Value chain analysis (VCA) can expose strategic and operational misalignments within chains, and the consequential misallocation of resources, and hence opportunities for improvements which create value and economic sustainability. This paper's purpose is to argue why and how VCA needs to integrate the social and environmental aspects of sustainability in pursuit of sustainable competitive advantage.
Based on a review of existing methods and case studies, the paper proposes three dimensions of VCA, which illustrate the flaws in narrow tools, and the need to broaden the boundaries of VCA, the interpretation of “value” and relationships along the chain in order to highlight opportunities for creating sustainable value chains.
To date VCA has largely focused on economic sustainability and paid inadequate attention to social and environment consequences of firm behaviour and the (re) allocation of resources within and between firms in the chain. This risks producing recommendations which either ignore the competitive advantage offered from improving environmental management and social welfare, or have such detrimental external consequences as to render any proposals unsustainable when exposed to government or broader (public) scrutiny.
VCA variants need to be developed which incorporate all three pillars of sustainability. Some initial experiences are presented and ideas for future research and applications proposed.
The development of sustainable VCA tools should identify business opportunities consistent with Porter and Kramer's imperative for value chains to create shared value between business and society.
Adopting the broader dimensions identified will allow VCA to become more widely applicable, and more relevant in business scenarios where there is a growing imperative to include social and environmental impacts into “mainstream” business strategies.
Fearne, A., Garcia Martinez, M. and Dent, B. (2012), "Dimensions of sustainable value chains: implications for value chain analysis", Supply Chain Management, Vol. 17 No. 6, pp. 575-581. https://doi.org/10.1108/13598541211269193Download as .RIS
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