(393f) Evaluating Triple Bottom Line Sustainability of Global Supply Chains Using Dynamic Simulation

Enterprises consider supply chain management to be a key factor for achieving better profitability and customer satisfaction. In the past decade, there has been a growing awareness of incorporating sustainability into business management. As today's supply chains are increasingly complex and globalized, there is a need for methods and tools to help companies evaluate the sustainability of their supply chains. The World Commission on Environment and Development (WCED) in the Brundtland Commission Report described sustainable development as meeting the needs of the present without compromising the ability of future generations to meet their needs [1]. To make this definition operational and use it to guide decisions, sustainability is viewed as having three pillars (also commonly known as the triple bottom line), i.e. economic, environmental, and social aspects.

It is common for decision-makers to address the economic aspect, and over the last decade, increasing attention has been given to the environmental aspect. The social dimension of sustainability, however, is still in early development stage. It includes themes and indicators such as poverty (percent of population living below poverty line), gender equality (ratio of average female wage to male wage), mortality (mortality rate under 5 years old, life expectancy at birth), sanitation, drinking water, healthcare access, education level, etc. [2]. Most of these are defined at the national or regional level and do not translate easily to the company or supply chain level. In this paper, we propose a framework comprising dynamic simulation and life cycle assessment (LCA) indicators for evaluating the triple bottom line sustainability of global supply chains. For the social dimension, the societal LCA approach [3] is adopted.

While LCA can be used for measuring the environmental (and social) costs associated with bringing a product to market, its approach is limited to taking a high-level view of the entire lifecycle of a product. LCA calculates the impact values based on a certain supply chain structure and operation. For instance, LCA usually does not consider the impacts of various logistics options from manufacturing plant to distributor or from distributor to customer. Further, it does not consider the different supply chain policies such as the plant's job assignments and inventory policies although they can be a significant contributor to the overall impacts. On the other hand, the robustness of the LCA accounting approach renders it suitable for quantitatively assessing the environmental (and social) impacts associated with the design and operation of a supply chain. Thus, in this work we integrate environmental and social LCA indicators into a dynamic simulation model of the supply chain, implemented in MATLAB/Simulink. This enables evaluation of the triple bottom line sustainability of supply chains considering the dynamics from different supply chain structures and operation policies. The proposed framework is illustrated using a detergent supply chain case study.

References: 1. WCED, "Our common future", New York: Oxford University Press (1987). 2. Hutchins, M.J., Sutherland, J.W., "An exploration of measures of social sustainability and their application to supply chain decisions", Journal of Cleaner Production, 16, 1688-1698 (2008). 3. Hunkeler, D, "Societal LCA Methodology and Case Study", International Journal of LCA, 11(6), 371-382 (2006).