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Measuring Sustainability in Supply Chain with Key Performance Indicators

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Measuring Sustainability in Supply Chain with Key Performance Indicators Measuring Sustainability in Supply Chain with Key Performance Indicators MASTER’S THESIS WITHIN: Business Administration NUMBER OF CREDITS: 30 PROGRAMME OF STUDY: International Logistics and Supply Chain Management AUTHORS: Himanen Laura; Martikainen Julia JÖNKÖPING May 2019 Master Thesis Degree Project in Business Administration Title: Measuring Sustainability in Supply Chain with Key Performance Indicators Authors: Himanen Laura & Martikainen Julia Tutor: Caroline Teh Date: 20.05.2019 Key terms: Sustainability, Supply Chain, Sustainable Supply Chain Management, Finland, Manufacturing ______________________________________________________________________ Abstract Background: The existing literature addresses the emerge of sustainability issues being one of the main concerns in organizations’ supply chains. Constantly growing environmental, social, and ethical concerns have increased the pressure of organizations to adopt sustainable business practices into their operations. Purpose: The aim of the study was to examine the current status of sustainability of supply chains and how it is measured. The goal of this study is to answer the research question: How organizations measure their sustainable supply chain performance with Key Performance Indicators? Method: To comprehensively answer the research question, a qualitative research approach was chosen, and the primary empirical data was collected through semi-structured interviews. Sufficient data was also gathered from companies’ websites and annual reports which is complimentary for data gathered from interviews. For data analysis, an abductive approach was followed. Conclusion: The results show that the sustainability in manufacturing industry is a growing trend. Commonly used Key Performance Indicators in manufacturing industry were identified and comparison was made between three companies, to finally find out how performance measurement is carried out in manufacturing companies. i Table of Contents 1. Introduction ............................................................................................................................. 1 1.1 Background of the study ................................................................................................................ 1 1.2 Problem discussion ........................................................................................................................ 4 1.3 Purpose of the study ...................................................................................................................... 5 1.3.1 Research question ........................................................................................................ 6 1.4 Scope and Delimitations ................................................................................................................ 7 1.5. Outline ............................................................................................................................................. 8 2. Literature review...................................................................................................................... 9 2.1. Sustainable development ............................................................................................................. 9 2.1.1. Triple bottom line ......................................................................................................... 9 2.1.2. Sustainability in manufacturing industry .................................................................... 10 2.2. Supply Chain management ........................................................................................................ 11 2.2.1 Supplier evaluation ..................................................................................................... 11 2.2.2 Warehousing and inventory management .................................................................. 12 2.2.3. Production .................................................................................................................. 14 2.2.4. Transportation ............................................................................................................ 14 2.3 Sustainable Supply Chain Management ................................................................................... 15 2.4 Drivers for sustainable supply chain management .................................................................. 16 2.5 Key Performance Indicators ........................................................................................................ 18 2.5.1. KPIs in SCM context .................................................................................................. 18 2.5.2 KPIs in SSCM ............................................................................................................. 19 3. Research Methodology ......................................................................................................... 21 3.1 Research philosophy.................................................................................................................... 21 3.1.1 Research Approach .................................................................................................... 23 3.2 Research Purpose ........................................................................................................................ 25 3.3 Research design ........................................................................................................................... 27 3.4 Data collection............................................................................................................................... 27 3.4.1 Article review ............................................................................................................... 27 3.4.2 Type of Data ............................................................................................................... 28 3.5 Interviews ....................................................................................................................................... 29 3.6. Data analysis ................................................................................................................................ 31 3.7. Trustworthiness ........................................................................................................................... 32 3.8 Ethical Considerations ................................................................................................................. 35 4. Empirical Findings ................................................................................................................ 37 4.1. Sustainability in manufacturing organizations ......................................................................... 37 4.2 Supplier selection and procurement .......................................................................................... 42 4.3. Warehousing and inventory management ............................................................................... 44 4.4. Waste management .................................................................................................................... 47 4.4 Production ...................................................................................................................................... 48 4.5. Transportation .............................................................................................................................. 50 4.6. Drivers for SSCM ......................................................................................................................... 51 ii 4.7 KPIs ................................................................................................................................................ 54 5. Analysis and Discussion ...................................................................................................... 56 5.1 Sustainability in manufacturing organizations .......................................................................... 56 5.2 Supplier selection and procurement .......................................................................................... 57 5.3. Warehousing and inventory management ............................................................................... 59 5.4. Waste management .................................................................................................................... 60 5.5 Production ...................................................................................................................................... 61 5.5. Transportation .............................................................................................................................. 63 5.6. Drivers for SSCM ......................................................................................................................... 64 5.7 KPIs ................................................................................................................................................ 65 6. Conclusion ............................................................................................................................. 67 6.1 Research Questions ..................................................................................................................... 67 6.2 Implications .................................................................................................................................... 69 6.2.1 Theoretical Implications .............................................................................................
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