5 The network perspective

Figure 8 The network perspective on supply chain sustainability

The last dimension that we will explore in this course is the network perspective. Here, we will principally discuss the different stakeholders that impact your organisation and the best approaches that can be used with stakeholders in order to ensure the sustainability of your supply chain.

5.1 Stakeholders in the supply chain

In the broadest sense, a ‘stakeholder’ is any person, group or organisation that is impacted in some way by the action or inaction of another. In Activity 4 you will identify the external stakeholders and make a judgement on the impact that they might have on the supply chain.

The most commonly used definition of a stakeholder is: ‘groups and individuals who benefit from or are harmed by, and whose rights are violated or respected by, corporate actions’ (Freeman, 2001, p. 42).

In this section, we are particularly interested in the sustainability of stakeholders that are external to the organisation and whose impact contributes to a smoothly running supply chain. We will focus on:

  • suppliers of raw materials, components and services
  • governments imposing international and national regulations
  • customers and consumers
  • society in general
  • competitors.

Activity 4: Analysing external stakeholder influence

15 minutes

Complete the following table and consider the potential impact that the sustainability of these five groups of stakeholders could have on the supply chain.

Table 2 The potential impact of stakeholders (A)

Stakeholder Potential impact
Supplier
Provide your answer...
Governments
Provide your answer...
Customer/consumer
Provide your answer...
Society
Provide your answer...
Competitors
Provide your answer...

Although the direct impact of the sustainability of external stakeholders is not always obvious, organisations should manage their stakeholder relations or prepare for changes.

5.2 Best practice when working with stakeholders

We will now look at some approaches that can be used with stakeholders to enhance sustainability. First we will look at some research based on high-performing organisations; we will then apply the ideas to two very different UK businesses.

The book Sustainable Supply Chain Management: Practical Ideas for Moving Towards Best Practice (Cetinkaya et al., 2011) has some practical advice on how to manage sustainability across stakeholders, gathered from interviews with practitioners, industry experts, industry association representatives, academics and politicians:

Think locally, act globally

Gain a thorough understanding of how stakeholders in different countries and different sectors perceive your company’s sustainability performance, and of their expectations. This will allow you to use communication and collaboration strategies customised to suit individual supply chain partners.

Combine stakeholder communication with expertise and innovation

Do not outsource stakeholder relations to lawyers or consultants. Stakeholder relations are best run by experts and colleagues from the relevant business units, who fully understand the operations involved and can focus on innovation and continuous improvement.

Communicate and involve

Communication and involvement entails reporting, providing information, educating and forestalling confrontational behaviour, but also includes efforts to understand the needs, preferences and concerns of local communities and non-governmental organisations. Use a varied selection of platforms and channels for communication and stakeholder involvement, such as focus groups, opinion polls, formal progress review meetings, multi-stakeholder networks, websites with open forums, newsletters, canvassing of local businesses, community information displays, etc.

Collaborate and cooperate

Stakeholder involvement should be reciprocal. Take a proactive role and establish new types of relationships with regulatory stakeholders, including competitors. Aim to influence regulations and standards at the earliest opportunity where they affect their supply chain strategies.

Force a value-added, strategic and holistic approach

Consider the economic and social concerns of stakeholders strategically and accord top management commitment to them. Apply the concept of value-added at both financial and operational levels. This will lead to a different sustainable supply chain philosophy. Consider end-to-end supply chains as value chains, and think about unexplored resource inefficiencies and opportunity costs at the level of suppliers, channels, and customers. This will allow you to see regulatory stakeholders as innovation drivers, and will motivate the organisation to collaborate with regulators to shape incentives and develop sustainable supply chain solutions.

(adapted from Cetinkaya et al., 2011, p. 126)

Activity 5: Identifying best practice in stakeholder relationships

30 minutes

Having reviewed the above analysis, you should now put these ideas into practice.

Watch the following videos from Whitbread PLC and Technology Will Save Us (TWSU). Make notes of where you feel that Brodie or Henry are discussing points that link to the best practises that were discussed earlier.

Whitbread

Whitbread PLC is the UK’s largest hospitality company, owning Costa Coffee, Premier Inn, Beefeater Grill, Brewers Fayre, Table Table and Taybarns. Whitbread has outsourced its entire logistics operations for Premier Inn and Costa. Brodie McMillan, Logistic Director at Whitbread, talks us through the very close relationship Whitbread has with its logistics provider, Keuhne + Nagel. Brodie explains some of the technology and digital systems that enable Whitbread to exceed 98% on time and in full deliveries. Brodie makes it clear that this arrangement only works because of the level of trust and openness between the two organisations. Initially, Whitbread asked logistics companies to tender for the work; Keuhne + Nagel were the successful bidders and the partnership has grown ever since, with both organisations investing significant capital into the partnership.

Video content is not available in this format.

Whitbread overview: Brodie McMillan

TWSU

TWSU is a small business focused on inspiring kids and empowering parents to become creators of technology. With a range of ‘make it yourself kits’ and hundreds of digital tools and projects to support kids in learning though play, TWSU sells to more than 97 countries around the world. Henry Haslam, the Head of Production and Operations at TWSU, talks to us through the TWSU experience of international supply chain relationships.

Video content is not available in this format.

TWSU overview: Henry Haslam

Now write down some notes on:

  • the extent to which you feel that these two organisations demonstrate good practice in stakeholder relationships
  • how the different relationships discussed in the videos support the sustainability of each of the organisations.

There is no discussion for this activity.

Provide your answer...

With Activity 5 we have completed our review of the four perspectives. Now let’s pick up the learning from this course and apply the perspectives to your own context (that of the organisation that you work for or an organisation that you are otherwise familiar with).