A Bidirectional Supply Chain Framework
In our current complex and interdependent global economy, it is very rare that a company that exists in isolation can survive in the marketplace. Increasing world population, ever-changing consumer demands, and increasing risks of supply disruptions due to environmental degradation and social instabilities pose challenging problems that require innovative solutions. Therefore, developing a holistic view of sourcing, production, distribution/delivery, and recovery of products is a crucial first step.
To that end, we propose in Figure 7.3, a bidirectional supply chain framework (BSCF), in which, without loss of generality, the perspective of a manufacturer, the “focal company” is taken. Note that the focal company is the closest upstream supplier of a “retailer,” which acts as intermediary between the manufacturer and the consumers and operates in an omnichannel environment (brick and mortar, online, or a mix of both, at varying stages of order fulfillment and pickup). The focal company’s eminent upstream (Tier-1) supplier is the customer of the Tier-2 supplier as the number of upstream suppliers is high, which makes it a “long” supply chain. Regarding this
FIGURE 7.3 A BSCF integrating TBL and consumer-purchasing factors.
construct, Yang et al. (2009) stated that “as supply chains are extended by outsourcing and stretched by globalization, disruption risks and lack of visibility into the supplier’s status can both worsen.” Shortening the supply chain, if possible, has the advantage of having fewer impacts of double marginalization (i.e., additional mark-ups imposed by the intermediary agents in the supply chain increase the purchase price as seen by the consumers) and the bullwhip effect (i.e., increasing variability in order sizes higher up in the supply chain).
Unlike the conventional supply chain models in which the information flows from the consumers toward the suppliers upstream and the materials (raw supplies, parts, assembled components, finished goods) flow in the opposite direction (downstream), to reflect the alignment opportunities with big data technologies and the sustainability canvas, our proposed framework considers the flow of both information and materials bidirectional. Once the customers give their orders (information moving up the chain), they can track the status of the orders (information moving downstream). Having received the orders (forward logistics), the consumers may be able to return the product to, say, the retailer, or they may return the product at the end of its life for recycling (reverse logistics). Moreover, the bidirectionality in our framework emphasizes the dynamic cocreation of products (goods plus services) and “values” by both consumers and producers (c.f., Sampson 2000, Wilkinson et al. 2009). Zhang et al. (2019) noted that consumer involvement in product design already exists, especially with mass customization.
Consumers, who are the driving force for the business of the supply chain, have varying needs and expectations from the product. As such, they factor in various attributes in their purchasing-decision process: price, utility, quality, service, and return policy. Note that for one consumer, price may be the only driver, while for another customer, all of the attributes may be at work with varying decision weights. That is, consumer heterogeneity is a better reflection. Consumers may utilize mobile technology, or visit a physical store, to research information about and to place their orders. Once the order is received by the seller, they may acquire or be notified about the delivery status of the shipment. Online shopping was already on an upswing for the recent decade, and it became a standard practice during the COVID-19 pandemic lockdown, which may further increase online shopping habits, postdisruption.
The BSCF is an adaption of the celebrated Supply Chain Operations Reference (SCOR) model which is a strategic planning tool applicable to supply chains across all industries (see, Huan et al. 2004) and integrates resources, processes, and key performance metrics. The SCOR model builds on plan, source, make, deliver, and return modules. We emphasize in our framework that not only the focal company but also its upstream and downstream (retailer) focus on the triple bottom line (TBL) sustainability objectives in the “planning” stage, so that those objectives are carried to other operational modules. For example, if the manufacturer is responsible for collecting the returned products and recovering value, it should gauge in its strategic plan and the “return” module how this could be achieved in the most efficient (economic), greenest (environment), and socially responsible way.
All the interactions between the supply chain partners, and operations along the chain from raw material extraction to production to delivery to the consumer, and the temporal reports and contracts in-between create massive amounts of data. Add to this, the interactions between the consumers, and consumers informing each other about and reviewing the product through social media sites, the amount of data gets bigger.
Using big data to better inform supply chain decisions foremost requires the supply chain partners to share in a transparent and timely manner their operations and product data with each other. To achieve this, the partners should work toward achieving a common TBL strategy within their value chain and maintain an information technology infrastructure, the installation, and upkeep costs of which are contractually agreed. Recently, several information technology paradigms such as the Digital Twin, Internet-of-Things, and Blockchain have emerged claiming such supply chain data coordination. Naturally, such innovations bring with them some drawbacks along with potential solutions to big problems. These mostly “energy-heavy” infrastructures, employing massive data storage and near real-time computing, may then defeat the purpose of sustainability. As well as studying possible reasons as to why supply chains are reluctant to adopt Blockchain technology, Kouhizadeh et al. (2020) noted the extreme cost and environmental burden that Blockchain placed on energy consumption.
