certificate - politesi...model consisted 6 dimensions out of which 5 are for assessing maturity...
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POLITECNICO DI MILANO
via Lambruschini, 4/b, 20156, Milano, Italy
Phone: +39 02 2399 3620 Fax: +39 02 2399 2730
Website: www.polimi.it
CERTIFICATE
This is to certify that “Vipul Kumar 838447 (10486780)” student of Management
Engineering from “POLITECNICO DI MILANO, ITALY” has done Thesis at
“Politecnico di Milano, Milano, ITALY” in the partial fulfilment for the award of
degree of “Master of Science” under the guidance of “Prof. Thomas E. Johnsen” and
“Assistant Prof. Antonella Moretto”
The project work entitled as “INTEGRATED SUSTAINABLE SUPPLY CHAIN MATURITY
MODEL DEVELOPMENT AND PILOT TESTING IN THE FIELD OF MICRO-FINANCE
SERVICE CHAIN” embodies the original work done for Thesis. This work has not been
submitted partially or wholly to any other university or institute for the award of this or any
other degree.
Prof. Thomas E. Johnsen
Dipartimento di Ingegneria Gestionale (DIG)
Antonella Moretto
Assistant Prof, DIG
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Abstract
Amidst increasingly stringent regulations and growing public awareness, organizations are
trying to become more mature while dealing with economic, environmental and social risks in
their supply chains. This paper addresses the problem of assessing the maturity level of
organizations while dealing with sustainability issues supply chain-wide. First, it provides key
definitions and discussion on related points. Secondly, it reviews literature to find available
sustainable supply chain maturity model. Third, it proposes an integrated conceptual
framework for supply chain sustainability maturity level assessment. Finally, a case study is
done to test the applicability of model. The model allows for the integration of the various
crucial sustainability dimensions of individual organizations and supply chain to apply into a
supply chain-wide sustainability stimulation. The results are based on a literature review of
sustainability maturity models in supply chain management as well as assessment done on
microfinance supply chain. The study strictly considers three sustainability dimensions, namely
economic, environmental, social. This paper contributes to the theory and practice of
sustainability maturity level diagnosis in supply chains by providing a literature analysis and a
model with seven key sustainability dimensions. They lay the groundwork for defining key
progressive steps towards a highly mature organization and supply chain while dealing with
sustainability issues.
Keywords: Sustainable Supply Chain Management, Maturity Model, Triple-bottom line
approach, Microfinance
Gestione Sostenibile della Catena di Fornitura, Modello di Maturità, L'approccio Triple Bottom
Line, Microfinanza
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ACKNOWLEDGEMENT
I would first like to thank my thesis advisor Professor Thomas E. Johnsen of the
Dipartimento di Ingegneria Gestionale at Politecnico Di Milano. He consistently allowed
this paper to be my own work, but steered me in the right direction whenever he thought I
needed it.
I would also like to thank Assistant Professor Antonella Moretto of the Dipartimento di
Ingegneria Gestionale at Politecnico Di Milano, who helped me whenever I ran into a trouble
spot or had a question about my research or writing.
I would also like to thank Arianna Molino and Giorgio di Maio of the Social Innovation
Teams for letting me be a part of their mission in India. I am gratefully indebted to their
valuable support during and after the mission.
I would like to express my gratitude to Mr. Bhadresh Rawal, Director of Prayas-
Organization for Sustainable Development for his unfailing support in carrying out the
project. I am extremely thankful to all the staff members of Prayas. It was fantastic to have the
opportunity to work majority of my research in your facilities.
Finally, I must express my very profound gratitude to my father Khem Karan, mother Nanhi
Devi, brother Rohit Kumar and sister Shailza Rani for providing me with unfailing support
and continuous encouragement throughout my years of study and through the process of
researching and writing this thesis. This accomplishment would not have been possible without
them. I am also grateful to my other family members and friends who have supported me along
the way. Thank you.
Author
Vipul Kumar
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Executive Summary
1. Introduction:
The aim of this work is to contribute to the theory and practice of sustainability maturity level
diagnosis in supply chain by providing a literature analysis and subsequently an integrated
model with some key sustainability dimensions for defining key progressive steps towards a
highly mature organization and supply chain while dealing with sustainability issues.
According to Brundtland Commission “a sustainable development is development that meets
the needs of the present without compromising the ability of future generations to meet their
own needs.” For the sake of our work sustainability is referred to with the “sustainable supply
chain management”. Sustainability has three elements/pillars which are the environmental
sustainability, economic sustainability and social sustainability. Taking an approach by
considering all these three elements while dealing with sustainability, is called Triple Bottom
Line Approach (TBL).
There are various tools to assess sustainability in Supply Chain. One of them is a maturity
model. A sustainability maturity model, basically, is a framework used to diagnose how mature
an organization is in dealing with sustainability issues typically economic, social and
environmental issues. A typical maturity model has three main traits which are: maturity levels,
dimensions and description of practices. Each maturity level suggests the step to be followed
by an organization to become highly mature in dealing with various issues, while dimensions
talk about the specific area in which the organization is mature.
2. Model Integration:
Existing sustainability maturity models available in sustainable supply chain management
literature were integrated in a single framework, Integrated Sustainable Supply Chain maturity
model (ISSCMM). 9 models were selected after an extensive literature review to form the base
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of final model. Main criterion for selecting these models was that they must explicitly discuss
sustainability and must present the steps of maturity progression.
Rather than overlapping these models we took a holistic approach to integrate them. Firstly,
arguments from these models were arranged according to the common points they are hinged
around. These common points defined the dimension for the final model. In conclusion, final
model consisted 6 dimensions out of which 5 are for assessing maturity within the organization
which are posture towards sustainability, sustainability strategy, sustainability implementation
at process level and in governance, sustainability leadership, sustainability reporting &
performance measurement. The sixth-dimension talks about the partners’ involvement in
making the entire chain sustainable. From the literature review, it is evident that a typical
maturity model has 4 to 6 maturity levels and most of them have 5, so to maintain consistency
with most of them we decided to have 5 maturity levels in the final model. The integrated
sustainable supply chain maturity model is shown here below.
Let us have a brief discussion on these dimensions;
“Posture towards sustainability” talks about how sustainability issues are considered in terms
of market opportunity. It is useful to check how active/proactive is an organization towards
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sustainability issues. A highly mature company sees sustainability issues as unique market
opportunity and shows a predictive and proactive nature.
“Sustainability strategy” dimension, as name suggests, checks how mature the company is in
developing sustainability strategy. A highly mature organization considers sustainability issues
at all levels (operational, corporate etc.) in the organization while developing its strategy.
“Sustainability implementation” dimension checks how mature the organization is in
implementing the sustainability strategy. This dimension is divided in two parts; first is with
respect to governance which checks how maturely stakeholders are involved in implementation
process. This dimension adds a stakeholders’ perspective which is generally missing from other
such diagnostic tools. The second part deals with sustainability at process level, diagnoses how
maturely processes are optimized, monitored and improved.
“Sustainability leadership” is to assess how an organizations and managers motivate their
partners and employees to consider sustainability issues. The dimension suggests a highly
mature organization adapts a complete transformational leadership style.
“Sustainability reporting and performance measurement” discusses how well the Performance
Measurement systems are integrated with sustainability. The dimension can be used to diagnose
the kind of tools and techniques used by the organization. How well the measurement system
is dispersed inside the organization. How well other supply chain partners are involved in
performance measurement.
The last dimension in the models is partner’s involvement, which diagnoses maturity of entire
supply chain rather than the focal company. It assesses how sustainability issues are considered
inside the entire chain. How partners take efforts in educating others and driving innovation
inside the chain.
3. Model validation:
Let us check how well the model fits into real case. We focused on following few points while
carrying out a pilot project. First, whether the model meets the requirement of a standard tool
to diagnose sustainability across entire supply chain.
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Secondly, after stressing on the fact that most of the existing models have a product-based
perspective and are western market perspective, carrying the ideology to the integrated final
model. we wanted to test the model in an organization which is in a ‘non-western’ major
developing country to check the adaptability of model in various markets .
Third, to check the applicability of this model in service based companies and to test it in the
most vulnerable enterprises, we chose Prayas and its clients.
In order to diagnose the maturity level of the organization we gathered information by visiting
the Prayas head and branch offices, its client microenterprises, taking help from available
annual reports, audit reports; face-to-face/online interviews with Prayas employees and
Director; and a follow-up questionnaire.
The title- “Prayas-an organization for sustainable development” brings lot of responsibilities to
the organization to not just grow the organization and its partners but making sure that the
overall growth is sustainable. In this work, we assessed Prayas’ maturity level in terms of
dealing with sustainability issues and how its clients have grown due to the efforts taken by
Prayas. The assessment has been done based on an integrated sustainable supply chain maturity
model.
Prayas’s maturity was diagnosed at each pillar of sustainability according to triple-bottom line
approach. At posture towards sustainability, on economic aspect they showed an improved
maturity from a reactive to proactive posture during 2005 to 2016. This improvement came at
the cost of discarding Natural Resource program after year 2006-07 due to issues with fund
raising. Prayas paid more attention on microfinance projects since then to be more financially
independent. Consequently, maturity level at environmental pillar slid down from proactive to
active during this period. On social front, Prayas has been trying to reach out to more
underprivileged enterprises and people, for instance, starting their operations in Assam. This
depicts their pro-active posture towards social issues.
Diagnosing economic sustainability strategy, Prayas showed unique strategies for dealing with
suppliers and customers, strategies for better management, bringing more transparency in the
practices, set targets to improve their assets quality, ambition to reach out to new markets. Also,
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economic aspects are preferred over other sustainability issues. In short, Prayas show
futurologist strategy maturity level. Lack of evidences on a well-defined environmental strategy
and abandoned NRM projects were decisive in diagnosing the maturity for environmental
strategy at second level (Partial strategy) from “defined” in the past. From the data collection,
it is evident that Prayas coordinates with local authorities such as GOs, make partnership with
other NGOs, capacity building of staff. From educating the employees to dealing with clients,
to involving locals in the strategic decision making shows the maturity level of organization in
integrating the sustainability strategy at various levels. However, a futurologist vision is
missing
Maturity level of sustainability implementation is first assessed in governance, where
community’s participation in projects, women empowerment and inclusion of women in
decision making, stakeholder’s consultation, emphasis on customer education are the factors
which help concluding an integrated maturity level. However, not being a carbon producing
organization Prayas shows a lack of awareness of non-value added environmental activities,
reflecting in their diagnosis as second maturity level “managed” sustainability implementation.
To diagnose economic element at implementation dimension, optimization level of the
processes as a proxy. Prayas has branch offices, which decentralize appraisal and disbursement
processes making them less time taking and better fool-proof. They have an efficient cash
management system, loan collection process and overdue management processes; but absence
of HR and other departments, ignorance of process specificities indicators conclude that Prayas
has a “defined” (level 3) maturity in dealing with economic implementation.
To diagnose leadership in the chain, first we check the power in the chain. Prayas, to some
extent, is dependent upon its fund providers which are better managed banks and financial
institutes. Upstream the chain, it is Prayas’s suppliers who are leading at economic front. Prayas
selects the microcredit borrowers based on their current financial status; provides training to its
clients (MSMEs), collaborate with other NGOs and organizations to help these MSMEs
depicting a hybrid leadership style. Inside the organization, various teams are led by
experienced members. Education, training and capability development programs are organized
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but are not very frequent. Therefore, inside the organization there is a hybrid leadership style.
On environmental front, Prayas shows no leadership.
Prayas shows a highly matured integrated economic performance measurement system, as not
only financial indicators are used but the financial reports, which are in accordance with
accounting principles accepted in India, are published online. They also have an end to end
computerized collection and overdue management system. Prayas measures the financial
performance of its clients using various analytical tools. Poverty Index developed by Grameen
foundation are used to assess the status of its clients. Trustees and other stakeholders are also
involved in the performance measurement. Hence, on social sustainability element for
performance measurement, Prayas shows highest maturity level. However, again on
environmental front they still have an ad-hoc performance measurement system.
For diagnosing entire supply chain using last dimension (Partners’ involvement), Prayas’s
major fund provider “Yes Bank”, “Tata Consultancy Services (TCS)” and Prayas’s clients are
considered. Yes bank, like TCS, shows a great intention to collaborate to the end members of
Microfinance chain. However, lack of available capital for investment, inefficiencies in chain,
technology barriers, lack of education are few of the issues related to end customers which have
kept end customers
away from an effective
collaboration. Overall,
there is a collaboration
focused involvement in
the chain at social and
economic aspect but the
collaboration succumbs
before it reaches the
final customer. There is
a passive involvement of
end customers
(MicroSMEs) in dealing
with these issues.
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4. Conclusion:
After the testing it was concluded that the model is flexible in usage, it allows for assessment
of a diverse range of environmental, social, economic factors, it is good at adapting variety of
information and works in relatively less information.
Also, the model is not specific to an industry, country, department or an organization with equal
emphasis on all three pillars of sustainability. Managers can use the model to find new
opportunities, help them in decision making and development of a standard pathway to deal
with global supply chain sustainability issues.
Talking specifically about Prayas, they can utilize this model as they don’t have any such tools.
They can start cosndiering environmental issues based on the diagnositic results.
There are few limitations in the work such as the model needs to be on various other industries
other than finance service industries. There is a lack of a validation of the results with real-
word data, the testing part does not consider customers, customers’ customers, suppliers’
suppliers.
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Table of Contents
Abstract ...................................................................................................................................... ii
ACKNOWLEDGEMENT ........................................................................................................ iii
Executive Summary .................................................................................................................. iv
1 Introduction ........................................................................................................................ 1
1.1 Goals for the thesis: ..................................................................................................... 2
1.2 Report layout ............................................................................................................... 3
2 Literature review ................................................................................................................. 4
2.1 Sustainability ............................................................................................................... 4
2.2 Three pillars of sustainability ...................................................................................... 4
2.2.1 Environmental pillar ............................................................................................ 5
2.2.2 Social pillar .......................................................................................................... 6
2.2.3 Economic pillar .................................................................................................... 9
2.3 Why sustainability? ................................................................................................... 10
2.4 Sustainability: Challenge and Opportunity ............................................................... 10
2.5 Sustainable Supply chain management ..................................................................... 12
2.5.1 Challenges involved in sustainable supply chain management ......................... 13
2.5.2 Analysis of Published papers regarding the measures taken for sustainable supply
chain 14
2.5.3 Existing state of literature on sustainable supply chain management ................ 15
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2.6 Sustainability vs Corporate Social Responsibility .................................................... 17
2.6.1 Recent trends ...................................................................................................... 21
2.6.2 Importance of CSR in business .......................................................................... 21
2.6.3 Assistance in sustainability maturity diagnosis ................................................. 21
2.7 Maturity model .......................................................................................................... 22
2.7.1 Types of maturity models .................................................................................. 23
3 Literature review on sustainable supply chain maturity models ...................................... 26
3.1 Procedure to search ................................................................................................... 26
3.2 Models discussion ..................................................................................................... 27
3.2.1 SSCM maturity model (Reefke, Ahmed, & Sundaram, 2014) .......................... 28
3.2.2 A framework of sustainable self-evaluation maturity (Gouvinhas, Reyes, Perry,
& Filho, 2016) .................................................................................................................. 30
3.2.3 Maturity Model for the Strategic Design of Sustainable Supply Networks
(Kirkwood, Alinaghian, & Srai, 2011) ............................................................................. 32
3.2.4 Purchasing & Supply Management Maturity Model (Johnsen, Howard, &
Miemczyk, 2014) .............................................................................................................. 35
3.2.5 Sustainable Development Maturity Model for Green Virtual Enterprise Breeding
Environments (Romero & Molina, 2014)......................................................................... 36
3.2.6 Energy and utility management maturity model (EUMMM) (Ngai, Chau, Poon,
& To, 2013) ...................................................................................................................... 40
3.2.7 Eco-design Maturity Model (EcoM2) (Pigosso & McAloone, 2016) based on
(Reim, Parida, & Örtqvist, 2015) ..................................................................................... 41
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3.2.8 Governance maturity grid (Allais, Roucoules, & Reyes, 2017) ........................ 42
3.2.9 Lean and Green maturity model (Verrier, Rose, & Caillaud, 2016) .................. 44
4 Models Integration ............................................................................................................ 46
4.1 Dimensional integration ............................................................................................ 47
4.2 Level integration ....................................................................................................... 47
4.3 Model integration reasoning...................................................................................... 49
4.3.1 Posture towards sustainability issues ................................................................. 49
4.3.2 Sustainability Strategy ....................................................................................... 52
4.3.3 Sustainability implementation ........................................................................... 54
4.3.4 Sustainability leadership .................................................................................... 59
4.3.5 Sustainability reporting and performance measurement .................................... 63
4.3.6 Partners’ involvement ........................................................................................ 66
5 Final model ....................................................................................................................... 71
5.1 A short guideline to use the model ............................................................................ 72
5.2 Completeness of model ............................................................................................. 73
5.3 Comparison with GRI standards ............................................................................... 74
6 Model Validation: A case study on micro-finance chain ................................................. 76
6.1 Research Questions: .................................................................................................. 76
6.2 Case selection: ........................................................................................................... 76
6.3 Information collection: .............................................................................................. 77
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6.3.1 Case site visits: ................................................................................................... 78
6.3.2 Formal interview and discussion with employees: ............................................ 79
6.3.3 Skype discussion with Director Bhadresh Rawal: ............................................. 80
6.3.4 Archive ............................................................................................................... 81
6.3.5 Questionnaire: .................................................................................................... 81
6.4 Information analysis .................................................................................................. 84
6.4.1 Organization introduction .................................................................................. 84
6.4.2 Microfinance chain ............................................................................................ 86
6.4.3 Microfinance industry in India: A SWOT analysis ........................................... 86
6.4.4 Sustainability issues related to Prayas ............................................................... 87
6.5 Diagnosis using the model ........................................................................................ 88
6.5.1 Posture towards sustainability............................................................................ 88
6.5.2 Sustainability strategy ........................................................................................ 90
6.5.3 Sustainability implementation ........................................................................... 94
6.5.4 Sustainability leadership .................................................................................... 97
6.5.5 Sustainability reporting and performance measurement .................................. 101
6.5.6 Partner’s involvement ...................................................................................... 104
6.6 Results ..................................................................................................................... 108
6.7 Result summary ....................................................................................................... 111
6.8 Discussion ............................................................................................................... 112
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7 Conclusions .................................................................................................................... 113
7.1 Theoretical implications .......................................................................................... 114
7.2 Managerial implications .......................................................................................... 115
7.3 Managerial implications (Prayas specific) .............................................................. 115
7.4 Implications (microfinance chain specific) ............................................................. 116
7.5 Limitations .............................................................................................................. 116
References .............................................................................................................................. 117
Figure 1- Three pillars of sustainability ..................................................................................... 5
Figure 2- Sustainability popularity check via Google Ngram ................................................. 12
Figure 3- Elements of Corporate Social Responsibility .......................................................... 18
Figure 4- Difference between SCM and BE ............................................................................ 20
Figure 5- Maturity Model Description ..................................................................................... 22
Figure 6- Sample Maturity Grid- Crosby's QMM grid ............................................................ 23
Figure 7- Likert-scale like Questionnaires (Hybrid) Maturity Model ..................................... 24
Figure 8- SSCM decision making cycle .................................................................................. 29
Figure 9- Sustainability modelling and reporting system (SMART)....................................... 29
Figure 10- Description, Goals and Requirements of SSCM Maturity Model Level ............... 30
Figure 11- Constructed sustainable self-evaluation maturity model ....................................... 31
Figure 12- Maturity Model for the Strategic Design of Sustainable Supply Networks........... 34
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Figure 13- Purchasing and Supply Management maturity model ........................................... 35
Figure 14- Maturity Model for Green Virtual Enterprise ........................................................ 38
Figure 15- Sustainability management continuum GVBE evolutionary model ...................... 39
Figure 16- Energy and utility management maturity model ................................................... 40
Figure 17- Eco-design Maturity Model (EcoM2) ................................................................... 42
Figure 18- Ambitions maturity grid ......................................................................................... 43
Figure 19- Mean maturity grid ................................................................................................. 44
Figure 20- Lean and Green maturity model ............................................................................. 45
Figure 21- Comparison of reviewed models ............................................................................ 46
Figure 22- Overlapping of reviewed maturity models ............................................................. 48
Figure 23- A conceptual model on SSCM strategy typology .................................................. 60
Figure 24- Integrated Sustainable Organization and Supply Chain Maturity Model .............. 71
Figure 25- Guideline to use the model ..................................................................................... 72
Figure 26- Prayas's operational areas ....................................................................................... 84
Figure 27- Prayas's organizational structure (adopted from Prayas’s annual report) .............. 85
Figure 28- Microfinance chain with Prayas as focal company ................................................ 86
Figure 29- Prayas-bank relationship diagnosis using Cousins Portfolio Model ...................... 99
Figure 30- Diagnostic evaluation with respect to economic pillar: Then (before 2013) ....... 108
Figure 31- Diagnostic evaluation with respect to economic pillar: Now (2016) ................... 108
Figure 32- Diagnostic evaluation with respect to social pillar: Then (before 2013) ............. 109
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Figure 33- Diagnostic evaluation with respect to social pillar: Now (2016) ......................... 109
Figure 34- Diagnostic evaluation with respect to environmental pillar: Then (2013) ........... 110
Figure 35-Diagnostic evaluation with respect to environmental pillar: Now (2016) ............ 110
Figure 36- Result summary .................................................................................................... 111
Figure 37 Conclusion on whether model meets the requirement of tool to diagnose
sustainability across entire chain ........................................................................................... 114
Table 1- Suggested measures in literature for sustainable supply chain ................................. 15
Table 2- Few examples of maturity models based on domain of applications ........................ 25
Table 3- Microfinance (in India): SWOT analysis .................................................................. 87
Table 4- Key stakeholders in Microfinance sector in India ..................................................... 87
Table 5- Sustainability issues related to Prayas ....................................................................... 88
Table 6- Posture towards sustainability diagnosis ................................................................... 90
Table 7- Sustainability Strategy diagnosis ............................................................................... 94
Table 8- Sustainability implementation diagnosis ................................................................... 97
Table 9- Sustainability leadership diagnosis.......................................................................... 101
Table 10- Sustainability reporting and performance management diagnosis ........................ 103
Table 11- Partners' involvement diagnosis ............................................................................ 107
1
1 Introduction
In the last periods, stakeholders have become the active participants in the process of
sustainable development. From Brundtland Commission’s (WCED, 1987) definition of
sustainable development; to the very popular concept of the triple bottom line (TBL) coined by
Elkington (1998); sustainability has become a well-defined subject of research in this period.
