Analysis of Sustainable Supplier Selection: A Nike Case Study

This report investigates the critical topic of sustainable supplier selection, using Nike as a compelling case study. It begins with an introduction to the importance of sustainable procurement and the ethical considerations involved, followed by a literature review of multi-criteria decision model...Read More

Sustainable Supplier Selection
Sustainable Supplier Selection
1

Sustainable Supplier Selection
Table of Contents
1: Introduction.................................................................................................................................3
2: a Literature review.......................................................................................................................4
2.1 Multi-criteria decision model for the selection of suppliers..................................................4
2.2 Sustainability supply chain management system for a procurement manager......................5
3: Method.........................................................................................................................................6
4: Case study findings and analysis...............................................................................................10
4.1 Case study of the company..................................................................................................10
4.2 Analysis of the findings and discussion...............................................................................10
5: Conclusion.................................................................................................................................12
References......................................................................................................................................14
2

Sustainable Supplier Selection
1: Introduction
Sustainable suppliers selection is a process through which business assess and determine
suppliers which fulfil all required criteria. Sustainable supply process includes management of
the environment, society so that business can manage ethics and development. Issue which arises
in the sustainable supply selection possess various scandals in context of different companies. It
is one of the most interesting topics to research so that business can determine the relevant model
to select a supplier of product and services (Bruno, et al., 2012). Nike is a leading shoe makers
with a good reputation in the market. This research will be included in some literature aspects to
support the argument. Methodology of a project is helpful to assess various tools and techniques
implied in a project. Findings and analysis section will be helped in the selection of an
appropriate supplier. Thus, based on aspect, aim and objectives will be drafted to facilitate
research properly.
Aim: Aim is a helpful measure of research which allows an investigation to lead in the right
direction. It enables in managing project properly so that it depicts the efficient outcome of a
project.
To identify the different aspects of the supplier to maintain sustainability in the business – A case
study in Nike.
Objectives: Based on aim, some objectives will be drafted. It will be allowing procurement
manager to identify the best possible frame to select supplier:
 To identify the different components of sustainability in the supply process
 To assess the factors which contribute to sustainability for supply chain management
 To articulate a decision-based model for the selection of best suppliers in the world
This research is helpful to analyse the best suppliers in the world. It enables and assists the
business to use efficient suppliers who work in favour of stakeholders. It will be helpful for a
business to manage its reputation in a keen competitive world. This research is helpful for the
procurement manager to select appropriate suppliers of the product. This research will be
3

Sustainable Supplier Selection
organized with the use of a secondary source of methods. A secondary source of methods
includes different literature about supplier’s selection, procurement management, etc. Use of the
relevant model to measure the performance of suppliers are some essential aspect analyze via the
secondary source of the method. Thus, a secondary source of methods is helpful aspect to
facilitate study towards the right and appropriate direction for efficient selection by Nike to
manage their reputation at the keen competitive world.
2: Literature review
The selected topic of the project is sustainable supplier's selection by the procurement manager
of Nike. Business is required to use appropriate aspects in the supply chain management system
so that association can integrate their work practices properly. Multi criteria decision model is
helpful to select appropriate supplier for products and services. Different theories are helpful in
underpinning sustainable supply chain management. Hence, Nike needs to assess all such frames
properly so that they can manage supply chain management.
2.1 Multi-criteria decision model for the selection of suppliers
According to the (Govindan, Khodaverdi and Jafarian, 2013), the supplier's selection process is
helpful for a business to choose an appropriate individual from the world to manage efficacy in
products and services. The evaluation process of suppliers is essential for a business to enhance
and maximize the overall reputation and goodwill of a firm (Ho, et al., 2010). Thus, the
procurement manager is required to use relevant criteria for the supplier's selection to choose the
appropriate one. Thus, business organizations or procurement manager mainly uses a triple
bottom line method which directs the environment, social and economic. The major aspects of
the selection include a relevant frame so that business can select effective suppliers. Multi
criteria involves various elements so that managers can analyse each of them before selecting a
person. This will be resulted in selection of best supplier for products and services. Hence, this
approach need to undertake by business managers for further growth and development.
Based on Handfield, et al. (2012), various problems are identified in the selection of suppliers
which uses multi-criteria decision model. Procurement managers are required to assess various
approaches to selection so that they can manage sustainability performance. Researchers are
4

