Benchmarking supply chainsustainability: insights from

a field studyClaudia Colicchia

Logistics Research Centre, Carlo Cattaneo University – LIUC,Castellanza, Italy, and

Marco Melacini and Sara PerottiDepartment of Management, Economics and Industrial Engineering,

Politecnico di Milano, Milano, Italy

Abstract

Purpose – Given the relevance of supply chain sustainability, the aim of the present paper isthreefold: first, to investigate the strategies currently undertaken by companies in the supply chainsustainability arena, and, second, to find out which phase of the supply chain is at the forefront in theimplementation of initiatives towards more sustainable supply chains. Finally, the criteria commonlyused for priority-setting amongst different initiatives within the same supply chain phase areidentified.

Design/methodology/approach – A three-pronged methodology was adopted. First, a frameworkwas developed to identify the initiatives towards supply chain sustainability. Second, the frameworkwas applied to a set of multinational companies by examining their environmental reporting, thus toassess the adoption of each initiative. Third, a further in-depth investigation of three companies wasfinally performed in order to provide additional insights on the obtained results.

Findings – The research offers a benchmark of primary multinational companies with respect to thesupply chain sustainability initiatives and their level of adoption.

Research limitations/implications – The examined set of companies, although representative(i.e. the analysed companies operate in industries in which the environmental concern is particularlycritical), is limited. However, the present paper contributes to the knowledge on supply chainsustainability and captures variations in theory, paving the way for new research.

Practical implications – The paper provides an instrument to evaluate and compare companies interms of supply chain sustainability and highlights the main challenges that companies have toconfront.

Originality/value – The originality of the paper lies in the adoption of a supply chain perspective toinvestigate sustainable initiatives.

Keywords Sustainability, Environment, Benchmarking, Supply chain management, Green logistics

Paper type Research paper

1. IntroductionSupply chain sustainability has been more and more in focus during the last years, bothamong the organizations (Hendrickson et al., 2006; Mahler, 2007) and as a research topic(Seuring and Muller, 2008). Originally, many companies have viewed sustainabilityinitiatives as mandatory and driven by regulation (Melacini et al., 2010) but more recentliterature would suggest that voluntary environmental programmes are also introducedby organizations as possible alternatives for gaining or maintaining a competitiveadvantage (Sarkis, 2003).

The current issue and full text archive of this journal is available at

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Benchmarking: An InternationalJournal

Vol. 18 No. 5, 2011pp. 705-732

q Emerald Group Publishing Limited1463-5771

DOI 10.1108/14635771111166839

According to the existing literature, the need for analysing environmentalalternatives and quantifying the sustainable performances of a company is more andmore vital (Sarkis, 2003; Veleva et al., 2001). Dealing with the sustainabilityquantification, a key issue regards the system boundaries to be considered (Finkbeiner,2009), i.e. analysing the single company or the supply chain as a whole (Schmidt andSchwegler, 2008), focusing only on direct impact of internal processes or also onindirect impact created at the supplier level (Koplin et al., 2007).

Traditionally, a major line of research about supply chain sustainability regardsreverse logistics (Seuring and Muller, 2008), defined from an environmentalperspective as the return of recyclable or reusable products and materials into theforward supply chain (Sarkis, 2003). In this field, the main focus is on logistics networkdesign with the aim to optimize the closed-loop manufacturing for product recovery,reuse and recycling of materials (Quariguasi et al., 2009).

Still, there is little existing literature that addresses sustainability of the “direct”flows of goods by using a supply chain view (Linton et al., 2007). In this sense,contributions on life cycle assessment (LCA) for single products or product families canbe considered as the only examples that adopt the broader perspective (Lai et al., 2008).However, LCA studies are very time consuming and very costly (McKinnon, 2010).According to Schmidt and Schwegler (2008), such analyses can only be carried out forproducts particularly relevant from a strategic or environmental point of view,avoiding situations in which the LCAs of all products are noted and updated.

Many authors are exploring environmental initiatives within each major phase ofthe supply chain. In fact, much of the research is focused predominantly on onefunctional area only (Sarkis, 1999), addressing specific aspects such as product designfor environment (Turner and Houston, 2009) or energy efficiency and greenhouse gasemissions (Hendrickson et al., 2006). To the best of our knowledge, the study by Raoand Holt (2005) is the only contribution that identifies the initiatives for greening thedifferent phases of the supply chain.

The present paper aims to fill this void, investigating the current adoption bycompanies of environmentally sustainable initiatives from a supply chain perspective,i.e. considering all the phases of supply chain management.

The remainder of the paper is organized as follows. The purpose and researchquestions are outlined in Section 2, while the methodology of the present research isdescribed in Section 3. After the description of the proposed framework forenvironmentally sustainable initiatives (Section 4), the analysis of the environmentalreporting of ten multinational companies follows (Section 5). The case studies arepresented in Section 6 and the paper then discusses the results, provides insights on thekey elements driving the adoption of sustainable programmes by companies, andconcludes with implications for research and management (Section 7).

2. Purpose and research questionsThe literature review has revealed the increasing interest that the research communityhas progressively shown towards the subject of supply chain sustainability.Such rising attention may be observed also from the practitioners’ viewpoint, sincecompanies have started to experience pressure from a variety of stakeholders toimplement new initiatives towards sustainable supply chains.

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Based on this scenario, the aim of the present paper is threefold: first, to find outwhich phase within the supply chain is at the forefront in the development of moresustainable supply chains (Research Question 1), and, second, to investigate theinitiatives currently undertaken by companies in the supply chain sustainability arena(Research Question 2). Finally, the criteria commonly used for priority-setting amongstdifferent initiatives within the same supply chain phase are identified (ResearchQuestion 3).

3. MethodologyIn order to achieve the research objectives, an in-depth review of previous literature onthis topic was initially performed. The three dimensions of sustainability, i.e. social,economic and environmental (Carter and Rogers, 2008) were explored. Of them, onlythe environmental dimension was specifically taken into account for the purposes ofthe present study. In order to address the emerged literature void, a supply chainperspective, that encompasses all the phases of supply chain management, wasadopted within the analysis.