Such is the effect of increasing importance of economic, social and environmental apects that
organizations are now obliged to change their strategies from based on economic accountability
for shareholders to sustainability performance for all stakeholders. Despite becoming a concern
from product development to post-consumer product management across various sectors
worldwide, sustainability consideration in supply chain management (SCM) is still lagging. It
is crucial for an organization to not only improve its own operations but also to take care of the
performance of its supply chain (SC).
There are numerous motives for the increasing importance of sustainable supply chain
management (SSCM) which are driven by a variety of stakeholders. For example, in
manufacturing industries, SSCM must be in accordance with increasingly complex regulatory
norms. One option to foster sustainability in Supply Chain is to carry out sustainability
assessment such as life cycle assessment (LCA) of products or environmental impact
assessments (EIA) of activities. These assessments are limited in their application as they
usually take a company or product viewpoint. To extend the scope of such diagnosis from
product to measure impacts in companies and their value chain various maturity models have
been developed. A sustainability maturity model, basically, is a framework used to diagnose
how mature an organization is in dealing with sustainability issues typically economic, social
and environmental issues. A typical maturity model has three main traits which are: maturity
levels, dimensions and description of practices. Each maturity level suggests the step to be
followed by an organization to become highly mature in dealing with various issues, while
dimensions talk about the specific area in which the organization is mature. However, to have
diagnosis possible, it needs the existence of a certain degree of influence, trust and collaboration
with organizations in the supply chain, as well as of suitable technical tools (Xia and Tang-P,
2011). This implies that there is a necessity of defining with care the information to be
2
exchanged on sustainability concerns and the limitations of a supply chain-wide sustainability
maturity diagnosis. Therefore, diagnosing the sustainability performance in an organization and
its supply chain is an extremely ambitious task, especially with respect to products as complex
as cars or electronic devices, where the identification of all supply chain associates is mostly
problematic. There must be a meaningful way to diagnose and accumulate sustainability
dimensions to have an improved decision-making, better strategic alignment and potentials for
efficiency improvements.
This work aims at presenting a qualitative model to provide a holistic diagnosis of sustainability
maturity within the organization and its supply chain (including suppliers, focal company and
customers) across all industries; based on existing models available in sustainable supply chain
management literature.
1.1 Goals for the thesis:
Retrieve existing sustainability maturity models by reviewing Supply Chain
Management literature.
Find out the most relevant sustainability aspects from these models to form sets of
dimensions and practices.
Integrate these sets of dimensions and practices in a holistic way to propose a
comprehensive supply chain maturity model to specifically diagnose sustainability
within the organization and along its supply chain which not only considers the
specificities of developed countries but also of developing countries. That also meets
the requirements of a tool to diagnose sustainability across entire supply chain.
Compare the model with GRI standards before the pilot testing in the field to gain
confidence in coverage of the model.
Validate the model to have multiple analysis based on all three pillars of sustainability
within a single case study
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1.2 Report layout
The report is divided in various sections to provide a systematic reading of the thesis, which
are explained here.
“Literature Review” section first introduces sustainability and its three pillars. The section
discusses the importance of sustainability and its increasing trend in recent time. We restrict
our area of interest about sustainability to sustainable supply chain management. A brief
discussion on challenges and opportunities of sustainability is done; followed by a review on
business ethics literature to point out the differences in corporate social responsibility and
SSCM. It is noticed from this literature review that social sustainability aspects have not been
deeply discussed in sustainable supply chain literature. The section discusses status quo of the
sustainable supply chain management literature, explains what are the challenges in assessing
sustainability issues in the supply chain management. The section also defines maturity models.
In the next section “Final goals for thesis”, objectives for this thesis are discussed which are
mainly to integrate existing sustainability maturity models available in SSCM literature.
Following section “A literature review on SSCM maturity models” introduces various maturity
models which are selected using following steps:
“Models Integration” section explains the procedure followed to integrate these models and
reasons this integration.
Thereafter, final Integrated Sustainable Supply Chain Maturity model is presented in “Final
Model” section. The possible way of using the model.
In the “Model Validation” section, model is tested strictly based on triple-bottom line approach
on a microfinance institute, its suppliers and clients. This section firstly discusses the
characteristics of the supply chains of the surveyed company as well as the perceived risks and
opportunities in the supply chains. Then maturity level of organization’s SSCM is diagnosed.
Finally, the conclusive remarks based on the diagnosis are discussed.
In the end, there is a discussion on theoretical and managerial implications of the work.
4
2 Literature review
2.1 Sustainability
With all these talks about sustainability, for the purpose of this thesis, it is important to
understand what sustainability actually is, its effects and the havoc it can cause to us if not
addressed properly in time.
In plane words, sustainability can be defined as a socio-ecological process characterized by the
pursuit of a common ideal. An ideal is by definition unattainable in a given time/space but
endlessly approachable and it is this endless pursuit that forms a sustainable system in the
process. The name sustainability is derived from the Latin sustinere (tenere, to hold; sub, up).
Sustain can mean “maintain", "support", or "endure”.1
The most widely quoted definition of sustainability, that of the Brundtland Commission of the
United Nations on March 20, 1987: “sustainable development is development that meets the
needs of the present without compromising the ability of future generations to meet their own
needs.”
Growing business context of sustainability, has made it a broader aspect. Sustainability could
have global sustainability context, country sustainability context or organizational
sustainability (Hua, Nitivattananon , & Li, 2015). But, in this thesis, sustainability is mostly
referred to with the “sustainable supply chain management”.
2.2 Three pillars of sustainability
Sustainability contains three elements which are the environmental sustainability, economic
sustainability and social sustainability. The main goal of sustainability is to fully integrate the
three elements into one system. Let us discuss these three pillars (elements) of sustainability:
1 Source: Global Business consulting
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2.2.1 Environmental pillar
Environmental sustainability is described as “the endeavours society must do to improve human
welfare by protecting the sources of raw materials used for human needs and ensuring that the
sinks for human wastes are not exceeded, in order to prevent harm to humans” (Goodland,
1995)
In environmental sustainability, the main topic stressed is the effect of organizational actions
in the direction of the environment. Organizations require to recognize the causes of
environmental issues due to their operative activities. Examples of sources given by (Mustapha,
Manan, & Alwi, 2016) that are related to environmental problems are productions, transport,
procurements and products.
According to authors (Cook, Saviolidis, Davíðsdóttir, Jóhannsdóttir, & Ólafsson, 2017),
sustainable development has been understood as social and economic growth that is also
environmentally sustainable, but in recent years there has also been growing recognition that
environmental sustainability has its own qualities as a notion of importance. There are various
indicators available in literature to recognize environmental concerns. However, authors also
Figure 1- Three pillars of sustainability
6
mention that selecting environmental indicators is an intricate process due to their
multifunctional and extensive nature. Although there are systematic management systems
available to guide organizations to review environmental issues. Examples are:
ISO14001:2015, EMAS (Mustapha, Manan, & Alwi, 2016), European Environment Agency
(EEA), International Energy Agency (IEA), OECD, and World Resources Institute (WRI) by
(Cook, Saviolidis, Davíðsdóttir, Jóhannsdóttir, & Ólafsson, 2017).
Environmental indicators are attractive to policy-makers as they enable the formation of a
transparent and easily understood way of comprehending the state of the environment.
2.2.2 Social pillar
By design, humans are a social species that the creation for opportunities to meet needs is one
of the main reason for the development of society. So, individual humans are accomplished of
meeting their own requirements, but are reliant on the environmental and the social systems to
do so (Missimer, Robert, & Goeran, 2017). Social sustainability deals with meeting the
elementary requirements of present and future humans. Most importantly is awareness of and
legislation protection of the health of people from pollution and other harmful activities of
business and other organizations. In the organizational context, examples of basic needs are
education and trainings, health and safety, management competence and wages and benefits.
Social sustainability takes into account the interest of staffs and the community in the
progression of providing an impartial and ethical organization. An employer values human
assets by providing a benign and vigorous working condition along with chances for employees
to build a social partnership. (Mustapha, Manan, & Alwi, 2016),
From social system's perspective, social sustainability is about the removal of basic
mechanisms of methodical deprivation of essential aspects of the social system. Such basic
mechanisms can then act as elimination conditions for re-design, thereby helping as boundary
conditions within which the system can continue to function and evolve, outside of which it
cannot.
In the sustainability literature, there are many scholars who have presented different measures
of Supply Chain Social Sustainability. These measures differ from countries to countries.
7
Majority of these measures are supplier performance oriented. According to (Mani, et al.,
2016), there are no complete measures for overall supply chain social sustainability especially
for developing countries. In order to describe issues related to social sustainability, the majority
of researchers have taken just the buyer’s perspective missing other stakeholders (Mani,
Gunasekaran, Papadopoulos, Hazen, & Dubey, 2016).
(Quarshie, Salmi, & Leuschner, 2015) discuss the managerial implications in dealing with
social corporate sustainability. They argue that large firms having a multitude of sustainability
issues, have no clear boundaries or have very less visibility in far-away locations. They further
alert the large firms that due to population growth, shifting consumption patterns, uncertain
growth projections, and increased disruption risks it will get increasingly difficult to navigate
social sustainability issues. Because of this complexity and uncertain or challenging priorities,
managers struggle with the real-world characteristics of inserting sustainability into
organizations and supply chains.
Authors (Mani, Gunasekaran, Papadopoulos, Hazen, & Dubey, 2016), suggest few social
sustainability practices and categorize them into 10 major dimensions: Society, Health and
Safety, Ethics, Equity, Labour Rights, Philanthropy, Child and Bonded Labour, Wages,
Education, Housing. A brief explanation of the practices is below.
1. Supplier social sustainability dimension:
Various activities such as hiring locals, female workers, marginalized people, handicapped
people and minorities being important elements of supplier social sustainability. Below are the
SSSD measures.
Supplier performance: timely delivery, reduction in errors and less agitations
Increase in stakeholder trust: hassle-free operational environment for the suppliers
Organizational learning: cooperation between suppliers and buyers
Supply chain performance: production quality and timely meeting of buyer’s
requirements.
2. Focal firm social sustainability dimensions:
8
The dimension discusses the practices firms do to engage its assets in order to enhance social
sustainability. Authors find out that firms involve in philanthropic activities such as
construction and renovation of schools and colleges, donations to educational institutions,
NGO’s and religious organizations. However, contextual in nature, companies prioritise these
issues based on need and local demand. Below are the SSSD measures.
Operational performance: ‘efficiency’, quality products and reliability
Productivity: improved facilities
Corporate social performance: reliable suppliers, productivity, cooperative
relationships with suppliers and customers
Firm social sustainability brings operational performance, by means of ‘efficiency’, quality
products and reliability, which increases the facility productivity and corporate social
performance
3. Customer social sustainability
The dimension discusses the practices firms do to involve its customers and enhance customer
social sustainability.
Corporate image: Good perception among stakeholders, positive impression by
employees and society
Customer relationship and commitment: employee learning, and increased cooperation
in relationship.
Customer performance: increased sales, increased loyalty, and increment in customer
perception.
Note: There is research gap between sustainability literature and Business ethics in terms of
social sustainability. Later we discuss Corporate Social Responsibility in detail and have
comparison between supply chain sustainability and CSR.
9
2.2.3 Economic pillar
According to business dictionary: “The use of several strategies for engaging existing resources
optimally so that an accountable and advantageous equilibrium can be achieved over the
longer term. Within a business context, economic sustainability involves using the assorted
assets of the company efficiently to allow it to continue functioning profitably over time.”2
In sustainability literature, economic sustainability has been often linked with environmental
and social sustainability, to integrate the sustainable processes in the business strategies.
(Peralta, Bárcena, & González, 2016). The reason for this association is, environmental
regulations and compliance costs caused in efforts; from business groups; to minimize the
environmental effect of process design and development. Emphasis on supply chain
management has consequently shifted from a specific cost perspective approach, to the wider
acceptance and growth of sustainability (Dias & Ierapetritou, 2017) .To achieve the desirable
sustainability results, economic models have been developed that ensure the technical and
economic feasibility of the sustainable solutions.
Studying economic sustainability identifies that any operational activity (author refers to
maintenance in particular) has a huge impact on economic, environmental and social
performance. In Industrial Ecology, operational activities are discussed from the viewpoint of
entire product life cycle. In a system thinking approach, it leads to the integration of system
complexity and a multidisciplinary vision to manage assets as a whole. (Peralta, Bárcena, &
González, 2016)
In traditional SCM literature, the economic dimension is well explored since it is considered as
one of the main drivers for sustainability. The economic dimension is traditionally assessed
with indicators on quality, speed, dependability, flexibility and cost.
In simple words, in order to maintain the competitiveness of the company, economic
sustainability embraces several general aspects of an organization that need to be respected, in
2 http://www.businessdictionary.com/definition/economic-sustainability.html
10
addition to environmental and social aspects; financial stability and liquidity, profitability,
financial benefits that are the outcome of sustainability activities are prime elements making
up the economic dimension (Baumgartner & Rauter, 2017).Therefore, topics such as innovation
and technology management, collaboration, organizational processes, knowledge management
and purchase or sustainability reporting are important economic aspects of corporate
sustainability.
2.3 Why sustainability?
(Mathivathanan, Kannan, & Haq, 2017) sustainability is an area of research which has seen
remarkable growth over the last few years, evidenced by a dramatic increase in the number of
publications in this field (see Figure 2). There are many reasons for the growing importance of
sustainability, especially in supply chain management (SSCM) which are driven by a variety
of stakeholders.
A company is a system that transforms resources (inputs) into valuable products and services
as well as into unwanted by-products, waste and emissions. To do so, the company must deliver
proper returns to those who make available the resources. In addition, corporate sustainability
can enhance the sustainability performance of other partners and systems. In principle, the
individual company, business community, society and nature can all benefit from more
sustainable corporate behaviour.
2.4 Sustainability: Challenge and Opportunity
Sustainability, in each of the three dimensions, presents a risk to organizations that are
unprepared but also an opportunity for those companies who are prepared to embrace the
challenge. (Johnsen, Howard, & Miemczyk, 2014)
Environmental, social and economic goals can have complementary, competitive, or irrelevant
relationships; and each kind of relationship can have different implications. For instance, in the
case of complementary relationships, satisfying one type of goal helps attain other types of
goals; when relationships are competitive, chasing one type of goal may have an undesirable
11
effect on the attainment of other types of goals; and when relationships are irrelevant, no mutual
effects between different goals are observed. (Baumgartner & Rauter, 2017)
Companies cannot tackle sustainability by themselves: implementing sustainability needs
systemic change. Importantly both external developments and internal strengths and
weaknesses must be considered when trying to integrate sustainable development issues into
strategic planning. Consequently, a corporate sustainability strategy integrates social and
environmental dimensions into the strategic management process and highlights the strategic
position of a company with regard to sustainable development.
Strategies with an extroverted and visionary sustainability strategy are possible to have a strong
societal impact. Not all industries have a positive social value, however, and whether a
company delivers a positive societal value or not is based on societal perceptions about the
company's products and services, also its impact on the natural environment. For instance, there
is a substantial consensus that nuclear weapons do not have any positive societal values.
However, in the case of traditional weapon systems opinions concerning their relative societal
values are more mixed. Whether cars or coffee pods have a positive value is even more
debatable. Therefore, identifying the societal and environmental values of corporate operations
from a sustainability perspective requires defined sustainability principles such as Framework
for Strategic Sustainable Development. (Baumgartner & Rauter, 2017)
Companies that want to achieve higher levels of sustainability stress the possible extra value
that can be created for the business by choosing a strategic development path; the impact of
their choice on society and the natural environment tend to be secondary considerations.
Corporate goals must be more carefully examined. From the viewpoint of sustainability, the
question arises as to what extent environmental and social goals are considered by companies,
and how sustainability-related goals and other corporate goals are related.
12
Figure 2- Sustainability popularity check via Google Ngram
2.5 Sustainable Supply chain management
(Ahi & Searcy, 2013) Sustainability and Supply Chain Management are two concepts that
independently have shaped many discussions over the last few decades. This has led to many
definitions for supply chain management. Normally, supply chain management is focused on
managing flows of materials, services and information. In order to manage these activities,
SCM emphasizes on the need for coordination within and between firms, and then on meeting
stakeholder needs too, particularly of customers. The management of internal and external
relationships also features prominently in SCM literature. The key results of these activities are
to create value, improve efficiency, and improve overall performance in the supply chain.
Nevertheless, scholars (Ahi & Searcy, 2013) published the most complete definitions of
sustainable supply chain management (SSCM). According to them: “The creation of
coordinated supply chains through the voluntary integration of economic, environmental, and
social considerations with key inter-organizational business systems designed to efficiently and
effectively manage the material, information, and capital flows associated with the
procurement, production, and distribution of products or services in order to meet stakeholder
requirements and improve the profitability, competitiveness, and resilience of the organization
over the short- and long-term.”
13
In SSCM literature, initial efforts were focused on improving economic aspects of the supply
chain, followed by introducing green/environmental practices into the supply chains, and
resulting in an evolution of green supply chain management.
2.5.1 Challenges involved in sustainable supply chain management
Supply chain management is one of the most challenging and complex decision-making process
in an organization. The main reason for this complexity is that the operations of a supply chain
usually take place as local interactions among the entities rather than a central unit managing
all the operations. The complexity increases further as these interactions lead further flows of
information, material and money which in turn again result in subsequent interactions. (Dias &
Ierapetritou, 2017). Let us talk about sustainability at different levels.
1. Organizational challenges:
To manage the supply chain, most companies use a variety of tools including complex
spreadsheets, enterprise resource planning, and supply chain management applications.
However, such tools usually do not interact with each other. Consequently, other decision
makers do not have access to all the information (Dias & Ierapetritou, 2017). According to
authors (Silvestre & Neto, 2013), organization needs to deal with such issues is through
innovation (e.g., organizational and cleaner production innovations). It requires new mind-sets,
innovative business practices and sometimes more comprehensive changes in the entire
business model
2. At supply chain level:
Global supply chains today are increasingly exposed to stricter regulations, audits and
certifications of sustainability. This has made companies aware of the requirement for
companies to proactively implement the sustainability principles into their supply chains.
Authors (Song, Ming, & Liu, 2016), discuss the various risk factors any organization faces
such as demand and supply uncertainty, failure to select the right supplier, lack of sustainable
knowledge/technology, market share reduction, environmental risk factors etc.
14
3. At decision making (strategies) level:
Extended supply chains involving raw material suppliers, manufacturing facilities, distribution
centres, and final customers can be global and involve many transportation modes that are
vulnerable to disruption. To be sustainable, supply chains need to be flexible and resilient.
Quantifying supply chain resiliency so that it can be rigorously considered during design and
operations is a difficult challenge.
2.5.2 Analysis of Published papers regarding the measures taken for sustainable supply
chain
A closer look at the nature of the papers that have been presented in IPSERA reveals a greater
mix of subjects covered, with a more balanced coverage of environmental/green and social
purchasing and supply subjects. It is evident that the theoretical framework, definitions, scope
and variables for social dimensions in the purchasing field is far less developed.
