Introduction of the Performance Evaluation, Challenges and Strategies of Sustainable Supply Chain Management
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents
 
Executive Summary. 3
Introduction. 4
1.0 Sustainable Supply Chain Management 5
1.1 The Concept of Sustainable Supply Chain Management 5
1.2 The Characteristics of Sustainable Supply Chain Management 5
1.3 The Targets of Sustainable Supply Chain Management 6
2.0 The Performance Evaluation Index System of Sustainable Supply Chain Management 7
2.1 The Definition of the Performance Evaluation of Sustainable Supply Chain Management 7
2.2 The Key Performance Indicators in Sustainable Supply Chain Management 7
2.21 Economic Indicators. 7
2.22 Social Effect 9
2.23 Environmental Benefit 10
2.3 The Functions of the Performance Evaluation of Sustainable Supply Chain Management 10
3.0 The Influencing Factors on Supply Chain Management 11
3.1 Driving Factors. 11
3.2 Obstacle Factors. 12
4.0 The Challenges of the Implement of Sustainable Supply Chain Management 13
5.0 The Strategies of Applying Supply Chain Management 14
Conclusion. 17
Reference. 19
 

Executive Summary
This report aims to present an overview of sustainable supply chain management. In addition, examples are given if necessary. This report comprises the proposal, development, challenges and future of sustainable supply chain management.
 
Sustainable supply chain management represents the idea of sustainable development. From this view, the characteristics and targets of sustainable supply chain management are introduced.
 
The performance evaluation index system of sustainable supply chain management is an important research area in today. The second part tries to explain several important indicators of performance.
 
The influencing factors: driving factors and obstacle factors are also interpreted. Thus, there are challenges in the practical process of applying sustainable supply chain management. And the penetration research on the challenges and strategies are made.
Introduction
With the intensification of market competition, the marketing’s regulatory function on the distribution of resources is increasing. To enhance the core competence, corporation tends to outsource the non-core business to other top professional enterprise. Therefore, the entire business process of a corporation involves several corporations that form an interlocking cycle chain, which is the supply chain of the enterprise. Supply chain management is guided by the requirements of market and customers to improve the competitive force, the market share and the customer satisfaction, and to acquire profit maximization, the principle of which is win-win and the business operating mode of which is collaborative commerce.
 
In the modern society, the environment has increasingly become a key influential and restrictive factor on social and economic development. With the speed development of economy of human society, the environment problem of human society is on the rise, which triggers a lot of social problems and threatens the survival and development of human being. In 21 century, the arrival of globalization further aggravates the environmental problems. However, the concept of sustainable development rises in response to the proper time and conditions. Under the impetus of the trend of globalization, the rivalry among firms has gradually transformed into the competition among supply chains (National Research Council et. al. 2000). The implement of sustainable supply chain management integrates the concept of sustainable development with supply chain management, which makes the enterprises in the chain integrate knowledge and technologies, and also comprehensively improve the competitiveness of the enterprise according to the concept of sustainable development.
1.0 Sustainable Supply Chain Management
1.1 The Concept of Sustainable Supply Chain Management
Sustainable supply chain management is the embodiment of the concept of sustainable development in supply chain management. Craig R. Carter and Dale S. Rogers defines Sustainable supply chain management as conducting the strategic and transparent integration and implementation toward the society, environment and economic aim of the organization  through systematically coordinating intersectional core business process to promote the long-term economic benefits of the corporate and the supply chain that involves the corporate. Stefan Seuring and Martin Müller (2008) believes that sustainable supply chain management comprehensively considerate the three dimensional targets which are sustainable economy, environment and society driven by the requirements related to customers and interests, and manage the physical distribution, flow of information, capital flow and the cooperation among enterprises of the supply chain. It seems to me that from the perspective of the integration of the idea of sustained development and the thought of supply chain management, sustainable supply chain management is the way to coordinate the benefit of economy, society and environment systematically and manage the physical distribution, information flow and fund flow effectively, the goal of which is to acquire long-term economic benefits and durable competitive advantage.
 
