industry- Supplier company relationship and Integration
management challenge
Masoud Zafarzadeh, Master student of production and Logistics, Malardalen University Sweden, School of Innovation Design and Technology, mzh10001@student.mdh.se,+46-760604659
Hariram Vedapatti Ranganathan, Master of Science in production and Logistics, Malardalen University Sweden, School of Innovation Design and Technology, hvi10001@student.mdh.se,+91-9597000846
Martin Kurdve, PhD student, Malardalen university Sweden, School of Innovation Design and Technology, martin.kurdve@Swerea.se, +46-31706 6132
Abstract Growing competition in automotive industry has forced companies to have serious attention towards the sustainability concept. Obviously environmental, social and economic challenges do not only happen inside companies, but rather involves the whole supply chain process. Most of the practical efforts are focusing on manufacturing phase and less attention has been paid to supply and distribution areas. However, it is not possible to achieve a sustainable supply chain unless the current situation is accurately mapped and long term policies toward a sustainable future state are defined. In this respect, the authors consider two major challenges, first supplier coordination with sustainability requirements and second investigating the alliance of current managerial policies. In theory, the paper aim is to represent sustainable supply chain management by focusing on supplier company relations. Integration as a vital element to meet sustainable supply chain is discussed by exploring the coherence of lean and green with sustainability. In practice, three leading automotive companies Sustainable Supply Chain Management (SSCM) systems (TOYOTA, VOLVO and Volkswagen) are investigated in order to figure out their perspective toward SSCM.
Key words: Sustainability, Supply chain management, Automotive Industry, Supplier, Integration, Environment, Lean 1. Introduction Economy, ecology and socio-policy are three main elements in field of global challenges; air pollution, recent financial crisis and social movements are examples for these challenges. Developing countries like China and India with about 40% of world population tend to become more industrialized and due to that the pressure on world resources, ecosystem and societies culture and economy is increasing (Seliger et al., 2008). In such situation, companies sustainability depends on how they face with barriers and enablers in their supply chain process (Walker and Jones, 2012). Additionally, sustainability and social responsibility count as competitive assets and according to Wagner and Svensson (2010) A study revealed that 60% of firms have adopted sustainable practices that strengthen brand names or differentiate their products (Wagner and Svensson, 2010, p.177)
Research shows that during 1998-2008, manufacturing activities price had a dramatic raise 43 % worldwide which is an ignorable example of these motivations. (UN Statistics divisions). On the other hand most of opportunities and risks in the holistic point of view of production and consumption lie in the supply chain phase and the consumption phase but most of practical efforts are focusing on manufacturing phase and less attention is paid to supply and distribution areas.
Because of the automotive production nature which deals with sustainability challenges across their chains, it would be crucial to study leading automotive companies in order to have clear picture of sustainable supply chain management in automotive industries (Seliger et al., 2008). Sustainable development is often defined according to the Brundtland definition from 1987: "Development which meets the needs of current generations without compromising the ability of future generations to meet their own needs" (UNECE, Sustainable development). When it comes to environmental considerations it concerns the protection of natural resources from pollution or over exploitment of resources. One common way to measure the impact on the natural resource base (or simply on the environment) is by the use of life cycle assessment. This is common practice and most automotive companies have performed life cycle assessment of their products. It is clear that the main impact of automotive business comes from the use phase, mainly from their fuel use, and thus it is important to design the vehicles for low fuel consumption. How the supply chain impact on the design is thus crucial. However with lighter products and cleaner and more renewable fuels the impact of the production and end-of-use phases are increasing, thus the life cycle phases including extraction of material and all of the processes in manufacturing components and finally assembly to a vehicle are important. Clearly this involves all the suppliers in the supply-chain companies. This leads us to evaluating two main issues: 1. For suppliers who take part in the design phase how are the requirements of the design stated 2. For all suppliers how are requirements of sustainability included in the SCM In addition to the above it can be concluded that certain sub processes such as process chemicals (for metalworking and cleaning), paint processes and energy and waste management carries a large share of the total environmental impact from production and thus suppliers of these processes or services could have special requirements. To formulate what mentioned, following research questions are addressed in this paper: How do leading automotive companies handle their relationships with suppliers in a sustainability context?