Environmental/green
measures—69%
Social measures—
31%
Sub-categories % Sub-categories %
Internal P&S organisational
processes 33
Conflict of interest
issues 24
Material, waste, recycling 26 Social equity in the
supply base 19
Pollution prevention or
management 9 Non/ethical behaviour 18
Cost reduction through green
actions 8
Community
involvement 12
Compliance & Standards 8 Compliance &
Standards 9
15
Design for environment 4 Health & Safety
initiatives 7
Energy, CO2, GHG 3 Codes of practice &
conduct 6
Life Cycle Assessment 3
Internal P&S
organisational
processes
3
Strategy
formulation/development 1 100
Monitoring of the supply base 1
Other product-related actions 1
Risk management <1
100
Table 1- Suggested measures in literature for sustainable supply chain
2.5.3 Existing state of literature on sustainable supply chain management
In this section, we discuss the lack of inclusive methods for maturity diagnosis with regards to
sustainability is considered. It is also observed that tools for sustainability maturity diagnosis
are limited and that the different perspectives they take (e.g., country, company, process
specific etc.)
Research in SSCM started in the 2000s and significantly grew consideration in the scientific
community since 2008 (Ahi & Searcy, 2013). Numerous literature reviews addressed the
current situation and need for more research in SSCM. According to authors, the term
Sustainable Supply Chain Management is not appropriate till date, as there is no “truly
sustainable supply chain”. They argue that there is a lack of stakeholder inclusiveness because
stakeholders have been considered for their economic role in SCM. On the other hand, there
are several important SC stakeholders like Non-Governmental Organisations (NGOs),
governments or the public that show no interest in the economic sustainability of SC, instead,
16
are interested in its social and environmental performance. Furthermore, authors (Fritz,
Schoggl, & Baumgartner, 2017), argue that the literature provides many comprehensive
methods that take all three dimensions of sustainability into consideration for practitioners to
support decision-making for more sustainable SCs but only a few are accepted and used by
practitioners. Most methods for sustainability diagnosis focus only on one or two and rarely
three sustainability dimension and differ in their perspective: industry, company, process, or
product levels. Argument supported by (Fritz, Schoggl, & Baumgartner, 2017), existing
frameworks and tools do not consider the specificities of developing countries. Many have a
European or North-American perspective, making it difficult to include companies from
developing countries. Most of the frameworks and tools often miss the inclusion of the different
maturity levels of companies regarding the integration of sustainability issues in decision-
making.
These disadvantages also make the inclusion of Micro, small and medium sized companies
(SMEs) difficult as the available models are either too precise or too unclear. Tools like LCA
need complex and costly data exchange, qualified personnel or experience in networking with
stakeholders. However, SMEs are abrasive part of SCs representing nearly 90% of businesses
and 60% of the employment rate of all countries. Percentage is even higher in developing
countries. Per scholars (Kumar, Singh, & Shankar, 2015); SMEs in India and other developing
countries face problems due to lack of resources and direction. At this level, these companies
do not strategically think about sustainability and barely are aware of sustainability matters.
The complex nature of sustainability maturity assessment can be explained by the fact that most
sustainability activities are done by a variety of persons without being included in their terms
of reference.
Few models to implement strategy are proposed in the literature. One is Sustainable Supply
Chain Management Scorecard (SSC-Scorecard) which is the result of an adaptation of the
balanced scorecard and the Supply Chain Operations Reference (SCOR) Model. Other models
are framework for SSCM and performance measures including the three dimensions of
sustainability according to the TBL. Both perspectives also omit a governance dimension.
Scholars ( (Fritz, Schoggl, & Baumgartner, 2017) emphasise the need to conduct research in
17
SSCM that addresses also the socio-cultural background of the multiple SC members, their
geographical location, their size, and that uses more qualitative approaches (e.g., grounded
theory, action research or content analysis). However, companies still have to face several
difficulties when assessing sustainability in supply chains which are
indicators focusing mainly on an economic assessment,
the complexity of sustainability assessment especially for social indicators that can
hardly be quantified or assessed objectively, and
trade-offs between improved performance and costs
In such context, transparency is a key for a successful sustainability assessment of supply chains
(Beske-Janssen et al., 2015). There is hence a need to take a holistic perspective to provide
companies and SCs with a comprehensive tool for sustainability data exchange.
2.6 Sustainability vs Corporate Social Responsibility
The WBCSD's definition of CSR: "Corporate Social Responsibility is the continuing
commitment by business to contribute to economic development while improving the quality of
life of the workforce and their families as well as of the community and society at large."3
Corporate Social Responsibility Model considers four responsibilities which point out the
commitment an organization must have to become a law abiding, ethical, profitable, global
stakeholder. In general CSR deals with these four responsibilities focusing on the focal
company which are Corporations’ legal, economic, ethical and philanthropic responsibilities
(figure 3). Scholars (Anholon, et al., 2016) even suggest companies to go beyond the legal
execution of their economic function in order to contribute to the society.
3 http://www.wbcsd.org/work-program/business-role/previous-work/corporate-social-responsibility.aspx
18
Figure 3- Elements of Corporate Social Responsibility
Corporate Social Responsibility as a concept is generally dealt under Business Ethics where
almost the same considerations are taken in account in order to make the focal company as
Sustainability does under Supply Chain Management. Both CSR and Sustainability have been
studied qualitatively, although research on Business Ethics are mainly based on Stakeholder
Theory while SCM researches have been from Resource Based View.
In Business ethics, supply chain issues have not been deeply addressed; as you can see in the
figure 4, where logistics, transportation etc. have rarely been discussed under BE. Moreover,
SSCM studies have focused on a variety of industries and sectors while the study on BE has
mainly focused on consumer goods sector. Most of the BE scholars have emphasized more on
social and ethical dimensions compared to environmental issues.
Furthermore, the amount of research on supply chain outnumbers that on BE. However, this
had not been the situation in 1980s and 1990s where CSR was seemingly the possible solution
to the social problems. (Anholon, et al., 2016)
As a result, CSR model has evolved slowly over last few decades compared to SSCM. Over
this period, few guidelines & few new dimensions along with traditional ones have been added
to CSR model such as accountability, transparency, ethical behaviour, legality, human rights,
international standards.
Let us compare CSR with Sustainability on five most important topics.
19
1. Ethical issues:
Ethical issues are crucial topic to be discussed in both Business Ethics and SCM, although in
BE it has been discussed with more focus. Ethical leadership, conflict management,
opportunism, corruption in purchasing etc. have been of prime focus in BE studies.
2. SCM practices and activities:
This is another point which has brought attention in both the said areas of research. Though
they differ in how this topic has been approached. In SCM, scholars have focused on finding
the relation between Supply Chain Practices and Supply Chain Performance, which is overall
concluded as positive, while CSR’s more focus has been on the links between lean production
& quality management practices and sustainable corporate behaviour and shareholder value.
For example, (Quarshie, Salmi, & Leuschner, 2015) study of the implementation of CSR
policies in banana supply chains emphasized on the difficulty of addressing labour conditions
in the presence of contradicting price pressures
3. Supplier Management:
This is another aspect dealt in both the research areas, but differently. Both the studies focus
on better supplier selection, development, integration, evaluation, collaboration, supply
network management. Yet, BE pays attention to auditing and compliance.
4. Collaboration with Non-traditional partners:
This is one of the complex issue covered in BE studies. The dependency of markets and supply
chains on consumer labels and social movements is addressed in the study. Although the
complexity of their relationship has limited the understanding their role in SSCM.
20
Figure 4- Difference between SCM and BE
5. Codes, Policies and Standards:
In SCM, apart from TBL, four supporting aspects of sustainability have also been studied.
These four aspects are risk management, transparency, culture and strategy, logistics and
transportation. BE has not emphasized on these issues rather scholars have mainly focused on
the contents, implementation, benefits and limitations of the policies.
Overall, the direction in which CSR has been studied has not given much attention to required
Triple Bottom Line for sustainability, rather has focused on Ethical business. BE; even at times;
questions the profit maximization approach. Scholars say that CSR efforts may be hindered by
a Profit Maximization Strategy, industry realities and insufficient legal labour rights protection.
Hence, in CSR, there has not been a balanced attention to all three dimensions of TBL which
is crucial for sustainability which actually has been the prime focus in Sustainable Supply
Chain.
On the other hand, SSCM has more given more attention to Environmental issues leaving less
to talk about social issues.
21
2.6.1 Recent trends
Authors (Kudłak & Low, 2015) argue that in past few decades, researchers have not been much
interested concerning CSR and corporate sustainability. CSR-related matters have received
comparatively slight consideration by prominent academic papers. However, there is indication
that this inclination is shifting. During the last decade, numerous distinct issues on CSR and
sustainability topics were observed. The academic deficiencies of the present CSR research,
joined with its increasing popularity among scholars.
2.6.2 Importance of CSR in business
The study done by (Park, Kim, & Kwon, 2017), validate the powerful role of ethical values in
growing consumer trustworthiness. Higher corporate ethical standards are found to lead
consumers to believe that the company is committed to its CSR activities. Each organization
must go through a life cycle, like all living organisms. (Hasan & Habib, 2017) examine the
association between CSR and CLC and concluded that firm maturity is positively associated
with CSR initiatives. Companies evolve through set of phases but in the case of corporate life
cycle, the lengths of phases are not set strictly.
(Hahn & Kühnen, 2013) argue that CSR is an authoritative channel through which
managements try to meet these demands of sustainability reporting especially at financial,
social and ecological dimensions. They further argue that by disclosing sustainability
information, private companies can aim to increase transparency, reputation and legitimacy,
benchmarking with respect to competitors, proxy for competitiveness, brand value, motivate
employees.
2.6.3 Assistance in sustainability maturity diagnosis
As social dimension one of the main pillar in TBL, and historically this has not been studied
much in detail in sustainability while business ethics have been doing it with prime focus. Both
the studies can complete each other. Therefore, CSR can be very useful while diagnosing the
social sustainability through a maturity model. Moreover, it adds a stakeholder based view to
the sustainability study.
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2.7 Maturity model
According to oxford dictionary maturity defines the state, fact or period of being fully
developed physically.
Figure 5- Maturity Model Description
A maturity model is a framework which describes the quintessential progression towards
desired improvement using several successive stages or levels. This framework can be used
both as a diagnostic tool for assessment and also a pathway for improvement. Since Crosby’s
(1979) quality management grid maturity model, maturity models have diversified in various
areas, for example, product and software development, Supply Chain Management, Supplier
relationships, Research and Development, innovation etc. (Mendes, Leal, & Thomé, 2016).
They pointed out three common traits of all the Maturity Models.
1. Maturity levels:
23
Per authors (Nikkhou, Taghizadeh, & Hajiyakhchali, 2016), the process of achieving maturity
is not an event, nor it is a quick fix for immediate tactical problems rather, it is a consciously
prearranged and appropriately managed continuous improvement effort. The evolutionary steps
followed in the process of these continuous improvement are called maturity levels. Generally,
maturity models look similar at the first sight as most of them have basic 5 maturity stages. A
typical maturity model can consist of three to six maturity levels.
2. Dimensions: Each level consists of various dimensions with criteria or activities
defining the boundaries of maturity considerations.
3. Description of practices: The practices are defined standard set of doings for a specific
dimension and its corresponding maturity level.
2.7.1 Types of maturity models
Types of maturity models can be categorized based on
2.7.1.1 The structure of model
Maturity grid: It is a grid of moderate complexity. For instance; Crosby’s Quality
Management grid.
Figure 6- Sample Maturity Grid- Crosby's QMM grid
24
Likert-scale like Questionnaires (Hybrid): in this matrix; each question is associated
with numeric ranks. In these kind of maturity models, overall description of maturity
levels is given but activities are not explained.
Figure 7- Likert-scale like Questionnaires (Hybrid) Maturity Model
Complex Maturity Models: These are the models inspired by Capability Maturity
Model. A typical CMM contains five key aspects: which are Maturity level, Key process
areas, goals, common features, Key practices.
2.7.1.2 Domain of the model
A maturity model can be used in a variety of domains based on their application.
Few examples of maturity models Domain
Capability Maturity Model Integration
CMMI
Management
Enterprise Architecture Maturity Model IT management
25
European Foundation for Quality
Management (EFQM) Excellence Model
Business Management
Process Maturity Model Process Management
Project Management Maturity Model Project Management
Table 2- Few examples of maturity models based on domain of applications
An ideal maturity model must cover all the relevant dimensions that describe maturity. Maturity
models are used in different contexts and industries such as: information technology (for
example, as tool in software development), healthcare (framework for maturity and
improvements in clinical efficiency), mining (framework for risk management and continual
improvements), manufacturing (framework for service systems in enterprise), engineering and
construction (project management maturity models for estimating project effectiveness and
efficiency) etc. Talking about maturity models in the field of supply chain management, many
authors have confirmed the existence of relations between maturity levels and supply chain
performance. They consider that supply chain performance derives from an evolutive process
involving the implementation of ‘‘customised’’ practices grounded in an understanding of the
principles of value creation that actually lead to an improvement in performance. Note that this
shift from one level of maturity towards another higher one is usually associated with the
implementation of best practices. The ability to integrate best supply chain management
practices is one way of defining maturity levels.
26
3 Literature review on sustainable supply chain maturity models
3.1 Procedure to search
1. Keywords used to search SSCM maturity models
Maturity models
Sustainable maturity models
Supply chain maturity models
Sustainable supply chain maturity models
Sustainable purchasing maturity models
Sustainable procurement maturity models
Sustainable Supply chain decision making
The digital libraries searched were
ScienceDirect
Web of Science
Scopus
Google Scholars
Total number of articles retrieved after this step: 15
2. Apply the inclusion criteria:
For this thesis work; following points set the inclusion criteria
Article is related to supply chain management.
Article discusses sustainability.
The sustainability maturity levels are defined.
The dimensions and practices for maturity are discussed or tabulated.
3. Eliminate repetitions:
Total number of articles selected for maturity model dimensions after this step: 9
27
Several maturity models indirectly related to our subject have recently been published,
especially on energy management such as models ( (Antunes, Carreira, & Mira da Silva, 2014);
(Introna, Cesarotti, Benedetti, Biagiotti, & Rotunno, 2014). These models are quite similar to
Ngai et al model.
The maturity models selected are
1. Sustainable Supply Chain Management—Decision Making and Support: The SSCM
Maturity Model and System (Reefke, Ahmed, & Sundaram, 2014)
2. A proposed framework of sustainable self-evaluation maturity within companies: an
exploratory study (Gouvinhas, Reyes, Perry, & Filho, 2016)
3. A Maturity Model for the Strategic Design of Sustainable Supply Networks (Kirkwood,
Alinaghian, & Srai, 2011)
4. Purchasing and Supply Chain Management: A Sustainability Perspective (Johnsen,
Howard, & Miemczyk, 2014)
5. Sustainable Development Maturity Model for Green Virtual Enterprise Breeding
Environments (Romero & Molina, 2014)
6. Energy and utility management maturity model (EUMMM) (Ngai, Chau, Poon, & To,
2013)
7. Eco-design Maturity Model (EcoM2) (Pigosso & McAloone, 2016) based on (Reim,
Parida, & Örtqvist, 2015)
8. Governance maturity grid (Allais, Roucoules, & Reyes, 2017)
9. Lean and Green maturity model (Verrier, Rose, & Caillaud, 2016)
3.2 Models discussion
Evaluation and comparison of existing models and frameworks allows us to extract common
elements and contrast the differences to construct models of interaction applicable to SSCM.
Below are the selected models discussed
28
3.2.1 SSCM maturity model (Reefke, Ahmed, & Sundaram, 2014)
This article by (Reefke, Ahmed, & Sundaram, 2014) defines multi-level decision phases of
Sustainable Supply Chain Management. Subseq
uently, they propose an improved six-layered Sustainable Supply Chain Management maturity
model. The presented model emphasizes on sustainable business transformation roadmap and
proposes a customized edition of the sustainability modelling and reporting (SMART) system.
The sustainable supply chain management system (the SSCM system) eventually comprehend
the SSCM maturity model. Although author points out that previous editions have already been
tested and evaluated based on a business case, the presented model is to be continuously
improved.
For our understanding, we divided the article in three sections:
1. SSCM decision making cycle
To achieve a direction of SSCM, a macro-level decision cycle is proposed; as shown in the
figure 8.
i. Discover: Discovery of unsustainable areas within a SC.
ii. Learn: Learning more about these areas and about environmental, economic and
societal practices within these areas that could lead to win-win-win solutions.
iii. Strategy: The discovery and learning results in the formulation of a strategy for the
introduction and implementation of sustainable practices.
iv. Design: The strategy is then translated into a successful design of people, processes and
systems that enhance SC sustainability.
v. Implementation: The design is ultimately implemented across the SC resulting in its
transformation.
vi. Monitor: This transformation and its impact on sustainable practices need to be
monitored in terms of relevant key performance indicators and cross-indicators.
vii. Control: The monitoring may result in various measures to govern and control the
sustainability of the SC through corrective and proactive actions. The monitoring and
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control help to discover new areas of sustainability issues or identify whether newly
introduced practices are successful or there is need for a new cycle of discovery–
learning–strategising–design–transformation–monitoring–control.
2. Sustainability modelling and reporting system (SMART)
The above decision cycle is used to develop a computer based system known as Sustainability
modelling and reporting system (SMART). (See figure 9). Sustainability modelling and
reporting system is customized and configured into a SSCM system to support the incremental
progression of the focal company towards staged maturity levels of the proposed model.
3. The maturity model
Figure 9- SSCM decision making cycle Figure 8- Sustainability modelling and reporting system
(SMART)
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Figure 10- Description, Goals and Requirements of SSCM Maturity Model Level
Reefke et al focus on improving an organization’s internal system to control and monitor
sustainability. The above discussed SSCM decision making cycle is the basis of SSCM
computer system.
Authors stress the fact that maturity models are highly useful but only if they are
operationalized correctly. Further they add that to have significant improvements in the triple
bottom-line performance, maturity models need to be adapted to different scenarios and
requirements.
Remarks:
The maturity model is not very detailed and doesn’t consider dividing it in separate
dimensions.
Focus is on developing a software model to help implementing sustainability, especially
within the organization.
Triple bottom line approach is stressed.
3.2.2 A framework of sustainable self-evaluation maturity (Gouvinhas, Reyes, Perry, &
Filho, 2016)
Authors argue that today organizations face lot of difficulties in delivering holistic changes
mandatory to attain a long-term sustainability to stay competitive and also to gain competitive
advantage. Authors suggest that the companies must first improve their strategy and
management tactics for sustainability before taking a decision on introducing eco-design tool.
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Normally, there must be a cultural change within the entire organization towards sustainability.
The study presents a self-evaluation framework which helps companies to rank themselves into
various classes based on their level of maturity in terms of sustainability.
The model is not structured in the paper. However, after reviewing the article we have tabulated
the points so that it becomes easy for us to compare the work with other models. As shown in
the figure 11, this is a maturity model which guides an organization to include all the actors of
the supply chain to make the entire chain aware of environmental and social issues. The
ultimate level of maturity in this model is to have an integrated sustainable supply chain where
all suppliers and producers supplying and producing only for those customers who are
concerned about environmental and social issues. Hence, it is a pathway to bring an entire
supply chain at the ideal situation in terms of sustainability.
Key remarks:
Figure 11- Constructed sustainable self-evaluation maturity model
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Originally it is not a constructed model, authors describe various activities at different
level of sustainability maturity.
The model has 6 levels where the 6th level describes an ideal situation where each
member of the supply chain including all direct or indirect stakeholders are involved in
dealing with economic, social and environmental issues. But this level has not been
considered in the final model as level 5 nearly describes the practices to achieve a
significant sustainable maturity level.
The model is useful when entire chain sustainability integration is to be diagnosed.
3.2.3 Maturity Model for the Strategic Design of Sustainable Supply Networks
(Kirkwood, Alinaghian, & Srai, 2011)
The model is focused on designing a global sustainable supply networks with a waste
minimization and efficient resource utilization. This model is a very detailed and
comprehensive which proposes a sustainable maturity model from network perspective than an
organization’s perspective. The model suggests the specific guidelines for designing a
sustainable supply network. The primary supposition of this approach is that the sustainable
impact of any plant may be described by four primary factors, namely Energy (E), Resource
(R), Waste (W) and Carbon (C). Furthermore, it is supposed that E+R+W=C, which may be
better expressed as that only through a full consideration of all energy consumption, resource
utilisation and waste production can an accurate carbon footprint be determined for an industrial
process or plant.
The model has 5 main framework domains, which are listed in the figure 12. Here we discuss
all these domains in detail.
1. Sustainable supply network strategic design:
The domain talks about various strategies to form a network of suppliers and customers, so that
the network could keep up with the dynamics of today’s customer needs. The suggested
strategies are business plan of an organization, customer segmentation, leadership values and
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objectives, programme and project portfolio management model, supply integration strategies,
strategic marketing and processing.
Critical remark on this dimension is that it is very specific to the supply networks design which
is a special case of strategic decision making at organizational level.
