The Luxury Paradox: How Systems Thinking and Supply Chain Collaboration Can Bring Sustainability Into Mainstream Practice

• Author: Stanley E. Fawcett,Matthew A. Waller,Jonathan L. Johnson
• DOI: http://doi.org/10.1111/jbl.12110
• Date: 01 December 2015
• Published date: 01 December 2015

Editorial

The Luxury Paradox: How Systems Thinking and Supply Chain

Collaboration Can Bring Sustainability Into Mainstream Practice

Matthew A. Waller

1

, Stanley E. Fawcett

2

, and Jonathan L. Johnson

1

1

University of Arkansas

2

Weber State University

It is not hard to imagine sustainability behaviors that could be labeled as “luxury,”but for many sustainability efforts this might not be

descriptive. Systems thinking is at the core of the total cost concept of logistics and this is where there is often lots of overlap and opportu-

nity for logistics and sustainability initiatives. Some companies are now sharing reliable product level information and performance indicators

that are crucial to successful logistics as an outcome of collaboration on sustainability initiatives. In some cases, various sustainability perfor-

mance metrics can serve as proxy measures or leading indicators for logistics costs and service measures. They can also serve as a point of

collaboration for multiple firms in the supply chain.

Keywords: total cost concept; systems thinking; supply chain management; sustainability

INTRODUCTION

Over the years, as we have learned about sustainability initiatives,

we have been struck by the frequency with which we heard famil-

iar terminology. Consider for example, “the total cost of sustain-

ability.”Such language is at the heart of systems thinking—a

central tenant of modern logistics and supply chain management.

Although we already had interest in exploring the interactions

between sustainability and core supply chain phenomena, we were

encouraged to do so from dialog with a colleague, Jonathan L.

Johnson, who is deeply immersed in the quest to overcome the

challenges inherent in making sustainability a mainstream practice.

Indeed, in an earlier editorial addressing “supply chain game

changers...and forces that impede supply chain design,”we

described proactive supply chain risk management and sustain-

ability as costly “luxuries”that are often treated as “peripheral”

decision areas (Fawcett and Waller 2014). One might argue that

all corporate social responsibility (CSR) initiatives could be

described this way—they are vital to long-term corporate suc-

cess, but they are managed outside of the immediate primary

value-creation scope of supply chain managers. As a result, these

activities are managed as an afterthought or in an ad hoc manner.

Perhaps unsurprisingly, this contextualization of CSR attracted

the attention of readers interested in corporate sustainability. In

the spirit of our earlier call for dialog—conversation that is open

to others’points of view (Fawcett and Waller 2013)—we have

invited Jon to further explore these ideas with us.

LUXURY AND PERIPHERAL

The word “luxury”caught the eye of many readers. By luxury,

we meant activities that, although desirable or even necessary

among some social sectors, are costly to the firm and its

customers. Indeed, luxury goods are often defined by the price

premium they command. However, for some, “luxury”has a

less-positive connotation; that is, extravagant self-indulgence. We

can certainly imagine sustainability behaviors that would fit this

latter description. Consider, for example, a manager donating

company funds to a favorite cause that is wholly irrelevant to the

company. However, the real challenge we sought to bring into

the spotlight is how supply chain decision makers can make sus-

tainability affordable for the masses. Simply put, can sustainabil-

ity in all its forms become mainstream rather than niche or

localized practice?

The language “peripheral”is another matter. Many sustainabil-

ity issues—especially those related to the development and mar-

keting of sustainable products—are driven outside logistics and

supply chain management. These issues are peripheral. By con-

trast, many activities that lead to more sustainable operations fall

squarely in supply chain managers’decision core. Examples here

tend not to be transformative, but that is not to say that many

have not been substantial. A good example may be found at

Walmart U.S. Logistics, which improved fleet efficiency over

82% from 2005 to 2014, a savings of $64 million. Walmart lead-

ers attributed these efficiency gains to Lee Scott’s ambitious sus-

tainability strategy (Walmart Stores, Inc 2014). That is, Walmart

could not have achieved these efficiency gains with ad hoc initia-

tives. Success required the application of total costing analysis

and systems redesign, which were at the heart of Walmart’s sus-

tainability strategy. Of course, systems thinking is also at the

core of the total cost concept of logistics.

SYSTEMS THINKING AND BUSINESS PROCESS

INTEGRATION

It is not uncommon for product life cycle analyses to show that

some of the greatest environmental gains can come from

improvements in yield relative to miles driven, resources

consumed, electricity used, and waste generated–all actions that

Corresponding author:

Matthew A. Waller, Sam M. Walton College of Business, WCOB

308, University of Arkansas, Fayetteville, AR 72701-1201, USA;

E-mail: MWaller@walton.uark.edu

Journal of Business Logistics, 2015, 36(4): 303–305 doi: 10.1111/jbl.12110

© Council of Supply Chain Management Professionals