How do leading automotive companies integrate current managerial policies (e.g. lean philosophy and green supply chain management) with sustainability requirements?
To answer the research question, in advance to do literature review it is needed to investigate leading automotive companies approach toward SSCM. 2. Materials and Methods 2.1 Methodology This paper will follow an abductive approach which start point of research is prior theoretical knowledge and then goes to investigate what happen in reality. The aim of an abductive approach is to develop new understanding in order to suggest direction for future. Considering previous knowledge in Sustainable SCM, this study explores the practices of leading automotive companies in sustainable SCM through studying sustainability reports and companies official websites. 2.1.1 Case companies Three companies have been used as examples to show their view of integrating sustainability in their supply chain management; -Toyota is one of worlds leading automotive companies are renowned for their lean production philosophy integrated into their supply chain. It is one of the most researched companies in the automotive industry by technological and economical academic fields. -Volkswagen is chosen as they are known as the largest automaker in Europe in 2011. Volkswagen is one of only three automobile companies listed in the Dow Jones Sustainability World Index. Due to wide variety of brands and companies which are known as Volkswagen group, this case is chosen to figure out how a company can achieve sustainability while trying to maintain unity and individual identities. -Volvo Group is a manufacturer of heavy vehicles (not cars) and has been chosen for their known commitment to safety and environmental issues, also two of the authors have worked closely with Volvo in previous studies. The three companies own statements of how they work with sustainability in their supply chain are assessed, compared and discussed on the basis of the theories in literature. 3. Supplier-company relationship in SSCM
Previous research reveals that automakers have various approaches into cooperation structure with their suppliers. According to Alez-Aller and Longs-Garca, (2010, p315); The realization by automakers of just how much mutual dependence there is in their relations with their suppliers affect companies strategy toward their suppliers. In such a situation the level and depth of relationship is a strategic decision. (Simpson et al.,2007) Nawrocka et al., (2009, p1441) designed a survey which concluded a closer relationship with suppliers is benecial both for environmental outcomes of projects and as a facilitator for environmental work. A sustainability model for closer relations where the business is based on function rather than volume of sales is Product-Service-Systems(Mont et al 1998) where economical incentives are aligned. (figure 1). This is particularly common for supply of chemical process material and paint to the automotive industry. However as shown in Kurdve (2010) the gain is not automatic, the business model and responsibility allocation has to be aligned with the products and services supplied. Change in the supplier compensation model: the source of environment and economical gains Material (cost, volume) Wants to decrease Wants to Increase Customer Service provider Traditional model Conflicting Incentives Wants to decrease Service provider New approach Aligned Incentives Life cycle costs (material, labor, waste management) Wants to decrease Customer
Figure 1customer supplier relationship model adopted from Kurdve(2010) model
In Sustainable supply chains, firms tendency is to have long term relationship with suppliers to yield their services for multiple functions or evolve close service with consumers (Tseng and Chiu, 2010). In contrast Lee et al.(2009) argue that firms should avoid close relation with their suppliers in uncertain environments in order to be able to switch to other partners when necessary. Gunasekaran et al., (2008) developed a model to characterize the responsive supply chain concept as an important element to succeed with sustainable improvement along the supply chain. Model consists following elements:
-Strategic planning: Corporate and Business Strategies, Global Outsourcing, Strategic alliances, technology, and Continuous Improvement
-Knowledge and information technology management: Partnership based on Core competencies, Distributed network of partners, Integration by IT, Learning organization, Strategic alliances
-Virtual enterprise: Automation and IT including E-commerce , Strategy formulation and Tactical management, Training and education, Learning organization, Information technology, Flexible workforce considering continuous changing customer demand.
