RESPONSES TO SUSTAINABILITY TENSIONS: A CASE
STUDY IN THE DUTCH FOOD SUPPLY CHAIN
Master’s Thesis Supply Chain Management
University of Groningen, Faculty of Economics and Business
26 August 2019 Julia Slager S2921235 J.R.Slager@student.rug.nl Supervisor Dr. K. Peters Co-assessor Prof. dr. D.P. van Donk
1 ABSTRACT
Purpose: The purpose of this paper is to investigate how companies in the food industry react to sustainability tensions, in a supply chain context.
Design/methodology/approach: This study is based on a case study approach: multiple semi-structured interviews have been conducted with actors in the dairy and pork chain. Additionally, secondary data (interview transcripts) have been incorporated in the analysis. The data is analysed and coded according to the Gioia method.
Findings: There are tensions that affect the whole supply chain. The response comes out of the vision of the retailers and processors, where they communicate and cooperate with the other actors in the supply chain. There are also tensions that only affect a single company, through a consideration and the use of innovations is dealt with this kind of tensions.
2 TABLE OF CONTENT
1. INTRODUCTION... 3
2. THEORETICAL BACKGROUND... 5
2.1 Sustainability of Food Supply Chains ... 5
2.2 Tensions in a Sustainability Context ... 6
2.2.1 General sustainability tensions ... 7
2.2.2 Sustainability tensions in the food sector ... 9
2.3 Place in the Supply Chain ... 11
3. METHODOLOGY ... 13
3.1 Research Design/Method ... 13
3.2 Case Study Selection ... 13
3.3 Data Collection ... 15
3.4 Data Analysis ... 16
4. RESULTS ... 17
4.1 Tensions that are important for the Whole Supply Chain ... 17
4.2 Tensions that are important for just a Single Company in the Supply Chain... 21
5. DISCUSSION & CONCLUSION ... 24
5.1 Theoretical and Practical Implications ... 26
5.1 Limitations and Future Research ... 28
6. LITERATURE ... 29
7. APPENDIX ... 36
A: Interview protocol ... 36
3 1. INTRODUCTION
The importance of sustainability in the food industry has increased, because of the challenges of climate change, water usage, toxic discharges, environment change, and the food demand of a growing population (Wu & Huang, 2018). For instance, the production of food accounts already for 20-30 percent of the Western greenhouse gases (Tobbler, Visschers & Siegrist, 2011). This leads to an increased attention towards the sustainability of the production and consumption of food (Nemecek, Jungbluth, Canals & Schenck, 2016). Companies are growing along with this new phenomenon by adopting more proactive sustainability strategies and developing sustainable supply chain management practices (Sgarbossa & Russo, 2017). Unfortunately, sustainability still remains a difficult concept (Rau, Goggins & Fahy, 2018). One reason why sustainability is difficult for companies is because of tensions. Tensions, in this research also defined as trade-offs, are a result from pursuing contradictory yet interdependent demands (Smith & Lewis, 2011). Sustainability requires a balance between social, environmental and economic performance goals, which is a very challenging task for companies (Henry, Buyl & Jansen, 2019). Furthermore, there is a tension in sustainability management between the short- and the long-term (van Bommel, 2018). Besides, stakeholders can have different ideas and demands of sustainability, which makes it difficult for companies to take all their aspects of sustainability into account (van Calker, Berentsen, Romero, Giesen & Huirne, 2006).
There is a number of striking tensions especially in the food industry. A striking tension is due to the changing Dutch society and because animal production became more intensive, the concerns about the welfare of animals have also grown (Osinga, Kramer & Hofstede, 2015; Fraser, 2014). Animal welfare is influenced by many aspects of animal management including health protection, nutrition and handling, hygiene (Fraser, 2014). For instance, only one aspect of animal welfare, animal health, can have bidirectional relations with sustainability. The quest for sustainability of animal livestock production systems from the perspective of animal health is elusive and companies face some tensions between animal welfare and ecological sustainability (Perry, Robinson & Grace, 2018).
4 production and globalisation leads to unsustainable requirements of significant transport, and increasing amount of food waste due to unreliable demand forecasting methods as part of centralised production practices (Gimenez-Escalante & Rahimifard, 2018). As a result, there is a tension with globalization on the one hand and supervision of food safety and environmental sustainability and environmental benefits of food localization on the other.
There is a lack of understanding how companies in the food sector can deal successfully with the tensions and how they can lead successful implementations of sustainability. Besides, the current research on the tensions of sustainability in the food sector is at a relatively early stage (Tura, Keränen & Patala, 2019). Therefore, this paper addresses the following research question: How do food companies deal with sustainability tensions?
To answer this question, a supply chain perspective is used. This is used, because the position of the company in the supply chain can be of importance. Schmidt, Foerstl & Schaltenbrand (2017) found that how closer a company is located towards the end-consumer, the higher the sustainable practice levels are, but the performance gains decrease at the same time. Furthermore, the uncertainties a company encounters when implementing sustainable practices are also related to its position in the supply chain. For instance, a company closer to the upstream of the supply chain, has to deal with more competitive uncertainty (Lo, 2014). This research aims to investigate how companies in the food industry deal with the tensions of sustainability, with a supply chain perspective. This is done by interviewing different actors in the Milk and Pork supply chains in the Netherlands. The food sector in the Netherlands is an interesting context, as this is a dynamic, economically significant sector and is under pressure to improve its environmental performance (Long, Looijen & Blok, 2018). Furthermore, this thesis will build on previous thesis projects and those made clear that the chosen sectors are facing some sustainability tensions and are therefore the suitable research context (van Rijn, 2018; Luschen, 2018: Heida, 2018). This research contributes to the current literature as it broadens the perspective by looking at the responses to the sustainability tensions of the whole supply chain.
