact-oriented strategy had the
19

best carbon reduction performance (dropped from 2,130,176.63 kg CO2 equivalent to
1,849,144.51 kg CO2 equivalent), the total SC cost was significantly higher (growing from
$7,234,691.92 to $5,999,539.12). They concluded that the consideration of sustainability in
SSC can be challenging.
We suggest using ESSC framework to address this challenge through applying behavior
change to increase the number of people cycling, which eventually will increase the demand
for bicycles. Biking is one of the most sustainable means of transportation. The estimated
climate impact of riding a bicycle is 40-65 (g CO2/passenger/km) while driving a car has an
impact of 300 (g CO2/passenger/km) (Thorpe & Keith, 2016). Using a bicycle for trips of up
to 10 kilometers (each way) can save 1500 kg greenhouse gas emissions per year per
individual (Queensland Government- Department of Transport and Main Roads, 2018).
Increasing education, awareness, effective communication and social support as well as
reducing the perceived risks of cycling can motivate people to change their behavior and
start riding on a regular basis. For example, management and regulations could be directed
towards increasing the connectivity and safety of cycling routes and raising awareness about
the benefits of cycling for the rider (e.g., healthy lifestyle, burning calories, saving
transportation costs) and for the society (e.g., less road traffic, less need for fuels, more
carrying capacity of public transport). As a result of such measures, the proportion of people
in the City of Sydney, Australia, who have ridden their bicycle to work have doubled in a 10
year period (2006-2016) (NSW Government- The City of Sydney, 2018).
Such practices as organizing events (e.g., speed dating, charity rides), providing cycling
courses and informational campaigns, or funding projects for improving the usability,
accessibility, and attractiveness of biking can be considered as parts of the bicycle ESSC to
develop a more profitable, environmentally-friendly and socially-favorable business.
3.4.2 Extending an SCSC for Tire Production
Sahebjamnia, Fathollahi-Fard, and Hajiaghaei-Keshteli (2018) designed a SCSC model to
address supplier selection and location-allocation problems for the tire industry. The
sustainability objectives were defined as minimizing total network costs and total
environmental impacts as well as maximizing social benefits. The market demand for
different tire types and the fraction of used tires returned from market were assumed to be
deterministic and unchanging. They numerically showed that if the amount of collected and
recycled tires are increased, the total costs of economic considerations will decrease and the
social impacts (due to availability of more job opportunities) will improve. In this study, no
explanation was given to understand how the number of scrapped tires is to be increased,
how consumers can be motivated to return their products back to the collection/distribution
centers and what dynamics are involved in consumer behavior. The ESSC framework can
address this gap by suggesting to use behavior change strategies to motivate waste
recycling decisions of consumers. In Figure 6, we demonstrate how can Sahebjamnia et al.
(2018) CSC framework be extended.
20

Figure 6. Comparison of tire closed-loop supply chain network developed by Sahebjamnia et
al. (2018) (left hand side) and proposed tire extended closed loop supply chain (right hand
side). We suggest replacing markets agent with consumers agent to investigate used tire
disposal behavior of consumers
For designing appropriate change strategies, we first need to identify what individual and
situational factors influence the disposition behavior. Gaur et al. (2016) categorized these
factors as psychological, product-related, situational, and cultural. They highlighted that in
many cases, lack of information about take-back policy of companies, absence of financial
incentives, and poor access to collection centres are the main reasons discouraging
consumers to return the used products. Considering both the individual and situational
behavioral factors, the suggested framework gives a more realistic understanding of the
product acquisition process for remanufacturing. The quality and quantity of returned tires
can be increased if the company makes the return process easy by offering free shipping,
locating collection centres close to consumers, providing financial/non-financial incentives for
returns, informing consumers about the return policies, or creating a local culture for
recycling through education and information campaigns. Effective product return strategies
can result in higher profitability of the company, lower environmental impacts, and cheaper
remanufactured products for the consumer.
4. Conclusions and Outlook
In this paper, we suggest that an extension of the supply chain concept is needed if we
want to analyze their sustainability. First, we present an overview of the evolution of the SC
concept with respect to sustainability goals. To this end, we select some most relevant
papers and critically compare and contrast them. Summarizing literature on sustainable
supply chains, circular supply chains and sustainable circular supply chains, we show why
they were not quite adequate to address the holistic and system wide sustainability issues.
21

We discuss the sustainable forward logistics issues in SSC and the integration of circular
economy concepts with the supply chain organization. The relationship between LCA
methodologies and CSC is examined in the context of sustainable CSC. This review clearly
demonstrates how the SC concept has been evolving to include additional processes and
actors, to consider the requirements of sustainable development.
Next, we show how financial performance of supply chains may be influenced as a result of
implementing green practices such as green technology, green product design, and end of
life treatment. Most supply chain managers conclude that their competitiveness is eroded
with increases in the cost of green products. Furthermore, we explain consumer choice
behavior in purchasing green products and strategies to motivate pro-environmental
behavior. By doing so, we set the foundation to consider the role of green product
consumers in SSC.
To address sustainability in future research on SC we propose a conceptual framework
which links three very different areas (i) supply chain design and engineering, (ii) financial
performance, accounting and economic optimization and, (ii) consumer behavior and
environmental psychology. Figure 7 shows the evolution of sustainable supply chain concept
in literature and how we think it should further develop. Our findings demonstrate how
financial performance of SSC can be improved by bringing the consumer into the picture and
exploring how their willingness to pay and sustainability concerns can be influenced and
modified. Although it is important for the focal firms to identify possible strategies for
motivating pro-environmental behavior of stakeholders, particularly consumers, SSC studies
are still far from providing comprehensive analytical studies. Disregarding the relations
between SSC and consumer behavior leads to a blurred notion of sustainability in supply
chain research. From a theoretical perspective, we argue that for transition towards
sustainability, it is crucial to take the extended supply chain view, in which the boundaries
are expanded towards the involvement of consumers and their behavior.
Figure 7. Comparison of scopes for conventional, green, sustainable and extended supply
chains
We invite sustainable supply chain analyses to go beyond their tradition scope of
operations, and bring consumer behavior dynamics into consideration. It is important to
identify the factors influencing consumer choice behavior regarding sustainable products and
apply appropriate interventions to change unsustainable consumer behavior. The growing
22

field of behavioral and empirical economics and the proliferation of agent-based modeling
methods, can now look at heterogeneous human behavior under various conditions, and can
help understand and quantify some of the cultural and social drivers that affect SC (Filatova,
Verburg, Parker, & Stannard, 2013; Anufriev, Hommes, & Makarewicz, 2018). These models
can be well integrated with SSC models to include the social dynamics in SC design and
management (Taghikhah, Voinov, & Shukla, 2018). They can be used to improve SCM and
offer additional control parameters for optimization of SC performance. The ESSC
framework assumes that other managerial techniques should be also employed, with a focus
on the social dimension, on education, motivation, nudging and persuasion as part of
development towards sustainability.
We hope that the ESSC framework can help supply chains to become green and to gain
competitive advantage and improve visibility of sustainable practices in the evolving
marketplace. A future extension of this research will consist of developing analytical studies
to compare the performance of extended sustainable supply chain with conventional
frameworks. Another extension can be to empirically analyze the impact of adopting
behavioral change strategies for green demand and green supply. Future studies can
develop tools and models to deal with the difficulty of prediction and high uncertainties
involved in behavioral aspects of green consumption.
Funding sources
This research did not receive any specific grant from funding agencies in the public,
commercial, or not-for-profit sectors.
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