Based on these premises, the following three-pronged methodology was used.First, a framework was developed to identify the initiatives towards supply chainsustainability. Second, the framework was applied to a set of companies by examiningtheir company environmental reporting (CER), thus to assess the adoption level of eachinitiative. Third, a further in-depth investigation of three companies was finallyperformed.

The framework was built on the earlier study by Rao and Holt (2005) and furtherexpanded based on a comprehensive review of the existing literature. Two main stepswere detailed:

S1. Identification of a set of environmental initiatives for each phase of the supplychain.

S2. Identification and computation of an environmental performance index (EPI)for each phase of the supply chain to benchmark the company environmentalperformances.

In order to address the first aforementioned step of the framework (S1), building uponprevious literature (Linton et al., 2007; Rao and Holt, 2005) five different phases of thesupply chain were taken into account, namely:

(1) inbound supply chain (green procurement);

(2) production (“internal” supply chain);

(3) outbound supply chain;

(4) warehousing; and

(5) product design and use.

For each of the above-mentioned phases, a detailed list of initiatives that may beundertaken to enhance environmental sustainability was prepared based on theliterature review. Reverse logistics was excluded from the analysis, since it is a verynarrow aspect of sustainability, already studied in detail in the extant literature.The possible solutions and requirements of the reverse logistics channel may

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considerably vary depending on the organization, industry and product type (Sarkis,2003). For this reason, we considered it beyond the scope of the present research.

As for S2, an EPI for each phase was computed in order to measure the overall effortcurrently undertaken by companies to foster the sustainability of their supply chain.This allows a comparative analysis for benchmarking the sustainability initiatives inplace for each company within each phase of the supply chain.

The framework was then applied to a set of ten large multinational companies(Coca-Cola HBC, Electrolux, Henkel, Ikea, Fiat Group, Kimberly Clark, Levi Strauss& Co, Nestle, Pirelli and Tenaris). The companies, whose features are illustrated inTable I, were selected based on the following criteria:

. large companies, which are more inclined to adopt green initiatives (Vachon andKlassen, 2007);

. multinational companies with the headquarter, or at least a branch, in Italy;

. companies operating in industries in which the environmental concern isparticularly critical; and

. listed companies that communicate to their stakeholders their environmentalstrategy and the related obtained performances.

For each of them, the CER available on the internet site of the company was examined tounderstand the current environmental initiatives they are adopting within each phase ofthe supply chain. The analysis of public sustainability reports is already present in theextant literature on this topic (Schneider et al., 2010). The main aim is to provide someinsights into the level of understanding and awareness of sustainability issues withinthe companies reviewed, without claiming to link the obtained performances with therelated investment (Veleva et al., 2003; Roth and Kaberger, 2002).

Starting from the results obtained from applying the framework, a sub-set of threecompanies was finally selected for further in-depth interviews. Those companieswere chosen for a more detailed analysis as they were presenting a significant

CompanyTurnover (Italy2009) (million)

Industrysector

Number ofproductionplants in

Italy

Publicationyear of the firstenvironmental

report

Publication yearof the examinedenvironmental

report

Coca-Cola HBC 1,228 FMCG –beverage

8 2002 2008

Electrolux 1,026 Electronics 5 1995 2008Henkel 900 FMCG 2 2001 2009Ikea 1,382 Retail 0 2005 2008Fiat Group 12,726 Automotive 64 2004 2009Kimberly Clark 282 FMCG 2 2004 2009Levi Strauss & Co. 89 Fashion 0 n.a. 2007Nestle 1,548 FMCG 12 2006 2009Pirelli 500 Automotive

– tyres4 2005 2008

Tenaris n.a. Steelindustry

5 n.a. 2009Table I.Features of theexamined companies

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environmental sensibility, also due to the considerable interest that consumers had in theirsustainable initiatives. Specifically, two companies operate in the beverage industry(i.e. Coca-Cola HBC and Nestle), and one operates in the electronics industry(i.e. Electrolux). In particular, as for Nestle, the Waters division was specifically examined.

Companies were asked to discuss the obtained results and share ideas on theinhibitors that prevent them from pursuing major change programmes.

The interviewees were supply chain managers and/or environment managers,working in Italy. Interviews normally lasted between 3 and 4 hours (plus a furthercheck for data validation), and were completed in the September-December 2009 timeframe. The interviews were audio-taped and supported by a questionnaire composed oftwo macro-sections, respectively, dealing with:

(1) company general information, including logistics and transportation network; and

(2) initiatives in place towards supply chain environmental sustainability,including performance measurement indicators being adopted and overallperceived impact on CO2 emissions.

4. Framework for assessing supply chain sustainabilityIn this section, we present the framework to identify and assess the initiatives towardssupply chain sustainability. A brief description of the initiatives that can be used toenhance environmental sustainability within each of the above-mentioned supply chainphases (i.e. inbound supply chain, production, outbound supply chain, warehousing andproduct design and use) is initially provided (from Sections 4.1 to 4.5). The identifiedinitiatives were synthesized in Tables II and III. Then in Section 4.6, we present the EPIto benchmark company sustainability in the supply chain context.

4.1 Inbound supply chainThe traditional view of purchasing as a tactical function has changed profoundly in thelast years. Globalisation has allowed a deep variety of goods and services to becomeavailable anywhere in the world and it also facilitated offshore outsourcing to low-costcountries. Therefore, the purchasing function is becoming increasingly critical forthe competitiveness of the firm and its impact on the environmental performance of thecompany, through the purchase of materials or selection of suppliers, couldbe significantly relevant (Sarkis, 2003).

From the inbound perspective, greening the supply chain comprises initiativestowards a better management of inbound logistics as well as green purchasingstrategies. However, it should be noticed that the initiatives related to the transportationphase may also be applied in the outbound supply chain, with the only difference that theoutbound logistics is more critical for stricter service-level requirements to be respected(Wu and Dunn, 1995). Thus, its management towards an enhanced environmentalsustainability is more difficult. Furthermore, green purchasing strategies represent alarge part of the inbound function in response to environmental concern (Rao and Holt,2005). For these reasons, we decided to analyse within the inbound supply chain only theinitiatives related to green purchasing, while referring to the outbound phase for athorough analysis of environmental initiatives in logistics.

