Abstract
Fashion supply chain members now search for trade-offs between sustainable investment and the related incentives, such as savings on environmental taxes and gains in incremental demands. To evaluate the economic and environmental performance of sustainable investment from a power perspective, we develop an analytical model to study a two-echelon sustainable supply chain consisting of one retailer and one manufacturer with three different power structures. We derive the optimal solutions for various cases associated with different supply chain power structures and sustainable investors. Though it is beneficial for both the manufacturer and retailer to make sustainable investment, they often utilize high power to gain economic benefit with less sustainable investment. Interestingly, the follower with less supply chain power has more incentive to make a sustainable effort to achieve a higher profit. The optimal amount of sustainable investment in the apparel manufacturer investment case is greater than that in the retailer investment case in most scenarios.
Highlights
Global textile consumption is estimated at more than 30 million tons per year, which causes serious environmental impact within the fashion supply chain [1]
We aim to investigate the joint effort of power structure and sustainable investment on the economic and environmental performance of supply chains
We show that it can be beneficial for both the manufacturer and retailer to make sustainable investment, especially for the follower with less supply chain power
Summary
Global textile consumption is estimated at more than 30 million tons per year, which causes serious environmental impact within the fashion supply chain [1]. Both apparel manufacturers and retailers search for trade-offs between sustainable investment and the related incentives, such as savings on environmental taxes and gains in incremental demands. Sometimes, core enterprises, such as H&M and Marks & Spencer, involve their supply chain partners in their sustainable projects. We aim to investigate the joint effort of power structure and sustainable investment on the economic and environmental performance of supply chains. To the best of our knowledge, this paper is the first to study the effects of sustainable investment by different investors in supply chains with different power structures.
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