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Sustainable supply chain management: A case

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 Int. J. Production Economics 140 (2012) 193203

Contents lists available at SciVerse ScienceDirect

Int. J. Production Economics

journal homepage: www.elsevier.com/locate/ijpe

Sustainable supply chain management: A case study of British Aerospace

(BAe) Systems
Kavitha Gopalakrishnan, Yahaya Y. Yusuf n, Ahmed Musa, Tijjani Abubakar, Hafsat M. Ambursa
Lancashire Business School, University of Central Lancashire, Preston PR1 2HE, UK

a r t i c l e i n f o abstract

Article history: Sustainability is viewed as possessing environmental, economic and social dimensions. The sustain-
Received 28 October 2010 ability approaches adopted by individual businesses and the supply chains to which they belong must
Accepted 8 January 2012 include these facets. These three components of sustainability are collectively termed the triple
Available online 24 January 2012
bottom line or 3BL. The idea of a triple bottom line, which originated in the 1990s, implies attending to
Keywords: the traditional nancial aspects of an organisation as well as to the social and environmental criteria.
Sustainability The economic aspect of the 3BL refers to prot making and attaining and sustaining competitive
Triple bottom line advantage through sustainability. The environmental dimension involves factors relating to climate
Social responsibility change, global warming, air, land and water pollution (or preservation) and ozone layer depletion. The
Environmental considerations
social aspect involves health and safety issues, community well-being, employment opportunities,
BAe Systems
charities, cultural sensitivities and requirements and organisational behaviour. As global warming,
climate change and depletion of resources are on a rise alongside greater demand for improvement in
business processes, economic standards and technology, it has become necessary to sustain processes
along the value chain in order to contribute to sustainability. This paper examines the drivers of
sustainability and related key features based on extant literature and a case study. An overview is given
of the British Aerospace (BAe) Systems sustainability initiatives and activities. On the basis of the BAe
Systems case study, two resultant frameworks emerge that display the interdependence of the triple
bottom line and the essential elements required for a sustainable supply chain.
& 2012 Elsevier B.V. All rights reserved.

1. Introduction depletion and the attendant sharp decline of social well-being

Todays business world exhibits elements of intense competi-
tion, globalisation, as well as the quest for economic development
and higher standards of living by all nations. This comes at a time
of dwindling natural resources. Indeed, some writers have argued
that relentless consumerism, and the consequent endless search
for resources to satisfy the needs and wants of the growing world
population that is becoming predominantly middle class, is surely
increasing resource depletion and accelerating the negative
effects of climate change. Climate change due to carbon emissions
and the resultant global warming are on the rise, thereby
threatening the ability to sustain the world for future generations.
Outsourcing of products and services has become a key factor in
the search for increased competitiveness. This involves the ever-
increasing need to bring products and services from across
various parts of the world, together with the need for political
and economic adaptability and understanding of work culture
and ethics. The crisis the world faces today regarding resource
n
Corresponding author.
E-mail address: yyusuf@uclan.ac.uk (Y.Y. Yusuf).
poses great challenges (but also opportunities) for supply chains.
The need to sustain supply chains through energy efcient
technologies, resource restoration, green procurement, recycling,
carbon emission control, social responsibilities, employee recog-
nition and overall triple bottom line protection has since been
recognised by the academia and latterly by the various industries
and sectors of the global economy. The globalisation of operations
has propelled businesses to work together in dealing with natural
disasters and depleting natural resources. Many businesses and
their trading partners are currently restructuring their functions
and processes into more sustainable shapes and forms (Norman
and MacDonald, 2004; Markley and Davis, 2007; Willard, 2002).
Over the decades, supply chains have had signicant impacts
on the global society and its environment and economy. Because
resources are fast dwindling, tomorrows businesses will be
awarded not only on the grounds of economic benets but also
on the basis of sustainability (Markley and Davis, 2007). Firms
will win business and boost their share values not just on how
well they perform on margins but also on how much they are
prepared to protect the environment and adopt sustainable
production and distribution initiatives. According to the Brundt-
land Report (1987) to the World Commission on Environment and

0925-5273/$ - see front matter & 2012 Elsevier B.V. All rights reserved.
doi:10.1016/j.ijpe.2012.01.003
194 K. Gopalakrishnan et al. / Int. J. Production Economics 140 (2012) 193203
Development (WCED, 1987), sustainable development (SD) is the
development that meets the needs of the present without
compromising the ability of future generations to meet their
own needs. This generic denition, however, still carries a degree
of uncertainty as to what is most appropriate to a sustainable
supply chain. This paper adopts Norman and MacDonalds (2004)
denition of a sustainable organisation, namely, that a sustainable
supply chain is one that realizes development by acknowledging
the social, economic and environmental aspects of its policies and
actions and that while creating nancial benets and attending to
stakeholders preferences, supply chains must also care to shield
the environment from the detrimental effects of their policies and
actions.
This paper seeks to address the gap in literature concerning
the social and environmental practices of supply chains. Acknowl-
edging the need to sustain resources for future uses, the study
focuses on carbon emissions, stakeholder recognition, environ-
mental standards and social welfare of organisations. Owing to
the importance of recognising and supporting the interdepen-
dence of the triple bottom line, the paper is unique in the way
that it investigates and reports from the existing literature the
potential benets of deploying sustainability in supply chains in
an integrated manner. It also provides, by way of a case study of
BAe Systems, a best practice guide for the deployment of
sustainability in supply chains. The papers ndings and conclu-
sions corroborate earlier studies that concluded that a strong
focus on the integration of the social, economic and environ-
mental facets of the supply chain could act as an answer for a
sustainable future.