Sustainable Supplier Selection
identified that from the past few years, procurement managers, suppliers of the business become
more efficient in the selection of best suppliers from the world (Büyüközkanand Çifçi, 2011).
Now, managers are applying the AHP process, so that supplier's problems lead to address
properly. Now, suppliers are using AHP which include single model and combined models to
manage efficacy in supplier's selection.
Thus, relevant aspects are required to assess so that efficient suppliers lead to select for the
business. The multi-criteria decision model of suppliers in the procurement includes green
design, purchasing, logistic, recycling of products, production, appropriate labor workforce, etc.
All these are major selection criteria which need to undertake by business managers of a
company's so that they can select the suitable individual (Agarwal et al., 2011). This aspect is
required to apply by the procurement manager so that they can select relevant suppliers. With
this study, it has been analyzed that in the past companies does not focus on environment and
sustainability concept, but due to modern users, they are using sustainability concept to
maximize their users and enhance quality standard as well.
2.2 Sustainability supply chain management system for a procurement manager
Supply chain management system is helpful for a business to manage and ascertain efficient
system to procure products and services. This aspect is required to facilitate and align with the
sustainability concept so that procurement manager can facilitate the appropriate range of
products. The sustainability supply chain management can be determined while business start
focuses on society, environment, and economy of the world (Wang et al., 2017). Previously,
there were only one or two criteria determined with a study which define sustainability supply
chain management system (Genovese et al., 2017). The modern world recognizes various frames
of sustainability include green marketing, environment-friendly methods of production, etc. All
these are recognized previously as well but not such an extent. Now, procurement managers also
assess some social background of business like exploitation of workers, child labor,
inappropriate working hours, etc. Following are some criteria which identified in the study to
assess the gap in the present study with the previous study:
Criteria Sub aspects LR1 LR2 LR3
5

Sustainable Supplier Selection
Environment Green
manufacturing
Control on
environment
Green packaging
system
Yes
Yes
Yes Yes
Economy Cost management
Enforcement of
stakeholders
Product quality
Growth of
companies
Yes
Yes
Yes
Yes
Yes
Yes
(Table: Identified criteria for sustainability-based supplier selection in the literature)
(Sources: By Author)
This table is helpful to identify the different criteria prepared by authors to anticipate the
concept. This table is helpful to analyze various aspects and frames so that business lead in
selecting appropriate suppliers of the product. Procurement manager of a company is required to
assess this frame so that they can indulge different factors while selecting a relevant supplier.
This process is helpful to maximize the growth factor and promote sustainability and green
practices in the selection of suppliers (Jabbour and de Sousa Jabbour, 2016). If a supplier fulfills
some criteria, then they are identified as feasible and appropriate for a business. Hence, this
approach is really helpful for the procurement manager to draft efficient suppliers of products
and services. Nike can be used in this approach while selecting their suppliers (Su, et al., 2016).
They have already put the business in one scandal which harms their global image. They provide
an order of shoe manufacturing to one of Vietnam factory which mainly exploit their labor, use
children to work, etc. Moreover, they are not focusing on green practices as well and harm the
environment (de Camargo Fiorini and Jabbour, 2017). All such factors harm the reputation of a
company, and thus, the procurement manager needs to put these criteria before selecting any
supplier for the business.
6

Sustainable Supplier Selection
3: Method
Research methods are the helpful aspect which organizes the entire project in the right direction.
Research methods are some approaches which facilitate appropriate execution of a study. Thus,
the common concern of a project is to select the best suppliers by the procurement manager so
that sustainability leads to maintained and manage (Tseng, Lim & Wong, 2015). For this study,
the primary method will be conducted which include sustainability criteria of 5 suppliers in the
world. Thus, with an assessment of each supplier, business becomes able to determine the best
individual for further services.
The methods which will be going to apply on a project include decision-making matrix for a
better decision making the process. AHP will be assessed as well so that each pair of assessment
led to analyze properly and in an appropriate manner. Different criteria are prepared so that
business can ascertain effective judgment about the selection of suppliers (Akkerman, Farahani,
and Grunow, 2010). This will have resulted in the management of an efficient range of products
and services. The decision makers lead to assess 3 suppliers. All these three suppliers belong to
distinct parts of the world and selected on a random basis.
(1: Decision Making Matrix, 2019)
(Sources: By Author)
This matrix is helpful to assess appropriate decision about the model so that suitable criteria lead
to interpret properly. It mainly defines different quadrant so that study leads to organize properly.
The distinct aspects of this matrix are evaluated as follow:
7