1.2 The Characteristics of Sustainable Supply Chain Management
Firstly, to enhance the efficiency of the entire supply chain, sustainable supply chain management has to weigh the performance targets with wider range. Thus, except for the traditional economic goals, the enterprises in the supply chain also need to take the wider range of problems like environmental and social sustainability into consideration (Craig & Dale 2008). Besides, the cooperation need for larger scope and deeper extent among the corporates in the supply chain is going strong. In addition, because the highest level of economic benefits happens in the sustainable intersection of economy, society and environment, it is necessary that, from a strategic perspective, the firms in the supply chain conduct sustainable supply chain management while establishing strategic vision and long-term strategic objectives, which will obtain higher benefit than separately pursuing any one or two of the benefit of economy, society and environment. At last, sustainable supply chain Integrating society, environmental resources and knowledge is more difficult to be imitated. Naturally, economic sustainability will be brought about (Nicole et.al. 2008).
 
1.3 The Targets of Sustainable Supply Chain Management
In a dynamic competitive environment, the competition among enterprises is gradually replaced by supply chain competition. The development of supply chain management has experienced three stages: the internal functions management of corporate department, the integration among the corporate internal departments and the external integration among corporates. In the process of development, the environmental and social problems are rarely mentioned. Under the environment of sustainable supply chain management, enterprise and the supply chain pursue long-term economic benefit, durable competitive advantage and the concordance of economic, social and environmental benefits, which means the target is maximization of the benefits of the whole. The targets of traditional supply chain management only have relation with economic benefit, which include cost, time, quality, service and flexibility. On this basis, the objective system of sustainable supply chain management based on triple bottom line that are society, environment and economy are constitute organically with the combination of environment and society (John 1998). Therefore, the targets of sustainable supply chain management should include inter-related time, quality, cost, service, society, environment and flexibility.
 
2.0 The Performance Evaluation Index System of Sustainable Supply Chain Management
2.1 The Definition of the Performance Evaluation of Sustainable Supply Chain Management
From my perspective of view, the definition of the performance evaluation of sustainable supply chain is to evaluate the entire sustainable supply chain, the mutual relation of operation flow among the various panel points of that, and the influence of the entire sustainable supply chain and the various panel points on environment and society, and then make objective, accurate and impartial evaluation toward the various panel points on sustainable supply chain, including purchase, transportation, manufacture, marketing and consumption, through comprehensive inquiry, analysis and measurement. From the view of the starting point of sustainable supply chain management, the performance evaluation should focus on the strategic target of sustainable supply chain management, which includes the internal and external performance of the various nodes and the synthetical performance, environment, society and economic, of the whole supply chain from the perspective of space, the operation condition of the supply chain from the perspective of content, the supplier, the manufacturer, the retailer, the consumer, the society and the environment from the perspective of  object, and short-term performance and long-term performance from the perspective of time (Sunil & Peter 2009).
 
2.2 The Key Performance Indicators in Sustainable Supply Chain Management
2.21 Economic Indicators
2.211 Production and Operation
The goal of production, operation and management is producing acceptable product efficiently, punctually, flexibly with low consumption and offering satisfying service. The indicator of operation is mainly analyzed and assessed from the aspect of the internal business flow which includes production transportation, marketing and quality of the supply chain itself, which is reaching the optimal mode of production through soundest cost. The performance of internal production and operation of sustainable supply chain mainly involves process velocity, logistics efficiency, market occupancy rate and qualified products proportion. Process velocity reflects the ability of processing production and operating of corporate and incarnates the degree of effective work of the supply chain. It is also the indicator to measure the development potential of the supply chain. Logistics efficiency refers to whether the enterprise can provide the product and service according to the customer requirements timely. This indicator represents the flexibility of production and delivery. It is also the important indicator of measuring the enterprise reputation and improving customer satisfaction. Market occupancy rate reflects the corporate’s control of the market and the consumer’s acceptance level toward the product and service directly, which can be used to measure the status of the corporate in counterpart market and the competitive advantage of the corporate itself. Qualified products proportion is the lifeblood of a corporate (Bongsug 2009). It is an important indicator of whether the corporate could develop continuously. Not only should the quality of the present product satisfy the material request of the client, but also give expression to environmental protection and pollution-free. It is a crucial indicator to measure whether the corporate has market competitiveness.
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2.212 Financial Value and Cost
The financial indicator which is the summary and evaluation of financial situation and results from operation of the corporate is a relative indicator. It measures the economic income and cost of the sustainable supply chain in a certain period from the financial perspective. The financial indicators of sustainable supply chain management mainly include net assets income rate, return on investment, ratio of profits to cost and profit growth rate. Net assets income rate is to measure the earning power of the sustainable supply chain. Return on investment is a long and dynamic process to reflect the investment income ability, which is a significant indicator to weigh whether the investment project structure of a corporate is beneficial for the long-run development. Ratio of profits to cost reflects the economic benefit of the operating costs invested in sustainable supply chain. At last, profit growth rate is the reflection of the profit growth and development potential, which also illustrates the market competitiveness of the company (Rajat & Milind 2007).
 