2. Network integration and connectivity:
This domain shows how well the organizations of the network are connected to each other at
operational level. The elements stressed in this domain are network coordination and
leadership, product service system and offerings. In short day-to-day operations, business and
network processes and their integration.
3. Network efficiency:
This domain discusses the way of making processes environmentally and socially efficient.
The dimension discusses resource utilization, waste minimization, carbon footprint, people
capabilities and sustainable organizational design.
Making a critical remark, this dimension suggests the way of sustainability implementation at
organizational level. Unlike other previous dimensions discussed, this dimension is not very
specific to supply network design but can be generally used to define sustainability
implementation maturity.
4. Network performance development and reporting:
This domain discusses performance measurement at all three pillars of sustainability. Authors
state that a mature organization needs to have sustainability scorecards in place across the
supply chain.
5. Network product and service enhancement:
The last domain of the model relates to the science and technology involved in innovation and
regulatory and legislative compliance of the product and service offering process of the
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organisation. Ultimately the model is a guideline to make the company industrial leader in
sustainable technology.
Overall, the proposed model helps make a systematic analysis and assessment of activities to
guide sustainable operations. The core perspective of the model is supply network. Model is
very detailed and comprehensive in providing complementary approach, more metric and
measurement-centric analyses. The model is helpful in having an approach of integrating
sustainability across the entire supply chain.
Figure 12- Maturity Model for the Strategic Design of Sustainable Supply Networks
Key remarks:
Focused on Environmental pillar of sustainability.
Maturity level discussed from network level perspective.
Very detailed model, suggested practices, Network efficiency domain suggests way of
sustainability implementation at organizational level.
It is not wise to integrate the entire model in our final model because the model itself is
comprehensive and deals with many dimensions from a network perspective. It doesn’t
generally propose a methodology to monitor sustainability maturity of the supply chain
as a whole.
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3.2.4 Purchasing & Supply Management Maturity Model (Johnsen, Howard, &
Miemczyk, 2014)
The PSM maturity model is proposed to make the process of making incremental changes in
purchasing, gradual changes in structures, processes, people and inter- and intra-organizational
relationships; jumping steps can be problematic.
Authors point out that if purchasing plays a strategic role within a company, it reflects a high
degree of purchasing maturity. Model is useful for the organizations that understand the
importance of a mature purchasing function. Consequently, using the model helps the PSM to
rise within the ranks of the organization. Model has total 13 dimensions, which discuss various
crucial PSM practices and their levels of progression. Out of 13, three dimensions explicitly
talk about sustainability.
Figure 13- Purchasing and Supply Management maturity model
Key remarks:
Purchasing and supply department specific, but applicable for any industry, country.
Four maturity levels.
Three explicit sustainability dimensions; but sustainability aspects are implicit in other
dimension too.
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3.2.5 Sustainable Development Maturity Model for Green Virtual Enterprise Breeding
Environments (Romero & Molina, 2014)
Definition and introduction:
“A Green Virtual Enterprise Breeding Environment (GVBE) represents an association [also
known as a cluster] or pool of organisations that have both the potential and willingness to
cooperate with each other towards “eco-industrial networks” creation [e.g. GVEs]” stated by
(Molina & Romero, 2012). GVBEs is generally called as “virtual industrial eco-systems”.
Authors argument is that it enables the members of the ecosystem to work together to
instrument sustainable business practices by complying with sustainability continuum. It also
helps the members to improve their core-competencies and resources utilisation. Sticking to
GVBEs also enhances their industrial competitiveness, stimulating their eco-innovation, and
cut down their transaction costs.
“A Green Enterprise (GE) is an enterprise that strives to meet the triple bottom-line by
ensuring that all products, processes, manufacturing and logistics activities in its business
operation address the sustainable principles (Romero & Molina, 2010). GVBEs aim to develop
mechanism for assessing and enhancing their member enterprises green degree level.”
Developing GVBE is not just a gradual adjustment process, but a dynamic process too due to
changing market demand, nearly radical technical changes. Therefore, per Romero et al, Green
Virtual Enterprises present a harmonic model to reduce the natural resources consumption,
negative environmental impact, reduce pollution, conserve resources and protect ecological
environment, and achieve, at the same time, economic and social sustainable development for
the integration, interoperability and networking of different “eco-industrial strategies”.
Key practices:
Apart from creating a framework for eco-industrial network, authors also suggest key practices
useful to be applied to merge the core-competencies, resources and other common features
available in the common industrial environment to achieve sustainability goals. Some examples
for green key practices are: Design for the Environment (DFE), Green Procurement, Green
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Marketing, Green Product Lifecycle Management (G-PLM), Lifecycle Thinking, Lean
Manufacturing, Total Quality Environmental Management (TQEM), Environmental
Management Systems (EMS), Green Supply Chain Management (G-SCM), Green
[Collaborative] Logistics, ISO9000 family of standards related to quality management,
ISO14000 family of standards related to environmental management, ISO26000 guidelines for
social responsibility, ISO50001 specification for energy management, Waste Hierarchy
Management, Safe Disposal, etc.
Stakeholder’s role:
GVBEs as long-term collaborative networks aim to facilitate the engagement and interplay of
multiple stakeholders needed in any effort towards sustainable development. GVBEs can offer
a “community notion” that helps to develop at individual and collective levels common green
operating principles [e.g. green products, green services, green design, green materials, green
processes, green production, green packaging, green logistics, green recycling] that will jointly
create a holistic and integrated sustainable industrial development strategy.
Further research aims to continue the validation and enriching of the proposed Sustainable
Development Maturity Model for GVBEs and to increase understanding about the
attractiveness of its adoption from a business perspective [e.g. ROI] towards a sustainability-
driven competitive advantage.
The model:
Sustainable Development Maturity Model (SDMM) is a typical model developed by merging
the scientific discipline of industrial ecology and collaborative networks to assist industry
clusters, and their enterprises and related support institutions.
Typical features of the models:
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Maturity levels: the maturity model has four-levels where the topmost (4th) level is an ideal
state where eco-industrial
networking strategies are
systematically dealt with by
integrating process optimisation and
continuous process improvement.
Eco-Industrial Networking (EIN)
strategies’ domains: An eco-
industrial networking strategy
domain identifies a cluster of
sustainable practices that, when
performed together, achieve a set of
sustainability goals.
Sustainable management continuum
This model is selected from (Ko, 2009)’s environmental management continuum for industrial
parks. “It is a sustainability management continuum which is defined as a systematic approach
for incorporating higher sustainability functions [strategies, features and practices] into a
GVBE.” [ (Romero & Molina, 2014)]. The model shown in the figure shows the six
evolutionary steps of sustainable management continuum. (Only this dimension has been
considered for integrating in the final model).
Figure 14- Maturity Model for Green Virtual Enterprise
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Figure 15- Sustainability management continuum GVBE evolutionary model
Looking at the model, it is a 3D model with three dimensions as Eco-industrial networking
domain strategies, Sustainability management continuum GVBE evolutionary models and the
maturity levels. To maintain the consistency with our 2D model we need to compromise on one
of the dimension. Therefore, to have a better understanding of these dimensions we need to
discuss them in detail.
Eco-industrial networking strategies:
Authors (Cohen-Rosenthal, 2003), describe standard eco-industrial networking strategies. They
describe 10 various domains for eco-industrial networking strategies. The various domains are
Materials domain, Energy domain, Transportation domain, Marketing domain, Human
resource domain, Information and communication domain, environmental health & safety
domain, production processes domain, quality of life & community connections domain and
waste management domain. As the model is directed towards making an eco-industrial network
and emphasises on diffusing sustainability in the entire supply chain rather than just a specific
focal company. The above discussed domains are no doubt the essential part of GVBEs model,
but sustainability management continuum dimension discusses the progression of stimulating
sustainability inside an organization and later to integrate over the industry. The model fits in
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value chain section of our final model and eco-industrial networking strategy dimension suits
better in focal company’s maturity diagnosis.
Key take away from the model
Useful for Value chain section.
Equal emphasize on all three pillars of sustainability.
6 levels of maturity.
3.2.6 Energy and utility management maturity model (EUMMM) (Ngai, Chau, Poon, &
To, 2013)
Energy and Utility Management Maturity Model is a five maturity levels model that helps a
company to continuously monitor and improve in managing the natural resources. The maturity
model is a process maturity model focuses on environmental pillar of the sustainability. Like
other maturity models discussed before, this model also proposes an ordered approach to the
highest level of process maturity.
Model is typically designed for manufacturing industry, which is also one of the top consumers
of natural resources. Recently, the progress in environmental technology and introduction of
comprehensive environmental management systems have highlighted the intangible benefits of
environmental management practices and their potential to drive organizational
competitiveness. In addition, according to authors, no systematic framework exists for the
design and implementation of environmental management practices that guide organizations in
deciding on the practices or systems that they should implement given their organizational
situations.
Figure 16- Energy and utility management maturity model
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Key take away from the model:
Focus on environmental issues
Manufacturing industry specific
Process maturity model, capacity maturity model
Useful for sustainability implementation and monitoring at process level.
3.2.7 Eco-design Maturity Model (EcoM2) (Pigosso & McAloone, 2016) based on (Reim,
Parida, & Örtqvist, 2015)
Before jumping into the model, we discuss the growing trend of product and services
integration. In the study (Reim, Parida, & Örtqvist, 2015), authors discuss that the phenomenon
of PSS has the potential to improve efficiency and shows positive effects on economy and
environment too. This could be understood from the following example; customers who are not
very frequent car users could choose the car sharing rather than purchasing a car. But,
simultaneously, companies find it difficult to offer such facilities for various reasons which are
generally their internal inability to design and develop business model successfully.
The presented EcoM2 model, for Product service system, is a management model tool
developed to support organizations in implementing environmental concerns into product and
PSS development. The model is based on the hypothesis that the integration of eco-design best
practices with best practices for Product-service system development help increase the
environmental performance of the PSS.
The model EcoM2 [adapted from (Reim, Parida, & Örtqvist, 2015)] has 5 maturity levels. The
maturity levels extend from a preliminary consideration of external and internal drivers,
barriers, and other factors influence the integration of environmental considerations into the
strategic decision making processes of a company’s business.
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Figure 17- Eco-design Maturity Model (EcoM2)
Authors argue that the current model for integrating environmental considerations in PSS is not
comprehensive enough. So, in their studies they identify and critically discuss 30 best practices
for PSS development to make the model more comprehensive. These 30 best practices are
classified per the EcoM2 maturity levels. For instance, 13 out of 30 best practices are to be
applied at the maturity level 3. In other words, scholars have strong focus on implementing the
practices in the actual PSS development phases and integration into existing development
processes and procedures.
Key remarks:
This model is focused on only environmental pillar of sustainability. Authors are more
focused on making internal processes environmentally viable and depict the way to
implement the issues. This model could be helpful in defining the strategic course of
sustainability implementation in product service system.
Quite useful for manufacturing industry.
Number of levels are 5 which are consistent with many other maturity models.
Useful for sustainability implementation and monitoring at process level.
3.2.8 Governance maturity grid (Allais, Roucoules, & Reyes, 2017)
The governance maturity grid supports the organizational innovation, which can be used both
as a diagnostic and improvement tool. The grid helps organizations to use the sustainability
principles in a rapid and cost effective way.
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The development of this model is based on the idea that companies have a responsibility to
acknowledge its territory within the socio-ecological system. Although authors consider five
dimensions of sustainability rather than triple bottom line. The five dimensions are human,
ecological, economic, political and territorial. The maturity grid proposed in this study is
specially designed for the use of senior management. This is a qualitative maturity grid with
two domains: means and ambitions.
1. Ambitions maturity grid (AMG)
The AMG proposed here is useful to assess and improve sustainability integration into
governance. Authors have emphasised on the sustainable governance and the competitiveness
principles.
Figure 18- Ambitions maturity grid
2. Mean maturity grid (MMG)
The means maturity grid proposed here is to help senior management integrate the intangibles
into strategic and operational governance.
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Figure 19- Mean maturity grid
The model considers the company as an entity which is a part of larger system (territory and
socio-ecological system) and with the help of extended sustainability principles guides the
organization in having a progressive change. This grid validates four success criteria: system
thinking, radicalism, long-term orientation, and 5D-sustainability. However, authors show
inability in validating the mindset change criterion. Also, another limitation authors talk about
is the non-explicit consideration of the temporal dimension which makes the model less flexible
with respect to constantly evolving contexts.
Key remarks:
Emphasis on corporate social responsibility
3.2.9 Lean and Green maturity model (Verrier, Rose, & Caillaud, 2016)
The model is proposed to facilitate the practical implementation of an effective and sustainable
Lean & Green way of thinking through detailed best-practices. For best-practices, authors did
a study of Toyota commitments notably based on on-site observations both in Onnaing, France
and Toyota-Shi, Japan. They argue that efficiency of the model in the long-term is based on a
strong bond between top-down and bottom-up management.
Study also suggested three “top” tools which, as organizational strategic drivers, may have
positive effects on all Lean and Green mudas in addition to enhancing the involvement of
employees. These tools, easily accessible to less mature companies, are Genba Walk, Lean and
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Green VSM, Key Performance Indicators, and Visual Management. They stress the fact that
efficiency of this method in the long-term is based on a strong bond between top-down and
bottom-up management.
The model is an adaptation of the CMMI.
Figure 20- Lean and Green maturity model
Key remarks:
Capability maturity model integration.
Useful for implementing sustainability (especially economic and environmental
aspects) at process level.
Manufacturing industry specific.
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4 Models Integration
Comparing these nine models based on their focus of study, number of levels and sustainability
dimensions discussed.
Figure 21- Comparison of reviewed models
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4.1 Dimensional integration
Comparing author’s Ideology and scope of study; for example, models such as Johnsen et al
approach maturity level from purchasing and supply department perspective. Perhaps the model
is not meant for an organization but can be generalized for entire supply chain. Although
models discuss sustainable maturity from different angles, but interfere at the various aspects.
Simply merging these models might lead to loss of the essence of their work. Also, not all the
models have the same dimension title to the discussed practices. Therefore, we follow the below
discussed steps to integrate these models.
1. Consider sustainability related arguments from all the models.
2. Arrange the arguments according to the points they are hinged around.
3. Specify the point which is the dimension for the final model.
4. Eliminate any repetitions.
5. Support the final argument with respect to literatures other than these selected models.
4.2 Level integration
As numbers of maturity levels are not consistent among models. Instead of overlapping the
practices as it is from various models, we respected the gradual incremental nature of maturity
levels. Therefore, we considered arguments of various models and cumulative outcome of the
arguments defined the respective maturity level practices. Number of maturity levels in most
of these models are five, so to maintain consistency with them we too decided to have 5 levels
in our final model.
Colour code: To know the practices and arguments are taken from which model, follow the
colour codes as shown here. Below is the model which incorporates all the models with the
dimensions and practices.
Reefke, Ahmed, & Sundaram, 2014 Ngai, Chau, Poon, & To, 2013
Gouvinhas, Reyes, Perry, & Filho, 2016 Verrier, Rose, & Caillaud, 2016
Gosling, Jia, Gong, & Brown, 2017 Kirkwood, Alinaghian, & Srai, 2011
Allais, Roucoules, & Reyes, 2017 Romero & Molina, 2014
Johnsen, Howard, & Miemczyk, 2014
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Figure 22- Overlapping of reviewed maturity models
49
4.3 Model integration reasoning
This model combines theoretical investigation steps with the design of frameworks. The entire
process of building this integrated model is based on inductive and deductive reasoning. The
following sections in this report explains valid theories and guidelines to use the model.
4.3.1 Posture towards sustainability issues
This is the first dimension in the final maturity model. The dimension basically talks about how
sustainability is seen inside the company and what are the organization’s approach when they
are suddenly subjected to sustainability
The dimension has been discussed by almost all the models discussed above. But two models
talk about this dimension explicitly, those are by authors (Reefke, Ahmed, & Sundaram, 2014)
and (Gouvinhas, Reyes, Perry, & Filho, 2016).
Level 1.
At level 1 according to authors (Reefke, Ahmed, & Sundaram, 2014) and (Gouvinhas, Reyes,
Perry, & Filho, 2016); companies have a reactive posture towards sustainability. Companies at
this level are certainly not worried about social environmental issues. Their usual activities are
directed more towards profitability, cost reduction and production efficiency. For such
organizations, social environmental issues are just additional burden on management and are
cost addition. This means that social environment issues are considered as being a barrier for
their businesses and not an opportunity for market growth and increasing profitability. Thus,
they generally have a reactive posture towards social environmental issues.
Hence statement “Reactive” has been used to in the final model.
Level 2.
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At this level, scholars (Gouvinhas, Reyes, Perry, & Filho, 2016) argue that companies start
considering social environmental issues. This is because of the pressure from different
stakeholders. Companies have already started some timid experience on eco-design. Despite
the pressure, these companies keep the same reactive posture towards social environmental
concerns. Authors argue that this is because of their unchanged perception towards
sustainability which is a “rare market opportunity”.
Reactive SSCM posture is mainly attained by implementation of sustainability codes of conduct
within the organization. Companies emphasise on single-loop learning process to the make the
organizational activities compliant to sustainability codes of conduct. (Gosling, Jia, Gong, &
Brown, 2017)
The statement used in the final model is “Reactive”.
Level 3.
As per authors (Gouvinhas, Reyes, Perry, & Filho, 2016), at this level, companies find
sustainable issues important at strategic level. Social environmental issues are considered as a
market opportunity. They integrate these aspects as part of their daily normal management
procedures. Companies already have taken these issues into account at production level and
product development level. Authors argue that environmental issues are now considered at
strategic level and as vision of the future. This implies that companies at level 3 have a more
an active posture compared to companies at level 2.
Level 4.
As per scholars (Gouvinhas, Reyes, Perry, & Filho, 2016) and (Reefke, Ahmed, & Sundaram,
2014); moving from level 3 to level 4, companies amend their business criteria by brining
sincerity and seriousness in considering environmental issues. Companies have social and
environmental performance measurement for selecting and helping improve their suppliers.
Also, companies at this level see social environmental issues as unique market opportunity.
Hence it can be concluded that companies of level 4 have a pro-active posture towards social
environmental issues.
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Level 5.
Practice for level 5 discussed by authors (Gouvinhas, Reyes, Perry, & Filho, 2016), reads
“Perception towards sustainability is as a unique market opportunity hence posture is proactive”
which is supported by (Reefke, Ahmed, & Sundaram, 2014)’s model too. That is, at this stage,
companies introduce fresh commercial approaches into their business strategy. Few companies
also encourage their customers to use their products/services in a specific way by educating
them about the advantages of changing the way of using them. Companies are more integrated
to their suppliers and customers with the help of, for instance, closed loop information system
and they have a futurologist vision on social environmental concerns. They emphasize on
achieving a complete sustainable business approach with future trends in mind. In other words,
these companies have an entirely pro-active posture towards social environmental issues with
visionary posture towards future.
Therefore, the statement is “Proactive and Predictive” in the final model.
Discussion:
With the increasing focus on sustainability efforts in the supply chain, this extended concept of
posture gives an organization the possibility to strategically align itself with the interests of all
stakeholders to capture a unique and competitive market position. Yet there has not been a solid
empirical work done in the strategic posture of market- oriented sustainability. Specifically, it
is unclear what role the strategic alignment plays in implementing a proactive sustainability
strategy (Li, Zhou, & Wu, 2017).
The posture a company shows depends upon the type of a company is in. For example,
according to authors (Gosling, Jia, Gong, & Brown, 2017), a basic functional products/service
and suppliers opt for reactive SCM posture while a proactive SCM posture could be more
appropriate for innovative products/service
Author (Journeault, 2016) points out the flaw in conventional sustainability assessment tools
such as scorecard are entirely attached to the economic domain to determine the posture.
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Consequently, anything that happens outside related market domain are rarely considered
making it difficult to adopt a posture towards concerned sustainability aspect.
4.3.2 Sustainability Strategy
Level 1.
At level 1, authors (Johnsen, Howard, & Miemczyk, 2014) and (Reefke, Ahmed, & Sundaram,
2014) state there is no sustainability strategy. Although (Gouvinhas, Reyes, Perry, & Filho,
2016) and (Allais, Roucoules, & Reyes, 2017) argue that companies have a strategy but is not
linked to environmental and social issues but rather have a cost reduction strategy. Adding
further to this argument, as sustainability means ‘development that meets the needs of the
present without compromising the ability of future generations to meet their own needs’ leaving
out environmental and social issues implies there is very restricted sustainability strategy.
While diagnosing the strategy level of an organization at each pillar of sustainability, missing
strategy for any pillar would imply the strategy to be at level one.
Therefore, statement “No Sustainability Strategy” has been used in the final model.
Level 2.
At level 1, according to authors (Johnsen, Howard, & Miemczyk, 2014), sustainability strategy
is “partial and emerging”. Per (Gouvinhas, Reyes, Perry, & Filho, 2016) sustainability
measures are disconnected from strategic direction. “Cost reduction strategy” per (Reefke,
Ahmed, & Sundaram, 2014). Authors (Allais, Roucoules, & Reyes, 2017) argue that companies
still take decisions based on economic aspects but sometimes influenced by social and
environmental aspects. Overall, all the models are consistent while talking about sustainability
strategy at his level as we can say that organizations have “Partial and Emerging” strategy.