Sustainable Supplier Selection
 Decision criteria: (C1…Cn),
 Alternatives: (A1…Am)
 Performance of each alternative: (a11…amn)
All weights of the criteria are required to identify and analyze properly. Hence, each criterion is
required to evaluate separately rather than in a group. It is helpful to analyze results properly so
that it leads to commence in a right and appropriate manner.
(2: Framework for supplier evaluation based on sustainability performance)
(Sources: By Author)
8

Sustainable Supplier Selection
Supplier's evaluation is a typical factor for a business which creates problem in the
commencement of effective range of operations. It mainly revolves around different factors like
environment, society, economic and operational (Lim et al., 2017). Business is required to assess
each one of them before select any supplier. As per the scandal found in Vietnam, Nike needs to
be more efficient so that they lead to choosing appropriate supplier for their different range of
shoes. Nike is a leading shoe manufacturer in the world which provide quality shoes to maximize
the experience of users.
A sustainable supplier is one which focuses on the environment frame properly. This includes
efficient environment aspects with the launch of the environmental management system. It also
includes green marketing and packaging so that business become effective (Wang, et al., 2016).
Suppliers need to focus on green logistic as well so that they can protect environment pollution.
Moreover, suppliers are required to produce such products which can be recyclable for business.
It further draws some efficient and effective gains for betterment of a business. Hence, such sort
of aspect is helpful for a business to select suitable suppliers for their products and services and
management of reputation.
Social issues also need to minimize by suppliers of the company. Suppliers need to follow all
regulations and legislation so that they can work in favor of society (Siong Kuik, Verl
Nagalingam, and Amer, 2011). Moreover, they need to work as per provided working hours and
not to use children for production or any other business activities. A sustainable supplier is one
which compliance with all health and safety factor and provides ethical work practices. It also
uses relevant activities and uses labor as per define working hours. Procurement manager of
Nike needs to anticipate this factor so that they can maximize the sustainability of the business.
Performance Very Poor Poor Good Excellent
Score 1 2 3 4 5 6 7 8 9
All consequences of the pair-wise correlation and the execution assessment were moved into a
framework. The general provider manageability score was determined by duplicating the
weighted principle criteria by the heaviness of the sub-criteria and the execution rating given to
9

Sustainable Supplier Selection
the provider (Seuring, 2013). A similar methodology was utilized for all sub-criteria. A short
time later, the providers were positioned by their general maintainability score. This aspect is
helpful to assess the performance of each supplier and rate them as per the working frame and
aspect. A proper scoring is really essential for suppliers which include activities towards society,
environment etc. This will be resulted business to get right supplier for effective products and
services which not lead to compromise with environment.
4: Case study findings and analysis
4.1 Case study of the company
Nike is a famous American Multination business which mainly provides effective quality and
design shoes. Along with this, they also provide various equipment, accessories, and services to
users so that they can get better products (Nike’s labor practices, 2019). They are leading shoe
manufacturer in the world as compared with rivalries like Adidas, Puma, etc. They are best in
quality, best in everything. The company mainly outsource their products and services from
other countries suppliers. They provide a design of shoes and assess quality from around the
world and provide order to the best outsource supplier.
A news channel organizes a 48-hour program on inhumane treatment where an individual does
not get proper wages, getting exploit, with sexual abuse with women and children in Vietnam of
Nike Shoe manufacturing plant. Temporary workers do not get proper wages as per work of
more than 12 hours in a day. Vietnam Labor Watch launch a program and provide a report in
which they found accused done by Nike in Vietnam with their labors. They breach the legislation
of health and safety, equal wages and payment, employment act, working conditions act, child
labor act, and foremost sexual harassment act. A difference has been identified in the practices of
business as well as business reputation and statement to consumers in the rest of the world
(Kumar et al., 2012). Thus, it is a major issue which leads to analyze in the context of Nike.
Reports also found that Nike operates different in America and different in other Asian countries.
This aspect is required to understand by the managers of a company. Hence, procurement
manager of Nike needs to assess this factor so that they can use a sustainable approach of the
supplier.
10