5 2. THEORETICAL BACKGROUND
The following part describes the theoretical background relevant to the research question. Beginning with the sustainability of the food supply chains, the tensions companies face with implementing sustainability and the place in the supply chain.
2.1 Sustainability of Food Supply Chains
The first introduction of sustainability to a broader public is done by the Brundtland Report in 1987. In this report sustainability is defined as ‘the behaviour or actions which meet the needs of the present generation while maintaining the ability of coming generations to meet their own requirements’ (p. 34). This definition is still used by many people, but the definition by Seuring & Müller (2008) for sustainability is more common in the literature nowadays. Seuring & Müller (2008) describe sustainability as consisting of three dimensions; environmental, social and economic and sustainable supply chain management is seen as the management of companies and cooperation in a supply chain where those three dimensions of sustainability are considered (Dyllick & Hockerts, 2002; Koberg & Longoni, 2019; Seuring & Müller, 2008). The integration of those dimensions is called the ‘triple bottom line’ and is seen as a paradigm shift in the field of managing sustainability (Roy, Schoenherr & Charan, 2018; Matthews, Power, Touboulic & Marques, 2016). The triple bottom line (TBL) has evolved into a synonym for sustainability in business and is the most dominant view of sustainability in management (Isil & Hernke, 2017). Two assumptions underly the TBL paradigm according to Isil & Hernke (2017). The first assumption claims that an organization’s financial (economic dimension) and non-financial performance (social and environmental dimensions) are mutually enhancing and that the general objective is to maximize the goals across all the systems. The second assumption is that organizations are successful in TBL when they achieve a balance between the three dimensions.
6 2014). It links the emissions and other used resources to the different phases the product undergoes (Gemechu, Helbig, Sonnemann, Thorenz & Tuma, 2016). The life cycle assessment of the dairy industry and the pork industry can be found in table 2.1. From this, it can be concluded that the environmental impact in the various phases is very different (Caputi, 2018).
Feed production Farming Processing Retailing Consumer
LCA Dairy 21% 53% 6% 15% 6%
LCA Pork 65,5% 28,7% 2% 1.4% 2.4%
Table 2.1: Environmental impact distribution of dairy measured in CO2 equivalents (Caputi, 2018)
In addition to life cycle assessments, there are other methods for measuring sustainability in supply chains. In particular in the food supply chains, empirical approaches are used, consisting of a census of criteria characterizing sustainability (Enjolras & Aubert, 2018). Various frameworks have been developed to study the effect of the food sector on sustainability, for instance, lifecycle sustainability impacts, farm economic costing, food miles, energy accounting in product lifecycles, footprint analysis, mass balance and farm sustainability indicators (Yakovleva, Sarkis & Sloan, 2012). Through these studies, the problem areas in food production and consumption are highlighted. However, no formal approach for sustainability in food supply chains exists (Yakovleva, Sarkis & Sloan, 2012).
2.2 Tensions in a Sustainability Context
7 Companies face different tensions regarding sustainability. Prior research focused on these tensions in a general context, but also specifically in the food industry. This part will first discuss the general tensions of sustainability and subsequently the specific tensions in the food industry.
2.2.1 General sustainability tensions
The general sustainability tensions, also called trade-offs, can be divided in tensions between the economic and environmental dimension, conflicting stakeholder pressures & views and a short- versus long-term perspective. In addition to these tensions, there are many other complexities with implementing sustainability. For example, there is no agreed-upon definition of sustainability which also leads to complexities with measuring sustainability (Corvellec, 2016; Silva, Nuzum & Schaltegger, 2019; Mura, Longo, Micheli & Bolzani, 2018). Other complexities and problems regarding sustainability are outside the scope of this research. This is because these are more general problems for the whole world and collaboration between the government, industries, science and technology with requisite research and development is key to solving those problems (Mardani, Streimikiene, Zavadskas, Cavallaro, Nilashi, Jusoh & Zare, 2017). Therefore it is expected that single companies and supply chains are not really responding on those problems.
8 The second tension has to do with stakeholder pressures. Of course, companies experience pressures from different stakeholders. Stakeholders are groups who are interested in the performance of the company or are affected by the actions of the company (Chen, Harrison & Jiao, 2018). One stakeholder group with a lot of power is the end-customer (Brammer, Hoejmose & Millington, 2017). Therefore, most of the companies focus on satisfying their customer’s needs. The pressures of the end-customers are mainly focused on the quality and the price of the products. As stated before, the end-customers are often not willing to invest more of their money in sustainable products (Buchner, 2018). This means that companies do not feel that much pressure on being sustainable from their end-customers. From various other stakeholder groups however (for instance, the government and NGOs), the environmental pressures and demands are increasing, and it is quite challenging to manage them al (Yu & Ramanathan, 2015). Thus, the pressures and also the views of sustainability among the different stakeholders can deviate from each other (van Calker, Berentsen, Romero, Giesen & Huirne, 2006). Which can cause a tension between the different demands of the stakeholders.
