1.2 SUSTAINABILITY BEFORE SUSTAINABLE OPERATIONS AND SUPPLY CHAIN MANAGEMENT
To speak of sustainability, even from the specific perspective of Operations and Supply Chain Management, means confronting the question of how to pursue the objectives of the present – whether they are those of a company, an institution or a wider socio-economic system – while ensuring that adequate standards of development are also guaranteed in the future.
The subject of sustainability is therefore intrinsically connected to a vision of the future that postulates intergenerational equity and it is for this reason that we have decided to start our discussion with an analysis – albeit brief – of several scenarios that, most probably, will form the backdrop for the choices to be made by those that must make governance decisions, such as managers, entrepreneurs or heads of government. The socio-economic context in which future generations will live and companies and institutions will operate will largely be the result of the decisions made today and, in particular, of the actions to be taken due to these decisions. It is in the knowledge of this great responsibility, therefore, that it seems appropriate to rethink management choices, placing attention on a more extensive, complex, objective function than the one that traditionally characterises company operations, which is often summarised in the objective of value creation for shareholders. It involves, in fact, devising decision-making processes based on the values of responsibility, ethics and sustainability, within a time frame that is consistent with the ability of the system to generate and regenerate adequate resources for sustaining its development. The subject is complex and has both micro- and macroeconomic implications. It transcends the boundaries of a single discipline, encompassing aspects connected to the economy, management, economic policy, sociology, demographics and so on.
It therefore seems appropriate, right from the very beginning, to clearly define the specific perimeter in which the considerations contained in this work will be developed. This book focuses on some of the most important managerial processes – Operations and Supply Chain Management – and in this regard we have decided to examine the subject of corporate sustainability as systematically as possible. Indeed, it is not the intention of this study to thoroughly analyse the subject of corporate sustainability as a whole, which is why reference is made to many of the literature contributions (Benn et al., 2014; Tencati and Perini, 2011; Craig Smith and Lenssen, 2009), but rather to limit our analysis to the organisation and management of operations and supply chain processes, examined from a broad perspective (Cooper et al., 1997), and their interaction with the imperative of sustainability.
It may appear strange to start the discussion that will lead us to the subject area of this book, namely the topic of Sustainable Operations and Supply Chain Management, by looking at two factors considered to be available commodities today, at least in one part – the most fortunate part – of our planet: food and water.
The decision to dwell upon the growing scarcity of food and water, which are essential for survival, is based on a threefold consideration:
- First, because, however much it may appear obvious, these are two factors that are essential for the survival of the planet, the scarcity and unfair distribution of which already require an urgent response today in terms of global policies that guarantee the access and the availability of them to an increasing number of people.
- Second, because these two elements, food and water, are intrinsically dependent on one another: to produce food, a large quantity of water is consumed, and therefore raising the quality and quantity of food offered to those who need it, given current technology and lifestyles, will lead to an rapid shortage of water resources.
- Third, because the solutions that may be advised today to deal effectively with these problems concern the productivity of the agro-food system, the technology required for increasing the aforesaid productivity, the fight against waste and the responsible management of the connected supply chains – the main topics of this work.
We will attempt to develop these three points briefly next.
The global food system today is capable of producing 2800 calories per day per person compared to an average daily requirement of approximately 2550 calories. This means that today the planet would be capable of feeding its population of approximate 7 billion and, according to some studies, of sustaining 9 and even 11 billion people (Stuart, 2009; Hanley, 2014).
Nevertheless, about 2.5 billion people today live on less than $2 a day; the poorest families spend more than 70% of the their income on food (WB, 2010); 36 million people die every year due to malnutrition and undernourishment; about 870 million people are hit by malnutrition, 852 million of whom live in developing countries; and approximately 1.1 billion people are undernourished (FAO, 2012). At the same time, in a dramatic food paradox, more than 1.5 billion people are obese or overweight, a problem that is increasingly widespread, and almost 30 million people die each year from diseases linked to excess food (BCFN, 2012).
According to reliable projections (UNPD, 2015), demographic growth will drive the current 7.3 billion inhabitants on Earth to 8.5 billion by 2030 and more than 9.5 billion by 20501, meaning an increase of 30% in thirty-five years, who will have to be fed by extending agro-food production. Agriculture, however, is responsible today for 70–80% of the water consumption destined for food production and 33% of the global production of greenhouse gases – the main factors at the crux of climate change. Within the same time frame, it is estimated that arable land will be reduced by between 8% and 20% due to the effects of climate change, with the consequent modification of the geography of farming, which will lead to the conversion of tropical, subtropical and temperate forests into farmland. It is estimated that approximately 45% of these forests will be lost. More than 240 million people (most of them in rural areas) are projected to lack access to an improved water source by 2050, and almost 1.4 billion people will not have access to basic sanitation (OECD, 2012).
As already stated, there is a close interdependence between food production and water consumption. Currently 70% of freshwater withdrawals are destined for farm irrigation, whereas 22% are used by industry and the remaining 8% by domestic consumption (BCFN, 2012, p. 160)2. The consumption of freshwater is closely connected to the food production chain and consumption behaviours in the most populated areas of the planet. For instance, it is enough to recall the impact of the above in terms of Water Footprint (also known as Virtual Water Content), which analyses different types of food, measuring the consumption of water expre...
