FORMATION OF SUSTAINABLE SUPPLY CHAINS IN RUSSIAN FMCG SECTOR
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INTRODUCTION 6
CHAPTER 1. THEORETICAL ASPECTS OF SUPPLY CHAIN MANAGEMENT 9
1.1 Discussion issues of the definition of the terms "supply chain" and "supply chain
management" 9
1.2 Controversial issues of approaches to the classification of supply chains 12
1.3 Key issues in sales management and supply chain systems 15
1.4 Sustainable supply chain: the essence and content 16
1.5 Practical experience in creating sustainable supply chains 21
CHAPTER 2: ANALYZING PRACTICAL ASPECTS OF SUSTAINABILITY IN SUPPLY CHAINS 26
2.1 Methodology development 26
2.2 Exploring ESG Reporting: An Analysis of Current Non-Financial Reports 27
2.3 Analysis of SSC Practices in the Russian FMCG Sector 44
DISCUSSION OF RESULTS 60
REFERENCES 68
APPENDIX 71
Appendix 1. List of ESG Reports of Companies 71
Appendix 2. Interview transcript 72
Appendix 3. Qualitative coding system of interviews 76
Appendix 4: Interview questions (semi-structured approach) 77
CHAPTER 1. THEORETICAL ASPECTS OF SUPPLY CHAIN MANAGEMENT 9
1.1 Discussion issues of the definition of the terms "supply chain" and "supply chain
management" 9
1.2 Controversial issues of approaches to the classification of supply chains 12
1.3 Key issues in sales management and supply chain systems 15
1.4 Sustainable supply chain: the essence and content 16
1.5 Practical experience in creating sustainable supply chains 21
CHAPTER 2: ANALYZING PRACTICAL ASPECTS OF SUSTAINABILITY IN SUPPLY CHAINS 26
2.1 Methodology development 26
2.2 Exploring ESG Reporting: An Analysis of Current Non-Financial Reports 27
2.3 Analysis of SSC Practices in the Russian FMCG Sector 44
DISCUSSION OF RESULTS 60
REFERENCES 68
APPENDIX 71
Appendix 1. List of ESG Reports of Companies 71
Appendix 2. Interview transcript 72
Appendix 3. Qualitative coding system of interviews 76
Appendix 4: Interview questions (semi-structured approach) 77
Sustainable supply chain management has been a subject of scholarly debate since the 1990s. The relevance of this dissertation, dedicated to the formation of sustainable supply chains in the Russian FMCG sector, is conditioned by the need for an in-depth analysis of existing practices to optimize operations in accordance with contemporary sustainability requirements. The increasing importance of sustainable development in Russian business practices necessitates a detailed understanding of the factors influencing the development and implementation of sustainable supply chains.
My motivation for this work is driven by the current world's issue of globalization and the exacerbation of environmental problems not only current but also those accumulated over many years. This issue is particularly pertinent now, as the present environmental challenges will have an even greater impact on future generations and the environment. My decision to focus on the supply chain industry of the FMCG sector stems from the fact that supply chains are an intermediary link between two crucial components, such as production and consumption. Although most major foreign corporations have already demonstrated the benefits of sustainable supply chains through their examples, not all companies fully understand the importance of this, specifically, what they should focus on when transitioning to sustainable development. In my view, sustainable supply chains are the foundation of the global economy as they integrate economic responsibility, environmental care, and social responsibility, which go beyond the usual focus on profitability and production capabilities. Accordingly, my motivation comes from understanding that there is a dire need to reassess how the supply chain operates in current realities.
By delving into the study of factors that facilitate the formation of companies and organizations, you can explore ways and useful knowledge that will encourage more and more organizations to follow you towards sustainable activities. In my research, I aim to identify the most important aspects that influence the development of sustainable enterprises.
Despite the growing interest in SSC, there is still a significant research gap regarding the integration of sustainable practices into the Russian FMCG sector. We also need to delve much deeper into what currently exists a plethora of theoretical research on what a sustainable supply chain is, how to approach it, and what needs to be done but just as little information on how this happens in practice. All this needs further detailed study and research because all these processes in developed countries may be quite obvious but in developing countries there is still a large gap.
Thus, the basis of sustainable leadership in the supply chain is the integration and implementation of social, financial, and environmental sustainability goals into the supply chain strategy. The difficulty in developing and implementing such a strategy, undoubtedly, lies in the geographical distance separating individual links in the chain, as well as in the position of certain divisions throughout the chain structure. Various expectations can be associated with cultural differences and a lack of transparency in supply chains (including among suppliers or subcontractors from developing countries, where the external environment is assumed and protected differently, and regulatory acts are not always properly observed).