2. Literature review
According to Carter and Rogers (2008), the operationalization
and efcacy of the triple bottom line (see Fig. 1) lies in approach-
ing it in an integrated manner. There have been extensive debates
among authors from various backgrounds (organisational beha-
viour, technological innovation, politics and government, strate-
gic management and international business) on how best to
capture and implement the most essential requirements for an
organisation or an entire supply chain to integrate the economic,
social and environmental dimensions of sustainability (Anand and
Sen, 2000; Torras, 2003; Banerjee, 2003; Aguilera et al., 2007;
Linton et al., 2007; Sharma and Henriques, 2005; Barin-Cruz et al.,
2006; Cruz and Boehe, 2008). This is essential due to the
increased over-dependence of businesses on other trading part-
ners and organisations, resulting in vertical integrations and
strategic alliances. However in reality the integrated approach
to the triple bottom line is still fragmented.
Social dimension
Environmental
dimension
development
Sustainable
Economic dimension
Fig. 1. The triple bottom line.
By acknowledging the fragmented aspects of the 3BL, Markley
and Davis (2007) state that it is evident that the environmental
impacts due to procurement decisions, inventory operations,
transportation, waste accumulation, extensive pollution, resource
depletion and carbon emissions are on the rise, thereby leading to
climate change and global warming (Carter et al., 1998). Organi-
sations must contribute to environmental sustainability by
restructuring products and services, aligning core company values
by making operations environmentally friendly, implementing
environmental programmes that assist in resource alteration,
recycling and efcient waste disposal and nally conforming to
government legislations (Andersen and Larsen, 2009). In terms of
the social aspects, the rise of Corporate Social Responsibility (CSR)
in companies enhances the infusion of ethical trading by busi-
nesses, safety, human rights and diversity into core strategic
values (Beske et al., 2008; Spence and Bourlakis, 2009).
Due to the need to integrate the three dimensions of 3BL,
sustainability in operations has been viewed as a costly invest-
ment. It has been doubted for a number of years if environmental
and social sustainability can bring about economic benets. This
has tended to lead to the perception of an inverse relationship
between the sustainability dimensions implicated in the 3PL.
However, according to Mollenkopf et al. (2010), environmental
initiatives increase efciency and productivity, reduce risks and
costs, thereby increasing prots for businesses. These initiatives
include reduced packaging, carbon emissions accounting for
energy efciency and use of renewable sources and social pro-
grammes like increased employee involvement, workplace bene-
ts, diversity and equality for workers and contribution to
communities around the organisations (Keating et al., 2008;
Holmes et al., 1996; McElroy et al., 1993, Hervani and Helms,
2005). Integration of the 3BL increases reputation among custo-
mers, suppliers, employees and shareholders, hence favouring
economic benets (Ellen et al., 2006; Capaldi, 2005). Carter and
Dresner (2001) suggest that organisations should become proac-
tive towards sustainable operations. This will improve their
competitive positions because their initiatives will prove difcult
to replicate. In their survey of Spanish rms, Leal et al. (2003)
found a strong correlation between environmental consciousness
and a rms competitiveness. In a large survey of rms in the
United States, Sroufe (2003) found a positive relationship
between the application of environment management systems,
the environmental practices a rm deploys and operational
performance metrics.
Therefore, on successful integration of the three aspects of the
triple bottom line, economic benets can be gained by improving
social standards and preserving the environment for future genera-
tions. This makes the adoption of the 3BL by supply chains highly
worthwhile. Supply chains are just beginning to imbibe this spirit
and substance. It is essential that sustainable supply chains consider
and use the interrelationships between the actors (supply chain
players), resources and activities and interfaces comprising of
coordination, interaction, cooperation and competition (Svensson,
2007). Walker and Brammer (2009) and Rajesh (2008) suggest that
before implementing sustainable strategies in the supply chain, the
various players must ensure the following, which act as inuencing
factors during the implementation of sustainability:
(a) Understand the concept of sustainability, government and
social policies and legislations.
(b) Ensure they have the potential to implement sustainability in
terms of cost, quality and culture.
(c) Financial capabilities, since social/green production methods
are expensive at adoption.
(d) Appropriate organisational culture and avoidance of resis-
tance to change.
 K. Gopalakrishnan et al. / Int. J. Production Economics 140 (2012) 193203
(e) Find key sustainable suppliers who support the principle of
environmentally and socially friendly systems.
The key feature of a supply chain deploying sustainable
practices is the relationship between suppliers and focal compa-
nies. A healthy supply relationship can result in operational
efciency, positive environmental impacts, cost reduction, ex-
ibility in adapting to ever changing demands, technological
innovations, energy efciency and reduction in carbon emissions
(Simpson and Power, 2005). The geographical locations of sup-
pliers, manufacturers and focal companies are very important.
Closer proximity, such as found in industrial clusters, enables
higher competence in sustainable practices as it facilitates train-
ing programmes, periodic monitoring, quality checks, auditing
and lesser transportation costs. Suppliers are not considered a key
driver to sustainability but the integration and cooperation with
them through information dissemination can result in competi-
tive advantage and environmental abidance (Klassen and Vachon,
2003; Theyel, 2001; Vachon and Klassen, 2006).
Supply chain strength is measured by the quality and number
of suppliers, in terms of level of sophistication and nancial
capabilities and the abundance of suppliers in the supply chain.
Vachon and Mao (2008) propose that supply chain strength has
the ability to improve environmental performance, establish
corporate environmental practices by means of ISO 14001. Supply
chain strength also accentuates social sustainability by providing
income equity, workplace safety, community living, ethical trad-
ing practices and fair labour practices.
The adoption of green techniques and their link with lean
production and distribution have received relatively minor attention
in academic research on sustainable supply chains (Carter and Ellram,
1998; Farahani and Elahipanah, 2008). Lean production involves
waste reduction and reduction of non-value adding activities in terms
of time, space, labour, raw materials and equipment (Corbett and
Klassen, 2006). A conceptual model framed by Simpson and Power
(2005) provides a positive relationship between lean manufacturing/
zero defects policy, environmental management practices and supply
relationships. Lean manufacturing techniques adopted by suppliers
increase operational efciency, reduce costs and improves environ-
mental sustainability by means of reduced resource utilisation,
enhanced green procurement, lesser energy consumption and even-
tually lesser carbon emissions. The importance of supplier manage-
ment overlaps with the implementation of green production
methods, as extensive guidance and setting up of standards by buyers
are required to encourage suppliers to transform from non-lean to
lean management (Lamming, 1993; Dyer, 1997). Multinationals such
as General Motors, Intel and 3M have made signicant savings by
implementing green and lean initiatives (Markley and Davis, 2007).