Sometimes customer should be responsible to develop its suppliers. Supplier development refers to any activity undertaken by a buying rm to improve supplier performance, supplier capabilities, or both, so as to meet the buying rms short and long-term supply needs. (lee et al.,2009, p195) 4. Integrating management systems requirements upstream in the supply chain
Automotive firms with multiple suppliers and customers and stakeholders often have separate groups of experts focusing on three bottom lines of sustainability, but it is crucial that these groups work coherently considering mutual understanding of the practicalities. Based on Jrgensen et al., (2006) integration of quality, environmental and occupasional health and safety management systems should be considered on strategic, management and subsystems levels. The integration level is highly dependent on the current management system complexity and integration motivations. In automotive industry there is often an extraordinary attention on quality issues. However regarding product and process quality, environment and safety features may be seen as required features, consequently it is possible to consider quality management as a basic need in all management systems.
While ISO 9001 stipulates to, e.g. evaluate suppliers and manage core processes like product development and communication, ISO 14001 only makes this mandatory if the companys analysis shows that these processes are environmentally significant. Thus, it is almost impossible to implement a quality management system according to ISO 9001 and not integrate it in the companys core processes.
4.1 Lean, green - efficient and sustainable production processes Lean supply arrangements demand high levels of information sharing, rapid performance improvements with suppliers and minimal transaction costs (Dyer, 1997) (Lamming & Hampson, 1996). This type of relationship may provide the incentive firms need to bridge the lean and environmental supply chain practices of their suppliers. Improvements in manufacturing systems can lead to direct and indirect benefits for environmental management, usually in the form of waste reduction (Simpson & Power, 2005). Lean and green practices are becoming essentials practices / activities in the supply chain to sustain the market by responding to demand, meeting the regulations etc. Lean which tries to give satisfy the customer and the green which makes it environmental responsible when combined together makes more sustainable chain of supplies. Bergmiller and McCright (2009), in research on Parallel Models for Lean and Green Operations, compare Lean manufacturing systems models with Green systems models to determine the degree of similarity that exists between the two sets of models and conclude, by suggesting a model that integrates the two into one comprehensive program focused on reduction of all wastes (those targeted by Lean systems and those targeted by Green systems), that can be an effective and efficient path to long-term organizational sustainability as shown in Figure 2. Lean/Green Management systems Leadership Empowerments Environmental Management system Years ISO14001 Certified Lean and Green Waste reduction techniques Vision and strategy-Innovation Partnerships-Alliances Support functions Process and product design Disassembly-Substitution Reduce-Recycling-Remanufacturing Consume Internally-Prolong use Returnable packaging Spreading risks Creating markets Waste segregation Lean / Green Business results Quality-Cost delivery Cust. Satisfaction Profitability Lead time Market position Reputation Product design Process waste Equipment benefits Intl Sales
Figure 2 Comprehensive Lean and Green Model (Bergmiller and McCright, 2009)
According to Bergmiller and McCright (2009), many leading companies have implemented Lean Manufacturing Programs which yield increased efficiency, reduced costs, improved customer response time, and more. Others have adopted Green Programs resulting in reduced energy consumption, waste generation, and hazardous materials usage. Models for both Lean and Green systems all include management systems, waste identification, and implementation of waste reducing techniques (WRT) to achieve desired business results. Studying known Lean companies, we confirmed that strength of management system correlates with WRT implementation which correlates with business results for both Lean and Green Programs. Our results indicate that Lean and Green Programs lead to improved business results.