Sustainable Supplier Selection
4.2 Analysis of the findings and discussion
The results of the assessment are helpful for the procurement department of Nike so that they can
choose suitable suppliers for their products and services. Company has good sustainability score
which defines what they are engaged in efficient practices. They are performing a very good
environment sustainability aspect with some operational sustainability and maintain effective
environmental performance (B. DiPietro, Cao, and Partlow, 2013). They are very much concern
about society and sustainability for which they are required to assess each supplier to maintain
efficacy in their projects. Below is a graphical presentation which describes the project and
suppliers feasibility in an appropriate manner which needs to ascertain and consider by the Nike
for the betterment and growth:
(Sources: By Author)
This graph is helpful to identify the sustainability of suppliers and its feasibility. Different
aspects indicate different parameter of suppliers so that things lead to direct properly. Based on
this frame, there are mainly five suppliers are analyzed from the around. Various suppliers
include as follow:
11

Sustainable Supplier Selection
 Vietnam
 America
 China
 India
 Australia
All of these are helpful in analyzing suppliers from around the world. Vietnam has found a low
level of sustainability from the world so that business lead to facilitate things. America has good
conditions of work so that business lead to facilitate aspects in an appropriate manner. Overall
sustainability score is high in America and Australian suppliers. Thus, this sustainability score
defines that company doing well in mainly regulated countries rather than in other Asian
countries. After the investigation, Vietnam leads a lower score which defines the poor
performance of Nike suppliers. Thus, such frames are required to assess and understand properly
so that business can regulate properly and effectively. Supplier’s record is required to asses
properly and in the desired manner.
Based on the assessed aspect, it has been analyzed that Nike helps in facilitating things properly.
Overall sustainable performance enables in management of things effectively (Brandenburg et
al., 2014). Nike needs to consult with different suppliers and need to work on their frame so that
they lead to improve various frames. Suppliers from around the world of Nike need to work on
sustainability. They need to give proper labor rights to people, improve efficacy in green
practices, manage green packaging system, etc. All these frames are helpful for Nike to develop
their product quality and facilitate efficient gains in return (Carter et al., 2011). Suppliers
performance is required for Nike to enhance the welfare of society, environment and develop the
economy of a country.
5: Conclusion
Business firms are required to improvise and facilitate better supply chain execution need to
incorporate CSR qualities in the assessment of a supplier's selection process. The multi-criteria
decision model is helpful to select suppliers and chooses their providers with a focus on natural,
social, and economic criteria. Different literature and criteria’s are determined which reflects the
12

Sustainable Supplier Selection
quantitative and qualitative frame of sustainable supplier selection. The connected AHP method
was utilized to organize the choice criteria which indicates the relative weight.
Moreover, the selection of a supplier has focused on the score determine by each one. The model
assists the procurement manager with an organized way to deal with decision making and
manage different criteria of selection as per the assessment of the organization. Hence,
economic, environmental and social factors have helped in the assessment of appropriate
suppliers of the product and services. All factors have been analyzed properly so that
procurement manager can take a free flow decision with disruption of any frame. Sustainable
supply chain management system has helped in the broader context for efficient environmental
practices. Hence, such frames have helped in analyzing all factors properly and effectively.
13

Sustainable Supplier Selection
References
Agarwal, P., Sahai, M., Mishra, V., Bag, M. and Singh, V., 2011. A review of multi-criteria
decision-making techniques for supplier evaluation and selection. International journal of
industrial engineering computations, 2(4), pp.801-810.
Akkerman, R., Farahani, P. and Grunow, M., 2010. Quality, safety, and sustainability in food
distribution: a review of quantitative operations management approaches and challenges. Or
Spectrum, 32(4), pp.863-904.
B. DiPietro, R., Cao, Y. and Partlow, C., 2013. Green practices in upscale foodservice
operations: customer perceptions and purchase intentions. International Journal of
Contemporary Hospitality Management, 25(5), pp.779-796.
Brandenburg, M., Govindan, K., Sarkis, J. and Seuring, S., 2014. Quantitative models for
sustainable supply chain management: Developments and directions. European journal of
operational research, 233(2), pp.299-312.
Bruno, G., Esposito, E., Genovese, A. and Passaro, R., 2012. AHP-based approaches for
supplier evaluation: Problems and perspectives. Journal of purchasing and supply
management, 18(3), pp.159-172.
Büyüközkan, G. and Çifçi, G., 2011. A novel fuzzy multi-criteria decision framework for
sustainable supplier selection with incomplete information. Computers in industry, 62(2),
pp.164-174.
Carter, C.R. and Liane Easton, P., 2011. Sustainable supply chain management: evolution
and future directions. International journal of physical distribution & logistics
management, 41(1), pp.46-62.
De Camargo Fiorini, P. and Jabbour, C.J.C., 2017. Information systems and sustainable
supply chain management towards a more sustainable society: Where we are and where we
are going. International Journal of Information Management, 37(4), pp.241-249.
14