The “green purchasing” can be defined as the process of formally introducingand integrating environmental issues and concerns into the purchasing process,seeking to acquire goods and services characterised by a low environmental impact,

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i.e. products environmentally friendly in nature and produced using environmentallyfriendly processes (Handfield et al., 2002; Rao and Holt, 2005).

The initiatives to minimize environmental impact in inbound supply chain,according to the “green purchasing” approach, can be summarised as follows:

. Suppliers’ requirement to have an environmental certification, e.g. ISO 14001,EMAS. For example, once certified, the ISO 14001 label indicates that the supplierhas implemented a management system that documents the organization’s

Supplychainphase Approach Initiative Main references

Inboundsupplychain

Greenpurchasing

Suppliers’ requirement to have anenvironmental certification

Bowen et al. (2001), Chen (2005),Christensen et al. (2008),Darnall et al. (2008), Handfieldet al. (2002), Hervani et al. (2005),Matthews (2003), Rao and Holt(2005), Rex and Baumann (2006)and Vachon and Klassen (2008)

Eco-labelled product purchaseAdoption of environmental criteriainto the supplier assessmentsystemEnvironmental collaboration withsuppliers

Production Reduction ofinput resources

Energy: introduction of an energymanager

Florida and Davison (2001),Hilliard (2006), King and Lenox(2001) and Veleva andEllenbecker (2001)

Energy: choice of green electricpower suppliersEnergy: use of cogeneration plantsEnergy: energy efficiencyimprovementEnergy: adoption of cleanertechnologyFuel: district heating systemWater: increase water systemefficiencyWater: waste water treatmentWater: process optimizationMaterial: reuse of materialsMaterial: process optimization

Reduction ofwastes andhazardousemissions

CO2 capture and storage McKinnon et al. (2010),Rothenberg et al. (2005) andTurner and Houston (2009)

Reduction of hydrofluorocarbons(HFC) and perfluorocarbons (PFC)Use of CO2 refrigeration systemsTreatment and control of post-combustion emissionsUse of alternative fuels (e.g. cleanerfuels)Treatment and recycle ofhazardous wastesProcess optimizationImplementation of waste-to-energyprocessWaste reduction, reuse andrecycling approaches

Table II.Sustainable initiativeswithin inboundsupply chain andproduction phases

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environmental aspects and impacts, and identifies a process of continuousimprovement (Chen, 2005; Darnall et al., 2008; Matthews, 2003).

. Eco-labelled product purchase. Eco-labels allow buying companies to chooseproducts with a low environmental impact. Beyond mandatory eco-labels,a supplier can use voluntary eco-labelling systems (e.g. green lights, green label)as tools to improve its market share by communicating the environmentalinformation of products (Rex and Baumann, 2007).

. Adoption of environmental criteria into the supplier assessment system.This initiative represents the extension of the supplier assessment processaimed at incorporating environmental considerations into these activities(Bowen et al., 2001; Handfield et al., 2002). The company establishes the requiredenvironmental performances of suppliers and monitors them through techniquessuch as vendor rating. The required green performances could vary dependingon the context under consideration (Hervani et al., 2005).

. Environmental collaboration with suppliers. Beyond the assessment of theenvironmental suppliers’ performances, this initiative introduces more proactivemeasures, such as involving the suppliers in the product design process and/or inplans to reduce the environmental impact associated with material flows in thesupply chain (Chen, 2005; Christensen et al., 2008; Vachon and Klassen, 2008).The challenge is to create the conditions in which collaborative working becomespossible. The underlying principle is information sharing and the willingness tocreate partnerships. As pointed out by Rao and Holt (2005) often this initiative ismerely operationalised by holding awareness seminars for suppliers, bringingtogether suppliers to share problems, informing suppliers about the benefits ofcleaner production and technologies, arranging for funds to help suppliers topurchase equipment for sustainability improvement.

4.2 ProductionThe sustainable production, considering the sole environmental dimension ofsustainability, can be defined as “the creation of goods and services using processesand systems that are non-polluting, conserving of energy and natural resources”(Veleva et al., 2001).

There are a number of contributions addressing the environmental impact of themanufacturing phase. The proposed approaches to greening the production processcan be summarised into the following categories:

. Reduction of input resources, that is implementation of actions aimed at reducingutilisation of input resources and, consequently, the wastes of materials andenergy during the production process. In this sense, lean production practices(King and Lenox, 2001) and total quality management (Florida and Davison,2001) can lead to improved environmental performances.

. Reduction of wastes and hazardous emissions to human beings and/orenvironment (e.g. solid and liquid wastes, air emissions, noise).

The first category includes initiatives towards reduction of energy consumption,materials, fresh water and fuel utilisation (Veleva and Ellenbecker, 2001). In this sense,sustainable production can be considered as the application of an environmental

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strategy applied to production process to increase the eco-efficiency of the process itself,by minimising the input resources needed to obtain the same output. These solutionsmay lead to improvements both from an environmental and an economic point of viewand for this reason they are called eco-efficient (Tsoulfas and Pappis, 2006).Practices toward the improvement of eco-efficiency can significantly vary for differentprocesses and industries. In Table I, the generic term “process optimization” refers tothis kind of possible environmental initiatives. Other examples of initiatives aimed atminimising the input resources can be: introduction of an energy manager, choice ofgreen electric power suppliers, use of cogeneration plants, energy efficiencyimprovement. Finally, the integration of environmental protection consideration intoproduction technologies is broadly known as “cleaner technology” (Hilliard, 2006).

Approaches towards the reduction of wastes and hazardous emissions shouldconsider different elements: hydrofluorocarbons and perfluorocarbons, nitrous oxides,sulphur oxides, solvents, acids, arsenic, mercury, benzene, solid wastes generated fromthe production process and carbon dioxide (CO2) (Rothenberg et al., 2005;McKinnon et al., 2010).

Once again it is difficult to define specific initiatives towards the reduction ofemissions, since they depend strictly on the process under consideration.