Level 3.
At level 3, as per authors (Gouvinhas, Reyes, Perry, & Filho, 2016) for organizations
sustainability issues are still not prime concern. Although authors (Reefke, Ahmed, &
Sundaram, 2014) state that sustainability goal standards have been defined by the company.
Authors (Allais, Roucoules, & Reyes, 2017) add further to the argument that though companies
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identify key sustainability differentiating aspects and control them to maintain a competitive
advantage, but strategic decisions are still influenced by economic scorecard, generally
prepared for the intangible factors of differentiation. In other words, sustainability goals are
defined but not integrated with corporate strategy.
Level 4.
At level 4, authors (Johnsen, Howard, & Miemczyk, 2014) argue that companies have
integrated sustainability and PSM strategy, per authors (Gouvinhas, Reyes, Perry, & Filho,
2016) companies consider environmental concerns at operational, management and strategic
level. Per scholars (Allais, Roucoules, & Reyes, 2017), companies at this level take strategic
decisions based on all three sustainability aspects for value creation. Therefore, all intangible
(environmental and social) factors are identified and controlled. Not only this, companies
strategically think of their entire supply chain to inject these intangible concerns. To
summarize, companies at this level integrate the sustainability strategy at organization,
management and operational level and strategically think about the entire supply chain.
The statement “Integrated Sustainability strategy” has been used to define the level 4.
Level 5.
At this level, authors (Johnsen, Howard, & Miemczyk, 2014) state that companies have an
integrated Sustainability and PSM strategy like at level 4. As per (Gouvinhas, Reyes, Perry, &
Filho, 2016) companies have a futurologist vision on social environmental issues and begin to
develop strategies to achieve a complete “sustainable business approach”. (Allais, Roucoules,
& Reyes, 2017) state that at this level, which is the highest level in their maturity grid,
companies make strategies to master the value creation not just with the help of internal network
but also seek exploration of external value networks. Overall, companies have more focus on
partnerships, where stakeholders are considered as carriers of value while external stakeholders
are potential carriers of value. Therefore, at this level companies make strategies which are not
only just integrated but also cover the prospects of future opportunities.
Hence, the statement “Futurologist vision” has been used to define level 5.
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4.3.3 Sustainability implementation
Before discussing how the model would help diagnosing the maturity level of sustainability
implementation, let us discuss the complex process of implementing sustainability. It is obvious
SSCM takes more efforts than just SCM or operations management, reason being systemic
coordination of SC resources and flows to go hand in hand with triple bottom-line ideology.
Furthermore, the requirements of all SC stakeholders must be met and continuously optimized
from a short- as well as long-term perspective. Simultaneous monitoring of sustainability
implementation at all the pillars of sustainability is quite difficult. Hence, sustainability
implementation dimension has been divided into two sub-dimensions; the reason behind
dividing this dimension in two categories is that studies done on monitoring the sustainability
implementation has different nature of progression at economic-environmental pillar (generally
at process level: mainly resource based view) and social pillar (at governance level: mainly
stakeholder view). Hence, for bringing the simplicity in the model and keep it comprehensive
enough we divide the dimension in:
4.3.3.1 In governance:
Scholars (Allais, Roucoules, & Reyes, 2017) talk about sustainability implementation in
governance including stakeholders and territory of governance. Nevertheless, let us discuss
their arguments and integrate their models at sustainability implementation dimension. This
dimension category is to assess maturity from firm-level with core-corporate governance logic,
inter-organizational relationships and the cultural-cognitive system as described by authors
(Martin, Farndale, Paauwe, & Stiles, 2016).
Level 1
Referring to model (Allais, Roucoules, & Reyes, 2017); at this level companies don’t comply
with laws relating to sustainability. There is absolutely no link between the company and its
stakeholders. However, expectations of few internal stakeholders are also considered. It is to
be noted that only the board of directors are involved in making decisions, not other
stakeholders. Hence, at this level sustainability implementation is very limited with companies
showing lot of resistance towards the issues.
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Level 2
To discuss sustainability implementation among organization and stakeholders, authors (Allais,
Roucoules, & Reyes, 2017) argue that although companies start to comply with laws and
regulations but sustainability issues are managed as a risk factor case by case in case of crisis.
Stakeholder expectations are considered and they are consulted but are not allowed to
participate in decision making. Companies have very limited knowledge about some of their
local resources and have a partial integration in local value creation.
As a conclusion, the organization shows Conformist nature towards sustainability
implementation.
Level 3
Authors (Allais, Roucoules, & Reyes, 2017), state that at this level companies try to do cost
reductions by considering sustainability issues; use social aspects to enhance economic
performance etc. Stakeholders are still not a part of decision making process but they are
consulted and their expectations are considered. Companies have better knowledge of their
resources. There are positive externalities for the territory.
Overall it can be concluded that at process level sustainability issues are better defined and
sustainability governance are more opportunists towards sustainability.
Level 4
Authors (Allais, Roucoules, & Reyes, 2017), state that at this level, company incorporates
sustainability aspects as competitive advantage. Stakeholders are consulted and involved in
decision making process concerning them. Companies prioritize local resources and they are
considered beneficial for the local territory. There is a systematic integration of sustainable
working conditions within the business and relationship with primary stakeholders.
Level 5
Per authors (Allais, Roucoules, & Reyes, 2017), at this level the company takes care of
ecological limitations, emphasizes on creating value for the primary and secondary
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stakeholders needs and expectations. The company consults its stakeholders who are affected
by a decision, are allowed to take part in decision making. There is a complete integration for
value creation in corporate governance with the local actors. Company has a mutual sustainable
benefit from the relationship with them. Companies are innovative in creating values
considering stakeholders’ perspective.
Discussion:
The dimension takes the perspective of various major and minor stakeholders; merging
business ethics in sustainability literature. This dimension fills the missing gap of corporate
social responsibility.
They (Martin, Farndale, Paauwe, & Stiles, 2016) conclude that sustainability indicators only
assist the organization in a learning-by-doing process. Therefore, despite these five discrete
sustainability implementation maturity levels, implementation in governance in itself is not a
discrete process, but a gradual transition. The argument supported by authors (Pupphachai &
Zuidema, 2017) .
4.3.3.2 At process level
Sustainability implementation has been discussed from Purchasing and supply management
perspective by authors (Johnsen, Howard, & Miemczyk, 2014) while (Ngai, Chau, Poon, & To,
2013); is Energy and Utility Management Maturity model. These two models talk about
sustainability implementation from different perspective and at different parts of supply chain.
Though upon analysing both the models and their statements, it can be concluded that both give
a specific pathway for organizations to implement sustainability where these pathways are quite
consistent with each other irrespective of their area of application. It can be argued that Ngai et
al model is just an Energy and Utility Management Model for sustainable Manufacturing hence
the current model cannot be generalized over the entire chain and at various pillar of supply
chain. But on the other hand, it can be used to develop more sophisticated pathway to maturity.
These two models necessarily talk about sustainability implementation at functional level.
Although they are several other models, which follow the same steps as of proposed by Ngai
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et al. For example, model proposed by scholars (Jovanović & Filipović, 2016), (Verrier, Rose,
& Caillaud, 2016); their arguments are also considered.
This part of the model can be categorized as capacity maturity model as the it talks about the
enhancing internal capabilities for developing products and services.
Level 1
Practices for level 1 stated by Johnsen et al, read “none or limited”. According to authors
(Verrier, Rose, & Caillaud, 2016); at this level companies don’t comply with laws relating to
sustainability. This implies that organizations do not consider any energy and utility resource
management practices. Ngai et al state the process is “ad hoc or chaotic”. At this level
companies don’t have any procedures or policies which are defined or performed. Their prime
focus is on producing products that could function without caring for the budget. The
environmental performance of these organizations depends on the competence and self-
discipline of organizational members, not on the application of environmental practices.
Overall, all three considered models from various perspectives suggest that organizations have
no implementation of sustainability.
Hence, the statement used in the final model is “None or Limited”.
Level 2
At level 2, Johnsen et al state organizations take “some initiatives to avoid negative exposure”.
While Ngai et al argue that at the second maturity level companies’ processes are managed, but
results of these management practices are not frequently visible to management. Authors
(Verrier, Rose, & Caillaud, 2016) argue that basic green and lean action are not conducted very
often. as company is still not much aware of non-value added activities present in production
processes.
Hence companies at this level comply with regulations and environmental or social issues are
considered but they are just managed and when necessary, are taken seriously.
Level 3
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At level 3, we skip the statement from Johnsen et al for this level to maintain the consistency
with the number of levels of final model. Ngai et al describe company tries to make the process
better “defined and improved overtime”. (Verrier, Rose, & Caillaud, 2016) argue that
companies at this level take green and lean action on a regular basis and they know
environmental practices can add value to the company. Environmental indicators and process
specificities indicators (raw materials, machines consumables…) are declined at operational
levels to become process drivers. Overall, processes are better defined, measured and monitored
visually.
Hence at 3rd level of maturity in terms of sustainability implementation is “Defined”
Level 4
At level 4, (Johnsen, Howard, & Miemczyk, 2014) state from PSM standpoint that the company
does “Ethical supply chain evaluation e.g. CO2 measurement & audits but also supplier
development. NGO involvement. Extends to indirect suppliers.” (Verrier, Rose, & Caillaud,
2016) state green and lean projects are considered of prime importance and these projects are
conducted quite regularly. There is a constant improvement of working and safety conditions.
Employees too play an important role in process improvement. According to them the processes
are quantitatively managed. As per (Kirkwood, Alinaghian, & Srai, 2011), company shows full
transparency in using the resources, and company assesses the renewable sources locally.
Therefore, 4th level of maturity in terms of sustainability implementation at process level is
“Quantitively managed”
Level 5
At level 5, as per (Verrier, Rose, & Caillaud, 2016), the company is mature enough to
understand the direct and indirect correlations of its actions, and emphasizes on channelling the
positive effects of the actions at the process level. Company is very proactive and takes
anticipative actions. (Kirkwood, Alinaghian, & Srai, 2011) add further to the argument that
companies in the network (including focal company) create integrated renewable strategy. Per
authors (Ngai, Chau, Poon, & To, 2013); there is a continuous improvement in process
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performances via incremental and innovative technological enhancements. The effects of
process improvements are evaluated with respect to quantitative process- improvements.
Therefore, at this level processes are optimized.
Discussion:
Theoretically, this dimension is the application of CMMI to manage processes. Such integration
confirms the credibility of this maturity model in diagnosing the relationship between capability
and maturity level. The model features a pathway that any kind of company can follow to
manage their performances at both the organizational and operational level.
The SSCM decision making and decision support tool (SMART) developed by (Reefke,
Ahmed, & Sundaram, 2014) helps an organization to systematically approach the decision
making while implementing and monitoring sustainability. According to ISO (2008) guidance
on the process approach for management systems “A major advantage of the process approach
… is in the management and control of the interactions between these processes”. (Jovanović
& Filipović, 2016) provide a way to use Plan Do Act Check cycle for implementing
sustainability at process level.
4.3.4 Sustainability leadership
This dimension has been discussed in Reefke et al model but the maturity levels haven’t been
specified; other than level 6 where the statement is Full SC collaboration embracing leadership.
In order to define how leadership changes across all these levels, journal article by authors
(Gosling, Jia, Gong, & Brown, 2017) has been referred. The paper discusses dependence of
sustainable supply chain strategy upon the leadership. According to the scholars, supply chain
leadership influences the relationship between Sustainable Supply Chain Management
governance and supply chain learning such that the more a leading organization adopts a
transformational leadership style, the stronger the relationship between collaboration
governance and supply chain learning gets.
“The supply chain leader is characterized as the organization that demonstrates higher levels
of the four elements of leadership in relation to other member organizations (i.e. the
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organization capable of greater influence, readily identifiable by its behaviours, creator of the
vision, and that establishes a relationship with other supply chain organizations.” (Gosling,
Jia, Gong, & Brown, 2017)
In simple words, Sustainable Supply Chain Leadership is a way of making entire supply chain
involved. Considering social and environmental responsibilities, companies must note that in
learning phase they need to be flexible in choosing their leadership style. For example,
companies picking a reactive Sustainable Supply Chain strategy may depend on transactional
leadership to push suppliers to reach defined standards; companies picking a contributive
SSCM strategy should use both types of leadership to develop suppliers and to better implement
sustainability initiatives; finally for companies to adopt a proactive SSCM strategy, they should
create a learning environment and turn to transformational leadership to encourage partners to
be more innovative.
Let us discuss what maturity steps an organization follows in terms of becoming a sustainability
leader.
Figure 23- A conceptual model on SSCM strategy typology
Level 1.
Per (Gosling, Jia, Gong, & Brown, 2017); transactional leaders who guide their followers
toward established goals by clarifying role and task requirements. As at maturity level 1,
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companies don’t show much care about environmental and social issues, implies “No
sustainability leadership”.
Level 2.
A company which has reactive posture towards sustainability issues need to have its supply
chain counterparts to meet the required standards. Hence, a company shows transactional
leadership to push suppliers to reach defined standards. (Gosling, Jia, Gong, & Brown, 2017).
Hence, at level 2, statement used in the final model is “Transactional sustainable supply
chain leadership”.
Level 3.
Defining transformational leaders; they inspire followers to transcend their self-interests for the
good of the organization and can have an extraordinary effect on their followers. They pay
attention to the concerns and needs of individual followers and they excite and inspire followers
to put out extra effort to achieve group goals. Transactional and transformational leadership
complete each other. Although a transformational leader can improve his transactional
leadership, the reverse is not true.
At this level companies picking a contributive SSCM strategy need to use both the styles of
leadership to develop its supply chain partners and to better implement sustainability initiatives,
making their leadership hybrid of transformational and transactional.
Level 4
At this level, companies adopt a proactive SSCM posture, they need to create a learning
environment and choose to have a transformational leadership style to motivate partners to be
more innovative. Authors (Rita, Lozano, Ceulemans, & Ramos, 2017) argue in his study that
transformational leadership is vital in evolving processes of change. Therefore, if an
organization is having a pro-active posture towards sustainability transformational leadership
describes its maturity in dealing with dynamics of changes. Which implies a 4th level matured
organization need to show “Transformational sustainable supply chain leadership style”.
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Level 5
At this level, companies need to be not just proactive but also predictive. Therefore, a company
must have “Transformational sustainable supply chain leadership style” as at level 4.
Discussion:
‘Supply chain leadership’ is described as potentially significant, but is still to come up as a
specific field of scholarly research. This is also indicated by the small number of publications
and the time in which the papers were published. (Harland et al. 2007) agree that there is a
shortage of journals and empirical studies dedicated to leadership in supply chain domains. As
a deduction, it is not easy to diagnose SSCM leadership.
Although there are few ways proposed in literature to diagnose the leadership style of
organization.
There are several approaches and standard questionnaire to determine an individual’s
leadership style. (Vargas, 2015), (Avolio, Bass, & Jung, 1999). Such as to distinguish
transformational and leadership Multifactor Leadership Questionnaire (Avolio, Bass, & Jung,
1999) can be used. Furthermore, few hypotheses could be considered based on suggestions
from literatures which work as indicators.
Though to determine what leadership style an organization display; the study done in the paper
(Bajcar, Babiak, & Nosal, 2015) is found quite useful. The study refers to the typical elements
of leadership styles and examines the aspects of strategic thinking in predicting leadership
styles. Study shows that thinking–oriented strategies, expressed by convergent processes in the
strategic thinking directly predicted task–oriented leadership styles. Behaviour-oriented
strategies, expressed by divergent processes directly determined people–oriented leadership
styles.
In this study Leadership style is segregated in 17 correlated variables as Structuring Style,
Controlling Style, Participative style, Machiavellian style, Rewarding style, Distant Style,
Activity, Flexibility, Creativity, Persistence, Risk preferences, Self-efficacy, Analysis,
Consequences prediction, Globality, Long term Planning, Strategic evaluation.
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This study demonstrates the vital role of cognitive, motivational and behavioural processes in
leadership, especially in task recognition and participation of followers. Shown results illustrate
what is typical behaviour of organizational leaders in the context of strategic thinking.
4.3.4.1 Practices for leadership improvement:
(Kurucz, Colbert, Luedeke-Freund, Upward, & Willard, 2017) suggest a model of relational
leadership for strategic sustainability. The model provides a set of practices to be applied at a
particular level of five level Framework for Strategic Sustainable Development (FSSD). Refer
FSSD in annexure adopted from the source (Broman & Robèrt, 2015).
At Level 1 of FSSD; relational leaders for sustainability must surface underlying reality
assumptions about the physical and social environment to encourage sincerity and
meaningfulness in the system that takes the perspective of global socio-ecological system
within which individuals and organizations operate. (Integrative thinking).
At level 2 of FSSD, leaders must surface underlying values assumptions of various stakeholder
groups. They need to acknowledge diversity and differences to allow for collaboration in
developing principles. (Coproduction of principles).
At level 3 of FSSD, leaders involve others in double and triple loop learning to generate
transformative ideas that integrate a variety of viewpoints. Promoting dialogues (voicing,
listening, respecting, suspending) help identifying strategic opportunities and acknowledging.
(Dialogic strategic visioning)
At level 4 of FSSD, leaders involve others in pragmatic experimentation to recognize and take
synergistic actions. At this level, leaders understand actions and strategies in the context of
system relationships. (System building focus)
At level 5 of FSSD, in order to support efficiency and effectiveness of the actions, leaders need
to involve others in single and double loop learning to ensure that tools are developed to
strengthen relationships across levels of the FSSD. (System quality focus).
4.3.5 Sustainability reporting and performance measurement
Level 1
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At level 1, authors (Johnsen, Howard, & Miemczyk, 2014) describe that organization has no
performance measurements or reporting in place. Auhtors (Kirkwood, Alinaghian, & Srai,
2011) support the argument with the statement “No sustainability element in network
performance”, authors (Reefke, Ahmed, & Sundaram, 2014) and (Gouvinhas, Reyes, Perry, &
Filho, 2016) also have the same findings.
Hence, the statement “None” has been used to define the practices for level 1.
Level 2.
At this level, authors (Johnsen, Howard, & Miemczyk, 2014) state that there is just an ad-hoc
mention of sustainability policy or code of conduct. Authors (Reefke, Ahmed, & Sundaram,
2014) state that performance measurement is at basic level. Adding (Kirkwood, Alinaghian, &
Srai, 2011)’s argument, business units implement sustainability scorecards but with iterative
improvements. But these scorecards do not have any links outside the concerned BU.
Therefore, at this level, companies have just an ad-hoc performance measurement system.
Level 3.
At level 3, according to authors (Johnsen, Howard, & Miemczyk, 2014), organizations have
some disclosures including online reports, still elements of green washing. Authors (Kirkwood,
Alinaghian, & Srai, 2011) state that all Business Units have their own sustainability scorecards
aligned with strategic vision and leadership values but there are no inputs from customers or
suppliers. Therefore, at this level companies have an internal performance measurement
system.
Level 4.
At this level, authors (Reefke, Ahmed, & Sundaram, 2014) state that companies have put a
performance measurement system in place. According to authors (Kirkwood, Alinaghian, &
Srai, 2011), there is a cross-BU sustainability scorecard in place. This scorecard also provides
feedback loop to its suppliers and customers. In conclusion, at this level companies use a
Partially integrated performance measurement system which integrates various business
units and takes helps from its suppliers.
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Level 5.
At level 5, according to authors (Johnsen, Howard, & Miemczyk, 2014) an organization does
honest self-assessment. Authors (Gouvinhas, Reyes, Perry, & Filho, 2016) state that companies
reach out to its customer and involve them in dealing with sustainability issues. This is helped
by a complete loop of information exchange among customers, company and supply chain
partners. Authors (Kirkwood, Alinaghian, & Srai, 2011) argue that there is a fully integrated
network governance with sustainability continuous improvement process scoreboards built into
contracts. That implies, at highest matured level, companies have fully integrated
performance measurement.
Discussion:
Study done by (Rita, Lozano, Ceulemans, & Ramos, 2017) shows some interesting results.
Authors in their studies conclude that sustainability reporting is mainly driven by internal
motivations. Employees are the most involved in process of sustainability reporting. But simply
preparing sustainability report is not enough if they are not doing it periodically as a periodic
reporting makes it possible to monitor the sustainability performance.
According to (Chen, Yu, & Chang, 2006) leadership plays an important role as managers and
leaders need to initiate the sustainability reporting process. Knowing that there are challenges
that an organization faces to prepare a sustainability report, compromising the sustainability
reporting process could be one. For example, according to authors (Fonseca, McAllister, &
Fitzpatrick, 2012) large mining corporations are going extra miles to assess and report
contributions to sustainable development. Such practices, surely, help internalize the vision of
sustainability in corporate ethics. The results in the study by (Hahn & Kühnen, 2013), show the
quality of sustainability reporting has been largely neglected.
