Syed Abdul Rehman Khan - Global Perspectives on Green Business Administration and Sustainable Supply Chain Management

• Qingyun Zhu
  University of Alabama in Huntsville, USA
• Joseph Sarkis
  Worcester Polytechnic Institute, USA

ABSTRACT

Products and their associated material, capital, and information are critical flows within supply chains. Supply chain management needs to facilitate product portfolio management. Some example activities include material sourcing, product design and manufacture, product delivery and transportation, product usage, and service. Closing the supply-chain loop, especially for sustainable supply chains, include end-of-life disposal and repurposing activities. Sustainable supply chain development typically focuses on three major dimensions of organizational competitiveness, economic, social, and environmental. Organizations make product deletion continuously. These decisions can profoundly contribute to sustainability. Alternatively, sustainability performance of various supply chain process and product or material flows may also be strategic product deletion reasons. This chapter will review the integration of product deletion with sustainable supply chain management. It will entail the impact of product deletion on sustainable supply chains.

INTRODUCTION

Product management is critical for companies. The past few decades have witnessed dramatic growth in product development and innovations in product category, design and other variates. Continuous organizational product addition and product portfolio growth does not translate to profit margin increase. Considering the amount of resources and managerial effort for large product portfolio management, product addition may present a U-shape relationship to firm profit. Highly diverse product portfolios, though, enable firms to satisfy various needs, especially with highly heterogeneous consumer markets. Critically, these larger product families will likely drain resources and capabilities away from profitable products. Large companies often lose track of managing their product portfolio dynamics; not to mention small and medium sized companies with limited resources.

Yet today, product deletion has remained a neglected topic within business research. Existing literature has extensively investigated product addition related decisions, including product line extensions, product proliferation, product innovation, and new product development. Product deletion often occurs in a products decline stage of its life cycle. It is a viewed as relatively less appealing decision and area of focus to both academics and practitioners. But it can have deep and pervasive competitive implications (Zhu et al., 2018). Product deletions impact on firm performance, an intuitive while complex relationship, calls for systematic and in-depth investigation.

Firms compete as supply chains today. Products are critical flows on supply chains and supply chains are designed around products. Product deletion decisions have profound implications on supply chains and supply chain performance measurements. These implications should be included in product deletion decision making.

Eliminating or withdrawing weakly performing products from a firms product portfolio will result in a rationalized product portfolio with lower resources consumption, labor usage, as well as emissions and waste (Bai et al., 2018) on supply chains. The leaner a product portfolio, the more environmentally friendly and socially responsible its supply chain may become. A more rationalized product portfolio will open operational capacity and yield; potentially it will lead efficiency and economic competitiveness. Keeping a low level of product variety, firms can concentrate resources including capital, people and technology to core products, which will enhance the product performance in quality and service and further influence firm image and identity in its market segments.

Sustainability may also cause a product to be deleted (Zhu & Shah, 2018). When economic sustainability of a product portfolio becomes tight, given the restricted amount of financial resources, the firm might consider cutting products that are capital intensive but revenue shrinking. When certain products yield social concerns, for example, products outsourced to locations with child labor issues overseas, firms may delete these products. When some products lead greater hazardous wastes, consumption of depleted resources, or cause other environmental burdens due to growing material consumption, the product might be deleted with green and pro-environmental substitutes.

The chapter will provide an overview of the topic by including background on product deletion, sustainability in supply chains, and their melding. A general series of observations and concerns in managing these simultaneously will also be presented; with examples, where appropriate. Some research directions and concerns will form the fourth section. A concluding section will summarize the chapter.

PRODUCT DELETION

There is no standard definition for product deletion. In the existing literature, strategic outcomes overlap amongst concepts including product deletion, product portfolio rationalization, product portfolio optimization, product design and its dynamics, complexities and varieties. These concepts might not explicitly address product deletion, but they might discontinue or remove certain product units or attributes of products (Avlonitis et al., 2000; Gilliland, 2011; Saunders & Jobber, 1994). Product deletion, alone, is a strategic choice of a firm to discontinue, remove, or withdraw a product from its product line or product family (Avlonitis & Argouslidis, 2012).

Much of the existing product deletion research have developed around an assumption that products under investigation have reached to maturity and are at the declining stage of their lifecycles (S. J. Hart, 1989). It is assumed that product deletion occurs when there is shrinking market value and financial returns for a product.

In practice, diverse organizations such as Heinz, P&G, Kraft, Polygram, and Sony continuously evaluate and provide a reduction of the scope of their product portfolios. In these and other circumstances, product deletion significance is increasing because of shortened product life cycles, customization, and the consumer desire for new products.

Product deletion has been studied as a strategic planning activity compensating with product replacement and new product development.

In this chapter, we extend product deletion to a broader strategic dimension by integrating marketing and finance antecedents to a supply chain network perspective. This chapter will entail how product deletion is considered in supply chain network processes, especially from sustainability performance measurements; and how product deletion will affect supply chain sustainability, not only economically, but also socially and environmentally.

SUSTAINABLE SUPPLY CHAIN MANAGEMENT

The contemporary development of supply chain management (SCM) has changed the way organizations compete (Seuring & Mller, 2008). Companies are no longer individual entities that solely compete on their resources and products but interact and interlock as supply chains that transform comparative resources to interrelated resources amongst relationships. These relationships can be managed using material, transaction, and information flows. Products are important linkages for these relationship developments; even in some service environments.

To be able to produce products or provide services, having the necessary resources, processes, and materials is necessary. The term SCM involves both external, upstream and downstream, and internal operations practices (Mentzer et al., 2001). Supply chain principles also relate to the value chain concept. The elements of the value chain include core processes of inbound logistics, operations, outbound logistics, marketing and sales, and service, supported with various non-core organizational functions including sustainability.