The key issues present in the literature are waste management and the greenhousegas emissions. Waste management falls within the broad category of reverse logistics,through the adoption of reduction, reuse and recycling approaches (Turner and Houston,2009). Greenhouse gas emissions are usually reported in carbon dioxide equivalents.Furthermore, the literature is mainly concentrated on CO2 emissions since it is wellacknowledged by researches that, in the past few decades, the CO2 emission from humanactivities has significantly increased, and, consequently, the problem of global warminghas become an important issue. Many countries are setting out targets to limit the CO2

emission in different industries. A measure of the total amount of CO2 emitted eitherdirectly or indirectly is provided by the carbon footprint (Wiedmann et al., 2006;Wiedmann and Minx, 2008; Matthews et al., 2008). According to some authors, theanalysis of CO2 emissions can be misleading, since “the information contained ina carbon footprint varies depending on how it was calculated and how muchresponsibility the entity being ‘footprinted’ is willing to take on” (Matthews et al., 2008).Although assessing the mere carbon footprint of activities and processes canbe reductive, since it can be in conflict with other environmental indicators (e.g. recyclingpaper should be stopped, because compared to virgin paper with a carbon footprint closeto “zero”, it comes with a higher burden-unless renewable energy is used for theprocesses necessary, many efforts are under way in this direction (Finkbeiner, 2009)).As it will be explained in detail in the following sections, the analysis of carbon footprintregards, besides the production process, the transportation phase as well. Furthermore,the total carbon emissions are not just the direct emissions due to the manufacturingprocesses of the company but should consider also the indirect emission, arising fromthe consumption of energy. These indirect emissions can be controlled through theimprovement of energy efficiency and low-carbon energy supply (i.e. reduction of inputresources). Other initiatives can be used to achieve savings of direct emissions,depending on the process under consideration and the fuel type used.

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4.3 Outbound supply chainOutbound supply chain (also known as physical distribution) is one of the major sourcesof environmental problems (European Commission, 2001). The most critical element isrelated to CO2 emissions during the transportation. The key role of the carbon footprintis even attested by Wal-Mart green supply chain plan. According to Wal-Mart, the globalsupply chain footprint is much larger than its operational footprint and presents more“impactful” opportunities to reduce emissions (Berman, 2010).

Possible approaches towards the reduction of the carbon footprint during thephysical distribution may be identified as follows:

(1) Vehicle optimization, by means of:. vehicle technological innovation, i.e. energy efficiency, reduction of air

emissions and fuel use, vehicle aerodynamics (McKinnon, 2010);. vehicle maintenance and disposal (Wu and Dunn, 1995);. use of alternative fuels (Langley and Capgemini, 2008) (e.g. first- and

second-generation bio-fuels, pressurized natural gas, and, as a long-termstrategy, more advanced solutions such as hydrogen fuel cells);

. carrier selection (i.e. in case of logistics outsourcing, including vehicleenvironmental impacts, such as air emissions, among the carrier selectiondrivers); and

. driver skill improvement (e.g. training courses).

(2) Selection of green transportation modes, such as the combined use of road andeither rail, sea transportation or inland navigation (Wu and Dunn, 1995;Vannieuwenhuyse et al., 2003).

(3) Logistics optimization, aiming to reduce travel distances by means of:. shipment consolidation (Aronsson and Brodin, 2006; Langley and

Capgemini, 2008);. balancing backhaul movements (Wu and Dunn, 1995);. increase of the vehicle utilization degree (Wu and Dunn, 1995; McKinnon,

2000); and. logistics network redesign (Murphy, 1994; Van Hoek, 1999; Murphy and

Poist, 2000).

Travel distance optimization is promoted by the implementation of a good informationsystem (McIntyre et al., 1998). A further indirect transportation improvement may beachieved through product design (Van Hoek, 1999), aiming to reduce packaging weightand volume (Section 4.5).

The presence of tax restrictions or fees for the most pollutant vehicles (Greene andWegener, 1997; Himanen et al., 2005) have not been considered among the strategiestowards CO2 emission reduction, since the present study adopts a “private”(i.e. company) viewpoint.

Other possible strategies related to company car fleets – although noteworthy –have not been taken into account for the purposes of the analysis, since the focus of thepresent paper is on goods.

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4.4 WarehousingThe environmental impact of warehouses is primarily connected to energyconsumption (Andriansyah et al., 2009) and – as an indirect effect – to the CO2

emitted for energy production. Indeed, a number of activities or procedures performedwithin a warehouse, such as air conditioning or heating, material handling operations,lightening, require electrical energy to operate.

In the literature, very few papers may be found that specifically address the issueof energy consumption within warehouses (Rizzo, 2006).

Overall, possible approaches towards the achievement of sustainable warehousingmay be summarized as follows:

. Green building practices, i.e. attention to construction materials (e.g. use ofrecycled concrete, steel, asphalt and other materials), use of energy-efficientlighting systems and day lighting, efficient building thermal insulation(Rizzo, 2006), use of variable-frequency drive heating, ventilation and airconditioning (HVAC) equipment that allow both a significant reduction of energyconsumption and the performance optimization of appliances such as pumps andfans, based on the current building requirements.

. Use of green energy sources (i.e. introduction of solar and photovoltaic panels,use of cogeneration plants, wind turbines and rainwater collection systems).

. Operational strategies, e.g. travel distance optimization, container recycleor reuse (Wu and Dunn, 1995), use of energy-efficient material handlingequipment.

4.5 Product design and useAlthough product design is normally a “clean” phase, it contributes significantly to theoverall product environmental impacts. Such criticality is proved by an increasingnumber of contributions dealing with “design for sustainability” (Sherwin, 2004) or“design for environment” (Calcott and Walls, 2000; Sroufe et al., 2000; Schvaneveldt,2003; Wever et al., 2007). The key objective lies in the achievement of anenvironmentally friendly product design.

A reduction in the product environmental impact may be achieved not only throughan appropriate product design, but also a proper use by consumers. In this sense,consumers must become more aware of the environmental implications related to theproducts they are using, so that sustainability may be perceived as a value-addedelement for the society, as well as a distinguishing feature for companies.

Two main areas main be identified addressing the available strategies towardssustainable product design and use, namely product design, and packaging design.As for product design, possible strategies lie in:

. Reduction of product environmental impact within the supply chain (intended as a“closest loop”). For instance, product design may go towards a decrease in the useof material/energy, or an easier product break up and recycle at the end of the lifecycle (i.e. product design for reuse, recycle, recovery of material, componentparts) (Zsidisin and Hendrick, 1998).