This tension can also have an international nature. Montalbán-Domingo, García-Segura, Sanz & Pellicer (2018) found that there are significant differences of the social sustainability behaviour of different countries. Furthermore, there are also differences on the environmental sustainability. The management of environmental health risks is different; for instance, the United States and the European Union regulate the potential risks posed by pesticide contaminants different (Clahsen, Kamp, Hakkert, Vermeire, Piersma & Lebret, 2019). There are also international differences in the interpretation of ISO (International Standards Organization) (Burdick, 2001). As a result, there are tensions in the standards of sustainability at an international level.
9 in more innovative sustainable practices which have a good long-term influence on their sustainability (Croom, Vidal, Spetic, Marshall & McCarthy, 2018). So there is a tension between the long- and short-term horizon of companies regarding sustainability.
2.2.2 Sustainability tensions in the food sector
Trade-offs between different dimensions of food system sustainability are unavoidable (Béné, Oosterveer, Lamotte, Brouwer, de Haan, Prager, Talsma & Khoury, 2019). There is evidence that companies in the food industry also encounter the trade-off between economic and environmental performances (Stefansdottir, Depping, Grunow & Kulozik, 2018). For instance, Tahmasebi, Feike, Soltani, Ramroudi & Ha (2018) have investigated the trade-off between productivity (which increases gains) and sustainability of wheat production. Furthermore, Stefansdottir, Depping, Grunow & Kulozik (2018) developed a framework to analyse the impact of shelf life on the trade-off between economic and environemtnal performance of two types of dairy products.
10 Next to the found general paradoxical tensions in the food industry literature. In the food sector there is a tension between on the one hand the globalisation and on the other the supervision of food safety and environmental sustainability and environmental benefits of food localization. Nowadays, globalisation of food systems is going on, which has implications for the sustainability and supervision of your chain (Qaim, 2017). To secure the safety and sustainability of the food, companies face many challenges, cutting through country, society and organizational boundaries (Irani & Shariff, 2016). Because food production on a global scale leads to an increasing amount of food waste due to unreliable demand forecasting methods and to unsustainable requirements of significant transport (Gimenez-Escalante & Rahimifard, 2018). Besides, the production on a global scale is harder to supervise (Dermody, Sivapalan, Stehfest, van Vuuren, Wassen, Bierkens & Dekker, 2018), which can lead to a lack of understanding of how sustainable the food product actually is. So companies face a tension with regards to the trend of globalisation and with the supervision of sustainability.
Furthermore, Chiles, Fabian, Tobin, Colby & DePue (2018) found a sustainability tension between ethical considerations, which also can be seen as trade-offs between ethical issues. However, these tensions are often on a smaller scale & more in detail. For example, Chiles, Fabian, Tobin, Colby & DePue (2018) discuss the choice between improved genetics in meat and in feed additives. Genetics is one of the most effective ways to produce meat with fewer emissions per unit, but they are also among the most politically fraught and controversial technologies. More examples of ethical tensions in the food industry are with the use of pesticides, the involvement in addressing diet-related health issues, and with the commitment in reducing agriculture’s role as a contributor to global climate change (Zimdahl & Holtzer, 2016). The consumer determines the ethics of buying local, organic, or fair-trade food on a multitude of factors specific to the food system and food value chain, making ethical issues complex (Lam, 2016). Companies are thus experiencing those tensions, but those tensions are more detailed.
11
Tension Source General or Food
Economic versus
environmental sustainability
Béné, Oosterveer, Lamotte, Brouwer, de Haan, Prager, Talsma & Khoury (2019);
Buchner (2018); Gao & Bansal (2013); Gold & Schleper (2017);
Matthews, Power, Touboulic & Marques (2016); Pagell & Shevchenko (2014);
Stefansdottir, Depping, Grunow & Kulozik (2018); Tahmasebi, Feike, Soltani, Ramroudi & Ha (2018); Van der Byl & Slawinski (2015)
Both Conflicting stakeholder pressures Buchner (2018); Burdick (2001);
Chen, Harrison & Jia (2018); Brammer, Hoejmose & Millington (2017);
Clahsen, Kamp, Hakkert, Vermeire, Piersma & Lebret (2019); Fraser (2015);
Montalbán-Domingo, García-Segura, Sanz & Pellicer (2018); Osinga, Kramer & Hofstede (2015);
Perry, Robinson & Grace (2018);
van Calker, Berentsen, Romero, Giesen & Huirne (2006); Yu & Ramanathan (2015)
Both (on the international level only in the general literature)
Long- versus short-term
Caputi (2018);
Croom, Vidal, Spetic, Marshall & McCarthy (2018); Scholz & Geissler (2018)
Slawinski & Bansal (2015); Smith & Lewis (2011); van Bommel (2018)
Both
Globalisation versus supervision
Dermody, Sivapalan, Stehfest, van Vuuren, Wassen, Bierkens & Dekker (2018);
Gimenez-Escalante & Rahimifard (2018); Irani & Shariff (2016);
Qaim (2017)
Food
Ethical trade-offs
Chiles, Fabian, Tobin, Colby & DePue (2018); Lam (2016);
Zimdahl & Holtzer (2016)
Food
Table 2.2: Sustainability tensions 2.3 Place in the Supply Chain
13 3. METHODOLOGY
3.1 Research Design/Method
To get a better understanding of how companies in the food sector deal with the tensions of sustainability, a multiple case study is executed (Baxter & Jack, 2008). Since there has not been done any research about how companies deal with sustainability tensions in a supply chain context, a case study will be the best method. With this method researchers get the opportunity to explore the phenomenon using a variety of data sources which could be used to generate a comprehensive understanding of the needed responses to sustainability tensions (Baxter & Jack, 2008; Eisenhardt & Graebner, 2007). Furthermore, a multiple case study allows the researcher to conduct the study within different settings (Baxter & Jack, 2008). Multiple cases strengthen the results therewith increasing the confidence of the gathered results (Tellis, 1997).