Analytical approaches to supply chain optimisation that con-
sider sustainability as a unit of analysis have recently begun to
surface (e.g., Zanoni and Zavanella, in press; Nagurney and Yu,
2012). The design of sustainable supply chains under the emis-
sions trading scheme has also featured in recent literature on
sustainability (Chaabane et al., 2012). de Brito et al. (2008) discuss
how the sustainability movement is impacting the fashion retail
supply chain organisation and performance. Because of the
current erce competition in the industry, intensive resource
use and the exposure of the poor labour conditions in sweat
factories, sustainability issues have become important both
within and to the fashion supply chain.
3. The drivers of sustainabilty
Sustainability in an organisation is driven by various factors.
The magnitude by which a company faces up to the drivers and
195
issues of sustainability may vary depending on the size, location
and number of supply chain players involved.
3.1. Government legislations
The advent of extreme climate change and global warming has
spurred governments to enact laws on the environmental and
social impacts of organisations and industries. The aim is to
effectively control pollution and reduce the resultant environ-
mental damages (Sathiendrakumar, 2003). REACH (Registration,
Evaluation and Authorization of Chemicals) and Environmental
Liability in the European Union are signicant examples of
legislation that force companies to reduce the negative environ-
mental impacts of their operations. At the international level, two
notable examples of climate-related activities are the UN Frame-
work Convention on Climate Change (UNFCC) held in Rio de
Janeiro in 1992 and the Kyoto Protocol in Japan in December
1997. These legislations and treaties call for extensive sustain-
ability reporting and auditing of pollution, as well as emission
control. They hope to encourage companies to integrate sustain-
able processes within core businesses (Delbard, 2008).
Proactive approaches to legal compliance with climate-related
legislations seem to be more economically benecial to compa-
nies and societies than reactive approaches. This is due to better
mitigation strategies against environmental, social and nancial
risks (Beamon, 1999; Green et al., 1996; Handeld et al., 1997;
Walton et al., 1998; Zhu et al., 2005; Min and Galle, 2001). It
paves the way towards sustainably sound operations due to the
obligation of developing and utilising efcient waste treatment
technologies, enhanced use of raw materials and resources and
the provision of social and ethical considerations. Despite the
differences in government legislations from country to country, a
minimisation of costs with higher efciencies can be realized by
undertaking the above mentioned proactive tasks (Porter and Van
de Linde, 1995).
3.2. Stakeholder pressures
A signicant number of publications have posited that orga-
nisational commitment is a key driver of sustainability. Employee
and middle management involvement creates positive results
with regard to environmental and social sustainability of organi-
sations (Carter et al., 1998; Hanna et al., 2000). A companys
mission statements and values along with appropriate manage-
ment involvement are highly essential (New et al., 2000;
Wycherley, 1999). Employee satisfaction also plays a prominent
and potentially benecial role during the infusion of management
systems into the company. The morale amongst workers is
directly proportional to the efciency and efcacy of any organi-
sational change. On the other hand, worker resistance can result
in the failure of a company to implement a sustainability agenda.
Customers also play a vital role in driving sustainability.
Walker et al. (2008) state that customer pressures on organisa-
tions vary depending on the size of the organisation. The more
reputed the organisation is, the more sensitive the company
becomes to customer pressure, since customer attitude does
directly impact the companys bottom line. The inability or
unwillingness of the company to become eco-friendly could
directly cause reputational damage. It is interesting to note that
smaller rms also face signicant pressures in terms of sustain-
ability (Hall, 2001). Owing to the relatively weaker nancial
standing of small enterprises, sustainability programmes have
often proven to be expensive to those companies. An integrated
supply chain, as opposed to single organisations, acting in unison
can help overcome or address customer pressures relating to
sustainability.
196 K. Gopalakrishnan et al. / Int. J. Production Economics 140 (2012) 193203
Competitors equally have the ability to regulate standards and
norm, thereby directly encouraging sustainable innovation
(Henriques and Sadorsky, 1999). Organisations may not have
the proactive intention to be environmentally friendly but may
do so to gain nancial benets and reputation (Gonzalez-Benito
and Gonzalez-Benito, 2005).
The last signicant driver of sustainability among stakeholders
is socially aware organisations and the community at large. The
society has recently become more aware of environmentally and
socially sustainable production and distribution (Drumwright,
1994). This has motivated companies to introduce new business
practices with respect to sustainability (Delmas, 2001; Sharma
and Vredenburg, 1998; Trowbridge, 2001; Gabriel et al., 2000).
3.3. Resource depletion
So far resource depletion has not been addressed as a pro-
spective driver of sustainability. Since there is a battle for natures
resources between supply chains it is necessary for proactive
measures to be launched to preserve those resources for future
generations. The key objective of any rm is to make economic
prots in as much prudently short time scale as possible. It is
often not immediately apparent that sustainability can help
achieve this goal. Cost reduction as a result of resource efcien-
cies by means of energy efciency, waste recycling, competent
use and reuse of raw materials and resources, creating highest
standards of workplace culture and improvement in safety
standards can all act as considerable drivers of sustainability
(Hodges, 2009). Investments in sustainability do require a much
longer time horizon to bear fruit, the future benets are enor-
mous in terms of the economy and protection of the environment.
3.4. Low carbon economy
A low carbon economy is an economy with reduced rates of
per capita carbon emissions. Carbon emissions have been identi-
ed as a major contributor to global warming. Gandhi et al.