Wal-Mart has recognized that aligning green and lean practices across the supply chain drives the financial performance of the firm and earns respect from customers (Friedman, 2008). As a bottom line, integrated lean and green practices make a better chain of supplies and flows with good and balanced Environmental Performance (Environment Friendly), Financial Performance (Financial Stability) and Social Performance(Social responsibility). 5. Case studies
Toyota, Volkswagen and Volvos official statements as published in requirements, policies and yearly reports have been analyzed. Table 1 represents the three companies specification considering production capacity, sale, financial result and employee number. All cases are famous in automotive industry by producing cars and heavy vehicles like buss and construction equipment. Comp any 1. Production (Units) 2.Vehicle sale (Units) 3. Employee (Nos) Facility Financial highlight Reputation T O Y O T A a) 7,308,000 b) 7,169,000 c) 69,125 (Consolidated: 317,716) 50 overseas manufacturing companies in 26 countries and regions Net Revenues: 18,584 Billion Yen Operating Income: 356 Billion Yen The largest automakers in the world (2011) V o l k s -
w a g e n
G r o u p a) 8,494,280 b) 8,361,294 c) 501,956 44 production sites in 19 countries Sales Revenue: 159,337 Billion Operating Income: 11,271 Billion The largest automaker in Europe (2011) V O L V O
G r o u p
a) 238,000 trucks, 84,000 Construction machines b) NA c) 98,162 65 production facilities in 20 countries. Net sales: 310,367 Million SEK Operating Income: 26,899 Million SEK One of the largest heavy automaker in the world Table 1 case studies information in year 2011 5.1 VOLKSWAGEN Volkswagen developed a model for sustainable development in 2002. This is a long term cooperation policy based on three core values:
lasting balance of economic, ecological and social systems and the aim for a long-term balance of divergent interests responsibility for own actions at the regional, national and global level Transparent communication and fair cooperation
VW established a CSR office, responsible for sustainability management. The CSR office work is based on a structure defined by the VW-group, top management shown in figure 3.
Group Management Group Management Group environmental committee management: Research Group environmental committee management: Research Sustainability workshop Sustainability workshop Sustainability committee Management: External Relations Sustainability committee Management: External Relations Research, General secretary, investor relations, communication, human resources, environment, works council Research, General secretary, investor relations, communication, human resources, environment, works council Sustained financial markets work group Sustained financial markets work group Brand group Volkswagen Brand group environment committee Brand group Volkswagen Brand group environment committee Brand group Audi Ecology committee Brand group Audi Ecology committee Volkswagen commercial vehicles Volkswagen commercial vehicles Regions North America, South America, Africa, Asia pacefic Regions North America, South America, Africa, Asia pacefic
Figure 3 Sustainability organizational structure at VW Source: Sustainability in Supplier Relations at Volkswagen Group Research, Environment, October 2006
The main activities are within the sustainable supply chain concept, which is presented as follows: Close relationship with suppliers regarding supplier relations, VW has established the "Sustainability in Supplier Relations" concept. The concept consists of six main modules, presented below. Supplier Requirements for Sustainability Environmental protection (consist of five elements),following employees rights, providing ISO14001certificate or the European Eco Management and Audit System (EMAS) Early Detection to minimize Risks
A second step is the installation of an internal and external early detection system for risks. This allows the identification and avoidance of future environment-related Contact Point for Sustainability With the aid of an explanation in the form of a questionnaire, suppliers can carry out a self-check to determine their current status with regard to fulfilling sustainability requirements. Monitoring and supplier development Permanent checking of supplier alliance with principles and helping supplier to overcome sustainability difficulties in form of direct contact or training
Communication via B2B- Supplier Platform In order to have efficient relation with suppliers VW established B2B platform.
