BUS606: Operations and Supply Chain Management

In recent years, sustainability is becoming more important in all aspects of business and supply chains. Companies are developing and implementing strategies to incorporate sustainability into the products and services that they deliver to the marketplace. In order to remain in business, every company and its associated supply chain must design and deliver new products. These new products must address the growing sustainability movement. However, NPD incorporating sustainability within SCM is not an easy undertaking.

Based upon experience and a literature review of cases, empirical reviews, and other available literature, recommendations for NPD in SCM are relevant today for NPD in SSCM. As outlined above, the managerial recommendations include: top management support and development of an integrated NPD-SSCM strategy, resource allocation, financial support, and support for a common, shared information system; a focus on marketing demands; supplier/customer integration; integrated networks; a coordinated, cross-functional team; and a clear product vision. A single, NPD-SSCM strategy does not exist; however, managers need to consider the specific product, industry, and country factors relevant to their market and supply chains in strategy development.

With respect to economic sustainability, new products that fail to meet the cost-value proposition of the final customer cease to exist in the marketplace. Designers need to carefully analyze sustainable aspects during the design phase, and these sustainability efforts need to continue to be managed throughout the product lifecycle. To be successful, designers should focus on the sustainability requirements of the end customer. Market orientation, green targeting, green positioning, and customer outcomes all influence green NPD. Products – and their companies – that do not meet the economic needs of the end customer will cease to exist. Therefore, economic sustainability is an order qualifier for any new product.

With respect to environmental sustainability, efforts in the past two decades to consider the environmental impact of new products and their associated processes as the product moves through the supply chain have increased significantly. Procedures, such as PLM, DfE, and LCA have all gained in momentum as businesses look to reduce, reuse or recycle their products and associated materials, and reduce the environmental impact of the various processes associated with delivering the product from the raw material supplier to the end customer. However, current research notes that the end customer does not fully recognize the value and is often not willing to pay the additional costs associated with environmentally friendly products. A key recommendation to meet this challenge is to develop market-leading product aesthetic design capabilities geared toward the end customer requirements.

With respect to social sustainability, this is the least researched area of sustainability. To foster, NPD in SSCM, supply chain members should seek other supply chain members with similar socially sustainable values. Trust-building and communication are imperative to developing both internal and external social responsibility surrounding any product and supply chain. Corporate social responsibility toward the local and global communities that surround businesses and their supply chains has also gained momentum in the past decade. Companies have rallied around particular causes, such as the American Cancer Association, or sponsored employee events that give back to society, such as United Way days. To encourage social sustainability with respect to new products, companies need to leverage the brand image that they are creating to foster positive customer perceptions. Similar to environmental sustainability, when customers do not associate with the social sustainability efforts of the company, they may be less likely to spend more for the new 'socially' sustainable product.

In general, the recommendations and the discussion about each of the three areas of sustainability – economic, environmental, and social, all relate to a critical, underlying requirement: the need for NPD and SSCM to focus on end-customer requirements. In order to develop successful products, NPD-SSCM strategies need to address moving environmental and social sustainability into the 'order winner' category for the end customer.

This chapter represents a sampling of significant research efforts in NPD-SSCM that support the continued promotion of the original recommendations for innovative design in supply chains. In general, critical failings for this research include a lack of specific data and test cases as confidentiality agreements hinder discloser, and a lack of testing interactions due to difficulties in analysis and interpretation between factors such as industry, quality, cost, timing, and global factors. As indicated at several points in the above discussion, many unanswered questions remain in both the research and practitioner worlds. As noted above, research avenues include: research to address which company oversees and decides upon the final processes and product; how to resolve differences between sustainability visions between partners; how to develop more holistic, relational research in LCA; how to resolve differences in sustainability practices between partners; how to fully incorporate all three dimensions of sustainability into NPD methods such as 3DCE; how to assess and address customer's perceived trade-offs between the three sustainability dimensions; and how to address the varying prices associated with technology for greenhouse gas emission; and how to address different global regulatory issues and the technology choice associated with NPD? Research opportunities abound!