3.2 Case Study Selection
First, the unit of analysis is a single company in a food supply chain. Multiple companies in the same supply chain are investigated. It is important to investigate companies with different positions in the supply chains, to get a broad view of the responses to the sustainability tensions of the whole supply chain. Furthermore, it was stated that the position of the company in the supply chain can be of influence on their way of responding to the tensions (Schmidt, Foerstl & Schaltenbrand, 2017; Lo, 2014).
The chosen supply chains are investigated by collecting primary and secondary data. The secondary data used in this research were made available from previous thesis projects, where this thesis builds on (Buchner, 2018; Caputi, 2018; Dijkgraaf, 2018; Heida, 2018; Luschen, 2018; van Rijn, 2018), henceforth referred to as the Sustainable Food Supply Chain (SFSC) dataset. This research is built on a similar case study protocol as the SFSC dataset, in order to be able to make use of the data with the same criteria.
14 able to investigate how they deal with it. This has been determined in advance by investigating older research about tensions in food supply chains.
Based on the criteria, companies in two food supply chains are chosen: in the dairy chain and the pork chain. An overview of the cases can be found in table 3.1. The primary data consists of three feeders (are part of the dairy and pork chains), one dairy farmer, one pork farmer and two dairy processors. The secondary data consists of one dairy farmer, one pork farmer, one pork processor and two retailers (are part of the dairy and pork chains).
The dairy chain and pork chain are selected because in those chains the greenhouse gas emissions are relatively high in comparison to other food supply chains (de Valk, Hollander & Zijp, 2016). In addition, with the environmental burdens becoming more apparent and rising societal awareness, consumers are reconsidering the dietary choices and the food systems behind the chosen chains (Rohmer, Gerdessen & Claassen, 2019). Therefore, it is expected that those chains gain more pressure of the government, NGOs and consumers to act sustainable, which can lead to tensions. Besides, the SFSC dataset also made clear that the chains encounter some tensions regarding sustainability.
A schematic overview of the cases in their context can be found in figure 3.1. The two different chains have the same structure in the supply chain and have also the same feeders and retailers. The consumers are chosen to be left out of the scope of this study. First, because consumers are a totally different actor compared to the rest of the actors in the chains. Second, consumers have other and less possibilities in responding to the tensions than the other actors in the chains. Third, creating a general view of responding of the consumers would require a considerable number of interviews, because of the variety of consumers. Leaving out the consumers in this study provided a better focus and retrieval of valuable information from the entities that do lie in the scope of this research.
15 3.3 Data Collection
The interviews were semi-structured to ensure an in-depth understanding of how the companies deal with sustainability. The questions were mainly open in order to discover new things and provide some place for the interviewee to say what the interviewee thinks is important. A protocol of the interview can be found in the appendix. The protocol was also important for developing the way how the questions should be asked in order to ensure that the interview does not become biased by the interviewer.
In order to ensure the validity of the research, triangulation was employed. Triangulation means that at least two research methods have been used for retrieving information (Karlsson, 2010). In this research method triangulation, researcher triangulation and data source triangulation were used. Method triangulation is realized because primary interview data, secondary interview data and available information on websites was used. Researcher triangulation was accomplished, because most of the interviews were held with two researchers. This is to ensure that the data are of good quality and that there is no interviewer bias. And data source triangulation was achieved because multiple respondents have been asked to answer the same questions of the interview protocol. The respondents are the key informers and are the assigned people in their company who belong to the group employees that is most concerned with sustainability in their company.
At least 2 actors per phase in the chain are investigated, whereof at least one actor is from the dairy chain and at least one actor is from the pork chain. This is to ensure reliability. The data retrieval method is by interviewing or by studying the available secondary data of the SFSC dataset. Table 3.1 provides an overview of all the interviews and their data source.
Interview Supply Chain Data Source Position in Chain
Respondent(s)
Feeder 1 Dairy & Pork Primary data Feeder Marketing Director Feeder 2 Diary & Pork Primary data Feeder CSR Global Manager
Feeder 3 Diary & Pork Primary data Feeder Nutritionist & Quality Manager Dairy farmer 1 Dairy Primary data Farmer Co-owner
Dairy farmer 2 Dairy Secondary data Farmer Owner
Pork farmer 1 Pork Primary data Farmer Co-owner
Pork farmer 2 Pork Secondary data Farmer Owner
16 2. Quality Manager
Dairy processor 2 Dairy Primary data Processor 1. Manager of Business of Livestock Farming 2. Office Staff
Pork processor 1 Pork Secondary data Processor Quality Manager Retailer 1 Dairy & Pork Secondary data Retailer DC Manager Retailer 2 Dairy & Pork Secondary data Retailer Quality Manager
Table 3.1: overview of cases and interviews 3.4 Data Analysis
17 4. RESULTS
This research analyses how companies in the dairy and pork chains react to the different tensions that comes out of sustainability, in a supply chain context. The structure of the results will be the same as the coding tree that can be found in the appendix. These aggregate dimensions are the main findings and also serve as the main topics in this part.