2.22 Social Effect
Enterprise has to be responsible for employee, stakeholder, consumer and community while realizing profit maximization. Abidance by law and professional ethics, safety in production, legitimate rights protection of employee and consumer, social public welfare donation and philanthropy are all involved in social responsibility. The social indicators of sustainable supply chain management mainly include customer satisfaction rate, employee satisfaction rate and social contribution rate. Customer satisfaction rate reflects the psychological states of the client toward a kind of product or service that is whether the product or service meets the expectation of the client. The improvement of customer satisfaction rate can expand the market share, then increase the corporate profit margin. Employee satisfaction rate reflexes the employee’s satisfaction degree for salary, welfare, corporation culture and self-actualization, which estimates the corporate business performance from the angle of employee. High employee satisfaction rate promotes the working enthusiasm of the staff and the loyalty index for the corporate. Social contribution rate judges the ability of enterprise utilization of assets creating value for society's purchasing power, which covers salary, social welfare, social donation and tax. It mirrors the extent of the business’s contribution to society and internation (Seuring & Müller 2007).
 
2.23 Environmental Benefit
Environmental indicator describes the pressure change or variation of human’s living environment caused by sustainable supply chain. It mainly weighs the pollution in certain district, the overdevelopment of resources and the changes of landscape ecological system affected by supply chain. The indicators contains consumption rate of raw material and resources, emission ratio of pollutant, rate of resources recovery and reuse and efficiency of green gross domestic product. Consumption rate of raw material and resources is the proportion of corporate cost of resource consumption to corporate production and service value, which expresses business capacity utilization of resources and guides how to reduce resource utilization and environmental implication to gain biggest Profit. Emission ratio of pollutant is the proportion of the gross of the effluent contaminant to raw material used in production. This illustrates the corporate ability of emission pollution and the influential degree on environment. Rate of resources recovery and reuse is the ratio of reclaimed resources to rejected material. To have least effect on environment and develop sustainably, sustainable supply chain has to strengthen the recycling and reusing of resources to realize the cyclic utilization of resources. This indictor is the mirror of the sustainable supply chain’s overall utilization level of resources. At last, the higher the efficiency of green gross domestic product is, the higher the positive effect of the national economic growth is (Bai, Chunguang et. al. 2012).
 
2.3 The Functions of the Performance Evaluation of Sustainable Supply Chain Management
Sustainable supply chain management is a kind of overall pattern of management that connect supplier with producer, distributor and customer through straight material flow, recuperative information flow, enterprise social event and social conscience. Thus, there is a comparatively great distinction not only between the traditional supply chain management and sustainable supply chain management, but also between the performance evaluations of them. The indicators of the performance evaluation of the traditional supply chain management place emphasis on single enterprise or the whole supply chain, the objects of which are internal performance, business process, financial value, etc. Therefore, compared with that of the traditional supply chain management, the performance evaluation of sustainable supply chain management has the following function:
 
First, it can be used to evaluate the operation effect of the whole supply chain system. Not only should the cooperation among the various node corporations and the competition among the similar industries be taken into consideration, which can provide objective basis in terms of optimizing, recombination and operation for the supply chain, but also the supply chain’s responsibility for the external environment and society, which offer necessary guidance to corporates to realize the external liability (Anne-Marie 2007).
 
Second, it can be used to evaluate the social status of the supply chain. Considering the staff welfare, staff treatment, people-oriented service, environmental awareness, social commonweal industry and donation bring about soft power, such as reputation and image to the corporate.
Third, it can be used to evaluate the use ratio of the resources. From this view, the operation competency the, financial resources, the human resources and the social resources are mainly inspected, which is going to realize the social justice ultimately.
 