(2006) report that 2025 million tonnes of carbon dioxide are
added to the oceans each day, resulting in triggers for climate
change and global warming (United Nations, 2004). This gure
represents the waste emitted by human beings, organisations,
industries and supply chains. The world population is projected to
reach 10 billion by 2050 and the current carbon absorption limit
of the atmosphere is 10 billion tonnes per year. Recent studies
indicate that by 2050 each person can sustainably generate only
one tonne of carbon per year (Robins, 1999). This calls for some
urgent action by governments and businesses.
3.5. Environmental standards
Soaring demands from customers in the emerging (or recently
emerged) markets, the need for conservation of natural resources
and legal regulations have made environmental issues and
standards vital to an organisation and its supply chain. This has
triggered the adoption of various management systems, lifecycle
assessments, carbon disclosure projects, environmental auditing
of suppliers and sustainability reporting (Alshuwaikhat and
Abubakar, 2010). The International Organisation for Standardisa-
tion (ISO) introduced ISO 14001 in 1996 to assist organisations in
mitigating risks resulting from the environmental impacts of their
actions. The two main aspects of the standard were strategic
management and legal compliance (Nawrocka et al., 2009).
Researchers point out the minimal impact that ISO 14001 might
eventually achieve in encouraging supply chains to address
environmental sustainability (Kitazawa and Sarkis, 2000; King
et al., 2005; Simpson et al., 2007). In particular, they nd the
standard ambiguous in terms of providing the right environmen-
tal performance but they agree that it can possibly be a starting
point. It is to be understood that ISO 14001 has not set targets for
industries, but was only intended as a benchmark to assist
organisations achieve their environmental objectives (Kannan
et al., 2008; Handeld et al., 1997). Potoski and Prakash (2005),
Hansen et al. (2004), Montabon et al. (2000) and Dahlstrom et al.
(2003) observe that by following set standards, organisations can
achieve a reduction in the environmental impacts of their sys-
tems, better compliance with environmental regulations, shorter
lead times and improved product quality.
ISO 14001 recommends information gathering and open com-
munication between trading partners to standardise processes in
an environmentally friendly manner (Curkovic and Sroufe, 2010).
It also suggests measures in areas of procurement decisions,
reduction of waste and packaging material and logistics solutions.
Many organisations select suppliers based on their environmental
performances and motivate them to adopt ISO standards. Some
companies, in recent years have even compelled suppliers to
become ISO 14001 certied so as to increase operational efcien-
cies and improve environmental performances. The main require-
ments for supplier to satisfy current supplier selection methods
are environmental policies, health and safety standards, appro-
priate working conditions and code of conduct (Viadiu et al.,
2006). According to Nawrocka et al. (2009), supplier partnerships,
strategic supplier alliances and environmental audits of supplier
performance reports can foster environmental success.
3.6. Social responsibility
It is acknowledged that there has so far been only limited
amount of research behind sustainable supply chains. Recent
studies have provided evidences that point to the fact that
economic and environmental sustainability have become the
most dominant dimensions of the 3BL. The third dimension of
the 3BL (namely, social responsibility) has tended to be neglected
(Hodges, 2009; Seuring et al., 2008). The social responsibility of a
supply chain has three key facets: community and society,
employees and customers. Similar to the publicity and attention
given to ISO 14001 standards for environmental protection, equal
importance must be given to social accountability standards like
SA 8000 and ISO 26000, which are intended to ensure viable
working conditions, fair trading practices and a sense of right-
eousness to the society (Castka and Balzarova, 2008; Seuring and
Muller, 2008; Hutchins and Sutherland, 2008).
As stated earlier, employee satisfaction is a key driver of
sustainability in supply chains. Workplace benets, organisa-
tional commitment, health and safety measures, compensation
benets, retirement funds, equality and diversity amongst work-
ers, training and development and work-life balance help
encouraging employees accept new changes and improve morale
and company culture (Whooley, 2004).
The next dimension of social sustainability relates to community
and society aspects. Various organisations build reputation and
brand image by organising charity fundraisers and giving donations
in the best interest of the less-privileged people. Tie ups with
various charities and other social organisations also enhance com-
munity welfare. Some companies voluntarily undertake these activ-
ities to increase competitive advantage (Jones et al., 2005).
Although it is recognised that integrated sustainability initia-
tives contribute to social, economic and environmental benets,
there is still a signicant gap in knowledge regarding the follow-
ing under-addressed issues. This provided the basis of this paper:
(a) The interrelationships between the economic, social and
environmental aspects of the triple bottom line.
 K. Gopalakrishnan et al. / Int. J. Production Economics 140 (2012) 193203
(b) The essentialities, benchmarks and guidelines for implement-
ing sustainability in supply chains.
It can be seen from the above review that the work on
sustainability is underpinned by the so-called triple bottom line
of economy, society and environment. It is essential that organi-
sations approach these three important dimensions of sustain-
ability in an integrated manner. The cost of implementing
sustainable practices remains an open question but it is clear
that sustainability campaign is driven by a number of factors
including government legislations, pressures from stakeholders,
resource depletion, need for low carbon economies, environmen-
tal standards and the growing importance of corporate social
responsibility. Further research on the above issues and how they
relate to practice will not only help in formalising the steps to
sustaining supply chains but also reduce the return-on-invest-
ment period due to increased chances of success and nancial
benets. It can further assist in awareness building and creating
set guidelines as best practices for organisations that are at their
initial stages of implementing sustainability. It is in this context
that we present in the following sections a preliminary overview
and case study of a sustainability initiative in a major aerospace
and defence organisation, the BAe Systems.
4. The company
In this section the company background and historical devel-
opments of BAe Systems sustainability initiatives are discussed.
This section and the following subsections present the steps
involved and the challenges faced in deploying sustainability in
a real-life context. This underlines the fact that sustainability
even in a large supply chain like BAes is still in its infancy. With a
study of BAe Systems approach to sustainability, this paper aims
to create two frameworks, namely, the interdependence of the
triple bottom line and the key essentialities of practically deploy-
ing sustainability in supply chains.
