Networking for sustainable supplier development; evidence from a Finnish industrial cluster

Osmo Kauppila,Arto Reiman,Henri Jounila

doi:10.24840/2184-0954_004.002_0003

Osmo Kauppila, Arto Reiman + Show 1 more

Open Access

https://doi.org/10.24840/2184-0954_004.002_0003

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Abstract

This article examines a network approach to sustainably developing suppliers in the context of a Finnish industrial cluster. The approach (HSEQ AP) aims to assess and develop the health, safety, environmental and quality-related capabilities of the suppliers of the buying companies that form the cluster. In this study, the impact of this approach, which has been operating for more than a decade, is examined through a mixed-methods approach. Suppliers that have been audited two times or more (n = 29) were quantitatively analyzed in terms of safety performance, consecutive assessment scores and the relationship between assessment scores and financial indicators. To support the quantitative analyses, interviews were conducted with buyers and suppliers. The results suggest that the HSEQ AP can be linked to improvement in operational results and to enhancing social sustainability in the supply network, and that the suppliers and buyers generally find it a worthy investment. The antecedents for this network approach are partially similar to supplier development in general: Buyer demonstration of commitment, particularly through purchasing processes, is crucial and not fully realized in all cases. The use of a competent, trained third-party assessor was seen to bring value, and the suppliers also rated buyer participation very highly. Interestingly, no significant improvement was found regarding environmental capabilities. The HSEQ AP can be viewed as a CSR practice, but the results show there could be further potential to unlock.

Highlights

Outsourcing has increased internationally on a wider scale at numerous, often large organizations (Lind & Nenonen 2008; Milch & Laumann 2016; Walter 2017)
For assessing the effect of the HSEQ cluster and the assessment procedure (HSEQ AP) on safety, we investigated accident frequencies two years before and two years after the AP
In the end, deems whether the HSEQ AP is a viable approach to sustainable supplier development (SSD)? As Sucky and Durst (2013) point out, the division of costs and benefits between the buyer and benefits in Supplier development (SD) is of interest but less studied

Summary

Introduction

Outsourcing has increased internationally on a wider scale at numerous, often large organizations (Lind & Nenonen 2008; Milch & Laumann 2016; Walter 2017). As a consequence of outsourcing, at various industrial workplaces and construction sites, employees from many organizations work together on the same worksite, and often at the same time (Valluru et al 2017). These multi-employer worksites, often high-risk process industry sites or construction sites, are complex to manage (Mearns & Yule 2009; Fang & Wu 2013; Milch & Laumann 2016; Mapatar et al 2019). In practice and in scientific literature this combination of the four elements of H, S, E and Q is discussed under the concept of Integrated Management Systems (IMS) (Salomone 2007; Domingues et al 2017; Cabecinhas et al 2020)

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