Exploring the use of governance mechanisms in multi-tier sustainable supply chains

Figures & data

Figure 1. Multi-tier supply chain research design.

Table 1. Case study participants.

Firm	Industry	Suppliers	Employees	Interviewees’ areas of expertise and number of interviewees
FF Textile Retail	Wholesale and retail trade	<100	101–1000	Sustainability (1), P&SCM (2)
FF Passenger Traffic	Transportation and storage	5000	1001–10,000	P&SCM (2)
FF General Retail	Wholesale and retail trade	>10,000	>10,000	P&SCM (2)
FF Accommodation	Accommodation and food service	101–500	>10,000	Sustainability (1), P&SCM (2)
FF Food Service	Accommodation and food service	101–500	<100	General/P&SCM (2)
FT Textile Products	Wholesale and retail trade	<100	101–1000	P&SCM (1), Sales (1)
FT Agri-food Wholesale	Wholesale and retail trade	501–1000	101–1000	Sustainability/P&SCM (1), Sales (1)
FT Meal Solutions	Accommodation and food service	101–500	101–1000	General/P&SCM (1)
FT Bakery	Manufacturing	<100	101–1000	P&SCM (2)
FT Agri-food Production	Manufacturing	101–500	1001–10,000	P&SCM (2)
FT Meat	Manufacturing	>10,000	1001–10,000	Sustainability (1), P&SCM (1)
FT Service Provider	Administrative and support service	<100	1001–10,000	General/P&SCM (2)
FT Beverage Manufacturer	Manufacturing	<100	101–1000	P&SCM (2), Sales (1)
FT Construction	Construction	5000	1001–10,000	General/P&SCM (1), Sales (1)
FT Agri-food Trade	Wholesale and retail trade	N/A	<100	General/P&SCM (1)
LT Yarn	Manufacturing	<100	<100	P&SCM (1)
LT Confiture	Manufacturing	>10,000	>10,000	P&SCM (1)
LT Grain Mill 2	Manufacturing	>1000	101–1000	P&SCM (1)
LT Grain Mill 1	Manufacturing	101–500	<100	P&SCM (1)
LT Bakery Products	Wholesale and retail trade	101–500	<100	P&SCM (1)
LT Packaging	Manufacturing	<100	101–1000	P&SCM (1), Sales (1)
LT Chemical Products	Manufacturing	101–500	101–1000	P&SCM (2)
LT Beverages	Wholesale and retail trade	501–1000	1001–10,000	Sustainability (1), P&SCM (1)
LT Grain	Manufacturing, agriculture	101–500	101–1000	General/P&SCM (1), P&SCM (1)
LT Vegetables	Manufacturing	N/A	101–1000	Sales/P&SCM (1), General (1)

Figure 2. Frequencies.

Figure 3. Relative frequencies.

Table 2. Results: Governance mechanisms for ensuring supply chain sustainability.

Governance mechanisms	Imposed selection and monitoring				Imposed learning and innovation		Interactive selection and monitoring		Interactive learning and innovation				Total by firm
	Third-party certification	Code of conduct	First-party audits	Third-party audits	Second-party audits	Supplier training	Supplier visits	Continuous monitoring	Joint sustainability solution development	Building long-term commitment and trust	Continuous and open communication	Knowledge exchange
Case firm
FF Passenger Traffic	✓	✓	✓	✓	✓		✓	✓	✓		✓	✓	10
FF General Retail	✓	✓	✓	✓	✓		✓	✓	✓		✓	✓	10
FF Textile Retail	✓	✓	✓	✓			✓		✓	✓	✓		8
FF Accommodation	✓	✓			✓		✓		✓	✓	✓		7
FF Food Service	✓	✓			✓		✓			✓		✓	6
FT Textile Products	✓	✓	✓	✓	✓		✓	✓	✓	✓	✓		10
FT Bakery	✓	✓	✓	✓	✓		✓	✓	✓		✓		9
FT Agri-Food Production	✓	✓	✓	✓	✓		✓		✓	✓		✓	9
FT Beverage Manufacturer	✓	✓					✓	✓	✓	✓	✓		7
FT Agri-Food Wholesale	✓	✓	✓	✓	✓				✓				6
FT Meat	✓	✓			✓			✓	✓			✓	6
FT Meal Solutions	✓				✓				✓	✓	✓		5
FT Service Provider	✓						✓			✓	✓		4
FT Construction	✓				✓				✓				3
FT Agri-Food Trade	✓				✓			✓					3
LT Beverages	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	12
LT Confiture	✓	✓	✓		✓		✓		✓	✓		✓	8
LT Grain Mill 2	✓	✓	✓		✓		✓	✓			✓	✓	8
LT Chemical Products	✓	✓	✓		✓				✓	✓	✓		7
LT Grain		✓	✓		✓	✓		✓	✓			✓	7
LT Vegetables	✓	✓		✓				✓	✓	✓		✓	7
LT Yarn	✓	✓					✓		✓	✓		✓	6
LT Packaging	✓	✓	✓		✓				✓	✓			6
LT Bakery Products	✓	✓	✓		✓						✓		5
LT Grain Mill 1					✓			✓		✓			3
Total Mechanisms	23	20	14	9	20	2	14	12	19	15	13	11

Figure 4. Framework on governance mechanisms in multi-tier supply chains.