3.0 The Influencing Factors on Supply Chain Management
3.1 Driving Factors
The driving factors are mainly derived from the external pressure and encouragement of different groups. The primary driving factor is customer requirement. The key to success of supply chain operation is the ultimate products or services provided by them are accepted by the customer. Especially consumer has increasing requirement for sustainable product which refers to the product aiming at improving environmental and social quality, and conforming to the environment and society standard, the ultimate goal of which is to satisfy the customer while acquiring competitive advantage. In the meantime, the core companies in the sustainable supply chain paying more and more attention to environmental protection and social responsibility. The second one is the requirement of legislation and regulation that the direct pressure is from government regulation with respect to environment and society. In addition, due to the possible pressure in the matter of society and environment from interested party such as shareholders, employees, social groups, non-governmental organizations, media, in order to reduce risk and image loss, corporate and the supply chain that the corporate located have to attach importance on sustainable supply chain management. The last but not the least, competitive advantage is also an important driving factor (François et. al. 2009). For corporate, sustainable supply chain management is able to create new market opportunities and enhance the loyalty index of the customers, which is beneficial for keeping its market shares and forming barriers to other competitors and potential competitors.
3.2 Obstacle Factors
Contrary to the driving factors of sustainable supply chain management, the obstacle factors are mainly relevant with interior. First of all, the obstacle factor is the high cost. Adopting more effective environmental protection measures while giving consideration to social responsibility tend to increase the cost in the short term. Besides, the complexity of cooperation also blocks the implementation of sustainable supply chain management. Supply chain is the production of the development of the cooperation and competition among enterprises. The business cooperation relationship within the supply chain which can be adjusted in the dynamic is nonstationary. Thus the complexity of cooperation is high. Finally, the communication within the supply chain is insufficient, which means that the lack of communication, even confrontation, might be triggered by inconsistent supply chain performance evaluation standard and the tedious report among the members within the supply chain.
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4.0 The Challenges of the Implement of Sustainable Supply Chain Management
The theory of sustainable supply chain management is becoming more complete, and more and more enterprises begin to take supply chain management as the strategy of corporate development. However, no matter in practice or in theory, the infusion of sustainable development into supply chain management is confronted with challenges. In my view, the main challenges in the practical process of sustainable supply chain management is the corporate traditional conception toward environment, the incomplete governmental system toward sustainable supply chain management, and the traditional supply chain management mode.
 
First, at the business level, most enterprises ignore the negative externality brought by production on environmental problems and blindly pursue profit maximization. They think that applying sustainable development management increases cost and wastes money. Besides, some companies take environmental effect into consideration but just adopt end treatment mode, which inevitably regards environmental management as load. Thus, sustainability in the productive process is difficult to achieve. At the government level, the government in developing district and undeveloped district is lacking of sustainable production conception. They often sacrifice environment to develop economy. Therefore, to bring sustainable supply chain management into force in full scale, the primary way is changing the traditional concept (Stadtler & Kilger 2004).
 
In addition, at present, the laws and regulations punish environmental pollution behavior slightly in some countries, which lacks effective supervision. In china, for example, the standard of pollutant charge is much lower than the expense of comprehensive treatment of pollution. Stem from expense consideration, corporation tend to choose paying pollutant charge instead of curbing environmental pollution. This kind of externalization of manufacturing costs is legal, which also promotes the profit of the producer and arouses the conflict between individual goal and the goal of sustainable supply chain management during the process of the members in supply chain pursuing maximize profit. Hence, the target of sustainable should cover the entire life cycle of the product, not some stage or some part. The bottleneck of sustainable supply chain will be caused if any of the subsystem of supplying, producing, marketing or consuming does not reach the requirement of being compatible with the environment.
 
At last, sustainable supply chain management mode lays stress on the effective integration of sustainable purchasing, designing, producing, packaging, marketing, etc. during the life cycle of the product, which increases the difficulty of supply chain management greatly. Sustainable supply chain requires the knowledge innovation of the businesses in chain. Only through applying new knowledge, technology and resource continuously, the traditional end environmental governance method can be abandoned. Thus, after logistics, capital flow and information flow, knowledge flow had become a significant part of sustainable supply chain management (Balkan et. al. 2011).
 
