“Sustainable Supply Chain Management: Can the Poor be the Solution to Sustainability?”: A Case Study About the Inclusion of Small and Poor Farmers and Communities in the Supply Chains of Multinational Cosmetics Companies to Enhance Sustainability

Julia Alexandra Kositzki

Student thesis: Master thesis

Abstract

Recent research on sustainable supply chains highlights the importance of the interaction of environmental, social, and economic parameters to enhance sustainability. However, research up to now has focused to a large extent on the chain’ s environmental performance whereas it has paid little attention to social issues. The practice of including the poor in supply chains seems to be adequate to fill this gap. Research on the interface between sustainable SCM and doing business with the poor is, however, rare. Aiming at making a contribution to this field, this study examines the relationship between sustainable SCMand the inclusion of the poor in the supply chain of MNCs. The study is based on three research questions:
(1) What are the motivations of cosmetics companies to include small and poor farmers and communities as suppliers in their supply chains?
(2) How do the projects with farmers and communities create impacts on sustainability? (3) What challenges do the companies encounter when engaging in these projects?
The questions are addressed by conducting three case studies of projects with small and poor farmers in multinational cosmetics companies. The case studies not only found social motivations to engage in projects with the poor but also environmental, economic and cultural ones, as well as the objective to increase transparency and to put company strategy and values into practice. Environmental impacts are created through the preservation of biodiversity, soil conservation and climate protection, whereas income generation, institutional improvements, the promotion of self-sufficiency, and the compliance with human rights and labor law address social sustainability. Through price stability and a secured raw material supply, brand differentiation and a price premium for end products, the economic dimension is impacted. The projects were also found to contribute to the conservation of cultural heritage. However, the remoteness of suppliers, the lack of physical and institutional infrastructure, cultural differences, as well as the adaption of internal processes and the difficulty of finding adequate personnel present challenges when sourcing from these suppliers.
Considering the current state of research, the results of this analysis offer a solid base for developing a research field at the interface of sustainable SCMand business operations with the poor, and raise issues for future research in order to emerge deeper into the topic. It also provides a starting point for integrated approaches towards sustainability. Moreover, practical implications arise from the study on how to improve a SC’ s sustainability. The paper points out practices for companies targeting the poor as suppliers with the goal to not only create a social impact but also contribute to other issues such as environmental protection.

EducationsMSc in International Business, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2016
Number of pages154
SupervisorsLeonardo Santiago