. Reduction of product environmental impact in the consumer use. It is the case oflow energy-consuming products, or those products designed to avoid or reducethe use of hazardous of products (Zsidisin and Hendrick, 1998).

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As for the packaging design, it affects both the generated waste and the overallenvironmental efficiency of the whole supply chain (e.g. benefits related to the degreeof vehicle utilization due to reduced packaging volumes). In this sense, strategies maybe three-pronged:

(1) packaging reduction (i.e. decrease in packaging volume and weight, thus toreduce the generated waste and increase supply chain efficiency);

(2) packaging reuse (i.e. design packaging which may be easily reused); and

(3) packaging recycling (i.e. design packaging which may be easily recycled).

4.6 Environmental performance indexIn order to assess the adoption of the proposed sustainable initiatives for each phase j ofthe supply chain, an EPI for each company k can be defined as follows:

EPIk; j ¼

PNj

i¼1Sk;i; j · Wi; j

N j

· 100 ð1Þ

where:. Sk,i,j is a Boolean variable equal to 1 if the initiative i is adopted in the phase j by

company k, 0 otherwise.. Wi,j is the impact of the initiative i within the supply chain phase j on the overall

sustainable performance.. Nj is the total number of initiatives considered within the supply chain phase j.

The value of EPIk,j, as defined, assesses the implementation by companies of theproposed sustainable initiatives, without considering the intensity in their use. Even ifthis latter dimension could represent a valuable information, its evaluation is reallydifficult (Schvaneveldt, 2003) and is beyond the scope of the present research.

After having calculated EPIk,j for each phase j of the supply chain, an overall EPI foreach company k (EPIk) can be simply computed as their average value. This index,expressed as a percentage, is a measure of the effort made by the considered companyk towards supply chain sustainability.

The proposed initiatives could have a different impact on the performances actuallyobtained towards sustainability (e.g. within the “product design and use” phasethe initiative “easier product break up” could be considered less effective than “designinglow energy-consuming products”). In order to consider this aspect, it is possible to assigna different weight (Wi,j) to each initiative in the calculation of EPIk. However, assigningthe weights to the different initiatives is not always an easy task (e.g. considering theoutbound supply chain different viewpoints clearly exist about the debate on whether ismore important to improve vehicle utilization or redesign the logistics network).Additionally, in the literature, there is no unanimity on the value to be attributed to thedifferent sustainable initiatives. Therefore, hereafter an equal weight for the proposedinitiatives is considered in the calculation of the EPI, while through the case studyanalysis (Section 6) the criteria commonly used for priority-setting amongst differentinitiatives within the same supply chain phase will be investigated.

For displaying the EPI results two approaches are proposed, namely: radar chart,also as known spider chart, and box plots. The first one (i.e. radar chart) is useful to show

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each company results separately, and is commonly used in benchmarking applicationshaving multiple dimensions of performance (Camp, 1995). For instance, it has beenadopted for evaluating Sony’s environmental performance (Schvaneveldt, 2003) as wellas Hitachi’s (Burritt and Saka, 2006). Each axis of the radar chart represents the score ofone of the examined phases. The value displayed on the jth axis indicates thecorresponding EPIk,j indicator. The centre point indicates a score of 0 (i.e. zero initiativesin place), whereas values within the outer circle indicate a significant adoption level.

Such diagram allows to easily represent the directions towards which the companyis operating. The radar chart may help companies perform a benchmarking with theircompetitors, by comparing their average adoption level for each axis (EPIk). Otherwise,it can be also used for benchmarking the adoption level of a single company alongdifferent time frames. In such latter case, the company performance along differentyears may be represented.

However, if the aim is to compare a large number of companies, the radar charttends to offer a less clear representation; in such context the box plot tends to offer a betterreadability. This representation, developed in statistics for quality control(Montgomery, 2009), has been increasingly used in logistics and supply chainmanagement. The bottoms and tops of each “box” are the 25th and 75th percentiles of theEPIk,j, respectively. The distances between the tops and bottoms are the interquartileranges. The line in the middle of each box is the sample median. If the median is notcentered in the box, it shows sample skewness. The features of this plot allow for aninvestigation both within each phase of the supply chain and among them. In fact, it ispossible to find out which phase of the supply chain is at the forefront in theimplementation of initiatives towards more sustainable supply chains, and to analysethe variability in the company behaviour within the same phase.

5. Application of the frameworkBased on the proposed framework, the sustainability effort level has been examined fora set of ten companies (Tables IV and V).

As above observed, results may be analysed for each company or at an aggregatelevel. As for the analysis for each company, Figure 1 shows the case of Coca-Cola HBCusing a radar diagram. Company results in terms of EPIk,j have been plotted, as well asthe mean value for the examined set of ten companies (EPIj). Results attest that for threeout of five phases the adoption level of sustainable initiatives is equal or above 50%.Comparing Coca-Cola HBC with the others, the adoption level is higher, or at leastaligned, to the mean value. Specifically, the company sensitiveness to sustainabilityissues within the outbound supply chain phase is considerably higher than themean value.

The radar chart representation is generally not suitable for aggregate analysis.Therefore, we used the box-plot representation to compare the overall results (Figure 2).

On the basis of the results shown in Figure 2, we can provide a first answer to RQ1:

RQ1. Which phase(s) within the supply chain is at the forefront in the developmentof more sustainable supply chains.

. The majority of companies have adopted sustainable initiatives to strengthenbrand image or differentiate their product, confirming the evidence of the extantliterature. As for the “product design and use” phase, the sample median is equal

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719

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to 71 per cent. This value, besides being higher than for the other phases, coincideswith the 75th percentile. Furthermore, the value of the 25th percentile is thehighest, thus demonstrating a significant adoption level of such sustainableinitiatives for all the examined companies.

. Most of companies have concentrated their effort on the inbound supply chain (thesample median is equal to 50 per cent), or on the production phase (median equal to40 per cent). As far as the inbound supply chain is regarded, the reasonsunderpinning this choice could be related to the ease in the implementation: greenpurchasing initiatives in fact do not require any internal re-organization but only

Figure 1.Radar chart

of sustainability effortsfor Coca-Cola HBC

75%

35%

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Coca-Cola HBC

Benchmark

Figure 2.Company sustainability

effort for each phaseof the supply chain

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0

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the introduction of environmental criteria into suppliers’ selection andassessment. Considering the production phase, it must be remarked that it isthe most internally focused for the company, allowing companies to gatherreliable information to support sustainable initiatives and directly observe thebenefits of them.