There are multiple found sustainability tensions in the dairy and pork supply chains. Those tensions have a different nature and can be divided in tensions that are important for the whole supply chain and tensions that are important for just a single company in the supply chain. The responses to those tensions of the supply chain and the single companies in the supply chain are from a different nature. That is why the first part will only be about the tensions that are important for the entire supply chain and how the entire supply chain deals with this kind of tensions. With these tensions it appears that companies from different places in the supply chain have a different function when dealing with these tensions. Thereafter, the tensions that are only important for a single company in the supply chain are discussed and how companies respond to those tensions. With these kinds of tensions, it appears that it does not matter which place the company has in the supply chain.
4.1 Tensions that are important for the Whole Supply Chain
There are multiple tensions whereof the whole supply chain is affected. Those tensions are animal welfare versus environmental sustainability, growing society with limited resources, globalisation versus regionalization & environmental sustainability versus economical sustainability.
18 that the product does not damage the environment. So there is a trade-off between these two areas.
Growing society with limited resources. First of all, there is the feed gap. The world population is growing fast and it continues growing in the future. All these people need to be fed, this is called the feed gap. Furthermore, the earth does not increase. This means that there need to be fed more people with less land. This is called the land gap. So, the supply chains have to deal with a growing society, but the resources of the whole world are limited. ‘And we all have the obligation also to act in order to have a better way, with better efficiency and be able to produce a bigger output with less input’ – Feeder 2. So, there is a tension with using less input, but creating a bigger output.
Globalisation versus regionalization. The world is becoming more globalised. This has also an impact on companies and the consumers of the dairy and pork supply chains. The consumers expect to get products from the whole world and they compare the products with international products. For instance, if the milk imported from America has better a price, quality etcetera, the customers in the Netherlands will also buy that milk from America. Furthermore, companies have to keep an eye on the world market. ‘Because you have to deal with drought and trade agreements. They are now in conflict with China and America. So China no longer buys pork from America. And very coincidentally, now in China they have a pork disease. They call that pork fever. So then they do not get the production that they want to get. A lot is going on there now, a lot of meat is being exported from Europe to China now.’ – Pork Farmer 1. Which thus can have an impact on your supply chain in the Netherlands. But on the other side is regionalization. Some companies are trying to keep it as regional as possible. More customers are asking for regional products. Besides, in this way they can also minimize the transport distance.
19 Environmental sustainability versus economical sustainability. Consumers want environmental friendly products, but often they do not want to pay more for it. Unfortunately for companies, acting more environmental sustainable does have costs. Furthermore, environmental sustainability is constant changing in this sector, which makes it uncertain for companies what to do and what will be asked in the future. So on the one hand companies want to be more environmental sustainable, which is hard because sustainability is hard to define and ‘sustainability touches many aspects’ – Retailer 2. But on the other hand, companies want (eventually) get paid for their sustainability investments. ‘It is about whether an organization can run, because we have a to keep a business running. It is great fun all those images and nice company, but if nothing is earned…’ – Dairy Processor 1. This creates a tension between the environmental sustainability and the economical sustainability.
The responses to those tensions that affect the entire supply chain are divided in power distribution in the supply chain, sustainability goals & vision, urgency of the tension, communication and cooperation.
Power distribution in the supply chain. The position of the company in the supply chain appears to be of importance. Some parties are more powerful in the supply chain than others. The retailers and the milk/pork processors have the biggest role in responding to the tensions. ‘We, as dairy factories, will consult with retailers, we will make nice products out of it. You are responsible for the milk up to the tank. And then we pick it up and you don't have to think about it anymore’ – Dairy Farmer 1. The milk/pork processors demand certain things and the farmers have to obey in order to sell their products. Especially the retailers influence on giving answer to sustainability and the sustainability tensions is big. ‘This influence is very big. For the supply chain of (pig processor) we have a very big volume of their pork division, of course we work together. If we feel that we have to include certain aspects or requirements in our supply chain, we are able to do this together with our partner’ – Retailer 2. This causes a lot of pressure on the farmers. Farmers have to adhere to the new requirements of the processors and retailers and they also have to adhere to the (constantly new) sustainability rules from the government. ‘There is a huge pressure on them (talking of farmers). And also with all the changes going on in terms of environmental regulations and all those. You have to support them in how to deal with that. And how to change and implement those things’ – Feeder 2.
20 horizon, you no longer have to have discussions with each other. It is of course this and of course it is that. Because we have a sustainability goal’ – Milk Processor 1. The retail organizations and milk/pork processors establish this vision and goals regarding sustainability. They already have developed these or are still working on making the goals more concrete. The farmers then adhere to the vision of the retailers and processors. Or in the case of disagreement or unreachable goals, they have to switch to a different milk/pork chain. The farmers choose from which company they get their feed. Feeders sometimes also have a clear sustainability vision and goals, but sometimes they just adhere to the rest of the chain. Because the farmers choose where to get their feed, they ensure that the vision of the feed company is in line with the rest of the supply chain.
It is also important, that the supply chain is flexible with their concrete sustainability goals. Because the laws of sustainability are changing and, in addition, more and more becomes known about sustainability, so that also changes. ‘But now that we have spent so much on phosphate, the other, improving the soil, will be locked. So there was a goal, but then it is adjusted again, then it is just a matter of survival’ – Dairy Farmer 1.