4.1. Company background
BAe Systems is a premium defence, security and aerospace
organisation. It operates across seven home markets in the UK,
USA, Australia, India, Saudi Arabia, South Africa and Sweden and
currently employs approximately 107,000 employees. The com-
pany provides a comprehensive range of products and services for
land, air and naval forces. The key business areas include land and
armament, electronics, intelligence and support, programmes and
support, information technology solutions and international busi-
ness. BAe Systems aims to provide the nest customer support
services in addition to acknowledging the core business areas.
Customer demands and reputation are highly essential to the
company, making best efforts to meet expectations through on-
time and on-schedule deliveries of high quality products and
services. In addition, the company is perceived as a centre of
excellence in the global defence and aerospace industry. With
operations extending to ve continents of the world, the com-
panys supply chain is truly global.
BAe Systems possess a set of ethical standards, mission
statements and values and goals in line with their objectives to
have processes that are environmentally friendly, socially sound
and economically benecial and efcient. Their primary objective
is to maintain high standards of ethical conduct across all aspects
of business through their sustainability initiatives. The company
therefore follows an integrated business plan underpinning these
objectives as well as supporting corporate Code of Conduct.
197
Corporate social responsibility (CSR) is considered an integral
part of the working of BAe Systems. The CSR of the company is
known as Total Performance, which incorporates nancial
performance, customer focus, programme execution and respon-
sible behaviour. BAe Systems vision is to remain the premium
global defence, security and aerospace company. To support and
sustain this position, the company aims to implement a Group
Strategic Framework in line with the factors underpinning Total
Performance. This vision envisaged by BAe Systems seeks to keep
in mind the key aspects of social consideration, environmental
well-being and nancial gains.
BAe Systems has recognised the need to sustain the world for
future generations. Its mission statement is to deliver sustainable
growth to all stakeholders associated with the organisation through
effective commitment to addressing issues connected with the Total
Performance agenda or mantra. Based on the mission statement, in
2009, BAe formulated four key priorities for Responsible Behaviour
to encapsulate their enormous undertaking:
(a) Responsible business conduct
(b) Safety
(c) Diversity and inclusion
(d) Environmental performance
BAe Systems commitment to sustainability was undertaken by
adopting an ethical Code of Conduct which included accountability,
honesty, integrity, openness and respect for others. The safety of
employees was a facet which was considered highly important to
the business due to the hazardous nature of goods and handling of
products. For this reason, employees had to abide by the rules and
regulations of the Code of Conduct to ensure positive results of the
mission. Ethical standards of business practices, diversity and
inclusion among employees are integral to the business of BAe
systems. In terms of environmental performance, they realised that
a reduction in the negative impact of their operations could help
achieve the multiple objectives of cost reduction, increased efcien-
cies and compliance with legal regulations.
Following the recognition of the growing importance of
sustainable supply chain and a statement of intent to become a
global sustainable leader, a committee was set up with respon-
sibilities for reviewing actions and progress and making necessary
amendments to the ethical aspects of the companys businesses.
The recommendations had a three-year implementation plan and
the following features:
(a) Effective and transparent communication of the Responsible
Code of Conduct throughout the company.
(b) All business decisions and new project ventures must con-
sider the social, environmental and economic aspects of the
business.
(c) Providing contractual training on the Code of Conduct to all
employees.
(d) All gifts and hospitality to be accounted for. Disciplinary
action on all unethical behaviour should be undertaken,
thereby avoiding unprincipled behaviours and deeds.
(e) Top-quality management involvement and organisational
commitment in following the principles underlying the Code
of Conduct.
(f) Periodic reviews and assessments on the progress of employ-
ees abiding by the Code of Conduct.
(g) Extend the principles and corporate commitment to external
parties like non-governmental organisations, Governments as
well as the wider supply chain.
(h) Setting milestones in the project to review and make amend-
ments based on comparative results.
(i) Strict rules on safety, health and environmental policies.
198 K. Gopalakrishnan et al. / Int. J. Production Economics 140 (2012) 193203
4.2. Sustainability initiatives
4.2.1. Environmental initiatives
BAe Systems recognised that environmental efciencies can be
economically benecial. Their main sources of environmental
impacts are greenhouse gas emissions from energy usage, mate-
rial usage, waste generation and disposal on and off-site, water
utilisation and emissions of organic compounds during manufac-
turing processes. On recognition of these impacts, BAe undertook
a number of initiatives to amplify environmental efciencies on
the short, medium and long run. Thus they have implemented ISO
14001, the Environmental Management System which allows
setting standards, reviews and developments of the organisations
environmental impact. The company has also formulated an
Environmental Sustainability Framework to help various business
sites to mitigate risks concerning climate change, resource scar-
city and increasing energy prices. They are a signatory to UK
Ministry of Defence (MOD) Sustainable Charter which involves
sustainment of business processes by supplier management and
integration of environmental sustainability across the supply
chain which falls in line with the Code of Conduct. BAe considers
supplier management critical to environmentally sustaining the
supply chain, thereby adopting supplier assessments and infor-
mation sharing in terms of health and safety, business conduct
and stakeholder dialogue. They regard communication of envir-
onmental policies and proposals to suppliers as keys to reduce
overall impact of products along the supply chain by maintaining
steady suppliers to ensure continuity of supply.
Reuse, recycle and efcient use of resources are other initia-
tives undertaken by BAe to reduce environmental impacts. In
terms of energy utilisation, various ofces and manufacturing
sites are designed to decrease environmental impact and costs.
For example, in BAes Samlesbury site, Lancashire, low-energy
buildings were designed to ensure maximum use of daylight and
night time cooling with natural ventilation, reducing the usage of
air-conditioning, thereby controlling costs and environmental
impacts. Recycling and disposing materials wherever possible
were also carefully undertaken.