. The initiatives applied in outbound supply chain and warehousing arequite limited, up to values equal to zero for warehousing in nearly every case.Specifically for this latter phase, the median is equal to 0 and corresponds to the25th percentile. Only one case has been observed with a remarkable adoption level(i.e. Ikea). Conversely, as for the outbound phase the median value (equal to23 per cent) is higher than for warehousing, although lower than for the otherphases.

It is difficult to investigate the reasons underpinning a different level of adoption of thesustainable initiatives by individual companies. In some cases, the results of theanalysis can be related to the industry in which the company operates. As an example,being Ikea a retailer, no sustainable initiatives for the production phase have beendetected. As for Tenaris, the inbound supply chain phase is the most neglected since itis probably difficult to find “green” suppliers of raw materials for the production oftubes. In other cases, however, it is difficult to explain, with the available data andinformation, the adoption of the sustainable initiatives by companies. For example, it isa counter-intuitive finding that Tenaris does not adopt any initiative in warehousingand outbound SC phases, according to the examined CER.

Going back to the aims of the present paper, to answer RQ2:

RQ2. What are the initiatives currently undertaken by companies in the supplychain sustainability arena?

we consider the implementation of sustainable initiatives within each phase of thesupply chain. The following remarks may be pointed out:

. As a general result, a significant variability in terms of adoption level, partiallydue to the sample size.

. Only two cases have been detected, i.e. with reference to inbound supply chain(Kimberly Clark) and product design and use (Henkel), with a pervasive adoptionof all initiatives considered within the framework. This implies that companieshave been generally focusing their attention on a sub-set of initiatives rather thanencompassing all those available.

. Outbound supply chain and inbound supply chain present the highest variabilityin terms of adoption level. As for outbound supply chain, results range from8 per cent (25th percentile) and 54 per cent (75th percentile), with a differenceequal to 46 per cent between the two. Regards inbound supply chain, the25th percentile is equal to 25 per cent and the 75th percentile equals 75 per cent(difference equal to 50 per cent).

. The initiatives being used by most of companies (i.e. initiatives beingimplemented by at least 80 per cent of them) are: environmental collaborationwith suppliers, initiatives improving energy efficiency, process optimization,decrease in the use of material, packaging reduction.

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Overall, the analysis has confirmed the validity of the proposed framework forbenchmarking the sustainability initiatives towards which companies have started toshow their attention. It has also revealed the companies choose a sub-set of thesustainable initiatives to be implemented rather than adopt all of them. At present,the method to be used for priority setting (i.e. initiatives with high environmental impactversus low implementation costs) is not clear yet. Finally, although the great impact oftransportation process on supply chain sustainability (Roth and Kaberger, 2002), theinitiatives applied in this sense are not as widespread as it would be expected.

6. Case study analysisAmong the ten companies examined within the study, three have been selected(i.e. Coca-Cola HBC, Electrolux and Nestle) for additional in-depth interviews. The mainaim was to investigate the hurdles to the implementation of sustainable initiatives, aswell as the criteria commonly used for priority-setting amongst different initiativeswithin the same supply chain phase. The analysis was mainly focused on the supplychain phases in which the adoption of initiatives towards sustainability is quite limited(i.e. outbound supply chain and warehousing) and it refers to the Italian context only.

Within- and across-case analysis are, respectively, performed as follows. For eachcase, the distribution network is presented, as well as the environmental initiatives inplace, the performance measurement system being used, and the foremost hurdles fromimplementation.

6.1 Coca-Cola HBCCoca-Cola HBC Italia started operations in Italy in 1995 and operates eight bottlingplants across the country, serving approximately 118,000 customers. Coca-Colaproduces, sells and distributes a wide range of beverages, including mineral water.

All beverages produced in Italian plants are mainly sold within the country.The distribution is organized as follows: from the factory warehouses the products aredirectly delivered to large customers or to one of the five distribution centres of thecountry. From here, the goods can be delivered to customers, directly or througha network of transit points. Since production plants are highly specialized, there is aninter-plant flow of products in order to ensure the complete product range at the factorywarehouses. The distribution network, with the only exception of factory warehouses,is outsourced to third parties.

As shown in Figure 1, many of the identified initiatives towards a sustainablesupply chain are implemented.

Considering the supply chain phase product design and packaging, the companyaims to reduce the amount of material used for packaging and to support packaginglightweighting, using bottles, cans and secondary unit loads characterized by reducedweight and volume. This led to a better vehicle utilization, a reduction in thepurchasing cost of materials and a reduction in generated wastes (over 100 tonnes ofPET and 1,800 tonnes of cardboard in 2009 over the previous year).

As far as warehousing is regarded, the implemented initiatives are focused on factorywarehouses, since they are directly managed by the company. The rationalizationof the industrial lighting, through the adoption of automated systems, is plannedto be implemented in the next years. This initiative is embedded in the more

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general energy saving programme, that has already ensured significant economic andenvironmental benefits.

Other initiatives regard the outbound supply chain phase, aimed to reduce theenvironmental impact of distribution and transportation. Through the improvement ofdrivers’ skills, the use of cleaner trucks (e4 and e5) and a better vehicle utilization thecompany wants to conserve fuel and reduce emissions. Furthermore, supplies andfinished goods are transported by rail wherever possible.

The company measures and reports its sustainability performance. For example, thecarbon footprint (total and per litre of product sold) is continuously monitored.Considering the emissions from fleet and transportation, the performance is reviewedwith data monthly gathered from 3PLs, since the distribution is outsourced. It isnoteworthy to mention that, consistently with the transport rate used, the carbonfootprint is not calculated for backhauls. Also, the planning department, that ensures thatthe most efficient routes are taken, does not consider this part of the distribution network.

The company’s perception of the cost impact of the above-described environmentalsustainable initiatives is quite positive: the improvements achieved through productand packaging design, the energy saving programme and the initiatives towards thereduction of the carbon footprint are both economic and environmental. The onlyexception is represented by the use of rail transportation that, although ensuringa better environmental performance, is in Italy often disadvantageous from a costperspective.