Scholars (Schoggl, Fritz, & J. Baumgartner, 2016) list various sustainability assessment tools
such as Fuzzy Logic, Life Cycle Assessment, Analytical Network process, Supply chain-wide
sustainability, Rough Set Model, Balanced Scorecard, Multi-criteria analysis, conceptual
SSCM papers, Empirical/case study SSCM papers.
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Summing up, sustainability reporting and performance measurement is a sophisticated issue
which must have meaningful conclusions. There are going to be further researches at the quality
of sustainability reporting including stakeholder perceptions which would help change the
dominance of content analysis of published documents and help organizations have better
exploratory and confirmatory methodological approaches. Despite all that, it is the
responsibilities of leaders to channel the sustainable reporting and performance measurement
system to monitor sustainability.
In recent year, there has been a big rise in number of researches on environmental and
sustainability reporting initiatives. So, it has comparatively become easier over a period for
organizations to prepare the report following the standards such as GRI.
Value chain:
Maturity is determined from an organization’s standpoint discussing how the organization is
engaged in making the business such that triple bottom line could sustain its existence. Now
this part of the model is to determine the maturity level from the point of view of entire supply
chain i.e. it doesn’t diagnose the organization but the other partners.
4.3.6 Partners’ involvement
The dimension deals with involvement of all the actors of chain in dealing with sustainable
issues. The maturity levels in this part of the model set the progression of sustainability projects
move from outside the focal company to inside the organization and later involving its partners
to set a highly matured collaborative sustainable supply chain.
Level 1
At level 1, supply chain is not bothered about environmental and social issues, hence there are
no sustainability projects. Supply chain partners are unaware of sustainability issues.
(Gouvinhas, Reyes, Perry, & Filho, 2016). Per authors (Romero & Molina, 2014)’s GVBE
model, enterprises at the lowest maturity level deal with sustainability in an indirect way. These
enterprises follow rules but don’t try to comply with third party standards. Their way of dealing
with environmental social issues is very conventional.
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Hence, there is none or very limited involvement of partners.
Level 2
At level 2, per authors (Gouvinhas, Reyes, Perry, & Filho, 2016), a company starts considering
the environmental and social issues. Although they don’t do these projects in house, rather
outsource them. Which implies these issues are still not considered as a part of their core-
competence. The lack of such in-house activities also limits the awareness spill-over over its
partners. Per authors (Husted & Milton de Sousa-Filho, 2015), in outsourced sustainability,
organizations do not have duty of executing the sustainability projects but handover this activity
to other third parties. Companies lose managerial control of the project. This type of governance
makes sense for plans that are not centrally related to an organization's core competences.
According to authors (Romero & Molina, 2014)’s GVBE model enterprises still show a
voluntary nature towards sustainability but comply with a set of minimum requirements. These
requirements or standards are generally set by shareholders. At this level, enterprises try to
enhance their production processes and logistics methods. For instance, enterprises select only
certified material suppliers.
As a conclusion, there is a passive involvement of partners in dealing with sustainability issues.
Level 3
At level 3, company brings the sustainability activities in-house, bringing more control over
the sustainability considerations. In the case of product oriented company; Eco-design is
incorporated in company’s production. This leads to “concurrent engineering” approach.
(Gouvinhas, Reyes, Perry, & Filho, 2016). According to scholars (Husted & Milton de Sousa-
Filho, 2015) having the activities in-house implies sustainability projects are managed
hierarchically within the organization. There is a high level of organizational control over such
plans. Examples include pollution prevention, new environmental technologies, and projects
for employee safety. Such projects help reduce negative environmental and social impacts (Lee
and Min, 2015). At the same time, stakeholders are not actively involved in the process leaving
still a room of improvement. (Gouvinhas, Reyes, Perry, & Filho, 2016).
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However, Environmental GVBEs target to comply with the most challenging environmental
manufacturing and logistics regulations and standards by including variety of environmental
factors into their products manufacturing and logistics operations. Enterprises at this level
include an environmental performance measurement system, audits, and other controlling
system to deal with environmental issues. At this level, enterprises have a clearly defined
criterion for environmental responsibility. They go deep-in the relation of environmental
impacts and economic value created and shared with society. (Romero & Molina, 2014)
Therefore, there is an active involvement of partners.
Level 4
At level 4, the suppliers are encouraged to include social environmental issues in their agenda.
This implies social environmental performances are considered as one of the main criteria for
selecting suppliers. This leads to “domino effect” on entire supply chain which means more
and more companies (suppliers) start taking social environmental concerns into account while
developing their services/products. (Gouvinhas, Reyes, Perry, & Filho, 2016). According to
authors (Johnsen, Howard, & Miemczyk, 2014), there are high proportions of partnerships and
a better supplier relationship management. Per authors (Husted & Milton de Sousa-Filho,
2015), when two or more firms decide to collaborate on social and environmental issues in their
common supply chain, noteworthy environmental and social benefits result.
At this level, organizations have an industrial development model for the contribution to
circular economy, also called material close economy or life-cycle economy. industrial
symbiosis GVBE illustrates the paradigm shift from a traditional industrial model to a new
integrated and cyclic industrial eco-system. (Romero & Molina, 2014).
Therefore, there is a collaboration focused involvement of partners.
Level 5
At level 5, Companies not only involved their suppliers to consider social environmental
concerns on their business decisions but also “educate” their customers too to consider social
environmental issues while consuming product or service. Companies collect the information
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from customers and pass on to the entire supply chain forming a complete loop of information
exchange among customers, companies and supply chain. (Gouvinhas, Reyes, Perry, & Filho,
2016)
This is the highest level suggested in the literature where sustainable industrial development
model emphases on “eco-innovations”. That means all innovation activities at products,
services, processes, systems and business models aimed at improving in a holistic way.
Environmental protection, economic growth and social progress by means of collaboration.
This virtual group creates and promotes new systems of “radical innovation based sustainable
development”, instead of traditional “incremental innovations” model as a continuous
improvement process for achieving sustainable development. (Romero & Molina, 2014).
Therefore, there is a collaboration and innovation focused involvement of partners.
Discussion:
This dimension guides the partners to figure out the requirement of the entire chain to have an
efficient ways of information sharing, collaboration, innovation.
Contrary to much study related to upstream supply chains or focal organizations, the model
suggests companies to involve customers and consumers in sustainable supply chain efforts.
This is important because sustainability initiatives eventually depend on customer sustenance.
Also, related to downstream supply chains, increased focus on SSCM-related communications
could improve mature companies’ understanding of their corporate priorities and strategies for
supply chain information transparency and disclosure.
Beyond supply chain actors, sustainability issues often require companies to interact and
collaborate to form a network with a range of actors, including NGOs, certification schemes
and monitoring systems, competitors, trade unions, industry and trade associations, multi-
stakeholders and other network partners. Taking examples from Nike and Levi-Strauss’
interactions with competitors and stakeholders, which enabled the organizations to get
information.
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Noting the fact that sustainability awareness in industrial organizations are ambiguous.
Diagnosing sustainability awareness concerning a value chain is based on the stakeholder types
and organizations. The various stakeholders could be: academic, government, public, and
industry. Noting that each stakeholder has its unique infrastructure, thus cumulative
sustainability awareness is aggregated to estimate the final degree of sustainability awareness.
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5 Final model
Figure 24- Integrated Sustainable Organization and Supply Chain Maturity Model
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5.1 A short guideline to use the model
The model is based on logical integration of existing sustainable supply chain maturity models
with different ideology of authors. The model provides a comprehensive way to deal with
sustainability issues. However, the basic principle of the model is to use triple bottom line
approach. Hence, for using the model one must divide the considered dimension according
three pillars of sustainability and diagnose separately for each pillar.
Figure 25- Guideline to use the model
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5.2 Completeness of model
In order to understand requirements of a tool to diagnose sustainability across entire supply
chain, below discussed points are adopted from the research work done by scholars (Schoggl,
Fritz, & J. Baumgartner, 2016).
The key requirements are:
1. Accessibility for companies inexperienced in sustainability assessment
SMEs and companies located in non-industrialized countries often have inadequate information
and/or resources for conducting a thorough sustainability maturity assessment (e.g., assessing
energy consumption or calculating GHG-emissions). The model should allow such companies
to provide information on a lower level of detail without much additional work.
2. Applicability with respect to different types of sustainability data
The model should allow for assessment of a diverse range of environmental factors (e.g., energy
consumption, waste management), of social factors (e.g., occupational health and safety,
gender awareness) and of economic factors (e.g., Operational growth, new market
opportunities, industry competition). It should also allow for the aggregation of different types
of data along the supply chain. There must be no restriction on type of data to be used to use
the model, e.g., ratios, binary, total sums, reports, statements. Users are also suggested to even
consider non-mandatory sustainability issues.
Although the challenge remains in the aggregating this variety of data.
3. Applicability in supply chain-wide assessment
The model should give a window to apply not just to have bilateral consideration of focal
companies and their direct suppliers, but also to consider customers, customers’ customers,
suppliers’ suppliers.
4. Adaptability to supply chain dynamics
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Sustainability topics is subject to change over time (owing largely to changes in regulation or
in the level of public awareness) to the dynamic nature of supply chains. Because the
importance of, supply chain sustainability model must evolve over time as well.
5. Adaptability to regional and cultural characteristics
The model can be used to assess sustainability issues across different social, regional and
cultural contexts.
6. Comparability of results
The model should allow for cross-company benchmarking. With the help of such models,
assessment can be done on a diverse number of guidelines with standardized focus for
economic, environmental and social aspects. It gives a structured and meaningful way to
compare results at organizational level, at an entire supply chain. Hence, the point of model is
to promote better standardization and thus support comparability.
7. Robustness in the face of insufficient information
Mostly the lack of information is the result of the need to maintain confidentiality and
competitive advantage and to minimize the workload and/or the presence of insufficient trust.
Because these problems cannot be brushed aside, the integrated maturity model respect these
terms. Hence, to be realistic, the model should work in the situation of insufficient information
exchange and not just in the presence of relatively complete information.
5.3 Comparison with GRI standards
The current framework has been constructed from a review of various existing model of
research. Before pilot testing in the field, a review is undertaken against the dimensions used
with respect to GRI reporting elements. Annexure 1 provides a summary of the analysis against
GRI elements which delivers both confidence in coverage and potential linkages between the
two approaches.
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By tabulating the dimensions of the ISSCMM, it is possible to cross reference the GRI elements
against the ISSCMM. The analysis discloses that every element of the GRI scope is covered by
one or more element of the ISSCMM.
Almost every research paper concerned with SSCM maturity enhancement contributes to in
defining best practices to approach a specific sustainability maturity improvement. Thus, there
is a pool of practices available in literature. To make the model comprehensive we use GRI as
a comprehensive collection of such practices. Authors (Brown, de Jong, & Levy, 2009),
examined GRI's organizational field and concluded that GRI measures a successful
institutionalization project.
Although the guidelines provided in GRI disclosures concern sustainability reporting elements
that could be proxy for figuring out the necessary practices required to have a systematic
improvement in maturity. (see annexure 1). While such practices are the ones which help an
organization have positives or negative impacts on environment, society or economy.
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6 Model Validation: A case study on micro-finance chain
Methodology used in carrying out the model validation is based on “Building Theories From
Case Study Research” (Eisenhardt, 1989)
6.1 Research Questions:
1. Does the model considers the specificities of developing countries?
2. Is the model unclear or too precise to be used?
3. Can the model be utilized at range of organizations; from lacklustre to well-managed?
4. Is the model good at adapting and arranging variety of information? Does it show any
restriction to any kind of information?
5. Is there a method to use the model separately for each pillars of sustainability to have
a detailed maturity diagnosis?
6. How the model, derived mostly from product based maturity models, fares with
service based companies?
The microfinance chain with Prayas as focal company comprises of big banks and financial
institutes, microfinance institute, Micro-enterprises.
6.2 Case selection:
Initially, it was decided to test the model on a product based company along with a service
based company. The primary reason for choosing a product based company was to test the
sustainability in a complex supply chain. An automotive component manufacturing company
was contacted but no response was received from their side.
A microfinance institute (Prayas, Ahmedabad, India) was approached; with the help of Social
Innovation Teams (Arianna Molino: [email protected]) as a part of their social
mission. Case sites were visited from 5 November to 13 November, 2016. The original mission
was to do an enterprise evaluation of the Micro-financed enterprises (Prayas’s Clients).
However, it helped us gather some information for the current thesis work too.
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Reasons behind selecting microfinance chain:
As argued by authors (Fritz, Schoggl, & Baumgartner, 2017),
most of the existing sustainability frameworks and tools do not
consider the specificities of developing countries. Testing the
model on Prayas and its clients would check the adaptability of this model.
SMEs in India and other developing countries face problems due to lack of resources
and direction. At this level, these companies do not strategically think about
sustainability and barely are aware of sustainability matters. This would test the
robustness of model in case of lack of information and would also provide a pathway
for the improvement of SMEs.
6.3 Information collection:
For the sake of this work, three sample companies of this microfinance chain are considered,
which are Prayas (focal company), A sample Microenterprise (Customers) and Yes Bank
(Supplier).
The information gathered:
- From Focal comapny
1. Case site visits:
2. In person interview and discussion with Prayas’s Employees.
3. Confidential and non-confidential archives from Prayas.
4. Skype Interview with Director Bhadresh Rawal.
5. Questionnaire
- From microenterprise:
Few sample microenterprises were visited. We needed to rely on observation, formal and
impromptu interview questions for information collection from customers because of lack of
documentation.
1. Case site visits
2. In person interview with Microenterprises owners and employees. (I was accompanied
by one of the trustees: Dr. Shilpa Pandya)
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- From Yes bank: Online reports retrieved from Yes Bank website4
6.3.1 Case site visits:
During the visit, I was at head office located in Adalaj, District- Gandhinagar.
To collect the sustainability related data, the main focus was on following factors within the
organization:
Processes and their optimization, assets observation, work environment, mode of transportation
used to carry out necessary operations, locations of branch offices, level of involvement of
trustees and other board members and stakeholders,
6.3.1.1 Observation:
6.3.1.1.1 Assets observation:
Prayas offices are equipped with basic facilities and contemporary computer technologies;
providing a good and peaceful working environment for its workers.
6.3.1.1.2 Processes observation:
o Loan appraisal process:
Prayas has decentralised loan appraisal and sanctioning system. Local branch offices located
around Ahmedabad and Gandhi Nagar cover three main regions: Chandkheda-Adalaj, Mansa,
Dehgam. During the visit the loan disbursement process was observed at Chandkheda-Adalaj
branch. The loan was disbursed in cash to all the members of JLG borrower group in the branch
office in the presence of branch manager with formal confirmation on duly signed documents.
All the information regarding loan disbursement was updated on BIJLI MIS information system.
o Loan collection process
To observe the loan collection process, I accompanied loan collector during the collection in
Dehgam. The mode of transport is a two-wheeler motor bike.
4 https://www.yesbank.in/pdf/ybl_corporate_social_responsibility_policy
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It was a well-planned process in which locations and timing of JLG groups were pre-defined.
The route was optimized such that the distance covered was minimum. Loan collection was
smooth and on time; other than few late arrivals of clients.
o Loan collector’s behaviour:
The conversation between him and clients was friendly. Clients were treated with respect and
humility. Clients’ small issues were also noted.
6.3.2 Formal interview and discussion with employees:
o Client selection process:
At the head office, I got an opportunity to have an interview with Area Manager Mr. Harishbhai
Tiwari. With the help of a classified document, he explained the client selection process.
According to him, after targeting a potential area, the operations team visits the area, makes the
locals aware of microfinance and products/services provided by Prayas. Thereafter, interested
locals are asked to form a joint group. After group formation, operations team visit the potential
clients’ houses to inspect their financial status. Their financial status is one of the criteria apart
from age.
He further added that if a client does not meet the minimum financial requirements stands void
for next year appraisal. However, Prayas provides grace period for the clients’ who aren’t able
to meet the appraisal requirements at time.
o Information sharing
Chief Finance officer, Mr. Chirag Patel gave an insight about the key aspects while managing
the finances from borrowers. The information sharing system MIS and its effects on the process
efficiencies were explained.
At MicroSMEs:
The micro-enterprises visited to observe their production processes:
DANTANI MAYABEN RAVIBHAI: Rakhi
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.JAYABEN NANKARAM CHALBANI: Decoration ball
THAKOR ASHABEN JIVRAJBHAI: Decoration strip, Artificial flower balls
PANCHAL SHOBHNABEN SANJAYBHAI: Handicrafts
All these organizations showed very poor management skills, poor growth ability conditions,
very low employee productivity and lacklustre organization policies.
o Trustee visit:
During one of my visit to DANTANI MAYABEN RAVIBHAI MSME, I was accompanied by
Dr. Shilpa Pandya. These enterprises showed lack of infrastructure for an enterprise, as their
houses are the working place with poor management of resources, inefficient processes.
Issues with SMEs
These SMEs have issue of supply cut down during festival season; especially Diwali season in
October-November month. The operations remain shut for at least 15-20 days in this period,
the prime reason is suppliers’ strategic reasons of not supplying the material. Though we cannot
deny the fact that these MicroSMEs spend this time idle, upon asking them about whether they
would work during this season the answer was yes!
These MicroSMEs are locked in to their current buyers who are also their suppliers. Not
because they are the only suppliers but because they have been providing the materials to these
SMEs for quite a long time and have set up a strong relationship. Therefore, these MicroSMEs
are resistant to change the current buyers/suppliers.
6.3.3 Skype discussion with Director Bhadresh Rawal:
The discussion was regarding the efforts Prayas is putting in lifting the microenterprises apart
from providing the microcredits. He discussed Prayas is putting efforts in finding the right
market for these SMEs so that they can sell their products directly and get a better profit.
Because they earn 5 paisa per Rakhi which has a final price of 20-40 Rs in final market. Hence
they get 200 times less than what they can earn.
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6.3.4 Archive
MFI Grading Report- March 2016 (CARE-ratings, 2015-16)
A report on “Community based rehabilitation and mainstreaming of the most vulnerable
with a social focus on people with disability in the disaster-prone areas of Kutch”-
(Community based rehabilitation-Project-Report)
Annual reports (Prayas-Annual-Report, Annual report, 2015-16) (Prayas-Annual-
Report, Annual Report, 2014-15) (Prayas-Annual-Report, Annual report, 2013-14)
Code of Conduct Assessment Report (iMaCS, 2014)
6.3.5 Questionnaire:
Respondent: Bhadresh Rawal: Director, Prayas
Question 1: It is very well known that motive behind starting Prayas was to help sustainable
development. But it seems that more focus is on societal issues compared to environmental. Do
you consider environmental projects, like natural resource management mentioned on website?
Kindly provide a short explanation.
Answer: We have started organisation in Year 1997 with Natural Resource management
program and continuing till year 2005-06. After that, we have not received the fund so couldn’t
continue NRM program.
Question 2: Have you ever found Prayas under any kind of pressure from society or government
or trustees that made Prayas do some other projects or change ongoing ones. Can you give some
examples?
Answer:- Organisation was mainly dependent on Government fund during 1997 to 2001. About
in Year 2000, Government has changed the policy and withdrawal the project from NGOs
(Non- Government organisation). Due to that, we were in pressure to get fund from other
sources.
Question 3: Do you have projects or initiatives which are not focused on today’s issues but on
future ones? A short explanation!
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Answer: No. we are focusing on current issues.
Question 4: Do you have a well-defined and clearly stated strategy for sustainability?
Answer: Yes. It is inbuilt strategy of each program. See reports.
Question 5: Has any analysis been done on Prayas’s economic, social and environmental
impacts? What are your general thoughts about it?
Answer: No formal analysis done. We have some case studies where created economic impact
on family of community member. We have done watershed Development project in MP state
and water harvesting project in Gujarat which created environmental impact. We are doing
microfinance program with women members to empower them.
Question 6: What reporting standards are followed, (for instance GRI)?
Answer: We report to SaDhan Network.
Question 7: What are recent trends (such as macroeconomic or political) affecting the
organization and influencing its sustainability priorities?
Answer: Since Nov-16, facing overdue issues due to Demonetization of Rs.500 & 1000
currency note. Slowly, we overcome the issue.
Question 8: What are key events, achievements, and failures during the reporting period?
Answer:- Please download Annual report from the Prayas website.
Question 9: What are organization’s values, principles, standards and norms of behaviour?
Answer: attached vision, Mission and code of Conduct
Question 10: As it can be seen from the financial consolidated audit report published online
that Prayas gets secured and unsecured loans from financial institutions and banks e.g. HDFC,
SBI etc. How much rate of return they assume? (rough figures are enough). Is it generally lower
than other loans? How about unsecured loans?
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Answer: Almost, all loan cost, about 13 to 16% reducing Annual Interest. Unsecure loan cost
is Rs. 10-12 %
Question 11: Do they give any rewards for some targets achieved by Prayas set by these
institutions?