Supplier Programme Priority A
Extra training for suppliers to raise the level of environmental and sustainability kowledge through holding workshops and seminars Table 2 supplier relationship modules at VW Source: Sustainability in Supplier Relations at Volkswagen Group Research, Environment, October 2006
Figure 4 represents the conceptual framework of integrating sustainability into supply management
Early Detection International Issue-Screening Reporting Liability of Business units Analysis of Problematic cases
Normative Requirements Setting Purchasing requirements for sustainability in Business partners relations Monitoring + supplier development Case by case revisions Duty for suppliers qualifications Information/Technical Support Supplier Process Self disclosure via supplier website Plausibility check Environmental/Social evaluation
Figure 4 conceptual framework of integrating sustainability into supply management Source: Sustainability in Supplier Relations at Volkswagen Group Research, Environment, October 2006 Volkswagen practice waste elimination and continuous improvement under the title of Volkswagen way which aim is to have comprehensive optimization of all company process. The main focus is on process optimization. So in advance to quality, stability is a matter of concern. 5.2 TOYOTA Sustainability issues have forced Toyota to establish the CSR (Corporate Social Responsibility) Committee as the body responsible for sustainable development. Toyotas overview of sustainability is based on sustainability bottom lines and represented in form of a model which contains environment, safety, resource/ energy sources, comfort and convenience sections. The main elements in Toyotas concerning supplier relationship are defined in their Supplier CSR Guidelines. Based on these Toyota explains their basic management philosophy to achieve sustainability in following way: Monozukuri based on Genchi-Genbutsu: (focusing all corporate activity on the actual needs in the marketplace and on conditions in the workplace. Toyota practice Genchi Genbutsu, go to the source to find the facts to make correct decisions, build consensus, and achieve goals at our best speed) Relentless Kaizen Efforts explain Kaizen (~continuous improvement) Two-way Communication Creation of Work environment based on Respect for our Employees Toyota expects its suppliers providingProducts and Services to undertake five main expectations as safety, quality, delivery and production, cost, technological capabilities. Further Toyota's Expectations of Suppliers in the Process of Developing "Products and Services: Legal Compliance, Human Right/Labor, and Local/Global Community
Waste elimination (lean philosophy) as main issue in Toyota production system has influence on sustainability activities. Toyota lunched the guideline to manage waste and conducted training sessions for suppliers. Facilitating energy saving activities for interested suppliers to help them identify ways to reduce energy is what Toyota does for waste elimination. Toyotas parent company in Japan has challenged plants worldwide to send zero waste to landfill. Toyota set a target to achieve near-zero waste to landfill. Zero landfill metric is driven by the Toyota Production System, where the elimination of waste, in all aspects of business is a main objective.
Continuous Improvement as one of the pillars of Lean philosophy is considered by Toyota group to develop environmental action plan. In North America, Toyota Implements different kinds of Kaizens to reduce energy use at manufacturing plants and logistics sites. There are regular meetings to share Kaizens and ideas and review current waste regulations.
Toyota established green purchasing guidelines in order to clarify its approach toward sustainability, and expects Toyota business partners to follow it.
On the other hand Toyota established Toyota's Green Supplier Guidelines emphasize that Toyota expects its suppliers to be in compliance with applicable laws, regulations and social norms. Suppliers are also asked to go beyond legal and social requirements and to undertake activities that support Toyota's environmental goals. (Toyota, Environmental Report, 2008)
5.3 Volvo Group
Volvo are, in its value chain practices, trying to be more responsible of what they produce, how they produce it and how they act, than competitors in the market. Volvo aims at obtaining sustainable value chains and present a belief that this approach is essential for building lasting relations with customers, employees, suppliers and other stakeholders.
Focusing on the Sourcing process, Volvo practices responsible sourcing by deploying the same requirements on suppliers when it comes to environmental standards, business ethics and social performance as they place on own operations. The Volvo Groups vision is to become the world leader in sustainable transport solutions.
The Volvo Group believes there is no contradiction in running a financially viable business while contributing to sustainable development. A strategic CSR (Corporate Social Responsibility) approach is increasingly important for the Volvo Groups competitiveness by e.g. improving brand image, reducing cost, creating new business opportunities and building stakeholder relationships.
A detailed framework of sustainability is provided below in table 3.
Managing risks and promoting responsible behavior in long-term relationships, in order to continuously evolve and sustain. - Integrating expectations in formal agreements with suppliers (For instance, quality, environmental, work ethic expectations) - Development in close cooperation by exchanging knowledge, Joint programs, aiding suppliers during hardships. - Strategic sourcing program which integrates key suppliers in the product development process. - Local sourcing and risk assessments - to ensure efficient flow into the production. - Avoiding usage of black list materials and limiting grey list materials.