6.2 ElectroluxElectrolux is a global leader in household appliances and appliances for professionaluse. Its operations are organized in three core businesses: major appliances, floor careappliances and professional products.

Since many years, Electrolux Group has been committed to research for itsproducts and processes better operational performance as well as environmental impactminimization. The group has been carrying out a worldwide environmental programme,called “Green spirit”, which aims to reduce energy, water and other resourcesconsumption as well as CO2 emissions. The programme involves all activities/unitsalong the supply chain of all business sectors. Managing logistics efficiently is for thecompany of utmost importance (De Toni and Zamolo, 2005). The distribution network isorganized and managed by Electrolux Logistics Italy, a group entity acting as athird-party logistics provider serving customers both within and outside of theElectrolux Group.

The Italian logistics network consists of four plants, with factory warehouses fromwhich large customers are served by means of direct shipments. Smaller customers’orders are fulfilled from central distribution centres through a network of transitpoints. The products sold within the Italian country are partly produced abroad andthe foreign plant is responsible for their distribution to Italian warehouses. Since 2000,Electrolux Logistics Italy is certified ISO 14001. To this extent, it is worth to mentionthe recent introduction of audits to logistics partners, to monitor vehicle maintenanceand disposal, use of alternative fuels, and driver skill improvement.

With regard to product design and packaging, an initiative was implemented in2007 with the aim to reduce the packaging volume, enabling a better vehicle utilization(an improvement in saturation of 30 per cent in certain vehicle types was achieved).

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As far as warehousing is regarded, the implemented initiatives are focused on factorywarehouses, since they are directly managed by Electrolux. Besides the rationalizationof the industrial lighting, low-energy consumption forklift trucks are used.

Great attention is paid to optimize the outbound supply chain performance, both byincreasing the vehicle fill rate and by the planning of backhauls, trying to reduceempty running.

Furthermore, the company is building environmental criteria into carrier selectionand monitoring vehicle emissions. The carriers’ environmental management system ischecked through periodical audits while yearly target to increase the highest truckEuro categories is set by the company. Notwithstanding the increasing awarenessregarding this issue, it is challenging for the suppliers to fulfil the requirement as itresults in significant investments in their fleet.

Also, this company measures and reports its sustainability performance.For example, the carbon footprint (total and per km travelled) is automaticallycalculated and continuously monitored for each transport mode, measuring both directand indirect emissions (according to a LCA approach). The Euro category of each truckis registered in the IT system at its arrival at the warehouse. The calculation of thecarbon footprint is somewhat hampered by the inability of the company to have fullvisibility on the transportation process. Therefore, while assessing the supply chaincarbon footprint, outsource operations can only be assessed by estimates.

The company’s perception of the cost impact of the environmental sustainableinitiatives is positive in case of initiatives under the direct responsibility of Electrolux.Conversely, this perception becomes unknown when there is no full visibility on theprocess and the resources needed for the implementation of sustainable initiatives andthe related benefits are shared with other companies.

6.3 Nestle WatersNestle Waters is one of the Nestle divisions operating in Italy, and is focussed on theproduction and distribution of water, soft drinks, aperitifs and digestives.This business unit has its own physical distribution network, which is almostentirely managed by an external provider, owned for 51 per cent by Nestle Waters.

The logistics network is composed of 12 plants, all of them with a factory warehousefrom which large customers are directly served. The complete product range is presentat the nine central warehouses, from which products can be delivered to the customers,directly or through a network of 30 wholesalers. The goods produced in Italian plants aresold within the country and abroad. However, this latter flow is out of the scope of thepresent research. Nestle Waters Italia does not purchase finished goods from foreignplants. The flows of products from production plants to central warehousesor wholesalers’ warehouses are managed by the logistics service provider, whichorganize more than 180,000 trips per year.

Reducing the weight of packaging and the use of secondary packaging constitutes apriority area for the company. Furthermore, they are exploring new packagingsolutions that could reduce the environmental impacts even more in the future.

Initiatives related to the warehousing supply chain phase are not implemented.Conversely, great attention has been paid to the transportation phase.

The company tries to use alternative transport modes wherever possible: railtransportation is currently used for north-south shipments or, sometimes, for product

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deliveries to central warehouses. For its high adoption of the rail transportation mode,Nestle is one of the best performers within the Italian context. Nestle is participating intests of new engines, new fuels, driver training sessions in order to reduce fuelconsumption. In this direction, the company is also requiring drivers to use fueladditives for modern diesel engines (e.g. AdBlue). The fleet for full truck load (FTL)transportation has been renewed in recent years and today most of the trucks used aree5. Moreover, new ways of loading trucks to maximize loading capacity are underexamination: the company is currently involved in a pilot project on the introduction ofhigh volume-carrying capacity vehicles, as already done in other European countries.Increasing the capacity of trucks can allow the company to consolidate loads, achievinggreater vehicle fill and cutting trucks-kms. Another strategic direction regards thedevelopment of multi-spring brands to bring production sites closer to areas ofconsumption, thereby reducing distances travelled and road traffic. This solution wouldensure a better performance from an environmental point of view that has to be balancedwith a possible negative impact on costs, mainly due to a lower level of efficiencyachievable in production plants.

The group monitors the performances trough a multi-criteria environmentalevaluation that includes water consumption, greenhouse gas emissions and the use ofenergy from non-renewable resources. Once again the lack of a full visibility on localdistribution prevents from an accurate calculation of the carbon footprint generated bythe transportation process.

The company’s perception of the cost impact of the environmentalsustainable initiatives is positive, with the only exception of rail transportation, stilldisadvantageous in Italy from an economic point of view. This perception becomesnegative in case of initiatives that entail a logistics network redesign.

6.4 Cross case analysisThe examined cases, although limited in number, provide some interesting insights.

As for warehousing, a low responsiveness has been generally observed. The reasonis twofold. On the one hand, there is often a lack of awareness in terms of warehousingcost visibility (e.g. energy consumption), as warehouses often belong to third partiesor are located within a production plant (with a consequent lack of disaggregated data).On the other hand, in case of companies adopting a carbon footprint computationsystem, warehousing seems to be the phase with the lowest environmental impact.It should be noticed that the examined sample does not present environmentallycritical (i.e. high energy consuming) products, such as frozen goods.