The next aspect of their environmental policy is climate change. It
is controlled by the calculation of carbon footprint across the
organisation. The company reviews and reports carbon emissions
percentages and calls for changes in business processes and opera-
tions. BAe cuts carbon emissions by means of energy saving and
investing in research and development projects for new energy
management systems. Some of the BAe sites partake in the European
Emissions Trading Scheme (EUTS) which sets carbon limits. Another
characteristic feature of controlling carbon emissions is the reduction
in business travel which contributed to 10% of overall carbon output
in 2008. Where possible, business travel was replaced by video
conferencing and use of other telecommunication technologies.
BAe Systems undertakes an Environmental Management Policy
which involves managing risks across technological, business and
management areas, thereby cutting down through life-cycle costs. It
entails the following attributes toward environmental efciency:
(a) Utilising environmental-friendly machinery and equipment.
(b) Following MODs environmental policy.
(c) Undertaking life-cycle assessment for all products from pro-
curement stage to product disposal after customer use.
(d) Environmental auditing, assessment of legal regulations and
risk assessments to be undertaken.
(e) The usage of environmental management systems (ISO
14001) and Project-Oriented Management Systems.
Despite the extensive global operations, BAe Systems aims to
consolidate its environmental initiatives. The investments involved
in these initiatives are enormous but they believe that the outcome
will be positive on a long-term basis. It is expected that the
companys mission to be a global leader in all aspects of its business
can be enhanced by its environmental dealings.
4.2.2. Social initiatives
BAe has undertaken various social sustainability initiatives
involving its employees, workplace, community, customers and
the society at large. The most essential aspects of social sustain-
ability at BAe are safety of employees and employee compliance to
safety standards, to promote best working atmospheres. Due to the
hazardous nature of product handling at BAe, the company makes
extra effort to avoid accidents and risks caused to employees. For
this purpose, the SHE (Safety, Health and Environmental) Policy was
adopted at all sites that listed a set of standards to be followed for
the well-being of employees. Another key initiative for enhancing
and reviewing safety at the workplace is the Safety Maturity Matrix
(SMM) adopted from the Royal Dutch Shell PLC model. It is a four-
year framework which aims to measure and control safety perfor-
mance through all aspects of BAes business. Improvements and
safety assessments of different sites are conducted to calculate the
level of SMM. This enables further measures to be undertaken to
ensure highest safety in the workplace.
BAe believes that people want to succeed and a change in the
mindset of people can positively affect sustainability. Employee
engagement has been a core facet in BAes sustainability initia-
tives. This is undertaken by means of open communication,
meetings, consultations and regular survey of employee views
and opinions to better the workplace. A company-wide global
employee survey is conducted once every two years to measure
progress and increase value-adding suggestions on the working
culture and the Code of Conduct, giving due recognition to
employee thoughts. To further encourage employee involvement,
training and leadership programmes are conducted for manage-
ment and employees in areas of future career analysis, Code of
Conduct, technological innovations, diversity and safety at work-
place and leadership skills. BAe also propagated an Employee
Sustainability Training in 2010 in collaboration with the UKs
Chartered Institute of Purchasing and Supply (CIPS) and the US
Institute for Supply Management (ISM). This training involved
supplier engagement and the recognition of the need to sustain
resources. In this regard, suppliers and business partners were
expected to maintain the same or similarly high standards
of sustainable business conducts so as to ensure extended
supply chain sustainability as opposed to a single organisational
sustainability.
Workplace at BAe is also upheld in the best possible manner.
Workplace refers to age, gender, ethnicity, diversity, inclusion and
equality amongst employees. Womens diversity programmes
held recently include L&A Operating Groups Women Network
and Women at BAe Systems. Applicants from all walks of life
and ethnic groups can join BAe, thereby promoting equal oppor-
tunity. In 2009, this was strengthened by starting the Global
Diversity and Inclusion Working Group.
BAes responsibility to customers and the community are
highly commendable. They aim to provide customers with high
performance products and services which are cost effective and
less harmful to the environment. They also propose to create,
through charities, fund-raisers, donations and educational ser-
vices, a positive impact on communities living around their sites.
BAes charity programme is called Charity Challenge and is
voluntarily undertaken by the employees to raise funds for
communities. This has not only resulted in increased reputation
but also employee engagement and social welfare.
BAes sustainability has focused on an integrated business plan
promoting the importance of social and environmental facets of
 K. Gopalakrishnan et al. / Int. J. Production Economics 140 (2012) 193203
business. On the social front, employees, workplace and commu-
nity well-being have been given high consideration. In terms of
environmental sustainability, controlled carbon emissions, envir-
onmental audits through the implementation of environmental
management systems, use of environment-friendly products and
procurement of resources from renewable and recyclable avenues
have provided positive results. The identication of the impor-
tance of supplier and employee engagement has created a
common balance between social, environment and economic
initiatives. This equilibrium of the overall triple bottom line
sustainability issues has progressed BAe Systems on a road
towards a sustainable future. Above all, environmental and social
initiatives undertaken by BAe aim to result in economic gains
thereby supporting all facets of the 3BL.
4.2.3. Drawbacks and challenges faced by BAe Systems
Although sustainability has been a much pursued initiative by
BAe, deployments have effectively been made only in the last two
years. The key challenge BAe faces is the cost factor, namely, to
ensure procurement and manufacturing of products and services
within budgets while at the same time making processes envir-
onmentally friendly. There is also a lack of government and
industry mandates, i.e., the absence of a situation in which
sustainability is made an obligatory requirement for businesses.
At present, BAe mainly aims at business continuity that increases
economic value. This implies that, in reality, sustainability is a
secondary consideration by the company. Since BAe has many
divisions with varying activities, it appears to lack a top manage-
ment commitment and pull. Nevertheless, BAes annual reports, a
source of secondary data for this paper, show that the company is
having a progressively signicant impact on socio-economic and
environmental issues. These facts are, however, the results of
BAes own internal initiatives, as the company has not issued
environmental and social mandates to its upstream and down-
stream partners across the supply chain. Nevertheless, BAe
expects that its trading partners formulate and adopt at least
some minimum standards of sustainability. The lack of environ-
mental mandates from BAe is obviously a drawback on its
environment agenda, since an integrated supply chain with
cross-cutting sustainability objectives is key to ensuring supply-
chain-wide economic, social and environmental gains. Another
drawback with a social dimension or consequence is the choice of
suppliers. BAe aims at low cost production and distribution of
high-end and technologically advanced products. To this end, it
relies on high quality suppliers across the world. This poses a
challenge for the company, since currently it cannot keep a
constant eye on how the environmental initiatives of its suppliers
are implemented across the globe. In the long run, BAe can
overcome this challenge by continuously encouraging its local
suppliers to enlarge and strengthen their social sustainability and
environmental well-being. It is hoped that eventually a culture of
sustainability will emerge across BAes supply chain.