I can also highlight the main research questions that interest me:
1. What factors influence the formation of a sustainable supply chain and which of them are of priority importance?
2. What are the key SSC practices adopted by organizations in the FMCG sector?
Based on all of the above, I can outline the research goal of my work which is to identify factors that influence the development and key characteristics of establishing sustainable supply chains. During my research, I will study literature on this topic, company practices. Additionally, I will study the factors that slow down the process of implementing practices in Russian companies. In my work, I would like to outline a clear understanding of what exactly can motivate a company or, conversely, repel it from sustainable development. Therefore, it is initially necessary to determine what exactly can affect the successful implementation of sustainable supply chains in the company.
Initially, I will analyze the literature on the topic of sustainable supply chains. This will help form a theoretical base for my work and give me a deeper understanding. Then I will use a qualitative research method - case study. The sample will consist of professionals, managers who deal with supply chain management. Using semi-structured interviews, I will be able to obtain the necessary information for my further research. Then the obtained information will be analyzed, based on which I will be able to propose a universal model for implementing sustainable practices in the supply chain.
Accordingly, the tasks of my work are:
• To study the theoretical concepts and approaches to sustainable supply chain.
• To identify the key factors that affect the sustainability of companies' supply chains.
• To identify the relevant sustainable supply chain development practices.
• To develop recommendations for companies, to help them bring their supply chain to sustainability based on research findings...
My motivation for this work is driven by the current world's issue of globalization and the exacerbation of environmental problems not only current but also those accumulated over many years. This issue is particularly pertinent now, as the present environmental challenges will have an even greater impact on future generations and the environment. My decision to focus on the supply chain industry of the FMCG sector stems from the fact that supply chains are an intermediary link between two crucial components, such as production and consumption. Although most major foreign corporations have already demonstrated the benefits of sustainable supply chains through their examples, not all companies fully understand the importance of this, specifically, what they should focus on when transitioning to sustainable development. In my view, sustainable supply chains are the foundation of the global economy as they integrate economic responsibility, environmental care, and social responsibility, which go beyond the usual focus on profitability and production capabilities. Accordingly, my motivation comes from understanding that there is a dire need to reassess how the supply chain operates in current realities.
By delving into the study of factors that facilitate the formation of companies and organizations, you can explore ways and useful knowledge that will encourage more and more organizations to follow you towards sustainable activities. In my research, I aim to identify the most important aspects that influence the development of sustainable enterprises.
Despite the growing interest in SSC, there is still a significant research gap regarding the integration of sustainable practices into the Russian FMCG sector. We also need to delve much deeper into what currently exists a plethora of theoretical research on what a sustainable supply chain is, how to approach it, and what needs to be done but just as little information on how this happens in practice. All this needs further detailed study and research because all these processes in developed countries may be quite obvious but in developing countries there is still a large gap.
Thus, the basis of sustainable leadership in the supply chain is the integration and implementation of social, financial, and environmental sustainability goals into the supply chain strategy. The difficulty in developing and implementing such a strategy, undoubtedly, lies in the geographical distance separating individual links in the chain, as well as in the position of certain divisions throughout the chain structure. Various expectations can be associated with cultural differences and a lack of transparency in supply chains (including among suppliers or subcontractors from developing countries, where the external environment is assumed and protected differently, and regulatory acts are not always properly observed).
I can also highlight the main research questions that interest me:
1. What factors influence the formation of a sustainable supply chain and which of them are of priority importance?
2. What are the key SSC practices adopted by organizations in the FMCG sector?
Based on all of the above, I can outline the research goal of my work which is to identify factors that influence the development and key characteristics of establishing sustainable supply chains. During my research, I will study literature on this topic, company practices. Additionally, I will study the factors that slow down the process of implementing practices in Russian companies. In my work, I would like to outline a clear understanding of what exactly can motivate a company or, conversely, repel it from sustainable development. Therefore, it is initially necessary to determine what exactly can affect the successful implementation of sustainable supply chains in the company.
Initially, I will analyze the literature on the topic of sustainable supply chains. This will help form a theoretical base for my work and give me a deeper understanding. Then I will use a qualitative research method - case study. The sample will consist of professionals, managers who deal with supply chain management. Using semi-structured interviews, I will be able to obtain the necessary information for my further research. Then the obtained information will be analyzed, based on which I will be able to propose a universal model for implementing sustainable practices in the supply chain.
Accordingly, the tasks of my work are:
• To study the theoretical concepts and approaches to sustainable supply chain.
• To identify the key factors that affect the sustainability of companies' supply chains.
• To identify the relevant sustainable supply chain development practices.
• To develop recommendations for companies, to help them bring their supply chain to sustainability based on research findings...
