Developing closed loop supply chains for environmental sustainability

Abstract

Purpose Forward and reverse supply chains form a “closed loop” when managed in a coordinated way and this “cradle to cradle” responsibility has strong relevance to addressing environmental sustainability in global supply chains. The extensive outsourcing of manufacturing has created highly fragmented supply chains, which is strongly evidenced within the UK clothing industry, and it presents major environmental challenges, particularly around waste and resource use. The purpose of this paper is to investigate how a closed loop supply chain (CLSC) can be successfully developed to address environmental sustainability. Design/methodology/approach The natural resource-based view (NRBV) acknowledges the importance of a firm’s tangible and intangible resources, as well as socially complex relationships, and provides three path-dependent strategies for achieving environmentally based competitive advantage. Via an in-depth case study of the UK-based clothing firm, the NRBV is employed as a framework for understanding the processes that a focal firm needs to engage in to develop a CLSC, and the contribution that is made by its resources and supplier relationships. Findings The findings illustrate the key importance of strategic resources and shared vision and principles between the focal firm and its suppliers, in order to progress from a more reactive pollution prevention strategy to a fully embedded CLSC response to environmental sustainability. The case study highlights the need to extend the current CLSC model to integrate the design function and end customer; the design function ensures that appropriate environmental practices can be implemented, and customers represent a key stakeholder as they enable the reverse flows required to maximise value and minimise waste. Originality/value The NRBV and its three path-dependent strategies are an established framework for understanding environmentally based competitive advantage, but has not previously been explicitly employed to investigate CLSCs. This research, therefore, provides valuable insight into the applicability of this model in the supply chain field, and the key role of tangible and intangible resources and socially complex supplier relationships in developing and achieving a CLSC.