4.3. Future plans
BAe undertakes yearly reviews of its sustainability measures
to evaluate progress and focus on its aim of continuous improve-
ment. The key future plans and objectives of BAe are as follows:
(a) To have set values, mission statements and a clear vision
underlying sustainability.
(b) To understand and have leadership commitment on what
sustainability means and implicates.
(c) To mandate sustainable operations and initiatives across the
organisation.
199
(d) To review and reduce socio-economicenvironmental
impacts of its products and processes.
(e) Life-cycle management of its products and services through
servitization.
(f) Increase awareness among top-management, employees, sup-
ply chain partners and all stakeholders through clear laid
objectives and embedding a sustainable culture in the
company.
(g) To understand and reinforce the fact that sustainability
revolves around the people aspects.
(h) Risk assessments and supplier management, along with
socially and environmentally conscious contracting.
(i) One way of doing it approach across supply base, i.e., single
aim but locally variable objectives and mechanisms across the
supply chain.
(j) Ensure that the immediate society benets through local
employment and engagement.
(k) To introduce the balance score-card approach for sustain-
ability across the supplier base.
BAe Systems understands that sustainability is a long-term
process that is reinforced by cyclic learning. In this regard, they
believe they are on right path. The companys current social and
environmental initiatives, together with its regular review of
drawbacks and challenges for perpetual improvement in sustain-
ment across the organisation, pave the way towards a positive
and sustainable socio-environmental future.
5. Resultant framework for deployment of sustainability
across the supply chain
5.1. Interdependence of the triple bottom line
The economic, social and environmental features of sustain-
ability are interrelated and interdependent. It is common for
organisations and academics to view and tackle each of these
aspects individually and differently, but it is imperative to under-
stand that the question of sustainability must be approached in a
systematic and inclusive manner.
Fig. 2 depicts the Framework 1, the inter-relation between
the social, economic and environmental aspects of the triple
bottom line. The framework begins with the fullment of the
people factor of the supply chain. Here, the term people refers
to all the stakeholders (employees, management, shareholders,
government, suppliers, communities and end-customers). The
benets that underlie engaging and sustaining the social dimen-
sions of the supply chain include the adoption of a sustainable
culture and future. Appropriate cultural development, which
leads to the satisfaction of stakeholders, facilitates the ease of
adopting environmental sustainability initiatives like energy
efciency, reverse logistics, product recycle and disposal, con-
trolled carbon emissions, etc. Another feature of devising and
upholding a healthy, sustainable culture is the impact it has on
increased operational efciencies and higher reputation for the
companies involved. Organisations aim at this reputational gains
through the adoption of techniques like lean manufacturing, total
quality management, Just-In-Time, etc. The resulting efciency is
also a result of the adoption of environmental initiatives, since
environmental awareness and socially conscious policies and
actions often lead to reduced transportation, packaging, energy
utilisation, appropriate use of resources, refurbishment, recycling
and reuse of products and services. The nal target of the frame-
work is to create nancial benets to the supply chain. This is
facilitated by sound and sincere environmental initiatives,
increased brand image and by efcient processes.
200 K. Gopalakrishnan et al. / Int. J. Production Economics 140 (2012) 193203
Adoption of environmental
initiatives
Fulfilment of the people
dimension of the supply
chain
Improvement in
sustainability culture
Fig. 2. Interdependence of triple bottom line dimensions.
The framework thus provides a means to integrate and inter-
relate all the various aspects of the triple bottom line. It acts as a
favourable proof that social and environmental initiatives can
increase nancial gains, thereby encouraging supply chains to
approach sustainability in a positive and amalgamated fashion.
This demonstrates that each of the above elements must be
addressed in unison in order to achieve a highly sustainable
supply chain.
5.2. Essential elements for deploying sustainability in supply chains
Based on a review of past academic work and the sustain-
ability initiatives and activities of BAe Systems, an explanation of
the ten essentialities for deploying sustainability in supply chains
are captured in Fig. 3 and explained below.
(a) Supplier management and integration of supply chain
i. Building parameters that support supplier management in
sustainability.
ii. Maintaining good relations and providing value to
suppliers.
iii. Choosing suppliers who comply with environmental and
social standards.
iv. Conducting supplier audits and streamlining suppliers
through selection criteria based on quality, exibility,
environmental policies and legal compliance.
(b) Methods to reduce costs through periodcost analysis
i. Undertaking nancial audits on quarterly or half-yearly
basis to review economic progress.
ii. Adopting techniques like Just-in-Time, Six Sigma and Total
Quality Management to cut cost and increase operational
efciencies.
iii. Review the progress of suppliers, employees and procure-
ment and production facilities in meeting sustainability
goals.
(c) Quality and safety system protocol
i. Implementation of management systems and standards
such as ISO 14001, ISO 9001, OHSAS 18001 for social and
environmental sustainability.
ii. Product safety, personnel and operations quality check as
it increases efciency.
iii. Adoption of safety protocols like BAes Safety Maturity
Matrix (SMM) for employee well-being.
iv. In case of 100% outsourcing, companies can enforce the
quality and safety protocols adopted by the supply chain
by diagnosing supplier operations.