5.0 The Strategies of Applying Supply Chain Management
To reply the challenges, strategies will be given in this part from my perspective. Firstly, the continuous perfection of policies, laws and regulations is necessary. The requirement and pressure of the strengthen of world-wide sustainable development conception on environment and society will be reflected from the policies, laws and regulations issued by the government. And the government in each country should attach importance on this matter. Specific policies, laws and regulations, and the expression of guiding role of the government will further create favorable opportunity for sustainable supply chain management.
 
Besides, it is important to establish the strategic position of sustainable supply chain management. The senior leader of the enterprises in supply chain should update their management philosophy without delay and process whole coordination among the triple bottom line: economy, society and environment, the starting point of which should be the long-term effect of the supply chain. And also the sustainability should be a part of total strategy, which means the sustainable development conception need to be carried out in the whole process of the corporation and the supply chain, and reflected in the corporation culture. The sustainable development consciousness which is needed to be made as the conscious action as each member of the supply chain of supplier and employee should be increased as well to mould the image of sustainable development of the corporation.
 
In addition, the management system has to be perfected and the standard of behavior has to be specified (Frank & Mark 2012). In consideration of the complexity and uncertainty of supply chain, especially the globalization tendency of supply chain is becoming more and more obvious, the International Standardization Organization1400 standard environmental management system and the Social Accountability 8000 International standard are widely adopted to guarantee establishing the complete management system and  normative standard of behavior while ensuring the originality of the member enterprise in the supply chain.
Moreover, it is necessary to build effective performance evaluation system of sustainability of supply chain. In comparison with the evaluation system of economic performance, it is more complex to evaluate the situation of sustainability of enterprise or the supply chain it belongs to. However, it is beneficial for reducing the investment risk of the investors and drawing their attention to the supply chain’s ability of improving its sustainability constantly (Gracicla 1997).
 
At last, the intensified cooperation and all-around communication need to be emphasized. The cooperation relationship and mode among the enterprises in supply chain is the key factor to promote the enterprise to realize the compatibility between its activity and sustainable development conception. So the leading function of the core enterprise need to be valued and cooperation among the enterprises need to be consolidated (Li Ning 2012).
Conclusion
Sustainable supply chain management is a kind of continual supply chain management mode which attaches more importance on sustainability based on the triple bottom lines. It coordinates the economic benefits, society and environment comprehensively, and manages the physical distribution, information flow and capital flow effectively. The goal of sustainable supply chain management is getting long-term economic benefits and durable competitive advantage. From my view, the performance evaluation of sustainable supply chain management should be considered comprehensively from the dynamic, developing and all-sided angle of view. The performance evaluation of sustainable supply chain management mainly contains economic indicators, including production and operation of supply chain and financial value and cost, social effect and environmental benefit.
 
The influencing factors on supply chain management are analyzed from two aspects: driving factors, including customer requirement, requirement of legislation and regulation and competitive advantage, and obstacle factors, including high cost, the complexity of cooperation and the insufficient communication within the supply chain. At the end of the report, the challenges and strategies of applying sustainable supply chain management are given. The main challenges are the corporate traditional conception toward environment, the incomplete governmental environmental management system, and the traditional supply chain management mode. To reply all the tough challenges, several strategies are proposed at the end of the report from my point of view.
 
It is the development tendency of supply chain management in 21 century. On a global scale, the consciousness of sustainable development is strengthened, which makes people re-examine the traditional supply chain management that pursues one-sided economic effectiveness. For instance, recently, Fonterra Co-operative Group in New Zealand has given out the news that the whey protein concentrate produced in May 2012 were polluted by Clostridium botulinum, which involves lots of corporates, including Dumex. This event shows the separation between the profit maximization of the enterprises in the supply chain of dairy products and the social responsibility that should be taken as corporate citizenship. Besides, the water contamination accident caused by the continuous outbreak of blue-green algae in the Lake Taihu in China illustrates that in the process of pursuing economic goal, corporate take no account of the negative effects of its behavior on natural environment. As a result, for the supply chain enterprises, it is absolutely necessary to processing overall coordination toward economic, social and environmental benefits, and introduce the concept of sustainable development into supply chain management to pursue the overall benefit maximization. Sustainable supply chain management exactly caters to this trend.
 
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