The adoption of sustainable initiatives dealing with transportation activitiesstrongly depends on the level of visibility on the outbound supply chain. The threeconsidered companies use both FTL for deliveries to large customers or to other facilitieswithin the network and local distribution for small-sized deliveries. They benefit from acomplete visibility on the process and thus monitor the environmental impact of FTLtransportation (i.e. carbon footprint). On the opposite, local distribution seems to beunder-monitored, due to the fact that trucks normally belong to 3PLs, and thereforesimultaneously distribute goods of multiple companies. This complexity may beextended to less-than-truck load (LTL) transportation, where forwarders are expected tocollect and concurrently handle products of multiple companies.

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From this viewpoint, a first new research stream may be identified towards aneffective sustainability of transportation activities. Indeed, sustainable solutions areoften hampered by the inability of the companies to have full visibility on the processand to assess their environmental and economic benefit, since the transportation serviceis performed by an external provider who consolidates on a single truck the shipments ofdifferent customers. Furthermore, the single company, not being the owner of the trucksin most cases, is not willing to invest in renewing the fleet of its logistics service providerin order to reduce their carbon dioxide emissions. Therefore, while examining the supplychain carbon footprint, the company do not include the effects of LTL transportationactivities, due to the complexity of isolating their related impact.

A second new research stream may be identified, lying in the need for developing areporting system assessing the environmental impact of 3PL activities. This may allowtheir customers to achieve a higher awareness of the generated environmental impact.To date, to the best of authors’ knowledge, this aspect seems to be stillunder-represented.

Lastly and closely interconnected with the issue regarding the system boundaries tobe considered for quantifying supply chain sustainability, it should be noticed that themajority of companies do not consider backhauls within the carbon footprint analysis.

As regard to RQ3:

RQ3. The criteria commonly used for priority-setting amongst different initiativeswithin the same supply chain phase.

managers have declared that “green” initiatives have been initially adopted that weresimultaneously leading to cost reduction. All of the examined companies haveimplemented initiatives dealing with packaging (i.e. weight and volume decrease), thusto obtain a better vehicle utilisation and a reduction in the purchasing cost.

Great attention has been paid to transportation planning procedures, thus to gainboth improvements in vehicle utilisation and decrease in travel distances. On theopposite, a lower pervasiveness has been detected in the adoption of 3PL selectioninitiatives. Companies are currently monitoring vehicle pollution ranking, but no caseshave been identified looking for cleaner trucks only, possibly because of potentialtransportation cost increase.

As for the more “radical” initiatives (e.g. supply chain network redesign), thetrade-off between economic and environmental impact appears to be more significant.To this extent, developing tools to support managers in the selection of the propersustainable initiatives seems to be a key aspect, together with the adoption ofenvironmental measurement systems.

7. ConclusionsSupply chain sustainability has recently gained an increasing attention in the supplychain context both from the practitioners’ perspective and as a research area. In thepresent paper, a framework was developed, to address the increasing companies’ needfor analysing the available environmental alternatives and quantify the relatedsustainable efforts. In particular, through a literature review, the initiatives towardssupply chain sustainability were identified and an EPI to measure the adoptionby companies of these initiatives was proposed.

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The framework was applied to ten companies, by examining their CER. Three ofthem were the subject of further in-depth interviews to provide additional insight intothe level of understanding and awareness of sustainability issues within thecompanies.

The paper offers a two-pronged contribution: on the one hand, it provides an answerto the three research questions; on the other hand, it offers a starting point for companybenchmarking in terms of supply chain sustainability initiatives and their adoptionlevel.

Regard RQ1 (i.e. which phase within the supply chain is at the forefront in thedevelopment of more sustainable supply chains), a significant attention has beendetected on product/packaging design, whereas initiatives addressing warehousingand outbound supply chain seem to be less represented.

As for RQ2 (i.e. which initiatives are currently undertaken by companies to build asustainable supply chain) results show a significant variability in terms of adoptionlevel. Specifically, companies are gradually implementing more sustainable supplychains, thus selecting the initiatives to be progressively implemented among thoseavailable.

Finally, regard RQ3 (i.e. criteria commonly used for priority-settingamongst different initiatives within the same supply chain phase), companies havedeclared that “green” initiatives have been initially adopted that were simultaneouslyleading to cost reduction. However, results also highlight that initiatives have beeninitially implemented whose application and benefits could be fully monitored bythe company itself. This has been chiefly experienced for the outbound supply chain(i.e. transportation) phase, which is one of the most critical phases from theenvironmental viewpoint.

The results presented provide both practical and academics implications. First, withreference to supply chain managers, what has emerged is the importance of a supplychain viewpoint to look at environmental sustainability issues. Therefore, the need hasbeen pointed out for measuring the impact in terms of the whole supply chain, ratherthan focussing on product families. In this way, companies would benefit from theadoption of the examined sustainable initiatives. Second, it should be noticed thatthe adoption process of sustainable initiatives is usually a step-by-step procedure.As such, starting from the adoption of initiatives impacting on both an economic andan environmental level, it is possible to sensitize companies in terms of environmentalissues, thus progressively developing a cultural background. Indeed, after the initialphase, it will be possible to extend the adoption also to those initiatives whose balancebetween benefits and costs is less clear. Third, the present study has provided acomplete list of initiatives towards supply chain sustainability, so that managers maybe aware of the potential actions to take for each supply chain phase.

From the academic viewpoint, the paper confirms the importance of shifting theviewpoint from the mere LCA analysis also to the entire supply chain, as suggested byrecent studies. Therefore, it seems important to further deepen the motivations toadoption by extending the sample considered for the analysis.

Finally, the outcome of the present study opens two streams for future research: first,to include also the effects of transports on consolidation of shipments of more than onecompany within the carbon footprint analysis, and, second, to develop a reportingsystem assessing the environmental impact of 3PL activities. Future research may

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go towards the deepening of these aspects. Furthermore, delving deeper in thecomputation of the proposed EPI in order to assess the adoption of the sustainableinitiatives and the intensity in their use as well, could contribute to the body ofknowledge and provide valuable information for companies.

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Corresponding authorMarco Melacini can be contacted at: marco.melacini@polimi.it

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