Set sustainability objectives
To Reduce energy consumption and departure from energy from fossil fuels in production processes To develop alternative drivelines and vehicles operating on renewable fuels To decrease carbon dioxide emissions from internal transports. To reduce the total amount of carbon dioxide emitted by trucks, construction equipment and buses manufactured in the Group through 2014 by more than 30 million tons, compared with vehicles manufactured in 2008. Cut the emissions by half from a typical Swedish long-haul transport operation by 2020 compared with 2005. Employee welfare & Safety Global policy for health, workplace safety and wellbeing (medical examinations, rehabilitation support, ergonomics, different health promotion programs) Define important Challenges & addressing them Identify the potential challenges in order to keep the pace. Population growth, urbanization and megacities Climate change, oil resources and alternative fuels Shortage of natural resources and raw Safety and security Skilled employees CSR and Sustainable Development Strong and visible leadership in this area Accountability and responsibility within our sphere of influence Performance is measured and followed up Resource efficiency Transparency; reporting shall be conducted transparently based on the international standard Global Reporting Initiative (GRI) To engage stakeholders and take their expectations into account Work proactively and focus on potential risks Partnerships and cooperation. Table3 Volvo Group CSR and Sustainability report 2011
Evaluating Performance Suppliers performance are evaluated against requirements in order to verify that the assessment process yields the expected results which are used to enhance guidelines on assessment, development of the process and training material. LCA Life cycle analysis: Life Cycle Analysis (LCA) to map a products environmental impact in order to make informed decisions in the development process. LCA broadens the perspective and provides insights which show approximately 90% of the environmental impact results from the use of the products.
Figure 5 Creating Value Chains for Sustainability Source: Volvo Group CSR and Sustainability Report, 2011
Environmental Product Declaration (EDP) Volvo for many of its products gives EPD, based on the results from the LCA. This helps the customer to understand the environmental impact of the product which helps them to make better choices when choosing a vehicle.
Production It provides information about energy consumption, emissions and waste during the production of products Use This presents fuel consumption, emissions and spare parts utilization during the use phase of our products End of Life It deals with the scrapping and recycling of our products Table 4 Three components of Environmental Product Declaration Source: Volvo Group CSR and Sustainability Report, 2011 6. Analysis and Discussion Sustainable development applied on production should be the creation of goods and services using processes and systems that are non-polluting; conserving of energy and natural resources; economically viable; safe and healthful for employees, communities and consumers; and society and creatively rewarding for all working people according to Massachusets University. The reported results and indicators used in the research companies reflect the general trend toward sustainable development. TOYOTA and VOLVO have used lean type waste elimination integrated with green activities to meet sustainability. VW focus on waste elimination in context of VW way. Also continuous improvement is seen as effective way in TOYOTA, VW and VOLVO to meet sustainability targets. These policies are integrated with sustainability policies through guidelines and clear organizational structure and process. In more details, environmental indicators reveal that TOYOTA and VOLVO reports constant in absolute measurements and improvement in absolute numbers. Volkswagen has had growth in production volume and environmental indicators only shows positive improvement when calculated per vehicle. Economical indicators for VW represent positive growth and shows more profit in 2011 compare with last year. VOLVO also shows growth in net sale and operating income. TOYOTA, highly affected by Japan earth quake does not show this trend instead net revenues and operating income decreased in 2012 compared with 2011. Considering social activities all companies have various projects toward society, but no comparable measurement was revealed in this study. Regarding integration of the sustainability along the supply chain the companies approach may be further discussed. In order to meet sustainability throughout the supply chain, all abovementioned elements of sustainable production should be fit into the supply chain from raw material to end customer. The three companies state a long term relationship based on mutual benefits attitude towards suppliers. This is highlighted in the companies sustainability reports. Based on table 5 all cases have tried to form clear policies to their suppliers regarding sustainability and mentioned specific requirements. This is reflected in their guidelines and modules. Suppliers in all part of chains are asked to follow International standards like ISO 14001 and special requirements regarding chemical management and waste management are highlighted.