Economic benefits
Increase in operational
efficiency and social/public
reputation
(d) Carbon management across supply chain
i. Carbon emissions are directly proportional to the size,
growth and cost factors of the company. Consistent
relationships between carbon emissions and costs must
be maintained. If both costs and carbon emissions increase
beyond a threshold, sustainability operations prove inef-
cient. Therefore, periodic lifecycle assessments on carbon
footprints must be calculated to ensure a judicious bal-
ance between costs and carbon emissions.
ii. Engaging carbon management institutions like Carbon Trust
to assist in calculating carbon footprint of the supply chain.
iii. Maximum utilisation of logistics services such as efcient
transportation, reduction of business travel, etc. results in
diminishing costs, carbon emissions and fuel consumption.
(e) Review sourcing of raw materials ensuring sustainable
procurement
i. Explore the availability of resources required, and the
location and distance of sources of raw materials.
ii. Devise, assess and operate mechanisms for the substitution
of raw materials with renewable and recyclable resources.
iii. Undertake comparative tests of carbon emissions in the
process of procuring materials.
iv. Preferring raw materials manufactured and procured in
the most sustainably efcient ways.
(f) Government legislations and external support factors
i. Awareness of, and compliance with, the law, government
rules and regulations on environmental and social issues.
ii. If necessary, seek government subsidies and assistance
from aid organisations to enable the regular evaluation of
progress in sustainability.
iii. Assessing government legislations in various countries
across the world, since supply chain operations have
become global.
(g) Department ensuring social, economic and environmental
considerations
i. Create an exclusive unit such as a panel of sustainability
experts and managers that aims to ensure the sustain-
ability of the supply chain. For example, Mr. Raj Rajagopal
serves as the Managing Director of Corporate Responsi-
bility in BAe Systems.
(h) Organisational culture and employee involvement
i. Creating morale amongst employees and top management
across organisational boundaries to facilitate sustainability.
ii. Organising and holding awareness campaigns and training
for employees in various aspects of environmental and
social sustainability.
 K. Gopalakrishnan et al. / Int. J. Production Economics 140 (2012) 193203
Supplier management Methods to reduce
and integration of costs through periodic
supply chain cost analysis
10 essentialities of
Review the sourcing of
implementing
raw materials so as to
sustainability in supply
ensure sustainability
chains
A dedicated
Government department that
legislations and ensures social, ethical
external support factors and environmental
considerations
Fig. 3. Framework 2: essentialities of sustainable supply chain.
iii. Encouraging employees and ghting resistance by means
of awards of recognition, periodic surveys and feedback on
improvements and changes necessary for promoting an
open-minded culture.
iv. Serving the community and society by engaging employ-
ees in social benets.
(i) Product reuse and recycle specication
i. Conduct lifecycle assessments to enhance better product
disposal techniques and reuse of products.
ii. Review recycling methods and scrutinise opportunities to
recycle all waste and products. For example, BHEL, India,
uses a zero-water discharge cycle during manufacturing
processes.
iii. Modify product specications to ensure the use of sustain-
able products if required.
iv. Measure what percentage of products or raw materials
must be gathered from renewable sources and what can
be recycled in future. The greater the ability to recycle, the
greater the value.
(j) Key performance indicators (KPIs) of sustainability
initiatives
i. To set KPIs for each of the above essentialities and rank
them according to priority based on the factors or chal-
lenges affecting sustainability. For instance, during expan-
sion of operations, a rise in carbon emissions may occur. It
may be aimed to offset this by reducing carbon and energy
consumptions in other areas like transportation, business
travel, etc.
ii. Setting milestones along the sustainability programme
can aid progress benchmarking, review and amendments.
iii. Comparative results over various periods can be measured
and improved. This ensures not only environmental and
social returns but also traditional nancial benets.
6. Conclusion
There is a growing body of government legislation aimed at
reducing and controlling the environmental impacts of economic
activities. There is also rising customer awareness of environ-
mental and social sustainability issues. These trends increase the
pressure on supply chains to develop and deploy sustainable
production and distribution systems. The deployment of any
sustainability agenda in supply chains requires the formulation
and operationalization of an integrated approach that addresses
201
Quality and safety Carbon management
system protocols across the supply chain
Key performance
indicators (KPI) infused
through the supply
chain
Organizational culture
Product reuse and
and employee
recycle specifications
involvement
the relevant social, economic and environmental issues. Based on
the frameworks presented in this paper, it has become apparent
that the relational partnership and integration of the various
elements of the supply chain can bring about economic benets.
It is essential for supply chains to acquire a thorough under-
standing of the complex correlation and interplay of factors that
foster sustainability and company competitiveness. The worlds
societies and governments yearn for environment-friendly opera-
tions, products and services suited to consumer satisfaction,
social well-being and compliance with regulations concerning
the socio-environmental impacts of the supply chain.
This paper has touched upon every facet needed for the
enactment and deployment of sustainability in supply chains. It
is hoped that by treating each dimension of the triple bottom line
with due signicance and in an integrated manner, the desire for
a sustainable world thriving on economic benets for all nations
is highly achievable. A review of the sustainable supply chain
literature and an analysis of the key sustainability initiatives of
BAe Systems have demonstrated that the least attended dimen-
sion of sustainability (i.e. social factor) is among the key drivers of
sustaining supply chains. Further, expanded, case studies are
hereby suggested, to analyse the various sustainability initiatives
of more organisations. This will facilitate the wider authenticity
and applicability of the results of this paper. As a result of the
study of BAe Systems sustainability initiatives, it is also recom-
mended that further research be undertaken on the methods and
effectiveness of focal companies modes of integrating suppliers in
social and environmental programmes. A schematic detailing of
each of the essentialities proposed in this paper for implementing
sustainability in supply chains provides both a guide and frame-
work for further research. A study of the challenges and impacts
of social, economic and environmental aspects of implementing
sustainable supply chains and the possible ways to addressing
these challenges require further enquiry.
The evolutionary nature of supply chains requires continuous
attention to detail in improving best practices for sustaining the
local and global operations of companies, irrespective of their
industrial or business sector. This can further assist in creating
greener and more productive outlooks and systems.
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