It is a formidable task to collectively respond by the supply chain capabilities to the complex and intertwined consumer attributes and their resultant demand forms. However, the evolving landscape of sustainable supply chains calls for re-examining the feasibility of centralizations, with the current advents in technology. A sustainable supply chain analytics (Ulkii and Engau 2020) approach would be best suited for sustainably matching supply and demand.
Concluding Remarks
In the last few decades, we have witnessed remarkable changes in supply chains, from restructuring of chain members for coordination to adapting a “value chain” management approach to more responsive and efficient logistics system. Whether operational (short term) or strategic (long term), those required supply chain transformations emanate, in essence, from four main trends in the marketplace: globalization and trade facilitation (e.g., Benton et al. 2016), enhancements in mobile technology and computing powers, changing consumer wants and needs, and an increased awareness of the climate change and sustainability issues surrounding it. This chapter has brought a discussion as to what factors can affect consumers behavior toward purchasing sustainable products, and how can this be captured and reinforced with the increasing use of and generation of big data in supply chains.
In this chapter, the systematic content analysis of articles addressing consumer decisions to purchase products, including sustainable products, focused on five key factors. The factors examined were price, utility function, quality, services, and return policy. Findings indicated that consumers want products that are safe, environmentally friendly, sustainable, and priced within their means. Consumers also expected those involved in manufacturing products throughout the supply chain to uphold global environmental values, to make necessary products available to all, to recognize the importance of engaging in sustainable practices, and to produce quality products. To do this, manufacturers were encouraged to recognize the challenges facing our strained ecosystems, be transparent and communicate product content and manufacturing processes at all levels of the supply chain, and to consider consumers’ needs and concerns. With these findings in mind, a BSCF was proposed that differed from other unidirectional models. The BSCF posits that the flow of both information and material in the supply chain is bidirectional, a continuous interaction. The BSCF also considers the triple bottom line, sustainability, and consumer preferences and needs, creating large data sets. The big data sets that are generated through this framework can be used to assist supply chains in developing effective, sustainable manufacturing processes and understanding consumer decision-making and product needs.
While the research process was thorough, not all databases were examined. As well, keywords entered in the search may not have uncovered all relevant articles. Perhaps, using different key words or phrases would have resulted in additional articles focused on consumer decision-making processes when purchasing sustainable products. The key product factors used in this research are well-known and researched. However, other less researched factors may enter into decision-making when choosing a product to buy. In addition, few studies touched on the complex interplay among all the variables examined in this research.
Therefore, the future research could examine the existing literature related to consumer purchases with a view to uncovering more variables that impact consumer decisions rather than limiting them to a select, but relevant, few. Studies employing a qualitative research approach to address consumer understanding of the link among the supply chain, sustainability, environmental issues, and their choices are rare. Employing in-depth individual interview or focus group methods to ascertain consumers’ perspectives on their product purchasing choices, the importance of sustainability and environmental issues, and their knowledge of product content and manufacturing practices could produce unique data of the issues noted. In addition, researchers must also ensure that their findings and recommendations reach the public, as having answers and solutions without sharing them is futile.
Consumers who continue to demand their wants and needs from the products, have been feeling a need to actively contribute to a sustainable environment (do Pago et al. 2013). The supply chain framework we proposed is a starting point to identify at what stages or processes of supply chain operations (e.g., in value recovery) consumers’ voice can be further included. Amid all these fast-changing attributes and capabilities, an integrated consumer behavior and its related analytical demand model would be the next step as a research avenue.
Another emerging research is related to the trilogy of supply chains, disruptions like COVID-19, and sustainable consumption. As the pressure by consumers on supply chain visibility and access on the whole life cycle of products (from sourcing to recovery) increases, so does the pressure from government. However, for example, COVID-19 has created conflicting goals between policy-makers and sustainability; a good example of this is how the ban on single-use of plastic bags has been revoked, as a precaution to prevent further contagion of the corona virus (see, Silva et al. 2020). Add to this, the exponential use of home-deliveries during the pandemic has brought again the viability of the efforts toward a sustainable world. That is, the changing consumption behavior during the times of disruptions, and thereby, the need to formulate innovative public policies, supply chain models, and sustainable logistics systems stand ahead of us as research problems that need immediate attention. Studying the expected salient features of consumption behavior in a circular economy model would be another future research.
The amount and depth of the research on sustainability verifies its relevance to consumers, manufacturers, government, and researchers. However, balancing purchasing decisions, personal resources, and sustainability is difficult and hindered by not having a Circular Economy. Peralta et al. (2020) described a Circular Economy as one that is based on the principles of eliminating waste and pollution, developing products and materials for long-term use, and regenerating natural eco-systems. They also noted that a “transition to the Circular Economy seems to be the model of change necessary to achieve a society that is sustainably integrated into the planet.” Working together, governments, manufacturers, and consumers can produce products that embrace the principles of a Circular Economy in a manner that values human health, sustainability, controlled growth, and the environment.
