Are Fast Supply Chains Sustainable?
A critical decision made by many firms is whether to adopt a responsive supply chain (prioritizing speed) or an efficient supply chain (prioritizing cost). We consider the environmental implications of this choice. We analyze a model wherein responsiveness increases marginal costs, decreases leadtimes, and changes the per-unit environmental impact of production. We distinguish between responsive nearshore and offshore supply chains: in the former, responsiveness is achieved by reducing the physical distance between source and destination, while in the latter, it is achieved by using expedited production and transportation methods. Compared to an efficient supply chain, we find a responsive offshore supply chain always increases firm profit and environmental impact. A responsive nearshore supply chain yields greater profit than an efficient supply chain if demand variability is high; however, it generates smaller environmental impact if demand variability is low. These are opposite conditions, and hence even with a responsive nearshore supply chain, firms will have the greatest incentive to invest in a responsiveness when it is most detrimental to the environment. Nevertheless, it is possible for a responsive nearshore supply chain to both increase profit and decrease environmental impact, provided demand variability is moderate. We conclude that while fast supply chains are not inherently unsustainable, they generate the potential for misalignment of profit and environmental performance, and the problem is more severe with responsive offshore supply chains. We discuss the implications of this for policymakers seeking to encourage firms to use supply chains that generate the least environmental impact
Year of publication: |
2022
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Authors: | Tuna, Ali Kaan ; Swinney, Robert |
Publisher: |
[S.l.] : SSRN |
Saved in:
freely available
Extent: | 1 Online-Ressource (38 p) |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 28, 2021 erstellt |
Other identifiers: | 10.2139/ssrn.3995549 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10014086040
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