Making supply chains sustainable has become one of the most important concepts of recent years, which is reinforced by the need to take into account such aspects as environmental, social and economic aspects. The main goal of sustainable supply chains is to achieve such a level of sustainable development that all stakeholders are coordinated among themselves. These include both customers, employees, partners, and the environment itself.
The importance of forming a sustainable supply chain lies in the fact that 80% of the entire business is tied to supply chains and having a huge potential for growth and constant involvement of this element of the business, it is important to create such a holistic approach that will ensure that, while meeting our needs now, we do not jeopardize the well-being of future generations. By also applying sustainable development methods, companies are opening the way to a more viable and sustainable business model in the long term. This includes adopting strategies that minimize adverse environmental impacts, develop social responsibility and ensure economic efficiency.
A sustainable supply chain guarantees its customers the quality of products that are produced with minimal damage to the environment and include the principles of fair work. This is important for the company's employees, as they are guaranteed safe working conditions, equal and fair treatment. This is of great importance for suppliers, as it contributes to the establishment of strong and long-term relationships that are backed by trust and competitiveness, while shareholders in this case receive stable profits and discover new opportunities. Of course, the most important impact is on the environment, which gets rid of constant pollution and resource consumption.
To answer to the first research question of this article was made a content analysis of qualitative data. To evaluate the current factors which influences on sustainability of supply chains, we analyzed 20 ESG reports from companies operating in the international market in order to compare which of these practices can be applicable and useful in the Russian market. It was found that the selection of a business partner, monitoring of ESG of suppliers, exchanging information and merging knowledge, collaboration with stakeholders being in fourth place.
This order highlights the priorities and focus areas for companies regarding sustainable practices. Here’s why this order is significant and important:
The selection of business partners comes first because it forms the basis of any supply chain. Companies prioritize choosing partners who share their values and standards, especially concerning sustainability and ethical practices. This ensures that the entire supply chain adheres to consistent principles, minimizing risks related to unethical behavior and enhancing overall resilience. This step is crucial for building a reliable and sustainable supply chain. Monitoring the ESG performance of suppliers is the next priority. After choosing the right partners, continuous monitoring is essential to ensure suppliers maintain the required standards over time and adhere to ESG commitments. Regular monitoring helps identify and address potential issues early, preventing long-term negative impacts on the company’s reputation and operations. It also promotes accountability and continuous improvement among suppliers. Exchanging information and merging knowledge comes third. Once strong partnerships are established and monitored, companies focus on collaboration through sharing best practices, innovations, and insights. This practice enhances overall supply chain efficiency and sustainability by leveraging collective expertise, leading to better decision-making and innovation. Collaboration with stakeholders is in fourth place, indicating that while it is crucial, it follows the establishment of internal and partner practices. Engaging with external stakeholders, such as customers, NGOs, and regulatory bodies, helps companies align their practices with broader societal expectations and standards. This collaboration builds trust, enhances transparency, and strengthens the company’s social license to operate, ensuring that sustainability efforts are comprehensive and address the concerns of all relevant parties.
In summary, the order of these practices reflects a logical progression from building and maintaining strong internal and partner relationships to broader external engagement. Each step builds on the previous one, creating a robust framework for sustainable supply chain management. This structured approach is essential for achieving long-term sustainability goals and ensuring that all aspects of the supply chain contribute positively to the company’s overall ESG performance.
By conducting five semi-structured interviews with four company representatives and one supply chain expert was found the answer to the second research question. Based on the interviews with representatives of Russian FMCG companies and supply chain experts, we can conclude the similarities and differences between sustainability practices in Russian and international companies. Key practices, such as the selection of business partners and monitoring ESG compliance, were highlighted as similar. In Russia, as abroad, companies carefully select suppliers, focusing on environmental, social, and governance standards. Russian companies strive to follow key international and local standards, including waste management, emission control, route optimization, workers' rights, and corporate ethics. This approach not only helps maintain the company's reputation but also reduces risks associated with non-compliance with sustainability norms. However, there are differences in some aspects. Specifically, practices like "collaboration with stakeholders" and "information sharing and knowledge merging" are not as actively applied in Russia. Only two large international companies mentioned regular stakeholder engagement, which includes joint events and projects aimed at improving environmental impact. Medium-sized companies often face barriers such as a lack of awareness about the benefits of such engagement, high costs, and the absence of necessary infrastructure and expertise to manage these processes effectively. Moreover, the regulatory environment in Russia does not always encourage the active implementation of such practices, unlike in many foreign countries where there is greater pressure from governments and the public to adhere to sustainability principles. Therefore, despite the common trends in the application of sustainable practices, Russian companies often struggle to fully implement them compared to their international counterparts. This underscores the need for more active support and encouragement of sustainable practices within the Russian FMCG sector to meet global sustainability standards...