Urgency of the tension. Next to the made vision and goals of sustainability, the urgency of the tensions is also of importance for responding. This is done by looking at the impact of sustainability tensions on the entire supply chain. ‘Based on the philosophy that when things are going well with our customers, things are going well with us. And vice versa’ – Feeder 1. So when the tension has a great impact on the entire supply chain, companies take action. Those greater impact tensions are identified together with the important stakeholders, often through the materiality analysis. ‘We identify together with the stakeholders that we have 30 topics that you can consider that are important to society. Then we wanted to see how important it is to the stakeholders and how big the influence is that we can have’ – Pork Processor 1.
After this, an answer is given based on this created vision by the retailers and processors and the given urgency to the tension. This response requires communication and cooperation in the supply chain.
21 convinced to adhere to the sustainability vision of the powerful companies. This is done with arguments and by showing them what it is and what the benefits are. ‘Being able to calculate the best available and objective way, what the CO2 or sustainability footprint is. Making it visible to the farmers.’ - Pork Processor 1. Everyone needs to be informed about what is going on. As a result, knowledge is exchanged. The transparency of the chain is also of influence. In a transparent chain it is easier to respond to tensions, because it is better known what is going on and what still needs to be done. The milk supply chain is very transparent. The pork supply chain is, on the other hand, not completely transparent. For instance, ‘We just know the basic components, but the supplier of the feed doesn't want to give its secret recipe (because it is what makes it successful). So that might be something that can have a big influence on the environment’ – Pork Farmer 2. So if the farmer does not know where the Soy in the feed is from, they also can not give an answer to the tension of where to get the Soy (from within Europe or elsewhere).
Cooperation. Next to the communication used to give answer to the sustainability tensions, companies also cooperate together. They cooperate with other partners in their supply chain, but also with customers, stakeholders and other companies outside their supply chain. ‘Because we don’t have people in our own company who are specialized in those kinds of things. So other companies know a lot more about how to realize that. So it is better to use them than to do it yourself’ – Retailer 1. Companies depend on their network and supply chain, because they do not know everything themselves and they can not do everything themselves. They sometimes have to rely on other people and companies. However, to ensure reliability, they sometimes check their suppliers and other partners in the supply chain on their sustainability. So, there is discussed together in the supply chain and sustainable initiatives are implemented together. ‘And you implement together and you elaborate together a way to go’ – Feeder 2.
4.2 Tensions that are important for just a Single Company in the Supply Chain Tensions that are only important for just a single company in the supply chain have a different nature and response mechanism than the just discussed tensions. These tensions are cooling/energy use versus food safety, plastic versus shelf life of the product and investments versus environmental benefits.
22 Some companies in the supply chains (with the fresh, short shelf life products) have to face this dilemma in choosing in the trade-off between more water and energy use and the safety of the food.
Plastic versus shelf life of the product. Some researched companies also mention a trade-off between the use of plastic and the shelf life of the product. A plastic package turns out to be of influence on the shelf life of the product. However, customers ask conflicting things, as they want a sustainable packaging, products with a long shelf life and also fresh products. Therefore, the retailers will ask for this: ‘So I want a plastic seal, but I don't want the shelf life to go down’ – Dairy Processor 1. Because the retailers want to sell all their products. So there is a tension, because the more sustainable packaging and a longer shelf life do not go well together.
Investments versus environmental benefits. All companies have to deal with certain investments and they have to make decisions in this regard. On the one hand is the investment, in euros, and on the other hand there are the environmental benefits. This tension can also be seen as the tension between economical and environmental sustainability. But this tension is only important for one company and is all about investments in new technologies.
There is a tension in this, because often it is not known beforehand how the investment will exactly turn out and whether the investment outweighs the benefits (financial and/or environmental). Examples of made investments by the researched companies are the use of solar panels, using a new heating system for gas savings and reusing water in cooperation with a neighbouring business. With these made investments, often the benefits ultimately proved to outweigh the investment. This is due to the way of how they considered the investment. Unfortunately this is not always the case. ‘The heating here would then be heated by the heat from the factory, that does not work at all’ – Feeder 3.
The responses to those tensions that affect just a single company in the supply chain can be divided in consideration and innovation.
23 The company will make a choice with their gained knowledge. The argumentation of a choice is often based on euros, but it also depends on the received pressure from outside.
24 5. DISCUSSION & CONCLUSION
The purpose of this research was to investigate how companies in the food industry react to sustainability tensions, in a supply chain context. The results of the research paint that there are tensions that concern the entire supply chain and tensions that are only important for one company and that these tensions have a different way of responding. This section discusses the results in order to find out in how far they confirm previous findings in literature or present new insights.
All the sustainability tensions that were found in the literature affect the whole supply chain. Therefore, those tensions are first discussed. The economic sustainability versus the environmental sustainability was found as described in the literature. The tension about the conflicting stakeholder pressures also confirms previous findings in the literature as there is found one specific trade-off for the milk and pork supply chains. There is a trade-off between on the one hand the wish of the consumers of environmental sustainability products, but on the other hand the wish to take animal welfare into account.
Long- versus short-term is not perceived as a tension by the investigated companies. However, the companies take the long- and short-term benefits and cons into consideration when they respond to tensions. For example, there is a company that only makes an investment if it is earned back within 10 years.