Sustainable Supplier Selection
Dubey, R., Gunasekaran, A., Papadopoulos, T., Childe, S.J., Shibin, K.T. and Wamba, S.F.,
2017. Sustainable supply chain management: framework and further research
directions. Journal of Cleaner Production, 142, pp.1119-1130.
Genovese, A., Acquaye, A.A., Figueroa, A., and Koh, S.L., 2017. Sustainable supply chain
management and the transition towards a circular economy: Evidence and some applications.
Omega, 66, pp.344-357.
Govindan, K., Khodaverdi, R., and Jafarian, A., 2013. A fuzzy multi-criteria approach for
measuring the sustainability performance of a supplier based on the triple bottom line
approach. Journal of Cleaner Production, 47, pp.345-354.
Handfield, R., Walton, S.V., Sroufe, R. and Melnyk, S.A., 2012. Applying environmental
criteria to supplier assessment: a study in the application of the analytical hierarchy
process. European journal of operational research, 141(1), pp.70-87.
Ho, W., Xu, X. and Dey, P.K., 2010. Multi-criteria decision making approaches for supplier
evaluation and selection: A literature review. European Journal of operational
research, 202(1), pp.16-24.
Jabbour, C.J.C. and de Sousa Jabbour, A.B.L., 2016. Green human resource management and
green supply chain management: Linking two emerging agendas. Journal of Cleaner
Production, 112, pp.1824-1833.
Kumar, V., Rahman, Z., Kazmi, A.A. and Goyal, P., 2012. Evolution of sustainability as a
marketing strategy: Beginning of a new era. Procedia-Social and Behavioral Sciences, 37,
pp.482-489.
Lim, M.K., Tseng, M.L., Tan, K.H. and Bui, T.D., 2017. Knowledge management in
sustainable supply chain management: Improving performance through an interpretive
structural modeling approach. Journal of cleaner production, 162, pp.806-816.
15

Sustainable Supplier Selection
Nike’s labor practices, 2019. [Online] Available from:
http://www.icmrindia.org/casestudies/catalogue/Business%20Ethics/Nike%20Labor
%20Practices.htm. [Accessed on 4th May 2019].
Seuring, S., 2013. A review of modeling approaches for the sustainable supply chain
management. Decision support systems, 54(4), pp.1513-1520.
Sharma, A. and Iyer, G.R., 2012. Resource-constrained product development: Implications
for green marketing and green supply chains. Industrial Marketing Management, 41(4),
pp.599-608.
SiongKuik, S., VerlNagalingam, S. and Amer, Y., 2011. The sustainable supply chain for
collaborative manufacturing. Journal of Manufacturing Technology Management, 22(8),
pp.984-1001.
Su, C.M., Horng, D.J., Tseng, M.L., Chiu, A.S., Wu, K.J. and Chen, H.P., 2016. Improving
sustainable supply chain management using a novel hierarchical grey-DEMATEL
approach. Journal of Cleaner Production, 134, pp.469-481.
Tseng, M., Lim, M. and Wong, W.P., 2015. Sustainable supply chain management: a closed-
loop network hierarchical approach. Industrial Management & Data Systems, 115(3),
pp.436-461.
Wang, G., Gunasekaran, A., Ngai, E.W. and Papadopoulos, T., 2016. Big data analytics in
logistics and supply chain management: Certain investigations for research and
applications. International Journal of Production Economics, 176, pp.98-110.
Wang, K.Q., Liu, H.C., Liu, L. and Huang, J., 2017. Green supplier evaluation and selection
using cloud model theory and the QUALIFLEX method. Sustainability, 9(5), p.688.
16