- Enrico Fontana (Department of Management, Sasin School of Management, Bangkok, Thailand; Mistra Centre for Sustainable Markets, Stockholm School of Economics, Stockholm, Sweden)
- Christina Öberg (Department of Marketing, Örebro University, Örebro, Sweden; The Ratio Institute, Stockholm, Sweden; CTF, Service Research Center, Karlstad University, Karlstad, Sweden)
- León Poblete (Department of Business Studies, Uppsala University, Uppsala, Sweden; Department of Technology Management and Economics, Chalmers University of Technology, Gothenburg, Sweden)
This article looks at nominated procurement as a means through which buyers select sub-suppliers to achieve sustainability compliance upstream in emerging economies’ supply chains.
As a result of recurrent industrial incidents in emerging economies where apparel is made, international firms, such as clothing brands and retailers, are increasingly being held responsible for managing sustainability compliance upstream in the supply chain. This responsibility includes ensuring minimum environmental and social standards and applies to the entire supply chain.
The paper’s authors found that some buyers nominate their sub-supplier and require their direct suppliers to source from that sub-supplier. It was this discovery that inspired the study.
Most studies stress direct supplier accountability for their sub-suppliers and haven’t looked at buyer nomination of sub-suppliers and how this impacts compliance and the supply chain. The article critically examines the ways buyers articulate nominated procurement and the unfolding supply chain consequences.
Buyers are increasingly using accountability measures and outsourcing compliance to dilute their responsibility for the whole supply chain. This makes nominated procurement an issue of high practical importance. The research draws on qualitative fieldwork and interviews with senior managers from buyers, their direct suppliers, and nominated sub-suppliers in the apparel supply chain in Sri Lanka, an emerging economy.
The paper explains in detail the background and conceptual framework behind the study. It looks at the Sustainable Supply Chain Management (SSCM) literature, its theories, goals, and objectives, and how it ties in with nominated procurement.
The research employed a qualitative, explorative, and inductive methodology, grounded empirically in the apparel supply chain of Sri Lanka – which has widely adopted nominated procurement and is deemed an example of excellence in South Asia for compliance. The study’s data comes from a series of in-depth interviews and fieldwork undertaken between 2016 and 2018. These interviews were recorded, transcribed, and then analyzed in accordance with established research methodology.
The findings indicate that buyers accomplish sustainability compliance among their sub-suppliers while prioritizing their own business agenda. Nomination was not solely based on achieving compliance – often, commercial gains were of more importance than compliance and indicate that sustainability concerns were partly utilized to achieve further objectives.
Buyers articulate nominated procurement as involving four types of pressure: commercial, geographical, compliance and extended-compliance pressure. Although studies have shown that pressure has positive effects on compliance, the findings discussed in this article suggest that such positive outcomes may not extend beyond sub-supplier compliance because the parties cannot establish a trusting relationship.
This results in buyers perpetuating the “suboptimal compliance” of raw material suppliers. By conceptualizing sandwiching – a method whereby suppliers are squeezed by their buyers and excluded from taking part in decisions regarding the nomination of sub-suppliers – the article elucidates the tensions related to nominated procurement and how these tensions can jeopardize the overall stability of the supply chain.
This finding highlights the importance of reconfiguring nominated procurement as a more balanced and interdependent process that allows equal participation of all firms involved. The article develops ideas on direct and indirect pressure and on how compliance is utilized opportunistically by buyers for instrumental gain at the cost of supply chain stability.
This article contributes to the advancement of the Sustainable Supply Chain Management literature by theorizing about nominated procurement, direct and indirect pressure, and pointing to the supply chain consequences beyond achievements in sustainability compliance.
The paper is published in the Journal of Business Research. The full version of this article is available on ScienceDirect.