25 Furthermore, Chiles, Fabian, Tobin, Colby & DePue (2018) described some small ethical trade-offs in the food supply chain, for example the use of genetics. The investigated companies have not indicated that they experience this as tensions. However, there is a major ethical issue mentioned. The society is growing, but there are limited resources. This tension was not found in the literature study due to the global nature of the issue. The population of the whole world is growing and the surface of the earth remains the same. That is why this is a tension that affects the entire world, including the dairy and pork supply chains. The companies in the supply chains feel responsible for doing their part with this tension. They can not do anything about the growing society, but they can use the resources smarter. So the companies feel the tension between using less input and creating more output.
Furthermore, there are some smaller tensions that affect only one company. Those are trade-offs between cooling/energy use versus food safety, plastic versus shelf life of the product and investments versus environmental benefits. These tensions are very specific to the companies. That is why they have not been mentioned in the literature before. However, companies do the same with these tensions. So it is interesting to name these tensions and describe the way of responding, so it can be seen how they are generally dealt with.
Table 5.1 provides an overview of the found tensions in the literature with the additions from the data. The tensions that only affect one company are also added in this table.
Tension Found in the data Additions Economic versus
environmental sustainability
Yes -
Conflicting stakeholder pressures
Yes Only one trade-off was found in the
conflicting stakeholder wishes; between animal welfare and environmental sustainability
Long- versus short-term No This is not experienced as a tension, but the long-term and short-term benefits and cons are taken into consideration by the tensions that only affect one company Globalisation versus
supervision
Yes, but different It was found as a trade-off between globalisation and regionalization (instead of supervision)
Ethical trade-offs One ethical issue is found The issue is that the society is growing, but there are limited resources
Tensions that only affect one company
Cooling/energy use versus food safety; plastic versus shelf life of the product; investments versus environmental benefits
-
26 From the literature review it was expected that the position of the company in the supply chain can be of importance in the responses to the tensions. This appears to be true, as it turns out that the retailers and the milk/pork processors have the most power in responding to the tensions. They demand certain things and the farmers have to obey to the vision of the retailers and milk/pork processors. The result is that farmers receive the most pressure and also implement many new sustainable initiatives. This is in conflict with the statement of Schmidt, Foerstl & Schaltenbrand (2017); how closer a company is located toward the consumer, how higher the levels of sustainable practices are. All industries were included in their research, including the food sector. However this can lead to a general statement for multiple sectors. While it turns out to be different for the food industry, and in particular the food industry that is involved with animals.
To summarise the findings for answering the research question, how do food companies deal with sustainability tensions? It was found that for the tensions that affect the whole supply chain, the retailers and processors have the power and create some sustainability goals and a vision together. From these goals and the vision it becomes clear how the specific tensions are dealt with. Urgency is determined together with stakeholders for the tensions and other important sustainable issues. After this, are communication and cooperation in the supply chain very important, so that every actor agrees with and adheres to the sustainability vision. In addition, the smaller tensions that are important for a single company are treated differently. The company itself makes a consideration and they often use innovations and new technologies.
5.1 Theoretical and Practical Implications
These findings add to sustainable supply chain management literature because they improve the understanding of the influence that the different companies in the supply chain have on the sustainability tensions. This research shows that the power over the sustainability tensions and sustainability goals in general lies mainly with the companies more downstream (the retailers and processors). Therefore it is important to conduct studies with a supply chain perspective in order not to get a fragmented picture.
27 First, the generic model of food supply chains of one ingredient looks similar as the supply chains of the dairy and pork supply chain. Only the food supply chains that do not need animals in their process, also do not need a feed company. The feed companies do not have a very important role in responding to the tensions, so this should not really influence the way of how the supply chain is responding to tensions.
Second, the retailers of the dairy and pork supply chains participate also in other food supply chains. This is because retailers (such as supermarkets) often have all kinds of possible food products in their store and therefore are the retailers part of many supply chains. Besides, it is known from a research in the whole food industry in China that the retailers and processors have the most influence in the supply chain (Roth, Tsay, Pullman & Gray, 2008). It is therefore likely that retailers and processors also play a significant role in responding to the tensions in other food supply chains.
Third, the biggest impacts are made by the farmers in the majority of the food supply chains (de Valk, Hollander & Zijp, 2016). Many farmers produce often multiple products (including pork and milk), so there are no reasons for believing that there are differences between farmers in other food supply chains and the farmers in the dairy and pork supply chains.
Furthermore, trying to generalise the outcomes on an international level, may cause some problems. The Netherlands are seen as a front runner with innovations with regard to sustainability. So it is possible that other countries have more problems with responding to tensions with new sustainable initiatives. Besides, it is possible that other countries suffer less from the tensions and feel less pressure to become more sustainable and, as a result, also do not really need to respond to the tensions. For instance, in countries with economic constraints (tension between economic versus environmental sustainability perceived less) or with less educated and informed consumers (tension between the conflicting stakeholder pressures perceived less).
28 If companies and supply chains aim at becoming truly sustainable, it is not sufficient to respond to the sustainability tensions alone. For a truly sustainable supply chain, it is needed to overcome all the sustainability tensions and put sustainability always on the first place. Especially the retailers and the processors have the power for creating a truly sustainable supply chain and need to go beyond what is asked of them.
5.2 Limitations and Future Research
The dairy and pork chains were investigated in this study. These are both supply chains with animals. Because of this, there arises tensions between animal wellbeing and environmental sustainability. Companies feel the pressure of consumers to think about the wellbeing of their animals, which can have a negative effect on the environmental sustainability initiatives. Supply chains without animals do not have this specific tension. Those supply chains are interesting to investigate in the future, as they maybe act differently on the other tensions of sustainability. Another limitation of this study is that the study is solely conducted in the Netherlands. The investigated supply chains are exporting abroad and also some companies operate partly abroad. As mentioned, there are possible differences on an international level. It is stated that the Netherlands is the heart of agriculture, which can lead to a different response to the sustainability tensions than food supply chains in other countries. Future research should therefore be conducted on a global scale.