Answer: NO
Question 12: What is the negotiation procedure with banks and other financial institutes? How
government rules and regulations affect the process?
Answer: We are inviting them to visit the group members. So, they themselves understand that
we are helping to poor people. RBI- Bank regulatory authority issued Guideline for loan costing
& code of Conduct.
Question 13: What are these institutions’ main motive to provide loan?
Answer: Banks & financial institutions motive is profit.
Question 14: How has been the relationship with these institutions? Does Prayas in any case
want to change them?
Answer: Long relationship with banks and financial Institution as both have mutual benefits.
Question 15: Do you have any programs to educate your clients? Which all issues are covered
during the programs?
Answer: We are running functional Literacy classes for the Illiterate members.
Question 16: Can you rate these programs based on their emphasis on following pillars of
sustainability?
1. Environmental issues 2. Economic issues 3. Social issues
Answer::
1. Economic 2. Social 3. Environmental
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6.4 Information analysis
6.4.1 Organization introduction
Prayas is a charitable development organisation
working to support the vulnerable clusters of society.
PRAYAS was incorporated in November 1997 as a
society under the Society Registration Act, 1860 and
the Trust Registration Act, 1976. PRAYAS started its
microfinance program under PJVB from April 2006.
Prayas is simplifying capacity building activities,
natural resource management projects, Micro finance
program and livelihood activities. The principal
approach is to deliver ideas for building up
community-based local organizations to encourage
long-term sustainability. Prayas is receiving technical and financial support through partnership
with different NGOs and the government. It has major presence in centre western states, Gujrat
and Madhya Pradesh, of India. Recently Prayas started their operations in North-eastern state,
Assam.
6.4.1.1 Vision
“PRAYAS envisions a society where people have better social and economic opportunities,
accessibility to financial services and awareness of rights and duties”
6.4.1.2 Mission
“Unite 50,000 socio-economically deprived people by 2017 and empower them through
economic and social interventions”
To implement a sound and professional micro finance program to provide access to
financial services primarily to low income clients.
Figure 26- Prayas's operational areas
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To strengthen vulnerable sections of the society by raising awareness of their rights and
by giving them the opportunity to assert these rights to protect themselves against any
form of exploitation.
To carry out other social interventions in the fields of education, health, disaster
management, livelihood promotion, community organization.
6.4.1.3 Organizational structure
As it is evident from the structure that there is no unit specifically dedicated to supply chain
management. The reasons are:
There is no strategic relevance as the organization doesn’t manufacture any product.
Low geographic dispersion as operations are in 3 states of India.
Low national differentiation
Low vertical integration of the company
Figure 27- Prayas's organizational structure (adopted from Prayas’s annual report)
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Prayas has two operating wings:
1. Social wing which takes care of projects such as child health, education, water and
sanitation, HIV/AIDS awareness program etc.
2. Microfinance wing which gives micro credits to micro-small enterprises.
6.4.2 Microfinance chain
Figure 28- Microfinance chain with Prayas as focal company
6.4.3 Microfinance industry in India: A SWOT analysis
Strength Financing without any collateral to millions of unbanked people.
Microfinance for specific section, cluster for sustainable livelihoods
Innovative loan products
Professionalism
Weakness Available only in selected rural areas
Basic services such as insurance, savings, money transfer are
unavailable
Selection criteria limits number of eligible borrowers
Restricted capacity, technical services in smaller MFIs
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No transformative impact on poverty
Opportunity Improving policies and technologies to promote financial inclusion
Extending reach to more disadvantaged people.
Making improved and efficient delivery mechanisms.
Threats Loan amount is not big enough to make any significant change
Competition from rural-centric new banking players.
Ineffective and inefficient project assessment
Table 3- Microfinance (in India): SWOT analysis
6.4.3.1 Key stakeholders
A number of stakeholders are active in development of the MSME sector in India. Some of the
major stakeholders are given in table.
Government Ministries: Ministry of MSME, Ministry of Finance, Ministry of
Textiles, Ministry of Food Processing Industry, Department of
Industrial Policy and Promotion (DIPP)
Financial Institutions Prayas (Focal Company)
Developmental
organizations
Academic/research institutions, NGOs
Large financial
institutions
The corporate sector which provides direct or indirect
microfinancing to MSMEs
Table 4- Key stakeholders in Microfinance sector in India
6.4.4 Sustainability issues related to Prayas
Economic Aspects Loan products
Access to funds
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Ability to raise funds
Cost reduction
Competitive pressure
Innovation potential
Social Aspects Human rights
Health protection
Women empowerment
Poverty alleviation
Locals’ involvement
Environmental Transportation
Basic electricity energy consumption e.g. in office
Table 5- Sustainability issues related to Prayas
6.5 Diagnosis using the model
6.5.1 Posture towards sustainability
6.5.1.1 Economic pillar
Being a non-profit organization, Prayas has been dependent upon Government funds in past
mainly from a period of 1997-2001. About in year 2000, Government changed the policy and
withdrew the project from NGOs (Non-Government organisation). Due to that, Prayas were in
pressure to get fund from other sources such as private financial institutes (refer annexure 5,
question 2). Prayas at that point showed a reactive posture towards its economic issues.
Although since then, Prayas considered the issue as of prime concern. Now, Prayas gets its
funds from various banks and financial institutes such as lOBI Bank, SBI (State Bank of India),
SIDBI and financial institutions namely Ananya Finance for Inclusive Growth Pvt. ltd., IGS-
Basix, Sewa Energy, Gruh Finance, Habitat, Milaap, and MAS Financial services Limited.
(Prayas-Annual-Report, Annual report, 2013-14). Hence over a period, Prayas has managed to
raise funds from market with less risk of sudden fund cut off. Also, Prayas has focused more
on microfinance projects since 2001, discarding few environmental projects making them more
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economically secure. They also have credit life insurance policy for risk mitigation to cover the
loan in the event of the death of the borrower and for covering cash in transit and cash in safe.
(CARE-ratings, 2015-16).
As a conclusion, Prayas has shown a proactive posture towards economic aspect. But need to
note that they are not very predictive too as it was discussed in the interview that recent
demonetization of 500 and 1000 Indian Rupees notes made them struggle to raise funds for
some of the ongoing projects. (refer question 7). The effects were reasonable and they slowly
overcame the issue.
6.5.1.2 Environmental pillar
Prayas in past had natural resource projects, but they stopped in 2005-06 due to lack of funds.
Now they consider environmental projects as a rare market opportunity. (Evident from the reply
to question 1). They don’t have a systematic development programme to integrate
environmental sustainability elements into decision tools anymore. Comparing the situation
before 2013 and now in 2015, their posture towards environmental issues has changed from
proactive to reactive.
6.5.1.3 Social pillar
Certainly, Social issues are considered as a market opportunity by the organization. The social
aspect is tightly linked with Prayas’s corporate strategy as more underprivileged people it
reaches to more it is beneficial for society and economically an advantage for the organization.
Currently, Prayas is covering 5 districts of the state of Gujrat and 4 districts of the state of
Madhya Pradesh (Prayas Annual Reports, 2013-14, 2014-15, 2015-16). They have future
prospective of expanding it to more states and districts, to reach out to more under-privileged
people and enterprises. Recently they started operating in Assam. Undoubtedly it is a huge
competitive advantage for them to have this expansion, which has not changed since the
organization’s inception. Although as discussed in the interview and also in questionnaire
(question 3), they start projects based on current issues not on the issues which could arise in
future; questioning their futurologist view.
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Therefore, Prayas does not have a futurologist vision on social concerns. But certainly, they
have an entirely pro-active posture towards social issues.
Then (before 2013) Now (2016)
Economic Reactive (2) Proactive (2)
Social Proactive (4) Proactive (4)
Environment Proactive (4) Reactive (2)
Table 6- Posture towards sustainability diagnosis
6.5.2 Sustainability strategy
6.5.2.1 Economic pillar
Uniqueness of strategy:
As Prayas needs to deal with two kind of partners. One is supplier sides where they have well
managed financial institutes and other side there are customers which are mismanaged
microenterprises. So, undoubtedly, Prayas has different strategies for each.
Strategically dealing on loan recovery from its clients it has adopted Joint Liability Group
(JLG) model in the rural and urban areas. Prayas has put the age limit of 18-55 for eligibility
of clients. [ (CARE-ratings, 2015-16), (Case site visit: observation)]. To have a smooth financial
deal with the clients, Prayas gives them training organized in a centre. Continuous Group
Training (CGT) is given to the newly formed group. Training generally covers the objective,
rules, regulations, procedures and products of the credit programme. (refer question 15).
Overall Prayas has adequately mature strategy and clearly designed policy for dealing with
economic issues with clients. Prayas has a set of policies for disbursement process too.
Financial indicators:
The organizational structure seems very cost effective. Looking at the financial statement they
have projected operating expenses to cut down from 1.55 cr Rs. In FY15 to 1.01 cr. Rs. in FY
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16. There is an increase in tangible net-worth from 2.3 cr Rs. in FY14 to 2.89 cr Rs. in FY15
and projected 2.97 cr Rs. for FY16. Stated in the report (CARE-ratings, 2015-16): “sustenance
of good asset quality with the growing operations and AUM is yet to be demonstrated which
will remain a crucial factor for future growth and profitability of PRAYAS”.
Vision to reach out new markets:
Prayas has introduced fresh commercial approaches into their commercial strategy. It is evident
in their report as it says “Increasing the scale of operations to cater to huge unmet potential
demand is the reason for assumption of 21% growth rate. PRAYAS plans to grow by reaching
to RS.12.81 crore outstanding own portfolio by the end FV18”. (CARE-ratings, 2015-16)
According to Prayas’s director Mr. Bhadresh, the economic aspects are given preferences over
social and environmental aspects. (see Question 16)
The statement (CARE-ratings, 2015-16): “In the coming years, it strives to become one of the
country's best managed microfinance companies in terms of scale, quality and transparency. It
has plans to extend its operation by introducing new products and tapping new markets in
future.” Defines their futuristic vision towards economic sustainability. Prayas has more focus
on partnerships, where stakeholders are considered as carriers of value while external
stakeholders are potential carriers of value.
Overall, above arguments prove that Prayas has a well-defined, strategy for economic pillar of
sustainability integrated at operational, management and strategic level companies and have a
futurologist vision too.
6.5.2.2 Environmental pillar
Internally:
First, we discuss environmental aspect within the organization (internally). We need to stress
on the fact that Prayas is not a manufacturing company, has hardly any significant contribution
to carbon emission. The only effect is through electricity and transportation but they have not
tried to identify efficient transportation alternatives.
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Externally:
They started environmental projects such as natural resource management in the past but
stopped later. There are not many formal initiatives from the organization yet to educate its
clients for environmental issues. (Evident from Client site visit and observation, also in
questionnaire and reports there is no mention of such projects). Although they have
acknowledged the importance of the environmental projects and have few agriculture projects.
“We have done watershed Development project in MP state and water harvesting project in
Gujarat which created environmental impact” as per Mr. Bhadresh (Question 5).
It could be concluded that Prayas have identified differentiating environmental aspects in the
past but have not been able to keep up with the challenges and now they don’t have any strategy
defined for environmental issues. Therefore, in past they had a defined but not integrated
strategy for environmental pillar but now have partial strategy.
6.5.2.3 Social pillar
Coordination with local authorities:
Whenever Prayas strategizes a new project, it emphasises on co-ordination with government at
various level. According to them, the main purpose of co-ordination with GOs is to strengthen
the advocacy strategy. Therefore, partnership is their key strategy. (Community based
rehabilitation-Project-Report)
Partnership with other NGOs:
According to the report (Community based rehabilitation-Project-Report), (Prayas-Annual-
Report, Annual report, 2015-16) and case site observation; Prayas work with NGOs working
in the region. These NGOs could be different funding agencies or the implementing agencies.
Formal agreements are signed between Prayas and Concern Worldwide. In past, Prayas and
SYVM (another NGO) worked together in implementing all aspects of ‘Community Based
Rehabilitation in Kutch’ project, though Prayas was the key member and responsible for
reporting to the Concern worldwide timely (Community based rehabilitation-Project-Report).
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Staff
Analysing Prayas’s strategy towards capacity building of staff; according to interviewee,
employees are important assets of organization. In defining their strategy, Prayas stresses
capacity building of people’s organisation by spreading the awareness about human rights,
focusing on skill development, resource mobilization and institutionalisation.
It is a part of the organizational strategy to provide timely training to them. The training
programs reported in year 2013-14. (Prayas-Annual-Report, Annual report, 2013-14)
“Social Performance Management” at Gurgaon organised by Dia Vikas
“Social Performance Management” at Ahmedabad organised by Ananya and FWWB
“Risk Management” organised by Ananya.
“Heath in microfinance” organised by Ananya and FWWB
Although there is no further mention of any such programs in other annual reports or checklist
for strategy; questioning the strategic importance of such programs.
Let us now discuss the social sustainability strategy over the time frame to diagnose
organization’s future ambitions. Prayas’s strategy has not changed much over last few years.
Apart from microfinance programs it has social programs too, discussed in the introduction.
From the report, it is evident that Prayas’s vision limits to next year, as stated in the annual
report 2015-16 “PRAYAS's Mission is to unite 50,000 socio-economically deprived people by
2017 and empower them through economic and social interventions”.
Prayas has an inbuilt strategy for each program and as it is evident from the report that it is
quite well defined. While defining the strategy. social and economic aspects are given huge
importance. From educating the employees to dealing with clients, to involving locals in the
strategic decision making shows the maturity level of organization in integrating the
sustainability strategy at various levels. However, a futurologist vision is missing.
Then (before 2013) Now (2016)
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Economic Integrated sustainability
strategy (4)
Futurologist vision (5)
Social Integrated sustainability
strategy (4)
Integrated sustainability
strategy (4)
Environmental Partial and Emerging strategy
(2)
No strategy (1)
Table 7- Sustainability Strategy diagnosis
6.5.3 Sustainability implementation
To check the sustainability implementation level in Prayas, we need to diagnose it at process
level and in governance.
6.5.3.1 Social pillar (In governance)
Employees career advancement:
According to report (CARE-ratings, 2015-16); Prayas recruits its employees and takes care of
their career advancement. The new recruits are selected based on written test followed by
interview. New recruits are trained in process overview, understanding operational procedures.
Senior personnel share their experiences. Salaries are based on a clearly stated and documented
grade system with other allowances based on number of clients served.
Community’s participation in projects:
Implementation of a project stresses on people’s participation approach from its preliminary
stage. Community’s participation encouraged at all the stages of project like finalizing
beneficiaries, procurement of materials, distribution of tools and implements, monitoring and
evaluation of the project etc. (Community based rehabilitation-Project-Report).
Role of women:
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“We are doing microfinance program with women members to empower them.”, says Director,
Prayas (refer question 5)
No doubt the project implemented by Prayas have positive bias towards the most vulnerable
groups with special focus on women at all stages of the project. In the strategy decision making
women are involved through a certain inbuilt mechanism. (Prayas-Annual-Report, Annual
report, 2015-16).
Prayas also takes care of having a transparency and accountability towards project aim.
Stakeholders’ consultation:
Stakeholders such as trustees are consulted, NGOs are involved in carrying out projects to help
the institute grow economically. Although (CARE-ratings, 2015-16) report states “PRAYAS is
heavily dependent on its promoters Mr. Bhadresh K. Rawal for the strategic initiatives and
long term sustainability of the trust.” At economic front, Prayas is quite transparent and
consults its major stakeholders.
Customer education:
Prayas also encourage their customers to use their services in a specific way by educating them
with the help of other organizations, leaving a huge impact on lifting the level of their client
enterprises.
As stakeholders are regularly consulted and involved in certain decisions concerning their
interests. But decisions are mainly made by Prayas’s director. Prayas shows an integrated
maturity level.
6.5.3.2 Environmental pillar
As Prayas is a public service organization not a manufacturing company, it is not feasible to
test the maturity level in very detail at process level. The impact Prayas has on environment is
through its indirect purchasing. Reminding that organization doesn’t have a formal purchasing
department but the general indirect purchasing consists electricity usage, transportation mostly
for visiting clients for loan collection etc. On the positive note, organization complies with
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governmental laws and regulations for example electricity usage as per government rules and
regulations. But the sources of electricity are non-renewable or company is hardly aware of.
They have very limited knowledge about their local resources and have a partial integration in
environmental value creation.
6.5.3.3 Economic pillar (at process level)
Talking sustainability at process level implies how optimized are the processes so that
organization is getting maximum economic benefits. In order to diagnose economic pillar at
implementation dimension, we use the optimization level of the processes as a proxy.
In the report mFi report at operational level four processes are mentioned, which are:
Appraisal process:
The process is quite efficient as adequate decentralized appraisal system with the loan appraisal
and sanctioning at the branch level by the Branch Manager helps in reducing the time taken for
loan disbursement. [Source: Observation and (CARE-ratings, 2015-16)]
Disbursement process:
Prayas has appropriate disbursement policies. Disbursement of the sum takes place at the local
branch level. The cash to the JLG borrowers is directly provided by the branch manager hence
there is reduced risk of mismanagement of cash at the field level. [Source: Observation and
(CARE-ratings, 2015-16)]
Loan collection process:
According to mFI report, Prayas's loan collection process is satisfactory at the current level of
operations. This is because they have an Integrated MIS system which helps in faster transfer
of information for monitoring at the branch and Head Office. [Source: Observation and (CARE-
ratings, 2015-16)]
Overdue management process:
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Their report (CARE-ratings, 2015-16) states “PRAYAS has been able to maintain a good asset
quality over the last three years, showing its ability to collect the repayments on time.”
Human resource department:
Prayas also conducts training programs which ensures that the staff is well equipped to handle
the operations in efficient and effective way. Although absence of a separate human resource
department and demarcated roles and responsibilities questions the efficiency and effectiveness
of recruitment process. [Sources: (CARE-ratings, 2015-16), (Prayas-Annual-Report, Annual
report, 2013-14), (Prayas-Annual-Report, Annual Report, 2014-15), (Prayas-Annual-Report,
Annual report, 2015-16), observation and discussion with Director (Prayas)]. Overall, Prayas
has an efficient cash management system.
Prayas takes lean action on regular basis but simultaneously process specificities indicators are
ignored to measure the processes showing a defined process maturity level considering
economic aspects, while environmentally processes are managed not defined or measured.
Then (2013) Now (2016)
Economic (process level) Defined (3) Defined (3)
Social (in governance) Integrated (2) Integrated (4)
Environment (process level) Managed (2) Managed (2)
Table 8- Sustainability implementation diagnosis
6.5.4 Sustainability leadership
Prayas’s senior management took initiatives to channel sustainability process inside the
organization. According to the code of conduct report ( (iMaCS, 2014), Prayas’s employees
treated the clients with respect and humility. This behaviour of the employees could be justified
from the fact that clients are at ease with sharing their concerns and suggestions. (Evident from
observation).
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6.5.4.1 Economic and social pillars
In the value chain, Prayas is certainly not the most powerful player. Before determining the
leadership style of Prayas we need to check its relationship with suppliers and customers and
have a little discussion on its power.
Power in the chain:
Prayas’s direct purchasing item is getting funds from banks or other financial institutes. As
discussed earlier and described in report (CARE-ratings, 2015-16); Prayas has presence in few
states while its suppliers are big banks present in almost all states of India and have international
presence too. Knowing that Microfinance is a growing sector and all these big banks or
financial institutes see the sector as a future opportunity. So, there is a mutual dependency of
both banks (suppliers) and Prayas MFI (Customer/ focal company) to benefit from each other.
“We are inviting them to visit the group members. So, they themselves understand that we are
helping poor people. RBI- Bank regulatory authority issued Guideline for loan costing & code
of Conduct. Banks & financial institutions motive is profit.” Also, there has been a long
relationship and both suppliers and buyers have strategic ties between them. “Long relationship
with banks; financial Institution as both have mutual benefits”, says Mr. Bhadresh in reply to
question 12.
Putting the things in Cousins’ portfolio model.
Hence there is strategic collaboration between Prayas and other financial institutes and banks.
Although Prayas has expert and referent power in the field of microfinance but they need to be
dependent on the banks for funds. So, it is Prayas’s suppliers who are leading at economic front
not Prayas.
Now let us discuss Prayas and its clients’ relationship. Being a more than two decades old
organization, Prayas has set up a long and strong relationship with its clients. Since these clients
are financially dependent upon Prayas, it becomes an ethical duty of Prayas’s senior
management to guide these MicroSMEs. A good proxy to determine their leadership style is to
discuss how Prayas selects its clients.
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From the report (CARE-ratings, 2015-16), which states “Each staff member is given a small
manual printed in Hindi and English for better understanding of various processes including
appraisal process. Adequate focus is given to KYC policy and mandatory guidelines of
borrower's identity card before a lending decision.”. Prayas checks financial performance of
their clients for their loan appraisal. These clients are small and medium enterprises facing
various problems such as poor skills, market driven internal processes, less visibility over its
chain etc. If a client does not meet the minimum financial requirements stands void for next
year appraisal. However, Prayas provides grace period for the clients’ who aren’t able to meet
the appraisal requirements at time. [Sources: (CARE-ratings, 2015-16), discussion with
Harishbhai Tiwari].