VW Toyota Volvo Supplier- company relationship -Sustainability based relationship
-Sustainability in Supplier Relations" concept - CSR based supplier relations
-Clear supplier guidelines - Sustainability based long term relations - Aids suppliers during hardships - Involving key suppliers in product development Supplier training Sustainability training Supplier waste management training Knowledge Exchange and joint development programs Supplier monitoring Digital mandatory monitoring Periodical audits based on two main elements, quality and delivery Monitoring based on code of conduct Virtual connection Supplier Portal Supplier Portal Supplier Portal Supplier Environmental requirements ISO 14001 or EMAS certificate - Develop an early warning system for risk minimizing ISO 14001 or a similar certification
ISO 14001 or EMAS certificate
Requirements on supplier designs - - Life cycle assessment consideration - Life cycle assessment - Insights to reduce environmental impacts. Lean and efficient sustainable production - Waste elimination -Continuous improvement (KVP) - Lean Waste reduction -kaizen in supply process - Lean waste reduction processes Green and efficient sustainable production processes -Water recycling/reduce soil erosion in supply and upstream process -Resource efficiency - Green purchasing guidelines - Suppliers promotion to use eco friendly materials by adopting Ecological material -Reduction in use of substance of concerns - Self sustainable in water resource (through water recycling and rain water harvesting) - Reduce energy consumption and stop using energy from fossil fuels. Special requirements on Suppliers of chemicals energy or waste management -Specific environmental standards regarding chemical suppliers -Waste and recycling management
-Special requirements regarding substances of concerns -Considering chemical ban list
- Special Chemical requirements - Green energy at several countries, - Avoids usage of materials in black list and limits materials in grey list. Table 5. Companies approach toward sustainability in supply chain and upstream management VOLVO and TOYOTA clearly requested their suppliers to consider chemical management and waste reduction from their suppliers and VW has released a series of internal standards regarding substances of concerns and mentioned these standards include all VW group and business partners. TOYOTA and VOVLO that have specified requirements in design phase from developing suppliers through training is emphasized by TOYOTA and VW. VOVLO focus on Knowledge exchange to meet supplier development. All cases consider Internet as an effective tool to enhance relationship with suppliers through launching specific. It is not clear how much support for knowledge and information sharing the companies give in reality. The situation can depend on strategic concerns of risk of leaking inter organizational information or lack of effort to define a clear supplier information sharing strategy.
7. Conclusions
Two main challenges are addressed in this paper regarding supplier company relationship and integration in current managerial policies like Lean and green with sustainability requirements. Case investigation shows that: The three companies stated the importance of the sustainability issues in the supply chain management They have incorporated sustainability into the brand image of their companies and use sustainability as added value for the customer The companies focus on long term relationships with suppliers, practicing support like training and IT support Requirements and guidelines for cooperation with business partners address sustainability
Supplier development is a matter that companies have almost different approaches. VW has a specific program for training. It seems VOLVO is the only case cooperates with Supplier in product development. In practice TOYOTA has so many examples of supplier training and information and experience transferring. VOLVO also mentioned about Knowledge exchange with suppliers. Regarding supplier requirements, it seems depends on case specification, companies focus on special issue. For instance VOLVO has clear demand on chemical management; TOYOTA focuses on quality as a highest priority. VW ask supplier for early risk detection systems to avoid further difficulties.
Practically all companies are using the benefits of lean, green activities to meet sustainability but tin theory none of the companies publish guidelines or strategies to integrate their lean and green activities with sustainability requirements for suppliers. Authors believe that investigating the effect of supplier involvement in initial phases on sustainability is an interesting area for further research. Additionally integrating lean green activities with sustainability requirements in form of theoretical frame would be an interesting issue for future research.
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