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36 7. APPENDIX
Appendix A: Interview protocol
General procedure
The steps of the protocol are described below. The objective of this interview protocol is to make the research study replicable and consistent.
- Selection of the companies according to the case selection criteria.
- Looking on the webpage for information about the company regarding sustainability and general information.
- Preliminary contact by phone or email. The respondent will be asked to participate in the research and if possible, the interview will already be scheduled on a specific date and time.
- Send a mail with information about the research and the interview questions, so they can get familiar with the topic (see ‘interview questions’).
- Schedule the interview for a specific date and time, if this is not done yet. - Buy chocolate for all the interviewees to thank them for participating.
- Prepare the materials necessary to conduct the interview (recording machine, questions on paper, list with examples of tensions etcetera, pen, chocolate box).
- Attend the interviews in the dairy sector with two interviewers: one interviewer will be in charge of conducting the interview (asking the questions) and one interviewer will be responsible for time management (and other emerging questions). Both
interviewers will record the interview for insurance.
- Attend the interviews in the other sectors with one interviewer: one interviewer will be responsible for conducting the whole interview (asking the questions and time
management).
- Be at the scheduled time and place for the interview.
- Explain to the interviewee how the interview will be going (first something about the research and about the topics of the interview).
- Ask for permission of recording and explain that the information will be treated anonymous.
37 - Conduct the interview according to the questionnaire. If necessary, rephrase some
questions or skip some questions in order of the regarded time or because the interviewee already answered them naturally.
- Ask if the interviewee would want to receive the final research. - Transcript the notes after the interview.
- Send the final research to the interviewee.
Interview questions
Topic 1: Introduction
1. How long does the/your company exist?*
2. How many employees work at this company? / How many cows and acres do you have?*
3. What is your function/position in the company?
4. What is your (personal) vision/view on sustainability? (what do you mean with sustainability). And why?
5. Is it important to be sustainable for your company? Why? *If this cannot be found on the webpage of the company.
Topic 2: Sustainability at the company 6. What are your sustainability goals?
o And how does this translate into practice? What actions have you taken? o To what extent do you consider these actions as equally important? 7. What motivated you to take these mentioned actions?
o What considerations did you make before deciding about these actions and why? o Which consideration was most important? Was that also the decisive factor? o How far are you looking ahead when taking such decisions?
8. Did you measure the impact of your sustainable actions?
o Do you measure things like GHG emissions and water usage, energy etc. 9. Did your sustainability action have the desired effect?
o Did it improve your sustainability and/or economic performance? 10. Where do you get your information about sustainability?
38 11. Do you recognize shifts or new opportunities in sustainable practices?
o What do you do if you see a new opportunity?
12. What do you consider as the main challenges and risks of managing and or implementing sustainability?
o How do you deal with them?
13. Do you take risks with your sustainable practices? (experiment) o How?
Sum up*:
14. Do you prefer sustainable options in new products and processes or do you prefer to adjust your existing products and processes?
15. Do you like exploring new possibilities in sustainability or do you prefer to apply sustainability if you know certainly that it is profitable?
16. Do you have a routine in your sustainable activities / do you know how to perform it or do you see your sustainable activities more as an experiment with an unknown outcome? 17. Did you need to learn new skills for implementing sustainability or are your current
skills enough?
*If this does not become clear from the interview
Stakeholder pressures
18. Do you feel any pressures from your environment regarding sustainability? o Where does this come from?
o Public institutions, NGOs, end-customer, SC-customer, suppliers, employees your community?
19. To what extent do these pressures influence the sustainability actions that you take/took? o Are there stakeholders that support you in acting sustainable?
o Are there stakeholders that limit you in acting sustainable?
20. Do you sometimes feel that these pressures you are facing are conflicting with what you believe is truly sustainable?
Topic 3: Tensions in sustainability
39 22. What kind of role does sustainability play in the processes of supplier/buyer selection and supplier/buyer evaluation? Please compare sustainability with other performance dimensions, such as price, quality and delivery.
o To what extent do you perceive tensions among them?
23. To what extent do you experience tensions or issues in the process of managing supply chain sustainability in general?
Topic 4: Making sense of tensions
E.g. implementing sustainability was not profitable or pressures from stakeholders who demand different things. Internal tensions with employees and the board.
Scanning
24. What kind of information (economic objectives or sustainability objectives) do you normally gather (about the issue/initiative)?
25. Do you collect information from multiple sources? If yes: how many? 26. Is the information you gather normally very general or very detailed? 27. Do you gather extra knowledge or advise from colleagues or third parties? Interpreting
28. What level of control did/do you perceive about the issue(s)? 29. When do you perceive a sustainability issue as relevant?
30. Based on what criteria do you interpret an issue as positive or negative?
o What about when the issue has a positive financial result, do you interpret it as positive?
Responding
31. How do you deal with sustainability tensions?
o Do you actively approach or avoid an issue/tension?
▪ Do you put one sustainability element over the other? (e.g. economic objectives over environmental/social objectives)
32. From your experience in the past years, if you have to analyze the investment decisions, how do you deal when there is not a clear short-term benefit but maybe it has a long term one?