Table

Structure	Purpose	Governance mechanism	Description	Supportive quotes
Imposed	Selection and monitoring	Codes of conduct	Supplier engagement through Amfori Business Social Compliance Initiative (BSCI), supplier, firm-level, and/or group level code of conduct	“We have Supplier Code of Conduct that every supplier has to sign to convince that they operate in this way. Concurrently, they assure that their sub-suppliers also require this from them.” (FT Bakery) “We have made a common code of conduct within the group, which defines both our suppliers’ operations and our own operations.” (LT Chemical Products)
Imposed	Selection and monitoring	Third-party certification	Requiring sustainability-related certifications (e.g. Fairtrade, MSC, GOTS) or standards (e.g. SA8000, ISO14000) verified by a third-party	“In the first meeting, I require any kind of certifications that can show me the sustainability of working force, working environment, processing, energy and so on. And then after the first meeting, I go to double-check what is declared in the certifications.” (FT Agri-food Trade) “Regarding risk countries, we also require certification for social responsibility. This means that a third party has gone through those issues very carefully. Then, in a way, there will be additional verification, so we will not settle only for a contract. Of course, those things are in the contracts as well.” (FT Agri-food Wholesale) “Even though we conduct audits (…) if a third party does the verification following a scheme or standard, it is very valuable for me.” (LT Beverages)
Imposed	Selection and monitoring	Third-party audits	Audits conducted by independent third parties	“We do not have to go there every year because professionals are going through the production. So, we can count on the fact that a third party has done that audit. We don’t have to do that.” (FT Agri-food Production) “Some local suppliers or packaging suppliers are not so suitable to report this, so we have to audit them sometimes and check with them what they are doing in the company with our independent auditor.” (LT Vegetables)
Imposed	Selection and monitoring	First-party audits	Questionnaires and surveys for gathering information regarding supply chain sustainability	“Sustainability form; we investigate at that point [supplier selection] already where materials come from and how long the supply chain is.” (FF Textile Retail) “We have a self-audit questionnaire that has been mostly created based on IS0-standards. We go through the questionnaire, and it works as a so-called pre-audit.” (LT Packaging) “One way on the farmer side is that we do an annual survey—we have done already many years in a row—to find out the general level of responsibility on our contract farms.” (LT Grain Mill 2)
Interactive	Selection and monitoring	Continuous monitoring	Close, continuous, and interactive supplier monitoring including on-site observations and sample analysis	“We conduct quarter rating supplier assessment; we go through the status of each supplier and they get a scorecard from us. If something if found, meaning that the performance is not at the level that we require, we immediately go through it [with supplier] (…) it is constant doing.” (FF General Retail) “In fact, in almost every place we know exactly what it eats, how it grows, whether it is medicated, etc. In a way, we have the whole history of the animal in our hands and that is what we follow closely all the time.” (FT Meat) “Auditing is a good thing, but day-to-day business life and observations are more important” (FT Agri-food Trade)
Interactive	Selection and monitoring	Supplier visits	Visits and presence at supplier sites	“We try to visit at regular intervals so that they can show or verify what they have promised.” (FF Accommodation) “We make sustainability visits. Our buyers visit the producers; travel and look at the conditions there and this way we also get to know a lot of producers behind the tier one.” (LT Beverages)
Imposed	Learning and innovation	Second-party audits	On-site audits conducted by the buying firm	“Every time there is a private label product or other food product in question, a personal audit will be carried out.” (FF Food Service) “I go there to conduct check-ups; I read reports from a third party, and then I go to mirror it again. I go and check what is written in the report; I kind of compare and audit that those things are okay.” (FT Agri-food wholesale) “We have a big quality department and they do them [audits] on a regular basis. The bigger and more strategic suppliers are audited on a more regular basis, but we try to audit every supplier from time to time at least to get an understanding of how they work and behave.” (FT Meal Solutions)
Imposed	Learning and innovation	Supplier training	Imposed sustainability training for suppliers	“An online course in which they go through our CoC and environmental topics (…) This is demanded from everyone, and we follow that they complete it.” (LT Beverages) “Training events in which we can inform [suppliers] more.” (LT Grain)
Interactive	Learning and innovation	Knowledge exchange	Interactive exchange of sustainability-related knowledge through seminars and events	“We exchange information, but we do not really have supplier training for sustainability (…) Supplier Days and information sessions.” (FF Passenger Traffic) “Seminars for farmers (…) Lately, the content has been 25–75% about the sustainability.” (LT Grain Mill 2) “We have organised a seminar for producers, suppliers and other stakeholders as well.” (LT Beverages)
Interactive	Learning and innovation	Building long-term commitment and trust	Focusing on building and maintaining long-term commitment and trust to ensure supply chain sustainability	“We hope that that cooperation and relationship will be such that there is mutual trust and that they tell us if something radical happens.” (FF Textile Retail) “We have been working with the same company for over 30 years now—we are not shifting because we are a family business, and a lot of those companies are also family businesses. They value the long-term relationship because then they trust you, then you do development together.” (LT Yarn)
Interactive	Learning and innovation	Continuous and open communication	Active communication with suppliers to ensure sustainability	“The better and the more continuous our communication and cooperation with the supplier is, the easier it will be for us to ensure sustainability.” (FF General Retail) “If you are dealing and talking with them and visiting; that’s where the information comes from.” (FT Bakery) “An important way to mitigate risks is that we actively communicate to farmers what our requirements are, so they also know how to produce grain using the methods that we require.” (LT Grain Mill 2)
Interactive	Learning and innovation	Joint development of sustainability solutions	Collaboration aiming to improve supply chain sustainability and/or transparency	“If we can do some kind of project together, then we can develop the whole category together.” (FF General Retail) “We are involved in quite a few environmental impact research projects related to primary production.” (FT Meat) “We have lots of projects running on sustainability (…) We constantly follow trends, I go a lot to seminars, talk to my suppliers to see what the changes and innovations towards sustainability are.” (LT Yarn)

Data availability statement

Data are not available due to industry-specific restrictions. Due to the nature of this research, participants of this study did not agree for their data to be shared publicly, so supporting data are not available.