Prayas do have programs to lift the level of these MicroSMEs. With the help of other NGOs or
research scholars they educate the clients to have more efficient production system. Although
those programs have never gained the status of strategic priority for Prayas and that depicts in
Figure 29- Prayas-bank relationship diagnosis using Cousins Portfolio Model
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the slow overall growth of Microenterprises. (for instance; Social Innovation Team’s
collaboration various such NGOs).
This depicts that they have a hybrid transactional cum transformational leadership style.
Internal leadership:
This category diagnoses Prayas’s senior management’s leadership style towards its employees.
As leaders play important roles to motivate employees for sustainability process. According to
report (CARE-ratings, 2015-16) Prayas has a Second Line of Leadership, distinct departments
with clear roles and responsibilities. The teams are led by fairly experienced team members.
Being a small organization Mr. Bhadresh is key member in taking all key decisions, but he does
it with the help of trustees and other team members. Senior management occasionally organizes
education, training and capability development but not on very regular basis. (Evident from the
(Prayas-Annual-Report, Annual report, 2013-14).
“The company has conducted an organisation wide training program to apprise its staff on the
new manual. Each staff member has been instructed to refer the manual on a regular basis and
adhere to the prescribed guidelines.” (iMaCS, 2014)
Therefore, individual objectives are integrated with the organization’s vision and goals, but no
regular mention of activities in reports and documents questions the complete transformational
leadership style.
As a deduction, organization depicts a hybrid transformational cum transactional
leadership style.
6.5.4.2 Environmental pillar
On environmental front, the organization doesn’t show any leadership. As discussed earlier,
there are not any strategic consideration by Prayas for environmental projects neither any
initiatives to guide its employees to be environmentally conscious.
Then (2013) Now (2016)
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Economic and social-
Supplier side
No leadership (1) No leadership (1)
Economic and social- Client
side
Hybrid transactional cum
transformational leadership
(3)
Hybrid transactional cum
transformational leadership
(3)
Economic and social- Inside
the organization
Hybrid transactional cum
transformational leadership
(3)
Hybrid transactional cum
transformational leadership
(3)
Environment None (1) None (1)
Table 9- Sustainability leadership diagnosis
6.5.5 Sustainability reporting and performance measurement
6.5.5.1 Economic pillar
Prayas publishes its financial reports online on its website. The yearly financial statements are
audited which comprises the Balance Sheet, Income and Expenditure statement, for the year
then ended, and a summary of the significant accounting policies and other explanatory
information.
Prayas uses various indicators for measuring their financial performances. These indicators are
net number of borrowers over the years, borrowers vs loan cycle over the past years, repayment
rates etc. (CARE-ratings, 2015-16).
Trust’s management depicts honest self-assessment. This is evident from fair view of financial
position, statements, performance which comply with Section 33(2) of Bombay Public Trust
Act, 1950 and in accordance with accounting principles accepted in India. In the report, auditors
also show their responsibility while expressing their opinion on financial statements. (CARE-
ratings, 2015-16).
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Prayas has an operational manual in place which contains detailed mapping of the
organizatioon, credit and other internal processes of the organization with various
improvements introduced to its existing process. (iMaCS, 2014)
Prayas have put economic performance measurement system in place. For example, an end-to-
end computerized collection and overdue management system, which helps to generate reports
on early indication of delinquency to have a better overdue management process. (CARE-
ratings, 2015-16)
Prayas publicly uploads its monthly and yearly financial reports on its website, allowing the
access for its stakeholders. (Source: Prayas website)
6.5.5.2 Environmental pillar
Prayas has a very basic measurement system for electricity usage, fuel consumption. This
system is not integrated outside the concerned department.
6.5.5.3 Social pillar
Financial performance measurement of clients
Prayas has a financial performance evaluation system to appraise its clients. Prayas has High
Mark credit information system through which they obtain credit bureau report. Also, Prayas
uses progress out of Poverty Index developed by Grameen foundation to assess the current
status of clients viz. BPL, APL etc. (Prayas-Annual-Report, Annual report, 2013-14)
Involvement of trustees in performance measurement:
The trustees are directly involved in measuring the performance of the clients, as they pay
formal visits to Prayas’s clients to measure their performances and help them deal with small
issues. (Evident from observation: Dr. Shilpa Pandya’s visit to client site).
Ongoing project performance measurement:
For their ongoing social and microfinance projects, monitoring and evaluation is done by
measuring physical indicators. For instance, during their one of “improved livelihood” projects;
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indicators used were number and quality of income tools and implements distributed, houses’
quality and structure of Rain Roof Water Harvesting, Extent of community control and
involvement in aspects of design, material and skill procurement with special emphasis on
women in shelter and RRWHS, increased level of awareness among PWDs about their rights
and also among community and governments, number of workshops on People With Disability
Act 1995 and number of participants from various NGOs and GOs etc. to observe the progress
at different level. (Community based rehabilitation-Project-Report). Various analytical tools
are used to evaluate the project impact. These included self-Assessment by the implementing
agencies, Community-Assessment using social Audit method and external assessment by
funding agency. (iMaCS, 2014)
Information sharing
The branches are connected to the head office through internet. Data transfer happens through
File Transfer Protocol (FTP). They have management information system mainly for
microfinance data. Although any such systems were unavailable before 2009.
“We report to SaDhan Network”, says Mr. Bhadresh asking about the standards followed in
reporting. (See question 3 in questionnaire).
Overall, Prayas has approached positively in making a robust information sharing, performance
measurement systems. As a deduction, based on current level of operations Prayas has a fully
integrated performance measurement system for economic and social aspects which has
improved along with increase of level of operations while environmental PM system is ad-hoc.
Then (before 2013) Now (2016)
Economic Fully integrated (5) Fully integrated (5)
Social Fully integrated (5) Fully integrated (5)
Environment Ad-hoc (2) Ad-hoc (2)
Table 10- Sustainability reporting and performance management diagnosis
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6.5.6 Partner’s involvement
6.5.6.1 Economic and social pillar
Prayas’s annual report mentions its network of partners, collaborators and supporters such as
governments, corporate and international agencies.
Considering the case of few of the mentioned banks (Yes bank and Tata Consultancy services).
According to Yes Bank’s corporate social responsibility policy; they are working on several
social projects such as livelihood security and enhancement in rural India, skill building among
youth, and improving environmental sustainability, and occupational health & safety in the
MSME sector. Yes bank have independent projects and projects in association with national
partners.[4]
TCS embodies the Tata group’s philosophy of building sustainable businesses that are firmly
rooted in the community and demonstrate care for the environment. Towards this, TCS has
adopted the ‘triple bottom-line’ approach and recognizes ‘people’, ‘planet’, and ‘profit’ as the
central pillars of corporate sustainability. TCS is the member of Dow Jones sustainability
indices. CR Index 2015-Business in the community, GRI application level, Climate disclosure
leader 2015. (Tata Consultancy Services, n.d.)
Based on the comparison among the published reports of these banks/financial institutes and
Prayas; banks show a great level of awareness and lead in terms of sustainability. Sustainability
issue are not even considered by clients. That Prayas has an inclusive view of development and
focuses on both economic and social development. We have already mentioned the strategy
and strategic partnership between banks and Prayas. Prayas collaborate with its clients too to
deliver a sustainable development. (Evident from various NGOs, institutes involved in helping
these SMEs).
Let us check how these partners are involved in the making a sustainable microfinance chain.
From reading the reports published online by Yes bank, the bank has shown a great intention
to collaborate to the end members of Microfinance chain. Intermediaries in the chain such as
Prayas are playing an important role in sharing the information from MSMEs to Banks. Given
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the magnitude of issues associated with this chain, especially the magnitude increases going
downstream in the chain; banks such as Yes bank face problems in collaborating with every
partner in the chain. It is to be noted that this chain is not as complex as of a manufacturing
industry raises the questions. Let us discuss the issues related to the chain in order to have a
better understanding.
Issues:
As per Yes bank report; MicroSME sector is one of the major sectors where banks have
considerable number of NonPerforming-Assets (NPAs). Bankers have limited capacity to
assess MSME projects, one of the reason is there is no simple MSME assessment tool for
bankers. According to Sameeksha report; there is a lack of integration of innovative rating
systems for projects into the existing ones. Although, the possible solution could be using new
technologies that themself draws concerns in terms of applicability and benefits. It is even more
difficult to find the right technology for any given enterprise.
Inefficiencies in the chain:
There are inefficiencies in the chain due to stringent procedural norms and conditions to directly
obtain micro-loan from banks. MSMEs avoid going through these lengthy procedures making
the role of Prayas more crucial. MSMEs show low awareness on entrepreneurship.
Technology barriers:
A sophisticated information system is not supported by the in house technical operators which
is well experienced with the older technologies. The intermediaries in the chain also seem
reluctant to provide necessary training to the technical staff which comes at an additional cost
of implementation.
Less knowledge about the benefits:
The benefits accrued from sustainability considerations are not immediate. The actual predicted
savings may be less than the claims. Therefore, MSMEs are reluctant to any sustainability
considerations.
106
Financing roadblocks:
Lack of available capital for investment / implementation
Technologies which are suitable for a term loan attract heavy interest rates that discourages
entrepreneurs and microfinance institute such as Prayas.
Therefore, companies are not able to stimulate sustainability downstream to the very end of
chain. Environmental projects are considered by the banks and Prayas has not involved much
(strategic reasons). However, in case of economic growth and social progress, Prayas has
collaborated with its partners. As from reports of Yes bank, Tata consultancy services and
Prayas; all these partners take efforts to educate its customers to consider social environmental
and economic concerns on their business decisions. According to Mr. Bhadresh, “We are
running functional Literacy classes for the Illiterate members” (answer to question 12 in
questionnaire).
Although simultaneously accepting the fact that there is a lack of efficiency to collect the
information from customers and pass on to the entire supply chain forming an incomplete loop
of information exchange among customers, companies. From figure xxx it is evident that
microenterprises don’t have any formal information database which makes it even more
difficult to efficiently collaborate with Prayas and other institutes. (Observed during the
MSMEs visit).
As a deduction, there are steps taken from upstream members to bring innovation activities at
various level but misses a holistic way to do so. This group fails in creating any “radical
innovation based sustainable development”, and has followed a traditional “incremental
innovations” approach for achieving sustainable development.
We reach at two conclusions:
1. There is a collaboration focused involvement in the chain at social and economic aspect
but the collaboration succumbs before it reaches the final customer.
2. There is a passive involvement of end customers (MicroSMEs) in dealing with these issues.
107
Upstream Downstream
Economic Collaboration focused
involvement (4)
Passive involvement (2)
Social Collaboration focused
involvement (4)
Passive involvement (2)
Environment Passive involvement (2) Passive Involvement (2)
Table 11- Partners' involvement diagnosis
108
6.6 Results
Figure 30- Diagnostic evaluation with respect to economic pillar: Then (before 2013)
Figure 31- Diagnostic evaluation with respect to economic pillar: Now (2016)
109
Figure 32- Diagnostic evaluation with respect to social pillar: Then (before 2013)
Figure 33- Diagnostic evaluation with respect to social pillar: Now (2016)
110
Figure 34- Diagnostic evaluation with respect to environmental pillar: Then (2013)
Figure 35-Diagnostic evaluation with respect to environmental pillar: Now (2016)
111
6.7 Result summary
Figure 36- Result summary
112
6.8 Discussion
The results give indication of areas of improvement and provide a sense of inspiration to the
concerned company to climb the maturity level ladder.
Results obtained from the assessment indicate that, within the socio-economic pillar,
the organization and chain are relatively mature.
During the interview, I was informed that Prayas does not have any internal
sustainability maturity assessment model. Noticing the audit report, the sustainability
was assessed only on the basis of economic dimension. Hence, they require a more
comprehensive tool to assess sustainability.
Low strategic relevance of environmental dimension reflected on the organization and
microfinance chain’s maturity.
Comparing the maturity level between “now” and then; Prayas has become more mature
in defining its economic sustainability strategy. Economic sustainability
implementation at process level stays defined at maturity level 3. Prayas can consider
improving its infrastructure such as better MIS or other sophisticated technology to
stimulate a continuous improving process. The difference in strategy and
implementation level justifies the statement by Zahn (1979) “Organizations are more
mature to formulate strategies than at strategy implementation.
Prayas’s leadership needs to be transformational especially, while dealing with its
clients. For example, the client selection just based on his/her current financial situation
should be reconsidered. Indicators such as his/her potential based on age, MSMEs
projected growth based on future trends etc. could be considered.
Prayas has not shown much changes in maturity level despite few. This depicts a passive
consideration of sustainability issues within the organization.
113
7 Conclusions
This paper systematically reviewed the literature on sustainability maturity assessment models
in supply chains and grouped current models in terms of their focus, the type of sustainability
information used and authors’ ideologies. The models were integrated into one conceptual
framework for supply chain sustainability maturity assessment. This model consists of a six
major maturity dimensions. Different sustainability pillars and levels of maturity can be dealt
with for each sustainability dimension as we did in the case of Prayas. Furthermore, in order to
assess and find out the suitable sustainability practices, model was compared with GRI
standards and hypothesized that the reporting elements may provide proxies for best
sustainability practices. This model also allows sustainability diagnosis outside the
organization across other partners of supply chain.
To ensure successful practical implementation of the proposed model, model was tested on a
microfinance institute. As a conclusion, few of the noteworthy features of the model are given
below.
The model is flexible in usage as while assessing the model, few dimensions were
divided in subdimensions to increase the precision of results. For instance, leadership
was diagnosed from Prayas’s supplier side, leadership inside the organization and
leadership with respect to the clients.
This model allows for assessment of a diverse range of environmental, social, economic
factors.
Model is good at adapting variety of information and worked nicely in arranging the
information. It showed no restriction in using any kind of information.
There was a lack of information, especially from Prayas’s suppliers and clients side, but
still model worked in relatively less information.
Involving SMEs in testing the model proves the model’s accessibility for companies
inexperienced in sustainability assessment.
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Figure 37 Conclusion on whether model meets the requirement of tool to diagnose sustainability across entire chain
7.1 Theoretical implications
This work contributes to the theory of sustainable supply chain management by proposing a
SSCM maturity model which is not specific to an industry, country, department or an
organization with equal emphasis on all three pillars of sustainability. As Johnsen et al model
is specific to Purchasing and supply management, Kirkwood et al specific to Supply network
design, while Pigosso et al, Verrier et al are about sustainability at process level. Reefke et al
and Gouvinhas et al don’t equally emphasize on all three elements of sustainability. Therefore,
this model can be utilized at any level in the organization at a large range of organizations and
its partners.
Diagnosing maturity separately at all three elements of sustainability presents a detailed
analysis. While diagnosing economic and environmental elements Resource based view is
considered while dealing with social elements separately provides a detailed stakeholder
perspective. Also, considering Corporate social responsibility model for social elements
bridges the gap of Business Ethics in SSCM literature.
115
7.2 Managerial implications
The model provides a pathway to help organizations and its supply chain partners to exploit
standard pathway of improvement in dealing with sustainability issues. The lack of maturity in
any dimension can predict a new opportunity for the organization.
This work emphasizes on triple bottom line approach and suggests to diagnose sustainability
maturity separately for all three sustainability pillars. This can help managers not to miss the
inclusion of any of the sustainability issues in decision-making at various levels of the
organization and its supply chain.
Compared to traditional models for sustainability maturity assessment, the developed model is
not specific to type of industry, country, department of a company or just to an organization
but reaches out to assess entire supply chain. Therefore, it has the potential to assist decision-
making in sustainability considerations across global supply chain.
7.3 Managerial implications (Prayas specific)
Prayas widely covers social and economic sphere, and lack of maturity at various dimensions
is an opportunity for further sustainable improvement of the organization. From the analysis, it
is evident that over last a decade Prayas has not shown much changes in maturity levels despite
few. This depicts a passive consideration of sustainability issues within the organization. As
agreed in interview Prayas doesn’t have such diagnostic tool, hence the proposed model can
provide a ‘to the point’ approach to stimulate organization’s sustainability focused decision
making. The model can also fulfil its desire to make sure an overall sustainable growth of its
clients by proposing a guided way to them.
Considering that Prayas's activities do not directly create a high environmental impact in terms
of energy consumption, emissions, resource use or transport, but still activities financed by
Prayas can have an impact on biodiversity, pollution and waste generation as micro-financed
enterprise don’t consider any regulatory framework. The triple bottom-line approach can guide
Prayas to better monitor environmental issues. Using the model can help a better Microfinance
Information Exchange, Inc (MIXMarket) evaluation as MFIs’ environmental impacts are
considered while evaluating them.
116
7.4 Implications (microfinance chain specific)
The case study done on microfinance chain describes the variations of maturity levels and
provides a indicators to bridge the gap among all the supply chain partners. The importance of
sustainability declines moving from suppliers to end customers. The analysis done in this paper
can help all the partners to have collaborative approach and set common goals.
This work provides a sense of motivation and a pathway of sustainable development to the
struggling micro, small and medium enterprises. The model doesn’t necessarily require detailed
information hence can be utilized by the MSMEs. Although, we hypothesize that Prayas need
to take the responsibility to guide these SMEs.
7.5 Limitations
One limitation of the present paper derives from the choice of the chain. These consisted
mainly of experts from finance service industries. It is probable that a broader testing
method would uncover possibilities of sustainability maturity assessment that remained
undetected in the current analysis.
Another limitation is the lack of a validation of the results with real-word data such as
result comparison Microfinance Information Exchange, Inc was not possible due to
restricted access to evaluation report.
The model needs to be tested to have consideration of customers, customers’ customers,
suppliers’ suppliers.
Looking to the future, it can be said that further research is needed to develop a set of
supply chain sustainability indicators that can be integrated into this framework.
A further testing of the model is needed to check the adaptability to supply chain
dynamics.
117
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Annexure 1: Integrated Sustainable Organization and Supply Chain Maturity Model
comparison with Global Reporting Initiative
125
Annexure 1 continues
126
Annexure 1 continues
127
Annexure 2: Five-level model of the Framework for Strategic Sustainable Development
(FSSD)
Annexure 3: Matlab code for result summary graph
Z = [2 4 3 1 3.7 3.2 5 4; 4 4 5 1 3.7 3.2 5 4; 4 2 2 1 1 1 2 2]
stem3(Z)
hold on
Y= [2 5 3 1 3.7 3.2 5 4; 4 4 5 1 3.7 3.2 5 4; 2 1 2 1 1 1 2 2]
stem3(Y)
hold on
X = [5 5 5 5 5 5 5 5; 5 5 5 5 5 5 5 5; 5 5 5 5 5 5 5 5]
stem3(X)
function createfigure(X1, Y1, Z1, Z2, Z3)
%CREATEFIGURE(X1, Y1, Z1, Z2, Z3)
% X1: stem3 x
% Y1: stem3 y
% Z1: stem3 z
% Z2: stem3 z
% Z3: stem3 z
% Create figure
figure1 = figure('Color',[1 1 1]);
% Create axes
axes1 = axes('Parent',figure1);
hold(axes1,'on');
% Create stem3
128
stem3(X1,Y1,Z1,'DisplayName','Then (before 2013)','MarkerFaceColor',[0 0
1],...
'MarkerEdgeColor',[0 0 1],...
'MarkerSize',8,...
'LineWidth',2);
% Create stem3
stem3(X1,Y1,Z2,'DisplayName','Now (2016)','MarkerSize',8,'LineWidth',3,...
'LineStyle','--',...
'Color',[1 0 0]);
% Create stem3
stem3(X1,Y1,Z3,'DisplayName','Ideal situation','MarkerSize',2,...
'Marker','diamond',...
'LineWidth',9,...
'LineStyle','none');
% Create xlabel
xlabel({'Model dimensions'},'FontWeight','bold','FontSize',11);
% Create zlabel
zlabel({'Maturity level'},'FontWeight','bold','FontSize',11);
% Create title
title({''},'FontSize',11);
% Create ylabel
ylabel({'Sustainability pillars'},'FontWeight','bold','FontSize',11);
view(axes1,[-73.34 13.3600000000001]);
grid(axes1,'on');
% Set the remaining axes properties
set(axes1,'XTick',[0 1 2 3 4 5 6 7 8 9 10],'XTickLabel',...
{'0','Posture towards sustainability','Sustainability
Strategy','Sustainability Implementation','Sustainability leadership w.r.t.
suppliers','Sustainability leadership inside the
organization','Sustainability leadership w.r.t. customers','Sustainability
reporting and performance measurement','Partners''
involvement','9','10'},...
'YTick',[1 2 3],'YTickLabel',{'Economic','Social','Environmental'});
% Create legend
legend(axes1,'show');