Papers in Brief (V): Lüdeke-Freund, Gold & Bocken (2016): Sustainable Business Model and Supply Chain Conceptions – Towards an Integrated Perspective

[Note: This is the fifth post in our “Papers in Brief” series. This series offers a special service as it explains the core ideas of chosen research papers in a nutshell.]

Lüdeke-Freund, F.; Gold, S. & Bocken, N. (2016): Sustainable Business Model and Supply Chain Conceptions – Towards an Integrated Perspective, in: Bals, L. & Tate, W. (Eds.): Implementing Triple Bottom Line Sustainability into Global Supply Chains. Sheffield: Greenleaf, 337-363.

Introduction

This chapter belongs to a new book on “Implementing Triple Bottom Line Sustainability into Global Supply Chains” edited by Lydia Bals and Wendy Tate, published in May 2016 via Greenleaf. The chapter takes a close look at current conceptions of sustainable supply chains on the one hand and sustainable business models on the other. It intends to make three contributions to the current discourse on sustainable business models (SBMs) – a.k.a. “Business Models for Sustainability” – and sustainable supply chains (SSCs). These should be of particular value in the context of the increasingly accelerating discussions on circular economy supply chains and business models.

1. Contribution: A review and systematic comparison of SBM and SSC conceptions

We review and present selected SBM and SSC definitions. These are systematically compared with regard to the goals of using these concepts, the elements and contents of SBM and SSC concepts, and the functions of these concepts. The following table summarises our review and comparison.

comparison_SBM_SSC

Comparison of SBM and SSC concepts (source: Lüdeke-Freund, Gold & Bocken, 2016, p. 354)

2. Contribution: Improved understanding of the relationships between SBMs and SSCs

Most business model concepts mention supply chains as core elements without further detailing their complexities. That is, we have to “zoom-in” to understand the role and functioning of supply chains as complex systems within no less complex business models. Such close-ups should extend SBM approaches towards paying more attention to specific supply chain actors and related sustainability problems. Since supply chains are a crucial lever for corporate (un-)sustainability, supply chain design and management fundamentally influence the functioning and development of SBMs. As supply chains cannot be quickly changed altogether, they limit the range of feasible SBMs, at least in the short term.

While supply chains can impact SBMs, the opposite holds true as well. In order to tap the full potential of sustainable value creation, supply chains need to be adapted to the requirements of SBMs, i.e. if a business model is changed towards a potentially more sustainable model this has implications for the underlying supply chain. For example, if a company moves from selling products to leasing them, the sales channels and physical flows of products will need to change dramatically. In this respect, business model management and innovation constitute important sources of supply chain innovation. The review and comparison offered in our book chapter should contribute to a better understanding of these mutual influences and dependencies between SBMs and SSCs.

3. Contribution: Prototype of a new conceptual language

Making use of both conceptions can offer an extended perspective on value creation from a focal organization’s perspective in relation to its position in the supply chain and the relationships with other organizations positioned on upstream or downstream segments. We propose a prototype of a “visual language” in the following figure. This visual language could be used to describe and analyse (and innovate) supply chain and business model configurations simultaneously.

visual_language_sbm_ssc.png

Supply chain position and business models of a waste management provider (source: Lüdeke-Freund, Gold, Bocken, 2016, p. 356)

In the case of a waste management provider, waste becomes a form of raw material offering a new value proposition (waste as a resource) for the setup of new waste management business models. The focal actor, the waste management company (bold-framed), offers a value proposition to consumers (bold/dashed-framed): to take care of their waste that results from use and consumption of products and services. This consumer business model is at the same time embedded in a model which is about the relationships between the waste management provider and, for example, a raw material supplier (bold/dashed-framed). This overarching model is based on a value proposition for a raw material supplier. In return, the waste management company gets paid by the raw material supplier. In both cases there is space for business model variations in terms of incentive and payment structures, for example. We suggest that our visual language can help in analysing and exploring such business model and supply chain variations.

Summary and outlook

In this book chapter we lay the ground for

  1. Systematic reviews and comparisons of SBM and SSC conceptions,
  2. A better understanding of the mutual influences and dependencies between SBMs and SSCs, and
  3. A new visual language that could help bridge SBM and SSC thinking in analyses, communications, and/or innovation processes.

Further research and refinement is needed in these areas. We hope to motivate researchers and practitioners to take a closer look at these conceptions and, for example, to refine the proposed integrated framework and visual language.

References

Bals, L. & Tate, W. (2016) (Eds.): Implementing Triple Bottom Line Sustainability into Global Supply Chains. Sheffield: Greenleaf.

Ellen MacArthur Foundation (2012): Towards the Circular Economy Vol. 1: An economic and business rationale for an accelerated transition. Cowes: Ellen MacArthur Foundation.

Pagell, M. & Wu, Z. (2009:. Building a more complete theory of sustainable supply chain management using case studies of ten exemplars, Journal of Supply Chain Management, Vol. 45, No. 2, 37-56.

Lüdeke-Freund, F.; Gold, S. & Bocken, N. (2016): Sustainable Business Model and Supply Chain Conceptions – Towards an Integrated Perspective, in: Bals, L. & Tate, W. (Eds.): Implementing Triple Bottom Line Sustainability into Global Supply Chains. Sheffield: Greenleaf, 337-363.

 

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