The importance of forming a sustainable supply chain lies in the fact that 80% of the entire business is tied to supply chains and having a huge potential for growth and constant involvement of this element of the business, it is important to create such a holistic approach that will ensure that, while meeting our needs now, we do not jeopardize the well-being of future generations. By also applying sustainable development methods, companies are opening the way to a more viable and sustainable business model in the long term. This includes adopting strategies that minimize adverse environmental impacts, develop social responsibility and ensure economic efficiency.
A sustainable supply chain guarantees its customers the quality of products that are produced with minimal damage to the environment and include the principles of fair work. This is important for the company's employees, as they are guaranteed safe working conditions, equal and fair treatment. This is of great importance for suppliers, as it contributes to the establishment of strong and long-term relationships that are backed by trust and competitiveness, while shareholders in this case receive stable profits and discover new opportunities. Of course, the most important impact is on the environment, which gets rid of constant pollution and resource consumption.
To answer to the first research question of this article was made a content analysis of qualitative data. To evaluate the current factors which influences on sustainability of supply chains, we analyzed 20 ESG reports from companies operating in the international market in order to compare which of these practices can be applicable and useful in the Russian market. It was found that the selection of a business partner, monitoring of ESG of suppliers, exchanging information and merging knowledge, collaboration with stakeholders being in fourth place.
This order highlights the priorities and focus areas for companies regarding sustainable practices. Here’s why this order is significant and important:
The selection of business partners comes first because it forms the basis of any supply chain. Companies prioritize choosing partners who share their values and standards, especially concerning sustainability and ethical practices. This ensures that the entire supply chain adheres to consistent principles, minimizing risks related to unethical behavior and enhancing overall resilience. This step is crucial for building a reliable and sustainable supply chain. Monitoring the ESG performance of suppliers is the next priority. After choosing the right partners, continuous monitoring is essential to ensure suppliers maintain the required standards over time and adhere to ESG commitments. Regular monitoring helps identify and address potential issues early, preventing long-term negative impacts on the company’s reputation and operations. It also promotes accountability and continuous improvement among suppliers. Exchanging information and merging knowledge comes third. Once strong partnerships are established and monitored, companies focus on collaboration through sharing best practices, innovations, and insights. This practice enhances overall supply chain efficiency and sustainability by leveraging collective expertise, leading to better decision-making and innovation. Collaboration with stakeholders is in fourth place, indicating that while it is crucial, it follows the establishment of internal and partner practices. Engaging with external stakeholders, such as customers, NGOs, and regulatory bodies, helps companies align their practices with broader societal expectations and standards. This collaboration builds trust, enhances transparency, and strengthens the company’s social license to operate, ensuring that sustainability efforts are comprehensive and address the concerns of all relevant parties.
In summary, the order of these practices reflects a logical progression from building and maintaining strong internal and partner relationships to broader external engagement. Each step builds on the previous one, creating a robust framework for sustainable supply chain management. This structured approach is essential for achieving long-term sustainability goals and ensuring that all aspects of the supply chain contribute positively to the company’s overall ESG performance.
By conducting five semi-structured interviews with four company representatives and one supply chain expert was found the answer to the second research question. Based on the interviews with representatives of Russian FMCG companies and supply chain experts, we can conclude the similarities and differences between sustainability practices in Russian and international companies. Key practices, such as the selection of business partners and monitoring ESG compliance, were highlighted as similar. In Russia, as abroad, companies carefully select suppliers, focusing on environmental, social, and governance standards. Russian companies strive to follow key international and local standards, including waste management, emission control, route optimization, workers' rights, and corporate ethics. This approach not only helps maintain the company's reputation but also reduces risks associated with non-compliance with sustainability norms. However, there are differences in some aspects. Specifically, practices like "collaboration with stakeholders" and "information sharing and knowledge merging" are not as actively applied in Russia. Only two large international companies mentioned regular stakeholder engagement, which includes joint events and projects aimed at improving environmental impact. Medium-sized companies often face barriers such as a lack of awareness about the benefits of such engagement, high costs, and the absence of necessary infrastructure and expertise to manage these processes effectively. Moreover, the regulatory environment in Russia does not always encourage the active implementation of such practices, unlike in many foreign countries where there is greater pressure from governments and the public to adhere to sustainability principles. Therefore, despite the common trends in the application of sustainable practices, Russian companies often struggle to fully implement them compared to their international counterparts. This underscores the need for more active support and encouragement of sustainable practices within the Russian FMCG sector to meet global sustainability standards...
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